VEECO INSTRUMENTS INC, 10-K filed on 2/22/2017
Annual Report
Document and Entity Information (USD $)
12 Months Ended
Dec. 31, 2016
Feb. 14, 2017
Jul. 1, 2016
Document and Entity Information
 
 
 
Entity Registrant Name
VEECO INSTRUMENTS INC 
 
 
Entity Central Index Key
0000103145 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2016 
 
 
Amendment Flag
false 
 
 
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
Accelerated Filer 
 
 
Entity Public Float
 
 
$ 655,733,038 
Entity Common Stock, Shares Outstanding
 
40,595,406 
 
Document Fiscal Year Focus
2016 
 
 
Document Fiscal Period Focus
FY 
 
 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Current assets:
 
 
Cash and cash equivalents
$ 277,444 
$ 269,232 
Short-term investments
66,787 
116,050 
Accounts receivable, net
58,020 
49,524 
Inventories
77,063 
77,469 
Deferred cost of sales
6,160 
2,100 
Prepaid expenses and other current assets
16,034 
22,760 
Assets held for sale
 
5,000 
Total current assets
501,508 
542,135 
Property, plant and equipment, net
60,646 
79,590 
Intangible assets, net
58,378 
131,674 
Goodwill
114,908 
114,908 
Deferred income taxes
2,045 
1,384 
Other assets
21,047 
21,098 
Total assets
758,532 
890,789 
Current liabilities:
 
 
Accounts payable
22,607 
30,074 
Accrued expenses and other current liabilities
33,201 
49,393 
Customer deposits and deferred revenue
85,022 
76,216 
Income taxes payable
2,311 
6,208 
Current portion of long-term debt
368 
340 
Total current liabilities
143,509 
162,231 
Deferred income taxes
13,199 
11,211 
Long-term debt
826 
1,193 
Other liabilities
6,403 
1,539 
Total liabilities
163,937 
176,174 
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; 40,714,790 and 40,995,694 shares issued at December 31, 2016 and 2015, respectively; 40,588,194 and 40,526,902 shares outstanding at December 31, 2016 and 2015, respectively.
407 
410 
Additional paid-in capital
763,303 
767,137 
Accumulated deficit
(168,583)
(45,058)
Accumulated other comprehensive income
1,777 
1,348 
Treasury stock, at cost, 126,596 and 468,792 shares at December 31, 2016 and 2015, respectively.
(2,309)
(9,222)
Total stockholders' equity
594,595 
714,615 
Total liabilities and stockholders' equity
$ 758,532 
$ 890,789 
Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2016
Dec. 31, 2015
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
Preferred stock, shares outstanding
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
40,714,790 
40,995,694 
Common stock, shares outstanding
40,588,194 
40,526,902 
Treasury stock, shares
126,596 
468,792 
Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Consolidated Statements of Operations
 
 
 
Net sales
$ 332,451 
$ 477,038 
$ 392,873 
Cost of sales
199,593 
299,797 
257,991 
Gross profit
132,858 
177,241 
134,882 
Operating expenses, net:
 
 
 
Research and development
81,016 
78,543 
81,171 
Selling, general, and administrative
77,642 
90,188 
89,760 
Amortization of intangible assets
19,219 
27,634 
13,146 
Restructuring
5,640 
4,679 
4,394 
Asset impairment
69,520 
126 
58,170 
Changes in contingent consideration
 
 
(29,368)
Other, net
223 
(697)
(3,182)
Total operating expenses, net
253,260 
200,473 
214,091 
Operating income (loss)
(120,402)
(23,232)
(79,209)
Interest income
1,180 
1,050 
1,570 
Interest expense
(222)
(464)
(715)
Income (loss) before income taxes
(119,444)
(22,646)
(78,354)
Income tax expense (benefit)
2,766 
9,332 
(11,414)
Net income (loss)
$ (122,210)
$ (31,978)
$ (66,940)
Income (loss) per common share:
 
 
 
Basic (in dollars per share)
$ (3.11)
$ (0.80)
$ (1.70)
Diluted (in dollars per share)
$ (3.11)
$ (0.80)
$ (1.70)
Weighted average number of shares:
 
 
 
Basic (in shares)
39,340 
39,742 
39,350 
Diluted (in shares)
39,340 
39,742 
39,350 
Consolidated Statements of Comprehensive Income (Loss) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Consolidated Statements of Comprehensive Income (Loss)
 
 
 
Net income (loss)
$ (122,210)
$ (31,978)
$ (66,940)
Available-for-sale securities:
 
 
 
Change in net unrealized gains or losses
(6)
(49)
51 
Reclassification adjustments for net (gains) losses included in net income
18 
 
(65)
Net changes related to available-for-sale securities
12 
(49)
(14)
Minimum pension liability:
 
 
 
Change in minimum pension liability
 
15 
(145)
Reclassification adjustments for net (gains) losses included in net income
866 
 
 
Net changes related to minimum pension liability
866 
15 
(145)
Currency translation adjustments:
 
 
 
Change in currency translation adjustments
(19)
(87)
149 
Reclassification adjustments for net (gains) losses included in net income
(430)
 
(3,142)
Net changes related to currency translation adjustments
(449)
(87)
(2,993)
Other comprehensive income (loss), net of tax
429 
(121)
(3,152)
Total comprehensive income (loss)
$ (121,781)
$ (32,099)
$ (70,092)
Consolidated Statements of Stockholders' Equity (USD $)
In Thousands, unless otherwise specified
Common Stock
Treasury Stock
Additional Paid-in Capital
Early Adoption of New Accounting Principle
Additional Paid-in Capital
Retained Earnings (Accumulated Deficit)
Early Adoption of New Accounting Principle
Retained Earnings (Accumulated Deficit)
Accumulated Other Comprehensive Income
Early Adoption of New Accounting Principle
Total
Balance at the beginning of the period at Dec. 31, 2013
$ 397 
 
 
$ 721,352 
 
$ 53,860 
$ 4,621 
 
$ 780,230 
Balance (in shares) at Dec. 31, 2013
39,666 
 
 
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
 
 
 
Net loss
 
 
 
 
 
(66,940)
 
 
(66,940)
Other comprehensive income (loss), net of tax
 
 
 
 
 
 
(3,152)
 
(3,152)
Share-based compensation expense
 
 
 
18,813 
 
 
 
 
18,813 
Net issuance under employee stock plans
 
 
9,974 
 
 
 
 
9,981 
Net issuance under employee stock plans (in shares)
694 
 
 
 
 
 
 
 
 
Balance at the end of the period at Dec. 31, 2014
404 
 
 
750,139 
 
(13,080)
1,469 
 
738,932 
Balance (in shares) at Dec. 31, 2014
40,360 
 
 
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
 
 
 
Net loss
 
 
 
 
 
(31,978)
 
 
(31,978)
Other comprehensive income (loss), net of tax
 
 
 
 
 
 
(121)
 
(121)
Share-based compensation expense
 
 
 
17,986 
 
 
 
 
17,986 
Net issuance under employee stock plans
 
 
(988)
 
 
 
 
(982)
Net issuance under employee stock plans (in shares)
636 
 
 
 
 
 
 
 
 
Purchases of common stock
 
(9,222)
 
 
 
 
 
 
(9,222)
Purchase of common stock (in shares)
 
469 
 
 
 
 
 
 
 
Balance at the end 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 
 
 
 
 
 
 
 
Balance at the beginning of the period at Oct. 27, 2015
 
 
 
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
 
 
 
Cumulative effect of change in accounting principle (ASU 2016-09)
 
 
1,315 
 
(1,315)
 
 
 
 
Purchases of common stock
 
 
 
 
 
 
 
 
(22,300)
Balance at the end of the period (ASU 2016-09)
 
 
 
 
 
 
 
 
Balance at the end of the period at Dec. 31, 2016
 
 
 
 
 
 
 
 
594,595 
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
 
 
 
 
 
 
 
 
 
Cumulative effect of change in accounting principle (ASU 2016-09)
 
 
1,315 
 
(1,315)
 
 
 
 
Net loss
 
 
 
 
 
(122,210)
 
 
(122,210)
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 
 
 
 
 
 
 
700 
Balance at the end of the period (ASU 2016-09)
 
 
 
 
 
 
 
 
Balance at the end of the period at Dec. 31, 2016
407 
(2,309)
 
763,303 
 
(168,583)
1,777 
 
594,595 
Balance (in shares) at Dec. 31, 2016
40,715 
127 
 
 
 
 
 
 
 
Balance at the beginning of the period at Sep. 30, 2016
 
 
 
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
 
 
 
Cumulative effect of change in accounting principle (ASU 2016-09)
 
 
1,315 
 
(1,315)
 
 
 
 
Net loss
 
 
 
 
 
 
 
 
(4,998)
Balance at the end of the period (ASU 2016-09)
 
 
 
 
 
 
 
 
Balance at the end of the period at Dec. 31, 2016
 
 
 
 
 
 
 
 
$ 594,595 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Cash Flows from Operating Activities
 
 
 
Net income (loss)
$ (122,210)
$ (31,978)
$ (66,940)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization
32,650 
39,850 
24,573 
Deferred income taxes
940 
2,648 
(11,330)
Share-based compensation expense
15,741 
17,986 
18,813 
Asset impairment
69,520 
126 
58,170 
Gain on sale of lab tools
 
(1,261)
(1,549)
Provision (recovery) for bad debts
171 
43 
(1,814)
Gain on cumulative translation adjustment
(430)
 
(3,142)
Changes in contingent consideration
 
 
(29,368)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(8,667)
10,715 
(25,390)
Inventories and deferred cost of sales
(5,389)
(12,312)
6,513 
Prepaid expenses and other current assets
6,726 
(39)
(2,245)
Accounts payable and accrued expenses
(24,202)
9,470 
(5,534)
Customer deposits and deferred revenue
8,807 
(20,738)
55,536 
Income taxes receivable and payable, net
547 
759 
20,279 
Other, net
1,952 
520 
5,497 
Net cash provided by (used in) operating activities
(23,844)
15,789 
42,069 
Cash Flows from Investing Activities
 
 
 
Acquisitions of businesses, net of cash acquired
 
(68)
(144,069)
Capital expenditures
(11,479)
(13,887)
(15,588)
Proceeds from the sale of investments
152,301 
88,647 
318,276 
Payments for purchases of investments
(103,394)
(84,244)
(157,737)
Payments for purchase of cost method investment
 
(1,594)
(2,388)
Proceeds from sale of property, plant, and equipment
9,512 
 
 
Proceeds from sale of lab tools
 
3,068 
9,259 
Other
(230)
1,000 
350 
Net cash provided by (used in) investing activities
46,710 
(7,078)
8,103 
Cash Flows from Financing Activities
 
 
 
Proceeds from stock option exercises and employee stock purchase plan
1,656 
2,233 
12,056 
Restricted stock tax withholdings
(2,601)
(3,215)
(2,075)
Purchases of common stock
(13,349)
(8,907)
 
Repayments of long-term debt
(340)
(314)
(290)
Net cash provided by (used) in financing activities
(14,634)
(10,203)
9,691 
Effect of exchange rate changes on cash and cash equivalents
(20)
(87)
149 
Net increase in cash and cash equivalents
8,212 
(1,579)
60,012 
Cash and cash equivalents - beginning of period
269,232 
270,811 
210,799 
Cash and cash equivalents - end of period
277,444 
269,232 
270,811 
Supplemental Disclosure of Cash Flow Information
 
 
 
Interest paid
225 
485 
159 
Income taxes paid
1,699 
7,091 
3,320 
Non-cash operating and financing activities
 
 
 
Net transfer of inventory to property, plant and equipment
$ 1,827 
 
 
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 design, development, manufacture, and support of thin film process equipment primarily sold to make electronic devices including light emitting diodes (“LEDs”), power electronics, wireless devices, hard disk drives, and semiconductors.

 

(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 2016 the interim quarters ended on April 3, July 3, and October 2, and during 2015 the interim quarters ended on March 29, June 28 and September 27. 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) the best estimate of selling price 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) the fair value, less cost to sell, of assets held for sale; (vii) investment valuations and the valuation of derivatives, deferred tax assets, and assets acquired in business combinations; (viii) the recoverability of long-lived assets; (ix) liabilities for product warranty and legal contingencies; (x) share-based compensation; and (xi) 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 local functional currencies 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

 

The Company recognizes revenue when all of the following criteria have been met: persuasive evidence of an arrangement exists with a customer; delivery of the specified products has occurred or services have been rendered; prices are contractually fixed or determinable; and collectability is reasonably assured. Revenue is recorded including shipping and handling costs and excluding applicable taxes related to sales.

 

Contracts with customers frequently contain multiple deliverables, such as systems, upgrades, components, spare parts, maintenance, and service plans. Judgment is required to properly identify the accounting units of the multiple-element arrangements and to determine how the revenue should be allocated among the accounting units. The Company also evaluates whether multiple transactions with the same customer or related parties should be considered part of a single, multiple-element arrangement 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. Moreover, judgment is used in interpreting the commercial terms and determining when all criteria have been met in order to recognize revenue in the appropriate accounting period.

 

When there are separate units of accounting, the Company allocates revenue to each element based on the following selling price hierarchy: vendor-specific objective evidence (“VSOE”) if available; third party evidence (“TPE”) if VSOE is not available; or the best estimate of selling price (“BESP”) if neither VSOE nor TPE is available. The Company uses BESP for the elements in its arrangements. The maximum revenue recognized on a delivered element is limited to the amount that is not contingent upon the delivery of additional items.

 

The Company considers many facts when evaluating each of its sales arrangements to determine the timing of revenue recognition including its contractual obligations, the customer’s creditworthiness, 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 the majority of the arrangements, a customer source inspection of the system is performed in the Company’s facility or test data is sent to the customer documenting that the system is functioning to the agreed upon specifications prior to delivery. 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, revenue is recognized upon system delivery since there is no substantive contingency remaining related to the acceptance provisions at that date, subject to the retention amount constraint described below. 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 and fully recognized upon the receipt of final customer acceptance, assuming all other revenue recognition criteria have been met.

 

The Company’s system sales arrangements, including certain upgrades, generally do not contain provisions for right of return, forfeiture, refund, or other purchase price concession. In the rare instances where such provisions are included, all revenue is deferred until such rights expire. The sales arrangements generally include installation. The installation process is not deemed essential to the functionality of the equipment since it is not complex; it does not require significant changes to the features or capabilities of the equipment or involve constructing elaborate interfaces or connections subsequent to factory acceptance. The Company has a demonstrated history of consistently completing installations in a timely manner and can reliably estimate the costs of such activities. Most customers engage the Company to perform the installation services, although there are other third-party providers with sufficient knowledge who could complete these services. Based on these factors, installation is deemed to be inconsequential or perfunctory relative to the system sale as a whole, and as a result, installation service is not considered a separate element of the arrangement. As such, the Company accrues the cost of the installation at the time of revenue recognition for the system.

 

In many cases the Company’s products are sold with a billing retention, typically 10% of the sales price, which is payable by the customer when field acceptance provisions are completed. The amount of revenue recognized upon delivery of a system or upgrade, if any, is limited to the lower of i) the amount billed that is not contingent upon acceptance provisions or ii) the value of the arrangement consideration allocated to the delivered elements, if such sale is part of a multiple-element arrangement.

 

The Company’s contractual terms with customers in Japan generally specify that title and risk and rewards of ownership transfer upon customer acceptance. As a result, for customers in Japan, revenue is recognized upon the receipt of written customer acceptance. A distributor is used for almost all sales to customers in Japan. Title passes to the distributor upon shipment; however, due to customary local business practices, the risks and rewards of ownership of the system transfer to the end-customers upon their acceptance. As such, the Company recognizes revenue upon receipt of written acceptance from the end customer.

 

The Company recognizes revenue related to maintenance and service contracts ratably over the applicable contract term. The Company recognizes revenue from the sales of components, spare parts, and specified service engagements at the time of delivery in accordance with the terms of the applicable sales arrangement.

 

Incremental direct costs incurred related to the acquisition of a customer contract, such as sales commissions, are expensed as incurred, even if the related revenue is deferred in accordance with the above policy.

 

(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 semiannual 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 $0.8 million, $0.9 million, and $0.6 million for the years ended December 31, 2016, 2015, and 2014, 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.

 

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

 

In addition to stock options, restricted share awards (“RSAs”) and restricted stock units (“RSUs”) with time-based vesting, the Company issues performance share units and awards (“PSUs” and “PSAs”). Compensation cost for PSUs and PSAs 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 the probability of a performance condition being met is recognized in the period of the change in estimate. At the conclusion of the performance period, the number of shares granted may vary based on the level of achievement of the performance targets.

 

See Note 1(u), “Recently Adopted Accounting Standards,” for additional information concerning the Company’s early 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.

 

See Note 1(u), “Recently Adopted Accounting Standards,” for additional information concerning the Company’s early adoption of ASU 2015-17: Balance Sheet Classification of Deferred Taxes.

 

(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 and $0.2 million at December 31, 2016 and 2015, respectively.

 

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 insignificant for the years ended December 31, 2016, 2015, and 2014.

 

(n) Fair Value of Financial Instruments

 

The carrying amounts of financial instruments, including cash and 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, is estimated using 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 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 $1.5 million and $18.0 million of cash equivalents at December 31, 2016 and 2015 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 54% and 50% of cash and cash equivalents were maintained outside the United States at December 31, 2016 and 2015, respectively.

 

Marketable 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.

 

(p) Inventories

 

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. The Company reviews and sets standard costs on a periodic basis at current manufacturing costs in order to approximate actual costs. The Company assesses the valuation of all inventories, including manufacturing raw materials, work-in-process, finished goods, and spare parts, each quarter. 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 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. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When a project underlying reported IPR&D is completed, the corresponding amount of IPR&D is amortized over the asset’s estimated useful life. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred in “Selling, General, and Administrative” in the Consolidated Statements of Operations. See Note 5, “Business Combinations,” for additional information.

 

(r) Goodwill and Indefinite-Lived Intangibles

 

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 of the acquisition-date amounts of the 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 fourth quarter of each year or more frequently if impairment indicators arise.

 

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 applies the two-step impairment test. The two-step impairment test first compares the fair value of the Company’s reporting unit to its carrying amount. If the fair value exceeds the carrying amount, goodwill is not impaired, and the Company is not required to perform further testing. If the carrying amount exceeds fair value, the Company determines the implied fair value of the goodwill and, if the carrying amount of the goodwill exceeds its implied fair value, then the Company records an impairment loss equal to the difference.

 

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.

 

(s) Long-Lived Assets and Cost Method Investment

 

Long-lived intangible assets consist of purchased technology, customer-related intangible assets, patents, trademarks, covenants not-to-compete, and software licenses and are initially recorded at fair value. Long-lived intangibles 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 and cost method investments 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) Recent Accounting Pronouncements

 

The FASB issued ASU 2014-09, as amended: Revenue from Contracts with Customers, which has been codified as Accounting Standards Codification 606 (“ASC 606”). ASC 606 requires the Company’s revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. ASC 606 outlines a five-step model to make the revenue recognition determination and requires new financial statement disclosures. Publicly-traded companies are required to adopt ASC 606 for reporting periods beginning after December 15, 2017, but can adopt early for annual periods beginning after December 15, 2016. The Company is still finalizing its assessment of the impact of adopting the ASU on its consolidated financial statements and is still evaluating which method of adoption it will select.

 

In January 2016, the FASB issued ASU 2016-01: Financial Instruments — Overall, which requires certain equity investments to be measured at fair value, with changes in fair value recognized in net income. Publicly-traded companies are required to adopt the ASU for reporting periods beginning after December 15, 2017; early adoption is permitted. The Company does not expect this ASU will have a material impact on its consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02: Leases, which generally requires the Company’s operating lessee rights and obligations to be recognized as assets and liabilities on the balance sheet. In addition, interest on lease liabilities is to be recognized separately from the amortization of right-of-use assets in the Statement of Operations. Further, payments of the principal portion of lease liabilities are to be classified as financing activities while payments of interest on lease liabilities and variable lease payments are to be classified as operating activities in the Statement of Cash Flows. The transition to the ASU will require leases at the beginning of the earliest period presented to be recognized and measured using a modified retrospective approach. The ASU is effective for fiscal years beginning after December 15, 2018, with early application permitted. The Company is evaluating the anticipated impact of adopting the ASU on its consolidated financial statements.

 

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which provides guidance on eight specific cash flow issues, including debt prepayments or debt extinguishment costs. Publicly-traded companies are required to adopt the update for reporting periods beginning after December 15, 2017. The Company does not expect this ASU will have a material impact on its consolidated financial statements.

 

In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory, which requires that entities recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. Publicly-traded companies are required to adopt the update for reporting periods beginning after December 15, 2017. The Company is evaluating the anticipated effect the ASU will have on its consolidated financial statements.

 

(u) Recently Adopted Accounting Standards

 

In March 2016, the FASB issued ASU 2016-09: Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payments. The Company early adopted the ASU effective January 1, 2016. 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 effective. Accordingly, the Company recorded a $1.3 million charge to the opening accumulated deficit balance 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.

 

In November 2015, the FASB issued ASU 2015-17: Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred income taxes by requiring that deferred income tax liabilities and assets be classified as noncurrent in our consolidated balance sheet. Publicly-traded companies are required to adopt the update for reporting periods beginning after December 15, 2016, with early application permitted. The Company early adopted the ASU effective January 1, 2015. In accordance with the ASU’s transition requirements, the Company chose to apply the amendments in the update prospectively. As such, periods prior to 2015 have not been retrospectively adjusted. The adoption of this ASU did not have a material impact on the consolidated financial statements.

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 (loss) 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, 2016, 2015, and 2014 are as follows:

 

 

 

 

For the year ended December 31,

 

 

 

 

2016

 

 

2015

 

 

2014

 

 

 

(in thousands, except per share amounts)

 

Net income (loss)

 

$

(122,210

)

 

$

(31,978

)

 

$

(66,940

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

(3.11

)

 

$

(0.80

)

 

$

(1.70

)

Diluted

 

$

(3.11

)

 

$

(0.80

)

 

$

(1.70

)

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

39,340

 

 

39,742

 

 

39,350

 

Effect of potentially dilutive share-based awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

39,340

 

 

39,742

 

 

39,350

 

 

 

 

 

 

 

 

 

 

 

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

 

312

 

 

1,017

 

 

1,141

 

 

 

 

 

 

 

 

 

 

 

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

 

107

 

 

146

 

 

339

 

 

 

 

 

 

 

 

 

 

 

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

 

1,896

 

 

2,111

 

 

1,123

 

 

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, 2016 and 2015:

 

 

 

 

 

Level 1

 

 

 

Level 2

 

 

 

Level 3

 

 

 

Total

 

 

 

(in thousands)

 

December 31, 2016

 

 

 

 

 

 

 

 

 

Cash equivalents

 

 

 

 

 

 

 

 

 

Corporate debt

 

$

 

$

1,501 

 

$

 

$

1,501 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

1,501 

 

 

1,501 

 

Short-term investments

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

40,008 

 

 

 

40,008 

 

Government agency securities

 

 

10,012 

 

 

10,012 

 

Corporate debt

 

 

13,773 

 

 

13,773 

 

Commercial paper

 

 

2,994 

 

 

2,994 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

40,008 

 

$

26,779 

 

$

 

$

66,787 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2015

 

 

 

 

 

 

 

 

 

Cash equivalents

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

9,999 

 

$

 

$

 

$

9,999 

 

Government agency securities

 

 

4,998 

 

 

4,998 

 

Commercial paper

 

 

2,999 

 

 

2,999 

 

 

 

 

 

 

 

 

 

 

 

Total

 

9,999 

 

7,997 

 

 

17,996 

 

Short-term investments

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

94,918 

 

 

 

94,918 

 

Government agency securities

 

 

12,988 

 

 

12,988 

 

Corporate debt

 

 

8,144 

 

 

8,144 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

94,918 

 

$

21,132 

 

$

 

$

116,050 

 

 

Cash equivalents are highly liquid investments with maturities of three months or less when purchased. These investments are carried at cost, which approximates fair value. All investments classified as available-for-sale are recorded at fair value within short-term investments in the Consolidated Balance Sheets. 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.

Investments
Investments

Note 4 — Investments

 

At December 31, 2016 and 2015 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, 2016

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

40,013

 

$

 

$

(5

)

$

40,008

 

Government agency securities

 

10,020

 

 

(8

)

10,012

 

Corporate debt

 

13,780

 

 

(7

)

13,773

 

Commercial paper

 

2,994

 

 

 

2,994

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

66,807

 

$

 

$

(20

)

$

66,787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2015

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

94,935

 

$

6

 

$

(23

)

$

94,918

 

Government agency securities

 

12,985

 

3

 

 

12,988

 

Corporate debt

 

8,144

 

1

 

(1

)

8,144

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

116,064

 

$

10

 

$

(24

)

$

116,050

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities in a loss position at December 31, 2016 and 2015 were as follows:

 

 

 

 

 

December 31, 2016

 

 

 

December 31, 2015

 

 

 

 

 

 

 

 

 

Gross

 

 

 

 

 

 

 

Gross

 

 

 

 

 

Estimated

 

 

 

Unrealized

 

 

 

Estimated

 

 

 

Unrealized

 

 

 

 

 

Fair Value

 

 

 

Losses

 

 

 

Fair Value

 

 

 

Losses

 

 

 

(in thousands)

 

U.S. treasuries

 

$

20,002

 

$

(5

)

$

64,922

 

$

(23

)

Government agency securities

 

10,012

 

(8

)

 

 

Corporate debt

 

13,774

 

(7

)

3,353

 

(1

)

 

 

 

 

 

 

 

 

 

 

Total

 

$

43,788

 

$

(20

)

$

68,275

 

$

(24

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2016 and 2015, 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, 2016 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. There were no realized gains or losses for the year ended December 31, 2016. There were no realized losses and minimal realized gains for 2015 and 2014, which were included in “Other, net” in the Consolidated Statements of Operations.

 

Cost Method Investment

 

The Company has an ownership interest of less than 20% in a non-marketable investment, Kateeva, Inc. (“Kateeva”). The Company does not exert significant influence over Kateeva and therefore the investment is carried at cost. The carrying value of the investment was $21.0 million at December 31, 2016 and 2015. The investment is included in “Other assets” on the Consolidated Balance Sheet. The investment is subject to a periodic impairment review; as there are no open-market valuations, the impairment analysis requires judgment. The analysis includes assessments of Kateeva’s financial condition, the business outlook for its products and technology, its 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. Fair value of the investment is not estimated unless there are identified events or changes in circumstances that could have a significant adverse effect on the fair value of the investment. No such events or circumstances are present.

Business Combinations
Business Combinations

Note 5 — Business Combinations

 

PSP

 

On December 4, 2014 the Company acquired 100% of Solid State Equipment, LLC (“SSEC”) and rebranded the business Veeco Precision Surface Processing (“PSP”). The results of PSP operations have been included in the consolidated financial statements since the date of acquisition. PSP designs and develops wafer wet processing capabilities. Target market applications include semiconductor advanced packaging (including 2.5D and 3D ICs), micro-electromechanical systems (“MEMS”), compound semiconductor (RF, power electronics, LED and others), data storage, photomask, and flat panel displays. PSP further extends the Company’s penetration in the compound semiconductor and MEMS markets and represents the Company’s entry into the advanced packaging market.

 

The acquisition date fair value of the consideration totaled $145.5 million, net of cash acquired, which consisted of the following:

 

 

 

Acquisition Date

 

(December 4, 2014)

 

 

 

(in thousands)

 

Amount paid, net of cash acquired

 

$

145,382 

 

Working capital adjustment

 

88 

 

 

 

 

 

Acquisition date fair value

 

$

145,470 

 

 

 

 

 

 

 

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The Company utilized third-party valuations to estimate the fair value of certain of the acquired tangible and intangible assets:

 

 

 

Acquisition Date

 

(December 4, 2014)

 

 

 

(in thousands)

 

Accounts receivable

 

$

9,383 

 

Inventory

 

13,812 

 

Other current assets

 

463 

 

Property, plant, and equipment

 

6,912 

 

Intangible assets

 

79,810 

 

 

 

 

 

Total identifiable assets acquired

 

110,380 

 

 

 

 

 

Accounts payable and accrued expenses

 

6,473 

 

Customer deposits

 

6,039 

 

Deferred tax liability, net

 

2,705 

 

Other

 

1,089 

 

 

 

 

 

Total liabilities assumed

 

16,306 

 

 

 

 

 

Net identifiable assets acquired

 

94,074 

 

Goodwill

 

51,396 

 

 

 

 

 

Net assets acquired

 

$

145,470 

 

 

 

 

 

 

 

The gross contractual value of the acquired accounts receivable was approximately $10.5 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. Approximately 80% of the value of the goodwill is deductible for income tax purposes.

 

During 2015, the Company finalized the purchase accounting, including taxes and the working capital adjustment under the purchase agreement. Based on the final adjustments, net working capital increased $0.7 million, goodwill decreased $0.1 million, deferred tax liabilities decreased $0.2 million, and a lease-related asset retirement obligation of $0.8 million was recognized.

 

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

 

 

 

Acquisition Date

 

 

 

(December 4, 2014)

 

 

 

Amount

 

Useful life

 

 

 

(in thousands)

 

 

 

Technology

 

$

39,950 

 

10 years

 

Customer relationships

 

34,310 

 

14 years

 

Backlog

 

3,340 

 

6 months

 

Non-compete agreements

 

1,130 

 

2 years

 

Trademark and tradenames

 

1,080 

 

1 year

 

 

 

 

 

 

 

Intangible assets acquired

 

$

79,810 

 

 

 

 

 

 

 

 

 

 

 

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.

 

During 2014, the Company recognized $3.2 million of acquisition related costs that are included in “Selling, general, and administrative” in the Consolidated Statements of Operations.

 

The amounts of revenue and income (loss) from continuing operations before income taxes of PSP included in the Company’s consolidated statement of operations from the acquisition date (December 4, 2014) to the period ending December 31, 2014 are as follows:

 

 

 

Total

 

 

 

(in thousands)

 

Revenue

 

$

7,906

 

Loss from operations before income taxes

 

$

(3,011

)

 

The following represents the unaudited pro forma Consolidated Statements of Operations as if PSP had been included in the Company’s consolidated results for the periods indicated. These amounts have been calculated after applying the Company’s accounting policies to material amounts and also adjusting the results of PSP to reflect the additional amortization and depreciation that would have been expensed assuming the fair value adjustments to the acquired assets had been applied on January 1, 2013:

 

 

 

December 31,

 

 

 

2014

 

 

 

(in thousands)

 

Revenue

 

$

447,089

 

Loss from operations before income taxes

 

$

(68,715

)

 

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, 2014

 

$

238,158

 

$

123,199

 

$

114,959

 

Purchase price adjustments

 

(51

)

 

(51

)

 

 

 

 

 

 

 

 

Balance at December 31, 2015 and 2016

 

$

238,107

 

$

123,199

 

$

114,908

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company performed its annual goodwill impairment test during the year ended December 31, 2016. The fair value of the Company’s reporting unit exceeded the carrying amount and therefore goodwill was not impaired. In the future, a significant decline in the market price of the Company’s common stock could indicate a decline in the fair value of the Company’s reporting unit such that goodwill becomes impaired.

 

During 2014, the Company successfully demonstrated its FAST-ALD technology for flexible OLED encapsulation. But, subsequent to the Company’s annual goodwill impairment test in 2014, the incumbent deposition technology had progressed to satisfy current market requirements, which required an additional impairment test to be performed in the fourth quarter of 2014. After estimating the fair value of significant tangible and intangible long-lived assets related to the Atomic Layer Deposition (“ALD”) business, the Company recorded non-cash impairment charges of $28.0 million related to goodwill and $25.9 million related to other long-lived assets, including $17.4 million related to customer relationships, $4.8 million related to in-process research and development, and $3.6 million related to certain tangible assets.

 

During 2016, the Company decided to further significantly reduce future investments in its ALD technology development and, as a result, recorded non-cash impairment charges of its remaining ALD assets, including $54.3 million for the full impairment of the intangible purchased ALD technology. The impairment charges were based on projected cash flows that required the use of unobservable inputs.

 

The components of purchased intangible assets were as follows:

 

 

 

 

 

 

 

December 31, 2016

 

 

 

December 31, 2015

 

 

 

Weighted

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Average Remaining

 

 

 

Gross

 

 

 

Amortization

 

 

 

 

 

 

 

Gross

 

 

 

Amortization

 

 

 

 

 

 

 

Amortization

 

 

 

Carrying

 

 

 

and

 

 

 

Net

 

 

 

Carrying

 

 

 

and

 

 

 

Net

 

 

 

Period

 

 

 

Amount

 

 

 

Impairment

 

 

 

Amount

 

 

 

Amount

 

 

 

Impairment

 

 

 

Amount

 

 

 

(in years)

 

(in thousands)

 

Technology

 

7.3

 

$

149,198 

 

$

113,904 

 

$

35,294 

 

$

222,358 

 

$

120,496 

 

$

101,862 

 

Customer relationships

 

11.9

 

47,885 

 

28,659 

 

19,226 

 

47,885 

 

22,470 

 

25,415 

 

Trademarks and tradenames

 

4.3

 

2,590 

 

1,948 

 

642 

 

2,730 

 

1,937 

 

793 

 

Indefinite-lived trademark

 

 

2,900 

 

 

2,900 

 

2,900 

 

 

2,900 

 

Other

 

2.9

 

2,026 

 

1,710 

 

316 

 

6,241 

 

5,537 

 

704 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

8.9

 

$

204,599 

 

$

146,221 

 

$

58,378 

 

$

282,114 

 

$

150,440 

 

$

131,674 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other intangible assets primarily consist of patents, licenses, customer backlog, and non-compete agreements.

 

Based on the intangible assets recorded at December 31, 2016, and assuming no subsequent additions to or impairment of the underlying assets, the remaining estimated annual amortization expense is expected to be as follows:

 

 

 

 

 

Amortization

 

 

 

(in thousands)

 

2017

 

$

11,470 

 

2018

 

9,893 

 

2019

 

8,608 

 

2020

 

7,530 

 

2021

 

5,491 

 

Thereafter

 

12,486 

 

 

 

 

 

Total

 

$

55,478 

 

 

 

 

 

 

 

Inventories
Inventories

Note 7 — Inventories

 

Inventories are stated at the lower of cost or net realizable value using standard costs that approximate actual costs on a first-in, first-out basis. Inventories consist of the following:

 

 

 

 

December 31,

 

 

 

 

2016

 

 

 

2015

 

 

 

(in thousands)

 

Materials

 

$

46,457 

 

$

42,373 

 

Work-in-process

 

25,250 

 

30,327 

 

Finished goods

 

5,356 

 

4,769 

 

 

 

 

 

 

 

Total

 

$

77,063 

 

$

77,469 

 

 

 

 

 

 

 

 

 

 

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,

 

Average

 

 

 

2016

 

2015

 

Useful Life

 

 

 

(in thousands)

 

 

 

Land

 

$

5,669 

 

$

9,592 

 

N/A

 

Building and improvements

 

50,814 

 

54,622 

 

10-40 years

 

Machinery and equipment(1)

 

99,370 

 

110,075 

 

3-10 years

 

Leasehold improvements

 

3,652 

 

5,554 

 

3-7 years

 

 

 

 

 

 

 

 

 

Gross property, plant and equipment

 

159,505 

 

179,843 

 

 

 

Less: accumulated depreciation and amortization

 

98,859 

 

100,253 

 

 

 

 

 

 

 

 

 

 

 

Net property, plant and equipment

 

$

60,646 

 

$

79,590 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Machinery and equipment also includes software, furniture and fixtures

 

Depreciation expense was $13.4 million, $12.2 million, and $11.4 million for the years ended December 31, 2016, 2015, and 2014, respectively. During 2016, the Company decided to significantly reduce future investments in its ALD technology development and, as a result, recorded a charge for impairment of its ALD assets, including a $3.3 million impairment 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.

 

The Company also has a property in St. Paul, Minnesota that was classified as held for sale in 2014. At that time, the Company determined that the carrying value of this property exceeded the fair value, less cost to sell, and recorded an impairment charge of approximately $1.9 million for the year ended December 31, 2014. The Company continued to classify the property as held for sale throughout 2015. In early 2016, the Company recorded an additional impairment charge of approximately $1.2 million to reflect changes in market conditions that impacted the fair value of the assets. The Company continues to actively market the property for sale. However, the Company can no longer make the assessment that the assets will be sold within the next twelve months. As such, the land and building no longer meet the criteria to be classified as assets held for sale on the balance sheet and were reclassified to “Property, plant and equipment, net” in the Consolidated Balance Sheets at its carrying value of $3.6 million, which approximates its fair market value.

 

During the year ended December 31, 2014, the Company classified certain property, plant, and equipment related to the Company’s research and demonstration labs in Asia as held for sale, and recorded an impairment charge of approximately $1.6 million. During the year ended December 31, 2015, the Company sold these assets for $1.0 million, which approximated carrying value.

 

Finally, during the year ended December 31, 2014, the Company recognized additional asset impairment charges of $0.7 million relating to assets that were abandoned during the year.

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,

 

 

 

 

 

 

 

 

 

2016

 

 

 

2015

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

Payroll and related benefits

 

$

18,780 

 

$

30,917 

 

 

 

 

 

Warranty

 

4,217 

 

8,159 

 

 

 

 

 

Professional fees

 

1,827 

 

2,224 

 

 

 

 

 

Installation

 

1,382 

 

1,110 

 

 

 

 

 

Sales, use, and other taxes

 

1,282 

 

1,132 

 

 

 

 

 

Restructuring liability

 

1,796 

 

824 

 

 

 

 

 

Other

 

3,917 

 

5,027 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

33,201 

 

$

49,393 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer deposits and deferred revenue

 

Customer deposits totaled $22.2 million and $28.2 million at December 31, 2016 and 2015, respectively, which are included in “Customer deposits and deferred revenue” in the Consolidated Balance Sheets.

Restructuring Charges
Restructuring Charges

Note 10 — Restructuring Charges

 

During 2016, additional accruals were recognized and payments made related to previous years’ restructuring initiatives. In addition, in 2016, the Company undertook additional restructuring activities as part of its initiative to streamline operations, enhance efficiency, and reduce costs. As a result of these actions, the Company notified approximately 50 employees of their termination from the Company and recorded restructuring charges related to these actions of $4.4 million, consisting of $3.3 million of personnel severance and related costs and $1.1 million of facility closing costs. In addition, the Company decided to significantly reduce future investments in its ALD technology development, which impacted approximately 25 additional employees. As a result, the Company recorded personnel severance and related restructuring charges of $1.2 million. Over the next year, the Company expects to incur additional restructuring costs of $2 million to $5 million as it finalizes all of these activities.

 

During 2015, charges of $2.7 million were recognized and payments made related to the 2014 closing of the Ft. Collins, Colorado and Camarillo, California facilities. In 2015, the Company announced the closing of its Hyeongok-ri, South Korea facility and reduced the workforce, including 23 employees whose positions were eliminated, resulting in restructuring costs of $1.1 million. And in an effort to better align the Company’s cost structure with the then recently observed weakness in the LED market, the Company incurred $0.9 million to reduce spending primarily through the reduction of 16 employees and 12 temporary staff.

 

During 2014, the Company announced the closing of its Ft. Collins, Colorado and Camarillo, California facilities. Business activities formerly conducted at these sites were transferred to the Company’s Plainview, New York facility, and the Company recorded $0.4 million of facility closing costs. The Company also took additional measures to improve profitability and notified 93 employees of their termination from the Company and recorded $4.0 million of personnel severance and related costs. These actions were substantially complete at the end of 2014.

 

The following table shows the amounts incurred and paid for restructuring activities during the years ended December 31, 2016, 2015, and 2014 and the remaining accrued balance of restructuring costs at December 31, 2016, which is included in “Accrued expenses and other current liabilities” in the Consolidated Balance Sheets:

 

 

 

 

 

Personnel

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance and

 

 

 

Facility

 

 

 

 

 

 

 

 

 

Related Costs

 

 

 

Related Costs

 

 

 

Total

 

 

 

 

 

(in thousands)

 

 

 

Balance at December 31, 2013

 

$

533

 

$

 

$

533

 

Provision

 

4,012

 

382

 

4,394

 

Payments

 

(3,117

)

(382

)

(3,499

)

 

 

 

 

 

 

 

 

Balance at December 31, 2014

 

1,428

 

 

1,428

 

Provision

 

3,513

 

1,166

 

4,679

 

Payments

 

(4,117

)

(1,166

)

(5,283

)

 

 

 

 

 

 

 

 

Balance at 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 at December 31, 2016

 

$

1,796

 

$

 

$

1,796

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies
Commitments and Contingencies

Note 11 — Commitments and Contingencies

 

Warranty

 

Warranties are typically valid for one year from the date of system final acceptance, and the Company estimates the costs that may be incurred under the warranty. Estimated warranty costs are determined by analyzing specific product and historical configuration statistics and regional warranty support costs and is affected by product failure rates, material usage, and labor costs incurred in correcting product failures during the warranty period. Unforeseen component failures or exceptional component performance can also result in changes to warranty costs.

 

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

 

 

 

 

 

December 31,

 

 

 

 

 

2016

 

 

 

2015

 

 

 

2014

 

 

 

(in thousands)

 

Balance, beginning of the year

 

$

8,159

 

$

5,411

 

$

5,662

 

Addition for new warranties issued

 

3,916

 

7,873

 

3,484

 

Addition from PSP acquisition

 

 

 

809

 

Settlements

 

(6,433

)

(3,551

)

(3,802

)

Changes in estimate

 

(1,425

)

(1,574

)

(742

)

 

 

 

 

 

 

 

 

Balance, end of the year

 

$

4,217

 

$

8,159

 

$

5,411

 

 

 

 

 

 

 

 

 

 

 

 

 

Minimum Lease Commitments

 

Minimum lease commitments at December 31, 2016 for property and equipment under operating lease agreements (exclusive of renewal options) are payable as follows:

 

 

 

Operating

 

 

 

Leases

 

Payments due by period:

 

(in thousands)

 

2017

 

$

3,281 

 

2018

 

2,292 

 

2019

 

1,900 

 

2020

 

1,592 

 

2021

 

1,203 

 

Thereafter

 

3,605 

 

 

 

 

 

Total

 

$

13,873 

 

 

 

 

 

 

 

Lease expense was $2.5 million, $2.3 million, and $2.3 million for the years ended December 31, 2016, 2015, and 2014, respectively. In addition, the Company is obligated under such leases for certain other expenses, including real estate taxes and insurance.

 

Legal Proceedings

 

Veeco and certain other parties were named as defendants in a lawsuit filed on April 25, 2013 in the Superior Court of California, County of Sonoma. The plaintiff in the lawsuit, Patrick Colbus, sought unspecified damages and asserted claims that he suffered burns and other injuries while cleaning a molecular beam epitaxy system alleged to have been manufactured by Veeco. The lawsuit alleged, among other things, that the molecular beam epitaxy system was defective and that Veeco failed to adequately warn of the potential risks of the system. In April 2016, the parties settled the lawsuit, without any admission of wrongdoing. The settlement amount was fully covered by Veeco’s insurance.

 

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 73% and 75% of net accounts receivable at December 31, 2016 and 2015, respectively.

 

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

 

 

 

Accounts Receivable

 

Net Sales

 

 

 

 

 

 

 

Year ended December 31,

 

For the Year Ended December 31,

Customer

 

2016

 

2015

 

2016

 

2015

 

2014

Customer A

 

23%

 

*

 

13%

 

*

 

*

Customer B

 

17%

 

*

 

*

 

*

 

*

Customer C

 

*

 

23%

 

*

 

*

 

*

Customer D

 

*

 

*

 

*

 

20%

 

*

Customer E

 

*

 

*

 

*

 

12%

 

*

Customer F

 

*

 

*

 

*

 

*

 

15%

Customer G

 

*

 

*

 

*

 

*

 

11%

 

* 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.

 

Suppliers

 

The Company outsources certain functions to third parties, including the manufacture of its MOCVD systems. While the Company primarily relies on one supplier for the manufacturing of these systems, the Company maintains a minimum level of internal manufacturing capability for these systems. The failure of the Company’s present suppliers to meet their contractual obligations under its supply arrangements 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.

 

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 Company’s inability to develop alternative sources, if necessary, could result in a prolonged interruption in supply or a significant increase in the price of one or more components, which could adversely affect the Company’s operating results.

 

The Company had deposits with its suppliers of $7.8 million and $14.6 million at December 31, 2016 and 2015, respectively, that were included in “Prepaid expenses and other current assets” on the Consolidated Balance Sheets.

 

Purchase Commitments

 

The Company had purchase commitments of $72.6 million at December 31, 2016, all of which will come due within one year. Purchase commitments are primarily for inventory used in manufacturing products. The Company have $7.8 million of offsetting supplier deposits against these purchase commitments as of December 31, 2016.

 

Bank Guarantees

 

The Company has bank guarantees and letters of credit issued by a financial institution on its behalf as needed. At December 31, 2016, outstanding bank guarantees and letters of credit totaled $5.0 million, and unused bank guarantees and letters of credit of $59.4 million were available to be drawn upon.

Debt
Debt

Note 12 — Debt

 

As of December 31, 2016 and 2015, debt consists of a mortgage note payable with a carrying value of $1.2 million and $1.5 million, respectively. See Note 20, “Subsequent Events,” for information concerning the Company’s issuance of $345.0 million in aggregate principal amount of 2.7% convertible senior unsecured notes due 2023 in January 2017. The mortgage note payable is secured by certain land and buildings with a carrying value of $3.3 million at December 31, 2016 and 2015. The annual interest rate on the mortgage is 7.91%, and the final payment is due on January 1, 2020. The Company determined the mortgage is a Level 3 liability in the fair-value hierarchy and estimated its fair value as $1.2 million and $1.6 million at December 31, 2016 and 2015, respectively, using a discounted cash flow model. Payments due under the note are as follows:

 

 

 

 

Total

 

 

 

 

(in thousands)

 

2017

 

 

368 

 

2018

 

 

398 

 

2019

 

 

428 

 

 

 

 

 

 

Total

 

 

1,194 

 

Less current portion

 

 

368 

 

 

 

 

 

 

Total (less current maturities)

 

 

$

826 

 

 

 

 

 

 

 

 

See Note 20, “Subsequent Events,” for additional information regarding the Company’s Convertible Notes.

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, 2016 and 2015. The following table shows the gains and (losses) from currency exchange derivatives during the years ended December 31, 2016, 2015, and 2014, which are included in “Other, net” in the Consolidated Statements of Operations:

 

 

 

 

Year ended December 31,

 

 

 

 

2016

 

 

 

2015

 

 

 

2014

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

Foreign currency exchange forwards

 

 

$

219

 

 

 

$

 

 

 

$

(89

)

Foreign currency collar

 

 

 

 

 

 

 

 

(457

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$

219

 

 

 

$

 

 

 

$

(546

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity
Stockholders' 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

 

 

 

 

 

 

 

 

Foreign Currency

 

 

 

Minimum Pension

 

 

 

Gains (Losses) on
Available for Sale

 

 

 

 

 

 

 

 

Translation

 

 

 

Liability

 

 

 

Securities

 

 

 

Total

 

 

 

 

(in thousands)

 

Balance at December 31, 2013

 

 

$

5,326

 

 

 

$

(736

)

 

 

$

31

 

 

 

$

4,621

 

Other comprehensive income (loss) before reclassifications

 

 

149

 

 

 

(145

)

 

 

51

 

 

 

55

 

Amounts reclassified from AOCI

 

 

(3,142

)

 

 

 

 

 

(65

)

 

 

(3,207

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

(2,993

)

 

 

(145

)

 

 

(14

)

 

 

(3,152

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2014

 

 

2,333

 

 

 

(881

)

 

 

17

 

 

 

1,469

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

(87

)

 

 

15

 

 

 

(49

)

 

 

(121

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 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 at December 31, 2016

 

 

$

1,797

 

 

 

$

 

 

 

$

(20

)

 

 

$

1,777

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 its ALD subsidiary 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.

 

During 2015, there were minimal realized gains reclassified from “Accumulated other comprehensive income” in the Consolidated Balance Sheets 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, 2016 no preferred shares have been issued.

 

Treasury Stock

 

On October 28, 2015, the Board of Directors authorized the repurchase of up to $100 million of the Company’s outstanding common stock through October 28, 2017. Repurchases are expected to be made from time to time on the open market or in privately negotiated transactions in accordance with applicable federal securities laws. During 2016, the Company purchased 0.7 million shares for $13.0 million. At December 31, 2016, $22.3 million of the $100 million had been utilized.

 

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.

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, 2016, there are 77,500 option shares and 5,200 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, 2016, there are 1.5 million option shares and 0.6 million RSUs and PSUs outstanding under the 2010 Plan.

 

During 2016 the Company’s Board of Directors approved the 2016 Employee Stock Purchase Plan (the “ESPP Plan”). The Company is authorized to issue up to 750,000 shares under the 2016 ESPP Plan. Under the ESPP Plan, 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 Plan, and subject to certain limits. The ESPP Plan was approved by the Company’s shareholders.

 

Shares Reserved for Future Issuance

 

At December 31, 2016, the Company has 6.3 million shares reserved to cover exercises of outstanding stock options, vesting of RSUs, and additional grants under the 2010 Plan. At December 31, 2016, the Company has 0.7 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,

 

 

 

 

 

2016

 

 

 

2015

 

 

 

2014

 

 

 

 

 

(in thousands)

 

 

 

 

 

Cost of sales

 

 

 

$

1,956 

 

 

 

$

2,495 

 

 

 

$

2,456 

 

Research and development

 

 

 

3,324 

 

 

 

4,031 

 

 

 

4,498 

 

Selling, general, and administrative

 

 

 

10,433 

 

 

 

11,474 

 

 

 

11,859 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

$

15,713 

 

 

 

$

18,000 

 

 

 

$

18,813 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company did not realize any tax benefits associated with share-based compensation for the years ended December 31, 2016, 2015, and 2014, 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 insignificant amount of share-based compensation into inventory for the years ended December 31, 2016, 2015, and 2014.

 

Unrecognized share-based compensation costs at December 31, 2016 are summarized below:

 

 

 

 

 

Unrecognized

 

 

 

Weighted

 

 

 

 

 

Share-Based

 

 

 

Average Period

 

 

 

 

 

Compensation

 

 

 

Expected to be

 

 

 

 

 

Costs

 

 

 

Recognized

 

 

 

 

 

(in thousands)

 

 

 

(in years)

 

Stock option awards

 

 

 

$

660 

 

 

 

0.6 

 

Restricted stock units

 

 

 

3,034 

 

 

 

2.0 

 

Restricted stock awards

 

 

 

20,669 

 

 

 

2.7 

 

Performance share units

 

 

 

4,556 

 

 

 

2.5 

 

 

 

 

 

 

 

 

 

 

 

Total unrecognized share-based compensation cost

 

 

 

$

28,919 

 

 

 

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, 2016, 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

 

1,449 

 

 

$

35.39 

 

 

4.9 

 

 

$

39 

 

Expected to vest

 

127 

 

 

32.79 

 

 

5.1 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

1,576 

 

 

$

35.18 

 

 

4.9 

 

 

$

39 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The aggregate intrinsic value represents the difference between the option exercise price and $29.15, the closing price of the Company’s common stock on December 30, 2016, 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)

 

 

 

 

Outstanding at December 31, 2013

 

 

2,598

 

 

$

29.98

 

Granted

 

 

509

 

 

33.05

 

Exercised

 

 

(561

)

 

23.88

 

Expired or forfeited

 

 

(155

)

 

36.22

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2014

 

 

2,391

 

 

31.65

 

Granted

 

 

17

 

 

30.22

 

Exercised

 

 

(192

)

 

12.95

 

Expired or forfeited

 

 

(152

)

 

38.15

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2015

 

 

2,064

 

 

32.91

 

Granted

 

 

 

 

 

Exercised

 

 

(194

)

 

12.18

 

Expired or forfeited

 

 

(294

)

 

34.44

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2016

 

 

1,576

 

 

$

35.18

 

 

 

 

 

 

 

 

 

 

 

The following table summarizes stock option information at December 31, 2016:

 

 

 

Options Outstanding

 

Options Exercisable

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

Average

 

Weighted

 

 

 

 

Aggregate

 

Average

 

Weighted

 

Range of

 

 

 

 

Remaining

 

Average

 

 

 

 

Intrinsic

 

Remaining

 

Average

 

Exercise Prices

 

Shares

 

Contractual Life

 

Exercise Price

 

Shares

 

Value

 

Contractual Life

 

Exercise Price

 

 

 

(in thousands)

 

(in years)

 

 

 

(in thousands)

 

(in thousands)

 

(in years)

 

 

 

 

$20.00 – $30.00

 

 

32 

 

 

5.8 

 

 

$

28.18 

 

 

29 

 

 

$

39 

 

 

5.9 

 

 

$

28.04 

 

$30.01 – $40.00

 

 

1,336 

 

 

5.1 

 

 

33.09 

 

 

1,212 

 

 

 

 

5.1 

 

 

33.12 

 

$40.01 – $50.00

 

 

73 

 

 

2.7 

 

 

45.93 

 

 

73 

 

 

 

 

2.7 

 

 

45.96 

 

$50.01 – $60.00

 

 

135 

 

 

4.4 

 

 

51.70 

 

 

135 

 

 

 

 

4.4 

 

 

51.70 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,576 

 

 

4.9 

 

 

$

35.18 

 

 

1,449 

 

 

$

39 

 

 

4.9 

 

 

$

35.39 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model.

 

Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards. No options were granted in 2016. The weighted average estimated values of employee stock option grants as well as the weighted average assumptions that were used in calculating such values during fiscal years 2015 and 2014 were based on estimates at the date of grant as follows:

 

 

 

Year ended December 31,

 

 

 

2015

 

2014

 

Weighted average fair value

 

  $

10.58 

 

  $

11.58 

 

Dividend yield

 

0% 

 

0% 

 

Expected volatility factor(1)

 

44% 

 

44% 

 

Risk-free interest rate(2)

 

1.18% 

 

1.19% 

 

Expected life (in years)(3)

 

3.9 

 

3.9 

 

 

 

(1)

Expected volatility is measured using historical daily price changes of the Company’s stock over the respective expected term of the options and the implied volatility derived from the market prices of the Company’s traded options.

 

(2)

The risk-free rate for periods within the contractual term of the stock options 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 options will be outstanding prior to exercise. The Company’s computation of expected life was determined using a lattice-based model incorporating historical post vest exercise and employee termination behavior.

 

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

 

 

 

Year ended December 31,

 

 

 

2016

 

2015

 

2014

 

 

 

(in thousands)

 

Cash received from options exercised

 

  $

494 

 

  $

2,233 

 

  $

12,056 

 

Intrinsic value of options exercised

 

  $

1,165 

 

  $

2,089 

 

  $

8,390 

 

 

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 a payment to a grantee in shares of common stock if certain performance goals and vesting criteria are achieved. These awards typically vest over one to five years and vesting is subject to the grantee’s continued service with the Company and, in the case of performance awards, meeting the performance condition. 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.

 

The following table summarizes the activity of these awards:

 

 

 

 

 

Weighted

 

 

 

 

 

Average

 

 

 

Number of

 

Grant Date

 

 

 

Shares

 

Fair Value

 

 

 

(in thousands)

 

 

 

Outstanding - December 31, 2013

 

 

1,158

 

 

$

34.93

 

Granted

 

 

395

 

 

34.18

 

Released

 

 

(183

)

 

38.65

 

Forfeited

 

 

(133

)

 

33.66

 

 

 

 

 

 

 

 

 

Outstanding - December 31, 2014

 

 

1,237

 

 

34.27

 

Granted

 

 

672

 

 

30.33

 

Released

 

 

(389

)

 

35.65

 

Forfeited

 

 

(122

)

 

34.46

 

 

 

 

 

 

 

 

 

Outstanding - December 31, 2015

 

 

1,398

 

 

 

31.97

 

Granted

 

 

1,166

 

 

17.59

 

Released

 

 

(349

)

 

32.73

 

Forfeited

 

 

(266

)

 

27.31

 

 

 

 

 

 

 

 

 

Outstanding - December 31, 2016

 

 

1,949

 

 

$

23.85

 

 

 

 

 

 

 

 

 

 

 

For performance awards, the final number of shares earned will vary depending on the achievement of the actual results relative to the performance targets. 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 total fair value of shares that vested during the years ended December 31, 2016, 2015, and 2014 was $7.5 million, $9.6 million, and $6.2 million, respectively.

 

Employee Stock Purchase Plan

 

The Company received cash proceeds of $1.2 million and issued 83,000 shares under the ESPP Plan for the year ended December 31, 2016. 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 year 2016 were based on estimates at the date of grant as follows:

 

 

 

 

Year ended December 31,

 

 

 

2016

 

Weighted average fair value

 

  $

4.45 

 

Dividend yield

 

0% 

 

Expected volatility factor(1)

 

43% 

 

Risk-free interest rate(2)

 

0.35% 

 

Expected life (in years)(3)

 

0.5 

 

 

(1)

Expected volatility is measured using historical daily price changes of the Company’s stock over the respective expected term of the options and the implied volatility derived from the market prices of the Company’s traded options.

 

(2)

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

 

(3)

The expected life is the length of time, in years, that the purchase rights will be outstanding.

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. The Company recognized costs associated with these plans of approximately $2.6 million, $2.5 million, and $1.9 million for the years ended December 31, 2016, 2015, and 2014, 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.

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,

 

 

 

2016

 

2015

 

2014

 

 

 

 

 

 

(in thousands)

 

 

 

 

Domestic

 

 

$

(123,021

)

 

$

(53,553

)

 

$

(95,195

)

Foreign

 

 

3,577

 

 

30,907

 

 

16,841

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$

(119,444

)

 

$

(22,646

)

 

$

(78,354

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

Year ended December 31,

 

 

 

2016

 

2015

 

2014

 

 

 

 

 

 

(in thousands)

 

 

 

 

Current:

 

 

 

 

 

 

 

 

 

 

Federal

 

 

$

 

 

$

139

 

 

$

(2,464

)

Foreign

 

 

1,937

 

 

6,952

 

 

2,325

 

State and local

 

 

(111

)

 

(407

)

 

55

 

 

 

 

 

 

 

 

 

 

 

 

Total current expense (benefit) for income taxes

 

 

1,826

 

 

6,684

 

 

(84

)

 

 

 

 

 

 

 

 

 

 

 

Deferred:

 

 

 

 

 

 

 

 

 

 

Federal

 

 

1,459

 

 

2,104

 

 

(11,230

)

Foreign

 

 

(646

)

 

516

 

 

(291

)

State and local

 

 

127

 

 

28

 

 

191

 

 

 

 

 

 

 

 

 

 

 

 

Total deferred expense (benefit) for income taxes

 

 

940

 

 

2,648

 

 

(11,330

)

 

 

 

 

 

 

 

 

 

 

 

Total expense (benefit) for income taxes

 

 

$

2,766

 

 

$

9,332

 

 

$

(11,414

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

 

2016

 

2015

 

2014

 

 

 

 

 

 

(in thousands)

 

 

 

 

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

 

 

$

(41,806

)

 

$

(7,926

)

 

$

(27,424

)

State taxes, net of U.S. federal impact

 

 

(1,963

)

 

(1,607

)

 

(662

)

Effect of international operations

 

 

8,849

 

 

(7,659

)

 

(6,160

)

Research and development tax credit

 

 

(801

)

 

(1,628

)

 

(1,935

)

Net change in valuation allowance

 

 

50,520

 

 

23,655

 

 

27,156

 

Change in accrual for unrecognized tax benefits

 

 

(1,700

)

 

4,876

 

 

(1,940

)

ALD liquidation

 

 

(12,435

)

 

 

 

 

U.S. share-based compensation

 

 

2,133

 

 

 

 

 

Goodwill impairment

 

 

 

 

 

 

9,786

 

Change in contingent consideration

 

 

 

 

 

 

(10,279

)

Worthless stock deduction

 

 

 

 

(2,069

)

 

 

Change in entity tax status

 

 

 

 

904

 

 

 

Other

 

 

(31

)

 

786

 

 

44

 

 

 

 

 

 

 

 

 

 

 

 

Total expense (benefit) for income taxes

 

 

$

2,766

 

 

$

9,332

 

 

$

(11,414

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

 

2016

 

2015

 

 

 

(in thousands)

 

Deferred tax assets: 

 

 

 

 

 

 

 

Inventory valuation

 

 

$

6,681

 

 

$

6,334

 

Net operating losses and credit carry forwards

 

 

54,527

 

 

33,181

 

Credit carry forwards

 

 

24,598

 

 

20,738

 

Warranty and installation accruals

 

 

1,757

 

 

3,022

 

Share-based compensation

 

 

12,624

 

 

12,461

 

Other

 

 

6,778

 

 

5,787

 

 

 

 

 

 

 

 

 

Total deferred tax assets

 

 

106,965

 

 

81,523

 

Valuation allowance

 

 

(106,793

)

 

(56,273

)

 

 

 

 

 

 

 

 

Net deferred tax assets

 

 

172

 

 

25,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities: 

 

 

 

 

 

 

 

Purchased intangible assets

 

 

11,071

 

 

32,550

 

Undistributed earnings

 

 

186

 

 

618

 

Depreciation

 

 

69

 

 

1,908

 

 

 

 

 

 

 

 

 

Total deferred tax liabilities

 

 

11,326

 

 

35,076

 

 

 

 

 

 

 

 

 

Net deferred taxes

 

 

$

(11,154

)

 

$

(9,826

)

 

 

 

 

 

 

 

 

 

 

 

The Company did not record a provision for U.S. federal income taxes or any additional withholding taxes on unremitted earnings in foreign subsidiaries in the amount of $48.2 million at December 31, 2016, as such amount is permanently reinvested. It is not practicable to determine the hypothetical amount of tax associated with such unremitted earnings if the Company were to assume they were remitted to the U.S. For financial reporting purposes, these balances are determined as amounts that exceed the tax basis of such investments. The Company has provided U.S. federal income taxes and additional withholding taxes on foreign earnings that are anticipated to be remitted.

 

At December 31, 2016 the Company had U.S. federal net operating loss carryforwards of approximately $137.2 million that will expire between 2034 and 2036, if not utilized. Additionally, $3.5 million of capital losses will expire in 2021. At December 31, 2016 the Company had U.S. foreign tax credit carryforwards of $7.7 million that will expire between 2023 and 2026 and U.S. federal research and development credits of $12.1 million that will expire between 2031 and 2036. The Company also has state and local net operating loss carryforwards of approximately $68.0 million (a net deferred tax asset of $3.5 million net of federal tax benefits and before the valuation allowance) that will expire between 2016 and 2036. In addition, the Company has state credits of $9.9 million some of which are indefinite and others that will expire between 2016 and 2030.

 

The Company makes assessments to estimate if sufficient taxable income will be generated in the future to use existing deferred tax assets. The Company’s cumulative three year loss in its domestic operations led to a full valuation allowance against the Company’s U.S. deferred tax assets in fiscal year 2014, because the Company could not conclude that such amounts are realizable on a more-likely-than-not basis. As the cumulative three year loss continued in 2016, the Company increased the valuation allowance by approximately $50.5 million during the period ended December 31, 2016.

 

The Company amortizes certain indefinite-lived intangible assets for tax purposes, which are not amortizable for financial reporting purposes. The deferred tax liability at December 31, 2016 includes $13.2 million relating to the tax effect of differences between financial reporting and tax bases of intangible assets that are not expected to reverse within the Company’s net operating loss carryforward period.

 

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,

 

 

 

 

2016

 

 

 

2015

 

 

 

2014

 

 

 

 

(in thousands)

 

Balance at beginning of year

 

 

$

9,152

 

 

 

$

4,276

 

 

 

$

6,228

 

Additions for tax positions related to current year

 

 

1,038

 

 

 

5,596

 

 

 

244

 

Additions for tax positions related to prior years

 

 

233

 

 

 

143

 

 

 

199

 

Reductions for tax positions related to prior years

 

 

(2,826

)

 

 

 

 

 

(2,345

)

Reductions due to the lapse of the statute of limitations

 

 

(39

)

 

 

(642

)

 

 

(38

)

Settlements

 

 

(106

)

 

 

(221

)

 

 

(12

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at end of year

 

 

$

7,452

 

 

 

$

9,152

 

 

 

$

4,276

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

If the amount of unrecognized tax benefits at December 31, 2016 were recognized, the Company’s income tax provision would decrease by $5.4 million. The gross amount of interest and penalties accrued in income tax payable in the Consolidated Balance Sheets was approximately $0.3 million and $0.2 million at December 31, 2016 and 2015, respectively.

 

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 federal income tax matters have been concluded for years through 2013 subject to subsequent utilization of net operating losses 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 2013. Substantially all of the Company’s foreign jurisdictions’ statutes of limitation remain open with respect to the tax years from 2013 through 2016. 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.

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 design, development, manufacture, and support of 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 allocation of resources based on total Company results.

 

Sales by market is as follows:

 

 

 

 

For the year ended December 31,

 

 

 

 

2016

 

 

 

2015

 

 

 

2014

 

 

 

 

(in thousands)

 

Sales by end-market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lighting, Display & Power Electronics

 

 

$

136,247 

 

 

 

$

291,133 

 

 

 

$

278,551 

 

Advanced Packaging, MEMS & RF

 

 

68,304 

 

 

 

61,935 

 

 

 

11,449 

 

Scientific & Industrial

 

 

74,913 

 

 

 

64,297 

 

 

 

44,429 

 

Data Storage

 

 

52,987 

 

 

 

59,673 

 

 

 

58,444 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$

332,451 

 

 

 

$

477,038 

 

 

 

$

392,873 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

2016

 

 

 

2015

 

 

 

2014

 

 

 

2016

 

 

 

2015

 

 

 

2014

 

 

 

 

(in thousands)

 

United States

 

 

$

85,637 

 

 

 

$

86,627 

 

 

 

$

44,060 

 

 

 

$

60,012 

 

 

 

$

64,951 

 

 

 

$

63,349 

 

China

 

 

85,834 

 

 

 

242,442 

 

 

 

159,063 

 

 

 

219 

 

 

 

422 

 

 

 

621 

 

EMEA(1)

 

 

83,410 

 

 

 

64,019 

 

 

 

35,644 

 

 

 

93 

 

 

 

96 

 

 

 

78 

 

Rest of World

 

 

77,570 

 

 

 

83,950 

 

 

 

154,106 

 

 

 

322 

 

 

 

14,121 

 

 

 

14,704 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$

332,451 

 

 

 

$

477,038 

 

 

 

$

392,873 

 

 

 

$

60,646 

 

 

 

$

79,590 

 

 

 

$

78,752 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) EMEA consists of Europe, the Middle East, and Africa

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 2016 and 2015. 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 2016

 

Fiscal 2015

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

Q2

 

Q3

 

Q4

 

 

 

(in thousands, except per share amounts)

 

Net sales

 

 $

78,011

 

 $

75,348

 

 $

85,482

 

 $

93,609

 

 $

98,341

 

 $

131,410

 

 $

140,744

 

 $

106,543

 

Gross profit

 

31,956

 

31,439

 

33,455

 

36,008

 

35,136

 

49,069

 

54,250

 

38,786

 

Net income (loss)

 

(15,533)

 

(32,082)

 

(69,598)

 

(4,998)

 

(19,110)

 

(8,386)

 

5,306

 

(9,788)

 

Basic income (loss) per common share

 

(0.40)

 

(0.82)

 

(1.78)

 

(0.13)

 

(0.48)

 

(0.21)

 

0.13

 

(0.25)

 

Diluted income (loss) per common share

 

(0.40)

 

(0.82)

 

(1.78)

 

(0.13)

 

(0.48)

 

(0.21)

 

0.13

 

(0.25)

 

 

Impairment Charge

 

During the third quarter of 2016, the Company decided to significantly reduce future investments in its ALD technology development and, as a result, recorded a charge for impairment of its ALD assets, including $54.3 million for the full impairment of the intangible purchased ALD technology. The impairment charges were based on projected cash flows that required the use of unobservable inputs. Refer to Note 6, “Goodwill and Intangible Assets,” for additional information.

Subsequent Events
Subsequent Events

Note 20 — Subsequent Events

 

New Convertible Notes

 

In January 2017, the Company issued $345.0 million in aggregate principal amount of 2.70% convertible senior unsecured notes due 2023 (the “Convertible Notes”) pursuant to an indenture, dated as of January 18, 2017, between the Company and U.S. Bank National Association, as the trustee (the “Offering”). The Company received net proceeds from the Offering, after deducting fees and expenses payable by the Company, of approximately $336.0 million.

 

The Convertible Notes bear interest payable semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2017. The Company will separately account for the liability and equity components of the Convertible Notes. The fair value of the liability component used in the allocation between the liability and equity components as of the date of issuance was based on the present value of cash flows using a discount rate of 7%, the Company’s borrowing rate for a similar debt instrument without the conversion feature.

 

The Convertible Notes mature on January 15, 2023, unless earlier repurchased, redeemed or converted. The Convertible Notes are convertible into common shares of the Company under certain circumstances described in the indenture. The initial conversion rate is 24.9800 shares of the Company’s common stock per $1,000 principal amount of the Convertible Notes, with an initial conversion price of approximately $40.03 per share of common stock. The conversion rate is subject to adjustment in certain circumstances. The dilutive effect of the Convertible Notes on income (loss) per share will be calculated using the treasury stock method since the Company has both the current intent and ability to settle the principal amount of the Convertible Notes in cash.

 

Agreement to Acquire Ultratech

 

On February 2, 2017, Veeco and Ultratech, Inc. (“Ultratech”), a leading supplier of lithography, laser-processing, and inspection systems used to manufacture semiconductor devices and LEDs, signed a definitive agreement for Veeco to acquire Ultratech. The Boards of Directors of both Veeco and Ultratech have unanimously approved the transaction.

 

Ultratech shareholders will receive (i) $21.75 per share in cash and (ii) 0.2675 of a share of Veeco common stock for each Ultratech common share outstanding. Based on Veeco’s closing stock price on February 1, 2017, the transaction consideration is valued at approximately $28.64 per Ultratech share. The implied total transaction value is approximately $815 million and the implied enterprise value is approximately $550 million, net of Ultratech’s net cash balance as of December 31, 2016. The transaction is expected to close in the second quarter of 2017, subject to approval by Ultratech shareholders, regulatory approvals in the United States, and other customary closing conditions.

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, 2016

 

 

 

 

 

 

 

 

 

 

 

Allowance for doubtful accounts

 

$

206

 

$

171

 

$

 

$

(91

)

$

286

 

Valuation allowance in net deferred tax assets

 

56,273

 

50,520

 

 

 

106,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

56,479

 

$

50,691

 

$

 

$

(91

)

$

107,079

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

Allowance for doubtful accounts

 

$

731

 

$

43

 

$

 

$

(568

)

$

206

 

Valuation allowance in net deferred tax assets

 

34,909

 

23,655

 

(2,291

)

 

56,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

35,640

 

$

23,698

 

$

(2,291

)

$

(568

)

$

56,479

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2014

 

 

 

 

 

 

 

 

 

 

 

Allowance for doubtful accounts

 

$

2,438

 

$

(1,814

)

$

325

 

$

(218

)

$

731

 

Valuation allowance in net deferred tax assets

 

7,753

 

27,156

 

 

 

34,909

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

10,191

 

$

25,342

 

$

325

 

$

(218

)

$

35,640

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Significant Accounting Policies (Policies)

(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 2016 the interim quarters ended on April 3, July 3, and October 2, and during 2015 the interim quarters ended on March 29, June 28 and September 27. 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) the best estimate of selling price 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) the fair value, less cost to sell, of assets held for sale; (vii) investment valuations and the valuation of derivatives, deferred tax assets, and assets acquired in business combinations; (viii) the recoverability of long-lived assets; (ix) liabilities for product warranty and legal contingencies; (x) share-based compensation; and (xi) 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 local functional currencies 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

 

The Company recognizes revenue when all of the following criteria have been met: persuasive evidence of an arrangement exists with a customer; delivery of the specified products has occurred or services have been rendered; prices are contractually fixed or determinable; and collectability is reasonably assured. Revenue is recorded including shipping and handling costs and excluding applicable taxes related to sales.

 

Contracts with customers frequently contain multiple deliverables, such as systems, upgrades, components, spare parts, maintenance, and service plans. Judgment is required to properly identify the accounting units of the multiple-element arrangements and to determine how the revenue should be allocated among the accounting units. The Company also evaluates whether multiple transactions with the same customer or related parties should be considered part of a single, multiple-element arrangement 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. Moreover, judgment is used in interpreting the commercial terms and determining when all criteria have been met in order to recognize revenue in the appropriate accounting period.

 

When there are separate units of accounting, the Company allocates revenue to each element based on the following selling price hierarchy: vendor-specific objective evidence (“VSOE”) if available; third party evidence (“TPE”) if VSOE is not available; or the best estimate of selling price (“BESP”) if neither VSOE nor TPE is available. The Company uses BESP for the elements in its arrangements. The maximum revenue recognized on a delivered element is limited to the amount that is not contingent upon the delivery of additional items.

 

The Company considers many facts when evaluating each of its sales arrangements to determine the timing of revenue recognition including its contractual obligations, the customer’s creditworthiness, 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 the majority of the arrangements, a customer source inspection of the system is performed in the Company’s facility or test data is sent to the customer documenting that the system is functioning to the agreed upon specifications prior to delivery. 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, revenue is recognized upon system delivery since there is no substantive contingency remaining related to the acceptance provisions at that date, subject to the retention amount constraint described below. 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 and fully recognized upon the receipt of final customer acceptance, assuming all other revenue recognition criteria have been met.

 

The Company’s system sales arrangements, including certain upgrades, generally do not contain provisions for right of return, forfeiture, refund, or other purchase price concession. In the rare instances where such provisions are included, all revenue is deferred until such rights expire. The sales arrangements generally include installation. The installation process is not deemed essential to the functionality of the equipment since it is not complex; it does not require significant changes to the features or capabilities of the equipment or involve constructing elaborate interfaces or connections subsequent to factory acceptance. The Company has a demonstrated history of consistently completing installations in a timely manner and can reliably estimate the costs of such activities. Most customers engage the Company to perform the installation services, although there are other third-party providers with sufficient knowledge who could complete these services. Based on these factors, installation is deemed to be inconsequential or perfunctory relative to the system sale as a whole, and as a result, installation service is not considered a separate element of the arrangement. As such, the Company accrues the cost of the installation at the time of revenue recognition for the system.

 

In many cases the Company’s products are sold with a billing retention, typically 10% of the sales price, which is payable by the customer when field acceptance provisions are completed. The amount of revenue recognized upon delivery of a system or upgrade, if any, is limited to the lower of i) the amount billed that is not contingent upon acceptance provisions or ii) the value of the arrangement consideration allocated to the delivered elements, if such sale is part of a multiple-element arrangement.

 

The Company’s contractual terms with customers in Japan generally specify that title and risk and rewards of ownership transfer upon customer acceptance. As a result, for customers in Japan, revenue is recognized upon the receipt of written customer acceptance. A distributor is used for almost all sales to customers in Japan. Title passes to the distributor upon shipment; however, due to customary local business practices, the risks and rewards of ownership of the system transfer to the end-customers upon their acceptance. As such, the Company recognizes revenue upon receipt of written acceptance from the end customer.

 

The Company recognizes revenue related to maintenance and service contracts ratably over the applicable contract term. The Company recognizes revenue from the sales of components, spare parts, and specified service engagements at the time of delivery in accordance with the terms of the applicable sales arrangement.

 

Incremental direct costs incurred related to the acquisition of a customer contract, such as sales commissions, are expensed as incurred, even if the related revenue is deferred in accordance with the above policy.

(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 semiannual 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 $0.8 million, $0.9 million, and $0.6 million for the years ended December 31, 2016, 2015, and 2014, 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.

 

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

 

In addition to stock options, restricted share awards (“RSAs”) and restricted stock units (“RSUs”) with time-based vesting, the Company issues performance share units and awards (“PSUs” and “PSAs”). Compensation cost for PSUs and PSAs 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 the probability of a performance condition being met is recognized in the period of the change in estimate. At the conclusion of the performance period, the number of shares granted may vary based on the level of achievement of the performance targets.

 

See Note 1(u), “Recently Adopted Accounting Standards,” for additional information concerning the Company’s early 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.

 

See Note 1(u), “Recently Adopted Accounting Standards,” for additional information concerning the Company’s early adoption of ASU 2015-17: Balance Sheet Classification of Deferred Taxes.

(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 and $0.2 million at December 31, 2016 and 2015, respectively.

 

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 insignificant for the years ended December 31, 2016, 2015, and 2014.

(n) Fair Value of Financial Instruments

 

The carrying amounts of financial instruments, including cash and 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, is estimated using 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 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 $1.5 million and $18.0 million of cash equivalents at December 31, 2016 and 2015 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 54% and 50% of cash and cash equivalents were maintained outside the United States at December 31, 2016 and 2015, respectively.

 

Marketable 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.

(p) Inventories

 

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. The Company reviews and sets standard costs on a periodic basis at current manufacturing costs in order to approximate actual costs. The Company assesses the valuation of all inventories, including manufacturing raw materials, work-in-process, finished goods, and spare parts, each quarter. 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 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. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When a project underlying reported IPR&D is completed, the corresponding amount of IPR&D is amortized over the asset’s estimated useful life. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred in “Selling, General, and Administrative” in the Consolidated Statements of Operations. See Note 5, “Business Combinations,” for additional information.

(r) Goodwill and Indefinite-Lived Intangibles

 

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 of the acquisition-date amounts of the 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 fourth quarter of each year or more frequently if impairment indicators arise.

 

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 applies the two-step impairment test. The two-step impairment test first compares the fair value of the Company’s reporting unit to its carrying amount. If the fair value exceeds the carrying amount, goodwill is not impaired, and the Company is not required to perform further testing. If the carrying amount exceeds fair value, the Company determines the implied fair value of the goodwill and, if the carrying amount of the goodwill exceeds its implied fair value, then the Company records an impairment loss equal to the difference.

 

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.

(s) Long-Lived Assets and Cost Method Investment

 

Long-lived intangible assets consist of purchased technology, customer-related intangible assets, patents, trademarks, covenants not-to-compete, and software licenses and are initially recorded at fair value. Long-lived intangibles 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 and cost method investments 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) Recent Accounting Pronouncements

 

The FASB issued ASU 2014-09, as amended: Revenue from Contracts with Customers, which has been codified as Accounting Standards Codification 606 (“ASC 606”). ASC 606 requires the Company’s revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. ASC 606 outlines a five-step model to make the revenue recognition determination and requires new financial statement disclosures. Publicly-traded companies are required to adopt ASC 606 for reporting periods beginning after December 15, 2017, but can adopt early for annual periods beginning after December 15, 2016. The Company is still finalizing its assessment of the impact of adopting the ASU on its consolidated financial statements and is still evaluating which method of adoption it will select.

 

In January 2016, the FASB issued ASU 2016-01: Financial Instruments — Overall, which requires certain equity investments to be measured at fair value, with changes in fair value recognized in net income. Publicly-traded companies are required to adopt the ASU for reporting periods beginning after December 15, 2017; early adoption is permitted. The Company does not expect this ASU will have a material impact on its consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02: Leases, which generally requires the Company’s operating lessee rights and obligations to be recognized as assets and liabilities on the balance sheet. In addition, interest on lease liabilities is to be recognized separately from the amortization of right-of-use assets in the Statement of Operations. Further, payments of the principal portion of lease liabilities are to be classified as financing activities while payments of interest on lease liabilities and variable lease payments are to be classified as operating activities in the Statement of Cash Flows. The transition to the ASU will require leases at the beginning of the earliest period presented to be recognized and measured using a modified retrospective approach. The ASU is effective for fiscal years beginning after December 15, 2018, with early application permitted. The Company is evaluating the anticipated impact of adopting the ASU on its consolidated financial statements.

 

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which provides guidance on eight specific cash flow issues, including debt prepayments or debt extinguishment costs. Publicly-traded companies are required to adopt the update for reporting periods beginning after December 15, 2017. The Company does not expect this ASU will have a material impact on its consolidated financial statements.

 

In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory, which requires that entities recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. Publicly-traded companies are required to adopt the update for reporting periods beginning after December 15, 2017. The Company is evaluating the anticipated effect the ASU will have on its consolidated financial statements.

(u) Recently Adopted Accounting Standards

 

In March 2016, the FASB issued ASU 2016-09: Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payments. The Company early adopted the ASU effective January 1, 2016. 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 effective. Accordingly, the Company recorded a $1.3 million charge to the opening accumulated deficit balance 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.

 

In November 2015, the FASB issued ASU 2015-17: Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred income taxes by requiring that deferred income tax liabilities and assets be classified as noncurrent in our consolidated balance sheet. Publicly-traded companies are required to adopt the update for reporting periods beginning after December 15, 2016, with early application permitted. The Company early adopted the ASU effective January 1, 2015. In accordance with the ASU’s transition requirements, the Company chose to apply the amendments in the update prospectively. As such, periods prior to 2015 have not been retrospectively adjusted. The adoption of this ASU did not have a material impact on the consolidated financial statements.

Income (Loss) Per Share (Tables)
Schedule of basic and diluted net income (loss) per share and weighted average shares

 

 

 

 

For the year ended December 31,

 

 

 

 

2016

 

 

2015

 

 

2014

 

 

 

(in thousands, except per share amounts)

 

Net income (loss)

 

$

(122,210

)

 

$

(31,978

)

 

$

(66,940

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

(3.11

)

 

$

(0.80

)

 

$

(1.70

)

Diluted

 

$

(3.11

)

 

$

(0.80

)

 

$

(1.70

)

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

39,340

 

 

39,742

 

 

39,350

 

Effect of potentially dilutive share-based awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

39,340

 

 

39,742

 

 

39,350

 

 

 

 

 

 

 

 

 

 

 

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

 

312

 

 

1,017

 

 

1,141

 

 

 

 

 

 

 

 

 

 

 

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

 

107

 

 

146

 

 

339

 

 

 

 

 

 

 

 

 

 

 

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

 

1,896

 

 

2,111

 

 

1,123

 

 

Fair Value Measurements (Tables)
Schedule of assets measured on a recurring basis at fair value

 

 

 

 

 

Level 1

 

 

 

Level 2

 

 

 

Level 3

 

 

 

Total

 

 

 

(in thousands)

 

December 31, 2016

 

 

 

 

 

 

 

 

 

Cash equivalents

 

 

 

 

 

 

 

 

 

Corporate debt

 

$

 

$

1,501 

 

$

 

$

1,501 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

1,501 

 

 

1,501 

 

Short-term investments

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

40,008 

 

 

 

40,008 

 

Government agency securities

 

 

10,012 

 

 

10,012 

 

Corporate debt

 

 

13,773 

 

 

13,773 

 

Commercial paper

 

 

2,994 

 

 

2,994 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

40,008 

 

$

26,779 

 

$

 

$

66,787 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2015

 

 

 

 

 

 

 

 

 

Cash equivalents

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

9,999 

 

$

 

$

 

$

9,999 

 

Government agency securities

 

 

4,998 

 

 

4,998 

 

Commercial paper

 

 

2,999 

 

 

2,999 

 

 

 

 

 

 

 

 

 

 

 

Total

 

9,999 

 

7,997 

 

 

17,996 

 

Short-term investments

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

94,918 

 

 

 

94,918 

 

Government agency securities

 

 

12,988 

 

 

12,988 

 

Corporate debt

 

 

8,144 

 

 

8,144 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

94,918 

 

$

21,132 

 

$

 

$

116,050 

 

 

Investments (Tables)

 

 

 

 

 

 

 

 

 

Gross

 

 

 

Gross

 

 

 

 

 

 

 

 

 

Amortized

 

 

 

Unrealized

 

 

 

Unrealized

 

 

 

Estimated

 

 

 

 

 

Cost

 

 

 

Gains

 

 

 

Losses

 

 

 

Fair Value

 

 

 

 

 

(in thousands)

 

December 31, 2016

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

40,013

 

$

 

$

(5

)

$

40,008

 

Government agency securities

 

10,020

 

 

(8

)

10,012

 

Corporate debt

 

13,780

 

 

(7

)

13,773

 

Commercial paper

 

2,994

 

 

 

2,994

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

66,807

 

$

 

$

(20

)

$

66,787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2015

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

94,935

 

$

6

 

$

(23

)

$

94,918

 

Government agency securities

 

12,985

 

3

 

 

12,988

 

Corporate debt

 

8,144

 

1

 

(1

)

8,144

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

116,064

 

$

10

 

$

(24

)

$

116,050

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

 

December 31, 2015

 

 

 

 

 

 

 

 

 

Gross

 

 

 

 

 

 

 

Gross

 

 

 

 

 

Estimated

 

 

 

Unrealized

 

 

 

Estimated

 

 

 

Unrealized

 

 

 

 

 

Fair Value

 

 

 

Losses

 

 

 

Fair Value

 

 

 

Losses

 

 

 

(in thousands)

 

U.S. treasuries

 

$

20,002

 

$

(5

)

$

64,922

 

$

(23

)

Government agency securities

 

10,012

 

(8

)

 

 

Corporate debt

 

13,774

 

(7

)

3,353

 

(1

)

 

 

 

 

 

 

 

 

 

 

Total

 

$

43,788

 

$

(20

)

$

68,275

 

$

(24

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Combinations (Tables) (PSP)

 

 

 

Acquisition Date

 

(December 4, 2014)

 

 

 

(in thousands)

 

Amount paid, net of cash acquired

 

$

145,382 

 

Working capital adjustment

 

88 

 

 

 

 

 

Acquisition date fair value

 

$

145,470 

 

 

 

 

 

 

 

 

 

 

Acquisition Date

 

(December 4, 2014)

 

 

 

(in thousands)

 

Accounts receivable

 

$

9,383 

 

Inventory

 

13,812 

 

Other current assets

 

463 

 

Property, plant, and equipment

 

6,912 

 

Intangible assets

 

79,810 

 

 

 

 

 

Total identifiable assets acquired

 

110,380 

 

 

 

 

 

Accounts payable and accrued expenses

 

6,473 

 

Customer deposits

 

6,039 

 

Deferred tax liability, net

 

2,705 

 

Other

 

1,089 

 

 

 

 

 

Total liabilities assumed

 

16,306 

 

 

 

 

 

Net identifiable assets acquired

 

94,074 

 

Goodwill

 

51,396 

 

 

 

 

 

Net assets acquired

 

$

145,470 

 

 

 

 

 

 

 

 

 

 

Acquisition Date

 

 

 

(December 4, 2014)

 

 

 

Amount

 

Useful life

 

 

 

(in thousands)

 

 

 

Technology

 

$

39,950 

 

10 years

 

Customer relationships

 

34,310 

 

14 years

 

Backlog

 

3,340 

 

6 months

 

Non-compete agreements

 

1,130 

 

2 years

 

Trademark and tradenames

 

1,080 

 

1 year

 

 

 

 

 

 

 

Intangible assets acquired

 

$

79,810 

 

 

 

 

 

 

 

 

 

 

 

The amounts of revenue and income (loss) from continuing operations before income taxes of PSP included in the Company’s consolidated statement of operations from the acquisition date (December 4, 2014) to the period ending December 31, 2014 are as follows:

 

 

 

Total

 

 

 

(in thousands)

 

Revenue

 

$

7,906

 

Loss from operations before income taxes

 

$

(3,011

)

 

 

 

 

December 31,

 

 

 

2014

 

 

 

(in thousands)

 

Revenue

 

$

447,089

 

Loss from operations before income taxes

 

$

(68,715

)

 

Goodwill and Intangible Assets (Tables)

 

 

 

Gross carrying

 

Accumulated

 

 

 

 

 

 

 

amount

 

 

 

impairment

 

 

 

Net amount

 

 

 

 

 

(in thousands)

 

 

 

Balance at December 31, 2014

 

$

238,158

 

$

123,199

 

$

114,959

 

Purchase price adjustments

 

(51

)

 

(51

)

 

 

 

 

 

 

 

 

Balance at December 31, 2015 and 2016

 

$

238,107

 

$

123,199

 

$

114,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

 

December 31, 2015

 

 

 

Weighted

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Average Remaining

 

 

 

Gross

 

 

 

Amortization

 

 

 

 

 

 

 

Gross

 

 

 

Amortization

 

 

 

 

 

 

 

Amortization

 

 

 

Carrying

 

 

 

and

 

 

 

Net

 

 

 

Carrying

 

 

 

and

 

 

 

Net

 

 

 

Period

 

 

 

Amount

 

 

 

Impairment

 

 

 

Amount

 

 

 

Amount

 

 

 

Impairment

 

 

 

Amount

 

 

 

(in years)

 

(in thousands)

 

Technology

 

7.3

 

$

149,198 

 

$

113,904 

 

$

35,294 

 

$

222,358 

 

$

120,496 

 

$

101,862 

 

Customer relationships

 

11.9

 

47,885 

 

28,659 

 

19,226 

 

47,885 

 

22,470 

 

25,415 

 

Trademarks and tradenames

 

4.3

 

2,590 

 

1,948 

 

642 

 

2,730 

 

1,937 

 

793 

 

Indefinite-lived trademark

 

 

2,900 

 

 

2,900 

 

2,900 

 

 

2,900 

 

Other

 

2.9

 

2,026 

 

1,710 

 

316 

 

6,241 

 

5,537 

 

704 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

8.9

 

$

204,599 

 

$

146,221 

 

$

58,378 

 

$

282,114 

 

$

150,440 

 

$

131,674 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

 

 

(in thousands)

 

2017

 

$

11,470 

 

2018

 

9,893 

 

2019

 

8,608 

 

2020

 

7,530 

 

2021

 

5,491 

 

Thereafter

 

12,486 

 

 

 

 

 

Total

 

$

55,478 

 

 

 

 

 

 

 

Inventories (Tables)
Schedule of inventories

 

 

 

 

December 31,

 

 

 

 

2016

 

 

 

2015

 

 

 

(in thousands)

 

Materials

 

$

46,457 

 

$

42,373 

 

Work-in-process

 

25,250 

 

30,327 

 

Finished goods

 

5,356 

 

4,769 

 

 

 

 

 

 

 

Total

 

$

77,063 

 

$

77,469 

 

 

 

 

 

 

 

 

 

 

Property, Plant, and Equipment and Assets Held for Sale (Tables)
Schedule of property, plant and equipment

 

 

 

December 31,

 

Average

 

 

 

2016

 

2015

 

Useful Life

 

 

 

(in thousands)

 

 

 

Land

 

$

5,669 

 

$

9,592 

 

N/A

 

Building and improvements

 

50,814 

 

54,622 

 

10-40 years

 

Machinery and equipment(1)

 

99,370 

 

110,075 

 

3-10 years

 

Leasehold improvements

 

3,652 

 

5,554 

 

3-7 years

 

 

 

 

 

 

 

 

 

Gross property, plant and equipment

 

159,505 

 

179,843 

 

 

 

Less: accumulated depreciation and amortization

 

98,859 

 

100,253 

 

 

 

 

 

 

 

 

 

 

 

Net property, plant and equipment

 

$

60,646 

 

$

79,590 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Machinery and equipment also includes software, furniture and fixtures

Accrued Expenses and Other Liabilities (Tables)
Schedule of accrued expenses and other current liabilities

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

 

 

2016

 

 

 

2015

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

Payroll and related benefits

 

$

18,780 

 

$

30,917 

 

 

 

 

 

Warranty

 

4,217 

 

8,159 

 

 

 

 

 

Professional fees

 

1,827 

 

2,224 

 

 

 

 

 

Installation

 

1,382 

 

1,110 

 

 

 

 

 

Sales, use, and other taxes

 

1,282 

 

1,132 

 

 

 

 

 

Restructuring liability

 

1,796 

 

824 

 

 

 

 

 

Other

 

3,917 

 

5,027 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

33,201 

 

$

49,393 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring Charges (Tables)
Schedule of restructuring accrual activities

 

 

 

 

 

Personnel

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance and

 

 

 

Facility

 

 

 

 

 

 

 

 

 

Related Costs

 

 

 

Related Costs

 

 

 

Total

 

 

 

 

 

(in thousands)

 

 

 

Balance at December 31, 2013

 

$

533

 

$

 

$

533

 

Provision

 

4,012

 

382

 

4,394

 

Payments

 

(3,117

)

(382

)

(3,499

)

 

 

 

 

 

 

 

 

Balance at December 31, 2014

 

1,428

 

 

1,428

 

Provision

 

3,513

 

1,166

 

4,679

 

Payments

 

(4,117

)

(1,166

)

(5,283

)

 

 

 

 

 

 

 

 

Balance at 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 at December 31, 2016

 

$

1,796

 

$

 

$

1,796

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Tables)

 

 

 

 

 

December 31,

 

 

 

 

 

2016

 

 

 

2015

 

 

 

2014

 

 

 

(in thousands)

 

Balance, beginning of the year

 

$

8,159

 

$

5,411

 

$

5,662

 

Addition for new warranties issued

 

3,916

 

7,873

 

3,484

 

Addition from PSP acquisition

 

 

 

809

 

Settlements

 

(6,433

)

(3,551

)

(3,802

)

Changes in estimate

 

(1,425

)

(1,574

)

(742

)

 

 

 

 

 

 

 

 

Balance, end of the year

 

$

4,217

 

$

8,159

 

$

5,411

 

 

 

 

 

 

 

 

 

 

 

 

 

Minimum lease commitments at December 31, 2016 for property and equipment under operating lease agreements (exclusive of renewal options) are payable as follows:

 

 

 

Operating

 

 

 

Leases

 

Payments due by period:

 

(in thousands)

 

2017

 

$

3,281 

 

2018

 

2,292 

 

2019

 

1,900 

 

2020

 

1,592 

 

2021

 

1,203 

 

Thereafter

 

3,605 

 

 

 

 

 

Total

 

$

13,873 

 

 

 

 

 

 

 

 

 

 

Accounts Receivable

 

Net Sales

 

 

 

 

 

 

 

Year ended December 31,

 

For the Year Ended December 31,

Customer

 

2016

 

2015

 

2016

 

2015

 

2014

Customer A

 

23%

 

*

 

13%

 

*

 

*

Customer B

 

17%

 

*

 

*

 

*

 

*

Customer C

 

*

 

23%

 

*

 

*

 

*

Customer D

 

*

 

*

 

*

 

20%

 

*

Customer E

 

*

 

*

 

*

 

12%

 

*

Customer F

 

*

 

*

 

*

 

*

 

15%

Customer G

 

*

 

*

 

*

 

*

 

11%

 

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

Debt (Tables)
Schedule of maturity of long-term debt

 

 

 

 

Total

 

 

 

 

(in thousands)

 

2017

 

 

368 

 

2018

 

 

398 

 

2019

 

 

428 

 

 

 

 

 

 

Total

 

 

1,194 

 

Less current portion

 

 

368 

 

 

 

 

 

 

Total (less current maturities)

 

 

$

826 

 

 

 

 

 

 

 

 

Derivative Financial Instruments (Tables)
Schedule of derivative gains and (losses)

 

 

 

 

Year ended December 31,

 

 

 

 

2016

 

 

 

2015

 

 

 

2014

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

Foreign currency exchange forwards

 

 

$

219

 

 

 

$

 

 

 

$

(89

)

Foreign currency collar

 

 

 

 

 

 

 

 

(457

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$

219

 

 

 

$

 

 

 

$

(546

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity (Tables)
Schedule of the changes in the balances of each component of accumulated other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized

 

 

 

 

 

 

 

 

Foreign Currency

 

 

 

Minimum Pension

 

 

 

Gains (Losses) on
Available for Sale

 

 

 

 

 

 

 

 

Translation

 

 

 

Liability

 

 

 

Securities

 

 

 

Total

 

 

 

 

(in thousands)

 

Balance at December 31, 2013

 

 

$

5,326

 

 

 

$

(736

)

 

 

$

31

 

 

 

$

4,621

 

Other comprehensive income (loss) before reclassifications

 

 

149

 

 

 

(145

)

 

 

51

 

 

 

55

 

Amounts reclassified from AOCI

 

 

(3,142

)

 

 

 

 

 

(65

)

 

 

(3,207

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

(2,993

)

 

 

(145

)

 

 

(14

)

 

 

(3,152

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2014

 

 

2,333

 

 

 

(881

)

 

 

17

 

 

 

1,469

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

(87

)

 

 

15

 

 

 

(49

)

 

 

(121

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 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 at December 31, 2016

 

 

$

1,797

 

 

 

$

 

 

 

$

(20

)

 

 

$

1,777

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Plans (Tables)

 

 

 

 

 

For the year ended December 31,

 

 

 

 

 

2016

 

 

 

2015

 

 

 

2014

 

 

 

 

 

(in thousands)

 

 

 

 

 

Cost of sales

 

 

 

$

1,956 

 

 

 

$

2,495 

 

 

 

$

2,456 

 

Research and development

 

 

 

3,324 

 

 

 

4,031 

 

 

 

4,498 

 

Selling, general, and administrative

 

 

 

10,433 

 

 

 

11,474 

 

 

 

11,859 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

$

15,713 

 

 

 

$

18,000 

 

 

 

$

18,813 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrecognized share-based compensation costs at December 31, 2016 are summarized below:

 

 

 

 

 

Unrecognized

 

 

 

Weighted

 

 

 

 

 

Share-Based

 

 

 

Average Period

 

 

 

 

 

Compensation

 

 

 

Expected to be

 

 

 

 

 

Costs

 

 

 

Recognized

 

 

 

 

 

(in thousands)

 

 

 

(in years)

 

Stock option awards

 

 

 

$

660 

 

 

 

0.6 

 

Restricted stock units

 

 

 

3,034 

 

 

 

2.0 

 

Restricted stock awards

 

 

 

20,669 

 

 

 

2.7 

 

Performance share units

 

 

 

4,556 

 

 

 

2.5 

 

 

 

 

 

 

 

 

 

 

 

Total unrecognized share-based compensation cost

 

 

 

$

28,919 

 

 

 

2.5 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2016, 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

 

1,449 

 

 

$

35.39 

 

 

4.9 

 

 

$

39 

 

Expected to vest

 

127 

 

 

32.79 

 

 

5.1 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

1,576 

 

 

$

35.18 

 

 

4.9 

 

 

$

39 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

Number of

 

Average

 

 

 

Shares

 

Exercise Price

 

 

 

 

(in thousands)

 

 

 

 

Outstanding at December 31, 2013

 

 

2,598

 

 

$

29.98

 

Granted

 

 

509

 

 

33.05

 

Exercised

 

 

(561

)

 

23.88

 

Expired or forfeited

 

 

(155

)

 

36.22

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2014

 

 

2,391

 

 

31.65

 

Granted

 

 

17

 

 

30.22

 

Exercised

 

 

(192

)

 

12.95

 

Expired or forfeited

 

 

(152

)

 

38.15

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2015

 

 

2,064

 

 

32.91

 

Granted

 

 

 

 

 

Exercised

 

 

(194

)

 

12.18

 

Expired or forfeited

 

 

(294

)

 

34.44

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2016

 

 

1,576

 

 

$

35.18

 

 

 

 

 

 

 

 

 

 

 

The following table summarizes stock option information at December 31, 2016:

 

 

 

Options Outstanding

 

Options Exercisable

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

Average

 

Weighted

 

 

 

 

Aggregate

 

Average

 

Weighted

 

Range of

 

 

 

 

Remaining

 

Average

 

 

 

 

Intrinsic

 

Remaining

 

Average

 

Exercise Prices

 

Shares

 

Contractual Life

 

Exercise Price

 

Shares

 

Value

 

Contractual Life

 

Exercise Price

 

 

 

(in thousands)

 

(in years)

 

 

 

(in thousands)

 

(in thousands)

 

(in years)

 

 

 

 

$20.00 – $30.00

 

 

32 

 

 

5.8 

 

 

$

28.18 

 

 

29 

 

 

$

39 

 

 

5.9 

 

 

$

28.04 

 

$30.01 – $40.00

 

 

1,336 

 

 

5.1 

 

 

33.09 

 

 

1,212 

 

 

 

 

5.1 

 

 

33.12 

 

$40.01 – $50.00

 

 

73 

 

 

2.7 

 

 

45.93 

 

 

73 

 

 

 

 

2.7 

 

 

45.96 

 

$50.01 – $60.00

 

 

135 

 

 

4.4 

 

 

51.70 

 

 

135 

 

 

 

 

4.4 

 

 

51.70 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,576 

 

 

4.9 

 

 

$

35.18 

 

 

1,449 

 

 

$

39 

 

 

4.9 

 

 

$

35.39 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

 

2015

 

2014

 

Weighted average fair value

 

  $

10.58 

 

  $

11.58 

 

Dividend yield

 

0% 

 

0% 

 

Expected volatility factor(1)

 

44% 

 

44% 

 

Risk-free interest rate(2)

 

1.18% 

 

1.19% 

 

Expected life (in years)(3)

 

3.9 

 

3.9 

 

 

 

(1)

Expected volatility is measured using historical daily price changes of the Company’s stock over the respective expected term of the options and the implied volatility derived from the market prices of the Company’s traded options.

 

(2)

The risk-free rate for periods within the contractual term of the stock options 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 options will be outstanding prior to exercise. The Company’s computation of expected life was determined using a lattice-based model incorporating historical post vest exercise and employee termination behavior.

 

 

 

Year ended December 31,

 

 

 

2016

 

2015

 

2014

 

 

 

(in thousands)

 

Cash received from options exercised

 

  $

494 

 

  $

2,233 

 

  $

12,056 

 

Intrinsic value of options exercised

 

  $

1,165 

 

  $

2,089 

 

  $

8,390 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

Average

 

 

 

Number of

 

Grant Date

 

 

 

Shares

 

Fair Value

 

 

 

(in thousands)

 

 

 

Outstanding - December 31, 2013

 

 

1,158

 

 

$

34.93

 

Granted

 

 

395

 

 

34.18

 

Released

 

 

(183

)

 

38.65

 

Forfeited

 

 

(133

)

 

33.66

 

 

 

 

 

 

 

 

 

Outstanding - December 31, 2014

 

 

1,237

 

 

34.27

 

Granted

 

 

672

 

 

30.33

 

Released

 

 

(389

)

 

35.65

 

Forfeited

 

 

(122

)

 

34.46

 

 

 

 

 

 

 

 

 

Outstanding - December 31, 2015

 

 

1,398

 

 

 

31.97

 

Granted

 

 

1,166

 

 

17.59

 

Released

 

 

(349

)

 

32.73

 

Forfeited

 

 

(266

)

 

27.31

 

 

 

 

 

 

 

 

 

Outstanding - December 31, 2016

 

 

1,949

 

 

$

23.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

 

2016

 

Weighted average fair value

 

  $

4.45 

 

Dividend yield

 

0% 

 

Expected volatility factor(1)

 

43% 

 

Risk-free interest rate(2)

 

0.35% 

 

Expected life (in years)(3)

 

0.5 

 

 

(1)

Expected volatility is measured using historical daily price changes of the Company’s stock over the respective expected term of the options and the implied volatility derived from the market prices of the Company’s traded options.

 

(2)

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

 

(3)

The expected life is the length of time, in years, that the purchase rights will be outstanding.

Income Taxes (Tables)

 

 

 

 

Year ended December 31,

 

 

 

2016

 

2015

 

2014

 

 

 

 

 

 

(in thousands)

 

 

 

 

Domestic

 

 

$

(123,021

)

 

$

(53,553

)

 

$

(95,195

)

Foreign

 

 

3,577

 

 

30,907

 

 

16,841

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$

(119,444

)

 

$

(22,646

)

 

$

(78,354

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

 

2016

 

2015

 

2014

 

 

 

 

 

 

(in thousands)

 

 

 

 

Current:

 

 

 

 

 

 

 

 

 

 

Federal

 

 

$

 

 

$

139

 

 

$

(2,464

)

Foreign

 

 

1,937

 

 

6,952

 

 

2,325

 

State and local

 

 

(111

)

 

(407

)

 

55

 

 

 

 

 

 

 

 

 

 

 

 

Total current expense (benefit) for income taxes

 

 

1,826

 

 

6,684

 

 

(84

)

 

 

 

 

 

 

 

 

 

 

 

Deferred:

 

 

 

 

 

 

 

 

 

 

Federal

 

 

1,459

 

 

2,104

 

 

(11,230

)

Foreign

 

 

(646

)

 

516

 

 

(291

)

State and local

 

 

127

 

 

28

 

 

191

 

 

 

 

 

 

 

 

 

 

 

 

Total deferred expense (benefit) for income taxes

 

 

940

 

 

2,648

 

 

(11,330

)

 

 

 

 

 

 

 

 

 

 

 

Total expense (benefit) for income taxes

 

 

$

2,766

 

 

$

9,332

 

 

$

(11,414

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

 

2016

 

2015

 

2014

 

 

 

 

 

 

(in thousands)

 

 

 

 

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

 

 

$

(41,806

)

 

$

(7,926

)

 

$

(27,424

)

State taxes, net of U.S. federal impact

 

 

(1,963

)

 

(1,607

)

 

(662

)

Effect of international operations

 

 

8,849

 

 

(7,659

)

 

(6,160

)

Research and development tax credit

 

 

(801

)

 

(1,628

)

 

(1,935

)

Net change in valuation allowance

 

 

50,520

 

 

23,655

 

 

27,156

 

Change in accrual for unrecognized tax benefits

 

 

(1,700

)

 

4,876

 

 

(1,940

)

ALD liquidation

 

 

(12,435

)

 

 

 

 

U.S. share-based compensation

 

 

2,133

 

 

 

 

 

Goodwill impairment

 

 

 

 

 

 

9,786

 

Change in contingent consideration

 

 

 

 

 

 

(10,279

)

Worthless stock deduction

 

 

 

 

(2,069

)

 

 

Change in entity tax status

 

 

 

 

904

 

 

 

Other

 

 

(31

)

 

786

 

 

44

 

 

 

 

 

 

 

 

 

 

 

 

Total expense (benefit) for income taxes

 

 

$

2,766

 

 

$

9,332

 

 

$

(11,414

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

2016

 

2015

 

 

 

(in thousands)

 

Deferred tax assets: 

 

 

 

 

 

 

 

Inventory valuation

 

 

$

6,681

 

 

$

6,334

 

Net operating losses and credit carry forwards

 

 

54,527

 

 

33,181

 

Credit carry forwards

 

 

24,598

 

 

20,738

 

Warranty and installation accruals

 

 

1,757

 

 

3,022

 

Share-based compensation

 

 

12,624

 

 

12,461

 

Other

 

 

6,778

 

 

5,787

 

 

 

 

 

 

 

 

 

Total deferred tax assets

 

 

106,965

 

 

81,523

 

Valuation allowance

 

 

(106,793

)

 

(56,273

)

 

 

 

 

 

 

 

 

Net deferred tax assets

 

 

172

 

 

25,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities: 

 

 

 

 

 

 

 

Purchased intangible assets

 

 

11,071

 

 

32,550

 

Undistributed earnings

 

 

186

 

 

618

 

Depreciation

 

 

69

 

 

1,908

 

 

 

 

 

 

 

 

 

Total deferred tax liabilities

 

 

11,326

 

 

35,076

 

 

 

 

 

 

 

 

 

Net deferred taxes

 

 

$

(11,154

)

 

$

(9,826

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

 

2016

 

 

 

2015

 

 

 

2014

 

 

 

 

(in thousands)

 

Balance at beginning of year

 

 

$

9,152

 

 

 

$

4,276

 

 

 

$

6,228

 

Additions for tax positions related to current year

 

 

1,038

 

 

 

5,596

 

 

 

244

 

Additions for tax positions related to prior years

 

 

233

 

 

 

143

 

 

 

199

 

Reductions for tax positions related to prior years

 

 

(2,826

)

 

 

 

 

 

(2,345

)

Reductions due to the lapse of the statute of limitations

 

 

(39

)

 

 

(642

)

 

 

(38

)

Settlements

 

 

(106

)

 

 

(221

)

 

 

(12

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at end of year

 

 

$

7,452

 

 

 

$

9,152

 

 

 

$

4,276

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Reporting and Geographic Information (Tables)

 

 

 

 

For the year ended December 31,

 

 

 

 

2016

 

 

 

2015

 

 

 

2014

 

 

 

 

(in thousands)

 

Sales by end-market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lighting, Display & Power Electronics

 

 

$

136,247 

 

 

 

$

291,133 

 

 

 

$

278,551 

 

Advanced Packaging, MEMS & RF

 

 

68,304 

 

 

 

61,935 

 

 

 

11,449 

 

Scientific & Industrial

 

 

74,913 

 

 

 

64,297 

 

 

 

44,429 

 

Data Storage

 

 

52,987 

 

 

 

59,673 

 

 

 

58,444 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$

332,451 

 

 

 

$

477,038 

 

 

 

$

392,873 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales to Unaffiliated Customers

 

Long-lived Tangible Assets

 

 

 

2016

 

 

 

2015

 

 

 

2014

 

 

 

2016

 

 

 

2015

 

 

 

2014

 

 

 

 

(in thousands)

 

United States

 

 

$

85,637 

 

 

 

$

86,627 

 

 

 

$

44,060 

 

 

 

$

60,012 

 

 

 

$

64,951 

 

 

 

$

63,349 

 

China

 

 

85,834 

 

 

 

242,442 

 

 

 

159,063 

 

 

 

219 

 

 

 

422 

 

 

 

621 

 

EMEA(1)

 

 

83,410 

 

 

 

64,019 

 

 

 

35,644 

 

 

 

93 

 

 

 

96 

 

 

 

78 

 

Rest of World

 

 

77,570 

 

 

 

83,950 

 

 

 

154,106 

 

 

 

322 

 

 

 

14,121 

 

 

 

14,704 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$

332,451 

 

 

 

$

477,038 

 

 

 

$

392,873 

 

 

 

$

60,646 

 

 

 

$

79,590 

 

 

 

$

78,752 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) EMEA consists of Europe, the Middle East, and Africa

Selected Quarterly Financial Information (unaudited) (Tables)
Schedule of unaudited quarterly financial data

 

 

 

Fiscal 2016

 

Fiscal 2015

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

Q2

 

Q3

 

Q4

 

 

 

(in thousands, except per share amounts)

 

Net sales

 

 $

78,011

 

 $

75,348

 

 $

85,482

 

 $

93,609

 

 $

98,341

 

 $

131,410

 

 $

140,744

 

 $

106,543

 

Gross profit

 

31,956

 

31,439

 

33,455

 

36,008

 

35,136

 

49,069

 

54,250

 

38,786

 

Net income (loss)

 

(15,533)

 

(32,082)

 

(69,598)

 

(4,998)

 

(19,110)

 

(8,386)

 

5,306

 

(9,788)

 

Basic income (loss) per common share

 

(0.40)

 

(0.82)

 

(1.78)

 

(0.13)

 

(0.48)

 

(0.21)

 

0.13

 

(0.25)

 

Diluted income (loss) per common share

 

(0.40)

 

(0.82)

 

(1.78)

 

(0.13)

 

(0.48)

 

(0.21)

 

0.13

 

(0.25)

 

 

Significant Accounting Policies - Basis of Presentation and Revenue Recognition (Details)
12 Months Ended
Dec. 31, 2016
Significant Accounting Policies
 
Duration of each fiscal quarter for 52-week fiscal year
91 days 
Revenue Recognition
 
Revenue retention percentage
10.00% 
Significant Accounting Policies - Other (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Warranty Costs
 
 
 
Warranty period
1 year 
 
 
Advertising Expense
 
 
 
Advertising expenses
$ 0.8 
$ 0.9 
$ 0.6 
Concentration of Credit Risk
 
 
 
Allowance for doubtful accounts
0.3 
0.2 
 
Maturity period of irrevocable letters of credit, minimum
0 days 
 
 
Maturity period of irrevocable letters of credit, maximum
90 days 
 
 
Cash, Cash Equivalents, and Short-Term Investments
 
 
 
Maturity period of short-term investments, maximum
3 months 
 
 
Cash equivalents
$ 1.5 
$ 18.0 
 
Cash and cash equivalents maintained outside the U.S. by subsidiaries (as a percent)
54.00% 
50.00% 
 
Goodwill and Indefinite-Lived Intangibles
 
 
 
Number of trading days considered to calculate market capitalization
10 days 
 
 
Significant Accounting Policies - Change in Accounting Principle (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Change in Accounting Principle
 
 
 
 
Accumulated deficit balance
$ (168,583)
$ (45,058)
 
 
Additional paid-in capital
763,303 
767,137 
 
 
Total stockholders' equity
594,595 
714,615 
738,932 
780,230 
Deferred tax assets before valuation allowance
106,965 
81,523 
 
 
Valuation allowance
(106,793)
(56,273)
 
 
ASU 2016-09 |
Early Adoption of New Accounting Principle
 
 
 
 
Change in Accounting Principle
 
 
 
 
Accumulated deficit balance
(1,300)
 
 
 
Additional paid-in capital
1,300 
 
 
 
Total stockholders' equity
 
 
 
Deferred tax assets before valuation allowance
2,400 
 
 
 
Valuation allowance
$ 2,400 
 
 
 
Income (Loss) Per Share - Basic and Diluted EPS (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income (Loss) Per Share
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$ (4,998)
$ (69,598)
$ (32,082)
$ (15,533)
$ (9,788)
$ 5,306 
$ (8,386)
$ (19,110)
$ (122,210)
$ (31,978)
$ (66,940)
Net income (loss) per share:
 
 
 
 
 
 
 
 
 
 
 
Basic (in dollars per share)
$ (0.13)
$ (1.78)
$ (0.82)
$ (0.40)
$ (0.25)
$ 0.13 
$ (0.21)
$ (0.48)
$ (3.11)
$ (0.80)
$ (1.70)
Diluted (in dollars per share)
$ (0.13)
$ (1.78)
$ (0.82)
$ (0.40)
$ (0.25)
$ 0.13 
$ (0.21)
$ (0.48)
$ (3.11)
$ (0.80)
$ (1.70)
Basic weighted average shares outstanding
 
 
 
 
 
 
 
 
39,340 
39,742 
39,350 
Diluted weighted average shares outstanding
 
 
 
 
 
 
 
 
39,340 
39,742 
39,350 
Income (Loss) Per Share - Shares Excluded from EPS (Details)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
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
107 
146 
339 
Unvested participating shares
 
 
 
Income (Loss) Per Share
 
 
 
Unvested participating shares excluded from basic weighted average shares outstanding since the securityholders are not obligated to fund losses
312 
1,017 
1,141 
Non-participating shares
 
 
 
Income (Loss) Per Share
 
 
 
Potentially dilutive non-participating shares excluded from the diluted calculation as their effect would be antidilutive
1,896 
2,111 
1,123 
Fair Value Measurements (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Cash equivalents
 
 
 
 
Total
$ 277,444 
$ 269,232 
$ 270,811 
$ 210,799 
Assets measured on a recurring basis
 
 
 
 
Cash equivalents
 
 
 
 
Total
1,501 
17,996 
 
 
Short-term investments
 
 
 
 
Total
66,787 
116,050 
 
 
Assets measured on a recurring basis |
U.S. treasuries
 
 
 
 
Cash equivalents
 
 
 
 
Total
 
9,999 
 
 
Short-term investments
 
 
 
 
Total
40,008 
94,918 
 
 
Assets measured on a recurring basis |
Government agency securities
 
 
 
 
Cash equivalents
 
 
 
 
Total
 
4,998 
 
 
Short-term investments
 
 
 
 
Total
10,012 
12,988 
 
 
Assets measured on a recurring basis |
Corporate debt
 
 
 
 
Cash equivalents
 
 
 
 
Total
1,501 
 
 
 
Short-term investments
 
 
 
 
Total
13,773 
8,144 
 
 
Assets measured on a recurring basis |
Commercial paper
 
 
 
 
Cash equivalents
 
 
 
 
Total
 
2,999 
 
 
Short-term investments
 
 
 
 
Total
2,994 
 
 
 
Assets measured on a recurring basis |
Level 1
 
 
 
 
Cash equivalents
 
 
 
 
Total
 
9,999 
 
 
Short-term investments
 
 
 
 
Total
40,008 
94,918 
 
 
Assets measured on a recurring basis |
Level 1 |
U.S. treasuries
 
 
 
 
Cash equivalents
 
 
 
 
Total
 
9,999 
 
 
Short-term investments
 
 
 
 
Total
40,008 
94,918 
 
 
Assets measured on a recurring basis |
Level 2
 
 
 
 
Cash equivalents
 
 
 
 
Total
1,501 
7,997 
 
 
Short-term investments
 
 
 
 
Total
26,779 
21,132 
 
 
Assets measured on a recurring basis |
Level 2 |
Government agency securities
 
 
 
 
Cash equivalents
 
 
 
 
Total
 
4,998 
 
 
Short-term investments
 
 
 
 
Total
10,012 
12,988 
 
 
Assets measured on a recurring basis |
Level 2 |
Corporate debt
 
 
 
 
Cash equivalents
 
 
 
 
Total
1,501 
 
 
 
Short-term investments
 
 
 
 
Total
13,773 
8,144 
 
 
Assets measured on a recurring basis |
Level 2 |
Commercial paper
 
 
 
 
Cash equivalents
 
 
 
 
Total
 
2,999 
 
 
Short-term investments
 
 
 
 
Total
$ 2,994 
 
 
 
Investments - Available-For-Sale Securities (Details) (USD $)
12 Months Ended 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2015
Other net
Dec. 31, 2014
Other net
Dec. 31, 2016
U.S. treasuries
Dec. 31, 2015
U.S. treasuries
Dec. 31, 2016
Government agency securities
Dec. 31, 2015
Government agency securities
Dec. 31, 2016
Corporate debt
Dec. 31, 2015
Corporate debt
Dec. 31, 2016
Commercial paper
Total available-for-sale securities
 
 
 
 
 
 
 
 
 
 
 
Amortized Cost
$ 66,807,000 
$ 116,064,000 
 
 
$ 40,013,000 
$ 94,935,000 
$ 10,020,000 
$ 12,985,000 
$ 13,780,000 
$ 8,144,000 
$ 2,994,000 
Gross Unrealized Gains
 
10,000 
 
 
 
6,000 
 
3,000 
 
1,000 
 
Gross Unrealized Losses
(20,000)
(24,000)
 
 
(5,000)
(23,000)
(8,000)
 
(7,000)
(1,000)
 
Estimated Fair Value
66,787,000 
116,050,000 
 
 
40,008,000 
94,918,000 
10,012,000 
12,988,000 
13,773,000 
8,144,000 
2,994,000 
Available-for-sale securities in a loss position
 
 
 
 
 
 
 
 
 
 
 
Estimated Fair Value
43,788,000 
68,275,000 
 
 
20,002,000 
64,922,000 
10,012,000 
 
13,774,000 
3,353,000 
 
Gross Unrealized Losses
(20,000)
(24,000)
 
 
(5,000)
(23,000)
(8,000)
 
(7,000)
(1,000)
 
Short-term investments that had been in a continuous loss position for more than 12 months
 
 
 
 
 
 
 
 
 
Realized gains or losses
$ 0 
 
$ 0 
$ 0 
 
 
 
 
 
 
 
Investments - Cost Method Investment (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Cost Method Investment
 
 
Carrying value of the investment
$ 21.0 
$ 21.0 
Maximum
 
 
Cost Method Investment
 
 
Percentage ownership of cost method investee
20.00% 
 
Business Combinations (Details) (USD $)
12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 4, 2014
PSP
Dec. 31, 2015
PSP
Dec. 31, 2014
PSP
Dec. 4, 2014
PSP
Dec. 4, 2014
PSP
Technology
Dec. 4, 2014
PSP
Technology
Dec. 4, 2014
PSP
Customer relationships
Dec. 4, 2014
PSP
Customer relationships
Dec. 4, 2014
PSP
Backlog
Dec. 4, 2014
PSP
Backlog
Dec. 4, 2014
PSP
Non-compete agreements
Dec. 4, 2014
PSP
Non-compete agreements
Dec. 4, 2014
PSP
Trademark and tradenames
Dec. 4, 2014
PSP
Trademark and tradenames
Business Combinations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of outstanding common shares and voting interest acquired
 
 
 
 
 
 
100.00% 
 
 
 
 
 
 
 
 
 
 
Increase in net working capital adjustment
 
 
 
 
$ 700,000 
 
 
 
 
 
 
 
 
 
 
 
 
Decrease in goodwill as result of working capital adjustment
   
(51,000)
 
 
(100,000)
 
 
 
 
 
 
 
 
 
 
 
 
Reduction in deferred tax liabilities as a result of working capital adjustment
 
 
 
 
200,000 
 
 
 
 
 
 
 
 
 
 
 
 
Lease related asset retirement obligation
 
 
 
 
800,000 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of the consideration transferred
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount paid, net of cash acquired
 
 
 
145,382,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Working capital adjustment
 
 
 
88,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition date fair value
 
 
 
145,470,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summary of estimated fair values of the assets acquired and liabilities assumed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Account receivable
 
 
 
 
 
 
9,383,000 
 
 
 
 
 
 
 
 
 
 
Inventory
 
 
 
 
 
 
13,812,000 
 
 
 
 
 
 
 
 
 
 
Other current assets
 
 
 
 
 
 
463,000 
 
 
 
 
 
 
 
 
 
 
Property, plant, and equipment
 
 
 
 
 
 
6,912,000 
 
 
 
 
 
 
 
 
 
 
Intangible assets
 
 
 
 
 
 
79,810,000 
 
 
 
 
 
 
 
 
 
 
Total identifiable assets acquired
 
 
 
 
 
 
110,380,000 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
 
 
 
 
 
6,473,000 
 
 
 
 
 
 
 
 
 
 
Customer deposits
 
 
 
 
 
 
6,039,000 
 
 
 
 
 
 
 
 
 
 
Deferred tax liability, net
 
 
 
 
 
 
2,705,000 
 
 
 
 
 
 
 
 
 
 
Other
 
 
 
 
 
 
1,089,000 
 
 
 
 
 
 
 
 
 
 
Total liabilities assumed
 
 
 
 
 
 
16,306,000 
 
 
 
 
 
 
 
 
 
 
Net identifiable assets acquired
 
 
 
 
 
 
94,074,000 
 
 
 
 
 
 
 
 
 
 
Goodwill
114,908,000 
114,908,000 
114,959,000 
 
 
 
51,396,000 
 
 
 
 
 
 
 
 
 
 
Net assets acquired
 
 
 
 
 
 
145,470,000 
 
 
 
 
 
 
 
 
 
 
Gross contractual value of accounts receivable
 
 
 
 
 
 
10,500,000 
 
 
 
 
 
 
 
 
 
 
Percentage of goodwill is deductible for tax
 
 
 
 
 
 
80.00% 
 
 
 
 
 
 
 
 
 
 
Intangible assets acquired and the estimated weighted-average useful life
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intangible assets acquired, amount
 
 
 
 
 
 
79,810,000 
 
39,950,000 
 
34,310,000 
 
3,340,000 
 
1,130,000 
 
1,080,000 
Useful life
 
 
 
 
 
 
 
10 years 
 
14 years 
 
6 months 
 
2 years 
 
1 year 
 
Acquisition related costs
 
 
 
 
 
3,200,000 
 
 
 
 
 
 
 
 
 
 
 
Revenue and income (loss) from continuing operations before income taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
7,906,000 
 
 
 
 
 
 
 
 
 
 
 
Loss from operations before income taxes
 
 
 
 
 
(3,011,000)
 
 
 
 
 
 
 
 
 
 
 
Pro forma consolidated statement of operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
447,089,000 
 
 
 
 
 
 
 
 
 
 
 
Loss from operations before income taxes
 
 
 
 
 
$ (68,715,000)
 
 
 
 
 
 
 
 
 
 
 
Goodwill and Intangible Assets - Goodwill (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Goodwill rollforward
 
 
Gross carrying Amount, beginning balance
$ 238,107 
$ 238,158 
Accumulated Impairment, beginning balance
123,199 
123,199 
Net Amount, beginning balance
114,908 
114,959 
Purchase price adjustments
   
(51)
Gross carrying Amount, ending balance
238,107 
238,107 
Accumulated Impairment, ending balance
123,199 
123,199 
Net Amount, ending balance
$ 114,908 
$ 114,908 
Goodwill and Intangible Assets - Impairments (Details) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Impairments
 
 
 
Asset impairment
$ 69,520,000 
$ 126,000 
$ 58,170,000 
ALD
 
 
 
Impairments
 
 
 
Impairment of goodwill
 
 
28,000,000 
Asset impairment
54,300,000 
 
 
Customer relationships |
ALD
 
 
 
Impairments
 
 
 
Asset impairment
 
 
17,400,000 
In-process research and development |
ALD
 
 
 
Impairments
 
 
 
Asset impairment
 
 
4,800,000 
Other long-lived assets |
ALD
 
 
 
Impairments
 
 
 
Asset impairment
 
 
25,900,000 
Certain tangible assets |
ALD
 
 
 
Impairments
 
 
 
Asset impairment
 
 
$ 3,600,000 
Goodwill and Intangible Assets - Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Intangible assets
 
 
Weighted Average Remaining Amortization Period
8 years 10 months 24 days 
 
Gross Carrying Amount
$ 204,599 
$ 282,114 
Accumulated Amortization and Impairment
146,221 
150,440 
Total Net Intangible Assets
58,378 
131,674 
Estimated aggregate amortization expense
 
 
2017
11,470 
 
2018
9,893 
 
2019
8,608 
 
2020
7,530 
 
2021
5,491 
 
Thereafter
12,486 
 
Total
55,478 
 
Indefinite-lived trademark
 
 
Intangible assets
 
 
Gross Carrying Amount
2,900 
2,900 
Total Net Intangible Assets
2,900 
2,900 
Technology
 
 
Intangible assets
 
 
Weighted Average Remaining Amortization Period
7 years 3 months 18 days 
 
Gross Carrying Amount
149,198 
222,358 
Accumulated Amortization and Impairment
113,904 
120,496 
Total Net Intangible Assets
35,294 
101,862 
Customer relationships
 
 
Intangible assets
 
 
Weighted Average Remaining Amortization Period
11 years 10 months 24 days 
 
Gross Carrying Amount
47,885 
47,885 
Accumulated Amortization and Impairment
28,659 
22,470 
Total Net Intangible Assets
19,226 
25,415 
Trademark and tradenames
 
 
Intangible assets
 
 
Weighted Average Remaining Amortization Period
4 years 3 months 18 days 
 
Gross Carrying Amount
2,590 
2,730 
Accumulated Amortization and Impairment
1,948 
1,937 
Total Net Intangible Assets
642 
793 
Other
 
 
Intangible assets
 
 
Weighted Average Remaining Amortization Period
2 years 10 months 24 days 
 
Gross Carrying Amount
2,026 
6,241 
Accumulated Amortization and Impairment
1,710 
5,537 
Total Net Intangible Assets
$ 316 
$ 704 
Inventories (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Inventories
 
 
Materials
$ 46,457 
$ 42,373 
Work-in-process
25,250 
30,327 
Finished goods
5,356 
4,769 
Total
$ 77,063 
$ 77,469 
Property, Plant, and Equipment and Assets Held for Sale - Property and Equipment (Details) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Property, Plant and Equipment, net
 
 
 
Gross property, plant and equipment
$ 159,505,000 
$ 179,843,000 
 
Less: accumulated depreciation and amortization
98,859,000 
100,253,000 
 
Net property, plant and equipment
60,646,000 
79,590,000 
78,752,000 
Depreciation
13,400,000 
12,200,000 
11,400,000 
Property, plant and equipment, impairment charge of ALD assets
3,300,000 
 
 
Land
 
 
 
Property, Plant and Equipment, net
 
 
 
Gross property, plant and equipment
5,669,000 
9,592,000 
 
Building and improvements
 
 
 
Property, Plant and Equipment, net
 
 
 
Gross property, plant and equipment
50,814,000 
54,622,000 
 
Building and improvements |
Minimum
 
 
 
Property, Plant and Equipment, net
 
 
 
Average useful lives
10 years 
 
 
Building and improvements |
Maximum
 
 
 
Property, Plant and Equipment, net
 
 
 
Average useful lives
40 years 
 
 
Machinery and equipment
 
 
 
Property, Plant and Equipment, net
 
 
 
Gross property, plant and equipment
99,370,000 
110,075,000 
 
Machinery and equipment |
Minimum
 
 
 
Property, Plant and Equipment, net
 
 
 
Average useful lives
3 years 
 
 
Machinery and equipment |
Maximum
 
 
 
Property, Plant and Equipment, net
 
 
 
Average useful lives
10 years 
 
 
Leaseholds improvements
 
 
 
Property, Plant and Equipment, net
 
 
 
Gross property, plant and equipment
$ 3,652,000 
$ 5,554,000 
 
Leaseholds improvements |
Minimum
 
 
 
Property, Plant and Equipment, net
 
 
 
Average useful lives
3 years 
 
 
Leaseholds improvements |
Maximum
 
 
 
Property, Plant and Equipment, net
 
 
 
Average useful lives
7 years 
 
 
Property, Plant, and Equipment and Assets Held For Sale - Assets Held For Sale (Details) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Assets held for sale
 
 
 
Asset impairment charges
$ 69,520,000 
$ 126,000 
$ 58,170,000 
Additional asset impairment charges
 
 
700,000 
Property, plant and equipment, net
60,646,000 
79,590,000 
78,752,000 
Proceeds from sale of assets
 
3,068,000 
9,259,000 
St. Paul, Minnesota
 
 
 
Assets held for sale
 
 
 
Increase in carrying value recorded as impairment charge
 
 
1,900,000 
Additional asset impairment charges
1,200,000 
 
 
Asia
 
 
 
Assets held for sale
 
 
 
Asset impairment charges
 
 
1,600,000 
Proceeds from sale of assets
 
1,000,000 
 
Building |
South Korea
 
 
 
Assets held for sale
 
 
 
Number of facilities listed for sale
 
 
Asset impairment charges
4,500,000 
 
 
Lab equipment
 
 
 
Assets held for sale
 
 
 
Non-cash impairment charges
6,200,000 
 
 
Land and Buildings |
St. Paul, Minnesota
 
 
 
Assets held for sale
 
 
 
Property, plant and equipment, net
$ 3,600,000 
 
 
Accrued Expenses and Other Liabilities (Details) (USD $)
Dec. 31, 2016
Dec. 31, 2015
Accrued Expenses and Other Liabilities
 
 
Payroll and related benefits
$ 18,780,000 
$ 30,917,000 
Warranty
4,217,000 
8,159,000 
Professional fees
1,827,000 
2,224,000 
Installation
1,382,000 
1,110,000 
Sales, use, and other taxes
1,282,000 
1,132,000 
Restructuring liability
1,796,000 
824,000 
Other
3,917,000 
5,027,000 
Total
33,201,000 
49,393,000 
Customer deposits and deferred revenue
 
 
Customer deposits
$ 22,200,000 
$ 28,200,000 
Restructuring Charges - Information (Details) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Restructuring accruals
 
 
 
Restructuring Charges.
$ 5,640,000 
$ 4,679,000 
$ 4,394,000 
Ft. Collins, Colorado and Camarillo, California facilities (2014 Plan)
 
 
 
Restructuring accruals
 
 
 
Restructuring Charges.
 
2,700,000 
 
Hyeongok-ri South Korea facility (2015 Plan)
 
 
 
Restructuring accruals
 
 
 
Number of employees terminated
 
23 
 
Restructuring Charges.
 
1,100,000 
 
2016 Restructuring Plan
 
 
 
Restructuring accruals
 
 
 
Number of employees terminated
50 
 
 
Restructuring Charges.
4,400,000 
 
 
2016 Restructuring Plan |
Minimum
 
 
 
Restructuring accruals
 
 
 
Expected additional restructuring costs to be incurred
2,000,000 
 
 
2016 Restructuring Plan |
Maximum
 
 
 
Restructuring accruals
 
 
 
Expected additional restructuring costs to be incurred
5,000,000 
 
 
Personnel severance and related costs |
Ft. Collins, Colorado and Camarillo, California facilities (2014 Plan)
 
 
 
Restructuring accruals
 
 
 
Number of employees terminated
 
 
93 
Restructuring Charges.
 
 
4,000,000 
Personnel severance and related costs |
ALD technology development
 
 
 
Restructuring accruals
 
 
 
Number of employees terminated
25 
 
 
Restructuring Charges.
1,200,000 
 
 
Personnel severance and related costs |
LED Market Restructuring Plan
 
 
 
Restructuring accruals
 
 
 
Number of permanent positions eliminated
 
16 
 
Number of temporary positions eliminated
 
12 
 
Restructuring Charges.
 
900,000 
 
Personnel severance and related costs |
2016 Restructuring Plan
 
 
 
Restructuring accruals
 
 
 
Restructuring Charges.
3,300,000 
 
 
Facility closing costs |
Ft. Collins, Colorado and Camarillo, California facilities (2014 Plan)
 
 
 
Restructuring accruals
 
 
 
Restructuring Charges.
 
 
400,000 
Facility closing costs |
2016 Restructuring Plan
 
 
 
Restructuring accruals
 
 
 
Restructuring Charges.
$ 1,100,000 
 
 
Restructuring Charges - Rollforward (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Restructuring accruals rollforward
 
 
 
Balance at the beginning of the period
$ 824 
$ 1,428 
$ 533 
Provision
5,642 
4,679 
4,394 
Changes in estimate
(2)
 
 
Payments
(4,668)
(5,283)
(3,499)
Balance at the end of the period
1,796 
824 
1,428 
Personnel severance and related costs
 
 
 
Restructuring accruals rollforward
 
 
 
Balance at the beginning of the period
824 
1,428 
533 
Provision
4,544 
3,513 
4,012 
Changes in estimate
(2)
 
 
Payments
(3,570)
(4,117)
(3,117)
Balance at the end of the period
1,796 
824 
1,428 
Facility closing costs
 
 
 
Restructuring accruals rollforward
 
 
 
Provision
1,098 
1,166 
382 
Payments
$ (1,098)
$ (1,166)
$ (382)
Commitments and Contingencies - Warranty (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Accrued Warranty
 
 
 
Warranty period of products purchased
1 year 
 
 
Balance, beginning of the year
$ 8,159 
$ 5,411 
$ 5,662 
Addition for new warranties issued
3,916 
7,873 
3,484 
Addition from PSP acquisition
 
 
809 
Settlements
(6,433)
(3,551)
(3,802)
Changes in estimate
(1,425)
(1,574)
(742)
Balance, end of the year
$ 4,217 
$ 8,159 
$ 5,411 
Commitments and Contingencies - Minimum Lease Requirements (Details) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Minimum lease commitments for property and equipment
 
 
 
Lease expense
$ 2,500,000 
$ 2,300,000 
$ 2,300,000 
Property and equipment under operating leases
 
 
 
Minimum lease commitments for property and equipment
 
 
 
2017
3,281,000 
 
 
2018
2,292,000 
 
 
2019
1,900,000 
 
 
2020
1,592,000 
 
 
2021
1,203,000 
 
 
Thereafter
3,605,000 
 
 
Total
$ 13,873,000 
 
 
Commitments and Contingencies - Concentration of Credit Risk (Details) (Credit Concentration Risk)
12 Months Ended
Dec. 31, 2016
Accounts Receivable
Top Ten Customers
customer
Dec. 31, 2015
Accounts Receivable
Top Ten Customers
Dec. 31, 2016
Accounts Receivable
Customer A
Dec. 31, 2016
Accounts Receivable
Customer B
Dec. 31, 2015
Accounts Receivable
Customer C
Dec. 31, 2016
Net Sales
Customer A
Dec. 31, 2015
Net Sales
Customer D
Dec. 31, 2015
Net Sales
Customer E
Dec. 31, 2014
Net Sales
Customer F
Dec. 31, 2014
Net Sales
Customer G
Concentration of Credit Risk
 
 
 
 
 
 
 
 
 
 
Number of top customers
10 
 
 
 
 
 
 
 
 
 
Percentage of net accounts receivable from top customers
73.00% 
75.00% 
 
 
 
 
 
 
 
 
Concentration Risk (as a percent)
 
 
23.00% 
17.00% 
23.00% 
13.00% 
20.00% 
12.00% 
15.00% 
11.00% 
Commitments and Contingencies - Geographic Information (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Minimum
Dec. 31, 2016
Maximum
Revenue reporting by end-market and geographic region
 
 
 
 
Credit period for accounts receivable
 
 
30 days 
90 days 
Accounts receivable, net
$ 58,020 
$ 49,524 
 
 
Commitments and Contingencies - Suppliers and Purchase Commitments (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Purchase Commitments
 
 
Supplier deposits against purchase commitments
$ 7.8 
$ 14.6 
Purchase commitments due within one year
$ 72.6 
 
Commitments and Contingencies - Bank Guarantees (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Commitments and Contingencies
 
Bank guarantees outstanding
$ 5.0 
Unused letters of credit
$ 59.4 
Debt (Details) (USD $)
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Mortgage Payable
Dec. 31, 2015
Mortgage Payable
Dec. 31, 2016
Mortgage Payable
Level 3
Dec. 31, 2015
Mortgage Payable
Level 3
Dec. 31, 2016
Mortgage Payable
Land and Buildings
Dec. 31, 2015
Mortgage Payable
Land and Buildings
Jan. 31, 2017
Subsequent event
2.70 Convertible Senior Notes due 2023
Convertible debt
Long-term debt
 
 
 
 
 
 
 
 
 
Mortgage payable outstanding
 
 
$ 1,200,000 
$ 1,500,000 
 
 
 
 
 
Aggregate principal amount
 
 
 
 
 
 
 
 
345,000,000 
Interest rate (as a percent)
 
 
7.91% 
7.91% 
 
 
 
 
2.70% 
Value of assets pledged to secure debt
 
 
 
 
 
 
3,300,000 
3,300,000 
 
Fair value of debt instrument
 
 
 
 
1,200,000 
1,600,000 
 
 
 
Long-term debt maturities
 
 
 
 
 
 
 
 
 
2017
368,000 
 
 
 
 
 
 
 
 
2018
398,000 
 
 
 
 
 
 
 
 
2019
428,000 
 
 
 
 
 
 
 
 
Total
1,194,000 
 
 
 
 
 
 
 
 
Less current portion
368,000 
340,000 
 
 
 
 
 
 
 
Total (less current maturities)
$ 826,000 
$ 1,193,000 
 
 
 
 
 
 
 
Derivative Financial Instruments (Details) (Not Designated as Hedges, USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2014
Derivative Financial Instruments
 
 
Gain and (losses) from currency exchange derivatives
$ 219 
$ (546)
Foreign currency exchange forwards
 
 
Derivative Financial Instruments
 
 
Gain and (losses) from currency exchange derivatives
219 
(89)
Foreign currency collar
 
 
Derivative Financial Instruments
 
 
Gain and (losses) from currency exchange derivatives
 
$ (457)
Stockholders' Equity - Accumulated Other Comprehensive Income (Details) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Changes in the balances of each component of AOCI
 
 
 
Balance at the beginning of the period
$ 714,615,000 
$ 738,932,000 
$ 780,230,000 
Other comprehensive income (loss), net of tax
429,000 
(121,000)
(3,152,000)
Balance at the end of the period
594,595,000 
714,615,000 
738,932,000 
Accumulated Other Comprehensive Income
 
 
 
Changes in the balances of each component of AOCI
 
 
 
Balance at the beginning of the period
1,348,000 
1,469,000 
4,621,000 
Other comprehensive income (loss) before reclassifications
(25,000)
 
55,000 
Amounts reclassified from AOCI
454,000 
 
(3,207,000)
Other comprehensive income (loss), net of tax
429,000 
(121,000)
(3,152,000)
Balance at the end of the period
1,777,000 
1,348,000 
1,469,000 
Foreign Currency Translation
 
 
 
Changes in the balances of each component of AOCI
 
 
 
Balance at the beginning of the period
2,246,000 
2,333,000 
5,326,000 
Other comprehensive income (loss) before reclassifications
(19,000)
 
149,000 
Amounts reclassified from AOCI
(430,000)
 
(3,142,000)
Other comprehensive income (loss), net of tax
(449,000)
(87,000)
(2,993,000)
Balance at the end of the period
1,797,000 
2,246,000 
2,333,000 
Foreign Currency Translation |
ALD |
Other net
 
 
 
Changes in the balances of each component of AOCI
 
 
 
Amounts reclassified from AOCI
400,000 
 
 
Foreign Currency Translation |
ALD |
Accumulated Other Comprehensive Income
 
 
 
Changes in the balances of each component of AOCI
 
 
 
Amounts reclassified from AOCI
(400,000)
 
 
Minimum Pension Liability
 
 
 
Changes in the balances of each component of AOCI
 
 
 
Balance at the beginning of the period
(866,000)
(881,000)
(736,000)
Other comprehensive income (loss) before reclassifications
 
 
(145,000)
Amounts reclassified from AOCI
866,000 
 
 
Other comprehensive income (loss), net of tax
866,000 
15,000 
(145,000)
Balance at the end of the period
 
(866,000)
(881,000)
Minimum Pension Liability |
Other net
 
 
 
Changes in the balances of each component of AOCI
 
 
 
Amounts reclassified from AOCI
900,000 
 
 
Tax benefit related to amounts reclassified from AOCI
400,000 
 
 
Minimum Pension Liability |
Accumulated Other Comprehensive Income
 
 
 
Changes in the balances of each component of AOCI
 
 
 
Amounts reclassified from AOCI
(900,000)
 
 
Tax benefit related to amounts reclassified from AOCI
(400,000)
 
 
Unrealized Gains (Losses) on Available for Sale Securities
 
 
 
Changes in the balances of each component of AOCI
 
 
 
Balance at the beginning of the period
(32,000)
17,000 
31,000 
Other comprehensive income (loss) before reclassifications
(6,000)
 
51,000 
Amounts reclassified from AOCI
18,000 
 
(65,000)
Other comprehensive income (loss), net of tax
12,000 
(49,000)
(14,000)
Balance at the end of the period
$ (20,000)
$ (32,000)
$ 17,000 
Stockholders' Equity - Preferred Stock (Details) (USD $)
Dec. 31, 2016
Dec. 31, 2015
Stockholders' Equity
 
 
Preferred stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Preferred stock, shares issued
Stockholders' Equity - Treasury Stock (Details) (USD $)
Share data in Millions, unless otherwise specified
12 Months Ended 15 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Oct. 28, 2015
Treasury Stock
 
 
 
 
Authorized amount of common stock repurchase (in dollars)
 
 
 
$ 100,000,000 
Purchase of common stock
$ 13,035,000 
$ 9,222,000 
$ 22,300,000 
 
Purchase of common stock (in shares)
0.7 
 
 
 
Stock Plans - Plans and Awards (Details)
12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2013
Inducement Plan
Dec. 31, 2016
2010 Stock Incentive Plan
Dec. 31, 2016
2016 Employee Stock Purchase Plan
Dec. 31, 2016
Stock option Awards
Dec. 31, 2015
Stock option Awards
Dec. 31, 2014
Stock option Awards
Dec. 31, 2013
Stock option Awards
Dec. 31, 2013
Stock option Awards
Inducement Plan
Dec. 31, 2016
Stock option Awards
Inducement Plan
Dec. 31, 2016
Stock option Awards
2010 Stock Incentive Plan
Dec. 31, 2016
Stock option Awards
2010 Stock Incentive Plan
Minimum
Dec. 31, 2016
Stock option Awards
2010 Stock Incentive Plan
Maximum
Dec. 31, 2016
Restricted Stock Awards and Restricted Stock Units
2010 Stock Incentive Plan
Minimum
Dec. 31, 2016
Restricted Stock Awards and Restricted Stock Units
2010 Stock Incentive Plan
Maximum
Dec. 31, 2013
Restricted stock units
Inducement Plan
Dec. 31, 2016
Restricted stock units
Inducement Plan
Dec. 31, 2013
Restricted stock units
Inducement Plan
Minimum
Dec. 31, 2013
Restricted stock units
Inducement Plan
Maximum
Dec. 31, 2016
RSUs and PSUs
2010 Stock Incentive Plan
Stock plans disclosures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum number of shares authorized to be issued
 
10,600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock available for issuance (in shares)
 
750,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vesting period
 
 
 
 
 
 
 
3 years 
 
3 years 
 
 
1 year 
5 years 
 
 
2 years 
4 years 
 
Expiration term
 
 
 
 
 
 
 
10 years 
 
 
7 years 
10 years 
 
 
 
 
 
 
 
Number of options outstanding (in shares)
 
 
 
1,576,000 
2,064,000 
2,391,000 
2,598,000 
 
77,500 
1,500,000 
 
 
 
 
 
 
 
 
 
Number of awards other than options outstanding (in shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,200 
 
 
600,000 
Awards granted (in shares)
 
 
 
 
 
 
 
124,500 
 
 
 
 
 
 
 
 
 
 
 
Awards granted (in shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
87,000 
 
 
 
 
Share price (as a percent)
 
 
85.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares reserved for future issuance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total shares reserved
 
6,300,000 
700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock Plans - Recognized Share-based Compensation (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Recognized share-based compensation
 
 
 
Total
$ 15,713 
$ 18,000 
$ 18,813 
Cost of sales
 
 
 
Recognized share-based compensation
 
 
 
Total
1,956 
2,495 
2,456 
Research and development
 
 
 
Recognized share-based compensation
 
 
 
Total
3,324 
4,031 
4,498 
Selling, general, and administrative
 
 
 
Recognized share-based compensation
 
 
 
Total
$ 10,433 
$ 11,474 
$ 11,859 
Stock Plans - Unrecognized Share-based Compensation Costs (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Unrecognized share-based compensation costs
 
Unrecognized Share-Based Compensation Costs
$ 28,919 
Weighted Average Period Expected to be Recognized
2 years 6 months 
Stock option Awards
 
Unrecognized share-based compensation costs
 
Unrecognized Share-Based Compensation Costs
660 
Weighted Average Period Expected to be Recognized
7 months 6 days 
Vested
 
Number of Shares
1,449,000 
Weighted Average Exercise Price
$ 35.39 
Weighted Average Remaining Contractual Life
4 years 10 months 24 days 
Aggregate Intrinsic Value
39 
Expected to vest
 
Number of shares
127,000 
Weighted Average Exercise Price
$ 32.79 
Weighted Average Remaining Contractual Life
5 years 1 month 6 days 
Total
 
Number of shares
1,576,000 
Weighted Average Exercise Price
$ 35.18 
Weighted Average Remaining Contractual Life
4 years 10 months 24 days 
Aggregate Intrinsic Value
39 
Closing price
$ 29.15 
Restricted stock units
 
Unrecognized share-based compensation costs
 
Unrecognized Share-Based Compensation Costs
3,034 
Weighted Average Period Expected to be Recognized
2 years 
Restricted Stock Awards
 
Unrecognized share-based compensation costs
 
Unrecognized Share-Based Compensation Costs
20,669 
Weighted Average Period Expected to be Recognized
2 years 8 months 12 days 
Performance Share Units
 
Unrecognized share-based compensation costs
 
Unrecognized Share-Based Compensation Costs
$ 4,556 
Weighted Average Period Expected to be Recognized
2 years 6 months 
Stock Plans - Stock Option Activity (Details) (Stock option Awards, USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Stock option Awards
 
 
 
Number of Shares
 
 
 
Outstanding at the beginning of the period (in shares)
2,064,000 
2,391,000 
2,598,000 
Granted (in shares)
17,000 
509,000 
Exercised (in shares)
(194,000)
(192,000)
(561,000)
Expired or forfeited (in shares)
(294,000)
(152,000)
(155,000)
Outstanding at the end of the period (in shares)
1,576,000 
2,064,000 
2,391,000 
Weighted Average Exercise price
 
 
 
Outstanding at the beginning of the period (in dollars per share)
$ 32.91 
$ 31.65 
$ 29.98 
Granted (in dollars per share)
 
$ 30.22 
$ 33.05 
Exercised (in dollars per share)
$ 12.18 
$ 12.95 
$ 23.88 
Expired or forfeited (in dollars per share)
$ 34.44 
$ 38.15 
$ 36.22 
Outstanding at the end of the period (in dollars per share)
$ 35.18 
$ 32.91 
$ 31.65 
Stock Plans - Option Exercise Ranges and FV Assumptions (Details) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Options Outstanding
 
 
 
Options Outstanding, Shares
1,576,000 
 
 
Weighted Average Remaining Contractual Life
4 years 10 months 24 days 
 
 
Weighted-Average Exercise Price (in dollars per share)
$ 35.18 
 
 
Options Exercisable
 
 
 
Options Exercisable, Shares
1,449,000 
 
 
Aggregate Intrinsic Value
$ 39,000 
 
 
Weighted Average Remaining Contractual life
4 years 10 months 24 days 
 
 
Weighted Average Exercise Price (in dollars per share)
$ 35.39 
 
 
$20.00 - $30.00
 
 
 
Information about stock options outstanding
 
 
 
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
32,000 
 
 
Weighted Average Remaining Contractual Life
5 years 9 months 18 days 
 
 
Weighted-Average Exercise Price (in dollars per share)
$ 28.18 
 
 
Options Exercisable
 
 
 
Options Exercisable, Shares
29,000 
 
 
Aggregate Intrinsic Value
39,000 
 
 
Weighted Average Remaining Contractual life
5 years 10 months 24 days 
 
 
Weighted Average Exercise Price (in dollars per share)
$ 28.04 
 
 
$30.01 - $40.00
 
 
 
Information about stock options outstanding
 
 
 
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
1,336,000 
 
 
Weighted Average Remaining Contractual Life
5 years 1 month 6 days 
 
 
Weighted-Average Exercise Price (in dollars per share)
$ 33.09 
 
 
Options Exercisable
 
 
 
Options Exercisable, Shares
1,212,000 
 
 
Weighted Average Remaining Contractual life
5 years 1 month 6 days 
 
 
Weighted Average Exercise Price (in dollars per share)
$ 33.12 
 
 
$40.01 - $50.00
 
 
 
Information about stock options outstanding
 
 
 
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
73,000 
 
 
Weighted Average Remaining Contractual Life
2 years 8 months 12 days 
 
 
Weighted-Average Exercise Price (in dollars per share)
$ 45.93 
 
 
Options Exercisable
 
 
 
Options Exercisable, Shares
73,000 
 
 
Weighted Average Remaining Contractual life
2 years 8 months 12 days 
 
 
Weighted Average Exercise Price (in dollars per share)
$ 45.96 
 
 
$50.01 - $60.00
 
 
 
Information about stock options outstanding
 
 
 
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
135,000 
 
 
Weighted Average Remaining Contractual Life
4 years 4 months 24 days 
 
 
Weighted-Average Exercise Price (in dollars per share)
$ 51.70 
 
 
Options Exercisable
 
 
 
Options Exercisable, Shares
135,000 
 
 
Weighted Average Remaining Contractual life
4 years 4 months 24 days 
 
 
Weighted Average Exercise Price (in dollars per share)
$ 51.70 
 
 
2016 Employee Stock Purchase Plan
 
 
 
Assumptions based on which fair value of each option granted was estimated using the Black-Scholes option-pricing model
 
 
 
Proceeds from issue of shares under ESPP Plan
$ 1,200,000 
 
 
Number of shares issued under ESPP Plan
83,000 
 
 
Weighted average fair value (in dollars per share)
$ 4.45 
 
 
Dividend yield (as a percent)
0.00% 
 
 
Expected volatility factor (as a percent)
43.00% 
 
 
Risk-free interest rate (as a percent)
0.35% 
 
 
Expected life (in years)
6 months 
 
 
Stock option Awards
 
 
 
Options Exercisable
 
 
 
Granted (in shares)
17,000 
509,000 
Assumptions based on which fair value of each option granted was estimated using the Black-Scholes option-pricing model
 
 
 
Weighted average fair value (in dollars per share)
 
$ 10.58 
$ 11.58 
Dividend yield (as a percent)
 
0.00% 
0.00% 
Expected volatility factor (as a percent)
 
44.00% 
44.00% 
Risk-free interest rate (as a percent)
 
1.18% 
1.19% 
Expected life (in years)
 
3 years 10 months 24 days 
3 years 10 months 24 days 
Stock Plans - Options Exercised (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Stock Plans
 
 
 
Cash received from options exercised
$ 494 
$ 2,233 
$ 12,056 
Intrinsic value of options exercised
$ 1,165 
$ 2,089 
$ 8,390 
Stock Plans - RSAs, RSUs, PSAs and PSUs (Details) (RSAs, RSUs, PSAs and PSUs, USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Number of Shares
 
 
 
Outstanding at the beginning of the period (in shares)
1,398,000 
1,237,000 
1,158,000 
Granted (in shares)
1,166,000 
672,000 
395,000 
Released (in shares)
(349,000)
(389,000)
(183,000)
Forfeited (in shares)
(266,000)
(122,000)
(133,000)
Outstanding at the end of the period (in shares)
1,949,000 
1,398,000 
1,237,000 
Weighted Average Grant Date Fair Value
 
 
 
Outstanding at the beginning of the period (in dollars per share)
$ 31.97 
$ 34.27 
$ 34.93 
Granted (in dollars per share)
$ 17.59 
$ 30.33 
$ 34.18 
Released (in dollars per share)
$ 32.73 
$ 35.65 
$ 38.65 
Forfeited (in dollars per share)
$ 27.31 
$ 34.46 
$ 33.66 
Outstanding at the end of the period (in dollars per share)
$ 23.85 
$ 31.97 
$ 34.27 
Total fair value of shares vested
$ 7.5 
$ 9.6 
$ 6.2 
Minimum
 
 
 
Weighted Average Grant Date Fair Value
 
 
 
Vesting period
1 year 
 
 
Maximum
 
 
 
Weighted Average Grant Date Fair Value
 
 
 
Vesting period
5 years 
 
 
Retirement Plans - Defined Contribution Plan (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Defined contribution plan disclosures
 
 
 
Employer's matching contribution for every dollar the employees contribute (as a percent)
50.00% 
 
 
Employer's contribution as a percentage of the maximum an employee is permitted to contribute under IRS limits
3.00% 
 
 
Employer's matching contribution, vesting period (in years)
5 years 
 
 
Aggregate employer's contribution to pension plans
$ 2.6 
$ 2.5 
$ 1.9 
Maximum
 
 
 
Defined contribution plan disclosures
 
 
 
Employer's contribution as a percentage of employee's eligible compensation
3.00% 
 
 
Retirement Plans - Defined Benefit Plan (Details) (Minimum Pension Liability, USD $)
12 Months Ended
Dec. 31, 2016
Defined benefit plan disclosures
 
Amounts reclassified from AOCI
$ 866,000 
Other net
 
Defined benefit plan disclosures
 
Amounts reclassified from AOCI
900,000 
Tax benefit related to amounts reclassified from AOCI
400,000 
Accumulated Other Comprehensive Income
 
Defined benefit plan disclosures
 
Amounts reclassified from AOCI
(900,000)
Tax benefit related to amounts reclassified from AOCI
$ (400,000)
Income Taxes - Income Attributable to Domestic and Foreign Operations (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income (loss) from continuing operations before income taxes
 
 
 
Domestic
$ (123,021)
$ (53,553)
$ (95,195)
Foreign
3,577 
30,907 
16,841 
Income (loss) before income taxes
$ (119,444)
$ (22,646)
$ (78,354)
Income Taxes - Components of Provision (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Current:
 
 
 
Federal
 
$ 139 
$ (2,464)
Foreign
1,937 
6,952 
2,325 
State and local
(111)
(407)
55 
Total current expense (benefit) for income taxes
1,826 
6,684 
(84)
Deferred:
 
 
 
Federal
1,459 
2,104 
(11,230)
Foreign
(646)
516 
(291)
State and local
127 
28 
191 
Total deferred expense (benefit) for income taxes
940 
2,648 
(11,330)
Total expense (benefit) for income taxes
$ 2,766 
$ 9,332 
$ (11,414)
Income Taxes - Reconciliation to Statutory Tax Expense (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Taxes
 
 
 
Income tax expense (benefit) at U.S. statutory rates
$ (41,806)
$ (7,926)
$ (27,424)
State taxes, net of U.S. federal impact
(1,963)
(1,607)
(662)
Effect of international operations
8,849 
(7,659)
(6,160)
Research and development tax credit
(801)
(1,628)
(1,935)
Net change in valuation allowance
50,520 
23,655 
27,156 
Change in accrual for unrecognized tax benefits
(1,700)
4,876 
(1,940)
ALD liquidation
(12,435)
 
 
U.S. share-based compensation
2,133 
 
 
Goodwill impairment
 
 
9,786 
Change in contingent consideration
 
 
(10,279)
Worthless stock deduction
 
(2,069)
 
Change in entity tax status
 
904 
 
Other
(31)
786 
44 
Total expense (benefit) for income taxes
$ 2,766 
$ 9,332 
$ (11,414)
Income Taxes - Deferred Taxes (Details) (USD $)
Dec. 31, 2016
Dec. 31, 2015
Deferred tax assets:
 
 
Inventory valuation
$ 6,681,000 
$ 6,334,000 
Net operating losses and credit carry forwards
54,527,000 
33,181,000 
Credit carry forwards
24,598,000 
20,738,000 
Warranty and installation accruals
1,757,000 
3,022,000 
Share-based compensation
12,624,000 
12,461,000 
Other
6,778,000 
5,787,000 
Total deferred tax assets
106,965,000 
81,523,000 
Valuation allowance
(106,793,000)
(56,273,000)
Net deferred tax assets
172,000 
25,250,000 
Deferred tax liabilities:
 
 
Purchased intangible assets
11,071,000 
32,550,000 
Undistributed earnings
186,000 
618,000 
Depreciation
69,000 
1,908,000 
Total deferred tax liabilities
11,326,000 
35,076,000 
Net deferred taxes
(11,154,000)
(9,826,000)
Undistributed earnings of foreign subsidiaries
 
 
Undistributed earnings of foreign subsidiaries
$ 48,200,000 
 
Income Taxes - Operating Loss Carryforwards (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Operating loss carryforwards disclosures
 
Increase in valuation allowance
$ 50.5 
Tax effect of amortization of intangible assets not expected to reverse within the Company's net operating loss carryforward period
13.2 
Capital losses
 
Operating loss carryforwards disclosures
 
Tax credit carry forwards
3.5 
Federal
 
Operating loss carryforwards disclosures
 
Net operating loss carryforwards
137.2 
Federal |
Research and development tax credit carryforward
 
Operating loss carryforwards disclosures
 
Tax credit carry forwards
12.1 
State and local
 
Operating loss carryforwards disclosures
 
Net operating loss carryforwards
68.0 
Tax credit carry forwards
9.9 
Net deferred tax asset
3.5 
Foreign
 
Operating loss carryforwards disclosures
 
Tax credit carry forwards
$ 7.7 
Income Taxes - Uncertain Tax Positions (Details) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Change in unrecognized tax benefits
 
 
 
Balance at beginning of year
$ 9,152,000 
$ 4,276,000 
$ 6,228,000 
Additions for tax positions related to current year
1,038,000 
5,596,000 
244,000 
Additions for tax positions relating to prior years
233,000 
143,000 
199,000 
Reductions for tax positions relating to prior years
(2,826,000)
 
(2,345,000)
Reductions due to the lapse of the applicable statute of limitations
(39,000)
(642,000)
(38,000)
Settlements
(106,000)
(221,000)
(12,000)
Balance at end of year
7,452,000 
9,152,000 
4,276,000 
Unrecognized tax benefits that would impact effective tax rate if recognized
5,400,000 
 
 
Accrued interest and penalties related to unrecognized tax benefits
$ 300,000 
$ 200,000 
 
Segment Reporting and Geographic Information (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
segment
Dec. 31, 2015
Dec. 31, 2014
Revenue reporting by end-market and geographic region
 
 
 
 
 
 
 
 
 
 
 
Number of operating segments
 
 
 
 
 
 
 
 
 
 
Number of reportable segments
 
 
 
 
 
 
 
 
 
 
Sale by end-market
$ 93,609 
$ 85,482 
$ 75,348 
$ 78,011 
$ 106,543 
$ 140,744 
$ 131,410 
$ 98,341 
$ 332,451 
$ 477,038 
$ 392,873 
Long-Lived Tangible Assets
60,646 
 
 
 
79,590 
 
 
 
60,646 
79,590 
78,752 
United States
 
 
 
 
 
 
 
 
 
 
 
Revenue reporting by end-market and geographic region
 
 
 
 
 
 
 
 
 
 
 
Sale by end-market
 
 
 
 
 
 
 
 
85,637 
86,627 
44,060 
Long-Lived Tangible Assets
60,012 
 
 
 
64,951 
 
 
 
60,012 
64,951 
63,349 
China
 
 
 
 
 
 
 
 
 
 
 
Revenue reporting by end-market and geographic region
 
 
 
 
 
 
 
 
 
 
 
Sale by end-market
 
 
 
 
 
 
 
 
85,834 
242,442 
159,063 
Long-Lived Tangible Assets
219 
 
 
 
422 
 
 
 
219 
422 
621 
EMEA
 
 
 
 
 
 
 
 
 
 
 
Revenue reporting by end-market and geographic region
 
 
 
 
 
 
 
 
 
 
 
Sale by end-market
 
 
 
 
 
 
 
 
83,410 
64,019 
35,644 
Long-Lived Tangible Assets
93 
 
 
 
96 
 
 
 
93 
96 
78 
Rest of World
 
 
 
 
 
 
 
 
 
 
 
Revenue reporting by end-market and geographic region
 
 
 
 
 
 
 
 
 
 
 
Sale by end-market
 
 
 
 
 
 
 
 
77,570 
83,950 
154,106 
Long-Lived Tangible Assets
322 
 
 
 
14,121 
 
 
 
322 
14,121 
14,704 
Lighting, Display & Power Electronics
 
 
 
 
 
 
 
 
 
 
 
Revenue reporting by end-market and geographic region
 
 
 
 
 
 
 
 
 
 
 
Sale by end-market
 
 
 
 
 
 
 
 
136,247 
291,133 
278,551 
Advanced Packaging, MEMS & RF
 
 
 
 
 
 
 
 
 
 
 
Revenue reporting by end-market and geographic region
 
 
 
 
 
 
 
 
 
 
 
Sale by end-market
 
 
 
 
 
 
 
 
68,304 
61,935 
11,449 
Scientific & Industrial
 
 
 
 
 
 
 
 
 
 
 
Revenue reporting by end-market and geographic region
 
 
 
 
 
 
 
 
 
 
 
Sale by end-market
 
 
 
 
 
 
 
 
74,913 
64,297 
44,429 
Data Storage
 
 
 
 
 
 
 
 
 
 
 
Revenue reporting by end-market and geographic region
 
 
 
 
 
 
 
 
 
 
 
Sale by end-market
 
 
 
 
 
 
 
 
$ 52,987 
$ 59,673 
$ 58,444 
Selected Quarterly Financial Information (unaudited) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Quarterly Financial Information
 
 
 
 
 
 
 
 
 
 
 
Net sales
$ 93,609 
$ 85,482 
$ 75,348 
$ 78,011 
$ 106,543 
$ 140,744 
$ 131,410 
$ 98,341 
$ 332,451 
$ 477,038 
$ 392,873 
Gross Profit
36,008 
33,455 
31,439 
31,956 
38,786 
54,250 
49,069 
35,136 
132,858 
177,241 
134,882 
Net income (loss)
$ (4,998)
$ (69,598)
$ (32,082)
$ (15,533)
$ (9,788)
$ 5,306 
$ (8,386)
$ (19,110)
$ (122,210)
$ (31,978)
$ (66,940)
Basic income (loss) per common share
$ (0.13)
$ (1.78)
$ (0.82)
$ (0.40)
$ (0.25)
$ 0.13 
$ (0.21)
$ (0.48)
$ (3.11)
$ (0.80)
$ (1.70)
Diluted income (loss) per common share
$ (0.13)
$ (1.78)
$ (0.82)
$ (0.40)
$ (0.25)
$ 0.13 
$ (0.21)
$ (0.48)
$ (3.11)
$ (0.80)
$ (1.70)
Selected Quarterly Financial Information (unaudited) - Impairments (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended 3 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Sep. 30, 2016
ALD technology development
Future investments
 
 
 
 
Asset Impairment Charges
$ 69,520 
$ 126 
$ 58,170 
$ 54,300 
Subsequent Events (Details) (USD $)
12 Months Ended 0 Months Ended 1 Months Ended
Dec. 31, 2016
Ultratech, Inc.
Implied Value Per Agreement
Feb. 1, 2017
Subsequent event
Ultratech, Inc.
Feb. 2, 2017
Subsequent event
Ultratech, Inc.
Jan. 31, 2017
Subsequent event
2.70 Convertible Senior Notes due 2023
Convertible debt
Convertible Note
 
 
 
 
Aggregate principal amount
 
 
 
$ 345,000,000 
Interest rate (as a percent)
 
 
 
2.70% 
Net proceeds from the offering
 
 
 
336,000,000 
Discount rate (as a percent)
 
 
 
7.00% 
Conversion ratio
 
 
 
24.9800 
Common stock per principal amount
 
 
 
1,000 
Conversion price per share
 
 
 
$ 40.03 
Business Combinations
 
 
 
 
Cash to be received by acquiree (in dollars per share)
 
 
$ 21.75 
 
Number of shares to be received by acquiree
 
 
0.2675 
 
Transaction consideration (in dollars per share)
 
$ 28.64 
 
 
Total transaction value
815,000,000 
 
 
 
Value of net assets acquired, net of cash balances
$ 550,000,000 
 
 
 
Schedule II - Valuation and Qualifying Accounts (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Valuation and Qualifying Accounts
 
 
 
Balance at Beginning of Period
$ 56,479 
$ 35,640 
$ 10,191 
Charged (Credited) to Costs and Expenses
50,691 
23,698 
25,342 
Charged to Other Accounts
 
(2,291)
325 
Deductions
(91)
(568)
(218)
Balance at End of Period
107,079 
56,479 
35,640 
Allowance for doubtful accounts
 
 
 
Valuation and Qualifying Accounts
 
 
 
Balance at Beginning of Period
206 
731 
2,438 
Charged (Credited) to Costs and Expenses
171 
43 
(1,814)
Charged to Other Accounts
 
 
325 
Deductions
(91)
(568)
(218)
Balance at End of Period
286 
206 
731 
Valuation allowance in net deferred tax assets
 
 
 
Valuation and Qualifying Accounts
 
 
 
Balance at Beginning of Period
56,273 
34,909 
7,753 
Charged (Credited) to Costs and Expenses
50,520 
23,655 
27,156 
Charged to Other Accounts
 
(2,291)
 
Balance at End of Period
$ 106,793 
$ 56,273 
$ 34,909