Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 28, 2018 | Oct. 26, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 28, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | UCTT | |
Entity Registrant Name | Ultra Clean Holdings, Inc. | |
Entity Central Index Key | 1,275,014 | |
Current Fiscal Year End Date | --12-28 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 39,014,181 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 28, 2018 | Dec. 29, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 160,340 | $ 68,306 |
Accounts receivable, net of allowance of $235 and $69, respectively | 95,056 | 90,213 |
Inventories | 198,578 | 236,840 |
Prepaid expenses and other | 30,873 | 12,089 |
Total current assets | 484,847 | 407,448 |
Property and equipment, net | 133,746 | 32,246 |
Goodwill | 151,869 | 85,248 |
Purchased intangibles, net | 203,180 | 31,587 |
Deferred tax assets, net | 4,918 | 4,951 |
Other non-current assets | 8,072 | 1,932 |
Total assets | 986,632 | 563,412 |
Current liabilities: | ||
Bank borrowings | 42,818 | 12,381 |
Accounts payable | 95,178 | 173,521 |
Accrued compensation and related benefits | 18,981 | 10,788 |
Deferred rent, current portion | 684 | 670 |
Other current liabilities | 17,962 | 9,987 |
Total current liabilities | 175,623 | 207,347 |
Bank borrowings, net of current portion | 330,984 | 39,893 |
Deferred tax liability | 9,868 | 9,981 |
Other non-current liabilities | 23,409 | 5,886 |
Total liabilities | 539,884 | 263,107 |
Commitments and contingencies (See Note 9) | ||
Stockholders’ equity: | ||
Preferred stock — $0.001 par value, 10,000,000 authorized; none outstanding | ||
Common stock — $0.001 par value, 90,000,000 authorized; 39,001,184 and 33,664,940 shares issued and outstanding, in 2018 and 2017, respectively | 39 | 34 |
Additional paid-in capital | 287,293 | 188,639 |
Common shares held in treasury, at cost, 601,944 shares in 2018 and 2017 | (3,337) | (3,337) |
Retained earnings | 150,826 | 113,122 |
Accumulated other comprehensive gain | (43) | 1,847 |
Ultra Clean Holdings, Inc. stockholders' equity | 434,778 | 300,305 |
Noncontrolling interest | 11,970 | |
Total stockholders’ equity | 446,748 | 300,305 |
Total liabilities and stockholders’ equity | $ 986,632 | $ 563,412 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 28, 2018 | Dec. 29, 2017 |
Statement Of Financial Position [Abstract] | ||
Account receivable, allowance | $ 235 | $ 69 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common stock, shares issued | 39,001,184 | 33,664,940 |
Common stock, shares outstanding | 39,001,184 | 33,664,940 |
Treasury stock, shares | 601,944 | 601,944 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2018 | Sep. 29, 2017 | Sep. 28, 2018 | Sep. 29, 2017 | |
Income Statement [Abstract] | ||||
Sales | $ 234,079 | $ 242,610 | $ 839,134 | $ 675,465 |
Cost of goods sold | 199,084 | 199,914 | 709,270 | 551,903 |
Gross profit | 34,995 | 42,696 | 129,864 | 123,562 |
Operating expenses: | ||||
Research and development | 3,284 | 2,722 | 9,228 | 8,402 |
Sales and marketing | 3,839 | 3,662 | 11,274 | 10,064 |
General and administrative | 26,950 | 13,050 | 58,868 | 37,656 |
Total operating expenses | 34,073 | 19,434 | 79,370 | 56,122 |
Income from operations | 922 | 23,262 | 50,494 | 67,440 |
Interest and other income (expense), net | (2,766) | (19) | (3,249) | (2,077) |
Income (loss) before provision for income taxes | (1,844) | 23,243 | 47,245 | 65,363 |
Income tax provision | 4,596 | 3,527 | 9,984 | 11,127 |
Net income (loss) | (6,440) | 19,716 | 37,261 | 54,236 |
Net loss attributable to noncontrolling interest | (443) | (443) | ||
Net income (loss) attributable to Ultra Clean Holdings, Inc. | $ (5,997) | $ 19,716 | $ 37,704 | $ 54,236 |
Net income (loss) per share attributable to Ultra Clean Holdings, Inc. common stockholders: | ||||
Basic | $ (0.15) | $ 0.59 | $ 0.99 | $ 1.63 |
Diluted | $ (0.15) | $ 0.57 | $ 0.97 | $ 1.59 |
Shares used in computing net income (loss) per share: | ||||
Basic | 38,930 | 33,540 | 38,152 | 33,342 |
Diluted | 38,930 | 34,360 | 38,745 | 34,216 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2018 | Sep. 29, 2017 | Sep. 28, 2018 | Sep. 29, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) including noncontrolling interests | $ (6,440) | $ 19,716 | $ 37,261 | $ 54,236 |
Other comprehensive income (loss): | ||||
Change in cumulative translation adjustment | (193) | 312 | (656) | 1,001 |
Cash flow hedges: | ||||
Change in fair value of derivatives | 39 | 333 | (24) | 1,026 |
Adjustment for net gain (loss) realized and included in net income | (337) | (100) | (1,247) | (93) |
Total change in unrealized gain (loss) on derivative instruments | (298) | 233 | (1,271) | 933 |
Total Other comprehensive income (loss), net of tax | (491) | 545 | (1,927) | 1,934 |
Other comprehensive income (loss), net of tax, attributable to noncontrolling interest | (37) | (37) | ||
Comprehensive income (loss) attributable to Ultra Clean Holdings, Inc. | $ (6,894) | $ 20,261 | $ 35,371 | $ 56,170 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows $ in Thousands | 9 Months Ended | |
Sep. 28, 2018USD ($) | Sep. 29, 2017USD ($) | |
Cash flows from operating activities: | ||
Net income including noncontrolling interests | $ 37,261 | $ 54,236 |
Adjustments to reconcile net income to net cash provided by operating activities (excluding assets acquired and liabilities assumed): | ||
Depreciation and amortization | 5,801 | 3,895 |
Amortization of finite-lived intangibles | 4,607 | 3,693 |
Amortization of debt issuance costs | 322 | 115 |
Stock-based compensation | 7,133 | 5,059 |
Change in the fair value of financial instruments | (499) | (278) |
Loss on the disposal of assets and business | 1,352 | 72 |
Changes in assets and liabilities: | ||
Accounts receivable | 13,730 | (32,387) |
Inventories | 37,816 | (60,484) |
Prepaid expenses and other | (6,292) | (4,386) |
Deferred income taxes | 68 | (224) |
Other non-current assets | (297) | (486) |
Accounts payable | (86,699) | 57,695 |
Accrued compensation and related benefits | 5,332 | 4,514 |
Income taxes payable | (3,969) | 4,614 |
Other liabilities | (335) | 1,978 |
Net cash provided by operating activities | 15,331 | 37,626 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (15,526) | (12,534) |
Acquisition of QGT, net of cash acquired | (290,462) | |
Net cash used for investing activities | (305,988) | (12,534) |
Cash flows from financing activities: | ||
Proceeds from bank borrowings | 382,184 | 8,172 |
Proceeds from issuance of common stock | 94,471 | 1,689 |
Principal payments on bank borrowings | (78,608) | (19,228) |
Debt issuance costs paid | (12,118) | |
Employees’ taxes paid upon vesting of restricted stock units | (2,945) | (2,369) |
Net cash provided by (used for) financing activities | 382,984 | (11,736) |
Effect of exchange rate changes on cash and cash equivalents | (293) | 118 |
Net increase in cash and cash equivalents | 92,034 | 13,474 |
Cash and cash equivalents at beginning of period | 68,306 | 52,465 |
Cash and cash equivalents at end of period | 160,340 | 65,939 |
Supplemental cash flow information: | ||
Income taxes paid | 13,594 | 6,860 |
Income tax refunds | 39 | 25 |
Interest paid | 2,951 | 3,409 |
Non-cash investing and financing activities: | ||
Property and equipment purchased included in accounts payable | 1,767 | $ 1,514 |
Impairment loss due to a facility fire | 5,226 | |
Sale of a business unit | 291 | |
Fair value of earn-out payments related to QGT acquisition | $ 4,163 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 9 Months Ended |
Sep. 28, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization and Significant Accounting Policies | 1. Organization and Significant Accounting Policies Organization — Ultra Clean Holdings, Inc. (the “Company” or “UCT”) was founded in November 2002 for the purpose of acquiring Ultra Clean Technology Systems and Service, Inc. Ultra Clean Technology Systems and Service, Inc. was founded in 1991 by Mitsubishi Corporation and was operated as a subsidiary of Mitsubishi until November 2002, when it was acquired by UCT. UCT became a publicly traded company in March 2004. Ultra Clean Technology (Shanghai) Co., Ltd (“UCTS”) and Ultra Clean Micro-Electronics Equipment (Shanghai) Co., Ltd. (“UCME”) were established in 2005 and 2007, respectively, to facilitate the Company’s operations in China. In December 2015, UCTS merged into UCME. Ultra Clean Asia Pacific, Pte, Ltd. (Singapore) was established in fiscal year 2008 to facilitate the Company’s operations in Singapore. In July 2012, UCT acquired American Integration Technologies LLC (“AIT”) to add to the Company’s existing customer base in the semiconductor and medical spaces and to provide additional manufacturing capabilities. In February 2015, UCT acquired Marchi Thermal Systems, Inc. (“Marchi”), a designer and manufacturer of specialty heaters, thermocouples and temperature controllers. Marchi delivers flexible heating elements and thermal solutions to our customers. The Company believes heaters are increasingly critical in equipment design for the most advanced semiconductor nodes. In July 2015, UCT acquired MICONEX s.r.o. (“Miconex”), a privately-held provider of advanced precision fabrication of plastics, to expand the Company’s capabilities with existing customers. In May 2018, Marchi and Miconex changed their names to UCT Thermal Solutions, Inc. (“Thermal”) and to UCT Fluid Delivery Solutions s.r.o (“FDS”), respectively. In August 2018, the Company acquired Quantum Global Technologies, LLC (“QGT”), a provider of ultra-high purity outsourced parts cleaning, process tool part recoating, surface treatment and analytical services to the semiconductor and related industries, for a total purchase price of approximately $346.2 million. See Note 5 to the Company’s Condensed Consolidated Financial Statements for further information about the acquisition of QGT. Basis of Presentation — The unaudited condensed consolidated financial statements included in this quarterly report on Form 10-Q include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). This financial information reflects all adjustments which are, in the opinion of the Company, normal, recurring and necessary for the fair financial statement presentation for the dates and periods presented. Certain information and footnote disclosures normally included in our annual financial statements, prepared in accordance with GAAP, have been condensed or omitted. The Company’s December 29, 2017 balance sheet data were derived from its audited financial statements as of that date. Principles of Consolidation — The Company’s condensed consolidated financial statements include the accounts of the Company and its subsidiaries with the ownership interests of minority shareholders presented as noncontrolling interests. All intercompany accounts and transactions have been eliminated in consolidation. The Company uses a 52-53 week fiscal year ending on the Friday nearest December 31. All references to quarters refer to fiscal quarters and all references to years refer to fiscal years. Foreign Currency Translation and Remeasurement — The Company has one foreign subsidiary whose functional currency is not its local currency or the U.S. dollar. The Company remeasures the monetary assets and liabilities of this subsidiary into its functional currency. Gains and losses from these remeasurements are recorded in interest and other income (expense), net. The Company then translates the assets and liabilities of this subsidiary into the U.S. dollar. Gains and losses from these translations are recognized in foreign currency translation included in accumulated other comprehensive income (AOCI) within stockholders’ equity. For the Company’s foreign subsidiaries where the U.S. dollar is the functional currency, any gains and losses resulting from the translation of the assets and liabilities of these subsidiaries are recorded in interest and other income (expense), net. Use of Accounting Estimates — The presentation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions include reserves on inventory, valuation of deferred tax assets, impairment of goodwill, valuation of pension obligations and other long-lived assets. The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under the circumstances. However, future events are subject to change and the best estimates and judgments routinely require adjustment. Actual amounts may differ from those estimates. Concentration of Credit Risk — Financial instruments which subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company sells its products primarily to semiconductor capital equipment manufacturers in the United States. The Company performs credit evaluations of its customers’ financial condition and generally requires no collateral. Fair Value of Measurements — The Company measures its cash equivalents, interest rate swap contract and forward contracts at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value: Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings. Level 3 — Unobservable inputs that are supported by little or no market activities. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following table summarizes, for assets or liabilities measured at fair value, the respective fair value and the classification by level of input within the fair value hierarchy (in thousands): Fair Value Measurement at Reporting Date Using Description September 28, 2018 Quoted Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Other assets: Forward contracts $ 411 $ — $ 411 $ — Other non-current liabilities: Contingent earn-out liability $ 4,163 $ — $ — $ 4,163 Stock purchase obligation $ 8,552 $ — $ — $ 8,552 Fair Value Measurement at Reporting Date Using Description December 29, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Other assets: Interest rate swap $ 30 $ — $ 30 $ — Forward contracts $ 1,302 $ — $ 1,302 $ — Derivative Financial Instruments — The Company recognizes derivative instruments as either assets or liabilities in the accompanying Condensed Consolidated Balance Sheets at fair value. The Company records changes in the fair value of the derivatives in the accompanying Condensed Consolidated Statements of Operations as interest and other income (expense), net, or as a component of AOCI in the accompanying Condensed Consolidated Balance Sheets. Inventories — Inventories are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or net realizable value. The Company evaluates the valuation of all inventories, including raw materials, work-in-process, finished goods and spare parts on a periodic basis. Obsolete inventory or inventory in excess of management’s estimated usage is written-down to its estimated market value less costs to sell, if less than its cost. Inherent in the estimates of market value are management’s estimates related to economic trends, future demand for products, and technological obsolescence of the Company’s products. Inventory write downs inherently involve judgments as to assumptions about expected future demand and the impact of market conditions on those assumptions. Although the Company believes that the assumptions it used in estimating inventory write downs are reasonable, significant changes in any one of the assumptions in the future could produce a significantly different result. There can be no assurances that future events and changing market conditions will not result in significant increases in inventory write downs. Property and — Property and equipment are stated at cost, or, in the case of equipment under capital leases, the present value of future minimum lease payments at inception of the related lease. Depreciation and amortization are computed using the straight-line method and declining balance methods over the lesser of the estimated useful lives of the assets or the terms of the leases. Useful lives range from three to forty years. Internal use software — Direct costs incurred to develop software for internal use are capitalized and amortized over an estimated useful life of three to five years. Costs related to the design or maintenance of internal use software are expensed as incurred. Capitalized internal use software is included in computer equipment and software. Construction in progress — Construction in progress is related to the construction or development of property and equipment that has not yet been placed in service for their intended use and is, therefore, not depreciated. Construction in progress currently includes capitalized costs related to the Company’s Enterprise Resource Planning (“ERP”) implementation project. Income Taxes — The Company utilizes the asset and liability method of accounting for income taxes, under which deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating our ability to realize our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income, we begin with historical results and incorporate assumptions about the amount of future state, federal, and foreign pretax operating income adjusted for items that do not have tax consequences. The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider recent cumulative income (loss). A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. The Company continued to maintain a full valuation allowance on its federal and state deferred tax amounts as of September 28, 2018. Income tax positions must meet a more likely than not recognition threshold to be recognized. Income tax positions that previously failed to meet the more likely than not threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more likely than not threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits within the Condensed Consolidated Statements of Operations as income tax expense. The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with the Company’s expectations could have a material impact on its results of operations and financial position. Management believes that it has adequately provided for any adjustments that may result from these examinations; however, the outcome of tax audits cannot be predicted with certainty. Revenue Recognition — See Note 3 to the Company’s Condensed Consolidated Financial Statements. Research and Development Costs — Research and development costs are expensed as incurred. Net Income per Share — Basic net income per share is computed by dividing net income by the weighted average number of shares outstanding for the period. Diluted net income per share is calculated by dividing net income by the weighted average number of common shares outstanding and common equivalent shares from dilutive stock options and restricted stock using the treasury stock method, except when such shares are anti-dilutive. See Note 8 to the Company’s Condensed Consolidated Financial Statements. Segments — The Financial Accounting Standards Board’s (FASB) guidance regarding disclosure about segments in an enterprise and related information establishes standards for the reporting by public business enterprises of information about reportable segments, products and services, geographic areas, and major customers. The method for determining what information to report is based on the manner in which management organizes the reportable segments within the Company for making operational decisions and assessments of financial performance. The Company’s chief operating decision-maker is considered to be the Chief Executive Officer. The Company operates in one operating segment, and therefore, has one reportable segment. Business Combinations — The Company recognizes assets acquired (including goodwill and identifiable intangible assets) and liabilities assumed, and noncontrolling interests, if any, at fair value on the acquisition date. Subsequent changes to the fair value of such assets acquired and liabilities assumed are recognized in earnings, after the expiration of the measurement period, a period not to exceed 12 months from the acquisition date. Acquisition-related expenses and acquisition-related restructuring costs are recognized in earnings in the period in which they are incurred. Results of operations and cash flows of acquired companies are included in the Company’s operating results from the date of acquisition. Noncontrolling interests — Noncontrolling interests are recognized to reflect the portion of the equity of the majority-owned subsidiaries which is not attributable, directly or indirectly, to the controlling stockholder. Through the acquisition of QGT in August 2018, the Company’s consolidated entities include partially-owned entities through which the Company is obligated to own 86.0% of its consolidated subsidiary, Cincos Co., Ltd (“Cincos”), a Korean company that provides outsourced cleaning and recycling of precision parts for the semiconductor industry through its operating facilities in South Korea and, through a 60.0% interest in a joint venture, Cincos Xian Clean Technology, Ltd. (“Cincos Xian”), in China. The interest held by others in Cincos and in Cincos Xian are presented as noncontrolling interests in the accompanying condensed consolidated financial statements. The noncontrolling interest will continue to be attributed its share of gains and losses even if that attribution results in a deficit noncontrolling interest balance. Defined Benefit Plan — QGT has a noncontributory defined benefit plan covering substantially all of the employees of one of its foreign entities upon termination of their employee services. The benefits are based on expected years of service and average compensation. QGT records annual amounts relating to the defined benefit plan based on calculations that incorporate various actuarial and other assumptions, including discount rates, mortality rates, assumed rates of return, compensation increases, employee demographics, and turnover rates. QGT reviews its assumptions on an annual basis and makes modifications to those assumptions based on current asset returns, rates, and trends. The effect of modifications to those assumptions is recorded in accumulated other comprehensive income and amortized to net periodic costs over the future service period using the corridor method. The Company believes that the assumptions utilized in recording its obligations under the plan are reasonable based on its experience and market conditions. The net period costs are recognized as employees render the services necessary to earn the post termination benefits. Deferred Debt Issuance Costs — Debt issuance costs incurred in connection with obtaining debt financing are deferred and presented as a direct deduction from Bank Borrowings in the accompanying Condensed Consolidated Balance Sheets. Costs incurred in connection with revolving credit facilities and letter of credit facilities are deferred and presented as an offset to bank borrowings in the accompanying Condensed Consolidated Balance Sheets. Deferred costs are amortized on an effective interest method basis over the contractual term. Stock-Based Compensation Expense The Company maintains stock-based compensation plans which allow for the issuance of equity-based awards to executives, directors and certain employees. These equity-based awards include stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) which can be either time-based or performance-based. The Company has not granted stock options to its employees since fiscal year 2010. The Company also maintains an employee stock purchase plan that provides for the issuance of shares to all eligible employees of the Company at a discounted price. Stock-based compensation expense includes compensation costs related to estimated fair values of stock options and awards granted. The estimated fair value of the Company’s equity-based awards, net of expected forfeitures, is amortized on a straight-line basis over the awards’ vesting period, typically three years for RSUs and one year for RSAs, and is adjusted for subsequent changes in estimated forfeitures related to all equity-based awards and performance as it relates to performance-based RSUs. The Company applies the fair value recognition provisions based on the FASB’s guidance regarding stock-based compensation. Employee Stock Purchase Plan The Company also maintains an employee stock purchase plan (“ESPP”) that provides for the issuance of shares to all eligible employees of the Company at a discounted price. Under the ESPP, substantially all employees may purchase the Company’s common stock through payroll deductions at a price equal to 95 percent of the fair market value of the Company’s stock at the end of each applicable purchase period. Restricted Stock Units and Restricted Stock Awards The Company grants RSUs to employees and RSAs to non-employee directors as part of the Company’s long term equity compensation plan. Restricted Stock Units — RSUs are granted to employees with a per share or unit purchase price of zero dollars and either have time based or performance based vesting. RSUs typically vest over three years, subject to the employee’s continued service with the Company. For purposes of determining compensation expense related to these RSUs, the fair value is determined based on the closing market price of the Company’s common stock on the date of award. The expected cost of the grant is reflected over the service period, and is reduced for estimated forfeitures. There were 683,305 RSUs granted during the quarter ended September 28, 2018, with a weighted average fair value of $15.52. No RSU’s and performance stock units (PSUs) were granted during the quarter ended June 29, 2018. During the quarter ended March 30, 2018, the Company granted 174,900 RSUs, with a weighted average fair value of $19.57 per share, and granted 87,050 PSUs with a weighted average fair value of $19.25 per share. During the nine months ended September 28, 2018, 158,579 vested shares were withheld to satisfy withholding tax obligations, resulting in the net issuance of 522,971 shares. As of September 28, 2018, approximately $17.3 million of stock-based compensation cost, net of estimated forfeitures, related to RSUs and PSUs remains to be amortized over a weighted average period of 1.9 years. As of September 28, 2018, a total of 1,814,214 RSUs and PSUs remain outstanding with an aggregate intrinsic value of $22.8 million and a weighted average remaining contractual term of 1.3 years. Restricted Stock Awards — As of September 28, 2018, a total of 38,010 RSAs were outstanding. The total unamortized expense of the Company’s unvested restricted stock awards as of September 28, 2018 was $0.4 million. The following table summarizes the Company’s RSU, PSU and RSA activity for the nine months ended September 28, 2018: Shares Aggregate Fair (in thousands) Unvested restricted stock units and restricted stock awards at December 29, 2017 1,676,312 $ 38,706 Granted 983,265 Vested (726,550 ) Forfeited (118,813 ) Unvested restricted stock units and restricted stock awards at September 28, 2018 1,814,214 $ 22,768 Vested and expected to vest restricted stock units and restricted stock awards at September 28, 2018 1,506,549 $ 18,907 The following table shows the Company’s stock-based compensation expense included in the Condensed Consolidated Statements of Operations (in thousands): Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, 2018 2017 2018 2017 Cost of sales (1) $ 374 $ 395 $ 1,397 $ 996 Research and development 25 77 96 177 Sales and marketing 221 190 616 411 General and administrative 1,594 1,635 5,024 3,475 2,214 2,297 7,133 5,059 Income tax benefit (464 ) (349 ) (1,494 ) (860 ) Stock-based compensation expense, net of tax $ 1,750 $ 1,948 $ 5,639 $ 4,199 (1) Stock-based compensation expense capitalized in inventory for the three and nine months ended September 28, 2018 and September 29, 2017 was not significant. Recently Adopted Accounting Pronouncements Effective December 30, 2017, the Company adopted FASB Accounting Standards Codification (ASC) Revenue from Contracts with Customers (Topic 606) Our implementation team consisted of senior leadership from finance, legal, sales and operations with periodic progress reporting to management and to the audit committee of our board of directors. Implementation consisted of a review of the Company’s significant contracts and an evaluation of our systems and control environment to support additional disclosures under the new standard, as well as updates to our policies and procedures. During our assessment, we considered whether the adoption would require a transition from point-in-time revenue recognition to an over-time approach for products produced by us without an alternative use, which would result in acceleration of revenue. We concluded based on enforceable rights or prevailing terms and conditions included in the agreements with our customers, an enforceable right of payment that includes a reasonable profit throughout the duration of the contract does not exist. Therefore, we will remain at a point-in-time approach and record revenue at the point control transfers to our customers. Beginning fiscal 2018, the Company adopted Accounting Standards Update (ASU) Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, Beginning fiscal 2018, the Company adopted ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business Beginning fiscal 2018, the Company adopted ASU No. 2017-09, Stock Compensation: Scope of Modification Accounting Beginning with the Company’s acquisition of QGT, the Company adopted ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , (“ASC 842”). ASC 842 supersedes the lease recognition requirements in ASC 840, Leases . ASC 842 clarifies the definition of a lease and requires lessees to recognize right-of-use assets and lease liabilities for all leases, including those classified as operating leases under previous lease accounting guidance. The guidance is effective for public business entities for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. Originally, entities were required to adopt ASU 2016-02 using a modified retrospective transition method. However, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements , which provides entities with an additional transition method. Under ASU 2018-11, entities have the option of initially applying ASC 842 at the adoption date, rather than at the beginning of the earliest period presented, and recognizing the cumulative effect of applying the new standard as an adjustment to beginning retained earnings in the year of adoption while continuing to present all prior periods under previous lease accounting guidance. The Company expects to elect this transition method at the adoption date of January 1, 2019. The Company is continuing to evaluate the impact of adopting this guidance on the Company’s consolidated financial statements. The Company currently expects that its operating lease commitments will be subject to the new standard and recognized as right-of-use assets and operating lease liabilities upon adoption of this standard, which will increase the total assets and total liabilities that it reports relative to such amounts prior to adoption. In January 2017, the FASB issued ASU. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In March 2017, the FASB issued ASU 2017-07, Presentation of Net Periodic Benefit Cost Related to Defined Benefit Plans The Company is evaluating the impact of adopting this guidance on the Company’s consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 28, 2018 | |
Investments All Other Investments [Abstract] | |
Financial Instruments | 2. Financial Instruments Derivative Financial Instruments The Company utilizes foreign currency forward contracts with a local financial institution in the Czech Republic to reduce the risk that its cash flows and earnings of its FDS subsidiary will be adversely affected by foreign currency exchange rate fluctuations and Cash Flow Hedges In September 2015, the Company entered into an interest rate swap with East West Bank and City National Bank with a notional amount of $20.0 million pursuant to which the Company pays the counterparty a fixed rate of 0.99% and receives interest at a variable rate equal to the London Interbank Offered Rate (LIBOR) rate the Company is required to pay under its term loan. September 28, 2018. Gains or losses on the effective portion of a cash flow hedge are reflected as a component of AOCI and subsequently recorded to interest and other income (expense) when the hedged transactions are realized. If the hedged transactions become probable of not occurring, the corresponding amounts in AOCI would be immediately reclassified to interest and other income (expense), net. In August 2018, the Company extinguished its debt with East West Bank thus the interest rate swap contract was consequently cancelled. Non-Designated Derivatives A portion of FDS’s forward contracts with a total notional amount of $3.6 million is not designated as a hedging instrument. The Company recognizes gains and losses on these contracts, as well any related costs, in interest and other income (expense), net. The Company records all derivatives in the Condensed Consolidated Balance Sheets at fair value. The Company’s accounting treatment for these derivative instruments is based on its hedge designation. The following tables show the Company’s derivative instruments at gross fair value (in thousands) as of September 28, 2018 and December 29, 2017. September 28, 2018 Fair Value of Fair Value of Derivatives Derivatives Not Balance Sheet Designated as Designated as Total Location Hedge Instruments Hedge Instruments Fair Value Derivative assets and liabilities: Level 2: Forward contracts Prepaid expenses and other $ 88 $ 194 $ 282 Forward contracts Other non-current assets $ 21 $ 108 $ 129 December 29, 2017 Fair Value of Fair Value of Derivatives Derivatives Not Balance Sheet Designated as Designated as Total Location Hedge Instruments Hedge Instruments Fair Value Derivative assets and liabilities: Level 2: Interest rate swap Prepaid expenses and other $ 30 $ — $ 30 Forward contracts Prepaid expenses and other $ 714 $ — $ 714 Forward contracts Other non-current assets $ 588 $ — $ 588 The effect of derivative instruments in cash flow hedging relationships on income and other comprehensive income (OCI) is summarized below (in thousands): Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect (Effective Portion) Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, 2018 2017 2018 2017 Derivatives in Cash Flow Hedging Relationship Interest rate swap $ — $ (11 ) $ (36 ) $ — Forward contracts $ 27 $ 356 $ (44 ) $ 1,197 Gains Reclassified from AOCI into Income (Effective Portion) Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, Income Statement Location 2018 2017 2018 2017 Derivatives in Cash Flow Hedging Relationship Interest rate swap Interest and other income (expense), net $ (14 ) $ (6 ) $ 6 $ (13 ) Forward contracts Cost of goods sold $ (323 ) $ 106 $ (1,253 ) $ 106 There were no gains (losses) recognized in income on derivatives that are excluded from the effectiveness testing and ineffective portion of the cash flow hedge for the three and nine months ended September 28, 2018 and September 29, 2017. The effect of derivative instruments not designated as hedging instruments on income for the three and nine months ended September 28, 2018was $(0.1) million and none for the three and nine months ended September 29, 2017. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 28, 2018 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Recognition | 3. Revenue Recognition On December 30, 2017, the Company adopted Topic 606 using the modified retrospective method to value those contracts which were not completed as of December 30, 2017. The adoption of Topic 606 did not have a material effect on the Company’s financial position or results of operations. Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company assesses collectability based on the credit worthiness of the customer and past transaction history. The Company performs on-going credit evaluations of customers and generally does not require collateral from customers. The Company operates in one operating and reportable segment as the nature of the Company’s products and production processes, as well as type of customers and distribution methods, is consistent among all of the Company’s products. The Company sells its products primarily to customers in the semiconductor capital equipment industry. The Company’s revenues are highly concentrated, and we are therefore highly dependent upon a small number of customers. Typical payment terms with our customers range from thirty to sixty days. The Company’s most significant customers (having accounted for 10% or more of sales) and their related sales as a percentage of total sales were as follows: Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, 2018 2017 2018 2017 Lam Research Corporation 48.7 % 59.1 % 59.9 % 58.3 % Applied Materials, Inc. 23.0 24.5 21.9 25.7 Total 71.7 % 83.6 % 81.8 % 84.0 % Three customers’ accounts receivable balances, Lam Research Corporation, Applied Materials, Inc. and ASM International, Inc., were individually greater than 10% of accounts receivable as of September 28, 2018, in the aggregate approximately 65.6% of accounts receivable. Two customers’ accounts receivable balances, Lam Research Corporation and Applied Materials were individually greater than 10% of accounts receivables as of December 29, 2017, in the aggregate represented approximately 75.8% of accounts receivable. The Company provides warranty on its products for a period of up to two years and provides for warranty costs at the time of sale based on historical activity. Determination of the warranty reserve requires the Company to make estimates of product return rates and expected costs to repair or replace the products under warranty. If actual return rates and/or repair and replacement costs differ significantly from these estimates, adjustments to recognize additional cost of sales may be required in future periods. The warranty reserve is included in other current liabilities on the Condensed Consolidated Balance Sheets and are not considered significant. The Company’s products are manufactured at our facilities in the U.S.A., China, Singapore and the Czech Republic. QGT has operations in the U.S.A., Singapore, United Kingdom, Israel, Taiwan, South Korea, and China. See Note 12 for geographical revenue details. Sales to customers are initiated through a purchase order and are governed by our standard terms and conditions, written agreements, or both. Revenue is recognized when performance obligations under the terms of an agreement with a customer are satisfied; generally, this occurs with the transfer of control of our products. Transfer of control occurs at a specific point-in-time. Based on the enforceable rights included in our agreements or prevailing terms and conditions, products produced by the Company without an alternative use are not protected by an enforceable right of payment that includes a reasonable profit throughout the duration of the agreement. Sales with terms f.o.b. shipping point are recognized at the time of shipment. For sales transactions with terms f.o.b. destination, revenue is recorded when the product is delivered to the customer’s site. Consignment sales are recognized in revenue at the earlier of the period that the goods are consumed or after a period of time subsequent to receipt by the customer as specified by terms of the agreement, provided control of the promised goods or services has transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Sales, value-add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Certain of our customers may receive cash-based incentives, such as rebates or credits, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. As of September 28, 2018, an accrual for unpaid customer rebates of $1.2 million is included in accrued expenses on the Company’s Condensed Consolidated Balance Sheet. The adoption of Topic 606 did not have a significant impact on our estimates for variable consideration. |
Balance Sheet Information
Balance Sheet Information | 9 Months Ended |
Sep. 28, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Balance Sheet Information | 4. Balance Sheet Information Inventories consisted of the following (in thousands): September 28, December 29, 2018 2017 Raw materials $ 146,912 $ 183,457 Work in process 32,563 43,826 Finished goods 19,103 9,557 Total $ 198,578 $ 236,840 Property, equipment and leasehold improvements, net, consisted of the following (in thousands): September 28, December 29, 2018 2017 Land $ 14,012 $ — Building 24,399 — Computer equipment and software 29,144 11,672 Furniture and fixtures 3,873 3,318 Machinery and equipment 54,743 19,781 Leasehold improvements 38,288 22,839 Vehicles 400 — Accumulated depreciation (41,193 ) (38,879 ) 123,666 18,731 Construction in progress 10,080 13,515 Total $ 133,746 $ 32,246 |
Acquisition
Acquisition | 9 Months Ended |
Sep. 28, 2018 | |
Business Combinations [Abstract] | |
Acquisition | 5. Acquisition QGT On August 27, 2018, the Company acquired all of the outstanding preferred and common units of QGT, a provider of ultra-high purity parts cleaning, process tool part recoating, surface treatment and analytical services to the semiconductor and related industries, for total purchase consideration of $346.2 million, including approximately $342.0 million in cash and an estimated $4.2 million in contingent consideration related to $15.0 million of potential cash earn-out payments if the Company achieves certain specified revenue levels through December 27, 2019. In addition, the Company incurred approximately $9.4 million of costs related to the acquisition. The Company completed this acquisition primarily in order to diversify the Company’s customer base, to create a wafer-starts-based recurring revenue stream, and to expand the Company’s addressable market. The Company borrowed $350.0 million to finance the acquisition and to refinance its existing indebtedness. See further discussion of the new borrowing arrangements in Note 7 to the Notes to Condensed Consolidated Financial Statements. The fair value of the earn-out at the acquisition date was determined using the Monte Carlo Simulation, which incorporated risk adjusted revenue projections. These inputs are not observable in the market and thus represent a Level 3 measurement as discussed in Note 1 of the Company’s Condensed Consolidated Financial Statements. The Company has preliminarily allocated the purchase price of QGT to the tangible assets, liabilities and identifiable intangible assets acquired, based on their estimated fair values. The excess of purchase price over the aggregate fair value was recorded as goodwill. Goodwill associated with the acquisition is primarily attributable to the future technology, market presence and knowledgeable and experienced workforce. Although goodwill is not amortized for financial accounting purposes, it is amortized in its entirely for tax purposes over fifteen years. The fair value assigned to identifiable intangible assets acquired was determined using the income approach taking into account the Company’s consideration of a number of inputs, including an independent third-party analysis that was based upon estimates and assumptions provided by the Company. These estimates and assumptions were determined through established and generally accepted valuation techniques. The estimated fair value of the tangible and intangible assets acquired was allocated at QGT’s acquisition date. The Merger Agreement contains customary representations and warranties between the Company and QGT, who agreed to indemnify each other for certain breaches of representations, warranties, covenants and other specified matters. Approximately $2.3 million of the purchase price was placed in escrow as security for post-closing working capital adjustments. In addition, approximately $3.4 million of the purchase price was placed in escrow as security for the QGT’s indemnification obligations during the escrow period. The Company also obtained representation and warranty insurance as an additional source of recourse for certain losses in excess of the amount of funds in the indemnity escrow account. On March 31, 2014, QGT purchased 51% of the outstanding shares of Cinos Co., Ltd., a Korean company that provides outsourced cleaning and recycling of precision parts for the semiconductor industry through its operating facilities in South Korea and, through a 60% interest in a joint venture (Cinos Xian Clean Technology, Ltd.), in China. In connection with the acquisition, the Company is obligated to purchase shares held by two other shareholders of Cinos Co., Ltd. representing a combined 35% interest. The carrying value of the remaining 14% interest held by others in Cinos Co., Ltd. and the 40% interest in the China joint venture are presented as noncontrolling interests in the accompanying consolidated financial statements. The fair values of the noncontrolling interests were estimated based on the values of Cinos Co., Ltd. and Cinos Xian Clean Technology, Ltd. on a 100% basis. The values were calculated based on the pro-rata portion of total forecasted Q4 2018 QGT earnings before interest expense, taxes, depreciation and amortization ("EBITDA") contributed by each entity. Management indicated that each entity's pro-rata portion of EBITDA was reasonably reflective of each entity's invested capital value at the acquisition date. The stock purchase obligation requires the Company to purchase stock owned by one Cinos Co., Ltd. shareholder at a fixed price per share, while the purchase price per share for the other shareholder is the greater of the then fair value of the stock and the fixed price per share (floor). The Company has a firm obligation to purchase the shares and a call option, while the two shareholders have a put option. Accordingly, the fair value of the obligation of $8.6 million has been recorded as a non-current liability in the accompanying consolidated balance sheets and represents a Level 3 measurement as discussed in Note 1 of the Company’s Condensed Consolidated Financial Statements. The agreement with Cinos Co., Ltd. allows for the purchase obligation to become due at various times through December 2022. In March 2018, QGT transferred 39,000 shares of its Cinos Co., Ltd stock to Cinos Co., Ltd. The shares are to be held as treasury stock and may be repurchased by the Company in the future. At the acquisition date, Cinos held bank debt in the amount of $30.0 million. The debt was not assumed by the Company and therefore is not included in the purchase price allocation. The Company paid the sellers of QGT the purchase price net of the debt. During the quarter ended September 28, 2018, the Company made a partial payment to the Cinos bank for $1.2 million and the remaining balance of $28.8 million was settled in October 2018. The allocation of the purchase price is preliminary pending the completion of various analyses and the finalization of estimates. The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the fair values of certain tangible assets and liabilities, primarily property and equipment, intangible assets, finalization of a working capital adjustment per the merger agreement and residual goodwill. During the measurement period, which can be no more than one year from the date of acquisition, we expect to continue to obtain information to assist us in determining the final fair value of the net assets acquired at the acquisition date during the measurement period. Assets acquired and liabilities assumed are recorded based on valuations derived from estimated fair value assessments and assumptions used by the Company. Thus, the provisional measurements of fair value discussed above are subject to change. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date. While the Company believes that its estimates and assumptions underlying the valuations are reasonable, different estimates and assumptions could result in different valuations assigned to the individual assets acquired and liabilities assumed, and the resulting amount of goodwill. The following table summarizes the preliminary fair values of assets acquired and liabilities assumed at the date of acquisition (in thousands): Fair Market Values (in thousands) Cash and cash equivalents $ 18,991 Accounts receivable 18,683 Inventories 474 Prepaid expenses and other 13,194 Property and equipment 98,738 Goodwill 66,622 Purchased intangible assets 176,200 Total assets acquired 392,902 Accounts payable (9,362 ) Accrued compensation and related benefits (2,904 ) Other current liabilities (8,945 ) Other liabilities (13,115 ) Noncontrolling interest (12,413 ) Total liabilities assumed (46,739 ) Purchase price allocated $ 346,163 Purchased Useful Life Intangible Assets (In years) (In thousands) Customer relationships 10 $ 79,500 Trade name 4 14,900 Recipes 20 73,200 Standard operating procedures 20 8,600 Total purchased intangible assets $ 176,200 Goodwill is not amortized but is reviewed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The results of operations for the Company for the nine months ended September 28, 2018 include operating activity for QGT since its acquisition date of August 27, 2018. For the three and nine months ended September 28, 2018, net sales of approximately $22.5 million attributable to QGT were included in the consolidated results of operations. For the three and nine months ended September 28, 2018, results of operations included charges of $1.3 million, attributable to amortization of purchased intangible assets and $9.4 million of deal costs associated with the acquisition. Deal costs are included in general and administrative expenses in the Company’s condensed consolidated results of operations. The following unaudited pro forma consolidated results of operations assume the acquisition was completed as of the beginning of the year of the reporting periods presented. The unaudited pro forma consolidated results of operations for the three and nine months ended September 28, 2018 and September 29, 2017 (in thousands, except per share amounts) as follows: Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, 2018 2017 2018 2017 Net sales $ 269,588 $ 298,180 $ 992,514 $ 836,246 Net income $ (3,343 ) $ 16,438 $ 31,321 $ 46,903 Basic earnings per share $ (0.09 ) $ 0.49 $ 0.82 $ 1.41 Diluted earnings per share $ (0.09 ) $ 0.48 $ 0.81 $ 1.37 The unaudited pro forma results above include adjustments related to the purchase price allocation and financing of the acquisition, primarily to increase amortization for the identifiable intangible assets, to increase interest expense for the additional debt incurred to complete the acquisition, to reflect the related income tax effect. The unaudited pro forma results for the three and nine months ended September 28, 2018 include acquisition related costs of $9.4 million which are not expected to occur in future quarters. The unaudited pro forma condensed combined financial information has been prepared by management for illustrative purposes only and are not necessarily indicative of the condensed consolidated financial position or results of income in future periods or the results that would have been realized had UCT and QGT been a combined company during the specified periods. The unaudited pro forma condensed combined financial information does not reflect any operating efficiencies and/or cost savings that the Company may achieve with respect to the combined companies, or any liabilities that may result from integration activities. Quantum Facility Fire In September 2018, a fire in a facility owned by a Korean subsidiary of QGT destroyed certain assets, including the building, acquired in the QGT acquisition. The Company recorded an impairment loss of $5.2 million for the net book value of a building and related assets. The Company expects receipt of insurance recoveries up to the recorded impairment losses and concurrently recorded a receivable and gain of $5.2 million. The fire also destroyed inventory owned by one of its customers. The Company is currently in the process of determining the cost of this inventory. The Company was able to minimize the impact on the Company’s revenue stream by utilizing its other local facilities and moving its labor force in quick order. The Company does not expect insurance proceeds to be in excess of recorded losses at this time, but continues to evaluate additional potential losses and related insurance claims. |
Goodwill and Purchased Intangib
Goodwill and Purchased Intangible Assets | 9 Months Ended |
Sep. 28, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Purchased Intangible Assets | 6. Goodwill and Purchased Intangible Assets The Company’s methodology for allocating the purchase price relating to purchase acquisitions is determined through established and generally accepted valuation techniques. Goodwill is measured as the excess of the cost of the acquisition over the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed. Goodwill and purchased intangible assets with indefinite useful lives are not amortized, but are reviewed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Company regularly monitors current business conditions and other factors including, but not limited to, adverse industry or economic trends and lower projections of profitability that may impact future operating results. To test goodwill for impairment, the Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, the Company then performs the two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. Under the two-step goodwill impairment test, the Company would in the first step compare the estimated fair value of each reporting unit to its carrying value. The Company determines the fair value of each of its reporting units based on a weighting of income and market approaches. If the carrying value of a reporting unit exceeds its fair value, the Company would then perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If the Company determines that the carrying value of a reporting unit’s goodwill exceeds its implied fair value, the Company would record an impairment charge equal to the difference. The evaluation of goodwill and intangible assets for impairment requires the exercise of significant judgment. In the event of future changes in business conditions, the Company will be required to reassess and update its forecasts and estimates used in future impairment analyses. If the results of these future analyses are lower than current estimates, a material impairment charge may result at that time. Goodwill and other intangible assets were as follows (in thousands): September 28, 2018 December 29, 2017 Intangible Intangible Goodwill Assets Total Goodwill Assets Total Carrying amount $ 151,869 $ 203,180 $ 355,049 $ 85,248 $ 31,587 $ 116,835 Purchased Intangible Assets Intangible assets are generally recorded in connection with a business acquisition. The Company evaluates the useful lives of its intangible assets each reporting period to determine whether events and circumstances require revising the remaining period of amortization. In addition, the Company reviews indefinite lived intangible assets for impairment when events or changes in circumstances indicate their carrying value may not be recoverable and tests definite lives intangible assets at least annually for impairment. Management considers such indicators as significant differences in product demand from the estimates, changes in the competitive and economic environment, technological advances, and changes in cost structure. Purchased intangible assets were as follows (in thousands): As of September 28, 2018 As of December 29, 2017 Gross Gross Carrying Accumulated Carrying Carrying Accumulated Carrying Useful Amount Amortization Value Amount Amortization Value Life AIT Customer relationships $ 19,000 $ (18,462 ) $ 538 $ 19,000 $ (17,998 ) $ 1,002 7 Tradename 1,900 (1,900 ) — 1,900 (1,900 ) — 6 Intellectual property/know-how 1,600 (1,429 ) 171 1,600 (1,257 ) 343 7 Thermal Customer relationships 9,900 (3,630 ) 6,270 9,900 (2,887 ) 7,013 10 Tradename 1,170 (1,170 ) — 1,170 (1,170 ) — 6 Intellectual property/know-how 12,300 (5,057 ) 7,243 12,300 (4,023 ) 8,277 8-12 FDS Customer relationships 8,800 (3,716 ) 5,084 8,800 (2,835 ) 5,965 7.5 QGT Customer relationships 79,500 (662 ) 78,838 — — — 10 Tradename 14,900 (310 ) 14,590 — — — 4 Recipes 73,200 (305 ) 72,895 — — — 20 Standard operating procedures 8,600 (36 ) 8,564 — — — 20 UCT Tradename 8,987 — 8,987 8,987 — 8,987 * Total $ 239,857 $ (36,677 ) $ 203,180 $ 63,657 $ (32,070 ) $ 31,587 * The Company concluded that the UCT tradename intangible asset life is indefinite and is therefore not amortized but is reviewed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Company amortizes its intangible assets for AIT, Thermal, FDS and QGT on a straight-line basis over the estimated economic life of the assets. Amortization expense was approximately $2.4 million and $1.2 million for the three months ended September 28, 2018 and September 29, 2017, respectively. Amortization expense related to QGT’s recipes and standard operating procedures is charged to cost of goods sold and remainder is to general and administrative expense. As of September 28, 2018, future estimated amortization expense is expected to be as follows (in thousands): Amortization Expense 2018 (remaining in year) $ 5,039 2019 19,805 2020 19,308 2021 19,308 2022 18,066 Thereafter 112,667 Total $ 194,193 Sale of UAMC On August 3, 2018, the Company sold its subsidiary, UAMC, for $0.3 million, in the form of note receivable from the purchaser. UAMC was launched in November 2004 to develop additive, 3D printing manufacturing capabilities. At closing, the carry value of the UAMC assets sold were $1.1 million. The Company also included free rent, labor and utilities for a period of six months are part of the agreement. The Company believes that the assets related to UAMC that were sold include all key inputs and processes necessary to generate output, and, accordingly, the Company has determined that UAMC qualified as a business. As a result of the sale, the Company recognized a loss on sale of a business of $1.1 million in the accompanying Condensed Consolidated Statements of Operations as Interest and other income (expense), net. |
Borrowing Arrangements
Borrowing Arrangements | 9 Months Ended |
Sep. 28, 2018 | |
Debt Disclosure [Abstract] | |
Borrowing Arrangements | 7. Borrowing Arrangements In August 2018, the Company entered into a credit agreement with Barclays Bank that provided a Term Loan, a Revolving Credit Facility, and a Letter of Credit Facility (the “Credit Facilities”). The Company and certain of its subsidiaries have agreed to secure all of their obligations under the Credit Facilities by granting a first priority lien in substantially all of their respective personal property assets (subject to certain exceptions and limitations). In August 2018, the Company borrowed $350.0 million under the Term Loan and used the proceeds, together with cash on hand, to finance the acquisition of Quantum (see Note 5) and to refinance its previous credit facilities. The Company had a credit facility in the U.S. that was refinanced in August 2018, under which, the Company and certain of its subsidiaries had agreed to secure all of their obligations under a credit agreement (the “Credit Agreement”) by granting a first priority lien in substantially all of their respective personal property assets (subject to certain exceptions and limitations). In August 2018, the Company paid $41.6 million of principal, accrued interest, and fees in settlement of the then-outstanding term loan, revolving credit facility, interest rate swap under the Credit Agreement, and recognized $0.1 million in expense upon extinguishment as Interest and other income (expense), net. The Term Loan has a maturity date of August 27, 2025, with monthly interest payments in arrears, quarterly principal payments of 0.625% of the original outstanding principal balance payable beginning January 2019, with the remaining principal paid upon maturity. The Term Loan accrues interest daily at a rate equal to, at the Company’s option, either (a) a base rate equal to the greater of (i) 1.0%, (ii) the Prime Rate, (iii) the Federal Funds Effective Rate plus 0.5%, or (iv) the one-month Eurodollar Rate plus 1.0%, plus 2.0%, or (b) a base LIBOR rate determined by reference to the London interbank offered rate for dollars, plus 3.0% (subject to certain adjustments quarterly based upon the Company’s consolidated leverage ratio). The Company may prepay the Term Loan in whole or in part without penalty after six months from issuance, before which the Company must pay a prepayment fee equal to 1.0% of the aggregate principal amount prepaid. As of September 28, 2018, the Company had an outstanding amount under the Term Loan of $350.0 million, gross of unamortized debt issuance costs of $12.0 million. The Revolving Credit Facility has an initial available commitment of $65.0 million and a maturity date of August 27, 2023. The Company pays a quarterly commitment fee in arrears equal to 0.25% of the average daily available commitment outstanding. As of September 28, 2018, the Company had zero outstanding amount under the Revolving Credit Facility. The New Credit Agreement requires the Company to maintain certain financial covenants including a consolidated fixed charge coverage ratio (as defined in the New Credit Agreement) as of the last day of any fiscal quarter of at least 1.25 to 1.00, and a consolidated leverage ratio (as defined in the New Credit Agreement) as of the last day of any fiscal quarter of no greater than 3.75 to 1.00. The Company was in compliance with all covenants for the quarter ended September 28, 2018. The Letter of Credit Facility has an initial available commitment of $50.0 million and a maturity date of August 27, 2023. The Company pays quarterly in arrears a fee equal to 2.5% (subject to certain adjustments as per the Term Loans) of the dollar equivalent of all outstanding letters of credit, and a fronting fee equal to 0.125% of the undrawn and unexpired amount of each letter of credit. As of September 28, 2018, the Company’s outstanding letters of credit and remaining available commitments was none and $65.0 million. As a result of the acquisition of QGT, one of its Korean subsidiaries had an outstanding amount under a credit facility with a local bank in the Korean won equivalent of approximately $28.8 million as of September 28, 2018. In October 2018, the amount was settled in full. As of September 28, 2018, FDS had outstanding amount under a revolving credit facility of 6.0 million euros (approximately $6.9 million) with an interest rate of 1.3% plus a variable rate based on the Euro Interbank Offered Rate. As of September 28, 2018, the Company’s total bank debt was $373.8 million, net of unamortized debt issuance costs of $12.0 million. As of September 28, 2018, the Company had $65.0 million and 2.3 million euros (approximately $2.6 million) available to borrow on its revolving credit facilities in the U.S. and Czech Republic, respectively. The fair value of the Company’s long term debt was based on Level 2 inputs, and fair value was determined using quoted prices for similar liabilities in inactive markets. The Company’s carrying value approximates fair value for the Company’s long term debt. |
Income Tax
Income Tax | 9 Months Ended |
Sep. 28, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax | 8. Income Tax On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act of 2017 (TCJA). The TCJA significantly revised the future ongoing U.S. corporate income tax by, among other things, lowering U.S. corporate income tax rates from 35% to 21% and implementing a territorial tax system. Other provisions included an immediate deduction for qualified investments and limitations on the deductibility of interest expense and executive compensation. In December 2017, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows companies to record provisional amounts during a measurement period not to extend more than one year beyond the Act enactment date. During the quarter ended September 28, 2018, the Company filed its 2017 federal tax return. As a result of IRS guidance on the transition tax issued during the quarter, the Company revised its calculation of the tax liability associated with previously unremitted foreign earnings which resulted in additional tax expense of $1.5M and an ASC 740-10 reserve of $0.7M. Since the Company is still in the process of filings its 2017 state tax returns, which are impacted by the TCJA, the Company considers the accounting for deferred tax remeasurements and other provisions to be incomplete. The Company is continuing to evaluate the estimates used to record and disclose the effects of the Tax Act. Effective January 1, 2018, the TCJA created a new requirement to include in U.S. income global intangible low-taxed income (GILTI) earned by controlled foreign corporations (“CFC”). The effect of GILTI, and the associated foreign tax credit, is to effectively create a minimum floor of taxation on CFC profits that must be included currently in the gross income of the CFCs’ U.S. shareholder. Under U.S. GAAP, we are allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). The Company uses the period cost method in recording the tax effects of GILTI in its financial statements. The Company’s income tax provision and effective tax rates for the three and nine months ended September 28, 2018 were $4.6 million and(249.2)% and $10.0 million and 21.1% and $3.5 million and 15.2% and $11.1 million and 17.0% for the three and nine months ended September 29, 2017. The change in respective rates reflects, primarily, the recently enacted TCJA as discussed above, changes in the geographic mix of worldwide earnings and financial results in jurisdictions which are taxed at different rates, the impact of losses in jurisdictions with full federal and state valuation allowances and tax benefits associated with share-based compensation. Company management continuously evaluates the need for a valuation allowance and, as of September 28, 2018, concluded that a full valuation allowance on its federal and state deferred tax assets was still appropriate. The Company provides for U.S. income taxes on its undistributed earnings of foreign subsidiaries as required by the TCJA. However, the Company does not provide for any withholding taxes on its undistributed earnings of its subsidiaries that it intends to invest indefinitely outside the U.S. In prior years, the Company determined that a portion of the current year earnings of one of its China subsidiaries may be remitted in the future to one of its foreign subsidiaries outside of mainland China and, accordingly, the Company provided for the related withholding taxes in its condensed consolidated financial statements. The Company does not currently plan to remit any earnings from its China subsidiaries to any other foreign subsidiary in 2018. If the Company changes its intent to reinvest its undistributed foreign earnings indefinitely or if a greater amount of undistributed earnings are needed than the previous anticipated remaining unremitted foreign earnings, the Company could be required to accrue or pay foreign taxes on some or all of these undistributed earnings. As of September 28, 2018, the Company had undistributed earnings of foreign subsidiaries that are indefinitely invested outside of the U.S. of approximately $216.4 million. It is not practicable to determine the tax liability that might be incurred if these earnings were to be distributed. The Company’s gross liability for unrecognized tax benefits as of September 28, 2018 and September 29, 2017 was $1.0 million and $0.3 million, respectively. Although it is possible some of the unrecognized tax benefits could be settled within the next twelve months, the Company cannot reasonably estimate the outcome at this time. |
Pension Benefits
Pension Benefits | 9 Months Ended |
Sep. 28, 2018 | |
Compensation And Retirement Disclosure [Abstract] | |
Pension Benefits | 9. Pension Benefits As a result of the acquisition of QGT in August 2018, the Company has assumed all assets and liabilities of QGT’s defined benefit plan, which covers substantially all of its full-time employees in one of QGT’s subsidiaries. Periodic benefit costs for the three and nine month ended September 28, 2018 were immaterial. The Company’s contributions to these plans for the three and nine months ended September 28, 2018 were immaterial. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 28, 2018 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | 10. Net Income Per Share Basic net income per share excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that would occur if outstanding securities or other contracts to issue common stock were exercised or converted into common stock. The following is a reconciliation of the numerators and denominators used in computing basic and diluted net income (loss) per share (in thousands, except per share data): Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, 2018 2017 2018 2017 Numerator: Net income (loss) attributable to Ultra Clean Holdings, Inc. $ (5,997 ) $ 19,716 $ 37,704 $ 54,236 Denominator: Shares used in computation — basic: Weighted average common shares outstanding 38,930 33,540 38,152 33,342 Shares used in computation — diluted: Shares used in computing basic net income per share 38,930 33,540 38,152 33,342 Dilutive effect of common shares outstanding subject to repurchase — 813 588 856 Dilutive effect of options outstanding — 7 5 18 Weighted average shares used in computing diluted net income per share 38,930 34,360 38,745 34,216 Net income per share attributable to Ultra Clean Holdings, Inc. — basic $ (0.15 ) $ 0.59 $ 0.99 $ 1.63 Net income per share attributable to Ultra Clean Holdings, Inc. — diluted $ (0.15 ) $ 0.57 $ 0.97 $ 1.59 On February 2, 2018, the Company successfully completed a follow-on offering whereby the Company issued 4,761,905 shares of its common stock. The weighted average impact for the nine months ended September 28, 2018 was 4,168,847 shares. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 28, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies The Company had commitments to purchase inventory totaling approximately $94.3 million at September 28, 2018. The Company, excluding QGT, leases properties domestically in Hayward, California, Austin, Texas, Chandler, Arizona and South San Francisco, California and internationally in China, Singapore, the Philippines and the Czech Republic. The Company leases certain of its facilities under non-cancelable leases, which expire on various dates through 2023. QGT leases its corporate offices and other operating facilities under operating leases expiring at various dates through 2026. Leased properties domestically include: Colorado Springs, Colorado; Phoenix, Arizona; San Jose, California; Fremont, California; Hillsboro, Oregon; Portland, Oregon; Scarborough, Maine; Carrollton, Texas; and Quakertown, Pennsylvania. Leased properties internationally include: Scotland, Israel, Taiwan, South Korea, and Singapore. As of September 28, 2018, future minimum payments under these operating leases were as follows (in thousands): Fiscal Year 2018 (remaining in year) $ 3,578 2019 12,800 2020 10,514 2021 8,927 2022 6,150 Thereafter 5,606 Total minimum lease payments $ 47,575 From time to time, the Company is subject to various legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. Although the outcome of the various legal proceedings and claims cannot be predicted with certainty, the Company has not had a history of outcomes to date that have been material to the statement of operations and does not believe that any of these proceedings or other claims will have a material adverse effect on its consolidated financial condition or results of operations. |
Geographical Information
Geographical Information | 9 Months Ended |
Sep. 28, 2018 | |
Geographical Information [Abstract] | |
Geographical Information | 12. Geographical Information The Company’s principal markets include America, Asia and Europe. The Company’s foreign operations are conducted primarily through its subsidiaries in China, Singapore, Israel, Taiwan, South Korea, United Kingdom and the Czech Republic. Sales by geographic area represent sales to unaffiliated customers and are based upon the location to which the products were shipped or performed. The following table sets forth revenue by geographic area (in thousands): Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, 2018 2017 2018 2017 United States $ 123,655 $ 138,866 $ 467,616 $ 372,571 China 11,803 6,834 30,782 24,947 Singapore 62,437 73,427 247,974 207,477 Austria 18,320 6,132 48,249 25,844 Other 17,864 17,351 44,513 44,626 $ 234,079 $ 242,610 $ 839,134 $ 675,465 At September 28, 2018, approximately $78.7 million and $2.6 million of the Company’s net long-lived assets were located in Asia and Europe, respectively, and the remaining balances were located in the United States. At September 29, 2017, approximately $9.9 million and $1.6 million of the Company’s net long-lived assets were located in Asia and the Czech Republic, respectively, and the remaining balances were located in the United States. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 28, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. Subsequent Events Pricing of Term Loan On October 1, 2018, the Company amended its Term Loan as part of the completion of primary syndication with Barclays. Under the amended terms, the Term Loan interest rate is no longer subject to certain adjustments based upon the Company’s consolidated leverage ratio, and accrues interest daily at a rate equal to, at the Company’s option, either (a) a base rate equal to the greater of (i) 1.0%, (ii) the Prime Rate, (iii) the Federal Funds Effective Rate plus 0.5%, or (iv) the one-month Eurodollar Rate plus 1.0%, plus 3.5%, or (b) a base LIBOR rate determined by reference to the London interbank offered rate for dollars, plus 4.5%. In addition, the period for which the Company agrees to pay a prepayment fee was extended from six months to twelve months. |
Organization and Significant _2
Organization and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 28, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation — The unaudited condensed consolidated financial statements included in this quarterly report on Form 10-Q include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). This financial information reflects all adjustments which are, in the opinion of the Company, normal, recurring and necessary for the fair financial statement presentation for the dates and periods presented. Certain information and footnote disclosures normally included in our annual financial statements, prepared in accordance with GAAP, have been condensed or omitted. The Company’s December 29, 2017 balance sheet data were derived from its audited financial statements as of that date. |
Principles of Consolidation | Principles of Consolidation — The Company’s condensed consolidated financial statements include the accounts of the Company and its subsidiaries with the ownership interests of minority shareholders presented as noncontrolling interests. All intercompany accounts and transactions have been eliminated in consolidation. The Company uses a 52-53 week fiscal year ending on the Friday nearest December 31. All references to quarters refer to fiscal quarters and all references to years refer to fiscal years. |
Foreign Currency Translation and Remeasurement | Foreign Currency Translation and Remeasurement — The Company has one foreign subsidiary whose functional currency is not its local currency or the U.S. dollar. The Company remeasures the monetary assets and liabilities of this subsidiary into its functional currency. Gains and losses from these remeasurements are recorded in interest and other income (expense), net. The Company then translates the assets and liabilities of this subsidiary into the U.S. dollar. Gains and losses from these translations are recognized in foreign currency translation included in accumulated other comprehensive income (AOCI) within stockholders’ equity. For the Company’s foreign subsidiaries where the U.S. dollar is the functional currency, any gains and losses resulting from the translation of the assets and liabilities of these subsidiaries are recorded in interest and other income (expense), net. |
Use of Accounting Estimates | Use of Accounting Estimates — The presentation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions include reserves on inventory, valuation of deferred tax assets , impairment of goodwill, valuation of pension obligations and other long-lived assets. The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under the circumstances. However, future events are subject to change and the best estimates and judgments routinely require adjustment. Actual amounts may differ from those estimates. |
Concentration of Credit Risk | Concentration of Credit Risk — Financial instruments which subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company sells its products primarily to semiconductor capital equipment manufacturers in the United States. The Company performs credit evaluations of its customers’ financial condition and generally requires no collateral |
Fair Value of Measurements | Fair Value of Measurements — The Company measures its cash equivalents, interest rate swap contract and forward contracts at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value: Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings. Level 3 — Unobservable inputs that are supported by little or no market activities. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following table summarizes, for assets or liabilities measured at fair value, the respective fair value and the classification by level of input within the fair value hierarchy (in thousands): Fair Value Measurement at Reporting Date Using Description September 28, 2018 Quoted Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Other assets: Forward contracts $ 411 $ — $ 411 $ — Other non-current liabilities: Contingent earn-out liability $ 4,163 $ — $ — $ 4,163 Stock purchase obligation $ 8,552 $ — $ — $ 8,552 Fair Value Measurement at Reporting Date Using Description December 29, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Other assets: Interest rate swap $ 30 $ — $ 30 $ — Forward contracts $ 1,302 $ — $ 1,302 $ — |
Derivative Financial Instruments | Derivative Financial Instruments — The Company recognizes derivative instruments as either assets or liabilities in the accompanying Condensed Consolidated Balance Sheets at fair value. The Company records changes in the fair value of the derivatives in the accompanying Condensed Consolidated Statements of Operations as interest and other income (expense), net, or as a component of AOCI in the accompanying Condensed Consolidated Balance Sheets. |
Inventories | Inventories — Inventories are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or net realizable value. The Company evaluates the valuation of all inventories, including raw materials, work-in-process, finished goods and spare parts on a periodic basis. Obsolete inventory or inventory in excess of management’s estimated usage is written-down to its estimated market value less costs to sell, if less than its cost. Inherent in the estimates of market value are management’s estimates related to economic trends, future demand for products, and technological obsolescence of the Company’s products. Inventory write downs inherently involve judgments as to assumptions about expected future demand and the impact of market conditions on those assumptions. Although the Company believes that the assumptions it used in estimating inventory write downs are reasonable, significant changes in any one of the assumptions in the future could produce a significantly different result. There can be no assurances that future events and changing market conditions will not result in significant increases in inventory write downs. |
Property and Equipment, net | Property and — Property and equipment are stated at cost, or, in the case of equipment under capital leases, the present value of future minimum lease payments at inception of the related lease. Depreciation and amortization are computed using the straight-line method and declining balance methods over the lesser of the estimated useful lives of the assets or the terms of the leases. Useful lives range from three to forty years. |
Internal use software | Internal use software — Direct costs incurred to develop software for internal use are capitalized and amortized over an estimated useful life of three to five years. Costs related to the design or maintenance of internal use software are expensed as incurred. Capitalized internal use software is included in computer equipment and software. |
Construction in Progress | Construction in progress — Construction in progress is related to the construction or development of property and equipment that has not yet been placed in service for their intended use and is, therefore, not depreciated. Construction in progress currently includes capitalized costs related to the Company’s Enterprise Resource Planning (“ERP”) implementation project. |
Income Taxes | Income Taxes — The Company utilizes the asset and liability method of accounting for income taxes, under which deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating our ability to realize our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income, we begin with historical results and incorporate assumptions about the amount of future state, federal, and foreign pretax operating income adjusted for items that do not have tax consequences. The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider recent cumulative income (loss). A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. The Company continued to maintain a full valuation allowance on its federal and state deferred tax amounts as of September 28, 2018. Income tax positions must meet a more likely than not recognition threshold to be recognized. Income tax positions that previously failed to meet the more likely than not threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more likely than not threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits within the Condensed Consolidated Statements of Operations as income tax expense. The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with the Company’s expectations could have a material impact on its results of operations and financial position. Management believes that it has adequately provided for any adjustments that may result from these examinations; however, the outcome of tax audits cannot be predicted with certainty. |
Revenue Recognition | Revenue Recognition — See Note 3 to the Company’s Condensed Consolidated Financial Statements. |
Research and Development Costs | Research and Development Costs — Research and development costs are expensed as incurred. |
Net Income per Share | Net Income per Share — Basic net income per share is computed by dividing net income by the weighted average number of shares outstanding for the period. Diluted net income per share is calculated by dividing net income by the weighted average number of common shares outstanding and common equivalent shares from dilutive stock options and restricted stock using the treasury stock method, except when such shares are anti-dilutive. See Note 8 to the Company’s Condensed Consolidated Financial Statements. |
Segments | Segments — The Financial Accounting Standards Board’s (FASB) guidance regarding disclosure about segments in an enterprise and related information establishes standards for the reporting by public business enterprises of information about reportable segments, products and services, geographic areas, and major customers. The method for determining what information to report is based on the manner in which management organizes the reportable segments within the Company for making operational decisions and assessments of financial performance. The Company’s chief operating decision-maker is considered to be the Chief Executive Officer. The Company operates in one operating segment, and therefore, has one reportable segment. |
Business Combinations | Business Combinations — The Company recognizes assets acquired (including goodwill and identifiable intangible assets) and liabilities assumed , and noncontrolling interests, if any, at fair value on the acquisition date. Subsequent changes to the fair value of such assets acquired and liabilities assumed are recognized in earnings, after the expiration of the measurement period, a period not to exceed 12 months from the acquisition date. Acquisition-related expenses and acquisition-related restructuring costs are recognized in earnings in the period in which they are incurred. Results of operations and cash flows of acquired companies are included in the Company’s operating results from the date of acquisition. |
Noncontrolling interests | Noncontrolling interests — Noncontrolling interests are recognized to reflect the portion of the equity of the majority-owned subsidiaries which is not attributable, directly or indirectly, to the controlling stockholder. Through the acquisition of QGT in August 2018, the Company’s consolidated entities include partially-owned entities through which the Company is obligated to own 86.0% of its consolidated subsidiary, Cincos Co., Ltd (“Cincos”), a Korean company that provides outsourced cleaning and recycling of precision parts for the semiconductor industry through its operating facilities in South Korea and, through a 60.0% interest in a joint venture, Cincos Xian Clean Technology, Ltd. (“Cincos Xian”), in China. The interest held by others in Cincos and in Cincos Xian are presented as noncontrolling interests in the accompanying condensed consolidated financial statements. The noncontrolling interest will continue to be attributed its share of gains and losses even if that attribution results in a deficit noncontrolling interest balance. |
Defined Benefit Plan | Defined Benefit Plan — QGT has a noncontributory defined benefit plan covering substantially all of the employees of one of its foreign entities upon termination of their employee services. The benefits are based on expected years of service and average compensation. QGT records annual amounts relating to the defined benefit plan based on calculations that incorporate various actuarial and other assumptions, including discount rates, mortality rates, assumed rates of return, compensation increases, employee demographics, and turnover rates. QGT reviews its assumptions on an annual basis and makes modifications to those assumptions based on current asset returns, rates, and trends. The effect of modifications to those assumptions is recorded in accumulated other comprehensive income and amortized to net periodic costs over the future service period using the corridor method. The Company believes that the assumptions utilized in recording its obligations under the plan are reasonable based on its experience and market conditions. The net period costs are recognized as employees render the services necessary to earn the post termination benefits. |
Deferred Debt Issuance Costs | Deferred Debt Issuance Costs — Debt issuance costs incurred in connection with obtaining debt financing are deferred and presented as a direct deduction from Bank Borrowings in the accompanying Condensed Consolidated Balance Sheets. Costs incurred in connection with revolving credit facilities and letter of credit facilities are deferred and presented as an offset to bank borrowings in the accompanying Condensed Consolidated Balance Sheets. Deferred costs are amortized on an effective interest method basis over the contractual term. |
Stock-Based Compensation Expense | Stock-Based Compensation Expense The Company maintains stock-based compensation plans which allow for the issuance of equity-based awards to executives, directors and certain employees. These equity-based awards include stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) which can be either time-based or performance-based. The Company has not granted stock options to its employees since fiscal year 2010. The Company also maintains an employee stock purchase plan that provides for the issuance of shares to all eligible employees of the Company at a discounted price. Stock-based compensation expense includes compensation costs related to estimated fair values of stock options and awards granted. The estimated fair value of the Company’s equity-based awards, net of expected forfeitures, is amortized on a straight-line basis over the awards’ vesting period, typically three years for RSUs and one year for RSAs, and is adjusted for subsequent changes in estimated forfeitures related to all equity-based awards and performance as it relates to performance-based RSUs. The Company applies the fair value recognition provisions based on the FASB’s guidance regarding stock-based compensation. |
Employee Stock Purchase Plan | Employee Stock Purchase Plan The Company also maintains an employee stock purchase plan (“ESPP”) that provides for the issuance of shares to all eligible employees of the Company at a discounted price. Under the ESPP, substantially all employees may purchase the Company’s common stock through payroll deductions at a price equal to 95 percent of the fair market value of the Company’s stock at the end of each applicable purchase period. |
Restricted Stock Units and Restricted Stock Awards | Restricted Stock Units and Restricted Stock Awards The Company grants RSUs to employees and RSAs to non-employee directors as part of the Company’s long term equity compensation plan. Restricted Stock Units — RSUs are granted to employees with a per share or unit purchase price of zero dollars and either have time based or performance based vesting. RSUs typically vest over three years, subject to the employee’s continued service with the Company. For purposes of determining compensation expense related to these RSUs, the fair value is determined based on the closing market price of the Company’s common stock on the date of award. The expected cost of the grant is reflected over the service period, and is reduced for estimated forfeitures. There were 683,305 RSUs granted during the quarter ended September 28, 2018, with a weighted average fair value of $15.52. No RSU’s and performance stock units (PSUs) were granted during the quarter ended June 29, 2018. During the quarter ended March 30, 2018, the Company granted 174,900 RSUs, with a weighted average fair value of $19.57 per share, and granted 87,050 PSUs with a weighted average fair value of $19.25 per share. During the nine months ended September 28, 2018, 158,579 vested shares were withheld to satisfy withholding tax obligations, resulting in the net issuance of 522,971 shares. As of September 28, 2018, approximately $17.3 million of stock-based compensation cost, net of estimated forfeitures, related to RSUs and PSUs remains to be amortized over a weighted average period of 1.9 years. As of September 28, 2018, a total of 1,814,214 RSUs and PSUs remain outstanding with an aggregate intrinsic value of $22.8 million and a weighted average remaining contractual term of 1.3 years. Restricted Stock Awards — As of September 28, 2018, a total of 38,010 RSAs were outstanding. The total unamortized expense of the Company’s unvested restricted stock awards as of September 28, 2018 was $0.4 million. The following table summarizes the Company’s RSU, PSU and RSA activity for the nine months ended September 28, 2018: Shares Aggregate Fair (in thousands) Unvested restricted stock units and restricted stock awards at December 29, 2017 1,676,312 $ 38,706 Granted 983,265 Vested (726,550 ) Forfeited (118,813 ) Unvested restricted stock units and restricted stock awards at September 28, 2018 1,814,214 $ 22,768 Vested and expected to vest restricted stock units and restricted stock awards at September 28, 2018 1,506,549 $ 18,907 The following table shows the Company’s stock-based compensation expense included in the Condensed Consolidated Statements of Operations (in thousands): Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, 2018 2017 2018 2017 Cost of sales (1) $ 374 $ 395 $ 1,397 $ 996 Research and development 25 77 96 177 Sales and marketing 221 190 616 411 General and administrative 1,594 1,635 5,024 3,475 2,214 2,297 7,133 5,059 Income tax benefit (464 ) (349 ) (1,494 ) (860 ) Stock-based compensation expense, net of tax $ 1,750 $ 1,948 $ 5,639 $ 4,199 (1) Stock-based compensation expense capitalized in inventory for the three and nine months ended September 28, 2018 and September 29, 2017 was not significant. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements Effective December 30, 2017, the Company adopted FASB Accounting Standards Codification (ASC) Revenue from Contracts with Customers (Topic 606) Our implementation team consisted of senior leadership from finance, legal, sales and operations with periodic progress reporting to management and to the audit committee of our board of directors. Implementation consisted of a review of the Company’s significant contracts and an evaluation of our systems and control environment to support additional disclosures under the new standard, as well as updates to our policies and procedures. During our assessment, we considered whether the adoption would require a transition from point-in-time revenue recognition to an over-time approach for products produced by us without an alternative use, which would result in acceleration of revenue. We concluded based on enforceable rights or prevailing terms and conditions included in the agreements with our customers, an enforceable right of payment that includes a reasonable profit throughout the duration of the contract does not exist. Therefore, we will remain at a point-in-time approach and record revenue at the point control transfers to our customers. Beginning fiscal 2018, the Company adopted Accounting Standards Update (ASU) Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, Beginning fiscal 2018, the Company adopted ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business Beginning fiscal 2018, the Company adopted ASU No. 2017-09, Stock Compensation: Scope of Modification Accounting Beginning with the Company’s acquisition of QGT, the Company adopted ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , (“ASC 842”). ASC 842 supersedes the lease recognition requirements in ASC 840, Leases . ASC 842 clarifies the definition of a lease and requires lessees to recognize right-of-use assets and lease liabilities for all leases, including those classified as operating leases under previous lease accounting guidance. The guidance is effective for public business entities for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. Originally, entities were required to adopt ASU 2016-02 using a modified retrospective transition method. However, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements , which provides entities with an additional transition method. Under ASU 2018-11, entities have the option of initially applying ASC 842 at the adoption date, rather than at the beginning of the earliest period presented, and recognizing the cumulative effect of applying the new standard as an adjustment to beginning retained earnings in the year of adoption while continuing to present all prior periods under previous lease accounting guidance. The Company expects to elect this transition method at the adoption date of January 1, 2019. The Company is continuing to evaluate the impact of adopting this guidance on the Company’s consolidated financial statements. The Company currently expects that its operating lease commitments will be subject to the new standard and recognized as right-of-use assets and operating lease liabilities upon adoption of this standard, which will increase the total assets and total liabilities that it reports relative to such amounts prior to adoption. In January 2017, the FASB issued ASU. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In March 2017, the FASB issued ASU 2017-07, Presentation of Net Periodic Benefit Cost Related to Defined Benefit Plans The Company is evaluating the impact of adopting this guidance on the Company’s consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities |
Organization and Significant _3
Organization and Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 28, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Assets or Liabilities Measured at Fair Value | The following table summarizes, for assets or liabilities measured at fair value, the respective fair value and the classification by level of input within the fair value hierarchy (in thousands): Fair Value Measurement at Reporting Date Using Description September 28, 2018 Quoted Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Other assets: Forward contracts $ 411 $ — $ 411 $ — Other non-current liabilities: Contingent earn-out liability $ 4,163 $ — $ — $ 4,163 Stock purchase obligation $ 8,552 $ — $ — $ 8,552 Fair Value Measurement at Reporting Date Using Description December 29, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Other assets: Interest rate swap $ 30 $ — $ 30 $ — Forward contracts $ 1,302 $ — $ 1,302 $ — |
Summary of Restricted Stock Unit, Performance Stock Units and Restricted Stock Award Activity | The following table summarizes the Company’s RSU, PSU and RSA activity for the nine months ended September 28, 2018: Shares Aggregate Fair (in thousands) Unvested restricted stock units and restricted stock awards at December 29, 2017 1,676,312 $ 38,706 Granted 983,265 Vested (726,550 ) Forfeited (118,813 ) Unvested restricted stock units and restricted stock awards at September 28, 2018 1,814,214 $ 22,768 Vested and expected to vest restricted stock units and restricted stock awards at September 28, 2018 1,506,549 $ 18,907 |
Stock-Based Compensation Expense Included in Condensed Consolidated Statements of Operations | The following table shows the Company’s stock-based compensation expense included in the Condensed Consolidated Statements of Operations (in thousands): Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, 2018 2017 2018 2017 Cost of sales (1) $ 374 $ 395 $ 1,397 $ 996 Research and development 25 77 96 177 Sales and marketing 221 190 616 411 General and administrative 1,594 1,635 5,024 3,475 2,214 2,297 7,133 5,059 Income tax benefit (464 ) (349 ) (1,494 ) (860 ) Stock-based compensation expense, net of tax $ 1,750 $ 1,948 $ 5,639 $ 4,199 (1) Stock-based compensation expense capitalized in inventory for the three and nine months ended September 28, 2018 and September 29, 2017 was not significant. |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Sep. 28, 2018 | |
Investments All Other Investments [Abstract] | |
Schedule of Derivative Instruments at Gross Fair Value | The following tables show the Company’s derivative instruments at gross fair value (in thousands) as of September 28, 2018 and December 29, 2017. September 28, 2018 Fair Value of Fair Value of Derivatives Derivatives Not Balance Sheet Designated as Designated as Total Location Hedge Instruments Hedge Instruments Fair Value Derivative assets and liabilities: Level 2: Forward contracts Prepaid expenses and other $ 88 $ 194 $ 282 Forward contracts Other non-current assets $ 21 $ 108 $ 129 December 29, 2017 Fair Value of Fair Value of Derivatives Derivatives Not Balance Sheet Designated as Designated as Total Location Hedge Instruments Hedge Instruments Fair Value Derivative assets and liabilities: Level 2: Interest rate swap Prepaid expenses and other $ 30 $ — $ 30 Forward contracts Prepaid expenses and other $ 714 $ — $ 714 Forward contracts Other non-current assets $ 588 $ — $ 588 |
Effect of Derivative Instruments in Cash Flow Hedging Relationships on Income and Other Comprehensive Income | The effect of derivative instruments in cash flow hedging relationships on income and other comprehensive income (OCI) is summarized below (in thousands): Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect (Effective Portion) Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, 2018 2017 2018 2017 Derivatives in Cash Flow Hedging Relationship Interest rate swap $ — $ (11 ) $ (36 ) $ — Forward contracts $ 27 $ 356 $ (44 ) $ 1,197 Gains Reclassified from AOCI into Income (Effective Portion) Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, Income Statement Location 2018 2017 2018 2017 Derivatives in Cash Flow Hedging Relationship Interest rate swap Interest and other income (expense), net $ (14 ) $ (6 ) $ 6 $ (13 ) Forward contracts Cost of goods sold $ (323 ) $ 106 $ (1,253 ) $ 106 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 28, 2018 | |
Revenue From Contract With Customer [Abstract] | |
Customers as Percentage of Total Sales | The Company’s most significant customers (having accounted for 10% or more of sales) and their related sales as a percentage of total sales were as follows: Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, 2018 2017 2018 2017 Lam Research Corporation 48.7 % 59.1 % 59.9 % 58.3 % Applied Materials, Inc. 23.0 24.5 21.9 25.7 Total 71.7 % 83.6 % 81.8 % 84.0 % |
Balance Sheet Information (Tabl
Balance Sheet Information (Tables) | 9 Months Ended |
Sep. 28, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Summary of Inventories | Inventories consisted of the following (in thousands): September 28, December 29, 2018 2017 Raw materials $ 146,912 $ 183,457 Work in process 32,563 43,826 Finished goods 19,103 9,557 Total $ 198,578 $ 236,840 |
Property, Equipment and Leasehold Improvements, Net | Property, equipment and leasehold improvements, net, consisted of the following (in thousands): September 28, December 29, 2018 2017 Land $ 14,012 $ — Building 24,399 — Computer equipment and software 29,144 11,672 Furniture and fixtures 3,873 3,318 Machinery and equipment 54,743 19,781 Leasehold improvements 38,288 22,839 Vehicles 400 — Accumulated depreciation (41,193 ) (38,879 ) 123,666 18,731 Construction in progress 10,080 13,515 Total $ 133,746 $ 32,246 |
Acquisition (Tables)
Acquisition (Tables) | 9 Months Ended |
Sep. 28, 2018 | |
Business Combinations [Abstract] | |
Summary of Preliminary Fair Values of Assets Acquired and Liabilities Assumed at Date of Acquisition | The following table summarizes the preliminary fair values of assets acquired and liabilities assumed at the date of acquisition (in thousands): Fair Market Values (in thousands) Cash and cash equivalents $ 18,991 Accounts receivable 18,683 Inventories 474 Prepaid expenses and other 13,194 Property and equipment 98,738 Goodwill 66,622 Purchased intangible assets 176,200 Total assets acquired 392,902 Accounts payable (9,362 ) Accrued compensation and related benefits (2,904 ) Other current liabilities (8,945 ) Other liabilities (13,115 ) Noncontrolling interest (12,413 ) Total liabilities assumed (46,739 ) Purchase price allocated $ 346,163 |
Summary of Purchased Intangible Assets | Purchased Useful Life Intangible Assets (In years) (In thousands) Customer relationships 10 $ 79,500 Trade name 4 14,900 Recipes 20 73,200 Standard operating procedures 20 8,600 Total purchased intangible assets $ 176,200 |
Unaudited Proforma Consolidated Results of Operations | The following unaudited pro forma consolidated results of operations assume the acquisition was completed as of the beginning of the year of the reporting periods presented. The unaudited pro forma consolidated results of operations for the three and nine months ended September 28, 2018 and September 29, 2017 (in thousands, except per share amounts) as follows: Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, 2018 2017 2018 2017 Net sales $ 269,588 $ 298,180 $ 992,514 $ 836,246 Net income $ (3,343 ) $ 16,438 $ 31,321 $ 46,903 Basic earnings per share $ (0.09 ) $ 0.49 $ 0.82 $ 1.41 Diluted earnings per share $ (0.09 ) $ 0.48 $ 0.81 $ 1.37 |
Goodwill and Purchased Intang_2
Goodwill and Purchased Intangible Assets (Tables) | 9 Months Ended |
Sep. 28, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Indefinite Lived Intangible Assets | Goodwill and other intangible assets were as follows (in thousands): September 28, 2018 December 29, 2017 Intangible Intangible Goodwill Assets Total Goodwill Assets Total Carrying amount $ 151,869 $ 203,180 $ 355,049 $ 85,248 $ 31,587 $ 116,835 |
Purchased Intangible Assets | Purchased intangible assets were as follows (in thousands): As of September 28, 2018 As of December 29, 2017 Gross Gross Carrying Accumulated Carrying Carrying Accumulated Carrying Useful Amount Amortization Value Amount Amortization Value Life AIT Customer relationships $ 19,000 $ (18,462 ) $ 538 $ 19,000 $ (17,998 ) $ 1,002 7 Tradename 1,900 (1,900 ) — 1,900 (1,900 ) — 6 Intellectual property/know-how 1,600 (1,429 ) 171 1,600 (1,257 ) 343 7 Thermal Customer relationships 9,900 (3,630 ) 6,270 9,900 (2,887 ) 7,013 10 Tradename 1,170 (1,170 ) — 1,170 (1,170 ) — 6 Intellectual property/know-how 12,300 (5,057 ) 7,243 12,300 (4,023 ) 8,277 8-12 FDS Customer relationships 8,800 (3,716 ) 5,084 8,800 (2,835 ) 5,965 7.5 QGT Customer relationships 79,500 (662 ) 78,838 — — — 10 Tradename 14,900 (310 ) 14,590 — — — 4 Recipes 73,200 (305 ) 72,895 — — — 20 Standard operating procedures 8,600 (36 ) 8,564 — — — 20 UCT Tradename 8,987 — 8,987 8,987 — 8,987 * Total $ 239,857 $ (36,677 ) $ 203,180 $ 63,657 $ (32,070 ) $ 31,587 * The Company concluded that the UCT tradename intangible asset life is indefinite and is therefore not amortized but is reviewed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. |
Future Estimated Amortization Expense | As of September 28, 2018, future estimated amortization expense is expected to be as follows (in thousands): Amortization Expense 2018 (remaining in year) $ 5,039 2019 19,805 2020 19,308 2021 19,308 2022 18,066 Thereafter 112,667 Total $ 194,193 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 28, 2018 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Net Income (loss) Per Share | The following is a reconciliation of the numerators and denominators used in computing basic and diluted net income (loss) per share (in thousands, except per share data): Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, 2018 2017 2018 2017 Numerator: Net income (loss) attributable to Ultra Clean Holdings, Inc. $ (5,997 ) $ 19,716 $ 37,704 $ 54,236 Denominator: Shares used in computation — basic: Weighted average common shares outstanding 38,930 33,540 38,152 33,342 Shares used in computation — diluted: Shares used in computing basic net income per share 38,930 33,540 38,152 33,342 Dilutive effect of common shares outstanding subject to repurchase — 813 588 856 Dilutive effect of options outstanding — 7 5 18 Weighted average shares used in computing diluted net income per share 38,930 34,360 38,745 34,216 Net income per share attributable to Ultra Clean Holdings, Inc. — basic $ (0.15 ) $ 0.59 $ 0.99 $ 1.63 Net income per share attributable to Ultra Clean Holdings, Inc. — diluted $ (0.15 ) $ 0.57 $ 0.97 $ 1.59 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 28, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Summary of Future Minimum Payments under Operating Leases | As of September 28, 2018, future minimum payments under these operating leases were as follows (in thousands): Fiscal Year 2018 (remaining in year) $ 3,578 2019 12,800 2020 10,514 2021 8,927 2022 6,150 Thereafter 5,606 Total minimum lease payments $ 47,575 |
Geographical Information (Table
Geographical Information (Tables) | 9 Months Ended |
Sep. 28, 2018 | |
Geographical Information [Abstract] | |
Revenue by Geographic Area | The following table sets forth revenue by geographic area (in thousands): Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, 2018 2017 2018 2017 United States $ 123,655 $ 138,866 $ 467,616 $ 372,571 China 11,803 6,834 30,782 24,947 Singapore 62,437 73,427 247,974 207,477 Austria 18,320 6,132 48,249 25,844 Other 17,864 17,351 44,513 44,626 $ 234,079 $ 242,610 $ 839,134 $ 675,465 |
Organization and Significant _4
Organization and Significant Accounting Policies - Additional Information (Detail) $ in Thousands | Aug. 27, 2018USD ($) | Sep. 28, 2018Segment |
Concentration Risk [Line Items] | ||
Number of operating segments | 1 | |
Number of reportable segments | 1 | |
Cincos Co., Ltd [Member] | ||
Concentration Risk [Line Items] | ||
Noncontrolling interest, ownership percentage by parent | 86.00% | |
Cincos Xian Clean Technology, Ltd [Member] | ||
Concentration Risk [Line Items] | ||
Noncontrolling interest, ownership percentage by parent | 60.00% | |
Minimum [Member] | ||
Concentration Risk [Line Items] | ||
Fiscal year duration | 364 days | |
Useful lives range | 3 years | |
Minimum [Member] | Internal Use Software [Member] | ||
Concentration Risk [Line Items] | ||
Useful lives range | 3 years | |
Maximum [Member] | ||
Concentration Risk [Line Items] | ||
Fiscal year duration | 371 days | |
Useful lives range | 40 years | |
Measurement period to determine fair value of assets and liabilities | 12 months | |
Maximum [Member] | Internal Use Software [Member] | ||
Concentration Risk [Line Items] | ||
Useful lives range | 5 years | |
Quantum Global Technologies, LLC [Member] | ||
Concentration Risk [Line Items] | ||
Total purchase consideration | $ | $ 346,163 |
Organization and Significant _5
Organization and Significant Accounting Policies - Assets or Liabilities Measured at Fair Value (Detail) - USD ($) $ in Thousands | Sep. 28, 2018 | Dec. 29, 2017 |
Forward Contracts [Member] | ||
Other assets: | ||
Assets measured at fair value | $ 411 | $ 1,302 |
Interest Rate Swap [Member] | ||
Other assets: | ||
Assets measured at fair value | 30 | |
Contingent Earn-out Liability [Member] | ||
Other non-current liabilities: | ||
Liabilities measured at fair value | 4,163 | |
Stock Purchase Obligation [Member] | ||
Other non-current liabilities: | ||
Liabilities measured at fair value | 8,552 | |
Significant Other Observable Inputs (Level 2) [Member] | Forward Contracts [Member] | ||
Other assets: | ||
Assets measured at fair value | 411 | 1,302 |
Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Swap [Member] | ||
Other assets: | ||
Assets measured at fair value | $ 30 | |
Significant Unobservable Inputs (Level 3) [Member] | Contingent Earn-out Liability [Member] | ||
Other non-current liabilities: | ||
Liabilities measured at fair value | 4,163 | |
Significant Unobservable Inputs (Level 3) [Member] | Stock Purchase Obligation [Member] | ||
Other non-current liabilities: | ||
Liabilities measured at fair value | $ 8,552 |
Organization and Significant _6
Organization and Significant Accounting Policies - Additional Information 1 (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2018 | Jun. 29, 2018 | Mar. 30, 2018 | Sep. 28, 2018 | |
Restricted Stock Units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares vesting period, years | 3 years | |||
Granted stock units | 683,305 | 0 | 174,900 | |
Weighted average fair value, granted | $ 15.52 | $ 19.57 | ||
Vested shares withheld to satisfy withholding tax obligations | 158,579 | |||
Vested shares issued net of tax withholdings | 522,971 | |||
Stock-based compensation cost, net of estimated forfeitures, recognized | $ 17,300,000 | |||
Outstanding restricted stock | 1,814,214 | 1,814,214 | ||
Aggregate fair value | $ 22,800,000 | $ 22,800,000 | ||
Weighted average remaining contractual term (in years) | 1 year 3 months 18 days | |||
Restricted Stock Units [Member] | Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares vesting period, years | 1 year 10 months 24 days | |||
Restricted Stock Units [Member] | Employees [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares vesting period, years | 3 years | |||
Unit purchase price of Restricted Stock Units | $ 0 | |||
Restricted Stock Awards [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares vesting period, years | 1 year | |||
Restricted Stock Awards [Member] | Non-Employee Directors [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Outstanding restricted stock | 38,010 | 38,010 | ||
Unamortized expense of company's unvested restricted stock awards | $ 400,000 | $ 400,000 | ||
Employee Stock Purchase Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Employee common stock fair market value rate | 95.00% | |||
Performance Stock Units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted stock units | 0 | 87,050 | ||
Weighted average fair value, granted | $ 19.25 | |||
Stock-based compensation cost, net of estimated forfeitures, recognized | $ 17,300,000 | |||
Outstanding restricted stock | 1,814,214 | 1,814,214 | ||
Aggregate fair value | $ 22,800,000 | $ 22,800,000 | ||
Weighted average remaining contractual term (in years) | 1 year 3 months 18 days | |||
Performance Stock Units [Member] | Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares vesting period, years | 1 year 10 months 24 days |
Organization and Significant _7
Organization and Significant Accounting Policies - Summary of Restricted Stock Unit, Performance Stock Units and Restricted Stock Award Activity (Detail) - Restricted Stock Unit, Performance Stock Units and Restricted Stock Award [Member] $ in Thousands | 9 Months Ended | |
Sep. 28, 2018USD ($)shares | Dec. 29, 2017USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unvested restricted stock units and restricted stock awards, Number of Shares, Beginning balance | 1,676,312 | |
Granted, Number of Shares | 983,265 | |
Vested, Number of Shares | (726,550) | |
Forfeited, Number of Shares | (118,813) | |
Unvested restricted stock units and restricted stock awards, Number of Shares, Ending balance | 1,814,214 | |
Vested and expected to vest restricted stock units and restricted stock awards, Number of Shares | 1,506,549 | |
Unvested restricted stock units and restricted stock awards, Aggregate Intrinsic Value | $ | $ 22,768 | $ 38,706 |
Vested and expected to vest restricted stock units and restricted stock awards, Aggregate Intrinsic Value | $ | $ 18,907 |
Organization and Significant _8
Organization and Significant Accounting Policies - Stock-Based Compensation Expense Included in Condensed Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2018 | Sep. 29, 2017 | Sep. 28, 2018 | Sep. 29, 2017 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation | $ 2,214 | $ 2,297 | $ 7,133 | $ 5,059 |
Income tax benefit | (464) | (349) | (1,494) | (860) |
Stock-based compensation expense, net of tax | 1,750 | 1,948 | 5,639 | 4,199 |
Cost of Sales [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation | 374 | 395 | 1,397 | 996 |
Research and Development [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation | 25 | 77 | 96 | 177 |
Sales and Marketing [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation | 221 | 190 | 616 | 411 |
General and Administrative [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation | $ 1,594 | $ 1,635 | $ 5,024 | $ 3,475 |
Financial Instruments - Additio
Financial Instruments - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 28, 2018 | Sep. 29, 2017 | Sep. 28, 2018 | Sep. 29, 2017 | Sep. 30, 2015 | |
Financial Instruments [Line Items] | |||||
Effect of derivative instruments not designated as hedging instruments on income | $ (100,000) | $ 0 | $ (100,000) | $ 0 | |
Derivatives in Cash Flow Hedging Relationship [Member] | |||||
Financial Instruments [Line Items] | |||||
Gains (losses) recognized in income on derivatives that are excluded from effectiveness testing and ineffective portion | 0 | $ 0 | $ 0 | $ 0 | |
FDS [Member] | Derivatives Not Designated as Hedging Instruments [Member] | |||||
Financial Instruments [Line Items] | |||||
Non-Designated Derivatives, description | A portion of FDS’s forward contracts with a total notional amount of $3.6 million is not designated as a hedging instrument. The Company recognizes gains and losses on these contracts, as well any related costs, in interest and other income (expense), net. | ||||
Forward Contracts [Member] | FDS [Member] | Derivatives Not Designated as Hedging Instruments [Member] | |||||
Financial Instruments [Line Items] | |||||
Derivative instrument, notional amount | $ 3,600,000 | $ 3,600,000 | |||
East West Bank and City National Bank [Member] | Interest Rate Swap [Member] | |||||
Financial Instruments [Line Items] | |||||
Derivative instrument, notional amount | $ 20,000,000 | ||||
Credit Agreement [Member] | Interest Rate Swap [Member] | Term Loan Credit Facility [Member] | |||||
Financial Instruments [Line Items] | |||||
Debt instrument LIBOR rate | 0.99% |
Financial Instruments - Schedul
Financial Instruments - Schedule of Derivative Instruments at Gross Fair Value (Detail) - Significant Other Observable Inputs (Level 2) [Member] - USD ($) $ in Thousands | Sep. 28, 2018 | Dec. 29, 2017 |
Forward Contracts [Member] | Prepaid Expenses and Other [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets, Fair Value of Derivatives Designated as Hedge Instrument | $ 88 | $ 714 |
Derivative assets, Fair Value of Derivatives Not Designated as Hedge Instrument | 194 | |
Derivative assets, Total Fair Value | 282 | 714 |
Forward Contracts [Member] | Other Non-Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets, Fair Value of Derivatives Designated as Hedge Instrument | 21 | 588 |
Derivative assets, Fair Value of Derivatives Not Designated as Hedge Instrument | 108 | |
Derivative assets, Total Fair Value | $ 129 | 588 |
Interest Rate Swap [Member] | Prepaid Expenses and Other [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets, Fair Value of Derivatives Designated as Hedge Instrument | 30 | |
Derivative assets, Total Fair Value | $ 30 |
Financial Instruments - Effect
Financial Instruments - Effect of Derivative Instruments in Cash Flow Hedging Relationships on Income and Other Comprehensive Income (Detail) - Derivatives in Cash Flow Hedging Relationship [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2018 | Sep. 29, 2017 | Sep. 28, 2018 | Sep. 29, 2017 | |
Interest Rate Swap [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect (Effective Portion) | $ (11) | $ (36) | ||
Interest Rate Swap [Member] | Interest and Other Income (Expense), Net [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains Reclassified from AOCI into Income (Effective Portion) | $ (14) | (6) | 6 | $ (13) |
Forward Contracts [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect (Effective Portion) | 27 | 356 | (44) | 1,197 |
Forward Contracts [Member] | Cost of Goods Sold [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains Reclassified from AOCI into Income (Effective Portion) | $ (323) | $ 106 | $ (1,253) | $ 106 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Detail) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 28, 2018USD ($)SegmentCustomer | Dec. 29, 2017Customer | |
Concentration Risk [Line Items] | ||
Number of reportable segments | Segment | 1 | |
Accrued Expenses [Member] | ||
Concentration Risk [Line Items] | ||
Unpaid customer rebates | $ | $ 1.2 | |
Maximum [Member] | ||
Concentration Risk [Line Items] | ||
Product warranty period (in years) | 2 years | |
Customer Concentration Risk [Member] | Lam Research Corporation, Applied Materials, Inc. and ASM International, Inc. [Member] | ||
Concentration Risk [Line Items] | ||
Number of customers with accounts receivable greater than 10% | 2 | |
Customer Concentration Risk [Member] | Lam Research Corporation, Applied Materials, Inc. and ASM International, Inc. [Member] | Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Concentration percentage | 75.80% | |
Customer Concentration Risk [Member] | Lam Research Corporation and Applied Materials, Inc. [Member] | ||
Concentration Risk [Line Items] | ||
Number of customers with accounts receivable greater than 10% | 3 | |
Customer Concentration Risk [Member] | Lam Research Corporation and Applied Materials, Inc. [Member] | Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Concentration percentage | 65.60% |
Revenue Recognition - Customers
Revenue Recognition - Customers as Percentage of Total Sales (Detail) - Sales [Member] - Customer Concentration Risk [Member] | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2018 | Sep. 29, 2017 | Sep. 28, 2018 | Sep. 29, 2017 | |
Concentration Risk [Line Items] | ||||
Total | 71.70% | 83.60% | 81.80% | 84.00% |
Lam Research Corporation [Member] | ||||
Concentration Risk [Line Items] | ||||
Total | 48.70% | 59.10% | 59.90% | 58.30% |
Applied Materials, Inc. [Member] | ||||
Concentration Risk [Line Items] | ||||
Total | 23.00% | 24.50% | 21.90% | 25.70% |
Balance Sheet Information - Sum
Balance Sheet Information - Summary of Inventories (Detail) - USD ($) $ in Thousands | Sep. 28, 2018 | Dec. 29, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 146,912 | $ 183,457 |
Work in process | 32,563 | 43,826 |
Finished goods | 19,103 | 9,557 |
Total | $ 198,578 | $ 236,840 |
Balance Sheet Information - Pro
Balance Sheet Information - Property, Equipment and Leasehold Improvements, Net (Detail) - USD ($) $ in Thousands | Sep. 28, 2018 | Dec. 29, 2017 |
Property, Plant and Equipment [Line Items] | ||
Accumulated depreciation | $ (41,193) | $ (38,879) |
Equipment and leasehold improvements net excluding construction in progress | 123,666 | 18,731 |
Construction in progress | 10,080 | 13,515 |
Total | 133,746 | 32,246 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 14,012 | |
Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 24,399 | |
Computer Equipment and Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 29,144 | 11,672 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 3,873 | 3,318 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 54,743 | 19,781 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 38,288 | $ 22,839 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | $ 400 |
Acquisition - Additional Inform
Acquisition - Additional Information (Detail) - USD ($) $ in Thousands | Oct. 31, 2018 | Aug. 27, 2018 | Mar. 31, 2014 | Sep. 28, 2018 | Mar. 30, 2018 | Sep. 28, 2018 | Sep. 29, 2017 | Sep. 28, 2018 | Sep. 29, 2017 | Dec. 29, 2017 |
Business Acquisition [Line Items] | ||||||||||
Contingent consideration | $ 4,163 | $ 4,163 | $ 4,163 | |||||||
Bank debt | $ 330,984 | 330,984 | 330,984 | $ 39,893 | ||||||
Sales | 234,079 | $ 242,610 | 839,134 | $ 675,465 | ||||||
Amortization of finite-lived intangibles | $ 2,400 | $ 1,200 | $ 4,607 | $ 3,693 | ||||||
Cinos Co., Ltd. and Cinos Xian Clean Technology, Ltd. [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Percentage of value used for fair value of non-controlling interest estimates | 100.00% | |||||||||
Cincos Co., Ltd [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Noncontrolling interest, ownership percentage by parent | 86.00% | 86.00% | 86.00% | |||||||
Percentage of non-controlling interest | 14.00% | |||||||||
Cincos Co., Ltd [Member] | Cincos Xian Clean Technology, Ltd [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Noncontrolling interest, ownership percentage by parent | 60.00% | |||||||||
China Joint Venture [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Percentage of non-controlling interest | 40.00% | |||||||||
Quantum Global Technologies, LLC [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Date of acquisition | Aug. 27, 2018 | |||||||||
Total purchase consideration | $ 346,163 | |||||||||
Business acquisition, payment for acquisition | 342,000 | |||||||||
Contingent consideration | 4,200 | |||||||||
Business acquisition potential cash earn-out payments | 15,000 | |||||||||
Acquisition related costs | 9,400 | $ 9,400 | $ 9,400 | |||||||
Cash borrowed for acquisition and refinancing | 350,000 | |||||||||
Stock purchase obligation, fair value | $ 8,600 | |||||||||
Purchase obligation maturity period | 2022-12 | |||||||||
Sales | 22,500 | 22,500 | ||||||||
Amortization of finite-lived intangibles | 1,300 | 1,300 | ||||||||
Impairment loss for net book value of building and related assets | $ 5,200 | |||||||||
Insurance receivable | $ 5,200 | 5,200 | 5,200 | |||||||
Quantum Global Technologies, LLC [Member] | General and Administrative [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Acquisition related costs | 9,400 | $ 9,400 | ||||||||
Quantum Global Technologies, LLC [Member] | Cincos Co., Ltd [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Number of shares transferred | 39,000 | |||||||||
Quantum Global Technologies, LLC [Member] | Post-closing Working Capital Adjustments [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Esrow security | 2,300 | |||||||||
Quantum Global Technologies, LLC [Member] | Indemnification Obligations [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Esrow security | $ 3,400 | |||||||||
Cincos Co., Ltd [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Percentage of outstanding shares purchased | 35.00% | |||||||||
Bank debt | $ 30,000 | |||||||||
Repayment of debt | $ 1,200 | |||||||||
Cincos Co., Ltd [Member] | Subsequent Event [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Repayment of debt | $ 28,800 | |||||||||
Cincos Co., Ltd [Member] | Quantum Global Technologies, LLC [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Percentage of outstanding shares purchased | 51.00% |
Acquisition - Summary of Prelim
Acquisition - Summary of Preliminary Fair Values of Assets Acquired and Liabilities Assumed at Date of Acquisition (Detail) - USD ($) $ in Thousands | Aug. 27, 2018 | Sep. 28, 2018 | Dec. 29, 2017 |
Business Acquisition [Line Items] | |||
Goodwill | $ 151,869 | $ 85,248 | |
Quantum Global Technologies, LLC [Member] | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 18,991 | ||
Accounts receivable | 18,683 | ||
Inventories | 474 | ||
Prepaid expenses and other | 13,194 | ||
Property and equipment | 98,738 | ||
Goodwill | 66,622 | ||
Purchased intangible assets | 176,200 | ||
Total assets acquired | 392,902 | ||
Accounts payable | (9,362) | ||
Accrued compensation and related benefits | (2,904) | ||
Other current liabilities | (8,945) | ||
Other liabilities | (13,115) | ||
Noncontrolling interest | (12,413) | ||
Total liabilities assumed | (46,739) | ||
Total purchase consideration | $ 346,163 |
Acquisition - Summary of Purcha
Acquisition - Summary of Purchased Intangible Assets (Detail) - Quantum Global Technologies, LLC [Member] - USD ($) $ in Thousands | Aug. 27, 2018 | Sep. 28, 2018 |
Business Acquisition [Line Items] | ||
Purchased intangible assets | $ 176,200 | |
Customer Relationships [Member] | ||
Business Acquisition [Line Items] | ||
Purchased intangible assets | $ 79,500 | |
Total purchased intangible assets, useful life | 10 years | 10 years |
Trade Name [Member] | ||
Business Acquisition [Line Items] | ||
Purchased intangible assets | $ 14,900 | |
Total purchased intangible assets, useful life | 4 years | 4 years |
Recipes [Member] | ||
Business Acquisition [Line Items] | ||
Purchased intangible assets | $ 73,200 | |
Total purchased intangible assets, useful life | 20 years | 20 years |
Standard Operating Procedures [Member] | ||
Business Acquisition [Line Items] | ||
Purchased intangible assets | $ 8,600 | |
Total purchased intangible assets, useful life | 20 years | 20 years |
Acquisition - Unaudited Pro for
Acquisition - Unaudited Pro forma Consolidated Results of Operations (Detail) - Quantum Global Technologies, LLC [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2018 | Sep. 29, 2017 | Sep. 28, 2018 | Sep. 29, 2017 | |
Business Acquisition [Line Items] | ||||
Net sales | $ 269,588 | $ 298,180 | $ 992,514 | $ 836,246 |
Net income | $ (3,343) | $ 16,438 | $ 31,321 | $ 46,903 |
Basic earnings per share | $ (0.09) | $ 0.49 | $ 0.82 | $ 1.41 |
Diluted earnings per share | $ (0.09) | $ 0.48 | $ 0.81 | $ 1.37 |
Goodwill and Purchased Intang_3
Goodwill and Purchased Intangible Assets - Goodwill and Other Indefinite Lived Intangible Assets (Detail) - USD ($) $ in Thousands | Sep. 28, 2018 | Dec. 29, 2017 |
Intangible Assets Net Including Goodwill [Abstract] | ||
Goodwill | $ 151,869 | $ 85,248 |
Intangible Assets | 203,180 | 31,587 |
Total | $ 355,049 | $ 116,835 |
Goodwill and Purchased Intang_4
Goodwill and Purchased Intangible Assets - Purchased Intangible Assets (Detail) - USD ($) $ in Thousands | Aug. 27, 2018 | Sep. 28, 2018 | Dec. 29, 2017 |
Finite-Lived Intangible Assets [Line Items] | |||
Definite lives intangible assets, accumulated amortization | $ (36,677) | $ (32,070) | |
Definite lives intangible assets, net carrying amount | 194,193 | ||
Intangible Assets, gross carrying value | 239,857 | 63,657 | |
Intangible Assets, net carrying value | 203,180 | 31,587 | |
American Integration Technologies LLC [Member] | Customer Relationships [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Definite lives intangible assets, gross carrying amount | 19,000 | 19,000 | |
Definite lives intangible assets, accumulated amortization | (18,462) | (17,998) | |
Definite lives intangible assets, net carrying amount | $ 538 | 1,002 | |
Useful Life (in years) | 7 years | ||
American Integration Technologies LLC [Member] | Trade Name [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Definite lives intangible assets, gross carrying amount | $ 1,900 | 1,900 | |
Definite lives intangible assets, accumulated amortization | $ (1,900) | (1,900) | |
Useful Life (in years) | 6 years | ||
American Integration Technologies LLC [Member] | Intellectual Properties/Know-How [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Definite lives intangible assets, gross carrying amount | $ 1,600 | 1,600 | |
Definite lives intangible assets, accumulated amortization | (1,429) | (1,257) | |
Definite lives intangible assets, net carrying amount | $ 171 | 343 | |
Useful Life (in years) | 7 years | ||
Thermal [Member] | Customer Relationships [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Definite lives intangible assets, gross carrying amount | $ 9,900 | 9,900 | |
Definite lives intangible assets, accumulated amortization | (3,630) | (2,887) | |
Definite lives intangible assets, net carrying amount | $ 6,270 | 7,013 | |
Useful Life (in years) | 10 years | ||
Thermal [Member] | Trade Name [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Definite lives intangible assets, gross carrying amount | $ 1,170 | 1,170 | |
Definite lives intangible assets, accumulated amortization | $ (1,170) | (1,170) | |
Useful Life (in years) | 6 years | ||
Thermal [Member] | Intellectual Properties/Know-How [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Definite lives intangible assets, gross carrying amount | $ 12,300 | 12,300 | |
Definite lives intangible assets, accumulated amortization | (5,057) | (4,023) | |
Definite lives intangible assets, net carrying amount | $ 7,243 | 8,277 | |
Thermal [Member] | Intellectual Properties/Know-How [Member] | Minimum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life (in years) | 8 years | ||
Thermal [Member] | Intellectual Properties/Know-How [Member] | Maximum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life (in years) | 12 years | ||
FDS [Member] | Customer Relationships [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Definite lives intangible assets, gross carrying amount | $ 8,800 | 8,800 | |
Definite lives intangible assets, accumulated amortization | (3,716) | (2,835) | |
Definite lives intangible assets, net carrying amount | $ 5,084 | 5,965 | |
Useful Life (in years) | 7 years 6 months | ||
UCT [Member] | Trade Name [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Indefinite lives intangible assets | $ 8,987 | $ 8,987 | |
Quantum Global Technologies, LLC [Member] | Customer Relationships [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Definite lives intangible assets, gross carrying amount | 79,500 | ||
Definite lives intangible assets, accumulated amortization | (662) | ||
Definite lives intangible assets, net carrying amount | $ 78,838 | ||
Useful Life (in years) | 10 years | 10 years | |
Quantum Global Technologies, LLC [Member] | Trade Name [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Definite lives intangible assets, gross carrying amount | $ 14,900 | ||
Definite lives intangible assets, accumulated amortization | (310) | ||
Definite lives intangible assets, net carrying amount | $ 14,590 | ||
Useful Life (in years) | 4 years | 4 years | |
Quantum Global Technologies, LLC [Member] | Recipes [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Definite lives intangible assets, gross carrying amount | $ 73,200 | ||
Definite lives intangible assets, accumulated amortization | (305) | ||
Definite lives intangible assets, net carrying amount | $ 72,895 | ||
Useful Life (in years) | 20 years | 20 years | |
Quantum Global Technologies, LLC [Member] | Standard Operating Procedures [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Definite lives intangible assets, gross carrying amount | $ 8,600 | ||
Definite lives intangible assets, accumulated amortization | (36) | ||
Definite lives intangible assets, net carrying amount | $ 8,564 | ||
Useful Life (in years) | 20 years | 20 years |
Goodwill and Purchased Intang_5
Goodwill and Purchased Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands | Aug. 03, 2018 | Sep. 28, 2018 | Sep. 29, 2017 | Sep. 28, 2018 | Sep. 29, 2017 |
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization of finite-lived intangibles | $ 2,400 | $ 1,200 | $ 4,607 | $ 3,693 | |
Consideration received in connection with sale of subsidiary | $ 291 | ||||
UAMC [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Date of disposal | Aug. 3, 2018 | ||||
Carry value of assets sold | $ 1,100 | ||||
Loss on sale of business | 1,100 | ||||
Sale of subsidiary, description | On August 3, 2018, the Company sold its subsidiary, UAMC, for $0.3 million, in the form of note receivable from the purchaser. UAMC was launched in November 2004 to develop additive, 3D printing manufacturing capabilities. At closing, the carry value of the UAMC assets sold were $1.1 million. The Company also included free rent, labor and utilities for a period of six months are part of the agreement. The Company believes that the assets related to UAMC that were sold include all key inputs and processes necessary to generate output, and, accordingly, the Company has determined that UAMC qualified as a business. As a result of the sale, the Company recognized a loss on sale of a business of $1.1 million in the accompanying Condensed Consolidated Statements of Operations as Interest and other income (expense), net. | ||||
UAMC [Member] | Note Receivable [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Consideration received in connection with sale of subsidiary | $ 300 |
Goodwill and Purchased Intang_6
Goodwill and Purchased Intangible Assets - Future Estimated Amortization Expense (Detail) $ in Thousands | Sep. 28, 2018USD ($) |
Finite Lived Intangible Assets Future Amortization Expense [Abstract] | |
2018 (remaining in year) | $ 5,039 |
2,019 | 19,805 |
2,020 | 19,308 |
2,021 | 19,308 |
2,022 | 18,066 |
Thereafter | 112,667 |
Definite lives intangible assets, net carrying amount | $ 194,193 |
Borrowing Arrangements - Additi
Borrowing Arrangements - Additional Information (Detail) € in Millions | Aug. 27, 2018USD ($) | Aug. 31, 2018USD ($) | Sep. 28, 2018USD ($) | Sep. 28, 2018EUR (€) |
Quantum Global Technologies, LLC [Member] | ||||
Debt Instrument [Line Items] | ||||
Cash borrowed for acquisition and refinancing | $ 350,000,000 | |||
Outstanding amounts | $ 28,800,000 | |||
Minimum [Member] | ||||
Debt Instrument [Line Items] | ||||
Fixed charge coverage ratio | 1.25% | |||
Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Consolidated leverage ratio | 3.75% | |||
Credit Agreement [Member] | ||||
Debt Instrument [Line Items] | ||||
Payment of existing principal, accrued interest, and fees in settlement | $ 41,600,000 | |||
Expense recognized on extinguishment | 100,000 | |||
Bank Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Unamortized debt issuance costs | 12,000,000 | |||
Outstanding amount of borrowing classified as long-term debt | $ 373,800,000 | |||
Bank Debt [Member] | Czech Republic [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument interest rate | 1.30% | 1.30% | ||
Term Loan Credit Facility [Member] | Barclays Bank PLC [Member] | ||||
Debt Instrument [Line Items] | ||||
Cash borrowed for acquisition and refinancing | $ 350,000,000 | |||
Term loan, maturity date | Aug. 27, 2025 | |||
Percentage of original outstanding principal balance as quarterly principal payment | 0.625% | |||
Debt instrument, frequency of periodic payment | Term Loan has a maturity date of August 27, 2025, with monthly interest payments in arrears, quarterly principal payments of 0.625% of the original outstanding principal balance payable beginning January 2019, with the remaining principal paid upon maturity | |||
Description of interest rate term | The Term Loan accrues interest daily at a rate equal to, at the Company’s option, either (a) a base rate equal to the greater of (i) 1.0%, (ii) the Prime Rate, (iii) the Federal Funds Effective Rate plus 0.5%, or (iv) the one-month Eurodollar Rate plus 1.0%, plus 2.0%, or (b) a base LIBOR rate determined by reference to the London interbank offered rate for dollars, plus 3.0% (subject to certain adjustments quarterly based upon the Company’s consolidated leverage ratio). | |||
Debt instrument floor base rate | 1.00% | |||
Debt instrument variable interest rate | 2.00% | |||
Percentage of aggregate principal amount as prepayment fee | 1.00% | |||
Outstanding term loan | $ 350,000,000 | |||
Unamortized debt issuance costs | 12,000,000 | |||
Term Loan Credit Facility [Member] | Barclays Bank PLC [Member] | Federal Funds Effective Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument variable interest rate | 0.50% | |||
Term Loan Credit Facility [Member] | Barclays Bank PLC [Member] | One-Month Eurodollar [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument variable interest rate | 1.00% | |||
Term Loan Credit Facility [Member] | Barclays Bank PLC [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument variable interest rate | 3.00% | |||
Revolving Credit Facility [Member] | Bank Debt [Member] | Czech Republic [Member] | ||||
Debt Instrument [Line Items] | ||||
Remaining available commitments | 2,600,000 | € 2.3 | ||
Revolving Credit Facility [Member] | Bank Debt [Member] | U.S. [Member] | ||||
Debt Instrument [Line Items] | ||||
Remaining available commitments | 65,000,000 | |||
Revolving Credit Facility [Member] | Bank Debt [Member] | FDS [Member] | Czech Republic [Member] | ||||
Debt Instrument [Line Items] | ||||
Outstanding amounts | 6,900,000 | € 6 | ||
Revolving Credit Facility [Member] | Barclays Bank PLC [Member] | ||||
Debt Instrument [Line Items] | ||||
Initial available commitment | $ 65,000,000 | |||
Maturity date | Aug. 27, 2023 | |||
Commitment fee percentage | 0.25% | |||
Outstanding amount under credit facility | 0 | |||
Letter of Credit Facility [Member] | Barclays Bank PLC [Member] | ||||
Debt Instrument [Line Items] | ||||
Initial available commitment | $ 50,000,000 | |||
Maturity date | Aug. 27, 2023 | |||
Commitment fee percentage | 2.50% | |||
Outstanding amount under credit facility | 0 | |||
Percentage of undrawn and unexpired amount of letter of credit as fronting fee | 0.125% | |||
Remaining available commitments | $ 65,000,000 |
Income Tax - Additional Informa
Income Tax - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 28, 2018 | Sep. 29, 2017 | Sep. 28, 2018 | Sep. 29, 2017 | Dec. 29, 2017 | |
Income Tax Disclosure [Abstract] | |||||
U.S. statutory tax rate | 21.00% | 35.00% | |||
Additional tax expense | $ 1,500 | ||||
Reserve | $ 700 | 700 | |||
Income tax provision | $ 4,596 | $ 3,527 | $ 9,984 | $ 11,127 | |
Effective tax rate | (249.20%) | 15.20% | 21.10% | 17.00% | |
Undistributed earnings of foreign subsidiaries | $ 216,400 | $ 216,400 | |||
Gross liability for unrecognized tax benefits | $ 1,000 | $ 300 | $ 1,000 | $ 300 |
Net Income Per Share - Basic an
Net Income Per Share - Basic and Diluted Net Income (loss) Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2018 | Sep. 29, 2017 | Sep. 28, 2018 | Sep. 29, 2017 | |
Numerator: | ||||
Net income (loss) attributable to Ultra Clean Holdings, Inc. | $ (5,997) | $ 19,716 | $ 37,704 | $ 54,236 |
Shares used in computation — basic: | ||||
Weighted average common shares outstanding | 38,930 | 33,540 | 38,152 | 33,342 |
Shares used in computation — diluted: | ||||
Shares used in computing basic net income per share | 38,930 | 33,540 | 38,152 | 33,342 |
Dilutive effect of common shares outstanding subject to repurchase | 813 | 588 | 856 | |
Dilutive effect of options outstanding | 7 | 5 | 18 | |
Weighted average shares used in computing diluted net income per share | 38,930 | 34,360 | 38,745 | 34,216 |
Net income per share attributable to Ultra Clean Holdings, Inc. — basic | $ (0.15) | $ 0.59 | $ 0.99 | $ 1.63 |
Net income per share attributable to Ultra Clean Holdings, Inc. — diluted | $ (0.15) | $ 0.57 | $ 0.97 | $ 1.59 |
Net Income Per Share - Addition
Net Income Per Share - Additional Information (Detail) - shares | Feb. 02, 2018 | Sep. 28, 2018 |
Earnings Per Share [Abstract] | ||
Common stock, shares issued | 4,761,905 | |
Weighted average impact of shares issued | 4,168,847 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Millions | 9 Months Ended |
Sep. 28, 2018USD ($) | |
Long Term Purchase Commitment [Line Items] | |
Operating lease expiration period | various dates through 2023 |
Inventory [Member] | |
Long Term Purchase Commitment [Line Items] | |
Purchase commitments | $ 94.3 |
Commitments and Contingencies_2
Commitments and Contingencies - Summary of Future Minimum Payments under Operating Leases (Detail) $ in Thousands | Sep. 28, 2018USD ($) |
Operating Leases Future Minimum Payments Due [Abstract] | |
2018 (remaining in year) | $ 3,578 |
2,019 | 12,800 |
2,020 | 10,514 |
2,021 | 8,927 |
2,022 | 6,150 |
Thereafter | 5,606 |
Total minimum lease payments | $ 47,575 |
Geographical Information - Reve
Geographical Information - Revenue by Geographic Area (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2018 | Sep. 29, 2017 | Sep. 28, 2018 | Sep. 29, 2017 | |
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Sales | $ 234,079 | $ 242,610 | $ 839,134 | $ 675,465 |
United States [Member] | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Sales | 123,655 | 138,866 | 467,616 | 372,571 |
China [Member] | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Sales | 11,803 | 6,834 | 30,782 | 24,947 |
Singapore [Member] | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Sales | 62,437 | 73,427 | 247,974 | 207,477 |
Austria [Member] | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Sales | 18,320 | 6,132 | 48,249 | 25,844 |
Other [Member] | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Sales | $ 17,864 | $ 17,351 | $ 44,513 | $ 44,626 |
Geographical Information - Addi
Geographical Information - Additional Information (Detail) - USD ($) $ in Millions | Sep. 28, 2018 | Sep. 29, 2017 |
Asia [Member] | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Net long-lived assets | $ 78.7 | $ 9.9 |
Europe [Member] | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Net long-lived assets | $ 2.6 | |
Czech Republic [Member] | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Net long-lived assets | $ 1.6 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) - Barclays Bank PLC [Member] - Term Loan Credit Facility [Member] | Oct. 01, 2018 | Aug. 31, 2018 |
Subsequent Event [Line Items] | ||
Debt instrument floor base rate | 1.00% | |
Debt instrument variable interest rate | 2.00% | |
Federal Funds Effective Rate [Member] | ||
Subsequent Event [Line Items] | ||
Debt instrument variable interest rate | 0.50% | |
One-Month Eurodollar [Member] | ||
Subsequent Event [Line Items] | ||
Debt instrument variable interest rate | 1.00% | |
London Interbank Offered Rate (LIBOR) [Member] | ||
Subsequent Event [Line Items] | ||
Debt instrument variable interest rate | 3.00% | |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Debt instrument floor base rate | 1.00% | |
Debt instrument variable interest rate | 3.50% | |
Subsequent Event [Member] | Minimum [Member] | ||
Subsequent Event [Line Items] | ||
Prepayment fee extended period | 6 months | |
Subsequent Event [Member] | Maximum [Member] | ||
Subsequent Event [Line Items] | ||
Prepayment fee extended period | 12 months | |
Subsequent Event [Member] | Federal Funds Effective Rate [Member] | ||
Subsequent Event [Line Items] | ||
Debt instrument variable interest rate | 0.50% | |
Subsequent Event [Member] | One-Month Eurodollar [Member] | ||
Subsequent Event [Line Items] | ||
Debt instrument variable interest rate | 1.00% | |
Subsequent Event [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||
Subsequent Event [Line Items] | ||
Debt instrument variable interest rate | 4.50% |