What changed in this filing

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Item 1. Financial Statements

2020-08-04 compared with 2020-05-05 · 156 added, 119 removed, 452 unchanged (38% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Cost of revenue

4 unchanged sentences

Total operating expenses

Operating (loss) income

Operating income

Interest income, net

Other income, net

(Loss) income before provision for income taxes

Provision for income taxes

Net (loss) income

(Loss) earnings per share:

Other (expense) income, net

Income before provision for income taxes

Provision (benefit) for income taxes

Earnings per share:

Weighted average shares outstanding:

1 unchanged sentence

ONTO INNOVATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Three Months Ended

Net (loss) income

Other comprehensive (loss), net of tax:

Change in net unrealized (losses) gains on available-for-sale marketable

Six Months Ended

Other comprehensive income (loss), net of tax:

Change in net unrealized gains on

available-for-sale marketable securities

Change in currency translation adjustments

Other comprehensive (loss)

Total comprehensive (loss) income

Other comprehensive income

Total comprehensive income

The accompanying notes are an integral part of these financial statements.

33 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net (loss) income

Adjustments to reconcile net income to net cash and cash equivalents provided by (used in)

Adjustments to reconcile net income to net cash and cash equivalents provided by

operating activities:

4 unchanged sentences

Changes in operating assets and liabilities

Net cash and cash equivalents provided by (used in) operating activities

Net cash and cash equivalents provided by operating activities

Cash flows from investing activities:

1 unchanged sentence

Proceeds from sales of marketable securities

Cash received from convertible note receivable

Purchases of property, plant and equipment

Net cash and cash equivalents used in investing activities

Net cash and cash equivalents provided by (used in) investing activities

Cash flows from financing activities:

1 unchanged sentence

Tax payments related to shares withheld for share-based compensation plans

Payment of contingent consideration for acquired business

Issuance of shares through share-based compensation plans

21 unchanged sentences

Balance at March 28, 2020

Issuance of shares through share-based

compensation plans, net

Repurchase of common stock

Share-based compensation

Share-based compensation plan

Currency translation

Unrealized gain on investments

Balance at June 27, 2020

Additional Paid-in

10 unchanged sentences

Balance at March 31, 2019

Issuance of shares through share-based

compensation plans, net

Share-based compensation

Share-based compensation plan

Currency translation

Unrealized gain on investments

Balance at June 30, 2019

The accompanying notes are an integral part of these financial statements.

3 unchanged sentences

Basis of Presentation

The accompanying interim unaudited Condensed Consolidated Financial Statements have been prepared by Onto Innovations Inc.

(the “Company” or “Onto”) and in the opinion of management reflect all adjustments, consisting of normal recurring accruals, necessary for their fair presentation in accordance with accounting principles generally accepted in the United States of America (“U.S.

The accompanying interim unaudited Condensed Consolidated Financial Statements have been prepared by Onto Innovation Inc.

(the “Company,” or “Onto”, “we”, “our”, or “us”) and in the opinion of management reflect all adjustments, consisting of normal recurring accruals, necessary for their fair presentation in accordance with accounting principles generally accepted in the United States of America (“U.S.

Preparing financial statements requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes.

Actual amounts could differ materially from reported amounts.

The interim results for the three months ended March 28, 2020 are not necessarily indicative of results to be expected for the entire year or any future periods.

The interim results for the three and six months ended June 27, 2020 are not necessarily indicative of results to be expected for the entire year or any future periods.

This interim financial information should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Form 10-K”) filed with the Securities and Exchange Commission (“SEC”) on February 25, 2020.

The accompanying Condensed Consolidated Balance Sheet at December 31, 2019 has been derived from the audited consolidated financial statements included in the 2019 Form 10-K.

As further discussed in Note 2 of Notes to the Condensed Consolidated Financial Statements, Rudolph Technologies, Inc.

As further discussed in Note 2 of the Notes to the Condensed Consolidated Financial Statements, Rudolph Technologies, Inc.

(“Rudolph”) and Nanometrics Incorporated (“Nanometrics”) completed a merger effective October 25, 2019 (the “Merger”).

Upon consummation of the Merger, the combined company was renamed Onto Innovation.

The Merger was accounted for as a reverse acquisition where Rudolph was the accounting acquirer and Nanometrics was the legal acquirer in accordance with Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations” (“ASC 805”).

Upon consummation of the Merger, the combined company was renamed Onto Innovation Inc.

Accordingly, Rudolph’s historical results of operations replaced the Nanometrics historical results of operations for all periods prior to the Merger.

3 unchanged sentences

Accordingly, earnings per share has been retroactively restated for periods prior to the merger date.

On February 28, 2020, the Board of Directors of Onto Innovation Inc.

(the “Company”) determined it is in the best interests of the Company to change its fiscal year end from December 31 to a 52-53 week fiscal year ending on the Saturday closest to December 31.

On February 28, 2020, the Company’s Board of Directors determined it is in the best interests of the Company to change its fiscal year end from December 31 to a 52-53 week fiscal year ending on the Saturday closest to December 31.

The change is intended to align the Company’s fiscal periods more closely with industry peers and improve comparability.

The Company made the fiscal year change on a prospective basis and has not adjusted operating results for prior periods.

The change affects the prior year comparability of the Company’s fiscal quarters in 2020 and will result in shifts in the quarterly periods, which will not have a material impact on quarterly financial results.

The first fiscal quarter of 2020 began on January 1, 2020 and ended March 28, 2020 and is referred to throughout this report as the “three months ended March 28, 2020” or the “first quarter of 2020.” The registrant’s current fiscal year will end on December 26, 2020.

The change affects the prior year comparability of the Company’s fiscal quarters in 2020 and results in shifts in the quarterly periods, which has not had, and is not expected to have, a material impact on quarterly financial results.

The second fiscal quarter of 2020 began on March 29, 2020 and ended June 27, 2020 and is referred to throughout this Quarterly Report on Form 10-Q as the “three months ended June 27, 2020” or the “second quarter of 2020.” The Company’s current fiscal year will end on December 26, 2020.

Reclassifications

3 unchanged sentences

Amounts related to applications engineering are now presented under the caption, “Sales and marketing” on the Condensed Consolidated Statements of Operations and were previously reported under the caption “Research and development.”

Impact of COVID-19 on our Business

The impact of the COVID-19 pandemic continues to unfold.

The extent of the pandemic’s effect on the Company’s operational and financial performance will depend in large part on future developments, which cannot be predicted with confidence at this time.

Future developments include the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact, the impact on governmental programs and budgets, the development of treatments or vaccines, and the

resumption of widespread economic activity.

Due to the inherent uncertainty of the unprecedented and rapidly evolving situation, the Company is unable to predict with any confidence the likely impact of the COVID-19 pandemic on its future operations.

Use of Estimates

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

estimates made by management that are evaluated on an ongoing basis include the allowances for doubtful accounts and convertible notes receivable, excess and obsolete inventory, fair value of assets acquired and liabilities assumed in a busines s combination, recoverability and useful lives of property, plant and equipment and identifiable intangible assets, recoverability of goodwill, recoverability of deferred tax assets, liabilities for product warranty, contingencies, including litigation res erves and share-based payments and liabilities for tax uncertainties.

Actual results could differ from those estimates.

These estimates and assumptions are based on historical experience and on various other factors which the Company believes to be reasonable under the circumstances.

The Company may engage third-party valuation specialists to assist with estimates related to the valuation of financial instruments, assets and stock awards associated with various contractual arrangements.

Such estimates often require the selection of appropriate valuation methodologies and significant judgment.

Actual results could differ from these estimates under different assumptions or circumstances and such differences could be material.

The Company also assessed the impacts of COVID-19 on the above accounting matters as of June 27, 2020 and through the date of this report.

While there was not a material impact as of and for the quarter ended June 27, 2020, future actual magnitude and duration of COVID-19, as well as other associated factors, could result in material negative impacts to its condensed consolidated financial statements in future reporting periods.

Recent Accounting Pronouncements

2 unchanged sentences

2018-13, “Fair Value Measurement (Topic 820):

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU is part of the Financial Account Standard Board’s (“FASB”) larger disclosure framework project intended to improve the effectiveness of financial statement footnote disclosure.

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU is part of the Financial Accounting Standard Board’s (“FASB”) larger disclosure framework project intended to improve the effectiveness of financial statement footnote disclosure.

2018-13 modifies required fair value disclosures related primarily to Level 3 investments.

27 unchanged sentences

Rudolph and Nanometrics completed the Merger effective October 25, 2019.

The Company accounted for the Merger as a reverse acquisition, using the acquisition method of accounting in accordance with generally accepted accounting principles, with Rudolph being treated as the accounting acquiring entity.

The Company accounted for the Merger as a reverse acquisition, using the acquisition method of accounting in accordance with U.S.

GAAP, with Rudolph being treated as the accounting acquiring entity.

The acquired assets and liabilities of Nanometrics were recorded at their respective fair values including an amount for goodwill, which represents the purchase price paid in excess of the fair value of the net tangible and intangible assets acquired and liabilities assumed, and is attributable primarily to expected synergies, economies of scale and the assembled workforce of Nanometrics.

The following table summarizes the preliminary allocation of the total purchase consideration to the initial estimated fair values of the assets acquired and liabilities assumed as of October 25, 2019, as well as adjustments aggregating $ 478 to other non-current liabilities during the three months ended March 28, 2020:

The following table summarizes the preliminary allocation of the total purchase consideration to the initial estimated fair values of the assets acquired and liabilities assumed as of October 25, 2019, as well as adjustments aggregating $ 0 and $ 478 to other non-current liabilities during the three and six months ended June 27, 2020:

Cash and cash equivalents

22 unchanged sentences

A financial asset’s or liability’s fair value measurement classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis at March 28, 2020 and December 31, 2019:

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis at June 27, 2020 and December 31, 2019:

Fair Value Measurements Using

5 unchanged sentences

Unobservable Inputs

March 28, 2020

June 27, 2020

Available-for-sale debt securities:

Municipal notes and bonds

treasury securities

Asset-backed securities

2 unchanged sentences

Corporate bonds

Foreign currency forward contracts

Contingent consideration - acquisitions

Foreign currency forward contracts

Total liabilities

9 unchanged sentences

Total liabilities

The Company’s available-for-sale debt securities classified as Level 2 are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency.

The Company’s available-for-sale debt securities classified as Level 1 are based on quoted prices that are available in active markets.

Treasury securities are measured based on quoted market prices.

Level 2 are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency.

The foreign currency forward contracts are primarily measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers.

1 unchanged sentence

Level 3 liabilities consisted of contingent consideration related to an acquisition for which the Company uses a discounted cash flow model to value these liabilities.

The Level 3 assumptions used in the discounted cash flow model for the contingent consideration included projected revenue, timing of cash flows and estimates of discount rates of 0.0 % and 9.2 % for the three months ended March 28, 2020 and March 31, 2019, respectively.

A significant decrease in the projected revenue or increase in discount rates could result in a significantly lower fair value measurement for the contingent consideration.

This table presents a reconciliation of all liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 28, 2020:

The Level 3 assumptions used in the discounted cash flow model for the contingent consideration included projected revenue, timing of cash flows and estimates of discount rates.

This table presents a reconciliation of the Contingent consideration - acquisitions liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 27, 2020:

Fair Value Measurements Using

2 unchanged sentences

Transfer into (out of) Level 3

Balance at March 28, 2020

Balance at June 27, 2020

See Note 4 for additional discussion regarding the fair value of the Company’s marketable securities.

5 unchanged sentences

The Company has evaluated its investment policies and determined that all of its marketable securities, which are comprised of debt securities, are to be classified as available-for-sale.

The Company’s available-for-sale debt securities are carried at fair value, with the unrealized gains and losses reported in Stockholders’ equity under the caption “Accumulated other comprehensive loss.” Realized gains and losses on available-for-sale securities are included in “Other income, net” on the Condensed Consolidated Statements of Operations.

The Company’s available-for-sale debt securities are carried at fair value, with the unrealized gains and losses reported in Stockholders’ equity under the caption “Accumulated other comprehensive loss.” Realized gains and losses on available-for-sale securities are included in “Other (expense) income, net” on the Condensed Consolidated Statements of Operations.

The Company records other-than-temporary impairment charges for its available-for-sale debt securities when it intends to sell the securities, it is more-likely-than not that it will be required to sell the securities before a recovery, or when it does not expect to recover the entire amortized cost basis of the securities.

The cost of securities sold is based on the specific identification method.

The Company has determined that the gross unrealized losses on its marketable securities at March 28, 2020 and December 31, 2019 are temporary in nature.

The Company has determined that the gross unrealized losses on its marketable securities at June 27, 2020 and December 31, 2019 are temporary in nature.

The Company reviews its investment portfolio to identify and evaluate marketable securities that have indications of possible impairment.

Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, credit quality and the Company’s ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value.

At March 28, 2020 and December 31, 2019, marketable securities are categorized as follows:

At June 27, 2020 and December 31, 2019, marketable securities are categorized as follows:

Amortized Cost

1 unchanged sentence

Gross Unrealized Holding Losses

March 28, 2020

June 27, 2020

Municipal notes and bonds

treasury securities

Asset-backed securities

10 unchanged sentences

Total marketable securities

The amortized cost and estimated fair value of marketable securities classified by the maturity date listed on the security, regardless of the Condensed Consolidated Balance Sheets classification, is as follows at March 28, 2020 and December 31, 2019:

March 28, 2020

June 27, 2020

December 31, 2019

6 unchanged sentences

Total marketable securities

The following table summarizes the estimated fair value and gross unrealized holding losses of marketable securities, aggregated by investment instrument and period of time in an unrealized loss position, at March 28, 2020 and December 31, 2019:

In Unrealized Loss Position For

4 unchanged sentences

Gross Unrealized Losses

March 28, 2020

June 27, 2020

Municipal notes and bonds

8 unchanged sentences

The Company, when it considers it to be appropriate, enters into forward contracts to hedge the economic exposures arising from foreign currency denominated transactions.

At March 28, 2020 and December 31, 2019, these contracts included the future sale of Japanese Yen, Korean Won, Taiwanese dollar and Chinese Yuan Renminbi to purchase U.S.

Foreign currency forward contracts are not designated as hedges for accounting purposes and therefore, the change in fair value is recorded in general and administrative expenses in the Condensed Consolidated Statements of Operations.

The Company records its forward contracts at fair value in either prepaid expenses and other current assets or other current liabilities in the Condensed Consolidated Balance Sheets.

At June 27, 2020 and December 31, 2019, these contracts included the future sale of British Pound, European Euro, Israeli Shekel, Japanese Yen, Korean Won, Singapore Dollar, Taiwanese Dollar,

and Chinese Yuan Renminbi to purchase U.S.

Foreign currency forward contracts are not designated as hedges for accounting purposes and th erefore, the change in fair value is recorded in “Other (expense) income, net,” in the Condensed Consolidated Statements of Operations.

The Company records its forward contracts at fair value in either prepaid expenses and other current assets or other cu rrent liabilities in the Condensed Consolidated Balance Sheets.

The dollar equivalent of the U.S.

dollar forward contracts and related fair values as of March 28, 2020 and December 31, 2019 were as follows:

dollar forward contracts and related fair values as of June 27, 2020 and December 31, 2019 were as follows:

Notional amount

Fair value of asset

Fair value of (liability) asset

Purchased Intangible Assets

2 unchanged sentences

Goodwill adjustments (Note 2)

Balance at March 28, 2020

Purchased intangible assets as of March 28, 2020 and December 31, 2019 are as follows:

Balance at June 27, 2020

Purchased intangible assets as of June 27, 2020 and December 31, 2019 are as follows:

Gross Carrying Amount

Accumulated Amortization

March 28, 2020

June 27, 2020

Finite-lived intangibles:

13 unchanged sentences

Total identifiable intangible assets

Intangible assets amortization expenses for the three months ended March 28, 2020 and March 31, 2019 were $ 13,732 and $ 387 , respectively.

Intangible assets amortization expenses for the three and six months ended June 27, 2020 were $ 13,703 and $ 27,435 , respectively.

For the three and six month periods ended June 30, 2019, intangible assets amortization expenses were $ 387 and $ 774 , respectively.

Assuming no change in the gross carrying value of identifiable intangible assets and estimated lives, estimated amortization expenses for the remainder of fiscal 2020 are $ 26,309 , and for each of the next five fiscal years estimated amortization expenses are $ 48,014 for 2021, $ 47,615 for 2022, $ 47,140 for 2023, $ 41,455 for 2024, and $ 24,905 for 2025.

1 unchanged sentence

On May 31, 2018, the Company entered into a convertible note agreement with Simax Precision Technologies Limited (“the borrower”), which allowed them to borrow up to $ 15,000 in multiple promissory notes with an interest rate of 4.25 % per annum payable on a semi-annual basis.

The Company expected to be a supplier of lithography modules to Simax, which is used in the manufacture, sale and service of lithography systems.

During the first quarter of 2020, the Company and the borrower entered into a settlement agreement to end their relationship as it pertains to this convertible note agreement.

At the time of the settlement, the Company had $ 5,000 in outstanding convertible notes receivable with the borrower and the settlement amount of $ 2,848 was agreed to by both parties.

Therefore, the Company increased its reserve against the convertible notes receivable to $ 2,152 as of March 28, 2020.

The settlement was subsequently paid in April 2020.

The Company expected to be a supplier of lithography modules to Simax, which is

used in the manufacture, sale and service of lithography systems.

At December 31, 2019, the Company had $ 3,000 , net of allowance, in outstanding convertible notes receivable with the borrower.

The Company and the borrower entered into a settlement agreement to end their relationship as it pertains to this convertible note agreement.

The Company agreed to the settlement amount of $ 2,848 , which was paid in April 2020.

Balance Sheet Details

Inventories, net are comprised of the following:

March 28, 2020

June 27, 2020

December 31, 2019

4 unchanged sentences

Property, plant and equipment, net is comprised of the following:

March 28, 2020

June 27, 2020

December 31, 2019

7 unchanged sentences

Other assets is comprised of the following:

March 28, 2020

June 27, 2020

December 31, 2019

Convertible notes receivable, net of allowance of $ 2,000

Convertible notes receivable, net of allowance of $ 2,000 at December 31,

Operating lease right-of-use assets

2 unchanged sentences

Accrued liabilities is comprised of the following:

March 28, 2020

June 27, 2020

December 31, 2019

3 unchanged sentences

Other current liabilities is comprised of the following:

March 28, 2020

June 27, 2020

December 31, 2019

8 unchanged sentences

Other non-current liabilities is comprised of the following:

March 28, 2020

June 27, 2020

December 31, 2019

6 unchanged sentences

These receivables were not included in the condensed consolidated balance sheets as the criteria for sale treatment had been met.

The Company sold $ 3,777 of receivables during the three months ended March 28, 2020.

The Company sold $ 6,357 of receivables during the three months ended June 27, 2020.

There were no material gains or losses on the sale of such receivables.

There were no amounts due from such third-party financial institutions at March 28, 2020.

There were no amounts due from such third-party financial institutions at June 27, 2020.

Intellectual Property Indemnification Obligations

10 unchanged sentences

Changes in the Company’s warranty reserves are as follows:

Three Months Ended

Six Months Ended

Balance, beginning of the period

3 unchanged sentences

From time to time, the Company is subject to legal proceedings and claims in the ordinary course of business.

The following reflects an overview of the material activities with regard to these matters.

The following reflects an overview of the material developments with regard to the Company’s pending material legal proceedings.

Optical Solutions Inc.

3 unchanged sentences

The Complaint, brought by Optical Solutions, Inc.

(“OSI”), alleges claims arising from a purported exclusive purchase contract between OSI and Nanometrics pertaining to certain product.

On September 18, 2017, Nanometrics removed the action to the United States District Court for the District of New Hampshire.

On September 25, 2017, Nanometrics moved to transfer the Complaint to the District Court for the Northern District of California (the “Court”).

(“OSI”), alleges claims arising from a purported exclusive purchase contract between OSI and Nanometrics pertaining to certain products.

On September 18, 2017, Nanometrics removed the action to the United States District Court for the District of New Hampshire (the “District of New Hampshire”).

On September 25, 2017, Nanometrics moved to transfer the Complaint to the United States District Court for the Northern District of California (the “Northern District of California”).

On December 20, 2017, Nanometrics filed its complaint against OSI in the California Superior Court for the County of Santa Clara alleging claims arising from OSI’s breach of certain purchase orders.

Nanometrics’ complaint was later removed by OSI to the Northern District of California.

On May 29, 2018, the District Court of New Hampshire issued an order granting Nanometrics’ motion to transfer the Complaint to the Northern District of California and denying Nanometrics’ motion to dismiss the Complaint without prejudice.

On May 29, 2018, the District of New Hampshire issued an order granting Nanometrics’ motion to transfer the Complaint to the Northern District of California and denying Nanometrics’ motion to dismiss the Complaint without prejudice.

On June 14, 2018, the Complaint was consolidated with Nanometrics’ complaint against OSI.

2 unchanged sentences

Nanometrics’ motion to dismiss was heard on February 28, 2019.

On March 5, 2019, the Court granted Nanometrics’ Motion to Dismiss with leave to amend.

On March 5, 2019, the Northern District of California granted Nanometrics’ motion to dismiss with leave to amend.

OSI filed a Second Amended Complaint on March 29, 2019.

3 unchanged sentences

Thereafter, the Company’s second motion to dismiss was heard on November 14, 2019.

On November 26, 2019, the Court granted the Company’s Motion to dismiss with leave to amend.

On November 26, 2019, the Northern District of California granted the Company’s motion to dismiss with leave to amend.

OSI filed a Third Amended Complaint on January 21, 2020.

On March 2, 2020, the Company filed a motion to dismiss OSI’s Third Amended Complaint.

On March 2, 2020, the Company filed a motion to dismiss OSI’s Third Amended Complaint and a hearing on the motion was held on June 11, 2020.

On June 23, 2020, the Northern District of California granted the Company’s motion to dismiss with prejudice with regard to two claims asserted by OSI and dismissed two other claims asserted by OSI with leave to amend.

Thereafter, on July 7, 2020, OSI filed a Fourth Amended Complaint.

Trial has been set for May 16, 2022.

At this time, the Company does not anticipate the outcome of this matter to have a material impact on its financial position, results of operations, or cash flows.

Lin e of Credit

Line of Credit

The Company has a credit agreement with a bank that provides for a line of credit which is secured by the marketable securities the Company has with the bank.

The Company is permitted to borrow up to 70 % of the value of eligible securities held at the time the line of credit is accessed.

The available line of credit as of March 28, 2020 was approximately $ 71.1 million with an available interest rate of 1.8 %.

The available line of credit as of June 27, 2020 was approximately $ 75.6 million with an available interest rate of 1.8 %.

The credit agreement is available to the Company until such time that either party terminates the arrangement at their discretion.

2 unchanged sentences

Three Months Ended

Six Months Ended

Point-in-time

Total revenue

See Note 16 of the Notes to the Condensed Consolidated Financial Statements for additional discussion of the Company’s disaggregated revenue in detail.

See Note 16 for additional discussion of the Company’s disaggregated revenue in detail.

Contract Liabilities

3 unchanged sentences

Three Months Ended

Six Months Ended

Balance, beginning of the period

4 unchanged sentences

Restricted Stock Unit Activity

A summary of the Company’s restricted stock unit activity with respect to the three months ended March 28, 2020 is as follows:

A summary of the Company’s restricted stock unit activity with respect to the six months ended June 27, 2020 is as follows:

Number of Shares

2 unchanged sentences

Nonvested at December 31, 2019

Nonvested at March 28, 2020

As of March 28, 2020 and December 31, 2019, there was $ 22,111 and $ 22,230 of total unrecognized compensation cost related to restricted stock units granted under the Company’s stock plans, respectively.

That cost is expected to be recognized over a weighted average period of 1.9 years for each of the respective periods.

Other Income, Net

Other income, net, is comprised of the following:

Nonvested at June 27, 2020

As of June 27, 2020 and December 31, 2019, there was $ 27,558 and $ 22,230 of total unrecognized compensation cost related to restricted stock units granted under the Company’s stock plans, respectively.

That cost is expected to be recognized over a weighted average period of 2.1 years and 1.9 years for each of the respective periods.

Other (Expense) Income, Net

Other (expense) income, net, is comprised of the following:

Three Months Ended

Six Months Ended

Foreign currency exchange gains (losses), net

Total other income, net

Total other (expense) income, net

The following table provides details of income taxes:

Three Months Ended

(Loss) income before income taxes

Provision for income taxes

Six Months Ended

Income before income taxes

Provision (benefit) for income taxes

Effective tax rate

The income tax provision for the three months ended March 28, 2020 was computed based on the Company’s annual forecast of profit by jurisdiction and forecasted effective tax rate for the year.

The changes in the Company’s effective tax rate for the three months ended March 28, 2020 as compared to the three months ended March 31, 2019 are primarily due to (i) changes in the mix of forecasted earnings by jurisdictions, (ii) computed research and development credits on forecasted earnings levels, and (iii) a one-time provision for additional withholding tax related to a dividend distribution from the Company’s Korea subsidiary.

The income tax provision for the six months ended June 27, 2020 was computed based on the Company’s annual forecast of profit by jurisdiction and forecasted effective tax rate for the year.

The changes in the Company’s effective tax rate for the three and six months ended June 27, 2020 as compared to the three and six months ended June 30, 2019 are primarily due to (i) changes in forecasted earnings, (ii) computed research and development credits on forecasted earnings levels, and (iii) the Foreign Derived Intangible Income (“FDII”) deduction on forecasted earnings levels, and (iv) a one-time provision for additional withholding tax related to a dividend distribution from the Company’s Korea subsidiary offset by a one-time benefit related to the filings of the Company’s 2019 foreign income tax returns.

The Company’s recorded effective tax rate is less than the U.S.

statutory rate primarily due to projected Foreign Derived Intangible Income Deductions and federal research and development tax credits.

statutory rate primarily due to projected FDII deductions and federal research and development tax credits.

The Company currently has a partial valuation allowance recorded against certain foreign and state net operating loss and credit carryforwards where the realizability of such deferred tax assets is substantially in doubt.

4 unchanged sentences

The Company continues to monitor available evidence and may reverse some or all of the remaining valuation allowance in future periods, if appropriate.

The Company has a recorded valuation allowance against certain of its deferred tax assets of $ 14,116 and $ 14,160 as of March 28, 2020 and December 31, 2019, respectively.

The Company has a recorded valuation allowance against certain of its deferred tax assets of $ 14,143 and $ 14,160 as of June 27, 2020 and December 31, 2019, respectively.

On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security Act” (the “CARES Act”) was enacted.

The CARES Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

The Company is currently analyzing the impact of these changes and therefore an estimate of the impact to income taxes is not yet available.

Earnings (Loss) Per Share

Basic earnings (loss) per share is calculated using the weighted average number of shares of common stock outstanding during the period.

These changes did not have a material impact on the Company’s consolidated financial position, results of operations, and cash flows.

Earnings Per Share

Basic earnings per share is calculated using the weighted average number of shares of common stock outstanding during the period.

Diluted earnings per share is computed in the same manner and also gives effect to all dilutive common stock equivalent shares outstanding during the period.

2 unchanged sentences

GAAP, these shares were not included in calculating diluted earnings per share.

For the three months ended March 28, 2020, all weighted average outstanding stock options and restricted stock units totaling 1,087 , were excluded from the computation of diluted loss per share because the effect in the period

would be anti-dilutive.

For the three months ended March 31, 2019, the weighted average number of restricted stock units excluded from the computation of diluted earnings per share were 167 .

The following table sets forth the weighted average number of restricted stock units that have been excluded from the calculation of diluted earnings per share as their effect would have been anti-dilutive:

Three Months Ended

Six Months Ended

Restricted stock units

The Company’s basic and diluted earnings per share amounts are as follows:

Three Months Ended

Net (loss) income

Basic (loss) earnings per share - weighted average shares

Six Months Ended

Basic earnings per share - weighted average shares

Effect of potential dilutive securities:

1 unchanged sentence

units - dilutive shares

Diluted (loss) earnings per share - weighted average shares

(Loss) earnings per share:

Diluted earnings per share - weighted average shares

Earnings per share:

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax at March 28, 2020, as well as the activity for the three months ended March 28, 2020, were as follows:

The components of accumulated other comprehensive loss, net of tax at June 27, 2020, as well as the activity for the six months ended June 27, 2020, were as follows:

Accumulated Foreign Currency

Accumulated Net Unrealized

Accumulated Net Unrealized Gain

Available-For-Sale Marketable

2 unchanged sentences

Balance at December 31, 2019

Net current period other comprehensive loss

Net current period other comprehensive gain

Reclassifications

Balance at March 28, 2020

Balance at June 27, 2020

Segment Reporting and Geographic Information

6 unchanged sentences

Three Months Ended

Six Months Ended

Systems and software

1 unchanged sentence

The Company’s significant operations outside the United States include sales, service and application offices in Asia and Europe.

For geographical revenue reporting, revenue is attributed to the geographic location to which the product is shipped.

Revenu e by geographic region is as follows:

For geographical reve nue reporting, revenue is attributed to the geographic location to which the product is shipped.

Revenue by geographic region is as follows:

Three Months Ended

Six Months Ended

Revenue from third parties:

2 unchanged sentences

The following customers accounted for more than 10% of total revenue for the indicated periods:

Three Months Ended

Six Months Ended

Share Repurchase Authorization

2 unchanged sentences

Under the terms of this share repurchase authorization, shares may be repurchased through open market or privately negotiated transactions.

Share repurchases during the three months ended March 28, 2020 were made under this repurchase authorization and at March 28, 2020, there was $ 46,385 available for future share repurchases.

During the three months ended March 31, 2019, share repurchases were made under a legacy Rudolph share repurchase authorization which was terminated on October 25, 2019 due to closing of the Merger.

Share repurchases during the three and six months ended June 27, 2020 were made under this repurchase authorization and at June 27, 2020, there was $ 28,000 available for future share repurchases.

During the six months ended June 30, 2019, share repurchases were made under a legacy Rudolph share repurchase authorization which was terminated on October 25, 2019 due to closing of the Merger.

See Note 2 for additional information regarding the Merger.

1 unchanged sentence

Three Months Ended

Six Months Ended

Shares of common stock repurchased

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements