Axcelis (ACLS) 10-Q 3 Nov 17 2017 Q3 Quarterly report Financial data

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