~~-4-~~We have incurred additional debt and may still incur substantially more debt or take other actions which would intensify the risks discussed above.

We are not restricted under the terms of the indenture governing the 2014 Notes from incurring additional debt, securing existing or future debt, recapitalizing our debt, or taking a number of other actions that are not limited by the terms of the indenture governing the 2014 Notes that could have the effect of diminishing our ability to make payments on the 2014 Notes when due. Any failure by us or any of our significant subsidiaries to make any payment at maturity of indebtedness for borrowed money in excess of $15.0 million or the acceleration of any such indebtedness in excess of $15.0 million would, subject to the terms of the indenture governing the 2014 Notes, constitute a default under the indenture. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the 2014 Notes when required.

In August 2018, we entered into the Revolving Credit Facility with Silicon Valley Bank, which matures on August 2, 2020. Amounts drawn under the Revolving Credit Facility will be used for working capital and general corporate purposes. While we currently have no outstanding debt under the Revolving Credit Facility, we may incur up to $15.0 million of secured debt pursuant to the Revolving Credit Facility. See Note 6 to the Consolidated Financial Statements included in this Form 10-K for more information about the Revolving Credit Facility.

We may not have the ability to raise the funds necessary to repurchase the 2014 Notes upon specified dates or upon a fundamental change, and our future debt may contain limitations on our ability to repurchase the 2014 Notes.

Holders of the 2014 Notes have the right to require us to repurchase all or a portion of their 2014 Notes on certain dates or upon the occurrence of a fundamental change at a repurchase price equal to, for the 2014 Notes, 100% of the principal amount of the 2014 Notes to be repurchased plus accrued and unpaid interest, if any. We may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of 2014 Notes surrendered therefor.

In addition, our ability to repurchase the 2014 Notes may be limited by law, regulatory authority, or agreements governing our future indebtedness. Our failure to repurchase the 2014 Notes at a time when the repurchase is required by the indenture would constitute a default under the indenture. A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the 2014 Notes when required.

Holders of 2014 Notes are not entitled to any rights with respect to our common stock, but they are subject to all changes made with respect to them to the extent our conversion obligation includes shares of our common stock.

Holders of 2014 Notes are not entitled to any rights with respect to our common stock (including, without limitation, voting rights and rights to receive any dividends or other distributions on our common stock) prior to the conversion date with respect to any 2014 Notes they surrender for conversion, but they are subject to all changes affecting our common stock. For example, if an amendment is proposed to our certificate of incorporation or bylaws requiring stockholder approval and the record date for determining the stockholders of record entitled to vote on the amendment occurs prior to the conversion date with respect to any 2014 Notes surrendered for conversion, then the holder surrendering such 2014 Notes will not be entitled to vote on the amendment, although such holder will nevertheless be subject to any changes affecting our common stock.

We have made only limited covenants in the indenture governing the 2014 Notes, and these limited covenants may not protect a noteholder's investment.

The indenture governing the 2014 Notes does not:

require us to maintain any financial ratios or specific levels of net worth, revenues, income, cash flows, or liquidity and, accordingly, does not protect holders of the 2014 Notes in the event that we experience adverse changes in our financial condition or results of operations;

limit our subsidiaries’ ability to guarantee or incur indebtedness that would rank structurally senior to the 2014 Notes;

limit our ability to incur additional indebtedness, including secured indebtedness;

restrict our subsidiaries’ ability to issue securities that would be senior to our equity interests in our subsidiaries and therefore would be structurally senior to the 2014 Notes;

~~Semiconductor Corporation (NASDAQ: LSCC)~~restrict our ability to repurchase our securities;

restrict our ability to pledge our assets or those of our subsidiaries; or

restrict our ability to make investments or pay dividends or make other payments in respect of our common stock or our other indebtedness.

Furthermore, the indenture governing the 2014 Notes contains only limited protections in the event of a change of control. We could engage in many types of transactions, such as acquisitions, refinancings, or certain recapitalizations, that could substantially affect our capital structure and the value of the 2014 Notes and our common stock but may not constitute a “fundamental change” that permits holders to require us to repurchase their 2014 Notes or a “make-whole fundamental change” that permits holders to convert their 2014 Notes at an increased conversion rate. For these reasons, the limited covenants in the indenture governing the 2014 Notes may not protect a noteholder's investment in the 2014 Notes.

The increase in the conversion rate for 2014 Notes converted in connection with a make-whole fundamental change or provisional redemption may not adequately compensate noteholders for any lost value of the 2014 Notes as a result of such transaction or redemption.

If (i) a make-whole fundamental change occurs prior to February 6, 2021, or (ii) upon our issuance of a notice of provisional redemption, under certain circumstances, we will increase the conversion rate by a number of additional shares of our common stock for the 2014 Notes converted in connection with such events. The increase in the conversion rate for the 2014 Notes converted in connection with such events may not adequately compensate noteholders for any lost value of the 2014 Notes as a result of such transaction or redemption. In addition, if the price of our common stock in the transaction is greater than $180.00 per share or less than $39.96 per share (in each case, subject to adjustment), a fabless semiconductor company. From 2012 to 2013, Mr. Jones served as chairman of Dialogic Inc. (OTC: DLGC), a communications technology company. From 2005 to 2012, Mr. Jones served as chairman of Epocrates, Inc., a provider of clinical solutions to healthcare professionals and interactive servicesno additional shares will be added to the ~~healthcare industry,~~conversion rate for the 2014 Notes. Moreover, in no event will the conversion rate per $1,000 principal amount of 2014 Notes as a result of this adjustment exceed 25.0250 shares of common stock, subject to adjustment.

Our obligation to increase the conversion rate for 2014 Notes converted in connection with such events could be considered a penalty, in which ~~was acquired by athenahealth, Inc. in 2013. From 2007~~case the enforceability thereof would be subject to ~~2012, Mr. Jones also served on~~general principles of reasonableness and equitable remedies.

The conversion rate of the ~~board~~2014 Notes may not be adjusted for all dilutive events.

The conversion rate of ~~directors~~the 2014 Notes is subject to adjustment for certain events, including, but not limited to, the issuance of Openwave Systems Inc., a telecom infrastructure software provider that changed its name to Unwired Planet (NASDAQ: UPIP) in 2012. From 2007 to 2011, Mr. Jones served on the board of directors of Novell, Inc., an enterprise infrastructure software provider that was sold to Attachmate Corporation in 2011. From June 1998 to March 2001, Mr. Jones was the senior vice president and chief financial officer of Gemplus International S.A. (now GEMALTO N.V.), a provider of solutions empowered by smart cards. From March 1992 to June 1998, he was vice president of finance and corporate controller at Intel Corporation, a producer of microchips and communications products. Prior to that, Mr. Jones served as chief financial officer of LSI Corporation (formerly known as LSI Logic), a semiconductor company. Mr. Jones received a B.A. from the University of Illinois and an M.B.A. from St. Louis University. We believe that Mr. Jones’ significant financial and accounting expertise and international business experience qualify him to servecertain stock dividends on our ~~board~~common stock, the issuance of ~~directors.~~certain rights or warrants, subdivisions, combinations, distributions of capital stock, indebtedness, or assets, cash dividends and certain issuer tender or exchange offers. However, the conversion rate will not be adjusted for other events, such as a third-party tender or exchange offer or an issuance of common stock for cash, that may adversely affect the trading price of the 2014 Notes or our common stock. An event that adversely affects the value of the 2014 Notes may occur, and that event may not result in an adjustment to the conversion rate.

~~Class II Directors (Term Expiring~~Some significant restructuring transactions may not constitute a fundamental change, in ~~2018)~~which case we would not be obligated to offer to repurchase the 2014 Notes.

~~John A. Young, age 84,~~Upon the occurrence of a fundamental change, a holder of 2014 Notes has ~~been~~the right to require us to repurchase the 2014 Notes. However, the fundamental change provisions will not afford protection to holders of 2014 Notes in the event of other transactions that could adversely affect the 2014 Notes. For example, transactions such as leveraged recapitalizations, refinancings, restructurings, or acquisitions initiated by us may not constitute a ~~member~~fundamental change requiring us to repurchase the 2014 Notes. In the event of any such transaction, the holders would not have the right to require us to repurchase the 2014 Notes, even though each of these transactions could increase the amount of our indebtedness, or otherwise adversely affect our capital structure or any credit ratings, thereby adversely affecting the holders of 2014 Notes.

In addition, absent the occurrence of a fundamental change or a make-whole fundamental change as described under changes in the composition of our board of directors ~~since March 2001. Mr. Young retired~~will not provide holders with the right to require us to repurchase the 2014 Notes or to an increase in ~~October 1992 after having served as president~~the conversion rate upon conversion.

We cannot assure noteholders that an active trading market will develop or be maintained for the 2014 Notes.

We do not intend to apply to list our outstanding 2014 Notes on any securities exchange or to arrange for quotation on any automated dealer quotation system. In addition, the liquidity of the trading market in the 2014 Notes and ~~chief executive officer~~the market price quoted for the 2014 Notes may be adversely affected by changes in the overall market for this type of ~~Hewlett-Packard Company,~~security and by changes

in our financial performance or prospects or in the prospects for companies in our industry generally. As a ~~diversified electronics manufacturer, since 1978. Mr. Young served~~result, we cannot assure noteholders that an active trading market will develop or be maintained for the 2014 Notes. If an active trading market does not develop or is not maintained, the market price and liquidity of the 2014 Notes may be adversely affected. In that case, noteholders may not be able to sell the 2014 Notes at a particular time or at a favorable price.

Any adverse rating of the 2014 Notes may cause their trading price to fall.

We do not intend to seek a rating on the 2014 Notes. However, if a rating service were to rate the 2014 Notes and if such rating service were to lower its rating on the 2014 Notes below the rating initially assigned to the 2014 Notes or otherwise announces its intention to put the 2014 Notes on credit watch, the trading price of the 2014 Notes could decline.

Holders of 2014 Notes may be subject to tax if we make or fail to make certain adjustments to the conversion rate of the 2014 Notes even though they do not receive a corresponding cash distribution.

The conversion rate of the 2014 Notes is subject to adjustment in certain circumstances, including the payment of cash dividends. If the conversion rate is adjusted as a ~~director~~result of ~~Affymetrix, Inc. (NASDAQ: AFFX),~~ a ~~provider of genomic analysis tools and reagents for genetic testing, from 1992~~distribution that is taxable to ~~2010, and Vermillion, Inc. (NASDAQ: VRML), a molecular diagnostics company, from 1994 to 2008. He currently serves~~our common stockholders, such as a ~~director of Nanosys, Inc.,~~cash dividend, a ~~private venture-backed semiconductor company specializing in nanotechnology. Mr. Young~~noteholder may be deemed to have received a ~~B.S.~~dividend subject to U.S. federal income tax without the receipt of any cash. In addition, a failure to adjust (or to adjust adequately) the conversion rate after an event that increases a noteholder's proportionate interest in ~~electrical engineering from Oregon State University~~us could be treated as a deemed taxable dividend to you. If a make-whole fundamental change occurs prior to February 6, 2021 or upon our issuance of a notice of provisional redemption, under some circumstances, we will increase the conversion rate for the 2014 Notes converted in connection with the make-whole fundamental change or provisional redemption. Such increase may also be treated as a distribution subject to U.S. federal income tax as a dividend. For a non-U.S. holder, any deemed dividend would be subject to U.S. federal withholding tax at a 30% rate, or such lower rate as may be specified by an applicable treaty, which may be set off against subsequent payments on the 2014 Notes.

Any conversions of the 2014 Notes will dilute the ownership interest of our existing stockholders, including holders who had previously converted their notes.

Any conversion of some or all of the 2014 Notes will dilute the ownership interests of our existing stockholders. The initial conversion price under the 2014 Notes is approximately $55.94. As a result, each of the outstanding 2014 Notes is initially convertible into 17.8750 shares of our common stock per $1,000 principal amount. Issuances of shares of common stock upon conversion of our 2014 Notes could depress the market price of our common stock and ~~an M.B.A. from Stanford University.~~ impair our ability to raise capital through the sale of additional equity securities. In addition, the existence of the 2014 Notes may encourage short selling by market participants because the conversion of the 2014 Notes could depress the price of our common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We lease approximately 74,100 square feet of office and laboratory space at our headquarters in South San Francisco, California under a lease that expires in April 2020. Additionally, we lease office, laboratory and manufacturing space in Singapore of approximately 50,000 square feet and in Ontario, Canada of approximately 44,500 square feet under leases that expire in June 2022 and March 2026, respectively. As of December 31, 2018, we also leased office space in Japan, China, and France, with various expiration dates through February 2026. In addition, we believe that ~~Mr. Young’s extensive executive management experience qualifies him~~our properties are in good condition and are adequate and suitable for their purposes.

ITEM 3. LEGAL PROCEEDINGS

In the normal course of business, we are from time to ~~serve~~time involved in legal proceedings or potential legal proceedings, including matters involving employment, intellectual property, or others. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of any currently pending matters would not have a material adverse effect on our board of directors. As previously disclosed in our Current Report on Form 8-K filed on March 2, 2017, Mr. Young has notified the Company that he intends to resign from our board of directors no later than our next annual meeting of stockholders.

~~Gerhard F. Burbach, age 55, has been a member of our board of directors since January 2013. Mr. Burbach currently serves as chairman~~business, operating results, financial condition, or cash flows. Regardless of the ~~board~~outcome, litigation can have an adverse impact on us because of ~~directors~~defense and settlement costs, diversion of ~~Autonomic Technologies, Inc., or ATI, a private medical device company focused~~management resources, and other factors.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market for Our Common Stock; Dividends

Our common stock began trading on the ~~treatment~~Nasdaq Global Select Market under the symbol “FLDM” on February 10, 2011.

We had 86 stockholders of severe headaches, and is chairman of the board of directors of Procyrion Inc., a private medical device company focused on the treatment of chronic heart failure. Mr. Burbach served as interim chief executive officer and president of ATI from December 2015 to April 2016. From January 2006 to September 2014, Mr. Burbach served as president, chief executive officer, and director of Thoratec Corporation (NASDAQ: THOR), a company that develops, manufactures, and markets proprietary medical devices used for circulatory support. In addition, from 2004 to February 2013, Mr. Burbach served as a member of the board of directors of Digirad Corporation (NASDAQ: DRAD), a company focused on diagnostic imaging products. From April 2005 to January 2006, Mr. Burbach served as president and chief executive officer of Digirad Corporation. From July 2003 to April 2005, he served as president and chief executive officer of Bacchus Vascular, Inc., a developer of catheter-based medical devices. From January 2001 to July 2003, he served as chief executive officer of Philips Nuclear Medicine, a division of Philips Electronics, and before its acquisition by Philips, he worked for four years for ADAC Laboratories, most recently as president. Mr. Burbach also spent six years with the management consulting firm of McKinsey & Company, Inc., where he was most recently a senior engagement manager in the firm’s healthcare practice. Mr. Burbach received a B.S. in Industrial Engineering from Stanford University in 1984 and an M.B.A. from Harvard business School in 1990. We believe that Mr. Burbach’s experience as a chief executive officer and director of other public life sciences companies qualifies him to serve on our board of directors.

~~Carlos Paya, M.D., Ph.D.~~, age 58, has served as a member of our board of directors since March 2017. Since May 2011, Dr. Paya has served as president, chief executive officer and director of Immune Design Corp. He previously served as president of Elan Corporation, a pharmaceutical corporation, which was acquired by Perrigo Company, from November 2008 to April 2011. Before joining Elan Corporation, Dr. Paya was at Eli Lilly & Company, a pharmaceutical corporation, from September 2001 to November 2008, as vice president, Lilly Research Laboratories. From January 1991 to August 2001, Dr. Paya was professor of medicine, immunology, and pathology, and vice dean of the clinical investigation program at the Mayo Clinic in Rochester, Minnesota. He received his M.D. and Ph.D. degrees from the University of Madrid and underwent postdoctoral training at the Institute Pasteur, Paris,

~~-5-~~

~~France. We believe that Dr. Paya’s experience in the life sciences industry gives him the qualifications and skills to serve on our Board.~~

~~Class III Directors (Term Expiring in 2019)~~

~~Samuel D. Colella~~, age 77, has served as a member and chairman of our board of directors since July 2000. Mr. Colella is a managing director of Versant Ventures, a healthcare venture capital firm he co-founded in 1999, and has been a general partner of Institutional Venture Partners since 1984. Mr. Colella currently serves on the board of directors of Flexion Therapeutics, Inc. (NASDAQ: FLXN), a specialty pharmaceutical company. Mr. Colella also is currently a member of the board of directors of several private companies. Mr. Colella served on the board of directors of Genomic Health, Inc. (NASDAQ: GHDX), a molecular diagnostics company, from 2001 to 2014; Alexza Pharmaceuticals, Inc. (NASDAQ; ALXA), a pharmaceutical company, from 2002 to 2012; Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ), a biopharmaceutical company, from 2003 to 2012; Veracyte, Inc. (NASDAQ: VCYT), a diagnostics company, from 2006 to 2014; Solta Medical, Inc., a medical aesthetics company, from 1997 to 2007; and Symyx Technologies, Inc., a life science company that merged with Accelrys, Inc. from 1997 to 2007. Mr. Colella received a B.S. in business and engineering from the University of Pittsburgh and an M.B.A. from Stanford University. We believe that Mr. Colella’s broad understanding of the life science industry and his extensive experience working with emerging private and public companies, including prior service as chairman of boards of directors, qualifies him to serve on, and as chairman of our board of directors.

~~Stephen Christopher Linthwaite~~,~~age 45,~~ joined Fluidigm as President and Chief Operating Officer in August 2016 and has served as our President, Chief Executive Officer, and Director since October 2016. From August 2003 to April 2016, Mr. Linthwaite held various managerial positions at Thermo Fisher Scientific Inc., a life sciences company, and prior to its acquisition by Thermo Fisher, at Life Technologies Corporation, a life sciences company, including president, genetic sciences division, from December 2014 to April 2016, president, genetic analysis platform, from September 2011 to December 2014, and various other managerial positions at Invitrogen prior to the creation of Life Technologies through a merger of Invitrogen and Applied Biosystems. Prior to joining Invitrogen, Mr. Linthwaite held various strategic consulting roles. Mr. Linthwaite served on the board of directors of Claritas Genomics, Inc. from December 2014 to April 2016. Mr. Linthwaite received a M.B.A. from the University of Virginia (Darden) School of Business, and a B.A. in Foreign Affairs from the University of Virginia. Prior to business school, Mr. Linthwaite served on active duty in the U.S. Army as an armor officer. We believe that Mr. Linthwaite's extensive industry experience with life sciences companies qualifies him to serve on our board.

~~Nicolas M. Barthelemy, age 51,~~has served as a member of our board of directors since March 2017. Mr. Barthelemy brings over 25 years of health-care industry experience to the director role. From 2014 to February 2017, Mr. Barthelemy served as the president and chief executive officer of Biotheranostics, Inc., a molecular diagnostics company. From 2010 until 2013, he served as president, global commercial operations at Life Technologies Corporation, a global life sciences company, which was acquired by Thermo Fisher Scientific Inc. in February 2014. Prior to that position, he led the $850M Cell Systems division from 2005 to 2010. Before Life Technologies, from 1996 to 2004, Mr. Barthelemy was with Biogen Inc., a biotechnology company, most recently as vice president, manufacturing and general manager for the company's manufacturing organization at Research Triangle Park. He began his career with Merck & Co., Inc. (NYSE: MRK), a pharmaceutical company, as a project engineer in the vaccine division and worked for the company from 1991 to 1996. Mr. Barthelemy currently serves as a member of the boards of directors of Repligen Corporation (NASDAQ: RGEN), a biotechnology company. He received an M.S. in Chemical Engineering from the University of California, Berkeley in 1991, and an engineering degree from Ecole Superieure de Physique et Chimie Industrielles, Paris in 1989. We believe that Mr. Barthelemy's extensive experience in manufacturing, distributing and commercializing life science instruments, reagents and services, his knowledge of the research and clinical markets as well as his relevant public board experience qualify him to serve on our board of directors.

~~Executive Officers~~

~~-6-~~

~~The names of our executive officers, their ages, their positions with Fluidigm and other biographical information~~record as of March ~~31, 2017 are set forth below. There are no family relationships among any~~13, 2019; however, because many of our ~~directors~~outstanding shares are held by brokers or ~~executive officers.~~other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial owners represented by the holders of record.



~~Name~~	~~Age~~	~~Position~~
~~Stephen Christopher Linthwaite~~	45	~~President, Chief Executive Officer, and Director~~
~~Vikram. Jog~~	60	~~Chief Financial Officer~~
~~Steven C. McPhail~~	63	~~Chief Commercial Officer~~
~~Mai Chan (Grace) Yow~~	58	~~Executive Vice President, Worldwide Manufacturing of Fluidigm Singapore Pte. Ltd.~~
~~Nicholas Khadder~~	43	~~Senior Vice President, General Counsel, Chief Compliance Officer and Secretary~~
~~Jennifer Lee~~	54	~~Vice President, Controller, and Principal Accounting Officer~~

~~Stephen Christopher Linthwaite.~~ ~~Please see~~We have never declared or paid cash dividends on our common stock and do not expect to pay dividends on our common stock for the ~~biographical information above~~foreseeable future. Instead, we anticipate that all of our earnings in the ~~section entitled “Board~~foreseeable future will be used for the operation and growth of ~~Directors~~our business.

Stock Performance Graph

The following performance graph shall not be deemed “soliciting material” or to be “filed” with the Securities and ~~Corporate Governance – Class III Directors (Term Expiring in 2019)~~.”

~~Vikram Jog~~ ~~has served as our Chief Financial Officer since February 2008. From April 2005 to February 2008, Mr. Jog served as chief financial officer~~Exchange Commission for ~~XDx, Inc. (now CareDx, Inc.), a molecular diagnostics company. From March 2003 to April 2005, Mr. Jog was a vice president~~purposes of Applera Corporation, a life science company that is now part of Thermo Fisher Scientific, and vice president of finance for its related businesses, Celera Genomics and Celera Diagnostics. From April 2001 to March 2003, Mr. Jog was vice president of finance for Celera Diagnostics and corporate controller of Applera Corporation. Mr. Jog received a Bachelor of Commerce degree from Delhi University and an M.B.A. from Temple University. Mr. Jog is a member of the American Institute of Certified Public Accountants.

~~Steven C. McPhail~~ joined Fluidigm as General Manager, Production Genomics in May 2015 and became our Chief Commercial Officer in August 2016. From December 2014 to March 2015, Mr. McPhail was vice president, special projects at Quintiles Transnational Corporation, a biopharmaceutical development and commercial outsourcing services firm. From February 2003 to August 2012, Mr. McPhail was president and chief executive officer of Expression Analysis, Inc., a genomic services company that was acquired by Quintiles Transnational Corporation in August 2012, where Mr. McPhail was president of the post-acquisition operation until December 2014. Prior to Expression Analysis, Inc., Mr. McPhail held various staff and management positions at companies in the diagnostic, biotechnology, and medical device markets, including ArgoMed Inc., Xanthon, Inc., TriPath Imaging Inc., Dynex Technologies, Inc., and Abbott Laboratories. Mr. McPhail serves on the board of visitors of NC Children's Hospital and on the board of trustees of the Carolinas chapter of the Crohn's and Colitis Foundation of America as well as ImproveCareNow, a quality improvement network designed to improve the care and outcomes of children with inflammatory bowel disease. Mr. McPhail received a B.S. in Biology from San Diego State University.

~~Mai Chan (Grace) Yow~~ has served as Executive Vice President, Worldwide Manufacturing of Fluidigm Singapore Pte. Ltd., our Singapore subsidiary, since February 2012, and as Managing Director of Fluidigm Singapore Pte. Ltd. since March 2006. Ms. Yow served as Vice President, Worldwide Manufacturing, from March 2006 to January 2012. From June 2005 to March 2006, Ms. Yow served as General Manager of Fluidigm Singapore Pte. Ltd. From August 2004 to May 2005, Ms. Yow served as vice president engineering (Asia) for Kulicke and Soffa, a public semiconductor equipment manufacturer. From March 1991 to July 2004, Ms. Yow served as director, assembly operations, plant facilities and EHS, for National Semiconductor Singapore, a semiconductor fabrication subsidiary of National Semiconductor Corporation. Ms. Yow received a B.E. in electronic engineering from Curtin University, a certificate in management studies from the Singapore Institute of Management, and a diploma in electrical engineering from Singapore Polytechnic.

~~Nicholas Khadder~~ has served as our Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary since June 2016. From 2010 to June 2016, Mr. Khadder held various positions at Amyris, Inc., an industrial biotechnology company, including senior vice president, general counsel and corporate secretary from 2013 to June 2016, interim general counsel from July 2013 to December 2013 and assistant general counsel from October 2010 to July 2013. Prior to joining Amyris, Mr. Khadder served in senior corporate counsel roles at LeapFrog Enterprises, Inc., an educational entertainment company, from August 2008 to September 2010, and at Protiviti, Inc.,

~~-7-~~

an internal audit and risk consulting firm, from June 2005 to July 2008. Before commencing his in-house legal career, Mr. Khadder was a corporate law associate at Fenwick & West LLP from 1998 to 2005. Mr. Khadder received a J.D. from Berkeley Law (the University of California, Berkeley, School of Law) and a B.A. in English from the University of California, Berkeley.

~~Jennifer Lee~~ has served as Vice President, Controller, and Principal Accounting Officer since May 2016. From 1996 to May 2016, Ms. Lee held various finance leadership roles at Genentech, Inc., a biotechnology company that was acquired by Roche Holdings, Inc., in March 2009, including Director of Commercial Finance from 2010 to May 2016, Director of General Audit from 2008 to 2009, Director of Collaborations Finance and Royalties from 2006 to 2008 and Associate Director of External Reporting from 2000 to 2006. Prior to joining Genentech, Ms. Lee held staff and managerial roles at Pacific Gas and Electric Company and Arthur Andersen & Co. Ms. Lee received her B.S. in accounting from San Francisco State University and her M.B.A. from Golden Gate University. Ms. Lee is also a certified public accountant.

Section ~~16(a) Beneficial Ownership Reporting Compliance~~

~~Section 16(a)~~18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, ~~requires~~or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Fluidigm Corporation under the Securities Act or the Exchange Act.

The following graph compares, from December 31, 2013 through December 31, 2018, the cumulative total return for our ~~directors, executive officers,~~common stock, the Nasdaq Composite Total Return Index, and ~~holders~~the Nasdaq US Benchmark Medical Equipment Index, assuming in each case an initial investment of ~~more than 10%~~$100 and reinvestment of all dividends. Such returns are based on historical results and are not intended to suggest future performance.

Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

We did not repurchase any shares of our common stock ~~to file~~during the year ended December 31, 2018.

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with the SEC reports regarding their ownership and changes in ownership of our securities. We believe that our directors, executive officers, and 10% stockholders complied with all Section 16(a) filing requirements in 2016. In making these statements, we have relied upon examination of the filings made with the SEC and the written representations of our directors and executive officers.

~~Fluidigm Policies on Business Conduct~~

We are committed to the highest standards of integrity and ethics in the way we conduct our business. We have adopted a code of ethics and conduct that applies to our board of directors, officers, and employees, including our Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and other executive and senior officers. Our code of ethics and conduct establishes our policies and expectations with respect to a wide range of business conduct, including preparation and maintenance of financial and accounting information, compliance with laws, and conflicts of interest.

Under our code of ethics and conduct, each of our directors, officers, and employees is required to report suspected or actual violations to the extent permitted by law. In addition, we have adopted separate procedures concerning the receipt and investigation of complaints relating to accounting or audit matters. These procedures have been adopted and are administered by our audit committee.

Our code of ethics and conduct is available on our website at http://investors.fluidigm.com/corporate-governance.cfm. When required by the rules of the NASDAQ Global Select Market, also referred to as NASDAQ, or the SEC, we will disclose any future amendment to, or waiver of, any provision of the code of ethics and conduct for our Chief Executive Officer, Principal Financial Officer, Principal Accounting Officer, or any member of our board of directors on our website at www.fluidigm.com in the Governance section of the Investors webpage, within four business days following the date of such amendment or waiver.

~~Corporate Governance Principles~~

Our board of directors has adopted a set of principles that establish the corporate governance policies pursuant to which our board of directors intends to conduct its oversight of our business in accordance with its fiduciary responsibilities. Among other things, these corporate governance principles address the establishment and operation of board committees, the role of our chairman, and matters relating to director independence and performance assessments. Our corporate governance principles are available on our website at http://investors.fluidigm.com/corporate-governance.cfm.

~~Board Committees~~

~~-8-~~

~~Our board of directors has three standing committees: an audit committee, a compensation committee, and a nominating and corporate governance committee.~~

~~Audit Committee~~. Our audit committee currently consists of directors Patrick S. Jones, Evan Jones, and Gerhard F. Burbach. Patrick S. Jones is the chairman of the audit committee, who also served on the audit committee during 2016. Our board of directors has determined that each of Patrick S. Jones, Gerhard F. Burbach, and Evan Jones is independent and financially literate under the current rules and regulations of the SEC and NASDAQ, and that Patrick S. Jones qualifies as an “audit committee financial expert” within the meaning of the rules and regulations of the SEC.

Our audit committee oversees our corporate accounting and financial reporting process and our enterprise risk management process, and assists our board of directors in monitoring our financial systems and our legal and regulatory compliance. Our audit committee is authorized to, among other things:

~~oversee the work of our independent registered public accounting firm;~~

~~approve the hiring, discharge, and compensation of our independent registered public accounting firm;~~

~~approve engagements of our independent registered public accounting firm to render any audit or permissible non-audit services;~~

~~evaluate the qualifications, independence, and performance of our independent registered public accounting firm;~~

~~discuss and, as appropriate, review with management and our independent registered public accounting firm our annual and quarterly~~consolidated financial statements and ~~our major critical accounting policies and practices;~~

~~review management’s assessment~~related notes thereto appearing elsewhere in this Form 10-K. We have derived the consolidated statement of ~~our internal controls; and~~

~~review the adequacy and effectiveness of our internal control policies and procedures.~~

Our audit committee operates under a written charter approved by our board of directors. The charter is available on our website at http://investors.fluidigm.com/corporate-governance.cfm. Our audit committee held 10 meetings during 2016.

~~Compensation Committee~~. In 2016, our compensation committee consisted of directors Gerhard F. Burbach, Evan Jones, John A. Young, and Samuel D. Colella. In March 2017, Nicolas Barthelemy was also appointed to the compensation committee. Mr. Burbach is the chairman of our compensation committee. Each member of our compensation committee is an independent director under the applicable rules and regulations of the SEC and NASDAQ and an outside director as defined pursuant to Section 162(m) of the U.S. Internal Revenue Code, as amended. Furthermore, if required to ensure compliance with Rule 16b-3 under the Exchange Act, a subcommittee of the compensation committee or the board of directors considers and approves the grant of equity awards to our executive officers.

~~Our compensation committee oversees our corporate compensation programs and is authorized to, among other things:~~

~~review the compensation and benefits of our Chief Executive Officer and other executive officers;~~

~~review our corporate goals and objectives relevant to compensation of our Chief Executive Officer;~~

~~assist our board in providing oversight of the company’s overall compensation plans and benefits program; and~~

~~-9-~~

~~administer our equity incentive plans.~~

~~Please see the sections entitled “Compensation of Non-Employee Directors” and “Executive Compensation” for a description of our processes and procedures~~operations data for the ~~consideration~~years ended December 31, 2018, 2017, and ~~determination~~2016, and consolidated balance sheet data as of ~~executive~~December 31, 2018, and ~~director compensation.~~

~~Our compensation committee operates under a written charter approved by~~December 31, 2017 from audited consolidated financial statements included elsewhere in this Form 10-K. The consolidated statement of operations data for the ~~board~~years ended December 31, 2015, and 2014, and the consolidated balance sheet data as of ~~directors, which is available on our website at http://investors.fluidigm.com/corporate-governance.cfm. Our compensation committee held 11 meetings during 2016.~~

~~Nominating~~December 31, 2016, December 31, 2015, and ~~Corporate Governance Committee~~. In 2016, our nominating and corporate governance committee consisted of directors Samuel D. Colella and John A. Young. In March 2017, Carlos Paya was also appointed to the nominating and corporate governance committee. Mr. Colella is the chairman of the nominating and corporate governance committee. Our board of directors has determinedDecember 31, 2014 were derived from audited consolidated financial statements that ~~each of Samuel D. Colella, John A. Young and Carlos Paya is an independent director under the applicable rules and regulations of the SEC and NASDAQ.~~

~~Our nominating and corporate governance committee oversees and assists our board of directors~~are not included in ~~reviewing and recommending nominees for election as directors and oversees our corporate governance matters. The nominating and corporate governance committee is authorized to, among other things:~~

~~evaluate and make recommendations regarding the composition, organization, and governance of the board of directors and its committees;~~

~~evaluate the performance of members of the board of directors and make recommendations regarding committee and chair assignments;~~

~~recommend desired qualifications for board of directors membership and conduct searches for potential members of the board of directors;~~

~~review and recommend board compensation programs for outside directors; and~~

~~develop and make recommendations with regard to our corporate governance guidelines.~~

Our nominating and corporate governance committee operates under a written charter approved by the board of directors, which is available on our website at http://investors.fluidigm.com/corporate-governance.cfm. Our nominating and corporate governance committee held four meetings during 2016.

~~Process for Recommending Candidates to the Board of Directors~~

~~No material changes have been made to the procedures by which our stockholders may recommend nominees to our board of directors.~~

this Form 10-K.

~~-10-~~




	2018			2017			2016			2015			2014
	(in thousands, except per share amounts)
Consolidated Statement of Operations Data:
Total revenue	$	112,964		$	101,937		$	104,446		$	114,712		$	116,456
Loss from operations	(48,164		)	(58,360		)	(73,190		)	(50,155		)	(51,836		)
Net loss	(59,013		)	(60,535		)	(75,985		)	(53,315		)	(52,830		)
Net loss per share, basic and diluted	(1.49		)	(1.84		)	(2.62		)	(1.86		)	(1.90		)


	2018			2017			2016			2015			2014
	(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents, and short and long-term investments	$	95,401		$	63,136		$	59,430		$	101,465		$	142,800
Working capital (1)	100,988			71,565			76,334			123,433			133,440
Total assets (2)	303,647			287,351			306,395			370,050			406,506
Total long-term debt (2)	172,058			195,238			194,951			194,673			194,402
Total stockholders’ equity	72,116			30,935			53,233			114,901			150,419

(1) Working capital excludes deferred revenue.

(2) $1.0 million and $1.1 million of debt issuance costs for Convertible notes were previously included in Total assets reclassified to Total long-term debt as a deduction in December 31, 2015 and December 31, 2014, respectively.

~~Item 11. Executive Compensation~~

~~Compensation Discussion and Analysis~~ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis ~~of compensation arrangements of our named executive officers~~ should be read together with our consolidated financial statements and the ~~compensation tables and related disclosures set forth below.~~notes to those statements included elsewhere in this Form 10-K. This discussion contains forward-looking statements ~~that are~~ based on our current ~~plans, considerations,~~ expectations, assumptions, estimates and ~~determinations regarding future compensation programs. The~~projections about Fluidigm and our industry. These forward-looking statements involve risks and uncertainties. Our actual ~~amount and form of compensation and the compensation programs that we adopt may~~results could differ materially from ~~currently planned programs~~those indicated in these forward-looking statements as ~~summarized~~a result of certain factors, as more fully described in “Risk factors” in Item 1A of this Form 10-K, in this ~~discussion.~~Item 7, and elsewhere in this Form 10-K. Except as may be required by law, we undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

~~This Compensation Discussion and Analysis provides information regarding the 2016 compensation awarded to, earned by, or paid to our named executive officers. These individuals were:~~

~~Stephen Christopher Linthwaite, our President and Chief Executive Officer;~~

~~Vikram Jog, our Chief Financial Officer;~~

~~Nicholas Khadder, our Senior Vice President, General Counsel, Chief Compliance Officer and Secretary;~~

~~Steven C. McPhail, our Chief Commercial Officer;~~

~~Mai Chan (Grace) Yow, our Executive Vice President, Worldwide Manufacturing of Fluidigm Singapore Pte. Ltd.;~~

~~Gajus V. Worthington, our former President and Chief Executive Officer;~~

~~William M. Smith, our former Executive Vice President, Legal Affairs, General Counsel and Secretary; and~~

~~Marc Unger, Ph.D., our former Executive Vice President, Research and Development and Marketing.~~

~~Management Changes During 2016~~

Mr. Linthwaite joined Fluidigm as our Chief Operating Officer and President on August 4, 2016. On October 19, 2016, he was appointed our Chief Executive Officer and President. Mr. Worthington resigned from his position of President and Chief Executive Officer effective October 19, 2016. Mr. Unger resigned from his position of Executive Vice President, Research and Development and Marketing effective December 12, 2016 following a leave of absence from the Company. Mr. Smith resigned from his position of Executive Vice President, Legal Affairs, General Counsel and Secretary effective June 6, 2016, but continued with the Company as an employee in a non-executive capacity through January 1, 2017. Mr. Khadder joined us as our Senior Vice President, General Counsel, Chief Compliance Officer and Secretary on June 6, 2016. Mr. McPhail joined Fluidigm as General Manager, Production Genomics in May 2015 and became our Chief Commercial Officer in August 2016.

Overview

~~The compensation committee~~Fluidigm is a global company that improves life through comprehensive health insight. Our innovative technologies and multi-omic tools are used by researchers to reveal meaningful insights in health and disease, identify biomarkers to inform decisions and accelerate the development of more effective therapies. We create, manufacture, and market innovative technologies and life science tools, including preparatory and analytical instruments for Mass Cytometry, PCR, Library Prep, Single Cell Genomics, and consumables, including IFCs, assays, and reagents.

Our focus is on the most pressing needs in translational and clinical research, including cancer, immunology and immunotherapy. We use proprietary CyTOF® and microfluidics technologies to develop innovative end-to-end solutions that have the flexibility required to meet the needs of translational research and the robustness to support high-impact clinical research studies. We sell our products to leading academic, government, pharmaceutical, biotechnology and plant and animal research laboratories worldwide.

We distribute our systems through our direct sales force and support organizations located in North America, Europe, and Asia-Pacific, and through distributors or sales agents in several European, Latin American, Middle Eastern, and Asia-Pacific countries. Our manufacturing operations are located in Singapore and Canada. Our facility in Singapore manufactures our genomics instruments, which are assembled by our contract manufacturer located within our in Singapore facility. All of our ~~board~~IFCs for commercial sale and some IFCs for our research and development purposes are also fabricated at our Singapore facility. Our mass cytometry instruments for commercial sale, as well as for internal research and development purposes, are manufactured at our facility in Canada. We also manufacture assays and reagents at our facilities in the United States. We also manufacture assays and reagents at our facilities in the United States. As part of ~~directors is responsible for establishing, implementing,~~our on-going efforts related to operational excellence and ~~monitoring adherence with~~improving efficiencies, we are consolidating our ~~compensation philosophy. The committee seeks to ensure that the~~North American production activities into our Canadian facility.

Our total ~~compensation paid to our executive officers is fair~~revenue was $113.0 million in 2018, $101.9 million in 2017, and reasonable. Currently, we have six executive officers, five of whom are our named executive officers. In addition, as required by the rules of the SEC, we have included Gajus Worthington, our former President and Chief Executive Officer,$104.4 million in our compensation table because he served as our Principal Executive Officer through October 2017, when Mr. Linthwaite became our President and Chief Executive Officer. Mr. Worthington continues to work with us as a consultant.2016. We have ~~also included William M. Smith,~~incurred significant net losses since our ~~former Senior Vice President, General Counsel, Chief Compliance Officer~~inception in 1999 and, Secretary, and Marc Unger, our former Executive Vice President, Research and Development and Marketing, because they are former executive officers for whom disclosure would have been required if they had still been serving as executive officers as of December 31, ~~2016. As a group, we~~2018, our accumulated deficit was $558.9 million.

~~-11-~~

~~refer to these executive officers as our “named executive officers.” Details~~At the end of 2016, ~~compensation for~~we began reallocating our ~~named executive officers can be found in the section entitled “Executive Compensation—Summary Compensation Table~~.”

~~This section describes~~resources based on revenue contribution and growth expectations across our compensation program for our executive officers and how it applies to our named executive officers specifically. The discussion focuses on our executive compensation policies and decisions and the most important factors relevant to an analysis of these policies and decisions. We address why we believe our compensation program is appropriate for us and our stockholders and explain how executive compensation is determined.

~~Objectives and Principles of Our Executive Compensation Program~~

~~The primary goal~~target markets, including a reorganization of our ~~executive compensation program is to ensure that we attract, hire,~~sales team and ~~retain talented~~commercial leadership. We implemented certain operational efficiencies and experienced executive officers who are motivated to achieve or exceed our corporate goals. We seek to have an executive compensation program that fosters synergy among our management team, incentivizes our executive officers to achieve our short-term and long-term goals, and fairly rewards our executive officers for corporate and individual performance. In determining the form and amount of compensation payable to our executive officers, we are guided by the following objectives and principles:

~~Team-oriented approach to establishing compensation levels. We believe that it is critical that our executive officers work together as a team to achieve overall corporate goals rather than focusing exclusively on individual departmental objectives.~~

~~Compensation should relate to performance. We believe that executive compensation should be directly linked to corporate as well as individual performance, including through the use of performance-based compensation.~~

~~Equity awards help executive officers think like stockholders~~. We believe that our executive officers’ total compensation should have a significant equity component because stock-based awards help reinforce the executive officers’ long-term interest in our overall performance and align the interests of our executive officers with the interests of our stockholders.

~~Total compensation opportunities should be competitive~~. We believe that our total compensation programs should be competitive so that we can attract, retain, and motivate talented executive officers who will help us to perform better than our competitors.

~~We target total cash compensation for our executive officers, consisting of base salary and cash incentive bonuses, at approximately the 50~~^th ~~percentile of our peer group. Prior to 2016, we targeted long-term equity incentives for our executive officers between the 50~~^th ~~and 75~~^th ~~percentiles of our peer group. For 2016, we targeted equity incentives for our executive officers at approximately the 50~~^th percentile of our peer group, which was reduced to manage available equity under our 2011 Equity Incentive Plan in 2016. For new executive officer hires, we establish initial base salaries through arm’s-length negotiation at the time we hire the individual executive officer, taking into account his or her position, qualifications, experience, prior salary level, the base salaries of our other executive officers, and our most recent compensation survey of our peer group. Except as described herein, our compensation committee has not adopted any formal or informal policies or guidelines for allocating compensation between cash and non-cash compensation, among different forms of non-cash compensation, or with respect to long-term and short-term performance. The determination of our compensation committee as to the appropriate use and weight of each component of executive compensation is subjective, based on its views of the relative importance of each component in meeting our overall objectives and factors relevant to the executive officer. An individual executive may be compensated above or below the targeted percentage based on factors such as performance, job criticality, experience and skill set. Since our initial public offering, cash compensation has played an increasing role in our compensation programs as we have sought to align compensation with our peer group. Nevertheless, equity compensation remains a meaningful element of our compensation philosophy.

~~-12-~~

~~Role of the Compensation Committee and Executive Officers in Setting Executive Compensation~~

The compensation committee has principal responsibility for reviewing our executive compensation structure, evaluating the performance of our executive officers relative to our corporate objectives, and considering and approving executive compensation. Members of the compensation committee are appointed by our board of directors. During 2016, our compensation committee consisted of Samuel D. Colella, Evan Jones, John A. Young, and Gerhard F. Burbach. In March 2017, Nicolas Barthelemy was appointed to our compensation committee and our compensation committee now consists of Samuel D. Colella, Evan Jones, John A. Young, Nicolas Barthelemy and Gerhard F. Burbach. Our compensation committee held 11 meetings during 2016. Mr. Burbach has served as Chairman of the compensation committee since February 2015.

Our compensation committee operates under a written charter adopted by our board of directors, which establishes the duties and authority of the compensation committee. A copy of our compensation committee charter is available on our website at http://investors.fluidigm.com/corporate-governance.cfm.

~~The fundamental responsibilities of our compensation committee are to:~~

~~assist the board of directors in providing oversight of our compensation policies, plans, and benefits programs;~~

assist the board of directors in discharging the board’s responsibilities relating to oversight of the compensation of our executive officers (including officers reporting under Section 16 of the Exchange Act);

~~review and make recommendations to the board of directors with respect to executive officer compensation, plans, policies, and programs; and~~

~~administer our equity compensation plans for executive officers and employees.~~

In determining each executive officer’s compensation, our compensation committee reviews our corporate financial performance and financial condition and assesses the performance of the individual executive officers. Individual executive officer performance is evaluated by our Chief Executive Officer, in the case of other executive officers, and by the compensation committee, in the case of our Chief Executive Officer. While our Chief Executive Officer provides input on his compensation, he does not participate in compensation committee or board deliberations regarding his own compensation. Our Chief Executive Officer meets with the compensation committee to discuss executive compensation matters and to make recommendations to the compensation committee with respect to other executive officers. The compensation committee may modify individual compensation components for executive officers and is not bound to accept the Chief Executive Officer’s recommendations. The compensation committee (or, in some cases, the independent members of the board) makes all final compensation decisions for our executive officers. In addition, it is the compensation committee’s practice to consult with the independent members of the board of directors prior to making material changes to our compensation policies.

~~Although we generally make many compensation decisions~~cost-savings initiatives beginning in the first quarter of 2017 intended to align our resources with our product strategy, reduce our operating expenses, and manage our cash flows. In 2017 and 2018, we have grown our revenues, increased gross margins, reduced operating expenses, streamlined our manufacturing operations, and rationalized our headcount and facilities. These activities have resulted in lower net losses, improving from $76.0 million in 2016 to $59.0 million in 2018. We have also strengthened our balance sheet through the ~~calendar year, the compensation evaluation process is ongoing. Compensation discussions~~issuance of common stock and ~~decisions are designed to promote~~refinancing our ~~fundamental business objectives and strategy. Evaluation~~convertible debt. In August 2017, we sold 9.1 million shares of ~~management performance and rewards is performed annually or more often as needed.~~

~~2016 Advisory Stockholder Vote on Executive Compensation~~

~~We value the opinions~~common stock for aggregate net proceeds of approximately $28.8 million; in December 2018, we sold approximately 9.4 million shares of common stock for aggregate net proceeds of $59.1 million. In March 2018, we refinanced $150 million of our ~~stockholders. At~~convertible debt which effectively extended the ~~2016 annual meeting~~maturity of ~~stockholders, more than 95% of shares voted on~~ the ~~say-on-pay proposal were~~debt while providing us with additional financing flexibility. These transactions are described in ~~favor~~Note 6 and Note 8 of our ~~executive compensation program described~~audited 2018 consolidated financial statements.

Recent Developments

From January 9, 2019 through February 27, 2019, we received notices from holders of the 2018 Notes electing to voluntarily convert approximately $138.1 million in ~~last year’s proxy statement. In light~~aggregate principal amount pursuant to the terms of ~~this strong stockholder support,~~the Second Supplemental Indenture dated March 6, 2018, between us and U.S. Bank National Association (Trustee) to the Indenture dated as of February 14, 2014, between us and the Trustee. As a result of such voluntary conversions, we have elected to fully satisfy our ~~compensation committee affirmed~~conversion obligations by delivering approximately 17.9 million shares of our ~~general principles~~common stock to such holders and ~~objectives relating~~have retired approximately $138.1 million of the 2018 Notes. On February 27, 2019, we notified the Trustee of our intention to ~~executive compensation and continues to apply such principles and objectives to our executive compensation program.~~

~~-13-~~

~~Executive Compensation Surveys~~

Our compensation committee has the authority to engage the services of outside consultants. In 2015 and 2016, the compensation committee directly engaged Radford, an independent compensation consulting firm, as its compensation consultant to reviewexercise our ~~then-existing executive compensation program, assess the competitiveness of such program, and advise our compensation committee on matters related to executive compensation for 2016.~~

~~Among other activities, Radford:~~

~~assisted us in identifying a peer group of companies for purposes of benchmarking our levels of compensation, collectively referred to as the benchmark companies;~~

~~gathered and analyzed compensation data from available compensation surveys; and~~

~~assisted us in assessing the competitiveness of our executive officer compensation program and developing a going-forward equity strategy.~~

~~Radford reported directly~~Issuer’s Conversion Option pursuant to the ~~compensation committee. The compensation committee assessed~~terms of the independence of Radford taking into account, among other things, the enhanced independence standards and factors set forth in Exchange Act Rule 10C-1 and the applicable NASDAQ Listing Standards, and concluded that that there were no conflicts of interestSecond Supplemental Indenture with respect to the remaining approximately $11.9 million in aggregate principal amount of 2018 Notes. These bonds were converted into approximately 1.5 million shares of our common stock and the bonds retired in March 2019.

In early March 2019, we experienced a ransomware attack that infiltrated and encrypted certain of our information technology systems, including systems containing critical business data. Immediately following the attack, actions were taken to recover the compromised systems and we believe we were able to restore their operation without significant loss of business data. Based on the nature of the attack and its impact on our systems, we do not believe confidential data was lost or disclosed, but we are continuing to monitor the situation. If confidential data is later determined to have been released in the course of this event, it is possible that we could be the subject of actions by governmental authorities or claims from persons alleging they suffered damages from such a release. As of the date of this filing, we estimate the costs associated with the intrusion to be approximately $1.5 million and are seeking to recover these costs under an applicable insurance policy. Although we believe we have now contained the disruption, we anticipate additional work and expense in the future as we continue to respond to the attack and further enhance our security processes and initiatives.

Critical Accounting Policies, Significant Judgments and Estimates

Our consolidated financial statements and the related notes included elsewhere in this Form 10-K are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that ~~Radford performed~~affect the reported amounts of assets, liabilities, revenue, costs, and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Changes in accounting estimates may occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.

We believe that the following critical accounting policies involve a greater degree of judgment and complexity than our other accounting policies. Accordingly, these are the policies we believe are the most critical to understanding and evaluating of our audited 2018 consolidated financial statements.

Revenue Recognition

We generate revenue primarily from sales of our products and services. Our product revenue consists of sales of our mass cytometry, high-throughput genomics and single-cell genomics instruments and consumables, including IFCs, assays, and other reagents. Our service revenue consists of post-warranty service contracts, preventive maintenance plans, repairs, installation, training and other specialized product support services. We also receive revenue from our license agreements with third parties. Revenue is reported net of any sales, use and value-added taxes we collect from customers as required by government authorities.

We recognize revenue based on the amount of consideration we expect to receive in exchange for the ~~compensation committee.~~goods and services we transfer to the customer. Our commercial arrangements typically include multiple distinct products and services, and we allocate revenue to these performance obligations based on their relative standalone selling prices. Standalone selling prices (SSPs) are generally determined using observable data from recent transactions. In cases where sufficient data is not available, we estimate a product’s SSP using a cost plus a margin approach or by applying a discount to the product’s list price.

~~Benchmark Companies~~

~~2015 Radford Survey for 2016 Executive Compensation.~~ ~~As directed by~~Product Revenue

We recognize product revenue at the point in time when control of the goods passes to the customer and we have an enforceable right to payment. This generally occurs either when the product is shipped from one of our ~~compensation committee,~~facilities or when it arrives at the customer’s facility, based on the contractual terms. Customers generally do not have a unilateral right to return products after delivery. Invoices are generally issued at shipment and become due in ~~connection with its 2015 survey, Radford reviewed companies~~30 to 60 days.

Service Revenue

We recognize revenue from repairs, installation, training and other specialized product support services at the point in ~~medical device~~time the work is completed. Installation and ~~biotechnology research-related industries that were comparable to us with respect to size, market capitalization,~~training services are generally billed in advance of service. Repairs and revenue based upon information available in public filings and from Radford’s Global Life Sciences Survey. The benchmark companies considered by our compensation committee and Radford as part of their 2016 executive compensation assessments were as follows:other services are generally billed at the point the work is completed.



~~Abaxis~~	~~Luminex~~	~~Sequenom~~
~~Accelerate Diagnostics~~	~~NanoString Technologies~~	~~SurModics~~
~~Affymetrix~~	~~Neogenomics~~	~~Veracyte~~
~~AtriCure~~	~~Pacific Biosciences~~	~~Zeltiq Aesthetics~~
~~GenMark Diagnostics~~	~~Quidel~~
~~Inogen~~	~~Repligen~~

Revenue associated with instrument service contracts is recognized on a straight-line basis over the life of the agreement, which is generally one to three years. We believe this approach is appropriate for service contracts because we provide services on demand throughout the term of the agreement. Invoices are generally issued in advance of service on a monthly, quarterly, annual or multi-year basis. Payments made in advance of service are reported on our consolidated balance sheet as deferred revenue.

~~Elements~~

Contract Costs

Incremental sales commission costs incurred to obtain instrument service contracts are capitalized and amortized to selling, general and administrative expense over the life of ~~Executive Compensation~~the contract, which is generally one to three years. As a practical expedient, we expense sales commissions associated with product support services that are delivered in less than one year as they are incurred. Sales commissions associated with the sale of products are expensed as they are incurred.

~~The primary components~~

Product Warranties

We generally provide a one-year warranty on our instruments. We accrue for estimated warranty obligations at the time of product shipment. We periodically review our warranty liability and record adjustments based on the terms of warranties provided to customers, and historical and anticipated warranty claim experience. This expense is recorded as a component of cost of product revenue in the consolidated statements of operations.

Significant Judgments

Applying the revenue recognition practices discussed above often requires significant judgment. Judgment is required when identifying performance obligations, estimating SSP and allocating purchase consideration in multi-element arrangements and estimating the future amount of our ~~executive compensation program~~warranty obligations. Significant judgment is also required when interpreting commercial terms and determining when control of goods and services passes to the customer. Any material changes created by errors in judgment could have a material effect on our operating results and overall financial condition.

Goodwill, Intangible Assets and Other Long-Lived Assets

Goodwill, which has an indefinite useful life, represents the excess of cost over fair value of net assets acquired. Our intangible assets include developed technology, patents and licenses. The cost of identifiable intangible assets with finite lives is generally amortized on a straight-line basis over the assets’ respective estimated useful lives.

Goodwill and intangible assets with indefinite lives are ~~cash compensation, comprised of base salary and~~not subject to amortization, but are tested for impairment on an annual ~~incentive bonus plan, and long-term equity incentive awards. In addition, we have entered into severance and change~~basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of ~~control agreements with our executive officers and provide our executive officers with health and other benefits~~these assets may not be recoverable. We first conduct an assessment of qualitative factors to determine whether it is more likely than not that ~~are generally available to all employees.~~

~~Cash Compensation~~

~~The first component~~the fair value of our ~~executive compensation program~~reporting unit is ~~cash compensation, comprised of base salary and an executive bonus plan.~~

~~Base Salary~~

~~We pay an annual base salary to each~~less than its carrying amount. If we determine that it is more likely than not that the fair value of our ~~executive officers~~reporting unit is less than its carrying amount, we then conduct a two-step test for impairment of goodwill. In the first step, we compare the fair value of our reporting unit to its carrying value. If the fair value of our reporting unit exceeds its carrying value, goodwill is not considered impaired and no further analysis is required. If the carrying value of the reporting unit exceeds its fair value, then the second step of the impairment test must be performed in order to ~~provide them with a fixed rate of cash compensation during~~determine the ~~year. Our executive compensation philosophy is team-oriented as our success is~~

~~-14-~~

dependent on our management team’s ability to work together to accomplish our corporate objectives. Therefore, we seek to provide our non-CEO executive officers with generally comparable levels of base salary.

~~2016 Base Salary.~~ Generally, we establish the initial base salaries of our executive officers through arm’s-length negotiation at the time we hire the individual executive officer, taking into account his or her position, qualifications, experience, prior salary level, the base salaries of our other executive officers, and our most recent compensation survey of our peer group. Thereafter, the compensation committee reviews the base salaries of our executive officers, including the named executive officers, annually and makes adjustments to base salaries as it determines to be necessary or appropriate. In February 2016, our compensation committee reviewed our executive officers’ base salaries in lightimplied fair value of the ~~2015 Radford survey and general compensation trends in our industry. The 2015 Radford survey concluded that our 2015 executive base salaries placed us at approximately~~goodwill. If the 50^th ~~percentile~~carrying value of the ~~benchmark companies (with some variation~~goodwill exceeds its implied fair value, then an impairment loss equal to the difference would be recorded.

We evaluate our long-lived assets, including finite-lived intangibles, for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If any indicators of impairment exist, we assess the recoverability of the affected long-lived assets by ~~position), consistent~~determining whether the carrying value of the asset can be recovered through undiscounted future operating cash flows. If impairment is indicated, we estimate the asset’s fair value using future discounted cash flows associated with ~~our total cash compensation target. As a result, base salary increases for~~ the ~~named executive officers in 2016 were modest,~~use of the asset and adjust the ~~compensation committee~~carrying value of the asset accordingly. We did not ~~approve~~recognize any ~~increase~~impairment of long-lived assets for our former Chief Executive Officer in light of our financial performance in 2015. Ms. Yow’s relatively larger increase was based on the performance of our Singapore manufacturing operations in 2015, and Mr. McPhail’s relatively smaller increase reflects the fact that he only joined us in 2015. Mr. Linthwaite’s base salary at the time he was hired in August 2016 was initially $450,000 per year, but increased to $500,000 as a result of his promotion to President and Chief Executive Officer in October 2016. The 2016 base salary increases for our named executive officers, other than our executive officers who were hired in 2016, were retroactive to January 1, 2016.

~~Base Salary Summary.~~ ~~The table below provides a summary of the effective base salaries for each of our named executive officers in 2015 and 2016:~~

Named Executive Officers 2015 Base Salary(1) 2016 Base Salary(1) 2016 Base Salary Percentage Increase(2)
Stephen Christopher Linthwaite(3)
President and Chief Executive Officer
— $500,000 —
Vikram Jog
Chief Financial Officer
$329,600 $339,500 3.0%
Steven C. McPhail(4)
Chief Commercial Officer
$333,000 $339,700 2.0%
Mai Chan (Grace) Yow(5)
Executive Vice President, Worldwide Manufacturing of Fluidigm Singapore Pte. Ltd.
S$403,224 S$423,400 5.0%
Nicholas Khadder(6)
Senior Vice President, General Counsel, Chief Compliance Officer and Secretary
— $325,000 —
Gajus V. Worthington(7)
Former President and Chief Executive Officer
$504,700 $504,700 —
William M. Smith(8)
Former Executive Vice President, Legal Affairs, General Counsel and Secretary
$334,750 $344,750 3.0%
Marc Unger, Ph.D.(9)
Former Executive Vice President, Research and Development and Marketing
$304,500 $313,600 3.0%


~~(1)~~	~~Represents the highest annualized base salary established for the named executive officer during the year indicated.~~


~~(2)~~	~~Represents percentage of increase over prior year’s base salary.~~


~~(3)~~	Mr. Linthwaite joined Fluidigm as our Chief Operating Officer and President on August 4, 2016. On October 19, 2016, he was appointed our Chief Executive Officer and President. Mr. Linthwaite’s base salary at the time he was hired in August 2016 was initially $450,000 per year, but increased to $500,000 as a result of his promotion to President and Chief Executive Officer.


~~(4)~~	~~Mr. McPhail joined Fluidigm as our General Manager, Production Genomics in May 2015. In August 2016 he was appointed our Chief Commercial Officer.~~

~~(5)~~

Base salaries for Ms. Yow are shown in Singapore dollars, the nominal currency in which Ms. Yow is paid. Ms. Yow’s 2015 base salary expressed in U.S. Dollars based on the average exchange rates for the month of December 2015 would have been $286,329. Ms. Yow’s 2016 base salary expressed in U.S. Dollars based on the average exchange rates for the month of December 2016 would have been $294,856.

~~-15-~~


~~(6)~~	~~Mr. Khadder joined Fluidigm as our Senior Vice President, General Counsel, Chief Compliance Officer and Secretary on June 6, 2016.~~


~~(7)~~	~~Mr. Worthington served as our President and Chief Executive Officer until October 19, 2016.~~


~~(8)~~	~~Mr. Smith served as our Executive Vice President, Legal Affairs from February 2012 and as General Counsel and Secretary from May 2000 until June 2016.~~


~~(9)~~	~~Dr. Unger served as Executive Vice President, Research and Development and Marketing from December 10, 2015 until December 12, 2016.~~

~~Executive Bonus Plan~~

Our executive bonus plan is intended to provide a significant portion of our executive officers’ potential compensation. In contrast to the longer term incentives of equity incentive awards, our bonus program is designed to ensure that our executive officers are focused on our near-term performance and on working together to achieve key identified corporate objectives, typically weighted toward financial objectives, during the applicable fiscal year.

~~General Terms.~~ Our executive bonus plan creates a structure for our executive officer bonuses from year to year, while allowing the compensation committee to adopt specific programs each year. The executive bonus plan generally provides that executive officers will be eligible for a target bonus based upon the achievement of performance objectives established by the compensation committee. Since 2011, we have established a cash incentive program under the executive bonus plan annually, with payment of awards being determined based all or in part on achievement of performance objectives established by the compensation committee in its discretion. Under this structure, each of our fiscal years constitutes a new performance period under the bonus plan. Corporate goals under the bonus plan have been, and we expect will continue to be, reviewed each year and adjusted to reflect changes in our stage of development, competitive position, and corporate objectives.

~~Performance Objectives.~~ ~~Under the terms of our bonus plan,~~ any of the ~~following factors may be used as a performance objective:~~periods presented herein.

~~attainment of research and development milestones~~Convertible Notes

~~business divestitures and acquisitions~~

~~cash flow and/or cash position~~

~~contract awards or backlog~~

~~customer renewals~~

~~customer retention rates from~~In February 2014, we closed an ~~acquired company, business, unit or division~~

~~departmental performance~~

~~earnings (which may include earnings before interest and taxes, earnings before taxes, and net earnings)~~

~~earnings per share~~

~~expenses, overhead or other expense reduction~~

~~growth in stockholder value relative to the moving average of the S&P 500 Index or another index~~

~~individual objectives such as peer reviews or other subjective or objective criteria~~

~~internal rate of return~~

~~market share~~

~~net income, net profit, net sales and/or net revenue~~

~~new product development~~

~~new product invention or innovation~~

~~number of customers~~

~~operating cash flow, expenses, income and/or margin~~

~~product defect measures~~

~~product release timelines~~

~~productivity~~

~~profit and/or gross margin~~

~~publicity or publication goals~~

~~return on assets, capital, equity, investment and/or sales~~

~~revenue and/or revenue growth~~

~~sales pipeline and orders~~

~~-16-~~

~~sales results and/or growth~~

~~stock price~~

~~time to market~~

~~total stockholder return~~

~~working capital~~

As determined by the compensation committee, performance goals may be based on generally accepted accounting principles, also referred to as GAAP, or based on non-GAAP results. Any actual results may be adjusted by the compensation committee for one-time items or unbudgeted or unexpected items when determining whether performance goals have been met. Goals may be evaluated on the basis of any factors the compensation committee determines relevant and may be on an individual, departmental, or company-wide basis. Performance goals may differ from participant to participant under the executive bonus plan and from award to award. In addition, our compensation committee may adjust the bonus pool established under the plan and any actual awards to be made under the plan, which may be at, below, or above targets established under the plan.

~~Committee Discretion.~~ Under the executive bonus plan, the compensation committee retains authority to award compensation absent attainment of a relevant performance goal, provide for cash incentive awards in excess of the target base salary percentages, reduce or eliminate awards, or provide for partial payment if performance goals are only partially met, in each case if the compensation committee determines appropriate in its discretion. The compensation committee may determine an adjustment to a bonus payout on the basis of such factors as it deems relevant and is not required to prospectively establish any weighting with respect to the factors it considers. We believe that maintaining this flexibility is helpful in ensuring that executive officers are appropriately compensated for their performance and are neither rewarded nor penalized as a result of unusual circumstances not foreseeable at the time the goals were developed.

~~2016 Bonus Program~~. In late 2015 and early 2016, our compensation committee, in conjunction with Radford, reviewed our executive bonus programs, including a review of their incentive structures, with an objective of ensuring that our compensation programs promote both short-term and long-term growth. As discussed below, with respect to long-term equity incentive compensation, our compensation committee adopted a performance-based equity incentive program to link equity compensation to short- and long-term financial objectives. With respect to our cash bonus program, the compensation committee structured the plan for the 2016 performance period with the objective of incentivizing a return to revenue growth and achievement of other strategic objectives. The compensation committee maintained the levels of target awards at 70.0% of base salary for our former Chief Executive Officer and current Chief Executive Officer and 42.5% for the other executive officers, consistent with its philosophy of setting bonus and total cash compensation at approximately the medianunderwritten public offering $201.3 million aggregate principal amount of our ~~peer group.~~

~~Bonus Plan Structure. For the 2016 corporate performance period, our bonus plan was weighted 70% toward corporate revenue goals and 30% toward strategic business objectives (described below).~~With respect to the corporate revenue goal weighting, bonuses were to be earned at 50% of target if a minimum threshold revenue is achieved, increasing on a linear basis such that 100% of the bonus award target is earned at target revenue and continuing up to a maximum of 130% of the bonus award target for substantial over-performance relative to the revenue target. No bonuses were to be paid under the executive bonus program for 2016, including with respect to strategic business objectives, if the minimum threshold revenue condition was not achieved. The compensation committee set the threshold level of revenue at an amount intended to ensure that no bonuses would be paid unless management successfully returned Fluidigm to credible revenue growth in 2016. In addition, the compensation committee, with the recommendation of our former Chief Executive Officer, set the target revenue objective at a level that it believed to be aggressive, but achievable.

~~2016 Corporate Goals~~. In February 2016, our compensation committee approved our corporate revenue goals and strategic business objectives for the 2016 performance period, which consisted of a corporate revenue goal of achieving a specified annual revenue and the following strategic business objectives: successfully launching new products and having a certain level of cash, cash equivalents and investments at the end of the year. The compensation committee believed that these goals would be achievable with a high level of executive officer performance. As indicated above, the compensation committee gave greater weighting to achieving our revenue targets but maintained discretion to alter the weightings among various objectives when it ultimately determined bonuses.

~~-17-~~

~~2016 Corporate Performance~~2.75% Senior Convertible Notes due 2034 (2014 Notes). In March 2017, our compensation committee reviewed our performance in 2016 relative to the corporate objectives identified above. The compensation committee also reviewed each named executive officer’s individual performance based in large part on achievements in the functional department overseen by the respective named executive officer. The compensation committee determined that because Fluidigm had not met or exceeded its performance objectives relating to annual revenue, no bonuses would be paid for the 2016 performance period under our executive bonus plan.

~~Long-Term Equity Incentive Awards~~

~~The second component~~2018, we entered into separate privately negotiated transactions with certain holders of our ~~executive compensation program includes long-term equity incentive awards. We believe that equity awards are an effective means~~2014 Notes to exchange $150.0 million in aggregate principal amount of ~~aligning~~ the interests of executive officers and stockholders, rewarding executive officers for the company’s success over the long term, and providing executive officers an incentive to remain with us. We have historically granted equity awards to new executive officers upon the commencement of their employment and consider additional grants to existing executive officers annually, based on our overall corporate performance, individual performance, and the executive officers’ existing equity grants and equity holdings. We target long-term incentive compensation2014 Notes for our ~~executive officers between~~new 2.75% Exchange Convertible Senior Notes due 2034 (2018 Notes). Following the 50^th ~~and 75~~^th ~~percentiles~~exchange, approximately $51.3 million in

aggregate principal amount of ~~our peer group.~~

~~Forms of Equity Awards~~

~~Prior to~~the 2014 our executive officers and employees received equity awards only in the form of time-based stock option grants. In 2014, the compensation committee determined that it was appropriate to begin granting time-based restricted stock unitsNotes remained outstanding in addition to ~~stock options for both employees and executive officers based upon several factors, including the results~~$150.0 million in aggregate principal amount of the ~~2013 Radford survey, which noted that approximately 50%~~2018 Notes.

As the 2018 Notes are convertible, at our election, into cash, shares of our common stock, or a combination of cash and shares of our common stock, we accounted for the 2018 Notes under the cash conversion guidance in ASC 470, whereby the embedded conversion option in the 2018 Notes was separated and accounted for in equity. The embedded conversion option value was calculated as the difference between (i) the total fair value of the ~~benchmark companies granted their executive officers~~2018 Notes and (ii) the fair value of a ~~mix~~similar debt instrument excluding the embedded conversion option. We determined an embedded conversion option value of $29.3 million, which was recorded in additional paid-in-capital and reduced the carrying value of the 2018 Notes. The resulting discount on the 2018 Notes will be amortized over the expected term of the 2018 Notes, using the effective interest method through the first note holder put date of February 6, 2023.

For both the 2014 Notes and 2018 Notes, offering-related costs, including underwriting costs, were capitalized as debt issuance costs, recorded as an offset to the carrying value of the related Notes, and are amortized over the expected term of the related Notes using the effective interest method.

Stock-Based Compensation

Our board of directors sets the terms, conditions, and restrictions related to our Employee Stock Purchase Plan (ESPP) and the grant of stock options, Restricted Share Units (RSUs) and ~~restricted stock units, with less than 15%~~performance-based awards under our various stock-based plans. Our board of ~~such companies granting equity~~directors determines the number of awards to ~~executive officers solely~~grant and sets the vesting criteria. For performance-based share awards, our board of directors sets the performance objectives and other vesting provisions in determining the ~~form~~number of ~~stock options; the competitive dynamics~~shares or value of performance units and performance shares that will be paid out. Such payout will be a function of the ~~markets in~~extent to which ~~we recruit, with most of our larger competitors offering “full value”~~performance objectives or other vesting provisions have been achieved.

We recognize compensation costs for all stock-based awards, ~~in the form of restricted stock units; and the more favorable dilutive impact of restricted stock units relative to stock option grants. To remain competitive in our market~~while furthering our executive compensation principles of directly linking executive compensation to corporate performance, reinforcing our executive officers’ long-term interest in our overall performance, and aligning the interests of our executive officers with the interests of our stockholders, our compensation committee determined that equity awards would be granted to executive officers comprised ofincluding stock options, RSUs, and ~~restricted~~ stock units, typically with a ratio of one restricted stock unit relative to 2.5 stock options granted. Subsequent to the end of 2015, the compensation committee determined it was appropriate to supplement time-based equity awards with equity awards that require certain performance-based goals to be met as a condition for any vesting. Under this approach, an executive officer is at risk with respect to the performance-based equity award unless specified performance is achieved. In particular, the compensation committee established the performance-based vesting conditions based on near-term and longer-term revenue objectives. If the performance-based conditionspurchased under ~~these awards are achieved (as determined by the board or~~ our compensation committee), a portion of the award will immediately vest and the balance of the award will commence vesting based on continued service. Similar to the structure of our 2016 executive bonus plans, the compensation committee set the revenue thresholds under the performance-based awards at levels intended to incentivize a return to credible growth rates and to reward substantial over-performance.

~~Grants of Equity Awards~~

~~2016 Grants.~~ As a part of the 2015 Radford survey on executive compensation, Radford reviewed the stock options and restricted stock units awarded to our executive officers in 2015. Radford’s review concluded that,ESPP, based on the grant date fair value of ~~stock options and restricted stock units awarded to our executive officers in 2015, our executive equity compensation generally placed us between~~ the 50^th ~~and 75~~^th ~~percentile of the benchmark companies. For 2016, our compensation committee targeted executive equity compensation at approximately the 50~~^th percentile, which was reduced to manage available equity under our 2011 Equity Incentive Plan in 2016 and 2017. Half of the equity awards made to executive officers in February 2016 are subject to the corporate performance conditions described above. The stock options and restricted stock units awarded to our named executive officers in 2016 are set forth in the table below captioned “—~~Grant Summary.”~~

~~-18-~~

~~Grant Summary.~~ ~~The table below provides a summary of grants of equity awards to our named executive officers in 2016:~~

2016
Named Executive Officer Time-based
Stock Options Time-based Restricted
Stock Units Performance-based
Stock Options Performance-based Restricted
Stock Units
Stephen Christopher Linthwaite
President and Chief Executive Officer
280,000(1) — — 14,000(2)
Vikram Jog
Chief Financial Officer
13,500(3) 5,400(4) 13,500(5) 5,400(5)
Steven C. McPhail
Chief Commercial Officer
13,500(3) 7,400(4)(6) 13,500(5) 5,400(5)
Mai Chan (Grace) Yow
Executive Vice President, Worldwide Manufacturing of Fluidigm
Singapore Pte. Ltd.
13,500(3) 5,400(4) 13,500(5) 5,400(5)
Nicholas Khadder
Senior Vice President, General Counsel, Chief Compliance Officer and Secretary
27,000(7) 10,800(8) — —
Gajus V. Worthington
Former President and Chief Executive Officer
33,750(3) 13,500(4) 33,750(5) 13,500(5)
William M. Smith
Former Executive Vice President, Legal Affairs, General Counsel and Secretary
13,500(3) 5,400(4) 13,500(5) 5,400(5)
Marc Unger, Ph.D.
Former Executive Vice President, Research and Development and Marketing
13,500(3) 5,400(4) 13,500(5) 5,400(5)

~~(1)~~

~~Consists of two option grants to purchase 140,000 shares each. For the first grant, 12/48~~^th ~~of the total number of shares subject to the option will vest on August 1, 2017 and 1/48~~^th of the total shares subject to such option will vest and become exercisable each month thereafter over the succeeding 36 months, such that the first option will be fully vested on August 1, 2020. For the second grant, 12/48^th ~~of the total number of shares subject to the second option will vest on October 19, 2017 and 1/48~~^th of the total shares subject to such option will vest and become exercisable each month thereafter over the succeeding 36 months, such that the second option will be fully vested on October 19, 2020. Vesting is subject to continued service through the applicable vesting date.


~~(2)~~	This performance-based restricted stock unit award will become fully eligible to vest should the growth in our revenues for the four fiscal quarters ending in the second quarter of 2017 over the four fiscal quarters ending in the second quarter of 2016 equal or exceed the target threshold. Vesting is subject to continued service through the applicable vesting date.


~~(3)~~	~~Vests monthly at a rate of 1/48~~^th ~~of the shares underlying the option, with vesting commencing January 1, 2016. Vesting is subject to continued service through the applicable vesting date.~~

~~(4)~~

~~4/48~~^th ~~of the total number of shares underlying the restricted stock units granted vested on May 20, 2016, and 3/48~~^th of the total number of shares underlying the restricted stock units have vested and will continue to vest every three months thereafter until fully vested; provided, however, that if a vesting date would otherwise fall on a day when the NASDAQ Stock Market is not open for trading, vesting will occur on the first trading day thereafter. Vesting is subject to continued service through the applicable vesting date.

~~(5)~~

The performance-based stock options and the performance-based restricted stock units (each, a “performance award”) each have two vesting components that must be met before the performance award vests: (1) a performance-based component and (2) a time-based component. The performance-based component covers two annual periods (fiscal 2016 and fiscal 2017), each covering 50% of the performance award. For each of the two fiscal years, the performance award will become eligible to vest based on the growth in our revenues as compared to the previous fiscal year. If the actual growth rate for a given fiscal year equals or exceeds the target threshold, 100% of the portion of the performance award covering that fiscal year will become eligible to vest. If the actual growth rate equals a certain minimum growth rate, then 50% of the portion of the performance award covering that fiscal year will become eligible to vest. For achievement between minimum and target growth rates, eligibility to vest scales linearly between 50% and 100%. Once the level of achievement has been certified, the performance awards for the given fiscal year that became eligible to vest will vest according to the following time-based schedule: (1) 50% immediately upon the date the actual growth rate is certified, (2) 25% on the one-year anniversary of the certification date, and

~~-19-~~

(3) 25% on the two-year anniversary of the certification date. If a change in control occurs before the end of any fiscal year covered by the performance award, the performance-based component for such fiscal year is treated as having been 100% achieved. Vesting is subject to continued service through the applicable vesting date.

~~(6)~~

~~Consists of two RSU grants. For one grant of 5,400 Restricted Stock Units, 4/48~~^th ~~of the total number of shares underlying the restricted stock units granted vested on May 20, 2016, and 3/48~~^th of the total number of shares underlying the restricted stock units have vested and will continue to vest every three months thereafter until fully vested; provided, however, that if a vesting date would otherwise fall on a day when the NASDAQ Stock Market is not open for trading, vesting will occur on the first trading day thereafter. Vesting is subject to continued service on the applicable vesting date. The second grant was for 2,000 Restricted Stock Units, and all of the shares underlying such Restricted Stock Units vested on May 20, 2016.


~~(7)~~	~~12/48~~^th ~~of the total number of shares underlying the option granted will vest on June 20, 2017, and 1/48~~^th ~~of the total number of shares underlying the option will vest each month thereafter until fully vested on June 20, 2020. Vesting is subject to continued service through the applicable vesting date.~~

~~(8)~~

~~14/48~~^th ~~of the total number of shares underlying the restricted stock units granted will vest on August 20, 2017, and 3/48~~^th of the total number of shares underlying the restricted stock units will vest every three months thereafter until fully vested; provided, however, that if a vesting date would otherwise fall on a day when the NASDAQ Stock Market is not open for trading, vesting will occur on the first trading day thereafter. Vesting is subject to continued service through the applicable vesting date.

~~2016 Corporate Performance.~~ In March 2017, our compensation committee reviewed our performance in 2016 for purposes of determining achievement of the performance based vesting conditions for each of the performance awards that had a fiscal 2016 performance period. The compensation committee determined that because Fluidigm had not met or exceeded its performance objectives relating to annual revenue, no vesting would occur with respect to the 2016 performance period.

~~Other Benefits~~

~~Employment and Severance Agreements~~

We have entered into employment and severance agreements with each of our executive officers that provide for specified payments and benefits if the executive officer’s employment is terminated without cause, or if the executive officer’s employment is terminated without cause or for good reason within 12 months following a change of control. The terms of these agreements are described under the section entitled “~~Executive Compensation—Potential Payments upon Termination or Change of Control.” We adopted these arrangements because we~~ recognize that we will from time to time consider the possibility of an acquisition by another company or other change of control transaction and that such consideration can cause such executive officers to consider alternative employment opportunities. Accordingly, our board of directors concluded that it is in the best interests of our company and our stockholders to provide executive officers with certain severance benefits upon termination of employment without cause, or without cause or for good reason following a change of control. Our board determined to provide such executive officers with certain severance benefits upon their termination of employment without cause outside of the change of control context in order to provide executive officers with enhanced financial security and incentive to remain with our company. In addition, we believe that providing for acceleration of options if an executive officer is terminated following a change of control transaction aligns the executive officer’s interest more closely with those of other stockholders when evaluating the transaction rather than putting the executive officer at risk of losing the benefits of those equity incentives.

In determining the amount of cash payments, benefits coverage, and acceleration of vesting to be provided to executive officers upon termination prior to a change of control or within 12 months following a change of control, our board considered the following factors:

~~the expected time required for an executive officer to find comparable employment following a termination event;~~

feedback received from potential candidates for executive officer positions at our company as to the level of severance payments and benefits they would require to leave other employment and join our company;

~~-20-~~

in the context of a change of control, the amount of vesting acceleration that would align the executive officer’s interests more closely with the interests of stockholders when considering a potential change of control transaction; and

~~the period of time following a change of control during which management positions are evaluated and subject to a heightened risk of elimination.~~

~~All outstanding options granted to our employees, including our named executive officers, will become fully vested upon a change of control if the options are not assumed by the acquiring company.~~

~~Worthington Separation and Release Agreement and Consulting Agreement~~

In October 2016, in connection with the resignation of Gajus Worthington, our former Chief Executive Officer and president, we entered into a separation agreement and release with Mr. Worthington in which we agreed to continue payments of his base salary for eighteen months from the date of his resignation and to reimburse any payments associated with maintaining benefits under our health insurance plans for a period of eighteen months. In addition, we entered into a consulting agreement with Mr. Worthington under which he agreed to provide transition consulting services at a rate of approximately $21,667 per month for six months from October 19, 2016. Equity incentive awards held by Mr. Worthington continued to vest and remain exercisable in accordance with their terms during Mr. Worthington’s consultancy, provided that Mr. Worthington voluntarily agreed to forfeit option and restricted stock unit awards with respect to an aggregate of 143,360 shares of our common stock in connection with his resignation. In partial consideration of the benefits we provided under the separation agreement and release, Mr. Worthington provided a general release of claims against Fluidigm.

~~Unger Consulting Agreement~~

In December 2016, we entered into a consulting agreement with Marc Unger, our former Executive Vice President, Research and Development and Marketing. Equity incentive awards held by Dr. Unger will continue to vest and remain exercisable in accordance with their terms during Dr. Unger’s consultancy. Under the terms of Dr. Unger’s consulting agreement, Dr. Unger is eligible to receive an hourly rate for each hour of consulting work provided thereunder.

~~Employee Benefits~~

Executive officers are eligible to participate in all of our employee benefit plans, such as medical, dental, vision, group life, disability, accidental death and dismemberment insurance, and our 401(k) plan, in each case on the same basis as other employees, subject to applicable law. Subject to applicable limits, we match contributions made to U.S.-based employees’ 401(k) defined contribution plans to a maximum of $2,000 per year. We also provide vacation and other paid holidays to all employees, including our executive officers, which we believe are comparable to those provided at peer companies.

~~Accounting and Tax Considerations~~

~~Deductibility of Executive Compensation~~

Section 162(m) of the Internal Revenue Code of 1986, as amended, or Section 162(m), places a limit of $1,000,000 on the amount of compensation that we may deduct as a business expense in any year with respect to our Chief Executive Officer and certain of our highly paid executive officers. We can, however, preserve the deductibility of certain performance-based compensation in excess of $1,000,000 if the conditions of Section 162(m) are met.

Our compensation committee is mindful of the advantages of being able to deduct the full amount of compensation paid to our executive officers. However, our business goals or market conditions may require us to provide compensation to our executive officers that is not fully deductible, and in order to preserve the flexibility to do so, our compensation committee has not adopted a policy that requires that all compensation provided to our executive

~~-21-~~

~~officers be within the $1,000,000 limit or qualify for the performance-based compensation exception under Section 162(m).~~

~~Taxation of Nonqualified Deferred Compensation~~

Section 409A of the Internal Revenue Code of 1986, as amended, or Section 409A, imposes additional taxes on certain non-qualified deferred compensation arrangements that do not comply with its requirements. These requirements regulate an individual’s election to defer compensation and the individual’s selection of the timing and form of distribution of the deferred compensation. Section 409A generally also provides that distributions of deferred compensation only can be made on or following the occurrence of certain events (i.e., the individual’s separation from service, a predetermined date, a change in control, or the individual’s death or disability). For certain executive officers, Section 409A requires that such individual’s distribution commence no earlier than six months after such officer’s separation from service. We have and will continue to endeavor to structure our compensation arrangements to comply with Section 409A so as to avoid the adverse tax consequences associated therewith.

~~Accounting for Stock-Based Compensation~~

The compensation committee takes accounting considerations into account in designing compensation plans and arrangements for our executive officers and other employees. Chief among these is Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”), the standard which governs the accounting treatment of stock-based compensation expense on a straight-line basis over the requisite service periods for non-performance-based awards.

~~ASC Topic 718 requires us to recognize in our financial statements all share-based payment awards to employees, including grants of options to purchase shares of our common stock and restricted~~ For performance-based stock awards, ~~that may be settled for shares of our common stock to our executive officers, based on their fair values. The application of ASC Topic 718 involves significant amounts of judgment in~~stock-based compensation expense is recognized over the determination of inputs into the Black-Scholes valuation model that we use to determine the fair value of stock options. These inputs are based upon assumptions as to the volatility of the underlying stock, risk free interest rates, and the expected life (term) of the options. As required under GAAP, we review our valuation assumptions at each grant date, and, as a result, our valuation assumptions used to value stock options granted in future periods may vary from the valuation assumptions we have used previously. For certain performance-based equity awards, we also must apply judgment in determining the periodsrequisite service period when ~~and if,~~ the achievement of ~~the related~~each individual performance ~~targets~~goal becomes probable.

~~ASC Topic 718 also requires us to recognize the~~

Stock-based compensation cost ~~of our share-based payment awards in our statement of operations over the period that an employee, including our executive officers, is required to render service in exchange~~ for ~~the award (which, generally, will correspond to the award’s vesting schedule).~~

~~Compensation Committee Interlocks and Insider Participation~~

None of the members of our compensation committee (which includes of Samuel D. Colella, Evan Jones, John A. Young, Gerhard F. Burbach and Nicolas Barthelemy) is, or was during 2016, an officer or employee of our company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee.

To the extent any members of our compensation committee and affiliates have participated in transactions with us meeting the disclosure requirements of Item 404 of Regulation S-K, their respective transactions are described in “~~Item 13. Certain Relationships and Related Party Transactions, and Director Independence – Related Person Transactions.” See also “Item 10. Directors, Executive Officers and Corporate Governance – Committees of the Board of Directors” for further information regarding our compensation committee.~~

~~-22-~~

~~Risk Management Considerations~~

In setting compensation, our compensation committee strives to create incentives that encourage a level of risk-taking consistent with our business strategy and to encourage a focus on building long-term value that does not encourage excessive risk-taking. In connection with its oversight of compensation-related risks, our compensation committee has reviewed our compensation programs and practices for employees, including executive and non-executive programs and practices. In its review, our compensation committee evaluated whether our policies and programs encourage unnecessary or excessive risk-taking and controls, and how such policies and programs are structured with respect to risks and rewards, as well as controls designed to mitigate any risks. As a result of this review, our compensation committee determined that any risks that may result from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on Fluidigm.

~~Compensation Committee Report~~

The compensation committee oversees Fluidigm’s compensation policies, plans, and benefit programs. The compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the compensation committee has recommended to the board of directors that the Compensation Discussion and Analysis be included in this Amendment No. 1 to Fluidigm’s Annual Report on Form 10-K.

~~The Compensation Committee~~

~~Gerhard F. Burbach (Chair)~~

~~Evan Jones~~

~~John A. Young~~

~~Samuel D. Colella~~

~~Nicolas Barthelemy~~

The Compensation Committee Report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other filing by Fluidigm under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent Fluidigm specifically incorporates the Compensation Committee Report by reference therein.

~~-23-~~

~~Summary Compensation Table~~

The following table provides information regarding the compensation of our Chief Executive Officer, Chief Financial Officer, each of the next three most highly compensated executive officers during 2016, our former Chief Executive Officer, and two former executive officers for whom disclosure would have been required if they had still been serving as executive officers as of December 31, 2016, together referred to as our “named executive officers,” for 2016, 2015, and 2014.

Name and Principal Position Year Salary ($) Stock Awards ($)(1) Option Awards ($)(1) Non-Equity Incentive Plan Compensation ($)(2) All Other Compensation ($) Total ($)
Stephen Christopher Linthwaite(3)
President and Chief Executive Officer
2016 197,349
126,700
872,746
—
2,000(4) 1,198,795
Vikram Jog
Chief Financial Officer
2016
2015
2014
339,500
329,600
320,000

76,680
197,472
266,280

80,939
237,772
367,739

—
—
82,000

2,000(4)
2,000
—
499,199
766,844
1,036,019

Steven C. McPhail(5)
Chief Commercial Officer
2016
2015 339,700
216,955
92,820
312,852
80,939
350,006
—
—
2,000(4)
2,000 515,459
881,813
Mai Chan (Grace) Yow
Executive Vice President, Worldwide Manufacturing of Fluidigm Singapore Pte.
2016
2015
2014 294,856(6)
286,329(8)
288,990(9)
76,680
320,892
266,280
80,939
237,772
367,739
—
—
78,000
7,127(6)(7)
7,243(8)
6,780(9) 459,602
852,236
1,007,789
Nicholas Khadder(10)
Senior Vice President, General Counsel, Chief Compliance Officer and Secretary.
2016 173,580
97,740
101,671
—
1,323(4) 374,314
Gajus V. Worthington(11)
Former President and Chief Executive Officer
2016
2015
2014 447,995
504,700
490,000
191,700(12)
511,782
1,236,300
202,348(12)
615,950(12)
1,707,359(12)
—
—
206,000
816,765(13)
2,000
— 1,658,808
1,634,432
3,639,659
William M. Smith(14)
Former Executive Vice President, Legal Affairs, General Counsel and Secretary
2016
2015
2014 293,417
334,750
325,000
76,680
197,472
266,280
80,939
237,772
367,739
—
—
83,000
2,000(4)
2,000
99,398 453,036
771,994
1,141,417
Marc Unger (15)
Former Executive Vice President, Research and Development and Marketing
2016
2015 270,435
304,500
76,680
254,112
80,939
298,172
—
—
7,375(16)
2,000 435,429
858,784

~~(1)~~

Amounts represent the aggregate grant date fair value of equity awards granted to the named executive officer in the year indicated calculated in accordance with FASB Topic ASC 718 without regard to estimated forfeitures. The performance stock options and performance RSUs were valued on the target outcome of performance-based conditions (~~i.e.,~~ based on 100% achievement). See Note 9 of the notes to our audited consolidated financial statements for a discussion of assumptions made in determining the grant date fair value and compensation expense of our equity awards.


~~(2)~~	The amounts in this column represent total performance-based bonuses earned under our executive bonus plan for service rendered during the applicable year. All such amounts were paid subsequent to year end. For a description of our executive bonus plan, please see the section entitled “~~Executive Bonus Plan” under “Compensation Discussion and Analysis” above.~~


~~(3)~~	Mr. Linthwaite joined Fluidigm as our Chief Operating Officer and President on August 4, 2016. On October 19, 2016, he was appointed our Chief Executive Officer and President. Mr. Linthwaite was not named an executive officer prior to 2016.


~~(4)~~	~~Consists of company contributions made to the applicable named executive officer’s 401(k) defined contribution plan.~~


~~(5)~~	Steven C. McPhail joined Fluidigm as General Manager, Production Genomics in May 2015 and became our Chief Commercial Officer in August 2016. Mr. McPhail was not a named executive officer prior to 2015.


~~(6)~~	~~Based on conversion of Singapore Dollars (SGD) to US Dollars (USD) at a rate of 1 SGD to 0.6964 USD, the average conversion rate for the period beginning December 1, 2016 to December 31, 2016.~~


~~(7)~~	~~Consists of company contributions made to Ms. Yow’s Central Providence Fund.~~


~~(8)~~	~~Based on conversion of Singapore Dollars (SGD) to US Dollars (USD) at a rate of 1 SGD to 0.7101 USD, the average conversion rate for the period beginning December 1, 2015 to December 31, 2015.~~


~~(9)~~	~~Based on conversion of Singapore Dollars (SGD) to US Dollars (USD) at a rate of 1 SGD to 0.7597 USD, the average conversion rate for the period beginning December 1, 2014 to December 31, 2014.~~


~~(10)~~	~~Mr. Khadder joined Fluidigm as our Senior Vice President, General Counsel, Chief Compliance Officer and Secretary on June 6, 2016.~~


~~(11)~~	~~Mr. Worthington served as our President and Chief Executive Officer from our inception until October 19, 2016.~~


~~(12)~~	~~Mr. Worthington forfeited a portion of these awards as a condition of his severance. For a description of the awards forfeited, please see the section entitled “Other Benefits – Worthington Separation and Release Agreement and Consulting Agreement” under “Compensation Discussion and Analysis” above.~~


~~(13)~~	Consists of $52,419 earned by Mr. Worthington under his consulting agreement, $757,050 of severance payments, COBRA reimbursements of $5,296, and $2,000 of Company contributions made to Mr. Worthington’s 401(k) defined contribution plan.


~~(14)~~	~~Mr. Smith served as our Executive Vice President, Legal Affairs from February 2012 and as General Counsel and Secretary from May 2000 until June 2016.~~


~~(15)~~	~~Dr. Unger served as Executive Vice President, Research and Development and Marketing until December 2016. Dr. Unger was not a named executive officer prior to 2015.~~


~~(16)~~	~~Consists of $5,375 earned under Dr. Unger’s consulting agreement and $2,000 of Company contributions made to Dr. Unger’s 401(k) defined contribution plan.~~

~~-24-~~

~~Grants of Plan-Based Awards~~

~~The following table presents information concerning each grant of an award made to a named executive officer in 2016 under any plan.~~



		~~Estimated Future Payouts Under Non-Equity~~ ~~Incentive Plan Awards ($)(1)~~			~~Estimated Future Payments Under Equity~~ ~~Incentive Plan Awards (#)(2)~~			~~All Stock Awards:~~ ~~Number of Shares of Stock or Units~~ ~~(#)~~	~~All Option Awards:~~ ~~Number of Securities Underlying Options (#)~~	~~Exercise or Base Price of Option Awards~~ ~~($/Sh)(3)~~	~~Grant Date Fair Value of Stock and Option Awards~~ ~~($)(4)~~
~~Name~~	~~Grant Date~~	~~Threshold~~	~~Target~~	~~Maximum~~	~~Threshold~~	~~Target~~	~~Maximum~~			~~Exercise or Base Price of Option Awards~~ ~~($/Sh)(3)~~
~~Stephen Christopher Linthwaite~~	~~08/04/2016(5)~~ ~~11/08//2016(6)~~ ~~08/09/2016(6)~~ ~~08/09/2016(6)~~	~~94,740(5)~~ — — —	~~145,753(5)~~ — — —	~~176,362(5)~~ — — —	— — — —	— — ~~14,000(7)~~ —	— — ~~14,000(7)~~ —	— — — —	— ~~140,000~~ — ~~140,000~~	— ~~4.99~~ — ~~9.05~~	— ~~343,098~~ ~~126,700~~ ~~529,648~~
~~Vikram Jog~~	~~03/04/2016(8)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~	~~93,787~~ — — — —	~~144,288~~ — — — —	~~174,588~~ — — — —	— — — ~~6,750~~ ~~2,700~~	— — — ~~13,500~~ ~~5,400~~	— — — ~~13,500~~ ~~5,400~~	— — ~~5,400~~ — —	— ~~13,500~~ — — —	— ~~7.10~~ — ~~7.10~~ —	— ~~40,137~~ ~~38,340~~ ~~40,802~~ ~~38,340~~
~~Steven C. McPhail~~	~~03/04/2016(8)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~ ~~03/31/2016(6)~~	~~93,842~~ — — — — —	~~144,373~~ — — — — —	~~174,691~~ — — — — —	— — — ~~6,750~~ ~~2,700~~ —	— — — ~~13,500~~ ~~5,400~~ —	— — — ~~13,500~~ ~~5,400~~ —	— — ~~5,400~~ — — ~~2,000~~	— ~~13,500~~ — — — —	— ~~7.10~~ — ~~7.10~~ — —	— ~~40,137~~ ~~38,340~~ ~~40,802~~ ~~38,340~~ ~~16,140~~
~~Mai Chan (Grace) Yow~~	~~03/04/2016(8)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~	~~81,454(9)~~ — — — —	~~125,314(9)~~ — — — —	~~151,630(9)~~ — — — —	— — — ~~6,750~~ ~~2,700~~	— — — ~~13,500~~ ~~5,400~~	— — — ~~13,500~~ ~~5,400~~	— — ~~5,400~~ — —	— ~~13,500~~ — — —	— ~~7.10~~ — ~~7.10~~ —	— ~~40,137~~ ~~38,340~~ ~~40,802~~ ~~38,340~~
~~Nicholas Khadder~~	~~06/06/2016(10)~~ ~~08/09/2016(6)~~ ~~08/09/2016(6)~~	~~47,719(10)~~ — —	~~73,414(10)~~ — —	~~88,831(10)~~ — —	— — —	— — —	— — —	— ~~10,800~~ —	— — ~~27,000~~	— — ~~9.05~~	— ~~97,740~~ ~~101,671~~
~~Gajus V. Worthington~~	~~03/04/2016(8)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~ ~~03/04/2016(11)~~ ~~03/04/2016(11)~~	~~229,639~~ — — — —	~~353,290~~ — — — —	~~427,481~~ — — — —	— — — ~~16,875(11)~~ ~~6,750(11)~~	— — — ~~33,750(11)~~ ~~13,500(11)~~	— — — ~~33,750(11)~~ ~~13,500(11)~~	— — ~~13,500~~ — —	— ~~33,750~~ — — —	— ~~7.10~~ — ~~7.10~~ —	— ~~100,342~~ ~~95,850~~ ~~102,006(11)~~ ~~95,850(11)~~
~~William M. Smith~~	~~03/04/2016(8)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~	~~95,237~~ — — — —	~~146,519~~ — — — —	~~177,288~~ — — — —	— — — ~~6,750~~ ~~2,700~~	— — — ~~13,500~~ ~~5,400~~	— — — ~~13,500~~ ~~5,400~~	— — ~~5,400~~ — —	— ~~13,500~~ — — —	— ~~7.10~~ — ~~7.10~~ —	— ~~40,137~~ ~~38,340~~ ~~40,802~~ ~~38,340~~
~~Marc Unger~~	~~03/04/2016(8)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~ ~~03/04/2016(6)~~	~~86,632~~ — — — —	~~133,280~~ — — — —	~~161,269~~ — — — —	— — — ~~6,750~~ ~~2,700~~	— — — ~~13,500~~ ~~5,400~~	— — — ~~13,500~~ ~~5,400~~	— — ~~5,400~~ — —	— ~~13,500~~ — — —	— ~~7.10~~ — ~~7.10~~ —	— ~~40,137~~ ~~38,340~~ ~~40,802~~ ~~38,340~~

~~(1)~~

The target amounts shown in this column reflect our annual incentive plan awards provided under our 2016 executive bonus plan. The maximum amounts in this column reflect the greatest payouts that could be made if pre-established maximum performance levels were met or exceeded. Actual 2016 executive bonus plan payouts are reflected in the non-equity incentive plan compensation column of the Summary Compensation Table.

~~(2)~~

The performance-based stock options and the performance-based restricted stock unit awards in this column (with the exception of Mr. Linthwaite, covered in footnote (5) below) reflect awards granted under our 2011 Equity Incentive Plan having a performance-based component. The performance-based component covers two annual periods (fiscal 2016 and fiscal 2017). For each of the two fiscal years, the performance award will become eligible to vest based on the growth in our revenues (as compared to the previous fiscal year). If the actual growth rate for a given fiscal year equals or exceeds the target, 100% of the portion of the performance award covering that fiscal year will become eligible to vest. If the actual growth rate equals a certain minimum growth rate, 50% of the portion of the performance award covering that fiscal year will become eligible to vest. For achievement between minimum and target growth rates, eligibility to vest scales linearly between 50% and 100%. Once the level of achievement has been certified, the performance awards for the given fiscal year that became eligible to vest will vest according to the following time-based schedule: (1) 50% immediately upon the date the actual growth rate is certified, (2) 25% on the one-year anniversary of the certification date, and (3) 25% on the two-year anniversary of the certification date. If a change in control occurs before the end of any fiscal year covered by the performance award, the performance-based component for such fiscal year is treated as having been 100% achieved (with the vesting schedule under the time-based component based on the date of the change in control rather than the certification date).


~~(3)~~	~~Based upon the closing sale price of our common stock as reported on the NASDAQ Global Select Market on the date of grant.~~


~~(4)~~	Amounts represent the grant date fair value of the equity awards, calculated in accordance with FASB ASC Topic 718 without regard to estimated forfeitures. See Note 9 of the notes to our audited consolidated financial statements for a discussion of assumptions made in determining the grant date fair value.


~~(5)~~	Mr. Linthwaite became eligible to participate in our 2016 executive bonus plan on his hire date, August 4 2016. The estimated future payout amounts Mr. Linthwaite was eligible to earn are based on his salary, pro-rated by month, from August to December 2016.


~~(6)~~	~~Represents awards granted under our 2011 Equity Incentive Plan.~~

~~(7)~~

This performance-based restricted stock unit award for Mr. Linthwaite reflects an award granted under our 2011 Equity Incentive Plan. If the revenue growth rate for the four fiscal quarters ending with the second fiscal quarter in 2017 over the four fiscal quarters ending with the second fiscal quarter in 2016 equals or exceeds the target, then 100% of these performance award shares will become eligible to vest. If the actual growth rate is below the target, then all performance award shares cancel.


~~(8)~~	~~Corresponds to the date on which our compensation committee set the target bonus amounts payable to each of our named executive officers pursuant to our 2016 executive bonus plan.~~


~~(9)~~	~~Based on conversion of Singapore Dollars (SGD) to US Dollars (USD) at a rate of 1 SGD to 0.6964 USD, the average conversion rate for the period beginning December 1, 2016 to December 31, 2016.~~


~~(10)~~	Mr. Khadder became eligible to participate in our 2016 executive bonus plan on his hire date, June 6, 2016. The estimated future payout amounts Mr. Khadder was eligible to earn are based on his salary, pro-rated by month, from June to December 2016.


~~(11)~~	~~Represents awards forfeited as a condition of Mr. Worthington’s severance.~~

~~-25-~~

~~Outstanding Equity Awards at Fiscal Year-End~~

~~The following table presents information concerning unexercised options and unvested stock awards outstanding as of December 31, 2016 for each named executive officer.~~

Option Awards Stock Awards
Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards:
Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock that Have Not Vested (#) Market Value of Shares or Units of Stock that Have Not Vested ($) Equity Incentive Plan Awards:
Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards:
Market Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Stephen Christopher Linthwaite —
—
140,000(1)
140,000(4) —
—
9.05
4.99 8/9/2026
11/8/2026 —
— —
— 14,000(2)
—
101,920(3)
—
Vikram Jog 3,334(5)
12,501(5)
23,410(8)
10,208(10)
5,749(12)
3,093(13)
—
—
1,042
3,792
6,251
10,407 —
—
—
—
—
—
13,500(14)
14.60
15.49
16.73
47.55
41.14
7.10
7.10 5/17/2021
2/17/2022
2/15/2023
3/14/2024
3/12/2025
3/4/2026
3/4/2026 1,634(6)
2,601(7)
4,276(9)
—
—
—
— 11,896(3)
18,935(3)
31,129(3)
—
—
—
— —
—
—
5,400(11)
—
—
—
—
—
—
39,312(3)
—
—
—
Steven C. McPhail 12,270(15)
3,093(13)
—
18,730
10,407
— —
—
13,500(14)
25.23
7.10
7.10 5/21/2015
3/4/2026
3/4/2026 7,750(16)
4,276(9)
— 56,420(3)
31,129(3)
— —
—
5,400(11)
—
—
39,312(3)
Mai Chan (Grace) Yow 834(5)
17,859(5)
64,625(8)
10,208(10)
5,749(12)
3,093(13)
—
—
—
1,375
3,792
6,251
10,407
— —
—
—
—
—
—
13,500(14)
14.60
15.49
16.73
47.55
41.14
7.10
7.10 5/17/2021
2/17/2022
2/15/2023
3/14/2024
3/12/2025
3/4/2026
3/4/2026
1,634(6)
4,226(7)
4,276(9)
—
—
— 11,896(3)
30,765(3)
31,129
—
—
—
— —
—
—
5,400(11)
—
—
—
—
—
—
39,312(3)
—
—
—
Nicholas Khadder —
27,000(17) —
9.05 08/09/2026 10,800(18) 78,624(3) —
—
Gajus V. Worthington 8,243(5)
5,780(5)
5,780(5)
5,780(5)
5,203(5)
577(5)
70,000(5)
100,000(5)
112,604(8)
7,734(13)
—
—
—
—
—
—
—
—
2,396
26,016 —
—
—
—
—
—
—
—
—
—
4.08
4.08
4.08
8.37
8.37
8.37
14.60
15.49
16.73
7.10 11/17/2019
11/17/2019
11/17/2019
1/4/2021
1/4/2021
1/4/2021
5/17/2021
2/17/2022
2/15/2023
3/4/2026 7,584(6)
6,739(7)
10,688(9)
—
—
—
—
—
—
— 55,212(3)
49,060(3)
77,809(3)
—
—
—
—
—
—
— —
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
William M. Smith 3,727(5)
34,000(5)
37,250(5)
53,854(8)
10,208(10)
5,749(12)
3,093(13)
—
—
—
1,146
3,792
6,251
10,407 —
—
—
—
—
—
—
13,500 (14)
8.37
14.60
15.49
16.73
47.55
41.14
7.10
7.10 1/4/2021
5/17/2021
2/17/2022
2/15/2023
3/14/2024
3/12/2025
3/4/2026
3/4/2026 1,634(6)
2,601(7)
4,276(9)
—
—
—
—
— 11,896(3)
18,935(3)
31,129
—
—
—
—
— —
—
—
5,400(11)
—
—
—
—
—
—
—
—
39,312(3)
—
—
—
—
Marc Unger 934(5)
5,780(5)
270(5)
20,000(5)
53,854(8)
10,208(10)
8,750(10)
5,749(12)
3,750(20)
3,093(13)
—
—
—
—
—
1,146
3,792
3,250
6,251
11,250(3)
10,407
— —
—
—
—
—
—
—
—
—
—
13,500(14)
4.45
8.37
8.37
14.55
16.73
47.55
47.55
41.14
9.44
7.10
7.10 8/26/2020
1/4/2021
1/4/2021
3/5/2022
2/15/2023
3/14/2024
3/14/2024
3/12/2025
12/14/2025
3/4/2026
3/4/2026 1,634(6)
1,400(6)
2,601(7)
4,625(19)
4,276(9)
—
—
—
—
—
— 11,896(3)
10,192(3)
18,935(3)
33,670(3)
31,129
—
—
—
—
—
— —
—
—
—
—
5,400(11)
—
—
—
—
—
—
—
—
—
39,312(3)
—
—
—
—


~~(1)~~	~~12/48~~^th of the shares subject to the option will vest on August 1, 2017 and each month thereafter such that the option will be fully vested on August 1, 2020. Vesting is subject to continued service through the applicable vesting date.


~~(2)~~	The Restricted Stock Units will vest as to 100% of the shares underlying the restricted stock units only if the Company’s revenue growth exceeds the target during the four Company fiscal quarters for Q3 2016 through Q2 2017 versus the four Company fiscal quarters Q3 2015 through Q2 2016. Vesting is subject to continued service through the applicable vesting date.


~~(3)~~	Based on the closing price of our common stock of $7.28 per share on December 30, 2016, as reported on the NASDAQ Global Select Market, and the number of the restricted stock units that had not vested as of December 31, 2016.


~~(4)~~	~~12/48~~^thof the shares subject to the option will vest on October 19, 2017 and each month thereafter such that the option will be fully vested on October 19, 2020. Vesting is subject to continued service through the applicable vesting date.


~~(5)~~	~~The option is fully vested.~~


~~(6)~~	~~4/48~~^th ~~of the shares underlying the restricted stock units vested on May 20, 2014 and 3/48~~^th ~~of the shares underlying the restricted stock units granted vest every three months thereafter until fully vested. Vesting is subject to continued service through the applicable vesting date.~~


~~(7)~~	~~4/48~~^th ~~of the shares underlying the restricted stock units vested on May 20, 2015 and 3/48~~^th ~~of the shares underlying the restricted stock units granted vest every three months thereafter until fully vested. Vesting is subject to continued service through the applicable vesting date.~~


~~(8)~~	~~1/48~~^th ~~of the shares subject to the option vested on February 15, 2013, and 1/48~~^th ~~of the shares subject to the option vested on March 1, 2013 and each month thereafter, such that the option was fully vested on January 1, 2017.~~


~~(9)~~	~~4/48~~^th ~~of the shares underlying the restricted stock units vested on May 20, 2016 and 3/48~~^th ~~of the shares underlying the restricted stock units granted vest every three months thereafter until fully vested. Vesting is subject to continued service through the applicable vesting date.~~


~~(10)~~	~~1/48~~^th of the shares subject to the option vested on February 1, 2014 and each month thereafter such that the option will be fully vested on January 1, 2018. Vesting is subject to continued service through the applicable vesting date.

~~(11)~~

These performance-based restricted stock units cover two annual periods (fiscal 2016 and fiscal 2017). For each of the two fiscal years, the performance award will become eligible to vest based on the growth in our revenues (as compared to the previous fiscal year). If the actual growth rate for a given fiscal year equals or exceeds the target, 100% of the portion of the performance award covering that fiscal year will become eligible to vest. If the actual growth rate equals a certain minimum growth rate, 50% of the portion of the performance award covering that fiscal year will become eligible to vest. For achievement between minimum and target growth rates, eligibility to vest scales linearly between 50% and 100%. Once the level of

~~-26-~~

achievement has been certified, the performance awards for the given fiscal year that became eligible to vest will vest according to the following time-based schedule: (1) 50% immediately upon the date the actual growth rate is certified, (2) 25% on the one-year anniversary of the certification date, and (3) 25% on the two-year anniversary of the certification date. Vesting is subject to continued service through the applicable vesting date.


~~(12)~~	~~1/48~~^th of the shares subject to the option vested on February 1, 2015 and each month thereafter such that the option will be fully vested on January 1, 2019. Vesting is subject to continued service through the applicable vesting date.


~~(13)~~	~~2/48~~^th ~~of the shares subject to the option vested on March 4, 2016, and 1/48~~^th of the shares subject to the option vested on April 1, 2016 and each month thereafter, such that the option will be fully vested on January 1, 2020. Vesting is subject to continued service through the applicable vesting date.

~~(14)~~

These performance-based stock options cover two annual periods (fiscal 2016 and fiscal 2017). For each of the two fiscal years, the performance award will become eligible to vest based on the growth in our revenues (as compared to the previous fiscal year). If the actual growth rate for a given fiscal year equals or exceeds the target, 100% of the portion of the performance award covering that fiscal year will become eligible to vest. If the actual growth rate equals a certain minimum growth rate, 50% of the portion of the performance award covering that fiscal year will become eligible to vest. For achievement between minimum and target growth rates, eligibility to vest scales linearly between 50% and 100%. Once the level of achievement has been certified, the performance awards for the given fiscal year that became eligible to vest will vest according to the following time-based schedule: (1) 50% immediately upon the date the actual growth rate is certified, (2) 25% on the one-year anniversary of the certification date, and (3) 25% on the two-year anniversary of the certification date. Vesting is subject to continued service through the applicable vesting date.


~~(15)~~	~~12/48~~^th ~~the shares subject to the option will vest on May 7, 2016 and 1/48~~^th ~~of the shares subject to the option will vest each month thereafter until fully vested. Vesting is subject to continued service through the applicable vesting date.~~


~~(16)~~	~~12/48~~^th ~~of the shares underlying the restricted stock units will vest on May 20, 2016 and 3/48~~^th ~~of the shares underlying the restricted stock units granted vest every three months thereafter until fully vested. Vesting is subject to continued service through the applicable vesting date.~~


~~(17)~~	~~12/48~~^thof the shares subject to the option will vest on June 20, 2017 and each month thereafter such that the option will be fully vested on June 20, 2020. Vesting is subject to continued service through the applicable vesting date.


~~(18)~~	~~14/48~~^th ~~of the shares underlying the restricted stock units will vest on August 20, 2017 and 3/48~~^th ~~of the shares underlying the restricted stock units granted vest every three months thereafter until fully vested. Vesting is subject to continued service through the applicable vesting date.~~


~~(19)~~	~~2/48~~^th ~~of the shares underlying the restricted stock units vested on February 20, 2016 and 3/48~~^th ~~of the shares underlying the restricted stock units granted vest every three months thereafter until fully vested. Vesting is subject to continued service through the applicable vesting date.~~


~~(20)~~	~~1/48~~^th ~~of the shares subject to the option vested on January 10, 2016, and 1/48~~^th ~~of the shares subject to the option vested on February 1, 2016 and each month thereafter until fully vested. Vesting is subject to continued service through the applicable vesting date.~~

~~-27-~~

~~Option Exercises and Stock Vested in 2016~~

The following table provides additional information about the value realized by the named executive officers upon option award exercises and the vesting of restricted stock unit awards during the year ended December 31, 2016.

Option Awards Stock Awards
Name Number of Shares Acquired on Exercise (#) Value Realized on Exercise ($) Number of Shares Acquired on Vesting (#) Value Realized on Vesting ($)(1)
Stephen Christopher Linthwaite —
—
—
—
Vikram Jog —
—
3,724
29,142
Steven C. McPhail —
—
7,774
65,433
Mai Chan (Grace) Yow —
—
4,474
34,902
Nicholas Khadder —
—
—
—
Gajus V. Worthington —
—
12,422
96,753
William M. Smith —
—
3,724
29,142
Marc Unger —
—
6,299
49,078


~~(1)~~	~~Value realized on vesting of stock awards is based on the closing price of our common stock on the vesting date and does not necessarily reflect actual proceeds received.~~

~~As of December 31, 2016, our named executive officers had not been awarded any equity awards other than stock options and restricted stock units.~~

~~Pension Benefits & Nonqualified Deferred Compensation~~

~~We do not provide a pension plan for our employees and no named executive officers participated in a nonqualified deferred compensation plan during the fiscal year ended December 31, 2016.~~

~~Potential Payments Upon Termination or Change of Control~~

We have entered into employment and severance agreements with each of our named executive officers, which require us to make payments if the named executive officer’s employment with us is terminated in certain circumstances.

~~Stephen Christopher Linthwaite~~

~~Pursuant to our employment and severance agreement with our current Chief Executive Officer, Mr. Linthwaite, a “change of control” is defined as the occurrence of the following events:~~

any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act, is or becomes the “beneficial owner,” as such term is defined in Rule 13d‑3 under said Act, directly or indirectly, of our securities representing 50% or more of the total voting power represented by our then outstanding voting securities;

a change in the composition of our board occurring within a two-year period, as a result of which fewer than a majority of our directors are “incumbent directors,” which term is defined as either (i) our directors as of the execution date of the relevant agreement or (ii) directors who are elected, or nominated for election, to our board with the affirmative votes of at least a majority of the incumbent directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of our directors);

~~the date of the consummation of our merger or consolidation with any other corporation that has been approved by our stockholders, other than a merger or consolidation that would result in our voting~~

~~-28-~~

securities outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by our voting securities or such surviving entity outstanding immediately after such merger or consolidation, or our stockholders approve a plan of our complete liquidation; or

~~the date of the consummation of the sale or disposition by us of all or substantially all of our assets.~~

~~Pursuant to our employment and severance agreements with Mr. Linthwaite, “cause” is defined as:~~

~~an act of dishonesty in connection with his responsibilities as an employee;~~

~~a conviction of, or plea of nolo contendere to, a felony or any crime involving fraud, embezzlement or any other act of moral turpitude;~~

~~gross misconduct;~~

~~an unauthorized use or disclosure of any of our proprietary information or trade secrets or of any other party to whom he owes an obligation of nondisclosure as a result of his relationship with us;~~

~~a willful breach of any obligations under any written agreement or covenant with us; or~~

his continued failure to perform his employment duties after he has received a written demand of performance from us and has failed to cure such non-performance to our satisfaction within 10 business days after receiving such notice.

Pursuant to our employment and severance agreement with Mr. Linthwaite, “good reason” means the occurrence of one or more of the following events effected without Mr. Linthwaite’s prior consent, provided that he terminates his or her employment within one year thereafter:

the assignment to Mr. Linthwaite of any duties or a reduction of Mr. Linthwaite’s duties, either of which results in a material diminution in Mr. Linthwaite’s then current position or responsibilities with us (and will be deemed to occur if, following a "change of control", Mr. Linthwaite is not the Chief Operating Officer or President of the acquiring entity);

~~a material reduction of Mr. Linthwaite’s base salary;~~

~~the relocation of Mr. Linthwaite's work location to a facility or a location greater than 25 miles from his present work location; or~~

~~a material breach by us of any material provision of the employment and severance agreement.~~

However, no act or omission by us shall constitute “good reason” if Mr. Linthwaite does not provide written notice that such act or omission constitutes "good reason" within 90 days of its initial existence or if we fully cure that act or omission within 30 days of receiving such notice from Mr. Linthwaite.

The employment and severance agreement provides that in the event Mr. Linthwaite’s employment is terminated (i) by us or our successor without “cause;” or (ii) by Mr. Linthwaite for “non-change of control good reason,” in each case more than 90 days prior to a “change of control” or after 12 months following a “change of control,” and Mr. Linthwaite executes a standard release of claims with us, in a form that is acceptable to us and which becomes effective no later than the 60^th day following termination of employment, Mr. Linthwaite is entitled to receive, in addition his salary payable through the date of termination of employment and any other benefits earned and owed through the date of termination, the following cash payments:

~~-29-~~

an amount, payable in accordance with our customary payroll practices, equal to (i) twelve months of the Mr. Linthwaite’s base salary in effect immediately prior to the time of termination; plus (ii) Mr. Linthwaite’s annual bonus at target level of achievement; and

reimbursement of costs and expenses incurred by Mr. Linthwaite and his eligible dependents for coverage under group health plans, policies or arrangements sponsored by us for a period of up to twelve months, provided that such coverage is timely elected under COBRA or similar applicable state statute.

“Non-change of control good reason” means our appointing a new Chief Executive Officer (other than Mr. Linthwaite) more than 90 days prior to a "change of control" and during the first 24 months of his employment

The employment and severance agreement further provides that in the event Mr. Linthwaite’s employment is terminated (i) by us or our successor without “cause” or(ii) by Mr. Linthwaite for “good reason,” in each case within 90 days prior to or 12 months following a “change of control,” and Mr. Linthwaite executes a standard release of claims with us, in a form that is acceptable to us and which becomes effective no later than the 60^th day following termination of employment, Mr. Linthwaite is entitled to receive, in addition to his salary payable through the date of termination of employment and any other benefits earned and owed through the date of termination, the following cash payments and benefits:

an amount, payable in a lump sum, equal to the greater of (i) 12 months of Mr. Linthwaite’s base salary in effect immediately prior to the “change in control” or (ii) 12 months of Mr. Linthwaite’s base salary in effect immediately prior to the time of termination;

an amount, payable in a lump sum, equal to Mr. Linthwaite’s annual bonus at target level of achievement as in effect immediately prior to the “change of control” or the termination, whichever is greater;

all outstanding unvested stock options, equity appreciation rights or similar equity awards then held by Mr. Linthwaite as of the date of termination will immediately vest and become exercisable as to all shares underlying such options;

any shares of restricted stock, restricted stock units and similar equity awards then held by Mr. Linthwaite will immediately vest and any of our rights of repurchase or reacquisition with respect to such shares will lapse as to all shares; and

~~All Other Executive Officers~~

We have also entered into employment and severance agreements with Mr. Jog, Mr. McPhail, Ms. Yow and Mr. Khadder. Under the terms of these agreements, a “change of control” is defined as the occurrence of the following events:

~~-30-~~

the date of the consummation of our merger or consolidation with any other corporation that has been approved by our stockholders, other than a merger or consolidation that would result in our voting securities outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by our voting securities or such surviving entity outstanding immediately after such merger or consolidation, or our stockholders approve a plan of our complete liquidation; or

~~the date of the consummation of the sale or disposition by us of all or substantially all of our assets.~~

~~Pursuant to our employment and severance agreements with our named executive officers, “cause” is defined as:~~

~~an act of dishonesty in connection with a named executive officer’s responsibilities as an employee;~~

~~a conviction of, or plea of nolo contendere to, a felony or any crime involving fraud, embezzlement or any other act of moral turpitude;~~

~~gross misconduct;~~

~~an unauthorized use or disclosure of any of our proprietary information or of any other party to whom he or she owes an obligation of nondisclosure as a result of his or her relationship with us;~~

~~a willful breach of any obligations under any written agreement or covenant with us; or~~

a named executive officer’s continued failure to perform his or her employment duties after he or she has received a written demand of performance from us and has failed to cure such non-performance to our satisfaction within 10 business days after receiving such notice.

Pursuant to our employment and severance agreements with our named executive officers, “good reason” means the occurrence of one or more of the following events effected without the named executive officer’s prior consent, provided that he or she terminates his or her employment within one year thereafter:

the assignment to the named executive officer of any duties or a reduction of the named executive officer’s duties, either of which significantly reduces his or her responsibilities; provided that the continuance of his or her responsibilities at the subsidiary or divisional level following a change of control, rather than at the parent, combined or surviving company level following such change of control shall not be deemed “good reason” within the meaning of this clause;

~~a material reduction of the named executive officer’s base salary;~~

~~the relocation of the named executive officer to a facility or a location greater than 50 miles from his or her present location; or~~

~~a material breach by us of any material provision of the employment and severance agreement.~~

~~However, no act or omission by us shall constitute “good reason” if we fully cure that act or omission within 30 days of receiving notice from the named executive officer.~~

The employment and severance agreements provide that in the event the named executive officer’s employment is terminated by us or our successor without “cause” prior to a “change of control” or after 12 months following a “change of control” and the named executive officer executes a standard release of claims with us, in a form that is acceptable to us and which becomes effective no later than the 60^th day following termination of employment, the named executive officer is entitled to receive, in addition to such officer’s salary payable through the date of termination of employment and any other benefits earned and owed through the date of termination, the following cash payments:

~~-31-~~

~~an amount, payable in accordance with our customary payroll practices, equal to six months of the named executive officer’s base salary in effect immediately prior to the time of termination; and~~

reimbursement of costs and expenses incurred by the executive officer and his or her eligible dependents for coverage under group health plans, policies or arrangements sponsored by us for a period of up to six months, provided that such coverage is timely elected under COBRA or similar applicable state statute.

The employment and severance agreements further provide that in the event the named executive officer’s employment is terminated (i) by us or our successor without “cause” and within 12 months following a “change of control” or (ii) by the executive officer for “good reason” and within 12 months following a “change of control”, and in each case the named executive officer executes a standard release of claims with us, in a form that is acceptable to us and which becomes effective no later than the 60^th day following termination of employment, the executive officer is entitled to receive, in addition to such officer’s salary payable through the date of termination of employment and any other benefits earned and owed through the date of termination, the following cash payments and benefits:

an amount, payable in a lump sum, equal to the greater of (i) six months of the named executive officer’s base salary in effect immediately prior to the change in control or (ii) six months of the named executive officer’s base salary in effect immediately prior to the time of termination;

all outstanding unvested stock options, equity appreciation rights or similar equity awards then held by the named executive officer as of the date of termination will immediately vest and become exercisable as to all shares underlying such options;

any shares of restricted stock, restricted stock units and similar equity awards then held by the named executive officer will immediately vest and any of our rights of repurchase or reacquisition with respect to such shares will lapse as to all shares; and

reimbursement of costs and expenses incurred by the named executive officer and his or her eligible dependents for coverage under group health plans, policies or arrangements sponsored by us for a period of up to six months, provided that such coverage is timely elected under COBRA or similar applicable state statute.

In December 2012, we entered into amended and restated employment and severance agreements with each of our then-current executive officers to conform the terms of the agreements to changes in applicable tax and healthcare laws. The amendment and restatement did not affect the economic terms of the agreements.

The following table describes the payments and benefits that each of our named executive officers would be entitled to receive pursuant to the employment and severance agreements, assuming that each of the following triggers occurred on December 31, 2016: (i) their employment was terminated without “cause” prior to a “change of control” or after 12 months following a “change of control” and (ii) their employment was terminated without “cause” or by them for “good reason” within 12 months following a “change of control.”

Mr. Worthington and Dr. Unger were no longer named executive officers on December 31, 2016 and were not entitled to receive payments pursuant to their employment and severance agreements in connection with a “change of control”. Please see the section entitled “~~Other Benefits – Worthington Separation and Release Agreement and Consulting Agreement” and “Other Benefits – Unger Consulting Agreement”~~ ~~under “Compensation Discussion and Analysis” above.~~

~~-32-~~

Employment Terminated without Cause prior to, or more than 12 Months after,
a Change of Control Employment Terminated within
12 Months after a Change of Control (1)
Name Severance Payments ($) Health Care Benefits ($) Equity Acceleration ($)(2) Severance Payments ($) Health Care Benefits ($)
Stephen Christopher Linthwaite 500,000(3) 28,089(4) 422,520 500,000(3) 28,089(4)
Vikram Jog 169,750(5) 14,045(6) 105,575 169,750(5) 14,045(6)
Steven C. McPhail 169,850(5) 14,045(6) 131,165 169,850(5) 14,045(6)
Mai Chan (Grace) Yow(7) 147,428(5) 857(8) 117,405 147,428(5) 857(6)
Nicholas Khadder 162,500(5) 14,684(6) 78,624 162,500(5) 14,684(6)
William M. Smith 167,375(5) 10,294(6) 105,575 167,375(5) 10,294(6)


~~(1)~~	~~Includes termination of the employee’s employment by the company or its successor without “cause” and termination by the employee for “good reason.”~~

~~(2)~~

We estimate the value of the acceleration of options and restricted stock units held by the named executive officer based on the closing stock price of our common stock of $7.28 per share on December 30, 2016 (the last trading day of 2016), as reported on the NASDAQ Global Select Market, and the number of unvested in-the-money options and shares held by such named executive officer as of December 31, 2016.


~~(3)~~	~~The amount shown is equal to 12 months of Mr. Linthwaite’s base salary as of December 31, 2016.~~


~~(4)~~	The amount shown is equal to the cost of covering Mr. Linthwaite and his eligible dependents under our benefit plans for a period of 12 months, assuming that such coverage is timely elected under COBRA.


~~(5)~~	~~The amount shown is equal to six months of the named executive officer’s base salary as of December 31, 2016.~~


~~(6)~~	The amount shown is equal to the cost of covering the named executive officer and his or her eligible dependents under our benefit plans for a period of six months, assuming that such coverage is timely elected under COBRA for such U.S.-based named executive officer.


~~(7)~~	~~Based on conversion of Singapore Dollars (SGD) to US Dollars (USD) at a rate of 1 SGD to 0.6964USD, the average conversion rate for the period beginning December 1, 2016 to December 31, 2016.~~


~~(8)~~	Ms. Yow is based in Singapore and is not eligible to participate in COBRA. The amount shown is equal to the cost of covering Ms. Yow and her eligible dependents under the applicable health care benefit plan in Singapore for a period of six months.

In addition to the benefits described above, our 2011 Equity Incentive Plan, 2009 Equity Incentive Plan, 1999 Stock Option Plan, and 2017 Inducement Award Plan provide for full acceleration of all outstanding options in the event of a change of control of our company where the successor company does not assume our outstanding options and other awards in connection with such acquisition transaction. We estimate the value of this benefit for each named executive officer to be equal to the amount listed above in the column labeled “Equity Acceleration.”

~~-33-~~

~~Compensation of Non-Employee Directors~~

~~Compensation Policy~~

~~Non-employee directors receive an annual retainer for service on our board of directors and an annual retainer for service on committees of the board as set forth below:~~



~~Annual cash retainer for each non-employee director~~	~~$40,000~~
~~Annual cash retainer for each audit committee member~~	~~$10,000~~
~~Annual cash retainer for each compensation committee member~~	~~$7,000~~
~~Annual cash retainer for each nominating and corporate governance committee member~~	~~$5,000~~
~~Additional cash retainer for chairman of the board~~	~~$40,000~~
~~Additional cash retainer for chairman of the audit committee~~	~~$10,000~~
~~Additional cash retainer for chairman of the compensation committee~~	~~$8,000~~
~~Additional cash retainer for chairman of the nominating and corporate governance committee~~	~~$5,000~~

Additionally, we have adopted an outside director equity compensation policy to formalize the granting of equity compensation to our non-employee directors under our 2011 Equity Incentive Plan. During 2015 and until May 2016, the policy provided for automatic, nondiscretionary grants of nonstatutory stock options, subject to the terms and conditions of the policy and the 2011 Equity Incentive Plan.

Such policy provided for the automatic grant of an option to purchase 20,000 shares of our common stock to anyone who became a non-employee director on the date such person first became a non-employee director. An employee director who subsequently ceased to be an employee, but remained a director, would not receive such an initial award.

In addition, each non-employee director was automatically granted an annual stock option to purchase 10,000 shares of our common stock on the date of each annual meeting of stockholders beginning on the date of the first annual meeting of stockholders held after such non-employee director received his or her initial award.

On May 18, 2016, our nominating and corporate governance committee recommended, and our board of directors approved, revisions to the policy to provide that, effective as of such date, each initial award will consist of an option to purchase 15,000 shares of our common stock and 10,000 restricted stock units, or RSUs. Also effective as of such date, each annual award will consist of an option to purchase 5,000 shares of our common stock and 5,000 RSUs. The decision to provide RSUs in addition to stock option grants was made to lessen the dilutive impact of the awards under our equity incentive plan and to fix total equity compensation between the 25^th ~~and 50~~^th ~~percentiles of our peer group based upon a director compensation survey completed by Radford in March 2016.~~

As was the case prior to revision of the policy, non-employee directors remain eligible to receive all types of awards under the 2011 Equity Incentive Plan, except for incentive stock options, and may receive discretionary awards not covered by the policy.

The exercise price of all stock options granted pursuant to the policy will continue to be equal to or greater than the fair market value of our common stock on the date of grant and the term of all stock options will continue to be ten years. Subject to the adjustment provisions of the 2011 Equity Incentive Plan, initial awards of options will continue to vest, and initial awards of RSUs will vest as to 25% of the shares subject to such awards on each anniversary of the date of grant, provided such non-employee director continues to serve as a director through each such date. Subject to the adjustment provisions of the 2011 Equity Incentive Plan, 1/12^th of the shares subject to the annual option awards will continue to vest each month after the date of date and the annual RSU awards will vest in full on the earlier of the day prior to the next annual meeting of our stockholders or the one-year anniversary of the date of grant, in each case provided such non-employee director continues to serve as a director through each such date.

~~-34-~~

~~The administrator of the 2011 Equity Incentive Plan in its discretion may change or otherwise revise the terms of awards granted under the outside director equity compensation policy.~~

In the event of a “change of control,” as defined in our 2011 Equity Incentive Plan, with respect to awards granted under the 2011 Equity Incentive Plan to non-employee directors, the participant non-employee director will fully vest in and have the right to exercise awards as to all shares underlying such award regardless of performance goals, vesting criteria, or other conditions.

~~RSUs in Lieu of Cash and RSU Deferral~~

Beginning in 2017, non-employee directors can elect to receive an RSU award in lieu of 100% of their annual cash retainers payable for services to be rendered as a non-employee director, chairman and chair, or member of any board committee. RSUs elected in lieu of payments in cash vest quarterly, but settlement of the RSU’s can be deferred as described below

Additionally, beginning in 2017, we allowed non-employee directors to defer the settlement of their RSU grants until the earlier of a termination of the director’s service on our board of directors or a qualifying change in control.

~~-35-~~

~~2016 Director Compensation~~

The following table sets forth information concerning compensation paid or accrued for services rendered to us by members of our board of directors for the year ended December 31, 2016. The table excludes Mr. Worthington and Mr. Linthwaite, who are named executive officers and did not receive any compensation from us in their role as directors in 2016. Additionally, the table also excludes Dr. Paya and Mr. Barthelemy, who were each appointed to the board of directors in 2017.

Fees Earned or Paid in Cash ($) Stock Awards
($)(1) Option Awards ($)(1) Total
($)
Gerhard F. Burbach 65,000 52,250 20,973 138,223
Samuel D. Colella 97,000 52,250 20,973 170,223
Evan Jones 57,000 52,250 20,973 130,223
Patrick S. Jones 60,000 52,250 20,973 133,223
John A. Young 52,000 52,250 20,973 125,223

~~(1)~~

Amounts represent the aggregate grant date fair value of the equity awards calculated in accordance with Financial Accounting Standards Board ASC Topic 718, Stock Compensation, as amended, without regard to estimated forfeitures. See Note 9 of the notes to our audited consolidated financial statements for a discussion of valuation assumptions made in determining the grant date fair value and compensation expense of our stock options.

~~Director Equity Awards~~

~~The aggregate number of shares underlying stock options outstanding at December 31, 2016 for each non-employee director was as follows:~~

Aggregate Number of Shares Underlying Stock Options Outstanding as of
December 31, 2016 Aggregate Number of Shares Underlying Restricted Stock Units Outstanding as of
December 31, 2016
Gerhard F. Burbach 67,000 5,000
Samuel D. Colella 25,000 5,000
Evan Jones 91,000 5,000
Patrick S. Jones 91,000 5,000
John A. Young 78,340 5,000

~~The table above excludes Dr. Paya and Mr. Barthelemy, who were each appointed to the board of directors in 2017.~~

~~-36-~~

~~Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~

~~Equity Compensation Plan Information~~

~~The following table summarizes the number of outstanding options and~~ restricted stock units granted to ~~our~~ employees ~~consultants, and directors, as well as~~is measured based on the ~~number of shares of common stock remaining available for future issuance, under our equity compensation plans as of December 31, 2016.~~

Number of
Securities to be Issued Upon Exercise
of Outstanding Options, Warrants and
Rights (a)(4) Weighted
Average Exercise Price of Outstanding Options, Warrants and Rights (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
Equity compensation plans approved by security holders
   1999 Stock Option Plan (1) 4,951
$ 17.12
—
   2009 Equity Incentive Plan (2) 212,140
$ 6.37
—
   2011 Equity Incentive Plan (3) 4,360,176
$ 13.21
510,237
Equity compensation plans not approved by security holders (5) —
$ —
—
Total 4,577,267
$ 12.90
510,237


~~(1)~~	The 1999 Stock Option Plan was replaced by the 2009 Equity Incentive Plan in April 2009. A total of 381,495 shares remaining available for grant under the 1999 Stock Option Plan were transferred to the 2009 Equity Incentive Plan and the 1999 Stock Option Plan was terminated for any new grants.


~~(2)~~	The 2009 Equity Incentive Plan was replaced by the 2011 Equity Incentive Plan in February 2011. A total of 55,423 shares remaining available for grant under the 2009 Equity Incentive Plan were transferred to the 2011 Equity Incentive Plan and the 2009 Equity Incentive Plan was terminated for any new grants.

~~(3)~~

The 2011 Equity Incentive Plan provides that the number of shares available for issuance under the plan will include an annual increase on the first day of each fiscal year beginning in 2012, equal to the least of: (a) 1,000,000 shares; (b) 4.0% of the outstanding shares of common stock as of the last day of our immediately preceding fiscal year; or (c) such other amount as our board of directors may determine. Pursuant to the provision, an additional 1,000,000 shares became available for issuance under the 2011 Equity Incentive Plan, effective January 1, 2017.

~~(4)~~

This column does not reflect awards of options assumed in acquisitions where the plans governing the awards were not available for future awards as of December 31, 2014. As of December 31, 2014, individual awards of options to purchase a total of 56,327 shares were outstanding pursuant to awards assumed in connection with our acquisition of DVS Sciences, Inc. and granted under DVS’s 2010 Equity Incentive Plan at a weighted-average exercise price of $4.12.


~~(5)~~	This table above does not reflect amounts available for issuance under the Fluidigm 2017 Inducement Award Plan, or 2017 Inducement Plan, which was approved by the board in January 2017. As of March 31, 2017, a total of 2,000,000 shares of Fluidigm common stock remained available for issuance under the 2017 Inducement Plan.

~~Material Features of the 2017 Inducement Award Plan~~

The 2017 Inducement Award Plan, or 2017 Inducement Plan, was established by the board in January 2017 with the purpose of attracting, retaining and incentivizing employees in furtherance of Fluidigm’s success. In accordance with NASDAQ rules, this plan is used to offer equity awards as material inducements for new employees to join Fluidigm. As of January 5, 2017, 2,000,000 shares of common stock were reserved solely for the granting of inducement stock options, restricted stock, restricted stock units and other awards. The 2017 Inducement Plan provides for the granting of stock options with exercise prices equal to theclosing fair market value of our common stock on the date of grant. AsThe fair value of ~~March 31, 2017, a total~~options and stock purchases under ESPP on the grant date is estimated using the Black-Scholes option-pricing model, which requires the use of ~~2,000,000 shares of Fluidigm common stock remained available for issuance under~~certain subjective assumptions, including expected term, volatility, risk-free interest rate and the ~~2017 Inducement Plan.~~

~~-37-~~

~~Security Ownership of Certain Beneficial Owners and Management~~

~~Except as indicated by the footnotes below, the following table sets forth information as of April 14, 2017 concerning:~~

~~Each person who we know beneficially owns more than five percent~~fair value of our common ~~stock;~~stock. These assumptions generally require significant judgment. We determine the expected volatility based on our historical stock price volatility generally commensurate with the estimated expected term of the stock awards. The expected term of an award is based on historical forfeiture experience, exercise activity, and the terms and conditions of the stock awards. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to each grant’s expected term. We account for forfeitures as they occur.

~~Each~~

Income Taxes

We use the asset and liability method to account for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, and any valuation allowance recorded against our deferred tax assets. Our provision for income taxes generally consists of tax expense/benefit related to current period earnings/losses.

As part of the process of preparing our consolidated financial statements, we continuously monitor the circumstances impacting the expected realization of our ~~directors~~deferred tax assets for each jurisdiction. We consider all available evidence, including historical operating results in each jurisdiction, expectations and ~~nominees~~risks associated with estimates of future taxable income, and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. To the extent a deferred tax asset cannot be recognized, a valuation allowance is established to reduce our deferred tax assets to the amount that is more likely than not to be realized. These deferred tax assets primarily consist of net operating loss carryforwards, research and development tax credits, and stock-based compensation. We intend to maintain such valuation allowance until sufficient evidence exists to support its reduction. Our deferred tax liabilities primarily consist of book and tax basis differences in fixed

assets and acquired identifiable intangible assets. We make estimates and judgments about our future taxable income that are based on assumptions that are consistent with our plans and estimates. Should the actual amounts differ from our estimates, the amount of our valuation allowance could be materially impacted. Changes in these estimates may result in significant increases or decreases to our tax provision in a period in which such estimates are changed, which in turn would affect net income or loss.

We recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Any interest and penalties related to uncertain tax positions are reflected in the income tax provision.

The Tax Cuts and Jobs Act (the Tax Act) was enacted in December 2017. The Tax Act introduced a broad range of tax reform measures that significantly changed the federal income tax laws. At December 31, 2017, we recorded the provisional income tax effects of the Tax Act in accordance with ASU No. 2018-05, Income Taxes (Topic 740). Due to our having recorded a full valuation allowance against its U.S. federal and state deferred tax assets, there was no net impact on our tax provision as a result of the remeasurement of U.S. deferred taxes using the relevant tax rate at which we expect them to reverse. The one-time transition tax on post-1986 foreign unremitted earnings did not have a material impact to our effective tax rate as a result of our generating net foreign deficit earnings. In accordance with Staff Accounting Bulletin (SAB No. 118, we completed the accounting related to tax reform in the fourth quarter of 2018 and no material adjustments to the provisional tax expense were required. We continue to monitor supplemental legislation and technical interpretations of the tax law that may cause the final impact from the Tax Act to differ from the amounts previously recorded.

At December 31, 2017, we changed our permanent reinvestment assertion and will not permanently reinvest our foreign earnings outside the United States. The cash generated from some of our foreign subsidiaries may be used domestically to fund operations. Any domestic, foreign withholding tax and state taxes that may be due upon future repatriation of earnings is not expected to be significant.

Inventory Valuation

Inventories are stated at the lower of cost (on a first-in, first-out basis) or net realizable value. Inventory costs include direct materials, direct labor, and normal manufacturing overhead. Finished goods that are used for research and development are expensed as consumed or depreciated over their period of use. We regularly review inventory for excess and obsolete products and components. Provisions for slow-moving, excess, and obsolete inventories are recorded when required to reduce inventory values to their estimated net realizable values based on product life cycle, development plans, product expiration, and quality issues.

Recent Accounting Changes and Accounting Pronouncements

Adoption of New Accounting Guidance

In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers (Topic 606). Topic 606 and its related amendments supersede Revenue Recognition (Topic 605), issued in June 2010, and provide principles for recognizing revenue for goods and services in a manner consistent with the transfer of control of those goods and services to the customer.

We adopted Topic 606 on January 1, 2018, using the modified retrospective method applied to those contracts with unrecognized revenue on the adoption date. We recognized the effect of applying the new revenue standard by recording a cumulative catch-up adjustment that reduced the accumulated deficit component of stockholders’ equity by $0.4 million and increased current assets by $0.2 million and non-current assets by $0.2 million. The adjustment capitalized certain sales commission costs that were incurred to obtain instrument service contracts. Under Topic 605, we accounted for these incremental contract acquisition costs by recognizing them as expense at the point the contract was awarded. Under Topic 606, the costs are capitalized and amortized to expense over the life of the contract, which is generally one to three years. The comparative information for periods prior to January 1, 2018, has not been restated and continues to be reported in accordance with Topic 605.

The following table summarizes the cumulative effect of adopting Topic 606 on amounts previously reported in our consolidated balance sheet at December 31, 2017 (in thousands):



	Balance at December 31, 2017			Topic 606 Transition Adjustments		Balance at January 1, 2018
Prepaid expenses and other current assets	$	1,528		$	153	$	1,681
Total current assets	$	94,801		$	153	$	94,954
Other non-current assets	$	7,541		$	205	$	7,746
Total assets	$	287,351		$	358	$	287,709
Accumulated deficit	$	(500,196	)	$	358	$	(499,838	)
Total stockholders' equity	$	30,935		$	358	$	31,293
Total liabilities and stockholders' equity	$	287,351		$	358	$	287,709

The following table summarizes the impacts on our consolidated statement of operations of adopting Topic 606 compared to Topic 605 for the twelve months ended December 31, 2018 (in thousands):



	As Reported			Balance Without Adoption of Topic 606			Effect of Change
	Twelve Months Ended December 31, 2018
Selling, general and administrative	$	79,783		$	79,859		$	(76	)
Total costs and expenses	$	161,128		$	161,204		$	(76	)
Loss from operations	$	(48,164	)	$	(48,240	)	$	76
Loss before income taxes	$	(61,420	)	$	(61,496	)	$	76
Net loss	$	(59,013	)	$	(59,089	)	$	76

The following table summarizes the impacts on our consolidated balance sheet of adopting Topic 606 compared to Topic 605 at December 31, 2018 (in thousands):



	As Reported		Balance Without Adoption of Topic 606		Effect of Change
			December 31, 2018
Prepaid expenses and other current assets	$	2,051	$	1,884	$	167
Total current assets	$	127,106	$	126,939	$	167
Other non-current assets	$	6,208	$	5,941	$	267
Total assets	$	303,647	$	303,213	$	434
Stockholders' equity	$	72,116	$	71,682	$	434
Total liabilities and stockholders' equity	$	303,647	$	303,213	$	434

In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. This ASU allows SEC reporting companies to record provisional amounts in earnings for the year ended December 31, 2017, due to the complexities involved in accounting for the enactment of the Tax Act. We recognized the estimated income tax effects of the Tax Act in its 2017 Consolidated Financial Statements in accordance with SEC Staff Accounting Bulletin No. 118. In accordance with SAB No. 118, we completed the accounting related to tax reform in the fourth quarter of 2018 and no material adjustments to the provisional tax expense were required. Refer to Note 10 of the consolidated financial statements in the Form 10-K for the fiscal year ended December 31, 2018 for further information regarding the provisional amounts recorded by the Company.

In August 2016, the FASB issued ASU 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The ASU addresses eight specific cash flow issues and their presentation within the statement of cash flows. We adopted this ASU in the first quarter of 2018. The adoption of this ASU did not have a material impact on our consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash, a consensus of the FASB’s Emerging Issues Task Force, which amended the presentation of restricted cash within the statement of cash flows. The new guidance requires restricted cash be included within cash and cash equivalents on the statement of cash flows. We adopted this ASU in the first quarter of 2018. The adoption of this ASU did not have a material impact on our consolidated financial statements.

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-15 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) which establishes new guidance on the accounting for costs incurred to implement a cloud computing arrangement that is considered a service arrangement. The new guidance requires the capitalization of such costs, aligning it with the accounting for costs associated with developing or obtaining internal-use software. The new guidance is effective for fiscal years beginning after December 15, 2019. We are currently evaluating the impact of adoption on its consolidated financial statements.

In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use (ROU) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating; the classification will impact the expense recognition in the income statement.

A Modified Retrospective Transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. We expect to adopt the new standard on January 1, 2019 and use the effective date as our date of initial application. Consequently, financial information will not be updated, and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. For dates and periods prior to January 1, 2019, the original disclosures under ASC 840 will be disclosed.

The new standard provides several optional practical expedients upon transition. We expect to elect the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification, and initial direct costs. We do not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us.

We expect that this standard will have a material effect on our financial statements. While we continue to assess all the effects of adoption, we currently believe the most significant effects relate to the recognition of new ROU assets and lease liabilities on our balance sheet for our building, vehicle and equipment leases. On adoption, we currently expect to recognize $8.0 million to $11.0 million of additional operating liabilities, based on the present value of the remaining fixed rental payments under current leasing standards for existing operating leases, with corresponding ROU assets of approximately $6.0 million to $9.0 million. The difference between the initial lease liability and right of use asset is attributable to deferred rent. We do not expect any impact on retained earnings from the adoption of ASC 842.

The new standard also provides certain accounting elections for an entity’s ongoing accounting. We currently expect to elect the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities. We also currently expect to elect to not separate lease and nonlease components for our building leases and to take a portfolio approach for our vehicle leases by country.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The ASU eliminates the requirement for an entity to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, an entity performs its annual, or interim, goodwill impairment testing by comparing the fair value of a reporting unit with its carrying amount and recording an impairment charge for the amount by which the carrying amount exceeds the fair value. The ASU will be effective for annual and interim goodwill impairment testing performed for our fiscal year beginning January 1, 2020, with early adoption permitted. We are currently evaluating the effect that the updated standard will have on our consolidated financial statements.

Results of Operations

The following table presents our historical consolidated statements of operations data for the years ended December 31, 2018, 2017, and 2016, and as a percentage of total revenue for the respective years (in thousands):



	Year Ended December 31,
	2018					2017					2016
Revenue:
Total revenue	$	112,964		100	%	$	101,937		100	%	$	104,446		100	%
Cost of sales:
Cost of product revenue	44,861			39		45,039			44		41,110			39
Cost of service revenue	6,454			6		4,916			5		4,899			5
Total cost of sales	51,315			45		49,955			49		46,009			44
Gross profit	61,649			55	%	51,982			51	%	58,437			56	%
Operating expenses:
Research and development	30,030			27		30,826			30		38,415			37
Selling, general and administrative	79,783			71		79,516			78		93,212			89
Total operating expenses	109,813			98		110,342			108		131,627			126
Loss from operations	(48,164		)	(43	)	(58,360		)	(57	)	(73,190		)	(70	)
Interest expense	(13,893		)	(12	)	(5,824		)	(6	)	(5,820		)	(6	)
Other income (expense), net	637			1		385			1		(1,167		)	(1	)
Loss before income taxes	(61,420		)	(54	)	(63,799		)	(62	)	(80,177		)	(77	)
Benefit from income taxes	2,407			2		3,264			3		4,192			4
Net loss	$	(59,013	)	(52	)%	$	(60,535	)	(59	)%	$	(75,985	)	(73	)%

Revenue

We generate revenue primarily from sales of our products and services, and license agreements. Our product revenue consists of sales of instruments and consumables. Consumable revenues are largely driven by the size of our installed base of instruments and the annual level of pull-through per instrument. Service revenue is linked to our sales of instruments as our service revenue consists of post-warranty service contracts, preventive maintenance plans, instrument parts, installation and training. Our license revenue is generated primarily in the United States and relates to licensing our technology to third-parties.

We sell our instruments to leading academic research institutions, translational research and medicine centers, cancer centers, clinical research laboratories, and biopharmaceutical, biotechnology, contract research organizations, and Ag-Bio companies. No single customer represented more than 10% of our total revenue for 2018, 2017, or 2016. Revenue from our five largest customers was 17%, 14% and 15% of total revenue in 2018, 2017, and 2016, respectively.

The following table presents our revenue by source for the years ended December 31, 2018, 2017, and 2016, and as a percentage of total revenue for the respective years (in thousands):



	Year Ended December 31,												Change
	2018				2017				2016				2018		2017
Revenue:
Instruments	$	45,491	40	%	$	42,505	42	%	$	46,834	45	%	7	%	(9	)%
Consumables	48,159		43		41,894		41		42,169		40		15	%	(1	)%
Product revenue	93,650		83	%	84,399		83	%	89,003		85	%	11	%	(5	)%
Service revenue	19,314		17		17,348		17		15,205		15		11	%	14	%
License revenue	—		—		190		—		238		—		(100	)%	(20	)%
Total revenue	$	112,964	100	%	$	101,937	100	%	$	104,446	100	%	11	%	(2	)%

The following table presents our total revenue by geographic area of our customers and as a percentage of total revenue for each year presented (in thousands):



	Year Ended December 31,												Change
	2018				2017				2016				2018		2017
Americas	$	51,172	46	%	$	49,290	48	%	$	56,229	54	%	4	%	(12	)%
EMEA	36,617		32		32,642		32		29,739		28		12	%	10	%
Asia-Pacific	25,175		22		20,005		20		18,478		18		26	%	8	%
Total revenue		$112,964	100	%		$101,937	100	%		$104,446	100	%	11	%	(2	)%

The Americas revenue includes revenue generated in the United States of $48.1 million, $45.8 million, and $52.6 million for 2018, 2017 and 2016, respectively.

Total Revenue

Total revenue increased by $11.0 million or 11%, to $113.0 million for 2018 compared to $101.9 million for 2017, primarily due to increased sales of our mass cytometry instruments and related service revenues, mass cytometry consumables, and microfluidics consumables. Revenue grew in 2018 compared to the prior year across all regions for both products and services. The significant growth in the Asia-Pacific region primarily reflects mass cytometry instrument and consumables growth in Japan and China. Changes in foreign currency exchange rates had a minimal impact on revenue in 2018.

Total revenue decreased by $2.5 million, or 2%, to $101.9 million for 2017 compared to $104.4 million for 2016. The revenue decrease was predominantly in the United States, partially offset by increases in Europe and Asia-Pacific. The decrease in the United States was mainly attributable to lower instrument sales, particularly our single-cell systems, partially offset by an increase in service revenue. The increases in Europe and Asia-Pacific were primarily driven by higher mass cytometry product sales, partially offset by a decrease in sales of our single-cell products.

Product Revenue

Product revenue increased by $9.3 million, or 11%, to $93.7 million for 2018 from $84.4 million in 2017. Instrument sales increased $3.0 million, or 7% in 2018 compared to 2017, due to higher mass cytometry instrument sales in the Americas and Asia-Pacific from higher unit volumes and average selling prices, partially offset by softer microfluidic instrument sales in both regions. Instrument sales in EMEA declined in 2018 compared to 2017, with softer mass cytometry instrument sales partially offset by higher microfluidic instrument sales.

Consumables sales increased $6.3 million, or 15% in 2018 compared to 2017, due to unit volume growth in both mass cytometry and microfluidic consumables, which comprise the bulk of our microfluidics business. Asia-Pacific and EMEA experienced strong growth in both mass cytometry and microfluidics consumables year-over-year. Total consumables sales in the Americas were essentially flat in 2018 versus 2017, with growth in mass cytometry offset by declines in microfluidics.

Product revenue decreased by $4.6 million, or 5%, to $84.4 million for 2017 compared to $89.0 million for 2016. Instrument revenue decreased by $4.3 million, or 9%, to $42.5 million for 2017 compared to 2016, predominately due to lower unit sales of our microfluidics instruments and particularly our C1 systems, partially offset by higher unit sales of our mass cytometry instruments. Consumables revenue decreased by $0.3 million, or 1%, to $41.9 million for 2017 compared to 2016, largely attributable to decreased unit sales of single-cell consumables and lower average selling prices for most consumables, partially offset by increased unit sales of mass cytometry reagents.

We expect the average selling prices of our products to fluctuate over time based on market conditions, product mix, and currency fluctuations.

Service Revenue

Service revenue increased by $2.0 million, or 11%, to $19.3 million for 2018 compared to 2017. Service revenue increased by $2.1 million, or 14%, to $17.3 million for 2017 compared to 2016. The increases in both 2018 and 2017 were primarily due to an increase in instruments under post-warranty service contracts as a result of growth in mass cytometry instruments. Revenue from post-warranty service contracts generally lags changes our instrument revenue by one year.

Cost of Product and Service Revenue

Cost of product revenue includes manufacturing costs incurred in the production process, including component materials, labor and overhead, installation, packaging, and delivery costs. In addition, cost of product revenue includes amortization of developed technology and intangibles, royalty costs for licensed technologies included in our products, warranty, provisions for slow-moving and obsolete inventory, and stock-based compensation expense. Cost of service revenue includes direct labor hours, overhead and instrument parts. While margins vary between product and service offerings, in general, instruments have the lowest profit margin, while margins on consumables tend to be higher than instrument margins. Service margins tend to be between the instrument and consumable margins.

The following table presents our cost of product and service revenue, total cost of sales, product and service margin, and gross margin for each year presented (in thousands):



	Year Ended December 31,
	2018			2017			2016
Cost of product revenue	$	44,861		$	45,039		$	41,110
Cost of service revenue	6,454			4,916			4,899
Total cost of sales	$	51,315		$	49,955		$	46,009

Product margin	52.1		%	46.6		%	53.8		%
Service margin	66.6		%	71.7		%	67.8		%
Gross margin	54.6		%	51.0		%	55.9		%

Product margin increased 5.5 percentage points in 2018 compared to 2017. The year-over-year increase in product margin was due to favorable manufacturing capacity utilization and product mix, coupled with the impact of fixed amortization on a higher revenue base in 2018.

Product margin decreased 7.0 percentage points in 2017 compared to 2016, primarily driven by increased microfluidic unit product costs from lower production volumes, higher excess and obsolete inventory expense and, to a lesser extent, lower average selling prices across most of the products, and the impact of fixed amortization on a lower revenue base in 2017. Favorable product mix partially offsets these negative factors.

Service margin decreased 5.1 percentage points during 2018 compared to 2017. Service margin decreased primarily due to product mix, with a greater percentage of service revenue coming from servicing mass cytometry products than microfluidics products. Service costs tend to be higher for mass cytometry instruments compared to microfluidic instruments as the servicing is more labor-intensive.

Service margin increased 3.9 percentage points during 2017 compared to 2016, mainly due to lower labor costs driven by product mix.

Operating Expenses

The following table presents our operating expenses for each year presented (in thousands):



	Year Ended December 31,						2018 vs. 2017 change		2017 vs. 2016 change
	2018		2017		2016		2018 vs. 2017 change		2017 vs. 2016 change
Research and development	$	30,030	$	30,826	$	38,415	(3	)%	(20	)%
Selling, general and administrative	79,783		79,516		93,212		—	%	(15	)%
Total operating expenses	$	109,813	$	110,342	$	131,627	—	%	(16	)%

Research and Development

Research and development expense consists primarily of personnel and independent contractor costs, prototype and material expenses and other allocated facilities, and information technology expenses. We have made substantial investments in research and development since our inception. Our research and development efforts have focused primarily on enhancing our technologies and supporting development and commercialization of new and existing products and services.

Research and development expense decreased by $0.8 million, or 3%, to $30.0 million for 2018 compared to $30.8 million for 2017, as a result of the lower severance and employee-related expenses.

Research and development expense decreased by $7.6 million, or 20%, to $30.8 million for 2017. The decrease in research and development expense for 2017 was primarily attributable to our cost-savings initiatives, which included headcount and compensation savings of $3.6 million. In addition, product materials and supplies costs decreased by $3.1 million mainly due to fewer projects in 2017 driven by our strategic realignment and focus.

We believe that our continued investment in research and development is essential to our long-term competitive position and that these expenses may increase in future periods.

Selling, General and Administrative

Selling, general and administrative expense consists primarily of personnel costs for our sales, marketing and administrative employees, facilities, depreciation and professional services, such as legal and accounting services.

Selling, general and administrative expense increased by $0.3 million, or 0%, to $79.8 million for 2018 compared to $79.5 million for 2017. The increase in 2018 was primarily due to higher headcount-related costs.

Selling, general and administrative expense decreased by $13.7 million or 15% to $79.5 million for 2017 compared to $93.2 million for 2016. This decrease for 2017 was primarily due to our cost-savings initiatives, which included infrastructure and facilities savings of $3.4 million. In addition, we had lower net legal expenses of $6.2 million mainly attributable to settlements in 2017 of previously pending litigations, a decrease in outside services of $1.5 million, a decrease in travel expenses of $1.2 million and a decrease in recruiting costs of $1.1 million.

Interest Expense and Other Income (Expense), Net

The following table presents these items for each year presented (in thousands):



	Year Ended December 31,									2018 vs. 2017 change		2017 vs. 2016 change
	2018			2017			2016			2018 vs. 2017 change		2017 vs. 2016 change
Interest expense	$	(13,893	)	$	(5,824	)	$	(5,820	)	(139	)%	—	%
Other income (expense), net	637			385			(1,167		)	(65	)%	133	%
Total	$	(13,256	)	$	(5,439	)	$	(6,987	)	(144	)%	22	%

As noted above in Critical Accounting Policies, in March 2018, we entered into privately negotiated transactions with certain holders of our 2014 Notes to exchange $150.0 million in aggregate principal amount of the 2014 Notes for $150.0 million in aggregate principal amount of our new 2.75% Exchange Convertible Senior Notes due 2034. As the 2018 Notes are convertible, at our election, into cash, shares of our common stock, or a combination of cash and shares of our common stock. we accounted for the 2018 Notes under the cash conversion guidance in ASC 470. Because of this conversion option, along with a redemption premium, the net effective interest rate for the 2018 Notes is higher than the 2014 Notes. The effective interest rate on the 2014 Notes and the 2018 Notes is approximately 3.0% and 12.3%, respectively. The majority of the difference in effective interest rates is due to non-cash amortization of debt discounts. With the higher effective interest rate, interest expense increased in 2018 as compared to 2017 and 2016.

Other income, net, of $0.6 million for 2018 is primarily attributable to $0.6 million of interest income. Other income, net, of $0.4 million for 2017 includes $0.3 million of interest income. Other expense, net, of $1.2 million for 2016 was mainly associated with losses of $1.5 million from revaluation of certain foreign currency denominated assets and liabilities, partially offset by $0.3 million of interest income.

Benefit from Income Taxes

We recorded a tax benefit of $2.4 million, or an effective tax rate benefit of 3.9%, for the year ended December 31, 2018. The tax benefit was principally due to the amortization of our acquisition-related deferred tax liability, partially offset by net income tax expense from our foreign operations and unrecognized tax benefits.

We recorded a tax benefit of $3.3 million, or an effective tax rate benefit of 5.1%, for the year ended December 31, 2017. This tax benefit was primarily attributable to amortization of our acquisition-related deferred tax liability.

We recorded a tax benefit of $4.2 million, or an effective tax rate benefit of 5.2% for the year ended December 31, 2016. The tax benefit was principally due to the amortization of our acquisition-related deferred tax liability, partially offset by net income tax expense from our foreign operations and unrecognized tax benefits.

Liquidity and Capital Resources

Sources of Liquidity

As of December 31, 2018, our principal sources of liquidity consisted of $95.4 million of cash and cash equivalents.

The following table presents our cash flow summary for each year presented (in thousands):



	Year Ended December 31,
	2018			2017			2016
Cash flow summary:
Net cash used in operating activities	$	(25,201	)	$	(24,098	)	$	(39,138	)
Net cash provided by investing activities	4,719			17,658			45,102
Net cash provided by financing activities	57,660			28,997			116
Net increase in cash and cash equivalents	37,345			23,011			5,928

Net Cash Used in Operating Activities

We derive cash flows from operations primarily from cash collected from the sale of our products and services, and license agreements. Our cash flows from operating activities are also significantly influenced by our use of cash for operating expenses and working capital to support the business. We have historically experienced negative cash flows from operating activities as we have expanded our business and built our infrastructure domestically and internationally.

Net cash used in operating activities in 2018 was $25.2 million and consisted of net loss of $59.0 million less non-cash adjustments of $36.3 million, and a net increase in assets and liabilities of $2.5 million. Non-cash items primarily included amortization of developed technology of $11.2 million, stock-based compensation expense of $11.0 million, amortization of debt discounts and issuance costs of $8.4 million and depreciation and amortization of $5.4 million. The net increase in assets

and liabilities was primarily due to lower accrued liabilities for retention bonuses, which were paid in November 2018 in the form of stock.

Net cash used in operating activities in 2017 was $24.1 million and consisted of net loss of $60.5 million less non-cash adjustments of $27.2 million, and a net reduction in assets and liabilities of $9.2 million. Non-cash items primarily included amortization of developed technology of $11.2 million, stock-based compensation expense of $9.1 million, and depreciation and amortization of $7.4 million. The net change in assets and liabilities was primarily driven by a decrease in inventory, an increase in deferred revenue, an increase in other liabilities and a decrease in prepaid expenses and other current assets.

Net cash used in operating activities in 2016 was $39.1 million and consisted of net loss of $76.0 million less non-cash adjustments of $32.1 million, and a net decrease in assets and liabilities of $4.7 million. Non-cash items primarily included stock-based compensation expense of $13.9 million, amortization of developed technology of $11.2 million, and depreciation and amortization of $6.7 million. The net change in assets and liabilities was primarily driven by a decrease in accounts receivable, offset by an increase in inventory and a decrease in accounts payable.

Net Cash Provided by Investing Activities

Our primary investing activities consist of purchases, sales, and maturities of our short-term investments and to a much lesser extent, capital expenditures for manufacturing, laboratory, computer equipment and software to support our infrastructure and work force. We expect to continue to incur costs for capital expenditures for demonstration units and loaner equipment to support our sales and service efforts, and computer equipment and software to support our business operations. However, we may choose to decrease or defer certain capital expenditures and development activities, while further optimizing our organization.

Net cash provided by investing activities in 2018 was $4.7 million, which included proceeds from sales and maturities of investments of $6.5 million, offset by purchases of investments of $1.5 million and capital expenditures of $0.4 million to support our commercial and manufacturing operations.

Net cash provided by investing activities in 2017 was $17.7 million, which included proceeds from sales and maturities of investments of $25.6 million, offset by purchases of investments of $6.3 million and capital expenditures of $1.6 million to support our commercial and manufacturing operations.

Net cash provided by investing activities in 2016 was $45.1 million, which included proceeds from sales and maturities of investments of $86.4 million and proceeds from the sale of investment in Verinata of $2.3 million, offset by purchases of investments of $38.6 million and capital expenditures of $5.1 million to support our commercial and manufacturing operations.

Net Cash Provided by Financing Activities

We generated cash from financing activities of $57.7 million during 2018. Approximately $59.5 million was generated from a public offering of our common stock. The remainder reflects the proceeds from stock option exercises and ESPP purchases, offset by debt and equity issuance costs and payments of taxes for the net settlement of equity awards. We generated cash from financing activities of $29.0 million during 2017, primarily due to a public equity offering. In 2016, we generated cash of $0.1 million, primarily from proceeds received in connection with the exercise of options for our common stock.

Capital Resources

At December 31, 2018 and December 31, 2017, our working capital, excluding deferred revenues, was $101.0 million and $71.6 million, respectively, including cash and cash equivalents of $95.4 million and $58.1 million, respectively, and short-term investments of $0.0 million and $5.1 million, respectively.

In February 2014, we closed an underwritten public offering of $201.3 million in aggregate principal amount of our 2.75% Senior Convertible Notes due 2034 (2014 Notes). In March 2018, we entered into privately negotiated transactions with certain holders of our 2014 Notes to exchange $150.0 million in aggregate principal amount of the 2014 Notes for $150.0 million in aggregate principal amount of our new 2.75% Exchange Convertible Senior Notes due 2034 (2018 Notes). Following the exchange transactions, approximately $51.3 million in aggregate principal amount of 2014 Notes remained outstanding. Our board of ~~directors;~~

~~Each~~directors determined that the private exchange transactions were in our best interest and in the best interest of our ~~named executive officers;~~stockholders following substantial review with management and

~~All~~ our financial advisors concerning the amount of our ~~directors~~outstanding indebtedness relative to the market capitalization of our common stock and, ~~executive officers~~in particular, obligations under the

indenture for the 2014 Notes that could require us to repurchase the 2014 Notes beginning in 2021 at a repurchase price equal to the aggregate principal amount of the 2014 Notes (approximately $201.3 million prior to the exchange). The principal differences between the 2014 Notes and the 2018 Notes are the following:

The date on which we may be first required to repurchase the 2018 Notes has been extended to February 2023, compared to February 2021 under the 2014 Notes. In addition, while the applicable cash repurchase price for the 2014 Notes is 100% of the outstanding principal amount, the cash repurchase price for the 2018 Notes is based on a formula that would result in the 2018 Notes being redeemed for up to an amount equal to 120% of the original principal amount, plus, in each case, accrued and unpaid interest.

The initial conversion price under the 2018 Notes is approximately $7.88, as compared to approximately $55.94 under the 2014 Notes. As a result, each of the outstanding 2018 Notes is initially convertible into 126.9438 shares of our common stock per $1,000 principal amount, while the 2014 Notes are initially convertible into 17.8750 shares of our common stock per $1,000 principal amount.

Under the supplemental indenture for the 2018 Notes, we may at any time cause the then-outstanding 2018 Notes to be converted into shares of our common stock at the then-applicable 2018 Note conversion price if the volume weighted average price of our common stock is at least 110% of the applicable 2018 Note conversion price on each applicable trading day over a period specified in the supplement indenture for the 2018 Notes. Under the indenture for the 2014 Notes, we may only redeem the 2014 Notes for cash under certain circumstances during the period from February 6, 2018, through February 6, 2021.

Under certain circumstances such as a ~~group.~~“fundamental change” (as defined in the applicable indenture) that occurs prior to (i) February 6, 2021, in the case of the 2014 Notes and (ii) February 6, 2023, in the case of the 2018 Notes, holders of the Notes are entitled to a “make-whole” premium that will result in an increase in the applicable conversion rate. Under the terms of the 2018 Notes (but not the 2014 Notes), holders will be entitled to receive additional shares reflecting the economic equivalent of approximately two years of additional coupon payments, subject to certain limitations, in connection with a voluntary conversion by the noteholder prior to our exercise of our early conversion option.

~~Unless otherwise noted below,~~

The foregoing summaries of the ~~address~~2014 Notes, the 2018 Notes, and the exchange transactions completed in March 2018 are not complete and are qualified in their entirety by the applicable indentures, forms of ~~each person listed on~~global notes, and other agreements and documents filed with the ~~table is c/o~~Securities and Exchange Commission with respect to the 2018 Notes and the exchange, and investors should refer to the text of the Second Supplemental Indenture, dated March 6, 2018, between Fluidigm Corporation ~~7000 Shoreline Court, Suite 100, South San Francisco, California 94080.~~and U.S. Bank National Association and the Form of Global Note included in the Second Supplemental Indenture, which are incorporated by reference as Exhibits 4.6 and 4.7, respectively, in our Annual Report on Form 10-K for the year ended December 31, 2017. With respect to the 2014 Notes, of which approximately $51.3 million in aggregate principal amount remains outstanding, investors should refer to the text of the Indenture, dated as of February 4, 2014, by and between Fluidigm Corporation and U.S. Bank National Association, the First Supplemental Indenture, dated as of February 4, 2014, by and between Fluidigm Corporation and U.S. Bank National Association, and the Form of Global Note included in the First Supplemental Indenture which are incorporated by reference as Exhibits 4.2, 4.3 and 4.4, respectively, in our Annual Report on Form 10-K for the year ended December 31, 2017.

On August 2, 2018, we entered into a Revolving Credit Facility with Silicon Valley Bank, which matures on August 2, 2020. Amounts drawn under the Revolving Credit Facility will be used for working capital and general corporate purposes. As of December 31, 2018, total availability under the Revolving Credit Facility was $12.3 million. We currently have no outstanding debt under the Revolving Credit Facility, and we are in compliance with all the terms and conditions of the loan agreement governing the Revolving Credit Facility. See Note 6 to the Consolidated Financial Statements included in this Form 10-K for more information about the Revolving Credit Facility.

In early 2017, we implemented a retention incentive plan that provided for payment of cash bonuses in January 2019 to plan participants who were employees at the time the plan was implemented and who remained with Fluidigm through January 1, 2019. In September 2018, certain plan participants were permitted to elect to surrender their right to receive all or a portion of the cash bonus in exchange for fully vested restricted stock units issued under our 2011 Equity Incentive Plan. Among other reasons, our compensation committee adopted the exchange program to encourage employee stock ownership and to effectively manage cash resources. Participants opted to exchange approximately $2.4 million of cash bonus payments for approximately 380,000 fully vested RSUs issued in November 2018. The cash bonus payments payable in January 2019 for plan participants that remain employed with Fluidigm through January 1, 2019 is approximately $3.3 million.

We believe our existing cash, cash equivalents, and investments will be sufficient to meet our working capital and capital expenditure needs for at least the next 18 months. However, we may experience lower than expected cash generated from operating activities or greater than expected capital expenditures, cost of revenue, or operating expenses, and we may need to raise additional capital to fund our operations, further our research and development activities, or acquire or invest in a business. Our future funding requirements will depend on many factors, including market acceptance of our products, the cost of our research and development activities, the cost of filing and prosecuting patent applications, the cost associated with litigation or disputes relating to intellectual property rights or otherwise, the cost and timing of regulatory clearances or approvals, if any, the cost and timing of establishing additional sales, marketing, and distribution capabilities, the cost and timing of establishing additional technical support capabilities, and the effect of competing technological and market developments. In the future, we may acquire businesses or technologies from third parties, and we may decide to raise additional capital through debt or equity financing to the extent we believe this is necessary to successfully complete these acquisitions.

If we require additional funds in the future, we may not be able to obtain such funds on acceptable terms, or at all. If we raise additional funds by issuing equity securities, our stockholders could experience dilution. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any additional debt or equity financing that we raise may contain terms that are not favorable to us or our stockholders. If we do not have, or are not able to obtain, sufficient funds, we may have to delay development or commercialization of our products or license to third parties the rights to commercialize products or technologies that we would otherwise seek to commercialize. We also may have to reduce marketing, customer support, research and development, or other resources devoted to our products.

Off-Balance Sheet Arrangements

Since our inception, we have not had any off-balance sheet arrangements as defined in Item 303(a)(4) of the Securities and Exchange Commission’s Regulation S-K.

Contractual Obligations and Commitments

The following summarizes our contractual obligations as of December 31, 2018 (in thousands):



	Payments Due by Period
	Total		Less than 1 Year		1-3 Years		3-5 Years		Thereafter
Long term debt obligations	$	271,725	$	5,534	$	11,069	$	189,074	$	66,048
Operating lease obligations, net	9,578		3,664		3,294		1,379		1,241
Purchase obligations	1,596		1,596		—		—		—
Total	$	282,899	$	10,794	$	14,363	$	190,453	$	67,289

Debt obligations include the principal amount of the Notes and interest payments to be made under the Notes. Although the Notes mature in 2034, they can be converted into cash and shares of our common stock prior to maturity if certain conditions are met. See Note 6 to our consolidated financial statements for additional information regarding the terms of the Notes.

Our operating lease obligations, net of sublease income, relate to leases for our current headquarters and leases for manufacturing and office space for our foreign subsidiaries. Purchase obligations consist of contractual and legally binding commitments to purchase goods and services.

We lease facilities and equipment under non-cancelable lease agreements expiring at various times through 2026. Our lease payments are expensed on a straight-line basis over the life of the leases. Rental expense under operating leases, net of amortization of lease incentive, totaled $5.0 million, $4.7 million, $6.3 million for 2018, 2017, and 2016, respectively.

We have ~~determined beneficial ownership~~entered into several license and patent agreements. Under these agreements, we pay annual license maintenance fees, non-refundable license issuance fees, and royalties as a percentage of net sales for the sale or sublicense of products using the licensed technology. Future payments related to these license agreements have not been included in ~~accordance with~~ the ~~rules~~contractual obligations table above as the period of time over which the future license payments will be required to be made, and the amount of such payments, are indeterminable. We do not expect the license payments to be material in any particular year.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates and interest rates. We do not hold or issue financial instruments for trading purposes.

Foreign Currency Exchange Risk

As we expand internationally our results of operations and cash flows will become increasingly subject to fluctuations due to changes in foreign currency exchange rates. Our revenue is generally denominated in the local currency of the ~~SEC. Except as indicated by~~contracting party. Historically, the ~~footnotes below, we believe, based on the information furnished to us, that the persons and entities named~~majority of our revenue has been denominated in U.S. dollars. Our expenses are generally denominated in the ~~table below~~currencies in which our operations are located, which is primarily in the United States, with a portion of expenses incurred in Singapore and Canada where our manufacturing facilities are located. Our results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. We have ~~sole voting~~experienced and will continue to experience fluctuations in our net income or loss as a result of transaction gains or losses related to revaluing certain current asset and current liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded. For the years ended December 31, 2018 and 2017, we experienced foreign currency losses of $0.0 million and $0.1 million, respectively. To date, we have not entered into any foreign currency hedging contracts although we may do so in the future. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates. If foreign currency exchange rates had changed by 10% during the periods presented, it would not have had a material impact on our financial position or results of operations.

Interest Rate Sensitivity

We had cash and cash equivalents of $95.4 million at December 31, 2018. These amounts were held primarily in cash on deposit with banks and money market funds which are short-term. We had no investments at December 31, 2018. Cash and cash equivalents and investments are held for working capital purposes. We believe that we do not have any material exposure to changes in the fair value of our money market portfolio as a result of changes in interest rates. Declines in interest rates, however, will reduce future investment ~~power~~income. If overall interest rates had decreased by 10% during the periods presented, our interest income would not have been materially affected.

Fair Value of Financial Instruments

We do not have material exposure to market risk with respect to ~~all shares of common stock that they beneficially own, subject to applicable community property laws.~~

Applicable percentage ownership is based on 29,291,677 shares of common stock outstanding at April 14, 2017. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we included outstanding shares of common stock subject to options held by that person that are currently exercisable, options held by that person that are exercisable within 60 days of April 14, 2017, and restricted stock units that are scheduled to vest within 60 days of April 14, 2017.investments. We ~~did~~do not ~~deem these shares outstanding, however,~~use derivative financial instruments for ~~the purpose of computing the percentage ownership of any other person.~~

~~The information provided~~speculative or trading purposes. We may adopt specific hedging strategies in the ~~table is based on our records, information filed with the SEC, and information provided~~future.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to ~~Fluidigm, except where otherwise noted.~~

~~-38-~~

Name of Beneficial Owner Shares
Beneficially Owned Percent of Shares Beneficially Owned
5% Stockholders:
Entities affiliated with Levin Capital Strategies, L.P. (1) 7,522,529 25.7 %
Entities affiliated with PRIMECAP Management Company (2) 4,295,532 14.7 %
Entities affiliated with BlackRock, Inc. (3) 1,827,699 6.2 %
Entities affiliated with Mubadala Development Company PJSC (4) 1,599,069 5.5 %
Entities affiliated with Adage Capital Partners, L.P. (5) 1,546,209 5.3 %
Directors and Named Executive Officers:
Stephen Christopher Linthwaite (6) 84,072 *
Nicolas M. Barthelemy (7) 7,100 *
Gerhard F. Burbach (8) 66,166 *
Samuel D. Colella (9) 83,250 *
Evan Jones (10) 154,617 *
Patrick S. Jones (11) 90,166 *
Carlos V. Paya 0 *
John A. Young (12) 78,355 *
Vikram Jog (13) 84,373 *
Nicholas S. Khadder (14) 10,893 *
Steven C. McPhail (15) 35,026 *
Mai Chan (Grace) Yow (16) 126,360 *
Gajus V. Worthington (17) 382,092 1.3 %
William M. Smith (18) 155,160 *
Marc Unger (19) 133,259 *
All directors and executive officers as a group (16 persons) (20) 1,502,987 4.9 %
Consolidated Financial Statements

	Page
*	~~Less than one percent.~~


~~(1)~~ Report of PricewaterhouseCoopers LLP-Independent Registered Accounting Firm	~~Based solely on~~58

Consolidated Balance Sheets as of December 31, 2018 and 2017	60

Consolidated Statements of Operations for the ~~Form 5 filed with~~years ended December 31, 2018, 2017 and 2016	61

Consolidated Statements of Comprehensive Loss for the SEC on February 14, 2017. Levin Capital Strategies, L.P., or LCS, filing jointly with LCS GP, LLC, Levin Capital Trilogy Master Fund, Ltd. (“Trilogy”), LCS, LLC, Levcap Alternative Fund, L.P. (“Levcap”), LCS Event Partners LLC, Safinia Partners, L.P. (“Safinia”), LCS L/S, LLCyears ended December 31, 2018, 2017 and ~~John A. Levin (collectively,~~2016	62

Consolidated Statements of Stockholders' Equity for the ~~“LCS Filing Group”), report that~~years ended December 31, 2018, 2017 and 2016	63

Consolidated Statements of Cash Flows for the ~~shares are beneficially owned as follows: 6,341,380 shares are owned by Managed~~years ended December 31, 2018, 2017 and 2016	64

Notes to Consolidated Financial Statements	65


Financial Statement Schedule

Schedule II - Valuation and Qualifying Accounts ~~of LCS; 1,098,376 shares are owned by Transamerica Large Cap Value Fund; 51,068 shares are owned by Trilogy; 22,453 shares are owned by Levcap;~~for the years ended December 31, 2018, 2017 and ~~9,252 shares are owned by Safinia. The address of LCS is 595 Madison Avenue, 17~~^th ~~Floor, New York, NY 10022.~~2016	96

~~(2)~~

Based solely on the most recently available Schedule 13G filed with the SEC on February 9, 2017. PRIMECAP Management Company, or PRIMECAP, reported sole voting power with respect to 2,892,532 shares, sole dispositive power with respect to 4,295,532 shares, and no shared voting or dispositive power. PRIMECAP is an investment advisor in accordance with Rule 13d 1(b). The address of PRIMECAP is 177 E. Colorado Blvd., 11^th ~~Floor, Pasadena, CA 91105.~~

~~(3)~~

Based solely on the most recently available Schedule 13G filed with the SEC on January 24, 2017. BlackRock, Inc., or BlackRock, and its affiliates, BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., BlackRock Investment Management, LLC, reported sole voting power with respect to 1,781,934 shares, sole dispositive power with respect to 1,827,699 shares, and no shared voting or dispositive power. The address of BlackRock is 55 East 52^nd ~~Street, New York, NY 10055.~~

~~(4)~~

~~Based solely on the most recently available Schedule 13G filed with the SEC on February 11, 2016. Mubadala Development~~
Company PJSC, or Mubadala Development Company, filing jointly with MDC Capital LLC and MDC Capital (Cayman) Limited, as trustee for Fifty First Investment Company LLC, reported shared voting power with respect to 1,599,069 shares, shared dispositive power with respect to 1,599,069 shares, and no sole voting or dispositive power. The address of Mubadala Development Company is P.O. Box 45005, Abu Dhabi, United Arab Emirates.

~~(5)~~

Based solely on the most recently available Schedule 13G filed with the SEC on March 13, 2017. Adage Capital Partners, L.P., or Adage, filing jointly with Adage Capital Partners GP, L.L.C, Adage Capital Advisors, L.L.C., Robert Atchinson and Phillip Gross reported shared voting power with respect to 1,546,209 shares, shared dispositive power with respect to 1,546,209 shares, and no sole voting or dispositive power. The address of Adage is 200 Clarendon Street, 52^nd ~~Floor, Boston, MA 02116.~~

~~-39-~~


~~(6)~~	Consists of 58,000 shares held by Stephen Christopher Linthwaite, options to purchase 19,739 shares of common stock that are exercisable within 60 days of April 14, 2017, and 6,333 restricted stock units scheduled to vest within 60 days of April 14, 2017.


~~(7)~~	~~Consists of 7,100 shares held by the Barthelemy 2001 Trust, of which Mr. Barthelemy is a trustee.~~


~~(8)~~	~~Consists of options to purchase 66,166 shares of common stock that are exercisable within 60 days of April 14, 2017.~~

~~(9)~~

Consists of 43,523 shares held by The Colella Family Trust U/D/T dated September 21, 1992, of which Mr. Colella is a trustee, 5,561 shares held by The Colella Family Partners, L.P., of which Mr. Colella is a general partner, 10,000 shares held by the Colella Family Exempt Marital Deduction Trust dated September 21, 1992 of which Mr. Colella is a trustee, and options to purchase 24,166 shares of common stock held by Mr. Colella that are exercisable within 60 days of April 14, 2017.


~~(10)~~	Consists of 64,451 shares held of record by jVen Capital, LLC, of which Mr. Jones is a managing member, and options to purchase 90,166 shares of common stock that are exercisable within 60 days of April 14, 2017.


~~(11)~~	~~Consists of options to purchase 90,166 shares of common stock that are exercisable within 60 days of April 14, 2017.~~


~~(12)~~	Consists of 849 shares held by the Young Family Trust dated September 8, 1986, of which Mr. Young is a trustee, and options to purchase 77,506 shares of common stock that are exercisable within 60 days of April 14, 2017.


~~(13)~~	Consists of 5,063 shares held by Vikram Jog, 2,061 shares held by the Vikram and Pratima Jog Family Trust U/A dated June 23, 2009, of which Mr. Jog is a trustee, options to purchase 73,379 shares of common stock that are exercisable within 60 days of April 14, 2017, and 3,870 restricted stock units scheduled to vest within 60 days of April 14, 2017.


~~(14)~~	~~Consists of options to purchase 8,260 shares of common stock that are exercisable within 60 days of April 14, 2017, and 2,633 restricted stock units scheduled to vest within 60 days of April 14, 2017~~


~~(15)~~	Consists of 5,925 shares held by Steven C. McPhail, options to purchase 26,277 shares of common stock that are exercisable within 60 days of April 14, 2017, and 2,824 restricted stock units scheduled to vest within 60 days of April 14, 2017.


~~(16)~~	Consists of 9,840 shares held by Mai Chan (Grace)Yow, options to purchase 113,722 shares of common stock that are exercisable within 60 days of April 14, 2017, and 2,798 restricted stock units scheduled to vest within 60 days of April 14, 2017.


~~(17)~~	Consists of 17,503 shares held by Gajus Worthington, 33,029 shares held of record by the Worthington Family Trust dated March 6, 2007, of which Mr. Worthington is a trustee, options to purchase 328,315 shares of common stock that are exercisable within 60 days of April 14, 2017, and 3,245 restricted stock units scheduled to vest within 60 days of April 14, 2017.


~~(18)~~	~~Consists of 4,487 shares held by William M. Smith, and options to purchase 150,673 shares of common stock that are exercisable within 60 days of April 14, 2017.~~


~~(19)~~	Consists of 8,400 shares held by Marc Unger, options to purchase 121,534 shares of common stock that are exercisable within 60 days of April 14, 2017, and 3,325 restricted stock units scheduled to vest within 60 days of April 14, 2017.


~~(20)~~	Consists of 275,792 shares beneficially owned by current directors and executive officers, options held by current directors and executive officers to purchase 1,198,148 shares of common stock that are exercisable within 60 days of April 14, 2017, and 29,047 restriction stock units scheduled to vest within 60 days of April 14, 2017.

~~-40-~~

Report of Independent Registered Public Accounting Firm

To theBoard of Directors and

Stockholders of Fluidigm Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Fluidigm Corporation and its subsidiaries (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of operations, of comprehensive loss, of stockholders’ equity, and of cash flows for each of the three years in the period ended December 31, 2018, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework(2013)issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for revenues from contracts with customers in 2018.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidatedfinancial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

~~Item 13.~~

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

San Jose, California

March 18, 2019

We have served as the Company’s auditor since 2015.

FLUIDIGM CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)



	December 31,
	2018			2017
ASSETS
Current assets:
Cash and cash equivalents	$	95,401		$	58,056
Short-term investments	—			5,080
Accounts receivable (net of allowances of $126 and $391, at December 31, 2018 and 2017, respectively)	16,651			15,049
Inventories	13,003			15,088
Prepaid expenses and other current assets	2,051			1,528
Total current assets	127,106			94,801
Property and equipment, net	8,825			12,301
Other non-current assets	6,208			7,541
Developed technology, net	57,400			68,600
Goodwill	104,108			104,108
Total assets	$	303,647		$	287,351
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,027		$	4,211
Accrued compensation and related benefits	14,470			10,535
Other accrued liabilities	7,621			8,490
Deferred revenue, current	11,464			10,238
Total current liabilities	37,582			33,474
Convertible notes, net	172,058			195,238
Deferred tax liability	13,714			16,919
Deferred revenue, non-current	6,327			4,960
Other non-current liabilities	1,850			5,825
Total liabilities	231,531			256,416
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000 shares authorized, no shares issued and outstanding at either December 31, 2018 or 2017	—			—
Common stock: $0.001 par value, 200,000 shares authorized at December 31, 2018 and 2017; 49,338 and 38,787 shares issued and outstanding at December 31, 2018 and 2017, respectively	49			39
Additional paid-in capital	631,605			531,666
Accumulated other comprehensive loss	(687		)	(574		)
Accumulated deficit	(558,851		)	(500,196		)
Total stockholders’ equity	72,116			30,935
Total liabilities and stockholders’ equity	$	303,647		$	287,351

See accompanying notes

FLUIDIGM CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)



	Year Ended December 31,
	2018			2017			2016
Revenue:
Product revenue	$	93,650		$	84,399		$	89,003
Service revenue	19,314			17,348			15,205
License revenue	—			190			238
Total revenue	112,964			101,937			104,446
Cost of sales:
Cost of product revenue	44,861			45,039			41,110
Cost of service revenue	6,454			4,916			4,899
Total cost of sales	51,315			49,955			46,009
Gross profit	61,649			51,982			58,437
Operating expenses:
Research and development	30,030			30,826			38,415
Selling, general and administrative	79,783			79,516			93,212
Total operating expenses	109,813			110,342			131,627
Loss from operations	(48,164		)	(58,360		)	(73,190		)
Interest expense	(13,893		)	(5,824		)	(5,820		)
Other income (expense), net	637			385			(1,167		)
Loss before income taxes	(61,420		)	(63,799		)	(80,177		)
Benefit from income taxes	2,407			3,264			4,192
Net loss	(59,013		)	(60,535		)	(75,985		)
Net loss per share, basic and diluted	$	(1.49	)	$	(1.84	)	$	(2.62	)
Shares used in computing net loss per share, basic and diluted	39,652			32,980			29,008

See accompanying notes

FLUIDIGM CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)



	Year Ended December 31,
	2018			2017			2016
Net loss	$	(59,013	)	$	(60,535	)	$	(75,985	)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment	(112		)	183			314
Unrealized gain (loss) on available-for-sale securities, net	(1		)	3			70
Other comprehensive income (loss)	(113		)	186			384
Comprehensive loss	$	(59,126	)	$	(60,349	)	$	(75,601	)

See accompanying notes

FLUIDIGM CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)



	Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive (Loss)/Income			Accumulated Deficit			Total Stockholders’ Equity
	Shares	Amount		Additional Paid-in Capital			Accumulated Other Comprehensive (Loss)/Income			Accumulated Deficit			Total Stockholders’ Equity
Balance at December 31, 2015	28,844	$	29	$	479,508		$	(1,144	)	$	(363,492	)	$	114,901
Issuance of restricted stock, net of shares withheld for taxes, and other	307	—		(152		)	—			—			(152		)
Issuance of common stock from option exercises	57	—		227			—			—			227
Stock-based compensation expense	—	—		13,858			—			—			13,858
Net loss	—	—		—			—			(75,985		)	(75,985		)
Other comprehensive income	—	—		—			384			—			384
Balance at December 31, 2016	29,208	$	29	$	493,441		$	(760	)	$	(439,477	)	$	53,233
At-the-market offering	9,091	9		28,793			—			—			28,802
Issuance of restricted stock, net of shares withheld for taxes, and other	413	1		(166		)	—			—			(165		)
Issuance of common stock from option exercises	25	—		100			—			—			100
Issuance of common stock under ESPP	50	—		222			—			—			222
Cumulative-effect of new accounting standard for Topic 718 Stock Compensation	—	—		184			—			(184		)	—
Stock-based compensation expense	—	—		9,092			—			—			9,092
Net loss	—	—		—			—			(60,535		)	(60,535		)
Other comprehensive income	—	—		—			186			—			186
Balance at December 31, 2017	38,787	$	39	$	531,666		$	(574	)	$	(500,196	)	$	30,935
Market offering	9,373	9		59,084			—			—			59,093
Issuance of restricted stock, net of shares withheld for taxes, and other	886	1		(379		)	—			—			(378		)
Issuance of common stock from option exercises	40	—		208			—			—			208
Issuance of common stock under ESPP	252	—		1,203			—			—			1,203
Conversion option on convertible debt	—	—		29,357			—			—			29,357
Closing cost related to conversion option on convertible debt	—	—		(557		)	—			—			(557		)
Cumulative-effect of new accounting standard for Topic 606 Revenue	—	—		—			—			358			358
Stock-based compensation expense	—	—		11,023			—			—			11,023
Net loss	—	—		—			—			(59,013		)	(59,013		)
Other comprehensive loss	—	—		—			(113		)	—			(113		)
Balance at December 31, 2018	49,338	$	49	$	631,605		$	(687	)	$	(558,851	)	$	72,116

See accompanying notes

FLUIDIGM CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



	Year Ended December 31,
	2018			2017			2016
Operating activities
Net loss	$	(59,013	)	$	(60,535	)	$	(75,985	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	5,372			7,409			6,738
Stock-based compensation expense	11,023			9,092			13,858
Amortization of developed technology	11,200			11,200			11,200
Amortization of debt discounts, premiums and issuance costs	8,379			287			278
Other non-cash items	175			(890		)	(26		)
Loss on disposal of property and equipment	141			135			87
Changes in assets and liabilities:
Accounts receivable	(1,788		)	(554		)	10,521
Inventories	1,488			4,596			(3,387		)
Prepaid expenses and other assets	178			1,583			(457		)
Accounts payable	(294		)	585			(2,271		)
Deferred revenue	2,574			1,636			(274		)
Other liabilities	(4,636		)	1,358			580
Net cash used in operating activities	(25,201		)	(24,098		)	(39,138		)
Investing activities
Purchases of investments	(1,450		)	(6,276		)	(38,594		)
Proceeds from sales and maturities of investments	6,541			25,550			86,431
Proceeds from sale of investment in Verinata	—			—			2,330
Purchases of intangible assets	—			(50		)	—
Purchases of property and equipment	(372		)	(1,566		)	(5,065		)
Net cash provided by investing activities	4,719			17,658			45,102
Financing activities
Payment of debt and equity issuance costs	(2,862		)	—			—
Net proceeds from issuance of common stock	59,469			28,793			—
Proceeds from exercise of stock options	208			100			227
Proceeds from stock issuance from ESPP	1,203			222			—
Payments for taxes related to net share settlement of equity awards	(358		)	(118		)	(111		)
Net cash provided by financing activities	57,660			28,997			116
Effect of foreign exchange rate fluctuations on cash and cash equivalents	167			454			(152		)
Net increase in cash and cash equivalents	37,345			23,011			5,928
Cash and cash equivalents at beginning of period	58,056			35,045			29,117
Cash and cash equivalents at end of period	$	95,401		$	58,056		$	35,045
Supplemental disclosures of cash flow information
Cash paid for interest	$	5,534		$	5,534		$	5,534
Cash paid for income taxes, net of refunds	$	321		$	245		$	355

See accompanying notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018

1. Description of Business

Fluidigm Corporation (we, our, or us) was incorporated in the State of California in May 1999 to commercialize microfluidic technology initially developed at the California Institute of Technology. In July 2007, we were reincorporated in Delaware. Our headquarters are located in South San Francisco, California.

We create, manufacture, and market innovative technologies and life science tools, including preparatory and analytical instruments for Mass Cytometry, PCR, Library Prep, Single Cell Genomics, and consumables, including IFCs, assays, and reagents. Our focus is on the most pressing needs in translational and clinical research, including cancer, immunology and immunotherapy. We use proprietary CyTOF® and microfluidics technologies to develop innovative end-to-end solutions that have the flexibility required to meet the needs of translational research and the robustness to support high-impact clinical research studies. We sell our instruments to leading academic research institutions, translational research and medicine centers, cancer centers, clinical research laboratories, and biopharmaceutical, biotechnology and Ag-Bio companies.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) and include the accounts of our wholly-owned subsidiaries. As of December 31, 2018, we had wholly-owned subsidiaries in Singapore, Canada, the Netherlands, Japan, France, the United Kingdom, China, and Germany. All subsidiaries, except for Singapore, use their local currency as their functional currency. The Singapore subsidiary uses the U.S. dollar as its functional currency. All intercompany transactions and balances have been eliminated in consolidation.

Certain ~~Relationships~~prior period amounts in the consolidated statements of stockholders’ equity and ~~Related Transactions,~~consolidated statements of cash flows were reclassified to conform with the current period presentation. These reclassifications were immaterial and ~~Director Independence~~did not affect prior period total assets, total liabilities, stockholders' equity, total revenue, total costs and expenses, loss from operations or net loss.

~~Related Person Transactions~~

~~OpGen Supply Agreement~~Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions believed to be reasonable, which together form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from these estimates and could have a material adverse effect on our consolidated financial statements.

Foreign Currency

Assets and liabilities of non-U.S. subsidiaries that use the local currency as their functional currency are translated into U.S. dollars at exchange rates in effect on the balance sheet date. The adjustments resulting from the foreign currency translations are recorded in accumulated other comprehensive loss, a separate component of stockholders’ equity. Income and expense accounts are translated at monthly average exchange rates during the year.

Revenue Recognition

We generate revenue primarily from the sale of our products and services. Product revenue is derived from the sale of instruments and consumables, including IFCs, assays and reagents. Service revenue is derived from the sale of instrument service contracts, repairs, installation, training and other specialized product support services. Revenue is reported net of any sales, use and value-added taxes we collect from customers as required by government authorities.

We recognize revenue based on the amount of consideration we expect to receive in exchange for the goods and services we transfer to the customer. Our commercial arrangements typically include multiple distinct products and services, and we allocate revenue to these performance obligations based on their relative standalone selling prices. Standalone selling prices (SSP) are generally determined using observable data from recent transactions. In cases where sufficient data is not available, we estimate a product’s SSP using a cost plus a margin approach or by applying a discount to the product’s list price.

Product Revenue

We recognize product revenue at the point in time when control of the goods passes to the customer and we have an enforceable right to payment. This generally occurs either when the product is shipped from one of our facilities or when it arrives at the customer’s facility, based on the contractual terms. Customers generally do not have a unilateral right to return products after delivery. Invoices are generally issued at shipment and generally become due in 30 to 60 days.

We sometimes perform shipping and handling activities after control of the product passes to the customer. We have made an accounting policy election to account for these activities as product fulfillment activities rather than as separate performance obligations.

Service Revenue

We recognize revenue from repairs, installation, training and other specialized product support services at the point in time the work is completed. Installation and training services are generally billed in advance of service. Repairs and other services are generally billed at the point the work is completed.

Revenue associated with instrument service contracts is recognized on a straight-line basis over the life of the agreement, which is generally one to three years. We believe this time-elapsed approach is appropriate for service contracts because we provide services on demand throughout the term of the agreement. Invoices are generally issued in advance of service on a monthly, quarterly, annual or multi-year basis. Payments made in advance of service are reported on our consolidated balance sheet as deferred revenue.

Contract Costs

Incremental sales commission costs incurred to obtain instrument service contracts are capitalized and amortized to selling, general and administrative expense over the life of the contract, which is generally one to three years. As a practical expedient, we expense sales commissions associated with product support services that are delivered in less than one year as they are incurred. Sales commissions associated with the sale of products are expensed as they are incurred.

Product Warranties

Significant Judgments

Applying the revenue recognition practices discussed above often requires significant judgment. Judgment is required when identifying performance obligations, estimating SSP and allocating purchasing consideration in multi-element arrangements and estimating the future amount of our warranty obligations. Moreover, significant judgment is required when interpreting commercial terms and determining when control of goods and services passes to the customer. Any material changes created by errors in judgment could have a material effect on our operating results and overall financial condition.

Cash and Cash Equivalents

We consider all highly liquid financial instruments with maturities at the time of purchase of three months or less to be cash equivalents. Cash and cash equivalents may consist of cash on deposit with banks, money market funds, and notes from government-sponsored agencies.

Investments

Short-term investments are comprised of notes from government-sponsored agencies. All investments are recorded at estimated fair value. Any unrealized gains and losses from investments are reported in accumulated other comprehensive loss, a separate component of stockholders’ equity. We evaluate our investments to assess whether investments with unrealized loss positions are other-than-temporarily impaired. An investment is considered to be other-than-temporarily impaired if the impairment is related to deterioration in credit risk or if it is likely that we will sell the securities before the recovery of their cost basis. No investment has been assessed as other than temporarily impaired, and realized gains and losses were immaterial during the years presented. The cost of securities sold, or the amount reclassified out of accumulated other comprehensive income into earnings is based on the specific-identification method.

Accounts Receivable

Trade accounts receivable are recorded at net invoice value. We review our exposure to accounts receivable and provide allowances of specific amounts if collectability is no longer reasonably assured based on historical experience and specific customer collection issues. We evaluate such allowances on a regular basis and adjust them as needed.

Concentrations of Business and Credit Risk

Financial instruments that potentially subject us to credit risk consist of cash, cash equivalents, investments, and accounts receivable. Our cash, cash equivalents, and investments may consist of deposits held with banks, money market funds, and other highly liquid investments that may at times exceed federally insured limits. Cash equivalents and investments are financial instruments that potentially subject us to concentrations of risk. Under our investment policy, we invest primarily in securities issued by the U.S. government. The goals of our investment policy, in order of priority, are as follows: preserve capital, meet liquidity needs, and optimize returns.

We generally do not require collateral to support credit sales. To reduce credit risk, we perform credit evaluations of our customers. No single customer represented more than 10% of total revenue for 2018, 2017, or 2016, and no single customer represented more than 10% of total accounts receivable at December 31, 2018, 2017, or 2016.

Our products include components that are currently procured from a single source or a limited number of sources. We believe that other vendors would be able to provide similar components; however, the qualification of such vendors may require start-up time. In order to mitigate any adverse impacts from a disruption of supply, we attempt to maintain an adequate supply of critical limited-source components.

Inventories

Inventories are stated at the lower of cost (on a first-in, first-out basis) or net realizable value. Inventory costs include direct materials, direct labor, and normal manufacturing overhead. Finished goods that are used for research and development are expensed as consumed or depreciated over their period of use. Provisions for slow-moving, excess, and obsolete inventories are recorded when required to reduce inventory values to their estimated net realizable values based on product life cycle, development plans, product expiration, and quality issues.

Property and Equipment

Property and equipment, including leasehold improvements, are stated at cost less accumulated depreciation. Accumulated depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the assets or the remaining term of the lease, whichever is shorter. The estimated useful lives of our property and equipment are generally as follows: computer

equipment and software, three to four years; laboratory and manufacturing equipment, two to five years; and office furniture and fixtures, five years.

Depreciation expense for the years ended December 31, 2018, 2017, and 2016 was $4.2 million, $5.9 million, and $5.1 million, respectively.

Goodwill, Intangible Assets and Other Long-Lived Assets

Goodwill and intangible assets with indefinite lives are not subject to amortization but are tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable. We first conduct an assessment of qualitative factors to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If we determine that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we then conduct a two-step test for impairment of goodwill. In the first step, we compare the fair value of our reporting unit to its carrying value. If the fair value of our reporting unit exceeds its carrying value, goodwill is not considered impaired and no further analysis is required. If the carrying value of the reporting unit exceed its fair value, then the second step of the impairment test must be performed in order to determine the implied fair value of the goodwill. If the carrying value of the goodwill exceeds its implied fair value, then an impairment loss equal to the difference would be recorded.

Convertible Notes

In February 2014, we closed an underwritten public offering $201.3 million aggregate principal amount of our 2.75% Senior Convertible Notes due 2034 (2014 Notes). In March 2018, we entered into separate privately negotiated transactions with certain holders of our 2014 Notes to exchange $150.0 million in aggregate principal amount of the 2014 Notes for our new 2.75% Exchange Convertible Senior Notes due 2034 (2018 Notes). Following the exchange, approximately $51.3 million in aggregate principal amount of the 2014 Notes remained outstanding in addition to $150.0 million in aggregate principal amount of the 2018 Notes.

As the 2018 Notes are convertible, at our election, into cash, shares of our common stock, or a combination of cash and shares of our common stock, we accounted for the 2018 Notes under the cash conversion guidance in ASC 470, whereby the embedded conversion option in the 2018 Notes was separated and accounted for in equity. The embedded conversion option value was calculated as the difference between (i) the total fair value of the 2018 Notes and (ii) the fair value of a similar debt instrument excluding the embedded conversion option. We determined an embedded conversion option value of $29.3 million, which was recorded in additional paid-in-capital and reduced the carrying value of the 2018 Notes. The resulting discount on the 2018 Notes will be amortized over the expected term of the 2018 Notes, using the effective interest method through the first note holder put date, of February 6, 2023.

For both the 2014 Notes and 2018 Notes, offering-related costs, including underwriting costs are capitalized as debt issuance costs, recorded as an offset to the carrying value of the related Notes, and are being be amortized over the expected term of the related Notes using the effective interest method.

Fair Value of Financial Instruments

Our financial instruments consist primarily of cash and cash equivalents, investments, accounts receivable, accounts payable, and convertible notes. Our cash equivalents, investments, accounts receivable, and accounts payable have short maturity or payment periods. Accordingly, their carrying values approximated their fair values at December ~~2013, OpGen, Inc.,~~31, 2018 and 2017. The convertible notes are presented at their carrying value, with fair value disclosures made in Note 7. As a basis for considering fair value, we follow a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level I: observable inputs such as quoted prices in active markets;

Level II: inputs other than quoted prices in active markets that are observable either directly or ~~OpGen, purchased a Biomark HD system~~indirectly; and

Level III: unobservable inputs for which there is little or no market data, which requires us to develop our own assumptions.

This hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. Our cash equivalents, which include money market funds, are classified as Level I because they are valued using quoted market prices. Our investments and convertible notes are generally classified as Level II because their value is based on valuations using significant inputs derived from or corroborated by observable market data. Depending on the security, the income and market approaches are used in the model driven valuations. Inputs of these models include recently executed transaction prices in securities of the issuer or comparable issuers and yield curves.

Research and Development

We recognize research and development expenses in the period incurred. Research and development expenses consist of personnel costs, independent contractor costs, prototype and materials expenses, allocated facilities and information technology expenses, and related ~~consumables~~overhead expenses.

Advertising Costs

We expense advertising costs as incurred. We incurred advertising costs of $2.2 million, $1.8 million and $2.3 million during 2018, 2017, and 2016, respectively.

Income Taxes

We use the asset and liability method to account for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are provided when the expected realization of deferred tax assets does not meet a “more likely than not” criterion. We make estimates and judgments about our future taxable income that are based on assumptions that are consistent with our plans and estimates. Should the actual amounts differ from ~~us. Evan Jones, a member~~our estimates, the amount of our ~~board~~valuation allowance could be materially impacted. Changes in these estimates may result in significant increases or decreases to our tax provision in a period in which such estimates are changed, which in turn would affect net income or loss.

We recognize the financial statement effects of ~~directors,~~a tax position when it is more likely than not, based on the ~~President~~technical merits, that the position will be sustained upon examination. Any interest and ~~Chief Executive Officer of OpGen, a member of OpGen’s board of~~penalties related to uncertain tax positions are reflected in the income tax provision.

Stock-Based Compensation

We account for stock options and restricted stock units granted to employees and directors and stock purchases under ESPP based on the fair value of the awards. We recognize stock-based compensation expense on a ~~substantial stockholder~~straight-line basis over the requisite service periods for non-performance-based awards. For performance-based stock awards, stock-based compensation expense is recognized over the requisite service period when the achievement of each individual performance goal becomes probable.

Comprehensive Loss

Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive income (loss) consists of unrealized gains and losses on our investments and foreign currency translation adjustments. Total comprehensive loss for all periods presented has been disclosed in ~~OpGen. OpGen’s~~the consolidated statements of comprehensive loss.

The components of accumulated other comprehensive loss, net of tax, for the years ended December 31, 2018, 2017, and 2016 are as follows (in thousands):



	Foreign Currency Translation Adjustment			Unrealized Gain (Loss) on Investments			Accumulated Other Comprehensive Income (Loss)
Ending balance at December 31, 2016	$	(758	)	$	(2	)	$	(760	)
Change during the year	183			3			186
Ending balance at December 31, 2017	$	(575	)	$	1		$	(574	)
Change during the year	(112		)	(1		)	(113		)
Ending balance at December 31, 2018	$	(687	)	$	—		$	(687	)

Immaterial amounts of unrealized gains and losses have been reclassified into the consolidated statement of operations for the years ended December 31, 2018, 2017 and 2016.

Net Loss per Share

Our basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding for the period. Restricted stock units and options to purchase our common stock are considered to be potentially dilutive common shares but have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive for all periods presented.

The following potentially dilutive common shares were excluded from the computations of diluted net loss per share for the periods presented because including them would have been anti-dilutive (in thousands):



	December 31,
	2018	2017	2016
Stock options, restricted stock units and performance awards	4,354	3,501	4,622
2018 Convertible Notes	19,035	—	—
2018 Convertible Notes potential make-whole shares	757	—	—
2014 Convertible Notes	916	3,598	3,598
Total	25,062	7,099	8,220

Recent Accounting Changes and Accounting Pronouncements

Adoption of New Accounting Guidance

The following table summarizes the cumulative effect of adopting Topic 606 on amounts previously reported in our consolidated balance sheet at December 31, 2017 (in thousands):



	Balance at December 31, 2017			Topic 606 Transition Adjustments		Balance at January 1, 2018
Prepaid expenses and other current assets	$	1,528		$	153	$	1,681
Total current assets	$	94,801		$	153	$	94,954
Other non-current assets	$	7,541		$	205	$	7,746
Total assets	$	287,351		$	358	$	287,709
Accumulated deficit	$	(500,196	)	$	358	$	(499,838	)
Total stockholders' equity	$	30,935		$	358	$	31,293
Total liabilities and stockholders' equity	$	287,351		$	358	$	287,709

The following table summarizes the impacts on our consolidated statements of operations of adopting Topic 606 compared to Topic 605 for the twelve months ended December 31, 2018 (in thousands):



	As Reported			Balance Without Adoption of Topic 606			Effect of Change
	Twelve Months Ended December 31, 2018
Selling, general and administrative	$	79,783		$	79,859		$	(76	)
Total costs and expenses	$	161,128		$	161,204		$	(76	)
Loss from operations	$	(48,164	)	$	(48,240	)	$	76
Loss before income taxes	$	(61,420	)	$	(61,496	)	$	76
Net loss	$	(59,013	)	$	(59,089	)	$	76

The following table summarizes the impacts on our consolidated balance sheets of adopting Topic 606 compared to Topic 605 at December 31, 2018 (in thousands):



	As Reported		Balance Without Adoption of Topic 606		Effect of Change
			December 31, 2018
Prepaid expenses and other current assets	$	2,051	$	1,884	$	167
Total current assets	$	127,106	$	126,939	$	167
Other non-current assets	$	6,208	$	5,941	$	267
Total assets	$	303,647	$	303,213	$	434
Stockholders' equity	$	72,116	$	71,682	$	434
Total liabilities and stockholders' equity	$	303,647	$	303,213	$	434

In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. This ASU allows SEC reporting companies to record provisional amounts in earnings for the year ended December 31, 2017, due to the complexities involved in accounting for the enactment of the Tax Act. We recognized the estimated income tax effects of the Tax Act in its 2017 Consolidated Financial Statements in accordance with SEC Staff Accounting Bulletin No. 118 (“SAB No. 118”). In accordance with SAB No. 118, we completed the accounting related to tax reform in the fourth quarter of 2018 and no material adjustments to the provisional tax expense was required. Refer to Note 10 for further information regarding the provisional amounts recorded by the Company.

In February 2018, the FASB issued ASU 2018-02 Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU amends the reporting of comprehensive income to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the Tax Act). The Tax Act was enacted in December 2017 and reduced the U.S federal corporate income tax rate and made other changes to U.S. federal tax law. ASU 2018-02 is effective for our fiscal year beginning January 1, 2019, and early adoption is permitted. This standard did not have a material effect on our consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash, a consensus of the FASB’s Emerging Issues Task Force, amending the presentation of restricted cash within the statement of cash flows. The new guidance requires that restricted cash be included within cash and cash equivalents on the statement of cash flows. We adopted this ASU in the first quarter of 2018. The adoption of this ASU did not have a material impact on our consolidated financial statements.

Recent Accounting Pronouncements

establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating; the classification will impact the expense recognition in the income statement.

Modified Retrospective Transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. We expect to adopt the new standard on January 1, 2019 and use the effective date as our date of initial application. Consequently, financial information will not be updated, and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. For dates and periods prior to January 1, 2019, the original disclosures under ASC 840 will be disclosed.

The new standard provides several optional practical expedients in transition. We expect to elect the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We do not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us.

On adoption, we currently expect to recognize $8.0 million to $11.0 million of additional operating liabilities, based on the present value of the remaining fixed rental payments under current leasing standards for existing operating leases, with corresponding ROU assets of approximately $6.0 million to $9.0 million. The difference between the initial lease liability and right of use asset is attributable to deferred rent. We do not expect any impact on retained earnings from the adoption of ASC 842.

3. Revenue

Disaggregation of Revenue

The following table presents our revenue for the year ended December 31, 2018, 2017, and 2016, respectively, based on geographic area and by products and services (in thousands):



	Year Ended December 31,
	2018		2017		2016
Geographic Markets:
Americas	$	51,172	$	49,290	$	56,229
EMEA	36,617		32,642		29,739
Asia-Pacific	25,175		20,005		18,478
Total	$	112,964	$	101,937	$	104,446



	Year Ended December 31,
	2018		2017		2016
Products and Services:
Instruments	$	45,491	$	42,505	$	46,834
Consumables	48,159		41,894		42,169
Product revenue	93,650		84,399		89,003
Services	19,314		17,348		15,205
License	—		190		238
Total	$	112,964	$	101,937	$	104,446

Performance Obligations

We reported $15.2 million of deferred revenue on our December 31, 2017 consolidated balance sheet. During the twelve months ended December 31, 2018, $9.1 million of the opening balance was recognized as revenue and $11.7 million of net additional advance payments were received from customers, primarily associated with instrument service contracts. At December 31, 2018, we reported $17.8 million of deferred revenue.

The following table summarizes the expected timing of revenue recognition for unfulfilled performance obligations associated with instrument service contracts that were partially completed at December 31, 2018 (in thousands):



Fiscal Year	Expected Revenue ⁽¹⁾
2019	$	10,037
2020	5,149
2021	2,525
Thereafter	1,436
Total	$	19,147

_______

⁽¹⁾Expected revenue includes both billed amounts included in deferred revenue and unbilled amounts that are not reflected in our consolidated financial statements and are subject to change if our customers decide to cancel or modify their contracts. Purchase orders for instrument service contracts can generally be canceled before the service period begins without penalty.

We apply the practical expedient that permits us to not disclose information about unsatisfied performance obligations for service contracts with an expected term of one year or less.

Contract Costs

We reported $0.4 million of capitalized commission costs from instrument service contracts at December 31, 2018 inthe consolidated balance sheet.

4. Goodwill and Intangible Assets, net

In connection with our acquisition of DVS in February 2014, we recognized goodwill of $104.1 million. Intangible assets include developed technology related to the DVS acquisition and other intangible assets included in Other non-current assets.

Developed Technology, Patents and Licenses

Developed technology as a result of the DVS acquisition, and patents and licenses, were as follows (in thousands):



	December 31, 2018
		Gross Amount		Accumulated Amortization			Net		Weighted-Average Amortization Period
Developed technology		$	112,000	$	(54,600	)	$	57,400	10.0 years
Patents and licenses		$	11,274	$	(6,861	)	$	4,413	7.8 years



	December 31, 2017
	Gross Amount		Accumulated Amortization			Net		Weighted-Average Amortization Period
Developed technology	$	112,000	$	(43,400	)	$	68,600	10.0 years
Patents and licenses	$	11,274	$	(5,721	)	$	5,553	7.8 years

Total amortization expense for the years ended December 31, 2018, December 31, 2017, and December 31, 2016 was $12.3 million, $12.4 million and $12.4 million, respectively.

Based on the carrying value of intangible assets, net, as of December 31, 2018, the annual amortization expense is expected to be as follows (in thousands):



Fiscal Year	Developed Technology Amortization Expense		Patents and Licenses Amortization Expense		Total
2019	$	11,200	$	1,046	$	12,246
2020	11,200		1,046		12,246
2021	11,200		888		12,088
2022	11,200		815		12,015
2023	11,200		610		11,810
Thereafter	1,400		8		1,408
Total	$	57,400	$	4,413	$	61,813

5. Balance Sheet Details

Cash and Cash Equivalents

Cash and cash equivalents consisted of the following as of December 31, 2018 and 2017 (in thousands):



	December 31,
Cash and cash equivalents:	2018		2017
Cash	$	17,685	$	20,129
Money market funds	77,716		16,142
U.S. Government and agency securities	—		21,785
Total	$	95,401	$	58,056

Inventories

Inventories consisted of the following as of December 31, 2018 and 2017 (in thousands):



	December 31,
Inventories:	2018		2017
Raw materials	$	5,996	$	7,566
Work-in-process	650		929
Finished goods	6,357		6,593
Total inventories, net	$	13,003	$	15,088

Property and Equipment, net

Property and equipment consisted of the following as of December 31, 2018 and 2017 (in thousands):



	December 31,
Property and equipment:	2018			2017
Computer equipment and software	$	4,201		$	4,179
Laboratory and manufacturing equipment	18,780			20,069
Leasehold improvements	7,173			7,799
Office furniture and fixtures	1,506			1,892
Property and equipment, gross	31,660			33,939
Less accumulated depreciation and amortization	(22,855		)	(21,646		)
Construction-in-progress	20			8
Property and equipment, net	$	8,825		$	12,301

Product Warranties

Activity for our warranty accrual for the years ended December 31, 2018 and 2017, which are included in other accrued liabilities, is summarized below (in thousands):



	Year Ended December 31,
	2018			2017
Beginning balance	$	699		$	1,023
Accrual for current period warranties	1,573			695
Warranty costs incurred	(1,409		)	(1,019		)
Ending balance	$	863		$	699

6. Convertible Notes and Credit Facility

2014 Senior Convertible Notes (2014 Notes)

On February 4, 2014, we closed an underwritten public offering of $201.3 million aggregate principal amount of our 2.75% Senior Convertible Notes due 2034 (2014 Notes) pursuant to an underwriting agreement, dated January 29, 2014. The 2014 Notes accrue interest at a rate of 2.75% per year, payable semi-annually in arrears on February 1 and August 1 of each year. The 2014 Notes will mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2014 Notes.

The initial conversion rate of the 2014 Notes is 17.8750 shares of our common stock, par value $0.001 per share, per $1,000 principal amount of 2014 Notes (which is equivalent to an initial conversion price of approximately $55.94 per share). The conversion rate will be subject to adjustment upon the occurrence of certain specified events including upon conversion in connection with a fundamental change, as defined in the indenture governing the 2014 Notes or, subject to certain conditions, redemption of the 2014 Notes by us.

Holders may surrender their 2014 Notes for conversion at any time prior to the stated maturity date. On or after February 6, 2018, and prior to February 6, 2021, we may redeem any or all of the 2014 Notes in cash if the closing price of our common stock exceeds 130% of the conversion price for a specified number of days, and on or after February 6, 2021, we may redeem any or all of the ~~Biomark HD system was~~2014 Notes in cash without any such condition. The redemption price of the 2014 Notes will equal 100% of the principal amount of the 2014 Notes plus accrued and unpaid interest. Holders may require us to repurchase all or a portion of their 2014 Notes on each of February 6, 2021, February 6, 2024, and February 6, 2029, at a repurchase price in cash equal to 100% of the principal amount of the 2014 Notes plus accrued and unpaid interest. If we undergo a fundamental change, as defined in the terms of the 2014 Notes, holders may require us to repurchase the 2014 Notes in whole or in part for cash at a repurchase price equal to 100% of the principal amount of the 2014 Notes plus accrued and unpaid interest.

In February 2014, we received $195.2 million, net of underwriting discounts, from the issuance of the 2014 Notes and incurred approximately ~~$221,000.~~ $1.1 million in offering-related expenses. The underwriting discount of $6.0 million and the debt issuance costs of $1.1 million were recorded as offsets to the proceeds. The underwriting discount and offering-related expenses are being amortized to interest expense using the effective-interest rate method.

2018 Senior Convertible Notes (2018 Notes)

In March 2018, we entered into separate privately negotiated transactions with certain holders of our 2014 Notes to exchange $150.0 million in aggregate principal amount of the 2014 Notes for new convertible notes (2018 Notes). As of the closing of the 2018 Notes on March 12, 2018, the estimated fair value was $145.5 million. The difference between the $150.0 million aggregate principal amount of the 2018 Notes and its fair value will be amortized over the expected term of the 2018 Notes using the effective interest method through the first note holder put date of February 6, 2023.

We accounted for the exchange transaction as an extinguishment of debt due to the significance of the change in value of the embedded conversion option, resulting in a $0.1 million gain. The gain on extinguishment of debt was calculated as the difference between the reacquisition price (i.e., the fair value of the principal amount of 2018 Notes) and the net carrying value of the 2014 Notes exchanged net of unamortized debt discount and debt issuance cost write-offs.

The 2018 Notes accrue interest at a rate of 2.75%, payable semi-annually in arrears on February 1 and August 1 of each year. The 2018 Notes will mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the indenture governing the 2018 Notes. The initial conversion rate of the 2018 Notes is 126.9438 shares of our common stock, par value $0.001 per share, per $1,000 principal amount of the 2018 Notes (which is equivalent to an initial conversion price of approximately $7.88 per share). The conversion rate will be subject to adjustment upon the occurrence of certain specified events. Those certain specified events include Holders who convert their 2018 Notes voluntarily prior to our exercise of the Issuer's Conversion Option or in connection with a make-whole fundamental change prior to February 6, 2023, are entitled, under certain circumstances, to a make-whole premium in the form of an increase in the conversion rate determined by reference to a make-whole table set forth in the indenture governing the 2018 Notes. Any time prior to the maturity of the 2018 Notes, we may convert the 2018 Notes, in whole but not in part, into cash, shares of our common stock, or combination thereof, if the closing price of our common stock equals or exceeds 110% of the conversion price then in effect for a specified number of days (Issuer’s Conversion Option). On or after February 6, 2022, we may elect to redeem all or any portion of the

2018 Notes at a redemption price equal to 100% of the accreted principal amount of the 2018 Notes on the redemption date of the 2018 Notes, plus accrued and unpaid interest.

Holders of the 2018 Notes have the right, at their option, to require us to purchase all or a portion of the 2018 Notes (i) on February 6, 2023, February 6, 2026, and February 6, 2029, or (ii) in the event of a fundamental change, as defined in the indenture governing the 2018 Notes, in each case, at a repurchase price equal to 100% of the accreted principal amount (i.e., up to 120% of the outstanding principal amount) of the 2018 Notes on the fundamental change repurchase date, plus accrued and unpaid interest.

Offering-related costs for the 2018 Notes were approximately $2.8 million. Offering-related costs of $2.2 million were capitalized as debt issuance costs, recorded as an offset to the carrying value of the 2018 Notes, and are being be amortized over the expected term of the 2018 Notes using the effective interest method through the first note holder put date of February 6, 2023. Offering-related costs of $0.6 million were accounted for as equity issuance costs, recorded as an offset to additional paid-in capital, and are not subject to amortization. Offering-related costs were allocated between debt and equity in the same proportion as the allocation of the 2018 Notes between debt and equity.

The carrying values of the components of the 2014 Notes and 2018 Notes are as follows (in thousands):



	December 31,
	2018			2017
2.75% 2014 Notes due 2034
Principal amount	$	51,250		$	201,250
Unamortized debt discount	(1,232		)	(5,087		)
Unamortized debt issuance cost	(224		)	(925		)
	$	49,794		$	195,238
2.75% 2018 Notes due 2034
Principal amount	$	149,999		$	—
Premium accretion	3,755			—
Unamortized debt discount	(29,558		)	—
Unamortized debt issuance cost	(1,932		)	—
	$	122,264		$	—
	$	172,058		$	195,238

2018 Revolving Credit Facility

On August 2, 2018, we entered into a ~~supply agreement~~revolving credit facility with ~~OpGen with respect~~Silicon Valley Bank (Revolving Credit Facility) in an aggregate principal amount of up to ~~OpGen’s purchases~~the lesser of ~~consumables for use~~(i) $15.0 million (Maximum Amount) or (ii) the sum of (a) 85% of our eligible receivables and (b) 50% of our eligible inventory, in each case, subject to certain limitations (Borrowing Base), provided that the amount of eligible inventory that may be counted towards the Borrowing Base shall be subject to a cap as set forth in the Revolving Credit Facility. Subject to the level of this borrowing base, we may make and repay borrowings from time to time until the maturity of the revolving credit facility. The borrowing base as of December 31, 2018 under the revolving credit facility was $12.3 million. There were no borrowings outstanding under the Revolving Credit Facility at December 31, 2018.

The Revolving Credit Facility matures on August 2, 2020, and is collateralized by substantially all our property, other than intellectual property. Outstanding loans under the Revolving Credit Facility will bear interest, at the greater of (i) prime rate plus 0.50% or (ii) 5.50%. Interest on any outstanding loans is due and payable monthly and the principal balance is due at maturity though loans can be prepaid at any time without penalty. In addition, we pay a quarterly unused revolving line facility fee of 0.75% per annum on the average unused facility.

Subject to certain exceptions, we must pay a prepayment fee equal to (i) 2.00% of the Maximum Amount if it prepays all advances and terminates the Loan Agreement prior to August 2, 2019, or (ii) 1.00% of the Maximum Amount if it prepays all advances and terminates the Loan Agreement on or after August 2, 2019, and prior to the maturity date.

We incurred approximately $335,000 of debt issuance costs in connection with the ~~system. OpGen’s aggregate purchases~~facility, including $225,000 in commitment fees. Half of the commitment fee was paid at the inception of the facility with the remainder due on the earliest of (i) August 2, 2019, (ii) the date on which we terminate the agreement or (iii) the occurrence and continuance of an event of default. Debt issuance costs were capitalized and are being amortized to interest expense over the life of the Revolving Credit Facility.

The Revolving Credit Facility contains customary affirmative and negative covenants which, unless waived by the bank, limit our ability to, among other things, incur additional indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer assets, enter into affiliate transactions, undergo a change of control, or engage in merger and acquisition activity, including merging or consolidating with a third party. The Revolving Credit Facility also contains customary events of default, subject to customary cure periods for certain defaults, that include, among other things, non-payment defaults, covenant defaults, material judgment defaults, bankruptcy and insolvency defaults, cross-defaults to certain other material indebtedness, and defaults due to inaccuracy of representation and warranties. Upon an event of default, the lender may declare all or a portion of the outstanding obligations payable by us to be immediately due and payable and exercise other rights and remedies provided for under the ~~supply agreement~~Revolving Credit Facility. During the existence of an event of default, interest on the obligations under the Revolving Credit Facility could be increased to 5.0% above the otherwise applicable rate of interest.

We were in compliance with all the terms and conditions of the Revolving Credit Facility at December 31, 2018.

7. Fair Value of Financial Instruments

The following tables summarize our cash and available-for-sale securities that were measured at fair value by significant investment category within the fair value hierarchy (in thousands):



	December 31, 2018
	Carrying Amount		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities
Assets:
Cash	$	17,685	$	—	$	—		$	17,685	$	17,685	$	—
Available-for-sale:
Level I:
Money market funds	77,716		—		—			77,716		77,716		—
U.S. treasury securities	—		—		—			—		—		—
Level II:
U.S. government and agency securities	—		—		—			—		—		—
Total	$	95,401	$	—	$	—		$	95,401	$	95,401	$	—

	December 31, 2017
	Carrying Amount		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities
Assets:
Cash	$	20,129	$	—	$	—		$	20,129	$	20,129	$	—
Available-for-sale:
Level I:
Money market funds	16,142		—		—			16,142		16,142		—
U.S. treasury securities	497		—		—			497		—		497
Level II:
U.S. government and agency securities	26,369		—		(1		)	26,368		21,785		4,583
Total	$	63,137	$	—	$	(1	)	$	63,136	$	58,056	$	5,080

There were no transfers between Level I and Level II measurements during the year ended December 31, ~~2016 totaled approximately $120,000. During~~2018, and there were no changes in the ~~first quarter~~valuation techniques used.

Based on an evaluation of securities that were in a loss position, we did not recognize any other-than-temporary impairment charges for the years ended December 31, 2018, 2017, ~~OpGen had additional purchases that totaled approximately $16,461. We believe that~~and 2016. None of our ~~transactions with OpGen were on commercially reasonable terms no less favorable to us than could~~investments have been ~~obtained from unaffiliated third parties. The terms of these transactions have been previously approved and ratified by our audit committee without~~in a continuous loss position for more than 12 months. We concluded that the ~~participation of Mr. Jones.~~

~~In addition, through its affiliated funds, Versant Ventures, a venture capital firm for which the Chairman~~declines in market value of our ~~board of directors, Samuel D. Colella, serves as a managing member, is a significant stockholder~~available-for-sale securities investment portfolio were temporary in ~~OpGen. Mr. Colella does~~nature and did not serve on the board of directors of OpGen and is not involved in its operations. We do not believe that our transactions with OpGen constitute “related person transactions” within the meaning of Item 404 of Regulation S-K as they pertain to Mr. Colella, but as partconsider any of our ~~governance policy, Versant’s relationship with OpGen was disclosed~~investments to ~~our audit committee in connection with its consideration~~be other-than-temporarily impaired.

Convertible Notes

The estimated fair value of the ~~transactions described above.~~2014 and 2018 Notes is based on a market approach and represents a Level II valuation. When determining the estimated fair value of our long-term debt, we used a commonly accepted valuation methodology and market-based risk measurements that are indirectly observable, such as credit risk.

~~Policy Concerning Audit Committee Approval~~

The following table summarizes the par value, carrying value and the estimated fair value of ~~Related Person Transactions~~the 2014 and 2018 Notes at December 31, 2018 and 2017, respectively (in thousands):



	December 31, 2018						December 31, 2017
	Par Value		Carrying Value		Fair Value		Par Value		Carrying Value		Fair Value
2014 Notes	$	51,250	$	49,794	$	43,665	$	201,250	$	195,238	$	166,162
2018 Notes	149,999		122,264		171,843		—		—		—
Total	$	201,249	$	172,058	$	215,508	$	201,250	$	195,238	$	166,162

8. Shareholders' Equity

Tax Benefit Preservation Plan

On August 1, 2017, the Tax Benefit Preservation Plan (Tax Plan) dated as of November 21, 2016 expired and all of the preferred share purchase rights distributed to the holders of our common stock pursuant to the Tax Plan expired.

2018 Market Offering

On December 14, 2018, we closed on our previously announced underwritten public offering of 9,372,500 shares our common stock, $0.001 par value. The common stock was sold at a price to the public of $6.75 per share, for aggregate gross proceeds of approximately $63.3 million, from our existing shelf registration statement. Net proceeds from the offering were approximately $59.1 million after deducting underwriting discounts and commissions of $3.8 million and the $0.4 million of estimated expenses of the offering. We intend to use the net proceeds of the offering for general corporate purposes, including working capital, capital expenditures and continued research and development with respect to products and technologies, and to fund possible investments in or acquisitions of complementary businesses, products, or technologies.

2017 At-the-Market Offering

On August 10, 2017, we sold 9,090,909 shares of our common stock, $0.001 par value per share, pursuant to an earlier Sales Agreement, for aggregate gross proceeds of $30.0 million. Our aggregate net proceeds were approximately $28.8 million, after deducting related expenses, including commissions of approximately $0.7 million and issuance costs of approximately $0.5 million. These sales fully exhausted the shares that were available for sale under the Sales Agreement.

At December 31, 2018, we had reserved shares of common stock for future issuance under equity compensation plans as follows:



(in 000's)	Securities To Be Issued Upon Exercise Of Options	Securities To Be Issued Upon Release Of Restricted Stock and Performance Share Units	Number Of Remaining Securities Available For Future Issuance
2009 Equity Incentive Plan	43	—	—
2011 Equity Incentive Plan	2,064	1,631	2,022
DVS Sciences Inc. 2010 Equity Incentive Plan	38	—	—
2017 Inducement Award Plan	240	338	1,422
2017 Employee Stock Purchase Plan		—	698
	2,385	1,969	4,142

9. Stock-Based Plans

Our board of directors sets the terms, conditions, and ~~audit committee~~restrictions related to our ESPP and the grant of stock options, RSUs and performance-based awards under our various stock-based plans. Our board of directors determines the number of awards to grant and also sets vesting criteria.

In general, RSUs vest on a quarterly basis over a period of four years from the date of grant at a rate of 25% on the first anniversary of the grant date and ratably each quarter over the remaining 12 quarters, subject to the employees' continued employment.

Incentive stock options and non-statutory stock options granted under the 2011 Plan have ~~adopted~~ a ~~formal written policy that our executive officers, directors, holders~~term of no more than 5%ten years from the date of ~~any class~~grant and an exercise price of at least 100% of the fair market value of the underlying common stock on the date of grant. If a participant owns stock representing more than 10% of the voting power of all classes of our ~~voting securities,~~stock on the grant date, an incentive stock option awarded to the participant will have a term of no more than five years from the date of grant and ~~any member~~an exercise price of at least 110% of the ~~immediate family of any~~fair market value of the ~~foregoing persons, are not permitted~~underlying common stock on the date of grant. Generally, options vest at a rate of either 25% on the first anniversary of the option grant date and ratably each month over the remaining period of 36 months, or ratably each month over 48 months. We may grant options with different vesting terms from time to ~~enter into any transaction with us for~~time.

For performance-based share awards, our board of directors sets the performance objectives and other vesting provisions in determining the number of shares or value of performance units and performance shares that will be paid out. Such payout will be a function of the extent to which ~~disclosure would~~performance objectives or other vesting provisions have been achieved.

2011 Equity Incentive Plan

On January 28, 2011, our board of directors adopted the 2011 Equity Incentive Plan (the 2011 Plan) under which incentive stock options, non-statutory stock options, restricted stock units (RSUs), stock appreciation rights, performance units, and performance shares may be ~~required~~granted to our employees, directors, and consultants.

2009 Equity Incentive Plan and 1999 Stock Option Plan

Our 2009 Equity Incentive Plan (the 2009 Plan) terminated on the date the 2011 Plan was adopted. Options granted, or shares issued under ~~Item 404~~the 2009 Plan that were outstanding on the date the 2011 Plan became effective, remained subject to the terms of ~~Regulation S-K, referred to as a related person transaction, without~~ the ~~review~~2009 Plan.

2017 Inducement Award Plan

On January 5, 2017, we adopted the Fluidigm Corporation 2017 Inducement Award Plan (the “Inducement Plan”) and ~~approval or ratification~~reserved 2 million shares of our ~~audit committee,~~common stock for issuance pursuant to equity awards granted under the Inducement Plan. The Inducement Plan provides for the grant of equity-based awards and its terms are substantially similar to the 2011 Plan. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, awards under the Inducement Plan may only be made to individuals not previously our employees or ~~other independent~~non-employee members of our board of directors ~~if it~~(or following such individual's bona fide period of non-employment), as an inducement material to the individual's entry into employment with us or in connection with a merger or acquisition, to the extent permitted by Rule 5635(c)(3) of the Nasdaq Listing Rules.

Valuation and Expense Information

We use the Black-Scholes option-pricing model to estimate the fair value of stock options granted under our equity incentive plans. The weighted average assumptions used to estimate the fair value were as follows:



	Year Ended December 31,
	2018			2017			2016
Stock options:
Weighted average expected volatility	68.4		%	65.0		%	43.4		%
Weighted average expected term	4.7 years			4.2 years			6.0 years
Weighted average risk-free interest rate	2.7		%	1.7		%	1.4		%
Dividend yield	—			—			—
Weighted-average fair value per share	$	3.45		$	2.97		$	3.19

We determine the expected volatility based on our historical stock price volatility generally commensurate with the estimated expected term of the stock awards. The expected term of an award is ~~inappropriate~~based on historical forfeiture experience, exercise activity, and the terms and conditions of the stock awards. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to each grant’s expected

life. Each of these inputs is subjective and generally requires significant judgment by us. The fair value of the underlying common stock is also required to compute the fair value calculation of options and ESPP. We account for forfeitures as they occur.

We grant stock options at exercise prices not less than the fair value of our ~~audit committee~~common stock at the date of grant. The fair value of RSUs granted to ~~review such transaction due~~employees was estimated on the date of grant by multiplying the number of shares granted by the fair market value of our common stock on the grant date.

Activity under the 2011 Plan, the 2009 Plan, the 1999 Plan, and the Inducement Plan is as follows:

Restricted Stock Units:



	Number of Units (in 000's)		Weighted-Average Grant Date Fair Value per Unit
Balance at December 31, 2015	663		$	32.48
RSU granted	940		$	7.06
RSU released	(328	)	$	24.71
RSU forfeited	(210	)	$	17.82
Balance at December 31, 2016	1,065		$	15.31
RSU granted	916		$	5.73
RSU released	(445	)	$	15.57
RSU forfeited	(368	)	$	13.11
Balance at December 31, 2017	1,168		$	8.55
RSU granted	1,822		$	5.98
RSU released	(945	)	$	9.63
RSU forfeited	(233	)	$	8.50
Balance at December 31, 2018	1,812		$	7.09

The total intrinsic value of RSUs vested and released during the year ended December 31, 2018, 2017 and 2016 were approximately $6.8 million, $2.3 million and $2.4 million, respectively. The intrinsic value of vested and released RSUs is calculated by multiplying the fair market value of our common stock on the vesting date by the number of shares vested. As of December 31, 2018, the unrecognized compensation costs related to outstanding unvested RSUs under our equity incentive plans were $9.7 million. We expect to recognize those costs over a weighted average period of 2.9 years.

2018 Retention Bonus Program

Included in the 2018 RSU activity are 379,593 of grants and releases related to a ~~conflict~~retention bonus program. As disclosed in our Current Report on Form 8-K filed on February 10, 2017, we previously implemented a company-wide retention bonus incentive program in which our executive officers at the time also participated. The bonus program provides for the payment of ~~interest. Any related person transaction must be presented~~cash bonuses to ~~our audit~~program participants who were employees at the time the plan was implemented and who remain with Fluidigm through January 1, 2019. On September 18, 2018, the compensation committee for review, consideration and approval or ratification. In approving or rejecting any such related person transaction, our audit committee is to consider the relevant facts and circumstances available and deemed relevant to the audit committee, including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of ~~the related person’s interest in the transaction.~~

~~Director Independence~~

As a company listed on NASDAQ, we are required under the NASDAQ listing requirements to maintain a board comprised of a majority of “independent directors,” as determined affirmatively by our board. In addition, the NASDAQ rules require that, subject to specified exceptions, each member of our audit, compensation, and nominating and corporate governance committees be independent. Our board of directors determined that a majority of our directors during 2016 were “independent directors” as defined under applicable NASDAQ rules, including Gerhard F. Burbach, Samuel D. Colella, Evan Jones, Patrick S. Jones, and John A. Young.

~~In April 2017,~~ our board of directors ~~undertook another review~~approved an exchange program for our executive officers and for employees resident in the United States and Canada who are retention bonus program participants. In the exchange program, eligible participants could elect to surrender their right to receive a cash bonus in exchange for fully vested restricted stock units issued under our 2011 Equity Incentive Plan on the terms described below. Among other reasons, our compensation committee adopted the exchange program to encourage employee stock ownership and to effectively manage cash resources.

In connection with the bonus exchange program, each eligible employee could elect to exchange 25%, 50%, 75%, or 100% of the ~~independence~~retention cash bonus otherwise payable under the terms of the program. Each employee participating in the exchange would receive a number of fully vested restricted stock units equal to the quotient, rounded up to the next whole number, determined by dividing the cash amount of the retention cash bonus that such eligible employee elects to exchange by an amount equal to 85% of the lower of the closing prices of one share of our ~~directors and considered whether any director has a material relationship with us that could compromise his ability to exercise independent judgment in carrying out his responsibilities. As a result~~common stock on the commencement date of this review, our board of directors determined that Gerhard F. Burbach, Samuel D. Colella, Evan Jones, Patrick S. Jones, John A. Young, Carlos Paya and Nicolas Barthelemy representing a majority of our directors, are “independent directors” as defined under applicable NASDAQ rules. Stephen Christopher Linthwaite is not considered an independent director because of his positions as our President and Chief Executive Officer.the

exchange offer or the closing date of the exchange offer. The exchange offer closed on November 5, 2018. The total value of the 379,593 shares of common stock issued under this program was $2.8 million and is included in the total intrinsic value of RSUs released in 2018.

~~-41-~~

~~Item 14. Principal Accounting Fees and Services~~

~~Principal Accounting Fees and Services~~

~~The following table sets forth the aggregate fees for audit services provided by PricewaterhouseCoopers LLP for the years ended December 31, 2016 and December 31, 2015:~~Stock Options:

2016
2015
Audit fees(1) $ 1,296,464
$ 1,248,247
Audit-related fees —
—
Tax fees(2) 72,000
—
All other fees —
—
Total fees $ 1,368,464
$ 1,248,247



	Number of Options (000's)		Weighted-Average Exercise Price per Option		Weighted- Average Remaining Contractual Life (in Years)	Aggregate Intrinsic Value (1) in (000's)
Balance at December 31, 2015	3,242		$	20.45	2.2
Options granted	978		$	7.44
Options exercised	(57	)	$	4.04		$	310
Option forfeited	(603	)	$	23.53
Balance at December 31, 2016	3,560		$	16.62	6.8
Options granted	1,364		$	5.61
Options exercised	(25	)	$	4.07		$	42
Option forfeited	(2,735	)	$	16.33
Balance at December 31, 2017	2,164		$	10.41	6.6
Options granted	758		$	6.05
Options exercised	(40	)	$	5.24		$	81
Option forfeited	(497	)	$	16.09
Balance at December 31, 2018	2,385		$	7.56	7.8	$	5,991
Vested at December 31, 2018	1,026		$	9.92	6.3	$	2,111
Expected to vest at December 31, 2018	1,359		$	5.78	8.9	$	3,879

(1)

~~Audit fees for 2016 and 2015 consist~~Aggregate intrinsic value as of ~~fees billed or to be billed by PricewaterhouseCoopers LLP for professional services rendered for~~December 31, 2018 was calculated as the ~~audit~~difference between the closing price per share of our ~~annual consolidated financial statements~~common stock on the last trading day of 2018, which was $8.62, and ~~for review~~the exercise price of ~~certain quarterly financial statements.~~


~~(2)~~	~~For 2016, Tax fees consist~~the options, multiplied by the number of ~~fees billed by PricewaterhouseCoopers LLP for professional services rendered primarily for intercompany transfer pricing services.~~in-the-money options.

~~Policy~~As of December 31, 2018, the unrecognized compensation costs related to outstanding unvested options under our equity incentive plans were $4.2 million. We expect to recognize those costs over a weighted average period of 2.6 years.

2017 Stock Option Exchange

Included in the 2017 option activity above is the impact of our 2017 Stock Option Exchange Program. On August 23, 2017, we launched a one-time Stock Option Exchange Program (the Program), which eligible employees were able to exchange certain outstanding stock options (Eligible Options), whether vested or unvested, with an exercise price greater than $4.37 per share and greater than the closing price of a share of our common stock on ~~Audit Committee Pre-Approval of Services Performed by Independent Registered Public Accounting Firm~~

~~Consistent with~~ the ~~requirements~~Nasdaq Global Select Market on the expiration date of the ~~SEC~~exchange offer (the Offer), for restricted stock units or stock options (New Awards) covering a lesser number of shares than were subject to the Eligible Options exchanged immediately before being canceled in the Offer. Non-employee members of our board of directors were not eligible to participate in the Program. The Program expired on September 20, 2017, with a closing price of $5.13 per share.

Employees elected to surrender Eligible Options to purchase a total of 1,204,198 shares of our common stock. All surrendered options were canceled effective as of the expiration date, and immediately thereafter, in exchange for such surrendered options, we issued (i) new options to purchase an aggregate of 399,117 shares of our common stock with an exercise price of $5.13; and (ii) restricted stock units representing 54,944 shares of our common stock, each, pursuant to the terms of the Offer and our 2011 Equity Incentive Plan. The new awards granted under the Program generally vest over three years.

The Program did not result in a material incremental stock-based compensation expense because the fair value of the new awards was approximately equal to the fair value of the surrendered options immediately prior to the exchange date. The

original fair value of the surrendered options plus the incremental stock-based compensation expense is being recognized over the vesting periods of the New Awards.

Performance-based Awards

2018 Performance Stock Units

During the three months ended March 31, 2018, we granted 167,000 performance stock units to certain executive officers and senior level employees. The number of performance stock units ultimately earned is calculated based on the Total Shareholder Return (TSR) of our common stock as compared to the TSR of a defined group of peer companies during the performance period from January 1, 2018, to December 31, 2020. The percentage of performance stock units that vest will depend on our relative position at the end of the performance period and can range from 0% to 200% of the number of units granted.

Under FASB ASC Topic 718, the provisions of the performance stock unit awards related to TSR are considered a market condition, and the ~~Public Company Accounting Oversight Board,~~effects of that market condition should be reflected in the grant date fair value of the awards. We used a Monte Carlo simulation pricing model to incorporate the market condition effects at our grant date with a fair value of $10.09 per unit.

Activity under the 2018 performance stock units is as follows:



	Number of Units (in 000's)		Weighted-Average Grant Date Fair Value per Unit
Balance at December 31, 2017	—		$	—
RSU granted	167		10.09
RSU released	—		—
RSU forfeited	(12	)	10.09
Balance at December 31, 2018	155		$	10.09

As of December 31, 2018, the unrecognized compensation costs related to these awards were $1.2 million. We expect to recognize those costs over a weighted average period of 2.2 years.

2016 Performance-based Stock Options and Restricted Stock Units

In 2016, we granted 184,050 and 87,620 performance-based stock options and performance-based restricted stock units (each, a performance award), respectively, to executive officers and employees, which were accounted for as equity awards. The number of performance awards that ultimately vested depended on the achievement of certain performance criteria set by the compensation committee of our board of directors. The performance-based stock options had an exercise price per share of $7.10. We recognize stock-based compensation expense over the vesting period of the performance awards when achievement of the performance criteria becomes probable. The performance criteria were not met, and the awards did not vest. We did not recognize any expense related to these performance awards in 2018, 2017 or ~~PCAOB, regarding auditor independence,~~2016.

2017 Employee Stock Purchase Plan

On August 1, 2017, our ~~audit committee~~stockholders approved our 2017 Employee Stock Purchase Plan (ESPP) at the annual meeting of stockholders. Our ESPP offers U.S. and some non-U.S. employees the right to purchase shares of our common stock. Our ESPP has ~~responsibility for appointing, setting~~a six-month offering period, with a new period commencing on the first trading day on or after May 31 and November 30 of each year. Employees are eligible to participate through payroll deductions of up to 10% of their compensation and ~~overseeing~~may not purchase more than $25,000 of stock in any calendar year. The purchase price at which shares are sold under the ~~work~~ESPP is 85% of the lower of the fair market value of a share of our ~~independent registered public~~common stock on the first day of the offering period or the last day of the offering period. Our first ESPP offering period began on October 1, 2017 with a shorter offering period ending on November 30, 2017.

Stock-Based Compensation

Total stock-based compensation expense recognized was as follows (in thousands):



	For the Year Ended December 31,
	2018		2017		2016
2018 Retention Bonus Program	$	2,809	$	—	$	—
Options and Restricted Stock Units	7,716		8,972		13,858
Employee Stock Purchase Plan	498		120		—
Total Share-Based Compensation	$	11,023	$	9,092	$	13,858

10. Income Taxes

Our loss before income taxes consists of the following (in thousands):



	Year Ended December 31,
	2018			2017			2016
Domestic	$	(47,600	)	$	(56,885	)	$	(65,211	)
International	(13,820		)	(6,914		)	(14,966		)
Loss before income taxes	$	(61,420	)	$	(63,799	)	$	(80,177	)

Significant components of our benefit for income taxes are as follows (in thousands):



	Year Ended December 31,
	2018			2017			2016
Current:
Federal	$	(27	)	$	—		$	—
State	(19		)	(17		)	(14		)
Foreign	(32		)	(501		)	286
Total current tax (expense) benefit	(78		)	(518		)	272
Deferred:
State	—			—			—
Foreign	2,485			3,782			3,920
Total deferred benefit	2,485			3,782			3,920
Total benefit for income taxes	$	2,407		$	3,264		$	4,192

Reconciliation of income taxes at the statutory rate to the benefit from (provision for) income taxes recorded in the statements of operations is as follows:



	Year Ended December 31,
	2018		2017		2016
Tax benefit at federal statutory rate	21.0	%	34.0	%	34.0	%
State tax expense, net of federal benefit	2.3		5.5		2.2
Foreign tax benefit (expense)	(1.1	)	0.4		(0.7	)
Change in valuation allowance	(19.2	)	39.2		(31.2	)
Federal research and development credit	1.5		1.9		1.3
Unrecognized tax benefit	(0.2	)	(0.6	)	(1.3	)
Impact of the Tax Act	—		(74.6	)	—
Other, net	(0.4	)	(0.7	)	0.9
Effective tax rate	3.9	%	5.1	%	5.2	%

The Tax Act was enacted in December 2017. The Tax Act introduced a broad range of tax reform measures that significantly change the federal income tax laws. At December 31, 2017, we recorded the provisional income tax effects of the Tax Act under Accounting Standards Codification Topic 740, Income Taxes. Due to our having recorded a full valuation allowance against its U.S. federal and state deferred tax assets, there was no net impact on our tax provision as a result of the remeasurement of U.S. deferred taxes using the relevant tax rate at which we expect them to reverse. The one-time transition tax on post-1986 foreign unremitted earnings did not have a material impact to our effective tax rate as a result of generating net foreign deficit earnings. In accordance with Staff Accounting Bulletin (“SAB”) No. 118, we completed the accounting ~~firm.~~related to tax reform in the fourth quarter of 2018 and no material adjustments to the provisional tax expense was required. We continue to monitor supplemental legislation and technical interpretations of the tax law that may cause the final impact from the Tax Act to differ from the amounts previously recorded.

Significant components of our deferred tax assets and liabilities are as follows (in thousands):



	December 31,
	2018			2017
Deferred tax assets:
Net operating loss carryforwards	$	98,920		$	91,701
Reserves and accruals	7,167			3,927
Depreciation and amortization	4,262			5,591
Tax credit carryforwards	16,675			14,838
Stock-based compensation	1,899			5,994
Total gross deferred tax assets	128,923			122,051
Valuation allowance on deferred tax assets	(126,109		)	(119,228		)
Total deferred tax assets, net of valuation allowance	2,814			2,823
Deferred tax liabilities:
Fixed asset and intangibles	(16,528		)	(18,912		)
Total deferred tax liabilities	(16,528		)	(18,912		)
Net deferred tax liability	$	(13,714	)	$	(16,089	)

We evaluate a number of factors to determine the realizability of our deferred tax assets. Recognition of deferred tax assets is appropriate when realization of these assets is more likely than not. Assessing the realizability of deferred tax assets is

dependent upon several factors including historical financial results. The net deferred tax assets have been partially offset by a valuation allowance because we have incurred losses since our inception. The valuation allowance increased by $6.9 million during 2018, decreased by $27.1 million during 2017 and increased by $22.1 million during 2016, respectively. The change in valuation allowance during 2018 is mainly due to significant taxable losses and an increase in tax attributes. The change in valuation allowance during 2017 is mainly due to the change in Federal statutory rate from 34% to 21%, offset by a significant increase in the taxable loss in 2017.

The valuation allowances of $126.1 million and $119.2 million as of December 31, 2018 and 2017, respectively, primarily relate to temporary tax differences, net operating losses and research and development credits generated in the current and prior years. We believe it is more likely than not that U.S. federal and state of California deferred tax assets relating to temporary differences, net operating losses and research and development credits are not realizable. As such, full valuation allowances have been applied against the deferred tax assets relating to jurisdictions of the federal U.S. and the state of California.

A reconciliation of the beginning and ending amount of the valuation allowance for the years ended December 31, 2018, 2017, and 2016 is as follows (in thousands):



	Valuation Allowance
December 31, 2015	$	124,137
Charges to earnings	—
Charges to other accounts	22,148
December 31, 2016	146,285
Charges to earnings	830
Charges to other accounts	(27,887		)
December 31, 2017	119,228
Charges to earnings	—
Charges to other accounts	6,880
December 31, 2018	$	126,108

As of December 31, 2018, we had net operating loss carryforwards for U.S. federal income tax purposes of $432.2 million, which expire beginning in 2021, and U.S. federal research and development tax credits of $8.5 million, which expire in the years 2021 through 2039. As of December 31, 2018, we had net operating loss carryforwards for state income tax purposes of $170.3 million, which expire beginning in 2028 through 2039, and California research and development tax credits of $11.0 million, which do not expire. As of December 31, 2018, we had foreign net operating loss carryforwards of $1.9 million, which expire in the years 2019 through 2027.

Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. In ~~recognition~~2015, we completed a Section 382 analysis for the period from our inception in May 1999 through December 31, 2015, which excluded the net operating loss carryforwards for DVS prior to the acquisition and determined that an ownership change as defined under Section 382 occurred in November 2001, which resulted in a reduction to our U.S. federal net operating losses by $1.2 million. In 2016, 2017 and 2018, we continued the Section 382 analysis through December 31, 2018 and determined that an ownership change did not occur during the periods.

Uncertain Tax Positions

The aggregate changes in the balance of our gross unrecognized tax benefits during 2018, 2017, and 2016 were as follows (in thousands):



December 31, 2015	$	8,662
Increases in balances related to tax positions taken during prior period	46
Increases in balances related to tax positions taken during current period	1,673
Decreases in balances related to tax positions taken during prior period	(1,048		)
December 31, 2016	9,333
Increases in balances related to tax positions taken during current period	61
Decreases in balances related to tax positions taken during prior period	(2,077		)
December 31, 2017	7,317
Increases in balances related to tax positions taken during current period	255
Decreases in balances related to tax positions taken during prior period	(228		)
December 31, 2018	$	7,344

Accrued interest and penalties related to unrecognized tax benefits were included in the income tax provision and are immaterial as of December 31, 2018 and 2017.

As of December 31, 2018, there are $0.4 million unrecognized tax benefits that, if recognized, would affect our effective tax rate. We do not anticipate that our existing unrecognized tax benefits will significantly increase or decrease within the next 12 months.

We file income tax returns in the United States, various states, and certain foreign jurisdictions. As a result of net operating loss carryforwards, all of our tax years are open to federal and state examination in the United States. Tax years from 2013 are open to examination in various foreign countries.

11. Employee Benefit Plans

We sponsor a 401(k) savings plan for our employees in the United States that stipulates that eligible employees may elect to contribute to the plan, subject to certain limitations, up to the lesser of 90% of eligible compensation or the maximum amount allowed by the U.S. Internal Revenue Service. In 2015, we implemented a match formula of 100% up to $2,000 annually, following a 4-year vesting schedule. Employer matching contributions to the 401(k) plan for the years ended December 31, 2018, 2017, and 2016 were $0.4 million, $0.5 million, and $0.6 million, respectively.

12. Information About Geographic Areas

We operate in one reporting segment that develops, manufacturers and commercializes tools for life sciences research. Our chief executive officer manages our operations and evaluates our financial performance on a consolidated basis. For purposes of allocating resources and evaluating regional financial performance, our chief executive officer reviews separate sales information for the different regions of the world. Our general and administrative expenses and our research and development expenses are not allocated to any specific region. Most of our principal operations, other than manufacturing, and our decision-making functions are located at our corporate headquarters in the United States.

A summary table of our total revenue by geographic areas of our customers and by product and services for the years ended December 31, 2018, 2017 and 2016 is included in Note 3 to the Consolidated Financial Statements of this ~~responsibility, our audit committee has established a policy~~Form 10K.

Sales to customers in the United States represented $48.1 million or 43%, of total revenues for the ~~pre-approval~~year ended December 31, 2018. Sales to customers in the United States represented $45.8 million or 45% of ~~all audit~~total revenues for the year ended December 31, 2017, and ~~permissible non-audit services provided by~~$52.6 million or 50% for the ~~independent registered public accounting firm. These services~~year ended December 31, 2016.

Sales to customers in China represented $14.0 million or 12%, of total revenues for the year ended December 31, 2018. Sales to customers in China represented 11% or $11.1 million, of total revenues for each of the years ended December 31, 2017, and 2016 respectively.

We had long-lived assets consisting of property, plant and equipment, net of accumulated depreciation, in the following geographic areas for each year presented (in thousands):



	December 31,
	2018		2017
United States	$	1,881	$	3,500
Singapore	3,748		5,167
Canada	3,104		3,481
EMEA	66		125
Asia-Pacific	26		28
Total	$	8,825	$	12,301

13. Commitments and Contingencies

Operating Leases

We have entered into various long-term non-cancelable operating lease agreements for equipment and facilities expiring at various times through March 2026. We lease office space under non-cancelable leases in the United States, Canada, Singapore, Japan, China, France and United Kingdom. Certain facility leases also contain rent escalation clauses. Our lease payments are expensed on a straight-line basis over the life of the leases. Rental expense under operating leases, net of amortization of lease incentives and sublease income, for the years ended December 31, 2018, 2017, and 2016 was $5.0 million, $4.7 million, and $6.3 million, respectively.

Future minimum lease payments and minimum sublease income under non-cancelable operating leases as of December 31, 2018 are as follows (in thousands):



Fiscal Year	Minimum Lease Payments		Minimum Sublease Income			Net Operating Leases
2019	$	4,184	$	(520	)	$	3,664
2020	2,213		(164		)	2,049
2021	1,245		—			1,245
2022	827		—			827
2023	552		—			552
Thereafter	1,241		—			1,241
Total	$	10,262	$	(684	)	$	9,578

Other Commitments

In the normal course of business, we enter into various contractual and legally binding purchase commitments. As of December 31, 2018, these commitments were approximately $1.6 million.

Indemnifications

From time to time, we have entered into indemnification provisions under certain of our agreements in the ordinary course of business, typically with business partners, customers, and suppliers. Pursuant to these agreements, we may ~~include audit services, audit-related services, tax services,~~indemnify, hold harmless, and ~~other services. The audit committee generally pre-approves particular services or categories of services~~agree to reimburse the indemnified parties on a case-by-case ~~basis.~~basis for losses suffered or incurred by the indemnified parties in connection with any patent or other intellectual property infringement claim by any third party with respect to our products. The term of these indemnification provisions is generally perpetual from the time of the execution of the agreement. The maximum potential amount of future payments we could be required to make under these indemnification provisions is typically not limited to a specific amount. In addition, we have entered into indemnification agreements with our

officers, directors, and certain other employees. With certain exceptions, these agreements provide for indemnification for related expenses including, among others, attorneys' fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding.

We incurred legal expenses between October 2015 and the third quarter of 2017 to defend claims by Thermo Fisher Scientific, Inc., (Thermo) against one of our employees. In December 2015, Thermo Fisher Scientific, Inc., (Thermo) filed a complaint in the Circuit Court for the County of Kalamazoo, Michigan against one of its former employees who had recently been hired by us alleging, among other claims, misappropriation of proprietary information and breach of contractual and fiduciary obligations to Thermo while such individual was still an employee of Thermo. In November 2016, Thermo amended its complaint to add us as a party to the litigation, making various commercial and employment-related claims and seeking damages and injunctive relief. In July 2017, we entered into a settlement agreement with Thermo. Pursuant to the terms of the settlement agreement, we agreed to pay Thermo a one-time payment of $3.0 million in exchange for a release and dismissal of all claims with prejudice upon payment of the settlement. In August 2017, we paid the settlement of $3.0 million and received an insurance recovery payment of $1.0 million related to this matter.

Contingencies

From time to time, we may be subject to various legal proceedings and claims arising in the ordinary course of business. These include disputes and lawsuits related to intellectual property, mergers and acquisitions, licensing, contract law, tax, regulatory, distribution arrangements, employee relations and other matters. Periodically, we review the status of each matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and a range of possible losses can be estimated, we accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, we continue to reassess the potential liability related to pending claims and litigation and may revise estimates.

14. Quarterly Results of Operations (Unaudited)

Selected quarterly results of operations for the years ended December 31, 2018 and 2017 are as follows (in thousands, except for per share amounts):



2018	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Total revenue	$	25,248		$	26,428		$	28,963		$	32,325
Net loss	$	(13,247	)	$	(16,241	)	$	(14,750	)	$	(14,775	)
Net loss per share, basic and diluted	$	(0.34	)	$	(0.42	)	$	(0.38	)	$	(0.36	)

2017	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Total revenue	$	25,533		$	23,912		$	24,747		$	27,745
Net loss	$	(17,202	)	$	(16,933	)	$	(15,944	)	$	(10,456	)
Net loss per share, basic and diluted	$	(0.59	)	$	(0.58	)	$	(0.46	)	$	(0.27	)

15. Subsequent Event

From January 9, 2019 through February 27, 2019, we received notices from holders of the 2018 Notes electing to voluntarily convert approximately $138.1 million in aggregate principal amount pursuant to the terms of the Second Supplemental Indenture dated March 6, 2018, between us and U.S. Bank National Association (Trustee) to the Indenture dated

as of February 14, 2014, between us and the Trustee. As a result of such voluntary conversions, we have elected to fully satisfy our conversion obligations by delivering approximately 17.9 million shares of our common stock to such holders and have retired approximately $138.1 million of the 2018 Notes. On February 27, we notified the Trustee of our intention to exercise our Issuer’s Conversion Option pursuant to the terms of the Second Supplemental Indenture with respect to the remaining approximately $11.9 million in aggregate principal amount of 2018 Notes. These bonds were converted into approximately 1.5 million shares of our common stock and the bonds retired in March 2019.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2018. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2018, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Management assessed our internal control over financial reporting as of December 31, 2018. Management based its assessment on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2018.

The effectiveness of our internal control over financial reporting as of December 31, 2018 has been audited by PricewaterhouseCoopers, LLP, an independent registered public accounting firm, as stated in their report included in this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on the Effectiveness of Controls

Control systems, no matter how well conceived and ~~management~~operated, are ~~required~~designed to ~~periodically report to~~provide a reasonable, but not an absolute, level of assurance that the ~~audit committee regarding~~objectives of the ~~extent~~control system are met. Further, the design of ~~services provided by~~a control system must reflect the ~~independent registered public accounting firm in accordance with these pre-approvals,~~fact that there are resource constraints, and the ~~fees for the services performed~~benefits of controls must be considered relative to ~~date.~~

~~All~~their costs. Because of the ~~services~~inherent limitations in all control systems, no evaluation of ~~PricewaterhouseCoopers LLP for 2015~~controls can provide absolute assurance that all control issues and ~~2016 described above were pre-approved by~~instances of fraud, if any, have been detected. Because of the ~~audit committee.~~inherent limitations in any control system, misstatements due to error or fraud may occur and not be detected.

~~-42-~~

ITEM 9B. OTHER INFORMATION

Not applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information called for by this item will be set forth in our Proxy Statement for the Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2018 and is incorporated herein by reference.

Our board of directors has adopted a Code of Ethics and Conduct that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer and other executive and senior financial officers. The full text of our code of business conduct and ethics is posted on the investor relations page on our website which is located at www.fluidigm.com. We will post any amendments to our code of business conduct and ethics, or waivers of its requirements, on our website.

ITEM 11. EXECUTIVE COMPENSATION

The information called for by this item will be set forth in our Proxy Statement and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information, if any, required by this item will be set forth in our Proxy Statement and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information, if any, required by this item will be set forth in our Proxy Statement and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item will be set forth in our Proxy Statement and is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

1. Financial Statements. See “Index to Consolidated Financial Statements” in Part II, Item ~~15. Exhibits,~~ 8 of this Form 10-K.

2. Financial Statement ~~Schedules~~


~~(a)~~	~~Documents filed as part of the report~~

1.schedule. See “Index to Consolidated Financial Statements” in Part II, Item 8 of this Form 10-K.

3. Exhibits.The ~~consolidated financial statements of Fluidigm Corporation were~~exhibits listed in the accompanying Index to Exhibits are filed herewith or are incorporated by reference to exhibits previously filed with ~~our Annual Report~~the U.S. Securities and Exchange Commission.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS AND RESERVES



	In thousands
	Balance at Beginning of Period		Additions/ Charged to Expense		Deductions			Balance at End of Period
Year ended December 31, 2018
Accounts receivable allowance	$	391	$	162	$	(427	)	$	126
Year ended December 31, 2017
Accounts receivable allowance	$	502	$	24	$	(135	)	$	391
Year ended December 31, 2016
Accounts receivable allowance	$	103	$	484	$	(85	)	$	502



	In thousands
	Balance at Beginning of Period		Additions/ Charged to Expense		Deductions			Balance at End of Period
Year ended December 31, 2018
Warranty allowance	$	699	$	1,573	$	(1,409	)	$	863
Year ended December 31, 2017
Warranty allowance	$	1,023	$	695	$	(1,019	)	$	699
Year ended December 31, 2016
Warranty allowance	$	1,076	$	885	$	(938	)	$	1,023

ITEM 16. FORM 10-K SUMMARY

None.

INDEX TO EXHIBITS



Exhibit Number	Description	Incorporated by Reference From Form	Incorporated by Reference From Exhibit Number	Date Filed
2.1	Agreement and Plan of Merger dated January 28, 2014 by and among Fluidigm Corporation, DVS Sciences, Inc., Dawid Merger Sub, Inc. and Shareholder Representative Services LLC.	8-K	2.1	1/29/2014
3.1	Eighth Amended and Restated Certificate of Incorporation of Fluidigm Corporation filed on February 15, 2011.	10-K	3.1	3/28/2011
3.2	Amended and Restated Bylaws of Fluidigm Corporation effective as of February 9, 2011.	10-K	3.2	3/28/2011
3.3	Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock.	8-K	3.1	11/22/2016
3.4	Certificate of Elimination of Series A Participating Preferred Stock of Fluidigm Corporation.	8-K	3.1	8/2/2017
4.1	Specimen Common Stock Certificate of Fluidigm Corporation.	S-8	4.1	8/3/2017
4.2	Indenture, dated February 4, 2014, by and between Fluidigm Corporation and U.S. Bank National Association.	8-K	4.1	2/4/2014
4.3	First Supplemental Indenture, dated February 4, 2014, by and between Fluidigm Corporation and U.S. Bank National Association.	8-K	4.2	2/4/2014
4.4	Form of Global Note (included in Exhibit 4.3).	8-K	4.3	2/4/2014
4.5	Tax Benefit Preservation Plan, dated as of November 21, 2016, by and between Fluidigm Corporation and Computershare Inc., as Rights Agent.	8-K	4.1	11/22/2016
4.6	Second Supplemental Indenture, dated March 6, 2018, between Fluidigm Corporation and U.S. Bank National Association.	8-K	4.2	3/6/2018
4.7	Form of Exchange Note (included in Exhibit 4.6).	8-K	4.3	3/6/2018
10.1	Form of Indemnification Agreement between Fluidigm Corporation and its directors and officers.	S-1/A	10.1	1/28/2011
10.2	Reserved.
10.3#	2009 Equity Incentive Plan of Fluidigm Corporation, as amended.	S-1	10.3	12/3/2010
10.3A#	Forms of agreements under the 2009 Equity Incentive Plan.	S-1	10.3A	12/3/2010
10.4#	2011 Equity Incentive Plan of Fluidigm Corporation.	S-1/A	10.4	1/28/2011
10.4A#	Forms of agreements under the 2011 Equity Incentive Plan.	S-1/A	10.4A	1/28/2011
10.4B#	Amendments to the Fluidigm Corporation 2011 Equity Incentive Plan and 2009 Equity Incentive Plan and the DVS Sciences, Inc. 2010 Equity Incentive Plan.	8-K	10.2	8/2/2017
10.4C#	Forms of U.S. agreements under the 2011 Equity Incentive Plan.	SC TO-I	(d)(2)	8/23/2017



Exhibit Number	Description	Incorporated by Reference From Form	Incorporated by Reference From Exhibit Number	Date Filed
10.4D	Rules of the Fluidigm Corporation 2011 Equity Incentive Plan for Restricted Stock Unit Awards Granted to French Participants.	SC TO-I	(d)(3)	8/23/2017
10.4E	Rules of the Fluidigm Corporation 2011 Equity Incentive Plan for Options Granted to French Participants.	SC TO-I	(d)(4)	8/23/2017
10.4F	UK Sub-plan to the Fluidigm Corporation 2011 Equity Incentive Plan.	SC TO-I	(d)(5)	8/23/2017
10.4G#	Form of Restricted Stock Unit Agreement-Non-U.S. under the 2011 Equity Incentive Plan.	SC TO-I	(d)(6)	8/23/2017
10.4H#	Form of Stock Option Agreement-Non-U.S. under the 2011 Equity Incentive Plan.	SC TO-I	(d)(7)	8/23/2017
10.5†	Second Amended and Restated License Agreement between California Institute of Technology and Fluidigm Corporation, effective as of May 1, 2004.	S-1	10.5	12/3/2010
10.5A†	First Addendum, effective as of March 29, 2007, to Second Amended and Restated License Agreement between California Institute of Technology and Fluidigm Corporation effective as of May 1, 2004.	S-1	10.5A	12/3/2010
10.6†	Co-Exclusive License Agreement between President and Fellows of Harvard College and Fluidigm Corporation effective as of October 15, 2000.	S-1	10.6	12/3/2010
10.6A†	First Amendment to Co-Exclusive License Agreement between President and Fellows of Harvard College and Fluidigm Corporation effective as of October 15, 2000.	S-1	10.6A	12/3/2010
10.7†	Co-Exclusive License Agreement between President and Fellows of Harvard College and Fluidigm Corporation effective as of October 15, 2000.	S-1	10.7	12/3/2010
10.8†	Co-Exclusive License Agreement between President and Fellows of Harvard College and Fluidigm Corporation effective as of October 15, 2000.	S-1	10.8	12/3/2010
10.9†	Letter Agreement between President and Fellows of Harvard College and Fluidigm Corporation dated December 22, 2004.	S-1	10.9	12/3/2010
10.10#	Fluidigm Corporation 2017 Inducement Award Plan and related form agreements.	8-K	10.1	1/11/2017
10.11	Loan and Security Agreement, dated as of August 2, 2018 by and between Fluidigm Corporation and Silicon Valley Bank.	8-K	10.1	8/2/2018
10.12	Reserved.
10.13#	Amended and Restated Offer Letter to Steven C. McPhail, dated February 28, 2017.	10-K	10.13	3/3/2017
10.14#	Form of Amended and Restated Employment and Severance Agreement between Fluidigm Corporation and each of its executive officers.	8-K	10.14	12/11/2012
10.15#	Offer Letter to Stephen Christopher Linthwaite, dated July 14, 2016.	10-Q	10.1	5/8/2018
10.16#	Employment and Severance Agreement, effective as of August 1, 2016, by and between Fluidigm Corporation and Stephen Christopher Linthwaite.	10-Q	10.2	11/9/2016
10.17#	Offer Letter to Vikram Jog dated January 29, 2008.	S-1	10.17	12/3/2010
10.18#	Offer Letter to Bradley A. Kreger dated February 13, 2018.	Filed herewith



Exhibit Number	Description	Incorporated by Reference From Form	Incorporated by Reference From Exhibit Number	Date Filed
10.19	Lease Agreement between ARE - San Francisco No. 17 LLC and Fluidigm Corporation, dated September 14, 2010, as amended September 22, 2010.	S-1/A	10.19	1/7/2011
10.19A	Second Amendment to Lease Agreement between ARE-San Francisco No. 17, LLC and Fluidigm Corporation, dated April 9, 2013.	10-Q	10.19A	5/9/2013
10.19B	Fourth Amendment to Lease Agreement between ARE-San Francisco No. 17, LLC and Fluidigm Corporation, dated June 4, 2014.	10-Q	10.3	8/4/2014
10.19C	Fifth Amendment to Lease Agreement between ARE-San Francisco No. 17, LLC and Fluidigm Corporation, dated September 15, 2014.	10-Q	10.2	11/6/2014
10.19D	Sixth Amendment to Lease Agreement between ARE-San Francisco No. 17, LLC and Fluidigm Corporation, dated December 8, 2015.	8-K	10.1	12/14/2015
10.19E	Seventh Amendment to Lease Agreement between ARE-San Francisco No. 17, LLC and Fluidigm Corporation, dated March 23,2017.	10-Q	10.1	5/9/2017
10.19F	Eighth Amendment to Lease Agreement between ARE-San Francisco No. 17, LLC and Fluidigm Corporation, dated August 2, 2017.	8-K	10.1	8/3/2017
10.19G	Ninth Amendment to Lease Agreement between ARE-San Francisco No. 17, LLC and Fluidigm Corporation, dated May 31, 2018.	10-Q	10.2	8/8/2018
10.20	Tenancy for Flatted Factory Space in Singapore between JTC Corporation and Fluidigm Corporation dated July 27, 2005, as amended August 12, 2008 and May 31, 2010.	S-1	10.20	12/3/2010
10.21	Offer of Tenancy for Facility Lease between Fluidigm Singapore Pte. Ltd. and SBC Institutional Trust Services (Singapore) Limited, as trustee of Ascendas Real Estate Investment Trust dated October 14, 2013.	10-K	10.21	3/12/2014
10.22	Offer of Tenancy for Lease of Additional Space at Singapore Facility between Fluidigm Singapore Pte. Ltd. and HSBC Institutional Trust Services (Singapore) Limited, as trustee of Ascendas Real Estate Investment Trust, dated April 2, 2015.	10-Q	10.1	8/10/2015
10.23†	Office Lease by and among Rodick Equities Inc., Fluidigm Canada Inc., and Fluidigm Corporation, dated August 17, 2015.	10-Q	10.1	11/9/2015
10.24#	Form of Award Agreement for purposes of the Retention Program.	8-K	10.1	2/10/2017
10.25#	Form of Retention Bonus Exchange Letter.	8-K	10.1	9/20/2018
10.26#	Executive Bonus Plan.	10-K	10.25	3/28/2011
10.27†	License Agreement between MDS Analytical Technologies, a business unit of MDS INC., and DVS Sciences Inc., dated July 17, 2008.	10-Q/A	10.3	9/15/2014
10.28†	Sublicense Agreement between DVS Sciences Inc. and Fluidigm Corporation, dated January 28, 2014.	10-Q/A	10.4	9/15/2014
10.29#	Separation Agreement and Release between Gajus V. Worthington and Fluidigm Corporation dated October 19, 2016.	8-K	99.1	10/24/2016
10.30	2017 Employee Stock Purchase Plan.	8-K	10.1	8/2/2017



Exhibit Number	Description	Incorporated by Reference From Form	Incorporated by Reference From Exhibit Number	Date Filed
10.31	Sales Agreement, dated as of August 3, 2017, between Fluidigm Corporation and Cowen and Company, LLC.	8-K	1.1	8/3/2017
10.32#	Fluidigm Corporation Change of Control and Severance Plan.	8-K	10.1	8/23/2017
10.33#	Endorsement Split-Dollar Life Insurance Agreement.	10-Q	10.5	11/7/2017
21.1	Subsidiaries of Fluidigm Corporation.	10-K	21.1	3/3/2017
23.1	Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.	Filed herewith
24.1	Power of Attorney (contained in the signature page to this Form 10-K).	Filed herewith
31.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer.	Filed herewith
31.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer.	Filed herewith
32.1~	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer.	Filed herewith
32.2~	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer.	Filed herewith
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith
101.LAB	XBRL Taxonomy Extension Label Document	Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation Document	Filed herewith

# Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate.

† Portions of the exhibit have been omitted pursuant to an order granted by the Securities and Exchange Commission for confidential treatment.

~ In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-K and will not be deemed “filed” for purposes of Section 18 of the ~~year ended December 31, 2016.~~

~~2. Financial Statement Schedules~~

~~“Schedule II—Valuation and Qualifying Account and Reserve” was previously filed with our Annual Report on Form 10-K for the year ended December 31, 2016.~~

~~3. Exhibits~~

~~The following is a list of exhibits filed, furnished or~~Exchange Act. Such certifications will not be deemed to be incorporated by reference ~~as a part of this Amendment No. 1~~into any filings under the Securities Act or the Exchange Act, except to ~~Form 10-K for~~ the ~~fiscal year ended December 31, 2016.~~extent that Fluidigm Corporation specifically incorporates it by reference.



~~Exhibit~~ ~~Number~~	~~Description~~	~~Incorporated by Reference~~ ~~From Form~~
~~24.2~~	~~Power of Attorney for certain directors of Fluidigm Corporation, authorizing the signing of this Annual Report on Form 10-K on their behalf.~~	~~Filed herewith~~
~~31.3~~	~~Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer.~~	~~Filed herewith~~
~~31.4~~	~~Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer.~~	~~Filed herewith~~

~~(b)~~ ~~Exhibits~~

~~See Item 15(a)(3) above.~~

~~(c)~~ ~~Schedules~~

~~See Item 15(a)(3) above.~~

~~-43-~~

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this ~~Amendment No. 1 to its Annual Report on Form 10-K~~report to be signed on its behalf by the undersigned, thereunto duly authorized.



		FLUIDIGM CORPORATION

Dated: ~~April 27, 2017~~
March 18, 2019	By:	/s/ Stephen Christopher Linthwaite
			Stephen Christopher Linthwaite
			President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stephen Christopher Linthwaite and Vikram Jog, jointly and severally, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises hereby ratifying and confirming all that said attorneys-in-fact and agents, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



Signature		Title		Date

/s/ Stephen Christopher Linthwaite		President and Chief Executive Officer (Principal Executive Officer); Director	~~April 27, 2017~~	March 18, 2019
Stephen Christopher Linthwaite

/s/ Vikram Jog		Chief Financial Officer ~~(Principal~~ (Principal Financial and Accounting Officer)	~~April 27, 2017~~	March 18, 2019
Vikram Jog

/s/ ~~Jennifer Lee~~	~~Vice President, Controller~~ ~~(Principal Accounting Officer)~~	~~April 27, 2017~~
~~Jennifer Lee~~		~~April 27, 2017~~
Samuel D. Colella
*	Chairman of the Board of Directors	~~April 27, 2017~~	March 18, 2019
Samuel D. Colella
/s/ Nicolas M. Barthelemy		Director		March 18, 2019
Nicolas M. Barthelemy
*/s/ Gerhard F. Burbach		Director	~~April 27, 2017~~	March 18, 2019
Gerhard F. Burbach
/s/ Laura M. Clague		Director		March 18, 2019
Laura M. Clague
*/s/ Patrick S. Jones		Director	~~April 27, 2017~~
~~Evan Jones~~

*	~~Director~~	~~April 27, 2017~~March 18, 2019
Patrick S. Jones	~~Director~~	~~April 27, 2017~~March 18, 2019

/s/ Carlos V. Paya		Director	~~April 27, 2017~~	March 18, 2019
Carlos V. Paya

~~/s/ Nicolas Barthelemy~~	~~Director~~	~~April 27, 2017~~
~~Nicolas Barthelemy~~	~~Director~~	~~April 27, 2017~~

*	~~Director~~	~~April 27, 2017~~
~~John A. Young~~	~~Director~~	~~April 27, 2017~~


*	~~By:/s/ Vikram Jog~~ ~~Vikram Jog,~~ ~~as attorney in fact~~

~~-44-~~

101

~~INDEX TO EXHIBITS~~



~~Exhibit~~ ~~Number~~	~~Description~~	~~Incorporated by Reference~~ ~~From Form~~
~~24.2~~	~~Power of Attorney for certain directors of Fluidigm Corporation, authorizing the signing of this Annual Report on Form 10-K on their behalf.~~	~~Filed herewith~~
~~31.3~~	~~Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer.~~	~~Filed herewith~~
~~31.4~~	~~Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer.~~	~~Filed herewith~~

~~-45-~~



Delaware		77-0513190
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
7000 Shoreline Court, Suite 100, South San Francisco, California		94080
(Address of principal executive offices)		(Zip Code)



Title of each class		Name of each exchange on which registered
Common Stock, $0.001 Par Value per Share		The Nasdaq Global Select Market



Product	Product Description	Applications
Mass Cytometry

Analytical Systems:

Helios™, a CyTOF system	The Helios mass cytometry system performs high-parameter single-cell analysis using antibodies conjugated to metal isotopes.	Mass Cytometry

Hyperion™ Imaging System	The Hyperion Imaging System brings together imaging capability with proven high-parameter CyTOF technology to enable the simultaneous detection of up to 37 protein markers in the spatial context of the tissue microenvironment.	Imaging Mass Cytometry

Hyperion™ Tissue Imager	The Hyperion Tissue Imager scans tissues at 1 micron resolution. It can be purchased as an upgrade for the Helios system to enable imaging capability, then referred to as Hyperion Imaging System.	Imaging Mass Cytometry

Assays and Reagents:

Maxpar® Reagents	Maxpar® reagents are included in multiple product lines addressing needs in functional and phenotypic profiling of single cells, as well as nucleic acid detection. The product lines include pre-conjugated antibodies, application specific kits, and custom antibody labeling services.	Mass Cytometry and Imaging Mass Cytometry.

Maxpar Human Immune Monitoring Panel Kit and Workflow	The kit contains 29 pre-titrated antibodies designed and optimized for deep immune profiling of human peripheral blood mononuclear cells. Enables comprehensive identification and characterization of key immune cell populations. The workflow includes protocol and data analysis.	Mass Cytometry



Product		Product Description		Applications
Microfluidics

Preparatory Instruments:

Access Array System		A modular, flexible system that automates amplicon-based library preparation of up to 480 amplicons across 48 unique samples per processing run. The resulting barcoded libraries are ready for targeted DNA sequencing on next-generation sequencing (NGS) platforms from Illumina® and Ion Torrent®.		Library preparation for targeted DNA sequencing on NGS systems

Juno System		An integrated system that automates the preparation of amplicon-based libraries for targeted next-generation DNA sequencing. Additionally, Juno automates microfluidic workflows for PCR-based gene expression, genotyping, digital PCR, and copy number variant analysis by processing IFCs prior to analysis on Biomark HD or EP1 platforms.		Library preparation for targeted DNA sequencing on NGS systems. End-Point PCR, SNP Genotyping, sample identification, Gene Expression, and digital PCR

Analytical Instruments:

Biomark HD System		Real-time PCR analytical instrument for microfluidics-based analysis of gene expression, single-cell targeted gene expression, microRNA expression, sample identification, SNP genotyping, and real-time digital PCR.		SNP Genotyping, sample identification, Digital PCR, and Gene Expression, including Single-Cell Targeted Gene Expression

EP1 System		End-point PCR analytical instrument for microfluidics-based analysis of SNP genotyping and end-point digital PCR.		SNP Genotyping, sample identification, and Digital PCR

Integrated Fluidic Circuits (IFCs):

LP IFCs		Library Preparation IFCs to support targeted DNA sequencing of 48 or 192 samples on next generation sequencing instruments.		Library preparation for targeted next-generation DNA sequencing

Juno Genotyping IFC		IFC that incorporates preamplification for genotyping of 96 samples and 96 markers on a single run.		Genotyping, sample identification

Dynamic Array IFCs		IFCs based on matrix architecture, allowing users to (i) individually assay up to 24 samples against up to 192 assays, (ii) individually assay up to 48 samples against up to 48 assays, (iii) individually assay up to 96 samples against up to 96 assays, or (iv) individually assay up to 192 samples against up to 24 assays.		Real-time qPCR, End-Point PCR, SNP Genotyping and Gene Expression, including Single-Cell Targeted Gene Expression, sample identification, copy number variant analysis

Digital Array IFCs		IFCs based on partitioning architecture allowing users to (i) individually assay up to 12 samples or panels across 765 chambers, or to (ii) individually assay up to 48 samples across 770 chambers per IFC.		~~UNITED STATES~~ ~~SECURITIES AND EXCHANGE COMMISSION~~Digital PCR, Copy Number Variation and ~~Washington, D.C. 20549~~Variant Detection

~~FORM 10‑K/A~~

~~(Mark One)~~
x Flex Six IFC	~~ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~	IFC that incorporates six 12 X 12 partitions that can be organized in any configuration, in up to six separate experimental runs.		Gene Expression and SNP Genotyping
	~~For the fiscal year ended December 31, 2016~~
	OR
¨	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~
	~~For the transition period from _________________ to _______________________~~
~~Commission file number: 001-34180~~

~~FLUIDIGM CORPORATION~~
~~(Exact name of registrant as specified in its charter)~~

~~Delaware~~		~~77-0513190~~
~~(State or other jurisdiction of~~ ~~incorporation or organization)~~		~~(I.R.S. Employer~~ ~~Identification Number)~~
~~7000 Shoreline Court, Suite 100~~ ~~South San Francisco, California~~		~~94080~~
~~(Address of principal executive offices)~~		~~(Zip Code))~~
~~Registrant’s telephone number, including area code: (650) 266‑6000~~

~~Securities registered pursuant to Section 12(b) of the Act:~~
~~Title of each class~~ ~~Common Stock, $0.001 Par Value per Share~~ ~~Preferred Share Purchase Rights~~		~~Name of each exchange on which registered~~ ~~The NASDAQ Global Select Market~~
~~Securities registered pursuant to Section 12(g) of the Act:~~
~~None~~

~~Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933, as amended. Yes~~ o No ý
~~Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended. Yes~~ o No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10 K or any amendment to this Form 10-K. Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
~~Large accelerated filer~~ o			~~Accelerated filer~~ ý
~~Non-accelerated filer~~ o ~~(Do not check if a smaller reporting company~~			~~Smaller reporting company~~ o
~~Emerging Growth Company~~ o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
~~Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes~~ o No ý
As of June 30, 2016, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was approximately $262,199,821 (based on a closing sale price of $9.03 per share as reported for the NASDAQ Global Select Market on June 30, 2016). Shares of common stock held by each executive officer and director and by each other person who may be deemed to be an affiliate of the Registrant have been excluded from this computation. The determination of affiliate status for this purpose is not necessarily a conclusive determination for other purposes.
~~The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of March 31, 2017 was 29,291,677.~~
~~DOCUMENTS INCORPORATED BY REFERENCE~~
~~None.______________________________________________.~~



Product		~~Page~~
~~PART III~~Product Description		Applications
Assays and Reagents:
	~~Item 10. Directors, Executive Officers and Corporate Governance~~	4

	~~Item 11. Executive Compensation~~	11

	~~Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~	37

	~~Item 13. Certain Relationships and Related Transactions, and Director Independence~~	41

~~PART IV~~	~~Item 14. Principal Accounting Fees and Services~~	42

	~~Item 15. Exhibits, Financial Statement Schedules~~	43

	~~Signatures~~	44


Delta Gene and SNP Type Assays		Custom designed assays targeted to genomic regions of interest for genotyping and gene expression.	Gene Expression, Single-Cell Targeted Gene Expression, SNP Genotyping

Access Array Target-Specific Primers and Targeted Sequencing Prep Primers		Custom designed assays for NGS library preparation using Access Array chemistry on the Access Array or Juno systems.	Library preparation for targeted next-generation DNA sequencing

Targeted DNA Seq Library Assays		Custom designed assays for NGS library preparation using Targeted DNA Sequencing Library Preparation chemistry on the Access Array or Juno systems.	Library preparation for targeted next-generation DNA sequencing

Single Cell Microfluidics

Preparatory Instrument:

C1 System		Sample preparation system that rapidly and reliably isolates and processes individual cells for genomic analysis.	Single-Cell Targeted Gene Expression, Single-Cell microRNA Analysis, Single-Cell mRNA Sequencing (Full Length and End-Counting), Single-Cell Targeted DNA Sequencing, Single-Cell Whole Exome Sequencing, and Single-Cell Whole Genome DNA Sequencing, Single-Cell Epigenetics, Total RNA sequencing, T-ATAC-seq, REAP-Seq (RNA and Protein)

Preparatory Analytical Instruments:

Polaris System		System and IFC that enables single cell contextual studies by facilitating active/live cell selection, isolation, imaging, dosing, and cell culturing workflows.	Functional Genomics Using Single-Cell mRNA Sequencing

C1 IFCs		IFCs that capture up to 800 cells between 5-25 microns in diameter and then automatically process the cells for a variety of genomic analysis using thermal and pneumatic controls at nanoliter scale.	Single-Cell Targeted Gene Expression, Single-Cell microRNA Analysis, Single-Cell mRNA Sequencing (Full Length and End-Counting), Single-Cell Targeted DNA Sequencing, Single-Cell Whole Exome DNA Sequencing, and Single-Cell Whole Genome DNA Sequencing, Total RNA sequencing, T-ATAC-seq, REAP-Seq (RNA and Protein). Additional customer and 3^rd-party developed applications available through Fluidigm Script Hub

Polaris IFC		IFC that actively selects, captures and cultures up to 48 single-cells for up to 24 hours. It integrates media exchange, dosing and time course studies followed by cell lysis, reverse transcriptions and library preparation for single cell mRNA sequencing.	Functional Genomics of Single Cells



		Page
PART I
ITEM 1.	BUSINESS	1
ITEM 1A.	RISK FACTORS	13
ITEM 1B.	UNRESOLVED STAFF COMMENTS	38
ITEM 2.	PROPERTIES	38
ITEM 3.	LEGAL PROCEEDINGS	38
ITEM 4.	MINE SAFETY DISCLOSURES	38

PART II

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	39
ITEM 6.	SELECTED FINANCIAL DATA	40
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	41
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	56
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	57
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	92
ITEM 9A.	CONTROLS AND PROCEDURES	92
ITEM 9B.	OTHER INFORMATION	93

PART III

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	94
ITEM 11.	EXECUTIVE COMPENSATION	94
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	94
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	94
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	94

PART IV

ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	95
ITEM 16.	FORM 10-K SUMMARY	97

INDEX TO EXHIBITS
SIGNATURES



Name	Class	Age	Position	Director Since
Evan Jones(1)(2)	I	60	Director	2011
Patrick S. Jones(1)	I	72	Director	2011
John A. Young(2)(3)	II	84	Director	2001
Gerhard F. Burbach(1)(2)	II	55	Director	2013
Carlos Paya(3)	II	58	Director	2017
Samuel D. Colella(2)(3)	III	77	Chairman	2000
Stephen Christopher Linthwaite	III	45	President, Chief Executive Officer and Director	2016
Nicolas Barthelemy(2)	III	51	Director	2017


~~(3)~~	~~Member of our nominating and corporate governance committee~~



Named Executive Officers	2015 Base Salary(1)	2016 Base Salary(1)	2016 Base Salary Percentage Increase(2)
Stephen Christopher Linthwaite(3) President and Chief Executive Officer	—	$500,000	—
Vikram Jog Chief Financial Officer	$329,600	$339,500	3.0%
Steven C. McPhail(4) Chief Commercial Officer	$333,000	$339,700	2.0%
Mai Chan (Grace) Yow(5) Executive Vice President, Worldwide Manufacturing of Fluidigm Singapore Pte. Ltd.	S$403,224	S$423,400	5.0%
Nicholas Khadder(6) Senior Vice President, General Counsel, Chief Compliance Officer and Secretary	—	$325,000	—
Gajus V. Worthington(7) Former President and Chief Executive Officer	$504,700	$504,700	—
William M. Smith(8) Former Executive Vice President, Legal Affairs, General Counsel and Secretary	$334,750	$344,750	3.0%
Marc Unger, Ph.D.(9) Former Executive Vice President, Research and Development and Marketing	$304,500	$313,600	3.0%



	2016
Named Executive Officer	Time-based Stock Options	Time-based Restricted Stock Units	Performance-based Stock Options	Performance-based Restricted Stock Units
Stephen Christopher Linthwaite President and Chief Executive Officer	280,000(1)	—	—	14,000(2)
Vikram Jog Chief Financial Officer	13,500(3)	5,400(4)	13,500(5)	5,400(5)
Steven C. McPhail Chief Commercial Officer	13,500(3)	7,400(4)(6)	13,500(5)	5,400(5)
Mai Chan (Grace) Yow Executive Vice President, Worldwide Manufacturing of Fluidigm Singapore Pte. Ltd.	13,500(3)	5,400(4)	13,500(5)	5,400(5)
Nicholas Khadder Senior Vice President, General Counsel, Chief Compliance Officer and Secretary	27,000(7)	10,800(8)	—	—
Gajus V. Worthington Former President and Chief Executive Officer	33,750(3)	13,500(4)	33,750(5)	13,500(5)
William M. Smith Former Executive Vice President, Legal Affairs, General Counsel and Secretary	13,500(3)	5,400(4)	13,500(5)	5,400(5)
Marc Unger, Ph.D. Former Executive Vice President, Research and Development and Marketing	13,500(3)	5,400(4)	13,500(5)	5,400(5)



Name and Principal Position	Year	Salary ($)	Stock Awards ($)(1)	Option Awards ($)(1)	Non-Equity Incentive Plan Compensation ($)(2)	All Other Compensation ($)	Total ($)
Stephen Christopher Linthwaite(3) President and Chief Executive Officer	2016	197,349	126,700	872,746	—	2,000(4)	1,198,795
Vikram Jog Chief Financial Officer	2016 2015 2014	339,500 329,600 320,000	76,680 197,472 266,280	80,939 237,772 367,739	— — 82,000	2,000(4) 2,000 —	499,199 766,844 1,036,019
Steven C. McPhail(5) Chief Commercial Officer	2016 2015	339,700 216,955	92,820 312,852	80,939 350,006	— —	2,000(4) 2,000	515,459 881,813
Mai Chan (Grace) Yow Executive Vice President, Worldwide Manufacturing of Fluidigm Singapore Pte.	2016 2015 2014	294,856(6) 286,329(8) 288,990(9)	76,680 320,892 266,280	80,939 237,772 367,739	— — 78,000	7,127(6)(7) 7,243(8) 6,780(9)	459,602 852,236 1,007,789
Nicholas Khadder(10) Senior Vice President, General Counsel, Chief Compliance Officer and Secretary.	2016	173,580	97,740	101,671	—	1,323(4)	374,314
Gajus V. Worthington(11) Former President and Chief Executive Officer	2016 2015 2014	447,995 504,700 490,000	191,700(12) 511,782 1,236,300	202,348(12) 615,950(12) 1,707,359(12)	— — 206,000	816,765(13) 2,000 —	1,658,808 1,634,432 3,639,659
William M. Smith(14) Former Executive Vice President, Legal Affairs, General Counsel and Secretary	2016 2015 2014	293,417 334,750 325,000	76,680 197,472 266,280	80,939 237,772 367,739	— — 83,000	2,000(4) 2,000 99,398	453,036 771,994 1,141,417
Marc Unger (15) Former Executive Vice President, Research and Development and Marketing	2016 2015	270,435 304,500	76,680 254,112	80,939 298,172	— —	7,375(16) 2,000	435,429 858,784



	Option Awards					Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock that Have Not Vested (#)	Market Value of Shares or Units of Stock that Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Stephen Christopher Linthwaite	— —	140,000(1) 140,000(4)	— —	9.05 4.99	8/9/2026 11/8/2026	— —	— —	14,000(2) —	101,920(3) —
Vikram Jog	3,334(5) 12,501(5) 23,410(8) 10,208(10) 5,749(12) 3,093(13)	— — 1,042 3,792 6,251 10,407	— — — — — — 13,500(14)	14.60 15.49 16.73 47.55 41.14 7.10 7.10	5/17/2021 2/17/2022 2/15/2023 3/14/2024 3/12/2025 3/4/2026 3/4/2026	1,634(6) 2,601(7) 4,276(9) — — — —	11,896(3) 18,935(3) 31,129(3) — — — —	— — — 5,400(11) — — —	— — — 39,312(3) — — —
Steven C. McPhail	12,270(15) 3,093(13) —	18,730 10,407 —	— — 13,500(14)	25.23 7.10 7.10	5/21/2015 3/4/2026 3/4/2026	7,750(16) 4,276(9) —	56,420(3) 31,129(3) —	— — 5,400(11)	— — 39,312(3)
Mai Chan (Grace) Yow	834(5) 17,859(5) 64,625(8) 10,208(10) 5,749(12) 3,093(13) —	— — 1,375 3,792 6,251 10,407 —	— — — — — — 13,500(14)	14.60 15.49 16.73 47.55 41.14 7.10 7.10	5/17/2021 2/17/2022 2/15/2023 3/14/2024 3/12/2025 3/4/2026 3/4/2026	1,634(6) 4,226(7) 4,276(9) — — —	11,896(3) 30,765(3) 31,129 — — — —	— — — 5,400(11) — — —	— — — 39,312(3) — — —
Nicholas Khadder	—	27,000(17)	—	9.05	08/09/2026	10,800(18)	78,624(3)	—	—
Gajus V. Worthington	8,243(5) 5,780(5) 5,780(5) 5,780(5) 5,203(5) 577(5) 70,000(5) 100,000(5) 112,604(8) 7,734(13)	— — — — — — — — 2,396 26,016	— — — — — — — — — —	4.08 4.08 4.08 8.37 8.37 8.37 14.60 15.49 16.73 7.10	11/17/2019 11/17/2019 11/17/2019 1/4/2021 1/4/2021 1/4/2021 5/17/2021 2/17/2022 2/15/2023 3/4/2026	7,584(6) 6,739(7) 10,688(9) — — — — — — —	55,212(3) 49,060(3) 77,809(3) — — — — — — —	— — — — — — — — — —	— — — — — — — — — —
William M. Smith	3,727(5) 34,000(5) 37,250(5) 53,854(8) 10,208(10) 5,749(12) 3,093(13)	— — — 1,146 3,792 6,251 10,407	— — — — — — — 13,500 (14)	8.37 14.60 15.49 16.73 47.55 41.14 7.10 7.10	1/4/2021 5/17/2021 2/17/2022 2/15/2023 3/14/2024 3/12/2025 3/4/2026 3/4/2026	1,634(6) 2,601(7) 4,276(9) — — — — —	11,896(3) 18,935(3) 31,129 — — — — —	— — — 5,400(11) — — — — —	— — — 39,312(3) — — — —
Marc Unger	934(5) 5,780(5) 270(5) 20,000(5) 53,854(8) 10,208(10) 8,750(10) 5,749(12) 3,750(20) 3,093(13) —	— — — — 1,146 3,792 3,250 6,251 11,250(3) 10,407 —	— — — — — — — — — — 13,500(14)	4.45 8.37 8.37 14.55 16.73 47.55 47.55 41.14 9.44 7.10 7.10	8/26/2020 1/4/2021 1/4/2021 3/5/2022 2/15/2023 3/14/2024 3/14/2024 3/12/2025 12/14/2025 3/4/2026 3/4/2026	1,634(6) 1,400(6) 2,601(7) 4,625(19) 4,276(9) — — — — — —	11,896(3) 10,192(3) 18,935(3) 33,670(3) 31,129 — — — — — —	— — — — — 5,400(11) — — — —	— — — — — 39,312(3) — — — —



	Employment Terminated without Cause prior to, or more than 12 Months after, a Change of Control		Employment Terminated within 12 Months after a Change of Control (1)
Name	Severance Payments ($)	Health Care Benefits ($)	Equity Acceleration ($)(2)	Severance Payments ($)	Health Care Benefits ($)
Stephen Christopher Linthwaite	500,000(3)	28,089(4)	422,520	500,000(3)	28,089(4)
Vikram Jog	169,750(5)	14,045(6)	105,575	169,750(5)	14,045(6)
Steven C. McPhail	169,850(5)	14,045(6)	131,165	169,850(5)	14,045(6)
Mai Chan (Grace) Yow(7)	147,428(5)	857(8)	117,405	147,428(5)	857(6)
Nicholas Khadder	162,500(5)	14,684(6)	78,624	162,500(5)	14,684(6)
William M. Smith	167,375(5)	10,294(6)	105,575	167,375(5)	10,294(6)



	Fees Earned or Paid in Cash ($)	Stock Awards ($)(1)	Option Awards ($)(1)	Total ($)
Gerhard F. Burbach	65,000	52,250	20,973	138,223
Samuel D. Colella	97,000	52,250	20,973	170,223
Evan Jones	57,000	52,250	20,973	130,223
Patrick S. Jones	60,000	52,250	20,973	133,223
John A. Young	52,000	52,250	20,973	125,223



	Aggregate Number of Shares Underlying Stock Options Outstanding as of December 31, 2016	Aggregate Number of Shares Underlying Restricted Stock Units Outstanding as of December 31, 2016
Gerhard F. Burbach	67,000	5,000
Samuel D. Colella	25,000	5,000
Evan Jones	91,000	5,000
Patrick S. Jones	91,000	5,000
John A. Young	78,340	5,000



	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)(4)	Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (b)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
Equity compensation plans approved by security holders
1999 Stock Option Plan (1)	4,951	$	17.12	—
2009 Equity Incentive Plan (2)	212,140	$	6.37	—
2011 Equity Incentive Plan (3)	4,360,176	$	13.21	510,237
Equity compensation plans not approved by security holders (5)	—	$	—	—
Total	4,577,267	$	12.90	510,237



Name of Beneficial Owner	Shares Beneficially Owned	Percent of Shares Beneficially Owned
5% Stockholders:
Entities affiliated with Levin Capital Strategies, L.P. (1)	7,522,529	25.7	%
Entities affiliated with PRIMECAP Management Company (2)	4,295,532	14.7	%
Entities affiliated with BlackRock, Inc. (3)	1,827,699	6.2	%
Entities affiliated with Mubadala Development Company PJSC (4)	1,599,069	5.5	%
Entities affiliated with Adage Capital Partners, L.P. (5)	1,546,209	5.3	%
Directors and Named Executive Officers:
Stephen Christopher Linthwaite (6)	84,072	*
Nicolas M. Barthelemy (7)	7,100	*
Gerhard F. Burbach (8)	66,166	*
Samuel D. Colella (9)	83,250	*
Evan Jones (10)	154,617	*
Patrick S. Jones (11)	90,166	*
Carlos V. Paya	0	*
John A. Young (12)	78,355	*
Vikram Jog (13)	84,373	*
Nicholas S. Khadder (14)	10,893	*
Steven C. McPhail (15)	35,026	*
Mai Chan (Grace) Yow (16)	126,360	*
Gajus V. Worthington (17)	382,092	1.3	%
William M. Smith (18)	155,160	*
Marc Unger (19)	133,259	*
All directors and executive officers as a group (16 persons) (20)	1,502,987	4.9	%



	2016		2015
Audit fees(1)	$	1,296,464	$	1,248,247
Audit-related fees	—		—
Tax fees(2)	72,000		—
All other fees	—		—
Total fees	$	1,368,464	$	1,248,247