Company Quick10K Filing
Axcelis
Price18.38 EPS0
Shares34 P/E85
MCap622 P/FCF-1,802
Net Debt-162 EBIT12
TEV459 TEV/EBIT38
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-06
10-K 2019-12-31 Filed 2020-03-02
10-Q 2019-09-30 Filed 2019-11-07
10-Q 2019-06-30 Filed 2019-08-07
10-Q 2019-03-31 Filed 2019-05-08
10-K 2018-12-31 Filed 2019-03-11
10-Q 2018-09-30 Filed 2018-11-02
10-Q 2018-06-30 Filed 2018-08-03
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10-K 2015-12-31 Filed 2016-03-04
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10-K 2013-12-31 Filed 2014-03-03
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10-K 2012-12-31 Filed 2013-03-01
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8-K 2020-05-19
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8-K 2018-11-01
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8-K 2018-05-16
8-K 2018-05-02
8-K 2018-02-06

ACLS 10Q Quarterly Report

Part 1—Financial Information
Item 1. Financial Statements.
Note 1. Nature of Business
Note 2. Stock - Based Compensation
Note 3. Leases
Note 4. Revenue
Note 5. Receivables and Allowances for Credit Losses
Note 6. Computation of Net Earnings per Share
Note 7. Accumulated Other Comprehensive Loss
Note 8. Cash, Cash Equivalents and Restricted Cash
Note 9. Inventories, Net
Note 10. Product Warranty
Note 11. Fair Value Measurements
Note 12. Financing Arrangements
Note 13. Income Taxes
Note 14. Concentration of Risk
Note 15. Share Repurchase
Note 16. Contingencies
Note 17. Recent Accounting Guidance
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part Ii—Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-31.1 acls-20200331ex311254b5b.htm
EX-31.2 acls-20200331ex312168d48.htm
EX-32.1 acls-20200331ex3219ed32a.htm
EX-32.2 acls-20200331ex3225949e1.htm

Axcelis Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
55044033022011002012201420172020
Assets, Equity
12510075502502012201420172020
Rev, G Profit, Net Income
3525155-5-152012201420172020
Ops, Inv, Fin

10-Q 1 acls-20200331x10q.htm 10-Q acls_Current_Folio_10Q

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31,  2020

 

Or

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from               to               

 

Commission file number 000-30941

 

AXCELIS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

Delaware

 

34-1818596

(State or other jurisdiction of
incorporation or organization)

 

(IRS Employer
Identification No.)

 

108 Cherry Hill Drive

Beverly, Massachusetts 01915

(Address of principal executive offices, including zip code)

 

(978) 787-4000

(Registrant’s telephone number, including area code)

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, $.001 par value

ACLS

Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐.

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐.

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

Large accelerated filer ☐

 

Accelerated filer ☒

Non-accelerated filer ☐

 

Smaller reporting company ☐

 

 

Emerging growth company  ☐

 

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

 

 

As of May 4,  2020 there were 32,875,141 shares of the registrant’s common stock outstanding.

 

 

Table of Contents

 

 

 

 

PART I - FINANCIAL INFORMATION 

 

Item 1. 

Financial Statements (Unaudited)

 

 

Consolidated Statements of Operations for the three months ended March 31,  2020 and 2019

3

 

Consolidated Statements of Comprehensive Income for the three months ended March 31,  2020 and 2019

4

 

Consolidated Balance Sheets as of March 31,  2020 and December 31, 2019

5

 

Consolidated Statements of Stockholders’ Equity for the three months ended March 31,  2020 and 2019

6

 

Consolidated Statements of Cash Flows for the three months ended March 31,  2020 and 2019

7

 

Notes to Consolidated Financial Statements (Unaudited)

8

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

 

Overview

18

 

Critical Accounting Estimates

19

 

Results of Operations

20

 

Liquidity and Capital Resources

25

Item 3. 

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4. 

Controls and Procedures

27

PART II - OTHER INFORMATION 

28

Item 1. 

Legal Proceedings

28

Item 1A. 

Risk Factors

28

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

28

Item 3. 

Defaults Upon Senior Securities

28

Item 4. 

Mine Safety Disclosures

28

Item 5. 

Other Information

28

Item 6. 

Exhibits

29

 

 

2

 

   PART 1—FINANCIAL INFORMATION

 

Item 1.    Financial Statements.

 

Axcelis Technologies, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31,

 

 

    

2020

    

2019

    

Revenue:

 

 

 

 

 

 

 

Product

 

$

112,133

 

$

84,197

 

Services

 

 

6,858

 

 

7,280

 

Total revenue

 

 

118,991

 

 

91,477

 

Cost of revenue:

 

 

 

 

 

 

 

Product

 

 

67,172

 

 

47,338

 

Services

 

 

6,270

 

 

6,633

 

Total cost of revenue

 

 

73,442

 

 

53,971

 

Gross profit

 

 

45,549

 

 

37,506

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

 

14,606

 

 

13,685

 

Sales and marketing

 

 

8,204

 

 

8,918

 

General and administrative

 

 

9,036

 

 

7,807

 

Total operating expenses

 

 

31,846

 

 

30,410

 

Income from operations

 

 

13,703

 

 

7,096

 

Other (expense) income:

 

 

 

 

 

 

 

Interest income

 

 

482

 

 

841

 

Interest expense

 

 

(1,303)

 

 

(1,230)

 

Other, net

 

 

(620)

 

 

(173)

 

Total other expense

 

 

(1,441)

 

 

(562)

 

Income before income taxes

 

 

12,262

 

 

6,534

 

Income tax provision

 

 

1,041

 

 

472

 

Net income

 

$

11,221

 

$

6,062

 

Net income per share:

 

 

 

 

 

 

 

Basic

 

$

0.34

 

$

0.19

 

Diluted

 

$

0.33

 

$

0.18

 

Shares used in computing net income per share:

 

 

 

 

 

 

 

Basic weighted average common shares

 

 

32,872

 

 

32,683

 

Diluted weighted average common shares

 

 

34,057

 

 

34,224

 

 

See accompanying Notes to these Consolidated Financial Statements

 

3

 

Axcelis Technologies, Inc.

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31,

 

 

    

2020

    

2019

    

Net income

 

$

11,221

 

$

6,062

 

Other comprehensive loss:

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(1,112)

 

 

(495)

 

Amortization of actuarial loss and other adjustments from pension plan

 

 

57

 

 

30

 

Total other comprehensive loss

 

 

(1,055)

 

 

(465)

 

Comprehensive income

 

$

10,166

 

$

5,597

 

 

See accompanying Notes to these Consolidated Financial Statements

 

4

 

Axcelis Technologies, Inc.

Consolidated Balance Sheets

(In thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

    

March 31,

    

December 31,

 

 

 

2020

 

2019

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

174,745

 

$

139,881

 

Accounts receivable, net

 

 

64,238

 

 

83,753

 

Inventories, net

 

 

136,068

 

 

140,364

 

Prepaid expenses and other current assets

 

 

16,621

 

 

11,681

 

Total current assets

 

 

391,672

 

 

375,679

 

Property, plant and equipment, net

 

 

26,363

 

 

25,328

 

Operating lease assets

 

 

5,583

 

 

5,849

 

Finance lease assets, net

 

 

21,528

 

 

21,880

 

Long-term restricted cash

 

 

6,671

 

 

6,653

 

Deferred income taxes

 

 

66,607

 

 

68,060

 

Other assets

 

 

44,149

 

 

44,645

 

Total assets

 

$

562,573

 

$

548,094

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

26,089

 

$

25,341

 

Accrued compensation

 

 

9,237

 

 

7,631

 

Warranty

 

 

3,431

 

 

2,759

 

Income taxes

 

 

344

 

 

294

 

Deferred revenue

 

 

28,892

 

 

24,601

 

Current portion of finance lease obligation

 

 

573

 

 

399

 

Other current liabilities

 

 

6,807

 

 

7,639

 

Total current liabilities

 

 

75,373

 

 

68,664

 

Long-term finance lease obligation

 

 

47,976

 

 

48,149

 

Long-term deferred revenue

 

 

5,214

 

 

4,650

 

Other long-term liabilities

 

 

6,838

 

 

7,204

 

Total liabilities

 

 

135,401

 

 

128,667

 

Commitments and contingencies (Note 16)

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Common stock, $0.001 par value, 75,000 shares authorized; 32,837 shares issued and outstanding at March 31, 2020; 32,585 shares issued and outstanding at December 31, 2019

 

 

33

 

 

33

 

Additional paid-in capital

 

 

559,182

 

 

559,878

 

Accumulated deficit

 

 

(130,730)

 

 

(140,226)

 

Accumulated other comprehensive loss

 

 

(1,313)

 

 

(258)

 

Total stockholders’ equity

 

 

427,172

 

 

419,427

 

Total liabilities and stockholders’ equity

 

$

562,573

 

$

548,094

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to these Consolidated Financial Statements

5

Axcelis Technologies, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Other

 

Total

 

 

 

 

Common Stock

 

Paid-in

 

Accumulated

 

Comprehensive

 

Stockholders’

 

 

    

 

Shares

    

Amount

    

Capital

    

Deficit

    

Income (Loss)

    

Equity

 

Balance at December 31, 2018

 

 

32,558

 

$

33

 

$

565,116

 

$

(157,260)

 

$

448

 

$

408,337

 

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

6,062

 

 

 —

 

 

6,062

 

Foreign currency translation adjustments

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(495)

 

 

(495)

 

Change in pension obligation

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

30

 

 

30

 

Exercise of stock options

 

 

288

 

 

 —

 

 

1,828

 

 

 —

 

 

 —

 

 

1,828

 

Issuance of restricted common shares

 

 

35

 

 

 —

 

 

(281)

 

 

 —

 

 

 —

 

 

(281)

 

Stock-based compensation expense

 

 

 —

 

 

 —

 

 

1,672

 

 

 —

 

 

 —

 

 

1,672

 

Balance at March 31, 2019

 

 

32,881

 

$

33

 

$

568,335

 

$

(151,198)

 

$

(17)

 

$

417,153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Other

 

Total

 

 

 

Common Stock

 

Paid-in

 

Accumulated

 

Comprehensive

 

Stockholders’

 

    

 

Shares

    

Amount

    

Capital

    

Deficit

    

Income (Loss)

    

Equity

Balance at December 31, 2019

 

 

32,585

 

$

33

 

$

559,878

 

$

(140,226)

 

$

(258)

 

$

419,427

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

11,221

 

 

 —

 

 

11,221

Foreign currency translation adjustments

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(1,112)

 

 

(1,112)

Change in pension obligation

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

57

 

 

57

Exercise of stock options

 

 

540

 

 

 1

 

 

4,498

 

 

 —

 

 

 

 

 

4,499

Issuance of shares under Employee Stock Purchase Plan

 

 

 1

 

 

 —

 

 

19

 

 

 —

 

 

 —

 

 

19

Issuance of restricted common shares

 

 

69

 

 

 —

 

 

(1,162)

 

 

 —

 

 

 —

 

 

(1,162)

Stock-based compensation expense

 

 

 —

 

 

 —

 

 

1,724

 

 

 —

 

 

 —

 

 

1,724

Repurchase of common stock

 

 

(358)

 

 

(1)

 

 

(5,775)

 

 

(1,725)

 

 

 —

 

 

(7,501)

Balance at March 31, 2020

 

 

32,837

 

$

33

 

$

559,182

 

$

(130,730)

 

$

(1,313)

 

$

427,172

 

See accompanying Notes to these Consolidated Financial Statements

 

 

6

Axcelis Technologies, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31,

 

 

    

2020

    

2019

    

Cash flows from operating activities

 

 

 

 

 

 

 

Net income

 

$

11,221

 

$

6,062

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,363

 

 

1,615

 

Deferred income taxes

 

 

899

 

 

582

 

Stock-based compensation expense

 

 

1,724

 

 

1,672

 

Provision for excess and obsolete inventory

 

 

802

 

 

607

 

Changes in operating assets & liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

19,223

 

 

7,642

 

Inventories

 

 

1,924

 

 

(6,171)

 

Prepaid expenses and other current assets

 

 

(4,435)

 

 

(1,174)

 

Accounts payable and other current liabilities

 

 

1,689

 

 

(16,911)

 

Deferred revenue

 

 

4,859

 

 

(2,098)

 

Income taxes

 

 

53

 

 

32

 

Other assets and liabilities

 

 

(645)

 

 

(4,207)

 

Net cash provided by (used in) operating activities

 

 

39,677

 

 

(12,349)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

Expenditures for property, plant and equipment and capitalized software

 

 

(1,290)

 

 

(4,255)

 

Net cash used in investing activities

 

 

(1,290)

 

 

(4,255)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Net settlement on restricted stock grants

 

 

(1,162)

 

 

(281)

 

Repurchase of common stock

 

 

(7,501)

 

 

 —

 

Proceeds from Employee Stock Purchase Plan

 

 

19

 

 

 —

 

Proceeds from exercise of stock options

 

 

4,499

 

 

1,828

 

Net cash (used in) provided by financing activities

 

 

(4,145)

 

 

1,547

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

640

 

 

123

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

34,882

 

 

(14,934)

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

146,534

 

 

184,902

 

Cash, cash equivalents and restricted cash at end of period

 

$

181,416

 

$

169,968

 

 

 

 

 

 

 

 

 

See accompanying Notes to these Consolidated Financial Statements

 

 

 

7

Axcelis Technologies, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

Note 1.  Nature of Business

 

Axcelis Technologies, Inc. (“Axcelis” or the “Company”) was incorporated in Delaware in 1995, and is a producer of ion implantation equipment used in the fabrication of semiconductor chips in the United States, Europe and Asia. In addition, we provide extensive worldwide aftermarket service and support, including spare parts, equipment upgrades, used equipment and maintenance services to the semiconductor industry. 

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments which are of a normal recurring nature and considered necessary for a fair presentation of these financial statements have been included. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for other interim periods or for the year as a whole.

 

The balance sheet at December 31, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Axcelis Technologies, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019.

 

 

Note 2.  Stock-Based Compensation

 

We maintain the Axcelis Technologies, Inc. 2012 Equity Incentive Plan (the “2012 Equity Plan”), which became effective on May 2, 2012, and permits the issuance of options, restricted stock, restricted stock units (“RSUs”) and performance awards to selected employees, directors and consultants of the Company. Our 2000 Stock Plan (the “2000 Stock Plan”) expired on May 1, 2012 and no new grants may be made under that plan after that date.  However, unexpired awards granted under the 2000 Stock Plan remain outstanding and subject to the terms of the 2000 Stock Plan. We also maintain the Axcelis Technologies, Inc. Employee Stock Purchase Plan (the “ESPP”), an Internal Revenue Code Section 423 plan.

 

The 2012 Equity Plan and the ESPP are more fully described in Note 13 to the consolidated financial statements in our 2019 Annual Report on Form 10-K.

 

We recognized stock-based compensation expense of $1.7 million for the three month periods ended March 31,  2020 and 2019, respectively. These amounts include compensation expense related to RSUs, non-qualified stock options and stock to be issued to participants under the ESPP.

 

In the three month periods ended March 31,  2020 and 2019,  we issued 0.6 million and 0.3 million shares of common stock, respectively, upon stock option exercises, purchases under the ESPP and vesting of RSUs. In the three month periods ended March 31,  2020 and 2019,  we received proceeds of $4.5 million and $1.8 million, respectively, in connection with the exercise of stock options.

 

Note 3.  Leases

 

We have operating leases for office space, warehouse space, computer and office equipment and vehicles used in our business operations. We have a finance lease in relation to the 2015 sale-leaseback of our corporate headquarters in Beverly, Massachusetts. We review all agreements to determine if they contain a lease component. An agreement contains a lease component if it provides the use of a specific physical space or a specific physical item. We recognize the lease obligation on a discounted basis using the explicit or implicit discount rate stated within the agreement. We recognize a corresponding right-of-use asset, which is initially determined based upon the net present value of the associated liability and is adjusted for deferred costs and possible impairment, if any. For those lease agreements that do not indicate the applicable discount rate, we use our incremental borrowing rate. We have made the following policy elections: (i) operating

8

leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet; (ii) we recognize lease expense for operating leases on a straight-line basis over the lease term; and (iii) we account for lease components and non-lease components that are fixed payments as one component. Some of our operating leases include one or more options to renew, with renewal terms that can extend the respective lease term 1 to 3 years. The exercise of lease renewal options are at our sole discretion. For lease extensions that are reasonably certain to occur, we have included these renewal periods in our calculation of the net present value of the lease obligation and related right-of-use asset. Certain leases also include options to purchase the leased property. The depreciable life of certain assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The amounts of operating and finance lease right-of-use assets and related lease obligations recorded within our consolidated balance sheet are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

Leases

Classification

 

2020

    

2019

    

Assets

 

 

(in thousands)

 

Operating lease

Operating lease assets

 

$

5,583

 

$

5,849

 

Finance lease

Finance lease assets *

 

 

21,528

 

 

21,880

 

Total leased assets

 

 

$

27,111

 

$

27,729

 

Liabilities

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Operating

Other current liabilities

 

$

3,233

 

$

3,144

 

Finance

Current portion of finance lease obligation

 

 

573

 

 

399

 

Noncurrent

 

 

 

 

 

 

 

 

Operating

Other long-term liabilities

 

 

2,326

 

 

2,553

 

Finance

Finance lease obligation

 

 

47,976

 

 

48,149

 

Total lease liabilities

 

 

$

54,108

 

$

54,245

 

 

 

 

 

 

 

 

 

 

* Finance lease assets are recorded net of accumulated depreciation of $47.6 million and include $0.7 million of prepaid financing costs as of March 31, 2020. Finance lease assets are recorded net of accumulated depreciation of $47.4 million and include $0.7 million of prepaid financing costs as of December 31, 2019.

 

 

 

 

 

 

 

 

 

 

All of our office locations support selling and servicing functions. Lease expense, depreciation expense relating to finance leased assets and interest expense relating to our finance lease obligation recognized within our consolidated statement of operations for the three months ended March 31,  2020 are as follows:

9

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31,

 

Lease cost

Classification

 

2020

    

2019

    

Operating lease cost

 

 

(in thousands)

 

Service

Cost of revenue

 

$

550

 

$

597

 

Research and development

Operating expenses

 

 

81

 

 

66

 

Sales and marketing*

Operating expenses

 

 

332

 

 

355

 

General and administrative*

Operating expenses

 

 

215

 

 

208

 

Total operating lease cost

 

 

$

1,178

 

$

1,226

 

Finance lease cost

 

 

 

 

 

 

 

 

Depreciation of leased assets

Cost of revenue, R&D, Sales and marketing and G&A

 

$

353

 

$

333

 

Interest on lease liabilities

Interest expense

 

 

1,303

 

 

1,230

 

Total finance lease cost

 

 

$

1,656

 

$

1,563

 

 

 

 

 

 

 

 

 

 

Total lease cost

 

 

$

2,834

 

$

2,789

 

 

 

 

 

 

 

 

 

 

* Sales and marketing, general and administrative expense includes short-term lease and variable lease costs of approximately $0.2 million for the three months ended March 31, 2020 and 2019, respectively.

 

   

Our corporate headquarters, shown below under finance leases, has an original lease term of 22 years. All other locations are treated as operating leases, with lease terms ranging from 1 to 10 years. The tables below reflect the minimum cash outflow regarding our current lease obligations as well as the weighted-average remaining lease term and weighted-average discount rates used on our calculation of our lease obligations and right-of-use assets as of March 31, 2020:  

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance

 

Operating

    

Total

Maturity of Lease Liabilities

 

Leases

 

Leases

 

Leases

 

 

(in thousands)

2020

 

$

4,298

 

$

2,728

 

$

7,026

2021

 

 

5,848

 

 

2,094

 

 

7,942

2022

 

 

5,980

 

 

838

 

 

6,818

2023

 

 

6,114

 

 

168

 

 

6,282

2024

 

 

6,252

 

 

70

 

 

6,322

Thereafter

 

 

79,653

 

 

203

 

 

79,856

Total lease payments

 

$

108,145

 

$

6,101

 

$

114,246

Less interest portion*

 

 

(59,596)

 

 

(542)

 

 

(60,138)

Finance lease and operating lease obligations

 

$

48,549

 

$

5,559

 

$

54,108

 

 

 

 

 

 

 

 

 

 

* Finance lease interest calculated using the implied interest rate; operating lease interest calculated using estimated corporate borrowing rate.

 

 

 

 

 

 

 

March 31,

Lease term and discount rate

    

2020

Weighted-average remaining lease term (years):

 

 

 

Operating leases

 

 

1.8

Finance leases

 

 

16.8

Weighted-average discount rate:

 

 

 

Operating leases

 

 

4.5%

Finance leases

 

 

10.5%

 

 

 

 

 

Our cash outflows from our operating leases include rent expense and other charges associated with these leases. These cash flows are included within the operating section of our statement of cash flows. Our cash flows from our finance lease currently include an interest only component and starting in April 2020, both an interest and payment of principal component. The table below shows our cash outflows, by lease type and related section of our statement of cash flows as well as the non-cash amount capitalized on our balance sheet in relation to our operating lease right-of-use assets:

 

10

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31,

 

Cash paid for amounts included in the measurement of lease liabilities

    

2020

 

2019

 

 

 

(in thousands)

 

Operating cash outflows from operating leases

 

$

1,178

 

$

1,226

 

Operating cash outflows from finance leases

 

 

1,422

 

 

1,391

 

Financing cash outflows from finance leases

 

 

 —

 

 

 —

 

Operating lease assets obtained in exchange for operating lease liabilities

 

 

765

 

 

7,453

 

Finance lease assets obtained in exchange for new finance lease liabilities

 

$

 —

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

Note 4.  Revenue

 

 To reflect the organization of our business operations, we divide revenue into two categories: revenue from sales of new systems and revenue arising from the sale of used systems, parts and labor to customers who own systems, which we refer to as “Aftermarket.”

 

Revenue by categories used by management are as follows:

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

March 31,

 

 

2020

 

2019

 

 

(in thousands)

Systems

 

$

82,338

 

$

57,092

Aftermarket

 

 

36,653

 

 

34,385

 

 

$

118,991

 

$

91,477

 

We also consider revenue by geography. Revenue is allocated to geographic markets based upon the location to which our products are shipped and in which our services are performed. Revenue in our principal geographic markets is as follows:

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

March 31,

 

 

2020

 

2019

 

 

(in thousands)

North America

 

$

10,661

 

$

11,607

Asia Pacific

 

 

96,828

 

 

62,927

Europe

 

 

11,502

 

 

16,943

 

 

$

118,991

 

$

91,477

 

Our system sales revenue transactions give rise to contract liabilities  (in the case of pre-payments and the fair value of goods and services to be delivered after the system delivery, such as installation and certain warranty obligations).

 

Contract liabilities are as follows:

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2020

 

2019

 

 

(in thousands)

Contract liabilities

 

$

34,106

 

$

29,251

 

 

 

 

 

 

 

 

11

Contract liabilities are reflected as deferred revenue on the consolidated balance sheet and relate to payments invoiced or received in advance of completion of performance obligations under a contract. Contract liabilities are recognized as revenue upon the fulfillment of performance obligations.

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