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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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For the quarterly period ended September 30, 2018
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or
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||
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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For the transition period from
to
.
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Delaware
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84-0846841
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1625 Sharp Point Drive, Fort Collins, CO
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80525
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Emerging growth company
o
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Page
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Condensed Consolidated Statements of
Comprehensive Income
|
|
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EX-2.1
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EX-10.1
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EX-31.1
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EX-31.2
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EX-32.1
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EX-32.2
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ITEM 1.
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UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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September 30,
|
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December 31,
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||||
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2018
|
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2017
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||||
ASSETS
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|||
Current assets:
|
|
|
|
|
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Cash and cash equivalents
|
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$
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338,673
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|
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$
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407,283
|
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Marketable securities
|
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3,058
|
|
|
3,104
|
|
||
Accounts and other receivable, net of allowances of $2,851 and $1,748 respectively
|
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110,440
|
|
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87,429
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Inventories
|
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110,327
|
|
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78,450
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Income taxes receivable
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4,229
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|
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1,295
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Other current assets
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9,777
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|
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8,129
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Current assets from discontinued operations
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8,273
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|
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9,535
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Total current assets
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584,777
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595,225
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Property and equipment, net
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30,174
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|
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17,795
|
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Deposits and other assets
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5,608
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|
|
3,051
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Goodwill
|
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102,813
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53,812
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Intangible assets, net
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55,071
|
|
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33,499
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Deferred income tax assets
|
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44,112
|
|
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18,841
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||
Non-current assets from discontinued operations
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11,077
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|
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11,085
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||
TOTAL ASSETS
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$
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833,632
|
|
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$
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733,308
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
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Current liabilities:
|
|
|
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Accounts payable
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$
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45,620
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$
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48,177
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Income taxes payable
|
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23,620
|
|
|
5,365
|
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||
Accrued payroll and employee benefits
|
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21,443
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|
|
18,412
|
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Other accrued expenses
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20,248
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|
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19,913
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Customer deposits and other
|
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7,770
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|
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6,402
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Current liabilities from discontinued operations
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5,895
|
|
|
7,850
|
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Total current liabilities
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124,596
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106,119
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Deferred income tax liabilities
|
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12,763
|
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4,556
|
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Uncertain tax positions
|
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14,104
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17,031
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Long term deferred revenue
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30,216
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33,402
|
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Other long-term liabilities
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40,811
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36,282
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Non-current liabilities from discontinued operations
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11,567
|
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15,277
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Total liabilities
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234,057
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212,667
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Commitments and contingencies (Note 18)
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||||
Stockholders’ equity:
|
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||||
Preferred stock, $0.001 par value, 1,000 shares authorized, none issued and outstanding
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—
|
|
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—
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Common stock, $0.001 par value, 70,000 shares authorized; 38,716 and 39,604
issued and outstanding, respectively |
|
39
|
|
|
40
|
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Additional paid-in capital
|
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120,628
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184,843
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Accumulated other comprehensive (loss) income
|
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(2,155
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)
|
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2,533
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Retained earnings
|
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480,550
|
|
|
333,225
|
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Advanced Energy stockholders’ equity
|
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599,062
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520,641
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Noncontrolling interest
|
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513
|
|
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—
|
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Total stockholders’ equity
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599,575
|
|
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520,641
|
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$
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833,632
|
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$
|
733,308
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Three Months Ended September 30,
|
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Nine Months Ended September 30,
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||||||||||||
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2018
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2017
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2018
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2017
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||||||||||||
Sales:
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||||||||
Product
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$
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144,843
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$
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152,363
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|
|
$
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485,287
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|
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$
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424,478
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Services
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28,239
|
|
|
24,212
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|
|
79,444
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|
|
67,320
|
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||||
Total sales
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173,082
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|
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176,575
|
|
|
564,731
|
|
|
491,798
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|
||||
Cost of sales:
|
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|
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|
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||||||||
Product
|
73,019
|
|
|
72,146
|
|
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233,778
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|
|
198,754
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|
||||
Services
|
14,524
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|
|
12,195
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|
|
40,534
|
|
|
34,838
|
|
||||
Total cost of sales
|
87,543
|
|
|
84,341
|
|
|
274,312
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|
|
233,592
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|
||||
Gross profit
|
85,539
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|
|
92,234
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|
|
290,419
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|
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258,206
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|
||||
Operating expenses:
|
|
|
|
|
|
|
|
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|
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|
||||
Research and development
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18,451
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|
14,629
|
|
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55,283
|
|
|
41,742
|
|
||||
Selling, general and administrative
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25,386
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24,692
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78,792
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|
|
70,580
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|
||||
Amortization of intangible assets
|
1,437
|
|
|
1,240
|
|
|
3,958
|
|
|
3,176
|
|
||||
Restructuring expense
|
403
|
|
|
—
|
|
|
403
|
|
|
—
|
|
||||
Total operating expenses
|
45,677
|
|
|
40,561
|
|
|
138,436
|
|
|
115,498
|
|
||||
Operating income
|
39,862
|
|
|
51,673
|
|
|
151,983
|
|
|
142,708
|
|
||||
Other income (expense), net
|
401
|
|
|
153
|
|
|
(58
|
)
|
|
(3,138
|
)
|
||||
Income from continuing operations, before income taxes
|
40,263
|
|
|
51,826
|
|
|
151,925
|
|
|
139,570
|
|
||||
Provision (benefit) for income taxes
|
5,106
|
|
|
(31,968
|
)
|
|
23,998
|
|
|
(25,538
|
)
|
||||
Income from continuing operations
|
35,157
|
|
|
83,794
|
|
|
127,927
|
|
|
165,108
|
|
||||
Income (loss) from discontinued operations, net of income taxes
|
(371
|
)
|
|
70
|
|
|
(226
|
)
|
|
2,343
|
|
||||
Net income
|
$
|
34,786
|
|
|
$
|
83,864
|
|
|
$
|
127,701
|
|
|
$
|
167,451
|
|
Income from continuing operations attributable to noncontrolling interest
|
7
|
|
|
—
|
|
|
82
|
|
|
—
|
|
||||
Net income attributable to Advanced Energy Industries, Inc.
|
$
|
34,779
|
|
|
$
|
83,864
|
|
|
$
|
127,619
|
|
|
$
|
167,451
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted-average common shares outstanding
|
38,970
|
|
|
39,786
|
|
|
39,309
|
|
|
39,787
|
|
||||
Diluted weighted-average common shares outstanding
|
39,195
|
|
|
40,172
|
|
|
39,594
|
|
|
40,207
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per share
|
$
|
0.90
|
|
|
$
|
2.11
|
|
|
$
|
3.25
|
|
|
$
|
4.15
|
|
Diluted earnings per share
|
$
|
0.90
|
|
|
$
|
2.09
|
|
|
$
|
3.23
|
|
|
$
|
4.11
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.06
|
|
Diluted earnings per share
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.06
|
|
Net income:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
0.89
|
|
|
$
|
2.11
|
|
|
$
|
3.25
|
|
|
$
|
4.21
|
|
Diluted earnings per share
|
$
|
0.89
|
|
|
$
|
2.09
|
|
|
$
|
3.23
|
|
|
$
|
4.16
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
34,786
|
|
|
$
|
83,864
|
|
|
$
|
127,701
|
|
|
$
|
167,451
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
(735
|
)
|
|
807
|
|
|
(4,679
|
)
|
|
5,333
|
|
||||
Unrealized loss on marketable securities
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(22
|
)
|
||||
Minimum benefit retirement liability
|
27
|
|
|
(100
|
)
|
|
(9
|
)
|
|
(254
|
)
|
||||
Comprehensive income
|
34,078
|
|
|
84,570
|
|
|
123,013
|
|
|
172,508
|
|
||||
Comprehensive income attributable to noncontrolling interest
|
7
|
|
|
—
|
|
|
82
|
|
|
—
|
|
||||
Comprehensive income attributable to Advanced Energy Industries, Inc.
|
$
|
34,071
|
|
|
$
|
84,570
|
|
|
$
|
122,931
|
|
|
$
|
172,508
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
||
Net income
|
|
$
|
127,701
|
|
|
$
|
167,451
|
|
Income (loss) from discontinued operations, net of income taxes
|
|
(226
|
)
|
|
2,343
|
|
||
Income from continuing operations, net of income taxes
|
|
127,927
|
|
|
165,108
|
|
||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|||
Depreciation and amortization
|
|
9,488
|
|
|
6,792
|
|
||
Stock-based compensation expense
|
|
7,461
|
|
|
10,707
|
|
||
Provision for deferred income taxes
|
|
—
|
|
|
(26,185
|
)
|
||
Loss on foreign exchange hedge
|
|
—
|
|
|
3,489
|
|
||
Net loss on disposal of assets
|
|
167
|
|
|
106
|
|
||
Changes in operating assets and liabilities, net of assets acquired:
|
|
|
|
|
||||
Accounts and other receivable, net
|
|
(6,739
|
)
|
|
4,119
|
|
||
Inventories
|
|
(22,132
|
)
|
|
(15,062
|
)
|
||
Other current assets
|
|
717
|
|
|
(430
|
)
|
||
Accounts payable
|
|
(8,553
|
)
|
|
(5,725
|
)
|
||
Other liabilities and accrued expenses
|
|
49
|
|
|
3,763
|
|
||
Income taxes
|
|
10,098
|
|
|
(6,375
|
)
|
||
Net cash provided by operating activities from continuing operations
|
|
118,483
|
|
|
140,307
|
|
||
Net cash used in operating activities from discontinued operations
|
|
(4,550
|
)
|
|
(7,293
|
)
|
||
Net cash provided by operating activities
|
|
113,933
|
|
|
133,014
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|||
Purchases of marketable securities
|
|
(93
|
)
|
|
(86
|
)
|
||
Proceeds from sale of marketable securities
|
|
6
|
|
|
1,883
|
|
||
Acquisitions, net of cash acquired
|
|
(93,801
|
)
|
|
(17,347
|
)
|
||
Purchase of foreign exchange hedge
|
|
—
|
|
|
(3,489
|
)
|
||
Purchases of property and equipment
|
|
(16,586
|
)
|
|
(5,646
|
)
|
||
Net cash used in investing activities from continuing operations
|
|
(110,474
|
)
|
|
(24,685
|
)
|
||
Net cash used in investing activities from discontinued operations
|
|
—
|
|
|
—
|
|
||
Net cash used in investing activities
|
|
(110,474
|
)
|
|
(24,685
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
||
Purchase and retirement of common stock
|
|
(69,021
|
)
|
|
(24,998
|
)
|
||
Net payments related to stock-based award activities
|
|
(2,636
|
)
|
|
(1,902
|
)
|
||
Net cash used in financing activities from continuing operations
|
|
(71,657
|
)
|
|
(26,900
|
)
|
||
Net cash used in financing activities from discontinued operations
|
|
—
|
|
|
—
|
|
||
Net cash used in financing activities
|
|
(71,657
|
)
|
|
(26,900
|
)
|
||
EFFECT OF CURRENCY TRANSLATION ON CASH
|
|
(722
|
)
|
|
1,138
|
|
||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
(68,920
|
)
|
|
82,567
|
|
||
CASH AND CASH EQUIVALENTS, beginning of period
|
|
415,037
|
|
|
289,517
|
|
||
CASH AND CASH EQUIVALENTS, end of period
|
|
346,117
|
|
|
372,084
|
|
||
Less cash and cash equivalents from discontinued operations
|
|
7,444
|
|
|
5,512
|
|
||
CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of period
|
|
$
|
338,673
|
|
|
$
|
366,572
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
||
Cash paid for interest
|
|
$
|
171
|
|
|
$
|
27
|
|
Cash paid for income taxes
|
|
14,180
|
|
|
4,599
|
|
||
Cash received for refunds of income taxes
|
|
734
|
|
|
1,153
|
|
||
Cash held in banks outside the United States
|
|
269,276
|
|
|
271,777
|
|
NOTE 1.
|
BASIS OF PRESENTATION
|
|
December 31, 2017
|
|
Impact of
|
|
Impact of
|
|
January 1, 2018
|
||||||||
|
as reported
|
|
ASC 606
|
|
ASU 2016-16
|
|
as adjusted
|
||||||||
Accounts and other receivable, net
|
$
|
87,429
|
|
|
$
|
8,251
|
|
|
$
|
—
|
|
|
$
|
95,680
|
|
Inventories
|
78,450
|
|
|
(3,561
|
)
|
|
—
|
|
|
74,889
|
|
||||
Total current assets
|
595,225
|
|
|
4,690
|
|
|
—
|
|
|
599,915
|
|
||||
Deferred income tax assets
|
18,841
|
|
|
—
|
|
|
17,080
|
|
|
35,921
|
|
||||
Total assets
|
733,308
|
|
|
4,690
|
|
|
17,080
|
|
|
755,078
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income taxes payable
|
5,365
|
|
|
—
|
|
|
921
|
|
|
6,286
|
|
||||
Deferred income tax liabilities
|
4,556
|
|
|
1,143
|
|
|
—
|
|
|
5,699
|
|
||||
Total liabilities
|
212,667
|
|
|
1,143
|
|
|
921
|
|
|
214,731
|
|
||||
Retained earnings
|
333,225
|
|
|
3,547
|
|
|
16,159
|
|
|
352,931
|
|
||||
Total stockholders’ equity
|
520,641
|
|
|
3,547
|
|
|
16,159
|
|
|
540,347
|
|
||||
Total liabilities and stockholders' equity
|
733,308
|
|
|
4,690
|
|
|
17,080
|
|
|
755,078
|
|
NOTE 2.
|
BUSINESS ACQUISITIONS
|
|
Trek
|
|
Electrostatic Product Line
|
|
LumaSense
|
||||||
Cash paid for acquisition, net of working capital adjustments
|
$
|
11,723
|
|
|
$
|
3,000
|
|
|
$
|
94,910
|
|
Cash acquired
|
(5,651
|
)
|
|
—
|
|
|
(10,181
|
)
|
|||
Total fair value of consideration transferred
|
$
|
6,072
|
|
|
$
|
3,000
|
|
|
$
|
84,729
|
|
|
Trek
|
|
Electrostatic Product Line
|
|
LumaSense
|
||||||
Assets acquired and liabilities assumed, net
|
$
|
5,284
|
|
|
$
|
380
|
|
|
$
|
12,133
|
|
Total amortizable intangible assets
|
788
|
|
|
1,400
|
|
|
24,000
|
|
|||
Total identifiable net assets
|
6,072
|
|
|
1,780
|
|
|
36,133
|
|
|||
Goodwill
|
—
|
|
|
1,220
|
|
|
48,596
|
|
|||
Total fair value of consideration transferred
|
$
|
6,072
|
|
|
$
|
3,000
|
|
|
$
|
84,729
|
|
|
|
Trek
|
|
Electrostatic Product Line
|
|
LumaSense
|
|
Amortization Method
|
|
Useful Life
|
||||||
Technology
|
|
$
|
671
|
|
|
$
|
1,200
|
|
|
$
|
16,000
|
|
|
Straight-line
|
|
10
|
Customer relationships
|
|
117
|
|
|
200
|
|
|
8,000
|
|
|
Straight-line
|
|
10
|
|||
Total
|
|
$
|
788
|
|
|
$
|
1,400
|
|
|
$
|
24,000
|
|
|
|
|
|
NOTE 3.
|
REVENUE
|
|
|
September 30, 2018
|
||||||||||
|
|
|
|
|
|
Balances without
|
||||||
|
|
|
|
|
|
adoption of
|
||||||
|
|
As Reported
|
|
Adjustments
|
|
ASC 606
|
||||||
Accounts and other receivable, net
|
|
$
|
110,440
|
|
|
$
|
(17,343
|
)
|
|
$
|
93,097
|
|
Inventories
|
|
110,327
|
|
|
7,137
|
|
|
117,464
|
|
|||
Total current assets
|
|
584,777
|
|
|
(10,206
|
)
|
|
574,571
|
|
|||
TOTAL ASSETS
|
|
833,632
|
|
|
(10,206
|
)
|
|
823,426
|
|
|||
|
|
|
|
|
|
|
||||||
Income taxes payable
|
|
23,620
|
|
|
(1,249
|
)
|
|
22,371
|
|
|||
Total current liabilities
|
|
124,596
|
|
|
(1,249
|
)
|
|
123,347
|
|
|||
Deferred income tax liabilities
|
|
12,763
|
|
|
(1,143
|
)
|
|
11,620
|
|
|||
Total liabilities
|
|
234,057
|
|
|
(2,392
|
)
|
|
231,665
|
|
|||
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
480,550
|
|
|
(7,814
|
)
|
|
472,736
|
|
|||
Advanced Energy stockholders’ equity
|
|
599,062
|
|
|
(7,814
|
)
|
|
591,248
|
|
|||
Total stockholders’ equity
|
|
599,575
|
|
|
(7,814
|
)
|
|
591,761
|
|
|||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
833,632
|
|
|
(10,206
|
)
|
|
823,426
|
|
|
|
Three Months Ended September 30, 2018
|
||||||||||
|
|
|
|
|
|
Balances without
|
||||||
|
|
|
|
|
|
adoption of
|
||||||
|
|
As Reported
|
|
Adjustments
|
|
ASC 606
|
||||||
Product sales
|
|
$
|
144,843
|
|
|
$
|
(3,454
|
)
|
|
$
|
141,389
|
|
Total sales
|
|
173,082
|
|
|
(3,454
|
)
|
|
169,628
|
|
|||
Product cost of sales
|
|
73,019
|
|
|
(1,533
|
)
|
|
71,486
|
|
|||
Total cost of sales
|
|
87,543
|
|
|
(1,533
|
)
|
|
86,010
|
|
|||
Gross profit
|
|
85,539
|
|
|
(1,921
|
)
|
|
83,618
|
|
|||
Operating income
|
|
39,862
|
|
|
(1,921
|
)
|
|
37,941
|
|
|||
Income from continuing operations, before income taxes
|
|
40,263
|
|
|
(1,921
|
)
|
|
38,342
|
|
|||
Provision for income taxes
|
|
5,106
|
|
|
(442
|
)
|
|
4,664
|
|
|||
Income from continuing operations
|
|
35,157
|
|
|
(1,479
|
)
|
|
33,678
|
|
|||
Net income
|
|
34,786
|
|
|
(1,479
|
)
|
|
33,307
|
|
|||
Net income attributable to Advanced Energy Industries, Inc.
|
|
34,779
|
|
|
(1,479
|
)
|
|
33,300
|
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||
|
|
|
|
|
|
Balances without
|
||||||
|
|
|
|
|
|
adoption of
|
||||||
|
|
As Reported
|
|
Adjustments
|
|
ASC 606
|
||||||
Product sales
|
|
$
|
485,287
|
|
|
$
|
(9,093
|
)
|
|
$
|
476,194
|
|
Total sales
|
|
564,731
|
|
|
(9,093
|
)
|
|
555,638
|
|
|||
Product cost of sales
|
|
233,778
|
|
|
(3,577
|
)
|
|
230,201
|
|
|||
Total cost of sales
|
|
274,312
|
|
|
(3,577
|
)
|
|
270,735
|
|
|||
Gross profit
|
|
290,419
|
|
|
(5,516
|
)
|
|
284,903
|
|
|||
Operating income
|
|
151,983
|
|
|
(5,516
|
)
|
|
146,467
|
|
|||
Income from continuing operations, before income taxes
|
|
151,925
|
|
|
(5,516
|
)
|
|
146,409
|
|
|||
Provision (benefit) for income taxes
|
|
23,998
|
|
|
(1,249
|
)
|
|
22,749
|
|
|||
Income from continuing operations
|
|
127,927
|
|
|
(4,267
|
)
|
|
123,660
|
|
|||
Net income
|
|
127,701
|
|
|
(4,267
|
)
|
|
123,434
|
|
|||
Net income attributable to Advanced Energy Industries, Inc.
|
|
127,619
|
|
|
(4,267
|
)
|
|
123,352
|
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||
|
|
|
|
|
|
Balances without
|
||||||
|
|
|
|
|
|
adoption of
|
||||||
|
|
As Reported
|
|
Adjustments
|
|
ASC 606
|
||||||
Net income
|
|
$
|
127,701
|
|
|
$
|
(4,267
|
)
|
|
$
|
123,434
|
|
Income from continuing operations, net of income taxes
|
|
$
|
127,927
|
|
|
$
|
(4,267
|
)
|
|
$
|
123,660
|
|
Changes in operating assets and liabilities, net of assets acquired:
|
|
|
|
|
|
|
||||||
Accounts and other receivable, net
|
|
(6,739
|
)
|
|
9,093
|
|
|
2,354
|
|
|||
Inventories
|
|
(22,132
|
)
|
|
(3,577
|
)
|
|
(25,709
|
)
|
|||
Income taxes
|
|
10,098
|
|
|
(1,249
|
)
|
|
8,849
|
|
|||
Net cash provided by operating activities from continuing operations
|
|
118,483
|
|
|
—
|
|
|
118,483
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Semiconductor capital market
|
$
|
96,360
|
|
|
$
|
116,468
|
|
|
$
|
359,661
|
|
|
$
|
338,136
|
|
Industrial technology capital market
|
48,483
|
|
|
35,895
|
|
|
125,626
|
|
|
86,342
|
|
||||
Global support
|
28,239
|
|
|
24,212
|
|
|
79,444
|
|
|
67,320
|
|
||||
Total
|
$
|
173,082
|
|
|
$
|
176,575
|
|
|
$
|
564,731
|
|
|
$
|
491,798
|
|
|
|
Three Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
||||||||||
Sales to external customers:
|
|
|
||||||||||||
United States
|
|
$
|
108,239
|
|
|
62.5
|
%
|
|
$
|
115,137
|
|
|
65.3
|
%
|
Canada
|
|
76
|
|
|
—
|
|
|
12
|
|
|
—
|
|
||
North America
|
|
108,315
|
|
|
62.5
|
|
|
115,149
|
|
|
65.3
|
|
||
|
|
|
|
|
|
|
|
|
||||||
People's Republic of China
|
|
13,510
|
|
|
7.8
|
|
|
9,944
|
|
|
5.6
|
|
||
Republic of Korea
|
|
10,906
|
|
|
6.3
|
|
|
16,922
|
|
|
9.6
|
|
||
Other Asian countries
|
|
13,447
|
|
|
7.8
|
|
|
10,477
|
|
|
5.9
|
|
||
Asia
|
|
37,863
|
|
|
21.9
|
|
|
37,343
|
|
|
21.1
|
|
||
|
|
|
|
|
|
|
|
|
||||||
Germany
|
|
20,765
|
|
|
12.0
|
|
|
15,980
|
|
|
9.0
|
|
||
Ireland
|
|
4,158
|
|
|
2.4
|
|
|
3,988
|
|
|
2.3
|
|
||
United Kingdom
|
|
1,544
|
|
|
0.9
|
|
|
4,115
|
|
|
2.3
|
|
||
Other European countries
|
|
437
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
||
Europe
|
|
26,904
|
|
|
15.6
|
|
|
24,083
|
|
|
13.6
|
|
||
Total
|
|
$
|
173,082
|
|
|
100.0
|
%
|
|
$
|
176,575
|
|
|
100.0
|
%
|
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
||||||||||
Sales to external customers:
|
|
|
||||||||||||
United States
|
|
$
|
361,512
|
|
|
64.2
|
%
|
|
$
|
334,118
|
|
|
68.0
|
%
|
Canada
|
|
230
|
|
|
—
|
|
|
45
|
|
|
—
|
|
||
North America
|
|
361,742
|
|
|
64.2
|
|
|
334,163
|
|
|
68.0
|
|
||
|
|
|
|
|
|
|
|
|
||||||
People's Republic of China
|
|
35,729
|
|
|
6.3
|
|
|
26,447
|
|
|
5.4
|
|
||
Republic of Korea
|
|
42,545
|
|
|
7.5
|
|
|
42,809
|
|
|
8.7
|
|
||
Other Asian countries
|
|
45,392
|
|
|
8.0
|
|
|
31,650
|
|
|
6.4
|
|
||
Asia
|
|
123,666
|
|
|
21.8
|
|
|
100,906
|
|
|
20.5
|
|
||
|
|
|
|
|
|
|
|
|
||||||
Germany
|
|
61,713
|
|
|
10.9
|
|
|
42,662
|
|
|
8.7
|
|
||
Ireland
|
|
12,070
|
|
|
2.1
|
|
|
3,988
|
|
|
0.8
|
|
||
United Kingdom
|
|
5,103
|
|
|
0.9
|
|
|
10,079
|
|
|
2.0
|
|
||
Other European countries
|
|
437
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
||
Europe
|
|
79,323
|
|
|
14.0
|
|
|
56,729
|
|
|
11.5
|
|
||
Total
|
|
$
|
564,731
|
|
|
100.0
|
%
|
|
$
|
491,798
|
|
|
100.0
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Product and service revenue recognized at point in time
|
$
|
171,806
|
|
|
$
|
175,668
|
|
|
$
|
561,578
|
|
|
$
|
489,200
|
|
Extended warranty and service contracts recognized over time
|
1,276
|
|
|
907
|
|
|
3,153
|
|
|
2,598
|
|
||||
Total
|
$
|
173,082
|
|
|
$
|
176,575
|
|
|
$
|
564,731
|
|
|
$
|
491,798
|
|
NOTE 4.
|
DISCONTINUED OPERATIONS
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cost of sales
|
—
|
|
|
944
|
|
|
(88
|
)
|
|
47
|
|
||||
Total operating expense (benefit)
|
—
|
|
|
(441
|
)
|
|
31
|
|
|
(1,587
|
)
|
||||
Operating income (loss) from discontinued operations
|
—
|
|
|
(503
|
)
|
|
57
|
|
|
1,540
|
|
||||
Other income (expense)
|
(258
|
)
|
|
(86
|
)
|
|
(261
|
)
|
|
291
|
|
||||
Income (loss) from discontinued operations before income taxes
|
(258
|
)
|
|
(589
|
)
|
|
(204
|
)
|
|
1,831
|
|
||||
Provision (benefit) for income taxes
|
113
|
|
|
(659
|
)
|
|
22
|
|
|
(512
|
)
|
||||
Income (loss) from discontinued operations, net of income taxes
|
$
|
(371
|
)
|
|
$
|
70
|
|
|
$
|
(226
|
)
|
|
$
|
2,343
|
|
|
|
September 30,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
|
$
|
7,444
|
|
|
$
|
7,754
|
|
Accounts and other receivables, net
|
|
415
|
|
|
1,363
|
|
||
Inventories
|
|
414
|
|
|
418
|
|
||
Current assets of discontinued operations
|
|
$
|
8,273
|
|
|
$
|
9,535
|
|
|
|
|
|
|
||||
Other assets
|
|
$
|
64
|
|
|
$
|
72
|
|
Deferred income tax assets
|
|
11,013
|
|
|
11,013
|
|
||
Non-current assets of discontinued operations
|
|
$
|
11,077
|
|
|
$
|
11,085
|
|
|
|
|
|
|
||||
Accounts payable and other accrued expenses
|
|
$
|
468
|
|
|
$
|
545
|
|
Accrued warranty
|
|
5,427
|
|
|
7,305
|
|
||
Current liabilities of discontinued operations
|
|
$
|
5,895
|
|
|
$
|
7,850
|
|
|
|
|
|
|
||||
Accrued warranty
|
|
$
|
11,405
|
|
|
$
|
15,112
|
|
Other liabilities
|
|
162
|
|
|
165
|
|
||
Non-current liabilities of discontinued operations
|
|
$
|
11,567
|
|
|
$
|
15,277
|
|
NOTE 5.
|
INCOME TAXES
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Income from continuing operations, before income taxes
|
$
|
40,263
|
|
|
$
|
51,826
|
|
|
$
|
151,925
|
|
|
$
|
139,570
|
|
Provision (benefit) for income taxes
|
5,106
|
|
|
(31,968
|
)
|
|
23,998
|
|
|
(25,538
|
)
|
||||
Effective tax rate
|
12.7
|
%
|
|
(61.7
|
)%
|
|
15.8
|
%
|
|
(18.3
|
)%
|
NOTE 6.
|
EARNINGS PER SHARE
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Income from continuing operations
|
$
|
35,157
|
|
|
$
|
83,794
|
|
|
$
|
127,927
|
|
|
$
|
165,108
|
|
Income from continuing operations attributable to noncontrolling interest
|
7
|
|
|
—
|
|
|
82
|
|
|
—
|
|
||||
Income from continuing operations attributable to Advanced Energy Industries, Inc.
|
$
|
35,150
|
|
|
$
|
83,794
|
|
|
$
|
127,845
|
|
|
$
|
165,108
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted-average common shares outstanding
|
38,970
|
|
|
39,786
|
|
|
39,309
|
|
|
39,787
|
|
||||
Assumed exercise of dilutive stock options and restricted stock units
|
225
|
|
|
386
|
|
|
285
|
|
|
420
|
|
||||
Diluted weighted-average common shares outstanding
|
39,195
|
|
|
40,172
|
|
|
39,594
|
|
|
40,207
|
|
||||
Continuing operations:
|
|
|
|
|
|
|
|
|
|
||||||
Basic earnings per share
|
$
|
0.90
|
|
|
$
|
2.11
|
|
|
$
|
3.25
|
|
|
$
|
4.15
|
|
Diluted earnings per share
|
$
|
0.90
|
|
|
$
|
2.09
|
|
|
$
|
3.23
|
|
|
$
|
4.11
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Restricted stock units
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Amount paid to repurchase shares
|
$
|
30,962
|
|
|
$
|
24,983
|
|
|
$
|
69,021
|
|
|
$
|
24,983
|
|
Number of shares repurchased
|
533
|
|
|
351
|
|
|
1,121
|
|
|
351
|
|
||||
Average repurchase price per share
|
$
|
58.12
|
|
|
$
|
71.12
|
|
|
$
|
61.57
|
|
|
$
|
71.12
|
|
NOTE 7.
|
MARKETABLE SECURITIES AND ASSETS MEASURED AT FAIR VALUE
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Cost
|
|
Fair Value
|
|
Cost
|
|
Fair Value
|
||||||||
Total marketable securities
|
$
|
3,054
|
|
|
$
|
3,058
|
|
|
$
|
3,103
|
|
|
$
|
3,104
|
|
|
|
Earliest
|
|
|
|
Latest
|
Certificates of deposit
|
|
10/10/2018
|
|
to
|
|
7/28/2019
|
September 30, 2018
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Total marketable securities
|
$
|
—
|
|
|
$
|
3,058
|
|
|
$
|
—
|
|
|
$
|
3,058
|
|
|
|
||||||||||||||
December 31, 2017
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Total marketable securities
|
$
|
—
|
|
|
$
|
3,104
|
|
|
$
|
—
|
|
|
$
|
3,104
|
|
NOTE 8.
|
DERIVATIVE FINANCIAL INSTRUMENTS
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Foreign currency loss from foreign currency exchange contracts
|
$
|
—
|
|
|
$
|
(469
|
)
|
|
$
|
(750
|
)
|
|
$
|
(1,096
|
)
|
NOTE 9.
|
ACCOUNTS AND OTHER RECEIVABLE
|
|
September 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Amounts billed, net
|
$
|
93,097
|
|
|
$
|
87,429
|
|
Unbilled receivables
|
17,343
|
|
|
—
|
|
||
Total receivables, net
|
$
|
110,440
|
|
|
$
|
87,429
|
|
NOTE 10.
|
INVENTORIES
|
|
September 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Parts and raw materials
|
$
|
81,383
|
|
|
$
|
58,567
|
|
Work in process
|
10,622
|
|
|
7,986
|
|
||
Finished goods
|
18,322
|
|
|
11,897
|
|
||
Total
|
$
|
110,327
|
|
|
$
|
78,450
|
|
NOTE 11.
|
PROPERTY AND EQUIPMENT
|
|
September 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Buildings and land
|
$
|
1,753
|
|
|
$
|
1,788
|
|
Machinery and equipment
|
41,891
|
|
|
36,579
|
|
||
Computer and communication equipment
|
26,542
|
|
|
26,819
|
|
||
Furniture and fixtures
|
1,751
|
|
|
1,568
|
|
||
Vehicles
|
280
|
|
|
341
|
|
||
Leasehold improvements
|
19,579
|
|
|
17,286
|
|
||
Construction in process
|
1,487
|
|
|
802
|
|
||
|
93,283
|
|
|
85,183
|
|
||
Less: Accumulated depreciation
|
(63,109
|
)
|
|
(67,388
|
)
|
||
Property and equipment, net
|
$
|
30,174
|
|
|
$
|
17,795
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Depreciation expense
|
$
|
2,134
|
|
|
$
|
1,333
|
|
|
$
|
5,530
|
|
|
$
|
3,616
|
|
NOTE 12.
|
GOODWILL
|
|
Beginning Balance
|
|
Additions
|
|
Effect of Changes in Exchange Rates
|
|
Ending Balance
|
||||||||
September 30, 2018
|
$
|
53,812
|
|
|
$
|
49,816
|
|
|
$
|
(815
|
)
|
|
$
|
102,813
|
|
September 30, 2018
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Customer relationships
|
$
|
37,794
|
|
|
$
|
(12,767
|
)
|
|
$
|
25,027
|
|
Technology
|
36,111
|
|
|
(7,050
|
)
|
|
29,061
|
|
|||
Trademarks and other
|
2,545
|
|
|
(1,562
|
)
|
|
983
|
|
|||
Total
|
$
|
76,450
|
|
|
$
|
(21,379
|
)
|
|
$
|
55,071
|
|
December 31, 2017
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Customer relationships
|
$
|
30,034
|
|
|
$
|
(10,787
|
)
|
|
$
|
19,247
|
|
Technology
|
18,702
|
|
|
(5,559
|
)
|
|
13,143
|
|
|||
Trademarks and other
|
2,623
|
|
|
(1,514
|
)
|
|
1,109
|
|
|||
Total
|
$
|
51,359
|
|
|
$
|
(17,860
|
)
|
|
$
|
33,499
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Amortization expense
|
|
$
|
1,437
|
|
|
$
|
1,240
|
|
|
$
|
3,958
|
|
|
$
|
3,176
|
|
NOTE 15.
|
WARRANTIES
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Balances at beginning of period
|
$
|
1,981
|
|
|
$
|
3,933
|
|
|
$
|
2,312
|
|
|
$
|
2,329
|
|
Warranty liabilities acquired
|
213
|
|
|
—
|
|
|
305
|
|
|
—
|
|
||||
Increases to accruals
|
436
|
|
|
333
|
|
|
920
|
|
|
2,722
|
|
||||
Warranty expenditures
|
(590
|
)
|
|
(439
|
)
|
|
(1,492
|
)
|
|
(1,236
|
)
|
||||
Effect of changes in exchange rates
|
(2
|
)
|
|
6
|
|
|
(7
|
)
|
|
18
|
|
||||
Balances at end of period
|
$
|
2,038
|
|
|
$
|
3,833
|
|
|
$
|
2,038
|
|
|
$
|
3,833
|
|
NOTE 16.
|
PENSION LIABILITY
|
|
September 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Pension liability
|
$
|
18,938
|
|
|
$
|
19,797
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest cost
|
$
|
205
|
|
|
$
|
242
|
|
|
$
|
637
|
|
|
$
|
742
|
|
Expected return on plan assets
|
(151
|
)
|
|
(128
|
)
|
|
(470
|
)
|
|
(394
|
)
|
||||
Amortization of actuarial gains and losses
|
64
|
|
|
64
|
|
|
333
|
|
|
197
|
|
||||
Net periodic pension cost
|
$
|
118
|
|
|
$
|
178
|
|
|
$
|
500
|
|
|
$
|
545
|
|
NOTE 17.
|
STOCK-BASED COMPENSATION
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Stock-based compensation expense
|
$
|
1,024
|
|
|
$
|
3,453
|
|
|
$
|
7,461
|
|
|
$
|
10,707
|
|
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||||||||
|
Number of RSUs
|
|
Weighted-Average Grant Date Fair Value
|
|
Number of RSUs
|
|
Weighted- Average Grant Date Fair Value
|
||||||
RSUs outstanding at beginning of period
|
352
|
|
|
$
|
59.25
|
|
|
386
|
|
|
$
|
51.06
|
|
RSUs granted
|
18
|
|
|
$
|
33.63
|
|
|
243
|
|
|
$
|
64.60
|
|
RSUs vested
|
(3
|
)
|
|
$
|
41.92
|
|
|
(202
|
)
|
|
$
|
55.52
|
|
RSUs forfeited
|
(1
|
)
|
|
$
|
56.70
|
|
|
(61
|
)
|
|
$
|
47.73
|
|
RSUs outstanding at end of period
|
366
|
|
|
$
|
58.16
|
|
|
366
|
|
|
$
|
58.16
|
|
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||||||||
|
Number of Options
|
|
Weighted-Average Exercise Price per Share
|
|
Number of Options
|
|
Weighted-Average Exercise Price per Share
|
||||||
Options outstanding at beginning of period
|
238
|
|
|
$
|
20.40
|
|
|
317
|
|
|
$
|
18.97
|
|
Options exercised
|
(4
|
)
|
|
$
|
12.89
|
|
|
(81
|
)
|
|
$
|
14.55
|
|
Options expired
|
(1
|
)
|
|
$
|
14.02
|
|
|
(3
|
)
|
|
$
|
13.48
|
|
Options outstanding at end of period
|
233
|
|
|
$
|
20.57
|
|
|
233
|
|
|
$
|
20.57
|
|
NOTE 18.
|
COMMITMENTS AND CONTINGENCIES
|
NOTE 19.
|
RELATED PARTY TRANSACTIONS
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Sales to related parties
|
$
|
—
|
|
|
$
|
648
|
|
|
$
|
389
|
|
|
$
|
1,255
|
|
Number of related party customers
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
September 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Accounts receivable from related parties
|
$
|
—
|
|
|
$
|
27
|
|
Number of related party customers
|
—
|
|
|
1
|
|
NOTE 20.
|
SIGNIFICANT CUSTOMER INFORMATION
|
|
Three Months Ended September 30,
|
||||||||||||
|
2018
|
|
% of Total Sales
|
|
2017
|
|
% of Total Sales
|
||||||
Applied Materials, Inc.
|
$
|
60,546
|
|
|
35.0
|
%
|
|
$
|
50,078
|
|
|
28.4
|
%
|
LAM Research
|
19,878
|
|
|
11.5
|
%
|
|
46,315
|
|
|
26.2
|
%
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
% of Total Sales
|
|
2017
|
|
% of Total Sales
|
||||||
Applied Materials, Inc.
|
$
|
198,159
|
|
|
35.1
|
%
|
|
$
|
165,239
|
|
|
33.6
|
%
|
LAM Research
|
92,368
|
|
|
16.4
|
%
|
|
114,325
|
|
|
23.2
|
%
|
|
September 30,
|
|
December 31,
|
||||||||||
|
2018
|
|
2017
|
||||||||||
Applied Materials, Inc.
|
$
|
42,896
|
|
|
38.8
|
%
|
|
$
|
36,755
|
|
|
42.0
|
%
|
LAM Research
|
11,707
|
|
|
10.6
|
%
|
|
5,421
|
|
|
6.2
|
%
|
NOTE 21.
|
CREDIT FACILITY
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Unused line of credit fees
|
$
|
57
|
|
|
$
|
27
|
|
|
$
|
171
|
|
|
$
|
27
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Semiconductor capital equipment market - Customers in the semiconductor capital equipment market incorporate our products into equipment that make integrated circuits. Our power conversion systems provide the energy to enable thin film processes, such as deposition and etch, and high voltage applications such as ion implant, wafer inspection and metrology. Our remote plasma sources deliver ionized gases for reactive chemical processes used in cleaning, surface treatment, and gas abatement.
|
•
|
Industrial technology capital equipment market - Our industrial technology capital market is comprised of products for Thin Films Industrial Power and Specialty Power applications.
|
◦
|
Thin Films Industrial Power applications include glass coating, glass manufacturing, flat panel displays, solar cell manufacturing, and similar thin film manufacturing, including data storage, hard and optical coating.
|
◦
|
Specialty Power applications include power control modules for metal fabrication and treatment, and material and chemical processing. Our high voltage industrial applications include scanning electron microscopy, medical equipment, and instrumentation applications such as x-ray and mass spectroscopy, as well as general electron gun sources for scientific and industrial applications.
|
◦
|
Our thermal instrumentation products measure the temperature of the processed substrate or the process chamber. Precise control over the energy delivered to plasma-based processes enables the production of integrated circuits with reduced feature sizes and increased speed and performance.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Sales
|
$
|
173,082
|
|
|
$
|
176,575
|
|
|
$
|
564,731
|
|
|
$
|
491,798
|
|
Gross profit
|
85,539
|
|
|
92,234
|
|
|
290,419
|
|
|
258,206
|
|
||||
Operating expenses
|
45,677
|
|
|
40,561
|
|
|
138,436
|
|
|
115,498
|
|
||||
Operating income from continuing operations
|
39,862
|
|
|
51,673
|
|
|
151,983
|
|
|
142,708
|
|
||||
Other income (expense), net
|
401
|
|
|
153
|
|
|
(58
|
)
|
|
(3,138
|
)
|
||||
Income from continuing operations before income taxes
|
40,263
|
|
|
51,826
|
|
|
151,925
|
|
|
139,570
|
|
||||
Provision (benefit) for income taxes
|
5,106
|
|
|
(31,968
|
)
|
|
23,998
|
|
|
(25,538
|
)
|
||||
Income from continuing operations, net of income taxes
|
$
|
35,157
|
|
|
$
|
83,794
|
|
|
$
|
127,927
|
|
|
$
|
165,108
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Gross profit
|
49.4
|
|
|
52.2
|
|
|
51.4
|
|
|
52.5
|
|
Operating expenses
|
26.4
|
|
|
23.0
|
|
|
24.5
|
|
|
23.5
|
|
Operating income from continuing operations
|
23.0
|
|
|
29.2
|
|
|
26.9
|
|
|
29.0
|
|
Other income (expense), net
|
0.3
|
|
|
0.1
|
|
|
—
|
|
|
(0.6
|
)
|
Income from continuing operations before income taxes
|
23.3
|
|
|
29.3
|
|
|
26.9
|
|
|
28.4
|
|
Provision (benefit) for income taxes
|
3.0
|
|
|
(18.2
|
)
|
|
4.2
|
|
|
(5.2
|
)
|
Income from continuing operations, net of income taxes
|
20.3
|
%
|
|
47.5
|
%
|
|
22.7
|
%
|
|
33.6
|
%
|
|
Three Months Ended September 30,
|
|
Change 2018 v. 2017
|
|||||||||||
|
2018
|
|
2017
|
|
Dollar
|
|
Percent
|
|||||||
Semiconductor capital market
|
$
|
96,360
|
|
|
$
|
116,468
|
|
|
$
|
(20,108
|
)
|
|
(17.3
|
)%
|
Industrial technology capital market
|
48,483
|
|
|
35,895
|
|
|
12,588
|
|
|
35.1
|
%
|
|||
Global support
|
28,239
|
|
|
24,212
|
|
|
4,027
|
|
|
16.6
|
%
|
|||
Total
|
$
|
173,082
|
|
|
$
|
176,575
|
|
|
$
|
(3,493
|
)
|
|
(2.0
|
)%
|
|
Nine Months Ended
September 30,
|
|
Change 2018 v. 2017
|
|||||||||||
|
2018
|
|
2017
|
|
Dollar
|
|
Percent
|
|||||||
Semiconductor capital market
|
$
|
359,661
|
|
|
$
|
338,136
|
|
|
$
|
21,525
|
|
|
6.4
|
%
|
Industrial technology capital market
|
125,626
|
|
|
86,342
|
|
|
39,284
|
|
|
45.5
|
%
|
|||
Global support
|
79,444
|
|
|
67,320
|
|
|
12,124
|
|
|
18.0
|
%
|
|||
Total
|
$
|
564,731
|
|
|
$
|
491,798
|
|
|
$
|
72,933
|
|
|
14.8
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Semiconductor capital market
|
55.7
|
%
|
|
66.0
|
%
|
|
63.7
|
%
|
|
68.8
|
%
|
Industrial technology capital market
|
28.0
|
|
|
20.3
|
|
|
22.2
|
|
|
17.6
|
|
Global support
|
16.3
|
|
|
13.7
|
|
|
14.1
|
|
|
13.6
|
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Research and development
|
$
|
18,451
|
|
|
$
|
14,629
|
|
|
$
|
55,283
|
|
|
$
|
41,742
|
|
Selling, general, and administrative
|
25,386
|
|
|
24,692
|
|
|
78,792
|
|
|
70,580
|
|
||||
Amortization of intangible assets
|
1,437
|
|
|
1,240
|
|
|
3,958
|
|
|
3,176
|
|
||||
Restructuring charges
|
403
|
|
|
—
|
|
|
403
|
|
|
—
|
|
||||
Total operating expenses
|
$
|
45,677
|
|
|
$
|
40,561
|
|
|
$
|
138,436
|
|
|
$
|
115,498
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Research and development
|
10.7
|
%
|
|
8.3
|
%
|
|
9.8
|
%
|
|
8.5
|
%
|
Selling, general, and administrative
|
14.7
|
|
|
14.0
|
|
|
13.9
|
|
|
14.4
|
|
Amortization of intangible assets
|
0.8
|
|
|
0.7
|
|
|
0.7
|
|
|
0.6
|
|
Restructuring charges
|
0.2
|
|
|
—
|
|
|
0.1
|
%
|
|
—
|
|
Total operating expenses
|
26.4
|
%
|
|
23.0
|
%
|
|
24.5
|
%
|
|
23.5
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cost of sales
|
—
|
|
|
944
|
|
|
(88
|
)
|
|
47
|
|
||||
Total operating expense (benefit)
|
—
|
|
|
(441
|
)
|
|
31
|
|
|
(1,587
|
)
|
||||
Operating income (loss) from discontinued operations
|
—
|
|
|
(503
|
)
|
|
57
|
|
|
1,540
|
|
||||
Other income (expense)
|
(258
|
)
|
|
(86
|
)
|
|
(261
|
)
|
|
291
|
|
||||
Income (loss) from discontinued operations before income taxes
|
(258
|
)
|
|
(589
|
)
|
|
(204
|
)
|
|
1,831
|
|
||||
Provision (benefit) for income taxes
|
113
|
|
|
(659
|
)
|
|
22
|
|
|
(512
|
)
|
||||
Income (loss) from discontinued operations, net of income taxes
|
$
|
(371
|
)
|
|
$
|
70
|
|
|
$
|
(226
|
)
|
|
$
|
2,343
|
|
Reconciliation of Non-GAAP measure - operating expenses and operating income from continuing operations, excluding certain items
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Gross profit from continuing operations, as reported
|
$
|
85,539
|
|
|
$
|
92,234
|
|
|
$
|
290,419
|
|
|
$
|
258,206
|
|
Adjustments to gross profit:
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation
|
76
|
|
|
334
|
|
|
576
|
|
|
1,048
|
|
||||
Facility transition and relocation costs
|
725
|
|
|
—
|
|
|
974
|
|
|
—
|
|
||||
Acquisition-related costs
|
158
|
|
|
—
|
|
|
158
|
|
|
—
|
|
||||
Non-GAAP gross profit from continuing operations
|
86,498
|
|
|
92,568
|
|
|
292,127
|
|
|
259,254
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses from continuing operations, as reported
|
45,677
|
|
|
40,561
|
|
|
138,436
|
|
|
115,498
|
|
||||
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Amortization of intangible assets
|
(1,437
|
)
|
|
(1,240
|
)
|
|
(3,958
|
)
|
|
(3,176
|
)
|
||||
Stock-based compensation
|
(948
|
)
|
|
(3,119
|
)
|
|
(6,885
|
)
|
|
(9,659
|
)
|
||||
Acquisition-related costs
|
(705
|
)
|
|
—
|
|
|
(1,310
|
)
|
|
(150
|
)
|
||||
Facility expansion and relocation costs
|
(29
|
)
|
|
—
|
|
|
(518
|
)
|
|
—
|
|
||||
Restructuring charges
|
(403
|
)
|
|
—
|
|
|
(403
|
)
|
|
—
|
|
||||
Non-GAAP operating expenses from continuing operations
|
42,155
|
|
|
36,202
|
|
|
125,362
|
|
|
102,513
|
|
||||
Non-GAAP operating income from continuing operations
|
$
|
44,343
|
|
|
$
|
56,366
|
|
|
$
|
166,765
|
|
|
$
|
156,741
|
|
Reconciliation of Non-GAAP measure - operating expenses and operating income from continuing operations, excluding certain items
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Gross profit from continuing operations, as reported
|
49.4
|
%
|
|
52.2
|
%
|
|
51.4
|
%
|
|
52.5
|
%
|
Adjustments to gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
—
|
|
|
0.2
|
|
|
0.1
|
|
|
0.2
|
|
Facility transition and relocation costs
|
0.5
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
Acquisition-related costs
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Non-GAAP gross profit from continuing operations
|
50.0
|
|
|
52.4
|
|
|
51.7
|
|
|
52.7
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses from continuing operations, as reported
|
26.4
|
|
|
23.0
|
|
|
24.5
|
|
|
23.5
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
(0.8
|
)
|
|
(0.7
|
)
|
|
(0.7
|
)
|
|
(0.6
|
)
|
Stock-based compensation
|
(0.6
|
)
|
|
(1.8
|
)
|
|
(1.2
|
)
|
|
(2.1
|
)
|
Acquisition-related costs
|
(0.4
|
)
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
Facility expansion and relocation costs
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
Restructuring charges
|
(0.2
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
Non-GAAP operating expenses from continuing operations
|
24.4
|
|
|
20.5
|
|
|
22.2
|
|
|
20.8
|
|
Non-GAAP operating income from continuing operations
|
25.6
|
%
|
|
31.9
|
%
|
|
29.5
|
%
|
|
31.9
|
%
|
Reconciliation of Non-GAAP measure - income from continuing operations, excluding certain items
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Income from continuing operations, less noncontrolling interest, net of income taxes
|
$
|
35,150
|
|
|
$
|
83,794
|
|
|
$
|
127,845
|
|
|
$
|
165,108
|
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Amortization of intangible assets
|
1,437
|
|
|
1,240
|
|
|
3,958
|
|
|
3,176
|
|
||||
Stock-based compensation
|
1,024
|
|
|
3,453
|
|
|
7,461
|
|
|
10,707
|
|
||||
Acquisition-related costs
|
863
|
|
|
—
|
|
|
1,468
|
|
|
150
|
|
||||
Facility expansion and relocation costs
|
754
|
|
|
—
|
|
|
1,492
|
|
|
—
|
|
||||
Restructuring charges
|
403
|
|
|
—
|
|
|
403
|
|
|
—
|
|
||||
Nonrecurring tax (benefit) expense associated with inverter business
|
—
|
|
|
(40,194
|
)
|
|
—
|
|
|
(40,194
|
)
|
||||
Loss on foreign exchange hedge
|
—
|
|
|
—
|
|
|
—
|
|
|
3,489
|
|
||||
Incremental expense associated with start-up of the Asia regional headquarters
|
—
|
|
|
1,133
|
|
|
—
|
|
|
1,133
|
|
||||
Tax Cuts and Jobs Act Impact
|
2,398
|
|
|
—
|
|
|
4,251
|
|
|
—
|
|
||||
Tax effect of non-GAAP adjustments
|
(843
|
)
|
|
(1,426
|
)
|
|
(2,890
|
)
|
|
(4,451
|
)
|
||||
Non-GAAP income from continuing operations, net of income taxes
|
$
|
41,186
|
|
|
$
|
48,000
|
|
|
$
|
143,988
|
|
|
$
|
139,118
|
|
Non-GAAP diluted earnings per share
|
$1.05
|
|
$1.19
|
|
$3.64
|
|
$3.46
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Amount paid to repurchase shares (in thousands)
|
$
|
30,962
|
|
|
$
|
24,983
|
|
|
$
|
69,021
|
|
|
$
|
24,983
|
|
Number of shares repurchased (in thousands)
|
533
|
|
|
351
|
|
|
1,121
|
|
|
351
|
|
||||
Average repurchase price per share
|
$
|
58.12
|
|
|
$
|
71.12
|
|
|
$
|
61.57
|
|
|
$
|
71.12
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Net cash provided by operating activities from continuing operations
|
$
|
118,483
|
|
|
$
|
140,307
|
|
Net cash used in operating activities from discontinued operations
|
(4,550
|
)
|
|
(7,293
|
)
|
||
Net cash provided by operating activities
|
113,933
|
|
|
133,014
|
|
||
|
|
|
|
||||
Net cash used in investing activities from continuing operations
|
(110,474
|
)
|
|
(24,685
|
)
|
||
Net cash used in investing activities from discontinued operations
|
—
|
|
|
—
|
|
||
Net cash used in investing activities
|
(110,474
|
)
|
|
(24,685
|
)
|
||
|
|
|
|
||||
Net cash used in financing activities from continuing operations
|
(71,657
|
)
|
|
(26,900
|
)
|
||
Net cash used in financing activities from discontinued operations
|
—
|
|
|
—
|
|
||
Net cash used in financing activities
|
(71,657
|
)
|
|
(26,900
|
)
|
||
|
|
|
|
||||
EFFECT OF CURRENCY TRANSLATION ON CASH
|
(722
|
)
|
|
1,138
|
|
||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(68,920
|
)
|
|
82,567
|
|
||
CASH AND CASH EQUIVALENTS, beginning of period
|
415,037
|
|
|
289,517
|
|
||
CASH AND CASH EQUIVALENTS, end of period
|
346,117
|
|
|
372,084
|
|
||
Less cash and cash equivalents from discontinued operations
|
7,444
|
|
|
5,512
|
|
||
CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of period
|
$
|
338,673
|
|
|
$
|
366,572
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
the inability to obtain an adequate supply of required parts, components, or subassemblies;
|
•
|
supply shortages, if a sole or limited source provider ceases operations;
|
•
|
the need to fund the operating losses of a sole or limited source provider;
|
•
|
reduced control over pricing and timing of delivery of raw materials and parts, components, or subassemblies;
|
•
|
the need to qualify alternative suppliers;
|
•
|
suppliers that may provide parts, components or subassemblies that are defective, contain counterfeit goods or are otherwise misrepresented to us in terms of form, fit or function; and
|
•
|
the inability of our suppliers to develop technologically advanced products to support our growth and development of new products.
|
•
|
the impact of geopolitical issues or tariffs that could effect the cost and availability of required parts, components, or subassemblies.
|
•
|
issue stock that would dilute our current stockholders' percentage ownership;
|
•
|
pay cash that would decrease our working capital;
|
•
|
incur debt;
|
•
|
assume liabilities; or
|
•
|
incur expenses related to impairment of goodwill and amortization.
|
•
|
problems combining or separating the acquired/divested operations, systems, technologies, or products;
|
•
|
an inability to realize expected sales forecasts, operating efficiencies or product integration benefits;
|
•
|
difficulties in coordinating and integrating geographically separated personnel, organizations, systems, and facilities;
|
•
|
difficulties integrating business cultures;
|
•
|
unanticipated costs or liabilities;
|
•
|
diversion of management's attention from our core business;
|
•
|
adverse effects on existing business relationships with suppliers and customers;
|
•
|
potential loss of key employees, particularly those of purchased organizations;
|
•
|
incurring unforeseen obligations or liabilities in connection with either acquisitions or divestitures; and
|
•
|
the failure to complete acquisitions even after signing definitive agreements which, among other things, would result in the expensing of potentially significant professional fees and other charges in the period in which the acquisition or negotiations are terminated.
|
•
|
our ability to effectively manage our employees at remote locations who are operating in different business environments from the United States;
|
•
|
our ability to develop and maintain relationships with suppliers and other local businesses;
|
•
|
compliance with product safety requirements and standards that are different from those of the United States;
|
•
|
variations and changes in laws applicable to our operations in different jurisdictions, including enforceability of intellectual property and contract rights;
|
•
|
trade restrictions, political instability, disruptions in financial markets, and deterioration of economic conditions;
|
•
|
customs regulations and the import and export of goods (including customs audits in various countries that occur from time to time);
|
•
|
the ability to provide sufficient levels of technical support in different locations;
|
•
|
our ability to obtain business licenses that may be needed in international locations to support expanded operations;
|
•
|
timely collecting accounts receivable from foreign customers including
$19.9 million
in accounts receivable from foreign customers as of
September 30, 2018
; and
|
•
|
changes in tariffs, taxes, and foreign currency exchange rates.
|
•
|
substantial costs in the form of legal fees, fines, and royalty payments;
|
•
|
restrictions on our ability to sell certain products or in certain markets;
|
•
|
an inability to prevent others from using technology we have developed; and
|
•
|
a need to redesign products or seek alternative marketing strategies.
|
•
|
we could be subject to fines and penalties;
|
•
|
our production or shipments could be suspended; and
|
•
|
we could be prohibited from offering particular products in specified markets.
|
•
|
negatively impact global demand for our products, which could result in a reduction of sales, operating income and cash flows;
|
•
|
make it more difficult or costly for us to obtain financing for our operations or investments or to refinance our debt in the future;
|
•
|
cause our lenders to depart from prior credit industry practice and make more difficult or expensive the granting of any technical or other waivers under our debt agreements to the extent we may seek them in the future;
|
•
|
decrease the value of our investments; and
|
•
|
impair the financial viability of our insurers.
|
Period
|
|
Total Number of Shares Purchased (thousands)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program (1) (thousands)
|
|
Approximate Value of Shares that May Yet Be Purchased Under the Program
(thousands)
|
||||||
July 1 - July 31, 2018
|
|
175
|
|
|
$
|
59.73
|
|
|
175
|
|
|
$
|
71,511
|
|
August 1 - August 31, 2018
|
|
198
|
|
|
59.40
|
|
|
198
|
|
|
$
|
59,763
|
|
|
September 1 - September 30, 2018
|
|
160
|
|
|
54.76
|
|
|
160
|
|
|
$
|
51,006
|
|
|
Total
|
|
533
|
|
|
$
|
58.12
|
|
|
533
|
|
|
$
|
51,006
|
|
(1) In September 2015, our Board of Directors authorized a program to repurchase up to $150.0 million of our stock over a thirty-month period. In November 2017, our Board of Directors approved an extension of this program until December 31, 2019. In May, 2018, our Board of Directors approved a $50 million increase in its authorization to repurchase shares of Company common stock under this same program.
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
Attached as Exhibit 101 to this report are the following materials from Advanced Energy, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Earnings, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Stockholders’ Equity, and (vi) the Notes to the Condensed Consolidated Financial Statements.
|
*
|
Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Advanced Energy Industries, Inc.
undertakes to furnish supplemental copies of any of the omitted schedules upon request by the Securities and
Exchange Commission.
|
|
|
|
ADVANCED ENERGY INDUSTRIES, INC.
|
|
|
|
|
Dated:
|
October 29, 2018
|
|
/s/ Paul Oldham
|
|
|
|
Paul Oldham
|
|
|
|
Chief Financial Officer & Executive Vice President
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended
September 30, 2018
of Advanced Energy Industries, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
|
|
|
|
|
|
||
|
/s/ Yuval Wasserman
|
|
||
|
Yuval Wasserman
|
|
||
|
Chief Executive Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended
September 30, 2018
of Advanced Energy Industries, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
|
|
|
|
|
|
||
|
/s/ Paul Oldham
|
|
||
|
Paul Oldham
|
|
||
|
Chief Financial Officer & Executive Vice President
|
|||
|
|
|
|
|
|
|
|
|
||
|
/s/ Yuval Wasserman
|
|
||
|
Yuval Wasserman
|
|
||
|
Chief Executive Officer
|
|
||
|
|
|
|
|
|
|
|
|
||
|
/s/ Paul Oldham
|
|
||
|
Paul Oldham
|
|
||
|
Chief Financial Officer & Executive Vice President
|
|||
|