What changed in this filing

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Item 1. Financial Statements

2021-05-06 compared with 2020-11-06 · 67 added, 142 removed, 355 unchanged (37% of the section changed)

4 unchanged sentences

Three months ended

Nine months ended

September 30,

Total revenue

12 unchanged sentences

Income before income taxes

Income tax provision (benefit)

Income tax provision

Net income per share:

7 unchanged sentences

Three months ended

Nine months ended

September 30,

Other comprehensive income (loss):

Other comprehensive loss:

Foreign currency translation adjustments

Amortization of actuarial loss and other adjustments from pension plan

Total other comprehensive income (loss)

Comprehensive income (loss)

Amortization of actuarial loss and other adjustments from pension plan, net of tax

Total other comprehensive loss

Comprehensive income

See accompanying Notes to these Consolidated Financial Statements

2 unchanged sentences

(In thousands, except per share amounts)

September 30,

Current assets:

24 unchanged sentences

Common stock, $ 0.001 par value, 75,000 shares authorized;

33,491 shares issued and outstanding at September 30, 2020;

33,679 shares issued and outstanding at March 31, 2021;

33,633 shares issued and outstanding at December 31, 2020

1 unchanged sentence

Accumulated deficit

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Total stockholders’ equity

11 unchanged sentences

Exercise of stock options

Issuance of restricted common shares,

net of shares withheld

Stock-based compensation expense

Balance at March 31, 2019

Foreign currency translation adjustments

Change in pension obligation

Exercise of stock options

Issuance of shares under Employee Stock Purchase Plan

3 unchanged sentences

Repurchase of common stock

Balance at June 30, 2019

Foreign currency translation adjustments

Change in pension obligation

Exercise of stock options

Issuance of restricted common shares,

net of shares withheld

Stock-based compensation expense

Balance at September 30, 2019

See accompanying Notes to these Consolidated Financial Statements

Axcelis Technologies, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands)

Balance at March 31, 2020

Comprehensive

5 unchanged sentences

Exercise of stock options

Issuance of shares under Employee Stock Purchase Plan

Issuance of restricted common shares,

3 unchanged sentences

Balance at March 31, 2021

Foreign currency translation adjustments

Change in pension obligation

Exercise of stock options

Issuance of shares under Employee Stock Purchase Plan

Issuance of restricted common shares,

net of shares withheld

Stock-based compensation expense

Balance at June 30, 2020

Foreign currency translation adjustments

Change in pension obligation

Exercise of stock options

Issuance of restricted common shares,

net of shares withheld

Stock-based compensation expense

Balance at September 30, 2020

See accompanying Notes to these Consolidated Financial Statements

2 unchanged sentences

(In thousands)

Nine months ended

September 30,

Three months ended

Cash flows from operating activities

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

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

2 unchanged sentences

Provision for excess and obsolete inventory

Changes in operating assets & liabilities:

Changes in operating assets and liabilities:

Accounts receivable

3 unchanged sentences

Other assets and liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities

9 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

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

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

16 unchanged sentences

We maintain the Axcelis Technologies, Inc.

2012 Equity Incentive Plan (the “2012 Equity Plan”), which became effective on May 2, 2012, and permits the issuance of options, restricted stock, restricted stock units (“RSUs”) and performance awards to selected employees, directors and consultants of the Company.

2012 Equity Incentive Plan, as amended (the “2012 Equity Plan”), which became effective on May 2, 2012, and permits the issuance of options, restricted stock, restricted stock units (“RSUs”) and performance awards to selected employees, directors and consultants of the Company.

Our 2000 Stock Plan (the “2000 Stock Plan”) expired on May 1, 2012 and no new grants may be made under that plan after that date.

3 unchanged sentences

The 2012 Equity Plan is more fully described in Note 13 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020.

Note 13 also describes our prior Employee Stock Purchase Plan which expired on June 30, 2020 (the “Prior ESPP”).

No shares have yet been issued under the 2020 ESPP, but its terms are substantially the same as those of the Prior ESPP.

We recognized stock-based compensation expense of $ 2.9 million and $ 2.1 million for the three month periods ended September 30, 2020 and 2019, respectively.

We recognized stock-based compensation expense of $ 7.7 million and $ 6.1 million for the nine month periods ended September 30, 2020 and 2019, respectively.

These amounts include compensation expense related to RSUs, non-qualified stock options and stock issued to participants under the Prior ESPP.

In both the three month periods ended September 30, 2020 and 2019, we issued 0.1 million shares of common stock, respectively, upon stock option exercises and vesting of RSUs.

In the three month periods ended September 30, 2020 and 2019, we received proceeds of $ 0.5 million and $ 0.6 million, respectively, in connection with the exercise of stock options and Prior ESPP purchases.

In the nine month periods ended September 30, 2020 and 2019, we issued 1.3 million and 0.7 million shares of common stock, respectively, upon stock option exercises, purchases under the Prior ESPP and vesting of RSUs.

In the nine month periods ended September 30, 2020 and 2019, we received proceeds of $ 8.3 million and $ 3.4 million, respectively, in connection with the exercise of stock options and Prior ESPP purchases.

We recognized stock-based compensation expense of $ 2.4 million and $ 1.7 million for the three-month periods ended March 31, 2021 and 2020, respectively.

These amounts include compensation expense related to RSUs and non-qualified stock options.

In the three-month periods ended March 31, 2021 and 2020, we issued 0.3 million and 0.6 million shares of common stock, respectively, upon stock option exercises and vesting of RSUs.

In the three-month periods ended March 31, 2021 and 2020, we received proceeds of $ 2.5 million and $ 4.5 million, respectively, in connection with the exercise of stock options.

We have operating leases for office space, warehouse space, computer and office equipment and vehicles used in our business operations.

3 unchanged sentences

We recognize the lease obligation on a discounted basis using the explicit or implicit discount rate stated within the agreement.

We recognize a corresponding right-of-use asset, which is initially determined based upon the net present value of the associated liability and is adjusted for deferred costs and possible impairment, if any.

For those lease agreements that do not indicate the applicable discount rate, we use our incremental borrowing rate.

10 unchanged sentences

The amounts of operating and finance lease right-of-use assets and related lease obligations recorded within our consolidated balance sheets are as follows:

September 30,

Classification

(in thousands)

Operating lease

Operating leases

Operating lease assets

7 unchanged sentences

Total lease liabilities

* Finance lease assets are recorded net of accumulated depreciation of $ 48.1 million and include $ 0.7 million of prepaid financing costs as of September 30, 2020.

* Finance lease assets are recorded net of accumulated depreciation of $ 48.7 million and include $ 0.7 million of prepaid financing costs as of March 31, 2021.

Finance lease assets are recorded net of accumulated depreciation of $ 48.4 million and include $ 0.7 million of prepaid financing costs as of December 31, 2020.

All of our operating lease office locations support selling and servicing functions.

Operating lease expense, and depreciation and interest expense relating to our finance lease obligation, are recognized within our consolidated statement of operations for the three and nine months ended September 30, 2020 and 2019 as follows:

Three months ended

Nine months ended

September 30,

Classification

16 unchanged sentences

Total lease cost

* Sales and marketing, general and administrative expense includes short-term lease and variable lease costs of approximately $ 0.3 million and $ 0.8 million for the three and nine months ended September 30, 2020, respectively and includes short-term lease and variable lease costs of approximately $ 0.2 million and $ 0.6 million for the three and nine months ended September 30, 2019, respectively.

* Sales and marketing and general and administrative expense also includes short-term lease and variable lease costs of approximately $ 0.4 million and $ 0.2 million for the three months ended March 31, 2021 and 2020, respectively.

Our corporate headquarters, shown below under finance leases, has an original lease term of 22 years .

All other locations are treated as operating leases, with lease terms ranging from 1 to 10 years .

The tables below reflect the minimum cash outflow regarding our current lease obligations as well as the weighted-average remaining lease term and weighted-average discount rates used in our calculation of our lease obligations and right-of-use assets as of September 30, 2020:

Maturity of Lease Liabilities

5 unchanged sentences

operating lease interest calculated using estimated corporate borrowing rate.

September 30,

Lease term and discount rate

8 unchanged sentences

Our cash flows from our finance lease include both an interest component and payment of principal component.

The table below shows our cash

outflows, by lease type and related section of our statement of cash flows, as well as the non-cash amount capitalized on our balance sheet in relation to our operating lease right-of-use assets:

Nine months ended

September 30,

The table below shows our cash outflows, by lease type and related section of our statement of cash flows, as well as the non-cash amount capitalized on our balance sheet in relation to our operating lease right-of-use assets for the three months ending March 31, 2021 and 2020, respectively:

Three months ended

Cash paid for amounts included in the measurement of lease liabilities

9 unchanged sentences

Three months ended

Nine months ended

September 30,

(in thousands)

Total Revenue

We also consider revenue by geography.

2 unchanged sentences

Three months ended

Nine months ended

September 30,

(in thousands)

North America

Total Revenue

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

Contract liabilities are as follows:

September 30,

(in thousands)

3 unchanged sentences

Three months ended

Nine months ended

September 30,

(in thousands)

2 unchanged sentences

Recognition of deferred revenue

Balance, ending of the period

Balance, end of the period

The majority of our system transactions have payment terms of 90 % due upon shipment of the tool and 10 % due upon acceptance.

9 unchanged sentences

These factors may include the customer’s financial condition, past payment experience, and credit bureau report, as well as the value of the underlying collateral.

Management performs detailed reviews of its receivables on a quarterly basis to assess the adequacy of the allowances and to determine if any impairment has occurred.

Management performs detailed reviews of Axcelis’ receivables on a quarterly basis to assess the adequacy of the allowances and to determine if any impairment has occurred.

Amounts determined to be uncollectable are charged directly against the allowances, while amounts recovered on previously written-off accounts increase the allowances.

Changes to the

allowances for credit losses are maintained through adjustments to the provision for credit losses, which are charged to current period earnings.

The following table shows changes of the allowances for credit losses related to trade receivables for the three and nine months ended September 30, 2020:

Changes to the allowances for credit losses are maintained through adjustments to the provision for credit losses, which are charged to current period earnings.

The following table shows changes of the allowances for credit losses related to trade receivables for the three months ended March 31, 2021 and 2020, respectively:

Three months ended

Nine months ended

September 30,

(in thousands)

1 unchanged sentence

Provision for credit losses

Balance, ending of period

Balance, end of period

Computation of Net Earnings per Share

3 unchanged sentences

Three months ended

Nine months ended

September 30,

(in thousands, except per share amounts)

Net income available to common stockholders

3 unchanged sentences

Net income per share

Diluted weighted average common shares outstanding does not include 848 and 847,448 common equivalent shares issuable with respect to outstanding equity awards for the three month periods ended September 30, 2020 and 2019, respectively, or 8,226 and 236,229 common equivalent shares issuable with respect to outstanding equity awards for the nine month periods ending September 30, 2020 and 2019, respectively, as their effect would have been anti-dilutive.

Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in accumulated other comprehensive income, net of tax, by component, for the nine months ended September 30, 2020:

Diluted weighted average common shares outstanding does not include 1,429 and 1,675 common equivalent shares issuable with respect to outstanding equity awards for the three-month periods ended March 31, 2021 and 2020, respectively, as their effect would have been anti-dilutive.

Accumulated Other Comprehensive Income

The following table presents the changes in accumulated other comprehensive income, net of tax, by component, for the three months ended March 31, 2021:

Defined benefit

1 unchanged sentence

Balance at December 31, 2020

Other comprehensive income and pension reclassification

Balance at September 30, 2020

Other comprehensive loss and pension reclassification

Balance at March 31, 2021

Cash, cash equivalents and restricted cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheet to the total of the amounts shown in the statement of cash flows:

September 30,

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the total of the amounts shown in the statement of cash flows:

(in thousands)

2 unchanged sentences

Total cash, cash equivalents and restricted cash

As of September 30, 2020, we had $ 0.8 million in restricted cash representing the total of (i) cash collateral for a $ 0.7 million letter of credit relating to workers’ compensation insurance and (ii) a $ 0.1 million deposit relating to customs activity.

As of March 31, 2021, we had $ 0.8 million in restricted cash representing the total of (i) cash collateral for a $ 0.7 million letter of credit relating to workers’ compensation insurance and (ii) a $ 0.1 million deposit relating to customs activity.

Inventories, net

The components of inventories are as follows:

September 30,

(in thousands)

15 unchanged sentences

The changes in our standard product warranty liability are as follows:

Nine months ended

September 30,

Three months ended

(in thousands)

3 unchanged sentences

Changes in estimate of liability for pre-existing warranties during the period

Balance at September 30 (end of period)

Balance at March 31 (end of period)

Amount classified as current

17 unchanged sentences

The following table sets forth our assets by level within the fair value hierarchy:

September 30, 2020

March 31, 2021

Fair Value Measurements

14 unchanged sentences

As part of the sale, we also entered into a 22-year lease agreement of our headquarters facility.

This sale-leaseback is accounted for as a financing lease under generally accepted accounting principles and, as such, we have recorded a financing obligation of $ 48.3 million as of September 30, 2020.

This sale-leaseback is accounted for as a financing lease under generally accepted accounting principles and, as such, we have recorded a financing obligation of $ 48.0 million as of March 31, 2021.

The associated lease payments include both an interest component and payment of principal, with the remaining liability being extinguished at the end of the original lease term.

5 unchanged sentences

The revolving credit facility terminates on July 31, 2023.

As of September 30, 2020, we were in compliance with all covenant requirements of the Credit Agreement.

As of March 31, 2021, we were in compliance with all covenant requirements of the Credit Agreement.

As of such date, no borrowings had been made under the Credit Agreement, although a letter of credit for $ 5.9 million, previously issued by Silicon Valley Bank, had been rolled under the Credit Agreement, reducing the funds available for borrowing under the credit line.

Income tax expense was $ 2.8 million for the three months ended September 30, 2020, compared to $ 0.3 million benefit for the three months ended September 30, 2019.

The $ 3.1 million increase was primarily due to a $ 13.2 million increase in pretax income.

The income tax provision was $ 6.1 million during the nine months ended September 30, 2020, compared to $ 0.9 million for the nine months ended September 30, 2019.

The $ 5.2 million increase was primarily due to a $ 33.2 million increase in pretax income partially offset by a $ 2.0 million tax benefit relating to equity compensation.

The effective tax rate for the three and nine months ended September 30, 2020 and 2019, respectively, was less than the U.S.

We entered into a First Amendment to the Credit Agreement with Silicon Valley Bank in March 2021 to (i) align the covenants with our 2021 stock repurchase program, and (ii) establish terms to transition from a Eurodollar based interest rate option to an interest rate benchmark using a secured overnight financing rate (known as “SOFR”) published by the Federal Reserve Bank of New York.

Income tax expense was $ 1.7 million for the three months ended March 31, 2021, compared to $ 1.0 million for the three months ended March 31, 2020.

The $ 0.7 million increase was primarily due to a $ 6.0 million increase in pretax income partially offset by a tax benefit of $ 0.2 million due to the expiration of a statute of limitations on an uncertain tax

The effective tax rate for the three months ended March 31, 2021 and 2020, respectively, was less than the U.S.

statutory rate of 21 % due to favorable discrete items related to equity compensation in those periods and Federal research and development tax credits that reduce the annual tax rate.

We had $ 58.2 million and $ 68.1 million of net deferred tax assets worldwide relating to net operating loss carryforwards, tax credit carryforwards and other temporary differences, as of September 30, 2020 and December 31, 2019, respectively.

We had $ 54.9 million and $ 57.9 million of net deferred tax assets worldwide relating to net operating loss carryforwards, tax credit carryforwards and other temporary differences, as of March 31, 2021 and December 31, 2020, respectively.

These deferred tax assets are available to reduce income taxes in future years.

4 unchanged sentences

Concentration of Risk

For the three months ended September 30, 2020, three customers accounted for 16.8 %, 11.2 % and 10.3 % of total revenue, respectively.

For the three months ended September 30, 2019, two customers accounted for 28.0 % and 13.2 % of total revenue, respectively.

For the nine months ended September 30, 2020, three customers accounted for 18.8 %, 15.2 % and 12.1 % of total revenue, respectively.

For the nine months ended September 30, 2019, three customers accounted for 18.7 %, 12.4 %, and 11.8 % of total revenue respectively.

At September 30, 2020, three customers accounted for 19.5 %, 12.9 % and 10.2 % of accounts receivable, respectively.

At December 31, 2019, three customers accounted for 24.9 %, 15.3 % and 11.1 % of accounts receivable, respectively.

For the three months ended March 31, 2021, one customer accounted for 29.6 % of total revenue.

For the three months ended March 31, 2020, four customers accounted for 20.9 %, 16.9 %, 14.6 % and 10.7 % of total revenue, respectively.

At March 31, 2021, one customer accounted for 19.8 % of accounts receivable.

At December 31, 2020, two customers accounted for 23.8 % and 11.9 % of accounts receivable, respectively.

Share Repurchase

The Board has approved stock repurchases of up to $ 50 million of our common stock through the end of 2020.

At the end of the first quarter of 2020, we suspended the repurchase program in light of the economic uncertainty relating to the COVID-19 pandemic.

We continue to invest cash in our business and to evaluate whether to recommence stock repurchases.

If we do so, the timing and actual number of shares repurchased in 2020 beyond those acquired in the first quarter, will depend on various factors, including the price of our common stock, general business and market conditions, and alternative investment opportunities or other uses of cash.

Shares repurchased are accounted for when the transaction is settled.

There were no unsettled share repurchases at September 30, 2020.

In December 2020, our Board of Directors approved stock repurchases of up to $ 100 million of our common stock through the end of 2021.

During the three months ended March 31, 2021, we purchased 0.3 million shares at an average cost of $ 38.41 per share.

The timing and actual number of shares repurchased under this program will depend on various factors including price, corporate and regulatory requirements, alternative investment opportunities and other market conditions.

Shares repurchased by us are accounted for when the transaction is settled.

There were 22,160 unsettled share repurchases totaling approximately $ 0.9 million at March 31, 2021.

Shares repurchased and retired are deducted from common stock for par value and from additional paid-in capital for the excess over par value.

If additional paid-in capital has been exhausted, the excess over par value is deducted from retained earnings.

Direct costs incurred to acquire the shares are included in the total cost of the shares.

Contingencies

6 unchanged sentences

Recent Accounting Guidance

Accounting Standards Update 2019-12 Income Taxes (Topic 740)

We adopted Financial Accounting Standards Board ASU No.

2019-04 “Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” as of January 1, 2020, using the modified-retrospective approach resulting in no cumulative adjustment to retained earnings.

The amendments in this Update clarify the guidance within Topic 326 relating to credit losses.

Topic 326 replaces the current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates.

Due to the requirements of Topic 326, management reviews the average annual write-off rate along with an assessment of current micro and macro-economic factors to determine any expected losses.

The adoption of this Update did not have any material impact on our results of operations or cash flows.

See Note 5 above for further discussion.

2019-12 “ Income Taxes (Topic 740) ” as of January 1, 2021 on a prospective basis.

The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions from the previous standard as well as requiring entities to include franchise tax partially based on income as an income based tax and to account for an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date.

The guidance in ASU 2019-12 is required for annual reporting periods beginning after December 15, 2020.

Adoption of ASU 2019-12 had no material effect on our consolidated financial statements and disclosures.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements