44 unchanged sentences
February 21, 2024
−Removed: CONTROLS AND PROCEDURES
+Added: OTHER INFORMATION
+Added: None of our directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the quarter ended December 31, 2023.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
6 unchanged sentences
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
−Removed: The information required hereunder is incorporated herein by reference to our definitive Proxy Statement to be filed pursuant to Regulation 14A, which Proxy Statement is anticipated to be filed with the SEC within 120 days after December 31, 2022.
+Added: The information required hereunder is incorporated herein by reference to our definitive Proxy Statement to be filed pursuant to Regulation 14A, which Proxy Statement is anticipated to be filed with the SEC within 120 days after December 31, 2023, with the exception of the information regarding securities authorized for issuance under our equity compensation plans, which is set forth below.
+Added: Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, RSUs and PSUs
+Added: Weighted-Average Exercise Price of Outstanding Options, RSUs and PSUs
+Added: Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
+Added: Equity Compensation Plans Approved by Security Holders (1)
+Added: 1,388,347 $ 144.72 3,247,512
+Added: Equity Compensation Plans Not Approved by Security Holders
+Added: Total 1,388,347 3,247,512
+Added: (1) As of December 31, 2023, there were 3,107,336 shares available for future issuance under the 2006 Incentive Compensation Plan and 140,176 shares available for future issuance under the employee stock purchase plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
9 unchanged sentences
Exhibit Number
−Removed: 3.1 Form of Second Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Registration Statement No.
−Removed: 333-136521 filed with the Securities and Exchange Commission (the "Commission") on August 11, 2006)
−Removed: 3.2 Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed with the Commission on November 10 , 202 2 )
+Added: 3.1 Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q filed w i t h the Commission on August 1, 2023)
+Added: 3.2 Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed with the Commission on January 23 , 202 3 )
4.1 Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement No.
1 unchanged sentence
4.2 Description of the Registrant's Securities Registered under Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.2 to the Registrant's Annual Report on Form 10-K filed with the Commission on February 24, 2020)
−Removed: 2006 Incentive Compensation Plan, as amended (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K/A filed with the Commission on February 22, 2017)
+Added: 2006 Incentive Compensation Plan, as amended and restated effective May 23, 2023 (incorporated by reference to Exhibit 10 .1 to the Registrant's Quarterly Report on Form 10-Q filed w i t h the Commission on August 1, 2023)
IPG Photonics Corporation Non-Employee Director Compensation Plan, as amended (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on February 22, 2023)
−Removed: Senior Executive Annual Incentive Plan, as amend ed and restated April 28, 2020
+Added: Senior Executive Annual Incentive Plan, as amended and restated April 28, 2020 (incorporated by reference to Exhibit 10.3 to the Registrant's Annual Report on Form 10-K filed with the Com mission on February 27, 2023)
IPG Photonics Corporation 2008 Employee Stock Purchase Plan, as amended and restated effective December 1, 2018 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on June 3, 2019)
3 unchanged sentences
Eugene Scherbakov (incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q filed with the Commission on August 4, 2021)
+Added: Amendment to Dr.
+Added: Scherbakov Service Agreement (incorporated by reference to Exhibit 10.1 to the Registrant 's Current Report on Form 8-K filed with the Commission on September 1, 2023)
Confidentiality, Non-Competition and Confirmatory Assignment Agreement dated May 4, 2021 between the Registrant and Dr.
2 unchanged sentences
Mammen, Angelo P.
−Removed: Lopresti and Alexander Ovtchinnikov (incorporated by reference to Exhibit 10.7 to the Registrant's Annual Report Form 10-K filed with the Commission on February 24, 2020)
+Added: Lopresti and Alexander Ovtchinnikov (incorporated by reference to Exhibit 10.7 to the Registrant's Annual Report on Form 10-K filed with the Commission on February 24, 2020)
Form of Confidentiality, Non-Competition and Confirmatory Assignment Agreement between the Registrant and each of the named executive officers and certain other executive officers, (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed with the Commission on October 15, 2013)
3 unchanged sentences
dated as of March 25, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on March 26, 2020)
−Removed: 10.13 Revolving Credit Note, between the Registrant and Bank of America, N.A., dated March 25, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the Commission on March 26, 2020)
Exhibit Number
−Removed: 10.14 Credit Facility Agreement between IPG Laser GmbH and Deutsche Bank AG, dated July 27, 2017 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on August 1, 2017)
−Removed: 10.15 Annex I to Credit Facility Agreement between IPG Laser GmbH and Deutsche Bank AG, dated July 27, 2017 (incorporated by reference to Exhibit 10.2 on Current Report on Form 8-K filed with the Commission on August 1, 2017)
−Removed: 10.16 Guarantee of the Registrant to Deutsche Bank dated July 27, 2017 (incorporated by reference to Exhibit 10.3 on Current Report on Form 8-K filed with the Commission on August 1, 2017)
−Removed: 10.17 First Amendment to Credit Facility Agreement between IPG Laser GmbH and Deutsche Bank AG, dated April 20, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on April 23, 2020)
+Added: 10.14 Revolving Credit Note, between the Registrant and Bank of America, N.A., dated March 25, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the Commission on March 26, 2020)
List of Subsidiaries
3 unchanged sentences
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 1350
−Removed: XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
−Removed: XBRL Taxonomy Extension Schema
−Removed: XBRL Taxonomy Extension Calculation Linkbase
−Removed: XBRL Taxonomy Definition Linkbase
−Removed: XBRL Taxonomy Extension Label Linkbase
−Removed: XBRL Taxonomy Extension Presentation Linkbase
+Added: IPG Photonics Corporation Incentive Based Compensation Recoupment Policy
+Added: Inline XBRL Instance Document
+Added: Inline XBRL Taxonomy Extension Schema
+Added: Inline XBRL Taxonomy Extension Calculation Linkbase
+Added: Inline XBRL Taxonomy Definition Linkbase
+Added: Inline XBRL Taxonomy Extension Label Linkbase
+Added: Inline XBRL Taxonomy Extension Presentation Linkbase
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
+Added: * Filed herewith.
+Added: ** Furnished herewith.
+Added: The certification attached as Exhibit 32.1 that accompanies this Annual Report on Form 10-K is deemed furnished and not filed with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation.
† Identifies management contract or compensatory plans or arrangements required to be filed as an exhibit.
7 unchanged sentences
Chief Executive Officer
+Added: KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Eugene A.
+Added: Scherbakov and Angelo P.
+Added: Lopresti, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
6 unchanged sentences
/s/ Thomas J.
−Removed: Vice President, Corporate Controller
−Removed: (Principal Accounting Officer) February 27, 2023
+Added: Vice President, Corporate Controller and Chief Accounting Officer
+Added: (Principal Accounting Officer)
+Added: February 21, 2024
/s/ Gregory Beecher
10 unchanged sentences
Director February 21, 2024
+Added: /s/ Kolleen Kennedy
+Added: Kolleen Kennedy
+Added: Director February 21, 2024
/s/ Eric Meurice
5 unchanged sentences
Non-Executive Chair of the Board and Director February 21, 2024
−Removed: /s/ Thomas Seifert
−Removed: Thomas Seifert
−Removed: Director February 27, 2023
−Removed: /s/ Felix Stukalin
−Removed: Felix Stukalin
−Removed: Director February 27, 2023
/s/ Agnes Tang
27 unchanged sentences
We believe that our audits provide a reasonable basis for our opinion.
−Removed: Critical Audit Matters
−Removed: The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
−Removed: Long-lived Asset Impairment:
−Removed: Refer to Notes 1 and 8 to the Financial Statements
−Removed: Critical Audit Matter Description
−Removed: As a result of changes in business conditions in Russia, the Company completed an impairment analysis of long-lived assets in Russia during the fourth quarter of 2022 and recorded a charge of $79.0 million in the accompanying Consolidated Statement of Income.
−Removed: We identified this charge as a critical audit matter because of the significant judgments made by management to estimate the charge.
−Removed: This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate to the reasonableness of management's estimates and assumptions related to future revenues and cash flows.
−Removed: How the Critical Audit Matter Was Addressed in the Audit
−Removed: Our audit procedures related to management’s judgments underlying the calculation of the charge, included the following, among others:
−Removed: • We tested the effectiveness of controls over recording long-lived asset impairment charges, including those controls related to the forecasts of future revenues and cash flows.
−Removed: • We evaluated management's ability to estimate future revenues and cash flows by comparing management’s projections to the Company’s historical results.
−Removed: • We tested for the appropriate application of accounting guidance related to the impairment of long-lived assets, including judgments made by management related to the asset group subject to impairment and the timing of the related charge.
−Removed: • We considered the existence of contradictory evidence based on consideration of internal communication to management and the board of directors, Company press releases, and analysts' reports, as well as any changes within the business.
+Added: Critical Audit Matter
+Added: The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Excess or Obsolete Inventory Reserve:
3 unchanged sentences
Once recorded, these reserves are considered permanent adjustments to the carrying value of inventory.
−Removed: As of December 31, 2022, the Company has inventories of $509.4 million.
−Removed: This balance reflects inventory provisions and related charges totaling $128.0 million for the year ended December 31, 2022, and includes $74.1 million recorded in the fourth quarter of 2022 related to the restructuring of the Company’s Russian operations.
+Added: As of December 31, 2023, the Company has inventories of $453.9 million, net of excess quantities and obsolescence reserves.
We identified the reserve for excess quantities and obsolete inventory as a critical audit matter because of the significant estimates and assumptions management makes to quantify the reserve, including the determination of expected demand, especially when considering the vertically integrated nature of the Company as well as parts subject to technological obsolescence.
37 unchanged sentences
Other long-term liabilities and deferred income taxes 68,652 83,274
−Removed: Long-term debt, net of current portion — 16,031
Total liabilities 283,513 357,920
10 unchanged sentences
Total IPG Photonics Corporation stockholders' equity 2,415,385 2,385,360
−Removed: Non-controlling interests — 639
−Removed: Total equity 2,385,360 2,747,221
Total liabilities and equity $ 2,698,898 $ 2,743,280
12 unchanged sentences
General and administrative 125,749 131,253 125,882
−Removed: Goodwill impairment — — 44,589
Gain on divestiture and sale of asset — ( 31,846 ) —
Impairment of long-lived assets 1,237 79,949 —
−Removed: Other restructuring charges 9,697 — 506
−Removed: Loss (gain) on foreign exchange 4,103 ( 15,120 ) ( 12,915 )
+Added: Restructuring charges (recoveries), net
+Added: ( 288 ) 9,697 —
+Added: (Gain) loss on foreign exchange
+Added: ( 1,356 ) 4,103 ( 15,120 )
Total operating expenses 309,725 385,913 328,515
24 unchanged sentences
Foreign currency translation adjustments and other ( 7,854 ) ( 14,838 ) ( 44,267 )
−Removed: Adjustment for net gain realized and included in net income — — ( 232 )
−Removed: Unrealized gain (loss) on derivatives 336 278 ( 472 )
+Added: Unrealized (loss) gain on derivatives
+Added: ( 152 ) 336 278
Total other comprehensive (loss) income
+Added: ( 8,006 ) ( 14,502 ) ( 43,989 )
Comprehensive income 210,872 96,260 233,877
9 unchanged sentences
Balance, January 1, 2021 53,427,234 $ 6 ( 2,034,012 ) $ ( 303,614 ) $ 854,301 $ 2,188,191 $ ( 146,065 ) $ 1,292 $ 2,594,111
−Removed: Exercise of stock options and vesting of RSUs and PSUs, net of shares withheld for taxes 677,076 1 — — 27,934 — — — 27,935
+Added: Vesting of RSUs and PSUs, net of shares withheld for taxes, and exercise of stock options
+Added: 292,849 — — — 10,766 — — — 10,766
Common stock issued under employee stock purchase plan 34,151 — — — 5,492 — — — 5,492
1 unchanged sentence
Stock-based compensation — — — — 37,864 — — — 37,864
−Removed: Recently adopted accounting standards — — — — — ( 115 ) — — ( 115 )
Net income — — — — — 278,416 — ( 550 ) 277,866
Foreign currency translation adjustments and other — — — — — — ( 44,164 ) ( 103 ) ( 44,267 )
−Removed: Unrealized (loss) on derivatives, net of tax — — — — — — ( 472 ) — ( 472 )
−Removed: Adjustment for net gain realized and included in net income — — — — — — ( 232 ) — ( 232 )
+Added: Unrealized gain on derivatives, net of tax
+Added: — — — — — — 278 — 278
Balance, December 31, 2021 53,010,265 6 ( 2,777,981 ) ( 438,503 ) 908,423 2,466,607 ( 189,951 ) 639 2,747,221
−Removed: Exercise of stock options and vesting of RSUs and PSUs, net of shares withheld for taxes 292,849 — — — 10,766 — — — 10,766
+Added: Vesting of RSUs and PSUs, net of shares withheld for taxes, and exercise of stock options
+Added: 167,193 — — — 693 — — — 693
Common stock issued under employee stock purchase plan 62,233 — — — 4,890 — — — 4,890
3 unchanged sentences
Foreign currency translation adjustments and other — — — — — — ( 14,909 ) 71 ( 14,838 )
+Added: Purchase of non-controlling interests — — — — ( 937 ) — — ( 1,563 ) ( 2,500 )
Unrealized gain on derivatives, net of tax — — — — — — 336 — 336
Balance, December 31, 2022 48,138,257 6 ( 7,879,415 ) ( 938,009 ) 951,371 2,576,516 ( 204,524 ) — 2,385,360
−Removed: Exercise of stock options and vesting of RSUs and PSUs, net of shares withheld for taxes 167,193 — — — 693 — — — 693
+Added: Vesting of RSUs and PSUs, net of shares withheld for taxes, and exercise of stock options
+Added: 241,782 — — — ( 1,891 ) — — — ( 1,891 )
Common stock issued under employee stock purchase plan 57,984 — — — 5,038 — — — 5,038
3 unchanged sentences
Foreign currency translation adjustments and other — — — — — — ( 7,854 ) — ( 7,854 )
−Removed: Purchase of non-controlling interests — — — — ( 937 ) — — ( 1,563 ) ( 2,500 )
−Removed: Unrealized gain on derivatives, net of tax — — — — — — 336 — 336
+Added: Unrealized loss on derivatives, net of tax
+Added: — — — — — — ( 152 ) — ( 152 )
Balance, December 31, 2023 46,320,671 $ 6 ( 9,996,767 ) $ ( 1,161,505 ) $ 994,020 $ 2,795,394 $ ( 212,530 ) $ — $ 2,415,385
11 unchanged sentences
Stock-based compensation 39,502 38,302 37,864
−Removed: Goodwill impairment — — 44,589
−Removed: Impairment of long-lived assets 79,949 — 671
+Added: Impairment of long-lived assets and restructuring charges (recoveries), net
+Added: ( 486 ) 79,949 —
Unrealized gain on foreign currency transactions ( 4,334 ) ( 592 ) ( 8,560 )
Gain on divestiture and sales of asset — ( 31,846 ) —
−Removed: Other 1,654 8,618 8,642
Provisions for inventory, warranty and bad debt 61,058 153,652 68,441
−Removed: Changes in assets and liabilities that provided (used) cash, net of acquisitions:
+Added: Amortization of premium/discount on investments ( 25,102 ) ( 4,557 ) 2,502
+Added: Other 5,194 6,211 6,116
+Added: Changes in assets and liabilities that (used) provided cash, net of acquisitions:
Accounts receivable ( 10,395 ) 34,100 ( 2,091 )
8 unchanged sentences
Proceeds from sales of property, plant and equipment 31,241 26,862 1,409
−Removed: Proceeds from short-term investments 1,446,355 1,647,537 1,099,224
Purchases of short-term investments ( 1,232,863 ) ( 1,117,022 ) ( 1,940,605 )
+Added: Proceeds from sale of short-term investments
+Added: 1,073,993 1,446,355 1,647,537
Acquisitions of businesses, net of cash acquired — ( 2,000 ) —
1 unchanged sentence
Other 558 ( 43 ) ( 1,515 )
−Removed: Net cash provided by (used in) investing activities 296,952 ( 416,282 ) ( 99,574 )
+Added: Net cash (used in) provided by investing activities
+Added: ( 237,554 ) 296,952 ( 416,282 )
Cash flows from financing activities:
6 unchanged sentences
Effect of changes in exchange rates on cash, cash equivalents and restricted cash ( 5,587 ) ( 5,948 ) ( 17,800 )
−Removed: Net (decrease) increase in cash, cash equivalents and restricted cash ( 10,896 ) ( 169,448 ) 195,569
+Added: Net decrease in cash, cash equivalents and restricted cash
+Added: ( 183,535 ) ( 10,896 ) ( 169,448 )
Cash, cash equivalents and restricted cash — Beginning of year 698,209 709,105 878,553
5 unchanged sentences
Demonstration units transferred from inventory to other assets $ 5,404 $ 5,178 $ 5,729
−Removed: Property, plant and equipment transferred from inventory $ 4,172 $ 3,701 $ 4,243
−Removed: Changes in accounts payable related to property, plant and equipment $ 1,073 $ 816 $ ( 75 )
+Added: Inventory transferred to machinery and equipment
+Added: $ 2,767 $ 4,172 $ 3,701
+Added: Additions to property, plant and equipment included in accounts payable
+Added: $ 3,251 $ 1,073 $ 816
Leased assets obtained in exchange for new operating lease liabilities $ 4,457 $ 7,566 $ 7,489
8 unchanged sentences
It also has facilities and sales offices elsewhere in North and South America, Europe and Asia.
−Removed: Evaluation of Russian Operations — In October 2022, the European Union (“EU”) issued sanctions that restricted the Company’s Russian subsidiary from supplying laser components to its other manufacturing facilities beginning in January 2023.
−Removed: These EU sanctions, coupled with increased tariffs in the United States on items imported from Russia, have negatively impacted forecasts for the Russian subsidiary’s most significant source of revenue, which is selling components and finished goods to other IPG subsidiaries.
−Removed: As a result of these changes in business conditions in Russia, the Company completed an impairment analysis of assets in Russia during the fourth quarter of 2022 and recorded charges in the accompanying Consolidated Statement of Income.
−Removed: The Company recorded $ 74,055 of inventory provision and related charges included in Cost of sales, $ 79,030 impairment of long-lived asset charges included in Impairment of long-lived assets and a $ 35,518 valuation allowance for deferred tax assets included in provision for income taxes.
+Added: Russian Operations — In October 2022, the European Union (“EU”) issued sanctions that restricted the Company’s Russian subsidiary from supplying laser components to its other manufacturing facilities beginning in January 2023.
+Added: These EU sanctions, coupled with increased tariffs in the United States on items imported from Russia, negatively affected what had been the Russian subsidiary’s most significant source of revenue, which was selling components and finished goods to other IPG subsidiaries.
+Added: As a result of these changes in business conditions in Russia at the end of 2022, the Company completed an impairment analysis of assets in Russia during the fourth quarter of 2022 and recorded charges in the accompanying Consolidated Statement of Income.
+Added: In 2022, the Company recorded $ 74,055 of inventory provision and related charges included in Cost of sales, $ 79,030 of impairment of long-lived asset charges included in Impairment of long-lived assets and a $ 35,518 valuation allowance for deferred tax assets included in provision for income taxes.
The long-lived asset impairment charge was based on a probability-weighted average of valuations using the discounted cash flow method under the income approach, the guideline public company method and the guideline transaction method under the market approach, to estimate the fair value of the long-lived assets in Russia.
−Removed: Further, the Company implemented a restructuring program at its Russian subsidiary and recorded restructuring charges of $ 8,542 for personnel-related restructuring charges and other post employment benefits included in Other restructuring charges.
+Added: Further, in 2022 the Company implemented a restructuring program at its Russian subsidiary and recorded restructuring charges of $ 8,542 for personnel-related restructuring charges and other post employment benefits included in Restructuring charges (recoveries), net.
+Added: In 2023, the Company substantially completed the restructuring program.
+Added: As a result, the remaining restructuring accrual was substantially recovered.
+Added: This resulted in net restructuring recoveries of $ 288 for the year ended December 31, 2023.
Principles of Consolidation — The accompanying financial statements include the accounts of the Company and its majority-owned subsidiaries.
9 unchanged sentences
Exchange rate differences resulting from translation adjustments are accounted for directly as a component of accumulated other comprehensive (loss) income.
−Removed: Cash and Cash Equivalents and Short-Term Investments — Cash and cash equivalents consist primarily of highly liquid investments, such as money market fund deposits and term deposits, commercial paper, and corporate bonds with maturities of three months or less at the date of purchase with insignificant interest rate risk.
+Added: Cash and Cash Equivalents and Short-Term Investments — Cash and cash equivalents consist primarily of highly liquid investments, such as money market fund deposits, term deposits, corporate bonds, and commercial paper with maturities of three months or less at the date of purchase with insignificant interest rate risk.
Short-term investments consist of liquid investments including commercial paper, corporate bonds, U.S.
−Removed: government and government agency notes, and term deposits with original maturities of greater than three months but less than one year with insignificant interest rate risks.
−Removed: Short-term investments are held-to-maturity and accounted for at amortized cost.
+Added: government and government agency notes and term deposits with original maturities of greater than three months but less than one year with insignificant interest rate risk.
+Added: Fixed-term securities included in cash equivalents and short-term investments are held-to-maturity and accounted for at amortized cost.
Accounts Receivable and Allowance for Doubtful Accounts — Accounts receivable include $ 17,313 and $ 12,977 of bank acceptance drafts at December 31, 2023 and 2022, respectively.
11 unchanged sentences
Provision for bad debts, net of recoveries
−Removed: Uncollectable accounts written off ( 125 ) ( 437 ) ( 114 )
+Added: Uncollectible accounts written off
+Added: ( 840 ) ( 125 ) ( 437 )
Foreign currency translation ( 72 ) ( 56 ) ( 45 )
3 unchanged sentences
The Company periodically reviews the quantities and carrying values of inventories to assess whether the inventories are recoverable.
−Removed: The costs associated with provisions for excess quantities, technological obsolescence, or component rejections are charged to cost of sales as incurred.
+Added: The costs associated with provisions for excess quantities, technological obsolescence, or scrap related to out of specification components are charged to cost of sales as incurred.
Goodwill — Goodwill is the amount by which the cost of the acquired net assets in a business acquisition exceeded the fair values of the net identifiable assets on the date of purchase.
5 unchanged sentences
Intangible Assets — Intangible assets result from the Company's various business acquisitions.
−Removed: Intangible assets are reported at cost, net of accumulated amortization, and are amortized on a straight-line basis either over their estimated useful lives of one year to thirteen years or over the period the economic benefits of the intangible asset are consumed.
+Added: Intangible assets are reported at cost, less accumulated amortization, and are amortized on a straight-line basis either over their estimated useful lives of one year to thirteen years or over the period the economic benefits of the intangible asset are consumed.
Property, Plant and Equipment — Property, plant and equipment are stated at cost, less accumulated depreciation.
6 unchanged sentences
Office furniture and fixtures 5 - 7 years
−Removed: Expenditures for maintenance and repairs are charged to operating expenses.
+Added: Expenditures for maintenance and repairs are charged to operating expenses when they are incurred.
Long-Lived Assets — Long-lived assets, which consist primarily of property, plant and equipment and identifiable intangible assets, are reviewed by management for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
When undiscounted expected future cash flows are less than the carrying value, an impairment loss is recorded equal to the amount by which the carrying value exceeds the fair value of assets.
−Removed: The Company incurred $ 79,949 of non-cash impairment charges related to long-lived assets, with the majority related to Russian operations, during the year ended December 31, 2022.
−Removed: See Note 1, "Nature of Business and Summary of Significant Accounting Policies", section Evaluation of Russian Operations for further detail .
−Removed: There were no impairment charges during the year ended December 31, 2021.
−Removed: The Company incurred $ 671 of non-cash impairment charges related to long-lived assets during the year ended December 31, 2020.
+Added: The impact of the long-lived assets impairment for the years ended December 31, 2023, and 2022 are discussed in Note 8, "Property, Plant and Equipment" and Note 13, "Leases".
Included in other long-term assets is certain demonstration equipment.
2 unchanged sentences
Amortization expense of demonstration equipment for the years ended December 31, 2023, 2022 and 2021, was $ 3,480 , $ 2,387 and $ 3,596 , respectively.
+Added: Authorized Capital — The Company has authorized capital stock consisting of 175,000,000 shares of common stock, par value $ 0.0001 per share, and 5,000,000 shares of preferred stock, par value $ 0.0001 per share.
+Added: There are no shares of preferred stock outstanding as of December 31, 2023.
IPG PHOTONICS CORPORATION
1 unchanged sentence
(In thousands, except share and per share data)
−Removed: Authorized Capital — The Company has authorized capital stock consisting of 175,000,000 shares of common stock, par value $ 0.0001 per share, and 5,000,000 shares of preferred stock, par value $ 0.0001 per share.
−Removed: There are no shares of preferred stock outstanding as of December 31, 2022.
Revenue Recognition — Revenue is recognized when transfer of control to the customer occurs in an amount reflecting the consideration that the Company expects to be entitled.
29 unchanged sentences
The customer receives the assurance that the product will operate in accordance with agreed-upon specifications evenly during the extended warranty period regardless of whether they make a claim during that period, and therefore, revenue at time of sale is deferred and recognized over the time period of the extended warranty period.
+Added: The Company enters into contracts to sell customized large scale materials processing systems through its subsidiary Genesis Systems Group, LLC, for which revenue is generally recognized over time, depending on the terms of the contract.
+Added: Recognizing revenue over time for these contracts is based on the Company’s judgment that the customized large scale
IPG PHOTONICS CORPORATION
1 unchanged sentence
(In thousands, except share and per share data)
−Removed: The Company enters into contracts to sell customized large scale materials processing systems through its subsidiary Genesis Systems Group, LLC, for which revenue is generally recognized over time, depending on the terms of the contract.
−Removed: Recognizing revenue over time for these contracts is based on the Company’s judgment that the customized large scale materials processing systems do not have an alternative use and the Company has an enforceable right to payment for performance completed to date.
+Added: materials processing systems do not have an alternative use and the Company has an enforceable right to payment for performance completed to date.
The determination of the revenue to be recognized in a given period for performance obligations over time is based on the input method.
26 unchanged sentences
The Company records restructuring charges when they are probable and estimable.
−Removed: The Company accrues for severance and other employee separation costs under these plans when the employees accept the offer and the amount can be reasonably estimated, or when there is legal requirement.
−Removed: Income Taxes — Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial statement carrying amounts and tax basis of assets and liabilities and net operating loss and credit carryforwards using enacted rates in effect when those differences are expected to reverse.
+Added: The Company accrues for severance and other employee separation costs under these plans when the plan is communicated to employees and an amount per employee can be reasonably estimated either by the communicated terms, or by legal requirements, if applicable.
+Added: The results of restructuring program implemented during the years ended December 31, 2023, and 2022 are discussed in Note 6, "Restructuring".
+Added: Income Taxes — Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities and net operating loss and credit carryforwards.
+Added: These differences are valued using enacted rates in effect when those differences are expected to reverse.
Valuation allowances are provided against deferred tax assets that are not deemed to be recoverable.
−Removed: The Company recognizes tax positions that are more
+Added: The Company recognizes tax positions that are more likely than not to be sustained upon examination by relevant tax authorities.
IPG PHOTONICS CORPORATION
1 unchanged sentence
(In thousands, except share and per share data)
−Removed: likely than not to be sustained upon examination by relevant tax authorities.
−Removed: The tax positions are measured at the greatest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement.
+Added: positions are measured at the greatest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement.
The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions and other issues.
−Removed: The reserves are based on a determination of whether and how much of a tax benefit taken in its tax filings or positions is more likely than not to be realized following resolution of uncertainties related to the tax benefit, assuming that the matter in question will be raised by the tax authorities.
+Added: The reserves are based on a determination of whether a tax benefit claimed in our tax filings is more likely than not to be realized following the resolution of any potential tax audits related to the tax benefit, assuming that the matter in question will be reviewed by the tax authorities.
Concentration of Credit Risk — Financial instruments that potentially subject the Company to credit risk consist primarily of cash and cash equivalents, short-term investments and accounts receivable.
2 unchanged sentences
Such losses historically have been within management's expectations.
−Removed: One of our customers accounted for 14 % and 22 % of our net accounts receivable as of December 31, 2022 and 2021, respectively.
+Added: One of our customers accounted for 14 % of our net accounts receivable as of both December 31, 2023 and 2022.
The Company has historically depended on a few customers for a significant percentage of its annual net sales.
2 unchanged sentences
Comprehensive Income — Comprehensive income includes charges and credits to equity that are not the result of transactions with stockholders.
−Removed: Included within comprehensive income is the cumulative foreign currency translation adjustment, unrealized gains or losses on derivatives and unrealized gains or losses on available-for-sale securities.
+Added: Included within comprehensive income is the cumulative foreign currency translation adjustment, and unrealized gains or losses on derivatives.
These adjustments are accumulated within the consolidated statements of comprehensive income.
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In thousands, except share and per share data)
Total components of accumulated other comprehensive loss were as follows:
−Removed: Foreign currency translation adjustments and other Unrealized gain (loss) on derivatives, net of tax Unrealized gain (loss) on available-for-sale securities Total
+Added: Foreign currency translation adjustments and other Unrealized (loss) gain on derivatives, net of tax
Balance, January 1, 2021 $ ( 145,603 ) $ ( 462 ) $ ( 146,065 )
−Removed: Other comprehensive income (loss), net of tax:
−Removed: Foreign currency translation adjustments and other 1,558 1,558
−Removed: Unrealized (loss) on derivatives, net of tax benefit of $ 144
−Removed: ( 472 ) ( 472 )
−Removed: Adjustment for net gain realized and included in net income ( 232 ) ( 232 )
−Removed: Total other comprehensive (loss) income 1,558 ( 472 ) ( 232 ) 854
−Removed: Balance, December 31, 2020 ( 145,603 ) ( 462 ) — ( 146,065 )
−Removed: Other comprehensive income (loss), net of tax:
+Added: Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments and other, net of tax benefit of $ 246
( 44,164 ) — ( 44,164 )
−Removed: Unrealized (loss) on derivatives, net of tax of $ 83
+Added: Unrealized gain on derivatives, net of tax of $ 83
Total other comprehensive (loss) income
+Added: ( 44,164 ) 278 ( 43,886 )
Balance, December 31, 2021 ( 189,767 ) ( 184 ) ( 189,951 )
−Removed: Other comprehensive income (loss), net of tax:
+Added: Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments and other before reclassification, net of tax of $ 156
4 unchanged sentences
Balance, December 31, 2022 ( 204,676 ) 152 ( 204,524 )
+Added: Other comprehensive loss, net of tax:
+Added: Foreign currency translation adjustments and other before reclassification, net of tax of $ 151
+Added: ( 7,854 ) — ( 7,854 )
+Added: Unrealized (loss) on derivatives, net of tax benefit of $ 46
+Added: — ( 152 ) ( 152 )
+Added: Total other comprehensive loss
+Added: ( 7,854 ) ( 152 ) ( 8,006 )
+Added: Balance, December 31, 2023 $ ( 212,530 ) $ — $ ( 212,530 )
Derivative Instruments — The Company's primary market exposures are to interest rates and foreign exchange rates.
The Company from time to time may use certain derivative financial instruments to help manage these exposures.
−Removed: The Company executes these instruments with financial institutions it judges to be credit-worthy.
+Added: IPG PHOTONICS CORPORATION
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In thousands, except share and per share data)
+Added: executes these instruments with financial institutions it judges to be credit-worthy.
The Company does not hold or issue derivative financial instruments for trading or speculative purposes.
9 unchanged sentences
Information about potentially dilutive and antidilutive shares for the reporting period is provided in Note 18, "Net Income Attributable to IPG Photonics Corporation Per Share."
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In thousands, except share and per share data)
Leases — The Company determines if an arrangement is a lease at inception.
2 unchanged sentences
As most of the Company's leases do not provide an implicit rate, IPG uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.
−Removed: The ROU assets also include any lease payments made and initial direct costs incurred and exclude lease incentives.
−Removed: Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.
+Added: The ROU assets include any lease payments made and initial direct costs incurred and exclude lease incentives.
+Added: Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
4 unchanged sentences
Adopted Pronouncements — None.
+Added: Pronouncements Currently Under Evaluation - In November 2023, the FASB issued ASU No.
+Added: 2023-07, "Segment Reporting (Topic 280):
+Added: Improvements to Reportable Segment Disclosures" ("ASU 2023-07"), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an annual and interim basis.
+Added: Under the new guidance an entity is required to disclose the title and position of the chief operating decision maker ("CODM") and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.
+Added: The ASU also requires that an entity that has a single reportable segment provide all the disclosures required by this ASU and all existing segment disclosures in Topic 280.
+Added: ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.
+Added: The Company is evaluating the impact of this ASU and does not expect this standard will have a material impact.
+Added: In December 2023, the FASB issued ASU No.
+Added: 2023-09, "Income Taxes (Topic 740):
+Added: Improvements to Income Tax Disclosures" ("ASU 2023-07"), which requires an entity on an annual basis to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.
+Added: The guidance also requires an entity to disclose on an annual basis information about income taxes paid.
+Added: ASU 2023-07 is effective for fiscal years beginning after December 15, 2024.
+Added: The Company is evaluating the impact of this ASU and does not expect this standard will have a material impact.
+Added: IPG PHOTONICS CORPORATION
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In thousands, except share and per share data)
REVENUE FROM CONTRACTS WITH CUSTOMERS
Sales are derived from products for different applications:
−Removed: fiber lasers, diode lasers, systems and accessories for materials processing, fiber lasers, amplifiers and diodes for advanced applications, fiber amplifiers and transceivers for communications applications, and fiber lasers, systems and fibers for medical applications.
+Added: fiber lasers, diode lasers, systems and accessories for materials processing, fiber lasers, amplifiers and diodes for advanced applications, and fiber lasers, systems and fibers for medical applications.
The following tables represent a disaggregation of revenue from contracts with customers for the years ended December 31, 2023, 2022 and 2021:
13 unchanged sentences
Total $ 1,287,439 $ 1,429,547 $ 1,460,860
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In thousands, except share and per share data)
−Removed: Year Ended December 31,
−Removed: 2022 2021 2020
Sales by Geography
1 unchanged sentence
Germany 88,026 85,491 101,738
−Removed: Other including Eastern Europe/CIS 294,481 289,136 219,540
+Added: 291,336 294,481 289,136
China 355,321 479,926 548,348
13 unchanged sentences
The standalone selling price for installation services is determined based on the estimated number of days of service technician time required for installation at standard service rates.
−Removed: The Company recognizes customer deposits and deferred revenue as net sales after control of the goods or services has been transferred to the customer and all revenue recognition criteria are met.
+Added: The Company recognizes customer deposits and deferred revenue as net sales after control of the goods or services has been transferred to the customer and all revenue
+Added: IPG PHOTONICS CORPORATION
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In thousands, except share and per share data)
+Added: recognition criteria are met.
The Company bills customers for extended warranties upon entering into the agreement with the customer, resulting in deferred revenue that is recognized over the period of the extended warranty contract.
13 unchanged sentences
Contract liabilities - long-term 2,851 3,142 ( 291 ) 3,142 2,691 451
−Removed: During the year ended December 31, 2022 and 2021, the Company recognized revenue of $ 73,325 and $ 64,364 , respectively, that was included in the contract liabilities at the beginning of the period.
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In thousands, except share and per share data)
−Removed: The Company has elected the practical expedient in ASC 606-10-50-14, whereby the performance obligations for contracts with an original expected duration of one year or less are not disclosed.
+Added: During the years ended December 31, 2023 and 2022, the Company recognized revenue of $ 62,247 and $ 73,325 , respectively, that was included in the contract liabilities at the beginning of the period.
The following table represents the Company's remaining performance obligations from contracts that are recognized over time as of December 31, 2023:
6 unchanged sentences
FAIR VALUE MEASUREMENTS
−Removed: The Company's financial instruments consist of cash equivalents, short-term investments, accounts receivable, accounts payable, long-term debt, interest rate swaps and contingent purchase consideration.
+Added: The Company's financial instruments consisted of cash equivalents, short-term investments, accounts receivable, accounts payable, long-term debt, interest rate swaps and revolving lines of credit.
The valuation techniques used to measure fair value are based upon observable and unobservable inputs.
5 unchanged sentences
The Company classifies its financial instruments according to the prescribed criteria.
−Removed: The carrying amounts of money market fund deposits, cash equivalent term deposits, accounts receivable, and accounts payable are considered reasonable estimates of their fair market value due to the short maturity of most of these instruments or as a result of the competitive market interest rates, which have been negotiated.
−Removed: The fair value of the Company's bond securities is based upon quoted prices for instruments with identical terms in active markets.
−Removed: The Company's commercial paper securities reported at fair value are based upon model-driven valuations in which all significant inputs are observable or can be derived from or corroborated by observable market data for substantially the full term of the asset or liability, and are therefore classified as Level 2.
+Added: The carrying amounts of money market fund deposits, cash equivalent term deposits, accounts receivable, and accounts payable and revolving lines of credit are considered reasonable estimates of their fair market value due to the short maturity of most of these instruments or as a result of the competitive market interest rates, which have been negotiated.
+Added: The fair value of the Company's commercial paper, corporate bonds, U.S.
+Added: Treasury and agency obligations, and term deposits are based on Level 2 inputs.
IPG PHOTONICS CORPORATION
1 unchanged sentence
(In thousands, except share and per share data)
−Removed: The following table presents fair value information related to the Company's assets and liabilities measured at amortized cost on the consolidated balance sheets with the exception of the interest rate swap and contingent purchase consideration, which is measured at fair value:
+Added: The following table presents fair value information related to the Company's assets and liabilities measured at amortized cost on the consolidated balance sheets with the exception of the interest rate swap, which was measured at fair value:
Fair Value Measurements at December 31, 2023
2 unchanged sentences
Money market fund deposits $ 171,632 $ 171,632 $ — $ —
−Removed: Commercial paper 94,661 — 94,661 —
Term deposits 83,965 — 83,965 —
Corporate bonds 23,516 — 23,516 —
+Added: Commercial paper 6,369 — 6,369 —
Short-term investments:
3 unchanged sentences
Term deposits 3,009 — 3,009 —
−Removed: Other assets:
−Removed: Interest rate swap 198 — 198 —
Total assets $ 948,293 $ 171,632 $ 776,661 $ —
−Removed: Term debt $ 16,031 $ — $ 16,031 $ —
−Removed: Total liabilities $ 16,031 $ — $ 16,031 $ —
Fair Value Measurements at December 31, 2022
1 unchanged sentence
Cash equivalents:
−Removed: Money market fund deposits and term deposits $ 279,066 $ 279,066 $ — $ —
+Added: Money market fund deposits
+Added: $ 195,654 $ 195,654 $ — $ —
Commercial paper 94,661 — 94,661 —
+Added: Term deposits
+Added: 68,827 — 68,827 —
Corporate bonds 1,497 — 1,497 —
−Removed: Municipal bonds 3,220 — 3,220 —
Short-term investments:
2 unchanged sentences
Treasury and agency obligations 39,611 — 39,611 —
−Removed: Municipal bonds 4,546 — 4,546 —
−Removed: Term deposit 3,000 — 3,000 —
−Removed: Foreign government bonds 2,015 — 2,015 —
+Added: Term deposits
+Added: 10,113 — 10,113 —
+Added: Other assets:
+Added: Interest rate swap 198 — 198 —
Total assets $ 839,574 $ 195,654 $ 643,920 $ —
Term debt $ 16,031 $ — $ 16,031 $ —
−Removed: Contingent purchase consideration 1,371 — — 1,371
−Removed: Interest rate swaps 242 — 242 —
Total liabilities $ 16,031 $ — $ 16,031 $ —
There were no impairments for the investments considered held-to-maturity at December 31, 2023 and December 31, 2022.
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In thousands, except share and per share data)
+Added: There were no current expected credit loss allowances for the investments considered held-to-maturity at December 31, 2023 and 2022.
+Added: The Company holds highly-rated held-to-maturity instruments that are within one year of maturity.
The following table presents the effective maturity dates of debt investments, which are held-to-maturity:
3 unchanged sentences
Less than 1 year $ 662,807 $ 662,811 $ 479,374 $ 478,737
−Removed: The Company entered into an interest rate swap that is designated as a cash flow hedge associated with a long-term note issued during the second quarter of 2016 that will terminate with the long-term note in May 2023.
−Removed: The fair value at December 31, 2022 for the interest rate swap considered pricing models whose inputs are observable for the securities held by the Company.
−Removed: At December 31, 2022, the Company's long-term note consisted of a variable rate note.
−Removed: The carrying value of the note approximates the estimated fair value of $ 16,031 .
−Removed: At December 31, 2021, the Company's long-term notes consisted of a variable rate note and a fixed rate note.
−Removed: The fair value of the notes were estimated using a discounted cash flow model using observable market interest rates.
−Removed: The fair value of the long-term notes, including the current portion, at December 31, 2021, was $ 34,226 as compared to the carrying value of $ 34,157 .
+Added: IPG PHOTONICS CORPORATION
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In thousands, except share and per share data)
+Added: The Company entered into an interest rate swap that is designated as a cash flow hedge associated with a long-term note issued during the second quarter of 2016.
+Added: In May 2023, the Company's long-term variable rate note matured and the interest rate swap associated with this note matured.
+Added: At December 31, 2022, the carrying value of the note approximates the estimated fair value of $ 16,031 .
The long-term notes were reported at amortized cost on the consolidated balance sheets and were classified within Level 2 of the fair value hierarchy.
−Removed: The fair value of contingent consideration at December 31, 2021 was determined using an income approach at the respective business combination date and at the reporting date.
−Removed: The approach is based on significant inputs that are not observable in the market and include key assumptions such as assessing the probability of meeting certain milestones required to earn the contingent consideration.
−Removed: The contingency period ended during 2022.
−Removed: The following table presents information about the Company's movement in Level 3 liability measured at fair value:
−Removed: Contingent purchase consideration
−Removed: Balance at January 1 $ 1,371 $ 1,963
−Removed: Cash payments — ( 466 )
−Removed: Change in fair value ( 1,477 ) —
−Removed: Foreign exchange adjustment 106 ( 126 )
−Removed: Balance at December 31 $ — $ 1,371
Inventories consist of the following:
3 unchanged sentences
$ 453,874 $ 509,363
−Removed: The Company recorded inventory provisions and related charges totaling $ 127,960 , $ 34,285 and $ 45,375 for the years ended December 31, 2022, 2021 and 2020, respectively.
+Added: The Company recorded inventory provisions of $ 45,499 , $ 127,960 and $ 34,285 for the years ended December 31, 2023, 2022 and 2021, respectively.
These provisions relate to the recoverability of the value of inventories due to excess quantities and technological changes.
1 unchanged sentence
Within the inventory provision and related charges recorded in 2022, $ 74,055 is related to Russian operations.
−Removed: See Note 1, "Nature of Business and Summary of Significant Accounting Policies", section Evaluation of Russian Operations for further detail .
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In thousands, except share and per share data)
+Added: See Note 1, "Nature of Business and Summary of Significant Accounting Policies", section Russian Operations for further detail.
DIVESTITURE AND SALE OF ASSET
1 unchanged sentence
The Company recorded a gain on divestiture of $ 21,918 for the year ended December 31, 2022, which was included in the Company's consolidated statements of income.
−Removed: As part of and just prior to closing, the Company also acquired the remaining non-controlling interests related to the business that was sold for $ 2,500 .
+Added: As part of the transaction and just prior to closing, the Company also acquired the remaining non-controlling interests related to the business that was sold for $ 2,500 .
During the fourth quarter of 2022, the Company completed the sale of its corporate aircraft for $ 25,693 and recorded a gain of $ 9,928 which was included in the Company's consolidated statements of income.
RESTRUCTURING
−Removed: In the fourth quarter of 2022, the Company implemented a restructuring program at its Russian subsidiary and closed its Lebanon branch office.
−Removed: These programs resulted in personnel-related restructuring charges of $ 9,697 for the year ended December 31, 2022.
−Removed: The Company expects to incur approximately $ 1,600 of additional personnel-related restructuring charges in 2023.
−Removed: All personnel-related restructuring charges are expected to be paid within 12 months.
−Removed: See Note 1, "Nature of Business and Summary of Significant Accounting Policies", section Evaluation of Russian Operations for further detail .
−Removed: The Lebanon branch office was closed in conjunction with sale of the telecommunications transmission product line detailed in Note 5, "Divestiture and Sale of Asset".
−Removed: There was no restructuring related activity in 2021.
+Added: In the fourth quarter of 2022, the Company implemented a restructuring program at its Russian subsidiary.
+Added: In 2023, the Company substantially completed the restructuring program.
+Added: As a result, the remaining restructuring accrual was substantially recovered.
+Added: This resulted in net restructuring recoveries of $ 288 for the year ended December 31 2023.
+Added: The Company incurred restructuring charges of $ 9,697 for the year ended December 31, 2022.
The restructuring accrual was included in accrued expenses and other liabilities in the Company's consolidated balance sheets.
−Removed: Activity related to the restructuring accrual was as follows:
−Removed: Restructuring Charges
+Added: Activities related to the restructuring accrual were as follows:
Balance at January 1
3 unchanged sentences
Balance at December 31
+Added: IPG PHOTONICS CORPORATION
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In thousands, except share and per share data)
GOODWILL AND INTANGIBLE ASSETS
1 unchanged sentence
Balance at January 1 $ 38,325 $ 38,609
−Removed: Adjustments to goodwill during the measurement period — ( 2,205 )
Goodwill arising from business combinations — 1,000
2 unchanged sentences
Balance at December 31 $ 38,540 $ 38,325
−Removed: During the first quarter of 2021, the Company finalized the purchase price allocations related to the PiTec acquisition, which resulted in adjustments to goodwill of $ 2,205 .
The Company performed the 2023 and 2022 annual impairment test as of October 1, 2023 and 2022, respectively, and no impairments were recorded as a result of the tests.
The carrying balance of goodwill at December 31, 2023, and 2022 was net of accumulated impairments of $ 81,709 .
−Removed: During the third quarter of 2020, the Company concluded that declines in revenue and order flow for the Genesis custom systems business caused by pandemic-related decreases in capital spending in the aerospace and transportation industries were a triggering event requiring a goodwill impairment evaluation.
−Removed: The Company performed a quantitative assessment using the discounted cash flow method under the income approach as well as the guideline public company analysis and guideline transaction analysis under the market approach to estimate the fair value of the custom systems business.
−Removed: As a result, the
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In thousands, except share and per share data)
−Removed: Company recognized a non-cash impairment loss of $ 44,589 , which was equal to the carrying value of goodwill prior to its impairment.
−Removed: The analysis considered internal forecasts of sales, profitability and capital expenditures, as well as valuation multiples of comparable public companies and valuation multiples of transactions of comparable companies.
−Removed: The Company performed the 2020 annual impairment test as of October 1, 2020, and no additional impairments were recorded as a result of this test.
−Removed: The carrying value of goodwill at December 31, 2020 was net of accumulated impairments of $ 81,709 .
Intangible assets, subject to amortization, consisted of the following:
28 unchanged sentences
The Company recorded depreciation expense of $ 58,245 , $ 76,063 and $ 78,563 for the years ended December 31, 2023, 2022 and 2021, respectively.
+Added: In 2022, the Company recorded an impairment charge of $ 79,030 for long-lived asset in Russia.
IPG PHOTONICS CORPORATION
1 unchanged sentence
(In thousands, except share and per share data)
+Added: See Note 1, "Nature of Business and Summary of Significant Accounting Policies", section Russian Operations for further detail.
Long-lived assets include property, plant and equipment, related deposits on such assets and demonstration equipment.
2 unchanged sentences
Germany 132,218 111,726
−Removed: Russia — 70,088
Belarus 31,833 39,380
+Added: Japan 9,024 5,043
China 4,328 5,406
1 unchanged sentence
Total $ 613,732 $ 590,264
−Removed: During the fourth quarter of 2022, the Company recorded an impairment charge for long-lived assets in Russia.
−Removed: See Note 1, "Nature of Business and Summary of Significant Accounting Policies", section Evaluation of Russian Operations for further detail .
OTHER LIABILITIES
9 unchanged sentences
Long-term lease liabilities 13,664 16,787
+Added: Unrecognized tax benefits
+Added: 17,176 15,841
Transition tax related to 2017 U.S.
tax reform act 11,009 19,874
−Removed: Unrealized tax benefits 15,841 19,209
Deferred income taxes 1,508 1,469
14 unchanged sentences
FINANCING ARRANGEMENTS
−Removed: The Company's borrowings under existing financing arrangements consist of the following:
−Removed: Total debt $ 16,031 $ 34,157
−Removed: current portion ( 16,031 ) ( 18,126 )
−Removed: Long-term debt, net of current portion $ — $ 16,031
−Removed: Long-Term Notes — At December 31, 2022, the Company has an unsecured long-term note with an outstanding principal balance of $ 16,031 , all of which is current.
−Removed: The interest on this unsecured long-term note is variable at 1.20 % above LIBOR and is fixed using an interest rate swap at 2.85 % per annum.
−Removed: The unsecured long-term note matures in May 2023, at which time the outstanding principal balance will be $ 15,438 .
−Removed: The Company had another long-term note that was secured by its corporate aircraft, which matured and was paid in July 2022, at which time the outstanding principal balance was $15,375.
−Removed: The future principal payments in 2023 for the Company’s Note are $ 16,031 as of December 31, 2022.
+Added: The Company's unsecured long-term note matured and was paid in May 2023, at which time the outstanding principal balance was $ 15,438 .
+Added: At December 31, 2023, the Company has no long-term debt outstanding.
Revolving Line of Credit Facilities:
−Removed: Line of Credit — The Company maintains an unsecured revolving line of credit with a principal amount of $ 75,000 , expiring in April 2025.
+Added: The Company maintains an unsecured revolving line of credit with a principal amount of $ 75,000 , expiring in April 2025.
The line of credit bears interest at a variable rate of the Bloomberg Short-term Bank Yield Index ("BSBY") plus 0.80 % to 1.20 % depending on the Company's financial performance.
2 unchanged sentences
At December 31, 2023, the remaining availability under this line was $ 72,513 .
+Added: In addition, the Company maintains Euro line of credit facilities with a total principal amount of € 6,500 ($ 7,173 as of December 31, 2023), which are available to certain European subsidiaries.
The Company is required to meet certain financial covenants associated with its U.S.
5 unchanged sentences
in excess of $ 50,000 up to a maximum of $ 500,000 .
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In thousands, except share and per share data)
−Removed: Euro Line of Credit — The Company maintains an unsecured revolving line of credit with a principal amount of € 50,000 ($ 53,493 at December 31, 2022), expiring in July 2023.
−Removed: The line of credit bears interest at various rates based upon the type of loan.
−Removed: This credit facility is available to the Company's foreign subsidiaries including those in Germany, China and Italy based on management discretion.
−Removed: At December 31, 2022, there were no drawings, however, there were $ 1,737 of guarantees issued against the line which reduced the total availability.
−Removed: At December 31, 2022, the remaining availability under this line was $ 51,756 .
−Removed: Other European Facilities — The Company maintains one Euro credit line in Italy with an available principal of € 1,500 ($ 1,605 as of December 31, 2022), with no expiration date, which bear interest at market rates that reset at the beginning of each quarter.
−Removed: At December 31, 2022, there were no outstanding drawings and the aggregate remaining availability under this line was $ 1,605 .
−Removed: This facility is collateralized by a common pool of the assets of the Company's Italian subsidiary.
DERIVATIVE INSTRUMENTS
−Removed: The Company's only outstanding derivative financial instrument is an interest rate swap that is classified as a cash flow hedge of its variable rate debt.
−Removed: The fair value amounts in the consolidated balance sheets were:
−Removed: Notional amounts (1)
−Removed: $ 16,031 $ 17,219
−Removed: Other assets 198 —
−Removed: Deferred income taxes and other long-term liabilities — 242
−Removed: (1) Notional amounts represent the gross contract/notional amount of the derivative outstanding.
−Removed: The derivative gains and losses in the consolidated financial statements related to the Company's current and previous interest rate swap contracts were as follows:
+Added: The Company's previous outstanding derivative financial instrument was an interest rate swap that was classified as a cash flow hedge of its variable rate debt.
+Added: The interest rate swap matured with the long-term note in May 2023.
+Added: The derivative gains and losses in the consolidated financial statements related to the Company's previous interest rate swap contracts were as follows:
Year Ended December 31,
2023 2022 2021
−Removed: Effective portion recognized in other comprehensive income (loss), pre-tax:
+Added: Effective portion recognized in other comprehensive (loss) income, pre-tax:
Interest rate swap $ ( 198 ) $ 440 $ 361
+Added: IPG PHOTONICS CORPORATION
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In thousands, except share and per share data)
The Company leases certain warehouses, office spaces, land, vehicles and equipment under operating lease agreements.
10 unchanged sentences
Total lease liabilities $ 18,261 $ 22,021
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In thousands, except share and per share data)
+Added: The Company incurred $ 1,237 of non-cash impairment charges related to long-lived assets during the year ended December 31, 2023, related to the right-of-use ("ROU") asset for a leased building associated with the Company's Submarine Network Division business that was previously divested.
+Added: Attempts to sublease the space have been unsuccessful.
+Added: As of December 31, 2023, the ROU asset related to this lease has been reduced to zero .
The table below presents the maturities of operating lease liabilities as of December 31, 2023:
9 unchanged sentences
Employment Agreements — The Company has entered into employment agreements with certain members of senior management.
−Removed: The terms of these agreements are up to three years and include non-competition, non-solicitation and nondisclosure provisions, as well as provisions for defined severance for terminations of employment under certain conditions and a change of control of the Company.
+Added: The terms of these agreements are up to two years and include non-competition, non-solicitation and nondisclosure provisions, as well as provisions for defined severance for terminations of employment under certain conditions and a change of control of the Company.
The Company also maintains a severance plan for certain of its senior management providing for defined severance for terminations of employment under certain conditions and a change of control of the Company.
Contractual Obligations — The Company has entered into various purchase obligations that include agreements for construction of buildings, raw materials and equipment.
−Removed: Obligations under these agreements were $ 25,070 and $ 19,880 as of December 31, 2022 and 2021, respectively, and the obligations related to raw materials and equipment are generally expected to be fulfilled within one year.
+Added: Obligations under these agreements were $ 27,404 and $ 25,070 as of
+Added: IPG PHOTONICS CORPORATION
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In thousands, except share and per share data)
+Added: December 31, 2023 and 2022, respectively, and the obligations related to raw materials and equipment are generally expected to be fulfilled within one year.
Legal Proceedings — From time to time, the Company may be involved in legal disputes and other proceedings in the ordinary course of its business.
1 unchanged sentence
As of December 31, 2023 and through the date of the Company's subsequent review period of February 21, 2024, the Company is aware of no ongoing legal proceedings that management estimates could have a material effect on the Company's Consolidated Financial Statements.
−Removed: The Company has submitted a limited number of voluntary self-disclosures regarding compliance with export control laws and regulations to the Bureau of Industry and Security of the U.S.
−Removed: Department of Commerce ("BIS").
−Removed: In October 2021, the U.S.
−Removed: Department of Justice advised us it was conducting an investigation into certain shipments of equipment.
−Removed: We believe the DOJ's investigation has concluded however BIS continues its investigation regarding our export practices.
−Removed: At this time, the Company is not able to conclude whether it is probable that BIS will assert a claim or assessment against the Company.
−Removed: Nor can the Company estimate expenses that the Company may incur as a result of the investigation.
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: (In thousands, except share and per share data)
+Added: Following the submission of a limited number of voluntary self-disclosures regarding compliance with export control laws and regulations to the Bureau of Industry and Security of the U.S.
+Added: Department of Commerce ("BIS"), the Company received subpoenas from the U.S.
+Added: Department of Justice ("DOJ") and BIS in October 2021 and October 2022, respectively.
+Added: The Company has been informed by the DOJ and BIS that the Company has satisfied its obligations under the subpoenas.
+Added: The Company believes that those investigations are concluded.
STOCK-BASED COMPENSATION
−Removed: Stock-based compensation including employee stock purchase plan is included in the following financial statement captions:
+Added: Stock-based compensation, including the employee stock purchase plan, is included in the following financial statement captions:
Year Ended December 31,
7 unchanged sentences
Net stock-based compensation $ 30,944 $ 30,074 $ 29,910
−Removed: Incentive Plans — In February 2006, the Company's board of directors adopted the 2006 Incentive Compensation Plan (as amended and restated from time to time, the "2006 Plan"), which provides for the issuance of stock options, PSUs, RSUs, other equity-based awards and cash awards to the Company's directors, employees, consultants and advisors.
−Removed: In June 2006, the Company's board of directors adopted the Non-Employee Directors Stock Plan (the "Directors Plan") for non-employee directors, which was subsequently merged into the 2006 Plan.
+Added: Incentive Plans — In 2006, the Company's stockholders approved the 2006 Incentive Compensation Plan (as amended and restated from time to time, the "2006 Plan"), which provides for the issuance of stock options, PSUs, RSUs, other equity-based awards and cash awards to the Company's directors, employees, consultants and advisors.
+Added: Also in 2006, the Company's stockholders approved the Non-Employee Directors Stock Plan (the "Directors Plan") for non-employee directors, which was subsequently merged into the 2006 Plan.
+Added: The Company's stockholders approved amendments to the 2006 Plan in May 2006 and May 2023, including an increase in the authorized shares.
A total of 11,563,465 shares are reserved under the 2006 Plan.
1 unchanged sentence
The Company may grant stock options only at an exercise price equal to or greater than the fair market value of its common stock on the date of grant.
−Removed: Equity awards generally vest over periods of one to four years and generally expire ten years after the date of the grant.
+Added: Equity awards generally vest over periods of one to four years and, in the case of stock options, generally expire ten years after the date of the grant.
The vesting of awards under the 2006 Plan accelerate following the occurrence of certain change of control events if the participant's employment is terminated within two years by the Company without cause or by the participant for good reason or if an entity acquires control of the Company and does not agree to assume existing awards or replace with equivalent value awards.
3 unchanged sentences
The RSUs provide for time-based vesting of a fixed number of shares over three years .
−Removed: The PSUs provide the holder with the right to receive one share of the Company's common stock after the applicable award vesting period, generally three years .
−Removed: The final number of shares, if any, delivered upon vesting of PSUs are determined over the relevant performance period.
−Removed: The Company has granted two types of PSUs.
−Removed: In the case of TSR PSUs, performance is measured by the Company's total shareholder return over the performance period compared to the S&P 1500 Composite / Electronic Equipment Instruments & Components Index.
−Removed: In the case of all other PSUs, performance is measured against internal financial metrics established by the Company's board of directors.
+Added: The PSUs provide the holder with the right to receive shares of the Company's common stock after the applicable award vesting period, generally three years .
+Added: The final number of shares, if any, delivered upon vesting of PSUs are determined over the relevant performance period, generally three years .
+Added: Outstanding PSUs are based on either TSR or financial metrics.
+Added: In the case of TSR PSUs, performance is measured by the Company's total shareholder return over the performance period compared to the S&P 1500 Composite / Electronic Equipment & Instruments Index.
+Added: In the case of all other PSUs, performance is measured against internal financial metrics established by the Company's Board.
The final number of shares to be delivered under the PSUs range from 0 % to 200 % of the target award amount.
−Removed: There were no stock options granted for the years ended December 31, 2022 and 2021.
+Added: IPG PHOTONICS CORPORATION
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: (In thousands, except share and per share data)
+Added: The Company has not granted stock options since 2020.
The following table summarizes the option activity for the year ended December 31, 2023:
3 unchanged sentences
Aggregate Intrinsic Value
−Removed: Outstanding — January 1, 2022 1,039,372 $ 134.56
+Added: Outstanding at January 1, 2023 881,887 $ 138.16
Exercised ( 84,146 ) 66.90
Forfeited ( 28,579 ) 180.77
−Removed: Outstanding — December 31, 2022 881,887 $ 138.16 3.98 years $ 5,432
−Removed: Unvested — December 31, 2022 58,907 $ 154.74 6.14 years $ —
−Removed: Exercisable — December 31, 2022 822,980 $ 136.98 3.83 years $ 5,432
+Added: Outstanding at December 31, 2023 769,162 $ 144.38 3.21 years $ 6,271
+Added: Exercisable at December 31, 2023 769,162 $ 144.38 3.21 years $ 6,271
The intrinsic value of the options exercised during the years ended December 31, 2023, 2022 and 2021 was $ 4,085 , $ 6,069 and $ 28,353 , respectively.
−Removed: The total compensation cost related to non-vested option awards not yet recorded at
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: (In thousands, except share and per share data)
−Removed: December 31, 2022 was $ 529 which is expected to be recognized over a weighted-average of 0.3 year.
+Added: All option awards were vested during the year ended December 31, 2023.
Cash received from option exercises during the year ended December 31, 2023 was $ 5,630 .
3 unchanged sentences
Weighted-Average Grant-Date Fair Value
−Removed: Outstanding — January 1, 2022 334,107 $ 185.37
+Added: Nonvested at January 1, 2023 422,736 $ 154.22
Granted 265,661 128.71
Vested ( 190,133 ) 148.94
−Removed: Canceled ( 61,273 ) 159.49
−Removed: Outstanding — December 31, 2022 422,736 $ 154.22
+Added: ( 22,333 ) 146.59
+Added: Nonvested at December 31, 2023 475,931 $ 142.51
The fair value of each restricted stock unit is the market price of Company stock on the date of grant.
1 unchanged sentence
The intrinsic value of the RSUs that vested during the years ended December 31, 2023, 2022 and 2021, was $ 23,082 , $ 14,750 and $ 26,036 , respectively.
−Removed: The total compensation cost related to non-vested RSU awards not yet recorded at December 31, 2022 was $ 43,351 which is expected to be recognized over a weighted-average of 2.1 years.
+Added: The total compensation cost related to nonvested RSU awards not yet recorded at December 31, 2023 was $ 41,522 which is expected to be recognized over a weighted-average of 1.8 years.
The aggregate fair value of awards vested during the years ended December 31, 2023, 2022 and 2021 was $ 28,319 , $ 22,779 , $ 18,042 , respectively.
5 unchanged sentences
Fair value per share $ 248.49 - $ 165.15
+Added: IPG PHOTONICS CORPORATION
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: (In thousands, except share and per share data)
The following table summarizes TSR PSUs activity for the year ended December 31, 2023:
1 unchanged sentence
Weighted-Average Grant-Date Fair Value
−Removed: Outstanding — January 1, 2022 66,584 $ 195.15
−Removed: Canceled ( 27,494 ) 200.95
−Removed: Outstanding — December 31, 2022 39,090 $ 195.82
−Removed: For the years ended December 31, 2021 and 2020, the weighted average grant date fair value for new grants was $ 236.11 and $ 170.42 , respectively.
−Removed: TSR PSUs are included at 100 % of target goal.
−Removed: The TSR PSUs granted in 2019 and 2018 did not achieve the performance target upon vesting in 2022 and 2021, respectively, thus no shares became eligible to vest.
−Removed: The Company did not grant TSR PSUs in 2022.
+Added: Nonvested at January 1, 2023 39,090 $ 195.82
+Added: Vested ( 1,331 ) 248.49
+Added: Canceled / Forfeited
+Added: ( 22,851 ) 168.82
+Added: Nonvested at December 31, 2023 14,908 $ 233.75
+Added: The Company has not granted TSR PSUs since 2021.
+Added: For the year ended December 31, 2021, the weighted average grant date fair value for new grants was $ 236.11 .
+Added: TSR PSUs are expensed at 100% of the target goal.
The intrinsic value of the TSR PSUs vested during the years ended December 31, 2023, 2022 and 2021 was $ 128 , nil , nil .
−Removed: The aggregate fair value of awards vested during the years ended December 31, 2022, 2021 and 2020 was nil , nil , and $ 5,159 , respectively.
−Removed: The total compensation cost related to non-vested awards not yet recorded at December 31, 2022 was $ 1,734 which is expected to be recognized over a weighted average of 1.2 years.
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: (In thousands, except share and per share data)
+Added: The aggregate fair value of awards vested during the years ended December 31, 2023, 2022 and 2021 was $ 331 , nil , and nil , respectively.
+Added: The total compensation cost related to nonvested awards not yet recorded at December 31, 2023 was $ 220 which is expected to be recognized over a weighted average of 0.3 year.
The following table summarizes financial metric-based PSUs activity for the year ended December 31, 2023:
1 unchanged sentence
Weighted-Average Grant-Date Fair Value
−Removed: Outstanding — January 1, 2022 40,580 $ 179.60
+Added: Nonvested at January 1, 2023 97,552 $ 153.56
Granted 64,706 131.13
−Removed: Canceled ( 5,166 ) 153.83
−Removed: Outstanding — December 31, 2022 97,552 $ 153.56
+Added: Vested ( 27,561 ) 144.32
+Added: Canceled / Forfeited
+Added: ( 6,351 ) 146.63
+Added: Nonvested at December 31, 2023 128,346 $ 144.61
For the years ended December 31, 2023, 2022 and 2021, the weighted average grant date fair value for new grants was $ 131.13 , $ 136.64 , and $ 228.62 .
−Removed: The financial metric-based PSUs are included at 80 % to 100 % of target goals.
−Removed: The total compensation cost related to non-vested awards not yet recorded at December 31, 2022 was $ 7,455 , which is expected to be recognized over a weighted average period of 2.0 years.
+Added: The financial metric-based PSUs are expensed at 50 % to 80 % of the target goals.
+Added: The total compensation cost related to nonvested awards not yet recorded at December 31, 2023 was $ 6,098 , which is expected to be recognized over a weighted average period of 2.0 years.
The Company has an employee stock purchase plan ("ESPP") offered to its U.S.
3 unchanged sentences
The assumptions used in the Black-Scholes model for the calculation of the ESPP fair values were as follows:
+Added: 2023 2022 2021
Performance term (year) 0.5 0.5 0.5
2 unchanged sentences
0.19 % - 2.52 %
+Added: 0.09 % - 0.05 %
Dividend yield 0.10 % 0.10 % 0.10 %
1 unchanged sentence
$ 45.91 - $ 26.68
+Added: $ 53.09 - $ 56.43
Compensation expense related to the employee stock purchase plan was $ 1,595 , $ 1,924 and $ 1,861 for the years ended December 31, 2023, 2022 and 2021, respectively.
1 unchanged sentence
As of December 31, 2023, there were 140,176 shares available for issuance under the employee stock purchase plan.
+Added: IPG PHOTONICS CORPORATION
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: (In thousands, except share and per share data)
EMPLOYEE BENEFIT PLANS
−Removed: The Company maintains a defined contribution retirement plan offered to all of its U.S.
+Added: The Company maintains a defined contribution retirement plan offered to its eligible U.S.
employees, as well as plans at certain foreign and domestic subsidiaries.
The Company makes matching contributions to each plan, which amounted to approximately $ 6,496 , $ 6,344 and $ 6,081 , respectively, for the years ended December 31, 2023, 2022 and 2021.
−Removed: Income before the impact of income taxes for the years ended December 31 consisted of the following:
+Added: Income before the impact of income taxes consisted of the following:
+Added: Year Ended December 31,
2023 2022 2021
2 unchanged sentences
Total $ 274,875 $ 183,351 $ 366,481
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: (In thousands, except share and per share data)
−Removed: The Company's provision for income taxes for the years ended December 31 consisted of the following:
+Added: The Company's provision for income taxes consisted of the following:
+Added: Year Ended December 31,
2023 2022 2021
8 unchanged sentences
Provision for income taxes $ 55,997 $ 72,589 $ 88,615
+Added: IPG PHOTONICS CORPORATION
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: (In thousands, except share and per share data)
A reconciliation of income tax expense at the U.S.
−Removed: federal statutory income tax rate to the recorded tax provision for the years ended December 31, were as follows:
+Added: federal statutory income tax rate to the recorded tax provision were as follows:
+Added: Year Ended December 31,
2023 2022 2021
3 unchanged sentences
Stock-based compensation — tax detriment (benefit)
+Added: 1,835 2,736 ( 5,440 )
Foreign derived intangible income benefit ("FDII") ( 9,322 ) ( 14,576 ) ( 4,704 )
+Added: Prior year and audit adjustments
+Added: ( 4,793 ) ( 2,240 ) ( 2,119 )
Withholding tax on intercompany dividend — 1,005 2,883
5 unchanged sentences
Provision for income taxes $ 55,997 $ 72,589 $ 88,615
−Removed: The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, were as follows:
+Added: The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
+Added: Year Ended December 31,
Property, plant and equipment $ ( 5,019 ) $ 6,275
8 unchanged sentences
Net deferred tax assets $ 87,280 $ 73,683
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: (In thousands, except share and per share data)
−Removed: The Company has recorded $ 1,461 and $ 1,098 as a deferred tax liability on December 31, 2022 and 2021, respectively, for certain withholding and dividend taxes related to possible future distributions from subsidiaries to their respective parent companies.
−Removed: With regard to future repatriation of undistributed earnings of other non-U.S.
−Removed: subsidiaries, the Company continues to consider these earnings to be indefinitely reinvested to the extent the cash balance in each subsidiary is less than current needs for operations and expansion.
+Added: The Company accrues taxes on dividend distributions to the extent that foreign subsidiaries have cash in excess of their operational needs.
+Added: The Company has recorded $ 1,504 and $ 1,461 as a deferred tax liability on December 31, 2023 and 2022, respectively, for certain withholding and dividend taxes related to possible future distributions of excess cash from certain non-U.S.
+Added: subsidiaries to their respective parent companies.
+Added: In 2023, the German subsidiary paid a dividend of $ 107,941 to the U.S.
+Added: parent company.
+Added: There was no federal or withholding tax due on the distribution from Germany to the U.S., but in 2023 the Company has accrued a nominal amount of state tax expected to be paid in 2024 relating to the distribution.
+Added: With regard to the other non-U.S.
+Added: subsidiaries, the Company continues to consider the earnings from these entities to be indefinitely reinvested to the extent the cash balance in each subsidiary is not greater than the current needs for operations and expansion.
At December 31, 2023 and 2022, the cumulative undistributed earnings in non-U.S.
1 unchanged sentence
In determining the Company’s 2023 and 2022 tax provisions, the Company calculated the deferred tax assets and liabilities for each separate tax entity.
−Removed: The Company then considered a number of factors including the positive and negative evidence regarding the realization of deferred tax assets to determine whether a valuation allowance should be recognized with respect to the deferred tax assets.
+Added: The Company then considered a number of factors including the positive and negative
+Added: IPG PHOTONICS CORPORATION
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: (In thousands, except share and per share data)
+Added: evidence regarding the realization of deferred tax assets to determine whether a valuation allowance should be recognized with respect to the deferred tax assets.
As of December 31, 2023 and 2022, the Company had state tax credit carryforwards (net of federal tax benefit) of $ 20,704 and $ 18,398 , respectively.
The state tax credit carryforwards begin expiring in 2024.
−Removed: The Company has determined that it is not more likely than not that some of the state credits will be used before the expiration date and recorded a valuation allowance of $ 15,690 and $ 13,884 as of December 31, 2022 and 2021, respectively.
+Added: The Company has determined that some of the state credits will more likely than not expire before they can be used and has recorded a valuation allowance of $ 17,996 and $ 15,690 as of December 31, 2023 and 2022, respectively.
The Company has tax loss carryforwards in foreign jurisdictions totaling $ 25,747 and $ 22,134 as of December 31, 2023 and 2022, respectively.
−Removed: The Company does not believe it is more likely than not that most of the loss carryforwards can be used and has provided a valuation allowance against the tax benefit of the losses in foreign jurisdictions of $ 5,942 and $ 10,093 at December 31, 2022 and 2021, respectively.
−Removed: The decrease in the carryforward losses and related valuation allowance is primarily related to the sale or dissolution of entities that had losses rather than the use of those losses against current taxes.
−Removed: In addition, during the year ended December 31, 2022, the Company recorded a valuation allowance of $ 35,833 primarily related to deferred tax assets in its Russian subsidiary as it does not believe it is more likely than not that the entities will have future profits sufficient to get the benefit of those deferred assets.
+Added: The Company believes it is more likely than not that most of the loss carryforwards will expire before they can be used and has provided a valuation allowance against the tax benefit of the losses in foreign jurisdictions of $ 6,952 and $ 5,942 at December 31, 2023 and 2022, respectively.
+Added: In addition, the Company has a valuation allowance primarily from its Russian subsidiary against other deferred tax assets of $ 23,873 and $ 35,833 at December 31, 2023 and 2022, respectively.
The Company's acquisition of Menara Networks, Inc.
1 unchanged sentence
As of December 31, 2023 and 2022, the Company had $ 790 and $ 1,844 of these net operating loss carryforwards remaining, respectively.
−Removed: No valuation allowance has been provided for these carryforwards as the Company expects to be able to fully utilize them to offset future income.
+Added: No valuation allowance has been provided for these loss carryforwards as the Company expects them to be fully utilized to offset future income.
The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions and other issues.
−Removed: Reserves recorded are based on a determination of whether and how much of a tax benefit taken by the Company in the Company's tax filings or positions is "more likely than not" to be realized following resolution of any potential contingencies present related to the tax benefit, assuming that the matter in question will be raised by the tax authorities.
+Added: Reserves recorded are based on a determination of the amount of a tax benefit taken by the Company that is more likely than not to be realized, assuming that the matter in question will be reviewed by the tax authorities.
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:
6 unchanged sentences
The liability for uncertain tax benefits is included in other long-term liabilities and deferred income taxes at December 31, 2023 and 2022.
−Removed: Substantially all of the liability for uncertain tax benefits related to various federal, state and foreign income tax matters, would benefit the Company's effective tax rate, if recognized.
−Removed: Estimated penalties and interest related to the underpayment of income taxes were a net benefit of $ 168 and $ 359 for the years ended December 31, 2022 and 2021, respectively, and are included within the provision for income taxes.
+Added: Substantially all of the uncertain tax benefits reserved for as of December 31, 2023 will benefit the Company's effective tax rate, if recognized.
+Added: Estimated penalties and interest related to the potential underpayment of income taxes were a net expense of $ 646 and net benefit of $ 168 for the years ended December 31, 2023 and 2022, respectively, and are included within the provision for income taxes.
Total accrued penalties and interest related to the underpayment of income taxes were $ 2,043 and $ 1,476 at December 31, 2023 and 2022, respectively.
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: (In thousands, except share and per share data)
The Company's uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities.
The Company is currently under a tax audit in the U.S.
−Removed: for the years 2017 to 2020.
+Added: for the years 2019 and 2020.
Open tax years by major jurisdictions are:
+Added: Open Tax Years
United States 2019 - 2023
1 unchanged sentence
Russia 2021 - 2023
+Added: IPG PHOTONICS CORPORATION
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: (In thousands, except share and per share data)
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION PER SHARE
8 unchanged sentences
Diluted net income attributable to IPG Photonics Corporation per common share $ 4.63 $ 2.16 $ 5.16
−Removed: The computation of diluted weighted average common shares excludes certain common stock equivalents, including non-qualified stock options, PSUs, RSUs and the employee stock purchase plan because the effect of including them would be anti-dilutive.
+Added: The computation of diluted weighted average common shares excludes certain common stock equivalents, including non-qualified stock options, PSUs, RSUs and the ESPP because the effect of including them would be anti-dilutive.
The weighted average anti-dilutive shares outstanding for the years ended December 31, 2023, 2022 and 2021, respectively, were as follows:
4 unchanged sentences
Performance stock units 51,851 81,348 25,451
+Added: Employee stock purchase plan 30,951 — —
Total weighed average anti-dilutive shares outstanding 862,685 1,020,448 345,639
−Removed: On August 2, 2022 and February 15, 2022, the Company announced that its Board of Directors has authorized the purchases of up to $ 300,000 and $ 200,000 of IPG common stock, respectively.
−Removed: The authorizations are in addition to the Company's previously authorized stock repurchase programs.
−Removed: Share repurchases may be made periodically in open-market transactions, and are subject to market conditions, legal requirements and other factors.
−Removed: The share repurchase program authorization does not obligate the Company to repurchase any dollar amount or number of its shares, and repurchases may be commenced or suspended from time to time without prior notice.
−Removed: On May 5, 2020, the Company announced that its Board of Directors authorized the purchase of up to $ 200,000 of IPG common stock.
−Removed: This authorization is separate from, and in addition to, the Company's $ 125,000 stock repurchase program authorized in February 2019.
+Added: On May 2, 2023, the Company announced that its board of directors has authorized the purchase of up to $ 200,000 of IPG common stock.
+Added: This authorization is in addition to the Company's previously authorized stock repurchase programs.
For the years ended December 31, 2023, 2022 and 2021, respectively, the Company repurchased 2,117,352 shares, 5,101,434 shares, and 743,969 shares of its common stock with an average price of $ 104.68 , $ 97.89 and $ 181.28 per share in the open market, respectively.
−Removed: The May 2020 authorization and February 2022 authorization to repurchase common stock were completed in 2022.
−Removed: As of December 31, 2022 the remaining amount authorized under the August 2022 was up to $ 112,153 .
+Added: The August 2022 authorization to repurchase common stock was completed in 2023.
+Added: As of December 31, 2023 the remaining amount authorized under the May 2023 authorization was up to $ 90,518 .
The impact on the reduction of weighted average shares for years ended December 31, 2023, 2022 and 2021 was 1,167,412 shares, 2,393,478 shares and 244,451 shares, respectively.
−Removed: IPG PHOTONICS CORPORATION
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: (In thousands, except share and per share data)
−Removed: RELATED-PARTY TRANSACTIONS
−Removed: Gapontsev, the late Chairman and former CEO of the Company, leased the annual right to use 25 % of the Company's corporate aircraft under a lease signed in July 2017.
−Removed: The lease terminated in April 2022.
−Removed: The Company invoiced Dr.
−Removed: Gapontsev's estate or himself $ 249 , $ 924 and $ 937 in 2022, 2021, and 2020, respectively, under the aircraft lease.
−Removed: There was $ 77 due at December 31, 2021.
−Removed: Gapontsev and his estate directly paid an unrelated flight management firm for the operating costs of his private use including pilot fees, fuel and other costs.
−Removed: Natalia Pavlova, a director, and Angelo Lopresti, an executive officer, are executors of the estate of Dr.
+Added: SUBSEQUENT EVENTS
+Added: On February 13, 2024, the Company announced that its board of directors has authorized the purchase of up to $ 300,000 of IPG common stock.
+Added: Share repurchases may be made periodically in open-market transactions, and are subject to market conditions, legal requirements and other factors.
+Added: The share repurchase program authorization does not obligate the Company to repurchase any dollar amount or number of its shares, and repurchases may be commenced or suspended from time to time without prior notice.
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.