Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 01, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | AXT INC | |
Entity Central Index Key | 1,051,627 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 38,654,643 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 56,483,000 | $ 36,152,000 |
Short-term investments | 22,463,000 | 11,415,000 |
Accounts receivable, net of allowances of $819 and $1,013 as of June 30, 2017 and December 31, 2016 | 18,262,000 | 14,453,000 |
Inventories | 40,627,000 | 40,152,000 |
Related party notes receivable - current | 109,000 | |
Prepaid expenses and other current assets | 5,301,000 | 5,114,000 |
Total current assets | 143,245,000 | 107,286,000 |
Long-term investments | 8,578,000 | 6,156,000 |
Property, plant and equipment, net | 27,945,000 | 27,805,000 |
Related party notes receivable - long-term | 157,000 | |
Other assets | 12,004,000 | 12,842,000 |
Total assets | 191,772,000 | 154,246,000 |
Current liabilities: | ||
Accounts payable | 8,189,000 | 6,691,000 |
Accrued liabilities | 9,363,000 | 9,260,000 |
Total current liabilities | 17,552,000 | 15,951,000 |
Long-term portion of royalty payments | 287,000 | 575,000 |
Other long-term liabilities | 220,000 | 330,000 |
Total liabilities | 18,059,000 | 16,856,000 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity: | ||
Preferred stock Series A, $0.001 par value; 2,000 shares authorized; 883 shares issued and outstanding as of June 30, 2017 and December 31, 2016 (Liquidation preference of $6.7 million and $6.6 million as of June 30, 2017 and December 31, 2016) | 3,532,000 | 3,532,000 |
Common stock, $0.001 par value; 70,000 shares authorized; 38,655 and 33,032 shares issued and outstanding as of June 30, 2017 and December 31, 2016 | 39,000 | 33,000 |
Additional paid-in-capital | 227,539,000 | 194,177,000 |
Accumulated deficit | (62,390,000) | (64,985,000) |
Accumulated other comprehensive income | 1,293,000 | 253,000 |
Total AXT, Inc. stockholders' equity | 170,013,000 | 133,010,000 |
Noncontrolling interests | 3,700,000 | 4,380,000 |
Total stockholders' equity | 173,713,000 | 137,390,000 |
Total liabilities and stockholders' equity | $ 191,772,000 | $ 154,246,000 |
CONSOLIDATED BALANCE SHEETS (U3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Accounts receivable, allowances for doubtful accounts | $ 819 | $ 1,013 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, shares issued (in shares) | 883,000 | 883,000 |
Preferred stock, shares outstanding (in shares) | 883,000 | 883,000 |
Preferred stock, liquidation preference | $ 6,700 | $ 6,600 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 70,000,000 | 70,000,000 |
Common stock, shares issued (in shares) | 38,655,000 | 33,032,000 |
Common stock, shares outstanding (in shares) | 38,655,000 | 33,032,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||
Revenue | $ 23,557 | $ 20,495 | $ 44,173 | $ 39,208 |
Cost of revenue | 16,301 | 14,468 | 30,629 | 27,928 |
Gross profit | 7,256 | 6,027 | 13,544 | 11,280 |
Operating expenses: | ||||
Selling, general and administrative | 3,942 | 3,419 | 7,735 | 6,793 |
Research and development | 1,019 | 1,472 | 2,143 | 2,853 |
Restructuring charge | 226 | 226 | ||
Total operating expenses | 4,961 | 5,117 | 9,878 | 9,872 |
Income from operations | 2,295 | 910 | 3,666 | 1,408 |
Interest income, net | 114 | 100 | 212 | 198 |
Equity in loss of unconsolidated joint ventures | (188) | (400) | (1,121) | (856) |
Other (expense) income, net | (102) | 328 | (54) | 518 |
Income before provision for income taxes | 2,119 | 938 | 2,703 | 1,268 |
Provision for income taxes | 321 | 140 | 480 | 537 |
Net income | 1,798 | 798 | 2,223 | 731 |
Less: Net loss attributable to noncontrolling interests | 132 | 353 | 372 | 462 |
Net income attributable to AXT, Inc. | $ 1,930 | $ 1,151 | $ 2,595 | $ 1,193 |
Net income attributable to AXT, Inc. per common share: | ||||
Basic (in dollars per share) | $ 0.05 | $ 0.03 | $ 0.07 | $ 0.03 |
Diluted (in dollars per share) | $ 0.05 | $ 0.03 | $ 0.07 | $ 0.03 |
Denominator: | ||||
Basic (in shares) | 38,306 | 32,020 | 36,238 | 32,011 |
Diluted (in shares) | 39,706 | 32,451 | 37,645 | 32,354 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) | ||||
Net income | $ 1,798 | $ 798 | $ 2,223 | $ 731 |
Other comprehensive income (loss), net of tax: | ||||
Change in foreign currency translation gain (loss), net of tax | 847 | (1,870) | 1,322 | (1,568) |
Change in unrealized loss on available-for-sale investments, net of tax | (2) | (166) | (125) | (141) |
Total other comprehensive income (loss), net of tax | 845 | (2,036) | 1,197 | (1,709) |
Comprehensive income (loss) | 2,643 | (1,238) | 3,420 | (978) |
Less: Comprehensive loss attributable to the noncontrolling interest | 30 | 568 | 215 | 633 |
Comprehensive income (loss) attributable to AXT, Inc. | $ 2,673 | $ (670) | $ 3,635 | $ (345) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 2,223 | $ 731 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 2,250 | 2,398 |
Amortization of marketable securities premium | 75 | 62 |
Impairment charge on equity investee | 313 | |
Stock-based compensation | 622 | 508 |
Realized gain on sale of available for sale securities | (77) | (345) |
Gain on disposal of equipment | (1) | |
Loss from equity method investments, net | 808 | 856 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (3,683) | 313 |
Inventories | (119) | (947) |
Prepaid expenses and other current assets | (264) | (1,081) |
Other assets | (28) | 336 |
Accounts payable | 1,368 | 1,507 |
Accrued liabilities | 21 | (942) |
Other long-term liabilities, including royalties | (302) | (426) |
Net cash provided by operating activities | 3,206 | 2,970 |
Cash flows from investing activities: | ||
Purchases of equipment | (1,831) | (1,695) |
Purchases of available for sale securities | (23,763) | (7,875) |
Proceeds from sales and maturities of available-for-sale securities | 10,170 | 8,298 |
Repayment of related party notes receivable | 53 | |
Net cash used in investing activities | (15,371) | (1,272) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock and options exercised, net of issuance costs | 32,746 | 2 |
Dividends paid by joint ventures to their minority share holders | (465) | (39) |
Net cash provided by (used in) financing activities | 32,281 | (37) |
Effect of exchange rate changes on cash and cash equivalents | 215 | (421) |
Net increase in cash and cash equivalents | 20,331 | 1,240 |
Cash and cash equivalents at the beginning of the period | 36,152 | 24,875 |
Cash and cash equivalents at the end of the period | $ 56,483 | $ 26,115 |
CONSOLIDATED STATEMENTS OF CAS7
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||
Dividends accrued but not paid by joint ventures | $ 512 | $ 499 | $ 522 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Basis of Presentation | |
Basis of Presentation | Note 1. Basis of Presentation The accompanying condensed consolidated financial statements of AXT, Inc. (“AXT,” the “Company,” “we,” “us,” and “our” refer to AXT, Inc. and all of its consolidated subsidiaries) are unaudited, and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly this interim quarterly financial report does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of our management, the unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, considered necessary to present fairly the financial position, results of operations and cash flows of AXT and our consolidated subsidiaries for all periods presented. Certain reclassifications have been made to prior periods’ financial statements to conform to the current period presentation. These reclassifications did not result in any change in previously reported net income or total assets. Our management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ materially from those estimates. The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected in the future or for the full fiscal year. It is recommended that these condensed consolidated financial statements be read in conjunction with our consolidated financial statements and the notes thereto included in our 2016 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2017 and our Quarterly Report on Form 10-Q for the three months ended March 31, 2017 filed with the SEC on May 8, 2017 . The condensed consolidated financial statements include the accounts of AXT, our wholly-owned subsidiary, Beijing Tongmei Xtal Technology Co., Ltd., and our majority-owned, or significantly controlled subsidiaries, Beijing JiYa Semiconductor Material Co., Ltd., Nanjing JinMei Gallium Co., Ltd. and Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. All significant inter‑company accounts and transactions have been eliminated. Investments in business entities in which we do not have controlling interests, but have the ability to exercise significant influence over operating and financial policies (generally 20-50% ownership), are accounted for by the equity method. For partially-owned subsidiaries that we consolidate, we reflect the noncontrolling interest of the portion we do not own on our condensed consolidated balance sheets in stockholders’ equity and in our condensed consolidated statements of operations. |
Investments and Fair Value Meas
Investments and Fair Value Measurements | 6 Months Ended |
Jun. 30, 2017 | |
Investments and Fair Value Measurements | |
Investments and Fair Value Measurements | Note 2. Investments and Fair Value Measurements Our cash and cash equivalents consist of cash and instruments with original maturities of less than three months . Our investments consist of instruments with original maturities of more than three months . As of June 30, 2017 and December 31, 2016, our cash, cash equivalents and investments are classified as follows (in thousands): June 30, 2017 December 31, 2016 Gross Gross Gross Gross Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair Cost Gain (Loss) Value Cost Gain (Loss) Value Classified as: Cash $ 55,775 $ — $ — $ 55,775 $ 23,948 $ — $ — $ 23,948 Cash equivalents: Certificates of deposit 1 708 — — 708 12,204 — — 12,204 Total cash and cash equivalents 56,483 — — 56,483 36,152 — — 36,152 Investments (available-for-sale): Certificates of deposit 2 5,728 1 (12) 5,717 8,999 1 (20) 8,980 Corporate bonds 25,393 — (69) 25,324 8,479 — (47) 8,432 Corporate equity securities — — — — 48 111 — 159 Total investments 31,121 1 (81) 31,041 17,526 112 (67) 17,571 Total cash, cash equivalents and investments $ 87,604 $ 1 $ (81) $ 87,524 $ 53,678 $ 112 $ (67) $ 53,723 Contractual maturities on investments: Due within 1 year 3 $ 22,504 $ 22,463 $ 11,325 $ 11,415 Due after 1 through 5 years 4 8,617 8,578 6,201 6,156 $ 31,121 $ 31,041 $ 17,526 $ 17,571 1. Certificates of deposit with original maturities of less than three months. 2. Certificates of deposit with original maturities of more than three months. 3. Classified as “Short-term investments” in our condensed consolidated balance sheets. 4. Classified as “Long-term investments” in our condensed consolidated balance sheets. We manage our investments as a single portfolio of highly marketable securities that is intended to be available to meet our current cash requirements. We have no investments in auction rate securities. Certificates of deposit and corporate bonds are typically held until maturity. Corporate equity securities have no maturity and may be sold at any time. Our holding of corporate equity securities consists of common stock of GCS Holdings, Inc. (“GHI”) (previously Global Communication Semiconductors, Inc.), a Taiwan publicly-traded company. We began classifying GHI as an available-for-sale security in the second quarter of 2015 when we determined that there was sufficient trading volume in the exchange for the stock to be deemed readily marketable. D uring the three months ended March 31, 2017, we sold the remainder of our GHI stock; therefore, there were no GHI transactions in the three months ended June 30, 2017. D uring the six months ended June 30, 2017, our cash proceeds from sales of GHI stock were $125,000. Our cost was $48,000 and our gross realized gain from sales of GHI stock was $77,000. As of June 30, 2017, we no longer hold any GHI stock. D uring the three months ended June 30, 2016, we sold some of our GHI stock and our cash proceeds from sales of available-for-sale-investments were $222,000. Our cost was $58,000 and our gross realized gain from sales of available-for-sale-investments was $164,000. D uring the six months ended June 30, 2016, we sold some of our GHI stock and our cash proceeds from sales of available-for-sale investments were $468,000. Our cost was $123,000 and our gross realized gain from sales of available-for-sale investments was $345,000. The gross unrealized losses related to our portfolio of available-for-sale securities were primarily due to changes in interest rates and market and credit conditions of the underlying securities. We have determined that the gross unrealized losses on our available-for-sale securities as of June 30, 2017 are temporary in nature. We periodically review our investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether a loss is temporary include the magnitude of the decline in market value, the length of time the market value has been below cost (or adjusted cost), credit quality, and our ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value. A portion of our investments would generate a loss if we sold them on June 30, 2017. The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2017 (in thousands): In Loss Position In Loss Position Total In < 12 months > 12 months Loss Position Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized As of June 30, 2017 Value (Losses) Value (Losses) Value (Losses) Investments: Certificates of deposit $ 2,391 $ (9) $ 1,867 $ (3) $ 4,258 $ (12) Corporate bonds 23,624 (68) 1,700 (1) 25,324 (69) Total in loss position $ 26,015 $ (77) $ 3,567 $ (4) $ 29,582 $ (81) The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2016 (in thousands): In Loss Position In Loss Position Total In < 12 months > 12 months Loss Position Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized As of December 31, 2016 Value (Loss) Value (Loss) Value (Loss) Investments: Certificates of deposit $ 5,211 $ (20) $ 1,200 $ — $ 6,411 $ (20) Corporate bonds 5,037 (35) 3,395 (12) 8,432 (47) Total in loss position $ 10,248 $ (55) $ 4,595 $ (12) $ 14,843 $ (67) Investments in Privately-held Companies We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business (see Note 7). The investment balances for all of these companies, including minority investments indirectly in privately-held companies made by our consolidated subsidiaries, are accounted for under the equity method and included in “Other assets” in the condensed consolidated balance sheets and totaled $10.3 million and $11.3 million as of June 30, 2017 and December 31, 2016, respectively. As of June 30, 2017, there were seven companies accounted for under the equity method. There were no impairment charges in the three months ended June 30, 2017. The six months ended June 30, 2017 include an impairment charge of $313,000 for one of the gallium companies. During the first quarter of 2017, management determined that it is unlikely that this company will recover from the difficult pricing environment and we had written the investment down to zero. We had no impairment charges for the three and six months ended June 30, 2016. Fair Value Measurements We invest primarily in money market accounts, certificates of deposits, corporate bonds and notes, and government securities. Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes three levels of inputs that may be used to measure fair value. Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets of the asset or identical assets. Level 2 instrument valuations are obtained from readily-available, observable pricing sources for comparable instruments. Level 3 instrument valuations are obtained from unobservable inputs in which there is little or no market data, which require us to develop our own assumptions. On a recurring basis, we measure certain financial assets and liabilities at fair value, primarily consisting of our short-term and long-term investments. The type of instrument valued based on quoted market prices in active markets include our money market funds, which are generally classified within Level 1 of the fair value hierarchy. Other than corporate equity securities which are based on quoted market prices and classified as Level 1, we classify our available-for-sale securities including certificates of deposit and corporate bonds as having Level 2 inputs. The valuation techniques used to measure the fair value of these financial instruments having Level 2 inputs were derived from bank statements, quoted market prices, broker or dealer statements or quotations, or alternative pricing sources with reasonable levels of price transparency. We place short-term foreign currency hedges that are intended to offset the potential cash exposure related to fluctuations in the exchange rate between the United States dollar and Japanese Yen. We measure the fair value of these foreign currency hedges at each month end and quarter end using current exchange rates and in accordance with generally accepted accounting principles. At quarter end any foreign currency hedges not settled are netted in “accrued liabilities” on the condensed consolidated balance sheet and classified as Level 3 assets and liabilities. As of June 30, 2017 the net change in fair value from the placement of the hedge to settlement at each month end during the quarter had a de minimis impact to the consolidated results. There were no changes in valuation techniques or related inputs in the three and six months ended June 30, 2017. There have been no transfers between fair value measurements levels during the three months ended June 30, 2017. The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2017 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs June 30, 2017 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ 6,425 $ — $ 6,425 $ — Corporate bonds 25,324 — 25,324 — Total $ 31,749 $ — $ 31,749 $ — The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs December 31, 2016 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ 21,184 $ — $ 21,184 $ — Corporate bonds 8,432 — 8,432 — Corporate equity securities 159 159 — — Total $ 29,775 $ 159 $ 29,616 $ — Items Measured at Fair Value on a Nonrecurring Basis Certain assets that are subject to nonrecurring fair value measurements are not included in the table above. These assets include investments in privately-held companies accounted for by the equity or cost method (See Note 7). There were no impairment charges in the three months ended June 30, 2017. The six months ended June 30, 2017 include an impairment charge of $313,000 for one of the gallium companies. During the first quarter of 2017, management determined that it is unlikely that this company will recover from the difficult pricing environment and we had written the investment down to zero. Except as mentioned, we did not record other-than-temporary impairment charges for the remainder of these investments during the three and six months ended June 30, 2017 and 2016. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2017 | |
Inventories | |
Inventories | Note 3. Inventories The components of inventories are summarized below (in thousands): June 30, December 31, 2017 2016 Inventories: Raw materials $ 19,870 $ 17,485 Work in process 18,572 20,410 Finished goods 2,185 2,257 $ 40,627 $ 40,152 As of June 30, 2017 and December 31, 2016, carrying values of inventories were net of inventory reserves of $12.3 million and $12.0 million, respectively, for excess and obsolete inventory and $211,000 and $254,000, respectively, for lower of cost or net realizable value reserves. |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment, Net | |
Property, Plant and Equipment, Net | Note 4. Property, Plant and Equipment, Net The components of our property, plant and equipment are summarized below (in thousands): June 30, December 31, 2017 2016 Property, plant and equipment: Machinery and equipment, at cost $ 42,027 $ 41,254 Less: accumulated depreciation and amortization (38,961) (37,311) Building, at cost 30,333 29,600 Less: accumulated depreciation and amortization (10,465) (9,654) Leasehold improvements, at cost 5,048 4,942 Less: accumulated depreciation and amortization (3,917) (3,608) Construction in progress 3,880 2,582 $ 27,945 $ 27,805 |
Accrued Liabilities
Accrued Liabilities | 6 Months Ended |
Jun. 30, 2017 | |
Accrued Liabilities | |
Accrued Liabilities | Note 5. Accrued Liabilities The components of accrued liabilities are summarized below (in thousands): June 30, December 31, 2017 2016 Preferred stock dividends payable $ 2,901 $ 2,901 Accrued compensation and related charges 1,955 2,610 Advance from customers 1,286 238 Current portion of royalty payments 575 575 Dividends payable by consolidated joint ventures 512 499 Accrued professional services 401 583 Accrued income taxes 264 203 Accrued product warranty 130 251 Other accrued liabilities 1,339 1,400 $ 9,363 $ 9,260 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions | |
Related Party Transactions | Note 6. Related Party Transactions In August 2011, our consolidated joint venture, Beijing JiYa Semiconductor Material Co., Ltd. (“JiYa”), entered into a non-interest bearing note agreement in the amount of $1.6 million for a loan to one of its equity investment entities. The original term of the loan was for two years and ten months with three periodic principal payments required. After various amendments to the terms of the note, in December 2013, the parties agreed to delay all principal repayment until December 2017. In December 2016, we determined that this receivable was in substance an investment and began re-classifying this long term loan from “Related party notes receivable – long-term” to “Other assets” in our consolidated balance sheets. As of June 30, 2017 and December 31, 2016, we included $1.3 million and $1.4 million in “Other assets” in our condensed consolidated balance sheets, respectively. JiYa also purchases raw materials from one of its equity investment entities for production in the ordinary course of business. As of June 30, 2017 and December 31, 2016, amounts payable of $1.9 million and $1.8 million, respectively, were included in “Accounts payable” in our condensed consolidated balance sheets. JiYa also sold raw materials to one of its equity investment entities for production in the ordinary course of business . As of June 30, 2017 and December 31, 2016, amounts receivable of $320,000 and $313,000, respectively, were included in “Accounts receivable” in our condensed consolidated balance sheets. During the three months ended December 31, 2016, we deemed the collection of the outstanding amount to be improbable and established an allowance in full. There have since been no additional sales to the customer and as of June 30, 2017 the existing outstanding amount continues to be fully reserved. Beginning in 2012, our consolidated joint venture, Nanjing JinMei Gallium Co., Ltd. (“JinMei”), is contractually obligated under an agency sales agreement to sell raw material on behalf of its equity investment entity. JinMei bills the customers and remits the receipts, net of its portions of sales commission, to this equity investment entity. For each of the three months ended June 30, 2017 and 2016, JinMei has recorded $0 income from agency sales. For the six months ended June 30, 2017 and 2016, Jin Mei has recorded $1,000 and $0 income from agency sales, respectively, which were included in “Other (expense) income, net” in the condensed consolidated statements of operations. In March 2012, our wholly-owned subsidiary, Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”), entered into an operating lease for the land it owns with our consolidated joint venture, Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. (“BoYu”). The lease agreement for the land of approximately 22,081 square feet commenced on January 1, 2012 for a term of 10 years with annual lease payments of $24,000 subject to a 5% increase at each third year anniversary. The annual lease payment is due by January 31 st of each year. Tongmei has paid certain amounts on behalf of Donghai County Dongfang High Purity Electronic Materials Co., Ltd. (“Dongfang”), its equity investment entity, to purchase materials. The original agreement was signed between Tongmei and Dongfang in 2014 and the date of repayment was set as December 31, 2015. In 2015, both parties agreed to delay the date of repayment to December 31, 2017. As of June 30, 2017, the balance of $109,000 was included in “Related party notes receivable – current”. As of December 31, 2016, the balance of $107,000 was included in “Related party notes receivable – long-term” in our condensed consolidated balance sheets. In April 2014, Tongmei loaned an additional $44,000 to Dongfang. The loan bears interest at 6.15% per annum and comes due on December 31, 2017. During the three months ended June 30, 2017, the repayment of the principal and interest totaling $53,000 was received by our wholly-owned subsidiary . As of June 30, 2017 and December 31, 2016, this balance, including both principal and accrued interest, was $0 and $50,000, respectively, and was included in “Related party notes receivable – long-term” in our condensed consolidated balance sheets. Tongmei also purchases raw materials from Dongfang for production in the ordinary course of business. As of June 30, 2017 and December 31, 2016, amounts payable of $0 and $210,000, respectively, were included in “Accounts payable” in our condensed consolidated balance sheets. Tongmei purchases raw materials from one of our equity investment entities, Emei Shan Jiamei Materials Co. Ltd. (“Jiamei”), for production in the ordinary course of business. As of June 30, 2017 and December 31, 2016, amounts payable of $0 and $377,000, respectively, were included in “Accounts payable” in our condensed consolidated balance sheets. Tongmei also purchases raw materials from one of our equity investment entities, Xilingol Tongli Germanium Refine Co. Ltd. (“Tongli”), for production in the ordinary course of business. As of June 30, 2017 and December 31, 2016, amounts payable of $1.3 million and $246,000, respectively, were included in “Accounts payable” in our condensed consolidated balance sheets. In April 2016, our consolidated joint venture, BoYu, provided a personal loan of $177,000 to one of its executive employees. This loan is secured by the executive employee’s shares in BoYu. The loan bears interest at 2.75% per annum. Principal and accrued interest are due on March 31, 2019. During the three months ended June 30, 2017, the repayment of the principal and interest totaling $180,000 were received by our consolidated joint venture . As of June 30, 2017 and December 31, 2016, these balances , including both principal and accrued interest, were $0 and $179,000, respectively, and included in “Prepaid expenses and other current assets” in our condensed consolidated balance sheets. Tongmei also purchases raw materials from one of JiYa’s equity investment entities for production in the ordinary course of business. As of June 30, 2017 and December 31, 2016 , amounts payable of $146,000 and $146,000, respectively, were included in “Accounts payable” in our condensed consolidated balance sheets. Beijing Kaide Quartz Co. Ltd. (“Kaide”) has been a supplier of customized quartz tubes to the Company since 2004. Beijing XiangHeMing Trade Co. Ltd. (“XiangHeMing”) is a significant shareholder of Kaide. XiangHeMing was previously owned by, among others, certain immediate family members of Davis Zhang, our former President, China Operations, until at least sometime in 2004, at which time the official Chinese government records indicate that Mr. Zhang’s immediate family members transferred their ownership of XiangHeMing to a third party. However, we are currently unable to conclusively determine whether Mr. Zhang’s immediate family members retained any economic interest in XiangHeMing after the transfer. As of June 30, 2017 and December 31, 2016, amounts payable to Kaide of $419,000 and $323,000, respectively, were included in “Accounts payable” in our condensed consolidated balance sheets. Our Related Party Transactions Policy seeks to prohibit all conflicts of interest in transactions between related parties and us, unless they have been approved by our Board of Directors. This policy applies to all of our employees, directors, and our consolidated subsidiaries. Our executive officers retain board seats on the board of directors of the companies in which we have invested in our China joint ventures. See Note 7 for further details. |
Investments in Privately Held C
Investments in Privately Held Companies | 6 Months Ended |
Jun. 30, 2017 | |
Investments in Privately Held Companies | |
Investments in Privately Held Companies | Note 7. Investments in Privately-Held Companies We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business. We have six direct investments. Our consolidated subsidiaries have also made investments in private companies. We have four indirect investments. These companies form part of our overall supply chain. The six direct investments are summarized below (in thousands): Investment Balance as of June 30, December 31, Accounting Ownership Company 2017 2016 Method Percentage Beijing JiYa Semiconductor Material Co., Ltd. $ 3,331 $ 3,331 Consolidated 46 % Nanjing JinMei Gallium Co., Ltd. 592 592 Consolidated 83 % Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. 1,346 1,346 Consolidated 70 % $ 5,269 $ 5,269 Donghai County Dongfang High Purity Electronic Materials Co., Ltd. $ 1,394 $ 1,498 Equity 46 % Xilingol Tongli Germanium Co. Ltd. 3,813 4,000 Equity 25 % Emeishan Jia Mei High Purity Metals Co., Ltd. 985 1,101 Equity 25 % $ 6,192 $ 6,599 Our ownership of JiYa is 46%. We continue to consolidate JiYa as we are the founding and largest shareholder, appoint the general manager and controller and have the ability to exercise control in substance over the long-term strategic decisions made. Our Chief Executive Officer is chairman of the JiYa board and we have appointed one other representative, Davis Zhang, to serve on the board. Mr. Zhang was an executive officer of AXT for 27 years. Further, our Chief Financial Officer, Gary Fischer, is on the board of supervisors of JiYa. Our ownership of JinMei is 83%. We continue to consolidate JinMei as we have a controlling financial interest and have majority control of the board. Our Chief Executive Officer is chairman of the JinMei board and we have appointed two other representatives to serve on the board. Our ownership of BoYu is 70%. We continue to consolidate BoYu as we have a controlling financial interest and have majority control of the board. Our Chief Executive Officer is chairman of the BoYu board and we have appointed two other representatives to serve on the board. Although we have representation on the board of directors of each of these companies, the daily operations of each of these companies are managed by local management and not by us. Decisions concerning their respective short-term strategy and operations, ordinary course of business capital expenditures, and decisions concerning sales of finished products, are made by local management with regular guidance and input from us. During the three months ended June 30, 2017 and 2016, the three consolidated joint ventures generated an income of $208,000 and a loss of $306,000, respectively, of which a loss of $132,000 and a loss of $353,000, respectively, were allocated to noncontrolling interests, resulting in an income of $340,000 and an income of $47,000 , respectively, to our net income. During the six months ended June 30, 2017 and 2016, the three consolidated joint ventures generated an income of $196,000 and a loss of $481,000, respectively, of which a loss of $372,000 and a loss of $462,000 respectively, were allocated to noncontrolling interests, resulting in an income of $568,000 and a loss of $19,000, respectively, to our net income. For AXT’s three direct minority investment entities that are not consolidated, the investment balances are included in “Other assets” in our condensed consolidated balance sheets and totaled $6.2 million and $6.6 million as of June 30, 2017 and December 31, 2016. We own 46% of the ownership interests in one of these companies and 25% in each of the other two companies. These three companies are not considered variable interest entities because: · all three companies have sustainable businesses of their own; · our voting power is proportionate to our ownership interests; · we only recognize our respective share of the losses and/or residual returns generated by the companies if they occur; and · we do not have controlling financial interest in, do not maintain operational or management control of, do not control the board of directors of, and are not required to provide additional investment or financial support to any of these companies. We also maintain four minority investments indirectly in privately-held companies through our consolidated joint ventures. JiYa holds three investments and JinMei holds one investment. These minority investments are accounted for under the equity method in the books of our consolidated joint ventures. As of June 30, 2017 and December 31, 2016, our consolidated joint ventures included these minority investments in “Other assets” in our condensed consolidated balance sheets with a carrying value of $4.2 million and $4.7 million, respectively. There were no impairment charges in the three months ended June 30, 2017. The six months ended June 30, 2017 include an impairment charge of $313,000 for one of the gallium companies. During the first quarter of 2017, management determined that it is unlikely that this company will recover from the difficult pricing environment and we had written the investment down to zero. AXT’s three direct minority investment entities and the three minority investments of JiYa and the one minority investment of JinMei are not consolidated and are accounted for under the equity method. Excluding one fully impaired entity, the equity entities had the following summarized income information (in thousands) for the three and six months ended June 30, 2017 and 2016. Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Net revenue $ 5,908 $ 7,245 $ 11,363 $ 10,752 Gross profit (loss) $ 4,277 $ (481) $ 7,999 $ (435) Operating loss $ (794) $ (1,422) $ (1,631) $ (2,540) Net loss $ (818) $ (1,390) $ (2,523) $ (3,098) Our portion of the entity loss from these seven minority investment entities that are not consolidated and are accounted for under the equity method were $188,000 and $400,000 for the three months ended June 30, 2017 and 2016, respectively. Our portion of the entity loss, including impairment charges, from these seven minority investment entities that are not consolidated and are accounted for under the equity method were a loss of $1.1 million and $856,000 for the six months ended June 30, 2017 and 2016, respectively. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity | |
Stockholders' Equity | Note 8. Stockholders’ Equity Condensed Consolidated Statement of Changes in Stockholders’ Equity (in thousands) Accumulated Other AXT, Inc Total Preferred Common Additional Accumulated Comprehensive Stockholders’ Noncontrolling Stockholders’ Stock Stock Paid-In Capital Deficit Income Equity Interests Equity Balance as of December 31, 2016 $ 3,532 $ 33 $ 194,177 $ (64,985) $ 253 $ 133,010 $ 4,380 $ 137,390 Common stock options exercised — 1 884 — — 885 — 885 Stock-based compensation — — 622 — — 622 — 622 Issuance of common stock, net of stock issuance costs of $2,639 — 5 31,856 — — 31,861 — 31,861 Net income (loss) — — — 2,595 — 2,595 (372) 2,223 Dividends declared by joint ventures — — — — — — (465) (465) Other comprehensive income — — — — 1,040 1,040 157 1,197 Balance as of June 30, 2017 $ 3,532 $ 39 $ 227,539 $ (62,390) $ 1,293 $ 170,013 $ 3,700 $ 173,713 There were no reclassification adjustments from accumulated other comprehensive income for the three and six months ended June 30, 2017 and 2016 . Stock Repurchase Program On October 27, 2014, our Board of Directors approved a stock repurchase program pursuant to which we may repurchase up to $5.0 million of our outstanding common stock. These repurchases can be made from time to time in the open market and are funded from our existing cash balances and cash generated from operations. During 2015, we repurchased approximately 908,000 shares at an average price of $2.52 per share for a total purchase price of approximately $2.3 million under the stock repurchase program. No shares were repurchased during 2016. During the six months ended June 30, 2017, we did not repurchase any shares under the approved stock repurchase program. As of June 30, 2017, approximately $2.7 million remained available for future repurchases under this program. |
Stock-based Compensation
Stock-based Compensation | 6 Months Ended |
Jun. 30, 2017 | |
Stock-based Compensation | |
Stock-based Compensation | Note 9. Stock-Based Compensation We account for stock-based compensation in accordance with the provisions of ASC topic 718, Compensation-Stock Compensation (“ASC 718”), which established accounting for stock-based awards exchanged for employee services. Stock-based compensation cost is measured at each grant date, based on the fair value of the award, and is recognized as expense over the employee’s requisite service period of the award. All of our stock compensation is accounted for as an equity instrument. The following table summarizes compensation costs related to our stock-based awards (in thousands, except per share data): Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Cost of revenue $ 7 $ 5 $ 15 $ 10 Selling, general and administrative 252 213 508 413 Research and development 51 37 99 85 Total stock-based compensation 310 255 622 508 Tax effect on stock-based compensation — — — — Net effect on net income $ 310 $ 255 $ 622 $ 508 As of June 30, 2017, the unamortized compensation costs related to unvested stock options granted to employees under our stock option plan was approximately $1.6 million, net of estimated forfeitures of $183,000. These costs will be amortized on a straight-line basis over a weighted-average period of approximately 2.6 years and will be adjusted for subsequent changes in estimated forfeitures. We did not capitalize any stock-based compensation to inventory as of June 30, 2017 and December 31, 2016 due to the immateriality of the amount. We estimate the fair value of stock options using the Black-Scholes valuation model, consistent with the provisions of ASC 718. There were no options granted in the three months ended June 30, 2017 and 2016. There were 60,000 and 68,000 options with weighted average grant date fair values of $2.76 and $1.01 granted in the six months ended June 30, 2017 and 2016, respectively. The fair values of our stock options granted to employees for the three and six months ended June 30, 2017 were estimated using the following weighted-average assumptions: Three Months Ended Six Months Ended June 30, June 30, 2017 2017 Expected term (in years) — 5.9 Volatility — % 46.71 % Expected dividend — % — % Risk-free interest rate — % 2.08 % The following table summarizes the stock option transactions during the three months ended June 30, 2017 (in thousands, except per share data): Weighted- average Weighted- Remaining Number of average Contractual Aggregate Options Exercise Life Intrinsic Stock Options Outstanding Price (in years) Value Balance as of January 1, 2017 3,294 $ 3.38 7.23 $ 5,301 Granted 60 5.95 Exercised (289) 3.06 Canceled and expired (14) 2.18 Balance as of June 30, 2017 3,051 $ 3.47 6.93 $ 8,805 Options vested as of June 30, 2017 and unvested options expected to vest, net of forfeitures 2,997 $ 3.46 6.90 $ 8,690 Options exercisable as of June 30, 2017 1,677 $ 3.35 5.58 $ 5,054 The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on our closing price of $6.35 on June 30, 2017, which would have been received by the option holder had all option holders exercised their options on that date. Restricted stock awards A summary of activity related to restricted stock awards for the six months ended June 30, 2017 is presented below (in thousands, except per share data): Weighted-Average Grant Date Stock Awards Shares Fair Value Non-vested as of January 1, 2017 325 $ 3.27 Granted 26 $ 6.80 Vested (74) $ 3.22 Forfeited — $ — Non-vested as of June 30, 2017 277 $ 3.62 As of June 30, 2017, the unamortized compensation costs related to unvested restricted stock awards was approximately $816,000, which is to be amortized on a straight-line basis over a weighted-average period of approximately 1.1 years. |
Net Income Per Share
Net Income Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Net Income Per Share | |
Net Income Per Share | Note 10. Net Income Per Share Basic net income per share is computed using the weighted-average number of common shares outstanding during the periods less shares of common stock subject to repurchase and non-vested stock awards. Diluted net income per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the periods. The dilutive effect of outstanding stock options and restricted stock awards is reflected in diluted earnings per share by application of the treasury stock method. Potentially dilutive common shares consist of common shares issuable upon the exercise of stock options and vesting of restricted stock awards. Potentially dilutive common shares are excluded from the computation of weighted-average number of common shares outstanding in net loss years, as their effect would be anti-dilutive to the computation. A reconciliation of the numerators and denominators of the basic and diluted net income per share calculations is as follows (in thousands, except per share data): Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Numerator: Net income attributable to AXT, Inc $ 1,930 $ 1,151 $ 2,595 $ 1,193 Less: Preferred stock dividends (44) (44) (88) (88) Net income available to common stockholders $ 1,886 $ 1,107 $ 2,507 $ 1,105 Denominator: Denominator for basic net income per share - weighted average common shares 38,306 32,020 36,238 32,011 Effect of dilutive securities: Common stock options 1,212 284 1,216 223 Restricted stock awards 188 147 191 120 Denominator for dilutive net income per common shares 39,706 32,451 37,645 32,354 Net income attributable to AXT, Inc. per common share: Basic $ 0.05 $ 0.03 $ 0.07 $ 0.03 Diluted $ 0.05 $ 0.03 $ 0.07 $ 0.03 Options excluded from diluted net income per share as the impact is anti-dilutive 622 1,343 617 2,551 Restricted stock excluded from diluted net income per share as the impact is anti-dilutive — 19 5 10 The 883,000 shares of $0.001 par value Series A preferred stock issued and outstanding as of June 30, 2017 and December 31, 2016, valued at $3,532,000, are non-voting and non-convertible preferred stock with a 5.0% cumulative annual dividend rate payable when declared by the board of directors and a $4 per share liquidation preference over common stock, which must be paid before any distribution is made to common stockholders. These preferred shares were issued to Lyte Optronics, Inc. stockholders in connection with the completion of our acquisition of Lyte Optronics, Inc. on May 28, 1999. |
Segment Information and Foreign
Segment Information and Foreign Operations | 6 Months Ended |
Jun. 30, 2017 | |
Segment Information and Foreign Operations | |
Segment Information and Foreign Operations | Note 11. Segment Information and Foreign Operations Segment Information We operate in one segment for the design, development, manufacture and distribution of high-performance compound and single element semiconductor substrates and sale of raw materials integral to these substrates. In accordance with ASC topic 280, Segment Reporting, our chief operating decision-maker has been identified as our Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the Company. Since we operate in one segment, all financial segment and product line information can be found in the condensed consolidated financial statements. Product Information The following table represents revenue amounts (in thousands) by product type: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Product Type: Substrates $ 19,109 $ 16,727 $ 35,718 $ 32,579 Raw Materials and Others 4,448 3,768 8,455 6,629 Total $ 23,557 $ 20,495 $ 44,173 $ 39,208 Geographical Information The following table represents revenue amounts (in thousands) reported for products shipped to customers in the corresponding geographic region: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Europe (primarily Germany) $ 5,848 $ 4,573 $ 11,446 $ 8,951 China 6,324 4,183 10,746 7,275 Taiwan 4,195 4,649 7,513 8,784 Japan 2,862 2,695 6,002 4,597 Asia Pacific (excluding China, Taiwan and Japan) 2,645 2,402 4,716 5,152 North America (primarily the United States) 1,683 1,993 3,750 4,449 Total $ 23,557 $ 20,495 $ 44,173 $ 39,208 Long-lived assets consist primarily of property, plant and equipment, and are attributed to the geographic location in which they are located. Long-lived assets, net of depreciation, by geographic region were as follows (in thousands): As of June 30, December 31, 2017 2016 Long-lived assets by geographic region, net of depreciation: North America $ 958 $ 318 China 26,987 27,487 $ 27,945 $ 27,805 Significant Customers Two customers, Osram Opto and Landmark, represented 12% and 11% respectively, of our revenue for the three months ended June 30, 2017 while two customers, Landmark and IQE Group , represented 14% and 10% of our revenue for the three months ended June 30, 2016. Our top five customers, although not the same five customers for each period, represented 37% and 42% of our revenue for the three months ended June 30, 2017 and 2016, respectively. Two customers, Osram Opto and Landmark , represented 11% and 10%, respectively, of our revenue for the six months ended June 30, 2017 while two customers, Landmark and IQE Group, each represented 11% of our revenue for the six months ended June 30, 2016. Our top five customers, although not the same five customers for each period, represented 36% and 42% of our revenue for the six months ended June 30, 2017 and 2016 , respectively. We perform ongoing credit evaluations of our customers’ financial condition, and limit the amount of credit extended when deemed necessary, but generally do not require collateral. One customer accounted for 12% of our accounts receivable balance as of June 30, 2017 , while one customer accounted for 13% of our accounts receivable balance as of December 31, 2016. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 12. Commitments and Contingencies Indemnification Agreements We have entered into indemnification agreements with our directors and officers that require us to indemnify our directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of a culpable nature; to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified; and to obtain directors’ and officers’ insurance if available on reasonable terms, which we currently have in place. Product Warranty We provide warranties for our products for a specific period of time, generally twelve months, against material defects. We provide for the estimated future costs of warranty obligations in cost of sales when the related revenue is recognized. The accrued warranty costs represent the best estimate at the time of sale of the total costs that we expect to incur to repair or replace product parts that fail while still under warranty. The amount of accrued estimated warranty costs are primarily based on historical experience as to product failures as well as current information on repair costs. On a quarterly basis, we review the accrued balances and update the historical warranty cost trends. The following table reflects the change in our warranty accrual which is included in “Accrued liabilities” on the condensed consolidated balance sheets, during the three and six months ended June 30, 2017 and 2016 (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Beginning accrued warranty and related costs $ 133 $ 431 $ 251 $ 497 Accruals for warranties issued 37 4 70 23 Adjustments related to pre-existing warranties including expirations and changes in estimates (27) (64) (132) (131) Cost of warranty repair (13) (41) (59) (59) Ending accrued warranty and related costs $ 130 $ 330 $ 130 $ 330 Contractual Obligations We lease certain office space, warehouse facilities and equipment under long-term operating leases expiring at various dates through December 2025. The majority of our lease obligations relates to our lease agreement for the facility in Fremont, California with approximately 19,467 square feet, which expires in 2017. We have an option to extend the lease for an additional three years. In May 2017, we exercised this option and the lease was extended for an additional three years. All terms remain the same and this lease will expire in 2020. We entered into a royalty agreement with a competitor effective December 3, 2010 with a term of eight years, terminating December 31, 2018. We and our related companies are granted a worldwide, nonexclusive, royalty bearing, irrevocable license to certain patents for the term of the agreement. We shall pay up to $7.0 million of royalty payments over eight years that began in 2011 based on future royalty bearing sales. This royalty agreement contains a clause that allows us to claim a credit, starting in 2013, in the event that the royalty bearing sales for the year are lower than a pre-determined amount set forth in this agreement. The following table summarizes our contractual obligations as of June 30, 2017 (in thousands): Payments due by period 1-3 4-5 More than Contractual Obligations Total Less than 1 year years years 5 years Operating leases $ 670 $ 221 $ 351 $ 92 $ 6 Royalty agreement 862 287 — — Total $ 1,532 $ 796 $ 638 $ 92 $ 6 Purchase Obligations with Penalties for Cancellation In the normal course of business, we issue purchase orders to various suppliers. In certain cases, we may incur a penalty if we cancel the purchase order. As of June 30, 2017, we do not have any outstanding purchase orders that will incur a penalty if cancelled by the Company. Legal Proceedings From time to time we may be involved in judicial or administrative proceedings concerning matters arising in the ordinary course of business. We do not expect that any of these matters, individually or in the aggregate, will have a material adverse effect on our business, financial condition, cash flows or results of operations. |
Foreign Exchange Transaction Ga
Foreign Exchange Transaction Gains/Losses | 6 Months Ended |
Jun. 30, 2017 | |
Foreign Exchange Transaction Gains/Lossess | |
Foreign Exchange Transaction Gains/Losses | Note 13. Foreign Exchange Transaction Gains/Losses We incurred a foreign currency transaction exchange loss of $90,000 and a gain of $169,000 for the three months ended June 30, 2017 and 2016, respectively. We incurred a foreign currency transaction exchange loss of $75,000 and a gain of $244,000 for the six months ended June 30, 2017 and 2016 , respectively. These amounts are included in “Other (expense) income, net” on our condensed consolidated statements of operations. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Taxes | |
Income Taxes | Note 14. Income Taxes We account for income taxes in accordance with ASC topic 740, Income Taxes (“ASC 740”) which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that a portion of the deferred tax asset will not be realized. We recognize interest and penalties related to uncertain tax positions in income tax expense. Income tax expense for the three and six months ended June 30, 2017 includes no interest and penalties. As of June 30, 2017, we have no accrued interest and penalties related to uncertain tax positions. We file income tax returns in the U.S. federal, various states and foreign jurisdictions. Provision for income taxes for the three and six months ended June 30, 2017 was mostly related to our wholly owned China subsidiary and our three partially owned subsidiaries in China. Besides the state tax liabilities, no income taxes or benefits have been provided for U.S. operations for the three and six months ended June 30, 2017 due to the loss in the U.S. and the uncertainty of generating future profit in the U.S., which has resulted in our deferred tax asset being fully reserved. |
Whistleblower Complaint and Inv
Whistleblower Complaint and Investigation | 6 Months Ended |
Jun. 30, 2017 | |
Whistleblower Complaint and Investigation | |
Whistleblower Complaint and Investigation | Note 15. Whistleblower Complaint and Investigation On February 23, 2015, the Board of Directors announced that, pursuant to an anonymous whistleblower complaint, our Audit Committee had conducted an investigation of certain potential related-party transactions involving Davis Zhang, our former President, China Operations. The investigation did not conclude that there was any intentional misconduct by Mr. Zhang, or that he received any improper benefit from these transactions. Further, the investigation did not reveal any inaccuracies in our financial statements resulting from these transactions. However, the investigation identified certain historical related-party transactions that were not previously disclosed in our filings with the Securities and Exchange Commission (“SEC”). We filed a Current Report on Form 8-K with the SEC on February 23, 2015 to disclose such historical related-party transactions. On February 20, 2015, the Board waived any potential inconsistencies with our Code of Conduct and Ethics arising from the transactions identified in the investigation. Also, the Audit Committee approved the related-party nature of such transactions to the extent it had not previously approved such transactions. The Board and Audit Committee specified that such waiver and approval would have retroactive effect to the date of commencement of the transactions covered by such waiver and approval. We incurred approximately $1.8 million of professional service fees during the course of this investigation. |
Restructuring Charges
Restructuring Charges | 6 Months Ended |
Jun. 30, 2017 | |
Restructuring Charges | |
Restructuring Charges | Note 16. Restructuring Charges In the second quarter of 2016, we restructured the operations of JiYa, which resulted in a reduction in force of 28 positions that were no longer required to support production and operations. Accordingly, we recorded a restructuring charge of approximately $226,000 related to the reduction in force for severance-related expenses. As of June 30, 2016, we had completed this restructuring plan and the reduction in force. During the three and six months ended June 30, 2017 and 2016, we incurred no restructuring charges, except as mentioned above. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2017 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 17. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, which applies to any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other standards, superseding the existing revenue recognition requirements in ASC Topic 605 “Revenue Recognition.” Pursuant to ASU 2014-09, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange, as applied through a multi-step process to achieve that core principle. Subsequently, the FASB approved a deferral included in ASU 2015-14 that permits public entities to apply the amendments in ASU 2014-09 for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein, and that would also permit public entities to elect to adopt the amendments as of the original effective date as applicable to reporting periods beginning after December 15, 2016. The FASB has since issued additional updates of its new standard on revenue recognition issued in May 2014. In March 2016, an amendment was issued to clarify the implementation guidance on principal versus agent consideration. The guidance requires entities to determine whether the nature of its promise to provide goods or services to a customer is performed in a principal or agent capacity and to recognize revenue in a gross or net manner based on its principal/agent designation. In April 2016, amendments were issued to clarify the identification of performance obligations and the licensing implementation guidance in the initial standard. Amendments were issued in May 2016 related to its guidance on assessing collectability, presentation of sales tax, noncash consideration, and completed contracts and contract modification at transition, which reduce the potential for diversity in practice, and the cost and complexity of application at transition and on an ongoing basis. The new guidance allows for the amendment to be applied either retrospectively to each prior reporting period presented or retrospectively as a cumulative-effect adjustment as of the date of adoption. We are currently evaluating the impact that the adoption of ASU 2014-09 and ASU 2015-14 may have on our condensed consolidated financial statements and have not elected a transition method as of the period ended June 30, 2017. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, amending ASC 330. Upon adoption, this topic supersedes the existing guidance under ASC 330 and aims to simplify the subsequent measurement of inventory. Currently, inventory can be measured at the lower of cost or market, which could result in several potential outcomes, as market could be replacement cost, net realizable value or net realizable value less an approximately normal profit margin. The major amendments would be as follows: 1. Inventory should be measured at the lower of cost or net realizable value. 2. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. 3. The amendment does not apply to inventory measured under LIFO or the retail inventory method. 4. The amendment does apply to all other inventory, which includes inventory measured via FIFO or average cost. We adopted this guidance effective January 1, 2017 and it did not have a significant impact on our condensed consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, which made changes to the accounting for financial instruments that primarily affect equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The amendments in this update supersede the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and require equity securities to be measured at fair value with changes in the fair value recognized through net income. The standard amends financial reporting by providing relevant information about an entity’s equity investments and reducing the number of items that are recognized in other comprehensive income. This update will be effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. We are currently assessing the impact of the future adoption of this standard on our condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, which replaces the existing guidance for leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and requires retrospective application. We will adopt in fiscal 2019 and are currently evaluating the impact of the guidance on our condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-07, which eliminates the requirement to retrospectively apply the equity method in previous periods when an investor initially obtains significant influence over an investee. Under the amended guidance, the investor should apply the equity method prospectively from the date the investment qualifies for the equity method. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years with early application permitted. We adopted this guidance effective January 1, 2017. The Company's adoption of this standard did not have a significant impact on its condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, which simplifies several aspects of the accounting for share-based payment award transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods. We adopted this guidance effective January 1, 2017. The Company's adoption of this standard did not have a significant impact on its condensed consolidated financial statements. No excess income tax benefit or tax deficiencies have been recorded as a result of the adoption and there will be no change to accumulated deficit with respect to previously unrecognized excess tax benefits. The Company is electing to continue to account for forfeitures on an estimated basis. We have elected to present the condensed consolidated statements of cash flows on a prospective transition method and no prior periods have been adjusted. In August 2016, the FASB issued ASU No. 2016-15, which reduces diversity in practice where the FASB was either unclear or did not provide specific guidance for classifying cash payments and receipts in the statement of cash flows for eight specific transactions. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and requires retrospective application with early application permitted. We are currently evaluating the impact of the future adoption of this standard on our condensed consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, which clarifies the accounting for the current and deferred income taxes for an intra-entity transfer of an asset other than inventory. The guidance is effective for fiscal years beginning after December 15, 2017, including periods within those fiscal years and requires retrospective application with early application permitted. We are currently evaluating the impact of the future adoption of this standard on our condensed consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for fiscal years beginning after December 15, 2017, including periods within those fiscal years and requires retrospective application with early application permitted. We are currently evaluating the impact of the future adoption of this standard on our condensed consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The guidance provides clarity and reduces diversity in practice and cost and complexity when accounting for a change to the terms or conditions of a share-based payment award. The guidance is effective for fiscal years beginning after December 15, 2017. We are currently evaluating the impact the adoption of this ASU will have on our condensed consolidated financial statements. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events | |
Subsequent Events | Note 18. Subsequent Events One of our consolidated joint ventures, JinMei, is in the process of relocating its headquarters and manufacturing operations to an alternative location. Currently, JinMei has identified a site as a possible candidate and the estimated costs for the land use rights acquisition and facility construction is expected to be approximately $6 million. In July 2017, our wholly-owned subsidiary, Tongmei, provided an inter-company loan to JinMei in the amount of $738,000 in preparation for the acquisition of the land use rights and the construction of a new building. The inter-company loan carries an interest rate of 4.9% per annum and is due on June 30, 2023. |
Investments and Fair Value Me26
Investments and Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Investments and Fair Value Measurements | |
Cash, cash equivalents and investments | As of June 30, 2017 and December 31, 2016, our cash, cash equivalents and investments are classified as follows (in thousands): June 30, 2017 December 31, 2016 Gross Gross Gross Gross Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair Cost Gain (Loss) Value Cost Gain (Loss) Value Classified as: Cash $ 55,775 $ — $ — $ 55,775 $ 23,948 $ — $ — $ 23,948 Cash equivalents: Certificates of deposit 1 708 — — 708 12,204 — — 12,204 Total cash and cash equivalents 56,483 — — 56,483 36,152 — — 36,152 Investments (available-for-sale): Certificates of deposit 2 5,728 1 (12) 5,717 8,999 1 (20) 8,980 Corporate bonds 25,393 — (69) 25,324 8,479 — (47) 8,432 Corporate equity securities — — — — 48 111 — 159 Total investments 31,121 1 (81) 31,041 17,526 112 (67) 17,571 Total cash, cash equivalents and investments $ 87,604 $ 1 $ (81) $ 87,524 $ 53,678 $ 112 $ (67) $ 53,723 Contractual maturities on investments: Due within 1 year 3 $ 22,504 $ 22,463 $ 11,325 $ 11,415 Due after 1 through 5 years 4 8,617 8,578 6,201 6,156 $ 31,121 $ 31,041 $ 17,526 $ 17,571 1. Certificates of deposit with original maturities of less than three months. 2. Certificates of deposit with original maturities of more than three months. 3. Classified as “Short-term investments” in our condensed consolidated balance sheets. 4. Classified as “Long-term investments” in our condensed consolidated balance sheets. |
Fair value and gross unrealized losses related to available-for-sale securities | The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2017 (in thousands): In Loss Position In Loss Position Total In < 12 months > 12 months Loss Position Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized As of June 30, 2017 Value (Losses) Value (Losses) Value (Losses) Investments: Certificates of deposit $ 2,391 $ (9) $ 1,867 $ (3) $ 4,258 $ (12) Corporate bonds 23,624 (68) 1,700 (1) 25,324 (69) Total in loss position $ 26,015 $ (77) $ 3,567 $ (4) $ 29,582 $ (81) The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2016 (in thousands): In Loss Position In Loss Position Total In < 12 months > 12 months Loss Position Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized As of December 31, 2016 Value (Loss) Value (Loss) Value (Loss) Investments: Certificates of deposit $ 5,211 $ (20) $ 1,200 $ — $ 6,411 $ (20) Corporate bonds 5,037 (35) 3,395 (12) 8,432 (47) Total in loss position $ 10,248 $ (55) $ 4,595 $ (12) $ 14,843 $ (67) |
Summary of financial assets and liabilities measured at fair value on a recurring basis | The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2017 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs June 30, 2017 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ 6,425 $ — $ 6,425 $ — Corporate bonds 25,324 — 25,324 — Total $ 31,749 $ — $ 31,749 $ — The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs December 31, 2016 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ 21,184 $ — $ 21,184 $ — Corporate bonds 8,432 — 8,432 — Corporate equity securities 159 159 — — Total $ 29,775 $ 159 $ 29,616 $ — |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventories | |
Components of inventories | The components of inventories are summarized below (in thousands): June 30, December 31, 2017 2016 Inventories: Raw materials $ 19,870 $ 17,485 Work in process 18,572 20,410 Finished goods 2,185 2,257 $ 40,627 $ 40,152 |
Property, Plant and Equipment28
Property, Plant and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment, Net | |
Components of property, plant and equipment | June 30, December 31, 2017 2016 Property, plant and equipment: Machinery and equipment, at cost $ 42,027 $ 41,254 Less: accumulated depreciation and amortization (38,961) (37,311) Building, at cost 30,333 29,600 Less: accumulated depreciation and amortization (10,465) (9,654) Leasehold improvements, at cost 5,048 4,942 Less: accumulated depreciation and amortization (3,917) (3,608) Construction in progress 3,880 2,582 $ 27,945 $ 27,805 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accrued Liabilities | |
Components of accrued liabilities | The components of accrued liabilities are summarized below (in thousands): June 30, December 31, 2017 2016 Preferred stock dividends payable $ 2,901 $ 2,901 Accrued compensation and related charges 1,955 2,610 Advance from customers 1,286 238 Current portion of royalty payments 575 575 Dividends payable by consolidated joint ventures 512 499 Accrued professional services 401 583 Accrued income taxes 264 203 Accrued product warranty 130 251 Other accrued liabilities 1,339 1,400 $ 9,363 $ 9,260 |
Investments in Privately Held30
Investments in Privately Held Companies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Investments in Privately Held Companies | |
Investments | The six direct investments are summarized below (in thousands): Investment Balance as of June 30, December 31, Accounting Ownership Company 2017 2016 Method Percentage Beijing JiYa Semiconductor Material Co., Ltd. $ 3,331 $ 3,331 Consolidated 46 % Nanjing JinMei Gallium Co., Ltd. 592 592 Consolidated 83 % Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. 1,346 1,346 Consolidated 70 % $ 5,269 $ 5,269 Donghai County Dongfang High Purity Electronic Materials Co., Ltd. $ 1,394 $ 1,498 Equity 46 % Xilingol Tongli Germanium Co. Ltd. 3,813 4,000 Equity 25 % Emeishan Jia Mei High Purity Metals Co., Ltd. 985 1,101 Equity 25 % $ 6,192 $ 6,599 |
Summarized equity method income information | AXT’s three direct minority investment entities and the three minority investments of JiYa and the one minority investment of JinMei are not consolidated and are accounted for under the equity method. Excluding one fully impaired entity, the equity entities had the following summarized income information (in thousands) for the three and six months ended June 30, 2017 and 2016. Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Net revenue $ 5,908 $ 7,245 $ 11,363 $ 10,752 Gross profit (loss) $ 4,277 $ (481) $ 7,999 $ (435) Operating loss $ (794) $ (1,422) $ (1,631) $ (2,540) Net loss $ (818) $ (1,390) $ (2,523) $ (3,098) |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity | |
Consolidated statement of changes in equity | Condensed Consolidated Statement of Changes in Stockholders’ Equity (in thousands) Accumulated Other AXT, Inc Total Preferred Common Additional Accumulated Comprehensive Stockholders’ Noncontrolling Stockholders’ Stock Stock Paid-In Capital Deficit Income Equity Interests Equity Balance as of December 31, 2016 $ 3,532 $ 33 $ 194,177 $ (64,985) $ 253 $ 133,010 $ 4,380 $ 137,390 Common stock options exercised — 1 884 — — 885 — 885 Stock-based compensation — — 622 — — 622 — 622 Issuance of common stock, net of stock issuance costs of $2,639 — 5 31,856 — — 31,861 — 31,861 Net income (loss) — — — 2,595 — 2,595 (372) 2,223 Dividends declared by joint ventures — — — — — — (465) (465) Other comprehensive income — — — — 1,040 1,040 157 1,197 Balance as of June 30, 2017 $ 3,532 $ 39 $ 227,539 $ (62,390) $ 1,293 $ 170,013 $ 3,700 $ 173,713 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Stock-based Compensation | |
Compensation costs related to stock-based awards | The following table summarizes compensation costs related to our stock-based awards (in thousands, except per share data): Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Cost of revenue $ 7 $ 5 $ 15 $ 10 Selling, general and administrative 252 213 508 413 Research and development 51 37 99 85 Total stock-based compensation 310 255 622 508 Tax effect on stock-based compensation — — — — Net effect on net income $ 310 $ 255 $ 622 $ 508 |
Weighted-average assumptions | Three Months Ended Six Months Ended June 30, June 30, 2017 2017 Expected term (in years) — 5.9 Volatility — % 46.71 % Expected dividend — % — % Risk-free interest rate — % 2.08 % |
Summary of stock option activity | The following table summarizes the stock option transactions during the three months ended June 30, 2017 (in thousands, except per share data): Weighted- average Weighted- Remaining Number of average Contractual Aggregate Options Exercise Life Intrinsic Stock Options Outstanding Price (in years) Value Balance as of January 1, 2017 3,294 $ 3.38 7.23 $ 5,301 Granted 60 5.95 Exercised (289) 3.06 Canceled and expired (14) 2.18 Balance as of June 30, 2017 3,051 $ 3.47 6.93 $ 8,805 Options vested as of June 30, 2017 and unvested options expected to vest, net of forfeitures 2,997 $ 3.46 6.90 $ 8,690 Options exercisable as of June 30, 2017 1,677 $ 3.35 5.58 $ 5,054 |
Restricted stock awards | A summary of activity related to restricted stock awards for the six months ended June 30, 2017 is presented below (in thousands, except per share data): Weighted-Average Grant Date Stock Awards Shares Fair Value Non-vested as of January 1, 2017 325 $ 3.27 Granted 26 $ 6.80 Vested (74) $ 3.22 Forfeited — $ — Non-vested as of June 30, 2017 277 $ 3.62 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Net Income Per Share | |
Reconciliation of numerators and denominators of basic and diluted net income per share | A reconciliation of the numerators and denominators of the basic and diluted net income per share calculations is as follows (in thousands, except per share data): Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Numerator: Net income attributable to AXT, Inc $ 1,930 $ 1,151 $ 2,595 $ 1,193 Less: Preferred stock dividends (44) (44) (88) (88) Net income available to common stockholders $ 1,886 $ 1,107 $ 2,507 $ 1,105 Denominator: Denominator for basic net income per share - weighted average common shares 38,306 32,020 36,238 32,011 Effect of dilutive securities: Common stock options 1,212 284 1,216 223 Restricted stock awards 188 147 191 120 Denominator for dilutive net income per common shares 39,706 32,451 37,645 32,354 Net income attributable to AXT, Inc. per common share: Basic $ 0.05 $ 0.03 $ 0.07 $ 0.03 Diluted $ 0.05 $ 0.03 $ 0.07 $ 0.03 Options excluded from diluted net income per share as the impact is anti-dilutive 622 1,343 617 2,551 Restricted stock excluded from diluted net income per share as the impact is anti-dilutive — 19 5 10 |
Segment Information and Forei34
Segment Information and Foreign Operations (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Information and Foreign Operations | |
Revenues reported by product type | The following table represents revenue amounts (in thousands) by product type: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Product Type: Substrates $ 19,109 $ 16,727 $ 35,718 $ 32,579 Raw Materials and Others 4,448 3,768 8,455 6,629 Total $ 23,557 $ 20,495 $ 44,173 $ 39,208 |
Revenue reported for products shipped to customers in the corresponding geographic region | The following table represents revenue amounts (in thousands) reported for products shipped to customers in the corresponding geographic region: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Europe (primarily Germany) $ 5,848 $ 4,573 $ 11,446 $ 8,951 China 6,324 4,183 10,746 7,275 Taiwan 4,195 4,649 7,513 8,784 Japan 2,862 2,695 6,002 4,597 Asia Pacific (excluding China, Taiwan and Japan) 2,645 2,402 4,716 5,152 North America (primarily the United States) 1,683 1,993 3,750 4,449 Total $ 23,557 $ 20,495 $ 44,173 $ 39,208 |
Long-lived assets by geographic region | Long-lived assets consist primarily of property, plant and equipment, and are attributed to the geographic location in which they are located. Long-lived assets, net of depreciation, by geographic region were as follows (in thousands): As of June 30, December 31, 2017 2016 Long-lived assets by geographic region, net of depreciation: North America $ 958 $ 318 China 26,987 27,487 $ 27,945 $ 27,805 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies | |
Product warranty accrued liability | The following table reflects the change in our warranty accrual which is included in “Accrued liabilities” on the condensed consolidated balance sheets, during the three and six months ended June 30, 2017 and 2016 (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Beginning accrued warranty and related costs $ 133 $ 431 $ 251 $ 497 Accruals for warranties issued 37 4 70 23 Adjustments related to pre-existing warranties including expirations and changes in estimates (27) (64) (132) (131) Cost of warranty repair (13) (41) (59) (59) Ending accrued warranty and related costs $ 130 $ 330 $ 130 $ 330 |
Outstanding contractual obligations | The following table summarizes our contractual obligations as of June 30, 2017 (in thousands): Payments due by period 1-3 4-5 More than Contractual Obligations Total Less than 1 year years years 5 years Operating leases $ 670 $ 221 $ 351 $ 92 $ 6 Royalty agreement 862 287 — — Total $ 1,532 $ 796 $ 638 $ 92 $ 6 |
Investments and Fair Value Me36
Investments and Fair Value Measurements (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash, cash equivalents and investments [Abstract] | |||||
Cash | $ 55,775,000 | $ 23,948,000 | |||
Cash equivalents [Abstract] | |||||
Certificates of deposit | 708,000 | 12,204,000 | |||
Total cash and cash equivalents | $ 26,115,000 | 56,483,000 | $ 26,115,000 | 36,152,000 | $ 24,875,000 |
Amortized Cost | 87,604,000 | 53,678,000 | |||
Gross Unrealized Gain | 1,000 | 112,000 | |||
Gross Unrealized (Loss) | (81,000) | (67,000) | |||
Fair Value | 87,524,000 | 53,723,000 | |||
Contractual maturities on investments, amortized cost basis [Abstract] | |||||
Due within 1 year | 22,504,000 | 11,325,000 | |||
Due after 1 through 5 years | 8,617,000 | 6,201,000 | |||
Investments, amortized cost | 31,121,000 | 17,526,000 | |||
Contractual maturities on investments, fair value basis [Abstract] | |||||
Due within 1 year | 22,463,000 | 11,415,000 | |||
Due after 1 through 5 years | 8,578,000 | 6,156,000 | |||
Investments, fair value | 31,041,000 | 17,571,000 | |||
Gross realized gains from sales of available-for-sale investments | 77,000 | 345,000 | |||
GHI | |||||
Contractual maturities on investments, fair value basis [Abstract] | |||||
Proceeds from sales of available-for-sale investments | 222,000 | 125,000 | 468,000 | ||
Available-for-sale investments, expenses | 58,000 | 48,000 | 123,000 | ||
Gross realized gains from sales of available-for-sale investments | $ 164,000 | 77,000 | $ 345,000 | ||
Auction Rate Securities [Member] | |||||
Contractual maturities on investments, fair value basis [Abstract] | |||||
Investments, fair value | 0 | ||||
Total Investments [Member] | |||||
Cash equivalents [Abstract] | |||||
Amortized Cost | 31,121,000 | 17,526,000 | |||
Gross Unrealized Gain | 1,000 | 112,000 | |||
Gross Unrealized (Loss) | (81,000) | (67,000) | |||
Fair Value | 31,041,000 | 17,571,000 | |||
Certificates of Deposit [Member] | |||||
Cash equivalents [Abstract] | |||||
Amortized Cost | 5,728,000 | 8,999,000 | |||
Gross Unrealized Gain | 1,000 | 1,000 | |||
Gross Unrealized (Loss) | (12,000) | (20,000) | |||
Fair Value | 5,717,000 | 8,980,000 | |||
Corporate Bonds [Member] | |||||
Cash equivalents [Abstract] | |||||
Amortized Cost | 25,393,000 | 8,479,000 | |||
Gross Unrealized (Loss) | (69,000) | (47,000) | |||
Fair Value | $ 25,324,000 | 8,432,000 | |||
Corporate Equity Securities [Member] | |||||
Cash equivalents [Abstract] | |||||
Amortized Cost | 48,000 | ||||
Gross Unrealized Gain | 111,000 | ||||
Fair Value | $ 159,000 |
Investments and Fair Value Me37
Investments and Fair Value Measurements - Investment Category and Length (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2017USD ($)entity | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)entity | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | Mar. 31, 2017USD ($) | |
Summary of fair value and gross unrealized losses related to available-for-sale securities [Abstract] | ||||||
Fair value, in loss position less than twelve months | $ 26,015,000 | $ 26,015,000 | $ 10,248,000 | |||
Gross unrealized loss, in loss position less than twelve months | (77,000) | (55,000) | ||||
Fair value, in loss position greater than twelve months | 3,567,000 | 3,567,000 | 4,595,000 | |||
Gross unrealized loss, in loss position greater than twelve months | (4,000) | (12,000) | ||||
Fair value, total in loss position | 29,582,000 | 29,582,000 | 14,843,000 | |||
Gross unrealized loss, total in loss position | (81,000) | (67,000) | ||||
Minority Investments | ||||||
Investments in privately-held companies | $ 6,192,000 | $ 6,192,000 | 6,599,000 | |||
Number of gallium companies with impairment charge | entity | 1 | 1 | ||||
Equity method investments | entity | 7 | |||||
Impairment charge | $ 0 | $ 0 | $ 0 | |||
Investments held | 6,192,000 | $ 6,192,000 | 6,599,000 | |||
One Gallium Company | ||||||
Minority Investments | ||||||
Investments in privately-held companies | 0 | 0 | $ 0 | |||
Impairment charge | 0 | 313,000 | ||||
Investments held | 0 | 0 | $ 0 | |||
Certificates of Deposit [Member] | ||||||
Summary of fair value and gross unrealized losses related to available-for-sale securities [Abstract] | ||||||
Fair value, in loss position less than twelve months | 2,391,000 | 2,391,000 | 5,211,000 | |||
Gross unrealized loss, in loss position less than twelve months | (9,000) | (20,000) | ||||
Fair value, in loss position greater than twelve months | 1,867,000 | 1,867,000 | 1,200,000 | |||
Gross unrealized loss, in loss position greater than twelve months | (3,000) | |||||
Fair value, total in loss position | 4,258,000 | 4,258,000 | 6,411,000 | |||
Gross unrealized loss, total in loss position | (12,000) | (20,000) | ||||
Corporate Bonds [Member] | ||||||
Summary of fair value and gross unrealized losses related to available-for-sale securities [Abstract] | ||||||
Fair value, in loss position less than twelve months | 23,624,000 | 23,624,000 | 5,037,000 | |||
Gross unrealized loss, in loss position less than twelve months | (68,000) | (35,000) | ||||
Fair value, in loss position greater than twelve months | 1,700,000 | 1,700,000 | 3,395,000 | |||
Gross unrealized loss, in loss position greater than twelve months | (1,000) | (12,000) | ||||
Fair value, total in loss position | 25,324,000 | 25,324,000 | 8,432,000 | |||
Gross unrealized loss, total in loss position | (69,000) | (47,000) | ||||
Other Assets [Member] | ||||||
Minority Investments | ||||||
Investments in privately-held companies | 10,300,000 | 10,300,000 | 11,300,000 | |||
Investments held | $ 10,300,000 | $ 10,300,000 | $ 11,300,000 |
Investments and Fair Value Me38
Investments and Fair Value Measurements - FV Measurements (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale Securities | $ 87,524 | $ 53,723 |
Recurring [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total | 31,749 | 29,775 |
Recurring [Member] | Certificates of Deposit [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents, fair value disclosure | 6,425 | 21,184 |
Recurring [Member] | Corporate Bonds [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale Securities | 25,324 | 8,432 |
Recurring [Member] | Corporate Equity Securities [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale Securities | 159 | |
Recurring [Member] | Quoted Prices in Active Markets of Identical Assets (Level 1) [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total | 159 | |
Recurring [Member] | Quoted Prices in Active Markets of Identical Assets (Level 1) [Member] | Corporate Equity Securities [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale Securities | 159 | |
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total | 31,749 | 29,616 |
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Certificates of Deposit [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents, fair value disclosure | 6,425 | 21,184 |
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Bonds [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale Securities | $ 25,324 | $ 8,432 |
Inventories (Details)
Inventories (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Inventories | ||
Raw materials | $ 19,870,000 | $ 17,485,000 |
Work in process | 18,572,000 | 20,410,000 |
Finished goods | 2,185,000 | 2,257,000 |
Inventories, total | 40,627,000 | 40,152,000 |
Inventory reserve | 12,300,000 | 12,000,000 |
Excess and obsolete inventory | $ 211,000 | $ 254,000 |
Property, Plant and Equipment40
Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, net | $ 27,945 | $ 27,805 |
Machinery and equipment | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 42,027 | 41,254 |
Less: accumulated depreciation and amortization | (38,961) | (37,311) |
Building | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 30,333 | 29,600 |
Less: accumulated depreciation and amortization | (10,465) | (9,654) |
Leasehold improvements | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 5,048 | 4,942 |
Less: accumulated depreciation and amortization | (3,917) | (3,608) |
Construction in progress | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | $ 3,880 | $ 2,582 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 |
Components of accrued liabilities [Abstract] | |||
Preferred stock dividends payable | $ 2,901 | $ 2,901 | |
Accrued compensation and related charges | 1,955 | 2,610 | |
Advances from customers | 1,286 | 238 | |
Current portion of royalty payments | 575 | 575 | |
Dividends payable by consolidated joint ventures | 512 | 499 | $ 522 |
Accrued professional services | 401 | 583 | |
Accrued income taxes | 264 | 203 | |
Accrued product warranty | 130 | 251 | |
Other accrued liabilities | 1,339 | 1,400 | |
Accrued liabilities, total | $ 9,363 | $ 9,260 |
Related Party Transactions (Det
Related Party Transactions (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Apr. 30, 2016USD ($) | Apr. 30, 2014USD ($) | Aug. 31, 2011USD ($)item | Jun. 30, 2017USD ($)ft²installment | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)ft²installment | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Related Party Transaction [Line Items] | ||||||||
Related party notes receivable - long term | $ 157,000 | |||||||
Additional revenue | $ 23,557,000 | $ 20,495,000 | $ 44,173,000 | $ 39,208,000 | ||||
Area of leased property (in square feet) | ft² | 19,467 | 19,467 | ||||||
Repayment of related party notes receivable | $ 53,000 | |||||||
Related party notes receivable - current | $ 109,000 | 109,000 | ||||||
Equity investment entity | Beijing JiYa Semiconductor Material Co., Ltd | ||||||||
Related Party Transaction [Line Items] | ||||||||
Additional revenue | $ 0 | |||||||
Equity investment entity | Related party loan | Beijing JiYa Semiconductor Material Co., Ltd | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amount of transaction | $ 1,600,000 | |||||||
Number of equity method investees to whom loan was granted | item | 1 | |||||||
Term of loan | 2 years 10 months | |||||||
Number of installments | installment | 3 | 3 | ||||||
Equity investment entity | Related party loan | Other Assets [Member] | Beijing JiYa Semiconductor Material Co., Ltd | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party notes receivable - long term | $ 1,300,000 | $ 1,300,000 | 1,400,000 | |||||
Equity investment entity | Raw materials purchases from related party | Accounts payable | Beijing JiYa Semiconductor Material Co., Ltd | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amount payable to related party | 1,900,000 | 1,900,000 | 1,800,000 | |||||
Equity investment entity | Raw materials purchases from related party | Accounts payable | Beijing Tongmei Xtal Technology | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amount payable to related party | 146,000 | 146,000 | 146,000 | |||||
Equity investment entity | Raw materials sales to related party | Accounts receivable | Beijing JiYa Semiconductor Material Co., Ltd | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amounts receivable from related party | 320,000 | 320,000 | 313,000 | |||||
Equity investment entity | Raw material agency sales agreement | Other (expense) income, net | Nanjing JinMei Gallium Co., Ltd | ||||||||
Related Party Transaction [Line Items] | ||||||||
Other income from related party | 0 | $ 0 | 1,000 | $ 0 | ||||
Donghai County Dongfang High Purity Electronic Materials Co., Ltd | Related party loan | Beijing Tongmei Xtal Technology | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amount of transaction | $ 44,000 | |||||||
Related party notes receivable - long term | 0 | $ 0 | 50,000 | |||||
Interest rate (as a percent) | 6.15% | |||||||
Repayment of related party notes receivable | 53,000 | |||||||
Donghai County Dongfang High Purity Electronic Materials Co., Ltd | Raw materials purchases from related party | Beijing Tongmei Xtal Technology | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party notes receivable - long term | 109,000 | $ 109,000 | 107,000 | |||||
Donghai County Dongfang High Purity Electronic Materials Co., Ltd | Raw materials purchases from related party | Accounts payable | Beijing Tongmei Xtal Technology | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amount payable to related party | 0 | 0 | 210,000 | |||||
Emei Shan Jiamei Materials Co., Ltd | Raw materials purchases from related party | Accounts payable | Beijing Tongmei Xtal Technology | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amount payable to related party | 0 | 0 | 377,000 | |||||
Xilingol Tongli Germanium Co. Ltd | Raw materials purchases from related party | Accounts payable | Beijing Tongmei Xtal Technology | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amount payable to related party | 1,300,000 | 1,300,000 | 246,000 | |||||
Beijing Kaide Quartz Co. Ltd | Raw materials purchases from related party | Accounts payable | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amount payable to related party | $ 419,000 | $ 419,000 | 323,000 | |||||
Beijing BoYu Semiconductor Vessel Craftwork Technology Co | Lease of land | Beijing Tongmei Xtal Technology | ||||||||
Related Party Transaction [Line Items] | ||||||||
Area of leased property (in square feet) | ft² | 22,081 | 22,081 | ||||||
Lease term | 10 years | |||||||
Annual lease payment | $ 24,000 | |||||||
Increase in annual lease payment at each third year anniversary (in hundredths) | 5.00% | 5.00% | ||||||
Rental increase period | 3 years | |||||||
Executive officer | Related party loan | Beijing BoYu Semiconductor Vessel Craftwork Technology Co | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amount of transaction | $ 177,000 | |||||||
Interest rate (as a percent) | 2.75% | |||||||
Repayment of related party notes receivable | $ 180,000 | |||||||
Executive officer | Related party loan | Prepaid expenses and other current assets | Beijing BoYu Semiconductor Vessel Craftwork Technology Co | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party notes receivable - current | $ 0 | $ 0 | $ 179,000 |
Investments in Privately Held43
Investments in Privately Held Companies (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2017USD ($)employeeentity | Jun. 30, 2016USD ($)entity | Jun. 30, 2017USD ($)employeeentityitem | Jun. 30, 2016USD ($)entity | Dec. 31, 2016USD ($)entity | Mar. 31, 2017USD ($) | |
Summary of investments [Abstract] | ||||||
Direct investments | item | 6 | |||||
Indirect investments | item | 4 | |||||
Investments in privately-held companies | $ 6,192,000 | $ 6,192,000 | $ 6,599,000 | |||
Net loss attributable to noncontrolling interests | (132,000) | $ (353,000) | (372,000) | $ (462,000) | ||
Equity investments classified as other assets | 12,004,000 | $ 12,004,000 | $ 12,842,000 | |||
Direct minority investments not consolidated | entity | 3 | 3 | ||||
Minority investments not consolidated accounted for under equity method | entity | 7 | |||||
Net income | (818,000) | (1,390,000) | $ (2,523,000) | (3,098,000) | ||
Impairment charge | $ 0 | $ 0 | $ 0 | |||
Joint Ventures [Member] | ||||||
Summary of investments [Abstract] | ||||||
Indirect investments | entity | 4 | |||||
Number of consolidated joint ventures | entity | 3 | 3 | 3 | 3 | ||
Income (loss) from consolidated joint ventures | $ 208,000 | $ (306,000) | $ 196,000 | $ (481,000) | ||
Net loss attributable to noncontrolling interests | (132,000) | (353,000) | (372,000) | (462,000) | ||
Net income (loss) from joint ventures attributable to parent | 340,000 | 47,000 | 568,000 | (19,000) | ||
Other Assets [Member] | ||||||
Summary of investments [Abstract] | ||||||
Investments in privately-held companies | 10,300,000 | 10,300,000 | $ 11,300,000 | |||
Other Assets [Member] | Joint Ventures [Member] | ||||||
Summary of investments [Abstract] | ||||||
Minority investment in consolidated joint venture, included in other assets | 4,200,000 | 4,200,000 | 4,700,000 | |||
Beijing JiYa Semiconductor Material Co., Ltd Investment | ||||||
Summary of investments [Abstract] | ||||||
Investments, consolidated | $ 3,331,000 | $ 3,331,000 | 3,331,000 | |||
Percentage of ownership, consolidated method (in hundredths) | 46.00% | |||||
Number of persons on board | employee | 1 | 1 | ||||
Employee duration | 27 years | |||||
Nanjing JinMei Gallium Co., Ltd Investment | ||||||
Summary of investments [Abstract] | ||||||
Investments, consolidated | $ 592,000 | $ 592,000 | 592,000 | |||
Percentage of ownership, consolidated method (in hundredths) | 83.00% | |||||
Number of new board representatives | employee | 2 | |||||
Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd Investment | ||||||
Summary of investments [Abstract] | ||||||
Investments, consolidated | 1,346,000 | $ 1,346,000 | 1,346,000 | |||
Percentage of ownership, consolidated method (in hundredths) | 70.00% | |||||
Number of new board representatives | employee | 2 | |||||
Donghai County Dongfang High Purity Electronic Materials Co., Ltd Investment | ||||||
Summary of investments [Abstract] | ||||||
Investments in privately-held companies | $ 1,394,000 | $ 1,394,000 | 1,498,000 | |||
Percentage of ownership, equity method (in hundredths) | 46.00% | 46.00% | ||||
Xilingol Tongli Germanium Co. Ltd Investment | ||||||
Summary of investments [Abstract] | ||||||
Investments in privately-held companies | $ 3,813,000 | $ 3,813,000 | 4,000,000 | |||
Percentage of ownership, equity method (in hundredths) | 25.00% | 25.00% | ||||
Emeishan Jia Mei High Purity Metals Co., Ltd Investment | ||||||
Summary of investments [Abstract] | ||||||
Investments in privately-held companies | $ 985,000 | $ 985,000 | 1,101,000 | |||
Percentage of ownership, equity method (in hundredths) | 25.00% | 25.00% | ||||
Seven Minority Investments | ||||||
Summary of investments [Abstract] | ||||||
Minority investments not consolidated accounted for under equity method | entity | 7 | 7 | ||||
Net income | $ (188,000) | $ (400,000) | $ (1,100,000) | $ (856,000) | ||
One Gallium Company | ||||||
Summary of investments [Abstract] | ||||||
Investments in privately-held companies | 0 | 0 | $ 0 | |||
Impairment charge | 0 | $ 313,000 | ||||
Beijing JiYa Semiconductor Material Co., Ltd | ||||||
Summary of investments [Abstract] | ||||||
Indirect investments | entity | 3 | |||||
Nanjing JinMei Gallium Co., Ltd | ||||||
Summary of investments [Abstract] | ||||||
Indirect investments | entity | 1 | |||||
Majority-Owned Subsidiaries [Member] | ||||||
Summary of investments [Abstract] | ||||||
Investments, consolidated | $ 5,269,000 | $ 5,269,000 | $ 5,269,000 |
Investments in Privately Held44
Investments in Privately Held Companies - Minority Investment Entities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Summarized income information of all the minority investment entities that are not consolidated and accounted for under the equity method [Abstract] | ||||
Net revenue | $ 5,908 | $ 7,245 | $ 11,363 | $ 10,752 |
Gross profit (loss) | 4,277 | (481) | 7,999 | (435) |
Operating loss | (794) | (1,422) | (1,631) | (2,540) |
Net loss | $ (818) | $ (1,390) | $ (2,523) | $ (3,098) |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Oct. 27, 2014 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Balance, beginning of period | $ 137,390,000 | ||||||
Common stock options exercised | 885,000 | ||||||
Stock-based compensation | 622,000 | ||||||
Issuance of common stock, net of stock issuance costs of $2,246 | 31,861,000 | ||||||
Net income (loss) | $ 1,798,000 | $ 798,000 | 2,223,000 | $ 731,000 | |||
Dividends declared by joint ventures | (465,000) | ||||||
Other comprehensive income | 845,000 | $ (2,036,000) | 1,197,000 | (1,709,000) | |||
Balance, end of period | 173,713,000 | 173,713,000 | $ 137,390,000 | ||||
Reclassification adjustment from AOCI | 0 | $ 0 | |||||
Stock issuance cost | 2,639,000 | ||||||
Stock repurchase program, authorized amount | $ 5,000,000 | ||||||
Shares repurchased (in shares) | 0 | 908,000 | |||||
Average price of shares repurchased (in dollars per share) | $ 2.52 | ||||||
Total purchase price | $ 2,300,000 | ||||||
Stock repurchase program remaining authorized repurchase amount | 2,700,000 | 2,700,000 | |||||
Preferred Stock | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Balance, beginning of period | 3,532,000 | ||||||
Common stock options exercised | |||||||
Balance, end of period | 3,532,000 | 3,532,000 | $ 3,532,000 | ||||
Common Stock | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Balance, beginning of period | 33,000 | ||||||
Common stock options exercised | 1,000 | ||||||
Issuance of common stock, net of stock issuance costs of $2,246 | 5,000 | ||||||
Balance, end of period | 39,000 | 39,000 | 33,000 | ||||
Additional Paid-In Capital | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Balance, beginning of period | 194,177,000 | ||||||
Common stock options exercised | 884,000 | ||||||
Stock-based compensation | 622,000 | ||||||
Issuance of common stock, net of stock issuance costs of $2,246 | 31,856,000 | ||||||
Balance, end of period | 227,539,000 | 227,539,000 | 194,177,000 | ||||
Accumulated Deficit | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Balance, beginning of period | (64,985,000) | ||||||
Net income (loss) | 2,595,000 | ||||||
Balance, end of period | (62,390,000) | (62,390,000) | (64,985,000) | ||||
Accumulated Other Comprehensive Income | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Balance, beginning of period | 253,000 | ||||||
Other comprehensive income | 1,040,000 | ||||||
Balance, end of period | 1,293,000 | 1,293,000 | 253,000 | ||||
AXT, Inc. Stockholders' Equity | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Balance, beginning of period | 133,010,000 | ||||||
Common stock options exercised | 885,000 | ||||||
Stock-based compensation | 622,000 | ||||||
Issuance of common stock, net of stock issuance costs of $2,246 | 31,861,000 | ||||||
Net income (loss) | 2,595,000 | ||||||
Other comprehensive income | 1,040,000 | ||||||
Balance, end of period | 170,013,000 | 170,013,000 | 133,010,000 | ||||
Noncontrolling Interests | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Balance, beginning of period | 4,380,000 | ||||||
Net income (loss) | (372,000) | ||||||
Dividends declared by joint ventures | (465,000) | ||||||
Other comprehensive income | 157,000 | ||||||
Balance, end of period | $ 3,700,000 | $ 3,700,000 | $ 4,380,000 |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock-based compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | $ 310 | $ 255 | $ 622 | $ 508 |
Net effect on net income | 310 | 255 | 622 | 508 |
Cost of Revenue [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | 7 | 5 | 15 | 10 |
Selling, General and Administrative [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | 252 | 213 | 508 | 413 |
Research and Development [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | $ 51 | $ 37 | $ 99 | $ 85 |
Stock-based Compensation - Assu
Stock-based Compensation - Assumptions (Details) - Options [Member] | 6 Months Ended |
Jun. 30, 2017 | |
Weighted average assumptions [Abstract] | |
Expected term | 5 years 10 months 24 days |
Volatility (in hundredths) | 46.71% |
Risk-free interest rate (in hundredths) | 2.08% |
Stock-based Compensation - Opti
Stock-based Compensation - Options (Details) - Options [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Number of options outstanding [Roll Forward] | |||||
Options outstanding, beginning of period (in shares) | 3,294,000 | ||||
Granted (in shares) | 0 | 0 | 60,000 | 68,000 | |
Exercised (in shares) | (289,000) | ||||
Canceled and expired (in shares) | (14,000) | ||||
Options outstanding, end of period (in shares) | 3,051,000 | 3,051,000 | 3,294,000 | ||
Options vested and unvested options expected to vest, net of forfeitures, end of period (in shares) | 2,997,000 | 2,997,000 | |||
Options exercisable, end of period (in shares) | 1,677,000 | 1,677,000 | |||
Weighted average exercise price [Roll Forward] | |||||
Options outstanding, beginning of period (in dollars per share) | $ 3.38 | ||||
Granted (in dollars per share) | 5.95 | ||||
Exercised (in dollars per share) | 3.06 | ||||
Canceled and expired (in dollars per share) | 2.18 | ||||
Options outstanding, end of period (in dollars per share) | $ 3.47 | 3.47 | $ 3.38 | ||
Options vested as of March 31, 2015 and unvested options expected to vest, net of forfeitures (in dollars per share) | 3.46 | 3.46 | |||
Options exercisable, end of period (in dollars per share) | $ 3.35 | 3.35 | |||
Weighted-average grant date fair value of stock options granted (in dollars per share) | $ 2.76 | $ 1.01 | |||
Weighted average Remaining Contractual Life [Abstract] | |||||
Options outstanding | 6 years 11 months 5 days | 7 years 2 months 23 days | |||
Options vested and unvested options expected to vest, net of forfeitures, end of period | 6 years 10 months 24 days | ||||
Option exercisable, end of period | 5 years 6 months 29 days | ||||
Aggregate Intrinsic Value [Abstract] | |||||
Options outstanding, beginning of period | $ 5,301 | ||||
Options outstanding, end of period | $ 8,805 | 8,805 | $ 5,301 | ||
Options vested and expected to vest, end of period | 8,690 | 8,690 | |||
Options exercisable, end of period | $ 5,054 | $ 5,054 | |||
Closing price (in dollars per share) | $ 6.35 | $ 6.35 |
Stock-based Compensation - RSU
Stock-based Compensation - RSU (Details) $ / shares in Units, shares in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($)$ / sharesshares | |
Options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Compensation costs related to unvested stock options not yet recognized | $ | $ 1,600,000 |
Value of estimated forfeitures | $ | $ 183,000 |
Weighted-average period of amortization | 2 years 7 months 6 days |
Restricted Stock Awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted-average period of amortization | 1 year 1 month 6 days |
Shares [Roll Forward] | |
Non-vested, beginning of period (in shares) | shares | 325 |
Granted (in shares) | shares | 26 |
Vested (in shares) | shares | (74) |
Non-vested, end of period (in shares) | shares | 277 |
Weighted Average Grant Date Fair Value [Roll Forward] | |
Non-vested, beginning of period (in dollars per share) | $ / shares | $ 3.27 |
Granted (in dollars per share) | $ / shares | 6.80 |
Vested (in dollars per share) | $ / shares | 3.22 |
Non-vested, end of period (in dollars per share) | $ / shares | $ 3.62 |
Unrecognized compensation expense related to restricted stock awards | $ | $ 816,000 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Numerator: | |||||
Net income attributable to AXT, Inc | $ 1,930,000 | $ 1,151,000 | $ 2,595,000 | $ 1,193,000 | |
Less: Preferred stock dividends | (44,000) | (44,000) | (88,000) | (88,000) | |
Net income available to common stockholders | $ 1,886,000 | $ 1,107,000 | $ 2,507,000 | $ 1,105,000 | |
Denominator: | |||||
Denominator for basic net income per share - weighted average common shares (in shares) | 38,306,000 | 32,020,000 | 36,238,000 | 32,011,000 | |
Effect of dilutive securities: | |||||
Denominator for dilutive net income per common share (in shares) | 39,706,000 | 32,451,000 | 37,645,000 | 32,354,000 | |
Net income attributable to AXT, Inc. per common share: | |||||
Basic (in dollars per share) | $ 0.05 | $ 0.03 | $ 0.07 | $ 0.03 | |
Diluted (in dollars per share) | $ 0.05 | $ 0.03 | $ 0.07 | $ 0.03 | |
Preferred stock, shares issued (in shares) | 883,000 | 883,000 | 883,000 | ||
Preferred stock, shares outstanding (in shares) | 883,000 | 883,000 | 883,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | ||
Preferred stock, value | $ 3,532,000 | $ 3,532,000 | $ 3,532,000 | ||
Cumulative annual dividend rate (as a percent) | 5.00% | 5.00% | |||
Liquidation preference over common stock (in dollars per share) | $ 4 | $ 4 | $ 4 | ||
Options [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Securities excluded from diluted net income (loss) per share as the impact is anti-dilutive (in shares) | 622,000 | 1,343,000 | 617,000 | 2,551,000 | |
Restricted Stock Awards [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Securities excluded from diluted net income (loss) per share as the impact is anti-dilutive (in shares) | 19,000 | 5,000 | 10,000 | ||
Options [Member] | |||||
Effect of dilutive securities: | |||||
Effect of dilutive securities (in shares) | 1,212,000 | 284,000 | 1,216,000 | 223,000 | |
Restricted Stock Awards [Member] | |||||
Effect of dilutive securities: | |||||
Effect of dilutive securities (in shares) | 188,000 | 147,000 | 191,000 | 120,000 |
Segment Information and Forei51
Segment Information and Foreign Operations - Product Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenue by product type | ||||
Revenue | $ 23,557 | $ 20,495 | $ 44,173 | $ 39,208 |
Substrates | ||||
Revenue by product type | ||||
Revenue | 19,109 | 16,727 | 35,718 | 32,579 |
Raw Materials And Others | ||||
Revenue by product type | ||||
Revenue | $ 4,448 | $ 3,768 | $ 8,455 | $ 6,629 |
Segment Information and Forei52
Segment Information and Foreign Operations - Segment and Geographical Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)segment | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Number of operating segments | segment | 1 | ||||
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract] | |||||
Revenue | $ 23,557 | $ 20,495 | $ 44,173 | $ 39,208 | |
Long-lived assets by geographic region, net of depreciation: | |||||
Long-lived assets | 27,945 | 27,945 | $ 27,805 | ||
Reportable Geographical Components | Europe | |||||
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract] | |||||
Revenue | 5,848 | 4,573 | 11,446 | 8,951 | |
Reportable Geographical Components | China | |||||
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract] | |||||
Revenue | 6,324 | 4,183 | 10,746 | 7,275 | |
Long-lived assets by geographic region, net of depreciation: | |||||
Long-lived assets | 26,987 | 26,987 | 27,487 | ||
Reportable Geographical Components | Taiwan | |||||
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract] | |||||
Revenue | 4,195 | 4,649 | 7,513 | 8,784 | |
Reportable Geographical Components | Japan | |||||
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract] | |||||
Revenue | 2,862 | 2,695 | 6,002 | 4,597 | |
Reportable Geographical Components | Asia Pacific (excluding China, Taiwan, and Japan) | |||||
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract] | |||||
Revenue | 2,645 | 2,402 | 4,716 | 5,152 | |
Reportable Geographical Components | North America | |||||
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract] | |||||
Revenue | 1,683 | $ 1,993 | 3,750 | $ 4,449 | |
Long-lived assets by geographic region, net of depreciation: | |||||
Long-lived assets | $ 958 | $ 958 | $ 318 |
Segment Information and Forei53
Segment Information and Foreign Operations - Concentration of Credit Risk (Details) - customer | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Revenue [Member] | |||||
Revenue, Major Customer [Line Items] | |||||
Number of customers representing significant share | 2 | 2 | 2 | 2 | |
Accounts Receivable [Member] | |||||
Revenue, Major Customer [Line Items] | |||||
Number of customers representing significant share | 1 | 1 | |||
Landmark [Member] | Revenue [Member] | |||||
Revenue, Major Customer [Line Items] | |||||
Percentage share generated by major customers | 11.00% | 14.00% | 10.00% | 11.00% | |
IQE Group Customer [Member] | Revenue [Member] | |||||
Revenue, Major Customer [Line Items] | |||||
Percentage share generated by major customers | 10.00% | 11.00% | |||
Osram Opto [Member] | Revenue [Member] | |||||
Revenue, Major Customer [Line Items] | |||||
Percentage share generated by major customers | 12.00% | 11.00% | |||
Major Customer One [Member] | Accounts Receivable [Member] | |||||
Revenue, Major Customer [Line Items] | |||||
Percentage share generated by major customers | 12.00% | 13.00% | |||
Top Five Major Customers [Member] | Revenue [Member] | |||||
Revenue, Major Customer [Line Items] | |||||
Number of customers representing significant share | 5 | 5 | 5 | 5 | |
Percentage share generated by major customers | 37.00% | 42.00% | 36.00% | 42.00% |
Commitments and Contingencies54
Commitments and Contingencies (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
May 31, 2017 | Jun. 30, 2017USD ($)ft² | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)ft² | Jun. 30, 2016USD ($) | |
Product Warranty [Abstract] | |||||
Period of warranty | 12 months | ||||
Change in warranty accrual [Roll Forward] | |||||
Beginning accrued warranty and related costs | $ 133 | $ 431 | $ 251 | $ 497 | |
Accruals for warranties issued | 37 | 4 | 70 | 23 | |
Adjustments related to pre-existing warranties including expirations and changes in estimates | (27) | (64) | (132) | (131) | |
Cost of warranty repair | (13) | (41) | (59) | (59) | |
Ending accrued warranty and related costs | $ 130 | $ 330 | $ 130 | $ 330 | |
Leases [Abstract] | |||||
Area of property under long-term operating lease (in square feet) | ft² | 19,467 | 19,467 | |||
Additional years per lease option | 3 years | ||||
Number of additional years to lease term | 3 years | ||||
Term of royalty agreement | 8 years | ||||
Aggregate amount payable towards royalty | $ 7,000 | $ 7,000 | |||
Operating leases | |||||
Less than 1 year | 221 | 221 | |||
1-3 years | 351 | 351 | |||
4-5 years | 92 | 92 | |||
More than 5 years | 6 | 6 | |||
Total | 670 | 670 | |||
Royalty agreement | |||||
Less than 1 year | 575 | 575 | |||
1-3 years | 287 | 287 | |||
Total | 862 | 862 | |||
Total | |||||
Less than 1 year | 796 | 796 | |||
1-3 years | 638 | 638 | |||
4-5 years | 92 | 92 | |||
More than 5 years | 6 | 6 | |||
Total | $ 1,532 | $ 1,532 |
Foreign Exchange Transaction 55
Foreign Exchange Transaction Gains/Losses (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Other (expense) income, net | ||||
Foreign exchange gain (loss) | $ (90,000) | $ 169,000 | $ (75,000) | $ 244,000 |
Income Taxes - (Details)
Income Taxes - (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017USD ($)subsidiary | Jun. 30, 2017USD ($)subsidiary | |
Income Taxes | ||
Unrecognized tax benefits interest and penalties | $ 0 | $ 0 |
Unrecognized tax benefits accrued interest and penalties | $ 0 | $ 0 |
Number of partially owned subsidiaries | subsidiary | 3 | 3 |
Federal income tax benefit or expense | $ 0 | $ 0 |
Whistleblower Complaint and I57
Whistleblower Complaint and Investigation (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Whistleblower Complaint and Investigation | |
Professional service fees | $ 1.8 |
Restructuring Charges (Details)
Restructuring Charges (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2016USD ($)employee | Jun. 30, 2016USD ($) | |
Restructuring charge | $ 226,000 | $ 226,000 |
Beijing JiYa Semiconductor Material Co., Ltd | ||
Number of workforce reduced | employee | 28 | |
Restructuring charge | $ 226,000 |
Subsequent Events (Details)
Subsequent Events (Details) | 1 Months Ended | |
Jul. 31, 2017USD ($)entity | Dec. 31, 2016USD ($) | |
Subsequent Event [Line Items] | ||
Related party notes receivable - long term | $ 157,000 | |
Nanjing JinMei Gallium Co., Ltd | Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Number of consolidated joint ventures | entity | 1 | |
Estimated costs of land use rights | $ 6,000,000 | |
Nanjing JinMei Gallium Co., Ltd | Subsequent Event [Member] | Beijing Tongmei Xtal Technology | ||
Subsequent Event [Line Items] | ||
Interest rate (as a percent) | 4.90% | |
Related party notes receivable - long term | $ 738,000 |