Company Quick10K Filing
NeoPhotonics
Price6.21 EPS-1
Shares49 P/E-12
MCap302 P/FCF16
Net Debt-24 EBIT-23
TEV278 TEV/EBIT-12
TTM 2019-09-30, in MM, except price, ratios
10-Q 2021-03-31 Filed 2021-04-29
10-K 2020-12-31 Filed 2021-02-25
10-Q 2020-09-30 Filed 2020-11-02
10-Q 2020-06-30 Filed 2020-08-05
10-Q 2020-03-31 Filed 2020-05-07
10-K 2019-12-31 Filed 2020-02-28
10-Q 2019-09-30 Filed 2019-11-04
10-Q 2019-06-30 Filed 2019-08-07
10-Q 2019-03-31 Filed 2019-05-07
10-K 2018-12-31 Filed 2019-03-08
10-Q 2018-09-30 Filed 2018-11-05
10-Q 2018-06-30 Filed 2018-08-06
10-Q 2018-03-31 Filed 2018-05-09
10-K 2017-12-31 Filed 2018-03-09
10-Q 2017-09-30 Filed 2017-11-08
10-Q 2017-06-30 Filed 2017-08-09
10-Q 2017-03-31 Filed 2017-05-09
10-K 2016-12-31 Filed 2017-03-16
10-Q 2016-09-30 Filed 2016-11-08
10-Q 2016-06-30 Filed 2016-08-09
10-Q 2016-03-31 Filed 2016-05-10
10-K 2015-12-31 Filed 2016-03-15
10-Q 2015-09-30 Filed 2015-11-06
10-Q 2015-06-30 Filed 2015-08-10
10-Q 2015-03-31 Filed 2015-05-11
10-K 2014-12-31 Filed 2015-03-16
10-Q 2014-09-30 Filed 2014-11-10
10-Q 2014-06-30 Filed 2014-08-08
10-Q 2014-03-31 Filed 2014-06-24
10-K 2013-12-31 Filed 2014-06-04
10-Q 2013-06-30 Filed 2014-04-09
10-Q 2013-06-30 Filed 2013-08-08
10-Q 2013-03-31 Filed 2013-05-15
10-K 2012-12-31 Filed 2013-03-15
10-Q 2012-09-30 Filed 2012-11-09
10-Q 2012-06-30 Filed 2012-08-10
10-Q 2012-03-31 Filed 2012-05-10
10-K 2011-12-31 Filed 2012-03-30
10-Q 2011-09-30 Filed 2011-11-10
10-Q 2011-06-30 Filed 2011-08-11
10-Q 2011-03-31 Filed 2011-05-12
10-K 2010-12-31 Filed 2011-03-28
8-K 2020-11-02
8-K 2020-10-02
8-K 2020-08-31
8-K 2020-08-04
8-K 2020-07-20
8-K 2020-06-02
8-K 2020-04-30
8-K 2020-02-28
8-K 2020-02-27
8-K 2019-10-31
8-K 2019-08-05
8-K 2019-08-01
8-K 2019-07-03
8-K 2019-06-13
8-K 2019-06-04
8-K 2019-05-02
8-K 2019-02-28
8-K 2019-01-14
8-K 2018-11-02
8-K 2018-08-06
8-K 2018-06-05
8-K 2018-05-08
8-K 2018-04-17
8-K 2018-04-10
8-K 2018-03-01
8-K 2018-01-24

NPTN 10Q Quarterly Report

Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Note 1. Basis of Presentation and Significant Accounting Policies
Note 2. Revenue
Note 3. Net Income (Loss) per Share
Note 4. Cash, Cash Equivalents, Short - Term Investments and Restricted Cash
Note 5. Fair Value Disclosures
Note 6. Balance Sheet Components
Note 7. Restructuring Charges
Note 8. Debt
Note 9. Leases
Note 10. Japan Pension Plan
Note 11. Commitments and Contingencies
Note 12. Stockholders' Equity
Note 13. Restricted Net Assets
Note 14. Stock - Based Compensation
Note 15. Income Taxes
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 exhibit311nptn0331202110qq1.htm
EX-31.2 exhibit312nptn0331202110qq1.htm
EX-32.1 exhibit321nptn0331202110qq1.htm

NeoPhotonics Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
4053242431628102012201420172020
Assets, Equity
1108458326-202012201420172020
Rev, G Profit, Net Income
30198-3-14-252012201420172020
Ops, Inv, Fin

nptn-20210331
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Table of Contents
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, 2021
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: 001-35061
NeoPhotonics Corporation
(Exact name of registrant as specified in its charter)
 

   
Delaware 94-3253730
(State or other jurisdiction
of incorporation or organization)
 (I.R.S. Employer
Identification No.)
3081 Zanker Road
San Jose, California 95134
(Address of principal executive offices, zip code)
(408) 232-9200
(Registrant’s telephone number, including area code)
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, $0.0025 par valueNPTNThe New York Stock Exchange
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 (“Exchange Act”) 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, 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 filerSmaller 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.  


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    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 April 23, 2021, there were approximately 51,329,729 shares of the registrant’s Common Stock outstanding. 


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NEOPHOTONICS CORPORATION
For the Quarter Ended March 31, 2021
Table of Contents
  Page
  
 
 
 
 
 
  
 
 


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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NEOPHOTONICS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 As of
(In thousands, except par value data)March 31, 2021December 31, 2020
ASSETS
Current assets:  
Cash and cash equivalents$83,068 $95,117 
Short-term investments27,671 27,669 
Restricted cash488 489 
Accounts receivable, net39,975 45,232 
Inventories46,373 46,901 
Prepaid expenses and other current assets15,425 20,173 
Total current assets213,000 235,581 
Property, plant and equipment, net60,977 66,765 
Operating lease right-of-use assets13,315 13,823 
Purchased intangible assets, net1,280 1,468 
Goodwill1,115 1,115 
Other long-term assets4,808 4,912 
Total assets$294,495 $323,664 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$37,538 $43,539 
Current portion of long-term debt3,026 3,232 
Accrued and other current liabilities32,672 42,053 
Total current liabilities73,236 88,824 
Long-term debt, net of current portion29,047 30,327 
Operating lease liabilities, noncurrent13,974 14,522 
Other noncurrent liabilities8,580 9,584 
Total liabilities124,837 143,257 
Commitments and contingencies (Note 11)
Stockholders’ equity:   
Preferred stock, $0.0025 par value, 10,000 shares authorized, no shares issued
or outstanding
  
Common stock, $0.0025 par value, 100,000 shares authorized; at March 31, 2021,
51,009 shares issued and outstanding; at December 31, 2020, 50,457 shares issued
and outstanding
128 126 
Additional paid-in capital
599,744 597,460 
Accumulated other comprehensive income (loss)(608)1,735 
Accumulated deficit
(429,606)(418,914)
Total stockholders’ equity169,658 180,407 
Total liabilities and stockholders’ equity$294,495 $323,664 
See accompanying Notes to Condensed Consolidated Financial Statements.
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NEOPHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 Three Months Ended
March 31,
 
(In thousands, except per share data)20212020
Revenue$60,926 $97,401 
Cost of goods sold47,587 67,675 
Gross profit
13,339 29,726 
Operating expenses:  
Research and development
13,098 11,884 
Sales and marketing
3,865 3,659 
General and administrative
7,294 6,789 
Acquisition and asset sale related costs163 12 
Total operating expenses
24,420 22,344 
Income (loss) from operations(11,081)7,382 
Interest income
105 98 
Interest expense
(227)(378)
Other income, net1,143 1,198 
Total interest and other income, net1,021 918 
Income (loss) before income taxes(10,060)8,300 
Income tax provision(632)(1,993)
Net income (loss)$(10,692)$6,307 
Basic net income (loss) per share$(0.21)$0.13 
Diluted net income (loss) per share$(0.21)$0.12 
Weighted average shares used to compute basic net income (loss) per share50,717 48,615 
Weighted average shares used to compute diluted net income (loss) per share50,717 50,617 
 
See accompanying Notes to Condensed Consolidated Financial Statements.
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 NEOPHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 
 Three Months Ended
March 31,
 
(in thousands)20212020
Net income (loss)$(10,692)$6,307 
Other comprehensive loss:  
Foreign currency translation adjustments, net of zero tax
(2,343)(1,970)
Total other comprehensive loss(2,343)(1,970)
Comprehensive income (loss)$(13,035)$4,337 

See accompanying Notes to Condensed Consolidated Financial Statements.
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NEOPHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY  
(Unaudited)

Three Months Ended March 31, 2021Common stockAdditional paid-in capitalAccumulated other comprehensive income (loss)Accumulated deficitTotal stockholders’ equity
(In thousands)SharesAmount
Balances at December 31, 202050,457 $126 $597,460 $1,735 $(418,914)$180,407 
Comprehensive loss— — — (2,343)(10,692)(13,035)
Issuance of common stock upon exercise of stock options199 — 1,109 — — 1,109 
Issuance of common stock for vested restricted stock units503 2 (2)— —  
Tax withholding related to vesting of restricted stock units(150)— (1,835)— — (1,835)
Stock-based compensation costs— — 3,012 — — 3,012 
Balances at March 31, 202151,009 $128 $599,744 $(608)$(429,606)$169,658 

Three Months Ended March 31, 2020Common stockAdditional paid-in capitalAccumulated other comprehensive lossAccumulated deficitTotal stockholders’ equity
(In thousands)SharesAmount
Balances at December 31, 201948,526 $121 $582,504 $(7,871)$(414,548)$160,206 
Comprehensive income (loss)— — — (1,970)6,307 4,337 
Issuance of common stock upon exercise of stock options52 — 231 — — 231 
Issuance of common stock for vested restricted stock units114 1 — — — 1 
Tax withholding related to vesting of restricted stock units(30)— (219)— — (219)
Stock-based compensation costs— — 2,682 — — 2,682 
Balances at March 31, 202048,662 $122 $585,198 $(9,841)$(408,241)$167,238 

See accompanying Notes to Condensed Consolidated Financial Statements.

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NEOPHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 Three Months Ended
March 31,
 
(In thousands)20212020
Cash flows from operating activities  
Net income (loss)$(10,692)$6,307 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:  
Depreciation and amortization
6,381 6,674 
Stock-based compensation expense
3,277 2,518 
Deferred taxes
344 1,214 
Others
108 86 
Gain on sale of assets and other write-offs
(17)(25)
Write-down of inventories
2,267 3,011 
Amortization of operating lease right-of-use assets
508 462 
Foreign currency remeasurement
(968)(1,118)
Change in operating assets and liabilities:
  
Accounts receivable
5,255 7,209 
Inventories
(2,260)(2,699)
Prepaid expenses and other assets
3,441 (469)
Accounts payable
(5,526)523 
Accrued and other liabilities
(11,062)1,233 
Net cash provided by (used in) operating activities(8,944)24,926 
Cash flows from investing activities  
Purchase of property, plant and equipment
(1,908)(2,578)
Proceeds from sale of property, plant and equipment and other assets
358 109 
Purchase of marketable securities
(13,503)(24)
Proceeds from sale of marketable securities
13,501  
Net cash used in investing activities
(1,552)(2,493)
Cash flows from financing activities  
Proceeds from exercise of stock options and issuance of stock under ESPP
1,548 231 
Tax withholding on restricted stock units
(1,835)(219)
Repayment of bank loans
(794)(1,772)
Repayment of finance lease liabilities
(24)(21)
Net cash used in financing activities
(1,105)(1,781)
Effect of exchange rates on cash, cash equivalents and restricted cash
(449)(254)
Net increase (decrease) in cash, cash equivalents and restricted cash(12,050)20,398 
Cash, cash equivalents and restricted cash at the beginning of the period
95,606 81,439 
Cash, cash equivalents and restricted cash at the end of the period
$83,556 $101,837 
Supplemental disclosure of non-cash investing and financing activities:
Unpaid property, plant and equipment in accounts payable$862 $1,130 


See accompanying Notes to Condensed Consolidated Financial Statements.
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NeoPhotonics Corporation Notes to Condensed Consolidated Financial Statements
(Unaudited)


Note 1. Basis of presentation and significant accounting policies
Basis of Presentation and Consolidation
The condensed consolidated financial statements of NeoPhotonics Corporation (“NeoPhotonics” or the “Company”) as of March 31, 2021 and for the three months ended March 31, 2021 and 2020, have been prepared in accordance with the instructions on Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In accordance with those rules and regulations, the Company has omitted certain information and notes normally provided in the Company’s annual consolidated financial statements. In the opinion of management, the condensed consolidated financial statements contain all adjustments, consisting only of normal recurring items, except as otherwise noted, necessary for the fair presentation of the Company’s financial position and results of operations for the interim periods. These condensed consolidated financial statements do not include all disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) and should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results expected for the entire fiscal year. All intercompany accounts and transactions have been eliminated.
Certain Significant Risks and Uncertainties
The Company operates in a dynamic industry and, accordingly, can be affected by a variety of factors. For example, any of the following areas could have a negative effect on the Company in terms of its future financial position, results of operations or cash flows: the general state of the U.S., China and world economies; the highly cyclical nature of the industries the Company serves; successful and timely completion of product design efforts; the ability of the Company to sell its new products into new market segments; trade restrictions by the United States against the Company's customers in China, as well as potential retaliatory trade actions taken by China; the loss of any of its larger customers; restrictions on the Company's ability to sell to foreign customers due to additional U.S. or new China trade laws, regulations and requirements; disruptions of the supply chain of components needed for its products; ability to obtain additional financing; inability to meet certain debt covenants; fundamental changes in the technology underlying the Company’s products; the hiring, training and retention of key employees; and new product design introductions by competitors. The inputs into the Company’s judgments and estimates consider the economic implications of the Covid-19 pandemic as the Company knows them, on its critical and significant accounting estimates. The extent to which the Covid-19 pandemic may impact its business will depend on future developments, which are highly uncertain, such as the duration of the outbreak, travel restrictions, governmental mandates issued to mitigate the spread of the disease, business closures, economic disruptions, and the effectiveness of actions taken to contain and treat the virus. Accordingly, future adverse developments with respect to the Covid-19 pandemic may have a negative impact on its sales, supply chain and results of operations. The inputs into the Company's judgments and estimates also consider the Department of Commerce Entities List restrictions on Huawei Technologies effective September 2020 for the Company and expected loss of business from Huawei Technologies. See also Note 7.
Concentration
In the three months ended March 31, 2021, four customers were each greater than 10% and the Company’s total revenue and the Company's top five customers represented approximately 80% of the Company’s total revenue. In the three months ended March 31, 2020, two customers were greater than 10% of the Company's total revenue. Huawei accounted for approximately 52% of the Company's total revenue, one other customer was greater than 10% and the Company’s top five customers represented approximately 85% of the Company’s total revenue.
As of March 31, 2021, four customers accounted for a total of 72% of the Company’s total accounts receivable. As of December 31, 2020, three customers accounted for a total of 65% of the Company’s total accounts receivable.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP 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 financial statements and the reported revenue and expenses during the reporting period. Significant estimates made by management include: the useful lives and recoverability of long-lived assets; valuation allowances for deferred tax assets; valuation of excess and obsolete inventories; warranty reserves; litigation accrual and recognition of stock-based compensation, among others. Actual results could differ from these estimates.
Long-lived Assets
The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss would be recognized when the sum of the future net cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. The estimated future cash flows are based upon, among other things, assumptions about expected future operating performance and may differ from actual cash flows.

Due to the additional restrictions imposed by the U.S. Bureau of Industry and Security ("BIS"), an agency of the U.S. Department of Commerce, which became effective in September 2020, and the expected loss of business from Huawei, the
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Company performed a recoverability test in the third and fourth quarters of 2020 and determined there was no impairment of long-lived assets.
Leases
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, other current liabilities and operating lease liabilities on the Company's condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, current portion of long-term debt and long-term debt, net of current portion on the condensed consolidated balance sheets.
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company's leases do not provide an implicit rate, the Company uses an estimate of its incremental borrowing rate based on observed market data and other information available at the lease commencement date. The operating lease ROU assets also include any lease payments made and exclude lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company does not record leases on the condensed consolidated balance sheet with a term of one year or less. The Company does not separate lease and non-lease components but rather account for each separate component as a single lease component for all underlying classes of assets. Variable lease payments are expensed as incurred and are not included within the operating lease ROU asset and lease liability calculation. Variable lease payments primarily include reimbursements of costs incurred by lessors for common area maintenance and utilities. Lease expense for minimum operating lease payments is recognized on a straight-line basis over the lease term.
Accounting Pronouncements Recently Adopted
In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance became effective for fiscal years beginning after December 15, 2020. The Company adopted this ASU in the first quarter of 2021 and the adoption of this standard did not have a material impact on the Company's consolidated financial statements.
Recent Accounting Pronouncements Not Yet Effective 
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 amends existing guidance on the impairment of financial assets and adds an impairment model that is based on expected losses rather than incurred losses and requires an entity to recognize as an allowance its estimate of expected credit losses for its financial assets. An entity will apply this guidance through a cumulative-effect adjustment to retained earnings upon adoption (a modified-retrospective approach) while a prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. In November 2019, the FASB issued ASU 2019-10, according to which, the new standard is effective for smaller reporting companies (“SRC”) as defined by the SEC, for fiscal years beginning after December 15, 2022 including interim periods within those fiscal years. The Company is in the process of evaluating the impact and timing of the adoption on its consolidated financial statements and related disclosures.
Note 2. Revenue
Product revenue
The Company develops, manufactures and sells lasers and other high-speed optoelectronic products that transmit, receive, modify and switch high speed digital optical signals for communications networks. Revenue is derived primarily from the sale of optoelectronic laser, component and module hardware products. The Company sells its products worldwide, primarily to leading network equipment manufacturers.
Revenue recognition
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company generally bears all costs, risk of loss or damage and retains title to the goods up to the point of transfer of control of promised products to customer. Revenue related to the sale of consignment inventories at customer vendor managed locations is not recognized until the products are pulled from consignment inventories by customers. In instances where acceptance of the product or solutions is specified by the customer, revenue is deferred until such required acceptance criteria have been met. Shipping and handling costs are included in the cost of goods sold. The Company presents revenue net of sales taxes and any similar assessments.
Nature of products
Revenue from the sale of hardware products is recognized upon transfer of control to the customer. The performance obligation for the sale of hardware products is satisfied at a point in time. The Company has aligned its products in two groups - High Speed Products and Network Products and Solutions. The following presents revenue by product group (in thousands):
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
 Three Months Ended
March 31,
 20212020
High Speed Products$57,273 $89,850 
Network Products and Solutions3,653 7,551 
Total revenue$60,926 $97,401 
The following table presents the Company's revenue information by geographical region. Revenue is classified based on the ship to location requested by the customer. Such classification recognizes that for many customers, including those in North America or in Europe, designated shipping points are often in China or elsewhere in Asia (in thousands):

 Three Months Ended
March 31,
 20212020
China$15,244 $58,909 
Americas5,191 18,340 
Rest of world40,491 20,152 
Total revenue$60,926 $97,401 
Deferred revenue
The Company records deferred revenue when cash payments are received or due in advance of the Company's performance. There were no deferred revenue balances as of March 31, 2021 and December 31, 2020.
Contract assets
Contract assets are rights to consideration in exchange for goods or services that the Company has transferred to a customer when such right is conditional on something other than the passage of time. Contract assets exclude any amounts presented as an accounts receivable. There were no contract assets balances as of March 31, 2021 and December 31, 2020.
Refund liabilities
The Company recognizes a refund liability if the Company receives consideration from a customer and expects to refund some or all of that consideration to the customer. The refund liabilities as of March 31, 2021 and December 31, 2020 were immaterial.
Note 3. Net income (loss) per share 
The following table sets forth the computation of the basic and diluted net income (loss) per share for the periods indicated (in thousands, except per share amounts): 

 Three Months Ended
March 31,
 20212020
Numerator:     
Net income (loss)$(10,692)$6,307 
Denominator:  
Weighted average shares used to compute per share amount:  
Basic50,717 48,615 
Diluted50,717 50,617 
Basic net income (loss) per share$(0.21)$0.13 
Diluted net income (loss) per share$(0.21)$0.12 
 
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
The Company has excluded the impact of the following outstanding employee stock options and restricted stock units as well as the shares expected to be issued under its employee stock purchase plan from the computation of diluted net income (loss) per share, as their effect would have been antidilutive (in thousands): 

 Three Months Ended
March 31,
20212020
Employee stock options1,897 975 
Restricted stock units3,365 42 
Market-based restricted stock units305 612 
Performance-based restricted stock units90  
Employee stock purchase plan344 344 
 6,001 1,973 

Note 4. Cash, cash equivalents, short-term investments and restricted cash 
The following table summarizes the Company’s cash, cash equivalents and restricted cash (in thousands): 
 March 31, 2021December 31, 2020
Cash and cash equivalents$83,068 $95,117 
Restricted cash488 489 
Total cash, cash equivalents and restricted cash shown in the statement of cash flows$83,556 $95,606 
The following table summarizes the Company’s unrealized gains and losses related to its short-term investments in marketable securities designated as available-for-sale (in thousands): 

 As of March 31, 2021As of December 31, 2020
 Amortized CostGross Unrealized GainsGross Unrealized LossFair ValueAmortized CostGross Unrealized GainsGross Unrealized LossFair Value
Marketable securities:        
Money market funds$27,671 $ $ $27,671 $27,669 $ $ $27,669 
Reported as:        
Short-term investments$27,671 $27,669 
 
As of March 31, 2021 and December 31, 2020, maturities of marketable securities were less than one year. There were no realized gains and losses on the sale of marketable securities during the three months ended March 31, 2021 and 2020. The Company did not recognize any impairment losses on its marketable securities during the three months ended March 31, 2021 or 2020. As of March 31, 2021, the Company did not have any investments in marketable securities that were in an unrealized loss position for a period in excess of 12 months.
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Note 5. Fair value disclosures
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents the Company's assets that are measured at fair value on a recurring basis (in thousands):  

 As of March 31, 2021As of December 31, 2020
 Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets        
Short-term investments:
Money market funds$27,671 $ $ $27,671 $27,669 $ $ $27,669 
Other long-term assets:
Mutual funds held in Rabbi Trust$826 $ $ $826 $810 $ $ $810 
 The Company offers a Non-Qualified Deferred Compensation Plan (“NQDC Plan”) to a select group of its highly compensated employees. The NQDC Plan provides participants the opportunity to defer payment of certain compensation as defined in the NQDC Plan. A Rabbi Trust has been established to fund the NQDC Plan obligation, which was fully funded at March 31, 2021. The assets held by the Rabbi Trust are substantially in the form of exchange traded mutual funds and are included in the Company’s other long-term assets on its condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020.
There were no liabilities that are measured at fair value on a recurring basis as of March 31, 2021.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
As of March 31, 2021 and December 31, 2020 the Company had no assets or liabilities required to be measured at fair value on a nonrecurring basis. 
Assets and Liabilities Not Measured at Fair Value 
The carrying values of accounts receivable, accounts payable and short-term borrowings approximate their fair values due to the short-term nature and liquidity of these financial instruments.  
Note 6. Balance sheet components 
Accounts receivable, net
Accounts receivable, net, consists of the following (in thousands):
 March 31, 2021December 31, 2020
Accounts receivable$40,020 $45,277 
Allowance for doubtful accounts(45)(45)
 $39,975 $45,232 

Inventories
Inventories consist of the following (in thousands): 
 March 31, 2021December 31, 2020
Raw materials$24,741 $25,620 
Work in process10,348 9,196 
Finished goods(1)
11,284 12,085 
 $46,373 $46,901 
________________________________________________________

(1)Finished goods inventory at customer vendor managed inventory locations was $1.4 million and $1.7 million as of March 31, 2021 and December 31, 2020, respectively.


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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Prepaid expenses and other current assets
Prepaid expenses and other current assets consist of the following (in thousands):

 March 31, 2021December 31, 2020
Transition services agreement receivable (refer to Note 11)$ $5,933 
Prepaid taxes and taxes receivable6,008 6,137 
Receivables due from suppliers6,056 4,891 
Deposits and other prepaid expenses2,983 2,417 
Other receivable378 795 
 $15,425 $20,173 
Purchased intangible assets, net 
Purchased intangible assets, net, consist of the following (in thousands):
 March 31, 2021December 31, 2020
 Gross
Assets
Accumulated
Amortization
Net
Assets
Gross
Assets
Accumulated
Amortization
Net
Assets
Technology and patents$37,593 $(37,154)$439 $37,637 $(37,021)$616 
Customer relationships15,399 (15,399) 15,487 (15,487) 
Leasehold interest1,299 (458)841 1,304 (452)852 
 $54,291 $(53,011)$1,280 $54,428 $(52,960)$1,468 

For the three months ended March 31, 2021 and 2020, amortization expense relating to technology and patents is included within cost of goods sold and totaled $0.2 million in each period.
The estimated future amortization expense of purchased intangible assets as of March 31, 2021, was as follows (in thousands): 
2021 (remaining nine months)$446 
202210 
202310 
202410 
202510 
Thereafter794 
 $1,280 

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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Accrued and other current liabilities
Accrued and other current liabilities consist of the following (in thousands): 

 March 31, 2021December 31, 2020
Employee-related$22,663 $19,656 
Transition services agreement payables (refer to Note 11)823 9,708 
Operating lease liabilities, current2,143 2,128 
Income and other taxes payable1,289 1,590 
Accrued warranty1,096 1,111 
Other accrued expenses4,658 7,860 
 $32,672 $42,053 
Warranty accrual
The table below summarizes the movement in the warranty accrual, which is included in accrued and other current liabilities (in thousands):

 Three Months Ended
March 31,
 20212020
Beginning balance$1,111 $712 
Warranty accruals61 225 
Settlements(76)(188)
Ending balance$1,096 $749 

 Other noncurrent liabilities 
Other noncurrent liabilities consist of the following (in thousands): 

 March 31, 2021December 31, 2020
Pension and other employee-related$3,671 $3,844 
Asset retirement obligations3,825 3,810 
Transition services agreement payables (See Note 11) 823 
Deferred income tax liabilities500 501 
Government grant584 606 
 $8,580 $9,584 

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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Note 7. Restructuring Charges
Restructuring charges
On August 17, 2020, BIS increased restrictions on Huawei and its affiliates on the Entity List related to items produced domestically and abroad that use U.S. technology or software and imposed additional requirements for items subject to its export control authority. The Company announced on October 5, 2020, that it will manage the business without relying on and will not plan on future revenue contributions from Huawei. As a result, the Company initiated certain restructuring actions to reduce operating expenses and manufacturing costs while maintaining the Company's focus on its core capabilities, including its lasers, coherent components and solutions for data center interconnect and high speed communications networks. Under the restructuring actions, the Company estimates it will incur severance and related charges of approximately $1.1 million and is expected to be completed by the third quarter of 2021.
A summary of the current period activity in accrued restructuring costs is as follows (in thousands):
Employee SeveranceOtherTotal
Restructuring obligations December 31, 2020
$97 $42 $139 
Charges   
Cash payments(64)(42)(106)
Restructuring obligations March 31, 2021
$33 $ $33 

Note 8. Debt 
The table below summarizes the carrying amounts and weighted average interest rates of the Company’s debt (in thousands, except percentages):  
 March 31, 2021December 31, 2020
 Carrying
Amount
Interest
Rate
Carrying
Amount
Interest
Rate
Long-term debt, current and noncurrent:    
Borrowing under Wells Fargo Credit Facility$21,136 1.96 %$21,030 2.01 %
Mitsubishi Bank loans6,655 
1.07% -1.47%
7,662 
1.05%-1.45%
Mitsubishi Bank and Yamanashi Chuo Bank loan4,388 1.08 %5,002 1.07 %
Total long-term debt32,179 33,694 
Finance lease liability165 189 
Unaccreted discount and issuance costs(271) (324) 
Total long-term debt, net of unaccreted discount and issuance costs$32,073  $33,559  
Reported as:    
Current portion of long-term debt$3,026  $3,232  
Long-term debt, net of current portion29,047  30,327  
Total long-term debt, net of unaccreted discount and issuance costs$32,073  $33,559  
Notes payable and short-term borrowing 
The Company regularly issues notes payable to its suppliers in China. These notes are supported by non-interest bearing bank acceptance drafts issued under the Company’s existing line of credit facilities and are due three to six months after issuance. As a condition of the notes payable arrangements, the Company is required to keep a compensating balance at the issuing banks that is a percentage of the total notes payable balance until the amounts are settled. As of March 31, 2021, the Company’s subsidiary in China had two line of credit facilities with the following banking institutions:
Under the first line of credit facility with Shanghai Pudong Development Bank, the Company can borrow up to RMB 120.0 million ($18.3 million) for short-term loans at varying interest rates, or up to approximately RMB 240.0 million ($36.6 million) for bank acceptance drafts (with up to 50% compensating balance requirement). This line of credit facility expires in November 2021.
Under the second line of credit facility with Shanghai Pudong Development Bank, which expires in November 2021, the Company can borrow up to RMB 30.0 million ($4.6 million) for short-term loans at varying interest rates,
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
or up to approximately RMB 60.0 million ($9.2 million) for bank acceptance drafts (with up to 50% compensating balance requirement).
Under these line of credit facilities, the non-interest bearing bank acceptance drafts issued in connection with the Company’s notes payable to its suppliers in China, had no outstanding balance at March 31, 2021 and December 31, 2020.
As of March 31, 2021 and December 31, 2020, there were no non-interest bearing bank acceptance drafts issued in connection with our notes payable to our suppliers in China under these line of credit facilities. There were no compensating balances relating to these credit facilities as of March 31, 2021 and December 31, 2020, respectively. Compensating balances are classified as restricted cash on the Company’s condensed consolidated balance sheets.
Credit facilities
In September 2017, the Company entered into a revolving line of credit agreement with Wells Fargo Bank, National Association ("Wells Fargo") as the administrative agent for a lender group (the "Wells Fargo Credit Facility" or "Credit Facility").
The Wells Fargo Credit Facility provides for borrowings equal to the lower of (a) a maximum revolver amount of $50.0 million, or (b) an amount equal to 80% - 85% of eligible accounts receivable plus 100% of qualified cash balances up to $15.0 million, less certain discretionary adjustments ("Borrowing Base"). The maximum revolver amount may be increased by up to $25.0 million, subject to certain conditions.
The Credit Facility matures on June 30, 2022 and borrowings bear interest at an interest rate option of either (a) the LIBOR rate, plus an applicable margin ranging from 1.50% to 1.75% per annum, or (b) the prime lending rate, plus an applicable margin ranging from 0.50% to 0.75% per annum. The Company is also required to pay a commitment fee equal to 0.25% of the unused portion of the Credit Facility.
The Credit Facility agreement ("Agreement") requires prepayment of the borrowings to the extent the outstanding balance is greater than the lesser of (a) the most recently calculated Borrowing Base, or (b) the maximum revolver amount. The Company is required to maintain a combination of certain defined cash balances and unused borrowing capacity under the Credit Facility of at least $20.0 million, of which at least $5.0 million shall include unused borrowing capacity. The Agreement also restricts the Company's ability to dispose of assets, to permit change in control, merge or consolidate, make acquisitions, incur indebtedness, grant liens, make investments and make certain restricted payments. Borrowings under the Credit Facility are collateralized by substantially all of the Company's assets.
On June 14, 2019, the Company entered into a First Amendment to the Credit Facility (the "Amended Credit Facility"). The Amendment removes Huawei from the list of “Eligible Accounts” as a basis for the Company’s borrowing while Huawei is on the "Entity List" published by BIS. During the period of time while Huawei remains on the Entity List, the concentration limits of certain other customers are increased to partially offset the removal of Huawei. Additionally, until Huawei is no longer on the Entity List, the Company is required to maintain a temporary combination of certain defined unrestricted cash and unused borrowing capacity under the Credit Facility of at least $30.0 million in the U.S. and $40.0 million world-wide, of which at least $5.0 million shall include unused borrowing capacity. In May 2020, Fiberhome Technologies Group and certain affiliates ("Fiberhome") was added to the BIS Entity List and i