What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-05 · 54 added, 130 removed, 362 unchanged (34% of the section changed)

4 unchanged sentences

Three months ended

Nine months ended

September 30,

Total revenue

22 unchanged sentences

Three months ended

Nine months ended

September 30,

Other comprehensive (loss) income:

Other comprehensive loss:

Foreign currency translation adjustments

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

Total other comprehensive (loss) income

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

Total other comprehensive loss

Comprehensive income

3 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;

33,406 shares issued and outstanding at September 30, 2021;

33,064 shares issued and outstanding at March 31, 2022;

33,240 shares issued and outstanding at December 31, 2021

Additional paid-in capital

Accumulated deficit

Retained earnings (accumulated deficit)

Accumulated other comprehensive income

12 unchanged sentences

Exercise of stock options

Issuance of shares under Employee Stock Purchase Plan

Issuance of common shares on restricted stock units, net of shares withheld

2 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 common shares on restricted stock units, 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 common shares on restricted stock units, net of shares withheld

Stock-based compensation expense

Balance at September 30, 2020

See accompanying Notes to these Consolidated Financial Statements (Unaudited)

Axcelis Technologies, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands)

Comprehensive

9 unchanged sentences

Balance at March 31, 2022

Foreign currency translation adjustments

Change in pension obligation

Exercise of stock options

Issuance of shares under Employee Stock Purchase Plan

Issuance of common shares on restricted stock units, net of shares withheld

Stock-based compensation expense

Repurchase of common stock

Balance at June 30, 2021

Foreign currency translation adjustments

Change in pension obligation

Exercise of stock options

Issuance of common shares on restricted stock units, net of shares withheld

Stock-based compensation expense

Repurchase of common stock

Balance at September 30, 2021

See accompanying Notes to these Consolidated Financial Statements (Unaudited)

2 unchanged sentences

(In thousands)

Nine months ended

September 30,

Three months ended

Cash flows from operating activities

17 unchanged sentences

Repurchase of common stock

Proceeds from Employee Stock Purchase Plan

Principal payments on finance lease obligation

21 unchanged sentences

We maintain the Axcelis Technologies, Inc.

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.

We also maintain the Axcelis Technologies, Inc.

2020 Employee Stock Purchase Plan (the “2020 ESPP”), an Internal Revenue Code Section 423 plan.

The Company’s Employee Stock Purchase Plan, which was effective in June 2000 (the “2000 ESPP”), expired in June 2020.

2012 Equity Incentive Plan, as amended (the “2012 Equity Plan”), an Internal Revenue Code Section 423 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.

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, 2021.

We recognized stock-based compensation expense of $ 3.2 million and $ 2.9 million for the three-month periods ended September 30, 2021 and 2020, respectively.

We recognized stock-based compensation expense of $ 9.0 million and $ 7.7 million for the nine-month periods ended September 30, 2021 and 2020, respectively.

These amounts include compensation expense related to RSUs, non-qualified stock options and stock issued to participants under the 2020 ESPP and 2000 ESPP.

In both the three-month periods ended September 30, 2021 and 2020, we issued forty thousand and 0.1 million shares of common stock, respectively, upon stock option exercises and vesting of RSUs.

In the three-month periods ended September 30, 2021 and 2020, we received proceeds of $ 0.3 million and $ 0.5 million, respectively, in connection with the exercise of stock options.

In the nine-month periods ended September 30, 2021 and 2020, we issued 0.7 million and 1.3 million shares of common stock, respectively, upon stock option exercises, purchases under the employee stock purchase plans and vesting of RSUs.

In the nine-month periods ended September 30, 2021 and 2020, we received proceeds of $ 3.9 million and $ 8.2 million, respectively, in connection with the exercise of stock options and purchases under the employee stock purchase plans.

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

We recognized stock-based compensation expense of $ 2.7 million and $ 2.4 million for the three-month periods ended March 31, 2022 and 2021, respectively.

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

In the three-month periods ended March 31, 2022 and 2021, we issued 0.1 million and 0.3 million shares of common stock, respectively, upon stock option exercises and vesting of RSUs.

In the three-month periods ended March 31, 2022 and 2021, we received proceeds of $ 0.5 million and $ 2.5 million, respectively, in connection with the exercise of stock options.

We have operating leases for office space, warehouse space, a manufacturing plant, computer and office equipment as well as vehicles used in our business operations.

We have a finance lease as a result of the 2015 sale-leaseback of our corporate headquarters in Beverly, Massachusetts.

6 unchanged sentences

(i) operating leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet;

(ii) we recognize lease expense for operating leases on a straight-line basis over the lease term;

(ii) we recognize lease expense for

operating leases on a straight-line basis over the lease term;

and (iii) we account for lease components and non-lease components that are fixed payments as one component.

Some of our operating leases include one or more options to renew, with renewal terms that can extend the respective lease term 1 to 3 years .

Some of our operating leases include one or more options to renew, with renewal terms that can extend the respective lease term one to five years .

The exercise of lease renewal options is at our sole discretion.

4 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

10 unchanged sentences

Total lease liabilities

* Finance lease assets are recorded net of accumulated depreciation of $ 49.2 million and include $ 0.7 million of prepaid financing costs as of September 30, 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.

*Finance lease assets are recorded net of accumulated depreciation of $ 48.9 million and includes $ 0.6 million of prepaid financing costs as of March 31, 2022.

Finance lease assets are recorded net of accumulated depreciation of $ 48.6 million and includes $ 0.7 million of prepaid financing costs as of December 31, 2021.

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, 2021 and 2020 as follows:

Our Axcelis Asia Operations Center facility in South Korea brings production capability closer to our Asia-based customers.

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 months ended March 31, 2022 and 2021 as follows:

Three months ended

Nine months ended

September 30,

Classification

1 unchanged sentence

(in thousands)

Product / Services

Cost of revenue

13 unchanged sentences

Total lease cost

* Sales and marketing and general and administrative expense also includes short-term lease and variable lease costs of approximately $ 0.6 million and $ 1.4 million for the three and nine months ended September 30, 2021, respectively, and includes short-term and variable lease costs of approximately $ 0.3 million and $ 0.8 million for the three and nine months ended September 30, 2020, respectively.

The lease of our corporate headquarters, shown below under finance leases, had an original lease term of 22 years , beginning in January 2015.

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, 2021:

* Sales and marketing and general and administrative expense also includes short-term lease and variable lease costs of approximately $ 0.5 million and $ 0.4 million for the three months ended March 31, 2022 and 2021, respectively.

The lease of our corporate headquarters, shown below under finance leases, had an original lease term of 22 years , beginning in January 2015 and expiring in January 2037, with renewal options.

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

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 for the nine months ending September 30, 2021 and 2020, respectively:

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, 2022 and 2021, respectively:

Three months ended March 31,

Cash paid for amounts included in the measurement of lease liabilities

9 unchanged sentences

Three months ended

Nine months ended

September 30,

(in thousands)

4 unchanged sentences

Three months ended

Nine months ended

September 30,

(in thousands)

3 unchanged sentences

Contract liabilities are as follows:

September 30,

(in thousands)

3 unchanged sentences

Three months ended

Nine months ended

September 30,

(in thousands)

3 unchanged sentences

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.

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

Aftermarket transaction payment terms usually provide that payment is due either within 30 or 60 days after the service is provided or parts delivered.

11 unchanged sentences

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, 2021 and 2020, respectively:

The following table shows changes of the allowances for credit losses related to trade receivables for the three months ended March 31, 2022 and 2021, respectively:

Three months ended

Nine months ended

September 30,

(in thousands)

7 unchanged sentences

Three months ended

Nine months ended

September 30,

(in thousands, except per share amounts)

4 unchanged sentences

Net income per share

Diluted weighted average common shares outstanding does not include 347 and 848 common equivalent shares issuable with respect to outstanding equity awards for the three-month periods ended September 30, 2021 and 2020, respectively, or 413 and 8,226 common equivalent shares issuable with respect to outstanding equity awards for the nine-month periods ending September 30, 2021 and 2020, respectively, as their effect would have been anti-dilutive.

Diluted weighted average common shares outstanding does not include 4,706 and 1,429 common equivalent shares issuable with respect to outstanding equity awards for the three-month periods ended March 31, 2022 and 2021, 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 nine months ended September 30, 2021:

The following table presents the changes in accumulated other comprehensive income, net of tax, by component, for the three months ended March 31, 2022:

Defined benefit

2 unchanged sentences

Other comprehensive loss and pension reclassification

Balance at September 30, 2021

Balance at March 31, 2022

Cash, cash equivalents and restricted cash

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:

September 30,

(in thousands)

2 unchanged sentences

Total cash, cash equivalents and restricted cash

As of September 30, 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.

As of March 31, 2022, 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, 2021

March 31, 2022

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 $ 47.6 million as of September 30, 2021.

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 $ 47.2 million as of March 31, 2022.

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

As of March 31, 2022, 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 reduces the funds available for borrowing under the credit line.

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) established 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 $ 6.7 million for the three months ended September 30, 2021, compared to $ 2.8 million for the three months ended September 30, 2020.

We entered into a First Amendment to the Credit Agreement with Silicon Valley Bank in March 2021 to (i) align the covenants with our 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 $ 4.3 million for the three months ended March 31, 2022, compared to $ 1.7 million for the three months ended March 31, 2021.

The $ 2.6 million increase was primarily due to a $ 27.7 million increase in pretax income.

Income tax expense was $ 12.3 million during the nine months ended September 30, 2021, compared with $ 6.1 million for the nine months ended September 30, 2020.

The $ 6.2 million increase was primarily due to a $ 33.7 million

increase in pretax income.

The effective tax rate for the three and nine months ended September 30, 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.

The Deferred income taxes of $ 44.2 million and $ 57.9 million as of September 30, 2021 and December 31, 2020, respectively, reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards.

During the three months ended March 31, 2022, an international tax audit commenced, and we have determined that it is not more likely than not that certain tax positions being examined by the tax authorities will be sustained.

Therefore, we have recorded a liability of $ 0.7 million related to our estimated exposure as of March 31, 2022.

We will assess this tax reserve in subsequent quarters until final settlement.

The effective tax rate for the three months ended March 31, 2022 was less than the U.S.

statutory rate of 21 % due to forecasted Foreign Derived Intangible Income (FDII), Federal research and development tax credits and a favorable discrete item related to equity compensation that reduces the annual tax rate.

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

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

The Deferred income taxes of $ 36.2 million and $ 35.5 million as of March 31, 2022 and December 31, 2021, respectively, reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards.

We have recorded a $ 8.6 million valuation allowance in the U.S.

4 unchanged sentences

Concentration of Risk

For the three months ended September 30, 2021, one customer accounted for 26.7 % of total revenue.

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 nine months ended September 30, 2021, two customers accounted for 18.5 % and 14.1 % 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.

At September 30, 2021, one customer accounted for 32.2 % of accounts receivable.

For the three months ended March 31, 2022, two customers accounted for 15.0 % and 11.1 % of total revenue, respectively.

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

At March 31, 2022, three customers accounted for 19.1 %, 16.6 % and 10.3 % of accounts receivable, respectively.

At December 31, 2021, two customers accounted for 29.1 % and 13.6 % of accounts receivable, respectively.

Share Repurchase

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 nine months ended September 30, 2021, we purchased 0.9 million shares at an average cost of $ 40.90 per share.

In February 2022, our Board of Directors approved stock repurchases of up to $ 100 million of our common stock, beginning in March 2022.

During March 2022, we purchased 0.3 million shares at an average cost of $ 70.41 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.

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

Shares repurchased are returned to the status of authorized but unissued shares.

Accordingly, the repurchases 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.

7 unchanged sentences

We have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in the accompanying consolidated financial statements.

Recent Accounting Guidance

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

We adopted Financial Accounting Standards Board ASU No.

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