UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): April 30, 2013
MagnaChip Semiconductor Corporation
(Exact name of Registrant as specified in its charter)
| Delaware | 001-34791 | 83-0406195 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| c/o MagnaChip Semiconductor S.A., 74, rue de Merl, B.P. 709, L-2017 Luxembourg, Grand Duchy of Luxembourg |
Not Applicable | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (352) 45-62-62
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition. |
Attached hereto as Exhibit 99.1 and incorporated by reference herein is financial information for MagnaChip Semiconductor Corporation and its consolidated subsidiaries for the first quarter ended March 31, 2013, as presented in a press release dated April 30, 2013.
The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
The following exhibits are furnished as part of this report:
| Exhibit No. |
Description | |
| 99.1 | Press release for MagnaChip Semiconductor Corporation dated April 30, 2013, announcing the results for the first quarter ended March 31, 2013. | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MAGNACHIP SEMICONDUCTOR CORPORATION | ||||||
| Dated: April 30, 2013 | By: | /s/ Margaret Sakai | ||||
| Margaret Sakai Executive Vice President and Chief Financial Officer | ||||||
Exhibit Index
| Exhibit No. |
Description | |
| 99.1 | Press release for MagnaChip Semiconductor Corporation dated April 30, 2013, announcing the results for the first quarter ended March 31, 2013. | |
Exhibit 99.1
Press Release
MagnaChip Reports First Quarter 2013 Financial Results
| • | Revenue Grew 16% Year-Over-Year |
| • | Gross Margin Improved 380 Basis Points Year-Over-Year |
| • | Foundry Business Revenue Increased 53% Year-Over-Year |
| • | Ninth Consecutive Quarter of Achieving Financial Guidance |
SEOUL, South Korea and CUPERTINO, Calif., April 30, 2013 — MagnaChip Semiconductor Corporation (“MagnaChip”) (NYSE: MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, today announced financial results for the first quarter ended March 31, 2013.
Revenue for the first quarter of 2013 was $205.3 million, a 5.9% decrease compared to $218.1 million for the fourth quarter of 2012 and a 16.0% increase compared to $177.0 million for the first quarter of 2012.
Gross margin was $65.7 million or 32.0%, as a percent of revenue, for the first quarter of 2013. This compares to gross margin of $74.3 million or 34.1% for the fourth quarter of 2012 and $49.9 million or 28.2% for the first quarter of 2012.
Net loss, on a GAAP basis, for the first quarter of 2013 totaled $7.4 million or $0.21 per diluted share. This compares to net income of $125.3 million or $3.38 per diluted share for the fourth quarter of 2012 and a net income of $15.3 million or $0.40 per diluted share for the first quarter of 2012. Net loss was impacted primarily by a foreign currency loss of $22.6 million during the quarter which was primarily related to non-cash foreign currency translation for intercompany balances that were denominated in U.S. dollars.
“Our first quarter revenue and margin performance was better than the same quarter last year because of the product mix and customer shift we have been making which has enabled us to be better aligned with growing markets, said Sang Park, MagnaChip Chairman and CEO. “The March quarter is typically a weak quarter due to seasonality and the post-holiday consumer spending slowdown. However, in addition to normal seasonality we also experienced lower than anticipated demand from the smartphone market. Despite these obstacles, we were able to achieve our financial guidance for the ninth consecutive quarter. Looking ahead, challenges still remain and visibility is somewhat limited. However, we remain optimistic that the macro environment is starting to improve and that our business will return to normal seasonal growth beginning in the second quarter.”
Adjusted net income, a non-GAAP measurement, for the first quarter of 2013 totaled $19.7 million or $0.53 per diluted share compared to $28.7 million or $0.77 per diluted share for the fourth quarter of 2012 and $6.5 million or $0.17 per diluted share for the first quarter of 2012.
Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a more meaningful understanding of the factors and trends affecting MagnaChip’s business and operations. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income or as a better indicator of our operating performance than measures that are presented in accordance with GAAP. A reconciliation of GAAP results to non-GAAP results is included following the financial statements.
Combined cash balances (cash and cash equivalents plus restricted cash) totaled $183.0 million at the end of the first quarter of 2013, an increase of $0.7 million from the end of the prior quarter. Cash provided from operations totaled approximately $37.5 million for the first quarter of 2013.
Revenue by Segment
| In thousands of US dollars | Three Months Ended | |||||||||||
| March 31, 2013 | December 31, 2012 |
March 31, 2012 | ||||||||||
| Semiconductor Manufacturing Services |
$ | 104,138 | $ | 112,654 | $ | 67,863 | ||||||
| Display Solutions |
70,323 | 72,806 | 83,225 | |||||||||
| Power Solutions |
30,184 | 31,949 | 25,253 | |||||||||
| Other |
653 | 675 | 661 | |||||||||
| Total Revenue |
$ | 205,298 | $ | 218,084 | $ | 177,002 | ||||||
First Quarter and Recent Company Highlights
| • | Foundry Revenue Grew 53% Year-Over-Year. |
| • | Power Solutions Revenue Increased 20% Year-Over-Year. |
| • | Corporate Credit and Debit Rating Upgraded by Standard and Poor’s. |
| • | Repurchased 376,000 Shares in Q1 under MagnaChip’s 2011 Stock Repurchase Program. |
Business Outlook
For the second quarter of 2013, MagnaChip expects:
| • | Revenue will be in the range of $210 million to $220 million. |
| • | Gross margin will be 32.0% to 34.0% as a percent of revenue. |
Conference Call
MagnaChip will hold a conference call at 3 p.m. PDT today to discuss the first quarter 2013 financial results. The conference call will be webcast live and is also available by dialing 1-866-776-2061 in the U.S. or 1-706-679-0298 for all other locations. The conference ID number is 31661611 and participants are encouraged to initiate their calls at least 10 minutes in advance of the 3 p.m. PDT start time to ensure a timely connection. The webcast and earnings release will be accessible at www.magnachip.com.
A replay of the conference call will be available the same day and will run for 72 hours. The replay access numbers are 1-855-859-2056 or 1-404-537-3406. The access code is 31661611.
About MagnaChip Semiconductor Corporation
Headquartered in South Korea, MagnaChip is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer applications. MagnaChip believes it has one of the broadest and deepest ranges of analog and mixed-signal semiconductor platforms in the industry, supported by its 30-year operating history, a large portfolio of registered and pending patents, and extensive engineering and manufacturing process expertise. For more information, please visit www.magnachip.com. Information on or accessible through, MagnaChip’s website is not a part of, and is not incorporated into, this release.
Safe Harbor for Forward-Looking Statements
Information in this release regarding MagnaChip’s forecasts, business outlook, expectations and beliefs are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include statements about our ability to capitalize on improving market dynamics and future operating and financial performance including second quarter 2013 revenue and gross margin. All forward-looking statements included in this release are based upon information available to MagnaChip Semiconductor as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include general economic conditions, the impact of competitive products and pricing, timely design acceptance by our customers, timely introduction of new products and technologies, ability to ramp new products into volume production, industry wide shifts in supply and demand for semiconductor products, industry and/or company overcapacity, effective and cost efficient utilization of manufacturing capacity, financial stability in foreign markets and the impact of foreign exchange rates, unanticipated costs and expenses or the inability to identify expenses which can be eliminated, compliance with U.S. and international trade and export laws and regulations by us and our distributors, and other risks detailed from time to time in MagnaChip’s filings with the SEC, including our Form 10-K filed on February 22, 2013 and subsequent registration statements, amendments or other reports that we may file from time to time with the SEC and/or make available on our website. MagnaChip assumes no obligation and does not intend to update the forward-looking statements provided, whether as a result of new information, future events or otherwise.
| CONTACTS: | ||
| In the United States: Robert Pursel Director of Investor Relations Tel. +1-408-625-1262 robert.pursel@magnachip.com |
In Korea: Chankeun Park Senior Manager, Public Relations Tel. +82-2-6903-3195 chankeun.park@magnachip.com | |
# # #
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of US dollars, except share data)
(Unaudited)
| Three Months Ended | ||||||||||||
| March 31, 2013 |
December 31, 2012 |
March 31, 2012 |
||||||||||
| Net sales |
$ | 205,298 | $ | 218,084 | $ | 177,002 | ||||||
| Cost of sales |
139,555 | 143,796 | 127,087 | |||||||||
|
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|
|
|||||||
| Gross profit |
65,743 | 74,288 | 49,915 | |||||||||
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|
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|||||||
| Gross profit % |
32.0 | % | 34.1 | % | 28.2 | % | ||||||
| Selling, general and administrative expenses |
19,791 | 19,281 | 18,209 | |||||||||
| Research and development expenses |
20,582 | 19,660 | 19,831 | |||||||||
| Restructuring and impairment charges |
2,446 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Operating income |
22,924 | 35,347 | 11,875 | |||||||||
| Other income (expenses) |
||||||||||||
| Interest expense, net |
(5,849 | ) | (5,655 | ) | (5,580 | ) | ||||||
| Foreign currency gain (loss), net |
(22,558 | ) | 33,656 | 11,109 | ||||||||
| Other |
(260 | ) | 634 | 89 | ||||||||
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|
|||||||
| (28,667 | ) | 28,635 | 5,618 | |||||||||
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| Income (loss) before income taxes |
(5,743 | ) | 63,982 | 17,493 | ||||||||
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| Income tax expense (benefit) |
1,662 | (61,304 | ) | 2,230 | ||||||||
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| Net income (loss) |
$ | (7,405 | ) | $ | 125,286 | $ | 15,263 | |||||
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| Earnings (loss) per common share : |
||||||||||||
| - Basic |
$ | (0.21 | ) | $ | 3.50 | $ | 0.41 | |||||
| - Diluted |
$ | (0.21 | ) | $ | 3.38 | $ | 0.40 | |||||
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|||||||
| Weighted average number of shares—Basic |
35,539,413 | 35,845,367 | 37,524,127 | |||||||||
| Weighted average number of shares—Diluted |
35,539,413 | 37,074,657 | 38,298,336 | |||||||||
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NET INCOME
(In thousands of US dollars, except share data)
(Unaudited)
| Three Months Ended | ||||||||||||
| March 31, 2013 |
December 31, 2012 |
March 31, 2012 |
||||||||||
| Net income (loss) |
$ | (7,405 | ) | $ | 125,286 | $ | 15,263 | |||||
| Adjustments: |
||||||||||||
| Depreciation and amortization |
8,522 | 8,550 | 7,474 | |||||||||
| Interest expense, net |
5,849 | 5,655 | 5,580 | |||||||||
| Income tax expense (benefit) |
1,662 | (61,304 | ) | 2,230 | ||||||||
| Restructuring and impairment charges |
2,446 | — | — | |||||||||
| Stock-based compensation expense |
420 | 546 | 458 | |||||||||
| Foreign currency loss (gain), net |
22,558 | (33,656 | ) | (11,109 | ) | |||||||
| Derivative valuation loss (gain), net |
267 | (634 | ) | (85 | ) | |||||||
| Secondary offering expense |
669 | — | — | |||||||||
|
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|
|
|
|||||||
| Adjusted EBITDA |
$ | 34,988 | $ | 44,443 | $ | 19,811 | ||||||
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| Adjusted EBITDA per common share: |
||||||||||||
| - Diluted |
$ | 0.94 | $ | 1.20 | $ | 0.52 | ||||||
| Weighted average number of shares - Diluted |
37,138,414 | 37,074,657 | 38,298,336 | |||||||||
| Net income (loss) |
$ | (7,405 | ) | $ | 125,286 | $ | 15,263 | |||||
| Adjustments: |
||||||||||||
| Restructuring and impairment charges |
2,446 | — | — | |||||||||
| Stock-based compensation expense |
420 | 546 | 458 | |||||||||
| Amortization of intangibles |
1,749 | 1,893 | 1,993 | |||||||||
| Foreign currency loss (gain), net |
22,558 | (33,656 | ) | (11,109 | ) | |||||||
| Derivative valuation loss (gain), net |
267 | (634 | ) | (85 | ) | |||||||
| Secondary offering expense |
669 | — | — | |||||||||
| GAAP and cash tax expense difference |
(998 | ) | (64,749 | ) | — | |||||||
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|
|||||||
| Adjusted net income |
$ | 19,706 | $ | 28,686 | $ | 6,520 | ||||||
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| Adjusted net income per common share: |
||||||||||||
| - Diluted |
$ | 0.53 | $ | 0.77 | $ | 0.17 | ||||||
| Weighted average number of shares - Diluted |
37,138,414 | 37,074,657 | 38,298,336 | |||||||||
We define Adjusted EBITDA as net income (loss) adjusted to exclude (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expense (benefit), (iv) restructuring and impairment charges, (v) stock-based compensation expense, (vi) foreign currency loss (gain), net, (vii) derivative valuation loss (gain), net, and (viii) secondary offering expense.
We present Adjusted Net Income as a further supplemental measure of our performance. We prepare Adjusted Net Income by adjusting net income to eliminate the impact of a number of non-cash expenses and other items that may be either one time or recurring that we do not consider to be indicative of our core ongoing operating performance. We believe that Adjusted Net Income is particularly useful because it reflects the impact of our asset base and capital structure on our operating performance. We define Adjusted Net Income as net income (loss) adjusted to exclude (i) restructuring and impairment charges, (ii) stock-based compensation expense, (iii) amortization of intangibles, (iv) foreign currency loss (gain), net, (v) derivative valuation loss (gain), net, (vi) secondary offering expense, and (vii) GAAP and cash tax expense difference.
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of US dollars, except share data)
(Unaudited)
| March 31, 2013 |
December 31, 2012 |
|||||||
| Assets |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 182,987 | $ | 182,238 | ||||
| Restricted cash |
37 | 133 | ||||||
| Accounts receivable, net |
146,267 | 143,331 | ||||||
| Inventories, net |
83,910 | 89,363 | ||||||
| Other receivables |
3,662 | 1,429 | ||||||
| Prepaid expenses |
10,401 | 7,884 | ||||||
| Current deferred income tax assets |
22,870 | 22,768 | ||||||
| Other current assets |
5,322 | 9,680 | ||||||
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|
|||||
| Total current assets |
455,456 | 456,826 | ||||||
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|||||
| Property, plant and equipment, net |
255,144 | 238,256 | ||||||
| Intangible assets, net |
12,169 | 15,260 | ||||||
| Long-term prepaid expenses |
16,101 | 18,048 | ||||||
| Deferred income tax assets |
42,804 | 46,710 | ||||||
| Other non-current assets |
15,359 | 14,866 | ||||||
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| Total assets |
$ | 797,033 | $ | 789,966 | ||||
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| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities |
||||||||
| Accounts payable |
$ | 79,425 | $ | 79,236 | ||||
| Other accounts payable |
29,975 | 15,600 | ||||||
| Accrued expenses |
49,268 | 43,486 | ||||||
| Derivative liabilities |
4,619 | — | ||||||
| Other current liabilities |
3,136 | 9,973 | ||||||
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|||||
| Total current liabilities |
166,423 | 148,295 | ||||||
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|||||
| Long-term borrowings, net |
201,727 | 201,653 | ||||||
| Accrued severance benefits, net |
111,806 | 112,446 | ||||||
| Other non-current liabilities |
13,897 | 17,263 | ||||||
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|||||
| Total liabilities |
493,853 | 479,657 | ||||||
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| Stockholders’ equity |
||||||||
| Common stock, $0.01 par value, 150,000,000 shares authorized, 39,747,933 shares issued and 35,408,032 shares outstanding at March 31, 2013 and 39,599,374 shares issued and 35,635,357 shares outstanding at December 31, 2012 |
397 | 396 | ||||||
| Additional paid-in capital |
103,310 | 101,885 | ||||||
| Retained earnings |
279,846 | 287,251 | ||||||
| Treasury stock, 4,339,901 shares at March 31, 2013 and 3,964,017 shares at December 31, 2012 |
(45,918 | ) | (39,918 | ) | ||||
| Accumulated other comprehensive loss |
(34,455 | ) | (39,305 | ) | ||||
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|
|||||
| Total stockholders’ equity |
303,180 | 310,309 | ||||||
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|
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| Total liabilities and stockholders’ equity |
$ | 797,033 | $ | 789,966 | ||||
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MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars)
(Unaudited)
| Three Months Ended | ||||||||
| March 31, 2013 |
March 31, 2012 |
|||||||
| Cash flow from operating activities |
||||||||
| Net income (loss) |
$ | (7,405 | ) | $ | 15,263 | |||
| Adjustments to reconcile net income to net cash provided by operating activities |
||||||||
| Depreciation and amortization |
8,522 | 7,474 | ||||||
| Provision for severance benefits |
4,229 | 4,703 | ||||||
| Amortization of debt issuance costs and original issue discount |
283 | 242 | ||||||
| Loss (gain) on foreign currency translation, net |
28,280 | (12,824 | ) | |||||
| Gain on disposal of property, plant and equipment, net |
— | (269 | ) | |||||
| Loss on disposal of intangible assets, net |
1 | 11 | ||||||
| Restructuring and impairment charges |
618 | — | ||||||
| Stock-based compensation |
420 | 458 | ||||||
| Other |
635 | 123 | ||||||
| Changes in operating assets and liabilities |
||||||||
| Accounts receivable |
(6,409 | ) | 1,339 | |||||
| Inventories |
2,022 | (2,860 | ) | |||||
| Other receivables |
(1,278 | ) | (4,024 | ) | ||||
| Other current assets |
2,014 | 8,536 | ||||||
| Deferred tax assets |
2,182 | 871 | ||||||
| Accounts payable |
2,290 | 12,581 | ||||||
| Other accounts payable |
9,734 | (298 | ) | |||||
| Accrued expenses |
(1,125 | ) | 9,886 | |||||
| Other current liabilities |
(5,838 | ) | 2,225 | |||||
| Payment of severance benefits |
(627 | ) | (2,323 | ) | ||||
| Other |
(1,004 | ) | (1,261 | ) | ||||
|
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|
|
|||||
| Net cash provided by operating activities |
37,544 | 39,853 | ||||||
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|
|
|
|||||
| Cash flow from investing activities |
||||||||
| Decrease in restricted cash |
92 | 2,995 | ||||||
| Proceeds from disposal of plant, property and equipment |
— | 273 | ||||||
| Purchase of plant, property and equipment |
(32,927 | ) | (24,758 | ) | ||||
| Payment for intellectual property registration |
(142 | ) | (190 | ) | ||||
| Payment for acquisition |
— | (8,642 | ) | |||||
| Decrease in short-term financial instruments |
— | 173 | ||||||
| Collection of guarantee deposits |
— | 31 | ||||||
| Payment of guarantee deposits |
(741 | ) | (178 | ) | ||||
| Other |
8 | (48 | ) | |||||
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|
|||||
| Net cash used in investing activities |
(33,710 | ) | (30,344 | ) | ||||
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| Cash flow from financing activities |
||||||||
| Proceeds from issuance of common stock |
1,006 | 108 | ||||||
| Repayment of obligations under capital lease |
— | (1,510 | ) | |||||
| Acquisition of treasury stock |
(6,000 | ) | (11,935 | ) | ||||
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|
|
|||||
| Net cash used in financing activities |
(4,994 | ) | (13,337 | ) | ||||
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|
|||||
| Effect of exchange rates on cash and cash equivalents |
1,909 | (1,660 | ) | |||||
|
|
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|
|
|||||
| Net increase (decrease) in cash and cash equivalents |
749 | (5,488 | ) | |||||
|
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|
|||||
| Cash and cash equivalents |
||||||||
| Beginning of the period |
182,238 | 162,111 | ||||||
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|
|||||
| End of the period |
$ | 182,987 | $ | 156,623 | ||||
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