Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2013 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Summary of Significant Accounting Policies | ' |
Summary of Significant Accounting Policies |
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Nature of Operations and Basis of Presentation – Amtech Systems, Inc. (the “Company”) designs, assembles, sells and installs capital equipment and related consumables used in the manufacture of wafers, primarily for the solar and semiconductor industries. The Company is developing an ion implanter to provide its customers with a more complete solution for their next-generation high-efficiency solar cell production. The Company sells these products to manufacturers of solar cells, silicon wafers, and semiconductors worldwide, particularly in Asia, United States and Europe. |
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The Company serves niche markets in industries that are experiencing rapid technological advances and which historically have been very cyclical. Therefore, future profitability and growth depend on the Company’s ability to develop or acquire and market profitable new products and on its ability to adapt to cyclical trends. |
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Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and subsidiaries in which it has a controlling interest. The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity. All material intercompany accounts and transactions have been eliminated in consolidation. |
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Use of Estimates - The preparation of consolidated 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 disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
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Change in Accounting Estimate - The Company regularly reviews inventory quantities and inventory purchase commitments and writes down excess and obsolete inventory to its net realizable value, and records a loss for expected purchase order cancellation charges and for excess inventory purchase commitments that cannot be cancelled. The write-down is primarily based on historical inventory usage adjusted for expected changes in product demand and production requirements. Due to a downturn in the solar industry, product demand and production requirements have declined significantly. As the Company began its annual budget review in the fourth quarter of fiscal 2012, it determined that the downturn was expected to continue at least in 2013. As a result, the Company recorded a write-down of inventory of $10.4 million for the fiscal year ended September 30, 2012. The Company also recorded a loss of $2.5 million for the fiscal year ended September 30, 2012 on inventory purchase commitments. In fiscal 2012, the inventory write-down and loss on inventory purchase commitments reduced operating income by $12.8 million, reduced net income attributable to Amtech shareholders by $9.7 million and increased basic and diluted loss per share by $1.01 cents per share. In fiscal 2013, the Company determined that the downturn was expected to continue into 2014. As a result, the Company recorded a write-down of inventory of $3.7 million for fiscal year 2013. The write-down of inventory reduced net income attributable to Amtech shareholders by $3.7 million and increased basic and diluted loss per share by $0.39 cents per share. |
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Revenue Recognition – We review product and service sales contracts with multiple deliverables to determine if separate units of accounting are present in the arrangements. Where separate units of accounting exist, revenue is allocated to delivered items equal to the total sales price less the greater of (1) the relative fair value of the undelivered items, and (2) all contingent portions of the sales arrangement. |
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We recognize revenue when persuasive evidence of an arrangement exists; the product has been delivered and title has transferred, or services have been rendered; the seller’s price to the buyer is fixed or determinable and collectability is reasonably assured. For us, this policy generally results in revenue recognition at the following points: |
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-1 | For our equipment business, transactions where legal title passes to the customer upon shipment, we recognize revenue upon shipment for those products where the customer’s defined specifications have been met with at least two similarly configured systems and processes for a comparably situated customer. However, a portion of the revenue associated with certain installation-related tasks, equal to the greater of the relative fair value of those tasks or the portion of the contract price contingent upon their completion, generally 10%-20% of the system’s selling price (the “holdback”), and directly related costs, if any, are deferred and recognized into income when the tasks are completed. Since we defer only those costs directly related to installation or other unit of accounting not yet delivered and the portion of the contract price is often considerably greater than the fair market value of those items, our policy at times will result in deferral of profit that is disproportionate in relation to the deferred revenue. When this is the case, the gross margin recognized in one period will be lower and the gross margin reported in a subsequent period will improve. | | | | | | | | | | | | | | | | | | | | |
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-2 | For products where the customer’s defined specifications have not been met with at least two similarly configured systems and processes, the revenue and directly related costs are deferred at the time of shipment and later recognized at the time of customer acceptance or when this criterion has been met. We have, on occasion, experienced longer than expected delays in receiving cash from certain customers pending final installation or system acceptance. If some of our customers refuse to pay the final payment, or otherwise delay final acceptance or installation, the deferred revenue would not be recognized, adversely affecting our future cash flows and operating results. | | | | | | | | | | | | | | | | | | | | |
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-3 | Sales of polishing supplies generally do not include process guarantees, acceptance criteria or holdbacks; therefore, the related revenue is generally recorded upon transfer of title which is generally at the time of shipment. | | | | | | | | | | | | | | | | | | | | |
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-4 | Sales of spare parts and consumables are recognized upon shipment, as there are no post shipment obligations other than standard warranties. | | | | | | | | | | | | | | | | | | | | |
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-5 | Service revenue is recognized upon performance of the services requested by the customer. Revenue related to service contracts is recognized ratably over the period of the contract or in accordance with the terms of the contract, which generally coincides with the performance of the services requested by the customer. | | | | | | | | | | | | | | | | | | | | |
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Deferred Profit – Revenue deferred pursuant to our revenue policy, net of the related deferred costs, if any, is recorded as deferred profit in current liabilities. The components of deferred profit are as follows: |
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| September 30, | | | | | | | | | | |
| 2013 | | 2012 | | 2011 | | | | | | | | | | |
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Deferred revenue | $ | 3,371 | | | $ | 11,200 | | | $ | 29,666 | | | | | | | | | | | |
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Deferred costs | 304 | | | 964 | | | 2,058 | | | | | | | | | | | |
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Deferred profit | $ | 3,067 | | | $ | 10,236 | | | $ | 27,608 | | | | | | | | | | | |
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Cash Equivalents – Cash equivalents in the United States consist of money market mutual funds invested in securities issued by the U.S. Government and its agencies and time deposits. In Europe, cash equivalents consist of money market mutual funds and time deposits. The fair value of the cash equivalents is based on Level One inputs in the fair value hierarchy as defined by ASC No. 820, Fair Value Measurements and Disclosures. |
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Restricted Cash – Restricted cash of $5.1 million and $4.6 million as of September 30, 2013 and 2012, respectively, includes collateral for bank guarantees required by certain customers from whom deposits have been received in advance of shipment and cash received from research and development grants related to our ion implant technology to be used for research and development projects. |
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Accounts Receivable and Allowance for Doubtful Accounts – Accounts receivable are recorded at the gross sales price of products sold to customers on trade credit terms. Accounts receivable are considered past due when payment has not been received from the customer within the normal credit terms extended to that customer. A valuation allowance is established for accounts when collection is no longer probable. Accounts are written off against the allowance when the probability of collection is remote. |
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The following is a summary of the activity in the Company’s allowance for doubtful accounts: |
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| Years Ended September 30, | | | | | | | | | | |
| 2013 | | 2012 | | 2011 | | | | | | | | | | |
| (dollars in thousands) | | | | | | | | | | |
Balance at beginning of year | $ | 517 | | | $ | 246 | | | $ | 181 | | | | | | | | | | | |
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Provision | 199 | | | 271 | | | 115 | | | | | | | | | | | |
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Write offs | (78 | ) | | — | | | (50 | ) | | | | | | | | | | |
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Balance at end of year | $ | 638 | | | $ | 517 | | | $ | 246 | | | | | | | | | | | |
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Accounts Receivable - Unbilled and Other – Unbilled and other accounts receivable consist mainly of the contingent portion of the sales price that is not collectible until successful installation of the product. These amounts are generally billed upon final customer acceptance. |
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Concentrations of Credit Risk – Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and trade accounts receivable. The Company’s customers consist of manufacturers of solar cells, semiconductors, semiconductor wafers, LEDs and MEMS located throughout the world. Credit risk is managed by performing ongoing credit evaluations of the customers’ financial condition, by requiring significant deposits where appropriate, and by actively monitoring collections. Letters of credit are required of certain customers depending on the size of the order, type of customer or its creditworthiness, and its country of domicile. Reserves for potentially uncollectible receivables are maintained based on an assessment of collectability. |
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The Company maintains its cash, cash equivalents and restricted cash in multiple financial institutions. Balances in the United States (approximately 60% of total cash balances) are primarily invested in US Treasuries or are in financial institutions insured by the Federal Deposit Insurance Corporation (FDIC). The remainder of the Company’s cash is maintained in banks in The Netherlands, France and China that are uninsured. |
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As of September 30, 2013, two customers individually represented 18% and 13% of accounts receivable. As of September 30, 2012, two customers individually represented 14% and 12% of accounts receivable. Accounts receivable from Yingli Green Energy (Yingli) was 18% and 14% as of September 30, 2013 and 2012, respectively. |
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Refer to Note 9, Geographic Regions, for information regarding revenue and assets in other countries subject to fluctuation in foreign currency exchange rates. |
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Inventories – We value our inventory at the lower of cost or net realizable value. Costs for approximately 80% of inventory are determined on an average cost basis with the remainder determined on a first-in, first-out (FIFO) basis. The components of inventories are as follows: |
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| 30-Sep-13 | | 30-Sep-12 | | | | | | | | | | | | | | |
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Purchased parts and raw materials | $ | 11,757 | | | $ | 19,644 | | | | | | | | | | | | | | | |
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Work-in-process | 7,104 | | | 2,328 | | | | | | | | | | | | | | | |
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Finished goods | 3,140 | | | 3,698 | | | | | | | | | | | | | | | |
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| $ | 22,001 | | | $ | 25,670 | | | | | | | | | | | | | | | |
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Property, Plant and Equipment - Property plant, and equipment are recorded at cost. Maintenance and repairs are charged to expense as incurred. The cost of property retired or sold and the related accumulated depreciation and amortization are removed from the applicable accounts when disposition occurs and any gain or loss is recognized. Depreciation and amortization is computed using the straight-line method. Depreciation expense was $2.0 million, $2.2 million and $2.1 million in fiscal 2013, 2012 and 2011, respectively. Useful lives for equipment, machinery and leasehold improvements range from three to seven years; for furniture and fixtures from five to ten years; and for buildings twenty years. |
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The following is a summary of property, plant and equipment: |
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| 30-Sep-13 | | 30-Sep-12 | | | | | | | | | | | | | | |
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Land, building and leasehold improvements | $ | 10,960 | | | $ | 10,476 | | | | | | | | | | | | | | | |
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Equipment and machinery | 7,630 | | | 7,272 | | | | | | | | | | | | | | | |
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Furniture and fixtures | 5,685 | | | 5,458 | | | | | | | | | | | | | | | |
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| 24,275 | | | 23,206 | | | | | | | | | | | | | | | |
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Accumulated depreciation and amortization | (13,209 | ) | | (10,819 | ) | | | | | | | | | | | | | | |
| $ | 11,066 | | | $ | 12,387 | | | | | | | | | | | | | | | |
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Goodwill - Goodwill and intangible assets with indefinite lives are not subject to amortization, but are tested for impairment when it is determined that it is more likely than not that the fair value of a reporting unit or the indefinite-lived intangible asset is less than its carrying amount, typically at the end of the fiscal year, or more frequently if circumstances dictate. In fiscal 2012, the Company recorded a charge for impairment of goodwill in two of its reporting units. See Note 11, "Impairment Charge" for a description of the facts and circumstances leading to the goodwill impairment charge. |
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The changes in the carrying amount of goodwill for the year ended September 30, 2013 are as follows. |
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| Solar and Semiconductor | | Polishing Supplies and Equipment | | Total | | | | | | | | | | |
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Balance at the beginning of year | | | | | | | | | | | | | | | |
Goodwill | $ | 12,362 | | | $ | 728 | | | $ | 13,090 | | | | | | | | | | | |
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Accumulated impairment losses | (4,735 | ) | | — | | | (4,735 | ) | | | | | | | | | | |
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| 7,627 | | | 728 | | | 8,355 | | | | | | | | | | | |
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Net exchange differences | 126 | | | — | | | 126 | | | | | | | | | | | |
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Balance at the end of the year | | | | | | | | | | | | | | | |
Goodwill | 12,563 | | | 728 | | | 13,291 | | | | | | | | | | | |
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Accumulated impairment losses | (4,810 | ) | | — | | | (4,810 | ) | | | | | | | | | | |
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| $ | 7,753 | | | $ | 728 | | | $ | 8,481 | | | | | | | | | | | |
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Intangibles - Intangible assets are capitalized and amortized over their useful life if the life is determinable. If the life is not determinable, amortization is not recorded. Amortization expense related to intangible assets was $0.6 million, $0.7 million and $0.8 million in fiscal 2013, 2012 and 2011, respectively. The aggregate amortization expense for the intangible assets for each of the four succeeding fiscal years is estimated to be $0.7 million, $0.6 million, $0.4 million, $0.3 million in 2014, 2015, 2016, and 2017. Amortization expense for the four succeeding years does not include $1.6 million for in-process research and development. The in-process research and development will be amortized over its useful life when it has reached technological feasibility. |
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Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. See Note 11, “Impairment Charge” for a description of the facts and circumstances surrounding the impairment charges for the fiscal year ending September 30, 2012. |
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The following is a summary of intangibles: |
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| Useful Life | | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount |
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Non-compete agreements | 4-8 years | | $ | 1,065 | | $ | (717 | ) | $ | 348 | | | $ | 1,057 | | $ | (468 | ) | $ | 589 | |
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Customer lists | 10 years | | 871 | | (532 | ) | 339 | | | 828 | | (432 | ) | 396 | |
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Technology | 5-10 years | | 2,426 | | (1,422 | ) | 1,004 | | | 2,341 | | (1,085 | ) | 1,256 | |
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In-process research and development | -1 | | 1,600 | | — | | 1,600 | | | 1,600 | | — | | 1,600 | |
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Other | 2-10 years | | 341 | | (130 | ) | 211 | | | 325 | | (70 | ) | 255 | |
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| | | $ | 6,303 | | $ | (2,801 | ) | $ | 3,502 | | | $ | 6,151 | | $ | (2,055 | ) | $ | 4,096 | |
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(1) The in-process research and development will be amortized over its useful life when it has reached technological feasibility. |
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Warranty – A limited warranty is provided free of charge, generally for periods of 12 to 24 months to all purchasers of the Company’s new products and systems. Accruals are recorded for estimated warranty costs at the time revenue is recognized. The following is a summary of activity in accrued warranty expense: |
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| Years Ended September 30, | | | | | | | | | | |
| 2013 | | 2012 | | 2011 | | | | | | | | | | |
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Beginning balance | $ | 2,687 | | | $ | 2,265 | | | $ | 1,843 | | | | | | | | | | | |
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Warranty expenditures | (1,360 | ) | | (1,831 | ) | | (1,199 | ) | | | | | | | | | | |
Reserve provision | 127 | | | 2,253 | | | 1,621 | | | | | | | | | | | |
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Ending balance | $ | 1,454 | | | $ | 2,687 | | | $ | 2,265 | | | | | | | | | | | |
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Research and Development Expenses - Research and development expenses consist of the cost of employees, consultants and contractors who design, engineer and develop new products and processes as well as materials, supplies and facilities used in producing prototypes. Payments received for research and development grants prior to the meeting of milestones are recorded as unearned research and development grant liabilities and included in other accrued liabilities on the balance sheet. When certain contract requirements are met, governmental research and development grants are netted against research and development expenses. |
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| Years Ended September 30, | | | | | | | | | | |
| 2013 | | 2012 | | 2011 | | | | | | | | | | |
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Research and development | $ | 8,459 | | | $ | 14,723 | | | $ | 7,362 | | | | | | | | | | | |
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Grants earned | (1,865 | ) | | (1,029 | ) | | (1,578 | ) | | | | | | | | | | |
Net research and development | $ | 6,594 | | | $ | 13,694 | | | $ | 5,784 | | | | | | | | | | | |
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Shipping Expense – Shipping expenses of $0.8 million, $1.7 million and $5.9 million for fiscal 2013, 2012 and 2011 are included in selling, general and administrative expenses. |
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Foreign Currency Transactions and Translation – The functional currency of the Company’s European operations is the Euro. Net income includes pretax net losses from foreign currency transactions of less than $0.1 million, less than $0.1 million and $0.2 million in fiscal 2013, 2012 and 2011, respectively. The gains or losses resulting from the translation of foreign financial statements have been included in other comprehensive income (loss). |
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Income Taxes - The Company files consolidated federal income tax returns in the United States for all subsidiaries except those in the Netherlands, France, Hong Kong and China, where separate returns are filed. The Netherlands operations file separate returns in that country and, prior to fiscal 2012, were included in the United States consolidated return. The Company computes deferred income tax assets and liabilities based upon cumulative temporary differences between financial reporting and taxable income, carryforwards available and enacted tax laws. The Company also accrues a liability for uncertain tax positions when it is more likely than not that such tax will be incurred. |
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Deferred tax assets reflect the tax effects of temporary differences between the carrying value of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management and based on the weight of available evidence, it is more likely than not that a portion or all of the deferred tax asset will not be realized. Each quarter the valuation allowance is re-evaluated. |
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Stock-Based Compensation - The Company measures compensation costs relating to share-based payment transactions based upon the grant-date fair value of the award. Those costs are recognized as expense over the requisite service period, which is generally the vesting period. The benefits of tax deductions in excess of recognized compensation cost are reported as cash flow from financing activities rather than as cash flow from operating activities. |
In the third quarter of fiscal 2013, the Company's Board of Directors approved the acceleration of the vesting of one half of the unvested stock options with an exercise price of $2.95 and all of the remaining unvested stock options with exercise prices of $6.15 and $7.98 per share for approximately 110 employees holding options to purchase approximately 0.4 million shares of common stock. The Company concluded that the modification to the stated vesting provisions was substantive after the Company considered the volatility of its share price and the exercise price of the amended options in relation to recent share values. Because the modification was considered substantive, the remaining unearned compensation expense of $0.9 million was recorded as an expense in the third quarter of fiscal 2013. The weighted-average exercise price of the options that were accelerated was $5.77. |
Effective June 30, 2013, current and former executive officers of the Company voluntarily cancelled approximately 0.1 million stock options, vested and unvested, that were issued with exercise prices of $14.79 and $17.12 per share. At the time of the cancellation, all of the options with an exercise price of $14.79 were fully vested. The Company recognized the remaining unearned compensation expense of $0.3 million for the unvested portion of the stock options with an exercise price of $17.12 per share in the third quarter of fiscal 2013. |
Stock-based compensation expense for the fiscal years ended September 30, 2013, 2012 and 2011 reduced the Company’s results of operations as follows: |
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| Years Ended September 30, | | | | | | | | | | |
| 2013 | | 2012 | | 2011 | | | | | | | | | | |
| (dollars in thousands, except per share amounts) | | | | | | | | | | |
Effect on income before income taxes (1) | $ | (2,472 | ) | | $ | (1,763 | ) | | $ | (1,470 | ) | | | | | | | | | | |
Effect on income taxes | $ | 512 | | | $ | 255 | | | $ | 495 | | | | | | | | | | | |
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Effect on net income | $ | (1,960 | ) | | $ | (1,508 | ) | | $ | (975 | ) | | | | | | | | | | |
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(1) Stock-based compensation expense is included in selling, general and administrative expense |
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The Company awards restricted shares under the existing share-based compensation plans. Our restricted share-awards vest in equal annual installments over a two or four-year period. The total value of these awards is expensed on a ratable basis over the service period of the employees receiving the grants. The “service period” is the time during which the employees receiving grants must remain employed for the shares granted to fully vest. |
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Qualified stock options issued under the terms of the plans have, or will have, an exercise price equal to, or greater than, the fair market value of the common stock at the date of the option grant, and expire no later than ten years from the date of grant, with the most recent grant expiring in 2022. Options vest over 1 to 4 years. The Company estimates the fair value of stock option awards on the date of grant using the Black-Scholes option pricing model using the following assumptions: |
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| Years Ended September 30, | | | | | | | | | | | | | | | | |
| 2013 | | 2012 | | 2011 | | | | | | | | | | | | | | | | |
Risk free interest rate | 1% | | 1% | | 2% | | | | | | | | | | | | | | | | |
Expected life | 6 years | | 6 years | | 6 years | | | | | | | | | | | | | | | | |
Dividend rate | 0% | | 0% | | 0% | | | | | | | | | | | | | | | | |
Volatility | 70% | | 70% | | 70% | | | | | | | | | | | | | | | | |
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To estimate expected lives for this valuation, it was assumed that options will be exercised at varying schedules after becoming fully vested. Forfeitures have been estimated at the time of grant and will be revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based upon historical experience. Fair value computations are highly sensitive to the volatility factor assumed; the greater the volatility, the higher the computed fair value of the options granted. The Company uses historical stock prices to determine the volatility factor. |
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Fair Value of Financial Instruments – Cash, Cash Equivalents and Restricted Cash - The carrying amount of these assets on the Company’s Consolidated Balance Sheets approximates their fair value because of the short maturities of these instruments. |
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Receivables and Payables—The recorded amounts of financial instruments, including Accounts Receivable and Accounts Payable, approximate their fair value because of the short maturities of these instruments. |
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Pensions—The Company has retirement plans covering substantially all employees. The principal plans are the multiemployer defined benefit pension plans of the Company’s operations in the Netherlands and France and the plan for hourly union employees in Pennsylvania and the Company's defined contribution plan that covers substantially all of the employees in the United States. The multiemployer plans in the United States and France are insignificant. |
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The Company’s employees in The Netherlands, approximately 110, participate in a multi-employer union plan Pensioenfonds Metaal en Techniek (PMT), determined in accordance with the collective bargaining agreements effective for the industry in the Netherlands. This collective bargaining agreement has no expiration date. This multiemployer union plan covers approximately 34,000 companies and 1.2 million participants. Amtech's contribution to the multiemployer union plan is less than 5.0% of the total contributions to the plan. The plan monitors its risks on a global basis, not by company or employee, and is subject to regulation by Dutch governmental authorities. By law (the Dutch Pension Act), a multiemployer union plan must be monitored against specific criteria, including the coverage ratio of the plan assets to its obligations. This coverage ratio must exceed 104.3% for the total plan. Every company participating in a Dutch multiemployer union plan contributes a premium calculated as a percentage of its total pensionable salaries, with each company subject to the same percentage contribution rate. The premium can fluctuate yearly based on the coverage ratio of the multiemployer union plan. The pension rights of each employee are based upon the employee’s average salary during employment, the years of service, and the participant's age at the time of retirement. |
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The Company's net periodic pension cost for this multiemployer union plan for any period is the amount of the required contribution for that period. A contingent liability may arise from, for example, possible actuarial losses relating to other participating entities because each entity that participates in a multiemployer union plan shares in the actuarial risks of every other participating entity or any responsibility under the terms of a plan to finance any shortfall in the plan if other entities cease to participate |
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The coverage ratio of the Dutch multiemployer union plan is 101.5% as of September 30, 2013. Because of the low coverage ratio PMT prepared and executed a “Recovery Plan” which was approved by De Nederlandsche Bank, the Dutch central bank, which is the supervisor of all pension companies in the Netherlands. As a result of the Recovery Plan, the pension rights decreased 6.3% in April 2013 and the employer's premium percentage increased to 16.6% of pensionable wages. The coverage ratio is calculated by dividing the plan assets by the total sum of pension liabilities and is based on actual market interest. If the coverage ratio does not increase to 104.3% by December 31, 2013, pension rights may decrease again. As of September 30, 2013 PMT's total plan assets were $63.7 billion and the actuarial present value of accumulated plan benefits was $63.1 billion. |
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Below is a table of contributions made by the Company to multiemployer pension plans. |
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| Contributions | | | | | | | | | | |
| Years Ended September 30, | | | | | | | | | | |
| 2013 | | 2012 | | 2011 | | | | | | | | | | |
| (dollars in thousands) | | | | | | | | | | |
Pensioenfonds Metaal en Techniek (PMT) | $ | 879 | | | $ | 1,021 | | | $ | 913 | | | | | | | | | | | |
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Other plans | 163 | | | 181 | | | 192 | | | | | | | | | | | |
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Total | $ | 1,042 | | | $ | 1,202 | | | $ | 1,105 | | | | | | | | | | | |
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The Company matches employee funds to the Company's defined contribution plans on a discretionary basis. The match was insignificant in fiscal years 2013, 2012 and 2011. |
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Reclassifications – Certain reclassifications have been made to prior year financial statements to conform to the current year presentation. Specifically, prepaid income taxes of $1.4 million and $4.3 million as of September 30, 2012 and 2011, respectively, were previously stated as a separate line item in current assets, prepaid income taxes, and are now included in the line item, other assets - long term, in the Company's consolidated balance sheets. |
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Impact of Recently Issued Accounting Pronouncements |
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In July 2013, the FASB issued ASU No. 2013-11 "Income Taxes (Topic 740)." An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. We expect to adopt the amendment effective October 1, 2014. We do not expect that that the adoption will have a material impact on the Company's consolidated financial statements. |
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In March 2013, the FASB issued ASU No. 2013-05 "Foreign Currency Matters (Topic 830)." The objective of the amendments in this Update is to resolve the diversity in practice about which codification subtopic applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. |
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The amendments in this Update are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The Company will evaluate the impact of the Update as future transactions occur. |
In February 2013, The FASB issued ASU No. 2013-04 "Liabilities (Topic 405)," The guidance in this Update requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the following: |
a. The amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors. |
b. Any additional amount the reporting entity expects to pay on behalf of its co-obligors. |
The guidance in this Update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company does not expect this Update to have a material impact on the Company's consolidated financial statements. |