Axcelis (ACLS) 10-Q 5 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 31, 2015
Document and Entity Information
Entity Registrant Name	AXCELIS TECHNOLOGIES INC
Entity Central Index Key	1,113,232
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		114,279,081
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenue:
Product	$ 72,748	$ 34,795	$ 140,278	$ 89,810
Services	5,689	6,355	11,442	12,180
Total revenue	78,437	41,150	151,720	101,990
Cost of revenue:
Product	46,560	21,021	91,745	54,823
Services	4,703	5,645	9,421	10,943
Total cost of revenue	51,263	26,666	101,166	65,766
Gross profit	27,174	14,484	50,554	36,224
Operating expenses:
Research and development	7,899	8,845	16,098	18,102
Sales and marketing	5,858	5,037	11,486	10,513
General and administrative	6,231	6,494	12,332	12,975
Restructuring charges	8	160	18	360
Total operating expenses	19,996	20,536	39,934	41,950
Income (loss) from operations	7,178	(6,052)	10,620	(5,726)
Other (expense) income:
Interest income	6	2	9	4
Interest expense	(1,310)	(257)	(2,353)	(508)
Other, net	49	(362)	(384)	(70)
Total other expense	(1,255)	(617)	(2,728)	(574)
Income (loss) before income taxes	5,923	(6,669)	7,892	(6,300)
Income taxes	40	231	141	426
Net income (loss)	$ 5,883	$ (6,900)	$ 7,751	$ (6,726)
Net income (loss) per share
Basic (in dollars per share)	$ 0.05	$ (0.06)	$ 0.07	$ (0.06)
Diluted (in dollars per share)	$ 0.05	$ (0.06)	$ 0.06	$ (0.06)
Shares used in computing net income (loss) per share:
Basic weighted average common shares	113,784	111,212	113,470	110,932
Diluted weighted average common shares	120,612	111,212	119,900	110,932

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Consolidated Statements of Comprehensive Income (Loss)
Net income (loss)	$ 5,883	$ (6,900)	$ 7,751	$ (6,726)
Other comprehensive income (loss):
Foreign currency translation adjustments	329	759	(681)	82
Amortization of actuarial gains from pension plan	19	6	38	12
Total other comprehensive income (loss)	348	765	(643)	94
Comprehensive income (loss)	$ 6,231	$ (6,135)	$ 7,108	$ (6,632)

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 78,085	$ 30,753
Restricted cash		825
Accounts receivable, net	42,002	42,794
Inventories, net	122,001	104,063
Prepaid expenses and other current assets	8,650	6,700
Total current assets	250,738	185,135
Property, plant and equipment, net	29,951	30,464
Restricted cash	65
Other assets	14,559	12,055
Total assets	295,313	227,654
Current liabilities:
Accounts payable	38,849	21,605
Accrued compensation	5,262	4,232
Warranty	2,886	1,352
Income taxes	297	196
Deferred revenue	8,429	6,782
Current portion of long-term debt		14,530
Other current liabilities	4,620	3,401
Total current liabilities	60,343	52,098
Sale leaseback obligation	47,586
Long-term deferred revenue	455	449
Other long-term liabilities	6,539	6,755
Total liabilities	$ 114,923	$ 59,302
Commitments and contingencies (Note 13)
Stockholders' equity:
Preferred stock, $0.001 par value, 30,000 shares authorized; none issued or outstanding
Common stock, $0.001 par value, 300,000 shares authorized; 114,322 shares issued and 114,202 shares outstanding at June 30, 2015; 112,849 shares issued and 112,729 shares outstanding at December 31, 2014	$ 114	$ 113
Additional paid-in capital	523,997	519,068
Treasury stock, at cost, 120 shares at June 30, 2015 and December 31, 2014	(1,218)	(1,218)
Accumulated deficit	(343,136)	(350,887)
Accumulated other comprehensive income	633	1,276
Total stockholders' equity	180,390	168,352
Total liabilities and stockholders' equity	$ 295,313	$ 227,654

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Jun. 30, 2015	Dec. 31, 2014
Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	30,000	30,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	300,000	300,000
Common stock, shares issued	114,322	112,849
Common stock, shares outstanding	114,202	112,729
Treasury stock, shares	120	120

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities
Net income (loss)	$ 7,751	$ (6,726)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization	2,298	2,299
Deferred taxes	97	334
Stock-based compensation expense	3,055	2,182
Provision for excess and obsolete inventory	537	244
Changes in operating assets & liabilities:
Accounts receivable	516	4,493
Inventories	(19,381)	(10,917)
Prepaid expenses and other current assets	(2,205)	(1,334)
Accounts payable and other current liabilities	21,213	(3,860)
Deferred revenue	1,671	(377)
Income taxes	104	13
Other assets and liabilities	(3,888)	1,794
Net cash provided by (used for) operating activities	11,768	(11,855)
Cash flows from investing activities
Expenditures for property, plant, and equipment	(672)	(567)
Net cash used for investing activities	(672)	(567)
Cash flows from financing activities
Decrease in restricted cash	760
Financing fees and other expenses	(847)
Principal payments on term loan	(14,530)
Principal payments on sale leaseback obligation	(392)
Proceeds from sale leaseback obligation	48,940
Proceeds from exercise of stock options	1,665	1,583
Proceeds from Employee Stock Purchase Plan	213	227
Net cash provided by financing activities	35,809	1,810
Effect of exchange rate changes on cash and cash equivalents	427	(90)
Net increase/(decrease) in cash and cash equivalents	47,332	(10,702)
Cash and cash equivalents at beginning of period	30,753	46,290
Cash and cash equivalents at end of period	$ 78,085	$ 35,588

Nature of Business

Nature of Business	6 Months Ended
	Jun. 30, 2015
Nature of Business
Nature of Business	Note 1. Nature of Business Axcelis Technologies, Inc. (“Axcelis” or the “Company”) was incorporated in Delaware in 1995, and is a worldwide producer of ion implantation and other processing equipment used in the fabrication of semiconductor chips in the United States, Europe and Asia. In addition, the Company provides extensive aftermarket service and support, including spare parts, equipment upgrades and maintenance services to the semiconductor industry. The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments which are of a normal recurring nature and considered necessary for a fair presentation of these financial statements have been included. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for other interim periods or for the year as a whole. The balance sheet at December 31, 2014 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Axcelis Technologies, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014.

Stock-Based Compensation

Stock-Based Compensation	6 Months Ended
	Jun. 30, 2015
Stock-Based Compensation
Stock-Based Compensation	Note 2. Stock-Based Compensation The Company maintains the Axcelis Technologies, Inc. 2012 Equity Incentive Plan (the “2012 Equity Plan”), which became effective on May 2, 2012, and permits the issuance of options, restricted stock, restricted stock units and performance awards to selected employees, directors and consultants of the Company. The Company’s 2000 Stock Plan (the “2000 Stock Plan”), expired on May 1, 2012 and no new grants may be made under that plan after that date. However, unexpired awards granted under the 2000 Stock Plan remain outstanding and subject to the terms of the 2000 Stock Plan. The Company also maintains the Axcelis Technologies, Inc. Employee Stock Purchase Plan (the “ESPP”), an Internal Revenue Code Section 423 plan. The 2012 Equity Plan and the ESPP are more fully described in Note 13 to the consolidated financial statements in the Company’s 2014 Annual Report on Form 10-K. The Company recognized stock-based compensation expense of $1.9 million for the three-month period ended June 30, 2015, which included $1.1 million of expense due to accelerated vesting. There are no remaining stock option grants containing an acceleration clause. The Company recognized $1.0 million for the three-month period ended June 30, 2014. The Company recognized stock-based compensation expense of $3.1 million and $2.2 million for the six-month periods ended June 30, 2015 and 2014, respectively. These amounts include compensation expense related to restricted stock units, non-qualified stock options and stock to be issued to participants under the ESPP.

Sale of Corporate Headquarters

Sale of Corporate Headquarters and Related Leaseback	6 Months Ended
	Jun. 30, 2015
Sale of Corporate Headquarters and Related Leaseback
Sale of Corporate Headquarters and Related Leaseback	Note 3. Sale of Corporate Headquarters and Related Leaseback On January 30, 2015, the Company sold its corporate headquarters facility to Beverly Property Owner LLC (“Beverly Properties”), an affiliate of Middleton Partners, based in Northbrook, Illinois, for the purchase price of $48.9 million. As part of this sale, the Company also entered into a 22-year lease agreement with Beverly Properties, with the right to extend the term of the lease for five successive periods of five years each. The Company will pay rent of $4.7 million for the first year of the lease, with increased annual rent payments thereafter that will increase to $7.3 million in year twenty-two. At the time of this sale, the Company discharged the outstanding term loan of $14.4 million, the related accrued interest and paid a pre-payment penalty to Northern Bank and Trust Company for a total payment of $14.8 million. The Company accounted for the sale leaseback transaction as a financing arrangement for financial reporting purposes due to continuing involvement in association with the $5.9 million collateralized letter of credit requirement. See Note 10 for further discussion. As such, at the time of sale, the Company recorded a financing obligation in the amount of $48.9 million, less a pre-paid rent amount of $0.4 million, for a net liability of $48.5 million. Upon the adoption of Accounting Standards Update 2015-03, the Company reduced the carrying value of the financing obligation for debt issuance costs related to this transaction by $0.9 million, for a net liability of $47.6 million. See Note 14 for discussion regarding the adoption of this update. The Company classified the liability as long-term due to initial rent payments relating only to interest with future principal payments occurring outside of one year. The Company retained the historical costs of the property and the related accumulated depreciation on its financial books within property, plant and equipment and will continue to depreciate the property for financial reporting purposes over the remaining useful life as originally determined. The associated lease payments, less the portion considered to decrease the financing liability, will be recorded as interest expense using the effective interest method. The implicit interest rate on the associated cash flows during the initial 22 year lease term is 10.65%. See Note 13 for the schedule of contractual lease payments relating to the lease obligation. The Company does not anticipate any federal or state tax liability associated with the taxable gain on the sale of the building due to its current level of net operating loss carry forwards and has not provided for any federal or state tax expense.

Computation of Net Earnings (Lo

Computation of Net Earnings (Loss) per Share	6 Months Ended
	Jun. 30, 2015
Computation of Net Earnings (Loss) per Share
Computation of Net Earnings (Loss) per Share	Note 4. Computation of Net Earnings (Loss) per Share Basic earnings (loss) per share is computed by dividing income (loss) available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period. The computation of diluted earnings (loss) per share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares issuable on stock options, restricted stock units and employee stock purchase plan accounts had been issued, calculated using the treasury stock method. The components of net earnings (loss) per share are as follows: Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 (in thousands, except per share data) Net income (loss) available to common stockholders $ $ ) $ $ ) Weighted average common shares outstanding used in computing basic earnings (loss) per share Incremental options and RSUs — — Weighted average common shares outstanding used in computing diluted net earnings (loss) per share Net earnings (loss) per share Basic $ $ ) $ $ ) Diluted $ $ ) $ $ ) The Company incurred net losses for the three and six-month periods ended June 30, 2014, and has excluded the incremental shares attributable to outstanding stock options, and restricted stock units and employee stock purchase plan accounts from the calculation of net loss per share because the effect would have been anti-dilutive. The following table sets forth the number of incremental shares excluded from the calculation above: Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 (in thousands) Incremental shares excluded from the calculation of net loss per share — —

Accumulated Other Comprehensive

Accumulated Other Comprehensive Income (Loss)	6 Months Ended
	Jun. 30, 2015
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)	Note 5. Accumulated Other Comprehensive Income (Loss) The following table presents the changes in accumulated other comprehensive income (loss), net of tax, by component for the six months ended June 30, 2015: Foreign currency Defined benefit pension plan Total (in thousands) Balance at December 31, 2014 $ $ ) $ Other comprehensive income (loss) ) ) Balance at June 30, 2015 $ $ ) $

Inventories, net

Inventories, net	6 Months Ended
	Jun. 30, 2015
Inventories, net
Inventories, net	Note 6. Inventories, net The components of inventories are as follows: June 30, December 31, 2015 2014 (in thousands) Raw materials $ $ Work in process Finished goods (completed systems) $ $ When recorded, inventory reserves are intended to reduce the carrying value of inventories to their net realizable value. The Company establishes inventory reserves when conditions exist that indicate inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand for the Company’s products or market conditions. The Company regularly evaluates the ability to realize the value of inventories based on a combination of factors including the following: forecasted sales or usage, estimated product end of life dates, estimated current and future market value and new product introductions. Purchasing and usage alternatives are also explored to mitigate inventory exposure. As of June 30, 2015 and December 31, 2014, inventories are stated net of inventory reserves of $17.6 million and $23.6 million, respectively.

Restructuring Charges

Restructuring Charges	6 Months Ended
	Jun. 30, 2015
Restructuring Charges.
Restructuring Charges	Note 7. Restructuring Charges In 2014, the Company had severance and other costs related to reductions in force. Changes in the Company’s restructuring liability, which consist primarily of severance and related costs, included in amounts reported as other current liabilities, are as follows: (in thousands) Balance at December 31, 2014 $ Severance and related costs Cash payments ) Balance at June 30, 2015 $

Product Warranty

Product Warranty	6 Months Ended
	Jun. 30, 2015
Product Warranty
Product Warranty	Note 8. Product Warranty The Company generally offers a one year warranty for all of its systems, the terms and conditions of which vary depending upon the product sold. For all systems sold, the Company accrues a liability for the estimated cost of standard warranty at the time of system shipment and defers the portion of systems revenue attributable to the fair value of non-standard warranty. Costs for non-standard warranty are expensed as incurred. Factors that affect the Company’s warranty liability include the number of installed units, historical and anticipated product failure rates, material usage and service labor costs. The Company periodically assesses the adequacy of its recorded liability and adjusts the amount as necessary. The changes in the Company’s standard product warranty liability are as follows: Six months ended June 30, 2015 2014 (in thousands) Balance at January 1 (beginning of year) $ $ Warranties issued during the period Settlements made during the period ) ) Changes in estimate of liability for pre-existing warranties during the period Balance at June 30 (end of period) $ $ Amount classified as current $ $ Amount classified as long-term Total warranty liability $ $

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Jun. 30, 2015
Fair Value Measurements
Fair Value Measurements	Note 9. Fair Value Measurements Certain of the assets and liabilities on the Company’s balance sheets are reported at their “Fair Value”. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. (a) Fair Value Hierarchy The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows: Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. (b) Fair Value Measurements The Company’s money market funds are included in cash and cash equivalents in the consolidated balance sheets and are considered a level 1 investment as they are valued at quoted market prices in active markets. The Company’s sale leaseback obligation relating to the sale of our corporate headquarters is carried at amortized cost, which approximates fair value based on an implied borrowing rate of 10.65%. The underlying cash flow associated with our lease payments is being applied to both an interest and principal component using the effective interest method over the associated lease term. The liability is categorized as level 3 within the fair value hierarchy. The Company’s term loan was carried at amortized cost, which approximated fair value, based on current market pricing of similar debt instruments and was categorized as level 2 within the fair value hierarchy. The following table sets forth the Company’s assets and liabilities by level within the fair value hierarchy: June 30, 2015 Fair Value Measurements Level 1 Level 2 Level 3 Total (in thousands) Assets Cash equivalents: Money market funds $ $ — $ — $ Liabilities Sale leaseback obligation $ — $ — $ $ December 31, 2014 Fair Value Measurements Level 1 Level 2 Level 3 Total (in thousands) Assets Cash equivalents: Money market funds $ $ — $ — $ Liabilities Term loan $ — $ $ — $ (c) Other Financial Instruments The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents (which are comprised primarily of deposit and investment accounts), accounts receivable, prepaid expenses and other current and non-current assets, accounts payable and accrued expenses approximate fair value due to their short-term maturities.

Financing Arrangements

Financing Arrangements	6 Months Ended
	Jun. 30, 2015
Financing Arrangements
Financing Arrangements	Note 10. Financing Arrangements Term Loan On February 2, 2015, in connection with the sale of our headquarters facility, the Company repaid the outstanding balance on a term loan from Northern Bank and Trust Company of $14.4 million and related accrued interest of $0.1 million as well as a 2.0% prepayment penalty of $0.3 million for a total payment of $14.8 million. See Note 3 above for further discussion. Sale Leaseback Obligation On January 30, 2015, the Company sold its corporate headquarters facility to Beverly Property Owner LLC, an affiliate of Middleton Partners, based in Northbrook, Illinois, for the purchase price of $48.9 million. As part of the sale, the Company also entered into a 22-year lease agreement with Beverly Properties. The sale leaseback is accounted for as a financing arrangement for financial reporting and, as such, the Company has recorded a financing obligation of $47.6 million as of June 30, 2015. The associated lease payments will include both an interest component and payment of principal, with the underlying liability being extinguished at the end of the original lease term. The Company posted a collateralized security deposit of $5.9 million in the form of an irrevocable letter of credit at the time of the closing. See Note 3 above for further discussion. Credit Facility The Company has a revolving credit facility with Silicon Valley Bank dated October 31, 2013. Under this revolving credit facility, the Company has the ability to borrow up to $10.0 million on a revolving basis during its two year term. The Company’s ability to borrow under this line of credit is limited to 80% of the then current amount of qualified accounts receivable. As of June 30, 2015, the Company had not drawn down on the line of credit, although a portion of the availability is being used to support outstanding letters of credit in the amount of $6.9 million, which includes the $5.9 million associated to the security deposit for the sale leaseback transaction. At June 30, 2015, the Company’s available borrowing capacity under the revolving credit facility was $3.1 million. The Company was in compliance with all covenants associated with the credit facility during the second quarter of 2015.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2015
Income Taxes
Income Taxes	Note 11. Income Taxes Income tax expense relates principally to operating results of foreign subsidiaries in Europe and Asia, where the Company earns taxable income and does not have offsetting net operating loss carryforwards. The Company has significant net operating loss carryforwards available to offset income taxes in the U.S. and certain foreign tax jurisdictions and, as a result, has not provided for significant income taxes in those jurisdictions. As of December 31, 2014, the Company had deferred tax assets related to the U.S. of approximately $140.0 million. The Company maintains a 100% valuation allowance to reduce the carrying value of these deferred tax assets to zero because the Company is in a three year cumulative loss position in the United States. The Company will continue to maintain a full valuation allowance for these tax assets until sustainable future levels of profitability are evident. See Note 3 above relating to the potential effect associated with the taxable gain on the sale of the Company’s corporate headquarters.

Concentration of Risk

Concentration of Risk	6 Months Ended
	Jun. 30, 2015
Concentration of Risk
Concentration of Risk	Note 12. Concentration of Risk For the three months ended June 30, 2015, a customer accounted for 29.9%, and a second customer accounted for 10.0%, of consolidated revenue. For the six months ended June 30, 2015, one customer accounted for 33.1% of consolidated revenue. For the three months ended June 30, 2014, a customer accounted for 15.9%, and a second customer accounted for 11.1%, of consolidated revenue. For the six months ended June 30, 2014, a customer accounted for 24.5%, and a second customer accounted for 12.5%, of consolidated revenue. At June 30, 2015, a customer accounted for 18.1%, a second customer accounted for 17.0%, a third customer accounted for 14.3%, and a fourth customer accounted for 10.5%, of consolidated accounts receivable. At December 31, 2014, a customer accounted for 21.7%, and a second customer accounted for 20.4%, of consolidated accounts receivable.

Contingencies

Contingencies	6 Months Ended
	Jun. 30, 2015
Contingencies
Contingencies	Note 13. Contingencies (a) Litigation The Company is not presently a party to any litigation that it believes might have a material adverse effect on its business operations. The Company is, from time to time, a party to litigation that arises in the normal course of its business operations. (b) Indemnifications The Company’s system sales agreements typically include provisions under which the Company agrees to take certain actions, provide certain remedies and defend its customers against third-party claims of intellectual property infringement under specified conditions and to indemnify customers against any damage and costs awarded in connection with such claims. The Company has not incurred any material costs as a result of such indemnifications and has not accrued any liabilities related to such obligations in the accompanying consolidated financial statements. (c) Lease Commitments In addition to the lease commitments as described within Note 16 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for our year ending December 31, 2014, in January 2015, the Company entered into a 22-year lease agreement relating to our corporate headquarters in Beverly, Massachusetts. The following table relates to the cash payment schedule associated with our lease obligation as of June 30, 2015: Lease Obligation (in thousands) 2015 $ 2016 2017 2018 2019 Thereafter Total lease payments $ Less interest portion ) Sale leaseback obligation $

Recent Accounting Guidance

Recent Accounting Guidance	6 Months Ended
	Jun. 30, 2015
Recent Accounting Guidance
Recent Accounting Guidance	Note 14. Recent Accounting Guidance Accounting Standards or Updates Recently Adopted In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs . The amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For public business entities, the amendments in this Update are effective for the financial statements issued for fiscal years beginning after December 15, 2015, and the interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted for financial statements that have not been previously issued and shall be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. The Company adopted ASU No. 2015-03, effective on January 1, 2015. Our balance sheet at December 31, 2014 was not retrospectively adjusted, due to the immateriality of the effect of the adoption of this ASU. The Company’s balance sheet presentation as of June 30, 2015 netted all capitalized costs associated with our lease obligation. See Note 3 above regarding the amounts recognized relating to the lease obligation. Accounting Standards or Updates Not Yet Effective In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers,” which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB voted to defer for one year the effective date, which is now for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period with early adoption permitted as of January 1, 2017. We are currently assessing the potential impact the adoption of this standard will have on our financial statements. In July 2015, the FASB issued ASU No. 205-11, “Simplifying the Measurement of Inventory,” which changes the inventory measurement principles for entities using the first-in, first-out (FIFO) or average cost methods. For entities utilizing one of these methods, the inventory measurement principle will change from lower of cost or market to the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the reasonably predictable costs of completion, disposal and transportation. The amendments are effective for annual and interim periods beginning after December 15, 2016. We are currently assessing the potential impact the adoption of this standard will have on our financial statements.

Computation of Net Earnings (21

Computation of Net Earnings (Loss) per Share (Tables)	6 Months Ended
	Jun. 30, 2015
Computation of Net Earnings (Loss) per Share
Schedule of components of net loss per share	Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 (in thousands, except per share data) Net income (loss) available to common stockholders $ $ ) $ $ ) Weighted average common shares outstanding used in computing basic earnings (loss) per share Incremental options and RSUs — — Weighted average common shares outstanding used in computing diluted net earnings (loss) per share Net earnings (loss) per share Basic $ $ ) $ $ ) Diluted $ $ ) $ $ )
Schedule of the number of incremental shares excluded from the calculation of net loss per share	Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 (in thousands) Incremental shares excluded from the calculation of net loss per share — —

Accumulated Other Comprehensi22

Accumulated Other Comprehensive Income (Loss) (Tables)	6 Months Ended
	Jun. 30, 2015
Accumulated Other Comprehensive Income (Loss)
Schedule of changes in accumulated other comprehensive income (loss), net of tax	Foreign currency Defined benefit pension plan Total (in thousands) Balance at December 31, 2014 $ $ ) $ Other comprehensive income (loss) ) ) Balance at June 30, 2015 $ $ ) $

Inventories, net (Tables)

Inventories, net (Tables)	6 Months Ended
	Jun. 30, 2015
Inventories, net
Schedule of components of inventories	June 30, December 31, 2015 2014 (in thousands) Raw materials $ $ Work in process Finished goods (completed systems) $ $

Restructuring Charges (Tables)

Restructuring Charges (Tables)	6 Months Ended
	Jun. 30, 2015
Restructuring Charges.
Schedule of changes in restructuring liability	(in thousands) Balance at December 31, 2014 $ Severance and related costs Cash payments ) Balance at June 30, 2015 $

Product Warranty (Tables)

Product Warranty (Tables)	6 Months Ended
	Jun. 30, 2015
Product Warranty
Schedule of standard product warranty liability	Six months ended June 30, 2015 2014 (in thousands) Balance at January 1 (beginning of year) $ $ Warranties issued during the period Settlements made during the period ) ) Changes in estimate of liability for pre-existing warranties during the period Balance at June 30 (end of period) $ $ Amount classified as current $ $ Amount classified as long-term Total warranty liability $ $

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	6 Months Ended
	Jun. 30, 2015
Fair Value Measurements
Schedule of Company's assets and liabilities by level within the fair value hierarchy	June 30, 2015 Fair Value Measurements Level 1 Level 2 Level 3 Total (in thousands) Assets Cash equivalents: Money market funds $ $ — $ — $ Liabilities Sale leaseback obligation $ — $ — $ $ December 31, 2014 Fair Value Measurements Level 1 Level 2 Level 3 Total (in thousands) Assets Cash equivalents: Money market funds $ $ — $ — $ Liabilities Term loan $ — $ $ — $

Contingencies (Tables)

Contingencies (Tables)	6 Months Ended
	Jun. 30, 2015
Contingencies
Cash payment schedule associated with lease obligation	Lease Obligation (in thousands) 2015 $ 2016 2017 2018 2019 Thereafter Total lease payments $ Less interest portion ) Sale leaseback obligation $

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) item in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015USD ($)shares	Jun. 30, 2014USD ($)	Jun. 30, 2015USD ($)itemshares	Jun. 30, 2014USD ($)
Stock-Based Compensation
Stock-based compensation expense (in dollars)	$ 1.9	$ 1	$ 3.1	$ 2.2
Accelerated compensation expenses		$ 1.1
Stock award plans and stock-based compensation
Number of remaining stock options grants containing an acceleration clause | item			0
2000 Stock Plan
Stock award plans and stock-based compensation
Number of shares of common stock available for future grant | shares	0		0

Sale of Corporate Headquarter29

Sale of Corporate Headquarters and Related Leaseback (Details) $ in Thousands	Feb. 02, 2015USD ($)	Jan. 30, 2015USD ($)period	Jun. 30, 2015USD ($)
Sale of assets
2,015			$ 2,350
Repayment of debt			14,530
Sale leaseback obligation			47,586
Beverly Property Owner LLC
Sale of assets
Lease term		22 years
Buildings | Beverly Property Owner LLC | Sale and Leaseback
Sale of assets
Purchase price		$ 48,900
Lease term		22 years
Number of successive periods | period		5
Extension for term of lease		5 years
2,015		$ 4,700
Annual lease payments beginning in year twenty-two		7,300
Security deposit		5,900
Financing obligation, gross		48,900
Pre-paid rent related to financial obligation		400
Sale leaseback obligation		$ 48,500	$ 47,600
Implicit interest rate on associated cash flows		10.65%
Buildings | Beverly Property Owner LLC | Sale and Leaseback | Accounting Standards Update 2015-03
Sale of assets
Deferred asset for debt issuance costs reduced		$ 900
Sale leaseback obligation		47,600
Term Loan
Sale of assets
Repayment of debt	$ 14,400	14,400
Total payment	$ 14,800	$ 14,800

Computation of Net Earnings (30

Computation of Net Earnings (Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Computation of Net Earnings (Loss) per Share
Net income (loss) available to common stockholders	$ 5,883	$ (6,900)	$ 7,751	$ (6,726)
Weighted average common shares outstanding used in computing basic earning (loss) per share	113,784	111,212	113,470	110,932
Incremental options and RSUs	6,828		6,430
Weighted average common shares outstanding used in computing diluted net earnings (loss) per share	120,612	111,212	119,900	110,932
Net earnings (loss) per share
Basic	$ 0.05	$ (0.06)	$ 0.07	$ (0.06)
Diluted	$ 0.05	$ (0.06)	$ 0.06	$ (0.06)
Incremental shares excluded from the calculation of net loss per share (in shares)		4,047		4,625

Accumulated Other Comprehensi31

Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Changes in accumulated other comprehensive income, net of tax
Balance at the beginning of period			$ 1,276
Other comprehensive income (loss)	$ 348	$ 765	(643)	$ 94
Balance at the end of period	633		633
Foreign currency
Changes in accumulated other comprehensive income, net of tax
Balance at the beginning of period			1,920
Other comprehensive income (loss)			(681)
Balance at the end of period	1,239		1,239
Defined benefit pension plan
Changes in accumulated other comprehensive income, net of tax
Balance at the beginning of period			(644)
Other comprehensive income (loss)			38
Balance at the end of period	$ (606)		$ (606)

Inventories, net (Details)

Inventories, net (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Inventories, net
Raw materials	$ 74,245	$ 65,723
Work in process	33,277	22,358
Finished goods (completed systems)	14,479	15,982
Inventories, net	122,001	104,063
Inventory reserves	$ 17,600	$ 23,600

Restructuring Charges (Details)

Restructuring Charges (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Changes in restructuring liability
Severance and related costs	$ 8	$ 160	$ 18	$ 360
Severance
Changes in restructuring liability
Balance at the beginning of the period			481
Severance and related costs			18
Cash payments			(479)
Balance at the end of the period	$ 20		$ 20

Product Warranty (Details)

Product Warranty (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Product Warranty
Product warranty period	1 year
Changes in standard product warranty liability
Balance at the beginning of the period	$ 1,526	$ 1,428
Warranties issued during the period	2,230	832
Settlements made during the period	(1,020)	(978)
Changes in estimate of liability for pre-existing warranties during the period	344	79
Balance at the end of the period	3,080	1,361
Product warranty classification
Amount classified as current			$ 2,886	$ 1,352	$ 1,326
Amount classified as long-term			194		35
Total warranty liability	$ 1,526	$ 1,428	$ 3,080	$ 1,526	$ 1,361

Fair Value Measurements (Detail

Fair Value Measurements (Details) - USD ($) $ in Thousands	5 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Sale and Leaseback
Fair Value Measurements
Implicit interest rate on associated cash flows	10.65%
Recurring | Total | Sale and Leaseback
Fair Value Measurements
Sale leaseback obligation/Term loan	$ 47,586
Recurring | Total | Term Loan
Fair Value Measurements
Sale leaseback obligation/Term loan		$ 14,530
Recurring | Total | Money market funds
Fair Value Measurements
Money market funds	62,959	7,004
Recurring | Level 1 | Money market funds
Fair Value Measurements
Money market funds	62,959	7,004
Recurring | Level 2 | Term Loan
Fair Value Measurements
Sale leaseback obligation/Term loan		$ 14,530
Recurring | Level 3 | Sale and Leaseback
Fair Value Measurements
Sale leaseback obligation/Term loan	$ 47,586

Financing Arrangements (Details

Financing Arrangements (Details) - USD ($) $ in Thousands	Feb. 02, 2015	Jan. 30, 2015	Oct. 31, 2013	Jun. 30, 2015
Financing Arrangements
Repayment of debt				$ 14,530
Sale leaseback obligation				47,586
Beverly Property Owner LLC
Financing Arrangements
Lease term		22 years
Beverly Property Owner LLC | Sale and Leaseback | Buildings
Financing Arrangements
Purchase price		$ 48,900
Lease term		22 years
Sale leaseback obligation		$ 48,500		47,600
Security deposit		5,900
Term Loan
Financing Arrangements
Repayment of debt	$ 14,400	14,400
Accrued interest related to repayment of outstanding loan	$ 100
Prepayment penalty (as a percent)	2.00%
Prepayment penalty	$ 300
Total payment	$ 14,800	$ 14,800
Revolving credit facility
Financing Arrangements
Maximum borrowing capacity under the credit facility			$ 10,000
Term			2 years
Availability used to support outstanding letters of credit				6,900
Available borrowing capacity under the credit facility				3,100
Revolving credit facility | Maximum
Financing Arrangements
Limitation on ability to borrow expressed as a percentage of the then current amount of qualified accounts receivable			80.00%
Revolving credit facility | Sale and Leaseback
Financing Arrangements
Security deposit				$ 5,900

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Valuation allowance
Deferred tax assets valuation allowance		$ 140
Percentage of valuation allowance	100.00%
Deferred tax assets, net of valuation allowance	$ 0
United States
Valuation allowance
Period of cumulative loss position	3 years

Concentration of Risk (Details)

Concentration of Risk (Details) - item	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Revenue | Customer concentration risk
Concentration of risk
Number of customers				1
Revenue | Customer concentration risk | One customer
Concentration of risk
Percentage of concentration risk	29.90%	15.90%	33.10%	33.10%	24.50%
Revenue | Customer concentration risk | Second customer
Concentration of risk
Percentage of concentration risk	10.00%	11.10%			12.50%
Consolidated accounts receivable | Credit concentration risk | One customer
Concentration of risk
Percentage of concentration risk				18.10%		21.70%
Consolidated accounts receivable | Credit concentration risk | Second customer
Concentration of risk
Percentage of concentration risk				17.00%		20.40%
Consolidated accounts receivable | Credit concentration risk | Third customer
Concentration of risk
Percentage of concentration risk				14.30%
Consolidated accounts receivable | Credit concentration risk | Fourth customer
Concentration of risk
Percentage of concentration risk				10.50%

Contingencies (Details)

Contingencies (Details) - USD ($) $ in Thousands	Jan. 30, 2015	Jun. 30, 2015
Lease Obligation
2,015		$ 2,350
2,016		4,815
2,017		5,315
2,018		5,470
2,019		5,594
Thereafter		109,567
Total lease payments		133,111
Less interest portion		(85,525)
Sales leaseback obligation		$ 47,586
Beverly Property Owner LLC
Lease Commitments
Lease term	22 years