Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
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 | Sep. 30, 2017 | |
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 | 31,413,168 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue: | ||||
Product | $ 98,161 | $ 59,302 | $ 276,678 | $ 180,336 |
Services | 6,321 | 6,348 | 17,487 | 17,286 |
Total revenue | 104,482 | 65,650 | 294,165 | 197,622 |
Cost of revenue: | ||||
Product | 58,056 | 36,360 | 162,542 | 111,262 |
Services | 6,675 | 5,186 | 18,096 | 13,709 |
Total cost of revenue | 64,731 | 41,546 | 180,638 | 124,971 |
Gross profit | 39,751 | 24,104 | 113,527 | 72,651 |
Operating expenses: | ||||
Research and development | 11,003 | 8,493 | 32,154 | 25,607 |
Sales and marketing | 6,801 | 5,992 | 21,335 | 17,742 |
General and administrative | 8,112 | 5,988 | 22,960 | 18,262 |
Restructuring charges | 282 | |||
Total operating expenses | 25,916 | 20,473 | 76,449 | 61,893 |
Income from operations | 13,835 | 3,631 | 37,078 | 10,758 |
Other (expense) income: | ||||
Interest income | 219 | 53 | 399 | 161 |
Interest expense | (1,337) | (1,342) | (3,784) | (3,727) |
Other, net | 138 | (55) | (352) | |
Total other expense | (980) | (1,344) | (3,385) | (3,918) |
Income before income taxes | 12,855 | 2,287 | 33,693 | 6,840 |
Income tax provision (benefit) | 1,014 | 136 | (1,586) | (196) |
Net income | $ 11,841 | $ 2,151 | $ 35,279 | $ 7,036 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.38 | $ 0.07 | $ 1.15 | $ 0.24 |
Diluted (in dollars per share) | $ 0.35 | $ 0.07 | $ 1.07 | $ 0.23 |
Shares used in computing net income per share: | ||||
Basic weighted average common shares | 31,274 | 29,221 | 30,550 | 29,118 |
Diluted weighted average common shares | 33,524 | 31,037 | 33,048 | 30,760 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Consolidated Statements of Comprehensive Income | ||||
Net income | $ 11,841 | $ 2,151 | $ 35,279 | $ 7,036 |
Other comprehensive income: | ||||
Foreign currency translation adjustments | 524 | 936 | 2,928 | 1,529 |
Amortization of actuarial gains and other adjustments from pension plan | 32 | 26 | 89 | 78 |
Total other comprehensive income | 556 | 962 | 3,017 | 1,607 |
Comprehensive income | $ 12,397 | $ 3,113 | $ 38,296 | $ 8,643 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 113,889 | $ 70,791 |
Accounts receivable, net | 69,835 | 50,573 |
Inventories, net | 123,441 | 113,853 |
Prepaid expenses and other current assets | 7,466 | 5,512 |
Total current assets | 314,631 | 240,729 |
Property, plant and equipment, net | 35,704 | 30,840 |
Long-term restricted cash | 6,799 | 6,864 |
Other assets | 25,971 | 23,798 |
Total assets | 383,105 | 302,231 |
Current liabilities: | ||
Accounts payable | 33,594 | 24,996 |
Accrued compensation | 15,829 | 5,142 |
Warranty | 4,154 | 2,426 |
Income taxes | 285 | 240 |
Deferred revenue | 14,447 | 10,335 |
Other current liabilities | 5,388 | 4,592 |
Total current liabilities | 73,697 | 47,731 |
Sale leaseback obligation | 47,704 | 47,586 |
Long-term deferred revenue | 1,985 | 674 |
Other long-term liabilities | 5,317 | 4,785 |
Total liabilities | 128,703 | 100,776 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 30,000 shares authorized; none issued or outstanding | ||
Common stock, $0.001 par value, 75,000 shares authorized; 31,433 shares issued and outstanding at September 30, 2017; 29,518 shares issued and outstanding at December 31, 2016 | 31 | 30 |
Additional paid-in capital | 550,058 | 535,408 |
Accumulated deficit | (296,425) | (331,704) |
Accumulated other comprehensive income (loss) | 738 | (2,279) |
Total stockholders' equity | 254,402 | 201,455 |
Total liabilities and stockholders' equity | $ 383,105 | $ 302,231 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
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 | 75,000 | 75,000 |
Common stock, shares issued | 31,433 | 29,518 |
Common stock, shares outstanding | 31,433 | 29,518 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities | ||
Net income | $ 35,279 | $ 7,036 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 3,752 | 3,193 |
Gain on sale of equipment | (162) | |
Deferred taxes | (2,076) | 465 |
Stock-based compensation expense | 4,325 | 3,930 |
Provision for doubtful accounts | 106 | |
Provision for excess and obsolete inventory | 1,547 | 1,142 |
Changes in operating assets & liabilities: | ||
Accounts receivable | (18,374) | (7,898) |
Inventories | (8,237) | (7,534) |
Prepaid expenses and other current assets | (1,645) | (58) |
Accounts payable and other current liabilities | 21,345 | (4,120) |
Deferred revenue | 5,353 | (704) |
Income taxes | 34 | 85 |
Other assets and liabilities | (981) | (8,494) |
Net cash provided by (used in) operating activities | 40,322 | (13,013) |
Cash flows from investing activities | ||
Proceeds from sale of equipment | 162 | |
Expenditures for property, plant and equipment and capitalized software | (6,910) | (2,261) |
Net cash used in investing activities | (6,910) | (2,099) |
Cash flows from financing activities | ||
Net settlement on restricted stock grants | (1,134) | (2) |
Financing fees and other expenses | (146) | |
Proceeds from Employee Stock Purchase Plan | 349 | |
Proceeds from exercise of stock options | 11,112 | 1,737 |
Net cash provided by financing activities | 10,327 | 1,589 |
Effect of exchange rate changes on cash and cash equivalents | (706) | 186 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 43,033 | (13,337) |
Cash, cash equivalents and restricted cash at beginning of period | 77,655 | 85,825 |
Cash, cash equivalents and restricted cash at end of period | $ 120,688 | $ 72,488 |
Nature of Business
Nature of Business | 9 Months Ended |
Sep. 30, 2017 | |
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 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 worldwide aftermarket service and support, including spare parts, equipment upgrades, used equipment 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 period 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, 2016 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, 2016. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
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 14 to the consolidated financial statements in the Company’s 2016 Annual Report on Form 10-K. The Company recognized stock-based compensation expense of $1.7 million and $1.9 million for the three month periods ended September 30, 2017 and 2016, respectively. The Company recognized stock-based compensation expense of $4.3 million and $3.9 million for the nine month periods ended September 30, 2017 and 2016, 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. In the three month periods ended September 30, 2017 and 2016, the Company issued 0.3 million and 0.2 million shares of common stock, respectively, related to stock option exercises, shares issued under the ESPP and vesting of restricted stock units. In the three month periods ended September 30, 2017 and 2016, the Company received proceeds of $1.8 million and $1.2 million, respectively, related to stock option exercises and ESPP purchases. In the nine month periods ended September 30, 2017 and 2016, the Company issued 1.9 million and 0.4 million shares of common stock, respectively, related to stock option exercises, shares issued under the ESPP and vesting of restricted stock units. In the nine month periods ended September 30, 2017 and 2016, the Company received proceeds of $11.4 million and $1.7 million, respectively, related to stock option exercises and ESPP purchases. |
Computation of Net Earnings per
Computation of Net Earnings per Share | 9 Months Ended |
Sep. 30, 2017 | |
Computation of Net Earnings per Share | |
Computation of Net Earnings per Share | Note 3. Computation of Net Earnings per Share Basic earnings per share is computed by dividing income 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 per share is similar to basic earnings per share, except that the denominator is increased by the number of additional common shares that would have been outstanding if the potentially dilutive common shares issuable for 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 per share are as follows: Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 (in thousands, except per share data) Net income available to common stockholders $ 11,841 $ 2,151 $ 35,279 $ 7,036 Weighted average common shares outstanding used in computing basic income per share 31,274 29,221 30,550 29,118 Incremental options and RSUs 2,250 1,816 2,498 1,642 Weighted average common shares used in computing diluted net income per share 33,524 31,037 33,048 30,760 Net income per share Basic $ 0.38 $ 0.07 $ 1.15 $ 0.24 Diluted $ 0.35 $ 0.07 $ 1.07 $ 0.23 Diluted weighted average common shares outstanding does not include options and restricted stock units outstanding to purchase four thousand and 0.9 million common equivalent shares for the three month periods ended September 30, 2017 and 2016, respectively, and does not include options and restricted stock units outstanding to purchase 0.2 million and 0.9 million common equivalent shares for the nine month periods ended September 30, 2017 and 2016, respectively, as their effect would have been anti-dilutive. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss) | |
Accumulated Other Comprehensive Income (Loss) | Note 4. Accumulated Other Comprehensive Income (Loss) The following table presents the changes in accumulated other comprehensive income (loss), net of tax, by component for the nine months ended September 30, 2017: Foreign Defined benefit currency pension plan Total (in thousands) Balance at December 31, 2016 $ (1,591) $ (688) $ (2,279) Other comprehensive income 2,928 89 3,017 Balance at September 30, 2017 $ 1,337 $ (599) $ 738 |
Cash, cash equivalents and rest
Cash, cash equivalents and restricted cash | 9 Months Ended |
Sep. 30, 2017 | |
Cash, cash equivalents and restricted cash | |
Cash, cash equivalents and restricted cash | Note 5. Cash, cash equivalents and restricted cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows. September 30, 2017 2016 (dollars in thousands) Cash and cash equivalents $ $ Long-term restricted cash Total cash, cash equivalents and long-term restricted cash $ $ The restricted cash balance of $6.8 million as of September 30, 2017 includes a $5.9 million letter of credit associated with a security deposit for the lease of our corporate headquarters in Beverly, Massachusetts, a $0.8 million letter of credit relating to workers’ compensation insurance and a $0.1 million deposit relating to customs activity. The restricted cash balance of $6.9 million as of September 30, 2016 includes the $5.9 million letter of credit security deposit, a $0.9 million letter of credit relating to workers’ compensation insurance and a $0.1 million deposit relating to customs activity. |
Inventories, net
Inventories, net | 9 Months Ended |
Sep. 30, 2017 | |
Inventories, net | |
Inventories, net | Note 6. Inventories, net The components of inventories are as follows: September 30, December 31, 2017 2016 (in thousands) Raw materials $ 86,342 $ 82,263 Work in process 28,098 14,117 Finished goods (completed systems) 9,001 17,473 Inventories, net $ 123,441 $ 113,853 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 September 30, 2017 and December 31, 2016, inventories are stated net of inventory reserves of $8.4 million and $8.8 million, respectively. |
Product Warranty
Product Warranty | 9 Months Ended |
Sep. 30, 2017 | |
Product Warranty | |
Product Warranty | Note 7. 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: Nine months ended September 30, 2017 2016 (in thousands) Balance at January 1 (beginning of year) $ 2,666 $ 3,555 Warranties issued during the period 3,898 2,286 Settlements made during the period (1,614) (3,570) Changes in estimate of liability for pre-existing warranties during the period (562) 551 Balance at September 30 (end of period) $ 4,388 $ 2,822 Amount classified as current $ 4,154 $ 2,597 Amount classified as long-term 234 225 Total warranty liability $ 4,388 $ 2,822 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | Note 8. Fair Value Measurements Certain assets 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 following table sets forth the Company’s assets by level within the fair value hierarchy: September 30, 2017 Fair Value Measurements Level 1 Level 2 Level 3 Total (in thousands) Assets Cash equivalents: Money market funds, U.S. Government Securities and Agency Investments $ 95,510 $ — $ — $ 95,510 December 31, 2016 Fair Value Measurements Level 1 Level 2 Level 3 Total (in thousands) Assets Cash equivalents: Money market funds $ 54,170 $ — $ — $ 54,170 (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 assets and non-current cash assets, accounts payable and accrued expenses approximate fair value due to their short-term maturities. |
Financing Arrangements
Financing Arrangements | 9 Months Ended |
Sep. 30, 2017 | |
Financing Arrangements | |
Financing Arrangements | Note 9. Financing Arrangements Sale Leaseback Obligation On January 30, 2015, the Company sold its corporate headquarters facility in Beverly Massachusetts for $48.9 million. As part of the sale, the Company also entered into a 22-year lease agreement. The sale leaseback is accounted for as a financing arrangement for financial reporting and, as such, the Company has recorded a financing obligation of $47.7 million as of September 30, 2017. The associated lease payments are deemed to 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 security deposit of $5.9 million in the form of an irrevocable letter of credit at the time of the closing. This letter of credit is cash collateralized and is included in long-term restricted cash. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Taxes | |
Income Taxes | Note 10. Income Taxes During the three months ended September 30, 2017 and 2016, we recorded an income tax provision of $1.0 million and $0.1 million, respectively. During the nine months ended September 30, 2017 and 2016, we recorded an income tax benefit of $1.6 million and $0.2 million, respectively. The change in income tax provision and income tax benefit for the three and nine months ended September 30, 2017 was primarily related to excess tax benefits on the exercise of non-qualified stock options and vesting of restricted stock. At December 31, 2016, the Company had $124.0 million of deferred tax assets worldwide relating to net operating loss carryforwards, tax credit carryforwards and other temporary differences, which are available to reduce income taxes in future years. The Company continues to maintain a valuation allowance against certain deferred tax assets where it is more likely than not that the deferred tax asset will not be realized because of its extended history of annual losses. During the nine months ended September 30, 2017, the statute of limitations expired with respect to certain tax positions for which the Company had previously recorded a reserve. The related tax reserve of $0.3 million and accrued interest of $0.2 million were reversed. |
Concentration of Risk
Concentration of Risk | 9 Months Ended |
Sep. 30, 2017 | |
Concentration of Risk | |
Concentration of Risk | Note 11. Concentration of Risk For the three months ended September 30, 2017, two customers accounted for 25.9% and 15.9% of consolidated revenue, respectively. For the nine months ended September 30, 2017, four customers accounted for 23.6%, 18.0%, 13.4% and 10.5% of consolidated revenue, respectively. For the three months ended September 30, 2016, three customers accounted for 16.0%, 12.0% and 11.7%, of consolidated revenue, respectively. For the nine months ended September 30, 2016, two customers accounted for 12.3% and 10.1% of consolidated revenue, respectively. At September 30, 2017, two customers accounted for 22.9% and 14.7% of consolidated accounts receivable, respectively. At December 31, 2016, four customers accounted for 22.0%, 12.3%, 12.0% and 10.6% of accounts receivable, respectively. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Contingencies | |
Contingencies | Note 12. Contingencies (a) Litigation The Company is, from time to time, a party to litigation that arises in the normal course of its business operations. The Company is not presently a party to any litigation that it believes might have a material adverse effect on 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. |
Recent Accounting Guidance
Recent Accounting Guidance | 9 Months Ended |
Sep. 30, 2017 | |
Recent Accounting Guidance | |
Recent Accounting Guidance | Note 13. Recent Accounting Guidance Accounting Standards or Updates Adopted In July 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-11, “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 changes 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 Company adopted this ASU prospectively in the first quarter of 2017, which did not have a material impact on our financial statements and disclosures. In March 2016, the FASB issued ASU No. 2016-09 “Compensation — Stock Compensation,” which changes the accounting for stock-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amended guidance eliminates the requirement to record excess tax benefits as a reduction in current taxes payable and an increase to additional paid-in capital. The Company adopted this ASU in the first quarter of 2017, in part prospectively and in part retrospectively, as permitted by the ASU. The Company prospectively adopted the provisions of ASU No. 2016-09 relating to the accounting for excess tax benefits, which resulted in the recognition of approximately $2.0 million of tax benefit for the nine month period ending September 30, 2017. The Company retrospectively adopted the provisions of ASU 2016-09 related to the presentation of employee taxes. These provide that when an employer withholds shares for taxes on vesting of equity compensation, the value withheld is presented as a financing activity on the statement of cash flows. This resulted in a $1.1 million and a two thousand dollar reduction in net cash provided by financing activities for the nine month periods ended September 30, 2017 and 2016, respectively. Prior to adoption, these amounts were reflected within cash flows from operating activities. The Company has also elected to continue to estimate a forfeiture rate associated with our stock-based awards and related expense. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 203): Restricted Cash (a consensus of the FASB Emerging Issues Task Force).” This ASU requires the statement of cash flows to explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents are to be included with cash and cash equivalents when reconciling the beginning of period and end of period amounts shown on the statement of cash flows. On January 1, 2017, the Company early adopted this ASU retrospectively, resulting in $6.9 million of restricted cash being included in the beginning balances of cash, cash equivalents and restricted cash balances on the statement of cash flows for the periods presented. Please see Note 5 for additional information. 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. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers” (Topic 606 ): Identifying Performance Obligations and Licensing , which further clarifies performance obligations in a contract with a customer. In May 2016, the FASB issued ASU 2016-12, “ Revenue from Contracts with Customers” (Topic 606): Narrow-Scope Improvements and Practical Expedients , which provides a more narrow interpretation of ASU No. 2014-09. In July 2017, the FASB issued ASU 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842) , which clarifies the transition periods related to public and private business entities . These ASUs (collectively referred to as “Topic 606”) are effective for annual reporting periods beginning after December 15, 2017 and interim periods within those annual periods. We are in the process of comparing our current revenue recognition policies to the requirements of Topic 606 for each of our revenue categories. Based on our review to date, we believe that the recognition of the retention payments (the portion of the purchase price on system sales withheld by the customer until installation is complete) will in general occur earlier under the new model than under our current revenue recognition policy. Our evaluation is not complete, and we have not concluded on the overall impact of adopting Topic 606. We intend to adopt Topic 606, effective January 1, 2018, using the modified retrospective approach. In February 2016, the FASB issued ASU No. 2016-02 “Leases.” The ASU requires lessees to recognize the rights and obligations created by most leases as assets and liabilities on their balance sheet and continue to recognize expenses on their income statement over the lease term. It will also require disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. The guidance is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. We are currently evaluating the impact of ASU 2016-02 on the consolidated financial statements and disclosures. In August 2016, the FASB issued ASU No. 2016-15 “Classification of Certain Cash Receipts and Cash Payments.” The ASU is intended to add or clarify guidance on the classification of certain receipts and payments in the statement of cash flows and to eliminate the diversity in practice related to such classifications. The guidance in ASU 2016-15 is required for annual reporting periods beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact of ASU 2016-15 on the consolidated financial statements and disclosures. In March 2017, the FASB issued ASU No. 2017-07 “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The ASU is intended to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendment applies to all entities offering a defined benefit pension plan, other postretirement benefit plans, or other types of benefits accounted for under Topic 715. The amendments in the ASU require an employer to report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. The amendments in this ASU are effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within the annual period. The amendments in this ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. We are currently evaluating the impact of ASU 2017-07 on the consolidated financial statements and disclosures. |
Computation of Net Earnings p20
Computation of Net Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Computation of Net Earnings per Share | |
Schedule of components of net earnings per share | Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 (in thousands, except per share data) Net income available to common stockholders $ 11,841 $ 2,151 $ 35,279 $ 7,036 Weighted average common shares outstanding used in computing basic income per share 31,274 29,221 30,550 29,118 Incremental options and RSUs 2,250 1,816 2,498 1,642 Weighted average common shares used in computing diluted net income per share 33,524 31,037 33,048 30,760 Net income per share Basic $ 0.38 $ 0.07 $ 1.15 $ 0.24 Diluted $ 0.35 $ 0.07 $ 1.07 $ 0.23 |
Accumulated Other Comprehensi21
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss) | |
Schedule of changes in accumulated other comprehensive income, net of tax | Foreign Defined benefit currency pension plan Total (in thousands) Balance at December 31, 2016 $ (1,591) $ (688) $ (2,279) Other comprehensive income 2,928 89 3,017 Balance at September 30, 2017 $ 1,337 $ (599) $ 738 |
Cash, cash equivalents and re22
Cash, cash equivalents and restricted cash (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Cash, cash equivalents and restricted cash | |
Schedule of reconciliation of cash, cash equivalents and restricted cash | September 30, 2017 2016 (dollars in thousands) Cash and cash equivalents $ $ Long-term restricted cash Total cash, cash equivalents and long-term restricted cash $ $ |
Inventories, net (Tables)
Inventories, net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventories, net | |
Schedule of components of inventories | September 30, December 31, 2017 2016 (in thousands) Raw materials $ 86,342 $ 82,263 Work in process 28,098 14,117 Finished goods (completed systems) 9,001 17,473 Inventories, net $ 123,441 $ 113,853 |
Product Warranty (Tables)
Product Warranty (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Product Warranty | |
Schedule of product warranty liability | Nine months ended September 30, 2017 2016 (in thousands) Balance at January 1 (beginning of year) $ 2,666 $ 3,555 Warranties issued during the period 3,898 2,286 Settlements made during the period (1,614) (3,570) Changes in estimate of liability for pre-existing warranties during the period (562) 551 Balance at September 30 (end of period) $ 4,388 $ 2,822 Amount classified as current $ 4,154 $ 2,597 Amount classified as long-term 234 225 Total warranty liability $ 4,388 $ 2,822 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Measurements | |
Schedule of Company's assets and liabilities by level within the fair value hierarchy | September 30, 2017 Fair Value Measurements Level 1 Level 2 Level 3 Total (in thousands) Assets Cash equivalents: Money market funds, U.S. Government Securities and Agency Investments $ 95,510 $ — $ — $ 95,510 December 31, 2016 Fair Value Measurements Level 1 Level 2 Level 3 Total (in thousands) Assets Cash equivalents: Money market funds $ 54,170 $ — $ — $ 54,170 |
Stock-Based Compensation - (Det
Stock-Based Compensation - (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Stock-based compensation | ||||
Stock-based compensation expense | $ 1,700 | $ 1,900 | $ 4,300 | $ 3,900 |
Proceeds from exercise of stock options | $ 11,112 | $ 1,737 | ||
Common Stock | ||||
Stock-based compensation | ||||
Exercise of stock options (in shares) | 300,000 | 200,000 | 1,900,000 | 400,000 |
Proceeds from exercise of stock options | $ 1,800 | $ 1,200 | $ 11,400 | $ 1,700 |
2000 Stock Plan | ||||
Stock-based compensation | ||||
Number of shares of common stock available for future grant | 0 | 0 |
Computation of Net Earnings p27
Computation of Net Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Computation of Net Earnings per Share | ||||
Net income available to common stockholders | $ 11,841 | $ 2,151 | $ 35,279 | $ 7,036 |
Weighted average common shares outstanding used in computing basic income per share | 31,274 | 29,221 | 30,550 | 29,118 |
Incremental options and RSUs | 2,250 | 1,816 | 2,498 | 1,642 |
Weighted average common shares used in computing diluted net income per share | 33,524 | 31,037 | 33,048 | 30,760 |
Net income per share | ||||
Basic | $ 0.38 | $ 0.07 | $ 1.15 | $ 0.24 |
Diluted | $ 0.35 | $ 0.07 | $ 1.07 | $ 0.23 |
Weighted average number diluted shares outstanding adjustment | 4 | 900 | 200 | 900 |
Accumulated Other Comprehensi28
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Changes in accumulated other comprehensive income, net of tax | ||||
Balance at December 31, 2016 | $ (2,279) | |||
Other comprehensive income | $ 556 | $ 962 | 3,017 | $ 1,607 |
Balance at September 30, 2017 | 738 | 738 | ||
Foreign currency | ||||
Changes in accumulated other comprehensive income, net of tax | ||||
Balance at December 31, 2016 | (1,591) | |||
Other comprehensive income | 2,928 | |||
Balance at September 30, 2017 | 1,337 | 1,337 | ||
Defined benefit pension plan | ||||
Changes in accumulated other comprehensive income, net of tax | ||||
Balance at December 31, 2016 | (688) | |||
Other comprehensive income | 89 | |||
Balance at September 30, 2017 | $ (599) | $ (599) |
Cash, cash equivalents and re29
Cash, cash equivalents and restricted cash (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Cash and cash equivalents | $ 113,889 | $ 70,791 | $ 65,623 | |
Long-term restricted cash | 6,799 | 6,865 | ||
Total cash, cash equivalents and long-term restricted cash | 120,688 | $ 77,655 | 72,488 | $ 85,825 |
Workers' Compensation Liability | 800 | 900 | ||
Deposit related to customs activity | 100 | 100 | ||
Revolving credit facility | ||||
Availability used to support outstanding letters of credit | 6,800 | 6,900 | ||
Beverly Property Owner LLC | Revolving credit facility | ||||
Security Deposit | $ 5,900 | $ 5,900 |
Inventories, net (Details)
Inventories, net (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Inventories, net | ||
Raw materials | $ 86,342 | $ 82,263 |
Work in process | 28,098 | 14,117 |
Finished goods (completed systems) | 9,001 | 17,473 |
Inventories, net | 123,441 | 113,853 |
Inventory reserves | $ 8,400 | $ 8,800 |
Product Warranty (Details)
Product Warranty (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | |
Product Warranty | |||||
Product warranty period | 1 year | ||||
Changes in standard product warranty liability | |||||
Balance at January 1 (beginning of year) | $ 2,666 | $ 3,555 | |||
Warranties issued during the period | 3,898 | 2,286 | |||
Settlements made during the period | (1,614) | (3,570) | |||
Changes in estimate of liability for pre-existing warranties during the period | (562) | 551 | |||
Balance at September 30 (end of period) | 4,388 | 2,822 | |||
Product warranty classification | |||||
Amount classified as current | $ 4,154 | $ 2,426 | $ 2,597 | ||
Amount classified as long-term | 234 | 225 | |||
Total warranty liability | $ 2,666 | $ 3,555 | $ 4,388 | $ 2,666 | $ 2,822 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Money market funds | Total | ||
Fair Value Measurements | ||
Money market funds | $ 54,170 | |
Money market funds, US Government Securities and Agency Investments | Total | ||
Fair Value Measurements | ||
Money market funds | $ 95,510 | |
Level 1 | Money market funds | ||
Fair Value Measurements | ||
Money market funds | $ 54,170 | |
Level 1 | Money market funds, US Government Securities and Agency Investments | ||
Fair Value Measurements | ||
Money market funds | $ 95,510 |
Financing Arrangements (Details
Financing Arrangements (Details) - USD ($) $ in Thousands | Jan. 30, 2015 | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Financing Arrangements | ||||
Sale leaseback obligation | $ 47,704 | $ 47,586 | ||
Beverly Property Owner LLC | Sale leaseback obligation | Buildings | ||||
Financing Arrangements | ||||
Purchase price | $ 48,900 | |||
Lease term | 22 years | |||
Sale leaseback obligation | 47,700 | |||
Security deposit | 5,900 | |||
Revolving credit facility | Beverly Property Owner LLC | ||||
Financing Arrangements | ||||
Security deposit | $ 5,900 | $ 5,900 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Income Taxes | |||||
Income tax provision (benefit) | $ 1,014 | $ 136 | $ (1,586) | $ (196) | |
Deferred tax assets valuation allowance | $ 124,000 | ||||
Reversal of tax reserve | 300 | ||||
Reversal of accrued interest | $ 200 | $ 200 |
Concentration of Risk (Details)
Concentration of Risk (Details) - customer | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Revenue | Customer concentration risk | One customer | |||||
Concentration of risk | |||||
Number of customers | 2 | 3 | 4 | 2 | |
Percentage of concentration risk | 25.90% | 16.00% | 23.60% | 12.30% | |
Revenue | Customer concentration risk | Second customer | |||||
Concentration of risk | |||||
Number of customers | 2 | 3 | 4 | 2 | |
Percentage of concentration risk | 15.90% | 12.00% | 18.00% | 10.10% | |
Revenue | Customer concentration risk | Third customer | |||||
Concentration of risk | |||||
Number of customers | 3 | 4 | |||
Percentage of concentration risk | 11.70% | 13.40% | |||
Revenue | Customer concentration risk | Fourth customer | |||||
Concentration of risk | |||||
Number of customers | 4 | ||||
Percentage of concentration risk | 10.50% | ||||
Consolidated accounts receivable | Credit concentration risk | One customer | |||||
Concentration of risk | |||||
Number of customers | 2 | 4 | |||
Percentage of concentration risk | 22.90% | 22.00% | |||
Consolidated accounts receivable | Credit concentration risk | Second customer | |||||
Concentration of risk | |||||
Number of customers | 2 | 4 | |||
Percentage of concentration risk | 14.70% | 12.30% | |||
Consolidated accounts receivable | Credit concentration risk | Third customer | |||||
Concentration of risk | |||||
Number of customers | 4 | ||||
Percentage of concentration risk | 12.00% | ||||
Consolidated accounts receivable | Credit concentration risk | Fourth customer | |||||
Concentration of risk | |||||
Number of customers | 4 | ||||
Percentage of concentration risk | 10.60% |
Recent Accounting Guidance (Det
Recent Accounting Guidance (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Jan. 01, 2017 | |
Recent Accounting Guidance | |||
Restricted Cash and Cash Equivalents | $ 6,799 | $ 6,865 | |
Accounting Standards Update 2016-09 | |||
Recent Accounting Guidance | |||
Excess tax benefits of deferred tax assets | 2,000 | ||
Reduction in net cash provided by financing activities | $ 1,100 | $ 2 | |
Accounting Standards Update 2016-18 [Member] | |||
Recent Accounting Guidance | |||
Restricted Cash and Cash Equivalents | $ 6,900 |