VEECO INSTRUMENTS INC, 10-K/A filed on 5/1/2019
Amended Annual Report
v3.19.1
Document and Entity Information - USD ($)
12 Months Ended
Jan. 01, 2018
Dec. 31, 2018
Feb. 15, 2019
Jun. 29, 2018
Document and Entity Information        
Entity Registrant Name   VEECO INSTRUMENTS INC    
Entity Central Index Key   0000103145    
Document Type   10-K/A    
Document Period End Date   Dec. 31, 2018    
Amendment Flag   true    
Amendment Description This Amendment No. 1 to Form 10-K (this “Amendment”) amends the Annual Report on Form 10-K for the fiscal year ended December 31, 2018, originally filed on February 25, 2019 (the “Original 10-K”), of Veeco Instruments Inc., a Delaware corporation (the “Company” or “we”). We are filing this Amendment solely to correct an inadvertent clerical error on the cover page of the Original 10-K in which the box identifying the Company as an accelerated filer was incorrectly checked. The clerical error has been corrected in this Amendment by checking the “Large accelerated filer” box on the cover page. This Amendment does not reflect events occurring after February 25, 2019 or otherwise modify or update the disclosures set forth in the Original 10-K, including the financial statements and notes thereto included in the Original 10-K.      
Current Fiscal Year End Date   --12-31    
Entity Well-known Seasoned Issuer   Yes    
Entity Voluntary Filers   No    
Entity Current Reporting Status   Yes    
Entity Filer Category   Large Accelerated Filer    
Entity Public Float       $ 682,511,019
Entity Common Stock, Shares Outstanding     48,038,565  
Entity Small Business   false    
Entity Emerging Growth Company   false    
Entity Shell Company   false    
Document Fiscal Year Focus   2018    
Document Fiscal Period Focus   FY    
v3.19.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Current assets:    
Cash and cash equivalents $ 212,273 $ 279,736
Restricted cash 809 847
Short-term investments 48,189 47,780
Accounts receivable, net 66,808 98,866
Contract assets 10,397 160
Inventories 156,311 120,266
Deferred cost of sales 3,072 15,994
Prepaid expenses and other current assets 22,221 33,437
Total current assets 520,080 597,086
Property, plant, and equipment, net 80,284 85,058
Intangible assets, net 85,149 369,843
Goodwill 184,302 307,131
Deferred income taxes 1,869 3,047
Other assets 29,132 25,310
Total assets 900,816 1,387,475
Current liabilities:    
Accounts payable 39,611 50,318
Accrued expenses and other current liabilities 46,450 58,068
Customer deposits and deferred revenue 72,736 112,032
Income taxes payable 1,256 3,846
Total current liabilities 160,053 224,264
Deferred income taxes 5,690 36,845
Long-term debt 287,392 275,630
Other liabilities 9,906 10,643
Total liabilities 463,041 547,382
Stockholders' equity:    
Preferred stock, $0.01 par value; 500,000 shares authorized; no shares issued and outstanding.
Common stock, $0.01 par value; 120,000,000 shares authorized; 48,547,417 and 48,229,251 shares issued at December 31, 2018 and December 31, 2017, respectively; 48,024,685 and 48,144,416 shares outstanding at December 31, 2018 and December 31, 2017, respectively. 485 482
Additional paid-in capital 1,061,325 1,051,953
Accumulated deficit (619,983) (212,870)
Accumulated other comprehensive income 1,820 1,812
Treasury stock, at cost, 522,732 and 84,835 shares at December 31, 2018 and December 31, 2017, respectively. (5,872) (1,284)
Total stockholders' equity 437,775 840,093
Total liabilities and stockholders' equity $ 900,816 $ 1,387,475
v3.19.1
Consolidated Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2018
Dec. 31, 2017
Consolidated Balance Sheets    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized 500,000 500,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, authorized shares 120,000,000 120,000,000
Common stock, shares issued 48,547,417 48,229,251
Common stock, shares outstanding 48,024,685 48,144,416
Treasury stock, shares 522,732 84,835
v3.19.1
Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Consolidated Statements of Operations      
Net sales $ 542,082 $ 475,686 $ 331,702
Cost of sales 348,363 299,458 198,604
Gross profit 193,719 176,228 133,098
Operating expenses, net:      
Research and development 97,755 81,987 81,016
Selling, general, and administrative 92,060 100,250 77,642
Amortization of intangible assets 32,351 35,475 19,219
Restructuring 8,556 11,851 5,640
Acquisition costs 2,959 17,786  
Asset impairment 375,172 1,139 69,520
Other, net 368 (392) 223
Total operating expenses, net 609,221 248,096 253,260
Operating income (loss) (415,502) (71,868) (120,162)
Interest income 3,186 2,335 1,180
Interest expense (21,518) (19,457) (222)
Income (loss) before income taxes (433,834) (88,990) (119,204)
Income tax expense (benefit) (26,746) (37,594) 2,823
Net income (loss) $ (407,088) $ (51,396) $ (122,027)
Income (loss) per common share:      
Basic (in dollars per share) $ (8.63) $ (1.16) $ (3.10)
Diluted (in dollars per share) $ (8.63) $ (1.16) $ (3.10)
Weighted average number of shares:      
Basic (in shares) 47,151 44,174 39,340
Diluted (in shares) 47,151 44,174 39,340
v3.19.1
Consolidated Statements of Comprehensive Income (Loss) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Consolidated Statements of Comprehensive Income (Loss)      
Net income (loss) $ (407,088) $ (51,396) $ (122,027)
Available-for-sale securities:      
Change in net unrealized gains or losses 11 (7) (6)
Reclassification adjustments for net (gains) losses included in net income     18
Unrealized gain (loss) on available-for-sale securities 11 (7) 12
Minimum pension liability:      
Reclassification adjustments for net (gains) losses included in net income     866
Net changes related to minimum pension liability     866
Currency translation adjustments:      
Change in currency translation adjustments 5 42 (19)
Reclassification adjustments for net (gains) losses included in net income (8)   (430)
Net changes related to currency translation adjustments (3) 42 (449)
Total other comprehensive income (loss), net of tax 8 35 429
Total comprehensive income (loss) $ (407,080) $ (51,361) $ (121,598)
v3.19.1
Consolidated Statements of Stockholders' Equity - USD ($)
shares in Thousands, $ in Thousands
Common Stock
Treasury Stock
Additional Paid-in Capital
Accumulated Deficit
Accumulated Other Comprehensive Income
Total
Balance at the beginning of the period at Dec. 31, 2015 $ 410 $ (9,222) $ 767,137 $ (45,058) $ 1,348 $ 714,615
Balance (in shares) at Dec. 31, 2015 40,996 469        
Increase (Decrease) in Stockholders' Equity            
Net loss       (122,027)   (122,027)
Other comprehensive income (loss), net of tax         429 429
Share-based compensation expense     15,741     15,741
Net issuance under employee stock plans $ (3) $ 19,948 (20,890)     (945)
Net issuance under employee stock plans (in shares) (281) (1,072)        
Purchases of common stock   $ (13,035)       (13,035)
Purchase of common stock (in shares)   730        
Balance at the end of the period at Dec. 31, 2016 $ 407 $ (2,309) 763,303 (161,474) 1,777 601,704
Balance (in shares) at Dec. 31, 2016 40,715 127        
Increase (Decrease) in Stockholders' Equity            
Cumulative effect of change in accounting principle | ASU 2016-09     1,315 (1,315)    
Cumulative effect of change in accounting principle | ASU 2014-09, Revenue from Contracts with Customers       6,926   6,926
Net loss       (51,396)   (51,396)
Other comprehensive income (loss), net of tax         35 35
Share-based compensation expense     24,396     24,396
Net issuance under employee stock plans $ 3 $ 4,043 (9,795)     (5,749)
Net issuance under employee stock plans (in shares) 313 (245)        
Stock issuance for business acquisition $ 72   228,800     228,872
Stock issuance for business acquisition (in shares) 7,201          
Convertible Senior Notes, equity component     45,249     45,249
Purchases of common stock   $ (3,018)       (3,018)
Purchase of common stock (in shares)   203        
Balance at the end of the period at Dec. 31, 2017 $ 482 $ (1,284) 1,051,953 (212,870) 1,812 840,093
Balance (in shares) at Dec. 31, 2017 48,229 85        
Increase (Decrease) in Stockholders' Equity            
Net loss       (407,088)   (407,088)
Other comprehensive income (loss), net of tax         8 8
Share-based compensation expense     16,074     16,074
Net issuance under employee stock plans $ 3 $ 6,721 (6,702) (25)   (3)
Net issuance under employee stock plans (in shares) 318 (512)        
Purchases of common stock   $ (11,309)       (11,309)
Purchase of common stock (in shares)   950        
Balance at the end of the period at Dec. 31, 2018 $ 485 $ (5,872) $ 1,061,325 $ (619,983) $ 1,820 $ 437,775
Balance (in shares) at Dec. 31, 2018 48,547 523        
v3.19.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Cash Flows from Operating Activities      
Net income (loss) $ (407,088) $ (51,396) $ (122,027)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:      
Depreciation and amortization 49,998 50,095 32,650
Non-cash interest expense 11,762 10,446  
Deferred income taxes (27,620) (35,363) 997
Share-based compensation expense 16,074 24,396 15,741
Asset impairment 375,172 1,139 69,520
Provision for bad debts   99 171
Gain on cumulative translation adjustment     (430)
Changes in operating assets and liabilities:      
Accounts receivable and contract assets 21,821 10,240 (8,880)
Inventories and deferred cost of sales (24,678) 6,244 (6,106)
Prepaid expenses and other current assets 11,216 (10,204) 6,726
Accounts payable and accrued expenses (19,672) 11,308 (24,474)
Customer deposits and deferred revenue (39,296) 22,446 9,770
Income taxes receivable and payable, net (4,800) 775 547
Long-term income tax liability   (4,877)  
Other, net (627) (355) 1,951
Net cash provided by (used in) operating activities (37,738) 34,993 (23,844)
Cash Flows from Investing Activities      
Acquisitions of businesses, net of cash acquired (2,662) (401,828)  
Capital expenditures (12,654) (24,272) (11,479)
Proceeds from the sale of investments 90,065 348,927 152,301
Payments for purchases of investments (93,046) (282,947) (103,394)
Proceeds from held for sale assets   2,284 9,512
Other     (230)
Net cash provided by (used in) investing activities (18,297) (357,836) 46,710
Cash Flows from Financing Activities      
Proceeds (net of tax withholdings) from option exercises and employee stock purchase plan 3,064 2,992 1,656
Restricted stock tax withholdings (3,069) (8,741) (2,601)
Purchases of common stock (11,457) (2,869) (13,349)
Proceeds from long-term debt borrowings   335,752  
Principal payments on long-term debt   (1,194) (340)
Net cash provided by (used in) financing activities (11,462) 325,940 (14,634)
Effect of exchange rate changes on cash and cash equivalents (4) 42 (20)
Net increase (decrease) in cash, cash equivalents, and restricted cash (67,501) 3,139 8,212
Cash, cash equivalents, and restricted cash - beginning of period 280,583 277,444 269,232
Cash, cash equivalents, and restricted cash - end of period 213,082 280,583 277,444
Supplemental Disclosure of Cash Flow Information      
Interest paid 9,708 4,675 225
Income taxes paid 4,799 1,939 1,669
Non-cash operating and financing activities      
Net transfer of inventory to property, plant and equipment $ 1,479 $ (97) $ 1,827
v3.19.1
Significant Accounting Policies
12 Months Ended
Dec. 31, 2018
Significant Accounting Policies  
Significant Accounting Policies

Note 1 — Significant Accounting Policies

 

(a) Description of Business

 

Veeco Instruments Inc. (together with its consolidated subsidiaries, “Veeco,” or the “Company”) operates in a single segment: the development, manufacture, sales, and support of semiconductor and thin film process equipment primarily sold to make electronic devices.

 

(b) Basis of Presentation

 

The accompanying audited Consolidated Financial Statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). The Company reports interim quarters on a 13-week basis ending on the last Sunday of each period, which is determined at the start of each year. The Company’s fourth quarter always ends on the last day of the calendar year, December 31. During 2018 the interim quarters ended on April 1, July 1, and September 30, and during 2017 the interim quarters ended on April 2, July 2, and October 1. The Company reports these interim quarters as March 31, June 30, and September 30 in its interim consolidated financial statements.

 

(c) Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, these estimates may ultimately differ from actual results. Significant items subject to such estimates and assumptions include: (i) stand-alone selling prices for the Company’s products and services; (ii) allowances for doubtful accounts; (iii) inventory obsolescence; (iv) the useful lives and expected future cash flows of property, plant, and equipment and identifiable intangible assets; (v) the fair value of the Company’s reporting unit and related goodwill; (vi) investment valuations and the valuation of derivatives, deferred tax assets, and assets acquired in business combinations; (vii) the recoverability of long-lived assets; (viii) liabilities for product warranty and legal contingencies; (ix) share-based compensation; and (x) income tax uncertainties. Actual results could differ from those estimates.

 

(d) Principles of Consolidation

 

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. Companies acquired during each reporting period are reflected in the results of the Company effective from their respective dates of acquisition through the end of the reporting period.

 

(e) Foreign Currencies

 

Assets and liabilities of the Company’s foreign subsidiaries that operate using functional currencies other than the U.S. dollar are translated using the exchange rates in effect at the balance sheet date. Results of operations are translated using monthly average exchange rates. Adjustments arising from the translation of the foreign currency financial statements of the Company’s subsidiaries into U.S. dollars, including intercompany transactions of a long-term nature, are reported as currency translation adjustments in “Accumulated other comprehensive income” in the Consolidated Balance Sheets. Foreign currency transaction gains or losses are included in “Other, net” in the Consolidated Statements of Operations.

 

(f) Revenue Recognition

 

Revenue is recognized upon the transfer of control of the promised product or service to the customer in an amount that reflects the consideration the Company expects to receive in exchange for such product or service. The Company’s contracts with customers generally do not contain variable consideration. In the rare instances where variable consideration is included, the Company estimates the amount of variable consideration and determines what portion of that, if any, has a high probability of significant subsequent revenue reversal, and if so, that amount is excluded from the transaction price. The Company’s contracts with customers frequently contain multiple deliverables, such as systems, upgrades, components, spare parts, installation, maintenance, and service plans. Judgment is required to properly identify the performance obligations within a contract and to determine how the revenue should be allocated among the performance obligations. The Company also evaluates whether multiple transactions with the same customer or related parties should be considered part of a single contract based on an assessment of whether the contracts or agreements are negotiated or executed within a short time frame of each other or if there are indicators that the contracts are negotiated in contemplation of one another.

   

When there are separate units of accounting, the Company allocates revenue to each performance obligation on a relative stand-alone selling price basis. The stand-alone selling prices are determined based on the prices at which the Company separately sells the systems, upgrades, components, spare parts, installation, maintenance, and service plans. For items that are not sold separately, the Company estimates stand-alone selling prices generally using an expected cost plus margin approach.

   

Most of the Company’s revenue is recognized at a point in time when the performance obligation is satisfied. The Company considers many facts when evaluating each of its sales arrangements to determine the timing of revenue recognition, including its contractual obligations and the nature of the customer’s post-delivery acceptance provisions. The Company’s system sales arrangements, including certain upgrades, generally include field acceptance provisions that may include functional or mechanical test procedures. For many of these arrangements, a customer source inspection of the system is performed in the Company’s facility, test data is sent to the customer documenting that the system is functioning to the agreed upon specifications prior to delivery, or other quality assurance testing is performed internally to ensure system functionality prior to shipment. Historically, such source inspection or test data replicates the field acceptance provisions that are performed at the customer’s site prior to final acceptance of the system. When the Company objectively demonstrates that the criteria specified in the contractual acceptance provisions are achieved prior to delivery either through customer testing or the Company’s historical experience of its tools meeting specifications, transfer of control of the product to the customer is considered to have occurred and revenue is recognized upon system delivery since there is no substantive contingency remaining related to the acceptance provisions at that date. For new products, new applications of existing products, or for products with substantive customer acceptance provisions where the Company cannot objectively demonstrate that the criteria specified in the contractual acceptance provisions have been achieved prior to delivery, revenue and the associated costs are deferred. The Company recognizes such revenue and costs upon obtaining objective evidence that the acceptance provisions can be achieved, assuming all other revenue recognition criteria have been met.

   

In certain cases the Company’s contracts with customers contain a billing retention, typically 10% of the sales price, which is billed by the Company and payable by the customer when field acceptance provisions are completed. Revenue recognized in advance of the amount that has been billed is recorded as a contract asset on the Consolidated Balance Sheets.

   

The Company recognizes revenue related to maintenance and service contracts over time based upon the respective contract term. Installation revenue is recognized over time as the installation services are performed. The Company recognizes revenue from the sales of components, spare parts, and specified service engagements at a point in time, which is typically consistent with the time of delivery in accordance with the terms of the applicable sales arrangement.

   

The Company may receive customer deposits on system transactions. The timing of the transfer of goods or services related to the deposits is either at the discretion of the customer or expected to be within one year from the deposit receipt. As such, the Company does not adjust transaction prices for the time value of money. Incremental direct costs incurred related to the acquisition of a customer contract, such as sales commissions, are expensed as incurred since the expected amortization period is one year or less.

   

The Company has elected to treat shipping and handling costs as a fulfillment activity, and the Company includes such costs in cost of services when the Company recognizes revenue for the related goods. Taxes assessed by governmental authorities that are collected by the Company from a customer are excluded from revenue.

 

(g) Warranty Costs

 

The Company typically provides standard warranty coverage on its systems for one year from the date of final acceptance by providing labor and parts necessary to repair the systems during the warranty period. The Company accounts for the estimated warranty cost when revenue is recognized on the related system. Warranty cost is included in “Cost of sales” in the Consolidated Statements of Operations. The estimated warranty cost is based on the Company’s historical experience with its systems and regional labor costs. The Company calculates the average service hours by region and parts expense per system utilizing actual service records to determine the estimated warranty charge. The Company updates its warranty estimates on a quarterly basis when the actual product performance or field expense differs from original estimates.

 

(h) Shipping and Handling Costs

 

Shipping and handling costs are expenses incurred to move, package, and prepare the Company’s products for shipment and to move the products to a customer’s designated location. These costs are generally comprised of payments to third-party shippers. Shipping and handling costs are included in “Cost of sales” in the Consolidated Statements of Operations.

 

(i) Research and Development Costs

 

Research and development costs are expensed as incurred and include charges for the development of new technology and the transition of existing technology into new products or services.

 

(j) Advertising Expense

 

The cost of advertising is expensed as incurred and totaled $0.9 million, $0.9 million, and $0.8 million for the years ended December 31, 2018, 2017, and 2016, respectively.

 

(k) Accounting for Share-Based Compensation

 

Share-based awards exchanged for employee services are accounted for under the fair value method. Accordingly, share-based compensation cost is measured at the grant date based on the fair value of the award. The expense for awards is recognized over the employee’s requisite service period (generally the vesting period of the award). The Company has elected to treat awards with only service conditions and with graded vesting as one award. Consequently, the total compensation expense is recognized straight-line over the entire vesting period, so long as the compensation cost recognized at any date at least equals the portion of the grant date fair value of the award that is vested at that date.

 

In addition to stock options, restricted share awards (“RSAs”) and restricted stock units (“RSUs”) with time-based vesting, the Company grants performance share units and awards (“PSUs” and “PSAs”) that have either performance or market conditions. Compensation cost for PSUs and PSAs with performance conditions is recognized over the requisite service period based on the timing and expected level of achievement of the performance targets. A change in the assessment of performance attainment prior to the conclusion of the performance period is recognized in the period of the change in estimate. Compensation cost for PSUs and PSAs with market conditions is recognized over the requisite service period regardless of the expected level of achievement. For all PSUs and PSAs, the number of shares issued to the employee at the conclusion of the service period may vary from the original target based upon the level of attainment of the performance or market conditions.

 

The Company uses the Black-Scholes option-pricing model to compute the estimated fair value of option awards and purchase rights under the Employee Stock Purchase Plan. The Company uses a Monte Carlo simulation to compute the estimated fair value of awards with market conditions. The Black-Scholes model and Monte Carlo simulation include assumptions regarding dividend yields, expected volatility, expected option term, and risk-free interest rates. See Note 15, “Stock Plans,” for additional information.

 

See Note 1(t), “Recently Adopted Accounting Standards,” for additional information concerning the Company’s adoption of Accounting Standards Update (“ASU”) 2016-09: Stock Compensation: Improvements to Employee Share-Based Payment Accounting.

 

(l) Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rate is recognized in income in the period that includes the enactment date.

 

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “2017 Tax Act”), which made broad and complex changes to the U.S. tax code. In response to the 2017 Tax Act, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) which provided guidance on accounting for the tax effects of 2017 Tax Act, including addressing any uncertainty or diversity of view in applying ASC 740, Income Taxes (“ASC 740”), in the reporting period in which the 2017 Tax Act was enacted. In addition, SAB 118 provided a measurement period that should not extend beyond one year from the 2017 Tax Act enactment date for companies to complete the accounting under ASC 740. During the year ended December 31, 2018, the Company finalized the accounting for the tax effects of 2017 Tax Act.

 

In January 2018, the FASB released guidance on the accounting for taxes under the global intangible low-taxed income (“GILTI”) provisions of the 2017 Tax Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign operations. The Company has made a policy election to account for income taxes incurred under GILTI as a period cost.

 

(m) Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, investments, derivative financial instruments used in hedging activities, and accounts receivable. The Company invests in a variety of financial instruments and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. The Company has not experienced any material credit losses on its investments.

 

The Company maintains an allowance reserve for potentially uncollectible accounts for estimated losses resulting from the inability of its customers to make required payments. The Company evaluates its allowance for doubtful accounts based on a combination of factors. In circumstances where specific invoices are deemed to be uncollectible, the Company provides a specific allowance for bad debt against the amount due to reduce the net recognized receivable to the amount reasonably expected to be collected. The Company also provides allowances based on its write-off history. The allowance for doubtful accounts totaled $0.3 million at December 31, 2018 and 2017.

 

To further mitigate the Company’s exposure to uncollectable accounts, the Company may request certain customers provide a negotiable irrevocable letter of credit drawn on a reputable financial institution. These irrevocable letters of credit are typically issued to mature between zero and 90 days from the date the documentation requirements are met, typically when a system ships or upon receipt of final acceptance from the customer. The Company, at its discretion, may monetize these letters of credit on a non-recourse basis after they become negotiable but before maturity. The fees associated with the monetization are included in “Selling, general, and administrative” in the Consolidated Statements of Operations and were immaterial for the years ended December 31, 2018, 2017, and 2016.

 

(n) Fair Value of Financial Instruments

 

The carrying amounts of financial instruments, including cash equivalents, accounts receivable, accounts payable, and accrued expenses reflected in the consolidated financial statements approximate fair value due to their short-term maturities. The fair value of debt for footnote disclosure purposes, including current maturities, if any, is estimated using recently quoted market prices of the instrument, or if not available, a discounted cash flow analysis based on the estimated current incremental borrowing rates for similar types of instruments.

 

(o) Cash, Cash Equivalents, and Short-Term Investments

 

All financial instruments purchased with an original maturity of three months or less at the time of purchase are considered cash equivalents. Such items may include liquid money market funds, certificate of deposit and time deposit accounts, U.S. treasuries, government agency securities, and corporate debt. Investments that are classified as cash equivalents are carried at cost, which approximates fair value. The Company’s cash and cash equivalents includes $69.6 million and $76.7 million of cash equivalents at December 31, 2018 and 2017, respectively.

 

A portion of the Company’s cash and cash equivalents is held by its subsidiaries throughout the world, frequently in each subsidiary’s respective functional currency, which is typically the U.S. dollar. Approximately 32% and 77% of cash and cash equivalents were maintained outside the United States at December 31, 2018 and 2017, respectively.

 

Marketable debt securities are generally classified as available-for-sale for use in current operations, if required, and are reported at fair value, with unrealized gains and losses, net of tax, presented as a separate component of stockholders’ equity under the caption “Accumulated other comprehensive income.” These securities can include U.S. treasuries, government agency securities, corporate debt, and commercial paper, all with maturities of greater than three months when purchased. All realized gains and losses and unrealized losses resulting from declines in fair value that are other than temporary are included in “Other, net” in the Consolidated Statements of Operations. The specific identification method is used to determine the realized gains and losses on investments.

 

Non-marketable equity securities are equity securities without readily observable market prices and are included in “Other assets” in the Consolidated Balance Sheets. Non-marketable securities are measured at cost, adjusted for changes in observable prices minus impairment. Changes in fair value are included in “Other, net” in the Consolidated Statements of Operations.

 

(p) Inventories

 

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Each quarter the Company assesses the valuation of all inventories: materials (raw materials, spare parts, and service inventory); work-in-process; and finished goods. Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its estimated net realizable value if less than cost. Estimates of net realizable value include, but are not limited to, management’s forecasts related to the Company’s future manufacturing schedules, customer demand, technological and/or market obsolescence, general market conditions, possible alternative uses, and the ultimate realization of excess inventory. If future customer demand or market conditions are less favorable than the Company’s projections, additional inventory write-downs may be required and would be reflected in cost of sales in the period the revision is made. Inventory acquired as part of a business combination is recorded at fair value on the date of acquisition. See Note 5, “Business Combinations,” for additional information.

 

(q) Business Combinations

 

The Company allocates the fair value of the purchase consideration of the Company’s acquisitions to the tangible assets, intangible assets, including in-process research and development (“IPR&D”), if any, and liabilities assumed, based on estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred. See Note 5, “Business Combinations,” for additional information.

 

(r) Goodwill and Indefinite-Lived Intangible Assets

 

Goodwill is an asset representing the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is measured as the excess of the consideration transferred over the net fair value of identifiable assets acquired and liabilities assumed. Intangible assets with indefinite useful lives are measured at their respective fair values on the acquisition date. Intangible assets related to IPR&D projects are considered to be indefinite-lived until the completion or abandonment of the associated R&D efforts. If and when development is complete, the associated assets would be deemed long-lived and would then be amortized based on their respective estimated useful lives at that point in time. Goodwill and indefinite-lived intangibles are not amortized into results of operations but instead are evaluated for impairment. The Company performs the evaluation in the beginning of the fourth quarter of each year or more frequently if impairment indicators arise.

 

In testing goodwill for impairment, the Company may first perform a qualitative assessment of whether it is more likely than not that the reporting unit’s fair value is less than its carrying amount, and, if so, the Company then quantitatively compares the fair value of the reporting unit to its carrying amount. If the fair value exceeds the carrying amount, goodwill is not impaired. If the carrying amount exceeds fair value, the Company then records an impairment loss equal to the difference, up to the carrying value of goodwill.

 

The Company determines the fair value of its reporting unit based on a reconciliation of the fair value of the reporting unit to the Company’s adjusted market capitalization. The adjusted market capitalization is calculated by multiplying the average share price of the Company’s common stock for the last ten trading days prior to the measurement date by the number of outstanding common shares and adding a control premium. The control premium is estimated using historical transactions in similar industries.

 

In testing indefinite-lived intangible assets for impairment, the Company may first perform a qualitative assessment of whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, and, if so, the Company then quantitatively compares the fair value of the indefinite-lived intangible asset to its carrying amount. The Company determines the fair value of its indefinite-lived intangible assets using a discounted cash flow method.

 

(s) Long-Lived Assets

 

Long-lived intangible assets consist of purchased technology, customer relationships, patents, trademarks and tradenames, and backlog and are initially recorded at fair value. Long-lived intangible assets are amortized over their estimated useful lives in a method reflecting the pattern in which the economic benefits are consumed or straight-lined if such pattern cannot be reliably determined.

 

Property, plant, and equipment are recorded at cost. Depreciation expense is calculated based on the estimated useful lives of the assets by using the straight-line method. Amortization of leasehold improvements is recognized using the straight-line method over the shorter of the remaining lease term or the estimated useful lives of the improvements.

 

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, a recoverability test is performed utilizing undiscounted cash flows expected to be generated by that asset or asset group compared to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models or, when available, quoted market values and third-party appraisals.

 

(t) Recently Adopted Accounting Standards

 

The Company adopted ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), as of January 1, 2018, using the full retrospective method. All amounts and disclosures set forth in this Form 10-K reflect these changes. The most significant financial statement impacts of adopting ASC 606 are the elimination of the constraint on revenue associated with the billing retention related to the receipt of customer final acceptance and the identification of installation services as a performance obligation. The elimination of the constraint on revenue related to customer final acceptance, which is usually about 10 percent of a system sale, is now generally recognized at the time the Company transfers control of the system to the customer, which is earlier than under the Company’s previous revenue recognition model for certain contracts that were subject to the billing constraint. The performance obligation related to installation services is now recognized as the installation services are performed, which is later than the Company’s previous revenue recognition model.

 

The Company applied ASC 606 retrospectively and elected to use the disclosure exemption in the transition guidance under which the Company does not disclose prior period information regarding the amount of the transaction price allocated to remaining performance obligations. The cumulative effect of the adoption was recognized as a decrease to Accumulated deficit of $6.9 million on January 1, 2016. The following tables summarize the impact of adoption on the Company’s previously reported financial position and results of operations:

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

As reported

    

Adjustments

    

As adjusted

 

 

 (in thousands)

Balance Sheet

 

 

 

 

 

 

 

Contract assets

 

$

$

160

$

160

Deferred cost of sales

 

 

16,060

 

(66)

 

15,994

Deferred income taxes

 

 

2,953

 

94

 

3,047

Accrued expenses and other current liabilities

 

 

60,339

 

(2,271)

 

58,068

Customer deposits and deferred revenue

 

 

108,953

 

3,079

 

112,032

Additional paid-in capital

 

 

1,053,079

 

(1,126)

 

1,051,953

Accumulated deficit

 

 

(213,376)

 

506

 

(212,870)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

2017

 

2016

 

    

As reported

    

Adjustments

    

As adjusted

    

As reported

    

Adjustments

    

As adjusted

 

(in thousands, except per share amounts)

Statement of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

484,756

 

$

(9,070)

 

$

475,686

 

$

332,451

 

$

(749)

 

$

331,702

Cost of sales

 

 

300,438

 

 

(980)

 

 

299,458

 

 

199,593

 

 

(989)

 

 

198,604

Income tax expense (benefit)

 

 

(36,107)

 

 

(1,487)

 

 

(37,594)

 

 

2,766

 

 

57

 

 

2,823

Net income (loss)

 

 

(44,793)

 

 

(6,603)

 

 

(51,396)

 

 

(122,210)

 

 

183

 

 

(122,027)

Diluted earnings (loss) per share

 

 

(1.01)

 

 

(0.15)

 

 

(1.16)

 

 

(3.11)

 

 

0.01

 

 

(3.10)

 

The Company’s adoption of the standard had no impact to cash provided by or used in operating, investing, or financing activities on the Consolidated Statements of Cash Flows.

 

The Company adopted ASU 2016-01, Financial Instruments – Overall, as of January 1, 2018. This ASU requires certain equity investments to be measured at fair value, with changes in fair value recognized in net income. The Company measures equity investments without readily observable market prices at cost, adjusted for changes in observable prices minus impairment. Changes in measurement are included in “Other, net” in the Consolidated Statements of Operations. This ASU has not had a material impact on the consolidated financial statements upon adoption, and the Company will monitor its equity investments each reporting period for changes in observable market prices, if any, which may be material in future periods.

 

The Company adopted ASU 2016-09: Stock Compensation: Improvements to Employee Share-Based Payment Accounting, as of January 1, 2016. This ASU simplifies several aspects of the accounting for share-based payments. Beginning in 2016, excess tax benefits and deficiencies are recognized as income tax expense or benefit in the income statement in the reporting period incurred. The Company also made an accounting policy election to account for forfeitures when they occur. The ASU transition guidance requires that this election be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period in which the ASU is adopted. Accordingly, the Company recorded a $1.3 million charge to the opening accumulated deficit balance as of January 1, 2016, with a corresponding adjustment to additional paid-in capital, resulting in no impact to the opening balance of total stockholders’ equity. In addition, the Company recorded additional deferred tax assets with an equally offsetting valuation allowance of $2.4 million.

 

(u) Recent Accounting Pronouncements Not Yet Adopted

 

In February 2016, the FASB issued ASU 2016-02: Leases, which, along with subsequent ASUs related to this topic, has been codified as Accounting Standards Codification 842 (“ASC 842”). ASC 842 generally requires operating lessee rights and obligations to be recognized as assets and liabilities on the balance sheet. The new standard, which is effective for the Company on January 1, 2019, offers a transition option whereby companies can recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. The Company plans to adopt using this transition method. In addition, ASC 842 provides for a number of optional exemptions in transition. The Company expects to elect certain exemptions whereby prior conclusions regarding lease identification, lease classification, and initial direct costs are not required to be reassessed under the new standard. The Company also plans to elect allowable policies whereby the Company will not separate lease and non-lease components, and the Company will not recognize an asset or liability for leases with original terms or renewals of one year or less. Upon adoption, the Company expects to recognize an operating lease liability ranging from $12 million to $16 million based on the present value of remaining minimum rental payments on existing leases, with corresponding assets of approximately the same amount.

 

The Company is also evaluating other pronouncements recently issued but not yet adopted. The adoption of these pronouncements is not expected to have a material impact on our consolidated financial statements.

 

v3.19.1
Income (Loss) Per Share
12 Months Ended
Dec. 31, 2018
Income (Loss) Per Share  
Income (Loss) Per Share

Note 2 — Income (Loss) Per Share

 

The Company considers unvested share-based awards that have non-forfeitable rights to dividends prior to vesting to be participating shares, which are treated as a separate class of security from the Company’s common shares for calculating per share data. Therefore, the Company applies the two-class method when calculating income (loss) per share. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. However, since the holders of the participating shares are not obligated to fund losses, participating shares are excluded from the calculation of loss per share.

 

Basic income (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares outstanding during the period under the two-class method. Diluted income per share is calculated by dividing net income by the weighted average number of shares used to calculate basic income per share plus the weighted average number of common share equivalents outstanding during the period. The dilutive effect of outstanding options to purchase common stock and non-participating share-based awards is considered in diluted income per share by application of the treasury stock method. The dilutive effect of performance share units is included in diluted income per common share in the periods the performance targets have been achieved. The computations of basic and diluted income (loss) per share for the years ended December 31, 2018, 2017, and 2016 are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands, except per share amounts)

Net income (loss)

 

$

(407,088)

 

$

(51,396)

 

$

(122,027)

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

(8.63)

 

$

(1.16)

 

$

(3.10)

Diluted

 

$

(8.63)

 

$

(1.16)

 

$

(3.10)

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

47,151

 

 

44,174

 

 

39,340

Effect of potentially dilutive share-based awards

 

 

 —

 

 

 —

 

 

 —

Diluted weighted average shares outstanding

 

 

47,151

 

 

44,174

 

 

39,340

 

 

 

 

 

 

 

 

 

 

Unvested participating shares excluded from basic weighted average shares outstanding since the securityholders are not obligated to fund losses

 

 

20

 

 

72

 

 

312

Common share equivalents excluded from the diluted weighted average shares outstanding since Veeco incurred a net loss and their effect would be antidilutive

 

 

28

 

 

239

 

 

107

Potentially dilutive non-participating shares excluded from the diluted calculation as their effect would be antidilutive

 

 

2,474

 

 

1,744

 

 

1,896

Maximum potential shares to be issued for settlement of the Convertible Senior Notes excluded from the diluted calculation as their effect would be antidilutive

 

 

8,618

 

 

8,618

 

 

 —

 

v3.19.1
Fair Value Measurements
12 Months Ended
Dec. 31, 2018
Fair Value Measurements  
Fair Value Measurements

Note 3 — Fair Value Measurements

 

Fair value is the price that would be received for an asset or the amount paid to transfer a liability in an orderly transaction between market participants. The Company is required to classify certain assets and liabilities based on the following fair value hierarchy:

 

·

Level 1: Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

 

·

Level 2: Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and

 

·

Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

 

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company has evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions or estimation methodologies could have a significant effect on the estimated fair value amounts.

 

The following table presents the Company’s assets that were measured at fair value on a recurring basis at December 31, 2018 and 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Level 1

    

Level 2

    

Level 3

    

Total

 

 

(in thousands)

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

Certificate of deposits and time deposits

 

$

65,571

 

$

 —

 

$

 —

 

$

65,571

U.S. treasuries

 

 

3,990

 

 

 —

 

 

 —

 

 

3,990

Total

 

$

69,561

 

$

 —

 

$

 —

 

$

69,561

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

37,184

 

$

 —

 

$

 —

 

$

37,184

Corporate debt

 

 

 —

 

 

8,516

 

 

 —

 

 

8,516

Commercial paper

 

 

 —

 

 

2,489

 

 

 —

 

 

2,489

Total

 

$

37,184

 

$

11,005

 

$

 —

 

$

48,189

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

Certificate of deposits and time deposits

 

$

64,249

 

$

 —

 

$

 —

 

$

64,249

U.S. treasuries

 

 

12,490

 

 

 —

 

 

 —

 

 

12,490

Total

 

$

76,739

 

$

 —

 

$

 —

 

$

76,739

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

33,895

 

$

 —

 

$

 —

 

$

33,895

Corporate debt

 

 

 —

 

 

10,886

 

 

 —

 

 

10,886

Commercial paper

 

 

 —

 

 

2,999

 

 

 —

 

 

2,999

Total

 

$

33,895

 

$

13,885

 

$

 —

 

$

47,780

 

The Company’s investments classified as Level 1 are based on quoted prices that are available in active markets. The Company’s investments classified as Level 2 are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes, or alternative pricing sources with reasonable levels of price transparency.

v3.19.1
Investments
12 Months Ended
Dec. 31, 2018
Investments  
Investments

Note 4 — Investments

 

At December 31, 2018 and 2017 the amortized cost and fair value of marketable securities were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Gross

    

Gross

    

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Estimated

 

 

Cost

 

Gains

 

Losses

 

Fair Value

 

 

(in thousands)

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

37,191

 

$

 —

 

$

(7)

 

$

37,184

Corporate debt

 

 

8,525

 

 

 —

 

 

(9)

 

 

8,516

Commercial paper

 

 

2,489

 

 

 —

 

 

 —

 

 

2,489

Total

 

$

48,205

 

$

 —

 

$

(16)

 

$

48,189

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

33,914

 

$

 —

 

$

(19)

 

$

33,895

Corporate debt

 

 

10,894

 

 

 —

 

 

(8)

 

 

10,886

Commercial paper

 

 

2,999

 

 

 —

 

 

 —

 

 

2,999

Total

 

$

47,807

 

$

 —

 

$

(27)

 

$

47,780

 

Available-for-sale securities in a loss position at December 31, 2018 and 2017 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

December 31, 2017

 

    

 

 

    

Gross

    

 

    

Gross

 

 

Estimated

 

Unrealized

 

Estimated

 

Unrealized

 

 

Fair Value

 

Losses

 

Fair Value

 

Losses

 

 

(in thousands)

U.S. treasuries

 

$

37,184

 

$

(7)

 

$

33,895

 

$

(19)

Corporate debt

 

 

8,516

 

 

(9)

 

 

10,886

 

 

(8)

Total

 

$

45,700

 

$

(16)

 

$

44,781

 

$

(27)

 

At December 31, 2018 and 2017, there were no short-term investments that had been in a continuous loss position for more than 12 months.

 

The maturities of securities classified as available-for-sale at December 31, 2018 were all due in one year or less. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The realized gains or losses for the years ended December 31, 2018, 2017, and 2016 were immaterial.

 

Other Investments

 

Veeco has an ownership interest of less than 20% in a non-marketable investment, Kateeva, Inc. (“Kateeva”), over which Veeco does not exert significant influence. The carrying value of the investment was $21.0 million at December 31, 2018 and 2017. Additionally, during the year ended December 31, 2018, the Company made a separate non-marketable investment of $3.5 million in another entity. The Company does not exert significant influence over this investment and its ownership interest is less than 20%. Neither equity investment has a readily observable market price, and therefore the Company has elected to measure these investments at cost, adjusted for changes in observable market prices minus impairment. The investments are included in “Other assets” on the Consolidated Balance Sheets. There were no changes in observable market prices for either investment for the year ended December 31, 2018. These investments are subject to periodic impairment reviews; as there are no open-market valuations, the impairment analyses require judgment. The analyses include assessments of the companies’ financial condition, the business outlooks for their products and technologies, their projected results and cash flow, business valuation indications from recent rounds of financing, the likelihood of obtaining subsequent rounds of financing, and the impact of equity preferences held by Veeco relative to other investors. There were no impairment charges recorded for either investment for the years ended December 31, 2018, 2017, or 2016.

v3.19.1
Business Combinations
12 Months Ended
Dec. 31, 2018
Business Combinations  
Business Combinations

Note 5 — Business Combinations

 

Ultratech

 

On May 26, 2017, the Company completed its acquisition of Ultratech, Inc. (“Ultratech”). Ultratech develops, manufactures, sells, and supports lithography, laser annealing, and inspection equipment for manufacturers of semiconductor devices, including front-end semiconductor manufacturing and advanced packaging. Ultratech also develops, manufactures, sells, and supports ALD equipment for scientific and industrial applications. Ultratech’s customers are primarily located throughout the United States, Europe, China, Japan, Taiwan, Singapore, and Korea. The results of Ultratech’s operations have been included in the consolidated financial statements since the date of acquisition.

 

Ultratech shareholders received (i) $21.75 per share in cash and (ii) 0.2675 of a share of Veeco common stock for each Ultratech common share outstanding on the acquisition date. The acquisition date fair value of the consideration totaled $633.4 million, net of cash acquired, which consisted of the following:

 

 

 

 

 

 

    

Acquisition Date

 

 

(May 26, 2017)

 

 

(in thousands)

Cash consideration, net of cash acquired of $229.4 million

 

$

404,490

Equity consideration (7.2 million shares issued)

 

 

228,643

Replacement equity awards attributable to pre-acquisition service

 

 

228

Acquisition date fair value

 

$

633,361

 

Approximately $2.7 million of the cash merger consideration is included in “Accrued expenses and other current liabilities” on the Consolidated Balance Sheets as of December 31, 2017 related to shareholder appraisal proceedings that were subsequently settled and paid during 2018.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:

 

 

 

 

 

 

    

Acquisition Date

 

 

(May 26, 2017)

 

 

(in thousands)

Short-term investments

 

$

47,161

Accounts receivable

 

 

45,465

Inventories

 

 

59,100

Deferred cost of sales

 

 

242

Prepaid expense and other current assets

 

 

7,217

Property, plant, and equipment

 

 

18,152

Intangible assets

 

 

346,940

Other assets

 

 

6,442

Total identifiable assets acquired

 

 

530,719

 

 

 

 

Accounts payable

 

 

24,291

Accrued expenses and other current liabilities

 

 

16,356

Customer deposits and deferred revenue

 

 

4,834

Deferred income taxes

 

 

32,478

Other liabilities

 

 

11,622

Total liabilities assumed

 

 

89,581

 

 

 

 

Net identifiable assets acquired

 

 

441,138

Goodwill

 

 

192,223

Net assets acquired

 

$

633,361

 

The gross contractual value of the acquired accounts receivable was approximately $46.0 million. The fair value of the accounts receivables is the amount expected to be collected by the Company. Goodwill generated from the acquisition is primarily attributable to expected synergies from future growth and strategic advantages provided through the expansion of product offerings as well as assembled workforce and is not expected to be deductible for income tax purposes.

 

The classes of intangible assets acquired and the estimated useful life of each class is presented in the table below:

 

 

 

 

 

 

 

 

 

 

Acquisition Date

 

 

(May 26, 2017)

 

    

Amount

    

Useful life

 

 

(in thousands)

 

 

 

Technology

 

$

158,390

 

 9

years

Customer relationships

 

 

116,710

 

12

years

Backlog

 

 

3,080

 

 6

months

In-process research and development

 

 

43,340

 

*

 

Trademark and tradenames

 

 

25,420

 

 7

years

Intangible assets acquired

 

$

346,940

 

 

 


*In-process research and development will be amortized (or impaired) upon completion (or abandonment) of the development project.

 

The Company determined the estimated fair value of the identifiable intangible assets based on various factors including: cost, discounted cash flow, income method, loss-of-revenue/income method, and relief-from-royalty method in determining the purchase price allocation.

 

In-process research and development (“IPR&D”) represents the estimated fair values of incomplete Ultratech research and development projects that had not reached the commercialization stage and met the criteria for recognition as IPR&D as of the date of the acquisition. The fair value of IPR&D was determined using an income approach and costs to complete the project and expected commercialization timelines are considered key assumptions. This valuation approach reflected the present value of the projected cash flows that were expected to be generated by the IPR&D less charges representing the contribution of other assets to those cash flows. The value of the IPR&D was determined to be $43.3 million, approximately half of which was related to Ultratech’s lithography technologies and one-third of which was related to Ultratech’s laser annealing technologies.

 

During the second quarter of 2018, the Company lowered its projected results for the Ultratech asset group and determined that the revised projections were significantly lower than projected results at the time of the acquisition and that these revised projections required the Company to assess the Ultratech asset group for impairment. See Note 6, “Goodwill and Intangible Assets,” for additional information.

 

 

For the year ended December 31, 2018 and 2017, acquisition related costs were approximately $3.0 million and $17.8 million, respectively, including non-cash charges of $4.2 million related to accelerated share-based compensation for employee terminations for the year ended December 31, 2017.

 

The amounts of net sales and income (loss) from operations before income taxes of Ultratech included in the Company’s Consolidated Statement of Operations for the year ended December 31, 2017 are as follows:

 

 

 

 

 

 

    

Year ended

 

 

December 31, 2017

 

 

(in thousands)

Net sales

 

$

65,280

Loss before income taxes

 

$

(62,284)

 

Loss before income taxes of Ultratech for the year ended December 31, 2017 of $62.3 million includes acquisition costs of $17.8 million, release of inventory fair value step-up related to purchase accounting of $9.6 million, amortization expense on intangible assets of $23.9 million, and restructuring charges of $3.3 million.

 

The following table presents unaudited pro forma financial information as if the acquisition of Ultratech had occurred on January 1, 2016:

 

 

 

 

 

 

 

 

 

 

For the year ended December 31,

 

    

2017

    

2016

 

(in thousands, except per share amounts)

Net sales

 

$

546,428

 

$

525,752

Loss before income taxes

 

 

(90,000)

 

 

(217,783)

Diluted earnings per share

 

$

(1.38)

 

$

(4.67)

 

The pro-forma results were calculated by combining the audited results of the Company with the stand-alone unaudited results of Ultratech for the pre-acquisition period, and adjusting for the following:

 

(i)

Additional amortization expense related to identified intangible assets valued as part of the purchase price allocation that would have been incurred starting on January 1, 2016.

 

(ii)

Additional depreciation expense for the property, plant, and equipment fair value adjustments that would have been incurred starting on January 1, 2016.

 

(iii)

All acquisition related costs incurred by the Company as well as by Ultratech pre-acquisition have been removed from the year ended December 31, 2017 and included in the year ended December 31, 2016, as such expenses would have been incurred in the first quarter following the acquisition.

 

(iv)

All amortization of inventory step-up has been removed from the year ended December 31, 2017 and recorded in the year ended December 31, 2016, as such costs would have been incurred as the corresponding inventory was sold.

 

(v)

Additional interest expense related to the Convertible Senior Notes (see Note 12, “Debt”) as if they had been issued on January 1, 2016.

 

(vi)

Income tax expense (benefit) was adjusted for the impact of the above adjustments for each period.

 

(vii)

All shares issued in connection with the acquisition were considered outstanding as of January 1, 2016 for purposes of calculating diluted earnings per share.

v3.19.1
Goodwill and Intangible Assets
12 Months Ended
Dec. 31, 2018
Goodwill and Intangible Assets  
Goodwill and Intangible Assets

Note 6 — Goodwill and Intangible Assets

 

Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. The following table presents the changes in goodwill balances during the years indicated:

 

 

 

 

 

 

 

 

 

 

 

 

    

Gross carrying

    

Accumulated

    

 

 

 

amount

 

impairment

 

Net amount

 

    

(in thousands)

Balance at December 31, 2016

 

$

238,108

 

$

123,200

 

$

114,908

Acquisition

 

 

192,223

 

 

 —

 

 

192,223

Balance at December 31, 2017

 

 

430,331

 

 

123,200

 

 

307,131

Impairment

 

 

 —

 

 

122,829

 

 

(122,829)

Balance at December 31, 2018

 

$

430,331

 

$

246,029

 

$

184,302

 

The Company performs its annual goodwill impairment test at the beginning of the fourth quarter each year. As the Company maintains a single goodwill reporting unit, it determines the fair value of its reporting unit based upon the Company’s adjusted market capitalization. The adjusted market capitalization is calculated by multiplying the average share price of the Company’s common stock for the last ten trading days prior to the measurement date by the number of outstanding common shares and adding a control premium. The control premium is estimated using historical transactions in similar industries. The annual test performed at the beginning of the fourth quarter of fiscal 2017 and 2018 did not result in any potential impairment as the fair value of the reporting unit was determined to exceed the carrying amount of the reporting unit.

 

As a result of a significant decline in the Company’s stock price during the fourth quarter, the Company concluded it was appropriate to perform an interim goodwill impairment test as of the end of the fourth quarter. The fair value of its reporting unit, as calculated using the adjusted market capitalization approach noted above, was determined to be below the carrying value of the reporting unit, and the Company recorded an impairment charge equal to the excess of carrying value over fair value, or $122.8 million, for the year ended December 31, 2018. The impairment charge is included in “Asset impairment” in the Consolidated Statements of Operations. The valuation of goodwill will continue to be subject to changes in the Company’s market capitalization and observable market control premiums. This analysis is sensitive to changes in the Company’s stock price and absent other qualitative factors, the Company may be required to record additional goodwill impairment charges in future periods if the stock price declines and remains depressed for an extended period of time. 

 

The components of purchased intangible assets were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

December 31, 2017

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Accumulated

 

 

 

 

    

Remaining

    

Gross

    

Amortization

    

 

    

Gross

    

Amortization

    

 

 

 

Amortization

 

Carrying

 

and

 

Net

 

Carrying

 

and

 

Net

 

 

Period

 

Amount

 

Impairment

 

Amount

 

Amount

 

Impairment

 

Amount

 

 

(in years)

 

(in thousands)

Technology

 

6.4

 

$

337,218

 

$

290,808

 

$

46,410

 

$

307,588

 

$

133,121

 

$

174,467

Customer relationships

 

10.2

 

 

164,595

 

 

136,126

 

 

28,469

 

 

164,595

 

 

39,336

 

 

125,259

In-process R&D

 

 —

 

 

13,710

 

 

10,530

 

 

3,180

 

 

43,340

 

 

 —

 

 

43,340

Trademarks and tradenames

 

5.4

 

 

30,910

 

 

23,899

 

 

7,011

 

 

30,910

 

 

4,321

 

 

26,589

Other

 

1.3

 

 

3,686

 

 

3,607

 

 

79

 

 

3,686

 

 

3,498

 

 

188

Total

 

7.3

 

$

550,119

 

$

464,970

 

$

85,149

 

$

550,119

 

$

180,276

 

$

369,843

 

Other intangible assets primarily consist of patents, licenses, and backlog.

 

During the second quarter of 2018, the Company lowered its projected results for the Ultratech asset group, which were significantly below the projected results at the time of the acquisition. The reduced projections were based on lower than expected unit volume of certain smartphones, which incorporate advanced packaging methods such as fan-out wafer level packaging (“FOWLP”), and a delay in the adoption of FOWLP advanced packaging by other electronics manufacturers, both of which slowed orders and reduced revenue projections for the Company’s advanced packaging lithography systems. In addition, there has been a delay in the build out of 28nm facilities by companies in China who were expected to purchase the Company’s Laser Spike Anneal systems. Taken together, the reduced projections identified during the second quarter of 2018 required the Company to assess the Ultratech asset group for impairment. As a result of the analysis, which included projected cash flows that required the use of unobservable inputs, the Company recorded non-cash impairment charges of $216.4 million and $35.9 million related to definite-lived intangible assets and in-process research and development assets, respectively, during the second quarter of 2018. The impairment charge is included in “Asset impairment” in the Consolidated Statement of Operations. Subsequently, certain in-process research and development projects were completed and moved to the “Technology” line in the above table.

 

During 2016, the Company decided to reduce future investments in certain technologies and, as a result, recorded a non-cash impairment charge of $54.3 million for the related intangible purchased technology. The impairment charge was based on projected cash flows that required the use of unobservable inputs and was recorded in “Asset impairment” in the Consolidated Statements of Operations.

 

Based on the intangible assets recorded at December 31, 2018, and assuming no subsequent additions to or impairment of the underlying assets, the remaining estimated annual amortization expense, excluding in-process R&D, is expected to be as follows:

 

 

 

 

 

 

 

Amortization

 

    

(in thousands)

2019

 

$

16,820

2020

 

 

15,894

2021

 

 

12,772

2022

 

 

10,438

2023

 

 

8,675

Thereafter

 

 

17,370

Total

 

$

81,969

 

v3.19.1
Inventories
12 Months Ended
Dec. 31, 2018
Inventories  
Inventories

Note 7 — Inventories

 

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Inventories consist of the following:

 

 

 

 

 

 

 

 

 

 

December 31,

 

    

2018

    

2017

 

 

(in thousands)

Materials

 

$

90,816

 

$

59,919

Work-in-process

 

 

42,354

 

 

37,222

Finished goods

 

 

23,141

 

 

23,125

Total

 

$

156,311

 

$

120,266

 

v3.19.1
Property, Plant, and Equipment and Assets Held for Sale
12 Months Ended
Dec. 31, 2018
Property, Plant, and Equipment and Assets Held for Sale  
Property, Plant, and Equipment and Assets Held for Sale

Note 8 — Property, Plant, and Equipment and Assets Held for Sale

 

Property and equipment, net, consist of the following:

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

    

2018

    

2017

    

Average Useful Life

 

 

(in thousands)

 

 

Land

 

$

5,669

 

$

5,669

 

N/A

Building and improvements

 

 

61,124

 

 

54,449

 

10 – 40 years

Machinery and equipment (1)

 

 

128,385

 

 

126,829

 

3 – 10 years

Leasehold improvements

 

 

9,033

 

 

10,073

 

3 – 7 years

Gross property, plant, and equipment

 

 

204,211

 

 

197,020

 

 

Less: accumulated depreciation and amortization

 

 

123,927

 

 

111,962

 

 

Net property, plant, and equipment

 

$

80,284

 

$

85,058

 

 


(1)

Machinery and equipment also includes software, furniture, and fixtures

 

Depreciation expense was $17.6 million, $14.6 million, and $13.4 million for the years ended December 31, 2018, 2017, and 2016, respectively. During 2016, the Company decided to reduce future investments in certain technologies and, as a result, recorded an impairment charge of $3.3 million of property, plant, and equipment.

 

As part of the Company’s efforts to reduce costs, enhance efficiency, and streamline operations, the Company removed certain lab equipment that is no longer required and recorded a non-cash impairment charge of $6.2 million for the year ended December 31, 2016. Additionally, as part of that initiative, the Company listed its two facilities in South Korea for sale. When each facility was reclassified as held for sale, the Company determined that the carrying values of the buildings exceeded their fair market values, less cost to sell, and recorded net impairment charges of $4.5 million for the year ended December 31, 2016. Both facilities were sold before the end of 2016 at prices that approximated the revised carrying values.

 

Finally, during the year ended December 31, 2016, the Company recorded an impairment charge of approximately $1.2 million related to an owned property in St. Paul, Minnesota. The property was sold during 2017, resulting in an additional impairment charge of $0.7 million for the year ended December 31, 2017. There were no assets held for sale as of December 31, 2018 and 2017. All impairment charges were recorded in “Asset impairment” in the Consolidated Statements of Operations.

v3.19.1
Accrued Expenses and Other Liabilities
12 Months Ended
Dec. 31, 2018
Accrued Expenses and Other Liabilities  
Accrued Expenses and Other Liabilities

Note 9 — Accrued Expenses and Other Liabilities

 

The components of accrued expenses and other current liabilities were as follows:

 

 

 

 

 

 

 

 

 

 

December 31,

 

    

2018

    

2017

 

 

(in thousands)

Payroll and related benefits

 

$

20,486

 

$

32,996

Warranty

 

 

7,852

 

 

6,532

Interest

 

 

4,321

 

 

4,430

Professional fees

 

 

2,897

 

 

3,942

Merger consideration payable

 

 

 —

 

 

2,662

Sales, use, and other taxes

 

 

2,670

 

 

2,144

Restructuring liability

 

 

2,213

 

 

1,520

Other

 

 

6,011

 

 

3,842

Total

 

$

46,450

 

$

58,068

 

Customer deposits and deferred revenue

 

Customer deposits totaled $28.3 million and $41.5 million at December 31, 2018 and 2017, respectively, which are included in “Customer deposits and deferred revenue” in the Consolidated Balance Sheets. Deferred revenue represents amounts billed, other than deposits, in excess of the revenue that can be recognized on a particular contract at the balance sheet date. Changes in deferred revenue were as follows:

 

 

 

 

 

 

 

(in thousands)

Balance - December 31, 2017

 

$

70,536

Deferral of revenue

 

 

10,251

Recognition of previously deferred revenue

 

 

(36,372)

Balance - December 31, 2018

 

$

44,415

 

As of December 31, 2018, the Company has approximately $74.0 million of remaining performance obligations on contracts with an original estimated duration of one year or more, of which approximately 67% is expected to be recognized within one year, with the remaining amounts expected to be recognized between one to three years. The Company has elected to exclude disclosures regarding remaining performance obligations that have an original expected duration of one year or less.

 

Other liabilities

 

As part of the acquisition of Ultratech, the Company assumed an executive non-qualified deferred compensation plan that allowed qualifying executives to defer cash compensation. The plan was frozen at the time of acquisition and no further contributions have been made. At December 31, 2018 and 2017, plan assets approximated $3.2 million and $3.4 million, respectively, representing the cash surrender value of life insurance policies and is included within “Other assets” in the Consolidated Balance Sheets, while plan liabilities approximated $3.5 million and $4.7 million, respectively and is included within “Other liabilities” in the Consolidated Balance Sheets. Other liabilities also included asset retirement obligations of $3.2 million and $3.3 million at December 31, 2018 and 2017, respectively, medical and dental benefits for former executives of $2.2 million at both December 31, 2018 and 2017, and income tax payables of $1.0 million at December 31, 2018.

v3.19.1
Restructuring Charges
12 Months Ended
Dec. 31, 2018
Restructuring Charges  
Restructuring Charges

Note 10 — Restructuring Charges

 

During 2017, the Company initiated certain restructuring activities related to the Company’s efforts to streamline operations, enhance efficiencies, and reduce costs, as well as reduce the Company’s investments in certain technology development. In addition, during 2017, the Company began the Ultratech acquisition integration process to enhance efficiencies, resulting in reductions in headcount and other facility costs. During the year ended December 31, 2018, additional accruals were recognized and payments were made related to these restructuring initiatives.

 

During the second quarter of 2018, the Company initiated plans to further reduce excess capacity associated with the manufacture and support of the Company’s advanced packaging lithography and 3D wafer inspection systems by consolidating these operations into its San Jose, California facility. As a result of this and other cost saving initiatives, the Company announced headcount reductions of approximately 40 employees and recorded restructuring charges related to these actions of $2.8 million for the year ended December 31, 2018, consisting principally of personnel severance and related costs. The Company expects the consolidation to be completed in the first quarter of 2019, and expects to incur immaterial additional restructuring costs as this initiative is completed.

 

During the third quarter of 2018, the Company initiated additional restructuring activities to further reduce costs, including headcount reductions impacting approximately 35 employees and recorded restructuring charges related to these actions of $1.2 million, consisting principally of personnel severance and related costs. This initiative was completed by the end of 2018. Restructuring expense for the year ended December 31, 2018 included non-cash charges of $1.2 million related to accelerated share-based compensation for employee terminations, compared to $1.9 million for the comparable prior year period.

 

The following table shows the amounts incurred and paid for restructuring activities during the years ended December 31, 2018, 2017, and 2016 and the remaining accrued balance of restructuring costs at December 31, 2018, which is included in “Accrued expenses and other current liabilities” in the Consolidated Balance Sheets:

 

 

 

 

 

 

 

 

 

 

 

 

    

Personnel

    

Facility

    

 

 

 

 

Severance and

 

Related Costs

 

 

 

 

 

Related Costs

 

and Other

 

Total

 

 

(in thousands)

Balance - December 31, 2015

 

$

824

 

$

 —

 

$

824

Provision

 

 

4,544

 

 

1,098

 

 

5,642

Changes in estimate

 

 

(2)

 

 

 —

 

 

(2)

Payments

 

 

(3,570)

 

 

(1,098)

 

 

(4,668)

Balance - December 31, 2016

 

 

1,796

 

 

 —

 

 

1,796

Provision

 

 

4,714

 

 

5,257

 

 

9,971

Payments

 

 

(4,990)

 

 

(5,257)

 

 

(10,247)

Balance - December 31, 2017

 

 

1,520

 

 

 —

 

 

1,520

Provision

 

 

4,681

 

 

2,714

 

 

7,395

Payments

 

 

(4,058)

 

 

(2,644)

 

 

(6,702)

Balance - December 31, 2018

 

$

2,143

 

$

70

 

$

2,213

 

v3.19.1
Commitments and Contingencies
12 Months Ended
Dec. 31, 2018
Commitments and Contingencies  
Commitments and Contingencies

Note 11 — Commitments and Contingencies

 

Warranty

 

The Company typically provides standard warranty coverage on its systems for one year from the date of final acceptance by providing labor and parts necessary to repair the systems during the warranty period. The Company accounts for the estimated warranty cost when revenue is recognized on the related system. Warranty cost is included in “Cost of sales” in the Consolidated Statements of Operations. The estimated warranty cost is based on the Company’s historical experience with its systems and regional labor costs. The Company calculates the average service hours by region and parts expense per system utilizing actual service records to determine the estimated warranty charge. The Company updates its warranty estimates on a quarterly basis when the actual product performance or field expense differs from original estimates.

 

Changes in the Company’s product warranty reserves were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

2018

 

2017

    

2016

 

 

 

(in thousands)

Balance, beginning of the year

 

$

6,532

 

$

4,217

 

$

8,159

Warranties issued

 

 

6,737

 

 

5,817

 

 

3,916

Addition from Ultratech acquisition

 

 

 —

 

 

1,889

 

 

 —

Consumption of reserves

 

 

(6,573)

 

 

(6,330)

 

 

(6,433)

Changes in estimate

 

 

1,156

 

 

939

 

 

(1,425)

Balance, end of the year

 

$

7,852

 

$

6,532

 

$

4,217

 

Minimum Lease Commitments

 

Minimum lease commitments at December 31, 2018 for property and equipment under operating lease agreements (exclusive of renewal options) are payable as follows:

 

 

 

 

 

 

 

Operating

 

    

Leases

 

 

(in thousands)

Payments due by period:

 

 

2019

 

$

5,143

2020

 

 

5,056

2021

 

 

2,432

2022

 

 

1,812

2023

 

 

1,066

Thereafter

 

 

548

Total

 

$

16,057

 

Lease expense was $6.3 million, $5.3 million, and $2.5 million for the years ended December 31, 2018, 2017, and 2016, respectively. In addition, the Company is obligated under such leases for certain other expenses, including real estate taxes and insurance.

 

Legal Proceedings

 

On June 8, 2018, an Ultratech shareholder who received Veeco stock as part of the consideration for the Ultratech acquisition filed a purported class action complaint in the Superior Court of the State of California, County of Santa Clara, captioned Wolther v. Maheshwari et al., Case No. 18CV329690, on behalf of himself and others who purchased or acquired shares of Veeco pursuant to the registration statement and prospectus which Veeco filed with the SEC in connection with the Ultratech acquisition (the “Wolther Action”). On August 2 and August 8, 2018, two purported class action complaints substantially similar to the Wolther Action were filed on behalf of different plaintiffs in the same court as the Wolther Action. These cases have been consolidated with the Wolther Action, and a consolidated complaint was filed on December 11, 2018. The consolidated complaint seeks to recover damages and fees under Sections 11, 12, and 15 of the Securities Act of 1933 for, among other things, alleged false/misleading statements in the registration statement and prospectus relating to the Ultratech acquisition, relating primarily to the alleged failure to disclose delays in the advanced packaging business, increased MOCVD competition in China, and an intellectual property dispute. The defendants filed a demurrer on January 10, 2019, asking the court to dismiss the consolidated complaint for failure to state a claim. The demurrer is scheduled to be heard by the court on March 15, 2019. Veeco believes this lawsuit is without merit and intends to vigorously contest this matter.

 

On December 21, 2018, a purported Veeco stockholder filed a derivative action in the Superior Court of the State of California, County of Santa Clara, captioned Vladimir Gusinsky Revocable Trust v. Peeler, et al., Case No. 18CV339925, on behalf of nominal defendant Veeco. The complaint seeks to assert claims for breach of fiduciary duty, waste of corporate assets, and unjust enrichment against current and former Veeco directors premised on purported misstatements and omissions in the registration statement relating to the Ultratech acquisition. On January 2, 2019, the court ordered this action stayed until the case management conference, which is scheduled for March 15, 2019. Veeco believes this lawsuit is without merit and intends to vigorously contest this matter.

 

The Company is involved in various other legal proceedings arising in the normal course of business. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

 

Concentrations of Credit Risk

 

The Company depends on purchases from its ten largest customers, which accounted for 61% and 67% of net accounts receivable at December 31, 2018 and 2017, respectively.

 

Customers who accounted for more than 10% of net accounts receivable or net sales are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts Receivable

 

Net Sales 

 

 

 

December 31,

 

For the Year Ended December 31,

 

Customer

    

2018

    

2017

    

2018

    

2017

    

2016

 

Customer A

 

*

 

24

%  

*

 

21

%  

14

%

Customer B

 

22

%  

*

 

*

 

*

 

*

 

Customer C

 

*

 

*

 

12

%  

*

 

*

 


*Less than 10% of aggregate accounts receivable or net sales

 

The Company manufactures and sells its products to companies in different geographic locations. Refer to Note 18, “Segment Reporting and Geographic Information,” for additional information. In certain instances, the Company requires deposits from its customers for a portion of the sales price in advance of shipment and performs periodic credit evaluations on its customers. Where appropriate, the Company requires letters of credit on certain non-U.S. sales arrangements. Receivables generally are due within 30 to 90 days from the date of invoice.

 

Receivable Purchase Agreement

 

In December 2017, the Company entered into a Receivable Purchase Agreement with a financial institution to sell certain of its trade receivables from customers without recourse, up to $23.0 million at any point in time for a term of one year. Pursuant to this agreement, the Company sold $15.0 million of Receivables during the year ended December 31, 2017 and maintained $8.0 million available under the agreement for additional sales of Receivables as of December 31, 2017. No sales were made under this agreement in 2018, and the agreement was terminated in 2018. The net sale of accounts receivable, under the agreement is reflected as a reduction of accounts receivable in the Company’s Consolidated Balance Sheet at the time of sale and any fees for the sale of trade receivables were not material for the periods presented.

 

Suppliers

 

The Company outsources certain functions to third parties, including the manufacture of several of its systems. While the Company relies on its outsourcing partners to perform their contracted functions, the Company maintains some level of internal manufacturing capability for these systems. In addition, certain of the components and sub-assemblies included in the Company’s products are obtained from a single source or a limited group of suppliers. The failure of the Company’s present outsourcing partners and suppliers to meet their contractual obligations and the Company’s inability to make alternative arrangements or resume the manufacture of these systems could have a material adverse effect on the Company’s revenues, profitability, cash flows, and relationships with its customers.

 

The Company had deposits with its suppliers of $12.8 million and $7.6 million at December 31, 2018 and 2017, respectively, that were included in “Prepaid expenses and other current assets” on the Consolidated Balance Sheets.

 

Purchase Commitments

 

The Company had purchase commitments of $91.5 million at December 31, 2018, substantially all of which will come due within one year. Purchase commitments are primarily for inventory used in manufacturing products and are partially offset by existing deposits with suppliers.

 

Bank Guarantees

 

The Company has bank guarantees and letters of credit issued by a financial institution on its behalf as needed. At December 31, 2018, outstanding bank guarantees and letters of credit totaled $6.8 million and unused bank guarantees and letters of credit of $58.9 million were available to be drawn upon.

 

Other

 

On November 1, 2018, the Company announced an attack on its computer systems. Upon learning of the attack, forensic experts were promptly engaged to assist with the investigation. The Company also notified law enforcement of the incident.

 

The investigation, which has largely been completed, determined that the Company’s computer systems were accessed by what appears to be a highly-sophisticated actor at various times over a period of years. It appears that proprietary and confidential information of the Company and certain personal information of the Company’s employees was accessed and may have been compromised as a result of the incident. Based on the evidence available at this time, the extent and impact of the compromise cannot be determined. The Company notified employees of this incident. The Company is continuing to analyze the incident, along with appropriate remediation of the Company’s computer systems. That analysis and the related remediation efforts could ultimately reveal that additional information was revealed or compromised.

 

Based on the evidence available at this time, the Company does not know if or when it will be able to determine the potential impact to the Company, whether it will be able to identify who is responsible for this attack or whether it will be able to pursue legal action or other remedies to protect any compromised information or recover damages related to the attack. This attack, including the expenses incurred to address it, may have an adverse effect on the Company’s results of operations and/or financial condition. In addition, this attack may have caused the loss or misuse of proprietary and confidential information of the Company or others, result in litigation and potential liability, damage the Company’s reputation and/or otherwise harm its business.

v3.19.1
Debt
12 Months Ended
Dec. 31, 2018
Debt  
Debt

Note 12 — Debt

 

Convertible Senior Notes

 

On January 10, 2017, the Company issued $345.0 million of 2.70% convertible senior unsecured notes (the “Convertible Senior Notes”). The Company received net proceeds, after deducting underwriting discounts and fees and expenses payable by the Company, of approximately $335.8 million. The Convertible Senior Notes bear interest at a rate of 2.70% per year, payable semiannually in arrears on January 15 and July 15 of each year, commencing on July 15, 2017. The Convertible Senior Notes mature on January 15, 2023 (the “Maturity Date”), unless earlier purchased by the Company, redeemed, or converted.

 

The Convertible Senior Notes are unsecured obligations of Veeco and rank senior in right of payment to any of Veeco’s subordinated indebtedness; equal in right of payment to all of Veeco’s unsecured indebtedness that is not subordinated; effectively subordinated in right of payment to any of Veeco’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally subordinated to all indebtedness and other liabilities (including trade payables) of Veeco’s subsidiaries.

 

The Convertible Senior Notes are convertible into cash, shares of the Company’s common stock, or a combination thereof, at the Company’s election, upon the satisfaction of specified conditions and during certain periods as described below. The initial conversion rate is 24.9800 shares of the Company’s common stock per $1,000 principal amount of Convertible Senior Notes, representing an initial effective conversion price of $40.03 per share of common stock. The conversion rate may be subject to adjustment upon the occurrence of certain specified events as provided in the indenture governing the Convertible Senior Notes, dated January 18, 2017 between the Company and U.S. Bank National Association, as trustee, but will not be adjusted for accrued but unpaid interest.

 

Holders may convert all or any portion of their notes, in multiples of one thousand dollar principal amount, at their option at any time prior to the close of business on the business day immediately preceding October 15, 2022 only under the following circumstances:

 

(i)

During any calendar quarter (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

 

(ii)

During the five consecutive business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per one thousand dollar principal amount of Convertible Senior Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of Veeco’s common stock and the conversion rate on each such trading day;

 

(iii)

If the Company calls any or all of the Convertible Senior Notes for redemption at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

 

(iv)

Upon the occurrence of specified corporate events.

 

On or after October 15, 2022, until the close of business on the business day immediately preceding the Maturity Date, holders may convert their notes at any time, regardless of the foregoing circumstances.

 

Upon conversion by the holders, the Company may elect to settle such conversion in shares of its common stock, cash, or a combination thereof. As a result of its cash conversion option, the Company segregated the liability component of the instrument from the equity component. The liability component was measured by estimating the fair value of a non-convertible debt instrument that is similar in its terms to the Convertible Senior Notes. The calculation of the fair value of the debt component required the use of Level 3 inputs, including utilization of convertible investors’ credit assumptions and high yield bond indices. Fair value was estimated through discounting future interest and principal payments, an income approach, due under the Convertible Senior Notes at a discount rate of 7.00%, an interest rate equal to the estimated borrowing rate for similar non-convertible debt. The excess of the aggregate face value of the Convertible Senior Notes over the estimated fair value of the liability component of $72.5 million was recognized as a debt discount and recorded as an increase to additional paid-in capital and will be amortized over the expected life of the Convertible Senior Notes using the effective interest rate method. Amortization of the debt discount is recognized as non-cash interest expense.

 

The transaction costs of $9.2 million incurred in connection with the issuance of the Convertible Senior Notes were allocated to the liability and equity components based on their relative values. Transaction costs allocated to the liability component are being amortized using the effective interest rate method and recognized as non-cash interest expense over the expected term of the Convertible Senior Notes. Transaction costs allocated to the equity component of $1.9 million reduced the value of the equity component recognized in stockholders' equity.

 

The carrying value of the Convertible Senior Notes is as follows:

 

 

 

 

 

 

 

 

 

 

December 31,

 

    

2018

    

2017

 

 

(in thousands)

Principal amount

 

$

345,000

 

$

345,000

Unamortized debt discount

 

 

(52,336)

 

 

(63,022)

Unamortized transaction costs

 

 

(5,272)

 

 

(6,348)

Net carrying value

 

$

287,392

 

$

275,630

 

Total interest expense related to the Convertible Senior Notes is as follows:

 

 

 

 

 

 

 

 

 

 

For the year ended December 31,

 

 

2018

 

2017

 

 

(in thousands)

Cash Interest Expense

 

 

  

 

 

  

Coupon interest expense

 

$

9,315

 

$

8,901

Non-Cash Interest Expense

 

 

  

 

 

  

Amortization of debt discount

 

 

10,686

 

 

9,490

Amortization of transaction costs

 

 

1,076

 

 

956

Total Interest Expense

 

$

21,077

 

$

19,347

 

The Company determined the Convertible Senior Notes is a Level 2 liability in the fair value hierarchy and estimated its fair value as $255.3 million at December 31, 2018.

v3.19.1
Derivative Financial Instruments
12 Months Ended
Dec. 31, 2018
Derivative Financial Instruments  
Derivative Financial Instruments

Note 13 — Derivative Financial Instruments

 

The Company is exposed to financial market risks arising from changes in currency exchange rates. Changes in currency exchange rate changes could affect the Company’s foreign currency denominated monetary assets and liabilities and forecasted cash flows. The Company entered into monthly forward derivative contracts with the intent of mitigating a portion of this risk. The Company only used derivative financial instruments in the context of hedging and not for speculative purposes and had not designated its foreign exchange derivatives as hedges. Accordingly, changes in fair value from these contracts were recorded as “Other, net” in the Company’s Consolidated Statements of Operations. The Company executed derivative transactions with highly rated financial institutions to mitigate counterparty risk.

 

The Company did not have any outstanding derivative contracts at December 31, 2018.  A summary of the foreign exchange derivatives outstanding on December 31, 2017 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

    

Fair Value

    

Maturity Dates

    

Notional Amount

 

 

(in thousands)

Foreign currency exchange forwards

 

$

 —

 

January 2018

 

$

622

 

The following table shows the gains and (losses) from currency exchange derivatives during the years ended December 31, 2018, 2017, and 2016, which are included in “Other, net” in the Consolidated Statements of Operations as well as the weighted average notional amount of derivatives outstanding for each period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

2018

 

2017

 

2016

 

 

 

Gains (losses)

 

Weighted average notional amount

 

 

Gains (losses)

 

Weighted average notional amount

 

 

Gains (losses)

 

Weighted average notional amount

 

 

(in thousands)

Foreign currency exchange forwards

 

$

327

 

2,869

 

$

(6)

 

314

 

$

219

 

7,175

 

v3.19.1
Stockholders' Equity
12 Months Ended
Dec. 31, 2018
Equity  
Equity

Note 14 — Stockholders’ Equity

 

Accumulated Other Comprehensive Income

 

The following table presents the changes in the balances of each component of AOCI, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized

 

 

 

 

 

 

 

 

 

Gains (Losses)

 

 

 

 

 

Foreign

 

Minimum

 

on Available

 

 

 

 

 

Currency

 

Pension

 

for Sale 

 

 

 

 

    

Translation

    

Liability

    

Securities

    

Total

 

 

(in thousands)

Balance - December 31, 2015

 

$

2,246

 

$

(866)

 

$

(32)

 

$

1,348

Other comprehensive income (loss), before reclassifications

 

 

(19)

 

 

 —

 

 

(6)

 

 

(25)

Amounts reclassified from AOCI

 

 

(430)

 

 

866

 

 

18

 

 

454

Other comprehensive income (loss)

 

 

(449)

 

 

866

 

 

12

 

 

429

Balance - December 31, 2016

 

 

1,797

 

 

 —

 

 

(20)

 

 

1,777

Other comprehensive income (loss)

 

 

42

 

 

 —

 

 

(7)

 

 

35

Balance - December 31, 2017

 

 

1,839

 

 

 —

 

 

(27)

 

 

1,812

Other comprehensive income (loss)

 

 

(3)

 

 

 —

 

 

11

 

 

 8

Balance - December 31, 2018

 

$

1,836

 

$

 —

 

$

(16)

 

$

1,820

 

The Company did not allocate additional tax expense (benefit) to other comprehensive income (loss) for all years presented as the Company is in a full valuation allowance position such that a deferred tax asset related to amounts recognized in other comprehensive income is not regarded as realizable on a more-likely-than-not basis.

 

During 2016, the Company finalized the process to terminate a defined benefit plan. As a result, the Company reclassified the minimum pension liability of $0.9 million, net of a tax benefit of $0.4 million, from “Accumulated other comprehensive income” in the Consolidated Balance Sheets to “Other,  net” in the Consolidated Statements of Operations. Additionally, the Company completed its plan to liquidate one of its subsidiaries in Korea. As a result of this liquidation, a cumulative translation gain of $0.4 million was reclassified from “Accumulated other comprehensive income” to “Other, net” in the Consolidated Statements of Operations.

 

Preferred Stock

 

The Board of Directors has authority under the Company’s Certificate of Incorporation to issue shares of preferred stock, par value $0.01, with voting and economic rights to be determined by the Board of Directors. As of December 31, 2018, no preferred shares have been issued.

 

Treasury Stock

 

The share repurchase program authorized by the Company’s Board of Directors in October 2015 expired on October 28, 2017. On December 11, 2017, the Company’s Board of Directors authorized a new program to repurchase up to $100 million of the Company’s common stock to be completed through December 11, 2019. At December 31, 2018, $14.3 million of the $100 million had been utilized. Repurchases are expected to be made from time to time in the open market or in privately negotiated transactions in accordance with applicable federal securities laws.  

 

The Company records treasury stock purchases under the cost method using the first-in, first-out (“FIFO”) method. Upon reissuance of treasury stock, amounts in excess of the acquisition cost are credited to additional paid-in capital. If the Company reissues treasury stock at an amount below its acquisition cost and if additional paid-in capital associated with prior treasury stock transactions is insufficient to cover the difference between the acquisition cost and the reissue price, this difference is charged to accumulated deficit.

v3.19.1
Stock Plans
12 Months Ended
Dec. 31, 2018
Stock Plans  
Stock Plans

Note 15 — Stock Plans

 

Share-based incentive awards are provided to employees under the terms of the Company’s equity incentive compensation plans (the “Plans”), which are administered by the Compensation Committee of the Board of Directors. The 2010 Plan was approved by the Company’s shareholders. The Company’s employees, non-employee directors, and consultants are eligible to receive awards under the 2010 Stock Incentive Plan (as amended to date, the “2010 Plan”), which can include non-qualified stock options, incentive stock options, restricted share awards (“RSAs”), restricted share units (“RSUs”), performance share awards (“PSAs”), performance share units (“PSUs”), share appreciation rights, dividend equivalent rights, or any combination thereof. The Company settles awards under the Plans with newly issued shares or with shares held in treasury.

 

In 2013, the Board of Directors granted equity awards to certain employees under the Company’s 2013 Inducement Stock Incentive Plan (the “Inducement Plan”). The Company issued 124,500 stock option shares and 87,000 RSUs under this plan. Stock options under this plan vest over a three year period and have a 10-year term, and RSUs under this plan vest over a two or four year period. At December 31, 2013, the Inducement Plan was merged into the 2010 Plan and is considered an inactive plan with no further shares available for grant. At December 31, 2018, there are 2,000 option shares and no RSUs outstanding under the Inducement Plan.

 

The Company is authorized to issue up to 10.6 million shares under the 2010 Plan, including additional shares authorized under plan amendments approved by shareholders in 2016 and 2013. Option awards are granted with an exercise price equal to the closing price of the Company’s common stock on the trading day prior to the date of grant; option awards generally vest over a three year period and have a seven or ten year term. RSAs and RSUs generally vest over one to five years. Certain option and share awards provide for accelerated vesting if there is a change in control, as defined in the 2010 Plan. At December 31, 2018, there are 1.2 million option shares and 0.9 million RSUs and PSUs outstanding under the 2010 Plan.

 

During 2016, the Company’s Board of Directors approved the 2016 Employee Stock Purchase Plan (“ESPP”). The Company is authorized to issue up to 750,000 shares under the ESPP. Under the ESPP, substantially all employees in the U.S. may purchase the Company’s common stock through payroll deductions at a price equal to 85 percent of the lower of the fair market value of the Company’s common stock at the beginning or end of each six-month Offer Period, as defined in the ESPP, and subject to certain limits. The ESPP was approved by the Company’s shareholders.

 

During 2017, in connection with the acquisition of Ultratech, the Company assumed certain restricted stock units (the “Assumed RSUs”) available and outstanding under the Ultratech, Inc. 1993 Stock Option/Stock Issuance Plan, as amended (the “Ultratech Plan”). The Assumed RSUs remain subject to the terms set forth in the award agreement governing the award and the Ultratech Plan, except that the Assumed RSUs relate to shares of Company common stock and the number of restricted stock units was adjusted pursuant to the terms of the acquisition to reflect the difference in the value of a share of Company common stock and a share of Ultratech common stock prior to closing the acquisition. The Assumed RSUs were converted into 338,144 restricted stock units of the Company and generally vest over 50 months. After the acquisition and notwithstanding any other provisions of the Ultratech Plan, no further grants will be made under the Ultratech Plan, and the Company is solely maintaining the Ultratech Plan with respect to the Assumed RSUs. At December 31, 2018, there are 30,200 RSUs outstanding under the Ultratech Plan.

 

Shares Reserved for Future Issuance

 

At December 31, 2018, the Company has 4.5 million shares reserved to cover exercises of outstanding stock options, vesting of RSUs, and additional grants under the 2010 Plan. At December 31, 2018, the Company has 0.2 million shares reserved to cover future issuances under the ESPP Plan.

 

Share-Based Compensation

 

The Company recognized share-based compensation in the following line items in the Consolidated Statements of Operations for the periods indicated:

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands)

Cost of sales

 

$

1,885

 

$

2,505

 

$

1,956

Research and development

 

 

3,611

 

 

2,957

 

 

3,324

Selling, general, and administrative

 

 

9,417

 

 

12,851

 

 

10,433

Restructuring

 

 

1,161

 

 

1,880

 

 

 —

Acquisition costs

 

 

 —

 

 

4,203

 

 

 —

Total

 

$

16,074

 

$

24,396

 

$

15,713

 

The Company did not realize any tax benefits associated with share-based compensation for the years ended December 31, 2018, 2017, and 2016 due to the full valuation allowance on its U.S. deferred tax assets. See Note 17, “Income Taxes” for additional information. The Company capitalized an immaterial amount of share-based compensation into inventory for the years ended December 31, 2018, 2017, and 2016.

 

Unrecognized share-based compensation costs at December 31, 2018 are summarized below:

 

 

 

 

 

 

 

 

    

Unrecognized

    

Weighted

 

 

Share-Based

 

Average Period

 

 

Compensation

 

Expected to be

 

 

Costs

 

Recognized

 

 

(in thousands)

(in years)

Stock option awards

 

$

 —

 

 —

Restricted stock units

 

 

2,466

 

2.4

Restricted stock awards

 

 

19,663

 

2.6

Performance share units

 

 

7,356

 

2.4

Total unrecognized share-based compensation cost

 

$

29,485

 

2.5

 

Stock Option Awards

 

Stock options are awards issued to employees that entitle the holder to purchase shares of the Company’s stock at a fixed price. At December 31, 2018, options outstanding that have vested and are expected to vest are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

Number

 

Weighted

 

Average

 

Aggregate

 

 

of

 

Average

 

Remaining

 

Intrinsic

 

    

Shares

    

Exercise Price

    

Contractual Life

    

Value

 

 

(in thousands)

 

 

(in years)

 

(in thousands)

Vested

 

1,222

 

$

34.80

 

3.0

 

 —

Expected to vest

 

 —

 

 

 —

 

 —

 

 —

Total

 

1,222

 

 

34.80

 

3.0

 

 —

 

The aggregate intrinsic value represents the difference between the option exercise price and $7.41, the closing price of the Company’s common stock on December 31, 2018, the last trading day of the Company’s fiscal year as reported on the NASDAQ Stock Market.

 

Additional information with respect to stock option activity:

 

 

 

 

 

 

 

 

 

 

 

Weighted 

 

 

Number of

 

Average

 

    

Shares

    

Exercise Price

 

 

(in thousands)

 

 

 

Balance -  December 31, 2015

 

2,064

 

$

32.91

Granted

 

 —

 

 

 —

Exercised

 

(194)

 

 

12.18

Expired or forfeited

 

(294)

 

 

34.44

Balance -  December 31, 2016

 

1,576

 

 

35.18

Granted

 

 —

 

 

 —

Exercised

 

(18)

 

 

30.03

Expired or forfeited

 

(164)

 

 

37.47

Balance -  December 31, 2017

 

1,394

 

 

34.97

Granted

 

 —

 

 

 —

Exercised

 

 —

 

 

 —

Expired or forfeited

 

(172)

 

 

36.21

Balance -  December 31, 2018

 

1,222

 

 

34.80

 

The following table summarizes stock option information at December 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Outstanding

 

Options Exercisable

 

    

 

    

 

 

    

Weighted

    

 

    

 

    

 

 

    

Weighted

    

 

 

 

 

 

Aggregate

 

Average

 

Weighted

 

 

 

Aggregate

 

Average

 

Weighted

 

 

 

 

Intrinsic

 

Remaining

 

Average

 

 

 

Intrinsic

 

Remaining

 

Average

Range of Exercise Prices

 

Shares

 

Value

 

Contractual Life

 

Exercise Price

 

Shares

 

Value

 

Contractual Life

 

Exercise Price

 

 

(in thousands)

 

(in thousands)

 

(in years)

 

 

 

(in thousands)

 

(in thousands)

 

(in years)

 

 

 

$20.00 - $30.00

 

25

 

$

 —

 

3.6

 

$

28.13

 

25

 

$

 —

 

3.6

 

$

28.13

$30.01 - $40.00

 

1,058

 

 

 —

 

3.1

 

 

32.81

 

1,058

 

 

 —

 

3.1

 

 

32.81

$40.01 - $50.00

 

12

 

 

 —

 

1.7

 

 

45.57

 

12

 

 

 —

 

1.7

 

 

45.57

$50.01 - $60.00

 

127

 

 

 —

 

2.4

 

 

51.70

 

127

 

 

 —

 

2.4

 

 

51.70

 

 

1,222

 

$

 —

 

3.0

 

 

34.80

 

1,222

 

$

 —

 

3.0

 

 

34.80

 

The following table summarizes information on options exercised for the periods indicated:

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands)

Cash received from options exercised

 

$

 —

 

$

431

 

$

494

Intrinsic value of options exercised

 

$

 —

 

$

51

 

$

1,165

 

RSAs, RSUs, PSAs, PSUs

 

RSAs are stock awards issued to employees that are subject to specified restrictions and a risk of forfeiture. RSUs are stock awards issued to employees that entitle the holder to receive shares of common stock as the awards vest. PSAs and PSUs are awards that result in an issuance of shares of common stock to employees if certain performance or market conditions are achieved. All of these awards typically vest over one to five years and vesting is subject to the employee's continued service with the Company and, in the case of performance awards, meeting certain performance or market conditions. The fair value of the awards is determined and fixed based on the closing price of the Company’s common stock on the trading day prior to the date of grant, or, in the case of performance awards with market conditions, fair value is determined using a Monte Carlo simulation.

 

The following table summarizes the equity activity of non-vested restricted shares and performance shares:

 

 

 

 

 

 

 

 

    

 

    

Weighted

 

 

 

 

Average

 

 

Number of

 

Grant Date

 

 

Shares

 

Fair Value

 

 

(in thousands)

 

 

 

Balance -  December 31, 2015

 

1,398

 

$

31.97

Granted

 

1,166

 

 

17.59

Vested

 

(349)

 

 

32.73

Forfeited

 

(266)

 

 

27.31

Balance -  December 31, 2016

 

1,949

 

 

23.85

Granted

 

674

 

 

29.22

Performance award adjustments

 

(25)

 

 

20.95

Assumed from Ultratech

 

338

 

 

31.75

Vested

 

(831)

 

 

27.67

Forfeited

 

(225)

 

 

26.29

Balance -  December 31, 2017

 

1,880

 

 

25.41

Granted

 

1,257

 

 

17.37

Performance award adjustments

 

(5)

 

 

32.67

Vested

 

(523)

 

 

26.39

Forfeited

 

(391)

 

 

24.66

Balance -  December 31, 2018

 

2,218

 

 

20.74

 

The total fair value of shares that vested during the years ended December 31, 2018, 2017, and 2016 was $9.1 million, $22.3 million, and $7.5 million, respectively. For performance awards, the final number of shares earned will vary depending on the achievement of the actual results relative to the performance or market conditions. Each performance award is included in the table above at the grant date target share amount until the end of the performance period if not previously forfeited.

 

The fair value of performance awards with market conditions is estimated on the date of grant using a Monte Carlo simulation. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive these awards. The weighted average fair value and the assumptions used in calculating such values during fiscal year 2018 for performance awards with market conditions were based on estimates at the date of grant as follows:

 

 

 

 

 

 

 

Year ended December 31,

 

 

 

2018

 

Weighted average fair value

 

$

15.58

 

Dividend yield

 

 

 0

%

Expected volatility factor(1)

 

 

49

%

Risk-free interest rate(2)

 

 

2.88

%

Expected life (in years)(3)

 

 

3.0

 


(1)

Expected volatility is measured using historical daily price changes of the Company’s stock over the respective expected term.

(2)

The risk-free rate for periods within the contractual term is based on the U.S. Treasury yield curve in effect at the time of grant.

(3)

The expected life is the number of years the Company estimates that the awards will be outstanding prior to exercise.

 

Employee Stock Purchase Plan

 

For the years ended December 31, 2018, 2017, and 2016 the Company received cash proceeds of $3.1 million, $2.6 million, and $1.2 million, and issued shares of 332,096, 163,000, and 83,000, respectively, under the ESPP Plan. The weighted average estimated values of employee purchase rights as well as the weighted average assumptions that were used in calculating such values during fiscal years 2018, 2017, and 2016 were based on estimates at the date of grant as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

 

2018

    

2017

    

2016

 

Weighted average fair value

 

$

4.94

 

$

7.09

 

$

4.45

 

Dividend yield

 

 

 0

%  

 

 0

%  

 

 0

%

Expected volatility factor(1)

 

 

62

%  

 

36

%  

 

43

%

Risk-free interest rate(2)

 

 

1.81

%  

 

0.99

%  

 

0.35

%

Expected life (in years)(3)

 

 

0.5

 

 

0.5

 

 

0.5

 


(1)

Expected volatility is measured using historical daily price changes of the Company’s stock over the respective expected term.

(2)

The risk-free rate for periods within the contractual term is based on the U.S. Treasury yield curve in effect at the time of grant.

(3)

The expected life is the number of years the Company estimates that the purchase rights will be outstanding prior to exercise.

 

v3.19.1
Retirement Plans
12 Months Ended
Dec. 31, 2018
Retirement Plans  
Retirement Plans

Note 16 — Retirement Plans

 

The Company maintains a defined contribution plan for the benefit of its U.S. employees. The plan is intended to be tax qualified and contains a qualified cash or deferred arrangement as described under Section 401(k) of the Internal Revenue Code. Eligible participants may elect to contribute a percentage of their base compensation, and the Company may make matching contributions, generally equal to fifty cents for every dollar employees contribute, up to the lesser of three percent of the employee’s eligible compensation or three percent of the maximum the employee is permitted to contribute under then current Internal Revenue Code limitations. Generally, the plan calls for vesting in the Company contributions over the initial five years of a participant’s employment. In addition, the Company assumed Ultratech’s 401(k) plan as a result of the merger, and Ultratech’s plan was merged into the Company’s existing plan effective January 1, 2018. The Company provided employer contributions associated with these plans of approximately $3.0 million, $2.7 million, and $2.6 million for the years ended December 31, 2018, 2017, and 2016, respectively.

 

During 2016, the Company finalized the process to terminate a defined benefit plan it had acquired in the year 2000. The plan had been frozen as of September 30, 1991, and no further benefits had been accrued by participants since that date. In connection with the termination, responsibility for the payment of benefits under the plan was transferred to an insurance company. As a result, the Company reclassified the minimum pension liability of $0.9 million, net of a tax benefit of $0.4 million, from “Accumulated other comprehensive income” in the Consolidated Balance Sheets to “Other, net” in the Consolidated Statements of Operations.

 

v3.19.1
Income Taxes
12 Months Ended
Dec. 31, 2018
Income Taxes  
Income Taxes

Note 17 — Income Taxes

 

The amounts of income (loss) before income taxes attributable to domestic and foreign operations were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands)

Domestic

 

$

(286,561)

 

$

(101,573)

 

$

(123,089)

Foreign

 

 

(147,273)

 

 

12,583

 

 

3,885

Total

 

$

(433,834)

 

$

(88,990)

 

$

(119,204)

 

Significant components of the expense (benefit) for income taxes consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands)

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

(1,682)

 

$

 —

 

$

 —

Foreign

 

 

2,518

 

 

(2,246)

 

 

1,937

State and local

 

 

38

 

 

15

 

 

(111)

Total current expense (benefit) for income taxes

 

 

874

 

 

(2,231)

 

 

1,826

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

205

 

 

(35,912)

 

 

1,459

Foreign

 

 

(27,932)

 

 

1,291

 

 

(589)

State and local

 

 

107

 

 

(742)

 

 

127

Total deferred expense (benefit) for income taxes

 

 

(27,620)

 

 

(35,363)

 

 

997

Total expense (benefit) for income taxes

 

$

(26,746)

 

$

(37,594)

 

$

2,823

 

The income tax expense was reconciled to the tax expense computed at the U.S. federal statutory tax rate as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands)

Income tax expense (benefit) at U.S. statutory rates

 

$

(91,105)

 

$

(31,147)

 

$

(41,722)

State taxes, net of U.S. federal impact

 

 

(2,848)

 

 

(2,523)

 

 

(1,963)

Effect of international operations

 

 

11,847

 

 

10,158

 

 

8,798

Research and development tax credit

 

 

(2,230)

 

 

620

 

 

(801)

Net change in valuation allowance

 

 

7,747

 

 

1,883

 

 

50,544

Change in accrual for unrecognized tax benefits

 

 

2,868

 

 

(4,772)

 

 

(1,700)

Subsidiary liquidation

 

 

 —

 

 

 —

 

 

(12,435)

Share-based compensation

 

 

1,848

 

 

99

 

 

2,133

Effect of 2017 Tax Act

 

 

(1,690)

 

 

(11,344)

 

 

 —

Asset impairment

 

 

46,872

 

 

 —

 

 

 —

Other

 

 

(55)

 

 

(568)

 

 

(31)

Total expense (benefit) for income taxes

 

$

(26,746)

 

$

(37,594)

 

$

2,823

 

The Company recognized the income tax effects of the 2017 Tax Act in its 2017 financial statements in accordance with SAB 118, which provided SEC staff guidance for the application of ASC 740 in the reporting period in which the 2017 Tax Act was signed into law. As such, the Company’s 2017 financial results included provisional amounts for specific income tax effects of the 2017 Tax Act for which the accounting under ASC 740 was incomplete but for which a reasonable estimate could be determined. During the year ended December 31, 2018, the Company finalized the accounting for the tax effects of 2017 Tax Act based on legislative updates currently available and recorded an additional income tax benefit of $1.7 million for alternative minimum tax credits that became refundable in accordance with the 2017 Tax Act. The Company also reported an increase in deferred tax assets of $6.8 million as a result of adjustments to tax attributes utilized for one-time transition tax, which was offset by a full valuation allowance.

 

The most significant impacts of the 2017 Tax Act on the Company’s federal income taxes for the year ended December 31, 2017 were as follows:

 

Reduction of the U.S. Corporate Income Tax Rate

 

The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Accordingly, the Company’s deferred tax assets and liabilities were re-measured as of December 22, 2017 to reflect the reduction in the U.S. corporate income tax rate from 35 percent to 21 percent. The Company recorded an income tax benefit of $4.8 million for the year ended December 31, 2017, as the net deferred tax assets were reduced by $25.6 million with a corresponding valuation allowance reduction of $30.4 million.

 

One-Time Transition Tax on Foreign Earnings

 

As of December 31, 2017, the Company had $180.1 million of foreign earnings that was subject to the one-time transition tax. The Company used its 2017 and carryforward net operating losses to offset the impact of the transition tax. As the Company maintains a full valuation allowance against its U.S. deferred tax assets, the Company did not record an income tax expense related to the transition tax for the year ended December 31, 2017.

 

Valuation Allowance

 

The 2017 Tax Act modified the Net Operating Loss ("NOL") provisions to provide for an indefinite carryforward of NOLs arising in tax years beginning after December 31, 2017. The 2017 Tax Act also limits the amount of NOL deductions that can be used in any one year to 80 percent of the taxpayer’s taxable income, effective with respect to NOLs arising in tax years beginning after December 31, 2017. The Company recognized an income tax benefit of $6.5 million for the year ended December 31, 2017 related to a reduction in the Company’s valuation allowance as a result of the Company scheduling out the reversals of its net deferred tax assets which resulted in tax amortization on indefinite-lived intangible assets becoming available to offset existing deferred tax assets that are now expected to have an indefinite life.

Deferred income taxes reflect the effect of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes. The tax effects of the temporary differences were as follows:

 

 

 

 

 

 

 

 

 

 

December 31,

 

    

2018

    

2017

 

 

(in thousands)

Deferred tax assets: 

 

 

 

 

 

 

Inventory valuation

 

$

8,943

 

$

8,007

Net operating losses

 

 

67,787

 

 

73,458

Credit carry forwards

 

 

52,592

 

 

34,966

Warranty and installation accruals

 

 

1,695

 

 

1,690

Share-based compensation

 

 

6,981

 

 

7,385

Other

 

 

2,182

 

 

1,832

Total deferred tax assets

 

 

140,180

 

 

127,338

Valuation allowance

 

 

(114,955)

 

 

(100,456)

Net deferred tax assets

 

 

25,225

 

 

26,882

 

 

 

 

 

 

 

Deferred tax liabilities: 

 

 

 

 

 

 

Purchased intangible assets

 

 

15,401

 

 

45,807

Convertible Senior Notes

 

 

11,265

 

 

13,534

Depreciation

 

 

2,380

 

 

1,339

Total deferred tax liabilities

 

 

29,046

 

 

60,680

Net deferred taxes

 

$

(3,821)

 

$

(33,798)

 

The Company is no longer permanently reinvesting future earnings from certain foreign jurisdictions and has accrued for foreign tax withholdings of $0.6 million on its unremitted earnings as of December 31, 2018.

 

At December 31, 2018, the Company had U.S. federal NOL carryforwards of approximately $281.4 million, of which $16.0 million has an indefinite carryforward period, with the remaining expiring in varying amounts between 2024 and 2037, if not utilized. In connection with the Ultratech acquisition, $119.0 million of historical NOL carryforwards were acquired, which are subject to an annual limitation. The Company has $3.5 million of capital loss carryforwards that expire in 2021. At December 31, 2018, the Company had U.S. federal research and development credits of $28.3 million that will expire between 2019 and 2038. The Ultratech acquisition resulted in the carryover of $11.4 million of research and development credit carryforwards, which are subject to an annual limitation. The Company also has $9.4 million of foreign tax credits that expire in 2027. Additionally, the Company has state and local NOL carryforwards of approximately $147.6 million (a net deferred tax asset of $9.0 million, net of federal tax benefits and before the valuation allowance) that will expire between 2019 and 2038. Finally, the Company has state credits of $27.4 million, some of which are indefinite and others that will expire between 2019 and 2033.

 

The Company makes assessments to estimate if sufficient taxable income will be generated in the future to use existing deferred tax assets. As of December 31, 2018, the Company continued to have a cumulative three year loss with respect to its U.S. operations. As such, the Company has recorded a valuation allowance against its U.S. deferred tax assets. During 2018, the Company’s valuation allowance increased by approximately $14.5 million, including an increase of $6.8 million as a result of adjustments to tax attributes utilized for one-time transition tax.

 

A roll-forward of the Company’s uncertain tax positions for all U.S. federal, state, and foreign tax jurisdictions was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands)

Balance at beginning of year

 

$

8,269

 

$

7,452

 

$

9,152

Additions for tax positions related to current year

 

 

2,154

 

 

511

 

 

1,038

Additions for tax positions related to prior years

 

 

1,721

 

 

 3

 

 

233

Reductions for tax positions related to prior years

 

 

(934)

 

 

(4,877)

 

 

(2,826)

Reductions due to the lapse of the statute of limitations

 

 

(26)

 

 

(122)

 

 

(39)

Settlements

 

 

(47)

 

 

(287)

 

 

(106)

Additions for business combination

 

 

 —

 

 

5,589

 

 

 —

Balance at end of year

 

$

11,137

 

$

8,269

 

$

7,452

 

If the amount of unrecognized tax benefits at December 31, 2018 were recognized, the Company’s income tax provision would decrease by $1.5 million. The gross amount of interest and penalties accrued in income tax payable in the Consolidated Balance Sheets was approximately $0.3 million at both December 31, 2018 and 2017.

 

The Company, or one of its subsidiaries, files income tax returns in the United States federal jurisdiction, and various state, local, and foreign jurisdictions. All material consolidated federal income tax matters have been concluded for years through 2015 subject to subsequent utilization of NOLs generated in such years. All material state and local income tax matters have been reviewed through 2012. The majority of the Company’s foreign jurisdictions have been reviewed through 2015. The Company’s major foreign jurisdictions’ statutes of limitation remain open with respect to the tax years 2017 for China, 2015 through 2017 for Germany and Singapore, and 2017 for Taiwan. The Company does not anticipate that its uncertain tax position will change significantly within the next twelve months subject to the completion of the ongoing tax audits and any resultant settlement.

v3.19.1
Segment Reporting and Geographic Information
12 Months Ended
Dec. 31, 2018
Segment Reporting and Geographic Information  
Segment Reporting and Geographic Information

Note 18 — Segment Reporting and Geographic Information

 

The Company operates and measures its results in one operating segment and therefore has one reportable segment: the development, manufacture, sales, and support of semiconductor and thin film process equipment primarily sold to make electronic devices. The Company’s Chief Operating Decision Maker, the Chief Executive Officer, evaluates performance of the Company and makes decisions regarding the allocation of resources based on total Company results.

 

Sales by market is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands)

Sales by end-market

 

 

 

 

 

 

 

 

 

Advanced Packaging, MEMS & RF Filters

 

$

90,775

 

$

67,406

 

$

67,484

LED Lighting, Display & Compound Semiconductor

 

 

249,974

 

 

248,615

 

 

145,701

Front-End Semiconductor

 

 

62,582

 

 

40,319

 

 

8,427

Scientific & Industrial

 

 

138,751

 

 

119,346

 

 

110,090

Total

 

$

542,082

 

$

475,686

 

$

331,702

 

The Company’s significant operations outside the United States include sales and service offices in China, Europe, and Rest of World. For geographic reporting, sales are attributed to the location in which the customer facility is located.

 

Sales and long-lived tangible assets by geographic region are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales to Unaffiliated Customers

 

Long-lived Tangible Assets

 

    

2018

    

2017

    

2016

    

2018

    

2017

    

2016

 

 

(in thousands)

United States

 

$

125,659

 

$

93,433

 

$

85,582

 

$

78,503

 

$

81,046

 

$

60,012

China

 

 

194,032

 

 

106,674

 

 

84,604

 

 

81

 

 

64

 

 

219

EMEA(1)

 

 

89,102

 

 

72,979

 

 

84,181

 

 

205

 

 

231

 

 

93

Rest of World

 

 

133,289

 

 

202,600

 

 

77,335

 

 

1,495

 

 

3,717

 

 

322

Total

 

$

542,082

 

$

475,686

 

$

331,702

 

$

80,284

 

$

85,058

 

$

60,646


(1)

EMEA consists of Europe, the Middle East, and Africa

v3.19.1
Selected Quarterly Financial Information (unaudited)
12 Months Ended
Dec. 31, 2018
Selected Quarterly Financial Information (unaudited)  
Selected Quarterly Financial Information (unaudited)

Note 19 Selected Quarterly Financial Information (unaudited)

 

The following table presents selected unaudited financial data for each fiscal quarter of 2018 and 2017. Although unaudited, this information has been prepared on a basis consistent with the Company’s audited Consolidated Financial Statements and, in the opinion of management, reflects all adjustments (consisting only of normal recurring adjustments) that are considered necessary for a fair presentation of this information in accordance with GAAP. Such quarterly results are not necessarily indicative of future results of operations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal 2018

 

Fiscal 2017

 

    

Q1

    

Q2

    

Q3

    

Q4

    

Q1

    

Q2

    

Q3

    

Q4

 

 

(in thousands, except per share amounts)

Net sales

 

$

158,574

 

$

157,779

 

$

126,757

 

$

98,972

 

$

94,499

 

$

112,218

 

$

129,308

 

$

139,661

Gross profit

 

 

56,680

 

 

55,395

 

 

46,385

 

 

35,259

 

 

34,500

 

 

35,847

 

 

50,529

 

 

55,352

Net income (loss)

 

 

(15,827)

 

 

(237,634)

 

 

(8,953)

 

 

(144,674)

 

 

1,640

 

 

(20,817)

 

 

(23,740)

 

 

(8,479)

Basic income (loss) per common share

 

 

(0.34)

 

 

(5.02)

 

 

(0.19)

 

 

(3.11)

 

 

0.04

 

 

(0.49)

 

 

(0.51)

 

 

(0.18)

Diluted income (loss) per common share

 

 

(0.34)

 

 

(5.02)

 

 

(0.19)

 

 

(3.11)

 

 

0.04

 

 

(0.49)

 

 

(0.51)

 

 

(0.18)

 

Acquisition of Ultratech

 

During the second quarter of 2017, the Company acquired Ultratech. The results of operations of Ultratech have been included in the consolidated financial statements since the date of acquisition. Refer to Note 5, “Business Combinations,” for additional information.

 

Asset Impairments

 

During the second quarter of 2018, the Company recorded non-cash impairment charges related to the Ultratech asset group of $216.4 million and $35.9 million for definite-lived intangible assets and in-process research and development assets, respectively. Additionally, during the fourth quarter of 2018, the Company recorded a non-cash goodwill impairment charge of $122.8 million. Refer to Note 6, “Goodwill and Intangible Assets,” for additional information.

v3.19.1
Schedule II - Valuation and Qualifying Accounts
12 Months Ended
Dec. 31, 2018
Schedule II - Valuation and Qualifying Accounts  
Schedule II - Valuation and Qualifying Accounts

Schedule II — Valuation and Qualifying Accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions

 

 

 

 

 

 

 

 

 

 

 

Charged

 

 

 

 

 

 

 

 

 

 

    

Balance at

    

(Credited)

    

Charged to

    

 

 

    

Balance at

 

 

Beginning

 

 to Costs and

 

Other

 

 

 

 

End of

Deducted from asset accounts:

 

of Period

 

Expenses

 

Accounts

 

Deductions

 

Period

 

 

(in thousands)

Year ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for doubtful accounts

 

$

270

 

$

 —

 

$

 —

 

$

 —

 

$

270

Valuation allowance in net deferred tax assets

 

 

100,456

 

 

14,499

 

 

 —

 

 

 —

 

 

114,955

 

 

$

100,726

 

$

14,499

 

$

 —

 

$

 —

 

$

115,225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for doubtful accounts

 

$

286

 

$

99

 

$

 —

 

$

(115)

 

$

270

Valuation allowance in net deferred tax assets

 

 

104,744

 

 

(49,589)

 

 

45,301

 

 

 —

 

 

100,456

 

 

$

105,030

 

$

(49,490)

 

$

45,301

 

$

(115)

 

$

100,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for doubtful accounts

 

$

206

 

$

171

 

$

 —

 

$

(91)

 

$

286

Valuation allowance in net deferred tax assets

 

 

54,200

 

 

50,544

 

 

 —

 

 

 —

 

 

104,744

 

 

$

54,406

 

$

50,715

 

$

 —

 

$

(91)

 

$

105,030

 

v3.19.1
Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2018
Significant Accounting Policies  
Basis of Presentation

(b) Basis of Presentation

 

The accompanying audited Consolidated Financial Statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). The Company reports interim quarters on a 13-week basis ending on the last Sunday of each period, which is determined at the start of each year. The Company’s fourth quarter always ends on the last day of the calendar year, December 31. During 2018 the interim quarters ended on April 1, July 1, and September 30, and during 2017 the interim quarters ended on April 2, July 2, and October 1. The Company reports these interim quarters as March 31, June 30, and September 30 in its interim consolidated financial statements.

Use of Estimates

(c) Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, these estimates may ultimately differ from actual results. Significant items subject to such estimates and assumptions include: (i) stand-alone selling prices for the Company’s products and services; (ii) allowances for doubtful accounts; (iii) inventory obsolescence; (iv) the useful lives and expected future cash flows of property, plant, and equipment and identifiable intangible assets; (v) the fair value of the Company’s reporting unit and related goodwill; (vi) investment valuations and the valuation of derivatives, deferred tax assets, and assets acquired in business combinations; (vii) the recoverability of long-lived assets; (viii) liabilities for product warranty and legal contingencies; (ix) share-based compensation; and (x) income tax uncertainties. Actual results could differ from those estimates.

Principles of Consolidation

(d) Principles of Consolidation

 

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. Companies acquired during each reporting period are reflected in the results of the Company effective from their respective dates of acquisition through the end of the reporting period.

 

Foreign Currencies

(e) Foreign Currencies

 

Assets and liabilities of the Company’s foreign subsidiaries that operate using functional currencies other than the U.S. dollar are translated using the exchange rates in effect at the balance sheet date. Results of operations are translated using monthly average exchange rates. Adjustments arising from the translation of the foreign currency financial statements of the Company’s subsidiaries into U.S. dollars, including intercompany transactions of a long-term nature, are reported as currency translation adjustments in “Accumulated other comprehensive income” in the Consolidated Balance Sheets. Foreign currency transaction gains or losses are included in “Other, net” in the Consolidated Statements of Operations.

Revenue recognition

(f) Revenue Recognition

 

Revenue is recognized upon the transfer of control of the promised product or service to the customer in an amount that reflects the consideration the Company expects to receive in exchange for such product or service. The Company’s contracts with customers generally do not contain variable consideration. In the rare instances where variable consideration is included, the Company estimates the amount of variable consideration and determines what portion of that, if any, has a high probability of significant subsequent revenue reversal, and if so, that amount is excluded from the transaction price. The Company’s contracts with customers frequently contain multiple deliverables, such as systems, upgrades, components, spare parts, installation, maintenance, and service plans. Judgment is required to properly identify the performance obligations within a contract and to determine how the revenue should be allocated among the performance obligations. The Company also evaluates whether multiple transactions with the same customer or related parties should be considered part of a single contract based on an assessment of whether the contracts or agreements are negotiated or executed within a short time frame of each other or if there are indicators that the contracts are negotiated in contemplation of one another.

   

When there are separate units of accounting, the Company allocates revenue to each performance obligation on a relative stand-alone selling price basis. The stand-alone selling prices are determined based on the prices at which the Company separately sells the systems, upgrades, components, spare parts, installation, maintenance, and service plans. For items that are not sold separately, the Company estimates stand-alone selling prices generally using an expected cost plus margin approach.

   

Most of the Company’s revenue is recognized at a point in time when the performance obligation is satisfied. The Company considers many facts when evaluating each of its sales arrangements to determine the timing of revenue recognition, including its contractual obligations and the nature of the customer’s post-delivery acceptance provisions. The Company’s system sales arrangements, including certain upgrades, generally include field acceptance provisions that may include functional or mechanical test procedures. For many of these arrangements, a customer source inspection of the system is performed in the Company’s facility, test data is sent to the customer documenting that the system is functioning to the agreed upon specifications prior to delivery, or other quality assurance testing is performed internally to ensure system functionality prior to shipment. Historically, such source inspection or test data replicates the field acceptance provisions that are performed at the customer’s site prior to final acceptance of the system. When the Company objectively demonstrates that the criteria specified in the contractual acceptance provisions are achieved prior to delivery either through customer testing or the Company’s historical experience of its tools meeting specifications, transfer of control of the product to the customer is considered to have occurred and revenue is recognized upon system delivery since there is no substantive contingency remaining related to the acceptance provisions at that date. For new products, new applications of existing products, or for products with substantive customer acceptance provisions where the Company cannot objectively demonstrate that the criteria specified in the contractual acceptance provisions have been achieved prior to delivery, revenue and the associated costs are deferred. The Company recognizes such revenue and costs upon obtaining objective evidence that the acceptance provisions can be achieved, assuming all other revenue recognition criteria have been met.

   

In certain cases the Company’s contracts with customers contain a billing retention, typically 10% of the sales price, which is billed by the Company and payable by the customer when field acceptance provisions are completed. Revenue recognized in advance of the amount that has been billed is recorded as a contract asset on the Consolidated Balance Sheets.

   

The Company recognizes revenue related to maintenance and service contracts over time based upon the respective contract term. Installation revenue is recognized over time as the installation services are performed. The Company recognizes revenue from the sales of components, spare parts, and specified service engagements at a point in time, which is typically consistent with the time of delivery in accordance with the terms of the applicable sales arrangement.

   

The Company may receive customer deposits on system transactions. The timing of the transfer of goods or services related to the deposits is either at the discretion of the customer or expected to be within one year from the deposit receipt. As such, the Company does not adjust transaction prices for the time value of money. Incremental direct costs incurred related to the acquisition of a customer contract, such as sales commissions, are expensed as incurred since the expected amortization period is one year or less.

   

The Company has elected to treat shipping and handling costs as a fulfillment activity, and the Company includes such costs in cost of services when the Company recognizes revenue for the related goods. Taxes assessed by governmental authorities that are collected by the Company from a customer are excluded from revenue.

 

Warranty Costs

(g) Warranty Costs

 

The Company typically provides standard warranty coverage on its systems for one year from the date of final acceptance by providing labor and parts necessary to repair the systems during the warranty period. The Company accounts for the estimated warranty cost when revenue is recognized on the related system. Warranty cost is included in “Cost of sales” in the Consolidated Statements of Operations. The estimated warranty cost is based on the Company’s historical experience with its systems and regional labor costs. The Company calculates the average service hours by region and parts expense per system utilizing actual service records to determine the estimated warranty charge. The Company updates its warranty estimates on a quarterly basis when the actual product performance or field expense differs from original estimates.

Shipping and Handling Costs

(h) Shipping and Handling Costs

 

Shipping and handling costs are expenses incurred to move, package, and prepare the Company’s products for shipment and to move the products to a customer’s designated location. These costs are generally comprised of payments to third-party shippers. Shipping and handling costs are included in “Cost of sales” in the Consolidated Statements of Operations.

 

Research and Development Costs

(i) Research and Development Costs

 

Research and development costs are expensed as incurred and include charges for the development of new technology and the transition of existing technology into new products or services.

 

Advertising Expense

(j) Advertising Expense

 

The cost of advertising is expensed as incurred and totaled $0.9 million, $0.9 million, and $0.8 million for the years ended December 31, 2018, 2017, and 2016, respectively.

Accounting for Share-Based Compensation

(k) Accounting for Share-Based Compensation

 

Share-based awards exchanged for employee services are accounted for under the fair value method. Accordingly, share-based compensation cost is measured at the grant date based on the fair value of the award. The expense for awards is recognized over the employee’s requisite service period (generally the vesting period of the award). The Company has elected to treat awards with only service conditions and with graded vesting as one award. Consequently, the total compensation expense is recognized straight-line over the entire vesting period, so long as the compensation cost recognized at any date at least equals the portion of the grant date fair value of the award that is vested at that date.

 

In addition to stock options, restricted share awards (“RSAs”) and restricted stock units (“RSUs”) with time-based vesting, the Company grants performance share units and awards (“PSUs” and “PSAs”) that have either performance or market conditions. Compensation cost for PSUs and PSAs with performance conditions is recognized over the requisite service period based on the timing and expected level of achievement of the performance targets. A change in the assessment of performance attainment prior to the conclusion of the performance period is recognized in the period of the change in estimate. Compensation cost for PSUs and PSAs with market conditions is recognized over the requisite service period regardless of the expected level of achievement. For all PSUs and PSAs, the number of shares issued to the employee at the conclusion of the service period may vary from the original target based upon the level of attainment of the performance or market conditions.

 

The Company uses the Black-Scholes option-pricing model to compute the estimated fair value of option awards and purchase rights under the Employee Stock Purchase Plan. The Company uses a Monte Carlo simulation to compute the estimated fair value of awards with market conditions. The Black-Scholes model and Monte Carlo simulation include assumptions regarding dividend yields, expected volatility, expected option term, and risk-free interest rates. See Note 15, “Stock Plans,” for additional information.

 

See Note 1(t), “Recently Adopted Accounting Standards,” for additional information concerning the Company’s adoption of Accounting Standards Update (“ASU”) 2016-09: Stock Compensation: Improvements to Employee Share-Based Payment Accounting.

Income Taxes

(l) Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rate is recognized in income in the period that includes the enactment date.

 

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “2017 Tax Act”), which made broad and complex changes to the U.S. tax code. In response to the 2017 Tax Act, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) which provided guidance on accounting for the tax effects of 2017 Tax Act, including addressing any uncertainty or diversity of view in applying ASC 740, Income Taxes (“ASC 740”), in the reporting period in which the 2017 Tax Act was enacted. In addition, SAB 118 provided a measurement period that should not extend beyond one year from the 2017 Tax Act enactment date for companies to complete the accounting under ASC 740. During the year ended December 31, 2018, the Company finalized the accounting for the tax effects of 2017 Tax Act.

 

In January 2018, the FASB released guidance on the accounting for taxes under the global intangible low-taxed income (“GILTI”) provisions of the 2017 Tax Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign operations. The Company has made a policy election to account for income taxes incurred under GILTI as a period cost.

Concentration of Credit Risk

(m) Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, investments, derivative financial instruments used in hedging activities, and accounts receivable. The Company invests in a variety of financial instruments and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. The Company has not experienced any material credit losses on its investments.

 

The Company maintains an allowance reserve for potentially uncollectible accounts for estimated losses resulting from the inability of its customers to make required payments. The Company evaluates its allowance for doubtful accounts based on a combination of factors. In circumstances where specific invoices are deemed to be uncollectible, the Company provides a specific allowance for bad debt against the amount due to reduce the net recognized receivable to the amount reasonably expected to be collected. The Company also provides allowances based on its write-off history. The allowance for doubtful accounts totaled $0.3 million at December 31, 2018 and 2017.

 

To further mitigate the Company’s exposure to uncollectable accounts, the Company may request certain customers provide a negotiable irrevocable letter of credit drawn on a reputable financial institution. These irrevocable letters of credit are typically issued to mature between zero and 90 days from the date the documentation requirements are met, typically when a system ships or upon receipt of final acceptance from the customer. The Company, at its discretion, may monetize these letters of credit on a non-recourse basis after they become negotiable but before maturity. The fees associated with the monetization are included in “Selling, general, and administrative” in the Consolidated Statements of Operations and were immaterial for the years ended December 31, 2018, 2017, and 2016.

 

Fair Value of Financial Instruments

(n) Fair Value of Financial Instruments

 

The carrying amounts of financial instruments, including cash equivalents, accounts receivable, accounts payable, and accrued expenses reflected in the consolidated financial statements approximate fair value due to their short-term maturities. The fair value of debt for footnote disclosure purposes, including current maturities, if any, is estimated using recently quoted market prices of the instrument, or if not available, a discounted cash flow analysis based on the estimated current incremental borrowing rates for similar types of instruments.

Cash, Cash Equivalents, and Short-Term Investments

(o) Cash, Cash Equivalents, and Short-Term Investments

 

All financial instruments purchased with an original maturity of three months or less at the time of purchase are considered cash equivalents. Such items may include liquid money market funds, certificate of deposit and time deposit accounts, U.S. treasuries, government agency securities, and corporate debt. Investments that are classified as cash equivalents are carried at cost, which approximates fair value. The Company’s cash and cash equivalents includes $69.6 million and $76.7 million of cash equivalents at December 31, 2018 and 2017, respectively.

 

A portion of the Company’s cash and cash equivalents is held by its subsidiaries throughout the world, frequently in each subsidiary’s respective functional currency, which is typically the U.S. dollar. Approximately 32% and 77% of cash and cash equivalents were maintained outside the United States at December 31, 2018 and 2017, respectively.

 

Marketable debt securities are generally classified as available-for-sale for use in current operations, if required, and are reported at fair value, with unrealized gains and losses, net of tax, presented as a separate component of stockholders’ equity under the caption “Accumulated other comprehensive income.” These securities can include U.S. treasuries, government agency securities, corporate debt, and commercial paper, all with maturities of greater than three months when purchased. All realized gains and losses and unrealized losses resulting from declines in fair value that are other than temporary are included in “Other, net” in the Consolidated Statements of Operations. The specific identification method is used to determine the realized gains and losses on investments.

 

Non-marketable equity securities are equity securities without readily observable market prices and are included in “Other assets” in the Consolidated Balance Sheets. Non-marketable securities are measured at cost, adjusted for changes in observable prices minus impairment. Changes in fair value are included in “Other, net” in the Consolidated Statements of Operations.

Inventories

(p) Inventories

 

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Each quarter the Company assesses the valuation of all inventories: materials (raw materials, spare parts, and service inventory); work-in-process; and finished goods. Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its estimated net realizable value if less than cost. Estimates of net realizable value include, but are not limited to, management’s forecasts related to the Company’s future manufacturing schedules, customer demand, technological and/or market obsolescence, general market conditions, possible alternative uses, and the ultimate realization of excess inventory. If future customer demand or market conditions are less favorable than the Company’s projections, additional inventory write-downs may be required and would be reflected in cost of sales in the period the revision is made. Inventory acquired as part of a business combination is recorded at fair value on the date of acquisition. See Note 5, “Business Combinations,” for additional information.

 

Business Combinations

(q) Business Combinations

 

The Company allocates the fair value of the purchase consideration of the Company’s acquisitions to the tangible assets, intangible assets, including in-process research and development (“IPR&D”), if any, and liabilities assumed, based on estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred. See Note 5, “Business Combinations,” for additional information.

Goodwill and Indefinite-Lived Intangibles

(r) Goodwill and Indefinite-Lived Intangible Assets

 

Goodwill is an asset representing the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is measured as the excess of the consideration transferred over the net fair value of identifiable assets acquired and liabilities assumed. Intangible assets with indefinite useful lives are measured at their respective fair values on the acquisition date. Intangible assets related to IPR&D projects are considered to be indefinite-lived until the completion or abandonment of the associated R&D efforts. If and when development is complete, the associated assets would be deemed long-lived and would then be amortized based on their respective estimated useful lives at that point in time. Goodwill and indefinite-lived intangibles are not amortized into results of operations but instead are evaluated for impairment. The Company performs the evaluation in the beginning of the fourth quarter of each year or more frequently if impairment indicators arise.

 

In testing goodwill for impairment, the Company may first perform a qualitative assessment of whether it is more likely than not that the reporting unit’s fair value is less than its carrying amount, and, if so, the Company then quantitatively compares the fair value of the reporting unit to its carrying amount. If the fair value exceeds the carrying amount, goodwill is not impaired. If the carrying amount exceeds fair value, the Company then records an impairment loss equal to the difference, up to the carrying value of goodwill.

 

The Company determines the fair value of its reporting unit based on a reconciliation of the fair value of the reporting unit to the Company’s adjusted market capitalization. The adjusted market capitalization is calculated by multiplying the average share price of the Company’s common stock for the last ten trading days prior to the measurement date by the number of outstanding common shares and adding a control premium. The control premium is estimated using historical transactions in similar industries.

 

In testing indefinite-lived intangible assets for impairment, the Company may first perform a qualitative assessment of whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, and, if so, the Company then quantitatively compares the fair value of the indefinite-lived intangible asset to its carrying amount. The Company determines the fair value of its indefinite-lived intangible assets using a discounted cash flow method.

Long-Lived Assets

(s) Long-Lived Assets

 

Long-lived intangible assets consist of purchased technology, customer relationships, patents, trademarks and tradenames, and backlog and are initially recorded at fair value. Long-lived intangible assets are amortized over their estimated useful lives in a method reflecting the pattern in which the economic benefits are consumed or straight-lined if such pattern cannot be reliably determined.

 

Property, plant, and equipment are recorded at cost. Depreciation expense is calculated based on the estimated useful lives of the assets by using the straight-line method. Amortization of leasehold improvements is recognized using the straight-line method over the shorter of the remaining lease term or the estimated useful lives of the improvements.

 

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, a recoverability test is performed utilizing undiscounted cash flows expected to be generated by that asset or asset group compared to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models or, when available, quoted market values and third-party appraisals.

Recently Adopted Accounting Standards and Recent Accounting Pronouncements Not Yet Adopted

(t) Recently Adopted Accounting Standards

 

The Company adopted ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), as of January 1, 2018, using the full retrospective method. All amounts and disclosures set forth in this Form 10-K reflect these changes. The most significant financial statement impacts of adopting ASC 606 are the elimination of the constraint on revenue associated with the billing retention related to the receipt of customer final acceptance and the identification of installation services as a performance obligation. The elimination of the constraint on revenue related to customer final acceptance, which is usually about 10 percent of a system sale, is now generally recognized at the time the Company transfers control of the system to the customer, which is earlier than under the Company’s previous revenue recognition model for certain contracts that were subject to the billing constraint. The performance obligation related to installation services is now recognized as the installation services are performed, which is later than the Company’s previous revenue recognition model.

 

The Company applied ASC 606 retrospectively and elected to use the disclosure exemption in the transition guidance under which the Company does not disclose prior period information regarding the amount of the transaction price allocated to remaining performance obligations. The cumulative effect of the adoption was recognized as a decrease to Accumulated deficit of $6.9 million on January 1, 2016. The following tables summarize the impact of adoption on the Company’s previously reported financial position and results of operations:

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

As reported

    

Adjustments

    

As adjusted

 

 

 (in thousands)

Balance Sheet

 

 

 

 

 

 

 

Contract assets

 

$

$

160

$

160

Deferred cost of sales

 

 

16,060

 

(66)

 

15,994

Deferred income taxes

 

 

2,953

 

94

 

3,047

Accrued expenses and other current liabilities

 

 

60,339

 

(2,271)

 

58,068

Customer deposits and deferred revenue

 

 

108,953

 

3,079

 

112,032

Additional paid-in capital

 

 

1,053,079

 

(1,126)

 

1,051,953

Accumulated deficit

 

 

(213,376)

 

506

 

(212,870)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

2017

 

2016

 

    

As reported

    

Adjustments

    

As adjusted

    

As reported

    

Adjustments

    

As adjusted

 

(in thousands, except per share amounts)

Statement of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

484,756

 

$

(9,070)

 

$

475,686

 

$

332,451

 

$

(749)

 

$

331,702

Cost of sales

 

 

300,438

 

 

(980)

 

 

299,458

 

 

199,593

 

 

(989)

 

 

198,604

Income tax expense (benefit)

 

 

(36,107)

 

 

(1,487)

 

 

(37,594)

 

 

2,766

 

 

57

 

 

2,823

Net income (loss)

 

 

(44,793)

 

 

(6,603)

 

 

(51,396)

 

 

(122,210)

 

 

183

 

 

(122,027)

Diluted earnings (loss) per share

 

 

(1.01)

 

 

(0.15)

 

 

(1.16)

 

 

(3.11)

 

 

0.01

 

 

(3.10)

 

The Company’s adoption of the standard had no impact to cash provided by or used in operating, investing, or financing activities on the Consolidated Statements of Cash Flows.

 

The Company adopted ASU 2016-01, Financial Instruments – Overall, as of January 1, 2018. This ASU requires certain equity investments to be measured at fair value, with changes in fair value recognized in net income. The Company measures equity investments without readily observable market prices at cost, adjusted for changes in observable prices minus impairment. Changes in measurement are included in “Other, net” in the Consolidated Statements of Operations. This ASU has not had a material impact on the consolidated financial statements upon adoption, and the Company will monitor its equity investments each reporting period for changes in observable market prices, if any, which may be material in future periods.

 

The Company adopted ASU 2016-09: Stock Compensation: Improvements to Employee Share-Based Payment Accounting, as of January 1, 2016. This ASU simplifies several aspects of the accounting for share-based payments. Beginning in 2016, excess tax benefits and deficiencies are recognized as income tax expense or benefit in the income statement in the reporting period incurred. The Company also made an accounting policy election to account for forfeitures when they occur. The ASU transition guidance requires that this election be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period in which the ASU is adopted. Accordingly, the Company recorded a $1.3 million charge to the opening accumulated deficit balance as of January 1, 2016, with a corresponding adjustment to additional paid-in capital, resulting in no impact to the opening balance of total stockholders’ equity. In addition, the Company recorded additional deferred tax assets with an equally offsetting valuation allowance of $2.4 million.

 

(u) Recent Accounting Pronouncements Not Yet Adopted

 

In February 2016, the FASB issued ASU 2016-02: Leases, which, along with subsequent ASUs related to this topic, has been codified as Accounting Standards Codification 842 (“ASC 842”). ASC 842 generally requires operating lessee rights and obligations to be recognized as assets and liabilities on the balance sheet. The new standard, which is effective for the Company on January 1, 2019, offers a transition option whereby companies can recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. The Company plans to adopt using this transition method. In addition, ASC 842 provides for a number of optional exemptions in transition. The Company expects to elect certain exemptions whereby prior conclusions regarding lease identification, lease classification, and initial direct costs are not required to be reassessed under the new standard. The Company also plans to elect allowable policies whereby the Company will not separate lease and non-lease components, and the Company will not recognize an asset or liability for leases with original terms or renewals of one year or less. Upon adoption, the Company expects to recognize an operating lease liability ranging from $12 million to $16 million based on the present value of remaining minimum rental payments on existing leases, with corresponding assets of approximately the same amount.

 

The Company is also evaluating other pronouncements recently issued but not yet adopted. The adoption of these pronouncements is not expected to have a material impact on our consolidated financial statements.

v3.19.1
Significant Accounting Policies (Tables)
12 Months Ended
Dec. 31, 2018
Change in Accounting Principle  
Summary of impact on adoption of accounting standards on previously reported financial position and results

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

As reported

    

Adjustments

    

As adjusted

 

 

 (in thousands)

Balance Sheet

 

 

 

 

 

 

 

Contract assets

 

$

$

160

$

160

Deferred cost of sales

 

 

16,060

 

(66)

 

15,994

Deferred income taxes

 

 

2,953

 

94

 

3,047

Accrued expenses and other current liabilities

 

 

60,339

 

(2,271)

 

58,068

Customer deposits and deferred revenue

 

 

108,953

 

3,079

 

112,032

Additional paid-in capital

 

 

1,053,079

 

(1,126)

 

1,051,953

Accumulated deficit

 

 

(213,376)

 

506

 

(212,870)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

2017

 

2016

 

    

As reported

    

Adjustments

    

As adjusted

    

As reported

    

Adjustments

    

As adjusted

 

(in thousands, except per share amounts)

Statement of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

484,756

 

$

(9,070)

 

$

475,686

 

$

332,451

 

$

(749)

 

$

331,702

Cost of sales

 

 

300,438

 

 

(980)

 

 

299,458

 

 

199,593

 

 

(989)

 

 

198,604

Income tax expense (benefit)

 

 

(36,107)

 

 

(1,487)

 

 

(37,594)

 

 

2,766

 

 

57

 

 

2,823

Net income (loss)

 

 

(44,793)

 

 

(6,603)

 

 

(51,396)

 

 

(122,210)

 

 

183

 

 

(122,027)

Diluted earnings (loss) per share

 

 

(1.01)

 

 

(0.15)

 

 

(1.16)

 

 

(3.11)

 

 

0.01

 

 

(3.10)

 

v3.19.1
Income (Loss) Per Share (Tables)
12 Months Ended
Dec. 31, 2018
Income (Loss) Per Share  
Schedule of basic and diluted income (loss) per share and weighted average shares

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands, except per share amounts)

Net income (loss)

 

$

(407,088)

 

$

(51,396)

 

$

(122,027)

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

(8.63)

 

$

(1.16)

 

$

(3.10)

Diluted

 

$

(8.63)

 

$

(1.16)

 

$

(3.10)

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

47,151

 

 

44,174

 

 

39,340

Effect of potentially dilutive share-based awards

 

 

 —

 

 

 —

 

 

 —

Diluted weighted average shares outstanding

 

 

47,151

 

 

44,174

 

 

39,340

 

 

 

 

 

 

 

 

 

 

Unvested participating shares excluded from basic weighted average shares outstanding since the securityholders are not obligated to fund losses

 

 

20

 

 

72

 

 

312

Common share equivalents excluded from the diluted weighted average shares outstanding since Veeco incurred a net loss and their effect would be antidilutive

 

 

28

 

 

239

 

 

107

Potentially dilutive non-participating shares excluded from the diluted calculation as their effect would be antidilutive

 

 

2,474

 

 

1,744

 

 

1,896

Maximum potential shares to be issued for settlement of the Convertible Senior Notes excluded from the diluted calculation as their effect would be antidilutive

 

 

8,618

 

 

8,618

 

 

 —

 

v3.19.1
Fair Value Measurements (Tables)
12 Months Ended
Dec. 31, 2018
Fair Value Measurements  
Schedule of assets measured on a recurring basis at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Level 1

    

Level 2

    

Level 3

    

Total

 

 

(in thousands)

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

Certificate of deposits and time deposits

 

$

65,571

 

$

 —

 

$

 —

 

$

65,571

U.S. treasuries

 

 

3,990

 

 

 —

 

 

 —

 

 

3,990

Total

 

$

69,561

 

$

 —

 

$

 —

 

$

69,561

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

37,184

 

$

 —

 

$

 —

 

$

37,184

Corporate debt

 

 

 —

 

 

8,516

 

 

 —

 

 

8,516

Commercial paper

 

 

 —

 

 

2,489

 

 

 —

 

 

2,489

Total

 

$

37,184

 

$

11,005

 

$

 —

 

$

48,189

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

Certificate of deposits and time deposits

 

$

64,249

 

$

 —

 

$

 —

 

$

64,249

U.S. treasuries

 

 

12,490

 

 

 —

 

 

 —

 

 

12,490

Total

 

$

76,739

 

$

 —

 

$

 —

 

$

76,739

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

33,895

 

$

 —

 

$

 —

 

$

33,895

Corporate debt

 

 

 —

 

 

10,886

 

 

 —

 

 

10,886

Commercial paper

 

 

 —

 

 

2,999

 

 

 —

 

 

2,999

Total

 

$

33,895

 

$

13,885

 

$

 —

 

$

47,780

 

v3.19.1
Investments (Tables)
12 Months Ended
Dec. 31, 2018
Investments  
Schedule of amortized cost and fair value of available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Gross

    

Gross

    

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Estimated

 

 

Cost

 

Gains

 

Losses

 

Fair Value

 

 

(in thousands)

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

37,191

 

$

 —

 

$

(7)

 

$

37,184

Corporate debt

 

 

8,525

 

 

 —

 

 

(9)

 

 

8,516

Commercial paper

 

 

2,489

 

 

 —

 

 

 —

 

 

2,489

Total

 

$

48,205

 

$

 —

 

$

(16)

 

$

48,189

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

33,914

 

$

 —

 

$

(19)

 

$

33,895

Corporate debt

 

 

10,894

 

 

 —

 

 

(8)

 

 

10,886

Commercial paper

 

 

2,999

 

 

 —

 

 

 —

 

 

2,999

Total

 

$

47,807

 

$

 —

 

$

(27)

 

$

47,780

 

Schedule of fair value and unrealized losses of available-for-sale securities in a loss position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

December 31, 2017

 

    

 

 

    

Gross

    

 

    

Gross

 

 

Estimated

 

Unrealized

 

Estimated

 

Unrealized

 

 

Fair Value

 

Losses

 

Fair Value

 

Losses

 

 

(in thousands)

U.S. treasuries

 

$

37,184

 

$

(7)

 

$

33,895

 

$

(19)

Corporate debt

 

 

8,516

 

 

(9)

 

 

10,886

 

 

(8)

Total

 

$

45,700

 

$

(16)

 

$

44,781

 

$

(27)

 

v3.19.1
Business Combinations (Tables)
12 Months Ended
Dec. 31, 2018
Business Combinations  
Schedule of acquisition date fair value of the consideration transferred net of cash acquired

 

 

 

 

 

    

Acquisition Date

 

 

(May 26, 2017)

 

 

(in thousands)

Cash consideration, net of cash acquired of $229.4 million

 

$

404,490

Equity consideration (7.2 million shares issued)

 

 

228,643

Replacement equity awards attributable to pre-acquisition service

 

 

228

Acquisition date fair value

 

$

633,361

 

Summary of the estimated fair values of the assets acquired, net of cash acquired, and liabilities assumed

 

 

 

 

 

    

Acquisition Date

 

 

(May 26, 2017)

 

 

(in thousands)

Short-term investments

 

$

47,161

Accounts receivable

 

 

45,465

Inventories

 

 

59,100

Deferred cost of sales

 

 

242

Prepaid expense and other current assets

 

 

7,217

Property, plant, and equipment

 

 

18,152

Intangible assets

 

 

346,940

Other assets

 

 

6,442

Total identifiable assets acquired

 

 

530,719

 

 

 

 

Accounts payable

 

 

24,291

Accrued expenses and other current liabilities

 

 

16,356

Customer deposits and deferred revenue

 

 

4,834

Deferred income taxes

 

 

32,478

Other liabilities

 

 

11,622

Total liabilities assumed

 

 

89,581

 

 

 

 

Net identifiable assets acquired

 

 

441,138

Goodwill

 

 

192,223

Net assets acquired

 

$

633,361

 

Schedule of classes of intangible assets acquired and the estimated weighted-average useful life of each class

 

 

 

 

 

 

 

 

 

Acquisition Date

 

 

(May 26, 2017)

 

    

Amount

    

Useful life

 

 

(in thousands)

 

 

 

Technology

 

$

158,390

 

 9

years

Customer relationships

 

 

116,710

 

12

years

Backlog

 

 

3,080

 

 6

months

In-process research and development

 

 

43,340

 

*

 

Trademark and tradenames

 

 

25,420

 

 7

years

Intangible assets acquired

 

$

346,940

 

 

 


*In-process research and development will be amortized (or impaired) upon completion (or abandonment) of the development project.

Schedule of amounts of revenue and income (loss) from continuing operations before income taxes

 

 

 

 

 

    

Year ended

 

 

December 31, 2017

 

 

(in thousands)

Net sales

 

$

65,280

Loss before income taxes

 

$

(62,284)

 

Schedule of pro forma financial information

 

 

 

 

 

 

 

 

 

For the year ended December 31,

 

    

2017

    

2016

 

(in thousands, except per share amounts)

Net sales

 

$

546,428

 

$

525,752

Loss before income taxes

 

 

(90,000)

 

 

(217,783)

Diluted earnings per share

 

$

(1.38)

 

$

(4.67)

 

v3.19.1
Goodwill and Intangible Assets (Tables)
12 Months Ended
Dec. 31, 2018
Goodwill and Intangible Assets  
Schedule of changes in goodwill

 

 

 

 

 

 

 

 

 

 

 

    

Gross carrying

    

Accumulated

    

 

 

 

amount

 

impairment

 

Net amount

 

    

(in thousands)

Balance at December 31, 2016

 

$

238,108

 

$

123,200

 

$

114,908

Acquisition

 

 

192,223

 

 

 —

 

 

192,223

Balance at December 31, 2017

 

 

430,331

 

 

123,200

 

 

307,131

Impairment

 

 

 —

 

 

122,829

 

 

(122,829)

Balance at December 31, 2018

 

$

430,331

 

$

246,029

 

$

184,302

 

Schedule of intangible assets excluding goodwill

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

December 31, 2017

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Accumulated

 

 

 

 

    

Remaining

    

Gross

    

Amortization

    

 

    

Gross

    

Amortization

    

 

 

 

Amortization

 

Carrying

 

and

 

Net

 

Carrying

 

and

 

Net

 

 

Period

 

Amount

 

Impairment

 

Amount

 

Amount

 

Impairment

 

Amount

 

 

(in years)

 

(in thousands)

Technology

 

6.4

 

$

337,218

 

$

290,808

 

$

46,410

 

$

307,588

 

$

133,121

 

$

174,467

Customer relationships

 

10.2

 

 

164,595

 

 

136,126

 

 

28,469

 

 

164,595

 

 

39,336

 

 

125,259

In-process R&D

 

 —

 

 

13,710

 

 

10,530

 

 

3,180

 

 

43,340

 

 

 —

 

 

43,340

Trademarks and tradenames

 

5.4

 

 

30,910

 

 

23,899

 

 

7,011

 

 

30,910

 

 

4,321

 

 

26,589

Other

 

1.3

 

 

3,686

 

 

3,607

 

 

79

 

 

3,686

 

 

3,498

 

 

188

Total

 

7.3

 

$

550,119

 

$

464,970

 

$

85,149

 

$

550,119

 

$

180,276

 

$

369,843

 

Schedule of estimated annual amortization expense, excluding in-process R&D for intangible assets with definite useful lives

 

 

 

 

 

 

Amortization

 

    

(in thousands)

2019

 

$

16,820

2020

 

 

15,894

2021

 

 

12,772

2022

 

 

10,438

2023

 

 

8,675

Thereafter

 

 

17,370

Total

 

$

81,969

 

v3.19.1
Inventories (Tables)
12 Months Ended
Dec. 31, 2018
Inventories  
Schedule of inventories

 

 

 

 

 

 

 

 

 

December 31,

 

    

2018

    

2017

 

 

(in thousands)

Materials

 

$

90,816

 

$

59,919

Work-in-process

 

 

42,354

 

 

37,222

Finished goods

 

 

23,141

 

 

23,125

Total

 

$

156,311

 

$

120,266

 

v3.19.1
Property, Plant, and Equipment and Assets Held for Sale (Tables)
12 Months Ended
Dec. 31, 2018
Property, Plant, and Equipment and Assets Held for Sale  
Schedule of property, plant, and equipment

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

    

2018

    

2017

    

Average Useful Life

 

 

(in thousands)

 

 

Land

 

$

5,669

 

$

5,669

 

N/A

Building and improvements

 

 

61,124

 

 

54,449

 

10 – 40 years

Machinery and equipment (1)

 

 

128,385

 

 

126,829

 

3 – 10 years

Leasehold improvements

 

 

9,033

 

 

10,073

 

3 – 7 years

Gross property, plant, and equipment

 

 

204,211

 

 

197,020

 

 

Less: accumulated depreciation and amortization

 

 

123,927

 

 

111,962

 

 

Net property, plant, and equipment

 

$

80,284

 

$

85,058

 

 


(1)

Machinery and equipment also includes software, furniture, and fixtures

 

v3.19.1
Accrued Expenses and Other Liabilities (Tables)
12 Months Ended
Dec. 31, 2018
Accrued Expenses and Other Liabilities  
Schedule of accrued expenses and other current liabilities

 

 

 

 

 

 

 

 

 

December 31,

 

    

2018

    

2017

 

 

(in thousands)

Payroll and related benefits

 

$

20,486

 

$

32,996

Warranty

 

 

7,852

 

 

6,532

Interest

 

 

4,321

 

 

4,430

Professional fees

 

 

2,897

 

 

3,942

Merger consideration payable

 

 

 —

 

 

2,662

Sales, use, and other taxes

 

 

2,670

 

 

2,144

Restructuring liability

 

 

2,213

 

 

1,520

Other

 

 

6,011

 

 

3,842

Total

 

$

46,450

 

$

58,068

 

Schedule of changes in deferred revenue

 

 

 

 

 

 

(in thousands)

Balance - December 31, 2017

 

$

70,536

Deferral of revenue

 

 

10,251

Recognition of previously deferred revenue

 

 

(36,372)

Balance - December 31, 2018

 

$

44,415

 

v3.19.1
Restructuring Charges (Tables)
12 Months Ended
Dec. 31, 2018
Restructuring Charges  
Schedule of restructuring accrual activities

 

 

 

 

 

 

 

 

 

 

 

    

Personnel

    

Facility

    

 

 

 

 

Severance and

 

Related Costs

 

 

 

 

 

Related Costs

 

and Other

 

Total

 

 

(in thousands)

Balance - December 31, 2015

 

$

824

 

$

 —

 

$

824

Provision

 

 

4,544

 

 

1,098

 

 

5,642

Changes in estimate

 

 

(2)

 

 

 —

 

 

(2)

Payments

 

 

(3,570)

 

 

(1,098)

 

 

(4,668)

Balance - December 31, 2016

 

 

1,796

 

 

 —

 

 

1,796

Provision

 

 

4,714

 

 

5,257

 

 

9,971

Payments

 

 

(4,990)

 

 

(5,257)

 

 

(10,247)

Balance - December 31, 2017

 

 

1,520

 

 

 —

 

 

1,520

Provision

 

 

4,681

 

 

2,714

 

 

7,395

Payments

 

 

(4,058)

 

 

(2,644)

 

 

(6,702)

Balance - December 31, 2018

 

$

2,143

 

$

70

 

$

2,213

 

v3.19.1
Commitments and Contingencies (Tables)
12 Months Ended
Dec. 31, 2018
Commitments and Contingencies  
Schedule of changes in product warranty reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

2018

 

2017

    

2016

 

 

 

(in thousands)

Balance, beginning of the year

 

$

6,532

 

$

4,217

 

$

8,159

Warranties issued

 

 

6,737

 

 

5,817

 

 

3,916

Addition from Ultratech acquisition

 

 

 —

 

 

1,889

 

 

 —

Consumption of reserves

 

 

(6,573)

 

 

(6,330)

 

 

(6,433)

Changes in estimate

 

 

1,156

 

 

939

 

 

(1,425)

Balance, end of the year

 

$

7,852

 

$

6,532

 

$

4,217

 

Schedule of future minimum lease payments under non-cancelable operating leases (exclusive of renewal options)

Minimum lease commitments at December 31, 2018 for property and equipment under operating lease agreements (exclusive of renewal options) are payable as follows:

 

 

 

 

 

 

 

Operating

 

    

Leases

 

 

(in thousands)

Payments due by period:

 

 

2019

 

$

5,143

2020

 

 

5,056

2021

 

 

2,432

2022

 

 

1,812

2023

 

 

1,066

Thereafter

 

 

548

Total

 

$

16,057

 

Schedule of customers who accounted for more than 10% of our aggregate accounts receivable or net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts Receivable

 

Net Sales 

 

 

 

December 31,

 

For the Year Ended December 31,

 

Customer

    

2018

    

2017

    

2018

    

2017

    

2016

 

Customer A

 

*

 

24

%  

*

 

21

%  

14

%

Customer B

 

22

%  

*

 

*

 

*

 

*

 

Customer C

 

*

 

*

 

12

%  

*

 

*

 


*Less than 10% of aggregate accounts receivable or net sales

 

v3.19.1
Debt (Tables)
12 Months Ended
Dec. 31, 2018
Debt  
Schedule of carrying value of Convertible Senior Notes

 

 

 

 

 

 

 

 

 

December 31,

 

    

2018

    

2017

 

 

(in thousands)

Principal amount

 

$

345,000

 

$

345,000

Unamortized debt discount

 

 

(52,336)

 

 

(63,022)

Unamortized transaction costs

 

 

(5,272)

 

 

(6,348)

Net carrying value

 

$

287,392

 

$

275,630

 

Schedule of interest expense related to Convertible Senior Notes

 

 

 

 

 

 

 

 

 

For the year ended December 31,

 

 

2018

 

2017

 

 

(in thousands)

Cash Interest Expense

 

 

  

 

 

  

Coupon interest expense

 

$

9,315

 

$

8,901

Non-Cash Interest Expense

 

 

  

 

 

  

Amortization of debt discount

 

 

10,686

 

 

9,490

Amortization of transaction costs

 

 

1,076

 

 

956

Total Interest Expense

 

$

21,077

 

$

19,347

 

v3.19.1
Derivative Financial Instruments (Tables)
12 Months Ended
Dec. 31, 2018
Derivative Financial Instruments  
Schedule of notional amount and fair value of derivatives

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

    

Fair Value

    

Maturity Dates

    

Notional Amount

 

 

(in thousands)

Foreign currency exchange forwards

 

$

 —

 

January 2018

 

$

622

 

Schedule of gains and (losses) and weighted average notional amount of derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

2018

 

2017

 

2016

 

 

 

Gains (losses)

 

Weighted average notional amount

 

 

Gains (losses)

 

Weighted average notional amount

 

 

Gains (losses)

 

Weighted average notional amount

 

 

(in thousands)

Foreign currency exchange forwards

 

$

327

 

2,869

 

$

(6)

 

314

 

$

219

 

7,175

 

v3.19.1
Stockholders' Equity (Tables)
12 Months Ended
Dec. 31, 2018
Equity  
Schedule of the changes in the balances of each component of AOCI, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized

 

 

 

 

 

 

 

 

 

Gains (Losses)

 

 

 

 

 

Foreign

 

Minimum

 

on Available

 

 

 

 

 

Currency

 

Pension

 

for Sale 

 

 

 

 

    

Translation

    

Liability

    

Securities

    

Total

 

 

(in thousands)

Balance - December 31, 2015

 

$

2,246

 

$

(866)

 

$

(32)

 

$

1,348

Other comprehensive income (loss), before reclassifications

 

 

(19)

 

 

 —

 

 

(6)

 

 

(25)

Amounts reclassified from AOCI

 

 

(430)

 

 

866

 

 

18

 

 

454

Other comprehensive income (loss)

 

 

(449)

 

 

866

 

 

12

 

 

429

Balance - December 31, 2016

 

 

1,797

 

 

 —

 

 

(20)

 

 

1,777

Other comprehensive income (loss)

 

 

42

 

 

 —

 

 

(7)

 

 

35

Balance - December 31, 2017

 

 

1,839

 

 

 —

 

 

(27)

 

 

1,812

Other comprehensive income (loss)

 

 

(3)

 

 

 —

 

 

11

 

 

 8

Balance - December 31, 2018

 

$

1,836

 

$

 —

 

$

(16)

 

$

1,820

 

v3.19.1
Stock Plans (Tables)
12 Months Ended
Dec. 31, 2018
Stock Plans  
Schedule of share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands)

Cost of sales

 

$

1,885

 

$

2,505

 

$

1,956

Research and development

 

 

3,611

 

 

2,957

 

 

3,324

Selling, general, and administrative

 

 

9,417

 

 

12,851

 

 

10,433

Restructuring

 

 

1,161

 

 

1,880

 

 

 —

Acquisition costs

 

 

 —

 

 

4,203

 

 

 —

Total

 

$

16,074

 

$

24,396

 

$

15,713

 

Summary of unrecognized share-based compensation costs

 

 

 

 

 

 

 

    

Unrecognized

    

Weighted

 

 

Share-Based

 

Average Period

 

 

Compensation

 

Expected to be

 

 

Costs

 

Recognized

 

 

(in thousands)

(in years)

Stock option awards

 

$

 —

 

 —

Restricted stock units

 

 

2,466

 

2.4

Restricted stock awards

 

 

19,663

 

2.6

Performance share units

 

 

7,356

 

2.4

Total unrecognized share-based compensation cost

 

$

29,485

 

2.5

 

Schedule of options, vested and expected to vest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

Number

 

Weighted

 

Average

 

Aggregate

 

 

of

 

Average

 

Remaining

 

Intrinsic

 

    

Shares

    

Exercise Price

    

Contractual Life

    

Value

 

 

(in thousands)

 

 

(in years)

 

(in thousands)

Vested

 

1,222

 

$

34.80

 

3.0

 

 —

Expected to vest

 

 —

 

 

 —

 

 —

 

 —

Total

 

1,222

 

 

34.80

 

3.0

 

 —

 

Summary of stock option activity

 

 

 

 

 

 

 

 

 

 

Weighted 

 

 

Number of

 

Average

 

    

Shares

    

Exercise Price

 

 

(in thousands)

 

 

 

Balance -  December 31, 2015

 

2,064

 

$

32.91

Granted

 

 —

 

 

 —

Exercised

 

(194)

 

 

12.18

Expired or forfeited

 

(294)

 

 

34.44

Balance -  December 31, 2016

 

1,576

 

 

35.18

Granted

 

 —

 

 

 —

Exercised

 

(18)

 

 

30.03

Expired or forfeited

 

(164)

 

 

37.47

Balance -  December 31, 2017

 

1,394

 

 

34.97

Granted

 

 —

 

 

 —

Exercised

 

 —

 

 

 —

Expired or forfeited

 

(172)

 

 

36.21

Balance -  December 31, 2018

 

1,222

 

 

34.80

 

Summary of information about stock option information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Outstanding

 

Options Exercisable

 

    

 

    

 

 

    

Weighted

    

 

    

 

    

 

 

    

Weighted

    

 

 

 

 

 

Aggregate

 

Average

 

Weighted

 

 

 

Aggregate

 

Average

 

Weighted

 

 

 

 

Intrinsic

 

Remaining

 

Average

 

 

 

Intrinsic

 

Remaining

 

Average

Range of Exercise Prices

 

Shares

 

Value

 

Contractual Life

 

Exercise Price

 

Shares

 

Value

 

Contractual Life

 

Exercise Price

 

 

(in thousands)

 

(in thousands)

 

(in years)

 

 

 

(in thousands)

 

(in thousands)

 

(in years)

 

 

 

$20.00 - $30.00

 

25

 

$

 —

 

3.6

 

$

28.13

 

25

 

$

 —

 

3.6

 

$

28.13

$30.01 - $40.00

 

1,058

 

 

 —

 

3.1

 

 

32.81

 

1,058

 

 

 —

 

3.1

 

 

32.81

$40.01 - $50.00

 

12

 

 

 —

 

1.7

 

 

45.57

 

12

 

 

 —

 

1.7

 

 

45.57

$50.01 - $60.00

 

127

 

 

 —

 

2.4

 

 

51.70

 

127

 

 

 —

 

2.4

 

 

51.70

 

 

1,222

 

$

 —

 

3.0

 

 

34.80

 

1,222

 

$

 —

 

3.0

 

 

34.80

 

Summary of information on options exercised

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands)

Cash received from options exercised

 

$

 —

 

$

431

 

$

494

Intrinsic value of options exercised

 

$

 —

 

$

51

 

$

1,165

 

Summary of non-vested restricted and performance shares activity

 

 

 

 

 

 

 

    

 

    

Weighted

 

 

 

 

Average

 

 

Number of

 

Grant Date

 

 

Shares

 

Fair Value

 

 

(in thousands)

 

 

 

Balance -  December 31, 2015

 

1,398

 

$

31.97

Granted

 

1,166

 

 

17.59

Vested

 

(349)

 

 

32.73

Forfeited

 

(266)

 

 

27.31

Balance -  December 31, 2016

 

1,949

 

 

23.85

Granted

 

674

 

 

29.22

Performance award adjustments

 

(25)

 

 

20.95

Assumed from Ultratech

 

338

 

 

31.75

Vested

 

(831)

 

 

27.67

Forfeited

 

(225)

 

 

26.29

Balance -  December 31, 2017

 

1,880

 

 

25.41

Granted

 

1,257

 

 

17.37

Performance award adjustments

 

(5)

 

 

32.67

Vested

 

(523)

 

 

26.39

Forfeited

 

(391)

 

 

24.66

Balance -  December 31, 2018

 

2,218

 

 

20.74

 

Summary of valuation assumptions for performance awards

 

 

 

 

 

 

 

Year ended December 31,

 

 

 

2018

 

Weighted average fair value

 

$

15.58

 

Dividend yield

 

 

 0

%

Expected volatility factor(1)

 

 

49

%

Risk-free interest rate(2)

 

 

2.88

%

Expected life (in years)(3)

 

 

3.0

 


(1)

Expected volatility is measured using historical daily price changes of the Company’s stock over the respective expected term.

(2)

The risk-free rate for periods within the contractual term is based on the U.S. Treasury yield curve in effect at the time of grant.

(3)

The expected life is the number of years the Company estimates that the awards will be outstanding prior to exercise.

Summary of valuation assumptions for employee stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

 

2018

    

2017

    

2016

 

Weighted average fair value

 

$

4.94

 

$

7.09

 

$

4.45

 

Dividend yield

 

 

 0

%  

 

 0

%  

 

 0

%

Expected volatility factor(1)

 

 

62

%  

 

36

%  

 

43

%

Risk-free interest rate(2)

 

 

1.81

%  

 

0.99

%  

 

0.35

%

Expected life (in years)(3)

 

 

0.5

 

 

0.5

 

 

0.5

 


(1)

Expected volatility is measured using historical daily price changes of the Company’s stock over the respective expected term.

(2)

The risk-free rate for periods within the contractual term is based on the U.S. Treasury yield curve in effect at the time of grant.

(3)

The expected life is the number of years the Company estimates that the purchase rights will be outstanding prior to exercise.

v3.19.1
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2018
Income Taxes  
Schedule of income (loss) from continuing operations before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands)

Domestic

 

$

(286,561)

 

$

(101,573)

 

$

(123,089)

Foreign

 

 

(147,273)

 

 

12,583

 

 

3,885

Total

 

$

(433,834)

 

$

(88,990)

 

$

(119,204)

 

Schedule of components of the expense (benefit) for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands)

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

(1,682)

 

$

 —

 

$

 —

Foreign

 

 

2,518

 

 

(2,246)

 

 

1,937

State and local

 

 

38

 

 

15

 

 

(111)

Total current expense (benefit) for income taxes

 

 

874

 

 

(2,231)

 

 

1,826

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

205

 

 

(35,912)

 

 

1,459

Foreign

 

 

(27,932)

 

 

1,291

 

 

(589)

State and local

 

 

107

 

 

(742)

 

 

127

Total deferred expense (benefit) for income taxes

 

 

(27,620)

 

 

(35,363)

 

 

997

Total expense (benefit) for income taxes

 

$

(26,746)

 

$

(37,594)

 

$

2,823

 

Schedule of reconciliation of the income tax expense computed using the Federal statutory rate to actual income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands)

Income tax expense (benefit) at U.S. statutory rates

 

$

(91,105)

 

$

(31,147)

 

$

(41,722)

State taxes, net of U.S. federal impact

 

 

(2,848)

 

 

(2,523)

 

 

(1,963)

Effect of international operations

 

 

11,847

 

 

10,158

 

 

8,798

Research and development tax credit

 

 

(2,230)

 

 

620

 

 

(801)

Net change in valuation allowance

 

 

7,747

 

 

1,883

 

 

50,544

Change in accrual for unrecognized tax benefits

 

 

2,868

 

 

(4,772)

 

 

(1,700)

Subsidiary liquidation

 

 

 —

 

 

 —

 

 

(12,435)

Share-based compensation

 

 

1,848

 

 

99

 

 

2,133

Effect of 2017 Tax Act

 

 

(1,690)

 

 

(11,344)

 

 

 —

Asset impairment

 

 

46,872

 

 

 —

 

 

 —

Other

 

 

(55)

 

 

(568)

 

 

(31)

Total expense (benefit) for income taxes

 

$

(26,746)

 

$

(37,594)

 

$

2,823

 

Schedule of deferred tax assets and liabilities

 

 

 

 

 

 

 

 

 

December 31,

 

    

2018

    

2017

 

 

(in thousands)

Deferred tax assets: 

 

 

 

 

 

 

Inventory valuation

 

$

8,943

 

$

8,007

Net operating losses

 

 

67,787

 

 

73,458

Credit carry forwards

 

 

52,592

 

 

34,966

Warranty and installation accruals

 

 

1,695

 

 

1,690

Share-based compensation

 

 

6,981

 

 

7,385

Other

 

 

2,182

 

 

1,832

Total deferred tax assets

 

 

140,180

 

 

127,338

Valuation allowance

 

 

(114,955)

 

 

(100,456)

Net deferred tax assets

 

 

25,225

 

 

26,882

 

 

 

 

 

 

 

Deferred tax liabilities: 

 

 

 

 

 

 

Purchased intangible assets

 

 

15,401

 

 

45,807

Convertible Senior Notes

 

 

11,265

 

 

13,534

Depreciation

 

 

2,380

 

 

1,339

Total deferred tax liabilities

 

 

29,046

 

 

60,680

Net deferred taxes

 

$

(3,821)

 

$

(33,798)

 

Schedule of reconciliation of beginning and ending amount of uncertain tax positions

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands)

Balance at beginning of year

 

$

8,269

 

$

7,452

 

$

9,152

Additions for tax positions related to current year

 

 

2,154

 

 

511

 

 

1,038

Additions for tax positions related to prior years

 

 

1,721

 

 

 3

 

 

233

Reductions for tax positions related to prior years

 

 

(934)

 

 

(4,877)

 

 

(2,826)

Reductions due to the lapse of the statute of limitations

 

 

(26)

 

 

(122)

 

 

(39)

Settlements

 

 

(47)

 

 

(287)

 

 

(106)

Additions for business combination

 

 

 —

 

 

5,589

 

 

 —

Balance at end of year

 

$

11,137

 

$

8,269

 

$

7,452

 

v3.19.1
Segment Reporting and Geographic Information (Tables)
12 Months Ended
Dec. 31, 2018
Segment Reporting and Geographic Information  
Schedule of sales by end-market

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31,

 

    

2018

    

2017

    

2016

 

 

(in thousands)

Sales by end-market

 

 

 

 

 

 

 

 

 

Advanced Packaging, MEMS & RF Filters

 

$

90,775

 

$

67,406

 

$

67,484

LED Lighting, Display & Compound Semiconductor

 

 

249,974

 

 

248,615

 

 

145,701

Front-End Semiconductor

 

 

62,582

 

 

40,319

 

 

8,427

Scientific & Industrial

 

 

138,751

 

 

119,346

 

 

110,090

Total

 

$

542,082

 

$

475,686

 

$

331,702

 

Schedule of sales by geographic region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales to Unaffiliated Customers

 

Long-lived Tangible Assets

 

    

2018

    

2017

    

2016

    

2018

    

2017

    

2016

 

 

(in thousands)

United States

 

$

125,659

 

$

93,433

 

$

85,582

 

$

78,503

 

$

81,046

 

$

60,012

China

 

 

194,032

 

 

106,674

 

 

84,604

 

 

81

 

 

64

 

 

219

EMEA(1)

 

 

89,102

 

 

72,979

 

 

84,181

 

 

205

 

 

231

 

 

93

Rest of World

 

 

133,289

 

 

202,600

 

 

77,335

 

 

1,495

 

 

3,717

 

 

322

Total

 

$

542,082

 

$

475,686

 

$

331,702

 

$

80,284

 

$

85,058

 

$

60,646


(1)

EMEA consists of Europe, the Middle East, and Africa

v3.19.1
Selected Quarterly Financial Information (unaudited) (Tables)
12 Months Ended
Dec. 31, 2018
Selected Quarterly Financial Information (unaudited)  
Schedule of unaudited quarterly financial data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal 2018

 

Fiscal 2017

 

    

Q1

    

Q2

    

Q3

    

Q4

    

Q1

    

Q2

    

Q3

    

Q4

 

 

(in thousands, except per share amounts)

Net sales

 

$

158,574

 

$

157,779

 

$

126,757

 

$

98,972

 

$

94,499

 

$

112,218

 

$

129,308

 

$

139,661

Gross profit

 

 

56,680

 

 

55,395

 

 

46,385

 

 

35,259

 

 

34,500

 

 

35,847

 

 

50,529

 

 

55,352

Net income (loss)

 

 

(15,827)

 

 

(237,634)

 

 

(8,953)

 

 

(144,674)

 

 

1,640

 

 

(20,817)

 

 

(23,740)

 

 

(8,479)

Basic income (loss) per common share

 

 

(0.34)

 

 

(5.02)

 

 

(0.19)

 

 

(3.11)

 

 

0.04

 

 

(0.49)

 

 

(0.51)

 

 

(0.18)

Diluted income (loss) per common share

 

 

(0.34)

 

 

(5.02)

 

 

(0.19)

 

 

(3.11)

 

 

0.04

 

 

(0.49)

 

 

(0.51)

 

 

(0.18)

 

v3.19.1
Significant Accounting Policies - Description of Business (Details)
12 Months Ended
Dec. 31, 2018
segment
Significant Accounting Policies  
Number of Operating Segments 1
v3.19.1
Significant Accounting Policies - Basis of Presentation (Details)
12 Months Ended
Dec. 31, 2018
Significant Accounting Policies  
Fiscal period duration (in days) 91 days
v3.19.1
Significant Accounting Policies - Revenue Recognition (Details)
12 Months Ended
Dec. 31, 2018
Accounting Changes  
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract [true false] true
Adjustments for adoption of guidance | ASU 2014-09, Revenue from Contracts with Customers  
Accounting Changes  
Billing retention recognized at time of transfer of control (as a percent) 10.00%
v3.19.1
Significant Accounting Policies - Warranty Costs (Details)
12 Months Ended
Dec. 31, 2018
Significant Accounting Policies  
Warranty period 1 year
v3.19.1
Significant Accounting Policies - Advertising Expense (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Significant Accounting Policies      
Advertising expense $ 0.9 $ 0.9 $ 0.8
v3.19.1
Significant Accounting Policies - Accounting for Share-Based Compensation (Details)
$ in Millions
12 Months Ended
Dec. 31, 2018
USD ($)
item
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Significant Accounting Policies      
Number of awards with which entity has elected to treat awards with only service conditions and with graded vesting | item 1    
Advertising expense | $ $ 0.9 $ 0.9 $ 0.8
v3.19.1
Significant Accounting Policies - Concentration of Credit Risk (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Significant Accounting Policies    
Allowance for doubtful accounts receivable $ 0.3 $ 0.3
Maturity period of irrevocable letters of credit, minimum 0 days  
Maturity period of irrevocable letters of credit, maximum 90 days  
v3.19.1
Significant Accounting Policies - Cash, Cash Equivalents, and Short-Term Investments (Details) - USD ($)
$ in Millions
Dec. 31, 2018
Dec. 31, 2017
Significant Accounting Policies    
Cash equivalents $ 69.6 $ 76.7
Cash and cash equivalents maintained outside the United States (as a percent) 32.00% 77.00%
v3.19.1
Significant Accounting Policies - Goodwill and Indefinite-Lived Intangibles (Details)
12 Months Ended
Dec. 31, 2018
Significant Accounting Policies  
Number of trading days used in adjusted market capitalization calculation 10 days
v3.19.1
Significant Accounting Policies - Recently Adopted Accounting Standards - Balance Sheet (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Jan. 01, 2016
Accounting Changes      
Contract assets $ 10,397 $ 160  
Deferred cost of sales 3,072 15,994  
Deferred income taxes 1,869 3,047  
Accrued expenses and other current liabilities 46,450 58,068  
Customer deposits and deferred revenue 72,736 112,032  
Additional paid-in capital 1,061,325 1,051,953  
Accumulated deficit $ (619,983) (212,870)  
ASU 2014-09, Revenue from Contracts with Customers | Previously Reported      
Accounting Changes      
Deferred cost of sales   16,060  
Deferred income taxes   2,953  
Accrued expenses and other current liabilities   60,339  
Customer deposits and deferred revenue   108,953  
Additional paid-in capital   1,053,079  
Accumulated deficit   (213,376)  
ASU 2014-09, Revenue from Contracts with Customers | Adjustments for adoption of guidance      
Accounting Changes      
Contract assets   160  
Deferred cost of sales   (66)  
Deferred income taxes   94  
Accrued expenses and other current liabilities   (2,271)  
Customer deposits and deferred revenue   3,079  
Additional paid-in capital   (1,126)  
Accumulated deficit   $ 506 $ 6,900
v3.19.1
Significant Accounting Policies - Recently Adopted Accounting Standards - Statement of Operations (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Accounting Changes                      
Net sales $ 98,972 $ 126,757 $ 157,779 $ 158,574 $ 139,661 $ 129,308 $ 112,218 $ 94,499 $ 542,082 $ 475,686 $ 331,702
Cost of sales                 348,363 299,458 198,604
Income tax expense (benefit)                 (26,746) (37,594) 2,823
Net income (loss) $ (144,674) $ (8,953) $ (237,634) $ (15,827) $ (8,479) $ (23,740) $ (20,817) $ 1,640 $ (407,088) $ (51,396) $ (122,027)
Diluted earnings (loss) per share (in dollars per share) $ (3.11) $ (0.19) $ (5.02) $ (0.34) $ (0.18) $ (0.51) $ (0.49) $ 0.04 $ (8.63) $ (1.16) $ (3.10)
Previously Reported | ASU 2014-09, Revenue from Contracts with Customers                      
Accounting Changes                      
Net sales                   $ 484,756 $ 332,451
Cost of sales                   300,438 199,593
Income tax expense (benefit)                   (36,107) 2,766
Net income (loss)                   $ (44,793) $ (122,210)
Diluted earnings (loss) per share (in dollars per share)                   $ (1.01) $ (3.11)
Adjustments for adoption of guidance | ASU 2014-09, Revenue from Contracts with Customers                      
Accounting Changes                      
Net sales                   $ (9,070) $ (749)
Cost of sales                   (980) (989)
Income tax expense (benefit)                   (1,487) 57
Net income (loss)                   $ (6,603) $ 183
Diluted earnings (loss) per share (in dollars per share)                   $ (0.15) $ 0.01
v3.19.1
Significant Accounting Policies - Recently Adopted Accounting Standards - ASU 2016-09 (Details) - USD ($)
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Jan. 01, 2016
Dec. 31, 2015
Accounting Changes          
Accumulated deficit $ (619,983,000) $ (212,870,000)      
Additional paid-in capital 1,061,325,000 1,051,953,000      
Total stockholders' equity 437,775,000 840,093,000 $ 601,704,000   $ 714,615,000
Deferred tax assets before valuation allowance 140,180,000 127,338,000      
Deferred tax assets valuation allowance $ 114,955,000 $ 100,456,000      
ASU 2016-09 | Early Adoption of New Accounting Principle          
Accounting Changes          
Accumulated deficit       $ (1,300,000)  
Additional paid-in capital       1,300,000  
Total stockholders' equity       0  
Deferred tax assets before valuation allowance       2,400,000  
Deferred tax assets valuation allowance       $ 2,400,000  
v3.19.1
Significant Accounting Policies - Recent Accounting Pronouncements (Details) - ASU 2016-02
$ in Millions
Jan. 01, 2019
USD ($)
Minimum  
Accounting Changes  
Operating lease liability $ 12.0
Operating lease asset 12.0
Maximum  
Accounting Changes  
Operating lease liability 16.0
Operating lease asset $ 16.0
v3.19.1
Income (Loss) Per Common Share - Basic and Diluted (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Income (Loss) Per Share                      
Net income (loss) $ (144,674) $ (8,953) $ (237,634) $ (15,827) $ (8,479) $ (23,740) $ (20,817) $ 1,640 $ (407,088) $ (51,396) $ (122,027)
Net income (loss) per common share:                      
Basic (in dollars per share) $ (3.11) $ (0.19) $ (5.02) $ (0.34) $ (0.18) $ (0.51) $ (0.49) $ 0.04 $ (8.63) $ (1.16) $ (3.10)
Diluted (in dollars per share) $ (3.11) $ (0.19) $ (5.02) $ (0.34) $ (0.18) $ (0.51) $ (0.49) $ 0.04 $ (8.63) $ (1.16) $ (3.10)
Weighted average shares reconciliation                      
Basic weighted average shares outstanding                 47,151 44,174 39,340
Diluted weighted average shares outstanding                 47,151 44,174 39,340
v3.19.1
Income (Loss) Per Common Share - Shares Excluded from EPS (Details) - shares
shares in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Unvested participating shares      
Basic income (loss) per share      
Unvested participating shares excluded from basic weighted average shares outstanding since the securityholders are not obligated to fund losses 20 72 312
Common stock equivalents      
Diluted income (loss) per share      
Common share equivalents excluded from the diluted weighted average shares outstanding since Veeco incurred a net loss and their effect would be antidilutive 28 239 107
Non-participating shares      
Diluted income (loss) per share      
Shares excluded from the diluted calculation as their effect would be antidilutive 2,474 1,744 1,896
Convertible Notes      
Diluted income (loss) per share      
Shares excluded from the diluted calculation as their effect would be antidilutive 8,618 8,618  
v3.19.1
Fair Value Measurements (Details) - Measured at fair value on a recurring basis - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Cash equivalents    
Total Cash equivalents $ 69,561 $ 76,739
Short-term investments    
Total Short-term investments 48,189 47,780
Certificate of deposits and time deposits    
Cash equivalents    
Total Cash equivalents 65,571 64,249
U.S. treasuries    
Cash equivalents    
Total Cash equivalents 3,990 12,490
Short-term investments    
Total Short-term investments 37,184 33,895
Corporate debt    
Short-term investments    
Total Short-term investments 8,516 10,886
Commercial paper    
Short-term investments    
Total Short-term investments 2,489 2,999
Level 1    
Cash equivalents    
Total Cash equivalents 69,561 76,739
Short-term investments    
Total Short-term investments 37,184 33,895
Level 1 | Certificate of deposits and time deposits    
Cash equivalents    
Total Cash equivalents 65,571 64,249
Level 1 | U.S. treasuries    
Cash equivalents    
Total Cash equivalents 3,990 12,490
Short-term investments    
Total Short-term investments 37,184 33,895
Level 2    
Short-term investments    
Total Short-term investments 11,005 13,885
Level 2 | Corporate debt    
Short-term investments    
Total Short-term investments 8,516 10,886
Level 2 | Commercial paper    
Short-term investments    
Total Short-term investments $ 2,489 $ 2,999
v3.19.1
Investments - Available-For-Sale Securities (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Total available-for-sale securities    
Amortized Cost $ 48,205 $ 47,807
Gross Unrealized Losses (16) (27)
Estimated Fair Value 48,189 47,780
Available-for-sale securities in a loss position    
Estimated Fair Value 45,700 44,781
Gross Unrealized Losses (16) (27)
Short-term investments in a continuous loss position    
Investments that had been in a continuous loss position for more than 12 months 0 0
U.S. treasuries    
Total available-for-sale securities    
Amortized Cost 37,191 33,914
Gross Unrealized Losses (7) (19)
Estimated Fair Value 37,184 33,895
Available-for-sale securities in a loss position    
Estimated Fair Value 37,184 33,895
Gross Unrealized Losses (7) (19)
Corporate debt    
Total available-for-sale securities    
Amortized Cost 8,525 10,894
Gross Unrealized Losses (9) (8)
Estimated Fair Value 8,516 10,886
Available-for-sale securities in a loss position    
Estimated Fair Value 8,516 10,886
Gross Unrealized Losses (9) (8)
Commercial paper    
Total available-for-sale securities    
Amortized Cost 2,489 2,999
Estimated Fair Value $ 2,489 $ 2,999
v3.19.1
Investments - Other Investment (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Other Investment      
Impairment charges for investments $ 0.0 $ 0.0 $ 0.0
Kateeva      
Other Investment      
Carrying amount $ 21.0 $ 21.0  
Kateeva | Maximum      
Other Investment      
Percentage ownership of cost method investee 20.00%    
Separate non-marketable investment      
Other Investment      
Amount of investment made $ 3.5    
Separate non-marketable investment | Maximum      
Other Investment      
Percentage ownership of cost method investee 20.00%    
v3.19.1
Business Combinations - Ultratech (Details) - Ultratech
$ / shares in Units, $ in Thousands
May 26, 2017
USD ($)
$ / shares
shares
Business Combinations  
Cash received by acquiree (in dollars per share) | $ / shares $ 21.75
Number of shares received by acquiree | shares 0.2675
Acquisition date fair value, net of cash acquired | $ $ 633,361
v3.19.1
Business Combinations - Consideration (Details) - Ultratech - USD ($)
$ in Thousands, shares in Millions
May 26, 2017
Dec. 31, 2017
Fair value of the consideration transferred    
Cash consideration, net of cash acquired $ 404,490  
Cash acquired 229,400  
Equity consideration (7.2 million shares issued) $ 228,643  
Shares issued (in shares) 7.2  
Replacement equity awards attributable to pre-acquisition service $ 228  
Acquisition date fair value $ 633,361  
Accrued expenses and other current liabilities    
Fair value of the consideration transferred    
Cash merger consideration   $ 2,700
v3.19.1
Business Combinations- Fair Value (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
May 26, 2017
Dec. 31, 2016
Summary of estimated fair values of the assets acquired and liabilities assumed        
Goodwill $ 184,302 $ 307,131   $ 114,908
Ultratech        
Summary of estimated fair values of the assets acquired and liabilities assumed        
Short-term investments     $ 47,161  
Account receivable     45,465  
Inventories     59,100  
Deferred cost of sales     242  
Prepaid expense and other current assets     7,217  
Property, plant, and equipment     18,152  
Intangible assets     346,940  
Other assets     6,442  
Total identifiable assets acquired     530,719  
Accounts payable     24,291  
Accrued expenses and other current liabilities     16,356  
Customer deposits and deferred revenue     4,834  
Deferred income taxes     32,478  
Other liabilities     11,622  
Total liabilities assumed     89,581  
Net identifiable assets acquired     441,138  
Goodwill     192,223  
Net assets acquired     633,361  
Gross contractual value of accounts receivable     $ 46,000  
v3.19.1
Business Combinations - Intangible Assets (Details) - Ultratech
$ in Thousands
May 26, 2017
USD ($)
Intangible assets acquired and the estimated weighted-average useful life  
Intangible assets acquired, amount $ 346,940
In-process R&D  
Intangible assets acquired and the estimated weighted-average useful life  
Intangible assets acquired, amount 43,340
Technology  
Intangible assets acquired and the estimated weighted-average useful life  
Intangible assets acquired, amount $ 158,390
Useful life 9 years
Customer relationships  
Intangible assets acquired and the estimated weighted-average useful life  
Intangible assets acquired, amount $ 116,710
Useful life 12 years
Backlog  
Intangible assets acquired and the estimated weighted-average useful life  
Intangible assets acquired, amount $ 3,080
Useful life 6 months
Trademarks and tradenames  
Intangible assets acquired and the estimated weighted-average useful life  
Intangible assets acquired, amount $ 25,420
Useful life 7 years
v3.19.1
Business Combinations - IPRD and other (Details) - USD ($)
$ in Thousands
12 Months Ended
May 26, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Business Combinations        
Acquisition related costs   $ 2,959 $ 17,786  
Non-cash charges related to share based compensation   16,074 24,396 $ 15,741
Amortization of intangible assets   32,351 35,475 19,219
Restructuring Charges.   8,556 11,851 $ 5,640
Ultratech        
Business Combinations        
Intangible assets acquired, amount $ 346,940      
Portion of IPR&D related to lithography technologies (as a percent) 50.00%      
Portion of IPR&D related to laser annealing technologies (as a percent) 33.00%      
Acquisition related costs   $ 3,000 17,800  
Non-cash charges related to share based compensation     4,200  
Net sales     65,280  
Loss before income taxes     (62,284)  
Inventory fair value step-up related to purchase accounting     9,600  
Amortization of intangible assets     23,900  
Restructuring Charges.     $ 3,300  
In-process R&D | Ultratech        
Business Combinations        
Intangible assets acquired, amount $ 43,340      
v3.19.1
Business Combinations - ProForma (Details) - Ultratech - USD ($)
$ / shares in Units, $ in Thousands
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Pro forma consolidated statement of operations    
Net sales $ 546,428 $ 525,752
Loss before income taxes $ (90) $ (217,783)
Diluted earnings per share (in dollars per share) $ (1.38) $ (4.67)
v3.19.1
Goodwill and Intangible Assets - Goodwill (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Goodwill    
Gross carrying amount, beginning balance $ 430,331 $ 238,108
Accumulated impairment, beginning balance 123,200 123,200
Net amount, beginning balance 307,131 114,908
Acquisition   192,223
Impairment 122,829  
Gross carrying amount, ending balance 430,331 430,331
Accumulated impairment, ending balance 246,029 123,200
Net amount, ending balance $ 184,302 $ 307,131
Number of trading days used in adjusted market capitalization calculation 10 days  
v3.19.1
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Jun. 30, 2018
Dec. 31, 2018
Dec. 31, 2016
Dec. 31, 2017
Intangible assets        
Weighted Average Remaining Amortization Period   7 years 3 months 18 days    
Net Amount, Definite-lived intangible assets   $ 81,969    
Total Gross Intangible Assets   550,119   $ 550,119
Accumulated Amortization and Impairment   464,970   180,276
Total Net Intangible Assets   85,149   369,843
Impairment charges, Definite-lived intangible assets $ 216,400      
In-process R&D        
Intangible assets        
Gross Carrying Amount, Indefinite-lived intangible assets   13,710   43,340
Accumulated Amortization and Impairment, Indefinite-lived intangible assets   10,530    
Net Amount, Indefinite-lived intangible assets   $ 3,180   43,340
Impairment charges, Indefinite-lived intangible assets $ 35,900      
Technology        
Intangible assets        
Weighted Average Remaining Amortization Period   6 years 4 months 24 days    
Gross Carrying Amount, Definite-lived intangible assets   $ 337,218   307,588
Accumulated Amortization and Impairment, Definite-lived intangible assets   290,808   133,121
Net Amount, Definite-lived intangible assets   $ 46,410   174,467
Impairment charges, Definite-lived intangible assets     $ 54,300  
Customer relationships        
Intangible assets        
Weighted Average Remaining Amortization Period   10 years 2 months 12 days    
Gross Carrying Amount, Definite-lived intangible assets   $ 164,595   164,595
Accumulated Amortization and Impairment, Definite-lived intangible assets   136,126   39,336
Net Amount, Definite-lived intangible assets   $ 28,469   125,259
Trademarks and tradenames        
Intangible assets        
Weighted Average Remaining Amortization Period   5 years 4 months 24 days    
Gross Carrying Amount, Definite-lived intangible assets   $ 30,910   30,910
Accumulated Amortization and Impairment, Definite-lived intangible assets   23,899   4,321
Net Amount, Definite-lived intangible assets   $ 7,011   26,589
Other Intangible Assets        
Intangible assets        
Weighted Average Remaining Amortization Period   1 year 3 months 18 days    
Gross Carrying Amount, Definite-lived intangible assets   $ 3,686   3,686
Accumulated Amortization and Impairment, Definite-lived intangible assets   3,607   3,498
Net Amount, Definite-lived intangible assets   $ 79   $ 188
v3.19.1
Goodwill and Intangible Assets - Amortization (Details)
$ in Thousands
Dec. 31, 2018
USD ($)
Estimated aggregate amortization expense  
2019 $ 16,820
2020 15,894
2021 12,772
2022 10,438
2023 8,675
Thereafter 17,370
Net Amount, Definite-lived intangible assets $ 81,969
v3.19.1
Inventories (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Inventories    
Materials $ 90,816 $ 59,919
Work-in-process 42,354 37,222
Finished goods 23,141 23,125
Total $ 156,311 $ 120,266
v3.19.1
Property, Plant, and Equipment and Assets Held for Sale - Property and Equipment (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Property, plant, and equipment      
Gross property, plant and equipment $ 204,211 $ 197,020  
Less: accumulated depreciation and amortization 123,927 111,962  
Net property, plant, and equipment 80,284 85,058 $ 60,646
Depreciation expense 17,600 14,600 13,400
Property, plant and equipment, impairment charge     $ 3,300
Land      
Property, plant, and equipment      
Gross property, plant and equipment 5,669 5,669  
Building and improvements      
Property, plant, and equipment      
Gross property, plant and equipment $ 61,124 54,449  
Building and improvements | Minimum      
Property, plant, and equipment      
Average Useful Life 10 years    
Building and improvements | Maximum      
Property, plant, and equipment      
Average Useful Life 40 years    
Machinery and equipment      
Property, plant, and equipment      
Gross property, plant and equipment $ 128,385 126,829  
Machinery and equipment | Minimum      
Property, plant, and equipment      
Average Useful Life 3 years    
Machinery and equipment | Maximum      
Property, plant, and equipment      
Average Useful Life 10 years    
Leaseholds improvements      
Property, plant, and equipment      
Gross property, plant and equipment $ 9,033 $ 10,073  
Leaseholds improvements | Minimum      
Property, plant, and equipment      
Average Useful Life 3 years    
Leaseholds improvements | Maximum      
Property, plant, and equipment      
Average Useful Life 7 years    
v3.19.1
Property, Plant, and Equipment and Assets Held For Sale - Assets Held For Sale (Details)
$ in Thousands
12 Months Ended
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
building
Assets held for sale      
Asset impairment charges $ 375,172 $ 1,139 $ 69,520
Assets held for sale $ 0 0  
South Korea      
Assets held for sale      
Number of facilities listed for sale | building     2
Asset impairment charges     $ 4,500
St. Paul, Minnesota      
Assets held for sale      
Asset impairment charges   $ 700 1,200
Lab equipment      
Assets held for sale      
Non-cash impairment charges     $ 6,200
v3.19.1
Accrued Expenses and Other Liabilities - Components (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Accrued expenses and other current liabilities    
Payroll and related benefits $ 20,486 $ 32,996
Warranty 7,852 6,532
Interest 4,321 4,430
Professional fees 2,897 3,942
Merger consideration payable   2,662
Sales, use, and other taxes 2,670 2,144
Restructuring liability 2,213 1,520
Other 6,011 3,842
Total $ 46,450 $ 58,068
v3.19.1
Accrued Expenses and Other Liabilities - Customer deposits and deferred revenue (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Customer deposits and deferred revenue    
Customer deposits and deferred revenue $ 28,300 $ 41,500
Changes in deferred revenue    
Beginning balance 70,536  
Deferral of revenue 10,251  
Recognition of previously deferred revenue (36,372)  
Ending balance $ 44,415  
v3.19.1
Accrued Expenses and Other Liabilities - Performance Obligation Amount (Details)
$ in Millions
Dec. 31, 2018
USD ($)
Accrued Expenses and Other Liabilities  
Remaining performance obligations $ 74.0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01  
Performance obligations  
Percentage of remaining performance obligation expected to be recognized 67.00%
v3.19.1
Accrued Expenses and Other Liabilities - Performance Obligation Timing (Details)
12 Months Ended
Dec. 31, 2018
Accrued Expenses and Other Liabilities  
Revenue, Practical Expedient, Remaining Performance Obligation true
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01  
Performance obligations  
Remaining performance obligations, expected timing of satisfaction 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01  
Performance obligations  
Remaining performance obligations, expected timing of satisfaction 3 years
v3.19.1
Accrued Expenses and Other Liabilities - Other liabilities (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Other liabilities    
Income taxes payable $ 1,256 $ 3,846
Other Assets    
Other liabilities    
Deferred compensation plan assets 3,200 3,400
Other Liabilities    
Other liabilities    
Deferred compensation plan liabilities 3,500 4,700
Asset retirement obligations 3,200 3,300
Medical and dental benefits 2,200 $ 2,200
Income taxes payable $ 1,000  
v3.19.1
Restructuring Charges - Information (Details)
$ in Thousands
3 Months Ended 12 Months Ended
Sep. 30, 2018
USD ($)
employee
Jun. 30, 2018
employee
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Restructuring Accruals          
Restructuring charges     $ 8,556 $ 11,851 $ 5,640
Non-cash charges related to share based compensation     16,074 24,396 $ 15,741
Reduce excess capacity          
Restructuring Accruals          
Number of employees terminated | employee   40      
Reduce costs          
Restructuring Accruals          
Number of employees terminated | employee 35        
Restructuring          
Restructuring Accruals          
Non-cash charges related to share based compensation     1,200 $ 1,900  
Personnel severance and related costs | Reduce excess capacity          
Restructuring Accruals          
Restructuring charges     $ 2,800    
Personnel severance and related costs | Reduce costs          
Restructuring Accruals          
Restructuring charges $ 1,200        
v3.19.1
Restructuring Charges - Rollforward (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Restructuring accruals roll forward      
Balance at the beginning of the period $ 1,520 $ 1,796 $ 824
Provision 7,395 9,971 5,642
Changes in estimate     (2)
Payments (6,702) (10,247) (4,668)
Balance at the end of the period 2,213 1,520 1,796
Personnel severance and related costs      
Restructuring accruals roll forward      
Balance at the beginning of the period 1,520 1,796 824
Provision 4,681 4,714 4,544
Changes in estimate     (2)
Payments (4,058) (4,990) (3,570)
Balance at the end of the period 2,143 1,520 1,796
Facility Closing Costs      
Restructuring accruals roll forward      
Provision 2,714 5,257 1,098
Payments (2,644) $ (5,257) $ (1,098)
Balance at the end of the period $ 70    
v3.19.1
Commitments and Contingencies - Warranty (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Warranty      
Warranty period of products purchased 1 year    
Balance, beginning of the year $ 6,532 $ 4,217 $ 8,159
Warranties issued 6,737 5,817 3,916
Addition from Ultratech acquisition   1,889  
Consumption of reserves (6,573) (6,330) (6,433)
Changes in estimate 1,156 939 (1,425)
Balance, end of the year $ 7,852 $ 6,532 $ 4,217
v3.19.1
Commitments and Contingencies - Minimum Lease Commitments (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Minimum lease payments under non-cancelable leases      
Lease expense $ 6,300 $ 5,300 $ 2,500
Property and equipment under operating leases      
Minimum lease payments under non-cancelable leases      
2019 5,143    
2020 5,056    
2021 2,432    
2022 1,812    
2023 1,066    
Thereafter 548    
Total $ 16,057    
v3.19.1
Commitments and Contingencies - Legal Proceedings (Detail)
Aug. 08, 2018
case
Commitments and Contingencies  
Number of purported class action complaints filed 2
v3.19.1
Commitments and Contingencies - Concentration of Credit Risk (Details) - customer
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Ten largest customers      
Concentration of Credit Risk      
Number of customers 10    
Accounts Receivable | Credit Concentration Risk | Ten largest customers      
Concentration of Credit Risk      
Concentration Risk (as a percent) 61.00% 67.00%  
Accounts Receivable | Credit Concentration Risk | Customer A      
Concentration of Credit Risk      
Concentration Risk (as a percent)   24.00%  
Accounts Receivable | Credit Concentration Risk | Customer B      
Concentration of Credit Risk      
Concentration Risk (as a percent) 22.00%    
Net Sales | Credit Concentration Risk | Customer A      
Concentration of Credit Risk      
Concentration Risk (as a percent)   21.00% 14.00%
Net Sales | Credit Concentration Risk | Customer C      
Concentration of Credit Risk      
Concentration Risk (as a percent) 12.00%    
v3.19.1
Commitments and Contingencies - Receivables (Details)
12 Months Ended
Dec. 31, 2018
Minimum  
Concentration of Credit Risk  
Credit period for accounts receivable 30 days
Maximum  
Concentration of Credit Risk  
Credit period for accounts receivable 90 days
v3.19.1
Commitments and Contingencies - Receivable Purchase Agreement (Details) - USD ($)
$ in Millions
1 Months Ended
Dec. 31, 2017
Dec. 31, 2018
Commitments and Contingencies    
Trade receivables from customers without recourse to be sold, maximum amount $ 23.0  
Receivable Purchase Agreement, term 1 year  
Trade receivables, sold $ 15.0 $ 0.0
Trade receivable, available for additional sales $ 8.0  
v3.19.1
Commitments and Contingencies - Suppliers (Details) - USD ($)
$ in Millions
Dec. 31, 2018
Dec. 31, 2017
Purchase Commitments    
Deposits with suppliers $ 12.8 $ 7.6
v3.19.1
Commitments and Contingencies - Purchase Commitments and Bank Guarantees (Details)
$ in Millions
Dec. 31, 2018
USD ($)
Purchase commitments  
Purchase commitments due within one year $ 91.5
Bank guarantees  
Bank guarantees and letters of credit outstanding 6.8
Unused bank guarantees and letters of credit $ 58.9
v3.19.1
Debt - Convertible Senior Notes (Details)
12 Months Ended
Jan. 10, 2017
USD ($)
D
$ / shares
Dec. 31, 2017
USD ($)
Dec. 31, 2018
USD ($)
Debt      
Proceeds from long-term debt borrowings   $ 335,752,000  
Convertible Notes      
Debt      
Principal amount $ 345,000,000 345,000,000 $ 345,000,000
Interest rate (as a percent) 2.70%    
Proceeds from long-term debt borrowings $ 335,800,000    
Conversion rate 0.249800    
Conversion price (in dollars per share) | $ / shares $ 40.03    
Multiples of principal holders may convert $ 1,000    
Consecutive trading days | D 30    
Stock price trigger (as a percent) 130.00%    
Trading days 5    
Number of consecutive business days 5 days    
Maximum percentage of common stock conversion 98.00%    
Measurement input 7.00    
Long-term Debt, Measurement Input [Extensible List] us-gaap:MeasurementInputDiscountRateMember    
Debt discount $ 72,500,000 $ 63,022,000 $ 52,336,000
Transaction costs 9,200,000    
Transaction costs allocated to the equity component $ 1,900,000    
Convertible Notes | Minimum      
Debt      
Trading days | D 20    
v3.19.1
Debt - Carrying Value - Convertible Senior Notes (Details) - Convertible Notes - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Jan. 10, 2017
Debt      
Principal amount $ 345,000 $ 345,000 $ 345,000
Unamortized debt discount (52,336) (63,022) $ (72,500)
Unamortized transaction costs (5,272) (6,348)  
Net carrying value $ 287,392 $ 275,630  
v3.19.1
Debt - Interest Expense - Convertible Senior Notes (Details) - Convertible Notes - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Cash Interest Expense    
Coupon interest expense $ 9,315 $ 8,901
Non-Cash Interest Expense    
Amortization of debt discount 10,686 9,490
Amortization of transaction costs 1,076 956
Total Interest Expense 21,077 $ 19,347
Estimated fair value $ 255,300  
Convertible Debt, Fair Value by Fair Value Hierarchy Level [Extensible List] Fair Value Inputs Level2 [Member]  
v3.19.1
Derivative Financial Instruments (Details) - Not designated as hedges - Foreign currency exchange forwards - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Derivative Financial Instruments      
Notional Amounts   $ 622  
Gains (losses) $ 327 (6) $ 219
Weighted average notional amount $ 2,869 $ 314 $ 7,175
v3.19.1
Stockholders' Equity - Changes in AOCI (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Changes in the balances of each component of AOCI      
Balance at the beginning of the period $ 840,093 $ 601,704 $ 714,615
Total other comprehensive income (loss), net of tax 8 35 429
Balance at the end of the period 437,775 840,093 601,704
Accumulated Other Comprehensive Income      
Changes in the balances of each component of AOCI      
Balance at the beginning of the period 1,812 1,777 1,348
Other comprehensive income (loss) before reclassifications     (25)
Amounts reclassified from AOCI     454
Total other comprehensive income (loss), net of tax 8 35 429
Balance at the end of the period 1,820 1,812 1,777
Foreign Currency Translation      
Changes in the balances of each component of AOCI      
Balance at the beginning of the period 1,839 1,797 2,246
Other comprehensive income (loss) before reclassifications     (19)
Amounts reclassified from AOCI     (430)
Total other comprehensive income (loss), net of tax (3) 42 (449)
Balance at the end of the period 1,836 1,839 1,797
Minimum pension liability      
Changes in the balances of each component of AOCI      
Balance at the beginning of the period     (866)
Amounts reclassified from AOCI     866
Total other comprehensive income (loss), net of tax     866
Unrealized Gains (Losses) on Available for Sale Securities      
Changes in the balances of each component of AOCI      
Balance at the beginning of the period (27) (20) (32)
Other comprehensive income (loss) before reclassifications     (6)
Amounts reclassified from AOCI     18
Total other comprehensive income (loss), net of tax 11 (7) 12
Balance at the end of the period $ (16) $ (27) $ (20)
v3.19.1
Stockholders' Equity - Reclassification out of AOCI (Details)
$ in Thousands
12 Months Ended
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
subsidiary
Reclassification out of AOCI      
Other income (expense), net $ (368) $ 392 $ (223)
Income tax expense (benefit) $ (26,746) $ (37,594) 2,823
Minimum pension liability | Reclassification out of AOCI      
Reclassification out of AOCI      
Other income (expense), net     (900)
Income tax expense (benefit)     (400)
Foreign Currency Translation | Reclassification out of AOCI      
Reclassification out of AOCI      
Other income (expense), net     $ 400
South Korea      
Reclassification out of AOCI      
Number of subsidiaries liquidated | subsidiary     1
v3.19.1
Stockholders' Equity - Preferred Stock (Details) - $ / shares
Dec. 31, 2018
Dec. 31, 2017
Equity    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares issued 0 0
v3.19.1
Stockholders' Equity - Treasury Stock (Details) - USD ($)
$ in Thousands
12 Months Ended 13 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2018
Dec. 11, 2017
Treasury Stock          
Authorized amount of common stock repurchase (in dollars)         $ 100,000
Purchase of common stock $ 11,309 $ 3,018 $ 13,035 $ 14,300  
v3.19.1
Stock Plans - 2010 Plan (Details) - shares
12 Months Ended
Dec. 31, 2018
Dec. 31, 2013
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Share-based compensation          
Number of options outstanding (in shares) 1,222,000   1,394,000 1,576,000 2,064,000
Inducement Plan          
Share-based compensation          
Common stock available for grant (in shares)   0      
2010 Stock Incentive Plan          
Share-based compensation          
Number of shares authorized 10,600,000        
Stock options | Inducement Plan          
Share-based compensation          
Awards granted (in shares)   124,500      
Vesting period   3 years      
Expiration term   10 years      
Number of options outstanding (in shares) 2,000        
Stock options | 2010 Stock Incentive Plan          
Share-based compensation          
Vesting period 3 years        
Number of options outstanding (in shares) 1,200,000        
Stock options | 2010 Stock Incentive Plan | Minimum          
Share-based compensation          
Expiration term 7 years        
Stock options | 2010 Stock Incentive Plan | Maximum          
Share-based compensation          
Expiration term 10 years        
Restricted stock awards and restricted stock units | 2010 Stock Incentive Plan | Minimum          
Share-based compensation          
Vesting period 1 year        
Restricted stock awards and restricted stock units | 2010 Stock Incentive Plan | Maximum          
Share-based compensation          
Vesting period 5 years        
Restricted stock units | Inducement Plan          
Share-based compensation          
Awards granted (in shares)   87,000      
Number of awards outstanding (in shares) 0        
Restricted stock units | Inducement Plan | Minimum          
Share-based compensation          
Vesting period   2 years      
Restricted stock units | Inducement Plan | Maximum          
Share-based compensation          
Vesting period   4 years      
RSUs and PSUs | 2010 Stock Incentive Plan          
Share-based compensation          
Number of awards outstanding (in shares) 900,000        
v3.19.1
Stock Plans - ESPP (Details) - ESPP
12 Months Ended
Dec. 31, 2016
shares
Share-based compensation  
Number of shares authorized 750,000
Share price (as a percent) 85.00%
Offer period 6 months
v3.19.1
Stock Plans - Ultratech Plan (Details) - Ultratech Plan - shares
12 Months Ended
May 17, 2017
Dec. 31, 2017
Dec. 31, 2018
Share-based compensation      
Shares that may be granted in future under Plan 0    
Restricted stock units      
Share-based compensation      
Awards converted (in shares)   338,144  
Vesting period   50 months  
Number of awards outstanding (in shares)     30,200
v3.19.1
Stock Plans - Shares Reserved for Future Issuance (Details)
shares in Millions
Dec. 31, 2018
shares
2010 Stock Incentive Plan  
Shares reserved for future issuance  
Total shares reserved 4.5
ESPP  
Shares reserved for future issuance  
Total shares reserved 0.2
v3.19.1
Stock Plans - Recognized Share-based Compensation (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Recognized share-based compensation      
Total $ 16,074 $ 24,396 $ 15,713
Cost of sales      
Recognized share-based compensation      
Total 1,885 2,505 1,956
Research and development      
Recognized share-based compensation      
Total 3,611 2,957 3,324
Selling, general and administrative      
Recognized share-based compensation      
Total 9,417 12,851 $ 10,433
Restructuring      
Recognized share-based compensation      
Total $ 1,161 1,880  
Acquisition costs      
Recognized share-based compensation      
Total   $ 4,203  
v3.19.1
Stock Plans - Unrecognized Share-based Compensation Costs (Details)
$ in Thousands
12 Months Ended
Dec. 31, 2018
USD ($)
Unrecognized share-based compensation costs  
Unrecognized Share-Based Compensation Costs $ 29,485
Weighted Average Period Expected to be Recognized 2 years 6 months
Restricted stock units  
Unrecognized share-based compensation costs  
Unrecognized Share-Based Compensation Costs $ 2,466
Weighted Average Period Expected to be Recognized 2 years 4 months 24 days
Restricted stock awards  
Unrecognized share-based compensation costs  
Unrecognized Share-Based Compensation Costs $ 19,663
Weighted Average Period Expected to be Recognized 2 years 7 months 6 days
Performance share units  
Unrecognized share-based compensation costs  
Unrecognized Share-Based Compensation Costs $ 7,356
Weighted Average Period Expected to be Recognized 2 years 4 months 24 days
v3.19.1
Stock Plans - Stock Option Awards (Details)
shares in Thousands
12 Months Ended
Dec. 31, 2018
$ / shares
shares
Vested  
Number of Shares | shares 1,222
Weighted Average Exercise Price $ 34.80
Weighted Average Remaining Contractual Life 3 years
Total  
Number of Shares | shares 1,222
Weighted Average Exercise Price $ 34.80
Weighted Average Remaining Contractual Life 3 years
Closing price $ 7.41
v3.19.1
Stock Plans - Stock Option Activity (Details) - $ / shares
shares in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Number of Shares      
Outstanding at the beginning of the period (in shares) 1,394 1,576 2,064
Exercised (in shares)   (18) (194)
Expired or forfeited (in shares) (172) (164) (294)
Outstanding at the end of the period (in shares) 1,222 1,394 1,576
Weighted Average Exercise Price      
Outstanding at the beginning of the period (in dollars per share) $ 34.97 $ 35.18 $ 32.91
Exercised (in dollars per share)   30.03 12.18
Expired or forfeited (in dollars per share) 36.21 37.47 34.44
Outstanding at the end of the period (in dollars per share) $ 34.80 $ 34.97 $ 35.18
v3.19.1
Stock Plans - Option Exercise Ranges (Details)
shares in Thousands
12 Months Ended
Dec. 31, 2018
$ / shares
shares
Options Outstanding  
Options Outstanding, Shares | shares 1,222
Weighted Average Remaining Contractual Life 3 years
Weighted-Average Exercise Price (in dollars per share) $ 34.80
Options Exercisable  
Options Exercisable, Shares | shares 1,222
Weighted Average Remaining Contractual life 3 years
Weighted Average Exercise Price (in dollars per share) $ 34.80
$20.00 - $30.00  
Stock plans  
Exercise price, low end of range (in dollars per share) 20.00
Exercise price, high end of range (in dollars per share) $ 30.00
Options Outstanding  
Options Outstanding, Shares | shares 25
Weighted Average Remaining Contractual Life 3 years 7 months 6 days
Weighted-Average Exercise Price (in dollars per share) $ 28.13
Options Exercisable  
Options Exercisable, Shares | shares 25
Weighted Average Remaining Contractual life 3 years 7 months 6 days
Weighted Average Exercise Price (in dollars per share) $ 28.13
$30.01 - $40.00  
Stock plans  
Exercise price, low end of range (in dollars per share) 30.01
Exercise price, high end of range (in dollars per share) $ 40.00
Options Outstanding  
Options Outstanding, Shares | shares 1,058
Weighted Average Remaining Contractual Life 3 years 1 month 6 days
Weighted-Average Exercise Price (in dollars per share) $ 32.81
Options Exercisable  
Options Exercisable, Shares | shares 1,058
Weighted Average Remaining Contractual life 3 years 1 month 6 days
Weighted Average Exercise Price (in dollars per share) $ 32.81
$40.01 - $50.00  
Stock plans  
Exercise price, low end of range (in dollars per share) 40.01
Exercise price, high end of range (in dollars per share) $ 50.00
Options Outstanding  
Options Outstanding, Shares | shares 12
Weighted Average Remaining Contractual Life 1 year 8 months 12 days
Weighted-Average Exercise Price (in dollars per share) $ 45.57
Options Exercisable  
Options Exercisable, Shares | shares 12
Weighted Average Remaining Contractual life 1 year 8 months 12 days
Weighted Average Exercise Price (in dollars per share) $ 45.57
$50.01 - $60.00  
Stock plans  
Exercise price, low end of range (in dollars per share) 50.01
Exercise price, high end of range (in dollars per share) $ 60.00
Options Outstanding  
Options Outstanding, Shares | shares 127
Weighted Average Remaining Contractual Life 2 years 4 months 24 days
Weighted-Average Exercise Price (in dollars per share) $ 51.70
Options Exercisable  
Options Exercisable, Shares | shares 127
Weighted Average Remaining Contractual life 2 years 4 months 24 days
Weighted Average Exercise Price (in dollars per share) $ 51.70
v3.19.1
Stock Plans - Options Exercised (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Stock Plans    
Cash received from options exercised $ 431 $ 494
Intrinsic value of options exercised $ 51 $ 1,165
v3.19.1
Stock Plans - RSAs, RSUs, PSAs and PSUs (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
RSAs, RSUs, PSAs and PSUs      
Number of Shares      
Outstanding at the beginning of the period (in shares) 1,880 1,949 1,398
Granted (in shares) 1,257 674 1,166
Performance award adjustments (in shares) (5) (25)  
Assumed from Ultratech (in shares)   338  
Vested (in shares) (523) (831) (349)
Forfeited (in shares) (391) (225) (266)
Outstanding at the end of the period (in shares) 2,218 1,880 1,949
Weighted Average Grant Date Fair Value      
Outstanding at the beginning of the period (in dollars per share) $ 25.41 $ 23.85 $ 31.97
Granted (in dollars per share) 17.37 29.22 17.59
Performance award adjustments (in dollars per share) 32.67 20.95  
Assumed from Ultratech (in dollars per share)   31.75  
Vested (in dollars per share) 26.39 27.67 32.73
Forfeited (in dollars per share) 24.66 26.29 27.31
Outstanding at the end of the period (in dollars per share) $ 20.74 $ 25.41 $ 23.85
Total fair value of shares vested $ 9.1 $ 22.3 $ 7.5
PSAs and PSUs | Minimum      
Weighted Average Grant Date Fair Value      
Vesting period 1 year    
PSAs and PSUs | Maximum      
Weighted Average Grant Date Fair Value      
Vesting period 5 years    
v3.19.1
Stock Plans - RSAs, RSUs, PSAs and PSUs FV Assumptions (Details) - RSAs, RSUs, PSAs and PSUs
12 Months Ended
Dec. 31, 2018
$ / shares
Assumptions  
Weighted average fair value (in dollars per share) $ 15.58
Dividend yield (as a percent) 0.00%
Expected volatility factor (as a percent) 49.00%
Risk-free interest rate (as a percent) 2.88%
Expected life (in years) 3 years
v3.19.1
Stock Plans - ESPP FV Assumptions (Details) - ESPP - USD ($)
$ / shares in Units, $ in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Share-based compensation      
Cash proceeds $ 3.1 $ 2.6 $ 1.2
Number of shares issued 332,096 163,000 83,000
Assumptions      
Weighted average fair value (in dollars per share) $ 4.94 $ 7.09 $ 4.45
Dividend yield (as a percent) 0.00% 0.00% 0.00%
Expected volatility factor (as a percent) 62.00% 36.00% 43.00%
Risk-free interest rate (as a percent) 1.81% 0.99% 0.35%
Expected life (in years) 6 months 6 months 6 months
v3.19.1
Retirement Plans - Defined Contribution Plan (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Defined contribution plan disclosures      
Employer's matching contribution for every dollar the employees contribute (as a percent) 50.00%    
Employer's matching contribution, vesting period (in years) 5 years    
Aggregate employer's contribution to pension plans $ 3.0 $ 2.7 $ 2.6
Maximum      
Defined contribution plan disclosures      
Employer's contribution as a percentage of employee's eligible compensation 3.00%    
Employer's contribution as a percentage of the maximum an employee is permitted to contribute under IRS limits 3.00%    
v3.19.1
Retirement Plans - Defined Benefit Plan (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Defined benefit plan disclosures      
Other income (expense), net $ (368) $ 392 $ (223)
Income tax expense (benefit) $ (26,746) $ (37,594) 2,823
Minimum pension liability | Reclassification out of AOCI      
Defined benefit plan disclosures      
Other income (expense), net     (900)
Income tax expense (benefit)     $ (400)
v3.19.1
Income Taxes - Income Attributable to Domestic and Foreign Operations (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Income (loss) from continuing operations before income taxes      
Domestic $ (286,561) $ (101,573) $ (123,089)
Foreign (147,273) 12,583 3,885
Income (loss) before income taxes $ (433,834) $ (88,990) $ (119,204)
v3.19.1
Income Taxes - Components of Expense (Benefit) (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Current:      
Federal $ (1,682)    
Foreign 2,518 $ (2,246) $ 1,937
State and local 38 15 (111)
Total current expense (benefit) for income taxes 874 (2,231) 1,826
Deferred:      
Federal 205 (35,912) 1,459
Foreign (27,932) 1,291 (589)
State and local 107 (742) 127
Total deferred expense (benefit) for income taxes (27,620) (35,363) 997
Total expense (benefit) for income taxes $ (26,746) $ (37,594) $ 2,823
v3.19.1
Income Taxes - Reconciliation to Statutory Tax Expense (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Income Taxes      
Income tax expense (benefit) at U.S. statutory rates $ (91,105) $ (31,147) $ (41,722)
State taxes, net of U.S. federal impact (2,848) (2,523) (1,963)
Effect of international operations 11,847 10,158 8,798
Research and development tax credit (2,230) 620 (801)
Net change in valuation allowance 7,747 1,883 50,544
Change in accrual for unrecognized tax benefits 2,868 (4,772) (1,700)
Subsidiary liquidation     (12,435)
Share-based compensation 1,848 99 2,133
Effect of 2017 Tax Act 1,690 11,344  
Asset impairment 46,872    
Other (55) (568) (31)
Total expense (benefit) for income taxes $ (26,746) $ (37,594) $ 2,823
v3.19.1
Income Taxes - Additional disclosure and 2017 Tax Act (Details)
$ in Millions
12 Months Ended
Dec. 31, 2018
USD ($)
Income Taxes  
Additional income tax benefit from effect of Tax Cuts and Jobs Act of 2017 $ 1.7
2017 Tax Act, Amount of increase in gross deferred tax assets 6.8
2017 Tax Act, Increase in deferred tax assets valuation allowance $ 6.8
v3.19.1
Income Taxes - Reduction of U.S. Corporate Tax Rate (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Income Taxes    
U.S. federal statutory rate (as a percent) 21.00% 35.00%
Income tax benefit   $ (4.8)
Amount of reduction in net deferred tax assets   25.6
Reduction in valuation allowance   $ 30.4
v3.19.1
Income Taxes - One-Time Transition Tax (Details)
$ in Millions
12 Months Ended
Dec. 31, 2017
USD ($)
Income Taxes  
Accumulated undistributed earnings by foreign subsidiaries $ 180.1
v3.19.1
Income Taxes - Valuation Allowance (Details) - USD ($)
$ in Millions
12 Months Ended
Jan. 01, 2018
Dec. 31, 2017
Income Taxes    
Maximum NOL deduction in any year as percentage of taxable income 80.00%  
Income tax benefit related to valuation allowance   $ 6.5
v3.19.1
Income Taxes - Deferred Taxes (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Deferred tax assets:    
Inventory valuation $ 8,943 $ 8,007
Net operating losses 67,787 73,458
Credit carry forwards 52,592 34,966
Warranty and installation accruals 1,695 1,690
Share-based compensation 6,981 7,385
Other 2,182 1,832
Total deferred tax assets 140,180 127,338
Valuation allowance (114,955) (100,456)
Net deferred tax assets 25,225 26,882
Deferred tax liabilities:    
Purchased intangible assets 15,401 45,807
Convertible Senior Notes 11,265 13,534
Depreciation 2,380 1,339
Total deferred tax liabilities 29,046 60,680
Net deferred taxes (3,821) $ (33,798)
Undistributed earnings of foreign subsidiaries    
Undistributed earnings of foreign subsidiaries $ 600  
v3.19.1
Income Taxes - Operating Loss Carryforwards (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Operating loss carryforwards disclosures    
Net deferred tax asset $ 67,787 $ 73,458
Federal    
Operating loss carryforwards disclosures    
Net operating loss carryforwards 281,400  
Net operating loss carryforwards, Indefinite carryforward period 16,000  
Federal | Ultratech    
Operating loss carryforwards disclosures    
Net operating loss carryforwards 119,000  
State and local    
Operating loss carryforwards disclosures    
Net operating loss carryforwards 147,600  
Net deferred tax asset $ 9,000  
v3.19.1
Income Taxes - Tax Credit Carryforwards (Details)
$ in Millions
12 Months Ended
Dec. 31, 2018
USD ($)
Valuation allowance  
Increase (decrease) in valuation allowance $ 14.5
2017 Tax Act, Increase in deferred tax assets valuation allowance 6.8
Federal | Capital loss carryforward  
Tax credit carryforward  
Tax credit carry forwards 3.5
Federal | Research and development tax credit carryforward  
Tax credit carryforward  
Tax credit carry forwards 28.3
Federal | Research and development tax credit carryforward | Ultratech  
Tax credit carryforward  
Tax credit carry forwards 11.4
State and local  
Tax credit carryforward  
Tax credit carry forwards 27.4
Foreign tax  
Tax credit carryforward  
Tax credit carry forwards $ 9.4
v3.19.1
Income Taxes - Uncertain Tax Positions (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Change in unrecognized tax benefits      
Balance at beginning of year $ 8,269 $ 7,452 $ 9,152
Additions for tax positions related to current year 2,154 511 1,038
Additions for tax positions relating to prior years 1,721 3 233
Reductions for tax positions relating to prior years (934) (4,877) (2,826)
Reductions due to the lapse of the applicable statute of limitations (26) (122) (39)
Settlements (47) (287) (106)
Additions for business combination   5,589  
Balance at end of year 11,137 8,269 $ 7,452
Unrecognized tax benefits that would impact effective tax rate if recognized 1,500    
Accrued interest and penalties related to unrecognized tax benefits $ 300 $ 300  
v3.19.1
Segment Reporting and Geographic Information - Segment (Details)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
USD ($)
Sep. 30, 2018
USD ($)
Jun. 30, 2018
USD ($)
Mar. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Sep. 30, 2017
USD ($)
Jun. 30, 2017
USD ($)
Mar. 31, 2017
USD ($)
Dec. 31, 2018
USD ($)
segment
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Revenue reporting by end-market and geographic region                      
Number of operating segments | segment                 1    
Number of reportable segments | segment                 1    
Net sales $ 98,972 $ 126,757 $ 157,779 $ 158,574 $ 139,661 $ 129,308 $ 112,218 $ 94,499 $ 542,082 $ 475,686 $ 331,702
Advanced Packaging, MEMS & RF Filters                      
Revenue reporting by end-market and geographic region                      
Net sales                 90,775 67,406 67,484
LED Lighting, Display & Compound Semiconductor                      
Revenue reporting by end-market and geographic region                      
Net sales                 249,974 248,615 145,701
Front-End Semiconductor                      
Revenue reporting by end-market and geographic region                      
Net sales                 62,582 40,319 8,427
Scientific & Industrial                      
Revenue reporting by end-market and geographic region                      
Net sales                 $ 138,751 $ 119,346 $ 110,090
v3.19.1
Segment Reporting and Geographic Information - Geographic (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Revenue reporting by end-market and geographic region                      
Net sales $ 98,972 $ 126,757 $ 157,779 $ 158,574 $ 139,661 $ 129,308 $ 112,218 $ 94,499 $ 542,082 $ 475,686 $ 331,702
Long-lived Tangible Assets 80,284       85,058       80,284 85,058 60,646
United States                      
Revenue reporting by end-market and geographic region                      
Net sales                 125,659 93,433 85,582
Long-lived Tangible Assets 78,503       81,046       78,503 81,046 60,012
China                      
Revenue reporting by end-market and geographic region                      
Net sales                 194,032 106,674 84,604
Long-lived Tangible Assets 81       64       81 64 219
EMEA                      
Revenue reporting by end-market and geographic region                      
Net sales                 89,102 72,979 84,181
Long-lived Tangible Assets 205       231       205 231 93
Rest Of World                      
Revenue reporting by end-market and geographic region                      
Net sales                 133,289 202,600 77,335
Long-lived Tangible Assets $ 1,495       $ 3,717       $ 1,495 $ 3,717 $ 322
v3.19.1
Selected Quarterly Financial Information (unaudited) (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Quarterly Financial Information                      
Net sales $ 98,972 $ 126,757 $ 157,779 $ 158,574 $ 139,661 $ 129,308 $ 112,218 $ 94,499 $ 542,082 $ 475,686 $ 331,702
Gross profit 35,259 46,385 55,395 56,680 55,352 50,529 35,847 34,500 193,719 176,228 133,098
Net income (loss) $ (144,674) $ (8,953) $ (237,634) $ (15,827) $ (8,479) $ (23,740) $ (20,817) $ 1,640 $ (407,088) $ (51,396) $ (122,027)
Basic income (loss) per common share (in dollars per share) $ (3.11) $ (0.19) $ (5.02) $ (0.34) $ (0.18) $ (0.51) $ (0.49) $ 0.04 $ (8.63) $ (1.16) $ (3.10)
Diluted earnings (loss) per share (in dollars per share) $ (3.11) $ (0.19) $ (5.02) $ (0.34) $ (0.18) $ (0.51) $ (0.49) $ 0.04 $ (8.63) $ (1.16) $ (3.10)
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Selected Quarterly Financial Information (unaudited) - Impairments (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Jun. 30, 2018
Dec. 31, 2018
Future investments    
Impairment charges, Definite-lived intangible assets $ 216,400  
Impairment   $ 122,829
In-process R&D    
Future investments    
Impairment charges, Indefinite-lived intangible assets $ 35,900  
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Schedule II - Valuation and Qualifying Accounts (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Valuation and Qualifying Accounts      
Balance at Beginning of Period $ 100,726 $ 105,030 $ 54,406
Charged (Credited) to Costs and Expenses 14,499 (49,490) 50,715
Charged to Other Accounts   45,301  
Deductions   (115) (91)
Balance at End of Period 115,225 100,726 105,030
Allowance for doubtful accounts      
Valuation and Qualifying Accounts      
Balance at Beginning of Period 270 286 206
Charged (Credited) to Costs and Expenses   99 171
Deductions   (115) (91)
Balance at End of Period 270 270 286
Valuation allowance in net deferred tax assets      
Valuation and Qualifying Accounts      
Balance at Beginning of Period 100,456 104,744 54,200
Charged (Credited) to Costs and Expenses 14,499 (49,589) 50,544
Charged to Other Accounts   45,301  
Balance at End of Period $ 114,955 $ 100,456 $ 104,744