What changed in this filing

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Item 1. Financial Statements

2023-08-03 compared with 2023-05-05 · 77 added, 51 removed, 368 unchanged (26% of the section changed)

4 unchanged sentences

Three months ended

Six months ended

Total revenue

22 unchanged sentences

Three months ended

Other comprehensive income (loss):

Six months ended

Other comprehensive loss:

Foreign currency translation adjustments

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

Total other comprehensive income (loss)

Total other comprehensive loss

Comprehensive income

30 unchanged sentences

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

32,726 shares issued and outstanding at March 31, 2023;

32,836 shares issued and outstanding at June 30, 2023;

32,775 shares issued and outstanding at December 31, 2022

18 unchanged sentences

Balance at March 31, 2022

Foreign currency translation adjustments

Change in pension obligation

Exercise of stock options

Issuance of stock under Employee Stock Purchase Plan

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

Stock-based compensation expense

Repurchase of common stock

Balance at June 30, 2022

Comprehensive

7 unchanged sentences

Balance at March 31, 2023

Foreign currency translation adjustments

Issuance of stock under Employee Stock Purchase Plan

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

Stock-based compensation expense

Repurchase of common stock

Balance at June 30, 2023

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

21 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 in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

13 unchanged sentences

The balance sheet at December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

As of March 31, 2023, there have been no material changes in the Company’s significant accounting policies.

As of June 30, 2023, there have been no material changes in the Company’s significant accounting policies.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

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, 2022.

We recognized stock-based compensation expense of $ 3.2 million and $ 2.7 million for the three-month periods ended March 31, 2023 and 2022, respectively.

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

In the three-month periods ended March 31, 2023 and 2022, we issued 58.0 thousand and 0.1 million shares of common stock, respectively, upon stock option exercises and vesting of RSUs.

In the three-month periods ended March 31, 2023 and 2022, we received proceeds of $ 25.0 thousand and $ 0.5 million, respectively, in connection with the exercise of stock options.

We recognized stock-based compensation expense of $ 4.7 million and $ 3.5 million for the three-month periods ended June 30, 2023 and 2022, respectively.

We recognized stock-based compensation expense of $ 7.9 million and $ 6.2 million for the six-month periods ended June 30, 2023 and 2022, 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, 2023 and 2022, we issued 0.2 million and 0.2 million of common stock for purchases under the 2020 ESPP and vesting of RSUs, respectively.

In the three-month period ended June 30, 2023, we received proceeds of $ 1.0 million for purchases under the 2020 ESPP.

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

In the six-month periods ended June 30, 2023 and 2022, we issued 0.3 million and 0.4 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, 2023 and 2022, we received proceeds of $ 1.0 million and $ 1.5 million, respectively, in connection with the exercise of stock options and purchases under the 2020 ESPP.

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

4 unchanged sentences

The guidance in Topic 842 requires recognition of lease assets and related liabilities 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.

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.

22 unchanged sentences

Total lease liabilities

*Finance lease assets are recorded net of accumulated depreciation of $ 46.2 million and includes $ 0.6 million of prepaid financing costs as of March 31, 2023.

Finance lease assets are recorded net of accumulated depreciation of $ 45.9 million and includes $ 0.6 million of prepaid financing costs as of December 31, 2022.

*Finance lease assets are recorded net of accumulated depreciation of $ 46.5 million and include $ 0.6 million of prepaid financing costs as of June 30, 2023.

Finance lease assets are recorded net of accumulated depreciation of $ 45.9 million and include $ 0.6 million of prepaid financing costs as of December 31, 2022.

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

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, 2023 and 2022 as follows:

Our state-of-the-art 98,500 square foot logistics and flex manufacturing center in Beverly, Massachusetts, which is anticipated to be fully operational in the second half of 2023, commenced during the three-months ended June 30, 2023.

As a result, we recorded a right-of-use asset of $ 21.0 million, which includes approximately $ 1.0 million of prepaid rent, and a related liability of $ 20.0 million.

Three months ended

Six months ended

Classification

17 unchanged sentences

Total lease cost

* Product / services, sales and marketing and general and administrative expense also includes short-term lease and variable lease costs of approximately $ 0.5 million for both the three months ended March 31, 2023 and 2022.

* Product / services, sales and marketing and general and administrative expense also includes short-term lease and variable lease costs of approximately $ 0.5 million and $ 1.0 million for the three and six months ended June 30, 2023, respectively, and 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.

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, 2023:

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

Maturity of Lease Liabilities

5 unchanged sentences

operating lease interest calculated using estimated corporate borrowing rate.

The table above does not include options to renew lease terms that are not reasonably certain of being exercised, nor leases signed but not yet commenced as of March 31, 2023.

As of March 31, 2023, total estimated future minimum lease payments for leases signed but not yet commenced, which consists only of the lease of property in Beverly, Massachusetts, on which a state-of-the-art logistics and flex manufacturing center with 98,000 square feet is being built to our specifications and has an expected commencement date in 2023, is estimated to be $ 32.5 million.

The table above does not include options to renew lease terms that are not reasonably certain of being exercised.

Lease term and discount rate

8 unchanged sentences

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 three months ended March 31, 2023 and 2022, respectively:

Three months ended March 31,

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 ended June 30, 2023 and 2022, 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)

3 unchanged sentences

Balance, end of the period

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

The majority of our system transactions have either (1) payment terms of 90 % due upon shipment of the system and 10 % due upon acceptance or (2) a deposit with the remaining balance due at shipment and acceptance.

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

12 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, 2023 and 2022, respectively:

Three months ended

(in thousands)

Balance, beginning of period

Provision for credit losses

Balance, end of period

We did not incur any credit losses or recoveries for the three and six-month periods ended June 30, 2023 and 2022, respectively.

As of June 30, 2023 and 2022, respectively, we had no provision for credit losses.

Computation of Net Earnings per Share

3 unchanged sentences

Three months ended

Six months ended

(in thousands, except per share amounts)

4 unchanged sentences

Net income per share

Diluted weighted average shares of common stock outstanding does not include 1,120 and 4,706 common equivalent shares issuable with respect to outstanding equity awards for the three-month periods ended March 31, 2023 and 2022, respectively, as their effect would have been anti-dilutive.

Diluted weighted average shares of common stock outstanding does not include 770 and 15,796 common equivalent shares issuable with respect to outstanding equity awards for the three-month periods ended June 30, 2023 and 2022, respectively, or 387 and 8,255 common equivalent shares issuable with respect to outstanding equity awards for the six-month periods ended June 30, 2023 and 2022, respectively, as their effect would have been anti-dilutive.

Accumulated Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive (loss) income, net of tax, by component, for the three months ended March 31, 2023:

The following table presents the changes in accumulated other comprehensive loss, net of tax, by component, for the six months ended June 30, 2023:

Defined benefit

1 unchanged sentence

Balance at December 31, 2022

Other comprehensive income and pension reclassification

Balance at March 31, 2023

Other comprehensive loss and pension reclassification

Balance at June 30, 2023

Cash, cash equivalents and restricted cash

4 unchanged sentences

Total cash, cash equivalents and restricted cash

As of March 31, 2023, we had $ 6.7 million in restricted cash representing the total of (i) a $ 5.9 million cash collateral relating to our lease for our headquarters in Beverly, Massachusetts, (ii) a $ 0.7 million letter of credit relating to workers’ compensation insurance and (iii) a $ 0.1 million deposit relating to customs activity.

As of June 30, 2023, we had $ 6.7 million in restricted cash representing the total of (i) a $ 5.9 million cash collateral relating to our lease for our headquarters in Beverly, Massachusetts, (ii) a $ 0.7 million letter of credit relating to workers’ compensation insurance and (iii) a $ 0.1 million deposit relating to customs activity.

See Note 12 for further discussion on the $ 5.9 million cash collateral.

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

Amount classified as long-term

Amount classified as long-term (within other long-term liabilities)

Total warranty liability

15 unchanged sentences

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

March 31, 2023

June 30, 2023

Fair Value Measurements

18 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 $ 46.1 million as of March 31, 2023.

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 $ 45.8 million as of June 30, 2023.

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.

As of March 31, 2023, we have a security deposit of $ 5.9 million related to this lease.

As of June 30, 2023, we have a security deposit of $ 5.9 million related to this lease.

On April 5, 2023 we terminated the Senior Secured Credit Facilities Credit Agreement, as amended (the “Credit Agreement”), with Silicon Valley Bank that we entered into on July 31, 2020.

2 unchanged sentences

Upon termination, these liens and all other obligations under the credit agreement, were released.

A letter of credit remained at Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (successor by purchase to the Federal Deposit Insurance Corporation as Receiver for Silicon Valley Bridge Bank, N.A.) as successor to Silicon Valley Bank, in the amount of $ 5.9 million, securing our lease on our corporate headquarters.

This letter of credit was transitioned to a cash collateral arrangment on March 30, 2023, and is classified as long-term restricted cash on our balance sheet at March 31, 2023.

Income tax expense was $ 5.2 million for the three months ended March 31, 2023, compared to $ 4.3 million for the three months ended March 31, 2022.

The $ 0.9 million increase was primarily due to an increase in taxable income.

The effective tax rate for the three months ended March 31, 2023 was less than the U.S.

A letter of credit remains at Silicon Valley Bank, a division of First Citizens Bank & Trust Company (successor by purchase to the Federal Deposit Insurance Corporation as Receiver for Silicon Valley Bridge Bank, N.A.) as successor to Silicon Valley Bank, in the amount of $ 5.9 million, securing our lease on our corporate headquarters.

This letter of credit was transitioned to a cash collateral arrangment on March 30, 2023, and is classified as long-term restricted cash on our balance sheet at June 30, 2023.

Income tax expense was $ 3.0 million for the three months ended June 30, 2023, compared to $ 4.0 million for the three months ended June 30, 2022.

The $ 1.0 million decrease was primarily due to a higher stock compensation deduction driven by an increase in stock price offset partially by an increase in pre-tax financial reporting income.

Income tax expense was $ 8.2 million for the six months ended June 30, 2023, compared to $ 8.3 million for the six months ended June 30, 2022.

The effective tax rate for the three and six months ended June 30, 2023 was less than the U.S.

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

The deferred income taxes of $ 35.4 million and $ 31.7 million as of March 31, 2023 and December 31, 2022, 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.

As of March 31, 2023, we have recorded a $ 10.9 million valuation allowance in the U.S.

The deferred income taxes of $ 38.9 million and $ 31.7 million as of June 30, 2023 and December 31, 2022, 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.

As of June 30, 2023, we have recorded a $ 10.6 million valuation allowance in the U.S.

against certain tax credits and state net operating losses due to the uncertainty of their realization.

3 unchanged sentences

Concentration of Risk

For the three months ended March 31, 2023, two customers accounted for 15.2 % and 12.9 % of total revenue, respectively.

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

At March 31, 2023, two customers accounted for 14.0 % and 13.4 % of accounts receivable, respectively.

For the three months ended June 30, 2023, no individual customer accounted for greater than ten percent of revenue.

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

For the six months ended June 30, 2023, two customers accounted for 11.6 % and 11.1 % of total revenue, respectively.

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

At June 30, 2023, two customers accounted for 12.5 % and 11.5 % of accounts receivable, respectively.

At December 31, 2022, two customers accounted for 19.4 % and 11.5 % 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.

During the three months ended March 31, 2023, we purchased 0.1 million shares at an average cost of $ 117.23 per share.

During the six months ended June 30, 2023, we repurchased 0.2 million shares at an average cost of $ 123.80 per share.

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

11 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