Company Quick10K Filing
Fluidigm
Price12.25 EPS-1
Shares70 P/E-16
MCap852 P/FCF-29
Net Debt-28 EBIT-51
TEV824 TEV/EBIT-16
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-11
10-K 2019-12-31 Filed 2020-02-27
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-07
10-Q 2019-03-31 Filed 2019-05-07
10-K 2018-12-31 Filed 2019-03-18
10-Q 2018-09-30 Filed 2018-11-06
10-Q 2018-06-30 Filed 2018-08-08
10-Q 2018-03-31 Filed 2018-05-08
10-K 2017-12-31 Filed 2018-03-08
10-Q 2017-09-30 Filed 2017-11-07
10-Q 2017-06-30 Filed 2017-08-08
10-Q 2017-03-31 Filed 2017-05-09
10-K 2016-12-31 Filed 2017-03-03
10-Q 2016-09-30 Filed 2016-11-09
10-Q 2016-06-30 Filed 2016-08-09
10-Q 2016-03-31 Filed 2016-05-09
10-K 2015-12-31 Filed 2016-02-29
10-Q 2015-09-30 Filed 2015-11-09
10-Q 2015-06-30 Filed 2015-08-10
10-Q 2015-03-31 Filed 2015-05-11
10-K 2014-12-31 Filed 2015-02-26
10-Q 2014-09-30 Filed 2014-11-06
10-Q 2014-06-30 Filed 2014-08-04
10-Q 2014-03-31 Filed 2014-05-12
10-K 2013-12-31 Filed 2014-03-12
10-Q 2013-09-30 Filed 2013-11-07
10-Q 2013-06-30 Filed 2013-08-07
10-Q 2013-03-31 Filed 2013-05-09
10-K 2012-12-31 Filed 2013-03-12
10-Q 2012-09-30 Filed 2012-11-09
10-Q 2012-06-30 Filed 2012-08-14
10-Q 2012-03-31 Filed 2012-05-15
10-K 2011-12-31 Filed 2012-03-26
10-Q 2011-09-30 Filed 2011-11-14
10-Q 2011-06-30 Filed 2011-08-09
10-Q 2011-03-31 Filed 2011-05-12
10-K 2010-12-31 Filed 2011-03-28
8-K 2020-06-23
8-K 2020-05-07
8-K 2020-05-05
8-K 2020-04-21
8-K 2020-04-14
8-K 2020-03-04
8-K 2020-02-10
8-K 2020-01-14
8-K 2019-11-20
8-K 2019-11-05
8-K 2019-08-01
8-K 2019-07-23
8-K 2019-06-03
8-K 2019-05-02
8-K 2019-04-18
8-K 2019-03-20
8-K 2019-02-27
8-K 2019-02-20
8-K 2019-02-13
8-K 2019-02-04
8-K 2018-12-11
8-K 2018-11-01
8-K 2018-10-30
8-K 2018-09-18
8-K 2018-08-02
8-K 2018-08-02
8-K 2018-07-30
8-K 2018-05-31
8-K 2018-05-03
8-K 2018-03-15
8-K 2018-03-12
8-K 2018-03-06
8-K 2018-03-02
8-K 2018-02-08
8-K 2018-02-06

FLDM 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
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 5. Other Information
Item 6. Exhibits
EX-31.1 exhibit31110q1q2020.htm
EX-31.2 exhibit31210q1q2020.htm
EX-32.1 exhibit32110q1q2020.htm
EX-32.2 exhibit32210q1q2020.htm

Fluidigm Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
0.50.40.30.20.10.02012201420172020
Assets, Equity
0.10.10.0-0.0-0.1-0.12012201420172020
Rev, G Profit, Net Income
0.20.10.0-0.0-0.1-0.22012201420172020
Ops, Inv, Fin

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
FORM 10-Q
(Mark One)
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
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: 001-34180

fluidlogopinkblackrgb.jpg
FLUIDIGM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
77-0513190
State or other jurisdiction of incorporation or organization
 
I.R.S. Employer Identification No.
 
 
 
2 Tower Place, Ste 2000
South San Francisco,
CA
 
94080
Address of principal executive offices
 
Zip Code
Registrant’s telephone number, including area code: (650) 266-6000
_____________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 par value per share
FLDM
The 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 (§ 232.405 of this chapter) 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, a 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 the 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 Act).    Yes      No  
As of April 30, 2020, there were 70,706,062 shares of the registrant’s common stock, $0.001 par value per share, outstanding.




FLUIDIGM CORPORATION
TABLE OF CONTENTS
 
 
Page
PART I.
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II.
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 
 


 



i



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

FLUIDIGM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) 
(Unaudited)
 
 
March 31,
 
December 31,
 
 
2020
 
2019
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
34,992

 
$
21,661

Short-term investments
 
13,493

 
36,978

Accounts receivable (net of allowances of $104 and $6, at March 31, 2020 and December 31, 2019, respectively)
 
14,410

 
18,981

Inventories
 
16,294

 
13,884

Prepaid expenses and other current assets
 
3,244

 
4,592

Total current assets
 
82,433

 
96,096

Property and equipment, net
 
8,143

 
8,056

Operating lease right-of-use asset, net
 
39,499

 
4,860

Other non-current assets
 
5,204

 
5,492

Developed technology, net
 
48,612

 
46,200

Goodwill
 
106,328

 
104,108

Total assets
 
$
290,219

 
$
264,812

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
9,440

 
$
6,510

Accrued compensation and related benefits
 
5,616

 
5,160

Operating lease liabilities, current
 
1,185

 
1,833

Other accrued liabilities
 
6,456

 
7,515

Deferred revenue, current
 
12,667

 
11,803

Total current liabilities
 
35,364

 
32,821

Convertible notes, net
 
53,920

 
53,821

Deferred tax liability
 
10,929

 
11,494

Operating lease liabilities, non-current
 
39,611

 
4,323

Deferred revenue, non-current
 
8,438

 
8,168

Other non-current liabilities
 
461

 
573

Total liabilities
 
148,723

 
111,200

Commitments and contingencies
 


 


Stockholders’ equity:
 
 
 
 
Preferred stock, $0.001 par value, 10,000 shares authorized, no shares issued and outstanding at either March 31, 2020 or December 31, 2019
 

 

Common stock: $0.001 par value, 200,000 shares authorized at March 31, 2020 and December 31, 2019; 70,697 and 69,956 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively
 
71

 
70

Additional paid-in capital
 
782,031

 
777,765

Accumulated other comprehensive loss
 
(885
)
 
(582
)
Accumulated deficit
 
(639,721
)
 
(623,641
)
Total stockholders’ equity
 
141,496

 
153,612

Total liabilities and stockholders’ equity
 
$
290,219

 
$
264,812

See accompanying notes




FLUIDIGM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Revenue:
 
 
 
 
Product revenue
 
$
18,981

 
$
24,827

Service revenue
 
5,186

 
5,284

Grant revenue
 
350

 

License revenue
 
3,100

 

Total revenue
 
27,617

 
30,111

Costs and expenses:
 
 
 
 
Cost of product revenue
 
9,640

 
11,389

Cost of service revenue
 
1,525

 
1,732

Research and development
 
8,699

 
8,372

Selling, general and administrative
 
22,695

 
22,824

Total costs and expenses
 
42,559

 
44,317

Loss from operations
 
(14,942
)
 
(14,206
)
Interest expense
 
(900
)
 
(2,701
)
Loss from extinguishment of debt
 

 
(9,000
)
Other income (loss), net
 
(818
)
 
484

Loss before income taxes
 
(16,660
)
 
(25,423
)
Income tax benefit (expense)
 
680

 
(42
)
Net loss
 
$
(15,980
)
 
$
(25,465
)
Net loss per share, basic and diluted
 
$
(0.23
)
 
$
(0.44
)
Shares used in computing net loss per share, basic and diluted
 
70,458

 
58,411


See accompanying notes

2



FLUIDIGM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)

 
 
 
Three Months Ended March 31,
 
 
 
2020
 
2019
 
Net loss
 
$
(15,980
)
 
$
(25,465
)
 
Other comprehensive income (loss), net of tax
 
 
 
 
 
Foreign currency translation adjustment
 
(303
)
 
8

 
Net change in unrealized gain (loss) on investments
 

 
2

 
Other comprehensive income (loss), net of tax
 
(303
)
 
10

 
Comprehensive loss
 
$
(16,283
)
 
$
(25,455
)
 

See accompanying notes

3



FLUIDIGM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)

 
 
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Accumulated
Deficit
 
Total
Stockholders’
Equity
 
 
Shares
 
Amount
 
Balance as of December 31, 2019
 
69,956

 
$
70

 
$
777,765

 
$
(582
)
 
$
(623,641
)
 
$
153,612

Issuance of restricted stock, net of shares withheld for taxes, and other
 
255

 

 
(146
)
 

 

 
(146
)
Cumulative-effect of new accounting standard for Topic 326 Credit Losses
 

 

 

 

 
(100
)
 
(100
)
Stock-based compensation expense
 

 

 
2,364

 

 

 
2,364

Acquisition of InstruNor AS
 
485

 
1

 
2,048

 

 

 
2,049

Net loss
 

 

 

 

 
(15,980
)
 
(15,980
)
Other comprehensive loss, net of tax
 

 

 

 
(303
)
 

 
(303
)
Balance as of March 31, 2020
 
70,696

 
$
71

 
$
782,031

 
$
(885
)
 
$
(639,721
)
 
$
141,496

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Accumulated
Deficit
 
Total
Stockholders’
Equity
 
 
Shares
 
Amount
 
 
 
 
Balance as of December 31, 2018
 
49,338

 
$
49

 
$
631,605

 
$
(687
)
 
$
(558,851
)
 
$
72,116

Issuance of common stock on bond conversion
 
19,460

 
19

 
133,279

 

 

 
133,298

Issuance of restricted stock, net of shares withheld for taxes, and other
 
140

 
1

 
(177
)
 

 

 
(176
)
Issuance of common stock from option exercises
 
53

 

 
255

 

 

 
255

Stock-based compensation expense
 

 

 
2,207

 

 

 
2,207

Net loss
 

 

 

 

 
(25,465
)
 
(25,465
)
Other comprehensive income, net of tax
 

 

 

 
10

 

 
10

Balance as of March 31, 2019
 
68,991

 
$
69

 
$
767,169

 
$
(677
)
 
$
(584,316
)
 
$
182,245

See accompanying notes


4



FLUIDIGM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 
 
Three Months Ended March 31,
 
 
 
2020
 
2019
 
Operating activities
 
 
 
 
 
Net loss
 
$
(15,980
)
 
$
(25,465
)
 
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
Depreciation and amortization
 
1,092

 
1,191

 
Stock-based compensation expense
 
2,366

 
2,271

 
Amortization of developed technology
 
2,968

 
2,800

 
Amortization of debt discounts, premiums and issuance costs
 
140

 
2,037

 
Loss on extinguishment of debt
 

 
9,000

 
Provision for excess and obsolete inventory
 
195

 
135

 
Loss on disposal of property and equipment
 

 
70

 
Other non-cash items
 
264


(25
)
 
Changes in assets and liabilities:
 
 
 
 
 
Accounts receivable, net
 
4,730

 
(2,483
)
 
Inventories
 
(2,280
)
 
(874
)
 
Prepaid expenses and other assets
 
112

 
(1,234
)
 
Accounts payable
 
3,124

 
2,649

 
Deferred revenue
 
1,040

 
650

 
Other liabilities
 
(2,066
)
 
(10,852
)
 
Net cash used in operating activities
 
(4,295
)
 
(20,130
)
 
Investing activities
 
 
 
 
 
Acquisition, net of cash acquired
 
(5,154
)
 

 
Purchases of investments
 

 
(9,491
)
 
Proceeds from maturities of investments
 
23,644

 

 
Purchases of property and equipment
 
(1,030
)
 
(266
)
 
Net cash provided by (used in) investing activities
 
17,460

 
(9,757
)
 
Financing activities
 
 
 
 
 
Payments of debt issuance cost
 
(357
)
 

 
Proceeds from exercise of stock options
 

 
255

 
Payments for taxes related to net share settlement of equity awards and other
 
(146
)
 
(108
)
 
Net cash provided by (used in) financing activities
 
(503
)
 
147

 
Effect of foreign exchange rate fluctuations on cash and cash equivalents
 
(331
)
 
(27
)
 
Net increase (decrease) in cash, cash equivalents and restricted cash
 
12,331

 
(29,767
)
 
Cash, cash equivalents and restricted cash at beginning of period
 
23,736

 
95,401

 
Cash, cash equivalents and restricted cash at end of period
 
$
36,067

 
$
65,634

 
Supplemental disclosures of cash flow information
 
 
 
 
 
Cash paid for interest
 
$
44

 
2,752

 
Cash paid for income taxes, net of refunds
 
$
87

 
29

 
Asset retirement obligations
 
$
303

 
316

 

See accompanying notes

5



FLUIDIGM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020

1. Description of Business

Fluidigm Corporation (the Company, Fluidigm, we, our or us) creates, manufactures, and markets technologies and tools for life sciences research, including preparatory and analytical instruments for Mass Cytometry, PCR, Library Prep, Single Cell Genomics, and consumables, including integrated fluidic circuits (IFC), assays, and reagents. Our focus is on the most pressing needs in translational and clinical research, including cancer, immunology and immunotherapy. We sell our instruments, consumables and services to academic institutions, clinical research laboratories, and contract research organizations, as well as biopharmaceutical, biotechnology, and agricultural biotechnology companies. The Company was formerly known as Mycometrix Corporation and changed its name to Fluidigm Corporation in April 2001. Fluidigm Corporation was founded in 1999 and is headquartered in South San Francisco, California.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) and include the accounts of our wholly owned subsidiaries. As of March 31, 2020, we had wholly owned subsidiaries in Singapore, Canada, the Netherlands, Japan, France, the United Kingdom, China, Germany and Norway. All subsidiaries, except for Singapore, use their local currency as their functional currency. The Singapore subsidiary uses the U.S. dollar as its functional currency. All intercompany transactions and balances have been eliminated in consolidation.

Certain prior period amounts in the condensed consolidated statements of income and condensed consolidated statements of cash flows were reclassified to conform with the current period presentation. These reclassifications were immaterial and did not affect prior period total assets, total liabilities, stockholders’ equity, total revenue, total costs and expenses, loss from operations or net loss.

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions believed to be reasonable, which together form the basis for making judgments about the carrying values of assets and liabilities. The full extent to which the COVID-19 pandemic impacts our business, results of operations and financial condition will depend on numerous evolving factors including, but not limited to, the magnitude and duration of COVID-19, the extent to which it will impact worldwide macroeconomic conditions, including the speed of recovery, and governmental and business reactions to the pandemic. We assessed certain accounting matters that generally require consideration of forecasted financial information in the context of information available to us and the unknown impact of COVID-19 as of March 31, 2020. These accounting matters included, but were not limited to, our allowance for doubtful accounts and credit losses, inventory and related reserves and the carrying value of goodwill and other long lived assets. Actual results could differ materially from these estimates and could have a material adverse effect on our consolidated financial statements.

Foreign Currency

Assets and liabilities of non-U.S. subsidiaries that use the local currency as their functional currency are translated into U.S. dollars at exchange rates in effect on the balance sheet date. The adjustments resulting from the foreign currency translations are recorded in accumulated other comprehensive loss, a separate component of stockholders’ equity. Income and expense accounts are translated at monthly average exchange rates during the year.

Revenue Recognition

We generate revenue primarily from the sale of our products and services. Product revenue is derived from the sale of instruments and consumables, including IFCs, assays and reagents. Service revenue is derived from the sale of instrument service contracts, repairs, installation, training and other specialized product support services. We receive grants from various

6


entities to perform research and development activities over contractually defined periods. Revenue is generally recognized provided that the conditions under which the grants were provided have been met and any remaining performance obligations are perfunctory. Revenue is reported net of any sales, use and value-added taxes we collect from customers as required by government authorities.

We recognize revenue based on the amount of consideration we expect to receive in exchange for the goods and services we transfer to the customer. Our commercial arrangements typically include multiple distinct products and services, and we allocate revenue to these performance obligations based on their relative standalone selling prices. Standalone selling prices (SSP) are generally determined using observable data from recent transactions. In cases where sufficient data is not available, we estimate a product’s SSP using a cost plus a margin approach or by applying a discount to the product’s list price.

Product Revenue

We recognize product revenue at the point in time when control of the goods passes to the customer and we have an enforceable right to payment. This generally occurs either when the product is shipped from one of our facilities or when it arrives at the customer’s facility, based on the contractual terms. Customers generally do not have a unilateral right to return products after delivery. Invoices are generally issued at shipment and generally become due in 30 to 60 days.

We sometimes perform shipping and handling activities after control of the product passes to the customer. We have made an accounting policy election to account for these activities as product fulfillment activities rather than as separate performance obligations.

Service Revenue

We recognize revenue from repairs, maintenance, installation, training and other specialized product support services at the point in time the work is completed. Installation and training services are generally billed in advance of service. Repairs and other services are generally billed at the point the work is completed.

Revenue associated with instrument service contracts is recognized on a straight-line basis over the life of the agreement, which is generally one to three years. We believe this time-elapsed approach is appropriate for service contracts because we provide services on demand throughout the term of the agreement. Invoices are generally issued in advance of service on a monthly, quarterly, annual or multi-year basis. Payments made in advance of service are reported on our condensed consolidated balance sheet as deferred revenue.

License Revenue

In March 2020, we reached a settlement agreement for intellectual property infringement claims, in which we received a $3.5 million payment in exchange for a perpetual license under certain Fluidigm intellectual property.

The settlement is considered a multiple-element arrangement with each element accounted for individually. Accordingly, $3.1 million of the proceeds was recognized as license revenue and $0.4 million was offset against legal costs.

Contract Costs

Incremental sales commission costs incurred to obtain instrument service contracts are capitalized and amortized to selling, general and administrative expense over the life of the contract, which is generally one to three years. As a practical expedient, we expense sales commissions associated with product support services that are delivered in less than one year as they are incurred. Sales commissions associated with the sale of products are expensed as they are incurred. To date, capitalized contract costs have been immaterial.

Product Warranties

We generally provide a one-year warranty on our instruments. We accrue for estimated warranty obligations at the time of product shipment. We periodically review our warranty liability and record adjustments based on the terms of warranties provided to customers, and historical and anticipated warranty claim experience. This expense is recorded as a component of cost of product revenue in the condensed consolidated statements of operations.


7


Significant Judgments

Applying the revenue recognition practices discussed above often requires significant judgment. Judgment is required when identifying performance obligations, estimating SSP and allocating purchasing consideration in multi-element arrangements and estimating the future amount of our warranty obligations. Moreover, significant judgment is required when interpreting commercial terms and determining when control of goods and services passes to the customer. Any material changes created by errors in judgment could have a material effect on our operating results and overall financial condition.

Accounts Receivable

Trade accounts receivable are recorded at net invoice value. We review our exposure to accounts receivable and provide allowances of specific amounts if collectability is no longer reasonably assured based on historical experience and specific customer collection issues. We evaluate such allowances on a regular basis and adjust them as needed.

Concentrations of Business and Credit Risk

Financial instruments that potentially subject us to credit risk consist of cash, cash equivalents, investments, and accounts receivable. Our cash, cash equivalents, and investments may consist of deposits held with banks, money market funds, and other highly liquid investments that may at times exceed federally insured limits. Cash equivalents and investments are financial instruments that potentially subject us to concentrations of risk. Under our investment policy, we invest primarily in securities issued by the U.S. government. The goals of our investment policy, in order of priority, are as follows: preserve capital, meet liquidity needs, and optimize returns.

We generally do not require collateral to support credit sales. To reduce credit risk, we perform credit evaluations of our customers. Excluding the impact of the settlement agreement, no single customer represented more than 10% of total revenue for three months ended March 31, 2020 or 2019 and no single customer represented more than 10% of total accounts receivable at March 31, 2020, or December 31, 2019.

Our products include components that are currently procured from a single source or a limited number of sources. We believe that other vendors would be able to provide similar components; however, the qualification of such vendors may require start-up time. In order to mitigate any adverse impacts from a disruption of supply, we attempt to maintain an adequate supply of critical limited-source components.

Leases

We determine if an arrangement is a lease, or contains a lease, at inception. Operating leases are included in operating lease right-of-use (ROU) assets and current and non-current operating lease liabilities in our condensed consolidated balance sheets. ROU assets represent our right-to-use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. Significant judgment is required in determining the incremental collateralized borrowing rate. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
We elected the short-term lease recognition exemption for all leases that qualify. This means that, for those leases that qualify, we will not recognize ROU assets or lease liabilities for leases with an initial lease term of one year or less. We also elected to not separate lease and nonlease components for our building leases. The nonlease components are generally variable in nature and are expected to represent most of our variable lease costs. Variable costs are expensed as incurred. We have taken a portfolio approach for our vehicle leases by country.

Goodwill, Intangible Assets and Other Long-Lived Assets

Goodwill, which has an indefinite useful life, represents the excess of cost over fair value of net assets acquired. Our intangible assets include developed technology, patents and licenses. The cost of identifiable intangible assets with finite lives is generally amortized on a straight-line basis over the assets’ respective estimated useful lives.

Goodwill and intangible assets with indefinite lives are not subject to amortization but are tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable. Events or changes in circumstances that could affect the likelihood that we will be required to

8


recognize an impairment charge include, but are not limited to, declines in our stock price or market capitalization, economic downturns and other macroeconomic events, including the current COVID-19 pandemic, declines in our market share or revenues, and an increase in our losses, rapid changes in technology, failure to achieve the benefits of capacity increases and utilization, significant litigation arising out of an acquisition, or other matters. Any impairment charges could have a material adverse effect on our operating results and net asset value in the quarter in which we recognize the impairment charge.

In evaluating our goodwill and intangible assets with indefinite lives for indications of impairment, we first conduct an assessment of qualitative factors to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If we determine that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we compare the fair value of our reporting unit to its carrying value. If the fair value of our reporting unit exceeds its carrying value, goodwill is not considered impaired and no further analysis is required. If the carrying value of the reporting unit exceeds its fair value, then an impairment loss equal to the difference would be recorded to goodwill. We did not recognize any impairment of goodwill for any of the periods presented herein.

We evaluate our long-lived assets, including finite-lived intangibles, for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If any indicator of impairment exists, we assess the recoverability of the affected long-lived assets by determining whether the carrying value of the asset can be recovered through undiscounted future operating cash flows. If impairment is indicated, we estimate the asset’s fair value using future discounted cash flows associated with the use of the asset and adjust the carrying value of the asset accordingly. We did not recognize any impairment of intangibles for any of the periods presented herein.

Convertible Notes

In February 2014, we closed an underwritten public offering of $201.3 million aggregate principal amount of our 2.75% Senior Convertible Notes due 2034 (2014 Notes). In March 2018, we entered into separate privately negotiated transactions with certain holders of our 2014 Notes to exchange $150.0 million in aggregate principal amount of the 2014 Notes for our 2.75% Exchange Convertible Senior Notes due 2034 (2018 Notes). As the 2018 Notes were convertible, at our election, into cash, shares of our common stock, or a combination of cash and shares of our common stock, we accounted for the 2018 Notes under the cash conversion guidance in ASC 470, whereby the embedded conversion option in the 2018 Notes was separated and accounted for in equity. In the first quarter of 2019, the 2018 Notes were converted into 19.5 million shares of our common stock and the 2018 Notes were retired. We recorded a loss of $9.0 million on the retirement of the 2018 Notes. We determined the fair value of the 2018 Notes using valuation techniques that required us to make assumptions related to the implied discount rate. 

In November 2019, we closed a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of $55.0 million aggregate principal amount of our 5.25% Senior Convertible Notes due 2024 (2019 Notes). The majority of the issuance proceeds were used to retire approximately $50.2 million of aggregate principal amount of our 2014 Notes, leaving approximately $1.1 million of aggregate principal amount of our 2014 Notes outstanding.

As the 2019 Notes do not provide for a cash conversion feature, the 2019 Notes are recorded for as debt in their entirety in accordance with ASC 470. For the 2014, 2018 and 2019 Notes, offering-related costs, including underwriting costs, were capitalized as debt issuance costs, recorded as an offset to the carrying value of the related Notes, and are amortized over the expected term of the related Notes using the effective interest method.

See Note 7 for a detailed discussion of the accounting treatment of the transactions and additional information.

 Comprehensive Loss

Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive income (loss) consists of unrealized gains and losses on our investments and foreign currency translation adjustments. Total comprehensive loss for all periods presented has been disclosed in the condensed consolidated statements of comprehensive loss.


9


The components of accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2020 is as follows (in thousands):
 
 
Foreign Currency Translation Adjustment
 
Unrealized Gain (Loss) on Investments
 
Accumulated Other Comprehensive Income (Loss)
Ending balance at December 31, 2019
 
$
(618
)
 
$
36

 
$
(582
)
Other comprehensive income (loss)
 
(303
)
 

 
(303
)
Ending balance at March 31, 2020
 
$
(921
)
 
$
36

 
$
(885
)


Immaterial amounts of unrealized gains and losses have been reclassified into the condensed consolidated statement of operations for the three months ended March 31, 2020 and 2019.

Net Loss per Share

Our basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding for the period. Restricted stock units, performance share units, and stock options to purchase our common stock are considered to be potentially dilutive common shares but have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive for all periods presented.

The following potentially dilutive common shares were excluded from the computations of diluted net loss per share for the periods presented because including them would have been anti-dilutive (in thousands):

 
 
Three Months Ended March 31,
 
 
 
2020
 
2019
 
Stock options, restricted stock units and performance awards
 
6,652

 
4,881

 
2019 Convertible Notes
 
18,966

 

 
2019 Convertible Notes potential make-whole shares
 
4,707

 

 
2014 Convertible Notes
 
19

 
916

 
Total
 
30,344

 
5,797

 


Recent Accounting Changes and Accounting Pronouncements

Adoption of New Accounting Guidance

In August 2018, the U.S.-based Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-15-Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), which establishes new guidance on the accounting for costs incurred to implement a cloud computing arrangement that is considered a service arrangement. The new guidance requires the capitalization of such costs, aligning it with the accounting for costs associated with developing or obtaining internal-use software. The new guidance is effective for fiscal years beginning after December 15, 2019. The adoption of the new guidance did not have a significant impact on our financial results.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The ASU eliminates the requirement for an entity to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, an entity performs its annual, or interim, goodwill impairment testing by comparing the fair value of a reporting unit with its carrying amount and recording an impairment charge for the amount by which the carrying amount exceeds the fair value. The ASU is effective for annual and interim goodwill impairment testing performed for our fiscal year beginning January 1, 2020. The adoption of the new guidance did not have a significant impact on our financial results.
The FASB issued two ASUs related to financial instruments – credit losses. The ASUs issued were: (1) in June 2016, ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and (2) in November 2018, ASU 2018-19-Codification Improvements to Topic 326, Financial Instruments-Credit Losses. ASU 2016-13 is intended to improve financial reporting by requiring more timely recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with

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the leasing standard. These ASUs are effective for fiscal years beginning after December 15, 2019, and interim periods within those years, with early adoption permitted. The modified retrospective method is required upon adoption. The adoption of the new guidance resulted in an adjustment of approximately $0.1 million to reduce the accumulated deficit component of stockholders’ equity and decrease current assets by the same amount in our condensed consolidated balance sheet.

Recent Accounting Pronouncements

In November 2019, the FASB issued ASU 2019-12-Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update improve consistent application of and simplifies U.S. GAAP for Topic 740 by clarifying and amending existing guidance including intra-period allocation, reporting tax law changes and losses in interim periods, state and local taxes not fully based on income and recognition of deferred tax liability related to certain transactions. There is also new guidance related to consolidated group reporting and tax impacts resulting from business combinations. The new guidance is effective for fiscal years beginning after December 15, 2020. We are currently evaluating the impact of adoption on our condensed consolidated financial statements.

3. Business Combination
On January 17, 2020, we completed the acquisition of all of the outstanding shares of InstruNor AS, a privately held Norwegian company (InstruNor).
InstruNor is a provider of the only fully integrated sample preparation system for flow and mass cytometry. The acquisition of InstruNor supports our entry into the sample preparation market for cytometry analysis and expands our capabilities to include fully automated sample preparation for flow and mass cytometry. The value of this technology is reflected in the intangible asset for developed technology. The developed technology was valued using a discounted cash flow model for which the most sensitive assumption is the revenue growth rate.
The purchase price of $7.2 million included approximately $5.2 million in cash and 485,451 shares of our common stock valued at the closing price on the effective date of $4.22.
A summary of the net cash flows is summarized below (in thousands):
 
 
January 17, 2020
Cash consideration paid to former equity holders
 
$
5,165

Less: cash and cash equivalents acquired
 
(11
)
Acquisition of InstruNor, net of cash acquired
 
$
5,154




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The acquisition was accounted for in accordance with ASC 805, Business Combinations. The assets acquired and liabilities assumed were recorded at their estimated fair values at the InstruNor acquisition date. Goodwill of $2.2 million was calculated as purchase price less the fair value of the net assets acquired as follows (in thousands):
 
 
January 17, 2020

Purchase price:
 
 
Cash consideration paid on closing to former equity holders
 
$
5,165

Non-cash consideration common shares
 
2,049

Total purchase price
 
$
7,214

 
 
 
Assets acquired:
 
 
Cash and cash equivalents
 
$
11

Accounts receivable
 
32

Other receivables
 
13

Inventories, net
 
153

Developed technology
 
5,380

Liabilities assumed:
 
 
Accounts payable
 
14

Other current liabilities
 
15

Deferred tax liability
 
566

Fair value of identifiable net assets acquired
 
4,994

Goodwill acquired on acquisition
 
$
2,220

 
 
 


4. Revenue
Disaggregation of Revenue
The following table presents our revenue for the three months ended March 31, 2020 and 2019, respectively, based on geographic area and by source (in thousands):
 
Three Months Ended March 31,
 
2020
 
2019
Geographic Markets:
 
 
 
Americas
$
14,844

 
$
12,971

EMEA
8,096

 
8,156

Asia-Pacific
4,677

 
8,984

Total
$
27,617

 
$
30,111

 
Three Months Ended March 31,
 
2020
 
2019
Source:
 
 
 
Instruments
$
9,471

 
$
12,840

Consumables
9,510

 
11,987

Product revenue
18,981

 
24,827

Service revenue
5,186

 
5,284

Grant revenue
350

 

License revenue
3,100

 

Total
$
27,617

 
$
30,111



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Performance Obligations

We reported $20.0 million of deferred revenue on our December 31, 2019 consolidated balance sheet. During the three months ended March 31, 2020, $3.4 million of the opening balance was recognized as revenue and $4.5 million of net additional advance payments were received from customers, primarily associated with instrument service contracts. At March 31, 2020, we reported $21.1 million of deferred revenue.

The following table summarizes the expected timing of revenue recognition for unfulfilled performance obligations associated with instrument service contracts that were partially completed at March 31, 2020 (in thousands):
Fiscal Year
 
Expected Revenue (1)
2020 (remainder of the year)
 
$
9,657

2021
 
7,500

2022
 
4,358

Thereafter
 
2,778

Total
 
$
24,293

_______
(1) Expected revenue includes both billed amounts included in deferred revenue and unbilled amounts that are not reflected in our condensed consolidated financial statements and are subject to change if our customers decide to cancel or modify their contracts. Purchase orders for instrument service contracts can generally be canceled before the service period begins without penalty.

We apply the practical expedient that permits us to not disclose information about unsatisfied performance obligations for service contracts with an expected term of one year or less.

5. Goodwill and Intangible Assets, net

In connection with our acquisition of DVS Sciences, Inc. in February 2014, we recognized goodwill of $104.1 million and $112.0 million of developed technology. In the first quarter of 2020, we recognized $2.2 million of goodwill from the InstruNor acquisition and $5.4 million of developed technology (see Note 3). We are amortizing InstruNor developed technology over 8.0 years.
Goodwill and intangible assets with indefinite lives are not subject to amortization but are tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable. Qualitative assessment includes assessing significant events and circumstances such as our current results, assumptions regarding future performance, strategic initiatives and overall economic factors, including the current global outbreak of the COVID-19 pandemic and macroeconomic developments to determine the existence of potential indicators of impairment and assess if it is more likely than not that the fair value of our reporting unit or intangible assets is less than their carrying value. If indicators of impairment are identified, a quantitative impairment test is performed.
During the first quarter of fiscal 2020, the Company assessed if the current and potential future impact of COVID-19 represented an event which necessitated an impairment review.  This assessment included an update of the qualitative and quantitative factors affecting our business. As a result of this assessment, we determined that a triggering event had occurred and a quantitative impairment test was performed. As a result of this quantitative analysis, we determined that fair value of our goodwill and developed technology intangibles were not less than their carrying value and no impairment was recognized.

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Intangible assets also include other patents and licenses, which are included in other non-current assets. Intangible assets, net, were as follows (in thousands):
 
March 31, 2020
 
 
Gross Amount
 
Accumulated Amortization
 
Net
 
Weighted-Average Amortization Period
Developed technology
 
$
117,380

 
$
(68,768
)
 
$
48,612

 
9.9 years
Patents and licenses
 
$
11,274

 
$
(8,576
)
 
$
2,698

 
7.8 years

 
 
December 31, 2019
 
 
Gross Amount
 
Accumulated Amortization
 
Net
 
Weighted-Average Amortization Period
Developed technology
 
$
112,000

 
$
(65,800
)
 
$
46,200

 
10.0 years
Patents and licenses
 
$
11,274

 
$
(8,342
)
 
$
2,932

 
7.8 years

Total amortization expense for the three months ended March 31, 2020 and 2019 was $3.2 million and $3.1 million, respectively.

Based on the carrying value of intangible assets, net, as of March 31, 2020, the amortization expense is expected to be as follows (in thousands):
Fiscal Year
Developed Technology Amortization Expense
 
Patents and Licenses Amortization Expense
 
Total
2020 (remainder of the year)
$
8,904

 
$
686

 
$
9,590

2021
11,873

 
759

 
12,632

2022
11,873

 
676

 
12,549

2023
11,873

 
570

 
12,443

2024
2,073

 
7

 
2,080

Thereafter
2,016

 

 
2,016

Total
$
48,612

 
$
2,698

 
$
51,310



6. Balance Sheet Details

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash consisted of the following as of March 31, 2020 and December 31, 2019 (in thousands):
 
 
March 31, 2020
 
December 31, 2019

Cash and cash equivalents
 
$
34,992

 
$
21,661

Restricted cash
 
1,075

 
2,075

Total cash, cash equivalents and restricted cash
 
$
36,067

 
$
23,736


Short-term restricted cash of approximately $75 thousand included in prepaid expenses and other current assets and $1.0 million of non-current restricted cash is included in other non-current assets in the condensed consolidated balance sheet as of March 31, 2020.


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Inventories

Inventories consisted of the following as of March 31, 2020 and December 31, 2019 (in thousands):
 
 
March 31, 2020
 
December 31, 2019
Raw materials
 
$
7,911

 
$
6,133

Work-in-process
 
639

 
659

Finished goods
 
7,744

 
7,092

Total inventories
 
$
16,294

 
$
13,884



Property and Equipment, net

Property and equipment consisted of the following as of March 31, 2020 and December 31, 2019 (in thousands):
 
 
March 31, 2020
 
December 31, 2019
Computer equipment and software
 
$
4,335

 
$
3,997

Laboratory and manufacturing equipment
 
19,354

 
19,325

Leasehold improvements
 
7,706

 
7,788

Office furniture and fixtures
 
2,003

 
1,824

Property and equipment, gross
 
33,398

 
32,934

Less accumulated depreciation and amortization
 
(25,517
)
 
(24,954
)
Construction-in-progress
 
262

 
76

Property and equipment, net
 
$
8,143

 
$
8,056


 
Warranties

Activity for our warranty accrual for the three months ended March 31, 2020 and 2019, which are included in other accrued liabilities, is summarized below (in thousands):
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Beginning balance
 
$
1,390

 
$
863

Accrual for current period warranties
 
227

 
286

Warranty costs incurred
 
(162
)
 
(219
)
Ending balance
 
$
1,455

 
$
930



7. Convertible Notes and Credit Facility
2014 Senior Convertible Notes (2014 Notes)
In February 2014, we closed an underwritten public offering of $201.3 million aggregate principal amount of our 2014 Notes. We received $195.2 million, net of underwriting discounts, from the issuance of the 2014 Notes and incurred approximately $1.1 million in offering-related expenses. The underwriting discount of $6.0 million and the debt issuance costs of $1.1 million were recorded as offsets to the proceeds. The underwriting discount and offering-related expenses are being amortized to interest expense using the effective-interest rate method. The effective interest rate on the 2014 Notes, reflecting the impact of debt discounts and issuance costs, is 3.0%. The 2014 Notes will mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2014 Notes.

We have retired the majority of the 2014 Notes through the issuance of the 2018 Notes and 2019 Notes, as discussed below. As of March 31, 2020, there is $1.1 million aggregate principal of the 2014 Notes outstanding.

2018 Senior Convertible Notes (2018 Notes)

In March 2018, we entered into separate privately negotiated transactions with certain holders of our 2014 Notes to exchange $150.0 million in aggregate principal amount of the 2014 Notes for 2018 Notes, leaving $51.3 million of aggregate

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principal amount of 2014 Notes outstanding. As of the closing of the 2018 Notes on March 12, 2018, the estimated fair value was $145.5 million. The difference between the $150.0 million aggregate principal amount of the 2018 Notes and its fair value was being amortized over the expected term of the 2018 Notes using the effective interest method through the first note holder put date of February 6, 2023.

The 2018 Notes accrued interest at a rate of 2.75% payable semi-annually in arrears on February 1 and August 1 in arrears of each year. The 2018 Notes were set to mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the indenture governing the 2018 Notes. The initial conversion rate of the 2018 Notes was 126.9438 shares of our common stock, par value $0.001 per share, per $1,000 principal amount of the 2018 Notes (which is equivalent to an initial conversion price of approximately $7.88 per share). The conversion rate was subject to adjustment upon the occurrence of certain specified events. Those certain specified events included holders who converted their 2018 Notes voluntarily prior to our exercise of the issuer’s conversion option described below or in connection with a make-whole fundamental change prior to February 6, 2023, entitling the holders, under certain circumstances, to a make-whole premium in the form of an increase in the conversion rate determined by reference to a make-whole table set forth in the indenture governing the 2018 Notes. Any time prior to the maturity of the 2018 Notes, we could convert the 2018 Notes, in whole but not in part, into cash, shares of our common stock, or combination thereof, if the closing price of our common stock equaled or exceeded 110% of the conversion price then in effect for a specified number of days.

Offering-related costs for the 2018 Notes were approximately $2.8 million. Offering-related costs of $2.2 million were capitalized as debt issuance costs, recorded as an offset to the carrying value of the 2018 Notes, and were being amortized over the expected term of the 2018 Notes using the effective interest method through the first note holder put date of February 6, 2023. The effective interest rate on the 2018 Notes was 12.3%. Offering-related costs of $0.6 million were accounted for as equity issuance costs, recorded as an offset to additional paid-in capital, and were not subject to amortization. Offering-related costs were allocated between debt and equity in the same proportion as the allocation of the 2018 Notes between debt and equity.

In the first quarter of 2019, we received notices from holders of the 2018 Notes electing to voluntarily convert approximately $138.1 million in aggregate principal amount of the 2018 Notes. In February 2019, we notified trustee U.S. Bank National Association of our intention to exercise our issuer’s conversion option with respect to the remaining approximately $11.9 million in aggregate principal amount of 2018 Notes. In total, $150.0 million of the 2018 Notes were converted into 19.5 million shares of our common stock and the bonds were retired. We recognized a loss of $9.0 million on the retirement of the 2018 Notes, which represents the difference between the fair value of the bonds retired and their carrying costs. The net impact on equity was $133.3 million and represents the fair value of the bonds retired.

2019 Senior Convertible Notes (2019 Notes)
In November 2019, we issued $55.0 million aggregate principal amount of 2019 Notes. Net proceeds of the 2019 Notes issuance were $52.7 million, after deductions for commissions and other debt issuance costs of approximately $2.3 million. $51.8 million of the proceeds of the 2019 Notes were used to retire $50.2 million aggregate principal amount of our 2014 Notes, leaving $1.1 million of aggregate principal value of 2014 Notes outstanding. We accounted for the transaction as an extinguishment of debt due to the significance of the change in value of the embedded conversion option, resulting in a $3.0 million loss in the fourth quarter of 2019. The loss on extinguishment of debt was calculated as the difference between the reacquisition price (i.e., the fair value of the principal amount of 2019 Notes) and the net carrying value of the 2014 Notes exchanged.

The 2019 Notes bear interest at 5.25% per annum, payable semiannually on June 1 and December 1 of each year, beginning on June 1, 2020. The Notes will mature on December 1, 2024, unless earlier repurchased or converted pursuant to their terms. The 2019 Notes will be convertible at the option of the holder at any point prior to the close of business on the second scheduled trading day preceding the maturity date. The initial conversion rate of the Notes is 344.8276 shares of the Company’s common stock per $1,000 principal amount of 2019 Notes (which is equivalent to an initial conversion price of approximately $2.90 per share). The conversion rate is subject to adjustment upon the occurrence of certain specified events. Those certain specified events include voluntary conversion of the 2019 Notes prior to our exercise of the Issuer’s Conversion Option or in connection with a make-whole fundamental change, entitling the holders, under certain circumstances, to a make-whole premium in the form of an increase in the conversion rate determined by reference to a make-whole table set forth in the indenture governing the 2019 Notes. The conversion rate will not be adjusted for any accrued and unpaid interest.

The 2019 Notes will also be convertible at our option upon certain conditions in accordance with the terms of the indenture governing the 2019 Notes. On or after December 1, 2021 to December 1, 2022, if the price of the Company’s common stock has equaled or exceeded 150% of the Conversion Price then in effect for a specified number of days (Issuer’s

16


Conversion Option), we may, at our option, elect to convert the 2019 Notes in whole but not in part into shares of the Company, determined in accordance with the terms of the indenture. On or after December 1, 2022, if the price of the Company’s common stock has equaled or exceeded 130% of the Conversion Price then in effect for a specified number of days, we may, at our option, elect to convert the 2019 Notes in whole but not in part into shares of the Company, determined in accordance with the terms of the indenture.

Offering-related costs for the 2019 Notes were capitalized as debt issuance costs and are recorded as an offset to the carrying value of the 2019 Notes. The debt issuance costs are being amortized over the expected term of the 2019 Notes using the effective interest method through the maturity date of December 1, 2024. The effective interest rate on the 2019 Notes is 6.2%.

The carrying values of the components of the 2014 Notes and the 2019 Notes are as follows (in thousands):
 
 
March 31, 2020
 
December 31, 2019
   2.75% 2014 Notes due 2034
 
 
 
 
Principal amount
 
$
1,079

 
$
1,079

Unamortized debt discount
 
(17
)
 
(18
)
Unamortized debt issuance cost
 
(4
)
 
(4
)
 
 
$
1,058

 
$
1,057

 
 
 
 
 
    5.25% 2019 Notes due 2024
 
 
 
 
Principal amount
 
$
55,000

 
$
55,000

Unamortized debt issuance cost
 
(2,138
)
 
(2,236
)
 
 
$
52,862