14 unchanged sentences
dollar against other currencies would result in an approximately $1.6 million increase in the fair value of our foreign currency contracts as of December 31, 2020.
−Removed: By contrast, a hypothetical 10%
−Removed: weakening of the U.S.
−Removed: dollar against other currencies would result in an approximately $ 0.1 million de crease in the fair value of our foreign currency contracts as of December 31, 201 9 .
+Added: By contrast, a hypothetical 10% weakening of the U.S.
+Added: dollar against other currencies would result in an approximately $1.6 million decrease in the fair value of our foreign currency contracts as of December 31, 2020.
Interest Rates
2 unchanged sentences
A 100 basis point increase in interest rates at December 31, 2020 would increase our annual pre-tax interest expense by approximately $2.0 million.
−Removed: Financial Statements and Supplementary Data
−Removed: INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Report of Independent Registered Public Accounting Firm – PricewaterhouseCoopers LLP
−Removed: Consolidated Balance Sheets as of December 31, 2019 and 2018
−Removed: Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017
−Removed: Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017
−Removed: Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2019, 2018 and 2017
−Removed: Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017
−Removed: Notes to Consolidated Financial Statements
−Removed: Report of Independent Registered Public Accounting Firm
−Removed: To the Board of Directors and Stockholders of Novanta Inc.
−Removed: Opinions on the Financial Statements and Internal Control over Financial Reporting
−Removed: We have audited the accompanying consolidated balance sheets of Novanta Inc.
−Removed: and its subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, including the related notes (collectively referred to as the “consolidated financial statements”).
−Removed: We also have audited the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
−Removed: In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America.
−Removed: Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
−Removed: Changes in Accounting Principles
−Removed: As discussed in Notes 2 and 3 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and the manner in which it accounts for revenues from contracts with customers in 2018.
−Removed: Basis for Opinions
−Removed: The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Annual Report on Internal Control Over Financial Reporting appearing under Item 9A.
−Removed: Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audits in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
−Removed: Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
−Removed: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
−Removed: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
−Removed: Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
−Removed: Our audits also included performing such other procedures as we considered necessary in the circumstances.
−Removed: We believe that our audits provide a reasonable basis for our opinions.
−Removed: Definition and Limitations of Internal Control over Financial Reporting
−Removed: A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
−Removed: A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
−Removed: (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
−Removed: and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
−Removed: Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
−Removed: Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate .
−Removed: Critical Audit Matters
−Removed: The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) 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 consolidated 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: Acquisitions of Med X Change, Inc., Ingenia-CAT, S.L., and ARGES GmbH – Valuation of Developed Technologies and Customer Relationships Intangible Assets
−Removed: As described in Notes 2 and 4 to the consolidated financial statements, the Company completed the acquisitions of Med X Change, Inc., Ingenia-CAT, S.L., and ARGES GmbH in 2019 for purchase prices of $21.9 million, $16.2 million and $72.9 million, respectively.
−Removed: The acquisition of Med X Change, Inc.
−Removed: resulted in $9.9 million of customer relationships intangible assets being recorded, the acquisition of Ingenia-CAT, S.L.
−Removed: resulted in $9.3 million of developed technologies intangible assets being recorded, and the acquisition of ARGES GmbH resulted in $11.8 million of customer relationships intangible assets and $11.4 million of developed technologies intangible assets being recorded.
−Removed: Assets acquired and liabilities assumed have been recorded by management at their estimated fair values as of the acquisition dates.
−Removed: The fair values of developed technologies for ARGES GmbH and Med X Change, Inc.
−Removed: were valued using the relief from royalty method.
−Removed: The fair values of developed technologies for Ingenia-CAT, S.L.
−Removed: were valued using the multi-period excess earnings method.
−Removed: The fair values of customer relationships were valued using the multi-period excess earnings method.
−Removed: The process for estimating the fair values of identifiable intangible assets requires the use of significant estimates and assumptions by management, including revenue growth rates, customer attrition rates royalty rates, discount rates and projected future cash flows.
−Removed: The principal considerations for our determination that performing procedures relating to the valuation of the developed technologies and customer relationships intangible assets as a result of the acquisitions of Med X Change, Inc., Ingenia-CAT, S.L., and ARGES GmbH is a critical audit matter are (i) there was a high degree of auditor judgment and subjectivity in applying procedures relating to the fair value measurements of developed technologies and customer relationships intangible assets acquired due to the significant judgment by management when developing the estimates, (ii) significant audit effort was required in evaluating the significant assumptions relating to the estimates, such as the revenue growth rates, customer attrition rates, and discount rates, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing procedures and evaluating the audit evidence obtained from these procedures.
−Removed: Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the developed technologies and customer relationships intangible assets and controls over the development of the assumptions related to the valuation of these intangible assets, including the revenue growth rates, customer attrition rates, and discount rates.
−Removed: These procedures also included, among others, (i) reading the purchase agreements, (ii) testing management’s process for estimating the fair value of the developed technologies and customer relationships intangible assets, and (iii) testing management’s assumptions used to estimate the fair value of the developed technologies and customer relationships intangible assets.
−Removed: Testing management’s process included evaluating the appropriateness of the valuation methods, testing the completeness and accuracy of underlying data used in the relief from royalty and multi-period excess earnings methods, and assessing the reasonableness of significant assumptions used by management, including the revenue growth rates, customer attrition rates, and discount rates.
−Removed: Evaluating the reasonableness of the revenue growth rates, customer attrition rates, and discount rates involved considering the past performance of the acquired businesses, as well as economic and industry forecasts.
−Removed: Professionals with specialized skill and knowledge were used to assist in the evaluation of certain significant assumptions, including the discount rates.
−Removed: The discount rates were evaluated by considering the cost of capital of comparable businesses and other industry factors.
−Removed: Fair Value Measurements of the Contingent Consideration for ARGES GmbH and Ingenia-CAT, S.L.
−Removed: As described in Notes 4 and 7 to the consolidated financial statements, the Company had $14.6 million of contingent consideration liabilities as of December 31, 2019 related to the acquisitions of ARGES GmbH and Ingenia-CAT, S.L.
−Removed: The contingent consideration payments will be payable annually based on the achievement of certain revenue targets by the Company from August 2019 through December 2026 for ARGES GmbH and from April 2019 through March 2022 for Ingenia-CAT, S.L.
−Removed: As of the acquisition dates, management determined the estimated fair value of contingent consideration liabilities using a Monte Carlo valuation method.
−Removed: following qualitative information was used by management to determine the fair value measurement of the contingent consideration liabilities:
−Removed: historical and projected revenues, revenue volatilities, cost of debt, and the discount rates .
−Removed: The principal considerations for our determination that performing procedures relating to valuation of contingent consideration related to the ARGES GmbH and Ingenia-CAT, S.L.
−Removed: acquisitions is a critical audit matter are (i) there was significant judgment by management when determining the estimated fair value, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to the Monte Carlo valuation method and assessing the significant assumptions used by management, including the projected revenues, revenue volatilities, and the discount rates, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing procedures and evaluating the audit evidence obtained from these procedures.
−Removed: Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: These procedures included testing the effectiveness of controls relating to management’s fair value measurements of the contingent consideration, including controls over management’s valuation method, significant assumptions and data.
−Removed: These procedures also included, among others, (i) reading the purchase agreements, (ii) testing management’s process for developing the fair value measurements of the contingent consideration, (iii) evaluating the appropriateness of the Monte Carlo valuation method, (iv) testing the completeness and accuracy of underlying data used in the method, and (v) evaluating the significant assumptions used by management, including the projected revenues, revenue volatilities, and discount rates.
−Removed: Evaluating the assumptions related to projected revenues involved evaluating whether the assumptions used by management were reasonable considering current and past performance of the acquired businesses, consistency with external market data, and whether these assumptions were consistent with evidence obtained in other areas of the audit.
−Removed: Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s Monte Carlo valuation method and certain significant assumptions, including revenue volatilities and discount rates.
−Removed: /s/ PricewaterhouseCoopers LLP
−Removed: Boston, Massachusetts
−Removed: February 26, 2020
−Removed: We have served as the Company’s auditor since 2013.
−Removed: CONSOLIDATED BALANCE SHEETS
−Removed: (In thousands of U.S.
−Removed: dollars or shares)
−Removed: Current Assets
−Removed: Cash and cash equivalents
−Removed: Accounts receivable, net of allowance of $ 297 and $ 321 , respectively
−Removed: Prepaid income taxes and income taxes receivable
−Removed: Prepaid expenses and other current assets
−Removed: Total current assets
−Removed: Property, plant and equipment, net
−Removed: Operating lease assets
−Removed: Deferred tax assets
−Removed: Intangible assets, net
−Removed: LIABILITIES AND STOCKHOLDERS’ EQUITY
−Removed: Current Liabilities
−Removed: Current portion of long-term debt
−Removed: Accounts payable
−Removed: Income taxes payable
−Removed: Current portion of operating lease liabilities
−Removed: Accrued expenses and other current liabilities
−Removed: Total current liabilities
−Removed: Long-term debt
−Removed: Operating lease liabilities
−Removed: Deferred tax liabilities
−Removed: Income taxes payable
−Removed: Other liabilities
−Removed: Total liabilities
−Removed: Commitments and Contingencies (Note 17)
−Removed: Stockholders’ Equity:
−Removed: Common shares, no par value;
−Removed: Authorized shares:
−Removed: Issued and outstanding:
−Removed: 35,052 and 34,886 , respectively
−Removed: Additional paid-in capital
−Removed: Accumulated deficit
−Removed: Accumulated other comprehensive loss
−Removed: Total stockholders’ equity
−Removed: Total liabilities and stockholders’ equity
−Removed: The accompanying notes are an integral part of these consolidated financial statements.
−Removed: CONSOLIDATED STATEMENTS OF OPERATIONS
−Removed: (In thousands of U.S.
−Removed: dollars or shares, except per share amounts)
−Removed: Year Ended December 31,
−Removed: Cost of revenue
−Removed: Operating expenses:
−Removed: Research and development and engineering
−Removed: Selling, general and administrative
−Removed: Amortization of purchased intangible assets
−Removed: Restructuring and acquisition related costs
−Removed: Total operating expenses
−Removed: Operating income
−Removed: Interest income (expense), net
−Removed: Foreign exchange transaction gains (losses), net
−Removed: Other income (expense), net
−Removed: Gain on acquisition of business
−Removed: Income before income taxes
−Removed: Income tax provision
−Removed: Consolidated net income
−Removed: Net income attributable to noncontrolling interest
−Removed: Net income attributable to Novanta Inc.
−Removed: Earnings per common share attributable to Novanta Inc.
−Removed: Weighted average common shares outstanding—basic
−Removed: Weighted average common shares outstanding—diluted
−Removed: The accompanying notes are an integral part of these consolidated financial statements.
−Removed: CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
−Removed: (In thousands of U.S.
−Removed: Year Ended December 31,
−Removed: Consolidated net income
−Removed: Other comprehensive income (loss):
−Removed: Foreign currency translation adjustments, net of tax (1)
−Removed: Pension liability adjustments, net of tax (2)
−Removed: Total other comprehensive income (loss)
−Removed: Total consolidated comprehensive income
−Removed: Comprehensive income attributable to noncontrolling interest
−Removed: Comprehensive income attributable to Novanta Inc.
−Removed: The tax effect on this component of comprehensive income was $ 3 , ($ 93 ) and ($ 94 ) in 2019, 2018 and 2017, respectively.
−Removed: The tax effect on this component of comprehensive income was $ 267 , ($ 153 ) and $ 277 in 2019, 2018 and 2017, respectively.
−Removed: The accompanying notes are an integral part of these consolidated financial statements.
−Removed: CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
−Removed: (In thousands of U.S.
−Removed: dollars or shares)
−Removed: Common Shares
−Removed: Additional Paid-In
−Removed: Accumulated Other Comprehensive
−Removed: Balance at December 31, 2016
−Removed: Redeemable noncontrolling interest redemption value adjustment
−Removed: Common shares issued under stock plans
−Removed: Common shares withheld for taxes on vested stock awards
−Removed: Repurchases of common shares
−Removed: Share-based compensation
−Removed: Other comprehensive income, net of tax
−Removed: Balance at December 31, 2017
−Removed: Redeemable noncontrolling interest redemption value adjustment
−Removed: Acquisition of noncontrolling interest
−Removed: Common shares issued under stock plans
−Removed: Common shares withheld for taxes on vested stock awards
−Removed: Repurchases of common shares
−Removed: Share-based compensation
−Removed: Adoption of ASU 2016-16
−Removed: Other comprehensive loss, net of tax
−Removed: Balance at December 31, 2018
−Removed: Common shares issued for business combination
−Removed: Common shares issued under stock plans
−Removed: Common shares withheld for taxes on vested stock awards
−Removed: Repurchases of common shares
−Removed: Share-based compensation
−Removed: Other comprehensive income, net of tax
−Removed: Balance at December 31, 2019
−Removed: The accompanying notes are an integral part of these consolidated financial statements.
−Removed: CONSOLIDATED STATEMENTS OF CASH FLOWS
−Removed: (In thousands of U.S.
−Removed: Year Ended December 31,
−Removed: Cash flows from operating activities:
−Removed: Consolidated net income
−Removed: Adjustments to reconcile consolidated net income to
−Removed: net cash provided by operating activities:
−Removed: Depreciation and amortization
−Removed: Provision for inventory excess and obsolescence
−Removed: Share-based compensation
−Removed: Deferred income taxes
−Removed: Earnings from equity-method investment
−Removed: Gain on acquisition of business
−Removed: Loss on disposal of fixed assets
−Removed: Contingent consideration adjustments
−Removed: Inventory acquisition fair value adjustment
−Removed: Non-cash interest expense
−Removed: Other non-cash items
−Removed: Changes in assets and liabilities which provided/(used) cash, excluding
−Removed: effects from businesses acquisitions:
−Removed: Accounts receivable
−Removed: Prepaid expenses and other current assets
−Removed: Prepaid income taxes, income taxes receivable and income taxes payable
−Removed: Accounts payable, accrued expenses and other current liabilities
−Removed: Other non-current assets and liabilities
−Removed: Cash provided by operating activities
−Removed: Cash flows from investing activities:
−Removed: Purchases of property, plant and equipment
−Removed: Acquisition of businesses, net of cash acquired and working capital adjustments
−Removed: Acquisition of assets
−Removed: Proceeds from sale of property, plant and equipment
−Removed: Cash used in investing activities
−Removed: Cash flows from financing activities:
−Removed: Borrowings under revolving credit facilities
−Removed: Repayments under term loan and revolving credit facilities
−Removed: Payments of debt issuance costs
−Removed: Payments of withholding taxes from share-based awards
−Removed: Payments of contingent considerations
−Removed: Repurchases of common shares
−Removed: Acquisition of noncontrollling interest
−Removed: Other financing activities
−Removed: Cash provided by (used in) financing activities
−Removed: Effect of exchange rates on cash and cash equivalents
−Removed: Increase (decrease) in cash and cash equivalents
−Removed: Cash and cash equivalents, beginning of year
−Removed: Cash and cash equivalents, end of year
−Removed: Supplemental disclosure of cash flow information:
−Removed: Cash paid for interest
−Removed: Cash paid for income taxes
−Removed: Income tax refunds received
−Removed: Supplemental disclosure of non-cash investing activity:
−Removed: Accrual for capital expenditures
−Removed: The accompanying notes are an integral part of these consolidated financial statements.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: AS OF DECEMBER 31, 2019
−Removed: Organization and Basis of Presentation
−Removed: and its subsidiaries (collectively referred to as “Novanta”, the “Company”, “we”, “us”, “our”) is a leading global supplier of core technology solutions that give medical and advanced industrial original equipment manufacturers (“OEMs”) a competitive advantage.
−Removed: Novanta combines deep proprietary technology expertise and competencies in photonics, vision and precision motion with a proven ability to solve complex technical challenges.
−Removed: This enables Novanta to engineer core components and sub-systems that deliver extreme precision and performance, tailored to the customers’ demanding applications.
−Removed: Basis of Presentation
−Removed: These consolidated financial statements have been prepared by the Company in United States (“U.S.”) dollars and in accordance with accounting principles generally accepted in the U.S., applied on a consistent basis.
−Removed: The consolidated financial statements include the accounts of Novanta Inc.
−Removed: and its subsidiaries.
−Removed: Intercompany accounts and transactions have been eliminated.
−Removed: Prior to January 10, 2017, the Company had an approximately 41 % ownership interest in Laser Quantum Limited (“Laser Quantum”), a privately held company located in the United Kingdom, which was accounted for under the equity method of accounting.
−Removed: During the year ended December 31, 2017, the Company recognized income from its equity method investment amounting to $ 0.1 million, which was included in other income (expense) in the accompanying consolidated statements of operations.
−Removed: On January 10, 2017, the Company acquired an additional approximately 35 % of the outstanding shares of Laser Quantum.
−Removed: As a result of this transaction, the Company’s ownership in Laser Quantum increased from approximately 41% to approximately 76 %.
−Removed: Since January 10, 2017, Laser Quantum has been consolidated in the Company’s consolidated financial statements.
−Removed: On September 27, 2018, the Company acquired the remaining approximately 24 % of the outstanding shares of Laser Quantum for an aggregate consideration of $ 45.1 million in cash and restricted stock.
−Removed: Summary of Significant Accounting Policies
−Removed: Use of Estimates
−Removed: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting periods.
−Removed: Estimates and assumptions are reviewed on an on-going basis and the effects of revisions are reflected in the period in which they are deemed to be necessary.
−Removed: The Company evaluates its estimates based on historical experience, current conditions and various other assumptions that it believes are reasonable under the circumstances.
−Removed: Actual results could differ significantly from those estimates.
−Removed: Foreign Currency Translation
−Removed: The financial statements of the Company and its subsidiaries outside the U.S.
−Removed: have been translated into U.S.
−Removed: Assets and liabilities of foreign operations are translated from foreign currencies into U.S.
−Removed: dollars at the exchange rates in effect as of the balance sheet date.
−Removed: Revenue and expenses are translated at the weighted average exchange rates for the period.
−Removed: Accordingly, gains and losses resulting from translating foreign currency financial statements are reported as cumulative translation adjustments, a separate component of other comprehensive income (loss) in stockholders’ equity.
−Removed: Foreign currency transaction gains and losses from transactions denominated in currencies other than the functional currencies are included in the accompanying consolidated statements of operations.
−Removed: Cash Equivalents
−Removed: Cash equivalents are highly liquid investments with original maturities of three months or less.
−Removed: These investments are carried at cost, which approximates fair value.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Accounts Receivable and Allowance for Doubtful Accounts
−Removed: Accounts receivable are recorded at the invoiced amounts, net of an allowance for doubtful accounts based on the Company’s best estimate of probable credit losses resulting from the inability of the Company’s customers to make required payments.
−Removed: The Company determines the allowance based on a variety of factors, including the age of amounts outstanding relative to their contractual due date, specific customer factors, and other known risks and economic trends.
−Removed: Charges related to the allowance for doubtful accounts are included as selling, general and administrative expenses and are recorded in the period that the outstanding receivables are determined to be uncollectible.
−Removed: Account balances are charged off against the allowance when the Company believes it is certain that the receivable will not be recovered.
−Removed: For the years ended December 31, 2019, 2018 and 2017, changes in the allowance for doubtful accounts were as follows (in thousands):
−Removed: Balance at beginning of year
−Removed: Provision charged to selling, general and administrative expenses
−Removed: Allowance resulting from acquisitions
−Removed: Write-offs, net of recoveries of amounts previously reserved
−Removed: Exchange rate changes
−Removed: Balance at end of year
−Removed: Inventories, which include materials and conversion costs, are stated at the lower of cost or net realizable value, using the first-in, first-out method.
−Removed: Cost includes the cost of purchased materials, inbound freight charges, external and internal processing and applicable labor and overhead costs.
−Removed: Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.
−Removed: The Company periodically reviews quantities of inventories on hand and compares these amounts to the expected use of each product.
−Removed: The Company records a charge to cost of revenue for the amount required to reduce the carrying value of inventory to the net realizable value.
−Removed: Property, Plant and Equipment
−Removed: Property, plant and equipment are recorded at cost, adjusted for any impairment, less accumulated depreciation.
−Removed: The Company uses the straight-line method to calculate the depreciation of its property, plant and equipment over their estimated useful lives.
−Removed: Estimated useful lives range from 3 to 30 years for buildings and building improvements and 3 to 10 years for machinery and equipment.
−Removed: Leasehold improvements are depreciated over the lesser of their useful lives or the lease terms, including any renewal period options that are reasonably assured of being exercised.
−Removed: Repairs and maintenance costs are expensed as incurred.
−Removed: Certain costs to develop software for internal use are capitalized when the criteria under Accounting Standards Codification (“ASC”) 350-40, “Internal-Use Software,” are met.
−Removed: Goodwill, Intangible Assets and Long-Lived Assets
−Removed: Goodwill represents the excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities acquired in a business combination.
−Removed: Allocations of the purchase price are based upon a valuation of the fair value of assets acquired and liabilities assumed as of the acquisition date.
−Removed: Goodwill and indefinite-lived intangibles are not amortized but are assessed for impairment at least annually to ensure their current fair values exceed their carrying values.
−Removed: The Company’s most significant intangible assets are customer relationships, patents and developed technologies, trademarks and trade names.
−Removed: The fair values of intangible assets are based on valuations using an income approach, with estimates and assumptions provided by management of the acquired companies and the Company.
−Removed: The process for estimating the fair values of identifiable intangible assets requires the use of significant estimates and assumptions, including revenue growth rates, customer attrition rates, royalty rates, discount rates and projected future cash flows.
−Removed: All definite-lived intangible assets are amortized over the periods in which their economic benefits are expected to be realized.
−Removed: The Company reviews the useful life assumptions, including the classification of certain intangible assets as “indefinite-lived,” on a periodic basis to determine if changes in circumstances
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: warrant revisions to them.
−Removed: Costs associated with patent and intellectual property applications, renewals or extensions are typically expensed as incurred.
−Removed: The Company evaluates its goodwill, intangible assets and other long-lived assets for impairment at the reporting unit level which is at least one level below the reportable segments.
−Removed: Impairment Charges
−Removed: Impairment analyses of goodwill and indefinite-lived intangible assets are conducted in accordance with ASC 350, “Intangibles —Goodwill and Other.” The Company performs its goodwill impairment test annually as of the beginning of the second quarter or more frequently if indicators are present or changes in circumstances suggest that an impairment may exist.
−Removed: The Company has the option of first performing a qualitative assessment to determine whether it is necessary to perform the quantitative impairment test.
−Removed: In performing the qualitative assessment, the Company reviews factors both specific to the reporting unit and to the Company as a whole, such as financial performance, macroeconomic conditions, industry and market considerations, and the fair value of each reporting unit at the last valuation date.
−Removed: If the Company elects this option and believes, as a result of the qualitative assessment, that it is more likely than not that the carrying value of the reporting unit exceeds its fair value, the quantitative impairment test is required;
−Removed: otherwise, no further testing is required.
−Removed: Alternatively, the Company may elect to bypass the qualitative assessment and perform the quantitative impairment test instead.
−Removed: This approach requires a comparison of the carrying value of each of the Company’s reporting units to the estimated fair value of these reporting units.
−Removed: The fair value of a reporting unit is estimated primarily using a discounted cash flow (“DCF”) method with a weighted average cost of capital.
−Removed: If the carrying value of a reporting unit exceeds its fair value, an impairment charge is recorded for the difference.
−Removed: The Company assesses indefinite-lived intangible assets for impairment on an annual basis as of the beginning of the second quarter, and more frequently if indicators are present, or changes in circumstances suggest, that an impairment may exist.
−Removed: The Company will also reassess the continuing classification of these intangible assets as indefinite-lived when circumstances change such that the useful life may no longer be considered indefinite.
−Removed: The fair values of the Company’s indefinite-lived intangible assets are determined using the relief from royalty method, based on forecasted revenues and estimated royalty rates.
−Removed: If the fair value of an indefinite-lived intangible asset is less than its carrying value, an impairment charge is recorded for the difference between the carrying value and the fair value of the impaired asset.
−Removed: The carrying amounts of definite-lived long-lived assets are reviewed for impairment whenever changes in events or circumstances indicate that their carrying values may not be recoverable.
−Removed: The recoverability of the carrying value is generally determined by comparison of the asset group’s carrying value to its undiscounted future cash flows.
−Removed: When this test indicates a potential for impairment, a fair value assessment is performed.
−Removed: Once an impairment is determined and measured, an impairment charge is recorded for the difference between the carrying value and the fair value of the impaired asset.
−Removed: Revenue Recognition
−Removed: See Note 3 for the Company’s revenue recognition policy.
−Removed: The Company leases certain equipment and facilities.
−Removed: The Company determines if an arrangement is a lease at inception.
−Removed: Operating lease right-of-use assets are included in operating lease assets on the consolidated balance sheet.
−Removed: Operating lease liabilities are included in current portion of operating lease liabilities and operating lease liabilities on the consolidated balance sheet based on the timing of future lease payments.
−Removed: Finance lease assets are included in property, plant and equipment.
−Removed: Finance lease liabilities are included in accrued expenses and other current liabilities and other liabilities on the consolidated balance sheet based on the timing of future lease payments.
−Removed: Leases with an initial term of 12 months or less are not recognized on the balance sheet.
−Removed: The Company recognizes lease expense on a straight-line basis over the lease term.
−Removed: Many of the Company’s lease arrangements include both lease (e.g., fixed payments including rent) and non-lease components (e.g., common-area maintenance or other property management costs).
−Removed: The Company accounts for lease and non-lease components separately.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Most leases held by the Company do not provide an implicit rate.
−Removed: The Company uses its incremental borrowing rate for the same jurisdiction and term as the associated lease based on the information available at the lease commencement date to determine the present value of future lease payments.
−Removed: The Company used the incremental borrowing rate as of January 1, 2019 for operating leases that commenced prior to that date.
−Removed: The Company has a centrally managed treasury function;
−Removed: therefore, the Company applies a portfolio approach for determining the incremental borrowing rate based on the applicable lease terms and the current economic environment.
−Removed: Research and Development and Engineering Costs
−Removed: Research and development and engineering (“R&D”) expenses are primarily comprised of employee related expenses and cost of materials for R&D projects.
−Removed: These costs are expensed as incurred.
−Removed: Share-Based Compensation
−Removed: The Company records the expense associated with share-based compensation awards to employees and directors based on the fair value of awards as of the grant date.
−Removed: For share-based compensation awards that vest over time based on employment, the associated expenses are recognized in the consolidated statements of operations ratably over the vesting period, net of estimated forfeitures.
−Removed: The Company also grants two types of performance-based awards to certain members of the executive management team:
−Removed: non-GAAP earnings per share performance-based restricted stock units (“EPS-PSUs”) and relative total shareholder return performance-based restricted stock units (“TSR-PSUs”).
−Removed: Share-based compensation expense associated with EPS-PSUs is recognized ratably over the vesting period when it is probable that the performance targets are expected to be achieved based on management’s projections.
−Removed: Management’s projections are revised, if necessary, in subsequent periods when underlying factors change the evaluation of the probability of achieving the performance targets as well as the level of achievement.
−Removed: When the estimated achievement levels are adjusted at a later date, a cumulative adjustment to the share-based compensation expense previously recognized would be required.
−Removed: Accordingly, share-based compensation expense associated with EPS-PSUs may differ significantly from period to period based on changes to both the probability and the level of achievement against performance targets.
−Removed: Share-based compensation expense associated with TSR-PSUs is based on the fair value of the TSR-PSUs, determined using the Monte-Carlo valuation model, as of the grant date and is recognized on a straight-line basis from the grant date to the end of the performance period.
−Removed: Compensation expense will not be affected by the number of TSR-PSUs that will actually vest at the end of the performance period.
−Removed: Advertising Costs
−Removed: Advertising costs are expensed to selling, general and administrative expenses as incurred and were not material for 2019, 2018 and 2017.
−Removed: Restructuring and Acquisition Related Costs
−Removed: The Company accounts for its restructuring activities in accordance with the provisions of ASC 420, “Exit or Disposal Cost Obligations.” The Company makes assumptions related to the amounts of employee severance benefits and related costs, useful lives and residual value of long-lived assets, and discount rates.
−Removed: Estimates and assumptions are based on the best information available at the time the obligation is recognized.
−Removed: These estimates are reviewed and revised as facts and circumstances dictate.
−Removed: Acquisition related costs incurred to effect a business combination, including finders’ fees, legal, valuation and other professional or consulting fees, are expensed as incurred.
−Removed: Acquisition related costs also include expenses recognized under earn-out agreements in connection with acquisitions.
−Removed: Accounting for Income Taxes
−Removed: The asset and liability method is used to account for income taxes.
−Removed: Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.
−Removed: This method also requires the recognition of future tax benefits, such as net operating loss carryforwards, to the extent that it is more likely than not that such benefits will be realized.
−Removed: Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the temporary
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: differences are expected to be recovered or settled.
−Removed: A valuation allowance is established to reduce the deferred tax assets if it is more likely than not that some or all of the related tax benefits will not be realized in the future.
−Removed: Valuation allowances are reassessed periodically to determine whether it is more likely than not that the tax benefits will be realized in the future and if any existing valuation allowance should be released.
−Removed: The majority of the Company’s business activities are conducted through its subsidiaries outside of Canada.
−Removed: Earnings from these subsidiaries are generally indefinitely reinvested in the local businesses.
−Removed: Further, local laws and regulations may also restrict certain subsidiaries from paying dividends to their parents.
−Removed: Consequently, the Company generally does not accrue income taxes for the repatriation of such earnings in accordance with ASC 740, “Income Taxes.” To the extent that there are excess accumulated earnings that the Company intends to repatriate from any such subsidiaries, the Company recognizes deferred tax liabilities on such foreign earnings.
−Removed: The Company assesses its income tax positions and records tax benefits for all years subject to examination based on the evaluation of the facts, circumstances, and information available at each reporting date.
−Removed: For those tax positions with a greater than 50 percent likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information, the Company records a tax benefit.
−Removed: For those income tax positions that are not likely to be sustained, no tax benefit is recognized in the consolidated financial statements.
−Removed: The Company recognizes interest and penalties related to uncertain tax positions as part of the provision for income taxes.
−Removed: Foreign Currency Contracts
−Removed: The Company uses foreign currency contracts as a part of its strategy to limit its exposures related to foreign currency denominated monetary assets and liabilities.
−Removed: The time duration of these foreign currency contracts approximates the underlying foreign currency transaction exposures, generally less than three months.
−Removed: These contracts are not designated as cash flow, fair value or net investment hedges.
−Removed: Changes in the fair value of these foreign currency contracts are recognized in income before income taxes.
−Removed: Recent Accounting Pronouncements
−Removed: The following table provides a brief description of recent Accounting Standards Updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”):
−Removed: Effective Date
−Removed: Effect on the Financial Statements or Other Significant Matters
−Removed: In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740):
−Removed: Simplifying the Accounting for Income Taxes.”
−Removed: ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles of ASC 740, including (i) the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items;
−Removed: (ii) the exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment (or vice-versa);
−Removed: and (iii) the exception for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.
−Removed: ASU 2019-12 also simplifies GAAP for other areas of ASC 740 by clarifying and amending the existing guidance.
−Removed: January 1, 2021.
−Removed: Early adoption is permitted.
−Removed: The Company is currently evaluating the impact of ASU 2019-12 on its consolidated financial statements.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Effective Date
−Removed: Effect on the Financial Statements or Other Significant Matters
−Removed: In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40):
−Removed: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.”
−Removed: ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).
−Removed: ASU 2018-15 should be applied either retrospectively or prospectively.
−Removed: January 1, 2020.
−Removed: Early adoption is permitted.
−Removed: The Company adopted ASU 2018-15 on a prospective basis during the first quarter of 2019.
−Removed: The adoption of ASU 2018-15 did not have a material impact on the Company’s consolidated financial statements.
−Removed: In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220):
−Removed: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.”
−Removed: ASU 2018-02 allows an entity to reclassify the income tax effects of the U.S.
−Removed: Tax Cuts and Jobs Act (the “Tax Reform Act”) on items within accumulated other comprehensive income to retained earnings.
−Removed: ASU 2018-02 shall be applied either in the period of adoption or retrospectively to each period (or periods) in which the effects of the change in the U.S.
−Removed: federal corporate income tax rate under the Tax Reform Act is recognized.
−Removed: January 1, 2019.
−Removed: The Company adopted ASU 2018-02 during the first quarter of 2019.
−Removed: The adoption of ASU 2018-02 did not have a material impact on the Company’s consolidated financial statements.
−Removed: In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326):
−Removed: Measurement of Credit Losses on Financial Instruments.”
−Removed: ASU 2016-13 requires the measurement of all expected credit losses of financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.
−Removed: Financial institutions and other organizations will now use forward looking information to better inform their credit loss estimates.
−Removed: January 1, 2020.
−Removed: Early adoption is permitted.
−Removed: The Company does not expect the adoption of ASU 2016-13 to have a material impact on its consolidated financial statements.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Effective Date
−Removed: Effect on the Financial Statements or Other Significant Matters
−Removed: In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).”
−Removed: ASU 2016-02 requires a lessee to recognize on the balance sheet a liability to make lease payments and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term for both finance and operating leases and to disclose key information about leasing arrangements.
−Removed: January 1, 2019.
−Removed: The Company adopted ASU 2016-02 during the first quarter of 2019 using the modified retrospective approach.
−Removed: In addition, the Company elected the package of practical expedients permitted under the transition guidance.
−Removed: The adoption of ASU 2016-02 resulted in the recording of operating lease ROU assets and operating lease liabilities of approximately $ 35.3 million and $ 36.5 million, respectively, as of January 1, 2019.
−Removed: The adoption of
−Removed: ASU 2016-02 did not have an impact on the Company’s accumulated deficit, consolidated statement of operations, or consolidated statement of cash flows .
−Removed: In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition,” and requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
−Removed: The Company adopted ASU 2014-09 during the first quarter of 2018 using the modified retrospective method.
−Removed: ASU 2014-09 has been applied to those contracts which had not been completed as of January 1, 2018 and all new contracts entered into by the Company subsequent to January 1, 2018.
−Removed: The adoption of ASU 2014-09 did not have an impact on the Company’s Accumulated deficit.
−Removed: The Company recognizes revenue when control of promised goods or services is transferred to the customer.
−Removed: The transfer of control generally occurs upon shipment when title and risk of loss pass to the customer.
−Removed: The vast majority of the Company’s revenue is generated from the sale of distinct products.
−Removed: Revenue is measured as the amount of consideration the Company expects to receive in exchange for such products, which is generally at contractually stated prices.
−Removed: Sales taxes and value added taxes collected concurrently with revenue generating activities are excluded from revenue.
−Removed: Performance Obligations
−Removed: Substantially all of the Company’s revenue is recognized at a point in time, upon shipment, rather than over time.
−Removed: At the request of its customers, the Company may perform professional services, generally for the maintenance and repair of products previously sold to those customers and for engineering services.
−Removed: Professional services are typically short in duration, mostly less than one month , and aggregate to less than 3 % of the Company’s consolidated revenue.
−Removed: Revenue is typically recognized at a point in time when control transfers to the customer upon completion of professional services.
−Removed: These services generally involve a single distinct performance obligation.
−Removed: The consideration expected to be received in exchange for such services is normally the contractually stated amount.
−Removed: The Company occasionally sells separately priced non-standard/extended warranty services or preventative maintenance plans with the sale of products.
−Removed: The transfer of control over the service plans is over time.
−Removed: The Company recognizes the related revenue ratably over the terms of the service plans.
−Removed: The transaction price of a contract is allocated to each performance obligation based on its relative standalone selling price.
−Removed: Standalone selling prices are generally determined based on the prices charged to customers or using the expected cost plus a margin.
−Removed: Shipping & Handling Costs
−Removed: The Company accounts for shipping and handling activities that occur after the transfer of control over the related goods as fulfillment activities rather than performance obligations.
−Removed: The shipping and handling fees charged to customers are recognized as revenue and the related costs are recorded in cost of revenue at the time of transfer of control.
−Removed: The Company generally provides warranties for its products.
−Removed: The standard warranty period is typically 12 months to 24 months for the Photonics and Precision Motion segments and 12 months to 36 months for the Vision segment.
−Removed: The standard warranty period for product sales is accounted for under the provisions of ASC 450, “Contingencies,” as the Company has the ability to ascertain the likelihood of the liability and can reasonably estimate the amount of the liability.
−Removed: A provision for the
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: estimated warranty cost is recorded in cost of revenue at the time revenue is recognized.
−Removed: The Company’s estimate of costs to service the warranty obligations is based on historical experience and expectations of future conditions.
−Removed: To the extent that the Company’s experience in warranty claims or costs associated with servicing those claims differ from the original estimates, revisions to the estimated warranty liability are recorded at that time, with an offsetting adjustment to cost of revenue.
−Removed: Practical Expedients and Exemptions
−Removed: The Company expenses incremental direct costs of obtaining a contract when incurred if the expected amortization period is one year or less.
−Removed: These costs are recorded within selling, general and administrative expenses in the consolidated statement of operations.
−Removed: The Company does not adjust the promised amount of consideration for the effects of a financing component because the time period between the transfer of a promised good to a customer and the customer’s payment for that good is typically one year or less.
−Removed: The Company does not disclose the value of the remaining performance obligation for contracts with an original expected length of one year or less.
−Removed: Contract Liabilities
−Removed: Contract liabilities consist of deferred revenue and advance payments from customers, including amounts that are refundable.
−Removed: These contract liabilities are classified as either current or long-term liabilities in the consolidated balance sheet based on the timing of when the Company expects to recognize the related revenue.
−Removed: As of December 31, 2019 and December 31, 2018, contract liabilities were $ 3.6 million and $ 4.7 million, respectively, and are included in accrued expenses and other current liabilities and other liabilities in the accompanying consolidated balance sheets.
−Removed: The decrease in the contract liability balance during the year ended December 31, 2019 is primarily due to $ 4.1 million of revenue recognized during the year that was included in the contract liability balance at December 31, 2018, partially offset by cash payments received in advance of satisfying performance obligations.
−Removed: Disaggregated Revenue
−Removed: See Note 19 for the Company’s disaggregation of revenue by segment, geography and end market.
−Removed: Business Combinations
−Removed: 2019 Acquisitions
−Removed: On July 31, 2019 , the Company acquired 100 % of the outstanding shares of ARGES GmbH (“ARGES”), a Wackersdorf, Germany-based manufacturer of innovative laser scanning subsystems used in industrial materials processing and medical applications, for a total purchase price of € 65.5 million ($ 72.9 million), subject to customary working capital adjustments.
−Removed: The purchase price consists of € 24.0 million ($ 26.7 million) cash paid at closing, 124,461 Novanta common shares issued at closing (with a fair market value of € 9.8 million, or $ 10.9 million, based on the closing market price of $ 87.58 per share on July 30, 2019), € 7.1 million ($ 7.9 million) estimated fair value of contingent consideration and € 24.7 million ($ 27.4 million) deferred cash consideration which is expected to be paid on June 29, 2020.
−Removed: The initial cash purchase price was financed with borrowings under the Company’s revolving credit facility.
−Removed: The contingent consideration will be payable annually based on actual revenue achievement against certain revenue targets from August 2019 through December 2026, with the first payment due in the first quarter of 2021.
−Removed: The undiscounted range of contingent consideration is zero to € 10.0 million.
−Removed: The addition of ARGES complements and expands the Company’s existing portfolio of lasers and laser beam steering solutions capabilities within the Photonics reportable segment.
−Removed: On June 5, 2019, the Company acquired 100 % of the outstanding stock of Med X Change, Inc.
−Removed: (“Med X Change”), a Bradenton, Florida-based provider of medical grade, high definition and 4K video recording and documentation solutions to OEMs in the medical market.
−Removed: The purchase price of $ 21.9 million, net of working capital adjustments, was financed with cash on hand and a $ 21.0 million borrowing under the Company’s revolving credit facility.
−Removed: The addition of Med X Change complements and broadens the range of technology capabilities within the Company’s Vision reportable segment by providing its medical OEM customers with more integrated operating room solutions.
−Removed: On April 16, 2019, the Company acquired 100 % of the outstanding stock of Ingenia-CAT, S.L.
−Removed: (“Ingenia”), a Barcelona, Spain-based provider of high-performance servo drives and control software to OEMs in the medical and advanced industrial
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: markets , for a total purchase price of € 14.3 million ($ 16.2 million), net of working capital adjustments .
−Removed: The purchase price consists of € 8.5 million ($ 9.6 million) cash consideration and € 5.8 million ($ 6.6 million) estimated fair value of contingent consideration.
−Removed: The initial cash purchase price was financed with cash on hand and borrowings under the Company’s revolving credit facility.
−Removed: The contingent consideration will be payable annually based on actual revenue achievement against certain revenue targets from April 2019 through March 2022, with the first payment due in the second quarter of 2020.
−Removed: The undiscounted range of contingent consideration is zero to € 8.0 million.
−Removed: The Ingenia purchase and sale agreement requires € 0.8 million ($ 0.9 million) of the purchase price to be held back by the Company for indemnification of certain representations and warranties claims by the Company until the expiration of the holdback agreement in October 2021 .
−Removed: The addition of Ingenia enhances the Company’s strategic position in precision motion control industry by enabling it to offer a broader range of motion control technologies and integrated solutions.
−Removed: Ingenia is included in the Company’s Precision Motion reportable segment.
−Removed: The acquisitions of ARGES, Med X Change and Ingenia have been accounted for as business combinations.
−Removed: Purchase price allocation is based upon a valuation of assets acquired and liabilities assumed.
−Removed: Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the acquisition dates.
−Removed: The fair values of intangible assets were based on valuation techniques with estimates and assumptions developed by management.
−Removed: The process for estimating the fair values of identifiable intangible assets requires the use of significant estimates and assumptions, including revenue growth rates, customer attrition rates, royalty rates, discount rates and projected future cash flows.
−Removed: The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill.
−Removed: The total purchase price for ARGES was allocated as follows (in thousands):
−Removed: Accounts receivable
−Removed: Property, plant and equipment
−Removed: Intangible assets
−Removed: Total assets acquired
−Removed: Accounts payable
−Removed: Deferred tax liabilities
−Removed: Other liabilities
−Removed: Total liabilities assumed
−Removed: Total assets acquired, net of liabilities assumed
−Removed: cash acquired
−Removed: Total purchase price, net of cash acquired
−Removed: contingent consideration
−Removed: issuance of common shares
−Removed: deferred cash consideration
−Removed: Initial cash purchase price, net of cash acquired
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: The purchase price allocation is preliminary pending final settlement of net working capital adjustment and the deferred purchase price.
−Removed: The fair value of intangible assets for ARGES is comprised of the following (dollar amounts in thousands):
−Removed: Weighted Average
−Removed: Estimated Fair
−Removed: Developed technologies
−Removed: Customer relationships
−Removed: Trademarks and trade names
−Removed: Customer relationships and backlog for ARGES were valued using the multi-period excess earnings method.
−Removed: Developed technology and trademarks and trade names for ARGES were valued using the relief-from-royalty method.
−Removed: The purchase price allocation resulted in $ 24.7 million of identifiable intangible assets and $ 43.0 million of goodwill.
−Removed: As the ARGES acquisition was an acquisition of outstanding common shares, none of the resulting goodwill is expected to be deductible for income tax purposes.
−Removed: Intangible assets are being amortized over their weighted average useful lives primarily based upon the pattern in which anticipated economic benefits from such assets are expected to be realized.
−Removed: The goodwill recorded represents the anticipated incremental value of future cash flows potentially attributable to:
−Removed: (i) expected future benefits from advancing the Company’s photonic-based product roadmap through the addition of R&D capabilities from ARGES;
−Removed: (ii) ARGES’s ability to grow the business with existing and new customers, including leveraging the Company’s customer base;
−Removed: (iii) ARGES’s ability to grow the business through new product introductions;
−Removed: and (iv) cost improvements due to the integration of ARGES’s operations into the Company’s existing infrastructure.
−Removed: The operating results of ARGES were included in the Company’s results of operations beginning on July 31, 2019.
−Removed: ARGES contributed revenues of $ 4.9 million and a loss before income taxes of $ 3.5 million for the year ended December 31, 2019.
−Removed: Loss before income taxes for the year ended December 31, 2019 included amortization of inventory fair value adjustments and purchased intangible assets of $ 2.2 million.
−Removed: The pro forma financial information reflecting the operating results of ARGES, as if it had been acquired as of January 1, 2018, would not differ materially from the operating results of the Company as reported for the year ended December 31, 2018.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Med X Change and Ingenia
−Removed: The final purchase price for Med X Change and Ingenia is as follows (in thousands):
−Removed: Accounts receivable
−Removed: Property, plant and equipment
−Removed: Intangible assets
−Removed: Total assets acquired
−Removed: Accounts payable
−Removed: Deferred tax liabilities
−Removed: Other liabilities
−Removed: Total liabilities assumed
−Removed: Total assets acquired, net of liabilities assumed
−Removed: cash acquired
−Removed: Total purchase price, net of cash acquired
−Removed: contingent consideration
−Removed: purchase price holdback
−Removed: Net cash used for acquisition of businesses
−Removed: The fair value of intangible assets for Med X Change and Ingenia is comprised of the following (dollar amounts in thousands):
−Removed: Weighted Average
−Removed: Estimated Fair Value
−Removed: Developed technologies
−Removed: Customer relationships
−Removed: Trademarks and trade names
−Removed: Customer relationships and backlog for both Med X Change and Ingenia were valued using the multi-period excess earnings method.
−Removed: Developed technology for Med X Change and Ingenia were valued using the relief from royalty and multi-period excess earnings methods, respectively.
−Removed: Trademarks and trade names for both Med X Change and Ingenia were valued using the relief-from-royalty method.
−Removed: The Company recorded an aggregate fair value of $ 22.4 million of identifiable intangible assets from the Med X Change and Ingenia acquisitions.
−Removed: Intangible assets are being amortized over their weighted average useful lives primarily based upon the pattern in which anticipated economic benefits from such assets are expected to be realized.
−Removed: The Company recorded $ 13.4 million of goodwill from these acquisitions.
−Removed: Goodwill amounting to $ 6.2 million from the Med X Change acquisition is expected to be fully deductible for income tax purposes.
−Removed: Goodwill amounting to $ 7.2 million from the Ingenia acquisition is not expected to be deductible for income tax purposes.
−Removed: The goodwill recorded represents the anticipated incremental value of future cash flows potentially attributable to:
−Removed: (i) the ability of Med X Change and Ingenia to grow the business with existing and new customers, including leveraging the Company’s customer base;
−Removed: (ii) their ability to grow the businesses through new product introductions;
−Removed: and (iii) cost improvements due to the integration of Med X Change and Ingenia operations into the Company’s existing infrastructure.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: The operating results of Med X Change and Ingenia were included in the Company’s results of operations beginning on the respective acquisition dates.
−Removed: These acquisitions contributed revenues of $ 7.9 million and an income before income taxes of $ 0.6 million for the year ended December 31, 2019.
−Removed: Income before income taxes for the year ended December 31, 2019 included amortization of inventory fair value adjustments and purchased intangible assets of $ 1.5 million.
−Removed: The pro forma financial information reflecting the operating results of Med X Change and Ingenia, as if they had been acquired as of January 1, 2018, would not differ materially from the operating results of the Company as reported for the year ended December 31, 2018.
−Removed: 2018 Acquisitions
−Removed: During the year ended December 31, 2018, the Company acquired two businesses for total cash considerations of $ 33.5 million, including the acquisition of Zettlex Holdings Limited ("Zettlex").
−Removed: The consolidated statement of operations includes the operating results of the businesses from the dates of acquisition.
−Removed: On May 1, 2018, the Company acquired 100 % of the outstanding stock of Zettlex, a Cambridge, United Kingdom-based provider of inductive encoder products that provide absolute and accurate positioning, even in extreme operating environments, to OEMs in the medical and advanced industrial markets.
−Removed: The purchase price of £ 23.3 million ($ 32.0 million), net of working capital adjustments, was financed with cash on hand and borrowings under the Company’s revolving credit facility.
−Removed: The final purchase price allocation is as follows (in thousands):
−Removed: Accounts receivable
−Removed: Property, plant and equipment
−Removed: Intangible assets
−Removed: Total assets acquired
−Removed: Accounts payable
−Removed: Accrued expenses and other liabilities
−Removed: Deferred tax liabilities
−Removed: Total liabilities assumed
−Removed: Total assets acquired, net of liabilities assumed
−Removed: cash acquired
−Removed: Total purchase price, net of cash acquired
−Removed: The fair value of intangible assets is comprised of the following (dollar amounts in thousands):
−Removed: Weighted Average
−Removed: Estimated Fair
−Removed: Developed technologies
−Removed: Customer relationships
−Removed: Trademarks and trade names
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: The purchase price allocation resulted in $ 14.6 million of identifiable intangible assets and $ 11.8 million of goodwill.
−Removed: As the Zettlex acquisition was an acquisition of outstanding common shares, none of the resulting goodwill is deductible for income tax purposes.
−Removed: Intangible assets are being amortized over their weighted average useful lives primarily based upon the pattern in which anticipated economic benefits from such assets are expected to be realized.
−Removed: The goodwill recorded represents the anticipated incremental value of future cash flows potentially attributable to:
−Removed: (i) Zettlex’s ability to grow its business with existing and new customers, including leveraging the Company’s customer base;
−Removed: and (ii) cost improvements due to the integration of Zettlex operations into the Company’s existing infrastructure.
−Removed: The operating results of Zettlex were included in the Company’s results of operations beginning on May 1, 2018.
−Removed: Zettlex contributed revenues of $ 8.3 million and a loss before income taxes of $ 1.8 million for the year ended December 31, 2018.
−Removed: Loss before income taxes for the year ended December 31, 2018 included amortization of purchased intangible assets of $ 1.3 million and compensation expense of $ 4.4 million recognized under earn-out agreements.
−Removed: Zettlex is included in the Company’s Precision Motion reportable segment.
−Removed: 2017 Acquisitions
−Removed: On July 3, 2017, the Company acquired 100 % of the outstanding shares of W.O.M.
−Removed: World of Medicine GmbH (“WOM”), a Berlin, Germany-based provider of medical insufflators, pumps, and related disposables for OEMs in the minimally invasive surgery market, for a total purchase price of € 118.1 million ($ 134.9 million).
−Removed: The acquisition was financed with a € 118.0 million ($ 134.8 million) draw-down on the Company’s revolving credit facility.
−Removed: The final purchase price allocation is as follows (in thousands):
−Removed: Accounts receivable
−Removed: Property, plant and equipment
−Removed: Intangible assets
−Removed: Total assets acquired
−Removed: Accounts payable
−Removed: Other liabilities
−Removed: Deferred tax liabilities
−Removed: Total liabilities assumed
−Removed: Total assets acquired, net of liabilities assumed
−Removed: cash acquired
−Removed: Total purchase price, net of cash acquired
−Removed: The fair value of intangible assets is comprised of the following (dollar amounts in thousands):
−Removed: Weighted Average
−Removed: Estimated Fair
−Removed: Developed technologies
−Removed: Customer relationships
−Removed: Trademarks and trade names
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: The purchase price allocation resulted in $ 59.7 million of identifiable intangible assets and $ 55.6 million of goodwill.
−Removed: As the WOM acquisition was an acquisition of outstanding common shares, none of the resulting goodwill is deductible for income tax purposes.
−Removed: Intangible assets are being amortized over their weighted average useful lives primarily based upon the pattern in which anticipated economic benefits from such assets are expected to be realized.
−Removed: The goodwill recorded represents the anticipated incremental value of future cash flows attributable to:
−Removed: (i) WOM’s ability to grow its business with existing and new customers, including leveraging the Company’s customer base;
−Removed: and (ii) cost improvements due to expansion in scale.
−Removed: The operating results of WOM were included in the Company’s results of operations beginning on July 3, 2017.
−Removed: WOM contributed revenues of $ 49.4 million and a loss before income taxes of $ 1.2 million for the year ended December 31, 2017.
−Removed: Loss before income taxes for the year ended December 31, 2017 included amortization of inventory fair value adjustments and amortization of purchased intangible assets of $ 6.0 million.
−Removed: WOM is included in the Company’s Vision reportable segment.
−Removed: Laser Quantum
−Removed: On January 10, 2017, the Company acquired an additional approximately 35 % of the outstanding shares of Laser Quantum, a Manchester, United Kingdom-based provider of solid state continuous wave lasers, ultrafast lasers, and optical light engines to OEMs in the medical market, for £ 25.5 million ($ 31.1 million) in cash consideration.
−Removed: The purchase price was financed with cash on hand and a $ 30.0 million draw-down on the Company’s revolving credit facility.
−Removed: As a result of this transaction, the Company’s ownership position in Laser Quantum increased from approximately 41 % to approximately 76 %.
−Removed: In connection with the purchase price allocation, upon gaining control over Laser Quantum, the Company recognized a nontaxable gain of $ 26.4 million in the consolidated statement of operations for the twelve months ended December 31, 2017.
−Removed: The gain represented the excess of the fair value of the Company’s previously-held equity interest in Laser Quantum over its carrying value upon gaining control.
−Removed: The fair value of the approximately 41 % equity interest previously held by the Company before the acquisition and the fair value of the approximately 24 % noncontrolling interest held by the remaining shareholders of Laser Quantum after the acquisition were determined using a combination of the discounted cash flow method (an income approach), the guideline public company method (a market approach), and the subject company transaction method (a market approach).
−Removed: The subject company transaction method was based on the purchase price paid by the Company for the acquisition of the additional approximately 35 % of the outstanding shares, while giving consideration to the control and/or minority nature of the subject equity interests.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: The final purchase price allocation is as follows (in thousands):
−Removed: Accounts receivable
−Removed: Property, plant and equipment
−Removed: Intangible assets
−Removed: Total fair value of assets
−Removed: Accounts payable
−Removed: Other liabilities
−Removed: Deferred tax liabilities
−Removed: Total fair value of liabilities
−Removed: Total fair value of assets, net of fair value of liabilities
−Removed: fair value of equity interest previously held by Novanta
−Removed: fair value of noncontrolling interest
−Removed: Total purchase price paid by Novanta
−Removed: cash acquired
−Removed: Purchase price, net of cash acquired
−Removed: The fair value of intangible assets is comprised of the following (dollar amounts in thousands):
−Removed: Weighted Average
−Removed: Estimated Fair
−Removed: Developed technologies
−Removed: Customer relationships
−Removed: Trademarks and trade names
−Removed: The purchase price allocation resulted in $ 39.0 million of identifiable intangible assets and $ 31.2 million of goodwill.
−Removed: As the Laser Quantum acquisition was an acquisition of outstanding common shares, none of the resulting goodwill is deductible for income tax purposes.
−Removed: Intangible assets are being amortized over their weighted average useful lives primarily based upon the pattern in which anticipated economic benefits from such assets are expected to be realized.
−Removed: The goodwill recorded represents the anticipated incremental value of future cash flow potential attributable to:
−Removed: (i) Laser Quantum’s ability to grow its business with existing and new customers, including leveraging the Company’s broader customer base;
−Removed: and (ii) cost improvements due to expansion in scale.
−Removed: The operating results of Laser Quantum were included in the Company’s results of operations beginning on January 10, 2017.
−Removed: Laser Quantum contributed revenues of $ 44.7 million and income before income taxes of $ 11.3 million for the year ended December 31, 2017.
−Removed: Income before income taxes for the year ended December 31, 2017 included $ 7.1 million of expenses associated with the amortization of inventory fair value step-up and purchased intangible assets.
−Removed: Laser Quantum is included in the Company’s Photonics reportable segment.
−Removed: As part of the agreement to acquire the additional approximately 35 % of the outstanding shares in January 2017, the Company and the remaining shareholders of Laser Quantum entered into a call and put option agreement for the purchase and sale, in 2020 , of all the remaining Laser Quantum shares held by the remaining shareholders, subject to certain conditions.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: price for the remaining shares would be based on the proportionate share of the noncontrolling interest in Laser Quantum’s cash on hand as of December 31, 2019 and a multiple of Laser Quantum’s EBITDA for the twelve months ending December 31, 2019, as defined in the call and put option agreement.
−Removed: As a result of the put option held by the remaining shareholders, the noncontrolling interest was considered a redeemable equity instrument and was presented as temporary equity on the consolidated balance sheet.
−Removed: The proportionate share of the net income from Laser Quantum attributable to the noncontrolling interest was reported as a reduction to the consolidated net income in the Company’s consolidated statement of operations and an increase to the carrying value of the redeemable noncontrolling interest on the consolidated balance sheet.
−Removed: The Company reported the redeemable noncontrolling interest at the higher of (i) the carrying value without any redemption value adjustments or (ii) the estimated redemption value as of the end of each reporting period.
−Removed: The estimated redemption value was determined as of the end of the reporting period as if it were also the redemption date for the instrument.
−Removed: The resulting adjustments were recorded in retained earnings in shareholders’ equity and did not affect net income attributable to Novanta Inc.
−Removed: However, these adjustments were included in the determination of earnings per common share for the periods in which such adjustments were required (See Note 9).
−Removed: The Company recorded a $ 1.8 million reduction and a $ 20.2 million addition to the noncontrolling interest redemption value for the years ended December 31, 2018 and 2017, respectively.
−Removed: On September 27, 2018, the Company acquired the remaining approximately 24 % of the outstanding shares of Laser Quantum for an aggregate consideration of $ 45.1 million, consisting of $ 30.7 million of cash and 213,219 shares of the Company’s restricted stock.
−Removed: The restricted stock will become fully vested upon achievement of certain milestones included in the restricted stock agreement.
−Removed: Restricted stock not otherwise vested as of December 31, 2025 will be subject to forfeiture.
−Removed: The acquisition was accounted for as a transaction among shareholders.
−Removed: No gain or loss was recognized in the consolidated statements of operations for the year ended December 31, 2018.
−Removed: On January 10, 2017, the Company acquired from Trimble Inc.
−Removed: certain assets and liabilities that constituted the business of ThingMagic, a Woburn, Massachusetts-based provider of ultra-high frequency (“UHF”) radio frequency identification (“RFID”) modules and finished RFID readers to OEMs in the medical and advanced industrial markets, for a total purchase price of $ 19.1 million.
−Removed: The acquisition was financed with cash on hand and a $ 12.0 million draw-down on the Company’s revolving credit facility.
−Removed: The final purchase price allocation is as follows (in thousands):
−Removed: Intangible assets
−Removed: Total assets acquired
−Removed: Other liabilities
−Removed: Total liabilities assumed
−Removed: Total purchase price
−Removed: The fair value of intangible assets is comprised of the following (dollar amounts in thousands):
−Removed: Weighted Average
−Removed: Estimated Fair
−Removed: Developed technologies
−Removed: Customer relationships
−Removed: Trademarks and trade names
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: The purchase price allocation resulted in $ 7.4 million of identifiable intangible assets and $ 9.9 million of goodwill.
−Removed: As the ThingMagic acquisition was treated as an acquisition of assets for income tax purposes, the goodwill acquired is fully deductible for income tax purposes.
−Removed: Intangible assets are being amortized over their weighted average useful lives primarily based upon the pattern in which anticipated economic benefits from such assets are expected to be realized.
−Removed: The goodwill recorded represents the anticipated incremental value of future cash flows potentially attributable to:
−Removed: (i) ThingMagic’s ability to grow its business with existing and new customers, including leveraging the Company’s customer base;
−Removed: (ii) cost synergies in combining the research and development capabilities from ThingMagic with the existing RFID capabilities within Novanta;
−Removed: and (iii) cost improvements due to the integration of ThingMagic operations into the Company’s existing infrastructure.
−Removed: The operating results of ThingMagic were included in the Company’s results of operations beginning on January 10, 2017.
−Removed: ThingMagic contributed revenues of $ 8.6 million and income before income taxes of $ 0.4 million for the year ended December 31, 2017.
−Removed: Income before income taxes for the year ended December 31, 2017 included amortization of inventory fair value adjustments and amortization of purchased intangible assets of $ 1.5 million.
−Removed: ThingMagic is included in the Company’s Vision reportable segment.
−Removed: Unaudited Pro Forma Information
−Removed: The unaudited pro forma information presented below includes the effects of business combination accounting resulting from the acquisitions of WOM and Laser Quantum, including amortization of intangible assets, interest expense on borrowings in connection with the acquisitions, and elimination of the gain from the Laser Quantum acquisition and income from the Company’s previous equity method investment in Laser Quantum, and the related tax effects, as though the acquisitions had been consummated as of January 1, 2016.
−Removed: The unaudited pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the results of operations that actually would have been achieved if the acquisitions had taken place on January 1, 2017.
−Removed: Year Ended December 31, 2017
−Removed: Consolidated net income
−Removed: Earnings per share attributable to Novanta Inc.
−Removed: Earnings per share attributable to Novanta Inc.
−Removed: - Diluted (1)
−Removed: The computation of pro forma earnings per share attributable to Novanta Inc.
−Removed: included a $ 20.2 million adjustment of redeemable noncontrolling interest to estimated redemption value for the year ended December 31, 2017.
−Removed: Pro forma earnings for the year ended December 31, 2017 were adjusted to exclude non-recurring items such as amortization of inventory fair value adjustments of $ 4.4 million, acquisition related costs of $ 4.3 million, the gain on business acquisition of $ 26.4 million and income from equity method investment of $ 0.1 million.
−Removed: Pro forma earnings for the year ended December 31, 2017 were adjusted to include an increase in amortization of intangible assets of $ 5.3 million and an increase in interest expense of $ 1.4 million associated with borrowings under the Company’s revolving credit facility used to fund the acquisitions.
−Removed: Acquisition Costs
−Removed: The Company recognized acquisition costs of $ 1.6 million, $ 1.1 million and $ 4.4 million in the years ended December 31, 2019, 2018 and 2017, respectively, related to the acquisitions that occurred during these years.
−Removed: These costs consisted of finders’ fees, legal, valuation and other professional or consulting fees.
−Removed: These amounts were included in restructuring and acquisition related costs in the consolidated statements of operations.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Accumulated Other Comprehensive Loss
−Removed: Comprehensive income (loss) is defined as net income (loss) and other changes in stockholders’ equity that do not represent transactions with stockholders or in the Company’s stock.
−Removed: Changes in accumulated other comprehensive loss were as follows (in thousands):
−Removed: Total Accumulated
−Removed: Comprehensive
−Removed: Balance at December 31, 2016
−Removed: Other comprehensive income (loss)
−Removed: Amounts reclassified from accumulated other comprehensive loss (1)
−Removed: Balance at December 31, 2017
−Removed: Other comprehensive income (loss)
−Removed: Amounts reclassified from accumulated other comprehensive loss (1)
−Removed: Balance at December 31, 2018
−Removed: Other comprehensive income (loss)
−Removed: Amounts reclassified from accumulated other comprehensive loss (1)
−Removed: Balance at December 31, 2019
−Removed: The amounts reclassified from accumulated other comprehensive loss were included in other income (expense) in the consolidated statements of operations.
−Removed: Goodwill, Intangible Assets and Impairment Charges
−Removed: The following table summarizes changes in goodwill during the year ended December 31, 2019 (in thousands):
−Removed: December 31, 2019
−Removed: Balance at beginning of year
−Removed: Goodwill acquired from acquisitions
−Removed: Effect of foreign exchange rate changes
−Removed: Balance at end of year
−Removed: Goodwill by reportable segment as of December 31, 2019 was as follows (in thousands):
−Removed: Reportable Segment
−Removed: Accumulated impairment of goodwill
−Removed: Goodwill by reportable segment as of December 31, 2018 was as follows (in thousands):
−Removed: Reportable Segment
−Removed: Accumulated impairment of goodwill
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Intangible Assets
−Removed: Intangible assets as of December 31, 2019 and 2018, respectively, are summarized as follows (dollar amounts in thousands):
−Removed: December 31, 2019
−Removed: Gross Carrying
−Removed: Weighted Average Remaining Life (Years)
−Removed: Amortizable intangible assets:
−Removed: Patents and developed technologies
−Removed: Customer relationships
−Removed: Customer backlog
−Removed: Trademarks and trade names
−Removed: Amortizable intangible assets
−Removed: Non-amortizable intangible assets:
−Removed: December 31, 2018
−Removed: Gross Carrying
−Removed: Weighted Average Remaining Life (Years)
−Removed: Amortizable intangible assets:
−Removed: Patents and developed technologies
−Removed: Customer relationships
−Removed: Customer backlog
−Removed: Non-compete covenant
−Removed: Trademarks and trade names
−Removed: Amortizable intangible assets
−Removed: Non-amortizable intangible assets:
−Removed: Amortizable intangible assets included intangible assets of $ 1.2 million recognized in conjunction with the acquisition of certain customer relationships in September 2018.
−Removed: All definite-lived intangible assets are amortized either on a straight-line basis or an economic benefit basis over their remaining estimated useful life.
−Removed: Amortization expense for patents and developed technologies is included in cost of revenue in the accompanying consolidated statements of operations.
−Removed: Amortization expense for customer relationships and definite-lived trademarks, trade names and other intangibles is included in operating expenses in the accompanying consolidated statements of operations.
−Removed: Amortization expense was as follows (in thousands):
−Removed: Year Ended December 31,
−Removed: Amortization expense – cost of revenue
−Removed: Amortization expense – operating expenses
−Removed: Total amortization expense
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Estimated future amortization expense for each of the five succeeding years and thereafter is as follows (in thousands):
−Removed: Year Ending December 31,
−Removed: Impairment Charges
−Removed: The Company did no t have any goodwill or indefinite-lived intangible asset impairment charges during 2019, 2018 or 2017.
−Removed: Fair Value Measurements
−Removed: ASC 820, “Fair Value Measurement,” establishes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the third is considered unobservable:
−Removed: Quoted prices for identical assets or liabilities in active markets which the Company can access
−Removed: Observable inputs other than those described in Level 1
−Removed: Unobservable inputs
−Removed: Current Assets and Liabilities
−Removed: The Company’s cash equivalents are highly liquid investments with original maturities of three months or less, which represent an asset the Company measures at fair value on a recurring basis.
−Removed: The Company determines the fair value of cash equivalents using a market approach based on quoted prices in active markets.
−Removed: The fair values of cash, accounts receivable, income taxes receivable, accounts payable, income taxes payable and accrued expenses and other current liabilities approximate their carrying values because of their short-term nature.
−Removed: Foreign Currency Contracts
−Removed: The Company addresses market risks from changes in foreign currency exchange rates through a risk management program that includes the use of derivative financial instruments to mitigate certain balance sheet foreign currency transaction exposures.
−Removed: The Company uses foreign currency forward contracts as a part of its strategy to manage exposures related to foreign currency denominated monetary assets and liabilities.
−Removed: Contingent Considerations
−Removed: On July 31, 2019, the Company acquired ARGES.
−Removed: Under the purchase and sale agreement for the ARGES acquisition, the former owner of ARGES is eligible to receive contingent consideration based on the achievement of certain revenue targets by the Company from August 2019 through December 2026.
−Removed: The undiscounted range of possible contingent consideration is zero to € 10.0 million.
−Removed: If the revenue targets are achieved, the contingent consideration would be payable annually with the first payment due in the first quarter of 2021.
−Removed: The estimated fair value of the contingent consideration of € 7.1 million ($ 7.9 million) was determined based on the Monte Carlo valuation method and was recorded as part of the purchase price as of the acquisition date.
−Removed: Subsequent changes in the estimated fair value of the contingent consideration liability are recorded in the consolidated statement of operations in restructuring and acquisition related costs until the liability is fully settled.
−Removed: Based on revenue performance as of December 31, 2019 and the most recent revenue projections for fiscal years 2020 to 2026, the fair value of the contingent consideration was adjusted to € 7.0 million ($ 7.9 million), which is reported as a long-term liability in other liabilities on the consolidated balance sheet as of December 31, 2019.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: On April 16, 2019, the Company acquired Ingenia.
−Removed: Under the purchase and sale agreement for the Ingenia acquisition, the former shareholders of Ingenia are eligible to receive contingent consideration based on the achievement of certain revenue targets by the Company from April 2019 through March 2022.
−Removed: The undiscounted range of possible contingent consideration is zero to € 8.0 million.
−Removed: If the revenue targets are achieved, the contingent consideration would be payable in three annual installments from 2020 to 2022.
−Removed: The estimated fair value of the contingent consideration of € 5.8 million ($ 6.6 million) as of the acquisition date was determined based on the Monte Carlo valuation method and was recorded as part of the purchase price as of the acquisition date.
−Removed: Subsequent changes in the estimated fair value of the contingent consideration liability are recorded in the consolidated statement of operations in restructuring and acquisition related costs until the liability is fully settled.
−Removed: Based on revenue performance as of December 31, 2019 and the most recent revenue projections for fiscal years 2020 to 2022, the fair value of the contingent consideration was adjusted to € 5.9 million ($ 6.7 million) as of December 31, 2019.
−Removed: On December 14, 2016 , the Company acquired certain video signal processing and management technologies used in medical visualization solutions.
−Removed: Under the purchase and sale agreement, the owners are eligible to receive contingent consideration based on the achievement of certain revenue targets by the Company from 2018 to 2021 from products utilizing the acquired technologies.
−Removed: The undiscounted range of possible contingent consideration is zero to € 5.5 million ($ 6.6 million).
−Removed: If such targets are achieved, the contingent consideration would be payable in four installments from 2019 to 2022.
−Removed: As the acquired assets did not meet the definition of a business, the fair value of the contingent consideration is recognized when probable and estimable and is capitalized as part of the cost of the acquired assets.
−Removed: Subsequent changes in the estimated fair value of this contingent liability are recorded as adjustments to the carrying value of the asset acquired and amortized over the remaining useful life of the underlying asset.
−Removed: Based on revenue performance as of December 31, 2019 and the most recent revenue projections for fiscal years 2020 and 2021, the fair value of the contingent consideration was adjusted to $ 5.8 million as of December 31, 2019.
−Removed: The first payment of $ 2.6 million will be due in the first quarter of 2020.
−Removed: The following table summarizes the fair values of the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 (in thousands):
−Removed: Quoted Prices in
−Removed: Significant Other
−Removed: Active Markets for
−Removed: Significant Other
−Removed: Identical Assets
−Removed: Observable Inputs
−Removed: Cash equivalents
−Removed: Prepaid expenses and other current assets:
−Removed: Foreign currency forward contracts
−Removed: Accrued expenses and other current liabilities:
−Removed: Contingent considerations - Current
−Removed: Foreign currency forward contracts
−Removed: Other liabilities:
−Removed: Contingent considerations - Long-term
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: The following table summarizes the fair values of the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 201 8 (in thousands):
−Removed: Quoted Prices in
−Removed: Significant Other
−Removed: Active Markets for
−Removed: Significant Other
−Removed: Identical Assets
−Removed: Observable Inputs
−Removed: Cash equivalents
−Removed: Prepaid expenses and other current assets:
−Removed: Foreign currency forward contracts
−Removed: Accrued expenses and other current liabilities:
−Removed: Foreign currency forward contracts
−Removed: Other liabilities:
−Removed: Contingent considerations - Long-term
−Removed: During the years ended December 31, 2019 and 2018, there were no transfers between fair value levels.
−Removed: Changes in the fair value of Level 3 contingent considerations for the year ended December 31, 2019 were as follows (in thousands):
−Removed: Contingent Considerations
−Removed: Balance at December 31, 2018
−Removed: Acquisition of ARGES
−Removed: Acquisition of Ingenia
−Removed: Fair value adjustments
−Removed: Effect of foreign exchange rates
−Removed: Balance at December 31, 2019
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: The following table provides qualitative information associated with the fair value measurement of the Company’s Level 3 liabilities:
−Removed: December 31, 2019
−Removed: (in thousands)
−Removed: Valuation Technique
−Removed: Unobservable Inputs
−Removed: Percentage Applied
−Removed: Contingent consideration (ARGES)
−Removed: Monte Carlo method
−Removed: Historical and projected revenues from July 2019 through December 2026
−Removed: Revenue volatility
−Removed: Discount rate
−Removed: Contingent consideration (Ingenia)
−Removed: Monte Carlo method
−Removed: Historical and projected revenues from April 2019 through March 2022
−Removed: Revenue volatility
−Removed: Discount rate
−Removed: Contingent consideration (Other)
−Removed: Discounted cash flow method
−Removed: Historical and projected revenues for fiscal years 2018 to 2021
−Removed: Discount rate
−Removed: See Note 11 for a discussion of the estimated fair value of the Company’s outstanding debt and Note 14 for a discussion of the estimated fair value of the Company’s pension plan assets.
−Removed: Foreign Currency Contracts
−Removed: The Company addresses market risks from changes in foreign currency exchange rates through a risk management program that includes the use of derivative financial instruments to mitigate certain foreign currency transaction exposures from future settlement of non-functional currency monetary assets and liabilities as of the end of a period.
−Removed: The Company does not enter into derivative transactions for speculative purposes.
−Removed: Gains and losses on derivative financial instruments substantially offset losses and gains on the underlying hedged exposures.
−Removed: Furthermore, the Company manages its exposure to counterparty risks on derivative instruments by entering into contracts with a diversified group of major financial institutions and by actively monitoring outstanding positions.
−Removed: As of December 31, 2019, the notional amount and fair value of the Company’s foreign currency forward contracts was $ 12.4 million and a net loss of less than $ 0.1 million, respectively.
−Removed: As of December 31, 2018, the notional amount and fair value of the Company’s foreign currency forward contracts was $ 31.2 million and a net loss of $ 0.2 million, respectively.
−Removed: For the years ended December 31, 2019, 2018 and 2017, the Company recognized aggregate net gains of $ 0.8 million, $ 1.5 million and $ 0.2 million, respectively, from the settlement of foreign currency forward contracts, which were included in foreign exchange transaction gains (losses) in the consolidated statements of operations.
−Removed: Earnings per Common Share
−Removed: Basic earnings per common share is computed by dividing net income attributable to Novanta Inc., after redeemable noncontrolling interest redemption value adjustment, if any, by the weighted average number of common shares outstanding during the year.
−Removed: Prior to the acquisition of the remaining noncontrolling interest in Laser Quantum in September 2018, the Company recognized changes in the redeemable noncontrolling interest redemption value by adjusting the carrying amount of the redeemable noncontrolling interest as of the end of the period to the higher of:
−Removed: (i) the estimated redemption value assuming the end of the period was also the redemption date or (ii) the carrying value without any redemption value adjustments.
−Removed: Such adjustments were recorded in retained earnings in stockholders’ equity instead of net income attributable to Novanta Inc.
−Removed: However, for both basic and diluted
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: earnings per common share, such redemption value adjustments were included in the calculation of the numerator for 2018 and 2017 .
−Removed: For diluted earnings per common share, the denominator includes the dilutive effects of outstanding restricted stock units, stock options, total shareholder return performance-based restricted stock units and certain non-GAAP EPS performance-based restricted stock units, determined using the treasury stock method.
−Removed: The dilutive effects of market-based contingently issuable shares are included in the weighted average dilutive share calculation based on the number of shares, if any, that would be issuable as of the end of the reporting period assuming the end of the reporting period is also the end of the performance period.
−Removed: The dilutive effects of attainment-based contingently issuable shares granted to the former Laser Quantum noncontrolling interest shareholders and non-GAAP EPS performance-based restricted stock units are included in the weighted average dilutive share calculation after the performance targets have been achieved.
−Removed: The following table sets forth the computation of basic and diluted earnings per common share (in thousands, except per share amounts):
−Removed: Year Ended December 31,
−Removed: Consolidated net income
−Removed: Net income attributable to noncontrolling interest
−Removed: Net income attributable to Novanta Inc.
−Removed: Redeemable noncontrolling interest redemption value adjustment
−Removed: Net income attributable to Novanta Inc.
−Removed: after adjustment for redeemable noncontrolling interest redemption value
−Removed: Denominators:
−Removed: Weighted average common shares outstanding— basic
−Removed: Dilutive potential common shares
−Removed: Weighted average common shares outstanding— diluted
−Removed: Antidilutive potential common shares excluded from above
−Removed: Earnings per Common Share Attributable to Novanta Inc.:
−Removed: For the year ended December 31, 2019, 46 non-GAAP EPS performance-based restricted stock units granted to certain members of the executive management team and 213 shares of restricted stock issued to Laser Quantum former non-controlling interest shareholders are considered contingently issuable shares and were excluded from the calculation of the denominator as the contingent conditions had not been met as of December 31, 2019.
−Removed: For the year ended December 31, 2018, 54 non-GAAP EPS performance-based restricted stock units granted to certain members of the executive management team and 213 shares of restricted stock issued to Laser Quantum former non-controlling interest shareholders were considered contingently issuable shares and were excluded from the calculation of the denominator as the contingent conditions had not been met as of December 31, 2018.
−Removed: For the year ended December 31, 2017, 59 non-GAAP EPS performance-based restricted stock units granted to certain members of the executive management team were excluded from the calculation of the denominator as the contingent conditions had not been met as of December 31, 2017.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Supplementary Balance Sheet Information
−Removed: The following tables provide the details of selected balance sheet items as of the dates indicated (in thousands):
−Removed: Raw materials
−Removed: Work-in-process
−Removed: Finished goods
−Removed: Demo and consigned inventory
−Removed: Total inventories
−Removed: Property, Plant and Equipment, Net
−Removed: Land, buildings and improvements
−Removed: Machinery and equipment
−Removed: Accumulated depreciation
−Removed: Property, plant and equipment, net
−Removed: The Company capitalized software development costs of $ 0.2 million, $ 1.1 million and $ 2.0 million in 2019, 2018 and 2017, respectively, in accordance with the guidance in ASC 350-40, “Internal-Use Software.”
−Removed: The following table summarizes depreciation expense on property, plant and equipment, including demo units and assets under finance leases (in thousands):
−Removed: Year Ended December 31,
−Removed: Depreciation expense
−Removed: Accrued Expenses and Other Current Liabilities
−Removed: The following table summarizes accrued expenses and other current liabilities as of the dates indicated (in thousands):
−Removed: Accrued compensation and benefits
−Removed: Accrued warranty
−Removed: Contract liabilities, current portion
−Removed: Deferred purchase price for acquisitions
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Accrued Warranty
−Removed: The following table summarizes changes in accrued warranty for the periods indicated (in thousands):
−Removed: Year Ended December 31,
−Removed: Balance at beginning of year
−Removed: Provision charged to cost of revenue
−Removed: Warranty liabilities acquired from acquisitions
−Removed: Use of provision
−Removed: Foreign currency exchange rate changes
−Removed: Balance at end of year
−Removed: Other Long Term Liabilities
−Removed: The following table summarizes other long term liabilities as of the dates indicated (in thousands):
−Removed: Finance lease obligations
−Removed: Accrued pension liabilities
−Removed: Accrued contingent considerations
−Removed: Debt consisted of the following (in thousands):
−Removed: Senior Credit Facilities – term loan
−Removed: unamortized debt issuance costs
−Removed: Total current portion of long-term debt
−Removed: Senior Credit Facilities – term loan
−Removed: Senior Credit Facilities – revolving credit facility
−Removed: unamortized debt issuance costs
−Removed: Total long-term debt
−Removed: Total Senior Credit Facilities
−Removed: Senior Credit Facilities
−Removed: On December 31, 2019, the Company entered into an amended and restated credit agreement (the “Third Amended and Restated Credit Agreement”) with existing lenders for an aggregate credit facility of $ 450.0 million, consisting of a $ 100.0 million U.S.
−Removed: dollar equivalent euro-denominated (approximately € 90.2 million) 5 -year term loan facility and a $ 350.0 million 5-year revolving credit facility (collectively, the “Senior Credit Facilities”).
−Removed: The Senior Credit Facilities mature in December 2024 .
−Removed: The Third Amended and Restated Credit Agreement amended and restated the Second Amended and Restated Credit Agreement dated as of May 19, 2016.
−Removed: The borrowings outstanding under the Senior Credit Facilities bear interest at rates based on (a) the Base Rate, as defined in the Third Amended and Restated Credit Agreement, plus a margin ranging between 0.25 % to 1.25 % per annum, determined by reference to the Company’s consolidated leverage ratio, or (b) the Eurocurrency Rate, as defined in the Third Amended and Restated Credit Agreement, plus a margin ranging between 1.25 % and 2.25 % per annum, determined by reference to the
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Company’s consolidated leverage ratio .
−Removed: In addition, t he Company is obligated to pay a commitment fee on the unused portion of the revolving credit facility , ranging between 0.20 % and 0.40 % per annum, determined by reference to the Company’s consolidated leverage ratio.
−Removed: The Third Amended and Restated Credit Agreement contains various customary representations, warranties and covenants applicable to the Company and its subsidiaries, including, among others:
−Removed: (i) limitations on restricted payments, including dividend payments and stock repurchases, provided that the Company and its subsidiaries may repurchase their equity interests so long as, immediately after giving effect to the repurchase, the Company’s consolidated leverage ratio is no more than 3.25 :1.00, with a step up to 3.75 :1.00 for four consecutive quarters following an acquisition with an aggregate consideration greater than or equal to $50.0 million, and the satisfaction of other customary conditions;
−Removed: (ii) limitations on fundamental changes involving the Company and its subsidiaries;
−Removed: (iii) limitations on the disposition of assets;
−Removed: and (iv) limitations on indebtedness, investments, and liens.
−Removed: The Third Amended and Restated Credit Agreement also requires the Company to satisfy certain financial covenants, such as maintaining a minimum consolidated fixed charge coverage ratio of 1.50 :1.00 and a maximum consolidated leverage ratio of 3.50 :1.00.
−Removed: The maximum consolidated leverage ratio will increase to 4.00 :1.00 for four consecutive quarters following an acquisition with an aggregate consideration greater than or equal to $ 50.0 million.
−Removed: As of December 31, 2019, the outstanding principal under the Company’s term loan facility is scheduled to be repaid as follows (in thousands):
−Removed: Principal Amount
−Removed: Total debt repayments
−Removed: The outstanding principal balance under the term loan facility is payable in quarterly installments of € 1.1 million beginning in March 2020, with the remaining due upon maturity.
−Removed: The Company may make additional principal payments at any time, which will reduce the next quarterly installment payment due.
−Removed: Borrowings under the revolving credit facility may be repaid at anytime through December 2024.
−Removed: The Company may be required to prepay outstanding loans under the Third Amended and Restated Credit Agreement with the net proceeds of certain asset dispositions and incurrences of certain debt.
−Removed: At the election of the Company, and so long as no default shall have occurred, the Company may reinvest all, or any portion of, the net proceeds from such asset dispositions or incurrences of debt within a year.
−Removed: As of December 31, 2019, the Company had $ 226.6 million available to be drawn under the revolving credit facility.
−Removed: Excluding commitment fees, the weighted average interest rate for the Senior Credit Facilities was approximately 2.34 % as of December 31, 2019.
−Removed: The commitment fee rate for the unused commitments under the revolving credit facility was approximately 0.30 % as of December 31, 2019.
−Removed: The Senior Credit Facilities is guaranteed by Novanta Inc., Novanta Corporation, NDS Surgical Imaging LLC, Med X Change, Inc., Novanta Medical Technologies Corp., Novanta Europe GmbH, Novanta UK Investments Holding Limited and Novanta Technologies UK Limited (collectively, “Guarantors”).
−Removed: Each Guarantor, jointly and severally, unconditionally guarantees the due and punctual payment of the principal, interest and fees under the Senior Credit Facilities, when due and payable, whether at maturity, by required prepayment, by acceleration or otherwise.
−Removed: In addition, Guarantors guarantee the due and punctual payment, fees and interest on the overdue principal of the Senior Credit Facilities and the due and punctual performance of all obligations of the Company in accordance with the terms of the Third Amended and Restated Credit Agreement.
−Removed: Furthermore, each Guarantor, jointly and severally, unconditionally guarantees that in the event of any extension, renewal, amendment, refinancing or modification of any of the Senior Credit Facilities, amounts due will be promptly paid in full when due in accordance with the terms of the extension or renewal, at stated maturity, by acceleration or otherwise.
−Removed: The obligations of each Guarantor are limited to the maximum amount, after giving effect to all other contingent and fixed liabilities or any collections from, or payments made by or on behalf of, any other Guarantor.
−Removed: Each Guarantor that makes a payment
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: or distribution under a Guarantee is entitled to a contribution from each other Guarantor of its pro rata share based on the adjusted net assets of each Guarantor.
−Removed: If at any time any payment of any of the obligations of the Guarantors is rescinded or must otherwise be returned upon the insolvency, bankruptcy or reorganization of the Company, a Guarantor or otherwise, the Guarantees will continue to be effective or be reinstated, as the case may be, as though such payment had not been made.
−Removed: Each Guarantor may be released from its obligations under its respective Guarantee and its obligations under the Third Amended and Restated Credit Agreement upon the occurrence of certain events, including, but not limited to:
−Removed: (i) the Guarantor ceasing to be a subsidiary;
−Removed: or (ii) payment in full of the principal and accrued and unpaid interest on the Senior Credit Facilities and all other obligations.
−Removed: The maximum potential amount of future payments the Guarantors could be required to make under the Guarantee is the principal amount of the Senior Credit Facilities plus all accrued and unpaid interest thereon.
−Removed: However, as of December 31, 2019, the Guarantors were not expected to be required to perform under the Guarantee.
−Removed: The Company’s obligations under the Senior Credit Facilities are secured, on a senior basis, by a lien on substantially all of the assets of Novanta Inc.
−Removed: The Third Amended and Restated Credit Agreement also contains customary events of default.
−Removed: Deferred Financing Costs
−Removed: In connection with the execution of the Third Amended and Restated Credit Agreement, the Company capitalized an additional $ 3.0 million of deferred financing costs.
−Removed: The Company allocated these costs between the term loan and the revolving credit facility based on the maximum borrowing capacity and amortizes the costs on a straight-line basis over the term of the Senior Credit Facilities.
−Removed: Previously unamortized deferred financing costs will continue to be amortized.
−Removed: Non-cash interest expense related to the amortization of the deferred financing costs was $ 1.1 million, $ 1.0 million and $ 0.8 million in 2019, 2018 and 2017, respectively.
−Removed: Unamortized deferred financing costs are presented as a reduction to the debt balances on the consolidated balance sheets.
−Removed: Fair Value of Debt
−Removed: As of December 31, 2019 and 2018, the outstanding balance of the Company’s debt approximated its fair value based on current rates available to the Company for debt of the same maturities.
−Removed: The fair value of the Company’s debt is classified as Level 2 under the fair value hierarchy.
−Removed: Most leases held by the Company expire between 2020 and 2034 .
−Removed: In the U.K., where longer lease terms are more common, the Company has a land lease that extends through 2078 .
−Removed: Certain leases include terms such as an option to purchase the property, one or more options to renew, with renewal terms that can extend the lease term from one to 10 years , and options to terminate the leases within one year .
−Removed: The exercise of lease renewal or termination option is at the Company’s sole discretion;
−Removed: therefore, the majority of renewals to extend the lease terms are not included in the Company’s right-of-use assets and operating lease liabilities as they are not reasonably certain of being exercised.
−Removed: The Company regularly evaluates the renewal options and includes the renewal periods in the lease term when they are reasonably certain of being exercised.
−Removed: The depreciable life of right-of-use assets and leasehold improvements is limited to the expected lease terms.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: The following table summarizes the components of lease costs during 2019 (in thousands):
−Removed: December 31, 2019
−Removed: Operating lease cost
−Removed: Finance lease cost
−Removed: Amortization of right-of-use assets
−Removed: Interest on lease liabilities
−Removed: Variable lease cost
−Removed: Total lease cost
−Removed: During 2018 and 2017, the Company recorded operating lease expense of $ 7.4 million and $ 5.5 million, respectively.
−Removed: The following table provides the details of balance sheet information related to leases as of December 31, 2019 (in thousands, except lease term and discount rate):
−Removed: Operating leases
−Removed: Operating lease right-of-use assets
−Removed: Current portion of operating lease liabilities
−Removed: Operating lease liabilities
−Removed: Total operating lease liabilities
−Removed: Finance leases
−Removed: Property, plant and equipment, gross
−Removed: Accumulated depreciation
−Removed: Finance lease assets included in property, plant and equipment, net
−Removed: Accrued expenses and other current liabilities
−Removed: Other liabilities
−Removed: Total finance lease liabilities
−Removed: Weighted-average remaining lease term (in years)
−Removed: Operating leases
−Removed: Finance leases
−Removed: Weighted-average discount rate
−Removed: Operating leases
−Removed: Finance leases
−Removed: The following table provides a summary of leased properties under finance leases by major classes as of December 31, 2018:
−Removed: Land, buildings and improvements
−Removed: Machinery and equipment
−Removed: Total gross assets under finance leases
−Removed: Accumulated depreciation on assets under finance leases
−Removed: Assets under finance leases included in property, plant and equipment, net
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: The following table provides the details of cash flow information related to leases for the year ended December 31, 2019 (in thousands):
−Removed: December 31, 2019
−Removed: Cash paid for amounts included in lease liabilities:
−Removed: Operating cash flows from finance leases
−Removed: Operating cash flows from operating leases
−Removed: Financing cash flows from finance leases
−Removed: Supplemental non-cash information:
−Removed: Right-of-use assets obtained in exchange for new operating lease liabilities
−Removed: Right-of-use assets obtained in exchange for new finance lease liabilities
−Removed: Future minimum lease payments under operating and finance leases expiring subsequent to December 31, 2019, including operating leases associated with facilities that have been vacated as a result of the Company’s restructuring actions, are summarized as follows (in thousands):
−Removed: Year Ending December 31,
−Removed: Operating Leases
−Removed: Finance Leases (1)
−Removed: Total minimum lease payments
−Removed: Present value of lease liabilities
−Removed: Future minimum lease payments under finance leases include the exercise price of an option to purchase a facility in Germany in 2021.
−Removed: Common Shares and Share-Based Compensation
−Removed: Capital Shares
−Removed: The authorized capital of the Company consists of an unlimited number of common shares without nominal or par value.
−Removed: Holders of common shares are entitled to one vote per share.
−Removed: Holders of common shares are entitled to receive dividends, if and when declared by the Board of Directors, and to share ratably in the Company’s assets legally available for distribution to shareholders in the event of liquidation.
−Removed: Holders of common shares have no redemption or conversion rights.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Common S hare Repurchase s
−Removed: The Company’s Board of Directors may approve share repurchase plans from time to time.
−Removed: Under these repurchase plans, shares may be repurchased at the Company’s discretion based on ongoing assessment of the capital needs of the business, the market price of the Company’s common shares, and general market conditions.
−Removed: Shares may also be repurchased through an accelerated share purchase agreement, on the open market or in privately negotiated transactions in accordance with applicable federal securities laws.
−Removed: Repurchases may be made under certain SEC regulations, which would permit common shares to be repurchased when the Company would otherwise be prohibited from doing so under insider trading laws.
−Removed: While the share repurchase plans are generally intended to offset dilution from equity awards granted to the Company’s employees and directors, the plans do not obligate the Company to acquire any particular amount of common shares.
−Removed: No time limit is typically set for the completion of the share repurchase plans, and the plans may be suspended or discontinued at any time.
−Removed: The Company expects to fund share repurchases through cash on hand and cash generated from operations.
−Removed: In October 2013, the Company’s Board of Directors approved a share repurchase plan (the “2013 Repurchase Plan”) authorizing the repurchase of $ 10.0 million worth of common shares.
−Removed: During 2018, the Company repurchased 89 thousand shares in the open market for an aggregate purchase price of $ 5.9 million at an average price of $ 65.43 per share.
−Removed: During 2017, the Company repurchased 14 thousand shares in the open market for an aggregate purchase price of $ 0.4 million at an average price of $ 26.41 per share.
−Removed: As of December 31, 2018, the Company had repurchased an aggregate of 385 thousand shares for an aggregate purchase price of $ 10.0 million at an average price of $ 25.97 per share.
−Removed: As of December 31, 2018, the Company had completed the 2013 Repurchase Plan.
−Removed: In October 2018, the Company’s Board of Directors approved a share repurchase plan (the “2018 Repurchase Plan”) authorizing the repurchase of $ 25.0 million worth of common shares.
−Removed: Share repurchases have been made under the 2018 Repurchase Plan pursuant to Rule 10b-18 under the Securities Exchange Act of 1934.
−Removed: During 2019, the Company repurchased 119 thousand shares for an aggregate purchase price of $ 10.0 million at an average price of $ 83.71 per share under the 2018 Repurchase Plan.
−Removed: The Company had $ 15.0 million available for share repurchases under the 2018 Repurchase Plan as of December 31, 2019.
−Removed: In February 2020, the Company’s Board of Directors approved a new share repurchase plan (the “2020 Repurchase Plan”) authorizing the repurchase of an additional $ 50.0 million worth of common shares.
−Removed: The Company expects that share repurchases will be made under the 2020 Repurchase Plan after the 2018 Repurchase Plan is completed.
−Removed: 2010 Incentive Award Plan
−Removed: In November 2010, the Company’s shareholders approved the 2010 Incentive Award Plan under which the Company may grant share-based compensation awards to employees, consultants and directors.
−Removed: In May 2014, the Company’s shareholders approved the amended and restated 2010 Incentive Award Plan and, in July 2016, the Company approved a further amended and restated 2010 Incentive Award Plan (as amended, the “Amended and Restated 2010 Incentive Plan”).
−Removed: The maximum number of shares which can be issued pursuant to the Amended and Restated 2010 Incentive Plan is 4,398,613 , subject to adjustment as set forth in the Amended and Restated 2010 Incentive Plan.
−Removed: The Amended and Restated 2010 Incentive Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights, deferred stock, deferred stock units, dividend equivalents, performance awards and stock payments (collectively referred to as “Awards”).
−Removed: The Amended and Restated 2010 Incentive Plan provides for specific limits on the number of shares with respect to Awards that may be granted to any person during any calendar year and the amount of cash that can be paid with respect to Awards to any one person during any calendar year.
−Removed: The Amended and Restated 2010 Incentive Plan will expire and no further Awards may be granted after April 9, 2024 .
−Removed: As of December 31, 2019, there were 840,889 shares available for future awards under the Amended and Restated 2010 Incentive Plan.
−Removed: Shares subject to Awards that have expired, forfeited or settled in cash, or repurchased by the Company at the same price paid by the awardee may be added back to the number of shares available for grant under the Amended and Restated 2010 Incentive Plan and may be granted as new Awards.
−Removed: Notwithstanding the foregoing, the following shares will not be added back to the number of shares available for grant:
−Removed: (a) shares that are used to pay the exercise price for an option, (b) shares tendered or withheld to pay taxes with respect to any Award (other than options and stock appreciation rights) to the extent they exceed the number of shares with a fair market value equal to the tax liability based on minimum withholding rates, (c) shares tendered or withheld to pay taxes with respect to options and stock appreciation rights, (d) shares subject to a stock appreciation right that are not issued in connection with the stock settlement of the stock appreciation right on exercise thereof, and (e) shares purchased on the open market with the
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: cash proceeds from the exercise of options.
−Removed: Shares issued to satisfy Awards under the Amended and Restated 2010 Incentive Plan may be previously authorized but unissued shares, treasury shares or shares repurchased on the open market.
−Removed: Share-Based Compensation Expense
−Removed: The table below summarizes share-based compensation expense recorded in operating income (in thousands):
−Removed: Year Ended December 31,
−Removed: Selling, general and administrative
−Removed: Research and development and engineering
−Removed: Cost of revenue
−Removed: Restructuring and acquisition related costs
−Removed: Total share-based compensation expense
−Removed: The expense recorded during each of the years ended December 31, 2019, 2018 and 2017 included $ 0.9 million, $ 0.5 million and $ 0.5 million, respectively, related to restricted stock units and deferred stock units granted to the members of the Company’s Board of Directors pursuant to the Company’s Amended and Restated 2010 Incentive Plan.
−Removed: As of December 31, 2019, the Company’s outstanding equity awards for which compensation expense will be recognized in the future consisted of time-based restricted stock units and performance stock units granted under the Amended and Restated 2010 Incentive Plan.
−Removed: The Company expects to record an aggregate share-based compensation expense of $ 15.5 million, net of estimated forfeitures, over a weighted average period of 1.12 years subsequent to December 31, 2019, for all outstanding equity awards as of December 31, 2019.
−Removed: Restricted Stock Units and Deferred Stock Units
−Removed: The Company’s restricted stock units (“RSUs”) have generally been issued to employees with vesting periods ranging from three years to five years and vest based solely on service conditions.
−Removed: Accordingly, the Company recognizes compensation expense on a straight-line basis over the requisite service period.
−Removed: The Company reduces the compensation expense by an estimated forfeiture rate which is based on anticipated forfeitures and actual experience.
−Removed: Deferred stock units (“DSUs”) are granted to the members of the Company’s Board of Directors.
−Removed: The compensation expense associated with the DSUs is recognized in full on the respective date of grant, as DSUs are fully vested and non-forfeitable upon grant.
−Removed: There were 187 thousand and 179 thousand DSUs outstanding as of December 31, 2019 and December 31, 2018, respectively, which were included in the calculation of weighted average basic shares outstanding for the respective periods.
−Removed: The table below summarizes activities during 2019 relating to restricted and deferred stock units issued and outstanding under the Amended and Restated 2010 Incentive Plan:
−Removed: Restricted and Deferred
−Removed: (In thousands)
−Removed: Average Grant
−Removed: Date Fair Value
−Removed: Weighted Average
−Removed: Remaining Vesting
−Removed: Period (in years)
−Removed: (In thousands)
−Removed: Unvested at December 31, 2018
−Removed: Unvested at December 31, 2019
−Removed: Expected to vest as of December 31, 2019
−Removed: The aggregate intrinsic value is calculated based on the fair value of $ 88.44 per share of the Company’s common stock on December 31, 2019 due to the fact that the restricted stock units carry a $ 0 purchase price.
−Removed: The total fair value of restricted stock units and deferred stock units that vested in 2019, based on the market price of the underlying shares on the day of vesting, was $ 13.4 million.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Performance Stock Units
−Removed: The Company typically grants two types of performance-based stock awards to certain members of the executive management team:
−Removed: non-GAAP EPS performance-based restricted stock units (“EPS-PSUs”) and relative total shareholder return performance-based restricted stock units (“TSR-PSUs”).
−Removed: Both types of performance-based restricted stock units generally cliff vest on the first day following the end of a three-year performance period.
−Removed: The number of common shares to be issued upon settlement following vesting of the EPS-PSUs is determined based on the Company’s cumulative non-GAAP EPS over the three-year performance period against the target established by the Company’s Board of Directors at the time of grant and will be in the range of zero to 200 % of the target number of shares.
−Removed: The Company recognizes compensation expense ratably over the performance period based on the number of shares that are deemed probable of vesting at the end of the three-year performance cycle.
−Removed: This probability assessment is performed quarterly and the cumulative effect of a change in the estimated compensation expense, if any, is recognized in the consolidated statement of operations in the period in which such determination is made.
−Removed: The number of common shares to be issued upon settlement following vesting of the TSR-PSUs is determined based on the relative market performance of the Company’s common stock compared to the Russell 2000 Index over the three-year performance period using a payout formula established by the Company’s Board of Directors at the time of grant and will be in the range of zero to 200 % of the target number of shares.
−Removed: The Company recognizes the related compensation expense based on the fair value of the TSR-PSUs, determined using the Monte-Carlo valuation model as of the grant date, on a straight-line basis from the grant date to the end of the three-year performance period.
−Removed: Compensation expense will not be affected by the number of TSR-PSUs that will actually vest at the end of the three-year performance period.
−Removed: The table below summarizes activities during 2019 relating to performance-based stock awards issued and outstanding under the Company’s Amended and Restated 2010 Incentive Plan:
−Removed: Stock Units (1)
−Removed: (in thousands)
−Removed: Average Grant
−Removed: Date Fair Value
−Removed: Weighted Average
−Removed: Remaining Vesting
−Removed: Period (in years)
−Removed: (in thousands)
−Removed: Unvested at December 31, 2018
−Removed: Performance adjustment ( 3 )
−Removed: Unvested at December 31, 2019
−Removed: Expected to vest as of December 31, 2019
−Removed: The unvested PSUs are shown in this table at target, except for the number of shares vested, which reflects the number of shares earned and expected to be issued.
−Removed: As of December 31, 2019, the maximum number of PSUs available to be earned was approximately 305 thousand.
−Removed: The aggregate intrinsic value is calculated based on the fair value of $ 88.44 per share of the Company’s common stock on December 31, 2019 due to the fact that the performance stock units carry a $ 0 purchase price.
−Removed: The amount shown represents performance adjustments for performance-based awards granted on March 30, 2016.
−Removed: These units vested at 200 % during 2019 based on the achievement of cumulative Non-GAAP EPS during the performance period of fiscal years 2016 through 2018.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: The total fair value of PSUs that vested in 2019, based on the market price of the underlying shares on the date of vesting, was $ 5.0 million .
−Removed: The fair value of the TSR-PSUs at the date of grant was estimated using the Monte-Carlo valuation model with the following assumptions:
−Removed: Year Ended December 31, 2019
−Removed: Grant-date stock price
−Removed: Expected volatility
−Removed: Risk-free interest rate
−Removed: Expected annual dividend yield
−Removed: Weighted average fair value
−Removed: Stock Options
−Removed: On March 30, 2016, the Company granted 193 thousand stock options to certain members of the executive management team to purchase common shares of the Company at a price equal to the closing market price of the Company’s common shares on the date of grant.
−Removed: The stock options vested ratably on the anniversary date of the grant date over a three-year period and expire on the tenth anniversary of the grant date.
−Removed: The fair value of these stock options was estimated using the Black-Scholes valuation model.
−Removed: Key input assumptions used to estimate the fair value of stock options included the expected option term, the expected volatility of the Company’s common stock over the expected term of the options, the risk-free interest rate, and the expected dividend yield.
−Removed: The Company recognized the compensation expense of stock options on a straight-line basis in the consolidated statement of operations over the vesting period.
−Removed: No stock options were granted during 2019.
−Removed: The following table shows stock options that were outstanding, exercisable and expected to vest as of December 31, 2019 and the related weighted average exercise price, weighted average remaining contractual term and aggregate intrinsic value:
−Removed: Number of Shares
−Removed: (In thousands)
−Removed: Average Exercise Price
−Removed: Weighted Average Remaining Contractual Term (years)
−Removed: (In thousands)
−Removed: Stock options outstanding
−Removed: Stock options exercisable
−Removed: The aggregate intrinsic value is calculated as the difference between the closing market price of $ 88.44 per share of the Company’s common stock on December 31, 2019 and the exercise price of the stock options.
−Removed: The total intrinsic value of stock options exercised in 2019, based on the difference between the market price on the date of exercise and the date of grant, was $ 2.4 million.
−Removed: The total amount of cash received from the exercise of these stock options was $ 0.4 million.
−Removed: The Company did no t record any income tax deductions from the stock options exercised in 2019 as these were non-qualified stock options.
−Removed: Employee Benefit Plans
−Removed: Defined Contribution Plans
−Removed: The Company has defined contribution employee retirement savings plans in the U.S., the U.K.
−Removed: The Company matches the contributions of participating employees on the basis of percentages specified in each plan.
−Removed: The Company’s matching contributions to the plans were $ 4.4 million, $ 3.9 million and $ 3.1 million for the years ended December 31, 2019, 2018 and 2017, respectively.
−Removed: Defined Benefit Plan
−Removed: The Company maintains a frozen defined benefit pension plan in the U.K.
−Removed: Plan was closed to new membership in 1997 and stopped accruing additional pension benefits for existing members in 2003.
−Removed: Benefits under the U.K.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Plan were based on the participants ’ years of service and compensation as of the date the plan was frozen in 2003, adjusted for inflation.
−Removed: The Company continues to fund the plan in accordance with the pension regulations in the U.K .
−Removed: The net periodic pension cost is included in other income (expense) in the consolidated statements of operations and consisted of the following components (in thousands):
−Removed: Year Ended December 31,
−Removed: Components of the net periodic pension cost:
−Removed: Interest cost
−Removed: Expected return on plan assets
−Removed: Amortization of actuarial losses
−Removed: Amortization of prior service cost
−Removed: Net periodic pension cost
−Removed: The actuarial assumptions used to compute the net periodic pension cost for the years ended December 31, 2019, 2018 and 2017, respectively, were as follows:
−Removed: Year Ended December 31,
−Removed: Weighted-average discount rate
−Removed: Weighted-average long-term rate of return on plan assets
−Removed: The actuarial assumptions used to compute the benefit obligations as of December 31, 2019 and 2018, respectively, were as follows:
−Removed: Weighted-average discount rate
−Removed: Rate of inflation
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: The discount rates used are derived from (AA) corporate bonds that have maturities approximating the terms of the pension obligations under the U.K.
−Removed: In estimating the expected return on plan assets, the Company considered the historical performance of the major asset classes held by the U.K.
−Removed: Plan and current forecasts of future rates of return for these asset classes.
−Removed: The following table provides a reconciliation of benefit obligations and plan assets of the U.K.
−Removed: Plan (in thousands):
−Removed: Change in benefit obligation:
−Removed: Projected benefit obligation at beginning of year
−Removed: Interest cost
−Removed: Actuarial (gains) losses
−Removed: Benefits paid
−Removed: Prior service cost (1)
−Removed: Foreign currency exchange rate changes
−Removed: Projected benefit obligation at end of year
−Removed: Accumulated benefit obligation at end of year
−Removed: Change in plan assets:
−Removed: Fair value of plan assets at beginning of year
−Removed: Actual return on plan assets
−Removed: Employer contributions
−Removed: Benefits paid
−Removed: Foreign currency exchange rate changes
−Removed: Fair value of plan assets at end of year
−Removed: Funded status at end of year
−Removed: Amounts included in accumulated other comprehensive loss not yet recognized in net periodic pension cost:
−Removed: Net actuarial losses at beginning of year
−Removed: Net actuarial gains (losses) during the year
−Removed: Prior service cost arising during the year (1)
−Removed: Amounts reclassified from accumulated other comprehensive income to income before income taxes
−Removed: Foreign currency exchange rate changes
−Removed: Net actuarial losses
−Removed: Amounts expected to be amortized from accumulated other comprehensive loss into net periodic pension cost over the next fiscal year consists of:
−Removed: Net actuarial losses
−Removed: Prior service cost
−Removed: On October 26, 2018, the High Court of Justice in the U.K.
−Removed: ruled that the Guaranteed Minimum Pensions (“GMPs”) provided by pension schemes need to equalize lifetime GMP benefits between genders.
−Removed: In order to meet the requirements set out by the High Court, the Company recorded an estimate of $ 0.8 million additional benefit obligations based on the existing plan participants, the date the U.K.
−Removed: Plan was allowed to stop accruing additional benefits, the pension plan rules and the approach taken to equalize the benefits.
−Removed: The additional benefit obligations will be amortized and recognized as part of net periodic pension cost in the consolidated statement of operations over the average remaining life expectancy of the plan participants.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: The funded status of the U.K.
−Removed: Plan is included in other long term liabilities in the accompanying consolidated balance sheets.
−Removed: The following table reflects the total expected benefit payments to plan participants and have been estimated based on the same assumptions used to measure the Company’s benefit obligations as of December 31, 2019 (in thousands):
−Removed: In the U.K., funding valuations are conducted every three years in order to determine the future level of contributions.
−Removed: Based on the results of the most recent valuation, the Company’s annual contributions will be approximately $ 1.0 million in 2020 and will increase by 2.9 % per year thereafter.
−Removed: Fair Value of Plan Assets
−Removed: The trustees of the U.K.
−Removed: Plan have the fiduciary responsibilities to manage the plan assets in consultation with the Company.
−Removed: The overall objective is to invest plan assets in a portfolio of diversified assets, primarily through the use of institutional collective funds, to achieve balanced growth through a combination of investments in equities for long-term growth and investments in debt instruments that match a portion of the expected future benefit payments and to maintain adequate liquidity to make pension payments to pensioners.
−Removed: The following table summarizes the fair values of Plan assets by asset category as of December 31, 2019 (in thousands):
−Removed: Asset Category
−Removed: Quoted Prices in Active Markets
−Removed: for Identical
−Removed: Significant Other Observable
−Removed: Significant Other Unobservable
−Removed: Mutual Funds:
−Removed: Fixed income (2)
−Removed: This class comprises a diversified portfolio of global investments which seeks a balanced return between capital growth and fixed income and is allocated on a weighted average basis as follows:
−Removed: equities ( 32 %), bonds ( 42 %), other assets ( 19 %) and cash ( 7 %).
−Removed: This class comprises a diversified portfolio of global investments which seeks fixed income growth and is allocated on a weighted average basis as follows:
−Removed: bonds ( 92 %), other assets ( 5 %) and cash ( 3 %).
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: The following table summarizes the fair values of Plan assets by asset category as of December 31, 2018 (in thousands):
−Removed: Asset Category
−Removed: Quoted Prices in Active Markets
−Removed: for Identical
−Removed: Significant Other Observable
−Removed: Significant Other Unobservable
−Removed: Mutual Funds:
−Removed: Fixed income (2)
−Removed: This class comprises a diversified portfolio of global investments which seeks a balanced return between capital growth and fixed income and is allocated on a weighted average basis as follows:
−Removed: equities ( 42 %), bonds ( 19 %), other assets ( 38 %) and cash ( 1 %).
−Removed: This class comprises a diversified portfolio of global investments which seeks long-term capital growth and is allocated on a weighted average basis as follows:
−Removed: bonds ( 86 %) and cash ( 14 %).
−Removed: Components of the Company’s income (loss) before income taxes are as follows (in thousands):
−Removed: Year Ended December 31,
−Removed: Income (loss) before income taxes:
−Removed: Components of the Company’s income tax provision (benefit) are as follows (in thousands):
−Removed: Year Ended December 31,
−Removed: The Company is incorporated in Canada and therefore uses the Canadian statutory rate for income tax disclosure.
−Removed: The reconciliation of the statutory Canadian tax rate to the effective tax rate related to income before income taxes is as follows (in thousands, except percentage data):
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Year Ended December 31,
−Removed: Statutory Canadian tax rate
−Removed: Expected income tax provision at Canadian statutory tax rate
−Removed: International tax rate differences
−Removed: state income taxes, net of federal benefits
−Removed: Withholding and other taxes
−Removed: Permanent differences and other
−Removed: Section 199 deduction
−Removed: Foreign-derived intangible income
−Removed: Statutory tax rate changes
−Removed: Uncertain tax positions
−Removed: Change in valuation allowance
−Removed: Acquisition contingent consideration adjustments
−Removed: Transaction costs
−Removed: Provision to return differences
−Removed: Windfall benefit from share-based compensation
−Removed: Gain on Laser Quantum acquisition
−Removed: Reported income tax provision
−Removed: Effective tax rate
−Removed: Deferred income taxes result principally from temporary differences in the recognition of certain revenue and expense items and operating loss and tax credit carryforwards for financial and tax reporting purposes.
−Removed: Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2019 and 2018 are as follows (in thousands):
−Removed: Deferred tax assets:
−Removed: Operating lease liabilities
−Removed: Compensation related deductions
−Removed: Restructuring related liabilities
−Removed: Total deferred tax assets
−Removed: Valuation allowance on deferred tax assets
−Removed: Net deferred tax assets
−Removed: Deferred tax liabilities:
−Removed: Unrealized currency gains/losses
−Removed: Operating lease right-of-use assets
−Removed: Total deferred tax liabilities
−Removed: Net deferred income tax assets (liabilities)
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: In determining its income tax provisions, the Company calculated deferred tax assets and liabilities for each separate jurisdiction.
−Removed: The Company then considered a number of factors, including positive and negative evidence related to the realization of its deferred tax assets, to determine whether a valuation allowance should be recognized with respect to its deferred tax assets.
−Removed: In 2019, the Company utilized valuation allowance of $ 0.5 million recorded on net operating losses and other timing items in certain tax jurisdictions due to taxable income generated in the current year.
−Removed: In 2018, the Company recorded an additional $ 0.4 million valuation allowance associated with an increase in deferred tax assets in Canada.
−Removed: In 2018, the Company utilized valuation allowance of $ 0.3 million recorded on net operating losses and other timing items in certain tax jurisdictions due to taxable income generated during the year.
−Removed: Valuation allowance continues to be provided on the remaining balances of certain U.S.
−Removed: state net operating losses and certain foreign tax attributes that the Company has determined that it is more likely than not that they will not be realized.
−Removed: In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company continuously reassesses the possibility of releasing the valuation allowance currently in place on its deferred tax assets.
−Removed: As of December 31, 2019, the Company had net operating loss carryforwards of $ 3.8 million (tax effected) available to reduce future taxable income.
−Removed: Of this amount, approximately $ 0.3 million relates to the U.S.
−Removed: and expires through 2037 ;
−Removed: and $ 3.5 million relates to Canada and expires starting in 2033 .
−Removed: In addition, the Company had capital loss carryforwards of $ 5.7 million, which had a full valuation allowance.
−Removed: Of this amount, $ 5.2 million and $ 0.5 million related to Canada and the U.K, respectively.
−Removed: As of December 31, 2018, the Company had net operating loss carryforwards of $ 3.7 million (tax effected) available to reduce future taxable income.
−Removed: Of this amount, approximately $ 0.7 million relates to the U.S.
−Removed: and expires through 2037 ;
−Removed: and $ 3.0 million relates to Canada and expires starting in 2033 .
−Removed: In addition, the Company had capital loss carryforwards of $ 5.7 million, which had a full valuation allowance.
−Removed: Of this amount, $ 5.2 million and $ 0.5 million related to Canada and the U.K, respectively.
−Removed: As of December 31, 2019, the Company had tax credit carryforwards of approximately $ 2.8 million available to reduce income taxes in future years.
−Removed: Approximately $ 0.9 million relates to the U.S.
−Removed: state tax credits, of which $ 0.8 million will expire through 2034 and $ 0.1 million can be carried forward indefinitely.
−Removed: The remaining $ 1.9 million tax credit carryforwards were related to Canada, of which $ 1.2 million expires through 2022 and $ 0.7 million can be carried forward indefinitely.
−Removed: As of December 31, 2018, the Company had tax credit carryforwards of approximately $ 2.8 million available to reduce income taxes in future years.
−Removed: Approximately $ 0.9 million relates to the U.S.
−Removed: state tax credits, of which $ 0.8 million will expire through 2033 and $ 0.1 million can be carried forward indefinitely.
−Removed: The remaining $ 1.9 million tax credit carryforwards were related to Canada, of which $ 1.2 million expires through 2022 and $ 0.7 million can be carried forward indefinitely.
−Removed: Income and foreign withholding taxes have not been recognized on the excess of the amount for financial reporting purposes over the tax basis of investments in foreign subsidiaries that are essentially permanent in nature.
−Removed: This amount becomes taxable upon a repatriation of assets from a subsidiary or a sale or liquidation of a subsidiary.
−Removed: The amount of undistributed earnings of foreign subsidiaries totaled $ 168.4 million as of December 31, 2019.
−Removed: The estimated unrecognized income tax and foreign withholding tax liability on this temporary difference is approximately $ 0.2 million.
−Removed: As of December 31, 2019, the Company’s total amount of gross unrecognized tax benefits was $ 4.9 million, of which $ 4.8 million would favorably affect the effective tax rate if benefited.
−Removed: Over the next twelve months, the Company may need to record up to $ 0.5 million of previously unrecognized tax benefits due to statute of limitations closures.
−Removed: The Company believes there are no jurisdictions in which the outcome of unresolved issues or claims is likely to be material to its results of operations, financial position or cash flows.
−Removed: Furthermore, the Company believes that it has adequately provided for all significant income tax uncertainties.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: As of December 31, 2018, the Company’s total amount of gross unrecognized tax benefits was $ 4.7 million, of which $ 3.6 million would favorably affect the effective tax rate if benefited.
−Removed: The reconciliation of the total amounts of unrecognized tax benefits is as follows (in thousands):
−Removed: Balance at December 31, 2016
−Removed: Additions based on tax positions related to the current year
−Removed: Additions for tax positions of prior years
−Removed: Reductions to tax positions of prior years
−Removed: Reductions to tax positions resulting from a lapse of the applicable statute of limitations
−Removed: Settlements with tax authorities
−Removed: Balance at December 31, 2017
−Removed: Additions based on tax positions related to the current year
−Removed: Additions for tax positions of prior years
−Removed: Reductions to tax positions of prior years
−Removed: Reductions to tax positions resulting from a lapse of the applicable statute of limitations
−Removed: Settlements with tax authorities
−Removed: Balance at December 31, 2018
−Removed: Additions based on tax positions related to the current year
−Removed: Additions for tax positions of prior years
−Removed: Reductions to tax positions of prior years
−Removed: Reductions to tax positions resulting from a lapse of the applicable statute of limitations
−Removed: Settlements with tax authorities
−Removed: Balance at December 31, 2019
−Removed: The Company recognizes interest and penalties related to uncertain tax positions in income tax provision.
−Removed: As of December 31, 2019 and 2018, the Company had approximately $ 0.5 million and $ 0.5 million, respectively, of accrued interest and penalties related to uncertain tax positions.
−Removed: During the years ended December 31, 2019, 2018 and 2017, the Company recognized less than $ 0.1 million of expense for an increase in interest and penalties related to uncertain tax positions.
−Removed: The Company files income tax returns in Canada, the U.S., and various foreign jurisdictions.
−Removed: Generally, the Company is no longer subject to U.S.
−Removed: or foreign income tax examinations, including transfer pricing tax audits, by tax authorities for the years before 2010.
−Removed: The Company’s income tax returns may be reviewed by tax authorities in the following countries for the following periods under the appropriate statute of limitations:
−Removed: United States
−Removed: 2016 - Present
−Removed: 2016 - Present
−Removed: United Kingdom
−Removed: 2018 - Present
−Removed: 2015 - Present
−Removed: The Netherlands
−Removed: 2013 - Present
−Removed: 2010 - Present
−Removed: 2014 - Present
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Restructuring and Acquisition Related Costs
−Removed: The following table summarizes restructuring and acquisition related costs recorded in the accompanying consolidated statements of operations (in thousands):
−Removed: Year Ended December 31,
−Removed: 2019 restructuring
−Removed: 2018 restructuring
−Removed: 2016 restructuring
−Removed: 2011 restructuring
−Removed: Total restructuring related charges
−Removed: Acquisition and related charges
−Removed: Total restructuring and acquisition related costs
−Removed: 2019 Restructuring
−Removed: During the fourth quarter of 2018, the Company implemented a restructuring plan intended to realign operations, reduce costs, achieve operational efficiencies and focus resources on growth initiatives.
−Removed: In 2019, the Company recorded $ 3.8 million in severance and related costs, $ 2.6 million in impairment of operating lease right-of-use assets and $ 1.1 million in impairment of long-lived assets in connection with the 2019 restructuring plan.
−Removed: The Company anticipates completing the 2019 restructuring program in the first quarter of 2020 and expects to incur additional restructuring charges of $ 0.1 million to $ 0.2 million related to the 2019 restructuring program in the next twelve months.
−Removed: The following table summarizes restructuring costs associated with the 2019 restructuring program by reportable segment (in thousands):
−Removed: Cumulative Costs as of
−Removed: December 31, 2019
−Removed: December 31, 2018
−Removed: December 31, 2019
−Removed: Precision Motion
−Removed: Unallocated Corporate and Shared Services
−Removed: 2018 Restructuring
−Removed: During the second quarter of 2018, the Company initiated a program to integrate manufacturing operations as a result of acquisition activities.
−Removed: In 2019, the Company recorded $ 1.2 million in severance and related costs in connection with the 2018 restructuring plan.
−Removed: The Company anticipates completing the 2018 restructuring program during the first quarter of 2020 and expects to incur additional restructuring charges of $ 0.1 million to $ 0.2 million related to the 2018 restructuring program.
−Removed: The following table summarizes restructuring costs associated with the 2018 restructuring program by reportable segment (in thousands):
−Removed: Cumulative Costs as of
−Removed: December 31, 2019
−Removed: December 31, 2018
−Removed: December 31, 2019
−Removed: Precision Motion
−Removed: Unallocated Corporate and Shared Services
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: 2016 Restructuring
−Removed: During the third quarter of 2015, the Company initiated the 2016 restructuring program, which included consolidating certain manufacturing operations to optimize facility footprint and better utilize resources, and reducing redundant costs due to productivity cost savings and business volume reductions.
−Removed: As of December 31, 2017, the Company incurred cumulative costs related to this restructuring plan totaling $ 6.5 million, net of the gain on the sale of the Chatsworth, California facility.
−Removed: The plan was completed in 2017.
−Removed: The following table summarizes restructuring costs associated with the 2016 restructuring program by reportable segment (in thousands):
−Removed: Cumulative Costs as of
−Removed: December 31, 2017
−Removed: December 31, 2017
−Removed: Precision Motion
−Removed: Unallocated Corporate and Shared Services
−Removed: Rollforward of Accrued Expenses Related to Restructuring
−Removed: The following table summarizes the accrual activities, by component, related to the Company’s restructuring charges recorded in the accompanying consolidated balance sheets (in thousands):
−Removed: Balance at December 31, 2017
−Removed: Restructuring charges
−Removed: Cash payments
−Removed: Non-cash write-offs and other adjustments
−Removed: Balance at December 31, 2018
−Removed: Restructuring charges
−Removed: Cash payments
−Removed: Reclassification of reserves ( 2 )
−Removed: Non-cash write-offs and other adjustments ( 3 )
−Removed: Balance at December 31, 2019
−Removed: Other restructuring charges mainly related to consulting fees and relocation costs.
−Removed: Accruals related to facilities exited prior to January 1, 2019 were reclassified to operating lease liabilities upon adoption of ASU 2016-02.
−Removed: Non-cash write-offs included impairment of operating lease right-of-use assets amounting to $ 2.6 million associated with the cessation of use of certain leased facilities.
−Removed: The Company expects to make $ 2.0 million in cash payments related to these restructuring plans during the twelve months ending December 31, 2020 .
−Removed: Acquisition and Related Charges
−Removed: Acquisition related costs incurred in connection with business combinations, primarily including finders’ fees, legal, valuation and other professional or consulting fees, totaled $ 5.3 million, $ 1.4 million, and $ 6.8 million during 2019, 2018, and 2017, respectively.
−Removed: Acquisition related costs recognized under earn-out agreements in connection with acquisitions totaled $ 2.6 million,
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: $ 4.6 million, and $ 0.4 million during 20 19 , 20 18 , and 20 17 , respectively .
−Removed: The majority of acquisition related costs for 201 9 were included in the Company’s Precision Motion and Unallocated Corporate and Shared Services reportable segment s .
−Removed: Commitments and Contingencies
−Removed: Purchase Commitments
−Removed: As of December 31, 2019, the Company had purchase commitments primarily for inventory purchases of $ 75.8 million.
−Removed: These purchase commitments are expected to be incurred as follows:
−Removed: $ 74.2 million in 2020, $ 0.8 million in 2021 and $ 0.8 million in 2022.
−Removed: Legal Proceedings
−Removed: The Company is subject to various legal proceedings and claims that arise in the ordinary course of business.
−Removed: The Company reviews the status of each significant matter and assesses the potential financial exposure on a quarterly basis.
−Removed: If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss.
−Removed: Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable.
−Removed: Because of uncertainties related to these matters, accruals are based only on the best information available as of the date of the consolidated balance sheet.
−Removed: As additional information becomes available, the Company reassesses the potential liability related to any pending claims and litigation and may revise its estimates.
−Removed: The Company does not believe that the outcome of these claims will have a material adverse effect upon its consolidated financial statements but there can be no assurance that any such claims, or any similar claims, would not have a material adverse effect upon its consolidated financial statements.
−Removed: Guarantees and Indemnifications
−Removed: In the normal course of its operations, the Company executes agreements that provide for indemnification and guarantees to counterparties in transactions such as business dispositions, sale of assets, sale of products and operating leases.
−Removed: Additionally, the by-laws of the Company require it to indemnify certain current or former directors, officers, and employees of the Company against expenses incurred by them in connection with each proceeding in which he or she is involved as a result of serving or having served in certain capacities.
−Removed: Indemnification is not available with respect to a proceeding as to which it has been adjudicated that the person did not act in good faith in the reasonable belief that the action was in the best interests of the Company.
−Removed: Certain of the Company’s officers and directors are also a party to indemnification agreements with the Company.
−Removed: These indemnification agreements provide, among other things, that the director and officer shall be indemnified to the fullest extent permitted by applicable law against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such officer or director in connection with any proceeding by reason of his or her relationship with the Company.
−Removed: In addition, the indemnification agreements provide for the advancement of expenses incurred by such director or officer in connection with any proceeding covered by the indemnification agreement, subject to the conditions set forth therein and to the extent such advancement is not prohibited by law.
−Removed: The indemnification agreements also set out the procedures for determining entitlement to indemnification, the requirements relating to notice and defense of claims for which indemnification is sought, the procedures for enforcement of indemnification rights, the limitations on and exclusions from indemnification, and the minimum levels of directors’ and officers’ liability insurance to be maintained by the Company.
−Removed: On July 1, 2013, the Company provided a Guarantee (the “Guarantee”) in favor of the trustees of the U.K.
−Removed: Plan with respect to all present and future obligations and liabilities (whether actual or contingent and whether owed jointly or severally and in any capacity whatsoever) of Novanta Technologies UK Limited, a wholly owned subsidiary of Novanta Inc.
−Removed: Credit Risks and Other Uncertainties
−Removed: The Company maintains financial instruments such as cash and cash equivalents and trade receivables.
−Removed: From time to time, certain of these instruments may subject the Company to concentrations of credit risk whereby one institution may hold a significant portion of the cash and cash equivalents, or one customer may represent a large portion of the accounts receivable balances.
−Removed: There was no significant concentration of credit risk related to the Company’s position in trade accounts receivable as no individual customer represented 10% or more of the Company’s outstanding accounts receivable at December 31, 2019 and 2018.
−Removed: Credit risk with respect to trade accounts receivables is generally minimized because of the diversification of the Company’s operations, as well as its large customer base and its geographic dispersion.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Certain of the components and materials included in the Company’s products are currently obtained from single source suppliers.
−Removed: There can be no assurance that a disruption of the supply of such components and materials would not create substantial manufacturing delays and additional cost to the Company.
−Removed: The Company’s operations involve a number of other risks and uncertainties including, but not limited to, the effects of general economic conditions, rapidly changing technologies, and international operations.
−Removed: Related Party Transactions
−Removed: As of March 29, 2019, certain members of the Company’s board of directors served on the board of directors or as advisors of companies that are customers of the Company.
−Removed: All contracts with related parties were executed at arm’s length in the ordinary course of business.
−Removed: As of the beginning of the second quarter of 2019, these customers were no longer considered to be related parties.
−Removed: The aggregate revenue from these customers was $ 11.6 million and $ 40.0 million in the three months ended March 29, 2019 and the twelve months ended December 31, 2018, respectively.
−Removed: There was $ 0.6 million in accounts receivable due from these customers as of December 31, 2018.
−Removed: There were no material transactions with related parties in 2017.
−Removed: Segment Information
−Removed: Reportable Segments
−Removed: The Company’s Chief Operating Decision Maker (“CODM”) utilizes financial information to make decisions about allocating resources and assessing performance for the entire Company.
−Removed: The Company evaluates the performance of, and allocates resources to, its segments based on revenue, gross profit and operating profit.
−Removed: The Company’s reportable segments have been identified based on commonality and adjacency of technologies, applications and customers amongst the Company’s individual product lines.
−Removed: The Company determined that disclosing revenue by specific product was impracticable due to the highly customized and extensive portfolio of technologies offered to customers.
−Removed: Based upon the information provided to the CODM, the Company has determined it operates in three reportable segments:
−Removed: Photonics, Vision, and Precision Motion.
−Removed: The reportable segments and their principal activities consist of the following:
−Removed: The Photonics segment designs, manufactures and markets photonics-based solutions, including laser scanning, laser beam delivery, CO2 laser, solid state laser, ultrafast laser, and optical light engine products to customers worldwide.
−Removed: The segment serves highly demanding photonics-based applications for advanced industrial processes, metrology, medical and life science imaging, DNA sequencing, and medical laser procedures.
−Removed: The vast majority of the segment’s product offerings are sold to OEM customers.
−Removed: The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.
−Removed: The Vision segment designs, manufactures and markets a range of medical grade technologies, including medical insufflators, pumps and related disposables;
−Removed: visualization solutions;
−Removed: wireless, recorder and video integration technologies for operating room integrations;
−Removed: optical data collection and machine vision technologies;
−Removed: radio frequency identification (“RFID”) technologies;
−Removed: thermal chart recorders;
−Removed: spectrometry technologies;
−Removed: and embedded touch screen solutions.
−Removed: The vast majority of the segment’s product offerings are sold to OEM customers.
−Removed: The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.
−Removed: Precision Motion
−Removed: The Precision Motion segment designs, manufactures and markets optical and inductive encoders, precision motor and motion control sub-assemblies, servo drives, air bearings, and air bearing spindles to customers worldwide.
−Removed: The vast majority of the segment’s product offerings are sold to OEM customers.
−Removed: The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Reportable Segment Financial Information
−Removed: Revenue, gross profit, operating income (loss), depreciation and amortization expenses, accounts receivable and inventories by reportable segments were as follows (in thousands):
−Removed: Year Ended December 31,
−Removed: Precision Motion
−Removed: Year Ended December 31,
−Removed: Precision Motion
−Removed: Unallocated Corporate and Shared Services
−Removed: Year Ended December 31,
−Removed: Operating Income (Loss)
−Removed: Precision Motion
−Removed: Unallocated Corporate and Shared Services
−Removed: Year Ended December 31,
−Removed: Depreciation and Amortization Expenses
−Removed: Precision Motion
−Removed: Unallocated Corporate and Shared Services
−Removed: Accounts Receivable
−Removed: Precision Motion
−Removed: Total accounts receivable
−Removed: Precision Motion
−Removed: Total inventories
−Removed: Total segment assets
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Total segment assets
−Removed: Cash and cash equivalents
−Removed: Prepaid income taxes and income taxes receivable
−Removed: Prepaid expenses and other current assets
−Removed: Property, plant and equipment, net
−Removed: Operating lease assets
−Removed: Deferred tax assets
−Removed: Intangible assets, net
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
−Removed: AS OF DECEMBER 31, 2019
−Removed: Geographic Information
−Removed: The Company aggregates geographic revenue based on the customer location where products are shipped.
−Removed: Revenue from these customers is summarized as follows (in thousands, except percentage data):
−Removed: Year Ended December 31,
−Removed: United States
−Removed: Rest of Europe
−Removed: Rest of Asia-Pacific
−Removed: Long-lived assets consist of property, plant and equipment, net, and are aggregated based on the location of the assets.
−Removed: A summary of these long-lived assets is as follows (in thousands):
−Removed: United States
−Removed: Rest of Europe
−Removed: Rest of Asia-Pacific
−Removed: Revenue by End Market
−Removed: The Company primarily operates in two end markets:
−Removed: the medical market and the advanced industrial market.
−Removed: Revenue by end market was approximately as follows:
−Removed: Year Ended December 31,
−Removed: Advanced Industrial
−Removed: The majority of the revenue from the Photonics and Precision Motion segments is generated from sales to customers in the advanced industrial market.
−Removed: The majority of the revenue from the Vision segment is generated from sales to customers in the medical market.
−Removed: Significant Customers
−Removed: No customer accounted for greater than 10% of the Company’s revenue during the years ended December 31, 2019, 2018 or 2017.
−Removed: Supplementary Information
−Removed: The Company’s interim financial statements are prepared on a quarterly basis ending on the Friday closest to the end of the calendar quarter, with the exception of the fourth quarter which always ends on December 31.
−Removed: The following tables reflect the Company’s unaudited condensed consolidated statements of operations for each of the quarterly periods in 2019 and 2018 (in thousands except per share data):
−Removed: Three Months Ended
−Removed: September 27,
−Removed: Cost of revenue
−Removed: Operating expenses:
−Removed: Research and development and engineering
−Removed: Selling, general and administrative
−Removed: Amortization of purchased intangible assets
−Removed: Restructuring and acquisition related costs
−Removed: Total operating expenses
−Removed: Operating income
−Removed: Interest income (expense), foreign exchange transaction gains (losses) and other income (expense), net
−Removed: Income before income taxes
−Removed: Income tax provision
−Removed: Consolidated net income
−Removed: Net income attributable to noncontrolling interest
−Removed: Net income attributable to Novanta Inc.
−Removed: Earnings per common share attributable to Novanta Inc.
−Removed: Three Months Ended
−Removed: September 28,
−Removed: Cost of revenue
−Removed: Operating expenses:
−Removed: Research and development and engineering
−Removed: Selling, general and administrative
−Removed: Amortization of purchased intangible assets
−Removed: Restructuring and acquisition related costs
−Removed: Total operating expenses
−Removed: Operating income
−Removed: Interest income (expense), foreign exchange transaction gains (losses) and other income (expense), net
−Removed: Income before income taxes
−Removed: Income tax provision
−Removed: Consolidated net income
−Removed: Net income attributable to noncontrolling interest
−Removed: Net income attributable to Novanta Inc.
−Removed: Earnings per common share attributable to Novanta Inc.
−Removed: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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.