The next dialogue and evaluation must be learn along with our consolidated monetary statements and the notes to these statements included elsewhere on this Type 10-Ok. This dialogue comprises forward-looking statements primarily based on our present expectations, assumptions, estimates and projections aboutFluidigm and our trade. These forward-looking statements contain dangers and uncertainties. Our precise outcomes might differ materially from these indicated in these forward-looking statements because of sure components, as extra totally described in "Danger components" in Merchandise 1A of this Type 10-Ok, on this Merchandise 7, and elsewhere on this Type 10-Ok. Besides as could also be required by legislation, we undertake no obligation to replace publicly any forward-looking statements for any cause, even when new info turns into accessible or different occasions happen sooner or later. OverviewFluidigm improves life by driving significant insights in well being and illness. Our revolutionary applied sciences discover the organic complexities of illness to advance human well being by analysis, diagnostics and medical purposes. We create, manufacture, and market a variety of services, together with devices, consumables, reagents and software program which might be utilized by researchers and medical labs worldwide. Our prospects are main tutorial and authorities laboratories, in addition to pharmaceutical, biotechnology, plant and animal analysis organizations, and medical laboratories worldwide. Along with our prospects, we try to extend the standard of life for all. We distribute our techniques by our direct gross sales power and assist organizations situated inNorth America ,Europe , andAsia-Pacific , and thru distributors or gross sales brokers in a number of European, Latin American, Center Japanese, andAsia-Pacific nations. Our manufacturing operations are situated inSingapore andCanada . Our facility inSingapore manufactures our microfluidics devices, that are assembled by our contract producer situated inside ourSingapore facility. All of our microfluidic merchandise are fabricated at ourSingapore facility. Our mass cytometry devices, assays and reagents are manufactured at our facility inCanada . We additionally useU.S. -based third-party contract producers for reagent manufacturing. Our whole income was$138.1 million in 2020, of which$122.5 million was product and repair income;$117.2 million in 2019, of which$116.7 million was product and repair income and$113.0 million in 2018, which was completely product and repair income. Now we have incurred vital web losses since our inception in 1999 and, as ofDecember 31, 2020 , our accrued deficit was$676.8 million . Current Developments Now we have been responding to the COVID-19 pandemic by taking steps to guard our staff, assist our prospects, and handle our liquidity. AsFluidigm is a designated important enterprise, a few of our important staff have been working at our laboratories and places of work, and in some instances, at buyer websites, whereas our administrative staff have been working from residence. Now we have applied well being and security practices in accordance with evolving authorities and public well being company pointers in all of our amenities all over the world, together with sustaining social distancing and enhanced cleansing protocols, amenities modifications, temperature checks in some places, and utilization of face masks and different private protecting gear the place applicable. Different operational changes made in response to COVID-19 embody elevated stocking ranges of uncooked supplies and proactive provider administration. Now we have taken steps to assist maintain our workforce wholesome and protected, and to make sure a powerful knowledge safety and inner management setting. WhereasFluidigm is a chosen important enterprise, widespread international adoption of work-from-home and shelter-in-place orders resulted in a major slowdown in buyer actions. We additionally noticed near-term COVID-19-related priorities briefly displace long term initiatives and analysis actions. As prospects have returned to work, we've seen some buyer ordering get well, however the timing of full restoration stays unsure given further waves of an infection and the necessity to distribute vaccines. We estimate that about 10% of our prospects are both closed or working at lowered capability as of the tip of 2020 due to the COVID-19 pandemic, in comparison with 60% to 70% within the first quarter and an estimated 30% to 40% of our international tutorial analysis neighborhood both remaining closed or working at a slower tempo on the finish of the second quarter. Though most of our prospects are working, they haven't returned to pre-pandemic ranges of exercise. We consider the affect of COVID-19 on our prospects has resulted within the delay of gross sales of our mass cytometry instrument techniques to future durations. InAugust 2020 , we acquired Emergency Use Authorization (EUA) from theU.S. Meals and Drug Administration (FDA) for our Advanta™ Dx SARS-CoV-2 RT-PCR Assay, a newly developed, extraction-free saliva-based take a look at to detect nucleic acid from the SARS-CoV-2 virus, designed to be run on the Fluidigm® Biomark™ HD microfluidics platform. InJanuary 2021 , we acquired the CE-IVD mark for our saliva-based Advanta Dx SARS-CoV-2 Assay permitting for industrial gross sales of this CE-IVD industrial package inEurope . As well as,Fluidigm is actively supporting prospects who're growing lab-developed assessments, 46 -------------------------------------------------------------------------------- in addition to prospects who're offering COVID-19 diagnostic assessments exterior of theU.S. The event of COVID-19 associated purposes has positively impacted gross sales of our microfluidics devices, consumables, and mass cytometry reagents. We consider our microfluidics and mass cytometry capabilities can play a vital position in virus detection in addition to in immune profiling of sufferers and populations. Moreover, we consider our applied sciences and options might be necessary to the sturdy response from authorities and medical establishments to be ready for future outbreaks. Regardless of these alternatives, there's nonetheless uncertainty concerning the affect of COVID-19 on the worldwide financial system, our prospects, and our enterprise over the close to time period. Additionally, although we at the moment are in a position to promote our Advanta Dx SARS-CoV-2 Assay for diagnostic use and sure medical laboratory prospects are growing lab developed assessments utilizing our know-how, our expertise promoting into diagnostic markets is restricted and we face vital competitors. A lot of our goal prospects in these markets don't have vital prior expertise utilizingFluidigm devices and consumables and require validation steps and help in establishing, integrating and scaling up testing applications utilizing our know-how and merchandise. Additionally, many such laboratories have expertise working with sure of our opponents for diagnostic testing, and we've confronted, and anticipate to proceed to face, complicated gross sales processes and competitors within the COVID-19 testing market. We anticipate to search collaborations with third events to fulfill the challenges related to penetrating these markets. Now we have actively sought authorities funding to assist our funding to develop our diagnostics capabilities for microfluidics. InSeptember 2020 , we executed a contract with theNationwide Institutes of Well being (NIH) for a mission beneath the NIH Speedy Acceleration of Diagnostics (RADx) program (collectively theNIH Contract). The RADx program supplies grants to assist a variety of latest lab-based and point-of-care assessments that might considerably improve the quantity, sort and availability of COVID-19 assessments. The NIH Contract has a complete worth of as much as$34.0 million upon the achievement of sure milestones. ByDecember 31, 2020 , we've achieved milestones and acquired funding of$25.4 million . Proceeds from the NIH Contract might be used primarily to develop manufacturing capability for COVID-19 testing withFluidigm microfluidics know-how and, to a lesser extent, to reimburse analysis and growth prices. Now we have spent roughly$10.2 million for capital expenditures byDecember 31, 2020 for the enlargement of ourSingapore facility because of the NIH Contract. We anticipated to finish the NIH Contract and associated spending for the enlargement in 2021. TheNIH has the suitable to terminate the NIH Contract for comfort. Within the occasion of termination for comfort,Fluidigm might be paid a proportion of the NIH Contract worth reflecting the proportion of the work carried out previous to the discover of termination, plus cheap fees. Within the occasion of termination for trigger because of our default,NIH isn't responsible for provides or companies not accepted. If we fail to ship inside the time specified within the NIH Contract and the delay is because ofFluidigm's fault or negligence, we're required to pay liquidated damages within the quantity of 33% of the quantity(s) already disbursed to date beneath the NIH Contract inside six months from the date of termination. We haven't paid, and don't at the moment anticipate to pay any liquidated damages and are in compliance with the phrases of the contract. We're working with theNIH repeatedly to make sure we're in compliance with the contract necessities and milestones. InMarch 2020 , we entered into an Open Market Sale Settlement (Sale Settlement) withJefferies LLC (Jefferies) to promote shares of our frequent inventory having mixture gross sales proceeds of as much as$50 million , on occasion, by an at-the-market fairness providing program beneath which Jefferies acts as gross sales agent. In the course of the third quarter of 2020, we offered 2.5 million shares of our frequent inventory,$0.001 par worth per share, pursuant to the Sale Settlement, for mixture gross proceeds of$20.9 million . Our web proceeds have been roughly$20.1 million , after deducting associated bills, together with commissions of roughly$0.6 million and issuance prices of roughly$0.2 million . On this interval of uncertainty, we're actively managing our working bills and money flows in response to the evolving market circumstances. As well as, we applied reductions in our working expense construction together with short-term wage reductions which started within the second quarter and ended within the third quarter of 2020 and constrained hiring till our enterprise returned to extra regular volumes. Now we have additionally taken benefit of varied authorities applications accessible to us. For instance, we've utilized for or acquired wage subsidies in sure nations. Within theU.S. , the Coronavirus Support, Reduction and Financial Safety (CARES) Act consists of provisions referring to refundable payroll tax credit, deferment of the employer portion of sure payroll taxes, and different tax-related provisions. Because of this, we've been preserving money by deferring fee ofU.S. payroll taxes. We're persevering with to evaluate the potential affect of the COVID-19 pandemic on our enterprise and operations. For added info on the varied dangers posed by the pandemic, confer with Half I, Merchandise 1A. Danger Components of this Type 10-Ok. Important Accounting Insurance policies, Important Judgments and Estimates Our consolidated monetary statements and the associated notes included elsewhere on this Type 10-Ok are ready in accordance with accounting ideas typically accepted inamerica . The preparation of monetary statements in accordance withU.S. GAAP requires administration to make estimates and assumptions that have an effect on the quantities reported within the consolidated monetary statements and accompanying notes. We base our estimates on historic expertise and on numerous different 47 -------------------------------------------------------------------------------- assumptions believed to be cheap, which collectively type the idea for making judgments in regards to the carrying values of property and liabilities. The total extent to which the COVID-19 pandemic impacts our enterprise, outcomes of operations and monetary situation will rely upon quite a few evolving components together with, however not restricted to, the magnitude and length of the pandemic, the extent to which it will affect worldwide macroeconomic circumstances, together with the velocity of restoration, and governmental and enterprise reactions to the pandemic. We assessed sure accounting issues that typically require consideration of forecasted monetary info, together with the unknown affect of COVID-19 as ofDecember 31, 2020 . These accounting issues included, however weren't restricted to, our allowance for uncertain accounts and credit score losses, stock and associated reserves and the carrying worth of goodwill and different long-lived property. Precise outcomes might differ materially from these estimates and will have a fabric adversarial impact on our consolidated monetary statements. We consider that the next important accounting insurance policies contain a larger diploma of judgment and complexity than our different accounting insurance policies. Accordingly, these are the insurance policies we consider are essentially the most important to understanding and evaluating our audited 2020 consolidated monetary statements. Income Recognition We generate income primarily from the sale of our services. Product income is derived from the sale of devices and consumables, assays and reagents. Service income is primarily derived from the sale of instrument service contracts, repairs, set up, coaching and different specialised product assist companies. We additionally generate income from growth agreements, license and royalty agreements and grants. Income is reported web of any gross sales, use and value-added taxes we gather from prospects as required by authorities authorities. Analysis and growth price consists of prices related to growth and grant income. We acknowledge income primarily based on the quantity of consideration we anticipate to obtain in alternate for the products and companies we switch to the shopper. Our industrial preparations sometimes embody a number of distinct merchandise and companies, and we allocate income to those efficiency obligations primarily based on their relative standalone promoting costs. Standalone promoting costs (SSP) are typically decided utilizing observable knowledge from current transactions. In instances the place adequate knowledge isn't accessible, we estimate a product's SSP by utilizing a price plus a margin strategy or by making use of a reduction to the product's checklist worth. Product Income We acknowledge product income on the cut-off date when management of the products passes to the shopper and we've an enforceable proper to fee. This typically happens both when the product is shipped from one among our amenities or when it arrives on the buyer's facility, primarily based on the contractual phrases. Prospects typically should not have a unilateral proper to return merchandise after supply. Invoices are typically issued at cargo and customarily develop into due in 30 to 60 days. We typically carry out delivery and dealing with actions after management of the product passes to the shopper. Now we have made an accounting coverage election to account for these actions as product success actions somewhat than as separate efficiency obligations. Service Income We acknowledge income from repairs, upkeep, set up, coaching and different specialised product assist companies on the cut-off date the work is accomplished. Set up and coaching companies are typically billed upfront of service. Repairs and different companies are typically billed on the level the work is accomplished. Income related to instrument service contracts is acknowledged on a straight-line foundation over the lifetime of the settlement, which is usually one to three years. We consider this time-elapsed strategy is suitable for service contracts as a result of we offer companies on demand all through the time period of the settlement. Invoices are typically issued upfront of service on a month-to-month, quarterly, annual or multi-year foundation. Funds made upfront of service are reported on our consolidated stability sheet as deferred income. Improvement Income The Firm has entered and should proceed to enter into growth agreements with third events that present for up-front and periodic milestone funds. Our growth agreements could embody multiple efficiency obligation. At the inception of the contract, we assess whether or not every obligation represents a separate efficiency obligation or whether or not such obligations must be mixed as a single efficiency obligation. The transaction worth for every growth settlement is decided primarily based on the quantity of consideration we anticipate to be entitled to for satisfying all efficiency obligations inside the settlement. 48 -------------------------------------------------------------------------------- We assess the character of the mixed efficiency obligation to find out whether or not the mixed efficiency obligation is happy over time or at a cut-off date and, if over time, the suitable technique of measuring progress for functions of recognizing income. In preparations the place we fulfill efficiency obligation(s) over time, we acknowledge growth income sometimes utilizing an enter technique primarily based on our prices incurred relative to the entire anticipated price which determines the extent of our progress towards completion. As a part of the accounting for these preparations, we develop estimates and assumptions that require judgment to find out the transaction worth and progress in direction of completion. We evaluation our estimate of the transaction worth and progress towards completion primarily based on one of the best info accessible to acknowledge the cumulative progress towards completion as of the tip of every reporting interval, and make revisions to such estimates as mandatory. We additionally generate income from growth or collaboration agreements that do not embody upfront or milestone-based funds and customarily acknowledge income on a majority of these agreements primarily based on the timing of growth actions. Different Income Different income consists of license and royalty income and grant income. We acknowledge income from license agreements when the license is transferred to the buyer and the shopper is ready to use and profit from the license. For contracts that embody sales-based royalties, we acknowledge income on the later of (i) when the associated gross sales happen, or (ii) when the efficiency obligation to which some or the entire royalty has been allotted has been happy. InMarch 2020 , we entered into an settlement to settle mental property infringement claims, during which we acquired a$3.5 million fee in alternate for a perpetual license beneath sureFluidigm mental property. The settlement is taken into account a multiple-element association with every aspect accounted for individually. Accordingly,$3.1 million of the proceeds was acknowledged as license income and$0.4 million was offset towards authorized prices. We obtain grants from numerous entities to carry out analysis and growth actions over contractually outlined durations. Income is usually acknowledged offered that the circumstances beneath which the grants have been offered have been met and any remaining efficiency obligations are perfunctory. Product Warranties We typically present a one-year guarantee on our devices. We accrue for estimated guarantee obligations on the time of product cargo. We periodically evaluation our guarantee legal responsibility and document changes primarily based on the phrases of warranties offered to prospects, and historic and anticipated guarantee declare expertise. This expense is recorded as a element of price of product income within the consolidated statements of operations. Important Judgments Making use of the income recognition practices mentioned above usually requires vital judgment. Judgment is required when figuring out efficiency obligations, estimating SSP and allocating buy consideration in multi-element preparations and estimating the long run quantity of our guarantee obligations. Important judgment can also be required when deciphering industrial phrases and figuring out when management of products and companies passes to the shopper. Any materials adjustments created by errors in judgment might have a fabric impact on our working outcomes and total monetary situation. Accounts Receivable Commerce accounts receivable are recorded at web bill worth. We evaluation our publicity to accounts receivable and supply allowances of particular quantities if collectability is not moderately assured primarily based on historic expertise and particular buyer assortment points. We consider such allowances on a common foundation and modify them as wanted. To scale back credit score threat, we carry out credit score evaluations of our prospects. We typically don't require collateral to assist credit score gross sales. Inventories, web Inventories are acknowledged on the decrease of price (on a first-in, first-out foundation) or web realizable worth. Stock prices embody direct supplies, direct labor, and regular manufacturing overhead. We repeatedly evaluation stock for extra and out of date merchandise and parts. Provisions for slow-moving, extra, and out of date inventories are recorded when required to scale back stock values to their estimated web realizable values primarily based on product life cycle, growth plans, product expiration, and high quality points. Leases We decide if an association is a lease, or comprises a lease, at inception. Working leases are included in working lease right-of-use (ROU) property, web and present and non-current working lease liabilities in our consolidated stability sheets. ROU 49 -------------------------------------------------------------------------------- property characterize our right-to-use an underlying asset for the lease time period and lease liabilities characterize our obligation to make lease funds arising from the lease. Working lease ROU property and liabilities are acknowledged on the graduation date primarily based on the current worth of lease funds over the lease time period. As most of our leases don't present an implicit price, we typically use our incremental borrowing price primarily based on the estimated price of curiosity for collateralized borrowing over an identical time period of the lease funds at graduation date. Important judgment is required in figuring out the incremental collateralized borrowing price. Lease expense for lease funds is acknowledged on a straight-line foundation over the lease time period. We elected the short-term lease recognition exemption for all leases that qualify. For these leases that qualify, we is not going to acknowledge ROU property or lease liabilities for leases with an preliminary lease time period of 1 yr or much less. We additionally elected to not separate lease and nonlease parts for our constructing leases. The nonlease parts are typically variable in nature and are anticipated to characterize most of our variable lease prices. Variable prices are expensed as incurred. Now we have taken a portfolio strategy for our automobile leases by nation. Enterprise Combos,Goodwill , Intangible Property and Different Lengthy-Lived Property Now we have accomplished acquisitions of companies prior to now and should purchase further companies or applied sciences sooner or later. The outcomes of companies acquired in a enterprise mixture are included in our consolidated monetary statements from the date of acquisition. We allocate the acquisition worth, which is the sum of the consideration offered in a enterprise mixture, to the identifiable property and liabilities of the acquired enterprise at their acquisition date truthful values. The surplus of the acquisition worth over the quantity allotted to the identifiable property and liabilities, if any, is recorded as goodwill. Figuring out the truthful worth of property acquired and liabilities assumed requires administration to make use of vital judgment and estimates, together with the number of valuation methodologies and estimates of future income.Goodwill , which has an indefinite helpful life, represents the surplus of price over truthful worth of web property acquired. Our intangible property embody developed know-how, patents and licenses. The price of identifiable intangible property with finite lives is usually amortized on a straight-line foundation over the property' respective estimated helpful lives.Goodwill and intangible property with indefinite lives should not topic to amortization however are examined for impairment on an annual foundation through the fourth quarter or each time occasions or adjustments in circumstances point out the carrying quantity of those property might not be recoverable. Occasions or adjustments in circumstances that might have an effect on the probability that we'll be required to acknowledge an impairment cost embody, however should not restricted to, declines in our inventory worth or market capitalization, financial downturns and different macroeconomic occasions, together with the present COVID-19 pandemic, declines in our market share or revenues, and a rise in our losses, fast adjustments in know-how, failure to realize the advantages of capability will increase and utilization, vital litigation arising out of an acquisition, or different issues. Any impairment fees might have a fabric adversarial impact on our working outcomes and web asset worth within the quarter during which we acknowledge the impairment cost. In evaluating our goodwill and intangible property with indefinite lives for indications of impairment, we first conduct an evaluation of qualitative components to find out whether or not it's extra seemingly than not that the truthful worth of our reporting unit is lower than its carrying quantity. If we decide that it's extra seemingly than not that the truthful worth of our reporting unit is lower than its carrying quantity, we examine the truthful worth of our reporting unit to its carrying worth. If the truthful worth of our reporting unit exceeds its carrying worth, goodwill isn't thought of impaired and no additional evaluation is required. If the carrying worth of the reporting unit exceeds its truthful worth, then an impairment loss equal to the distinction can be recorded to goodwill. There have been no indications of impairment in 2020. We didn't acknowledge any impairment of goodwill for any of the durations offered herein. We consider our long-lived property, together with finite-lived intangibles, for indicators of potential impairment when occasions or adjustments in circumstances point out the carrying quantity of an asset might not be recoverable. If any indicator of impairment exists, we assess the recoverability of the affected long-lived property by figuring out whether or not the carrying worth of the asset might be recovered by undiscounted future working money flows. If impairment is indicated, we estimate the asset's truthful worth utilizing future discounted money flows related to the usage of the asset and modify the carrying worth of the asset accordingly. Within the fourth quarter of 2019, we acknowledged an impairment cost of$0.4 million on patents and licenses that weren't utilized in then present merchandise and weren't anticipated for use in future product choices. Deferred Grant Earnings InSeptember 2020 , we executed the NIH Contract. The NIH Contract has a complete worth of as much as$34.0 million upon the achievement of sure milestones. Proceeds from the NIH Contract might be used primarily to develop manufacturing capability for COVID-19 testing withFluidigm microfluidics know-how and, to a lesser extent, to offset relevant working bills. Accounting for the NIH Contract doesn't fall beneath ASC 606, Income from Contracts with Prospects, because theNIH is not going to profit straight from our enlargement or product growth. As there is no such thing as a authoritative steerage beneathU.S. GAAP on accounting for presidency help to for-profit enterprise entities, we utilized Worldwide Accounting Requirements (IAS) 20, Accounting for Authorities Grants and Disclosure of Authorities Help, by analogy when accounting for the NIH Contract funds toFluidigm . 50 -------------------------------------------------------------------------------- The NIH Contract proceeds used for manufacturing capability enlargement meet the definition of grants associated to property as the first goal for the funds is to fund the acquisition and development of capital property to scale up manufacturing capability. Underneath IAS 20, authorities grants associated to property are offered within the assertion of monetary place both by organising the grant as deferred revenue or by deducting the grant in arriving on the carrying quantity of the asset. Both of those two strategies of presentation of grants associated to property in monetary statements are considered acceptable alternate options beneath IAS 20. Now we have elected to document the grants acquired as deferred revenue utilizing the first technique. Underneath IAS 20, grant proceeds are acknowledged when there's cheap assurance the circumstances of the grant might be met and the grant might be acquired. With the NIH Contract, this happens when both every milestone has been accepted byNIH or administration concludes the circumstances of the grant have been considerably met. Deferred revenue associated to manufacturing capability enlargement might be amortized over the interval of depreciation for the associated property as a discount of depreciation expense. Deferred revenue associated to reimbursement of working bills is recorded as a discount of these bills incurred so far. Convertible Notes InFebruary 2014 , we closed an underwritten public providing of$201.3 million mixture principal quantity of our 2014 Notes. InMarch 2018 , we entered into separate privately negotiated transactions with sure holders of our 2014 Notes to alternate$150.0 million in mixture principal quantity of the 2014 Notes for two.75% Trade Convertible Senior Notes due 2034 (2018 Notes). Following the alternate, roughly$51.3 million in mixture principal quantity of the 2014 Notes remained excellent, along with$150.0 million in mixture principal quantity of the 2018 Notes. Because the 2018 Notes have been convertible, at our election, into money, shares of our frequent inventory, or a mix of money and shares of our frequent inventory, we accounted for the 2018 Notes beneath the money conversion steerage in ASC 470, whereby the embedded conversion possibility within the 2018 Notes was separated and accounted for in fairness. The embedded conversion possibility worth was calculated as the distinction between (i) the entire truthful worth of the 2018 Notes and (ii) the truthful worth of an identical debt instrument excluding the embedded conversion possibility. We decided an embedded conversion possibility worth of$29.3 million , which was recorded in further paid-in-capital and lowered the carrying worth of the 2018 Notes. The ensuing low cost on the 2018 Notes was amortized over the anticipated time period of the 2018 Notes, utilizing the efficient curiosity technique by the primary notice holder put date, ofFebruary 6, 2023 . Within the first quarter of 2019, the 2018 Notes have been transformed into roughly 19.5 million shares of frequent inventory and the 2018 Notes have been retired. We recorded a lack of$9.0 million on the retirement of the 2018 Notes. This quantity represented the distinction between the truthful worth of the bonds transformed and the carrying worth of the bonds on the time of conversion, together with unamortized premiums, reductions and debt issuance prices. We decided the truthful worth of the 2018 Notes utilizing valuation methods that required us to make assumptions associated to the implied low cost price. InNovember 2019 , we closed a non-public placement to certified institutional patrons pursuant to Rule 144A beneath the Securities Act of$55.0 million mixture principal quantity of our 2019 Notes. Nearly all of the issuance proceeds have been used to retire roughly$50.2 million of mixture principal quantity of our 2014 Notes, leaving roughly$1.1 million of mixture principal quantity of our 2014 Notes excellent. We recorded a lack of$3.0 million on the extinguishment of the 2014 Notes. This quantity represented the distinction between the truthful worth of the 2019 Notes used to extinguish the debt and the carrying worth of the 2014 Notes, together with unamortized debt issuance prices. Because the 2019 Notes don't present for a money conversion function, the 2019 Notes are recorded as debt of their entirety in accordance with ASC 470. For the 2014, 2018 and 2019 Notes, offering-related prices, together with underwriting prices, have been capitalized as debt issuance prices, recorded as an offset to the carrying worth of the associated Notes, and are amortized over the anticipated time period of the associated Notes utilizing the efficient curiosity technique. Inventory-Primarily based Compensation Our board of administrators units the phrases, circumstances, and restrictions associated to our Worker Inventory Buy Plan (ESPP) and the grant of inventory choices, Restricted Share Models (RSUs) and performance-based awards (PSUs) beneath our numerous stock-based plans. Our board of administrators determines the variety of awards to grant and units the vesting standards. For PSUs, our board of administrators units the efficiency targets and different vesting provisions in figuring out the variety of shares or worth of efficiency items and efficiency shares that can be paid out. Such payout might be a perform of the extent to which efficiency targets or different vesting provisions have been achieved. We acknowledge compensation prices for all stock-based awards, together with inventory choices, RSUs, PSUs and inventory bought beneath our ESPP, primarily based on the grant date truthful worth of the award. We acknowledge stock-based compensation expense on a straight-line foundation over the requisite service durations for non-performance-based awards. For RSUs, truthful worth is measured primarily based on the closing truthful market worth of our frequent inventory on the date of grant. For PSUs with a market situation, we used a Monte Carlo simulation pricing mannequin to include the market situation results at our grant date. For PSUs with efficiency circumstances, 51 -------------------------------------------------------------------------------- stock-based compensation expense is acknowledged over the requisite service interval when the achievement of every particular person efficiency objective turns into possible. The truthful worth of choices and inventory purchases beneath ESPP on the grant date is estimated utilizing the Black-Scholes option-pricing mannequin, which requires the use of sure subjective assumptions, together with anticipated time period, volatility, risk-free rate of interest and the truthful worth of our frequent inventory. These assumptions typically require vital judgment. We decide the anticipated volatility primarily based on our historic inventory worth volatility typically commensurate with the estimated anticipated time period of the inventory awards. The anticipated time period of an award relies on historic forfeiture expertise, train exercise, and the phrases and circumstances of the inventory awards. The chance-free rate of interest relies on theU.S. Treasury yield in impact on the time of grant for zero couponU.S. Treasury notes with maturities roughly equal to every grant's anticipated time period. We account for forfeitures as they happen. Earnings Taxes We use the asset and legal responsibility technique to account for revenue taxes. Deferred tax property and liabilities are acknowledged for the long run tax penalties attributable to variations between the monetary assertion carrying quantities of present property and liabilities and their respective tax bases. Deferred tax property and liabilities are measured utilizing enacted tax charges anticipated to use to taxable revenue within the years during which these short-term variations are anticipated to be recovered or settled. Important administration judgment is required in figuring out our provision for revenue taxes, our deferred tax property and liabilities, and any valuation allowance recorded towards our deferred tax property. Our provision for revenue taxes primarily consists of overseas tax expense/profit. As a part of the method of making ready our consolidated monetary statements, we repeatedly monitor the circumstances impacting the anticipated realization of our deferred tax property for every jurisdiction. We take into account all accessible proof, together with historic working ends in every jurisdiction, expectations and dangers related to estimates of future taxable revenue, and ongoing prudent and possible tax planning methods in assessing the necessity for a valuation allowance. A valuation allowance is established to scale back our deferred tax property to the quantity that's extra seemingly than to not be realized. These deferred tax property primarily encompass web working loss carryforwards and analysis and growth tax credit. We intend to keep up such valuation allowance till adequate proof exists to assist its discount. Our deferred tax liabilities primarily encompass e book and tax foundation variations in fastened property and purchased identifiable intangible property. We make estimates and judgments about our future taxable revenue which might be primarily based on assumptions which might be according to our plans and estimates. Ought to the precise quantities differ from our estimates, the quantity of our valuation allowance might be materially impacted. Adjustments in these estimates could lead to vital will increase or decreases to our tax provision in a interval during which such estimates are modified, which in flip would have an effect on web revenue or loss. We acknowledge the monetary assertion results of a tax place when it's extra seemingly than not, primarily based on the technical deserves, that the place might be sustained upon examination. Any curiosity and penalties associated to unsure tax positions are mirrored within the revenue tax provision. AtDecember 31, 2017 , we modified our everlasting reinvestment assertion and can not completely reinvest our overseas earnings exterioramerica . The money generated from a few of our overseas subsidiaries could also be used domestically to fund operations. Any home overseas withholding tax and state taxes which will be due upon future repatriation of earnings isn't anticipated to be vital. Current Accounting Adjustments and Accounting Pronouncements Adoption of New Accounting Steering InAugust 2018 , the FASB issued Accounting Customary Replace (ASU) 2018-15-Intangibles-Goodwill andDifferent-Inside-Use Software program (Subtopic 350-40) which establishes new steerage on the accounting for prices incurred to implement a cloud computing association that's thought of a service association. The brand new steerage requires the capitalization of such prices, aligning it with the accounting for prices related to growing or acquiring internal-use software program. The brand new steerage was efficient for fiscal years starting afterDecember 15, 2019 . The adoption of the brand new steerage didn't have a major affect on our monetary outcomes. InJanuary 2017 , the FASB issued ASU 2017-04, Intangibles-Goodwill and Different (Subject 350): Simplifying the Check for Goodwill Impairment. The ASU eliminates the requirement for an entity to calculate the implied truthful worth of goodwill to measure a goodwill impairment cost. As an alternative, an entity performs its annual, or interim, goodwill impairment testing by evaluating the truthful worth of a reporting unit with its carrying quantity and recording an impairment cost for the quantity by which the carrying quantity exceeds the truthful worth. The ASU was efficient for annual and interim goodwill impairment testing 52 -------------------------------------------------------------------------------- carried out for our fiscal yr startingJanuary 1, 2020 . The adoption of the brand new steerage didn't have a major affect on our monetary outcomes. The FASB issued two ASUs associated to monetary devices - credit score losses. The ASUs issued have been: (i) inJune 2016 , ASU 2016-13, Monetary Devices-Credit score Losses (Subject 326): Measurement of Credit score Losses on Monetary Devices, and (ii) inNovember 2018 , ASU 2018-19-Codification Enhancements to Subject 326, Monetary Devices-Credit score Losses. ASU 2016-13 is meant to enhance monetary reporting by requiring extra well timed recording of credit score losses on loans and different monetary devices held by monetary establishments and different organizations. ASU 2018-19 clarifies that receivables arising from working leases should not inside the scope of the credit score losses commonplace, however somewhat, must be accounted for in accordance with the leasing commonplace. These ASUs have been efficient for fiscal years starting afterDecember 15, 2019 , and interim durations inside these years. The modified retrospective technique was required upon adoption. The brand new steerage was efficient for fiscal years starting afterDecember 15, 2019 . The adoption of the brand new steerage resulted in an adjustment of roughly$0.1 million to scale back the accrued deficit element of stockholders' fairness and reduce present property by the identical quantity in our consolidated stability sheet. Current Accounting Pronouncements InAugust 2020 , the FASB issued ASU 2020-06 Debt-Debt with Conversion and Different Choices (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Personal Fairness (Subtopic 815-40): Accounting for Convertible Devices and Contracts in an Entity's Personal Fairness. The modification to this ASU reduces the variety of accounting fashions for convertible devices and permits extra contracts to qualify for fairness classification, which is anticipated to lead to extra convertible devices being accounted for as a single unit, somewhat than being bifurcated between debt and fairness. The brand new steerage is efficient for fiscal years starting afterDecember 15, 2021 . We're at the moment evaluating the affect of adoption of the brand new steerage on our consolidated monetary statements. InNovember 2019 , the FASB issued ASU 2019-12 Earnings Taxes (Subject 740)-Simplifying the Accounting for Earnings Taxes. The amendments on this replace enhance constant software of and simplify GAAP for Subject 740 by clarifying and amending present steerage for, amongst different objects, intra-period allocation, reporting tax legislation adjustments and losses in interim durations, state and native taxes not totally primarily based on revenue and recognition of deferred tax legal responsibility associated to sure transactions. There's additionally new steerage associated to consolidated group reporting and tax impacts ensuing from enterprise mixtures. The brand new steerage is efficient for fiscal years starting afterDecember 15, 2020 . The adoption of the brand new steerage isn't anticipated to have a major affect on our monetary outcomes. Outcomes of Operations The next desk presents our historic consolidated statements of operations knowledge for the years endedDecember 31, 2020 , 2019, and 2018, and as a proportion of whole income for the respective years (in 1000's): Yr Ended December 31, 2020 2019 2018 Income: Complete income$ 138,144 100 %$ 117,243 100 %$ 112,964 100 % Prices and bills: Price of product income 47,527 34
45 461 39 44 861 39
Price of service income 7,291 5 7,503 6 6,454 6 Analysis and growth 36,461 26
31 640 27 30 030 27
Gross sales, normal and administrative 97,901 71 84,478 72 79,783 71
Complete prices and bills 189,180 136 169,082 144 161,128 143 Loss from operations (51,036) (36) (51,839) (44) (48,164) (43) Curiosity expense (3,572) (3) (4,279) (4) (13,893) (12) Loss from extinguishment of debt - - (12,020) (10) - - Different revenue, web 507 - 1,433 1 637 1 Loss earlier than revenue taxes (54,101) (39) (66,705) (57) (61,420) (54) Earnings tax profit 1,081 1 1,915 2 2,407 2 Web loss$ (53,020) (38) %$ (64,790) (55) %$ (59,013) (52) % 53
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Returned
We generate income primarily from gross sales of our services, growth agreements, license and royalty agreements, and grants. Our product income consists of gross sales of devices and consumables. Consumables income are largely pushed by the scale of our put in base of devices and the annual degree of pull-through per instrument. Service income is linked to the gross sales and energetic put in base of our devices as our service income primarily consists of post-warranty service contracts, preventive upkeep plans, instrument components, set up and coaching. We promote our merchandise to main tutorial and authorities laboratories, in addition to pharmaceutical, biotechnology, medical, plant and animal analysis organizations and medical laboratories worldwide. Improvement Income. EfficientMarch 31, 2020 , we signed an OEM Provide and Improvement Settlement (Improvement Settlement) with a buyer. Underneath the Improvement Settlement,Fluidigm will develop merchandise primarily based on our microfluidics know-how. The Improvement Settlement supplies up-front and periodic milestone funds of as much as$11.7 million through the growth stage. The event stage is anticipated to final roughly one yr from the date of the Improvement Settlement. We acknowledged$8.8 million of growth income from this settlement for the yr endedDecember 31, 2020 . We acknowledge income beneath the Improvement Settlement utilizing an enter technique primarily based on our prices incurred relative to the entire anticipated price which determines the extent of our progress towards satisfaction of our obligations beneath the settlement. Prices related to the Improvement Settlement are recorded in analysis and growth expense. Grant Income. We obtain grants to carry out analysis and growth actions over contractually outlined durations. Grant income within the present yr is attributable to a grant settlement entered into within the second half of 2019, which is anticipated to finish within the first half of 2021. Prices related to grant agreements are recorded in analysis and growth expense. License and Royalty Income. InMarch 2020 , we entered into an settlement to settle mental property infringement claims and acquired a$3.5 million fee in alternate for a perpetual license beneath sure of our mental property. The settlement is taken into account a multiple-element association with every aspect accounted for individually. Accordingly,$3.1 million of the proceeds was acknowledged as license income and$0.4 million was offset towards authorized prices. No single buyer represented greater than 10% of our whole income for 2020, 2019, or 2018. Income from our 5 largest prospects was 23% of whole income for 2020 and 17% for each the years endedDecember 31, 2019 and 2018. The next desk presents our income by supply for the years endedDecember 31, 2020 , 2019, and 2018, and as a proportion of whole income for the respective years (in 1000's): Yr Ended December 31, Change 2020 2019 2018 2020 2019 Income: Devices$ 45,536 33 %$ 50,004 43 %$ 45,491 40 % (9) % 10 % Consumables 54,408 39 45,412 39 48,159 43 20 % (6) % Product income 99,944 72 95,416 82 93,650 83 5 % 2 % Service income 22,579 16 21,277 18 19,314 17 6 % 10 % Product and repair income 122,523 88 116,693 100 112,964 100 5 % 3 % Improvement income 8,865 6 - - - - NA NA Grant income 3,593 3 550 - - - 553 % NA License income 3,163 3 - - - - NA NA Complete income$ 138,144 100 %$ 117,243 100 %$ 112,964 100 % 18 % 4 % The next desk presents our whole income by geographic space of our prospects and as a proportion of whole income for every year offered (in 1000's): Yr Ended December 31, Change 2020 2019 2018 2020 2019 Americas$ 74,586 54 %$ 47,016 40 %$ 51,172 46 % 59 % (8) % EMEA 37,776 27 40,024 34 36,617 32 (6) % 9 % Asia-Pacific 25,782 19 30,203 26 25,175 22 (15) % 20 % Complete income$ 138,144 100 %$117,243 100 %$112,964 100 % 18 % 4 % 54 -------------------------------------------------------------------------------- TheAmericas income consists of income generated inamerica of$72.0 million ,$43.4 million , and$48.1 million for 2020, 2019 and 2018, respectively.Asia-Pacific income consists of gross sales to prospects inChina of$11.1 million ,$15.4 million and$14.0 million for 2020, 2019 and 2018, respectively. There was no overseas nation or jurisdiction with gross sales in extra of 10% of whole income in 2020. Aside fromChina , no different overseas nation or jurisdiction had gross sales in extra of 10% of our whole income through the years 2019 and 2018. The next part consists of administration dialogue and evaluation for the fiscal yr endedDecember 31, 2020 . Confer with Half I Merchandise 7 of the Annual Report on Type 10-Ok for the fiscal yr endedDecember 31, 2019 , filed with theSEC onFebruary 27, 2020 , for a dialogue of the comparative outcomes for 2019 and 2018, which dialogue of comparative outcomes is included by reference into this Type 10-Ok. Complete Income. Complete income elevated by$20.9 million or 18%, to$138.1 million for 2020 in comparison with$117.2 million for 2019.Americas income elevated by 59%, pushed by gross sales of our Advanta Dx SARS-CoV-2 RT-PCR take a look at and associated gross sales of microfluidics devices; growth income; and grant income; partially offset by decrease mass cytometry product gross sales. COVID-19 microfluidics revenues solely partially offset decrease mass cytometry instrument revenues for EMEA, leading to a 6% decline in EMEA revenues. Stronger European currencies in 2020 in comparison with 2019 added roughly 2% to EMEA's reported revenues. The 15% lower inAsia-Pacific revenues is because of decreases in income in all product classes because of the pandemic and shelter-in-place orders. On a company-wide foundation, stronger overseas alternate charges positively impacted revenues by lower than 1% for 2020 in comparison with 2019. 55 -------------------------------------------------------------------------------- Product and Service Income. The next tables current the cut up of product and repair income between mass cytometry and microfluidic product classes and as a proportion of the respective class's whole product and repair income for every year offered (in 1000's): Yr Ended December 31, Change 2020 2019 2018 2020 2019 Mass cytometry: Devices$ 28,484 46 %$ 41,575 57 %$ 34,308 58 % (31) % 21 % Consumables 18,023 29 17,850 24 14,962 25 1 19 Complete product income 46,507 75 59,425 81 49,270 83 (22) 21 Service income 15,625 25 13,895 19 10,230 17 12 36 Complete product and repair income$ 62,132 100 %$ 73,320 100 %$ 59,500 100 % (15) % 23 % Yr Ended December 31, Change 2020 2019 2018 2020 2019 Microfluidics: Devices$ 17,053 28 %$ 8,429 19 %$ 11,183 21 % 102 % (25) % Consumables 36,384 60 27,562 64 33,197 62 32 (17) Complete product income 53,437 88 35,991 83 44,380 83 48 (19) Service income 6,954 12 7,382 17 9,084 17 (6) (19) Complete product and repair income$ 60,391 100 %$ 43,373 100 %$ 53,464 100 % 39 % (19) % The decline in mass cytometry instrument income was primarily attributable to decrease volumes of instrument gross sales because of ordering delays created by lab closures in response to the COVID-19 pandemic and, to a lesser extent, the affect of decrease common unit promoting costs on mass cytometry devices. Prospects are additionally shifting their sources to COVID-19 associated initiatives. Mass cytometry consumables revenues benefited from COVID-19 immune profiling research.Microfluidics revenues elevated because of gross sales of our newly developed SARS-CoV-2 diagnostic take a look at and associated gross sales of instrument techniques. Diagnostic income, comprised of each consumables and devices was$22.4 million in 2020, and greater than offset the decline in different microfluidics income brought on by a pandemic-related slowdown in key account exercise. The COVID-19 pandemic remains to be ongoing, and though we anticipate it to dissipate in 2021 as vaccinations proliferate worldwide, the timing and tempo of the restoration stay unsure. Reallocations of analysis budgets to COVID-related initiatives that began in 2020 are nonetheless in place as we enter 2021, and these persevering with funds reallocations and another pandemic-related impacts could lead to variability in sequential quarterly income progress. Product and Service Price, Product and Service Gross Revenue, and Product and Service Margin. Price of product income consists of manufacturing prices incurred within the manufacturing course of, together with element supplies, labor and overhead, set up, packaging, and supply prices. As well as, price of product income consists of amortization of developed know-how and intangibles, royalty prices for licensed applied sciences included in our merchandise, guarantee, provisions for slow-moving and out of date stock, and stock-based compensation expense. Our price of product income and associated product margin could fluctuate relying on the capability utilization of our manufacturing amenities in response to market circumstances and the demand for our merchandise. Price of service income consists of direct labor hours, overhead, and instrument components. Our price of service income and associated service margin could fluctuate relying on the variability in materials and labor prices of servicing devices. 56 -------------------------------------------------------------------------------- The next desk presents our product and repair price, product and repair gross revenue, and product and repair margin for every year offered (in 1000's): Yr Ended December 31, Change Change 2020 2019 2018 2020 2019 Price of product income$ 47,527 $ 45,461 $ 44,861 5 % 1 % Price of service income 7,291 7,503 6,454 (3) % 16 %
Price of revenue from services
$ 51,315 4 % 3 % Product and repair gross revenue$ 67,705 $ 63,729 $ 61,649 6 % 3 % Product and repair margin 55.3 % 54.6 % 54.6 % 0.7 ppts - ppts. Product and repair margin elevated by 0.7 proportion factors throughout 2020 in comparison with 2019. The affect of spreading fastened depreciation and amortization over the next income base contributed 0.6 proportion factors of the development in margin. The affect of decrease common unit promoting costs on mass cytometry devices was offset by decrease service prices and decrease manufacturing prices related to mass cytometry consumables. Product and repair margin was unchanged in 2019 in comparison with the prior yr. Increased capability utilization, in addition to the affect of spreading fastened depreciation and amortization over the next income base, was offset by larger stock reserves, unfavorable product combine and decrease common promoting costs on mass cytometry merchandise. Working Bills The next desk presents our working bills for every year offered (in 1000's): Yr Ended December 31, Change 2020 2019
2018 2020 2019
Analysis and growth$ 36,461 $ 31,640
Gross sales, normal and administrative 97,901 84,478
79,783 16% 6%
Complete working bills$ 134,362 $ 116,118
Analysis and Improvement Analysis and growth expense consists primarily of compensation-related prices, product growth and materials bills, and different allotted amenities and knowledge know-how bills. Our analysis and growth efforts have centered totally on enhancing our applied sciences and supporting growth and commercialization of latest and present services. Analysis and growth expense additionally consists of prices incurred together with analysis grants and growth preparations. Now we have made substantial investments in analysis and growth since our inception and anticipate to proceed to take action. We consider that our continued funding in analysis and growth is crucial to our long-term aggressive place and that these bills could improve in future durations. Analysis and growth expense elevated by$4.8 million , or 15%, to$36.5 million for 2020 in comparison with$31.6 million for 2019. Will increase are primarily due to larger compensation prices, together with larger worker incentive compensation and stock-based compensation prices, and outdoors service prices associated to growth and grant initiatives. Proceeds of the NIH Contract offset$1.4 million of analysis and growth prices. Promoting, Normal and Administrative Promoting, normal and administrative expense consists primarily of personnel prices for our gross sales and advertising and marketing, enterprise growth, finance, authorized, human sources, info know-how, and normal administration, in addition to skilled companies, akin to authorized and accounting companies. Promoting, normal and administrative expense elevated by$13.4 million , or 16%, to$97.9 million for 2020 in comparison with$84.5 million for 2019. The rise in expense is primarily attributable to larger compensation prices, together with larger worker incentive compensation and stock-based compensation, and better authorized prices. As well as, we incurred$4.9 million of elevated amenities prices reflecting prices related to our new lease, efficientMarch 2020 , for our company headquarters and associated transferring bills. Lease charges had elevated since coming into into our earlier, now expired, lease. Journey prices fell 57 --------------------------------------------------------------------------------$3.6 million in comparison with the prior interval, whereas prices associated to commerce exhibits and different occasions fell$1.9 million because of the cancellation of in-person occasions in mild of the COVID-19 pandemic. Curiosity Expense, Loss from Extinguishment of Debt and Different Earnings, Web The next desk presents these things for every year offered (in 1000's): Yr Ended December 31, Change 2020 2019 2018 2020 2019 Curiosity expense$ (3,572) $ (4,279) $ (13,893) 17 % 69 %
Loss from extinguishment of debt - (12,020) - (100) % NA
Different revenue, web 507 1,433 637 65 % (125) %
Complete $ (3,065) $ (14,866) $ (13,256) 79 % (12) %
In November 2019 , we issued $55.0 million mixture principal quantity of our 2019
Notes. Web proceeds of the 2019 Notes issuance have been used primarily to retire
$50.2 million mixture principal quantity of our 2014 Notes. The 2019 Notes have
an efficient rate of interest of 6.2% in comparison with the 2014 Notes, which have an
efficient rate of interest 3.0%.
In February 2014 , we closed an underwritten public providing of $201.3 million
mixture principal quantity of our 2014 Notes. In March 2018 , we entered into
separate privately negotiated transactions with sure holders of our 2014
Notes to alternate $150.0 million in mixture principal quantity of the 2014 Notes
for our 2018 Notes. The 2018 Notes had an efficient rate of interest of 12.3%. In
the primary quarter of 2019, the 2018 Notes have been transformed into 19.5 million
shares of our frequent inventory and the 2018 Notes have been retired. We acknowledged a loss
of $9.0 million on the conversion of 2018 Notes, which was included in loss on
extinguishment of debt. This quantity represents the distinction between the truthful
worth of the bonds transformed and the carrying worth of the bonds on the time of
conversion.
Curiosity expense of $3.6 million for the twelve months ended December 31, 2020
consists primarily of curiosity on $55.0 million of 2019 Notes, whereas curiosity
expense of $4.3 million for the twelve months ended December 31, 2019 included
each the curiosity on $51.3 million of 2014 Notes and a partial quarter of
curiosity expense on $150.0 million of 2018 Notes, which accrued at an efficient
price of 12.3%. The decrease curiosity expense of $3.6 million for the twelve months
ended December 31, 2020 in comparison with $4.3 million for the twelve months ended
December 31, 2019 displays the affect of upper debt balances and better
rates of interest for the twelve months ended December 31, 2019 in comparison with the
twelve months ended December 31, 2020 .
Different revenue, web primarily consists of curiosity revenue and positive factors or losses on
overseas alternate. Different revenue, web, of $0.5 million for 2020 is primarily
attributable to $0.2 million of curiosity revenue, and $0.2 million of overseas
alternate positive factors.
Earnings Tax Profit
Our tax provision is usually pushed by three parts: (i) tax provision
from our overseas operations, (ii) tax advantages from the amortization of
acquisition-related intangible property, and (iii) discrete objects, akin to adjustments
in valuation allowances or changes upon finalization of tax returns.
Relying on the relative worth of those parts, we are able to have both a tax
profit or expense for any given interval.
We recorded a tax advantage of $1.1 million , or an efficient tax price advantage of
2.0%, for the yr ended December 31, 2020 . The tax profit was principally due
to the amortization of our acquisition-related deferred tax liabilities,
partially offset by a provision from our overseas operations.
Liquidity and Capital Sources
Sources of Liquidity
As of December 31, 2020 , our principal sources of liquidity consisted of $68.5
million of money and money equivalents, in addition to $1.0 million of restricted money
and $15.0 million of availability beneath our Revolving Credit score Facility.
The next desk presents our money stream abstract for every year offered (in
1000's):
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Yr Ended December 31,
2020 2019 2018
Money stream abstract:
Web money utilized in working actions $ (15,417) $ (35,210) $ (25,201)
Web money offered by (utilized in) investing actions 39,975 (39,301) 4,719
Web money offered by financing actions 20,857 2,790 57,660
Web improve (lower) in money, money equivalents and
restricted money 45,800 (71,665) 37,345
Web Money Used in Working Actions. We derive money flows from operations
primarily from money collected from the sale of our services, and
license agreements and grants. Our money flows from working actions are additionally
considerably influenced by our use of money for working bills and dealing
capital to assist the enterprise. Now we have traditionally skilled destructive money
flows from working actions as we've expanded our enterprise and constructed our
infrastructure domestically and internationally.
Web money utilized in working actions in 2020 was $15.4 million and consisted of
web lack of $53.0 million much less non-cash changes of $35.2 million , and a web
improve in property and liabilities of $2.4 million . Non-cash objects embody
stock-based compensation expense of $14.5 million , amortization of developed
know-how of $11.9 million , depreciation and amortization of $4.0 million , and
lease amortization of $2.0 million . Will increase in inventories and accounts
receivable balances characterize working capital will increase because of larger revenues.
Increased incentive compensation and different accruals largely offset these will increase.
Web money utilized in working actions in 2019 was $35.2 million and consisted of
web lack of $64.8 million much less non-cash changes of $43.2 million , and a web
improve in property and liabilities of $13.6 million . Non-cash objects primarily
included a loss from extinguishment of debt of $12.0 million , amortization of
developed know-how of $11.2 million , stock-based compensation expense of $11.4
million , and depreciation and amortization of $4.6 million . The online improve in
property and liabilities was primarily because of decrease accrued liabilities for
retention bonuses and different variable compensation.
Web money utilized in working actions in 2018 was $25.2 million and consisted of
web lack of $59.0 million much less non-cash changes of $37.4 million , and a web
discount in property and liabilities of $3.6 million . Non-cash objects primarily
included amortization of developed know-how of $11.2 million , stock-based
compensation of $11.0 million and depreciation and amortization of $5.4 million .
The online improve in property and liabilities was primarily because of decrease accrued
liabilities for retention bonuses.
Web Money Offered by (Utilized in) Investing Actions. Our main investing
actions encompass purchases, gross sales, and maturities of our short-term
investments and capital expenditures for manufacturing, laboratory, laptop
gear and software program to assist our infrastructure and workforce. We anticipate to
proceed to incur prices for capital expenditures to enhance manufacturing
efficiencies and strengthen info know-how and community safety.
Nonetheless, we could select to lower or defer sure capital expenditures and
growth actions, whereas additional optimizing our group.
Web money offered by investing actions in 2020 was $40.0 million and consists of
$36.8 million of proceeds from the gross sales and maturities of investments as properly
as $21.0 million of proceeds from the NIH Contract, reflecting the portion
of the proceeds from the NIH Contract attributable to the capability enlargement.
These inflows have been partially offset by capital expenditures of $12.7 million ,
together with $10.2 million of capital expenditures funded by the NIH Contract to
develop our Singapore manufacturing facility, and $5.2 million of web money paid
for the InstruNor acquisition.
Complete proceeds from the NIH Contract are anticipated to be $34.0 million , of which
we acquired $25.4 million in 2020. We anticipate to incur the stability of the capital
expenditures for the manufacturing capability enlargement and obtain the remaining
proceeds from the NIH , topic to passable completion of all remaining
milestones, in 2021.
Web money utilized in investing actions in 2019 was $39.3 million , which included
purchases of investments of $62.4 million and capital expenditures of $2.5
million to assist our industrial and manufacturing operations, partially offset
by proceeds from maturities of investments of $25.6 million .
Web money offered by investing actions in 2018 was $4.7 million , which
included proceeds from maturities of investments of $6.5 million , partially
offset by purchases of investments of $1.5 million , and capital expenditures of
$0.4 million to assist our industrial and manufacturing operations.
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Web Money Offered by Financing Actions. We generated money from financing
actions of $20.9 million throughout 2020. Proceeds from our ATM fairness providing
have been $20.2 million , web of commissions and providing prices. Proceeds from our
ESPP program and inventory choices workouts have been largely offset by funds of debt
issuance prices and revenue tax withholding associated to web share settlement of
fairness awards.
We generated money from financing actions of $2.8 million throughout 2019. $51.8
million of proceeds from a brand new $55.0 million debt issuance have been used to retire
2014 Notes, as mentioned under in additional element. Funds of debt and fairness
issuance prices of $1.9 million have been partially offset by money inflows from fairness
applications.
We generated money from financing actions of $57.7 million throughout 2018, and
roughly $59.5 million was generated from a public providing of our frequent
inventory. The rest displays the proceeds from inventory possibility workouts and ESPP
purchases, offset by debt and fairness issuance prices and funds of taxes for
the online settlement of fairness awards.
Capital Sources. At December 31, 2020 and December 31, 2019 , our working
capital, excluding deferred revenues and restricted money, was $76.9 million and
$74.0 million , respectively, together with money and money equivalents of $68.5
million and $21.7 million , respectively, and short-term investments of $37.0
million at December 31, 2019 .
In February 2014 , we closed an underwritten public providing of $201.3 million in
mixture principal quantity of our 2014 Notes. In March 2018 , we entered into
privately negotiated transactions with sure holders of our 2014 Notes to
alternate $150.0 million in mixture principal quantity of the 2014 Notes for
$150.0 million in mixture principal quantity of 2018 Notes. Following the
alternate transactions, roughly $51.3 million in mixture principal quantity
of 2014 Notes remained excellent.
Within the first quarter of 2019, we acquired notices from holders of the 2018 Notes
electing to voluntarily convert roughly $138.1 million in mixture
principal quantity of the 2018 Notes. In February 2019 , we notified trustee U.S.
Financial institution Nationwide Affiliation of our intention to train our issuer's conversion
possibility with respect to the remaining roughly $11.9 million in mixture
principal quantity of 2018 Notes. In whole, $150.0 million of the 2018 Notes have been
transformed into roughly 19.5 million shares of our frequent inventory and the
2018 Notes have been retired.
In November 2019 , we closed a non-public placement to certified institutional
patrons pursuant to Rule 144A beneath the Securities Act of $55.0 million mixture
principal quantity of 2019 Notes. Web proceeds of the 2019 Notes issuance have been
$52.7 million , after deductions for commissions and different debt issuance prices.
$51.8 million of the proceeds was used to retire $50.2 million mixture
principal quantity of our 2014 Notes, leaving $1.1 million of mixture principal
quantity of our 2014 Notes excellent. The remaining money proceeds from the
issuance of the 2019 Notes have been used for normal company functions. Pursuant to
the Indenture governing the 2014 Notes, holders of the 2014 Notes have the
proper, topic to sure circumstances laid out in such indenture, to require the
Firm to buy their 2014 Notes starting in February 2021 . The non-public
placement of the 2019 Notes, and concurrent repurchase of a portion of the 2014
Notes, had the impact of refinancing a portion of the Firm's excellent debt
beneath the 2014 Notes to December 2024 .
The 2019 Notes bear curiosity at 5.25% every year, payable semiannually on June 1
and December 1 of every yr, starting on June 1, 2020 . The Notes will mature on
December 1, 2024 , except earlier repurchased or transformed pursuant to their
phrases. The 2019 Notes might be convertible on the possibility of the holder at any
level prior to shut of enterprise on the second scheduled buying and selling day previous
the maturity date. The preliminary conversion price of the Notes is 344.8276 shares
of the Firm's frequent inventory per $1,000 principal quantity of 2019 Notes (which
is equal to an preliminary conversion worth of $2.90 per share). The conversion
price might be topic to adjustment upon the incidence of sure specified
occasions however is not going to be adjusted for any accrued and unpaid curiosity.
The 2019 Notes may even be convertible at our possibility upon sure circumstances in
accordance with the phrases of the indenture governing the 2019 Notes. On or after
December 1, 2021 to December 1, 2022 , if the worth of the Firm's frequent inventory
has equaled or exceeded 150% of the Conversion Worth (as outlined within the
indenture, at the moment $2.90 , topic to adjustment) for a specified variety of
days (Issuer's Conversion Choice), we could, at our possibility, elect to transform the
2019 Notes in complete however not partially into shares of the Firm, decided in
accordance with the phrases of the indenture. On or after December 1, 2022 , if the
worth of the Firm's frequent inventory has equaled or exceeded 130% of the
Conversion Worth then in impact for a specified variety of days, we could, at our
possibility, elect to transform the 2019 Notes in complete however not partially into shares of
the Firm, decided in accordance with the phrases of the indenture.
The foregoing summaries of the 2014 Notes, the 2018 Notes, the 2019 Notes and
the alternate transactions accomplished in March 2018 and November 2019 should not
full and are certified of their entirety by the relevant indentures, kinds
of worldwide notes, and different agreements and paperwork filed with the SEC .
On August 2, 2018 , we entered into our Revolving Credit score Facility with SVB, with
a maturity date of August 2, 2020 . The Revolving Credit score Facility is
collateralized by considerably all our property, aside from mental
property. Excellent loans
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beneath the Revolving Credit score Facility bear curiosity, on the larger of (i) prime
price plus 0.50% or (ii) 5.50%. Quantities drawn beneath the Revolving Credit score
Facility might be used for working capital and normal company functions.
On April 21, 2020 , we entered into the Third Modification to Mortgage and Safety
Settlement with SVB (the Modification), which amends the Revolving Credit score Settlement.
The Modification extends the maturity date by two years, to August 2, 2022 . We additionally
amended the rate of interest to be the larger of (i) prime price (as usually
outlined), plus 0.50%, floating, and (ii) 5.25%. Curiosity on any excellent
loans continues to be due and payable month-to-month and the principal stability is due
at maturity although loans might be pay as you go at any time with out penalty. Annual
administration charges are unchanged. The Modification additionally consists of numerous
administrative adjustments.
As of December 31, 2020 , whole availability beneath the Revolving Credit score Facility
was $15.0 million . We at the moment haven't any excellent debt beneath the Revolving
Credit score Facility, and we're in compliance with all of the phrases and circumstances of
the Revolving Credit score Settlement governing the Revolving Credit score Facility. See Observe
9 to our consolidated monetary statements for extra details about the
Revolving Credit score Facility.
We consider our present money, money equivalents, and investments might be
adequate to fulfill our working capital and capital expenditure wants for at
least the subsequent 18 months. Nonetheless, we could expertise decrease than anticipated money
generated from working actions or larger than anticipated capital
expenditures, price of income, or working bills, and we may have to boost
further capital to fund our operations, additional our analysis and growth
actions, or purchase or put money into a enterprise. Our future funding necessities
will rely upon many components, together with market acceptance of our merchandise, the
price of our analysis and growth actions, the price of submitting and
prosecuting patent purposes, the associated fee related to litigation or disputes
referring to mental property rights or in any other case, the associated fee and timing of
regulatory clearances or approvals, if any, the associated fee and timing of creating
further gross sales, advertising and marketing, and distribution capabilities, the associated fee and timing
of creating further technical assist capabilities, and the impact of
competing technological and market developments. Sooner or later, we could purchase
companies or applied sciences from third events, and we could determine to boost
further capital by debt or fairness financing to the extent we consider
that is essential to efficiently full these acquisitions.
If we require further funds sooner or later, we could not have the ability to get hold of such
funds on acceptable phrases, or in any respect, and our capacity to boost further
capital could also be adversely impacted by potential worsening international financial
circumstances and the current disruptions to and volatility within the credit score and
monetary markets in america and worldwide ensuing from the COVID-19
pandemic. If we elevate further funds by issuing fairness securities, our
stockholders might expertise dilution. Debt financing, if accessible, could
contain covenants proscribing our operations or our capacity to incur further
debt. Any further debt or fairness financing that we elevate could include phrases
that aren't favorable to us or our stockholders. If we should not have, or should not
in a position to get hold of, adequate funds, we could should delay growth or
commercialization of our merchandise or license to 3rd events the rights to
commercialize merchandise or applied sciences that we might in any other case search to
commercialize. We additionally could have to scale back advertising and marketing, buyer assist, analysis
and growth, or different sources dedicated to our merchandise.
Off-Stability Sheet Preparations
Since our inception, we've not had any off-balance sheet preparations as
outlined in Merchandise 303(a)(4) of the SEC's Regulation S-Ok.
Contractual Obligations and Commitments
The next summarizes our contractual obligations as of December 31, 2020 (in
1000's):
Funds Due by Interval
Lower than 1
Complete Yr 1-3 Years 3-5 Years Thereafter
Debt obligations $ 67,851 $
3 411
Working lease obligations, web
68,272 7,565 14,205 14,594 31,908
Buy obligations 12,928 12,928 - - -
Complete $ 149,051 $ 23,904 $ 20,012 $ 72,514 $ 32,621
Debt obligations embody the principal quantity of the Notes and curiosity funds
to be made beneath the Notes. Though the 2014 and 2019 Notes mature in 2034 and
2024, respectively, they are often transformed into shares of our frequent inventory prior
to maturity if sure circumstances are met. As well as, holders of the 2014
Notes could require us to repurchase all or a portion of their 2014 Notes on every
of February 6, 2021 , February 6, 2024 , and February 6, 2029 , at a repurchase
worth in money equal to 100% of the principal quantity of the 2014 Notes plus
accrued and unpaid curiosity. On February 6, 2021 , holders of $0.5 million
61
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of the 2014 Notes precipitated us to repurchase their notes in accordance with this provision. This reimbursement is mirrored within the above commitments schedule as due in lower than one yr. See Observe 9 to our consolidated monetary statements for further info concerning the phrases of the Notes. Our working lease obligations primarily relate to leases for our company headquarters and leases for manufacturing and workplace area for our overseas subsidiaries. We at the moment lease amenities and gear beneath non-cancellable lease agreements expiring at numerous occasions by 2027. Our lease funds are expensed on a straight-line foundation over the lifetime of the leases. Rental expense beneath working leases, web of amortization of lease incentive, totaled$9.7 million ,$6.1 million and$5.0 million , for 2020, 2019, and 2018 respectively. Buy obligations encompass contractual and legally binding commitments to buy items and companies. Nearly all of our contracts are cancellable with little or no discover or penalty. Nonetheless, as soon as a vendor has incurred prices to fulfill a contract with us, and which prices can't be in any other case deployed, we're responsible for these prices upon cancellation. For instance, if a provider has bought uncooked supplies to supply a great for us, and people items can't be returned or in any other case utilized by our vendor, we're obligated to reimburse them for the prices they incurred. Buy obligations additionally consists of$10.4 million for capital expenditures associated to the NIH Contract. Now we have entered into a number of license and patent agreements. Underneath these agreements, we pay annual license upkeep charges, non-refundable license issuance charges, and royalties as a proportion of web gross sales for the sale or sublicense of merchandise utilizing the licensed know-how. Future funds associated to these license agreements haven't been included within the contractual obligations desk above because the time period over which the long run license funds might be required to be made, and the quantity of such funds, are indeterminable. We do not anticipate the license funds to be materials in any specific yr.
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