What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-05 · 73 added, 44 removed, 372 unchanged (24% of the section changed)

4 unchanged sentences

Three months ended

Six months ended

Total revenue

22 unchanged sentences

Three months ended

Other comprehensive loss:

Six months ended

Other comprehensive (loss) income:

Foreign currency translation adjustments

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

Total other comprehensive loss

Total other comprehensive (loss) income

Comprehensive income

29 unchanged sentences

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

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

33,094 shares issued and outstanding at June 30, 2022;

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

1 unchanged sentence

Retained earnings (accumulated deficit)

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

Total stockholders’ equity

15 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

Repurchase of common stock

Balance at June 30, 2021

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, 2022

See accompanying Notes to these Consolidated Financial Statements (Unaudited)

2 unchanged sentences

(In thousands)

Three months ended

Six months ended

Cash flows from operating activities

17 unchanged sentences

Repurchase of common stock

Proceeds from Employee Stock Purchase Plan purchases

Principal payments on finance lease obligation

2 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash, cash equivalents and restricted cash

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

Cash, cash equivalents and restricted cash at beginning of period

18 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, 2021.

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 recognized stock-based compensation expense of $ 3.5 million and $ 3.4 million for the three-month periods ended June 30, 2022 and 2021, respectively.

We recognized stock-based compensation expense of $ 6.2 million and $ 5.8 million for the six-month periods ended June 30, 2022 and 2021, respectively.

These amounts include compensation expense related to RSUs, non-qualified stock options and stock to be issued to participants under the 2020 Employee Stock Purchase Plan (the “2020 ESPP”).

In the three-month periods ended June 30, 2022 and 2021, we issued 0.2 million and 0.3 million shares of common stock, respectively, upon stock option exercises, purchases under the 2020 ESPP and vesting of RSUs.

In the three-month periods ended June 30, 2022 and 2021, we received proceeds of $ 1.0 million and $ 1.1 million, respectively, in connection with the exercise of stock options and purchases under the 2020 ESPP.

In the six-month periods ended June 30, 2022 and 2021, we issued 0.4 million and 0.7 million shares of common stock, respectively, upon stock option exercises, purchases under the 2020 ESPP and vesting of RSUs.

In the six-month periods ended June 30, 2022 and 2021, we received proceeds of $ 1.5 million and $ 3.6 million, respectively, in connection with the exercise of stock options and purchases under the 2020 ESPP.

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.

1 unchanged sentence

All new agreements are reviewed to determine if they contain a lease component.

A lease is a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment over a period of time in exchange for consideration.

A lease is a contract, or part of a contract, that conveys the right to control the use of identified

property, plant or equipment over a period of time in exchange for consideration.

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

3 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.

18 unchanged sentences

Total lease liabilities

*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 $ 49.2 million and includes $ 0.6 million of prepaid financing costs as of June 30, 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.

1 unchanged sentence

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

Six months ended

Classification

17 unchanged sentences

Total lease cost

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

* Sales and marketing and general and administrative expense also includes short-term lease and variable lease costs of approximately $ 0.6 million and $ 1.0 million for the three and six months ended June 30, 2022, respectively, and includes short-term and variable lease costs of approximately $ 0.4 million and $ 0.9 million for the three and six months ended June 30, 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 .

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 March 31, 2022:

Maturity of Lease Liabilities

14 unchanged sentences

These cash flows are included within the operating activities section of our statement of cash flows.

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 three months ending March 31, 2022 and 2021, respectively:

Three months ended March 31,

Our cash flows from our finance lease include both an interest component and a 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 six months ending June 30, 2022 and 2021, respectively:

Six months ended June 30,

Cash paid for amounts included in the measurement of lease liabilities

9 unchanged sentences

Three months ended

Six months ended

(in thousands)

4 unchanged sentences

Three months ended

Six months ended

(in thousands)

8 unchanged sentences

Three months ended

Six months ended

(in thousands)

17 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 months ended March 31, 2022 and 2021, respectively:

The following table shows changes of the allowances for credit losses related to trade receivables for the three and six months ended June 30, 2022 and 2021, respectively:

Three months ended

Six months ended

(in thousands)

7 unchanged sentences

Three months ended

Six months ended

(in thousands, except per share amounts)

4 unchanged sentences

Net income per share

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 three months ended March 31, 2022:

Diluted weighted average common shares outstanding does not include 15,796 and 1,800 common equivalent shares issuable with respect to outstanding equity awards for the three-month periods ended June 30, 2022 and 2021, respectively, or 8,255 and 1,352 common equivalent shares issuable with respect to outstanding equity awards for the six-month periods ended June 30, 2022 and 2021, respectively, as their effect would have been anti-dilutive.

Accumulated Other Comprehensive (Loss) Income

The following table presents the changes in accumulated other comprehensive (loss) income, net of tax, by component, for the six months ended June 30, 2022:

Defined benefit

2 unchanged sentences

Other comprehensive loss and pension reclassification

Balance at March 31, 2022

Balance at June 30, 2022

Cash, cash equivalents and restricted cash

4 unchanged sentences

Total cash, cash equivalents and restricted cash

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.

As of June 30, 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

17 unchanged sentences

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

Three months ended

Six months ended

(in thousands)

3 unchanged sentences

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

Balance at March 31 (end of period)

Balance at June 30 (end of period)

Amount classified as current

17 unchanged sentences

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

March 31, 2022

June 30, 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 $ 47.2 million as of March 31, 2022.

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 $ 46.9 million as of June 30, 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 March 31, 2022, we were in compliance with all covenant requirements of the Credit Agreement.

As of June 30, 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 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.

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.

Income tax expense was $ 4.0 million for the three months ended June 30, 2022, compared to $ 3.8 million for the three months ended June 30, 2021.

The $ 0.2 million increase was primarily due to a $ 25.4 million increase in pretax income offset by the Foreign Derived Intangible Income (“FDII”) deduction on export sales.

Income tax expense was $ 8.3 million during the six months ended June 30, 2022, compared with $ 5.6 million for the six months ended June 30, 2021.

The $ 2.7 million increase was primarily due to a $ 53.1 million increase in pretax income offset by the FDII deduction on export sales.

The effective tax rate for the three and six months ended June 30, 2022 was less than the U.S.

statutory rate of 21 % due to forecasted 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 and six months ended June 30, 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.

The Deferred income taxes of $ 33.7 million and $ 35.5 million as of June 30, 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 $ 8.9 million valuation allowance in the U.S.

4 unchanged sentences

Concentration of Risk

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.

For the three months ended June 30, 2022, two customers accounted for 19.3 % and 11.6 % of total revenue, respectively.

For the three months ended June 30, 2021, two customers accounted for 19.7 % and 10.2 % of total revenue.

For the six months ended June 30, 2022, three customers accounted for 15.3 %, 10.7 % and 10.3 % of total revenue, respectively.

For the six months ended June 30, 2021, one customer accounted for 24.4 % of total revenue.

At June 30, 2022, three customers accounted for 30.5 %, 13.2 % and 10.6 % of accounts receivable, respectively.

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

1 unchanged sentence

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.

During the six months ended June 30, 2022, we purchased 0.5 million shares at an average cost of $ 65.19 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.

12 unchanged sentences

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