Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 28, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | NOVT | |
Entity Registrant Name | NOVANTA INC | |
Entity Central Index Key | 1,076,930 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 34,549,524 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 80,014 | $ 68,108 |
Accounts receivable, net of allowance of $884 and $565, respectively | 70,073 | 63,769 |
Inventories | 71,019 | 59,745 |
Prepaid income taxes and income taxes receivable | 2,740 | 2,058 |
Prepaid expenses and other current assets | 6,139 | 5,570 |
Total current assets | 229,985 | 199,250 |
Property, plant and equipment, net | 36,792 | 35,421 |
Deferred tax assets | 10,013 | 8,593 |
Other assets | 3,835 | 12,502 |
Intangible assets, net | 104,363 | 61,743 |
Goodwill | 150,278 | 108,128 |
Total assets | 535,266 | 425,637 |
Current liabilities | ||
Current portion of long-term debt | 7,368 | 7,366 |
Accounts payable | 34,226 | 32,213 |
Income taxes payable | 5,410 | 3,969 |
Accrued expenses and other current liabilities | 30,941 | 26,948 |
Total current liabilities | 77,945 | 70,496 |
Long-term debt | 110,865 | 70,554 |
Deferred tax liabilities | 8,254 | 1,294 |
Income taxes payable | 6,043 | 5,710 |
Other liabilities | 15,868 | 18,713 |
Total liabilities | 218,975 | 166,767 |
Commitments and contingencies (Note 13) | ||
Redeemable noncontrolling interest | 22,095 | |
Stockholders’ equity: | ||
Common shares, no par value; Authorized shares: unlimited; Issued and outstanding: 34,546 and 34,458, respectively | 423,856 | 423,856 |
Additional paid-in capital | 29,705 | 30,276 |
Accumulated deficit | (133,295) | (167,547) |
Accumulated other comprehensive loss | (26,070) | (27,715) |
Total stockholders' equity | 294,196 | 258,870 |
Total liabilities, noncontrolling interest and stockholders’ equity | $ 535,266 | $ 425,637 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 884 | $ 565 |
Common shares, Authorized | Unlimited | Unlimited |
Common shares, no par value | $ 0 | $ 0 |
Common shares, Issued | 34,546 | 34,458 |
Common shares, outstanding | 34,546 | 34,458 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 108,974 | $ 90,316 |
Cost of revenue | 62,880 | 53,424 |
Gross profit | 46,094 | 36,892 |
Operating expenses: | ||
Research and development and engineering | 9,215 | 8,052 |
Selling, general and administrative | 23,001 | 21,187 |
Amortization of purchased intangible assets | 2,849 | 2,108 |
Restructuring, acquisition and divestiture related costs | 817 | 2,958 |
Total operating expenses | 35,882 | 34,305 |
Operating income from continuing operations | 10,212 | 2,587 |
Interest income (expense), net | (1,328) | (1,185) |
Foreign exchange transaction gains (losses), net | (1) | 83 |
Other income (expense), net | 96 | 743 |
Gain on acquisition of business | 26,409 | |
Income from continuing operations before income taxes | 35,388 | 2,228 |
Income tax provision | 1,114 | 322 |
Income from continuing operations | 34,274 | 1,906 |
Consolidated net income | 34,274 | 1,906 |
Less: Net income attributable to noncontrolling interest | (22) | |
Net income attributable to Novanta Inc. | $ 34,252 | $ 1,906 |
Earnings per common share from continuing operations: | ||
Basic | $ 0.99 | $ 0.05 |
Diluted | 0.98 | 0.05 |
Earnings per common share attributable to Novanta Inc.: | ||
Basic | 0.99 | 0.05 |
Diluted | $ 0.98 | $ 0.05 |
Weighted average common shares outstanding—basic | 34,765 | 34,657 |
Weighted average common shares outstanding—diluted | 35,125 | 34,853 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Apr. 01, 2016 | ||
Statement Of Income And Comprehensive Income [Abstract] | |||
Consolidated net income | $ 34,274 | $ 1,906 | |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments, net of tax | [1] | 1,440 | 65 |
Pension liability adjustments, net of tax | [2] | 205 | 449 |
Total other comprehensive income (loss) | 1,645 | 514 | |
Total consolidated comprehensive income (loss) | 35,919 | 2,420 | |
Less: Comprehensive income attributable to noncontrolling interest | (22) | ||
Comprehensive income (loss) attributable to Novanta Inc. | $ 35,897 | $ 2,420 | |
[1] | The tax effect on this component of comprehensive income was nominal for all periods presented. | ||
[2] | The tax effect on this component of comprehensive income was nominal for all periods presented. See Note 4 for the total amount of pension liability adjustments reclassified out of accumulated other comprehensive income (loss). |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Cash flows from operating activities: | ||
Consolidated net income | $ 34,274 | $ 1,906 |
Income from continuing operations | 34,274 | 1,906 |
Adjustments to reconcile income from continuing operations to net cash provided by operating activities of continuing operations: | ||
Depreciation and amortization | 6,482 | 5,229 |
Provision for inventory excess and obsolescence | 549 | 1,493 |
Share-based compensation | 1,469 | 1,342 |
Deferred income taxes | (1,607) | 108 |
Earnings from equity-method investment | (104) | (740) |
Dividend from equity-method investment | 2,341 | |
Gain on acquisition of business | (26,409) | |
Inventory acquisition fair value adjustment | 1,035 | |
Other | 509 | 797 |
Changes in assets and liabilities which (used)/provided cash, excluding effects from businesses purchased or classified as discontinued operations: | ||
Accounts receivable | (3,690) | (1,139) |
Inventories | (4,414) | (3,519) |
Prepaid income taxes, income taxes receivable, prepaid expenses and other current assets | (462) | (514) |
Accounts payable, income taxes payable, accrued expenses and other current liabilities | 4,851 | 1,302 |
Other non-current assets and liabilities | 277 | (308) |
Cash provided by operating activities of continuing operations | 12,760 | 8,298 |
Cash provided by operating activities | 12,760 | 8,298 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (1,760) | (2,341) |
Acquisition of businesses, net of cash acquired and working capital adjustments | (34,896) | 422 |
Proceeds from the sale of property, plant and equipment | 3,589 | |
Cash provided by (used in) investing activities of continuing operations | (36,656) | 1,670 |
Cash provided by investing activities of discontinued operations | 1,498 | |
Cash provided by (used in) investing activities | (36,656) | 3,168 |
Cash flows from financing activities: | ||
Borrowings under revolving credit facility | 42,000 | |
Repayments of long-term debt and revolving credit facility | (1,875) | (1,875) |
Payments of contingent considerations | (2,398) | |
Repurchase of common stock | (370) | |
Payments of withholding taxes from stock-based awards | (1,669) | (1,320) |
Capital lease payments | (215) | (342) |
Other financing activities | 88 | |
Cash provided by (used in) financing activities of continuing operations | 35,473 | (3,449) |
Cash provided by (used in) financing activities of discontinued operations | 0 | 0 |
Cash provided by (used in) financing activities | 35,473 | (3,449) |
Effect of exchange rates on cash and cash equivalents | 329 | (84) |
Increase in cash and cash equivalents | 11,906 | 7,933 |
Cash and cash equivalents, beginning of period | 68,108 | 59,959 |
Cash and cash equivalents, end of period | 80,014 | 67,892 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 781 | 810 |
Cash paid for income taxes | 1,819 | 2,470 |
Income tax refunds received | $ 23 | $ 1 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 1. Basis of Presentation Novanta Inc. and its subsidiaries (collectively referred to as the “Company”, “we”, “us”, “our”) is a global supplier of core technology solutions that give healthcare and advanced industrial original equipment manufacturers (“OEMs”) a competitive advantage. We combine deep proprietary technology expertise and competencies in photonics, vision and precision motion with a proven ability to solve complex technical challenges. This enables Novanta to engineer core components and sub-systems that deliver extreme precision and performance, tailored to our customers' demanding applications. The accompanying unaudited interim consolidated financial statements have been prepared in U.S. dollars and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), the instructions to Form 10-Q and the provisions of Regulation S-X pertaining to interim financial statements. Accordingly, certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim consolidated financial statements and notes included in this report should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. In the opinion of management, these interim consolidated financial statements include all adjustments and accruals of a normal and recurring nature necessary to fairly state the results of the interim periods presented. The results for interim periods are not necessarily indicative of results to be expected for the full year or for any future periods. Prior to January 10, 2017, the Company had an approximately 41% ownership interest in Laser Quantum Limited (“Laser Quantum”), a privately held company located in the United Kingdom, which was accounted for under the equity method of accounting. On January 10, 2017, the Company acquired an additional approximately 35% of the outstanding shares of Laser Quantum. As a result of this transaction, the Company’s ownership position in Laser Quantum increased from approximately 41% to approximately 76%. Since January 10, 2017, Laser Quantum has been consolidated in the Company’s consolidated financial statements. The Company’s unaudited interim financial statements are prepared for each quarterly period ending on the Friday closest to the end of the calendar quarter, with the exception of the fourth quarter which always ends on December 31. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. The Company evaluates its estimates based on historical experience, current conditions and various other assumptions that it believes are reasonable under the circumstances. Estimates and assumptions are reviewed on an on-going basis and the effects of revisions are reflected in the period in which they are deemed to be necessary. Actual results could differ significantly from those estimates. Recent Accounting Pronouncements Presentation of Net Periodic Pension Cost In March 2017, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires employers that offer or maintain defined benefit plans to disaggregate the service component from the other components of net benefit cost and provides guidance on the presentation of the service component and the other components of net benefit cost in the statement of operations. The new standard is effective for public companies for annual periods beginning after December 15, 2017. The Company expects to adopt the new standard in the first quarter of 2018 and expects to report its net periodic pension cost related to its frozen U.K. pension plan in Other income/(expense) in the consolidated statement of operations upon adoption. Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which simplifies the accounting for goodwill impairment. The amendment in ASU 2017-04 removes Step-two of the goodwill impairment test, which requires a hypothetical purchase price allocation. ASU 2017-04 will become effective prospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of the new standard on our consolidated financial statements. Statement of Cash Flows Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The standard further clarifies the classification in the cash flow statement of the following items: (i) debt prepayment or debt extinguishment costs; (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (iii) contingent consideration payments made after a business combination; (iv) proceeds from the settlement of insurance claims; (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (vi) distributions received from equity method investees; (vii) beneficial interests in securitization transactions; and (viii) separately identifiable cash flows and application of the predominance principle. ASU 2016-15 will become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. ASU 2016-15 should be applied using a retrospective transition method for each period presented. The Company adopted ASU 2016-15 during the first quarter of 2017. The adoption of ASU 2016-15 resulted in ($2.4) million of payments of contingent considerations being reported as cash used in financing activities on the Company’s consolidated statements of cash flows for the three months ended March 31, 2017. Leases In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which provides comprehensive lease accounting guidance. The standard requires entities to recognize lease assets and liabilities on the balance sheet and to disclose key information about leasing arrangements. ASU 2016-02 will become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of the new standard on our consolidated financial statements. Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provides guidance for revenue recognition. ASU 2014-09 supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition” (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for annual and interim reporting periods beginning after December 15, 2016. Early adoption is not permitted. Upon adoption, an entity may apply the new guidance either retrospectively to each prior reporting period presented or retrospectively only to customer contracts not yet completed as of the date of adoption with the cumulative effect of initially applying the standard recognized in beginning retained earnings at the date of the initial application. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers – Deferral of the Effective Date,” which defers the effective date of ASU 2014-09 by one year, with the option of early adoption as of the original effective date. The amendment in ASU 2015-14 will result in ASU 2014-09 being effective for annual and interim reporting periods beginning after December 15, 2017. The Company has identified various revenue streams that could be impacted by Topic 606 and has started to review individual customer contracts related to these various revenue streams to determine if any material differences exist between Topic 605 and Topic 606. The Company will adopt Topic 606 in the first quarter of 2018 and has preliminarily concluded that it will use the modified retrospective method upon adoption. |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
Business Combinations | 2. Business Combinations ThingMagic On January 10, 2017, the Company acquired from Trimble Inc. certain assets and liabilities that constituted the business of ThingMagic, a Woburn, Massachusetts-based provider of ultra-high frequency (“UHF”) radio frequency identification (“RFID”) modules and finished RFID readers to OEMs in the medical and advanced industrial markets, for a total purchase price of $19.2 million, subject to customary working capital adjustments. The acquisition was financed with cash on hand and a $12.0 million draw-down on our revolving credit facility. The Company expects that the addition of ThingMagic will broaden its portfolio of RFID solutions, while providing the resources to address the growing need for improvements in workflow solutions, patient safety, anti-counterfeiting, and asset tracking in a medical environment. ThingMagic is included in the Company’s Vision reportable segment. The acquisition of ThingMagic has been accounted for as a business combination. The allocation of the purchase price is based upon a valuation of assets and liabilities acquired. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the acquisition date. The fair values of intangible assets were based on valuations using an income approach, with estimates and assumptions provided by management of ThingMagic and the Company. The process for estimating the fair values of identifiable intangible assets requires the use of significant estimates and assumptions, including estimating future cash flows and developing appropriate discount rates. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The Company’s estimates and assumptions in determining the estimated fair values of certain assets and liabilities are subject to change within the measurement period (up to one year from the acquisition date) as a result of additional information obtained with regards to facts and circumstances that existed as of the acquisition date. The purchase price allocation is preliminary as the Company is in the process of collecting additional information for the valuation of inventory and intangible assets. Based upon a preliminary valuation, the total purchase price was allocated as follows (in thousands): Purchase Price Allocation Inventory $ 2,023 Intangible assets 7,283 Goodwill 9,976 Total assets acquired 19,282 Other liabilities 95 Total liabilities assumed 95 Total purchase price $ 19,187 The fair value of intangible assets is comprised of the following (dollar amounts in thousands): Weighted Average Estimated Fair Amortization Value Period Developed technologies $ 4,600 10 years Customer relationships 2,380 10 years Trademarks and trade names 303 5 years Total $ 7,283 The purchase price allocation resulted in $7.3 million of identifiable intangible assets and $10.0 million of goodwill. As the ThingMagic acquisition is treated as an acquisition of assets for income tax purposes, the goodwill acquired is expected to be fully deductible. Intangible assets are being amortized over their weighted average useful lives primarily based upon the pattern in which anticipated economic benefits from such assets are expected to be realized. The goodwill recorded represents the anticipated incremental value of future cash flows potentially attributable to: (i) ThingMagic’s ability to grow its business with existing and new customers, including leveraging the Company’s customer base, (ii) cost synergies in combining the research and development capabilities from ThingMagic with the existing RFID capabilities within Novanta, and (iii) cost improvements due to the integration of ThingMagic operations into the Company’s existing infrastructure. The operating results of ThingMagic were included in the Company’s results of operations beginning on January 10, 2017. ThingMagic contributed revenues of $1.9 million and a loss from continuing operations before income taxes of $0.3 million for the three months ended March 31, 2017. Operating loss from continuing operations before income taxes for the three months ended March 31, 2017 included amortization of inventory fair value adjustments and amortization of purchased intangible assets of $0.6 million. The pro forma financial information reflecting the operating results of ThingMagic, as if it had been acquired as of January 1, 2016, would not differ materially from the operating results of the Company as reported for the year ended December 31, 2016. Laser Quantum Limited On January 10, 2017, the Company acquired an additional approximately 35% of the outstanding shares of Laser Quantum, a Manchester, United Kingdom-based provider of solid state continuous wave lasers, femtosecond lasers, and optical light engines to OEMs in the medical market, for £25.5 million ($31.1 million) in cash consideration. The purchase price was financed with cash on hand and a $30.0 million draw-down on our revolving credit facility. By establishing control through a majority equity ownership, the Company expects to broaden its technology capability in photonics solutions for medical applications, particularly within the growing DNA sequencing market, while providing key enabling photonics-based technologies for instrumentation and life science applications such as biomedical imaging, cell sorting, and ophthalmology. Laser Quantum is included in the Company’s Photonics reportable segment. As a result of this transaction, the Company’s ownership position in Laser Quantum increased from approximately 41% to approximately 76%. In connection with the purchase price allocation under the business combination rules, the Company recognized a nontaxable gain of $26.4 million in the consolidated statements of operations for the three months ended March 31, 2017. The gain represented the excess fair value of the Company’s previously-held equity interest in Laser Quantum over its carrying value. The fair value of the approximately 41% equity interest previously held by the Company before the acquisition and the fair value of the approximately 24% noncontrolling interest (“NCI”) held by the remaining shareholders of Laser Quantum after the acquisition were determined using a combination of the discounted cash flow method (an income approach), the guideline public company method (a market approach), and the subject company transaction method (a market approach). The subject company transaction method was based on the purchase price paid by the Company for the acquisition of the additional approximately 35% of the outstanding shares, while giving consideration to the control and/or minority nature of the subject equity interests. In addition, the Company and the remaining shareholders of Laser Quantum entered into a call and put option for the purchase and sale in 2020 of all remaining Laser Quantum shares held by the other shareholders, subject to certain conditions. The purchase price for the remaining shares will be based on a multiple of Laser Quantum’s EBITDA for the twelve months ending December 31, 2019, as defined in the call and put option agreement. The acquisition of Laser Quantum has been accounted for as a business combination. The allocation of the purchase price is based upon a valuation of assets and liabilities acquired. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the acquisition date. The fair values of intangible assets were based on valuations using an income approach, with estimates and assumptions provided by management of Laser Quantum and the Company. The process for estimating the fair values of identifiable intangible assets requires the use of significant estimates and assumptions, including estimating future cash flows and developing appropriate discount rates. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The Company’s estimates and assumptions in determining the estimated fair values of certain assets and liabilities are subject to change within the measurement period (up to one year from the acquisition date) as a result of additional information to be obtained with regards to facts and circumstances that existed as of the acquisition date. The purchase price allocation is preliminary as the Company is in the process of collecting additional information for the valuation of inventory, intangible assets, deferred tax liabilities, and unrecognized tax benefits. Based upon a preliminary valuation, the total purchase price was allocated as follows (in thousands): Purchase Allocation Cash $ 15,343 Accounts receivable 2,739 Inventory 6,332 Property and equipment 1,700 Intangible assets 38,955 Goodwill 31,459 Other assets 717 Total fair value of assets 97,245 Accounts payable 796 Other liabilities 2,068 Deferred tax liabilities 7,110 Total fair value of liabilities 9,974 Total fair value of assets, net of fair value of liabilities 87,271 Less: fair value of equity interest previously held by Novanta 34,637 Less: fair value of noncontrolling interest 21,582 Total purchase price paid by Novanta 31,052 Less: cash acquired 15,343 Purchase price, net of cash acquired $ 15,709 The fair value of intangible assets is comprised of the following (dollar amounts in thousands): Weighted Average Estimated Fair Amortization Value Period Developed technologies $ 15,501 15 years Customer relationships 19,990 15 years Trademarks and trade names 1,964 15 years Backlog 1,500 9 months Total $ 38,955 The purchase price allocation resulted in $39.0 million of identifiable intangible assets and $31.5 million of goodwill. As the Laser Quantum acquisition is an acquisition of outstanding common shares, none of the resulting goodwill is deductible for tax purposes. Intangible assets are being amortized over their weighted average useful lives primarily based upon the pattern in which anticipated economic benefits from such assets are expected to be realized. The goodwill recorded represents the anticipated incremental value of future cash flow potential attributable to: (i) Laser Quantum’s ability to grow its business with existing and new customers, including leveraging the Company’s broader customer base, and (ii) cost improvements due to expansion in scale. The operating results of Laser Quantum were included in the Company’s results of operations beginning on January 10, 2017. Laser Quantum contributed revenues of $7.2 million and income from continuing operations before income taxes of $0.1 million for the three months ended March 31, 2017. Operating income from continuing operations before income taxes for the three months ended March 31, 2017 included $2.1 million expenses associated with the amortization of inventory fair value step-up and purchased intangible assets. The pro forma information for all periods presented below includes the effects of business combination accounting resulting from the acquisition of Laser Quantum, including amortization of inventory fair value adjustments, amortization of intangible assets, interest expense on borrowings in connection with the acquisition, elimination of the gain from business acquisition and income from equity method investment, and the related tax effects as though the acquisition had been consummated as of January 1, 2016. The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the results of operations that actually would have been achieved if the acquisition had taken place on January 1, 2016. Three Months Ended March 31, April 1, 2017 2016 Revenue $ 109,740 $ 97,015 Income from continuing operations $ 8,017 $ 2,257 Earnings per share from continuing operations - Basic $ 0.23 $ 0.06 Earnings per share from continuing operations - Diluted $ 0.23 $ 0.06 Acquisition Costs Acquisition-related costs are included in restructuring, acquisition and divestiture related costs in the consolidated statements of operations. Acquisition-related costs for ThingMagic and Laser Quantum are as follows (in thousands): Three March 31, 2017 ThingMagic $ 149 Laser Quantum $ 264 |
Discontinued Operations and Div
Discontinued Operations and Divestitures | 3 Months Ended |
Mar. 31, 2017 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Discontinued Operations and Divestitures | 3. Discontinued Operations and Divestitures In July 2014, the Company completed the sale of certain assets and liabilities of its Scientific Lasers business for approximately $6.5 million in cash, net of working capital adjustments. In accordance with the purchase and sale agreement, $1.5 million of the sales proceeds was held in escrow until January 2016. In January 2016, the $1.5 million escrow was released to the Company in full and is reported as cash flow from investing activities of discontinued operations. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | 4. Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income (loss) was as follows (in thousands): Total accumulated other Foreign currency comprehensive translation Pension income (loss) adjustments liabilities Balance at December 31, 2016 $ (27,715 ) $ (17,222 ) $ (10,493 ) Other comprehensive income (loss) 1,358 1,440 (82 ) Amounts reclassified from other comprehensive income (loss) (1) 287 — 287 Balance at March 31, 2017 $ (26,070 ) $ (15,782 ) $ (10,288 ) (1) The amounts reclassified from other comprehensive income (loss) were included in selling, general and administrative expenses in the consolidated statements of operations. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per Share | 5. Earnings per Share Basic earnings per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. For diluted earnings per common share, the denominator also includes the dilutive effect of outstanding restricted stock units, stock options and total shareholder return performance restricted stock units determined using the treasury stock method. Dilutive effects of contingently issuable shares are included in the weighted average dilutive share calculation using the treasury stock method when the contingencies have been resolved. For periods in which net losses are generated, the dilutive potential common shares are excluded from the calculation of diluted earnings per share as the effect would be anti-dilutive. The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): Three Months Ended March 31, April 1, 2017 2016 Numerators: Income from continuing operations $ 34,274 $ 1,906 Less: Net income attributable to noncontrolling interest (22 ) — Income from continuing operations attributable to Novanta Inc. 34,252 1,906 Loss from discontinued operations — — Net income attributable to Novanta Inc. $ 34,252 $ 1,906 Denominators: Weighted average common shares outstanding— basic 34,765 34,657 Dilutive potential common shares 360 196 Weighted average common shares outstanding— diluted 35,125 34,853 Antidilutive common shares excluded from above — — Basic Earnings per Share: From continuing operations $ 0.99 $ 0.05 From discontinued operations $ — $ — Basic earnings per share attributable to Novanta Inc. $ 0.99 $ 0.05 Diluted Earnings per Share: From continuing operations $ 0.98 $ 0.05 From discontinued operations $ — $ — Diluted earnings per share attributable to Novanta Inc. $ 0.98 $ 0.05 Common Share Repurchases During the three months ended March 31, 2017, the Company repurchased 14,000 shares in the open market for an aggregate purchase price of $0.4 million at an average price of $26.41 per share. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 6. Fair Value Measurements ASC 820, “Fair Value Measurements,” establishes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the third is considered unobservable: • Level 1: Quoted prices for identical assets or liabilities in active markets which the Company can access. • Level 2: Observable inputs other than those described in Level 1. • Level 3: Unobservable inputs. The Company’s cash equivalents are investments in money market accounts, which represent the only asset the Company measures at fair value on a recurring basis. The Company determines the fair value of cash equivalents using a market approach based on quoted prices in active markets. The fair values of cash, accounts receivable, income taxes receivable, accounts payable, income taxes payable and accrued expenses and other current liabilities (excluding contingent considerations) approximate their carrying values because of their short-term nature. Contingent consideration On December 18, 2015, the Company acquired all assets and certain liabilities of Skyetek. Under the purchase and sale agreement for the Skyetek acquisition, the owners of Skyetek are eligible to receive contingent consideration based on the achievement of certain sales order commitment targets from October 2015 through June 2017. The undiscounted range of possible contingent consideration is zero to $0.3 million. If such targets are achieved, the contingent consideration will be payable in 2017. The Company recognized an estimated fair value of $0.2 million as part of the purchase price as of the acquisition date. Subsequent changes in the estimated fair value of this contingent liability will be recorded in the consolidated statement of operations in restructuring, acquisition and divestiture related costs until the liability is fully settled. There have been no changes to the fair value of the contingent consideration since the acquisition date. On November 11, 2015, the Company acquired Lincoln Laser. Under the purchase and sale agreement for the Lincoln Laser acquisition, the shareholders of Lincoln Laser are eligible to receive contingent consideration based on the achievement of certain revenue targets for fiscal year 2016. The estimated fair value of the contingent consideration of $2.3 million was determined based on the Monte Carlo valuation method and was recorded as part of the purchase price as of the acquisition date. On February 19, 2015, the Company acquired Applimotion. Under the purchase and sale agreement for the Applimotion acquisition, the former shareholders of Applimotion are eligible to receive contingent consideration based on the achievement of certain revenue targets for fiscal years 2015 to 2017. The undiscounted range of contingent considerations is zero to $4.0 million. If such targets are achieved, the contingent consideration will be payable in cash in two installments in 2017 and 2018, respectively. The estimated fair value of the contingent consideration of $1.0 million was determined based on the Monte Carlo valuation method and was recorded as part of the purchase price as of the acquisition date. Subsequent changes in the estimated fair value of this contingent liability are recorded in the consolidated statement of operations in restructuring, acquisition and divestiture related costs until the liability is fully settled. Under the Monte Carlo valuation method, the fair value of the contingent consideration for Applimotion was $3.6 million as of December 31, 2016. Based on Applimotion’s revenue performance for 2015 and 2016, the Company paid $1.2 million contingent consideration during the three months ended March 31, 2017. The estimated fair value of the remaining contingent consideration of $2.4 million is reported as a current liability in accrued expenses and other current liabilities on the consolidated balance sheet as of March 31, 2017. The second installment of the contingent consideration will be payable in the first quarter of 2018. The following table summarizes the fair values of our financial assets and liabilities as of March 31, 2017 (in thousands): Quoted Prices in Significant Other Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) Assets Cash equivalents $ 1,881 $ 1,881 $ — $ — Liabilities Contingent consideration - Current $ 2,531 $ — $ — $ 2,531 Contingent consideration - Long-term — — — — $ 2,531 $ — $ — $ 2,531 The following table summarizes the fair values of our financial assets and liabilities as of December 31, 2016 (in thousands): Quoted Prices in Significant Other Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) Assets Cash equivalents $ 9,569 $ 9,569 $ — $ — Liabilities Contingent consideration - Current $ 2,775 $ — $ — $ 2,775 Contingent consideration - Long-term 2,381 — — 2,381 $ 5,156 $ — $ — $ 5,156 Changes in the fair value of Level 3 contingent consideration during the three months ended March 31, 2017 were as follows (in thousands): Contingent Consideration Balance at December 31, 2016 $ 5,156 Payment to Applimotion (1,192 ) Payment to Lincoln Laser (1,433 ) Balance at March 31, 2017 $ 2,531 See Note 9 to Consolidated Financial Statements for a discussion of the estimated fair value of the Company’s outstanding debt. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 7. Goodwill and Intangible Assets Goodwill Goodwill is recorded when the consideration for a business combination exceeds the fair value of net tangible and identifiable intangible assets acquired. The Company tests its goodwill balances annually for impairment as of the beginning of the second quarter or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. The Company performed its last annual goodwill impairment test at the beginning of the second quarter of 2016 and noted no impairment of goodwill. Implied fair value of all reporting units exceeded their carrying values by at least 20%. The following table summarizes changes in goodwill during the three months ended March 31, 2017 (in thousands): Balance at beginning of the period $ 108,128 Goodwill acquired from Laser Quantum acquisition 31,459 Goodwill acquired from ThingMagic acquisition 9,976 Effect of foreign exchange rate changes 715 Balance at end of the period $ 150,278 Goodwill by reportable segment as of March 31, 2017 was as follows (in thousands): Reportable Segment Photonics Vision Precision Motion Total Goodwill $ 168,452 $ 99,092 $ 33,963 $ 301,507 Accumulated impairment of goodwill (102,461 ) (31,722 ) (17,046 ) (151,229 ) Total $ 65,991 $ 67,370 $ 16,917 $ 150,278 Goodwill by reportable segment as of December 31, 2016 was as follows (in thousands): Reportable Segment Photonics Vision Precision Motion Total Goodwill $ 136,278 $ 89,116 $ 33,963 $ 259,357 Accumulated impairment of goodwill (102,461 ) (31,722 ) (17,046 ) (151,229 ) Total $ 33,817 $ 57,394 $ 16,917 $ 108,128 Intangible Assets Intangible assets as of March 31, 2017 and December 31, 2016, respectively, are summarized as follows (in thousands): March 31, 2017 December 31, 2016 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Amortizable intangible assets: Patents and acquired technologies $ 105,232 $ (69,585 ) $ 35,647 $ 84,742 $ (67,902 ) $ 16,840 Customer relationships 92,393 (44,892 ) 47,501 69,554 (42,934 ) 26,620 Customer backlog 2,156 (1,101 ) 1,055 622 (540 ) 82 Non-compete covenant 2,514 (1,553 ) 961 2,514 (1,419 ) 1,095 Trademarks and trade names 13,030 (6,858 ) 6,172 10,709 (6,630 ) 4,079 Amortizable intangible assets 215,325 (123,989 ) 91,336 168,141 (119,425 ) 48,716 Non-amortizable intangible assets: Trade names 13,027 — 13,027 13,027 — 13,027 Totals $ 228,352 $ (123,989 ) $ 104,363 $ 181,168 $ (119,425 ) $ 61,743 All definite-lived intangible assets are amortized either on a straight-line basis or an economic benefit basis over their remaining useful life. Amortization expense for customer relationships and definite-lived trademarks, trade names and other intangibles is included in operating expenses in the accompanying consolidated statements of operations. Amortization expense for patents and acquired technologies is included in cost of revenue in the accompanying consolidated statements of operations. Amortization expense is as follows (in thousands): Three Months Ended March 31, 2017 April 1, 2016 Amortization expense – cost of revenue $ 1,641 $ 1,184 Amortization expense – operating expenses 2,849 2,108 Total amortization expense $ 4,490 $ 3,292 Estimated amortization expense for each of the five succeeding years and thereafter as of March 31, 2017 was as follows (in thousands): Year Ending December 31, Cost of Revenue Operating Expenses Total 2017(remainder of year) $ 4,943 $ 7,946 $ 12,889 2018 5,088 9,417 14,505 2019 4,605 7,327 11,932 2020 4,125 5,251 9,376 2021 3,664 4,739 8,403 Thereafter 13,222 21,009 34,231 Total $ 35,647 $ 55,689 $ 91,336 |
Supplementary Balance Sheet Inf
Supplementary Balance Sheet Information | 3 Months Ended |
Mar. 31, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Supplementary Balance Sheet Information | 8. Supplementary Balance Sheet Information The following tables provide the details of selected balance sheet items as of the periods indicated (in thousands): Inventories March 31, December 31, 2017 2016 Raw materials $ 43,457 $ 39,822 Work-in-process 10,218 8,012 Finished goods 14,217 9,511 Demo and consigned inventory 3,127 2,400 Total inventories $ 71,019 $ 59,745 Accrued Expenses and Other Current Liabilities March 31, December 31, 2017 2016 Accrued compensation and benefits $ 11,666 $ 9,647 Accrued warranty 3,925 3,142 Accrued restructuring 1,032 1,371 Accrued professional services 1,271 1,237 Accrued contingent considerations 2,531 2,775 Customer deposits 1,904 1,164 Other 8,612 7,612 Total $ 30,941 $ 26,948 Accrued Warranty Three Months Ended March 31, 2017 April 1, 2016 Balance at beginning of the period $ 3,142 $ 3,335 Provision charged to cost of revenue 799 310 Acquisition related warranty accrual 419 — Use of provision (442 ) (393 ) Foreign currency exchange rate changes 7 (4 ) Balance at end of period $ 3,925 $ 3,248 Other Long Term Liabilities March 31, December 31, 2017 2016 Capital lease obligations $ 8,007 $ 8,111 Accrued pension liabilities 5,711 5,957 Accrued contingent considerations — 2,381 Other 2,150 2,264 Total $ 15,868 $ 18,713 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | 9. Debt Debt consisted of the following (in thousands): March 31, December 31, 2017 2016 Senior Credit Facilities – term loan $ 7,500 $ 7,500 Less: unamortized debt issuance costs (132 ) (134 ) Total current portion of long-term debt $ 7,368 $ 7,366 Senior Credit Facilities – term loan $ 61,875 $ 63,750 Senior Credit Facilities – revolving credit facility 52,000 10,000 Less: unamortized debt issuance costs (3,010 ) (3,196 ) Total long-term debt $ 110,865 $ 70,554 Total Senior Credit Facilities $ 118,233 $ 77,920 Senior Credit Facilities On May 19, 2016, the Company entered into the second amended and restated credit agreement (the “Second Amended and Restated Credit Agreement”) with new and existing lenders for an aggregate credit facility of $300.0 million, consisting of a $75.0 million, 5-year term loan facility due in quarterly installments of $1.9 million beginning in July 2016 and a $225.0 million, 5-year revolving credit facility (collectively, the “Senior Credit Facilities”). The Senior Credit Facilities mature in May 2021. Quarterly installments due in the next twelve months under the term loan amount to $7.5 million and are classified as a current liability on the consolidated balance sheet. The increase in the amount outstanding under the Company’s revolving credit facility in the three months ended March 31, 2017 was related to additional borrowings to fund the Laser Quantum and ThingMagic acquisitions. The Company is required to satisfy certain financial and non-financial covenants under the Second Amended and Restated Credit Agreement. The Company was in compliance with these covenants as of March 31, 2017. Liens The Company’s obligations under the Senior Credit Facilities are secured on a senior basis by a lien on substantially all of the assets of the Company and its material United States (“U.S.”) and United Kingdom (“U.K.”) subsidiaries and guaranteed by the Company and its material U.S. and U.K. subsidiaries. The Second Amended and Restated Credit Agreement also contains customary events of default. Fair Value of Debt As of March 31, 2017 and December 31, 2016, the outstanding balance of the Company’s debt approximated its fair value based on current rates available to the Company for debt of the same maturity. |
Share-based Compensation
Share-based Compensation | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-based Compensation | 10. Share-based Compensation The table below summarizes share-based compensation expense recorded in income from continuing operations in the consolidated statements of operations (in thousands): Three Months Ended March 31, April 1, 2017 2016 Selling, general and administrative $ 1,358 $ 1,243 Research and development and engineering 43 25 Cost of revenue 68 74 Total share-based compensation expense $ 1,469 $ 1,342 The expense recorded during each of the three-month periods ended March 31, 2017 and April 1, 2016, respectively, included $0.5 million related to deferred stock units granted to the members of the Company’s Board of Directors. Service-based Restricted Stock Units and Deferred Stock Units The Company’s restricted stock units (“RSUs”) have been issued with vesting periods of three, four, and five years and vest based solely on service conditions. Accordingly, the Company recognizes compensation expense on a straight-line basis over the requisite service period. The Company reduces the compensation expense by an estimated forfeiture rate which is based on anticipated forfeitures and actual experience. Deferred stock units (“DSUs”) are granted solely to the members of the Company’s Board of Directors, and have been issued as fully vested and non-forfeitable awards upon grant. The compensation expense associated with the DSUs is recognized in full on the respective date of grant. The table below summarizes activities relating to RSUs and DSUs issued and outstanding under the Company’s Amended and Restated 2010 Incentive Plan during the three months ended March 31, 2017: Shares (In thousands) Weighted Average Grant Date Fair Value Unvested at December 31, 2016 635 $ 13.97 Granted 220 $ 24.00 Vested (189 ) $ 13.87 Forfeited (1 ) $ 16.52 Unvested at March 31, 2017 665 $ 17.32 Expected to vest as of March 31, 2017 614 The total fair value of RSUs and DSUs that vested during the three months ended March 31, 2017 was $4.7 million based on the market price of the underlying stock on the date of vesting. Performance-based Awards The Company granted two types of performance-based awards to certain members of the executive management team: non-GAAP EPS performance-based restricted stock units (“EPS-PSUs”) and relative total shareholder return performance-based restricted stock units (“TSR-PSUs”). Both types of performance-based restricted stock units generally cliff vest on the first day following the end of the three-year performance period. The number of common shares to be issued upon settlement following vesting of the EPS-PSUs is determined based on the Company’s cumulative non-GAAP EPS over the three-year performance period against the target established by the Company’s Board of Directors at the time of grant and will be in the range of zero to 200% of the target number of shares. The Company recognizes the related compensation expense ratably over the performance period based on the number of shares that are deemed probable of vesting at the end of the three-year performance cycle. This probability assessment is performed quarterly and the cumulative effect of a change in the estimated compensation expense, if any, is recognized in the consolidated statement of operations in the period in which such determination is made. The number of shares to be issued upon settlement following vesting of the TSR-PSUs is determined based on the relative market performance of the Company’s common stock compared to the Russell 2000 Index over the three-year performance period using a payout formula established by the Company’s Board of Directors at the time of grant and will be in the range of zero to 200% of the target number of shares. The Company recognizes the related compensation expense based on the fair value of the TSR-PSUs, determined using the Monte-Carlo valuation model as of the date of grant, on a straight-line basis from the grant date to the end of the three-year performance period. Compensation expense will not be affected by the number of TSR-PSUs that will actually vest at the end of the three-year performance period. The table below summarizes the activities relating to the performance-based awards issued and outstanding under the Company’s Amended and Restated 2010 Incentive Plan during the three months ended March 31, 2017: Shares (In thousands) Weighted Average Grant Date Fair Value Unvested at December 31, 2016 29 $ 14.13 Granted 60 $ 28.81 Vested — $ — Forfeited — $ — Unvested at March 31, 2017 89 $ 24.00 The fair value of the TSR-PSUs at the date of grant was estimated using the Monte-Carlo valuation model with the following assumptions: Three Months Ended March 31, 2017 Grant-date stock price $ 24.30 Expected volatility 28.6 % Risk-free interest rate 1.44 % Expected annual dividend yield — Weighted average fair value $ 33.31 Stock Options The fair value of stock options is estimated using the Black-Scholes valuation model. Key input assumptions include the expected option term, the expected volatility of the common stock over the expected term of the options, the risk-free interest rate, and the expected dividend yield. Compensation expense related to stock options is recognized in the consolidated statement of operations on a straight-line basis over the vesting period. No stock options were granted during the three months ended March 31, 2017. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes The Company determines its estimated annual effective tax rate at the end of each interim period based on full-year forecasted pre-tax income and facts known at that time. The estimated annual effective tax rate is applied to the year-to-date pre-tax income at the end of each interim period. The tax effect of significant unusual items is reflected in the period in which they occur. Since the Company is incorporated in Canada, it is required to use Canada’s statutory tax rate of 29.0% in the determination of the estimated annual effective tax rate. The Company’s effective tax rate on income from continuing operations of 3.1% for the three months ended March 31, 2017 differs from the Canadian statutory tax rate of 29.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, the impact associated with establishing control over Laser Quantum upon the acquisition of an additional 35% of Laser Quantum’s outstanding shares, losses in jurisdictions with a full valuation allowance, and other discrete items for the period. The Company reported a nontaxable gain of $26.4 million on its previously-held Laser Quantum equity interest and wrote off $1.4 million of Laser Quantum related deferred tax liability, which had a combined 24.5% favorable impact on our effective tax rate for the three months ended March 31, 2017. The Company’s effective tax rate on income from continuing operations of 14.5% for the three months ended April 1, 2016 differed from the Canadian statutory rate of 27.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, losses in jurisdictions with a full valuation allowance, the Laser Quantum dividend distribution and the impact of other discrete items for the period. The Company received a tax free cash dividend of $2.3 million from Laser Quantum, which had an 18.9% favorable impact on our effective tax rate for the three months ended April 1, 2016. The Company maintains a valuation allowance on some of its deferred tax assets in certain jurisdictions. A valuation allowance is required when, based upon an assessment of various factors, including recent operating loss history, anticipated future earnings, and prudent and reasonable tax planning strategies, it is more likely than not that some portion of the deferred tax assets will not be realized. |
Restructuring, Acquisition and
Restructuring, Acquisition and Divestiture Related Costs | 3 Months Ended |
Mar. 31, 2017 | |
Restructuring And Related Activities [Abstract] | |
Restructuring, Acquisition and Divestiture Related Costs | 12. Restructuring, Acquisition and Divestiture Related Costs The following table summarizes restructuring, acquisition and divestiture related costs in the accompanying consolidated statements of operations (in thousands): Three Months Ended March 31, April 1, 2017 2016 2016 restructuring $ 33 $ 2,500 2011 restructuring 4 212 Total restructuring and divestiture charges 37 2,712 Acquisition and related charges 780 246 Total restructuring, acquisition and divestiture related costs $ 817 $ 2,958 2016 Restructuring During the third quarter of 2015, the Company initiated the 2016 restructuring program, which included consolidating certain of our manufacturing operations to optimize our facility footprint and better utilize resources, costs associated with discontinuing our radiology product line and reducing redundant costs due to productivity cost savings and business volume reductions. We substantially completed the 2016 restructuring program during the second quarter of 2016. As of March 31, 2017, the Company incurred cumulative costs related to this restructuring plan totaling $6.2 million. The Company expects to incur additional restructuring charges of $0.2 million to $0.3 million related to the 2016 restructuring plan. The following table summarizes restructuring costs for each segment and unallocated corporate and shared services related to the 2016 restructuring plan (in thousands): Three Months Ended March 31, April 1, 2017 2016 Photonics $ — $ 469 Vision 32 1,739 Precision Motion — 87 Unallocated Corporate and Shared Services 1 205 Total $ 33 $ 2,500 2011 Restructuring In November 2011, the Company announced a strategic initiative (“2011 restructuring”), which aimed to consolidate operations to reduce the Company’s cost structure and improve operational efficiency. As part of this initiative, the Company eliminated facilities through the consolidation of certain manufacturing, sales and distribution facilities and the exit of Semiconductor Systems and Laser Systems businesses. The Company substantially completed the 2011 restructuring program by the end of 2013. In March 2016, the Company sold its previously exited Laser Systems facility located in Orlando, Florida for cash at the net carrying value of $3.5 million. In December 2016, the lease agreement for the Company’s previously exited laser scanner business facility was terminated. Rollforward of Accrued Expenses Related to Restructuring The following table summarizes the accrual activities, by component, related to the Company’s restructuring plans recorded in the accompanying consolidated balance sheets (in thousands): Total Severance Facility Depreciation Other Balance at December 31, 2016 $ 1,736 $ 611 $ 1,111 $ — $ 14 Restructuring charges 37 32 — — 5 Cash payments (420 ) (281 ) (125 ) — (14 ) Non-cash write-offs and other adjustments — 8 (8 ) — — Balance at March 31, 2017 $ 1,353 $ 370 $ 978 $ — $ 5 Acquisition and Related Charges Acquisition related costs incurred to effect a business combination, including finders’ fees, legal, valuation, and other professional or consulting fees, totaled $0.8 million and $0.3 million for the three months ended March 31, 2017 and April 1, 2016, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 13. Commitments and Contingencies Leases The Company leases certain equipment and facilities under operating and capital lease agreements. There have been no material changes to the Company’s leases through March 31, 2017 from those discussed in Note 15 to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Purchase Commitments There have been no material changes to the Company’s purchase commitments since December 31, 2016. Legal Contingencies The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. The Company does not believe that the outcome of these claims will have a material adverse effect upon its consolidated financial statements but there can be no assurance that any such claims, or any similar claims, would not have a material adverse effect upon its consolidated financial statements. Guarantees and Indemnifications In the normal course of its operations, the Company executes agreements that provide for indemnification and guarantees to counterparties in transactions such as business dispositions, sale of assets, sale of products and operating leases. Additionally, the by-laws of the Company require it to indemnify certain current or former directors, officers, and employees of the Company against expenses incurred by them in connection with each proceeding in which he or she is involved as a result of serving or having served in certain capacities. Indemnification is not available with respect to a proceeding as to which it has been adjudicated that the person did not act in good faith in the reasonable belief that the action was in the best interests of the Company. Certain of the officers and directors are also a party to indemnification agreements with the Company. These indemnification agreements provide, among other things, that the director and officer shall be indemnified to the fullest extent permitted by applicable law against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such officer or director in connection with any proceeding by reason of his or her relationship with the Company. In addition, the indemnification agreements provide for the advancement of expenses incurred by such director or officer in connection with any proceeding covered by the indemnification agreement, subject to the conditions set forth therein and to the extent such advancement is not prohibited by law. The indemnification agreements also set out the procedures for determining entitlement to indemnification, the requirements relating to notice and defense of claims for which indemnification is sought, the procedures for enforcement of indemnification rights, the limitations on and exclusions from indemnification, and the minimum levels of directors’ and officers’ liability insurance to be maintained by the Company. |
Redeemable Noncontrolling Inter
Redeemable Noncontrolling Interest | 3 Months Ended |
Mar. 31, 2017 | |
Noncontrolling Interest [Abstract] | |
Redeemable Noncontrolling Interest | 14. Redeemable Noncontrolling Interest As a result of the Company’s acquisition of additional outstanding shares of Laser Quantum from the remaining shareholders on January 10, 2017, the Company increased its ownership position in Laser Quantum from approximately 41% to approximately 76% and began to consolidate the operating results of Laser Quantum in the consolidated financial statements. As part of the purchase agreement, the Company and the remaining equity holders entered into a call and put option agreement for the purchase and sale in 2020 of all remaining Laser Quantum shares held by the remaining equity holders, subject to certain conditions. The purchase price for the remaining shares will be based on a multiple of Laser Quantum’s EBITDA for the twelve months ending December 31, 2019, as defined in the call and put option agreement. As a result of the put option, the noncontrolling interest is considered a redeemable equity instrument and is presented as temporary equity on the consolidated balance sheet as of March 31, 2017. The proportionate share of the net income from Laser Quantum attributable to the noncontrolling interest has been reported as a reduction to the consolidated net income in the Company’s consolidated statements of operations. The initial value of the noncontrolling interest of £17.7 million ($21.6 million) was measured at fair value at the date of the acquisition and will be adjusted to its redemption value on a quarterly basis, to the extent that the redemption value exceeds the carrying value of the noncontrolling interest. The fair value of the noncontrolling interest was determined using a combination of the discounted cash flow method (an income approach), the guideline public company method (a market approach), and the subject company transaction method (a market approach). |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | 15. Segment Information The Company evaluates the performance of, and allocates resources to, its segments based on revenue, gross profit and operating profit. The Company’s reportable segments have been identified based on commonality and adjacency of technologies, applications and customers amongst the Company’s individual product lines. The Company operates in three reportable segments: Photonics, Vision, and Precision Motion. The reportable segments and their principal activities consist of the following: Photonics The Photonics segment designs, manufactures and markets photonics-based solutions, including CO2 lasers, continuous wave and femtosecond lasers, optical light engines, and laser scanning and laser beam delivery products, to customers worldwide. The segment serves highly demanding photonics-based applications such as industrial material processing, metrology, medical and life science imaging, DNA sequencing, and medical laser procedures. The vast majority of the segment’s product offerings are sold to Original Equipment Manufacturers (“OEMs”) customers. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors. Vision The Vision segment designs, manufactures and markets a range of medical grade technologies, including visualization solutions, imaging informatics products, optical data collection and machine vision technologies, RFID technologies, thermal printers, light and color measurement instrumentation, and embedded touch screen solutions, to customers worldwide. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors. Precision Motion The Precision Motion segment designs, manufactures and markets optical encoders, precision motor and motion control technology, air bearing spindles and precision machined components to customers worldwide. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors. Reportable Segment Financial Information Revenue, gross profit, gross profit margin, operating income (loss) from continuing operations, and depreciation and amortization by reportable segments are as follows (in thousands): Three Months Ended March 31, April 1, 2017 2016 Revenue Photonics $ 50,736 $ 40,358 Vision 32,762 28,862 Precision Motion 25,476 21,096 Total $ 108,974 $ 90,316 Three Months Ended March 31, April 1, 2017 2016 Gross Profit Photonics $ 21,789 $ 17,997 Vision 13,146 9,579 Precision Motion 11,518 9,668 Unallocated Corporate and Shared Services (359 ) (352 ) Total $ 46,094 $ 36,892 Three Months Ended March 31, April 1, 2017 2016 Gross Profit Margin Photonics 42.9 % 44.6 % Vision 40.1 % 33.2 % Precision Motion 45.2 % 45.8 % Total 42.3 % 40.8 % Three Months Ended March 31, April 1, 2017 2016 Operating Income (Loss) from Continuing Operations Photonics $ 8,080 $ 6,856 Vision 1,525 (3,771 ) Precision Motion 7,164 5,235 Unallocated Corporate and Shared Services (6,557 ) (5,733 ) Total $ 10,212 $ 2,587 Three Months Ended March 31, April 1, 2017 2016 Depreciation and Amortization Photonics $ 3,244 $ 1,544 Vision 2,437 3,100 Precision Motion 566 614 Unallocated Corporate and Shared Services 235 573 Total $ 6,482 $ 5,831 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. The Company evaluates its estimates based on historical experience, current conditions and various other assumptions that it believes are reasonable under the circumstances. Estimates and assumptions are reviewed on an on-going basis and the effects of revisions are reflected in the period in which they are deemed to be necessary. Actual results could differ significantly from those estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Presentation of Net Periodic Pension Cost In March 2017, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires employers that offer or maintain defined benefit plans to disaggregate the service component from the other components of net benefit cost and provides guidance on the presentation of the service component and the other components of net benefit cost in the statement of operations. The new standard is effective for public companies for annual periods beginning after December 15, 2017. The Company expects to adopt the new standard in the first quarter of 2018 and expects to report its net periodic pension cost related to its frozen U.K. pension plan in Other income/(expense) in the consolidated statement of operations upon adoption. Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which simplifies the accounting for goodwill impairment. The amendment in ASU 2017-04 removes Step-two of the goodwill impairment test, which requires a hypothetical purchase price allocation. ASU 2017-04 will become effective prospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of the new standard on our consolidated financial statements. Statement of Cash Flows Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The standard further clarifies the classification in the cash flow statement of the following items: (i) debt prepayment or debt extinguishment costs; (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (iii) contingent consideration payments made after a business combination; (iv) proceeds from the settlement of insurance claims; (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (vi) distributions received from equity method investees; (vii) beneficial interests in securitization transactions; and (viii) separately identifiable cash flows and application of the predominance principle. ASU 2016-15 will become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. ASU 2016-15 should be applied using a retrospective transition method for each period presented. The Company adopted ASU 2016-15 during the first quarter of 2017. The adoption of ASU 2016-15 resulted in ($2.4) million of payments of contingent considerations being reported as cash used in financing activities on the Company’s consolidated statements of cash flows for the three months ended March 31, 2017. Leases In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which provides comprehensive lease accounting guidance. The standard requires entities to recognize lease assets and liabilities on the balance sheet and to disclose key information about leasing arrangements. ASU 2016-02 will become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of the new standard on our consolidated financial statements. Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provides guidance for revenue recognition. ASU 2014-09 supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition” (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for annual and interim reporting periods beginning after December 15, 2016. Early adoption is not permitted. Upon adoption, an entity may apply the new guidance either retrospectively to each prior reporting period presented or retrospectively only to customer contracts not yet completed as of the date of adoption with the cumulative effect of initially applying the standard recognized in beginning retained earnings at the date of the initial application. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers – Deferral of the Effective Date,” which defers the effective date of ASU 2014-09 by one year, with the option of early adoption as of the original effective date. The amendment in ASU 2015-14 will result in ASU 2014-09 being effective for annual and interim reporting periods beginning after December 15, 2017. The Company has identified various revenue streams that could be impacted by Topic 606 and has started to review individual customer contracts related to these various revenue streams to determine if any material differences exist between Topic 605 and Topic 606. The Company will adopt Topic 606 in the first quarter of 2018 and has preliminarily concluded that it will use the modified retrospective method upon adoption. |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Summary of Acquisition Related Costs | Acquisition-related costs are included in restructuring, acquisition and divestiture related costs in the consolidated statements of operations. Acquisition-related costs for ThingMagic and Laser Quantum are as follows (in thousands): Three March 31, 2017 ThingMagic $ 149 Laser Quantum $ 264 |
Thing Magic | |
Summary of Fair Values of Assets Acquired and Liabilities Assumed Purchase Price Allocation | Based upon a preliminary valuation, the total purchase price was allocated as follows (in thousands): Purchase Price Allocation Inventory $ 2,023 Intangible assets 7,283 Goodwill 9,976 Total assets acquired 19,282 Other liabilities 95 Total liabilities assumed 95 Total purchase price $ 19,187 |
Fair Value of Intangible Assets | The fair value of intangible assets is comprised of the following (dollar amounts in thousands): Weighted Average Estimated Fair Amortization Value Period Developed technologies $ 4,600 10 years Customer relationships 2,380 10 years Trademarks and trade names 303 5 years Total $ 7,283 |
Laser Quantum | |
Summary of Fair Values of Assets Acquired and Liabilities Assumed Purchase Price Allocation | Based upon a preliminary valuation, the total purchase price was allocated as follows (in thousands): Purchase Allocation Cash $ 15,343 Accounts receivable 2,739 Inventory 6,332 Property and equipment 1,700 Intangible assets 38,955 Goodwill 31,459 Other assets 717 Total fair value of assets 97,245 Accounts payable 796 Other liabilities 2,068 Deferred tax liabilities 7,110 Total fair value of liabilities 9,974 Total fair value of assets, net of fair value of liabilities 87,271 Less: fair value of equity interest previously held by Novanta 34,637 Less: fair value of noncontrolling interest 21,582 Total purchase price paid by Novanta 31,052 Less: cash acquired 15,343 Purchase price, net of cash acquired $ 15,709 |
Fair Value of Intangible Assets | The fair value of intangible assets is comprised of the following (dollar amounts in thousands): Weighted Average Estimated Fair Amortization Value Period Developed technologies $ 15,501 15 years Customer relationships 19,990 15 years Trademarks and trade names 1,964 15 years Backlog 1,500 9 months Total $ 38,955 |
Summary of Pro Forma Financial Information | The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the results of operations that actually would have been achieved if the acquisition had taken place on January 1, 2016. Three Months Ended March 31, April 1, 2017 2016 Revenue $ 109,740 $ 97,015 Income from continuing operations $ 8,017 $ 2,257 Earnings per share from continuing operations - Basic $ 0.23 $ 0.06 Earnings per share from continuing operations - Diluted $ 0.23 $ 0.06 |
Accumulated Other Comprehensi24
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive Income (Loss) | Changes in accumulated other comprehensive income (loss) was as follows (in thousands): Total accumulated other Foreign currency comprehensive translation Pension income (loss) adjustments liabilities Balance at December 31, 2016 $ (27,715 ) $ (17,222 ) $ (10,493 ) Other comprehensive income (loss) 1,358 1,440 (82 ) Amounts reclassified from other comprehensive income (loss) (1) 287 — 287 Balance at March 31, 2017 $ (26,070 ) $ (15,782 ) $ (10,288 ) (1) The amounts reclassified from other comprehensive income (loss) were included in selling, general and administrative expenses in the consolidated statements of operations. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings per Share | The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): Three Months Ended March 31, April 1, 2017 2016 Numerators: Income from continuing operations $ 34,274 $ 1,906 Less: Net income attributable to noncontrolling interest (22 ) — Income from continuing operations attributable to Novanta Inc. 34,252 1,906 Loss from discontinued operations — — Net income attributable to Novanta Inc. $ 34,252 $ 1,906 Denominators: Weighted average common shares outstanding— basic 34,765 34,657 Dilutive potential common shares 360 196 Weighted average common shares outstanding— diluted 35,125 34,853 Antidilutive common shares excluded from above — — Basic Earnings per Share: From continuing operations $ 0.99 $ 0.05 From discontinued operations $ — $ — Basic earnings per share attributable to Novanta Inc. $ 0.99 $ 0.05 Diluted Earnings per Share: From continuing operations $ 0.98 $ 0.05 From discontinued operations $ — $ — Diluted earnings per share attributable to Novanta Inc. $ 0.98 $ 0.05 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Values of Financial Assets and Liabilities | The following table summarizes the fair values of our financial assets and liabilities as of March 31, 2017 (in thousands): Quoted Prices in Significant Other Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) Assets Cash equivalents $ 1,881 $ 1,881 $ — $ — Liabilities Contingent consideration - Current $ 2,531 $ — $ — $ 2,531 Contingent consideration - Long-term — — — — $ 2,531 $ — $ — $ 2,531 The following table summarizes the fair values of our financial assets and liabilities as of December 31, 2016 (in thousands): Quoted Prices in Significant Other Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) Assets Cash equivalents $ 9,569 $ 9,569 $ — $ — Liabilities Contingent consideration - Current $ 2,775 $ — $ — $ 2,775 Contingent consideration - Long-term 2,381 — — 2,381 $ 5,156 $ — $ — $ 5,156 |
Changes in Fair Value of Level 3 Contingent Consideration | Changes in the fair value of Level 3 contingent consideration during the three months ended March 31, 2017 were as follows (in thousands): Contingent Consideration Balance at December 31, 2016 $ 5,156 Payment to Applimotion (1,192 ) Payment to Lincoln Laser (1,433 ) Balance at March 31, 2017 $ 2,531 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Summary of Changes in Goodwill | The following table summarizes changes in goodwill during the three months ended March 31, 2017 (in thousands): Balance at beginning of the period $ 108,128 Goodwill acquired from Laser Quantum acquisition 31,459 Goodwill acquired from ThingMagic acquisition 9,976 Effect of foreign exchange rate changes 715 Balance at end of the period $ 150,278 |
Goodwill by Reportable Segment | Goodwill by reportable segment as of March 31, 2017 was as follows (in thousands): Reportable Segment Photonics Vision Precision Motion Total Goodwill $ 168,452 $ 99,092 $ 33,963 $ 301,507 Accumulated impairment of goodwill (102,461 ) (31,722 ) (17,046 ) (151,229 ) Total $ 65,991 $ 67,370 $ 16,917 $ 150,278 Goodwill by reportable segment as of December 31, 2016 was as follows (in thousands): Reportable Segment Photonics Vision Precision Motion Total Goodwill $ 136,278 $ 89,116 $ 33,963 $ 259,357 Accumulated impairment of goodwill (102,461 ) (31,722 ) (17,046 ) (151,229 ) Total $ 33,817 $ 57,394 $ 16,917 $ 108,128 |
Intangible Assets | Intangible assets as of March 31, 2017 and December 31, 2016, respectively, are summarized as follows (in thousands): March 31, 2017 December 31, 2016 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Amortizable intangible assets: Patents and acquired technologies $ 105,232 $ (69,585 ) $ 35,647 $ 84,742 $ (67,902 ) $ 16,840 Customer relationships 92,393 (44,892 ) 47,501 69,554 (42,934 ) 26,620 Customer backlog 2,156 (1,101 ) 1,055 622 (540 ) 82 Non-compete covenant 2,514 (1,553 ) 961 2,514 (1,419 ) 1,095 Trademarks and trade names 13,030 (6,858 ) 6,172 10,709 (6,630 ) 4,079 Amortizable intangible assets 215,325 (123,989 ) 91,336 168,141 (119,425 ) 48,716 Non-amortizable intangible assets: Trade names 13,027 — 13,027 13,027 — 13,027 Totals $ 228,352 $ (123,989 ) $ 104,363 $ 181,168 $ (119,425 ) $ 61,743 |
Amortization Expense of Intangible Assets | Amortization expense is as follows (in thousands): Three Months Ended March 31, 2017 April 1, 2016 Amortization expense – cost of revenue $ 1,641 $ 1,184 Amortization expense – operating expenses 2,849 2,108 Total amortization expense $ 4,490 $ 3,292 |
Estimated Amortization Expense | Estimated amortization expense for each of the five succeeding years and thereafter as of March 31, 2017 was as follows (in thousands): Year Ending December 31, Cost of Revenue Operating Expenses Total 2017(remainder of year) $ 4,943 $ 7,946 $ 12,889 2018 5,088 9,417 14,505 2019 4,605 7,327 11,932 2020 4,125 5,251 9,376 2021 3,664 4,739 8,403 Thereafter 13,222 21,009 34,231 Total $ 35,647 $ 55,689 $ 91,336 |
Supplementary Balance Sheet I28
Supplementary Balance Sheet Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Inventories | Inventories March 31, December 31, 2017 2016 Raw materials $ 43,457 $ 39,822 Work-in-process 10,218 8,012 Finished goods 14,217 9,511 Demo and consigned inventory 3,127 2,400 Total inventories $ 71,019 $ 59,745 |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities March 31, December 31, 2017 2016 Accrued compensation and benefits $ 11,666 $ 9,647 Accrued warranty 3,925 3,142 Accrued restructuring 1,032 1,371 Accrued professional services 1,271 1,237 Accrued contingent considerations 2,531 2,775 Customer deposits 1,904 1,164 Other 8,612 7,612 Total $ 30,941 $ 26,948 |
Accrued Warranty | Accrued Warranty Three Months Ended March 31, 2017 April 1, 2016 Balance at beginning of the period $ 3,142 $ 3,335 Provision charged to cost of revenue 799 310 Acquisition related warranty accrual 419 — Use of provision (442 ) (393 ) Foreign currency exchange rate changes 7 (4 ) Balance at end of period $ 3,925 $ 3,248 |
Summary of Other Long Term Liabilities | Other Long Term Liabilities March 31, December 31, 2017 2016 Capital lease obligations $ 8,007 $ 8,111 Accrued pension liabilities 5,711 5,957 Accrued contingent considerations — 2,381 Other 2,150 2,264 Total $ 15,868 $ 18,713 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt consisted of the following (in thousands): March 31, December 31, 2017 2016 Senior Credit Facilities – term loan $ 7,500 $ 7,500 Less: unamortized debt issuance costs (132 ) (134 ) Total current portion of long-term debt $ 7,368 $ 7,366 Senior Credit Facilities – term loan $ 61,875 $ 63,750 Senior Credit Facilities – revolving credit facility 52,000 10,000 Less: unamortized debt issuance costs (3,010 ) (3,196 ) Total long-term debt $ 110,865 $ 70,554 Total Senior Credit Facilities $ 118,233 $ 77,920 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Share-Based Compensation Expense Recorded In Income from Continuing Operations in Statements of Operations | The table below summarizes share-based compensation expense recorded in income from continuing operations in the consolidated statements of operations (in thousands): Three Months Ended March 31, April 1, 2017 2016 Selling, general and administrative $ 1,358 $ 1,243 Research and development and engineering 43 25 Cost of revenue 68 74 Total share-based compensation expense $ 1,469 $ 1,342 |
Fair Value of TSR Performance-Based Restricted Stock Units Estimated Using Monte-Carol Valuation Model | The fair value of the TSR-PSUs at the date of grant was estimated using the Monte-Carlo valuation model with the following assumptions: Three Months Ended March 31, 2017 Grant-date stock price $ 24.30 Expected volatility 28.6 % Risk-free interest rate 1.44 % Expected annual dividend yield — Weighted average fair value $ 33.31 |
2010 Incentive Award Plan | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Restricted Stock Issued and Outstanding | The table below summarizes activities relating to RSUs and DSUs issued and outstanding under the Company’s Amended and Restated 2010 Incentive Plan during the three months ended March 31, 2017: Shares (In thousands) Weighted Average Grant Date Fair Value Unvested at December 31, 2016 635 $ 13.97 Granted 220 $ 24.00 Vested (189 ) $ 13.87 Forfeited (1 ) $ 16.52 Unvested at March 31, 2017 665 $ 17.32 Expected to vest as of March 31, 2017 614 |
Performance-Based Awards Issued and Outstanding | The table below summarizes the activities relating to the performance-based awards issued and outstanding under the Company’s Amended and Restated 2010 Incentive Plan during the three months ended March 31, 2017: Shares (In thousands) Weighted Average Grant Date Fair Value Unvested at December 31, 2016 29 $ 14.13 Granted 60 $ 28.81 Vested — $ — Forfeited — $ — Unvested at March 31, 2017 89 $ 24.00 |
Restructuring, Acquisition an31
Restructuring, Acquisition and Divestiture Related Costs (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Restructuring And Related Activities [Abstract] | |
Schedule Of Restructuring And Related Cost | The following table summarizes restructuring, acquisition and divestiture related costs in the accompanying consolidated statements of operations (in thousands): Three Months Ended March 31, April 1, 2017 2016 2016 restructuring $ 33 $ 2,500 2011 restructuring 4 212 Total restructuring and divestiture charges 37 2,712 Acquisition and related charges 780 246 Total restructuring, acquisition and divestiture related costs $ 817 $ 2,958 |
Summary of Restructuring Costs for Each Segment and Unallocated Corporate and Shared Services | The following table summarizes restructuring costs for each segment and unallocated corporate and shared services related to the 2016 restructuring plan (in thousands): Three Months Ended March 31, April 1, 2017 2016 Photonics $ — $ 469 Vision 32 1,739 Precision Motion — 87 Unallocated Corporate and Shared Services 1 205 Total $ 33 $ 2,500 |
Summary of Accrual Activities by Components Related to Company's Restructuring Plans | The following table summarizes the accrual activities, by component, related to the Company’s restructuring plans recorded in the accompanying consolidated balance sheets (in thousands): Total Severance Facility Depreciation Other Balance at December 31, 2016 $ 1,736 $ 611 $ 1,111 $ — $ 14 Restructuring charges 37 32 — — 5 Cash payments (420 ) (281 ) (125 ) — (14 ) Non-cash write-offs and other adjustments — 8 (8 ) — — Balance at March 31, 2017 $ 1,353 $ 370 $ 978 $ — $ 5 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Revenue, Gross Profit, Gross Profit Margin, Operating Income (Loss) from Continuing Operations, and Depreciation and Amortization by Reportable Segments | Revenue, gross profit, gross profit margin, operating income (loss) from continuing operations, and depreciation and amortization by reportable segments are as follows (in thousands): Three Months Ended March 31, April 1, 2017 2016 Revenue Photonics $ 50,736 $ 40,358 Vision 32,762 28,862 Precision Motion 25,476 21,096 Total $ 108,974 $ 90,316 Three Months Ended March 31, April 1, 2017 2016 Gross Profit Photonics $ 21,789 $ 17,997 Vision 13,146 9,579 Precision Motion 11,518 9,668 Unallocated Corporate and Shared Services (359 ) (352 ) Total $ 46,094 $ 36,892 Three Months Ended March 31, April 1, 2017 2016 Gross Profit Margin Photonics 42.9 % 44.6 % Vision 40.1 % 33.2 % Precision Motion 45.2 % 45.8 % Total 42.3 % 40.8 % Three Months Ended March 31, April 1, 2017 2016 Operating Income (Loss) from Continuing Operations Photonics $ 8,080 $ 6,856 Vision 1,525 (3,771 ) Precision Motion 7,164 5,235 Unallocated Corporate and Shared Services (6,557 ) (5,733 ) Total $ 10,212 $ 2,587 Three Months Ended March 31, April 1, 2017 2016 Depreciation and Amortization Photonics $ 3,244 $ 1,544 Vision 2,437 3,100 Precision Motion 566 614 Unallocated Corporate and Shared Services 235 573 Total $ 6,482 $ 5,831 |
Basis of Presentation - Additio
Basis of Presentation - Additional information (Details) - USD ($) $ in Millions | Jan. 10, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
ASU 2016-15 | |||
Basis Of Presentation [Line Items] | |||
Payments of contingent considerations | $ (2.4) | ||
Laser Quantum | |||
Basis Of Presentation [Line Items] | |||
Equity method investment ownership percentage on Laser Quantum | 76.00% | 41.00% | |
Percentage of additional shares acquired | 35.00% | 35.00% |
Business Combinations - Additio
Business Combinations - Additional Information (Details) £ in Millions | Jan. 10, 2017USD ($) | Jan. 10, 2017GBP (£) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Business Acquisition [Line Items] | ||||
Goodwill | $ 150,278,000 | $ 108,128,000 | ||
Pre-tax gain on excess fair value of equity interest held | 26,409,000 | |||
Thing Magic | ||||
Business Acquisition [Line Items] | ||||
Total purchase price | $ 19,187,000 | |||
Intangible assets | 7,283,000 | |||
Goodwill | 9,976,000 | |||
Revenues | 1,900,000 | |||
Income (loss) from continuing operations before income taxes | (300,000) | |||
Amortization of inventory fair value adjustments and purchased intangible assets, included in operating income (loss) | $ 600,000 | |||
Thing Magic | Maximum | ||||
Business Acquisition [Line Items] | ||||
Estimated fair value measurement period from acquisition date | 1 year | |||
Laser Quantum | ||||
Business Acquisition [Line Items] | ||||
Total purchase price | 15,709,000 | |||
Intangible assets | 38,955,000 | |||
Goodwill | $ 31,459,000 | |||
Revenues | $ 7,200,000 | |||
Income (loss) from continuing operations before income taxes | 100,000 | |||
Amortization of inventory fair value adjustments and purchased intangible assets, included in operating income (loss) | 2,100,000 | |||
Percentage of additional shares acquired | 35.00% | |||
Total purchase price paid by Novanta | $ 31,052,000 | £ 25.5 | ||
Percentage of equity interest held before acquisition | 41.00% | 41.00% | ||
Percentage of equity interest held after acquisition | 76.00% | |||
Pre-tax gain on excess fair value of equity interest held | $ 26,400,000 | |||
Equity method investment ownership percentage on Laser Quantum | 41.00% | 41.00% | ||
Non controlling interest held by remaining shareholders | 24.00% | |||
Option to purchase and sell remaining shareholders shares, year | 2,020 | |||
Goodwill assets expected to be deductible for tax purposes | $ 0 | |||
Laser Quantum | Maximum | ||||
Business Acquisition [Line Items] | ||||
Estimated fair value measurement period from acquisition date | 1 year | |||
Revolving Credit Facility | Thing Magic | ||||
Business Acquisition [Line Items] | ||||
Amount draw-down to finance acquisition | 12,000,000 | |||
Revolving Credit Facility | Laser Quantum | ||||
Business Acquisition [Line Items] | ||||
Amount draw-down to finance acquisition | $ 30,000,000 |
Summary of Fair Values of Asset
Summary of Fair Values of Assets Acquired and Liabilities Assumed Purchase Price Allocation (Details) $ in Thousands, £ in Millions | Jan. 10, 2017USD ($) | Jan. 10, 2017GBP (£) | Mar. 31, 2017USD ($) | Jan. 10, 2017GBP (£) | Dec. 31, 2016USD ($) |
Business Acquisition [Line Items] | |||||
Goodwill | $ 150,278 | $ 108,128 | |||
Thing Magic | |||||
Business Acquisition [Line Items] | |||||
Inventory | $ 2,023 | ||||
Intangible assets | 7,283 | ||||
Goodwill | 9,976 | ||||
Total assets acquired | 19,282 | ||||
Other liabilities | 95 | ||||
Total liabilities assumed | 95 | ||||
Total purchase price | 19,187 | ||||
Laser Quantum | |||||
Business Acquisition [Line Items] | |||||
Cash | 15,343 | ||||
Accounts receivable | 2,739 | ||||
Inventory | 6,332 | ||||
Property and equipment | 1,700 | ||||
Intangible assets | 38,955 | ||||
Goodwill | 31,459 | ||||
Other assets | 717 | ||||
Total assets acquired | 97,245 | ||||
Accounts payable | 796 | ||||
Other liabilities | 2,068 | ||||
Deferred tax liabilities | 7,110 | ||||
Total liabilities assumed | 9,974 | ||||
Total fair value of assets, net of fair value of liabilities | 87,271 | ||||
Less: fair value of equity interest previously held by Novanta | 34,637 | ||||
Less: fair value of noncontrolling interest | 21,582 | £ 17.7 | |||
Total purchase price paid by Novanta | 31,052 | £ 25.5 | |||
Less: cash acquired | 15,343 | ||||
Total purchase price | $ 15,709 |
Fair Value of Intangible Assets
Fair Value of Intangible Assets (Details) $ in Thousands | Jan. 10, 2017USD ($) |
Thing Magic | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Intangible assets | $ 7,283 |
Thing Magic | Developed Technologies | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Intangible assets | $ 4,600 |
Amortization Period of intangible assets | 10 years |
Thing Magic | Customer Relationships | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Intangible assets | $ 2,380 |
Amortization Period of intangible assets | 10 years |
Thing Magic | Trademarks and Trade Names | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Intangible assets | $ 303 |
Amortization Period of intangible assets | 5 years |
Laser Quantum | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Intangible assets | $ 38,955 |
Laser Quantum | Developed Technologies | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Intangible assets | $ 15,501 |
Amortization Period of intangible assets | 15 years |
Laser Quantum | Customer Relationships | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Intangible assets | $ 19,990 |
Amortization Period of intangible assets | 15 years |
Laser Quantum | Trademarks and Trade Names | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Intangible assets | $ 1,964 |
Amortization Period of intangible assets | 15 years |
Laser Quantum | Backlog | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Intangible assets | $ 1,500 |
Amortization Period of intangible assets | 9 months |
Summary of Pro Forma Financial
Summary of Pro Forma Financial Information (Details) - Laser Quantum - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Business Acquisition [Line Items] | ||
Revenue | $ 109,740 | $ 97,015 |
Income from continuing operations | $ 8,017 | $ 2,257 |
Earnings per share from continuing operations - Basic | $ 0.23 | $ 0.06 |
Earnings per share from continuing operations - Diluted | $ 0.23 | $ 0.06 |
Summary of Acquisition Related
Summary of Acquisition Related Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Business Acquisition [Line Items] | ||
Acquisition costs | $ 800 | $ 300 |
Thing Magic | ||
Business Acquisition [Line Items] | ||
Acquisition costs | 149 | |
Laser Quantum | ||
Business Acquisition [Line Items] | ||
Acquisition costs | $ 264 |
Discontinued Operations and D39
Discontinued Operations and Divestitures - Additional Information (Details) - Scientific Lasers Business - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended |
Jul. 31, 2014 | Mar. 31, 2017 | |
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||
Proceeds from sale of business, net of transaction costs | $ 6.5 | |
Sale proceeds held in escrow | $ 1.5 | |
Sale proceeds held in escrow, period | 2016-01 |
Accumulated Other Comprehensi40
Accumulated Other Comprehensive Income (Loss) (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017USD ($) | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning Balance | $ 258,870 | |
Other comprehensive income (loss) | 1,358 | |
Amounts reclassified from other comprehensive income (loss) | 287 | [1] |
Ending Balance | 294,196 | |
Total accumulated other Foreign currency comprehensive translation Pension income (loss) | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning Balance | (27,715) | |
Ending Balance | (26,070) | |
Foreign currency translation adjustments | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning Balance | (17,222) | |
Other comprehensive income (loss) | 1,440 | |
Ending Balance | (15,782) | |
Pension liabilities | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning Balance | (10,493) | |
Other comprehensive income (loss) | (82) | |
Amounts reclassified from other comprehensive income (loss) | 287 | [1] |
Ending Balance | $ (10,288) | |
[1] | The amounts reclassified from other comprehensive income (loss) were included in selling, general and administrative expenses in the consolidated statements of operations. |
Computation of Basic and Dilute
Computation of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Numerators: | ||
Income from continuing operations | $ 34,274 | $ 1,906 |
Less: Net income attributable to noncontrolling interest | (22) | |
Income from continuing operations attributable to Novanta Inc. | 34,252 | 1,906 |
Net income attributable to Novanta Inc. | $ 34,252 | $ 1,906 |
Denominators: | ||
Weighted average common shares outstanding—basic | 34,765 | 34,657 |
Dilutive potential common shares | 360 | 196 |
Weighted average common shares outstanding— diluted | 35,125 | 34,853 |
Basic Earnings per Share: | ||
From continuing operations | $ 0.99 | $ 0.05 |
Basic earnings per share attributable to Novanta Inc. | 0.99 | 0.05 |
Diluted Earnings per Share: | ||
From continuing operations | 0.98 | 0.05 |
Diluted earnings per share attributable to Novanta Inc. | $ 0.98 | $ 0.05 |
Earnings per Share - Additional
Earnings per Share - Additional Information (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($)$ / sharesshares | |
Computation Of Earnings Per Share Line Items | |
Repurchase of common stock | $ 370 |
Common Stock Repurchase Plan | |
Computation Of Earnings Per Share Line Items | |
Shares repurchased | shares | 14,000 |
Repurchase of common stock | $ 400 |
Shares repurchased, average cost per share | $ / shares | $ 26.41 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) | 3 Months Ended | ||||
Mar. 31, 2017USD ($)Installment | Dec. 31, 2016USD ($) | Dec. 18, 2015USD ($) | Nov. 11, 2015USD ($) | Feb. 19, 2015USD ($) | |
Skyetek Inc. | |||||
Business Acquisition Contingent Consideration [Line Items] | |||||
Business combination, date of agreement | Dec. 18, 2015 | ||||
Name of acquired entity | Skyetek Inc | ||||
Undiscounted range of outcomes, minimum | $ 0 | ||||
Undiscounted range of outcomes, maximum | 300,000 | ||||
Estimated fair value of contingent consideration | $ 200,000 | ||||
Lincoln Laser Company | |||||
Business Acquisition Contingent Consideration [Line Items] | |||||
Business combination, date of agreement | Nov. 11, 2015 | ||||
Name of acquired entity | Lincoln Laser Company | ||||
Estimated fair value of contingent consideration | $ 1,400,000 | $ 2,300,000 | |||
Payments of contingent consideration | $ 1,400,000 | ||||
Applimotion Inc. | |||||
Business Acquisition Contingent Consideration [Line Items] | |||||
Business combination, date of agreement | Feb. 19, 2015 | ||||
Name of acquired entity | Applimotion Inc | ||||
Undiscounted range of outcomes, minimum | $ 0 | ||||
Undiscounted range of outcomes, maximum | 4,000,000 | ||||
Estimated fair value of contingent consideration | $ 2,400,000 | $ 3,600,000 | $ 1,000,000 | ||
Payments of contingent consideration | $ 1,200,000 | ||||
Number of contingent consideration installments | Installment | 2 |
Fair Values of Financial Assets
Fair Values of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Cash equivalents | $ 1,881 | $ 9,569 |
Liabilities | ||
Contingent consideration - Current | 2,531 | 2,775 |
Contingent consideration - Long-term | 2,381 | |
Liabilities, fair value | 2,531 | 5,156 |
Fair Value, Inputs, Level 1 | ||
Assets | ||
Cash equivalents | 1,881 | 9,569 |
Fair Value, Inputs, Level 3 | ||
Liabilities | ||
Contingent consideration - Current | 2,531 | 2,775 |
Contingent consideration - Long-term | 2,381 | |
Liabilities, fair value | $ 2,531 | $ 5,156 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Changes in the Fair Value of Level 3 Contingent Consideration (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Applimotion Inc. | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |
Payments of contingent consideration | $ (1,200) |
Lincoln Laser Company | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |
Payments of contingent consideration | (1,400) |
Fair Value, Inputs, Level 3 | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |
Beginning balance | 5,156 |
Ending balance | 2,531 |
Fair Value, Inputs, Level 3 | Applimotion Inc. | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |
Payments of contingent consideration | (1,192) |
Fair Value, Inputs, Level 3 | Lincoln Laser Company | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |
Payments of contingent consideration | $ (1,433) |
Goodwill and Intangible Asset46
Goodwill and Intangible Assets - Additional Information (Details) | Jul. 01, 2016USD ($) |
Goodwill And Intangible Assets [Line Items] | |
Impairment of goodwill and intangible assets | $ 0 |
Minimum | |
Goodwill And Intangible Assets [Line Items] | |
Reporting units in excess of carrying value | 20.00% |
Summary of Changes in Goodwill
Summary of Changes in Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Goodwill [Line Items] | |
Balance at beginning of the period | $ 108,128 |
Effect of foreign exchange rate changes | 715 |
Balance at end of the period | 150,278 |
Laser Quantum | |
Goodwill [Line Items] | |
Goodwill acquired | 31,459 |
Thing Magic | |
Goodwill [Line Items] | |
Goodwill acquired | $ 9,976 |
Goodwill By Reportable Segment
Goodwill By Reportable Segment (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Goodwill [Line Items] | ||
Goodwill | $ 301,507 | $ 259,357 |
Accumulated impairment of goodwill | (151,229) | (151,229) |
Total | 150,278 | 108,128 |
Photonics | ||
Goodwill [Line Items] | ||
Goodwill | 168,452 | 136,278 |
Accumulated impairment of goodwill | (102,461) | (102,461) |
Total | 65,991 | 33,817 |
Vision | ||
Goodwill [Line Items] | ||
Goodwill | 99,092 | 89,116 |
Accumulated impairment of goodwill | (31,722) | (31,722) |
Total | 67,370 | 57,394 |
Precision Motion | ||
Goodwill [Line Items] | ||
Goodwill | 33,963 | 33,963 |
Accumulated impairment of goodwill | (17,046) | (17,046) |
Total | $ 16,917 | $ 16,917 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Schedule of Intangible Assets Disclosure [Line Items] | ||
Amortizable intangible assets, gross carrying amount | $ 215,325 | $ 168,141 |
Amortizable intangible assets, accumulated amortization | (123,989) | (119,425) |
Amortizable intangible assets, net carrying amount | 91,336 | 48,716 |
Non-amortizable intangible assets | 13,027 | 13,027 |
Gross carrying amount | 228,352 | 181,168 |
Net carrying amount | 104,363 | 61,743 |
Patents and Acquired Technologies | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Amortizable intangible assets, gross carrying amount | 105,232 | 84,742 |
Amortizable intangible assets, accumulated amortization | (69,585) | (67,902) |
Amortizable intangible assets, net carrying amount | 35,647 | 16,840 |
Customer Relationships | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Amortizable intangible assets, gross carrying amount | 92,393 | 69,554 |
Amortizable intangible assets, accumulated amortization | (44,892) | (42,934) |
Amortizable intangible assets, net carrying amount | 47,501 | 26,620 |
Customer Backlog | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Amortizable intangible assets, gross carrying amount | 2,156 | 622 |
Amortizable intangible assets, accumulated amortization | (1,101) | (540) |
Amortizable intangible assets, net carrying amount | 1,055 | 82 |
Non-compete Covenant | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Amortizable intangible assets, gross carrying amount | 2,514 | 2,514 |
Amortizable intangible assets, accumulated amortization | (1,553) | (1,419) |
Amortizable intangible assets, net carrying amount | 961 | 1,095 |
Trademarks and Trade Names | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Amortizable intangible assets, gross carrying amount | 13,030 | 10,709 |
Amortizable intangible assets, accumulated amortization | (6,858) | (6,630) |
Amortizable intangible assets, net carrying amount | $ 6,172 | $ 4,079 |
Amortization Expense of Intangi
Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Amortization expense – cost of revenue | $ 1,641 | $ 1,184 |
Amortization expense – operating expenses | 2,849 | 2,108 |
Total amortization expense | $ 4,490 | $ 3,292 |
Estimated Amortization Expense
Estimated Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Finite Lived Intangible Assets [Line Items] | ||
2017(remainder of year) | $ 12,889 | |
2,018 | 14,505 | |
2,019 | 11,932 | |
2,020 | 9,376 | |
2,021 | 8,403 | |
Thereafter | 34,231 | |
Amortizable intangible assets, net carrying amount | 91,336 | $ 48,716 |
Cost of Revenue | ||
Finite Lived Intangible Assets [Line Items] | ||
2017(remainder of year) | 4,943 | |
2,018 | 5,088 | |
2,019 | 4,605 | |
2,020 | 4,125 | |
2,021 | 3,664 | |
Thereafter | 13,222 | |
Amortizable intangible assets, net carrying amount | 35,647 | |
Operating Expenses | ||
Finite Lived Intangible Assets [Line Items] | ||
2017(remainder of year) | 7,946 | |
2,018 | 9,417 | |
2,019 | 7,327 | |
2,020 | 5,251 | |
2,021 | 4,739 | |
Thereafter | 21,009 | |
Amortizable intangible assets, net carrying amount | $ 55,689 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 43,457 | $ 39,822 |
Work-in-process | 10,218 | 8,012 |
Finished goods | 14,217 | 9,511 |
Demo and consigned inventory | 3,127 | 2,400 |
Total inventories | $ 71,019 | $ 59,745 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | Apr. 01, 2016 | Dec. 31, 2015 |
Other Liabilities Disclosure [Abstract] | ||||
Accrued compensation and benefits | $ 11,666 | $ 9,647 | ||
Accrued warranty | 3,925 | 3,142 | $ 3,248 | $ 3,335 |
Accrued restructuring | 1,032 | 1,371 | ||
Accrued professional services | 1,271 | 1,237 | ||
Accrued contingent considerations | 2,531 | 2,775 | ||
Customer deposits | 1,904 | 1,164 | ||
Other | 8,612 | 7,612 | ||
Total | $ 30,941 | $ 26,948 |
Accrued Warranty (Details)
Accrued Warranty (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Product Warranties Disclosures [Abstract] | ||
Balance at beginning of the period | $ 3,142 | $ 3,335 |
Provision charged to cost of revenue | 799 | 310 |
Acquisition related warranty accrual | 419 | |
Use of provision | (442) | (393) |
Foreign currency exchange rate changes | 7 | (4) |
Balance at end of period | $ 3,925 | $ 3,248 |
Summary of Other Long Term Liab
Summary of Other Long Term Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Other Liabilities Noncurrent [Abstract] | ||
Capital lease obligations | $ 8,007 | $ 8,111 |
Accrued pension liabilities | 5,711 | 5,957 |
Accrued contingent considerations | 2,381 | |
Other | 2,150 | 2,264 |
Total | $ 15,868 | $ 18,713 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Total current portion of long-term debt | $ 7,368 | $ 7,366 |
Total long-term debt | 110,865 | 70,554 |
Total Senior Credit Facilities | 118,233 | 77,920 |
Term Loans | ||
Debt Instrument [Line Items] | ||
Current portion of long-term debt, Gross | 7,500 | 7,500 |
Long-term debt, Gross | 61,875 | 63,750 |
Term Loan And Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Less: unamortized debt issuance costs | (132) | (134) |
Less: unamortized debt issuance costs | (3,010) | (3,196) |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Long-term debt, Gross | $ 52,000 | $ 10,000 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | May 19, 2016 | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 300,000,000 | ||
Debt instrument maturity period | 5 years | ||
Revolving credit facility maturity year | 2021-05 | ||
Term Loans | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 75,000,000 | ||
Quarterly installments payable on term loan | 1,900,000 | ||
Current portion of long-term debt | $ 7,500,000 | $ 7,500,000 | |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 225,000,000 |
Share-based Compensation - Shar
Share-based Compensation - Share-Based Compensation Expense Recorded In Income from Continuing Operations in Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 1,469 | $ 1,342 |
Selling, general and administrative | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 1,358 | 1,243 |
Research and development and engineering | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 43 | 25 |
Cost of Revenue | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 68 | $ 74 |
Share-based Compensation - Addi
Share-based Compensation - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Share-based compensation expense recognized | $ 1,469 | $ 1,342 |
Deferred Stock Units | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Share-based compensation expense recognized | $ 500 | $ 500 |
Service-based Restricted Stock Units (RSUs) | 2010 Incentive Award Plan | Tranche One | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Service-based Restricted Stock Units (RSUs) | 2010 Incentive Award Plan | Tranche Two | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Vesting period | 4 years | |
Service-based Restricted Stock Units (RSUs) | 2010 Incentive Award Plan | Tranche Three | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Vesting period | 5 years | |
Service-based Restricted Deferred Stock Units | 2010 Incentive Award Plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Total fair value of RSUs and DSUs vested | $ 4,700 | |
EPS Performance-based Restricted Stock Units | 2010 Incentive Award Plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Vesting period | 3 years | |
EPS Performance-based Restricted Stock Units | 2010 Incentive Award Plan | Minimum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Range of percentage of shares to be issued upon settlement following vesting of target number of shares | 0.00% | |
EPS Performance-based Restricted Stock Units | 2010 Incentive Award Plan | Maximum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Range of percentage of shares to be issued upon settlement following vesting of target number of shares | 200.00% | |
TSR Performance-based Restricted Stock Units | 2010 Incentive Award Plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Vesting period | 3 years | |
TSR Performance-based Restricted Stock Units | 2010 Incentive Award Plan | Minimum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Range of percentage of shares to be issued upon settlement following vesting of target number of shares | 0.00% | |
TSR Performance-based Restricted Stock Units | 2010 Incentive Award Plan | Maximum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Range of percentage of shares to be issued upon settlement following vesting of target number of shares | 200.00% | |
Stock Options | 2010 Incentive Award Plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock options, Granted | 0 |
Share-based Compensation - Rest
Share-based Compensation - Restricted Stock Units Issued and Outstanding (Details) - 2010 Incentive Award Plan - Service-based Restricted Stock Units (RSUs) shares in Thousands | 3 Months Ended |
Mar. 31, 2017$ / sharesshares | |
Restricted Stock Units | |
Unvested, Beginning Balance | 635 |
Granted | 220 |
Vested | (189) |
Forfeited | (1) |
Unvested, Ending Balance | 665 |
Expected to vest at end of period | 614 |
Weighted Average Grant Date Fair Value | |
Unvested, Beginning Balance | $ / shares | $ 13.97 |
Granted | $ / shares | 24 |
Vested | $ / shares | 13.87 |
Forfeited | $ / shares | 16.52 |
Unvested, Ending Balance | $ / shares | $ 17.32 |
Share-based Compensation - Perf
Share-based Compensation - Performance-Based Awards Issued and Outstanding (Details) - 2010 Incentive Award Plan - Performance-based Awards shares in Thousands | 3 Months Ended |
Mar. 31, 2017$ / sharesshares | |
Performance-based Awards | |
Unvested, Beginning Balance | shares | 29 |
Granted | shares | 60 |
Unvested, Ending Balance | shares | 89 |
Weighted Average Grant Date Fair Value | |
Unvested, Beginning Balance | $ / shares | $ 14.13 |
Granted | $ / shares | 28.81 |
Unvested, Ending Balance | $ / shares | $ 24 |
Share-based Compensation - Fair
Share-based Compensation - Fair Value of TSR Performance-Based Restricted Stock Units Estimated Using Monte-Carol Valuation Model (Details) - TSR Performance-based Restricted Stock Units | 3 Months Ended |
Mar. 31, 2017$ / shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Grant-date stock price | $ 24.30 |
Expected volatility | 28.60% |
Risk-free interest rate | 1.44% |
Expected annual dividend yield | 0.00% |
Weighted average fair value | $ 33.31 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Apr. 01, 2016 | Jan. 10, 2017 | |
Income Taxes [Line Items] | |||
Effective tax rate on income from operations | 3.10% | 14.50% | |
Gain on acquisition of business | $ 26,409 | ||
Deferred tax liability write off | $ 1,400 | ||
Favorable impact on effective tax rate, write off percentage | 24.50% | ||
Tax free cash dividend received | $ 2,300 | ||
Favorable impact on effective tax rate, percentage | 18.90% | ||
Laser Quantum | |||
Income Taxes [Line Items] | |||
Percentage of additional shares acquired | 35.00% | 35.00% | |
Canada Revenue Agency | CANADA | |||
Income Taxes [Line Items] | |||
Statutory tax rate | 29.00% | 27.00% |
Schedule of Restructuring, Acqu
Schedule of Restructuring, Acquisition and Divestiture Related Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Restructuring Cost And Reserve [Line Items] | ||
Total restructuring and divestiture charges | $ 37 | $ 2,712 |
Acquisition and related charges | 780 | 246 |
Total restructuring, acquisition and divestiture related costs | 817 | 2,958 |
2016 Restructuring | ||
Restructuring Cost And Reserve [Line Items] | ||
Total restructuring and divestiture charges | 33 | 2,500 |
2011 Restructuring | ||
Restructuring Cost And Reserve [Line Items] | ||
Total restructuring and divestiture charges | $ 4 | $ 212 |
Restructuring, Acquisition an65
Restructuring, Acquisition and Divestiture Related Costs - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2017 | Apr. 01, 2016 | |
Restructuring and Acquisition Related Costs [Line Items] | |||
Restructuring Costs | $ 37 | $ 2,712 | |
Proceeds from the sale of property, plant and equipment | 3,589 | ||
Acquisition and related charges | $ 800 | 300 | |
2016 Restructuring | |||
Restructuring and Acquisition Related Costs [Line Items] | |||
Restructuring plan | During the third quarter of 2015, the Company initiated the 2016 restructuring program, which included consolidating certain of our manufacturing operations to optimize our facility footprint and better utilize resources, costs associated with discontinuing our radiology product line and reducing redundant costs due to productivity cost savings and business volume reductions. We substantially completed the 2016 restructuring program during the second quarter of 2016. As of March 31, 2017, the Company incurred cumulative costs related to this restructuring plan totaling $6.2 million. The Company expects to incur additional restructuring charges of $0.2 million to $0.3 million related to the 2016 restructuring plan. | ||
Restructuring Costs | $ 33 | 2,500 | |
2016 Restructuring | Cumulative Restructuring Costs | |||
Restructuring and Acquisition Related Costs [Line Items] | |||
Restructuring Costs | 6,200 | ||
2016 Restructuring | Minimum | Additional Restructuring Costs | |||
Restructuring and Acquisition Related Costs [Line Items] | |||
Restructuring Costs | 200 | ||
2016 Restructuring | Maximum | Additional Restructuring Costs | |||
Restructuring and Acquisition Related Costs [Line Items] | |||
Restructuring Costs | $ 300 | ||
2011 Restructuring | |||
Restructuring and Acquisition Related Costs [Line Items] | |||
Restructuring plan | In November 2011, the Company announced a strategic initiative (“2011 restructuring”), which aimed to consolidate operations to reduce the Company’s cost structure and improve operational efficiency. As part of this initiative, the Company eliminated facilities through the consolidation of certain manufacturing, sales and distribution facilities and the exit of Semiconductor Systems and Laser Systems businesses. The Company substantially completed the 2011 restructuring program by the end of 2013. In March 2016, the Company sold its previously exited Laser Systems facility located in Orlando, Florida for cash at the net carrying value of $3.5 million. In December 2016, the lease agreement for the Company’s previously exited laser scanner business facility was terminated. | ||
Restructuring Costs | $ 4 | $ 212 | |
2011 Restructuring | Orlando Facility | |||
Restructuring and Acquisition Related Costs [Line Items] | |||
Proceeds from the sale of property, plant and equipment | $ 3,500 |
Summary of Restructuring Costs
Summary of Restructuring Costs for Each Segment and Unallocated Corporate and Shared Services (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Restructuring Cost And Reserve [Line Items] | ||
Restructuring Costs | $ 37 | $ 2,712 |
2016 Restructuring | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring Costs | 33 | 2,500 |
2016 Restructuring | Photonics | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring Costs | 469 | |
2016 Restructuring | Vision | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring Costs | 32 | 1,739 |
2016 Restructuring | Precision Motion | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring Costs | 87 | |
2016 Restructuring | Unallocated Corporate and Shared Services | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring Costs | $ 1 | $ 205 |
Summary of Accrual Activities b
Summary of Accrual Activities by Components Related to Company's Restructuring Charges (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Restructuring Cost And Reserve [Line Items] | |
Accrued expense beginning balance | $ 1,736 |
Restructuring charges | 37 |
Cash payments | (420) |
Accrued expense ending balance | 1,353 |
Severance | |
Restructuring Cost And Reserve [Line Items] | |
Accrued expense beginning balance | 611 |
Restructuring charges | 32 |
Cash payments | (281) |
Non-cash write-offs and other adjustments | 8 |
Accrued expense ending balance | 370 |
Facility | |
Restructuring Cost And Reserve [Line Items] | |
Accrued expense beginning balance | 1,111 |
Cash payments | (125) |
Non-cash write-offs and other adjustments | (8) |
Accrued expense ending balance | 978 |
Other Restructuring Charges | |
Restructuring Cost And Reserve [Line Items] | |
Accrued expense beginning balance | 14 |
Restructuring charges | 5 |
Cash payments | (14) |
Accrued expense ending balance | $ 5 |
Redeemable Noncontrolling Int68
Redeemable Noncontrolling Interest- Additional Information (Details) - Laser Quantum $ in Thousands, £ in Millions | Jan. 10, 2017USD ($) | Jan. 10, 2017GBP (£) | Dec. 31, 2016 |
Minority Interest [Line Items] | |||
Percentage of equity interest held before acquisition | 41.00% | 41.00% | 41.00% |
Percentage of equity interest held after acquisition | 76.00% | 76.00% | |
Initial fair value of noncontrolling interest | $ 21,582 | £ 17.7 |
Segment Information - Additiona
Segment Information - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2017Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Revenue, Gross Profit, Gross Pr
Revenue, Gross Profit, Gross Profit Margin and Operating Income (Loss) from Continuing Operations by Reportable Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Segment Reporting Information [Line Items] | ||
Revenue | $ 108,974 | $ 90,316 |
Gross Profit | $ 46,094 | $ 36,892 |
Gross profit margin percentage | 42.30% | 40.80% |
Operating Income (Loss) from Continuing Operations | $ 10,212 | $ 2,587 |
Photonics | ||
Segment Reporting Information [Line Items] | ||
Revenue | 50,736 | 40,358 |
Gross Profit | $ 21,789 | $ 17,997 |
Gross profit margin percentage | 42.90% | 44.60% |
Operating Income (Loss) from Continuing Operations | $ 8,080 | $ 6,856 |
Vision | ||
Segment Reporting Information [Line Items] | ||
Revenue | 32,762 | 28,862 |
Gross Profit | $ 13,146 | $ 9,579 |
Gross profit margin percentage | 40.10% | 33.20% |
Operating Income (Loss) from Continuing Operations | $ 1,525 | $ (3,771) |
Precision Motion | ||
Segment Reporting Information [Line Items] | ||
Revenue | 25,476 | 21,096 |
Gross Profit | $ 11,518 | $ 9,668 |
Gross profit margin percentage | 45.20% | 45.80% |
Operating Income (Loss) from Continuing Operations | $ 7,164 | $ 5,235 |
Unallocated Corporate and Shared Services | ||
Segment Reporting Information [Line Items] | ||
Gross Profit | (359) | (352) |
Operating Income (Loss) from Continuing Operations | $ (6,557) | $ (5,733) |
Depreciation and Amortization b
Depreciation and Amortization by Reportable Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Apr. 01, 2016 | |
Depreciation and Amortization | ||
Depreciation and amortization | $ 6,482 | $ 5,831 |
Photonics | ||
Depreciation and Amortization | ||
Depreciation and amortization | 3,244 | 1,544 |
Vision | ||
Depreciation and Amortization | ||
Depreciation and amortization | 2,437 | 3,100 |
Precision Motion | ||
Depreciation and Amortization | ||
Depreciation and amortization | 566 | 614 |
Unallocated Corporate and Shared Services | ||
Depreciation and Amortization | ||
Depreciation and amortization | $ 235 | $ 573 |