Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 31, 2018 | |
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, 2018 | |
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 | 32,412,147 | |
Document Fiscal Year Focus | 2,018 | |
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, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue: | ||||
Revenue | $ 95,374 | $ 104,482 | $ 336,892 | $ 294,165 |
Cost of revenue: | ||||
Cost of revenue | 55,461 | 64,731 | 200,823 | 180,638 |
Gross profit | 39,913 | 39,751 | 136,069 | 113,527 |
Operating expenses: | ||||
Research and development | 12,845 | 11,003 | 37,631 | 32,154 |
Sales and marketing | 7,923 | 6,801 | 25,246 | 21,335 |
General and administrative | 8,477 | 8,112 | 24,755 | 22,960 |
Total operating expenses | 29,245 | 25,916 | 87,632 | 76,449 |
Income from operations | 10,668 | 13,835 | 48,437 | 37,078 |
Other (expense) income: | ||||
Interest income | 593 | 219 | 1,518 | 399 |
Interest expense | (1,323) | (1,337) | (3,787) | (3,784) |
Other, net | (592) | 138 | (1,710) | |
Total other expense | (1,322) | (980) | (3,979) | (3,385) |
Income before income taxes | 9,346 | 12,855 | 44,458 | 33,693 |
Income tax provision (benefit) | 508 | 1,014 | 7,036 | (1,586) |
Net income | $ 8,838 | $ 11,841 | $ 37,422 | $ 35,279 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.27 | $ 0.38 | $ 1.16 | $ 1.15 |
Diluted (in dollars per share) | $ 0.26 | $ 0.35 | $ 1.10 | $ 1.07 |
Shares used in computing net income per share: | ||||
Basic weighted average common shares | 32,365 | 31,274 | 32,225 | 30,550 |
Diluted weighted average common shares | 33,973 | 33,524 | 34,032 | 33,048 |
Product | ||||
Revenue: | ||||
Revenue | $ 88,496 | $ 98,161 | $ 317,039 | $ 276,678 |
Cost of revenue: | ||||
Cost of revenue | 49,136 | 58,056 | 181,423 | 162,542 |
Services | ||||
Revenue: | ||||
Revenue | 6,878 | 6,321 | 19,853 | 17,487 |
Cost of revenue: | ||||
Cost of revenue | $ 6,325 | $ 6,675 | $ 19,400 | $ 18,096 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Consolidated Statements of Comprehensive Income | ||||
Net income | $ 8,838 | $ 11,841 | $ 37,422 | $ 35,279 |
Other comprehensive (loss) income: | ||||
Foreign currency translation adjustments | (284) | 524 | (1,584) | 2,928 |
Amortization of actuarial loss and other adjustments from pension plan | 30 | 32 | 90 | 89 |
Total other comprehensive (loss) income | (254) | 556 | (1,494) | 3,017 |
Comprehensive income | $ 8,584 | $ 12,397 | $ 35,928 | $ 38,296 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 148,716 | $ 133,407 |
Short-term restricted cash | 750 | |
Accounts receivable, net | 84,977 | 75,302 |
Inventories, net | 124,008 | 120,544 |
Prepaid expenses and other current assets | 9,582 | 9,772 |
Total current assets | 367,283 | 339,775 |
Property, plant and equipment, net | 37,659 | 36,168 |
Long-term restricted cash | 6,877 | 6,723 |
Deferred income taxes | 76,382 | 83,148 |
Other assets | 31,031 | 22,404 |
Total assets | 519,232 | 488,218 |
Current liabilities: | ||
Accounts payable | 27,930 | 32,642 |
Accrued compensation | 14,261 | 20,955 |
Warranty | 4,545 | 4,112 |
Income taxes | 205 | 273 |
Deferred revenue | 14,393 | 16,181 |
Other current liabilities | 4,938 | 5,124 |
Total current liabilities | 66,272 | 79,287 |
Sale leaseback obligation | 47,746 | 47,714 |
Long-term deferred revenue | 3,381 | 1,964 |
Other long-term liabilities | 4,759 | 5,643 |
Total liabilities | 122,158 | 134,608 |
Commitments and contingencies (Note 13) | ||
Stockholders' equity: | ||
Common stock, $0.001 par value, 75,000 shares authorized; 32,398 shares issued and outstanding at September 30, 2018; 32,048 shares issued and outstanding at December 31, 2017 | 32 | 32 |
Additional paid-in capital | 562,083 | 556,147 |
Accumulated deficit | (165,723) | (204,745) |
Accumulated other comprehensive income | 682 | 2,176 |
Total stockholders' equity | 397,074 | 353,610 |
Total liabilities and stockholders' equity | $ 519,232 | $ 488,218 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Consolidated Balance Sheets | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 75,000 | 75,000 |
Common stock, shares issued | 32,398 | 32,048 |
Common stock, shares outstanding | 32,398 | 32,048 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities | ||
Net income | $ 37,422 | $ 35,279 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 4,208 | 3,752 |
Deferred taxes | 6,767 | (2,076) |
Stock-based compensation expense | 5,603 | 4,325 |
Provision for excess and obsolete inventory | 1,657 | 1,547 |
Changes in operating assets & liabilities: | ||
Accounts receivable | (10,222) | (18,374) |
Inventories | (4,867) | (8,237) |
Prepaid expenses and other current assets | 49 | (1,645) |
Accounts payable and other current liabilities | (10,872) | 21,345 |
Deferred revenue | 1,245 | 5,353 |
Income taxes | (61) | 34 |
Other assets and liabilities | (13,709) | (981) |
Net cash provided by operating activities | 17,220 | 40,322 |
Cash flows from investing activities | ||
Expenditures for property, plant and equipment and capitalized software | (3,852) | (6,910) |
Net cash used in investing activities | (3,852) | (6,910) |
Cash flows from financing activities | ||
Net settlement on restricted stock grants | (1,393) | (1,134) |
Proceeds from Employee Stock Purchase Plan | 437 | 349 |
Proceeds from exercise of stock options | 1,289 | 11,112 |
Net cash provided by financing activities | 333 | 10,327 |
Effect of exchange rate changes on cash and cash equivalents | 1,012 | (706) |
Net increase in cash, cash equivalents and restricted cash | 14,713 | 43,033 |
Cash, cash equivalents and restricted cash at beginning of period | 140,880 | 77,655 |
Cash, cash equivalents and restricted cash at end of period | $ 155,593 | $ 120,688 |
Nature of Business
Nature of Business | 9 Months Ended |
Sep. 30, 2018 | |
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 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, 2017 has been derived from the audited consolidated 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, 2017. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
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 11 to the consolidated financial statements in the Company’s 2017 Annual Report on Form 10-K. The Company recognized stock-based compensation expense of $2.4 million and $1.7 million for the three month periods ended September 30, 2018 and 2017, respectively. The Company recognized stock-based compensation expense of $5.6 million and $4.3 million for the nine month periods ended September 30, 2018 and 2017, respectively. These amounts include compensation expense related to restricted stock units (“RSUs”), non-qualified stock options and stock to be issued to participants under the ESPP. In the three month periods ended September 30, 2018 and 2017, the Company issued 0.1 million and 0.3 million shares of common stock, respectively, in relation to stock option exercises and vesting of RSUs. In the three month periods ended September 30, 2018 and 2017, the Company received proceeds of $0.5 million and $1.8 million, respectively, in connection with the exercise of stock options. In the nine month periods ended September 30, 2018 and 2017, the Company issued 0.3 million and 1.9 million shares of common stock, respectively, in relation to stock option exercises, shares issued under the ESPP and vesting of RSUs. In the nine month periods ended September 30, 2018 and 2017, the Company received proceeds of $1.7 million and $11.4 million, respectively, in connection with the exercise of stock options and ESPP purchases. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2018 | |
Revenue | |
Revenue | Note 3. Revenue We design, manufacture and service ion implantation and other processing equipment used in the fabrication of semiconductor chips and sell our products to leading semiconductor chip manufacturers worldwide. We offer a complete line of high energy, high current and medium current implanters (“Systems”) for all application requirements. In addition, we provide extensive aftermarket lifecycle products and services (“Aftermarket”), including used tools, spare parts, equipment upgrades, maintenance service and customer training. (a) Recognition of GAAP Revenue Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers or (“ASC 606”), revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration we expect to receive in exchange for those goods or services. We measure revenue based on the consideration specified in the client arrangement, and revenue is recognized when the performance obligations in the client arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The transaction price of a contract is allocated to each distinct performance obligation based upon the relative standalone selling price for each performance obligation and recognized as revenue when or as, the customer receives the benefit of the performance obligation. See Note 14 regarding the impact of the adoption of ASC 606 on our financial statements. To account for and measure revenue, the Company applies the following five steps: 1) Identify the contract with the customer A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the related payment terms, (ii) the contract has commercial substance, and (iii) the Company determines that collection of substantially all consideration for goods and services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. 2) Identify the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other available resources, and are distinct in the context of the contract, whereby the transfer of the good or service is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods and services, the Company must apply judgment to determine whether promised goods and services are capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation. Our Systems sales consist of multiple performance obligations, including the system itself and obligations that are not delivered simultaneously with the system. These undelivered obligations might include a combination of installation services, extended warranty and support and spare parts, all of which are generally covered by a single sales price. Our aftermarket business includes both products and services type arrangements. Performance obligations in these contracts consist of used tools, spare parts, equipment upgrades, maintenance services and customer training. Customers who purchase new systems are provided an assurance-type warranty for one year after acceptance of the tool. For Aftermarket transactions, we provide customers an assurance-type warranty for 90 days. Customers can choose to purchase extended warranty terms with enhanced support similar to a service-type warranty ranging from one to three years. In accordance with ASC 606, assurance-type warranties are not considered a performance obligation, whereas service-type warranties are. 3) Determine the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period for any changes. In applying this guidance, Companies must also consider whether any significant financing components exist. The transaction price for all transactions is based on the price reflected in the individual customer’s purchase order. Variable consideration has not been identified as a significant component of the transaction price for any of our transactions. For those transactions where all performance obligations will be satisfied within one year or less, the Company is applying the practical expedient outlined in ASC 606-10-32-18. This practical expedient allows the Company not to adjust promised consideration for the effects of a significant financing component if the Company expects at contract inception the period between when the Company transfers the promised good or service to a customer and when the customer pays for that good or service will be one year or less. For those transactions that are expected to be completed after one year, the Company has assessed that there are no significant financing components because any difference between the promised consideration and the cash selling price of the good or service is for reasons other than the provision of financing. 4) Allocate the transaction price to performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. Where required, the Company determines standalone selling price (SSP) for each obligation based on consideration of both market and Company specific factors, including the selling price and profit margin for similar products, the cost to produce, and the anticipated margin. For those contracts that contain multiple performance obligations (primarily systems sales, as well as some aftermarket contracts requiring both time and material inputs), the company must determine SSP. The Company used a cost plus margin approach in determining the SSP for any materials related performance obligations (such as upgrades, spare parts, systems). To determine the SSP for labor related performance obligations (such as the labor component of installation), the Company used directly observable inputs based on the standalone sale prices for these services. 5) Recognize revenue when or as the Company has satisfied a performance obligation The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized over time if either 1) the customer simultaneously receives and consumes the benefits provided by the entity’s performance, 2) the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or 3) the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. If the entity does not satisfy a performance obligation over time, the related performance obligation is satisfied at a point in time by transferring the control of a promised good or service to a customer. Examples of control are using the asset to produce goods or services, enhance the value of other assets, settle liabilities, and holding or selling the asset. For over time recognition, ASC 606 requires the Company to select a single revenue recognition method for the performance obligation that faithfully depicts the Company’s performance in transferring control of the goods and services. The guidance allows entities to choose between two methods to measure progress toward complete satisfaction of a performance obligation: Output methods - recognize revenue on the basis of direct measurements of the value to the customer of the goods or services transferred to date relative to the remaining goods or services promised under the contract (e.g. surveys of performance completed to date, appraisals of results achieved, milestones reached, time elapsed, and units produced or units delivered); and Input methods - recognize revenue on the basis of the entity’s efforts or inputs to the satisfaction of a performance obligation (e.g., resources consumed, labor hours expended, costs incurred, or time elapsed) relative to the total expected inputs to the satisfaction of that performance obligation. The Company has the right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date (i.e. certain aftermarket contracts), as such the Company has elected a practical expedient to recognize revenue in the amount to which the entity has a right to invoice for such services. Product related revenues (whether for systems or aftermarket business) are recognized at a point in time, when they are shipped or delivered, depending on shipping terms. For installation services, revenue is recognized at a point in time, once the installation of the tool is complete. The nature of the installation services are such that the customer does not simultaneously receive and consume the benefits provided by the entity’s performance, nor does performance of installation services create or enhance an asset that the customer controls. Installation services do not create an asset with an alternative use to the entity, and the entity does not have an enforceable right to payment for performance completed to date. Service-type warranties for any product are recognized over time, as these represent a stand ready obligation to service the product during the warranty period. Progress in the satisfaction of these performance obligations will be measured using an input method of time elapsed. Maintenance and service contracts are recognized over time. Progress in the satisfaction of these performance obligations will be measured using an input method of either time elapsed in the case of fixed period contracts, or labor hours expended, in the case of project based contracts. (b) Recognizing Assets related to Recoverable Customer Contract Costs The Company recognizes an asset related to incremental costs of obtaining a contract with a customer if the Company expects to recover those costs. The Company will recognize an asset from costs incurred to fulfill a contract only if such costs relate directly to a contract that the entity can specifically identify, the costs generate or enhance resources of the Company that will be used in satisfying performance obligations in the future, and the costs are expected to be recovered. Any assets recognized related to costs to obtain or fulfill a contract are amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. In substantially all of our business transactions, we incur incremental costs to obtain contracts with customers, in the form of sales commissions. We maintain a commission program which awards our employees for System sales, aftermarket activity and other individual goals. Under ASC 606, an asset shall be amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. However, ASC 606 provides a practical expedient to allow for the recognition of commission expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less. Based on the nature of the Company’s commission agreements, all commissions are expensed as incurred based upon the expectation that the amortization period would be one year or less. (c) Alternative Operational Revenue Categories used by Management To reflect the organization of the Company’s business operations, management also divides revenue into two categories: revenue from sales of new Systems and revenue arising from the sale of used systems, parts and labor to customers who own systems, which we refer to as Aftermarket. Below are the revenues by categories used by management for the periods covered in this report: Three months ended Nine months ended September 30, September 30, 2018* 2017 2018* 2017 (in thousands) (in thousands) Systems $ $ $ $ Aftermarket 38,980 35,264 121,103 107,257 $ $ $ $ *The impact upon adoption of ASC 606 was a decrease to Systems revenue of $0.6 million for the three month period ended September 30, 2018 and $1.3 million increase for the and nine month period ended September 30, 2018. Please refer to Note 14 for additional discussion of ASC 606 adoption impact on revenue amounts and comparable revenue figures. The increase in revenue in the nine month period ended September 30, 2018, in comparison to the nine month period ended September 30, 2017, is attributable to an increase in sales of our Purion products and Aftermarket business. (d) Economic Factors Affecting our Revenue: Geographic Breakdown of Revenue Global economic conditions have a direct impact on our revenue. We are substantially dependent on sales of our products and services to customers outside the United States. Adverse economic conditions, political instability, potential adverse tax consequences and volatility in exchange rates pose a risk that our clients may reduce, postpone or cancel spending for our products and services, which would impact our revenue. Revenue by geographic markets is determined based upon the location to which our products are shipped and where our services are performed. Revenue in our principal geographic markets is as follows: Three months ended Nine months ended September 30, September 30, 2018* 2017 2018* 2017 (in thousands) (in thousands) North America $ $ $ $ Asia Europe $ $ $ $ *The impact upon adoption of ASC 606 for the three months ended September 30, 2018 was a decrease in revenue to Asia of $0.8 million and an increase to Europe of $0.2 million. The impact upon adoption of ASC 606 for the nine months ended September 30, 2018 was primarily an increase in revenue to Asia of $1.5 million, partially offset by a decline to North America of $0.2 million. Please refer to Note 14 for additional discussion of ASC 606 adoption impact on revenue amounts and comparable revenue figures. (e) Recognition of Deferred Revenue from Contract Liabilities Contract assets and contract liabilities are as follows: September 30, December 31, 2018 2017 (in thousands) Contract assets $ — $ — Contract liabilities $ 17,774 $ 18,145 Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 (in thousands) Revenue recognized in the period from: Amounts included in contract liability at the beginning of the period $ 4,569 $ 8,516 $ 11,957 $ 8,880 Performance obligations satisfied in previous periods $ — $ — $ — $ — Contract liabilities are reflected as deferred revenue on the consolidated balance sheet. Contract liabilities relate to payments invoiced or received in advance of completion of performance obligations under a contract. Contract liabilities are recognized as revenue upon the fulfillment of performance obligations. The decrease in contract liabilities of $0.4 million from December 31, 2017 to September 30, 2018 is primarily due to the reclassification of $1.6 million relating to our adoption of ASC 606, offset by the timing of system acceptances. The majority of our system transactions have payment terms that are 90% due upon shipment of the tool and 10% due upon installation. Aftermarket transaction payment terms are such that payment is due either within 30 or 60 days of service provided or delivery of parts. As of September 30, 2018, the Company had deferred revenue of $17.8 million. This represents the portion of the transaction price for contracts with customers allocated to the performance obligations that remain unsatisfied or partially unsatisfied. Short-term deferred revenue of $14.4 million represents performance obligations that will be satisfied within the next 12 months. This amount relates primarily to installation and non-standard warranty performance obligations for system sales. Long-term deferred revenue of $3.4 million relates primarily to unsatisfied extended warranty performance obligations that we expect to be satisfied within the next 24 months. |
Computation of Net Earnings per
Computation of Net Earnings per Share | 9 Months Ended |
Sep. 30, 2018 | |
Computation of Net Earnings per Share | |
Computation of Net Earnings per Share | Note 4. 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 and restricted stock units had been issued, calculated using the treasury stock method. The components of net earnings per share are as follows: Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 (in thousands, except per share amounts) Net income available to common stockholders $ 8,838 $ 11,841 $ 37,422 $ 35,279 Weighted average common shares outstanding used in computing basic income per share 32,365 31,274 32,225 30,550 Incremental options and RSUs 1,608 2,250 1,807 2,498 Weighted average common shares used in computing diluted net income per share 33,973 33,524 34,032 33,048 Net income per share Basic $ 0.27 $ 0.38 $ 1.16 $ 1.15 Diluted $ 0.26 $ 0.35 $ 1.10 $ 1.07 Diluted weighted average common shares outstanding does not include options and restricted stock units outstanding to purchase 0.3 million and four thousand common equivalent shares for the three month periods ended September 30, 2018 and 2017, respectively, and does not include options and restricted stock units outstanding to purchase eleven thousand and 0.2 million common equivalent shares for the nine month periods ended September 30, 2018 and 2017, respectively, as their effect would have been anti-dilutive. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2018 | |
Accumulated Other Comprehensive Income | |
Accumulated Other Comprehensive Income | Note 5. Accumulated Other Comprehensive Income The following table presents the changes in accumulated other comprehensive income, net of tax, by component, for the nine months ended September 30, 2018: Foreign Defined benefit currency pension plan Total (in thousands) Balance at December 31, 2017 $ 2,756 $ (580) $ 2,176 Other comprehensive income and pension reclassification (1,584) 90 (1,494) Balance at September 30, 2018 $ 1,172 $ (490) $ 682 |
Cash, cash equivalents and rest
Cash, cash equivalents and restricted cash | 9 Months Ended |
Sep. 30, 2018 | |
Cash, cash equivalents and restricted cash | |
Cash, cash equivalents and restricted cash | Note 6. 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 amounts shown in the statement of cash flows. September 30, December 31, 2018 2017 (in thousands) Cash and cash equivalents $ $ Short-term and long-term restricted cash Total cash, cash equivalents and restricted cash $ $ The restricted cash balance of $6.9 million as of September 30, 2018 is the result of (i) a $5.9 million letter of credit associated with a security deposit for the lease of our corporate headquarters in Beverly, Massachusetts, (ii) a $0.8 million letter of credit relating to workers’ compensation insurance, (iii) a bank guarantee of our performance relating to customer payment in the amount of $0.1 million and (iv) a $0.1 million deposit relating to customs activity. The restricted cash balance of $7.5 million as of December 31, 2017 includes (i) a $5.9 million letter of credit associated with a security deposit for the lease of our corporate headquarters in Beverly, Massachusetts, (ii) a $0.8 million letter of credit relating to workers’ compensation insurance, a $0.7 million letter of credit associated with a bank guarantee and a $0.1 million deposit relating to customs activity. |
Inventories, net
Inventories, net | 9 Months Ended |
Sep. 30, 2018 | |
Inventories, net | |
Inventories, net | Note 7. Inventories, net The components of inventories are as follows: September 30, December 31, 2018 2017 (in thousands) Raw materials $ 91,782 $ 82,313 Work in process 23,849 31,651 Finished goods (completed systems) 8,377 6,580 Inventories, net $ 124,008 $ 120,544 When recorded, inventory reserves 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. |
Product Warranty
Product Warranty | 9 Months Ended |
Sep. 30, 2018 | |
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: Nine months ended September 30, 2018 2017 (in thousands) Balance at January 1 (beginning of year) $ 4,502 $ 2,666 Warranties issued during the period 4,294 3,898 Settlements made during the period (4,566) (1,614) Changes in estimate of liability for pre-existing warranties during the period 650 (562) Balance at September 30 (end of period) $ 4,880 $ 4,388 Amount classified as current $ 4,545 $ 4,154 Amount classified as long-term 335 234 Total warranty liability $ 4,880 $ 4,388 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | Note 9. 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 and short-term investments 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, 2018 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 $ 131,654 $ — $ — $ 131,654 December 31, 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 $ 116,433 $ — $ — $ 116,433 (c) Other Financial Instruments The carrying amounts reflected in the consolidated balance sheets for accounts receivable, prepaid expenses and other current assets and non-current assets, restricted cash, accounts payable and accrued expenses approximate fair value due to their short-term maturities. |
Financing Arrangements
Financing Arrangements | 9 Months Ended |
Sep. 30, 2018 | |
Financing Arrangements | |
Financing Arrangements | Note 10. Financing Arrangements 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 of our headquarters facility. This sale leaseback is accounted for as a financing arrangement under generally accepted accounting principles and, as such, the Company has recorded a financing obligation of $47.7 million as of September 30, 2018. 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 the associated cash is included in long-term restricted cash. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Taxes | |
Income Taxes | Note 11. Income Taxes On December 22, 2017, the Tax Cuts and Jobs Act ("TCJA") was enacted into law, which significantly changed existing U.S. tax law and includes numerous provisions that affect our business, such as reducing the U.S. federal statutory tax rate and adopting a territorial tax system. The TCJA reduces the U.S. federal statutory tax rate from 35% to 21%, effective January 1, 2018. The TCJA also includes a provision to tax global intangible low-taxed income ("GILTI") of foreign subsidiaries and a base erosion anti-abuse tax ("BEAT") measure that taxes certain payments between a U.S. corporation and its subsidiaries. The Company considered the available guidance and has incorporated the relevant provisions of GILTI into the income tax provision and concluded that the provisions of BEAT do not apply to the Company at this time. In accordance with Staff Accounting Bulletin 118, the Company disclosed in its 2017 Annual Report on Form 10-K that it is able to determine a reasonable estimate for certain effects of tax reform and has recorded that estimate as a provisional amount. The Company intends to use the one-year measurement period to update the provisional amount recorded as it finalizes its analysis relating to certain matters, such as developing interpretations of provisions to the TCJA, changes to certain estimates and amounts related to the Earning and Profits of certain subsidiaries and the filing of tax returns. Also, Treasury regulations, administrative interpretations, or court decisions interpreting the TCJA may require further adjustments and changes to the provisional amounts. During the three months ended September 30, 2018 we recorded an income tax provision of $0.5 million. During the nine months ended September 30, 2018 we recorded an income tax provision of $7.0 million. Included in the income tax provision for the three and nine months ended September 30, 2018 is a tax benefit of $1.4 million relating to the calculation of transition tax under the TCJA. This tax benefit reduced by 15.2% and 3.1% the otherwise effective tax rate for the three and nine months ended September 30, 2018, respectively. Also included in the income tax provision for the nine months ended September 30, 2018 is a tax benefit of $0.3 million recognized upon the expiration of the statute of limitations regarding an uncertain tax position previously recorded. The related interest and penalties previously accrued were reversed resulting in a reduction to interest expense of $0.2 million. The change in the income tax provision for the three and nine months periods ended September 30, 2018 compared to the prior year was primarily due to the release of a significant portion of our valuation allowance in the fourth quarter of 2017. Prior to the release of the valuation allowance, the Company reported in its consolidated statements of operations only the amount of taxes actually payable. Subsequent to the release of the valuation allowance, tax expense also reflects the tax liability that would be payable without consideration of the usage of any net operating loss carryforwards. We have significant net operating loss carryforwards in the United States and certain European jurisdictions, and, as a result, we do not currently pay significant income taxes in those jurisdictions. At December 31, 2017, the Company had $90.3 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 tax liabilities in future years. |
Concentration of Risk
Concentration of Risk | 9 Months Ended |
Sep. 30, 2018 | |
Concentration of Risk | |
Concentration of Risk | Note 12. Concentration of Risk For the three months ended September 30, 2018, three customers accounted for 17.8%, 13.6% and 13.1% of total revenue, respectively. For the three months ended September 30, 2017, two customers accounted for 25.9% and 15.9% of total revenue, respectively. For the nine months ended September 30, 2018, two customers accounted for 22.9% and 10.8% of total revenue, respectively. For the nine months ended September 30, 2017, four customers accounted for 23.6%, 18.0%, 13.4% and 10.5% of total revenue, respectively. At September 30, 2018, three customers accounted for 16.0%, 13.8% and 12.5% of accounts receivable, respectively. At December 31, 2017, three customers accounted for 19.8%, 11.8% and 10.6% of accounts receivable, respectively. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Contingencies | |
Contingencies | Note 13. 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, 2018 | |
Recent Accounting Guidance | |
Recent Accounting Guidance | Note 14. Recent Accounting Guidance (a) Accounting Standard Codification 606 on Revenue Recognition Adopted January 1, 2018 Effective January 1, 2018, we adopted FASB ASC Topic 606, Revenue from Contracts with Customers , or ASC 606. In accordance with ASC 606, we changed certain characteristics of our revenue recognition accounting policy as described below. In our adoption, ASC 606 was applied only to open contracts using the modified retrospective method, where the cumulative effect of the initial application is recognized as an adjustment to opening retained earnings at January 1, 2018. Therefore, comparative prior periods have not been adjusted and continue to be reported under FASB ASC Topic 605, Revenue Recognition , or ASC 605. In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated statement of operations for the three and nine months ended September 30, 2018 and consolidated balance sheet as of September 30, 2018 was as follows (in thousands): Three months ended Nine months ended September 30, 2018 September 30, 2018 Consolidated Statement of Operations As Reported ASC 606 Pro Forma Under ASC 605 As Reported ASC 606 Pro Forma Under ASC 605 Revenue: Product $ 88,496 $ 556 $ 89,052 $ 317,039 $ (1,280) $ 315,759 Total revenue 95,374 556 95,930 336,892 (1,280) 335,612 Gross profit 39,913 556 40,469 136,069 (1,280) 134,789 Income from operations 10,668 556 11,224 48,437 (1,280) 47,157 Income before income taxes 9,346 556 9,902 44,458 (1,280) 43,178 Income tax provision 508 121 629 7,036 (277) 6,759 Net income $ 8,838 $ 435 $ 9,273 $ 37,422 $ (1,003) $ 36,419 Net income per share: Basic $ 0.27 $ 0.01 $ 0.28 $ 1.16 $ (0.03) $ 1.13 Diluted $ 0.26 $ 0.01 $ 0.27 $ 1.10 $ (0.03) $ 1.07 September 30, 2018 Consolidated Balance Sheet As Reported ASC 606 Pro Forma Under ASC 605 Deferred income taxes $ 76,382 $ 277 $ 76,659 Total assets $ 519,232 $ 277 $ 519,509 Deferred revenue $ 17,774 $ 2,880 $ 20,654 Total current liabilities 66,272 2,880 69,152 Total liabilities 122,158 2,880 125,038 Accumulated deficit (165,723) (2,603) (168,326) Total stockholders' equity 397,074 (2,603) 394,471 Total liabilities and stockholders' equity $ 519,232 $ 277 $ 519,509 The impact of the adoption of ASC 606 on consolidated statements of comprehensive income and cash flows for the nine months ended September 30, 2018 was not material. Upon adoption of ASC 606, we changed our accounting policy for the installation performance obligation included in all system sales. Previously under ASC 605, the Company deferred revenue for the greater of the fair value of the installation or the portion of contract consideration for which collection was contingent upon installation completion (the “retention”). The concept of contingent consideration is no longer relevant under ASC 606 and therefore we will only defer the portion of the transaction price allocated to the installation performance obligation. As a result of this change, we recorded a cumulative effect adjustment to increase retained earnings and decrease deferred revenue on January 1, 2018 by $1.6 million. Upon the adoption, all new contracts will be accounted for under ASC 606. Disclosures related to the nature, amount and timing of revenue and cash flows arising from contracts with customers are included in Note 3. (b) Accounting Standard Update 2016-15 on Cash Receipts Adopted January 1, 2018 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 relating to specific cash flow 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, and is to be applied retrospectively for each period presented. Adoption of ASU 2016-15 had no material effect on our consolidated financial statements and disclosures. (c) Accounting Standard Update 2017-07 on Retirement Benefits Adopted January 1, 2018 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. Adoption of ASU 2017-07 had no material effect on the consolidated financial statements and disclosures. (d) Accounting Standard Update 2016-02 on Leases to be Effective January 1, 2019 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. In July 2018, the FASB issued ASU No. 2018-11 “Leases (Topic 842)” , that provides targeted improvements relating to the transition method options with which to adopt the new standard. Under this additional and optional transition method, an entity initially applies the new lease standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. An entity that elects this transition method must provide the required Topic 840 disclosures for all periods that continue to be in accordance with Topic 840. We are currently implementing procedures and controls in anticipation of our adoption as well as evaluating the impact of ASUs 2016-02 and 2018-11 on the consolidated financial statements and disclosures. The Company anticipates adopting the new standard on January 1, 2019 using the modified retrospective approach under the ASU 2018-11 transition method with the primary effect to be the recognition of additional right-of-use assets and corresponding liabilities related to operating leases. The adoption is not expected to have a material impact on the Company’s results of operations and cash flows. (e) Accounting Standard Update 2018-13 on Fair Value Measurements to be Effective January 1, 2020 In August 2018, the FASB issued ASU No. 2018-13 “Fair Value Measurement (Topic 820).” The amendments in ASU No. 2018-13 modify the disclosure requirements on fair value measurements in Topic 820, removing disclosure requirements for transfers between Level 1 and Level 2 within the fair value hierarchy, as well as modifying the disclosure requirement relating to the timing of liquidation for investments calculated on net asset value. The ASU also requires the disclosure of unrealized gains and losses for the period included in other comprehensive income for Level 3 instruments. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those years, beginning after December 15, 2019. The amendments on changes for unrealized gains and losses should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. Early adoption is permitted. We are currently evaluating the impact of ASU 2018-13 on the consolidated financial statements and disclosures. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue | |
Schedule of revenue by discipline | Three months ended Nine months ended September 30, September 30, 2018* 2017 2018* 2017 (in thousands) (in thousands) Systems $ $ $ $ Aftermarket 38,980 35,264 121,103 107,257 $ $ $ $ |
Schedule of revenue by geographic markets | Three months ended Nine months ended September 30, September 30, 2018* 2017 2018* 2017 (in thousands) (in thousands) North America $ $ $ $ Asia Europe $ $ $ $ |
Schedule of contract assets and contract liabilities | September 30, December 31, 2018 2017 (in thousands) Contract assets $ — $ — Contract liabilities $ 17,774 $ 18,145 Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 (in thousands) Revenue recognized in the period from: Amounts included in contract liability at the beginning of the period $ 4,569 $ 8,516 $ 11,957 $ 8,880 Performance obligations satisfied in previous periods $ — $ — $ — $ — |
Computation of Net Earnings p_2
Computation of Net Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Computation of Net Earnings per Share | |
Schedule of components of net income per share | Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 (in thousands, except per share amounts) Net income available to common stockholders $ 8,838 $ 11,841 $ 37,422 $ 35,279 Weighted average common shares outstanding used in computing basic income per share 32,365 31,274 32,225 30,550 Incremental options and RSUs 1,608 2,250 1,807 2,498 Weighted average common shares used in computing diluted net income per share 33,973 33,524 34,032 33,048 Net income per share Basic $ 0.27 $ 0.38 $ 1.16 $ 1.15 Diluted $ 0.26 $ 0.35 $ 1.10 $ 1.07 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accumulated Other Comprehensive Income | |
Schedule of changes in accumulated other comprehensive income, net of tax | Foreign Defined benefit currency pension plan Total (in thousands) Balance at December 31, 2017 $ 2,756 $ (580) $ 2,176 Other comprehensive income and pension reclassification (1,584) 90 (1,494) Balance at September 30, 2018 $ 1,172 $ (490) $ 682 |
Cash, cash equivalents and re_2
Cash, cash equivalents and restricted cash (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Cash, cash equivalents and restricted cash | |
Schedule of reconciliation of cash, cash equivalents and restricted cash | September 30, December 31, 2018 2017 (in thousands) Cash and cash equivalents $ $ Short-term and long-term restricted cash Total cash, cash equivalents and restricted cash $ $ |
Inventories, net (Tables)
Inventories, net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventories, net | |
Schedule of components of inventories | September 30, December 31, 2018 2017 (in thousands) Raw materials $ 91,782 $ 82,313 Work in process 23,849 31,651 Finished goods (completed systems) 8,377 6,580 Inventories, net $ 124,008 $ 120,544 |
Product Warranty (Tables)
Product Warranty (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Product Warranty | |
Schedule of product warranty liability | Nine months ended September 30, 2018 2017 (in thousands) Balance at January 1 (beginning of year) $ 4,502 $ 2,666 Warranties issued during the period 4,294 3,898 Settlements made during the period (4,566) (1,614) Changes in estimate of liability for pre-existing warranties during the period 650 (562) Balance at September 30 (end of period) $ 4,880 $ 4,388 Amount classified as current $ 4,545 $ 4,154 Amount classified as long-term 335 234 Total warranty liability $ 4,880 $ 4,388 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements | |
Schedule of Company's assets and liabilities by level within the fair value hierarchy | September 30, 2018 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 $ 131,654 $ — $ — $ 131,654 December 31, 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 $ 116,433 $ — $ — $ 116,433 |
Recent Accounting Guidance (Tab
Recent Accounting Guidance (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
ASU 2014-09 | |
Recent Accounting Guidance | |
Schedule of new accounting pronouncements and changes in accounting principles | In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated statement of operations for the three and nine months ended September 30, 2018 and consolidated balance sheet as of September 30, 2018 was as follows (in thousands): Three months ended Nine months ended September 30, 2018 September 30, 2018 Consolidated Statement of Operations As Reported ASC 606 Pro Forma Under ASC 605 As Reported ASC 606 Pro Forma Under ASC 605 Revenue: Product $ 88,496 $ 556 $ 89,052 $ 317,039 $ (1,280) $ 315,759 Total revenue 95,374 556 95,930 336,892 (1,280) 335,612 Gross profit 39,913 556 40,469 136,069 (1,280) 134,789 Income from operations 10,668 556 11,224 48,437 (1,280) 47,157 Income before income taxes 9,346 556 9,902 44,458 (1,280) 43,178 Income tax provision 508 121 629 7,036 (277) 6,759 Net income $ 8,838 $ 435 $ 9,273 $ 37,422 $ (1,003) $ 36,419 Net income per share: Basic $ 0.27 $ 0.01 $ 0.28 $ 1.16 $ (0.03) $ 1.13 Diluted $ 0.26 $ 0.01 $ 0.27 $ 1.10 $ (0.03) $ 1.07 September 30, 2018 Consolidated Balance Sheet As Reported ASC 606 Pro Forma Under ASC 605 Deferred income taxes $ 76,382 $ 277 $ 76,659 Total assets $ 519,232 $ 277 $ 519,509 Deferred revenue $ 17,774 $ 2,880 $ 20,654 Total current liabilities 66,272 2,880 69,152 Total liabilities 122,158 2,880 125,038 Accumulated deficit (165,723) (2,603) (168,326) Total stockholders' equity 397,074 (2,603) 394,471 Total liabilities and stockholders' equity $ 519,232 $ 277 $ 519,509 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Stock-Based Compensation | ||||
Stock-based compensation expense | $ 2,400 | $ 1,700 | $ 5,600 | $ 4,300 |
Proceeds from exercise of stock options | $ 1,289 | $ 11,112 | ||
Common Stock | ||||
Stock-Based Compensation | ||||
Exercise of stock options (in shares) | 100,000 | 300,000 | 300,000 | 1,900,000 |
Proceeds from exercise of stock options | $ 500 | $ 1,800 | $ 1,700 | $ 11,400 |
2000 Stock Plan | ||||
Stock-Based Compensation | ||||
Number of shares of common stock available for future grant | 0 | 0 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue | ||||
Product warranty period | 1 year | |||
Change in contract liabilities | $ (400) | $ (400) | ||
Contract liabilities | 17,774 | 17,774 | $ 18,145 | |
Deferred revenue | 14,393 | 14,393 | 16,181 | |
Long-term deferred revenue | 3,381 | 3,381 | $ 1,964 | |
ASC 606 Adjustments | ||||
Disaggregation of Revenue | ||||
Contract liabilities | 2,880 | 2,880 | ||
ASC 606 Adjustments | ASU 2014-09 | ||||
Disaggregation of Revenue | ||||
Reclassification gross decrease in customer contract liabilities | 1,600 | $ 1,600 | $ 1,600 | |
ASC 606 Adjustments | Maximum | ||||
Disaggregation of Revenue | ||||
Unsatisfied extended warranty performance obligations, period | 24 months | |||
Systems | ||||
Disaggregation of Revenue | ||||
Payment upon shipment of tool, as a percent | 90.00% | |||
Payment upon installation, as a percent | 10.00% | |||
Systems | Minimum | ||||
Disaggregation of Revenue | ||||
Payment upon delivery of parts, period | 30 days | |||
Systems | Maximum | ||||
Disaggregation of Revenue | ||||
Payment upon delivery of parts, period | 60 days | |||
Systems | ASC 606 Adjustments | ||||
Disaggregation of Revenue | ||||
Increase in revenue | $ (600) | $ 1,300 | ||
Aftermarket | Minimum | ||||
Disaggregation of Revenue | ||||
Extended warranty period | 1 year | |||
Aftermarket | Maximum | ||||
Disaggregation of Revenue | ||||
Extended warranty period | 3 years |
Revenue - Revenue by discipline
Revenue - Revenue by discipline & geographical areas (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of Revenue | ||||
Revenue | $ 95,374 | $ 336,892 | ||
North America | ||||
Disaggregation of Revenue | ||||
Revenue | 12,115 | 39,123 | ||
Asia | ||||
Disaggregation of Revenue | ||||
Revenue | 67,019 | 253,179 | ||
Europe | ||||
Disaggregation of Revenue | ||||
Revenue | 16,240 | 44,590 | ||
Systems | ||||
Disaggregation of Revenue | ||||
Revenue | 56,394 | 215,789 | ||
Aftermarket | ||||
Disaggregation of Revenue | ||||
Revenue | 38,980 | 121,103 | ||
Before Topic 606 | ||||
Disaggregation of Revenue | ||||
Revenue | 95,930 | $ 104,482 | 335,612 | $ 294,165 |
Before Topic 606 | North America | ||||
Disaggregation of Revenue | ||||
Revenue | 12,435 | 31,834 | ||
Before Topic 606 | Asia | ||||
Disaggregation of Revenue | ||||
Revenue | 80,245 | 224,591 | ||
Before Topic 606 | Europe | ||||
Disaggregation of Revenue | ||||
Revenue | 11,802 | 37,740 | ||
Before Topic 606 | Systems | ||||
Disaggregation of Revenue | ||||
Revenue | 69,218 | 186,908 | ||
Before Topic 606 | Aftermarket | ||||
Disaggregation of Revenue | ||||
Revenue | $ 35,264 | $ 107,257 | ||
ASC 606 Adjustments | ||||
Disaggregation of Revenue | ||||
Revenue | 556 | (1,280) | ||
ASC 606 Adjustments | North America | ||||
Disaggregation of Revenue | ||||
Revenue | (200) | |||
ASC 606 Adjustments | Asia | ||||
Disaggregation of Revenue | ||||
Revenue | (800) | $ 1,500 | ||
ASC 606 Adjustments | Europe | ||||
Disaggregation of Revenue | ||||
Revenue | $ 200 |
Revenue - Contract assets and l
Revenue - Contract assets and liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Revenue | |||||
Contract liabilities | $ 17,774 | $ 17,774 | $ 18,145 | ||
Revenue recognized in the period from: | |||||
Amounts included in contract liability at the beginning of the period | $ 4,569 | $ 8,516 | $ 11,957 | $ 8,880 |
Computation of Net Earnings p_3
Computation of Net Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Computation of Net Earnings per Share | ||||
Net income available to common stockholders | $ 8,838 | $ 11,841 | $ 37,422 | $ 35,279 |
Weighted average common shares outstanding used in computing basic income per share | 32,365 | 31,274 | 32,225 | 30,550 |
Incremental options and RSUs | 1,608 | 2,250 | 1,807 | 2,498 |
Weighted average common shares used in computing diluted net income per share | 33,973 | 33,524 | 34,032 | 33,048 |
Net income per share | ||||
Basic | $ 0.27 | $ 0.38 | $ 1.16 | $ 1.15 |
Diluted | $ 0.26 | $ 0.35 | $ 1.10 | $ 1.07 |
Weighted average number diluted shares outstanding adjustment | 300 | 4 | 11 | 200 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Changes in accumulated other comprehensive income, net of tax | ||||
Balance at December 31, 2017 | $ 2,176 | |||
Other comprehensive income and pension reclassification | $ (254) | $ 556 | (1,494) | $ 3,017 |
Balance at September 30, 2018 | 682 | 682 | ||
Foreign currency | ||||
Changes in accumulated other comprehensive income, net of tax | ||||
Balance at December 31, 2017 | 2,756 | |||
Other comprehensive income and pension reclassification | (1,584) | |||
Balance at September 30, 2018 | 1,172 | 1,172 | ||
Defined benefit pension plan | ||||
Changes in accumulated other comprehensive income, net of tax | ||||
Balance at December 31, 2017 | (580) | |||
Other comprehensive income and pension reclassification | 90 | |||
Balance at September 30, 2018 | $ (490) | $ (490) |
Cash, cash equivalents and re_3
Cash, cash equivalents and restricted cash (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Cash and cash equivalents | $ 148,716 | $ 133,407 | ||
Short-term and long-term restricted cash | 6,877 | 7,473 | ||
Total cash, cash equivalents and long-term restricted cash | 155,593 | 140,880 | $ 120,688 | $ 77,655 |
Letter of credit related to workers' compensation insurance | 800 | 800 | ||
Letter of credit associated with bank guarantee one | 700 | |||
Letter of credit associated with bank guarantee two | 100 | |||
Deposit related to customs activity | 100 | 100 | ||
Revolving credit facility | ||||
Restricted cash which relates to support of outstanding letters of credit | 6,900 | 7,500 | ||
Revolving credit facility | Beverly Property Owner LLC | ||||
Letter of credit associated with security deposit for leaseback transaction | $ 5,900 | $ 5,900 |
Inventories, net (Details)
Inventories, net (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Inventories, net | ||
Raw materials | $ 91,782 | $ 82,313 |
Work in process | 23,849 | 31,651 |
Finished goods (completed systems) | 8,377 | 6,580 |
Inventories, net | $ 124,008 | $ 120,544 |
Product Warranty (Details)
Product Warranty (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | |
Product Warranty | |||||
Product warranty period | 1 year | ||||
Changes in standard product warranty liability | |||||
Balance at January 1 (beginning of year) | $ 4,502 | $ 2,666 | |||
Warranties issued during the period | 4,294 | 3,898 | |||
Settlements made during the period | (4,566) | (1,614) | |||
Changes in estimate of liability for pre-existing warranties during the period | 650 | (562) | |||
Balance at September 30 (end of period) | 4,880 | 4,388 | |||
Product warranty classification | |||||
Amount classified as current | $ 4,545 | $ 4,112 | $ 4,154 | ||
Amount classified as long-term | 335 | 234 | |||
Total warranty liability | $ 4,502 | $ 2,666 | $ 4,880 | $ 4,502 | $ 4,388 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - Money market funds, US Government Securities and Agency Investments - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Total | ||
Fair Value Measurements | ||
Money market funds, U.S. Government Securities and Agency Investments | $ 131,654 | $ 116,433 |
Level 1 | ||
Fair Value Measurements | ||
Money market funds, U.S. Government Securities and Agency Investments | $ 131,654 | $ 116,433 |
Financing Arrangements (Details
Financing Arrangements (Details) - USD ($) $ in Thousands | Jan. 30, 2015 | Sep. 30, 2018 | Dec. 31, 2017 |
Financing Arrangements | |||
Sale leaseback obligation | $ 47,746 | $ 47,714 | |
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 |
Income Taxes (Details)
Income Taxes (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Income Taxes | |||||
Federal statutory tax rate | 21.00% | 35.00% | |||
Income tax provision | $ 508 | $ 1,014 | $ 7,036 | $ (1,586) | |
Transition tax benefit | $ 1,400 | $ 1,400 | |||
Decrease in effective tax rate (as a percent) | 15.2 | 3.1 | |||
Tax benefit recognized upon the expiration of statute of limitation | $ 300 | ||||
Interest and penalties previously accrued credited to interest expenses | $ 200 | $ 200 | |||
Deferred tax assets valuation allowance | $ 90,300 |
Concentration of Risk (Details)
Concentration of Risk (Details) - customer | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Revenue | Customer concentration risk | |||||
Concentration of Risk | |||||
Number of customers | 3 | 2 | 4 | ||
Revenue | Customer concentration risk | First customer | |||||
Concentration of Risk | |||||
Percentage of concentration risk | 17.80% | 25.90% | 22.90% | 23.60% | |
Revenue | Customer concentration risk | Second customer | |||||
Concentration of Risk | |||||
Percentage of concentration risk | 13.60% | 15.90% | 10.80% | 18.00% | |
Revenue | Customer concentration risk | Third customer | |||||
Concentration of Risk | |||||
Percentage of concentration risk | 13.10% | 13.40% | |||
Revenue | Customer concentration risk | Fourth customer | |||||
Concentration of Risk | |||||
Percentage of concentration risk | 10.50% | ||||
Consolidated accounts receivable | Credit concentration risk | |||||
Concentration of Risk | |||||
Number of customers | 3 | 3 | |||
Consolidated accounts receivable | Credit concentration risk | First customer | |||||
Concentration of Risk | |||||
Percentage of concentration risk | 16.00% | 19.80% | |||
Consolidated accounts receivable | Credit concentration risk | Second customer | |||||
Concentration of Risk | |||||
Percentage of concentration risk | 13.80% | 11.80% | |||
Consolidated accounts receivable | Credit concentration risk | Third customer | |||||
Concentration of Risk | |||||
Percentage of concentration risk | 12.50% | 10.60% |
Recent Accounting Guidance (Det
Recent Accounting Guidance (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Revenue: | ||||||
Revenue | $ 95,374 | $ 336,892 | ||||
Gross profit | 39,913 | $ 39,751 | 136,069 | $ 113,527 | ||
Income from operations | 10,668 | 13,835 | 48,437 | 37,078 | ||
Income before income taxes | 9,346 | 12,855 | 44,458 | 33,693 | ||
Income tax provision | 508 | 1,014 | 7,036 | (1,586) | ||
Net income | $ 8,838 | $ 11,841 | $ 37,422 | $ 35,279 | ||
Net income per share: | ||||||
Basic (in dollars per share) | $ 0.27 | $ 0.38 | $ 1.16 | $ 1.15 | ||
Diluted (in dollars per share) | $ 0.26 | $ 0.35 | $ 1.10 | $ 1.07 | ||
Consolidated Balance Sheet | ||||||
Deferred income taxes | $ 76,382 | $ 76,382 | $ 83,148 | |||
Total assets | 519,232 | 519,232 | 488,218 | |||
Deferred revenue | 17,774 | 17,774 | 18,145 | |||
Total current liabilities | 66,272 | 66,272 | 79,287 | |||
Total liabilities | 122,158 | 122,158 | 134,608 | |||
Accumulated deficit | (165,723) | (165,723) | (204,745) | |||
Total stockholders' equity | 397,074 | 397,074 | 353,610 | |||
Total liabilities and stockholders' equity | 519,232 | 519,232 | $ 488,218 | |||
Product | ||||||
Revenue: | ||||||
Revenue | 88,496 | 317,039 | ||||
ASC 606 Adjustments | ||||||
Revenue: | ||||||
Revenue | 556 | (1,280) | ||||
Gross profit | 556 | (1,280) | ||||
Income from operations | 556 | (1,280) | ||||
Income before income taxes | 556 | (1,280) | ||||
Income tax provision | 121 | (277) | ||||
Net income | $ 435 | $ (1,003) | ||||
Net income per share: | ||||||
Basic (in dollars per share) | $ 0.01 | $ (0.03) | ||||
Diluted (in dollars per share) | $ 0.01 | $ (0.03) | ||||
Consolidated Balance Sheet | ||||||
Deferred income taxes | $ 277 | $ 277 | ||||
Total assets | 277 | 277 | ||||
Deferred revenue | 2,880 | 2,880 | ||||
Total current liabilities | 2,880 | 2,880 | ||||
Total liabilities | 2,880 | 2,880 | ||||
Accumulated deficit | (2,603) | (2,603) | ||||
Total stockholders' equity | (2,603) | (2,603) | ||||
Total liabilities and stockholders' equity | 277 | 277 | ||||
ASC 606 Adjustments | Product | ||||||
Revenue: | ||||||
Revenue | 556 | (1,280) | ||||
ASC 606 Adjustments | ASU 2014-09 | ||||||
Consolidated Balance Sheet | ||||||
Gross Reclassification Decrease In Contract With Customer Liability Due To New ASU Adoption | 1,600 | 1,600 | $ 1,600 | |||
Cumulative adjustment increase in retained earnings | $ 1,600 | |||||
Before Topic 606 | ||||||
Revenue: | ||||||
Revenue | 95,930 | $ 104,482 | 335,612 | $ 294,165 | ||
Gross profit | 40,469 | 134,789 | ||||
Income from operations | 11,224 | 47,157 | ||||
Income before income taxes | 9,902 | 43,178 | ||||
Income tax provision | 629 | 6,759 | ||||
Net income | $ 9,273 | $ 36,419 | ||||
Net income per share: | ||||||
Basic (in dollars per share) | $ 0.28 | $ 1.13 | ||||
Diluted (in dollars per share) | $ 0.27 | $ 1.07 | ||||
Consolidated Balance Sheet | ||||||
Deferred income taxes | $ 76,659 | $ 76,659 | ||||
Total assets | 519,509 | 519,509 | ||||
Deferred revenue | 20,654 | 20,654 | ||||
Total current liabilities | 69,152 | 69,152 | ||||
Total liabilities | 125,038 | 125,038 | ||||
Accumulated deficit | (168,326) | (168,326) | ||||
Total stockholders' equity | 394,471 | 394,471 | ||||
Total liabilities and stockholders' equity | 519,509 | 519,509 | ||||
Before Topic 606 | Product | ||||||
Revenue: | ||||||
Revenue | $ 89,052 | $ 315,759 |