ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
04-3444218
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification Number)
|
|
|
50 Old Webster Road,
Oxford, Massachusetts
|
01540
|
(Address of principal executive offices)
|
(Zip code)
|
Large Accelerated Filer
|
ý
|
|
Accelerated Filer
|
¨
|
Non-Accelerated Filer
|
¨
|
|
Smaller Reporting Company
|
¨
|
|
Page
|
EX-10.1 Third Amendment to Credit Facility Agreement between IPG Laser GmbH and Deutsche Bank AG, dated November 1, 2016
|
|
EX-10.2 Annex I (Third Amendment) to Guarantee of IPG Laser GmbH to Deutsche Bank AG dated November 1, 2016
|
|
EX-31.1 CERTIFICATION OF CEO PURSUANT TO RULE 13a-14(a)
|
|
EX-31.2 CERTIFICATION OF CFO PURSUANT TO RULE 13a-14(a)
|
|
EX-32 CERTIFICATION OF CEO AND CFO PURSUANT TO SECTION 1350
|
|
EX-101.INS XBRL INSTANCE DOCUMENT
|
|
EX-101.SCH XBRL TAXONOMY EXTENSION SCHEMA
|
|
EX-101.CAL XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
|
|
EX-101.LAB XBRL TAXONOMY EXTENSION LABEL LINKBASE
|
|
EX-101.PRE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
|
|
EX-101.DEF XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
NET SALES
|
$
|
266,017
|
|
|
$
|
243,541
|
|
|
$
|
726,052
|
|
|
$
|
677,639
|
|
COST OF SALES
|
121,226
|
|
|
110,237
|
|
|
329,147
|
|
|
307,805
|
|
||||
GROSS PROFIT
|
144,791
|
|
|
133,304
|
|
|
396,905
|
|
|
369,834
|
|
||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
10,460
|
|
|
7,717
|
|
|
28,183
|
|
|
23,228
|
|
||||
Research and development
|
20,543
|
|
|
16,221
|
|
|
56,444
|
|
|
45,565
|
|
||||
General and administrative
|
16,797
|
|
|
14,679
|
|
|
46,849
|
|
|
42,474
|
|
||||
Loss (gain) on foreign exchange
|
2,905
|
|
|
5,125
|
|
|
6,316
|
|
|
(460
|
)
|
||||
Total operating expenses
|
50,705
|
|
|
43,742
|
|
|
137,792
|
|
|
110,807
|
|
||||
OPERATING INCOME
|
94,086
|
|
|
89,562
|
|
|
259,113
|
|
|
259,027
|
|
||||
OTHER INCOME (EXPENSE), Net:
|
|
|
|
|
|
|
|
||||||||
Interest income (expense), net
|
373
|
|
|
(40
|
)
|
|
835
|
|
|
(335
|
)
|
||||
Other income, net
|
194
|
|
|
132
|
|
|
342
|
|
|
378
|
|
||||
Total other income (expense)
|
567
|
|
|
92
|
|
|
1,177
|
|
|
43
|
|
||||
INCOME BEFORE PROVISION FOR INCOME TAXES
|
94,653
|
|
|
89,654
|
|
|
260,290
|
|
|
259,070
|
|
||||
PROVISION FOR INCOME TAXES
|
(25,426
|
)
|
|
(26,897
|
)
|
|
(74,703
|
)
|
|
(77,721
|
)
|
||||
NET INCOME
|
69,227
|
|
|
62,757
|
|
|
185,587
|
|
|
181,349
|
|
||||
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
|
(8
|
)
|
|
(34
|
)
|
|
(33
|
)
|
|
(101
|
)
|
||||
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION
|
$
|
69,235
|
|
|
$
|
62,791
|
|
|
$
|
185,620
|
|
|
$
|
181,450
|
|
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.30
|
|
|
$
|
1.19
|
|
|
$
|
3.50
|
|
|
$
|
3.45
|
|
Diluted
|
$
|
1.29
|
|
|
$
|
1.18
|
|
|
$
|
3.45
|
|
|
$
|
3.40
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
||||||||
Basic
|
53,071
|
|
|
52,675
|
|
|
53,039
|
|
|
52,628
|
|
||||
Diluted
|
53,761
|
|
|
53,392
|
|
|
53,752
|
|
|
53,390
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(In thousands)
|
||||||||||||||
Net income
|
$
|
69,227
|
|
|
$
|
62,757
|
|
|
$
|
185,587
|
|
|
$
|
181,349
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Translation adjustments
|
8,068
|
|
|
(16,540
|
)
|
|
32,948
|
|
|
(43,634
|
)
|
||||
Unrealized (loss) gain on derivatives
|
(47
|
)
|
|
—
|
|
|
104
|
|
|
95
|
|
||||
Total other comprehensive loss
|
8,021
|
|
|
(16,540
|
)
|
|
33,052
|
|
|
(43,539
|
)
|
||||
Comprehensive income
|
77,248
|
|
|
46,217
|
|
|
218,639
|
|
|
137,810
|
|
||||
Comprehensive loss attributable to noncontrolling interest
|
(4
|
)
|
|
(285
|
)
|
|
(17
|
)
|
|
(351
|
)
|
||||
Comprehensive income attributable to IPG Photonics Corporation
|
$
|
77,252
|
|
|
$
|
46,502
|
|
|
$
|
218,656
|
|
|
$
|
138,161
|
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
|
(In thousands)
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
185,587
|
|
|
$
|
181,349
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
37,646
|
|
|
31,079
|
|
||
Deferred income taxes
|
(12,054
|
)
|
|
(7,144
|
)
|
||
Stock-based compensation
|
16,099
|
|
|
13,875
|
|
||
Unrealized losses (gains) on foreign currency transactions
|
6,044
|
|
|
(3,893
|
)
|
||
Other
|
193
|
|
|
191
|
|
||
Provisions for inventory, warranty & bad debt
|
33,506
|
|
|
29,414
|
|
||
Changes in assets and liabilities that (used) provided cash:
|
|
|
|
||||
Accounts receivable
|
(10,853
|
)
|
|
(20,004
|
)
|
||
Inventories
|
(42,814
|
)
|
|
(52,172
|
)
|
||
Prepaid expenses and other current assets
|
(4,102
|
)
|
|
2,062
|
|
||
Accounts payable
|
(9,816
|
)
|
|
4,519
|
|
||
Accrued expenses and other liabilities
|
3,848
|
|
|
3,656
|
|
||
Income and other taxes payable
|
(7,439
|
)
|
|
17,501
|
|
||
Excess tax benefit from exercise of equity instruments
|
(2,844
|
)
|
|
(5,822
|
)
|
||
Net cash provided by operating activities
|
193,001
|
|
|
194,611
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Purchases of and deposits on property, plant and equipment
|
(100,047
|
)
|
|
(50,759
|
)
|
||
Proceeds from sales of property, plant and equipment
|
220
|
|
|
231
|
|
||
Purchases of short-term investments
|
(179,374
|
)
|
|
—
|
|
||
Proceeds from short-term investments
|
158,808
|
|
|
—
|
|
||
Acquisition of businesses, net of cash acquired
|
(46,527
|
)
|
|
(4,958
|
)
|
||
Other
|
16
|
|
|
63
|
|
||
Net cash used in investing activities
|
(166,904
|
)
|
|
(55,423
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Proceeds from line-of-credit facilities
|
6,030
|
|
|
7,506
|
|
||
Payments on line-of-credit facilities
|
(6,030
|
)
|
|
(9,780
|
)
|
||
Purchase of noncontrolling interests
|
(950
|
)
|
|
—
|
|
||
Proceeds on long-term borrowings
|
23,750
|
|
|
—
|
|
||
Principal payments on long-term borrowings
|
(1,797
|
)
|
|
(12,833
|
)
|
||
Exercise of employee stock options and issuances under employee stock purchase plan
|
9,186
|
|
|
10,489
|
|
||
Excess tax benefit from exercise of equity instruments
|
2,844
|
|
|
5,822
|
|
||
Purchase of treasury stock, at cost
|
(3,483
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
29,550
|
|
|
1,204
|
|
||
EFFECT OF CHANGES IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
|
7,379
|
|
|
(11,322
|
)
|
||
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
63,026
|
|
|
129,070
|
|
||
CASH AND CASH EQUIVALENTS — Beginning of period
|
582,532
|
|
|
522,150
|
|
||
CASH AND CASH EQUIVALENTS — End of period
|
$
|
645,558
|
|
|
$
|
651,220
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
||||
Cash paid for interest
|
$
|
623
|
|
|
$
|
688
|
|
Cash paid for income taxes
|
$
|
92,539
|
|
|
$
|
65,376
|
|
Non-cash transactions:
|
|
|
|
||||
Demonstration units transferred from inventory to other assets
|
$
|
2,916
|
|
|
$
|
1,995
|
|
Inventory transferred to machinery and equipment
|
$
|
4,056
|
|
|
$
|
2,371
|
|
Reductions to property, plant and equipment included in accounts payable
|
$
|
(430
|
)
|
|
$
|
(178
|
)
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
||||||||||
|
(In thousands, except share and per share data)
|
||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
||||||
COMMON STOCK
|
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
52,883,902
|
|
|
$
|
5
|
|
|
52,369,688
|
|
|
$
|
5
|
|
Exercise of stock options
|
268,198
|
|
|
—
|
|
|
392,913
|
|
|
—
|
|
||
Common stock issued under employee stock purchase plan
|
19,015
|
|
|
—
|
|
|
17,623
|
|
|
—
|
|
||
Purchased common stock
|
(41,800
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Balance, end of period
|
53,129,315
|
|
|
5
|
|
|
52,780,224
|
|
|
5
|
|
||
TREASURY STOCK
|
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Purchased treasury stock
|
(41,800
|
)
|
|
(3,483
|
)
|
|
—
|
|
|
—
|
|
||
Balance, end of period
|
(41,800
|
)
|
|
(3,483
|
)
|
|
—
|
|
|
—
|
|
||
ADDITIONAL PAID-IN CAPITAL
|
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
|
607,649
|
|
|
|
|
567,617
|
|
||||
Stock-based compensation
|
|
|
16,099
|
|
|
|
|
13,875
|
|
||||
Exercise of stock options and related tax benefit from exercise
|
|
|
10,737
|
|
|
|
|
15,203
|
|
||||
Common stock issued under employee stock purchase plan
|
|
|
1,293
|
|
|
|
|
1,108
|
|
||||
Balance, end of period
|
|
|
635,778
|
|
|
|
|
597,803
|
|
||||
RETAINED EARNINGS
|
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
|
833,356
|
|
|
|
|
591,202
|
|
||||
Net income attributable to IPG Photonics Corporation
|
|
|
185,620
|
|
|
|
|
181,450
|
|
||||
Balance, end of period
|
|
|
1,018,976
|
|
|
|
|
772,652
|
|
||||
ACCUMULATED OTHER COMPREHENSIVE LOSS
|
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
|
(181,482
|
)
|
|
|
|
(112,263
|
)
|
||||
Translation adjustments
|
|
|
32,948
|
|
|
|
|
(43,634
|
)
|
||||
Change in unrealized gain on derivatives, net of tax
|
|
|
104
|
|
|
|
|
95
|
|
||||
Balance, end of period
|
|
|
(148,430
|
)
|
|
|
|
(155,802
|
)
|
||||
TOTAL IPG PHOTONICS CORPORATION EQUITY
|
|
|
$
|
1,502,846
|
|
|
|
|
$
|
1,214,658
|
|
||
NONCONTROLLING INTERESTS (NCI)
|
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
|
1,137
|
|
|
|
|
—
|
|
||||
Purchase of NCI
|
|
|
(950
|
)
|
|
|
|
—
|
|
||||
Attribution to NCI
|
|
|
—
|
|
|
|
|
1,579
|
|
||||
Net loss attributable to NCI
|
|
|
(33
|
)
|
|
|
|
(101
|
)
|
||||
Other comprehensive income (loss) attributable to NCI
|
|
|
16
|
|
|
|
|
(250
|
)
|
||||
Balance, end of period
|
|
|
170
|
|
|
|
|
1,228
|
|
||||
TOTAL EQUITY
|
|
|
$
|
1,503,016
|
|
|
|
|
$
|
1,215,886
|
|
|
September 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Components and raw materials
|
$
|
99,251
|
|
|
$
|
70,394
|
|
Work-in-process
|
29,316
|
|
|
43,259
|
|
||
Finished components and devices
|
113,803
|
|
|
90,085
|
|
||
Total
|
$
|
242,370
|
|
|
$
|
203,738
|
|
|
September 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Accrued compensation
|
$
|
39,164
|
|
|
$
|
33,617
|
|
Customer deposits and deferred revenue
|
32,725
|
|
|
21,525
|
|
||
Current portion of accrued warranty
|
14,686
|
|
|
14,871
|
|
||
Other
|
9,801
|
|
|
5,654
|
|
||
Total
|
$
|
96,376
|
|
|
$
|
75,667
|
|
|
September 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Revolving line-of-credit facilities:
|
|
|
|
||||
European overdraft facilities
|
$
|
—
|
|
|
$
|
—
|
|
Euro line-of-credit
|
—
|
|
|
—
|
|
||
U.S. line-of-credit
|
—
|
|
|
—
|
|
||
Total
|
$
|
—
|
|
|
$
|
—
|
|
Term debt:
|
|
|
|
||||
Long-term notes
|
$
|
41,620
|
|
|
$
|
19,667
|
|
Less: current portion
|
(3,188
|
)
|
|
(2,000
|
)
|
||
Total long-term debt
|
$
|
38,432
|
|
|
$
|
17,667
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income attributable to IPG Photonics Corporation
|
$
|
69,235
|
|
|
$
|
62,791
|
|
|
$
|
185,620
|
|
|
$
|
181,450
|
|
Weighted average shares
|
53,071
|
|
|
52,675
|
|
|
53,039
|
|
|
52,628
|
|
||||
Dilutive effect of common stock equivalents
|
690
|
|
|
717
|
|
|
713
|
|
|
762
|
|
||||
Diluted weighted average common shares
|
53,761
|
|
|
53,392
|
|
|
53,752
|
|
|
53,390
|
|
||||
Basic net income attributable to IPG Photonics Corporation per share
|
$
|
1.30
|
|
|
$
|
1.19
|
|
|
$
|
3.50
|
|
|
$
|
3.45
|
|
Diluted net income attributable to IPG Photonics Corporation per share
|
$
|
1.29
|
|
|
$
|
1.18
|
|
|
$
|
3.45
|
|
|
$
|
3.40
|
|
Notional Amounts
1
|
|
Other Assets
|
|
Other Long-Term Liabilities
|
||||||||||||||||||
September 30,
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||
$
|
23,453
|
|
|
$
|
—
|
|
|
$
|
164
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Effective portion recognized in other comprehensive loss, pretax:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
(67
|
)
|
|
$
|
—
|
|
|
$
|
172
|
|
|
$
|
304
|
|
Effective portion reclassified from other comprehensive loss to interest expense, pretax:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
(8
|
)
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
(153
|
)
|
Ineffective portion recognized in income:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at September 30, 2016
|
||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
367,005
|
|
|
$
|
367,005
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investments
|
126,860
|
|
|
126,860
|
|
|
—
|
|
|
—
|
|
||||
Interest rate swap
|
164
|
|
|
—
|
|
|
164
|
|
|
—
|
|
||||
Auction rate securities
|
1,142
|
|
|
—
|
|
|
—
|
|
|
1,142
|
|
||||
Total assets
|
$
|
495,171
|
|
|
$
|
493,865
|
|
|
$
|
164
|
|
|
$
|
1,142
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Long-term notes
|
$
|
41,620
|
|
|
$
|
—
|
|
|
$
|
41,620
|
|
|
$
|
—
|
|
Contingent purchase consideration
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||
Total liabilities
|
$
|
41,641
|
|
|
$
|
—
|
|
|
$
|
41,620
|
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Fair Value Measurements at December 31, 2015
|
||||||||||||
|
|
|
|||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
214,232
|
|
|
$
|
214,232
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investments
|
106,375
|
|
|
106,375
|
|
|
—
|
|
|
—
|
|
||||
Auction rate securities
|
1,136
|
|
|
—
|
|
|
—
|
|
|
1,136
|
|
||||
Total assets
|
$
|
321,743
|
|
|
$
|
320,607
|
|
|
$
|
—
|
|
|
$
|
1,136
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Long-term notes
|
$
|
19,667
|
|
|
$
|
19,667
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Contingent purchase consideration
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
Total liabilities
|
$
|
19,687
|
|
|
$
|
19,667
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Auction Rate Securities
|
|
|
|
|
|
|
|
||||||||
Balance, beginning of period
|
$
|
1,140
|
|
|
$
|
1,132
|
|
|
$
|
1,136
|
|
|
$
|
1,128
|
|
Change in fair value and accretion
|
2
|
|
|
2
|
|
|
6
|
|
|
6
|
|
||||
Balance, end of period
|
$
|
1,142
|
|
|
$
|
1,134
|
|
|
$
|
1,142
|
|
|
$
|
1,134
|
|
Contingent Purchase Consideration
|
|
|
|
|
|
|
|
||||||||
Balance, beginning of period
|
$
|
20
|
|
|
$
|
80
|
|
|
$
|
20
|
|
|
$
|
98
|
|
Period transactions
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
||||
Change in fair value and currency fluctuations
|
1
|
|
|
(4
|
)
|
|
1
|
|
|
(22
|
)
|
||||
Balance, end of period
|
$
|
21
|
|
|
$
|
69
|
|
|
$
|
21
|
|
|
$
|
69
|
|
|
Amounts
|
||
Balance at January 1
|
$
|
505
|
|
Foreign exchange adjustment
|
(1
|
)
|
|
Total goodwill arising from acquisition
|
19,638
|
|
|
Balance at September 30
|
$
|
20,142
|
|
|
September 30, 2016
|
|
December 31, 2015
|
|
||||||||||||||||
|
Gross Carrying
Amount
|
Accumulated
Amortization
|
Net Carrying
Amount
|
Weighted-
Average Lives
|
Gross Carrying
Amount
|
Accumulated
Amortization
|
Net Carrying
Amount
|
Weighted-
Average Lives
|
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||
Patents
|
$
|
6,641
|
|
$
|
(4,838
|
)
|
$
|
1,803
|
|
6 Years
|
$
|
6,641
|
|
$
|
(4,573
|
)
|
$
|
2,068
|
|
6 Years
|
Customer relationships
|
12,798
|
|
(3,548
|
)
|
9,250
|
|
5 Years
|
3,325
|
|
(3,092
|
)
|
233
|
|
5 Years
|
||||||
Production know-how
|
6,714
|
|
(3,959
|
)
|
2,755
|
|
8 Years
|
6,672
|
|
(3,339
|
)
|
3,333
|
|
8 Years
|
||||||
Technology, trademark and tradename
|
18,002
|
|
(3,438
|
)
|
14,564
|
|
8 Years
|
8,247
|
|
(1,977
|
)
|
6,270
|
|
8 Years
|
||||||
|
$
|
44,155
|
|
$
|
(15,783
|
)
|
$
|
28,372
|
|
|
$
|
24,885
|
|
$
|
(12,981
|
)
|
$
|
11,904
|
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
|
Total
|
$1,319
|
|
$4,991
|
|
$4,926
|
|
$4,821
|
|
$4,185
|
|
$8,130
|
|
$28,372
|
|
2016
|
|
2015
|
||||
Balance at January 1
|
$
|
28,210
|
|
|
$
|
19,272
|
|
Provision for warranty accrual
|
16,098
|
|
|
16,424
|
|
||
Warranty claims
|
(12,273
|
)
|
|
(8,627
|
)
|
||
Foreign currency translation
|
643
|
|
|
(1,059
|
)
|
||
Balance at September 30
|
$
|
32,678
|
|
|
$
|
26,010
|
|
|
2016
|
|
2015
|
||||
Balance at January 1
|
$
|
7,579
|
|
|
$
|
6,494
|
|
Reductions of prior period positions
|
—
|
|
|
—
|
|
||
Additions for tax positions in prior period
|
—
|
|
|
—
|
|
||
(Reductions) additions for tax positions in current period
|
(1,876
|
)
|
|
—
|
|
||
Balance at September 30
|
$
|
5,703
|
|
|
$
|
6,494
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||||||||
|
|
2016
|
|
2015
|
|
Change
|
|||||||||||||||
|
|
|
|
% of Total
|
|
|
|
% of Total
|
|
|
|
|
|||||||||
Materials processing
|
|
$
|
246,299
|
|
|
92.6
|
%
|
|
$
|
223,813
|
|
|
91.9
|
%
|
|
$
|
22,486
|
|
|
10.0
|
%
|
Other applications
|
|
19,718
|
|
|
7.4
|
%
|
|
19,728
|
|
|
8.1
|
%
|
|
(10
|
)
|
|
(0.1
|
)%
|
|||
Total
|
|
$
|
266,017
|
|
|
100.0
|
%
|
|
$
|
243,541
|
|
|
100.0
|
%
|
|
$
|
22,476
|
|
|
9.2
|
%
|
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||||||||
|
|
2016
|
|
2015
|
|
Change
|
|||||||||||||||
|
|
|
|
% of Total
|
|
|
|
% of Total
|
|
|
|
|
|||||||||
High-Power Continuous Wave ("CW") Lasers
|
|
$
|
153,002
|
|
|
57.5
|
%
|
|
$
|
130,917
|
|
|
53.8
|
%
|
|
$
|
22,085
|
|
|
16.9
|
%
|
Medium-Power CW Lasers
|
|
25,011
|
|
|
9.4
|
%
|
|
26,951
|
|
|
11.1
|
%
|
|
(1,940
|
)
|
|
(7.2
|
)%
|
|||
Low-Power CW Lasers
|
|
2,992
|
|
|
1.1
|
%
|
|
2,960
|
|
|
1.2
|
%
|
|
32
|
|
|
1.1
|
%
|
|||
Pulsed Lasers
|
|
34,429
|
|
|
12.9
|
%
|
|
35,036
|
|
|
14.4
|
%
|
|
(607
|
)
|
|
(1.7
|
)%
|
|||
Quasi-Continuous Wave ("QCW") Lasers
|
|
11,660
|
|
|
4.4
|
%
|
|
19,849
|
|
|
8.2
|
%
|
|
(8,189
|
)
|
|
(41.3
|
)%
|
|||
Other Revenue including Amplifiers, Laser Systems, Service, Parts, Accessories and Change in Deferred Revenue
|
|
38,923
|
|
|
14.6
|
%
|
|
27,828
|
|
|
11.4
|
%
|
|
11,095
|
|
|
39.9
|
%
|
|||
Total
|
|
$
|
266,017
|
|
|
100.0
|
%
|
|
$
|
243,541
|
|
|
100.0
|
%
|
|
$
|
22,476
|
|
|
9.2
|
%
|
•
|
High-power laser sales increased due to higher demand for cutting, welding and additive manufacturing applications. High-power lasers are continuing to displace CO2 lasers in cutting systems sold by our OEM customers. In addition, OEM's for additive manufacturing equipment are increasing the use of high power lasers instead of medium power lasers. Our additive manufacturing OEM customers are producing systems using lasers with higher output powers in order to improve the speed with which parts are grown.
|
•
|
Medium-power sales decreased due to a decrease in demand for fine cutting and lasers used in sintering/additive manufacturing partially offset by a higher demand for welding applications. The decline in medium-power lasers used for additive manufacturing is due to timing of orders as well as increased use of high-power lasers for this application.
|
•
|
Low-power laser sales increased due to higher sales for medical applications.
|
•
|
Pulsed laser sales decreased due to lower sales of low-power pulsed lasers partially offset by an increase in high-power pulsed lasers sales and an increase in green pulsed lasers sales. High-power pulsed sales are driven by ablation and cleaning applications as well as marking and engraving applications. The increase in green pulsed lasers is driven by edge deletion in solar cell manufacturing.
|
•
|
QCW laser sales decreased due to lower demand from consumer electronics applications.
|
•
|
Other revenue increased due to higher telecom sales, an increase in parts and service revenue and lower deferred revenue.
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||||||||
|
|
2016
|
|
2015
|
|
Change
|
|||||||||||||||
|
|
|
|
% of Total
|
|
|
|
% of Total
|
|
|
|
|
|||||||||
Materials processing
|
|
$
|
683,562
|
|
|
94.1
|
%
|
|
$
|
640,302
|
|
|
94.5
|
%
|
|
$
|
43,260
|
|
|
6.8
|
%
|
Other applications
|
|
42,490
|
|
|
5.9
|
%
|
|
37,337
|
|
|
5.5
|
%
|
|
5,153
|
|
|
13.8
|
%
|
|||
Total
|
|
$
|
726,052
|
|
|
100.0
|
%
|
|
$
|
677,639
|
|
|
100.0
|
%
|
|
$
|
48,413
|
|
|
7.1
|
%
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||||||||
|
|
2016
|
|
2015
|
|
Change
|
|||||||||||||||
|
|
|
|
% of Total
|
|
|
|
% of Total
|
|
|
|
|
|||||||||
High-Power CW Lasers
|
|
$
|
412,628
|
|
|
56.8
|
%
|
|
$
|
377,058
|
|
|
55.6
|
%
|
|
$
|
35,570
|
|
|
9.4
|
%
|
Medium-Power CW Lasers
|
|
74,739
|
|
|
10.3
|
%
|
|
75,467
|
|
|
11.1
|
%
|
|
(728
|
)
|
|
(1.0
|
)%
|
|||
Low-Power CW Lasers
|
|
9,053
|
|
|
1.2
|
%
|
|
10,190
|
|
|
1.5
|
%
|
|
(1,137
|
)
|
|
(11.2
|
)%
|
|||
Pulsed Lasers
|
|
99,687
|
|
|
13.7
|
%
|
|
97,017
|
|
|
14.3
|
%
|
|
2,670
|
|
|
2.8
|
%
|
|||
QCW Lasers
|
|
36,484
|
|
|
5.0
|
%
|
|
45,592
|
|
|
6.7
|
%
|
|
(9,108
|
)
|
|
(20.0
|
)%
|
|||
Other Revenue including Amplifiers, Laser Systems, Service, Parts, Accessories and Change in Deferred Revenue
|
|
93,461
|
|
|
12.9
|
%
|
|
72,315
|
|
|
10.7
|
%
|
|
21,146
|
|
|
29.2
|
%
|
|||
Total
|
|
$
|
726,052
|
|
|
100.0
|
%
|
|
$
|
677,639
|
|
|
100.0
|
%
|
|
$
|
48,413
|
|
|
7.1
|
%
|
•
|
High-power laser sales increased due to higher demand for cutting, cladding, laser sintering and heating and annealing applications partially offset by a decline in automotive related welding applications and decreases in average selling prices. High-power lasers are continuing to displace CO2 lasers in cutting systems sold by our OEM customers. We are also seeing increased use of high-power lasers for deposition applications like cladding and laser sintering which is used in additive manufacturing. Our additive manufacturing OEM customers are producing systems using lasers with higher output powers in order to improve the speed with which parts are grown. The increase in heat treatment and annealing applications was due to a large order from one customer.
|
•
|
Medium-power sales decreased due to a decrease in demand for fine cutting and lasers used in sintering/additive manufacturing partially offset by a higher demand for welding applications. As discussed above, our additive manufacturing OEM customers are increasingly using high-power lasers instead of medium-power lasers in their systems.
|
•
|
Low-power laser sales decreased due to lower sales for medical applications.
|
•
|
Pulsed laser sales increased due to higher demand for marking and engraving applications. Marking and engraving applications are increasing due to increased demand in consumer electronics and packaging and due to increased performance offered by our high-power pulsed products.
|
•
|
QCW laser sales decreased due to lower demand from consumer electronics applications.
|
•
|
The increase in laser system sales contributed to the increase in other revenue detailed above. Increased sales in laser systems are due to increased demand for customized laser system solutions as a result of the investments we have made to develop laser systems for various applications and in the sales and distribution network to support this product line.
|
|
|
|
|
|
|
|
|
|
Description
|
|
Total Facility
|
|
Interest Rate
|
|
Maturity
|
|
Security
|
U.S. Revolving Line of Credit (1)
|
|
Up to $50.0 million
|
|
LIBOR plus 0.80% to 1.20%, depending on our performance
|
|
April 2020
|
|
Unsecured
|
Euro Credit Facilities (Germany) (2)
|
|
Euro 30.0 million ($33.6 million)
|
|
Euribor plus 1.00% or EONIA 1.25%
|
|
July 2017
|
|
Unsecured, guaranteed by parent company and Germany subsidiary
|
Euro Overdraft Facilities (3)
|
|
Euro 2.0 million
($2.2 million) |
|
1.0%-6.5%
|
|
October 2016
|
|
Common pool of assets of Italian subsidiary
|
(1)
|
This facility is available to certain foreign subsidiaries in their respective local currencies. At
September 30, 2016
, there were no drawings however, there were
$0.2 million
of guarantees issued against the facility which reduces the amount of the facility available to draw.
|
(2)
|
This facility is also available to certain foreign subsidiaries in their respective local currencies. At
September 30, 2016
, there were no drawings however, there were
$8.0 million
of guarantees issued against the facility which reduces the amount of the facility available to draw.
|
(3)
|
At
September 30, 2016
, there were no drawings.
|
•
|
An increase in cash provided by net income after adding back non-cash charges of
$22.2 million
to
$267.0 million
for the
nine months ended September 30, 2016
as compared to
$244.9 million
for the same period in
2015
mainly resulting from an increase in depreciation and amortization and stock-based compensation which was partially offset by a decrease in net income and changes in deferred income taxes between the two periods;
|
•
|
An increase in accounts receivable of
$10.9 million
for the
nine months ended September 30, 2016
as compared to an increase of
$20.0 million
for the same period in
2015
;
|
•
|
An increase in inventory of
$42.8 million
for the
nine months ended September 30, 2016
as compared to an increase of
$52.2 million
for the same period in
2015
;
|
•
|
The benefits to cash flow from operating activities described above were offset by a decrease in income taxes payable of
$7.4 million
for the
nine months ended September 30, 2016
as compared to an increase in income taxes payable of
$17.5 million
for the same period in
2015
. The decrease in income taxes payable was primarily attributable to an increase in cash taxes paid in Germany as a result of an increase in estimated tax payments due for the year ended December 31, 2015 and estimated tax payments for the current year. The estimated tax payments were increased after we filed our 2014 German tax return.
|
Date
|
|
Total Number of
Shares (or Units)
Purchased
|
|
|
|
Average Price
Paid per Share
(or Unit)
|
|
Total Number of
Shares (or Units)
Purchased as Part
of Publicly
Announced Plans
or Programs
|
|
Maximum Number
(or Approximate
Dollar Value) of
Shares (or Units)
that May Yet Be
Purchased Under
the Plans or
Programs
|
||||||
January 1, 2016 — January 31, 2016
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
February 1, 2016 — February 29, 2016
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
March 1, 2016 — March 31, 2016
|
|
407
|
|
|
(1)
|
|
$
|
84.09
|
|
|
—
|
|
|
—
|
|
|
April 1, 2016 — April 30, 2016
|
|
1,316
|
|
|
(1)
|
|
96.08
|
|
|
—
|
|
|
—
|
|
||
May 1, 2016 — May 31, 2016
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
June 1, 2016 — June 30, 2016
|
|
1,460
|
|
|
(1)
|
|
80.00
|
|
|
—
|
|
|
—
|
|
||
July 1, 2016 — July 31, 2016
|
|
—
|
|
|
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
||
August 1, 2016 — August 31, 2016
|
|
448
|
|
|
(1)
|
|
84.74
|
|
|
—
|
|
|
—
|
|
||
September 1, 2016 — September 30, 2016
|
|
43,257
|
|
|
(1,2)
|
|
82.84
|
|
|
41,800
|
|
|
$
|
96,571
|
|
|
Total
|
|
46,888
|
|
|
|
|
$
|
83.15
|
|
|
41,800
|
|
|
$
|
96,571
|
|
(1)
|
In 2012, the Board of Directors approved "withhold to cover" as a tax payment method for vesting of restricted stock awards for certain employees. Pursuant to the "withhold to cover" method, we withheld from such employees the shares noted in the table above to cover tax withholding related to the vesting of their awards. For the
three months ended September 30, 2016
, 1,905 shares were withheld at an average price of $83.55 and for the
nine months ended September 30, 2016
, the Company withheld 5,088 shares at an average price of $85.58.
|
(2)
|
On July 28, 2016, the Board of Directors authorized a share repurchase program (the “Program”). Under the Program, the Company's management is authorized to repurchase shares of common stock in an amount not to exceed the number of shares issued to employees and directors under its various employee and director equity compensation and employee stock purchase plans from January 1, 2016 through December 31, 2017. The Program limits aggregate share repurchases to no more than
$100
million over a period ending June 30, 2018. For the
three months ended September 30, 2016
and
nine months ended September 30, 2016
, the Company repurchased
41,800
shares of its common stock with an average price of
$83.33
per share in the open market.
|
Exhibit
No.
|
|
Description
|
10.1
|
|
Third Amendment to Credit Facility Agreement between IPG Laser GmbH and Deutsche Bank AG, dated November 1, 2016
|
10.2
|
|
Annex I (Third Amendment) to Guarantee of IPG Laser GmbH to Deutsche Bank AG dated November 1, 2016
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
|
32
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 1350
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
IPG PHOTONICS CORPORATION
|
|
|
|
|
|
Date: November 2, 2016
|
|
By:
|
/s/ Valentin P. Gapontsev
|
|
|
|
Valentin P. Gapontsev
|
|
|
|
Chairman and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
Date: November 2, 2016
|
|
By:
|
/s/ Timothy P.V. Mammen
|
|
|
|
Timothy P.V. Mammen
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
(1)
|
Aggregate Facility Amount
|
(a)
|
Facility 1: revolving cash credit facility in the amount of up to
Euro 14,000,000.00
(in words:
Euro Fourteen Million
)
(“Facility 1”)
.
|
(b)
|
Facility 2: revolving guarantee facility in the amount of up to
Euro 9,000,000.00
(in words:
Euro Nine Million
)
(“Facility 2”)
.
|
(c)
|
Facility 3: revolving margin line in the amount of up to
Euro 7,000,000.00
(in words:
Euro Seven Million
)
(“Facility 3”)
.
|
(3)
|
Purpose
|
(a)
|
The proceeds of Facility 1 shall be applied towards purposes of financing short-term working capital requirements, especially financing of the outstanding accounts receivables and inventories of the Borrower as well as - pursuant to § 4 - of companies of which a Borrower directly or indirectly owns a majority interest according to § 16 of the German Stock Companies Act (
Aktiengesetz
)
(“Subsidiaries”)
. For purposes of this Credit Facility Agreement only the IPG Photonics (Beijing) Fiber Laser Technology Company Limited, Beijing, China is deemed to be a Subsidiary (irrespective of § 16 of the German Stock Companies Act).
|
(b)
|
The proceeds of Facility 2 shall be applied towards the issuance of Guarantees upon instruction of the Borrower as well as - pursuant to § 4 - of its respective Subsidiaries.
|
(c)
|
Facility 3 may only be utilized by entering into financial derivatives transactions with the Subsidiaries of the Borrower - subject to the provisions of § 4.
|
(4)
|
Definitions
|
1.
|
I have reviewed this quarterly report on Form 10-Q of IPG Photonics Corporation;
|
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.
|
By:
|
|
/s/ Valentin P. Gapontsev
|
|
|
Valentin P. Gapontsev
|
|
|
Chairman and Chief Executive Officer (Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of IPG Photonics Corporation;
|
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.
|
By:
|
|
/s/ Timothy P.V. Mammen
|
|
|
Timothy P.V. Mammen
|
|
|
Vice President and Chief Financial Officer (Principal Financial Officer)
|
1
|
the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
|
2
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Valentin P. Gapontsev
|
Valentin P. Gapontsev
|
Chairman and Chief Executive Officer
|
|
/s/ Timothy P.V. Mammen
|
Timothy P.V. Mammen
|
Vice President and Chief Financial Officer
|