Other Income
Interest Expense. Interest expenses were $5.6 million and $5.6 million for the three months ended
March 31, 2020 and March 31, 2019, respectively.
Foreign Currency Loss,
Net. Net foreign currency loss for the three months ended March 31, 2020 was $31.0 million compared to net foreign currency loss of $10.6 million for the three months ended March 31, 2019. The net foreign
currency loss for the three months ended March 31, 2020 and March 31, 2019 was due to the depreciation in value of the Korean won relative to the US dollar during the period.
A substantial portion of our net foreign currency gain or loss is non-cash translation gain or loss
associated with intercompany long-term loans to our Korean subsidiary, which are denominated in US dollars, and are affected by changes in the exchange rate between the Korean won and the US dollar. As of March 31, 2020 and March 31,
2019, the outstanding intercompany loan balances including accrued interest between our Korean subsidiary and our Dutch subsidiary were $684 million and $666 million, respectively. Foreign currency translation gain or loss from
intercompany balances were included in determining our consolidated net income since the intercompany balances were not considered long-term investments in nature because management intended to settle these intercompany balances at their
respective maturity dates.
Loss on Early Extinguishment of Long-Term Borrowings, Net. For the three months ended
March 31, 2019, we repurchased a principal amount of $0.3 million and $0.9 million of the 2021 Notes and the Exchangeable Notes, respectively. In connection with these repurchases, we recognized a $0.04 million of net loss.
Others, Net. Others were comprised of rental income, interest income, and gains and losses from valuation of
derivatives which were designated as hedging instruments. Others for the three months ended March 31, 2020 and March 31, 2019 was $0.8 million and $0.6 million, respectively.
Income Tax Expense
Income tax
expense were $1.3 million and $0.8 million for three months ended March 31, 2020 and 2019, respectively, and were primarily attributable to interest on intercompany loan balances. Income tax expense was recorded for our Korean
subsidiary based on the estimated taxable income for the respective periods, combined with its ability to utilize net operating loss carryforwards up to 60% in 2020 and 2019.
Loss from continuing operations
As a result of the foregoing, a net loss from continuing operations decreased by $9.5 million for the three months ended March 31,
2020 compared to the three months ended March 31, 2019. As discussed above, the increase in net loss from continuing operations primarily resulted from a $20.4 million increase in net foreign currency loss, which was offset in part by an
$11.0 million increase in operating income.
Income (loss) from discontinued operations, net of tax
On March 30, 2020, we entered into the BTA for the sale of our Foundry Services Group business and Fab 4. As a result, the results of the
Foundry Services Group were classified as discontinued operations in our consolidated statements of operations and excluded from our continuing operations for all periods presented.
Net income from discontinued operations for the three months ended March 31, 2020 was $7.3 million compared to net loss from
discontinued operations of $12.6 million for the three months ended March 31, 2019. The $19.9 million increase in net income from discontinued operations primarily resulted from a $17.0 million increase in gross profit, a
$1.5 million increase in foreign currency gain, net, a $0.8 million decrease in restructuring and other charges, a $0.6 million decrease in research and development expenses and a $0.4 million decrease in selling, general and
administrative expenses, which was offset in part by a $0.4 million increase in income tax expense.
Net loss
As a result of the foregoing, a net loss of $23.7 million was recorded for the three months ended March 31, 2020 compared to a net
loss of $34.1 million for the three months ended March 31, 2019. As discussed above, the decrease in net loss of $10.4 million primarily resulted from a $19.9 million increase in net income from discontinued operations, which was
offset by a $9.5 million increase in net loss from continuing operations.
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