$PACB
PACIFIC BIOSCIENCES OF CALIFORNIA, INC.

2019 Q4 Form 10-K Financial Statement

#000129913020000008 Filed on February 28, 2020

View on sec.gov

Income Statement

Concept 2019 Q4 2019 Q1 2019
Revenue $27.93M $16.43M $90.89M
YoY Change 43.04% -15.17% 15.6%
Cost Of Revenue $15.00M $11.31M $56.32M
YoY Change 8.85% -6.31% 5.2%
Gross Profit $12.93M $5.117M $34.58M
YoY Change 125.06% -29.87% 37.77%
Gross Profit Margin 46.3% 31.15% 38.04%
Selling, General & Admin $16.58M $19.77M $75.49M
YoY Change -17.55% 32.36% 18.9%
% of Gross Profit 128.21% 386.28% 218.33%
Research & Development $14.27M $15.49M $59.63M
YoY Change -12.24% -5.06% -4.74%
% of Gross Profit 110.35% 302.62% 172.46%
Depreciation & Amortization $1.790M $1.796M $7.265M
YoY Change 0.56% -0.33% 0.69%
% of Gross Profit 13.84% 35.1% 21.01%
Operating Expenses $30.85M $35.25M $135.1M
YoY Change -15.18% 12.82% 7.17%
Operating Profit -$17.92M -$30.13M -$100.5M
YoY Change -41.49% 25.83% -0.44%
Interest Expense -$680.0K $625.0K $2.611M
YoY Change 7.94% 7.57% 7.76%
% of Operating Profit
Other Income/Expense, Net $500.0K $435.0K $1.022M
YoY Change 11.11% 23.93% 20.52%
Pretax Income -$90.00K -$30.32M -$84.13M
YoY Change -99.71% 25.39% -18.4%
Income Tax
% Of Pretax Income
Net Earnings -$91.00K -$30.32M -$84.13M
YoY Change -99.7% 25.41% -17.97%
Net Earnings / Revenue -0.33% -184.62% -92.57%
Basic Earnings Per Share -$0.20 -$0.55
Diluted Earnings Per Share -$588.00 -$0.20 -$0.55
COMMON SHARES
Basic Shares Outstanding 153.0M 151.3M 152.5M
Diluted Shares Outstanding 151.3M 152.5M

Balance Sheet

Concept 2019 Q4 2019 Q1 2019
SHORT-TERM ASSETS
Cash & Short-Term Investments $60.08M $91.75M $49.10M
YoY Change -40.43% 15.7% -52.05%
Cash & Equivalents $29.63M $38.21M $29.60M
Short-Term Investments $30.46M $53.54M $19.50M
Other Short-Term Assets $3.400M $2.800M $3.400M
YoY Change 21.43% 33.33% 21.43%
Inventory $13.31M $19.65M $13.30M
Prepaid Expenses
Receivables $15.27M $7.279M $15.30M
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $81.05M $112.6M $81.00M
YoY Change -38.44% -2.69% -38.5%
LONG-TERM ASSETS
Property, Plant & Equipment $30.07M $33.61M $62.90M
YoY Change -11.75% -8.41% 84.46%
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets $42.00K $65.00K $4.000M
YoY Change -2.33% -98.56% -11.11%
Total Long-Term Assets $66.94M $72.99M $67.00M
YoY Change 73.35% 77.16% 73.58%
TOTAL ASSETS
Total Short-Term Assets $81.05M $112.6M $81.00M
Total Long-Term Assets $66.94M $72.99M $67.00M
Total Assets $148.0M $185.6M $148.0M
YoY Change -13.09% 18.28% -13.09%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $8.368M $8.740M $8.400M
YoY Change 24.23% 1.63% 25.37%
Accrued Expenses $13.24M $11.16M $17.10M
YoY Change 3.27% 9.39% 33.59%
Deferred Revenue $7.600M $6.428M
YoY Change 16.26%
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due $15.90M $14.90M $15.90M
YoY Change
Total Short-Term Liabilities $49.15M $45.10M $49.20M
YoY Change 82.83% 81.11% 82.9%
LONG-TERM LIABILITIES
Long-Term Debt $0.00 $0.00 $0.00
YoY Change -100.0% -100.0% -100.0%
Other Long-Term Liabilities $43.90M $45.60M $43.90M
YoY Change 198.64% 196.1% 198.64%
Total Long-Term Liabilities $43.90M $45.60M $43.90M
YoY Change 49.32% 55.63% 49.32%
TOTAL LIABILITIES
Total Short-Term Liabilities $49.15M $45.10M $49.20M
Total Long-Term Liabilities $43.90M $45.60M $43.90M
Total Liabilities $93.07M $90.73M $93.10M
YoY Change 65.56% 67.39% 65.66%
SHAREHOLDERS EQUITY
Retained Earnings -$1.066B -$1.012B
YoY Change 8.57% 15.11%
Common Stock $153.0K $153.0K
YoY Change 2.0%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $54.92M $94.85M $54.90M
YoY Change
Total Liabilities & Shareholders Equity $148.0M $185.6M $148.0M
YoY Change -13.09% 18.28% -13.09%

Cashflow Statement

Concept 2019 Q4 2019 Q1 2019
OPERATING ACTIVITIES
Net Income -$91.00K -$30.32M -$84.13M
YoY Change -99.7% 25.41% -17.97%
Depreciation, Depletion And Amortization $1.790M $1.796M $7.265M
YoY Change 0.56% -0.33% 0.69%
Cash From Operating Activities -$18.18M -$25.31M -$78.31M
YoY Change -4.21% 34.84% 17.89%
INVESTING ACTIVITIES
Capital Expenditures -$140.0K $1.253M $2.836M
YoY Change 180.0% 264.24% 52.97%
Acquisitions
YoY Change
Other Investing Activities -$3.270M $39.24M $64.88M
YoY Change -40.0% -629.55% -277.46%
Cash From Investing Activities -$3.410M $37.98M $62.05M
YoY Change -38.22% -590.18% -261.52%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $6.690M $8.548M
YoY Change 169.0% -11.44%
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 18.13M 6.690M 26.55M
YoY Change 243.37% -81.14% -75.23%
NET CHANGE
Cash From Operating Activities -18.18M -25.31M -78.31M
Cash From Investing Activities -3.410M 37.98M 62.05M
Cash From Financing Activities 18.13M 6.690M 26.55M
Net Change In Cash -3.460M 19.36M 10.28M
YoY Change -82.0% 116.3% 340.01%
FREE CASH FLOW
Cash From Operating Activities -$18.18M -$25.31M -$78.31M
Capital Expenditures -$140.0K $1.253M $2.836M
Free Cash Flow -$18.04M -$26.57M -$81.15M
YoY Change -4.7% 38.97% 18.84%

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<div> <div style="margin-left:0pt;margin-right:0pt;"> <p style="margin:13.5pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-weight:bold;">NOTE 2. TERMINATION OF MERGER WITH ILLUMINA</font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">On November 1, 2018, we entered into a</font><font style="display: inline;">&nbsp;</font><font style="display: inline;">Merger Agreement with Illumina</font><font style="display: inline;">&nbsp;</font><font style="display: inline;">and FC Ops Corp.</font><font style="display: inline;">&nbsp;</font><font style="display: inline;">We, Illumina and Merger Subsidiary entered into </font><font style="display: inline;">the </font><font style="display: inline;">Amendment on September&nbsp;25, 2019. The Amendment, among other things, extended the End Time (as defined in the Merger Agreement) to December 31, 2019. 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CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseExcludingExchangeRateEffect
2337000
CY2019 us-gaap Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents Period Increase Decrease Excluding Exchange Rate Effect
CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseExcludingExchangeRateEffect
10283000
CY2018Q4 us-gaap Commitments And Contingencies
CommitmentsAndContingencies
CY2019Q4 us-gaap Commitments And Contingencies
CommitmentsAndContingencies
CY2019 us-gaap Common Stock Dividends Per Share Declared
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0
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0.001
CY2018Q4 us-gaap Common Stock Par Or Stated Value Per Share
CommonStockParOrStatedValuePerShare
0.001
CY2019Q4 us-gaap Common Stock Par Or Stated Value Per Share
CommonStockParOrStatedValuePerShare
0.001
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1000000000
CY2018Q4 us-gaap Common Stock Shares Authorized
CommonStockSharesAuthorized
1000000000
CY2019Q4 us-gaap Common Stock Shares Authorized
CommonStockSharesAuthorized
1000000000
CY2018Q4 us-gaap Common Stock Shares Issued
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150244000
CY2019Q4 us-gaap Common Stock Shares Issued
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153119000
CY2018Q4 us-gaap Common Stock Shares Outstanding
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150244000
CY2019Q4 us-gaap Common Stock Shares Outstanding
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153119000
CY2018Q4 us-gaap Common Stock Value
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150000
CY2019Q4 us-gaap Common Stock Value
CommonStockValue
153000
CY2019 us-gaap Common Stock Voting Rights
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one
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CY2018 us-gaap Comprehensive Income Net Of Tax
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CY2019 us-gaap Comprehensive Income Net Of Tax
ComprehensiveIncomeNetOfTax
-84093000
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EarningsPerShareBasicAndDiluted
-0.76
CY2017 us-gaap Gain Loss On Sale Of Derivatives
GainLossOnSaleOfDerivatives
-653000
CY2019 us-gaap Concentration Risk Credit Risk
ConcentrationRiskCreditRisk
<div> <div style="margin-left:0pt;margin-right:0pt;"> <p style="margin:13.5pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-weight:bold;font-style:italic;">Concentration and Other Risks </font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">The counterparties to the agreements relating to our investment securities consist of various major corporations, financial institutions, municipalities and government agencies of high credit standing. Our accounts receivable are derived from net revenue to customers and distributors located in the United States and other countries. We perform credit evaluations of our customers&#x2019; financial condition and, generally, require no collateral from our customers. We regularly review our accounts receivable including consideration of factors such as historical experience, credit quality, the age of the accounts receivable balances and current economic conditions that may affect a customer&#x2019;s ability to pay. We have not experienced any significant credit losses to date. </font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">For the years ended December 31, 2019, 2018 and 2017, </font><font style="display: inline;">one</font><font style="display: inline;"> customer, Gene Company Limited, accounted for </font><font style="display: inline;">appr</font><font style="display: inline;">oximately </font><font style="display: inline;">17%</font><font style="display: inline;">, &nbsp;</font><font style="display: inline;">26%</font><font style="display: inline;"> and </font><font style="display: inline;">31%</font><font style="display: inline;"> of our total revenue, respectively.</font><font style="display: inline;">&nbsp;</font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">As of December 31, 2019 and </font><font style="display: inline;">2018, </font><font style="display: inline;">55%</font><font style="display: inline;"> and </font><font style="display: inline;">50%</font><font style="display: inline;"> of our accounts receivable were from domestic customers, respectively. As of December 31, 2019 and 2018, </font><font style="display: inline;">one</font><font style="display: inline;"> customer, Gene Company Limited, represented approximately </font><font style="display: inline;">11%</font><font style="display: inline;"> and </font><font style="display: inline;">14%</font><font style="display: inline;"> of our net accounts receivable, respectively. We currently purchase several key parts and components used in the manufacture of our p</font><font style="display: inline;">roducts from a limited number of suppliers. Generally</font><font style="display: inline;">,</font><font style="display: inline;"> we have been able to obtain an adequate supply of such parts and components. However, an extended interruption in the supply of parts and components currently obtained from our suppliers could adversely affect our business and consolidated financial statements. </font> </p> <p><font size="1"> </font></p> </div> </div>
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CY2019Q4 us-gaap Contract With Customer Liability Current
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CY2018Q4 us-gaap Contract With Customer Liability Noncurrent
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890000
CY2019Q4 us-gaap Contract With Customer Liability Noncurrent
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1951000
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CY2017 us-gaap Cost Of Goods And Services Sold
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CY2018 us-gaap Cost Of Goods And Services Sold
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CY2019 us-gaap Cost Of Goods And Services Sold
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CY2019Q4 us-gaap Deferred Income Tax Liabilities
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13765000
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CY2019Q4 us-gaap Deferred Tax Assets Gross
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CY2019Q4 us-gaap Deferred Tax Assets Liabilities Net
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CY2018Q4 us-gaap Deferred Tax Assets Net
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2190000
CY2019Q4 us-gaap Deferred Tax Assets Net
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9186000
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226911000
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42635000
CY2019Q4 us-gaap Deferred Tax Assets Tax Credit Carryforwards Research
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CY2019Q4 us-gaap Deferred Tax Assets Tax Deferred Expense
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16219000
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CY2019Q4 us-gaap Deferred Tax Assets Valuation Allowance
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CY2019Q4 us-gaap Deferred Tax Liabilities Tax Deferred Income
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CY2018 us-gaap Depreciation
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CY2019 us-gaap Depreciation
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CY2019 us-gaap Earnings Per Share Basic And Diluted
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CY2017 us-gaap Effective Income Tax Rate Continuing Operations
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CY2018 us-gaap Effective Income Tax Rate Continuing Operations
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CY2019 us-gaap Effective Income Tax Rate Continuing Operations
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CY2017 us-gaap Effective Income Tax Rate Reconciliation At Federal Statutory Income Tax Rate
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CY2018 us-gaap Effective Income Tax Rate Reconciliation At Federal Statutory Income Tax Rate
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CY2019 us-gaap Effective Income Tax Rate Reconciliation At Federal Statutory Income Tax Rate
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CY2019 us-gaap Effective Income Tax Rate Reconciliation Change In Deferred Tax Assets Valuation Allowance
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-0.275
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CY2018 us-gaap Effective Income Tax Rate Reconciliation Nondeductible Expense Share Based Compensation Cost
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0.016
CY2019 us-gaap Effective Income Tax Rate Reconciliation Nondeductible Expense Share Based Compensation Cost
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0.008
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CY2019 us-gaap Effective Income Tax Rate Reconciliation Other Adjustments
EffectiveIncomeTaxRateReconciliationOtherAdjustments
0.002
CY2017 us-gaap Effective Income Tax Rate Reconciliation State And Local Income Taxes
EffectiveIncomeTaxRateReconciliationStateAndLocalIncomeTaxes
0.086
CY2018 us-gaap Effective Income Tax Rate Reconciliation State And Local Income Taxes
EffectiveIncomeTaxRateReconciliationStateAndLocalIncomeTaxes
0.035
CY2019 us-gaap Effective Income Tax Rate Reconciliation State And Local Income Taxes
EffectiveIncomeTaxRateReconciliationStateAndLocalIncomeTaxes
0.049
CY2017 us-gaap Effective Income Tax Rate Reconciliation Tax Credits Research
EffectiveIncomeTaxRateReconciliationTaxCreditsResearch
0.036
CY2018 us-gaap Effective Income Tax Rate Reconciliation Tax Credits Research
EffectiveIncomeTaxRateReconciliationTaxCreditsResearch
0.020
CY2019 us-gaap Effective Income Tax Rate Reconciliation Tax Credits Research
EffectiveIncomeTaxRateReconciliationTaxCreditsResearch
0.022
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9748000
CY2018 us-gaap Employee Service Share Based Compensation Allocation Of Recognized Period Costs Capitalized Amount
EmployeeServiceShareBasedCompensationAllocationOfRecognizedPeriodCostsCapitalizedAmount
700000
CY2019 us-gaap Employee Service Share Based Compensation Allocation Of Recognized Period Costs Capitalized Amount
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300000
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167000
CY2019 us-gaap Fair Value Measurement With Unobservable Inputs Reconciliation Recurring Basis Liability Gain Loss Included In Earnings
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16000
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183000
CY2018Q4 us-gaap Fair Value Measurement With Unobservable Inputs Reconciliations Recurring Basis Liability Value
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16000
CY2019Q4 us-gaap Fair Value Measurement With Unobservable Inputs Reconciliations Recurring Basis Liability Value
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0
CY2019 us-gaap Finance Lease Right Of Use Asset Amortization
FinanceLeaseRightOfUseAssetAmortization
2683000
CY2019 us-gaap Gain Loss On Contract Termination
GainLossOnContractTermination
18000000
CY2019Q4 us-gaap Gain Loss On Contract Termination
GainLossOnContractTermination
18000000
CY2018 us-gaap Gain Loss On Sale Of Derivatives
GainLossOnSaleOfDerivatives
167000
CY2019 us-gaap Gain Loss On Sale Of Derivatives
GainLossOnSaleOfDerivatives
16000
CY2017 us-gaap Gain Loss On Sale Of Property Plant Equipment
GainLossOnSaleOfPropertyPlantEquipment
-11000
CY2019 us-gaap Gain Loss On Sale Of Property Plant Equipment
GainLossOnSaleOfPropertyPlantEquipment
-194000
CY2017 us-gaap Gain Loss On Termination Of Lease
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-68000
CY2018 us-gaap Gain Loss On Termination Of Lease
GainLossOnTerminationOfLease
CY2019 us-gaap Gain Loss On Termination Of Lease
GainLossOnTerminationOfLease
CY2017 us-gaap Gross Profit
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34659000
CY2018Q1 us-gaap Gross Profit
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CY2018 us-gaap Gross Profit
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CY2018Q2 us-gaap Gross Profit
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CY2018Q3 us-gaap Gross Profit
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5746000
CY2019Q1 us-gaap Gross Profit
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5117000
CY2019 us-gaap Gross Profit
GrossProfit
34576000
CY2019Q2 us-gaap Gross Profit
GrossProfit
9613000
CY2019Q3 us-gaap Gross Profit
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6914000
CY2019Q4 us-gaap Gross Profit
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12932000
CY2019 us-gaap Impairment Of Long Lived Assets Held For Use
ImpairmentOfLongLivedAssetsHeldForUse
0
CY2017 us-gaap Income Loss From Continuing Operations Before Income Taxes Domestic
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-92700000
CY2019 us-gaap Income Loss From Continuing Operations Before Income Taxes Domestic
IncomeLossFromContinuingOperationsBeforeIncomeTaxesDomestic
-84800000
CY2017 us-gaap Income Loss From Continuing Operations Before Income Taxes Foreign
IncomeLossFromContinuingOperationsBeforeIncomeTaxesForeign
1000000
CY2018 us-gaap Income Loss From Continuing Operations Before Income Taxes Foreign
IncomeLossFromContinuingOperationsBeforeIncomeTaxesForeign
800000
CY2019 us-gaap Income Loss From Continuing Operations Before Income Taxes Foreign
IncomeLossFromContinuingOperationsBeforeIncomeTaxesForeign
900000
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IncomeLossFromContinuingOperationsPerBasicAndDilutedShare
-0.20
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IncomeLossFromContinuingOperationsPerBasicAndDilutedShare
-0.17
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IncomeLossFromContinuingOperationsPerBasicAndDilutedShare
-0.19
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IncomeLossFromContinuingOperationsPerBasicAndDilutedShare
-0.21
CY2019Q1 us-gaap Income Loss From Continuing Operations Per Basic And Diluted Share
IncomeLossFromContinuingOperationsPerBasicAndDilutedShare
-0.20
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IncomeLossFromContinuingOperationsPerBasicAndDilutedShare
-0.16
CY2019Q3 us-gaap Income Loss From Continuing Operations Per Basic And Diluted Share
IncomeLossFromContinuingOperationsPerBasicAndDilutedShare
-0.19
CY2019Q4 us-gaap Income Loss From Continuing Operations Per Basic And Diluted Share
IncomeLossFromContinuingOperationsPerBasicAndDilutedShare
0.00
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IncreaseDecreaseInAccountsPayable
764000
CY2018 us-gaap Increase Decrease In Accounts Payable
IncreaseDecreaseInAccountsPayable
-2239000
CY2018 us-gaap Increase Decrease In Accounts Receivable
IncreaseDecreaseInAccountsReceivable
-4838000
CY2019 us-gaap Increase Decrease In Accounts Receivable
IncreaseDecreaseInAccountsReceivable
6671000
CY2017 us-gaap Increase Decrease In Accrued Liabilities
IncreaseDecreaseInAccruedLiabilities
-3986000
CY2018 us-gaap Increase Decrease In Accrued Liabilities
IncreaseDecreaseInAccruedLiabilities
205000
CY2019 us-gaap Increase Decrease In Accrued Liabilities
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419000
CY2017 us-gaap Increase Decrease In Contract With Customer Asset
IncreaseDecreaseInContractWithCustomerAsset
1033000
CY2018 us-gaap Increase Decrease In Contract With Customer Asset
IncreaseDecreaseInContractWithCustomerAsset
-33000
CY2019 us-gaap Increase Decrease In Contract With Customer Asset
IncreaseDecreaseInContractWithCustomerAsset
-2134000
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8442000
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1713000
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IncreaseDecreaseInAccountsReceivable
2012000
CY2018 us-gaap Increase Decrease In Inventories
IncreaseDecreaseInInventories
-3623000
CY2019 us-gaap Increase Decrease In Inventories
IncreaseDecreaseInInventories
-3915000
CY2017 us-gaap Increase Decrease In Other Current Liabilities
IncreaseDecreaseInOtherCurrentLiabilities
880000
CY2018 us-gaap Increase Decrease In Other Current Liabilities
IncreaseDecreaseInOtherCurrentLiabilities
-505000
CY2019 us-gaap Increase Decrease In Other Current Liabilities
IncreaseDecreaseInOtherCurrentLiabilities
-563000
CY2017 us-gaap Increase Decrease In Prepaid Deferred Expense And Other Assets
IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets
-7803000
CY2018 us-gaap Increase Decrease In Prepaid Deferred Expense And Other Assets
IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets
290000
CY2019 us-gaap Increase Decrease In Prepaid Deferred Expense And Other Assets
IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets
523000
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2921000
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InterestExpense
2423000
CY2019 us-gaap Interest Expense
InterestExpense
2611000
CY2017 us-gaap Interest Paid Net
InterestPaidNet
1687000
CY2018 us-gaap Interest Paid Net
InterestPaidNet
1400000
CY2019 us-gaap Interest Paid Net
InterestPaidNet
1400000
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4315000
CY2019Q4 us-gaap Inventory Finished Goods Net Of Reserves
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4752000
CY2018Q4 us-gaap Inventory Net
InventoryNet
17878000
CY2019Q4 us-gaap Inventory Net
InventoryNet
13312000
CY2018Q4 us-gaap Inventory Raw Materials Net Of Reserves
InventoryRawMaterialsNetOfReserves
6222000
CY2019Q4 us-gaap Inventory Raw Materials Net Of Reserves
InventoryRawMaterialsNetOfReserves
3966000
CY2018Q4 us-gaap Inventory Work In Process Net Of Reserves
InventoryWorkInProcessNetOfReserves
7341000
CY2019Q4 us-gaap Inventory Work In Process Net Of Reserves
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4594000
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InvestmentIncomeNetAmortizationOfDiscountAndPremium
32000
CY2018 us-gaap Investment Income Net Amortization Of Discount And Premium
InvestmentIncomeNetAmortizationOfDiscountAndPremium
758000
CY2019 us-gaap Investment Income Net Amortization Of Discount And Premium
InvestmentIncomeNetAmortizationOfDiscountAndPremium
913000
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InvestmentsFairValueDisclosure
83510000
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InvestmentsFairValueDisclosure
19472000
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LeaseAndRentalExpense
6300000
CY2018 us-gaap Lease And Rental Expense
LeaseAndRentalExpense
6200000
CY2019 us-gaap Lease And Rental Expense
LeaseAndRentalExpense
6200000
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-30799000
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-30324000
CY2019 us-gaap Net Income Loss
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-84134000
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189000
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15871000
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NumberOfReportableSegments
1
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OperatingExpenses
124443000
CY2018Q1 us-gaap Operating Expenses
OperatingExpenses
31245000
CY2018 us-gaap Operating Expenses
OperatingExpenses
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NetIncomeLoss
-24596000
CY2019Q3 us-gaap Net Income Loss
NetIncomeLoss
-29123000
CY2019Q4 us-gaap Net Income Loss
NetIncomeLoss
-91000
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OperatingExpenses
30607000
CY2018Q3 us-gaap Operating Expenses
OperatingExpenses
27862000
CY2018Q4 us-gaap Operating Expenses
OperatingExpenses
36369000
CY2019Q1 us-gaap Operating Expenses
OperatingExpenses
35251000
CY2019 us-gaap Operating Expenses
OperatingExpenses
135121000
CY2019Q4 us-gaap Lessee Operating Lease Liability Payments Due
LesseeOperatingLeaseLiabilityPaymentsDue
61166000
CY2019Q4 us-gaap Lessee Operating Lease Liability Payments Due After Year Five
LesseeOperatingLeaseLiabilityPaymentsDueAfterYearFive
23598000
CY2019Q4 us-gaap Lessee Operating Lease Liability Payments Due Next Twelve Months
LesseeOperatingLeaseLiabilityPaymentsDueNextTwelveMonths
7150000
CY2019Q4 us-gaap Lessee Operating Lease Liability Payments Due Year Five
LesseeOperatingLeaseLiabilityPaymentsDueYearFive
7920000
CY2019Q4 us-gaap Lessee Operating Lease Liability Payments Due Year Four
LesseeOperatingLeaseLiabilityPaymentsDueYearFour
7704000
CY2019Q4 us-gaap Lessee Operating Lease Liability Payments Due Year Three
LesseeOperatingLeaseLiabilityPaymentsDueYearThree
7488000
CY2019Q4 us-gaap Lessee Operating Lease Liability Payments Due Year Two
LesseeOperatingLeaseLiabilityPaymentsDueYearTwo
7306000
CY2019Q4 us-gaap Lessee Operating Lease Liability Undiscounted Excess Amount
LesseeOperatingLeaseLiabilityUndiscountedExcessAmount
15365000
CY2018Q4 us-gaap Liabilities
Liabilities
56214000
CY2019Q4 us-gaap Liabilities
Liabilities
93068000
CY2018Q4 us-gaap Liabilities And Stockholders Equity
LiabilitiesAndStockholdersEquity
170275000
CY2019Q4 us-gaap Liabilities And Stockholders Equity
LiabilitiesAndStockholdersEquity
147985000
CY2018Q4 us-gaap Liabilities Current
LiabilitiesCurrent
26884000
CY2019Q4 us-gaap Liabilities Current
LiabilitiesCurrent
49153000
CY2019Q4 us-gaap Long Term Debt
LongTermDebt
15871000
CY2019Q4 us-gaap Long Term Debt Maturities Repayments Of Principal In Next Twelve Months
LongTermDebtMaturitiesRepaymentsOfPrincipalInNextTwelveMonths
16491000
CY2018Q4 us-gaap Long Term Notes Payable
LongTermNotesPayable
14659000
CY2019Q4 us-gaap Long Term Notes Payable
LongTermNotesPayable
CY2019 us-gaap Loss Contingency Disclosures
LossContingencyDisclosures
<div> <div style="margin-left:0pt;margin-right:0pt;"> <p style="margin:13.5pt 0pt 0pt;text-align:justify;text-justify:inter-ideograph;font-weight:bold;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">NOTE 7. COMMITMENTS AND CONTINGENCIES </font> </p> <p style="margin:13.5pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-weight:bold;font-style:italic;">Lease</font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:31.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">As of January 1, 2019, we leased approximately </font><font style="display: inline;">180,000</font><font style="display: inline;"> square feet in 1305 O&#x2019;Brien Drive, Menlo Park, California, where we house our headquarters, research and development, service and support functions, and our in-house manufacturing operations for which the right of use assets totaled </font><font style="display: inline;">$35.3</font><font style="display: inline;"> million. We also leased a sales office facility in Singapore and engineering support facilities in Allen, Texas for which the right of use assets totaled </font><font style="display: inline;">$0.2</font><font style="display: inline;"> million as of January 1, 2019. </font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">On July 22, 2015, we entered into a lease agreement with respect to our facility located at 1305 O&#x2019;Brien Drive, Menlo Park, California. The term of the O&#x2019;Brien Lease is one hundred thirty-two </font><font style="display: inline;">(</font><font style="display: inline;">132</font><font style="display: inline;">)</font><font style="display: inline;"> months. In December 2016, we entered into an amendment to the O&#x2019;Brien Lease which defined the commencement date of the lease to be October 25, 2016, notwithstanding that such substantial completion did not occur until the first quarter of 2017. Base monthly rent was abated for the first six (6) months of the lease term and thereafter was </font><font style="display: inline;">$540,000</font><font style="display: inline;"> per month during the first year of the lease term, with specified annual increases thereafter until reaching </font><font style="display: inline;">$711,000</font><font style="display: inline;"> per month during the last twelve (12) months of the lease term. If the rent is not received within </font><font style="display: inline;">five</font><font style="display: inline;"> days of the due date there will be an additional sum equal to </font><font style="display: inline;">5%</font><font style="display: inline;"> of the amount overdue as a late charge. Any amount not paid within </font><font style="display: inline;">10</font><font style="display: inline;"> days after receipt of landlord&#x2019;s written notice will bear interest from the date due until paid, at the lesser rate of (1) the prime rate of interest as published in the Wall Street Journal, plus </font><font style="display: inline;">2%</font><font style="display: inline;"> or (2) the maximum rate allowed by law, in addition to the late payment charge. We were required to establish a letter of credit for the benefits of the landlord and to submit </font><font style="display: inline;">$4.5</font><font style="display: inline;"> million as a deposit for the letter of credit in October 2015. Subsequently pursuant to the terms of the O&#x2019;Brien Lease, at May 1, 2019, the </font><font style="display: inline;">$4.5</font><font style="display: inline;"> million in restricted cash was reduced to </font><font style="display: inline;">$4.0</font><font style="display: inline;"> million. As such, </font><font style="display: inline;">$4.0</font><font style="display: inline;"> million and </font><font style="display: inline;">$4.5</font><font style="display: inline;"> million was recorded in &#x201C;Long-term restricted cash&#x201D; in the consolidated balance sheet as of December 31, 2019 and 2018, respectively. Pursuant to the terms of the O&#x2019;Brien Lease, the letter of credit balance of </font><font style="display: inline;">$4.0</font><font style="display: inline;"> million at December 31, 2019 will be reduced again in May 2020 by </font><font style="display: inline;">$500,000</font><font style="display: inline;">.</font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:31.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">All of our leases are operating leases. Operating lease assets and liabilities are reflected within &#x201C;Operating lease right-of-use assets, net&#x201D;, &#x201C;Operating lease liabilities, current&#x201D; and &#x201C;Operating lease liabilities, non-current&#x201D; on the consolidated balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining minimum lease payments over the lease term using our estimated secured incremental borrowing rates at the effective date of January 1, 2019. Lease payments included in the measurement of the lease liability comprise the base rent per the term of the Lease. Lease expense for these leases is recognized on a straight-line basis over the lease term, with variable lease payments, such as common area maintenance fees, recognized in the period those payments are incurred. </font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:31.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">We often have options to renew lease terms for buildings. For the O&#x2019;Brien Lease, the renewal option is </font><font style="display: inline;">5</font><font style="display: inline;"> years and the rent will be based on fair market value at the time of renewal and was not included in the lease term. In addition, certain lease arrangements may be terminated prior to their original expiration date at our discretion. We evaluate renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. The weighted average remaining lease term for our operating leases as of December 31, 2019 </font><font style="display: inline;">was </font><font style="display: inline;">7.8</font><font style="display: inline;"> years.</font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:31.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">The discount rate implicit within our leases is generally not determinable and therefore we determine the discount rate based on our incremental borrowing rate. The incremental borrowing rate for our leases is determined based on lease term and currency in which lease payments are made, adjusted for impacts of collateral. The weighted average discount rate used to measure our operating lease liabilities as of December 31, 2019 was </font><font style="display: inline;">7.9%</font><font style="display: inline;">.</font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:31.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">The following table presents information as to the amount and timing of cash flows arising from our operating leases as of December 31, 2019:</font> </p> <p style="margin:0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font> </p> <p style="margin:0pt;font-family:Times New Roman;font-size: 1pt"> <font style="display: inline;font-size:1pt;">&#xFEFF;</font> </p> <p style="margin:0pt;font-family:Times New Roman;font-size: 1pt"> <font style="display: inline;font-size:1pt;">&#xFEFF;</font> </p> <p style="margin:0pt;font-family:Times New Roman;font-size: 1pt"> <font style="display: inline;font-size:1pt;">&#xFEFF;</font> </p> <p style="margin:0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 1pt"> <font style="display: inline;font-size:1pt;">&#xFEFF;</font> </p> <div style="width:100%"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 100.00%;margin-left:0pt;"> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #auto;height:1.00pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;height:1.00pt;overflow:hidden;font-size: 1pt"> <font style="display: inline;font-size:1pt;">&#xFEFF;</font></p> </td> <td valign="bottom" style="width:02.18%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #auto;height:1.00pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;height:1.00pt;overflow:hidden;font-size:0pt;"> &nbsp;</p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #auto;height:1.00pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;height:1.00pt;overflow:hidden;font-size:0pt;"> &nbsp;</p> </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #auto;height:4.50pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;height:4.50pt;font-size: 8pt"> <font style="display: inline;font-weight:bold;font-size:8pt;">&#xFEFF;</font></p> </td> <td valign="bottom" style="width:02.18%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #auto;height:4.50pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;height:4.50pt;overflow: hidden;font-size:0pt;"> &nbsp;</p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #auto;height:4.50pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;height:4.50pt;overflow: hidden;font-size:0pt;"> &nbsp;</p> </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #auto;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-weight:bold;">&#xFEFF;</font><font style="display: inline;font-weight:bold;">Maturity of Lease Liabilities</font></p> </td> <td colspan="2" valign="middle" style="width:00.02%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;background-color: #auto;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;text-align:center;font-family:Times New Roman;font-size: 8pt"> <font style="display: inline;font-weight:bold;font-size:8pt;">Amount </font></p> </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #auto;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 8pt"> <font style="display: inline;font-weight:bold;font-size:8pt;">&#xFEFF;</font><font style="display: inline;font-weight:bold;font-size:8pt;">Years ending December 31,</font></p> </td> <td colspan="2" valign="middle" style="width:00.02%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #auto;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;text-align:center;font-family:Times New Roman;font-size: 8pt"> <font style="display: inline;font-weight:bold;font-size:8pt;">(in thousands)</font></p> </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font><font style="display: inline;">2020</font></p> </td> <td valign="middle" style="width:02.18%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">$</font></p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap">7,150&nbsp; </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font><font style="display: inline;">2021</font></p> </td> <td valign="middle" style="width:02.18%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;overflow: hidden;font-size:0pt;"> &nbsp;</p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap">7,306&nbsp; </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font><font style="display: inline;">2022</font></p> </td> <td valign="middle" style="width:02.18%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;overflow: hidden;font-size:0pt;"> &nbsp;</p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap">7,488&nbsp; </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font><font style="display: inline;">2023</font></p> </td> <td valign="middle" style="width:02.18%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;overflow: hidden;font-size:0pt;"> &nbsp;</p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap">7,704&nbsp; </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font><font style="display: inline;">2024</font></p> </td> <td valign="middle" style="width:02.18%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;overflow: hidden;font-size:0pt;"> &nbsp;</p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap">7,920&nbsp; </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font><font style="display: inline;">Thereafter</font></p> </td> <td valign="middle" style="width:02.18%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;overflow: hidden;font-size:0pt;"> &nbsp;</p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;height:12.75pt;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap">23,598&nbsp; </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font><font style="display: inline;">Total undiscounted operating lease payments</font></p> </td> <td valign="middle" style="width:02.18%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;overflow: hidden;font-size:0pt;"> &nbsp;</p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap">61,166&nbsp; </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font><font style="display: inline;">Less: imputed interest</font></p> </td> <td valign="middle" style="width:02.18%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;overflow: hidden;font-size:0pt;"> &nbsp;</p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;height:12.75pt;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap">(15,365) </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-weight:bold;">&#xFEFF;</font><font style="display: inline;font-weight:bold;">Present value of operating lease liabilities </font></p> </td> <td valign="middle" style="width:02.18%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">$</font></p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap">45,801&nbsp; </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font></p> </td> <td valign="middle" style="width:02.18%;border-top:2pt double #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;overflow: hidden;font-size:0pt;"> &nbsp;</p> </td> <td valign="bottom" style="width:25.60%;border-top:2pt double #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 6pt 0pt 0pt;text-align:right;font-family:Times New Roman;overflow: hidden;font-size:0pt;"> &nbsp;</p> </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-weight:bold;">&#xFEFF;</font><font style="display: inline;font-weight:bold;">Balance Sheet Classification</font></p> </td> <td valign="middle" style="width:02.18%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;overflow: hidden;font-size:0pt;"> &nbsp;</p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 6pt 0pt 0pt;text-align:right;font-family:Times New Roman;overflow: hidden;font-size:0pt;"> &nbsp;</p> </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font><font style="display: inline;">Operating lease liabilities, current</font></p> </td> <td valign="middle" style="width:02.18%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">$</font></p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap">3,837&nbsp; </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font><font style="display: inline;">Operating lease liabilities, non-current</font></p> </td> <td valign="middle" style="width:02.18%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;overflow: hidden;font-size:0pt;"> &nbsp;</p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;height:12.75pt;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap">41,964&nbsp; </td> </tr> <tr> <td valign="middle" style="width:72.22%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-weight:bold;">&#xFEFF;</font><font style="display: inline;font-weight:bold;">Total operating lease liabilities</font></p> </td> <td valign="middle" style="width:02.18%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;height:12.75pt;padding:0pt;"> <p style="margin:0.05pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">$</font></p> </td> <td valign="bottom" style="width:25.60%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;height:12.75pt;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap">45,801&nbsp; </td> </tr> </table></div> <p style="margin:0pt;border-bottom:1pt none #D9D9D9 ;text-indent:24.5pt;font-family:Times New Roman;font-size: 1pt"> <font style="display: inline;font-size:1pt;">&#xFEFF;</font> </p> <p style="margin:0pt;text-indent:0pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font> </p> <p style="margin:0pt;text-indent:0pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-style:italic;text-decoration:underline;">Cash Flows</font> </p> <p style="margin:0pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">An initial right-of-use asset of </font><font style="display: inline;">$35.5</font><font style="display: inline;"> million was recognized on the consolidated balance sheet as of January 1, 2019 with the </font><font style="display: inline;">adoption of the new lease accounting standard. Cash paid for amounts included in the present value of operating lease liabilities was </font><font style="display: inline;">$7.0</font><font style="display: inline;"> million for</font><font style="display: inline;"> the </font><font style="display: inline;">year </font><font style="display: inline;">ended </font><font style="display: inline;">December 31, </font><font style="display: inline;">2019 and included in operating cash flow. </font> </p> <p style="margin:0pt;text-indent:0pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font> </p> <p style="margin:0pt;text-indent:0pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-style:italic;text-decoration:underline;">Operating Lease Costs</font> </p> <p style="margin:0pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">Operating lease costs were </font><font style="display: inline;">$6.2</font><font style="display: inline;"> million for the year ended December 31, 2019, primarily related to our operating leases, but also include immaterial amounts for variable lease</font><font style="display: inline;"> payments</font><font style="display: inline;">.</font> </p> <p style="margin:4.5pt 0pt 0pt;border-top:1pt none #D9D9D9 ;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">Rent expense for the years ended December 31, 2019, 2018 and 2017 was </font><font style="display: inline;">$6.2</font><font style="display: inline;"> million, </font><font style="display: inline;">$6.2</font><font style="display: inline;"> million and </font><font style="display: inline;">$6.3</font><font style="display: inline;"> million, respectively. We are also required to pay our share of operating expenses with respect to the facilities in which we operate.</font><font style="display: inline;">&nbsp;</font> </p> <p style="margin:13.5pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-weight:bold;font-style:italic;">Contingencies </font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">We may become involved in legal proceedings, claims</font><font style="display: inline;"> and assessments from time to time in the ordinary course of business. We accrue liabilities for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.</font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">In addition, we had other purchase commitments of an estimated amount of approximately </font><font style="display: inline;">$15.5</font><font style="display: inline;"> million as of December 31, 2019, consisting of open purchase orders and contractual obligations in the ordinary course of business, including commitments with contract manufacturers and suppliers for which we have not received the goods or services, and acquisition and licensing of intellectual property. A majority of these purchase obligations are due within a year. Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule and adjust our requirements based on our business needs prior to the delivery of goods or performance of services. </font> </p> <p style="margin:13.5pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-weight:bold;font-style:italic;">Legal </font><font style="display: inline;font-weight:bold;font-style:italic;">Proceedings</font> </p> <p style="margin:13.5pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-style:italic;">USITC Proceedings </font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">On November 2, 2016, we filed a complaint against Oxford Nanopore Technologies Ltd. (&#x201C;ONT Ltd.&#x201D;), Oxford Nanopore Technologies, Inc. (&#x201C;ONT Inc.&#x201D;) and Metrichor, Ltd. (&#x201C;Metrichor&#x201D; and, together with ONT Ltd. and ONT Inc., &#x201C;ONT&#x201D;) with the U.S. International Trade Commission (&#x201C;USITC&#x201D;) for patent infringement. On December 5, 2016, the USITC provided notice that an investigation had been instituted based on the complaint. We sought exclusionary relief with respect to several ONT products, including ONT&#x2019;s MinION and PromethION devices. The complaint was based on our U.S. Patent No. 9,404,146, entitled &#x201C;Compositions and methods for nucleic acid sequencing&#x201D; which covers novel methods for sequencing single nucleic acid molecules using linked double-stranded nucleic acid templates, providing improved sequencing accuracy. On March 1, 2017, we filed an amended complaint to add a second patent in the same patent family, U.S. Patent No. 9,542,527, which was granted on January 10, 2017, to the investigation. We sought, among other things, an exclusion order permanently barring entry of infringing ONT products into the United States, and a cease and desist order preventing ONT from advertising and selling infringing products in the United States. On May 23, 2017, the Administrative Law Judge (&#x201C;ALJ&#x201D;) assigned to the matter issued an order construing certain claim terms of the asserted patents. On June 8, 2017, ONT filed a summary determination motion to terminate the proceedings based on the ALJ&#x2019;s claim construction decision, and we did not oppose the motion. The ALJ granted the motion on July 19, 2017, and, on July 31, 2017, we filed a petition to review with the USITC to correct what we believe was an incorrect construction of the claims. On September 5, 2017, the USITC issued a notice granting our petition to review the ALJ&#x2019;s claim construction decision. On February 7, 2018, the USITC issued a notice indicating that it had determined to adopt the ALJ&#x2019;s claim construction and terminating the investigation. On February 13, 2018, we filed a petition to appeal the USITC&#x2019;s ruling to the U.S. Court of Appeals for the Federal Circuit. (&#x201C;Federal Circuit&#x201D;). An oral hearing for this appeal was held on February 8, 2019. On February 12, 2019, the Federal Circuit filed a judgement affirming the USITC claim construction under Federal Circuit Rule 36 without a written opinion.</font> </p> <p style="margin:13.5pt 0pt 0pt;text-align:justify;text-justify:inter-ideograph;font-weight:bold;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-weight:normal;font-style:italic;">U.S. District Court Proceedings</font> </p> <p style="margin:4.5pt 0pt 0pt;border-bottom:1pt none #D9D9D9 ;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">On March 15, 2017, we filed a complaint in the U.S. District Court for the District of Delaware against ONT Inc. for patent infringement (C.A. No. 17-cv-275 (&#x201C;275 Action&#x201D;)). The complaint is based on our U.S. Patent No. 9,546,400 (the &#x201C;&#x2019;400 Patent&#x201D;), entitled &#x201C;Nanopore sequencing using n-mers&#x201D; which covers novel methods for nanopore sequencing of nucleic acid molecules using the signals from multiple monomeric units. This patent was granted on January 17, 2017. We are seeking remedies including injunctive relief, damages and costs. On August 23, 2018, we filed an amended complaint, adding ONT Ltd. as a defendant in the 275 Action. On August 15, 2019, the judge granted our motion to amend the complaint in the 275 Action to add allegations of willful infringement by ONT Inc. and ONT Ltd.</font> </p> <p style="margin:4.5pt 0pt 0pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">On September 25, 2017, we filed a second complaint in the U.S. District Court for the District of Delaware against ONT Inc. for patent infringement (C.A. No. 17-cv-1353 (&#x201C;1353 Action&#x201D;)). The complaint is based on our U.S. Patent No. 9,678,056 (the &#x201C;&#x2019;056 Patent&#x201D;) entitled &#x201C;Control of Enzyme Translation in Nanopore Sequencing&#x201D;, granted June 13, 2017, and U.S. Patent No. 9,738,929 (the &#x201C;&#x2019;929 Patent&#x201D;) entitled &#x201C;Nucleic Acid Sequence Analysis&#x201D;, granted August 22, 2017. We are seeking remedies including injunctive relief, damages and costs. On March 28, 2018, we added a claim for infringement of our U.S. Patent No. 9,772,323 (the &#x201C;&#x2019;323 Patent&#x201D;), entitled &#x201C;Nanopore sequencing using n-mers.&#x201D; On August 23, 2018 we filed an amended complaint, adding ONT Ltd. as a defendant in the 1353 Action.&nbsp;&nbsp;On August 15, 2019, the judge granted our motion to amend the complaint in the 1353 Action to add allegations of willful infringement by ONT Inc. and ONT Ltd.</font> </p> <p style="margin:4.5pt 0pt 0pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">A claim construction (or &#x201C;Markman&#x201D;) hearing for the U.S. District Court matters was held on December 17, 2018. On March 6, 2019, a claim construction order construing various claim terms in the patents in suit was issued. </font><font style="display: inline;">On January 8, 2020, the Court held a summary judgement and expert testimony admissibility (or &#x201C;</font><font style="display: inline;font-style:italic;">Daubert</font><font style="display: inline;">&#x201D;) hearing. On February 19, 2020, the Court issued its summary judgement and Daubert opinions. All of our claims survived summary judgement. </font><font style="display: inline;">A trial for the U.S. District Court matters is scheduled to begin on March 9, 2020.</font> </p> <p style="margin:4.5pt 0pt 0pt;border-top:1pt none #D9D9D9 ;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">Unrelated to the preceding matters, on September 26, 2019, Personal Genomics of Taiwan, Inc. (&#x201C;PGI&#x201D;) filed a complaint in the U.S. District Court for the District of Delaware against us for patent infringement (C.A. No. 19-cv-1810). The complaint is based on PGI&#x2019;s U.S. Patent No. 7,767,441.&nbsp;&nbsp;We plan to vigorously defend in this matter. </font><font style="display: inline;">On November 20, 2019, we filed our answer to the complaint, denying infringement and seeking a declaratory judgement of invalidity of the &#x2018;441 Patent. A trial for this matter is scheduled&nbsp;&nbsp;to begin on March 14, 2022.</font> </p> <p style="margin:13.5pt 0pt 0pt;text-align:justify;text-justify:inter-ideograph;font-weight:bold;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-weight:normal;font-style:italic;">UK and German Court Proceedings</font> </p> <p style="margin:4.5pt 0pt 0pt;border-bottom:1pt none #D9D9D9 ;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">On February 2, 2017, we filed a claim in the High Court of England and Wales against ONT Ltd. and Metrichor for infringement of Patent EP(UK) 3 045 542 (the &#x201C;&#x2019;542 Patent&#x201D;), which is in the same patent family as the patents asserted in the USITC action referred to above.&nbsp;&nbsp;We sought remedies including injunctive relief, damages, and costs. On August 31, 2017, we added a claim for infringement of a newly granted divisional, EP(UK) 3 170 904 (the &#x201C;&#x2019;904 Patent&#x201D;). On December 22, 2017, ONT Ltd. added to the action a request for declaration of non-infringement of its 1D2 product. A trial for these matters was scheduled to occur in May 2018.&nbsp; </font> </p> <p style="margin:4.5pt 0pt 0pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">On April 21, 2017, ONT Ltd. and Harvard University filed a claim against us in the High Court of England and Wales for infringement of Patent EP(UK) 1 192 453 (the &#x201C;&#x2019;453 Patent&#x201D;), a patent owned by Harvard University and entitled &#x201C;Molecular and atomic scale evaluation of biopolymers,&#x201D; and for which ONT Ltd. alleges it holds an exclusive license.&nbsp;&nbsp;ONT Ltd. and Harvard University sought remedies including injunctive relief, damages, and costs. On April 25, 2017, ONT Ltd. announced that it also had filed a claim against us in the District Court of Mannheim, Germany, for infringement of the German version of the patent.&nbsp;&nbsp;On December 6, 2017, we filed a cross-complaint in the German infringement matter alleging ONT Ltd.&#x2019;s infringement in Germany of our &#x2019;542 Patent.&nbsp;&nbsp;The trial date for the German infringement matter and cross-complaint was set for July 27, 2018.&nbsp;&nbsp;A trial for the UK matter was scheduled to occur in March 2019.&nbsp; </font> </p> <p style="margin:4.5pt 0pt 0pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">On May 8, 2018, the parties entered a settlement of all UK and German court proceedings pending as of such date. Under the terms of the settlement, ONT agreed not to make, dispose of, use or import any &#x201C;2D&#x201D; nanopore sequencing products, or to induce or assist others to carry out a &#x201C;2D&#x201D; sequencing process, in the UK or Germany, through the end of 2023. During this time, we agreed not to assert the &#x2019;542 Patent and &#x2019;904 Patent against either ONT or its customers in the UK or Germany. Accordingly, the High Court of England and Wales entered an order staying our UK action against ONT through the end of 2023. As part of the settlement, ONT and Harvard University dismissed their UK and German actions under the &#x2019;453 Patent and agreed not to assert the &#x2019;453 Patent against us or our customers through the end of 2023. We correspondingly agreed to dismiss our separate German nullity action seeking to invalidate the &#x2019;453 Patent, which expires on June 22, 2020.</font> </p> <p style="margin:4.5pt 0pt 0pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">Related to these proceedings, on August 15, 2017, ONT Ltd. filed a notice of opposition to our &#x2019;542 Patent with the European Patent Office, and on August 16, 2017, an anonymous party filed a second notice of opposition to the same patent, each alleging invalidity of the patent.&nbsp;&nbsp;On April 5, 2018, we filed our response to the combined opposition. On January 22, 2019, an oral hearing in the matter occurred and the European Patent Office rendered a decision in favor of the opponents. We believe the European Patent Office errored in its decision and we are appealing the decision. The &#x2019;542 Patent will remain in effect while the appeal is pending. Our settlement agreement with ONT Ltd. and Harvard University will also remain in effect regardless of the outcome of the appeal.</font> </p> <p style="margin:4.5pt 0pt 0pt;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">Also related to these proceedings, on May 16, 2018, ONT Ltd. filed a notice of opposition to our &#x2019;904 Patent with the European Patent Office alleging invalidity of the &#x2019;904 Patent. On October 11, 2018, we filed our response to the opposition. On July 16, 2019, an oral hearing in the matter occurred and the European Patent Office rendered a decision in favor of the opponents. We believe the European Patent Office erred in its decision and we are appealing the decision. The &#x2019;904 Patent will remain in effect while the appeal is pending. Our settlement agreement with ONT Ltd. and Harvard University will also remain in effect regardless of the outcome of the appeal.</font> </p> <p style="margin:4.5pt 0pt 0pt;border-top:1pt none #D9D9D9 ;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">Litigation is inherently unpredictable, and, except for events that have already occurred, it is too early in the foregoing proceedings, including the U.S. District Court Proceedings, to predict the outcome of these proceedings, or any impact they may have on us. As such, the estimated financial effect associated with these complaints cannot be made as of the date of filing of this Annual Report on Form 10-K. Litigation is a significant ongoing expense with an uncertain outcome, and has been in the past and may in the future be a material expense for us. Management believes this investment is important to protect our intellectual property position, even recognizing the uncertainty of the outcome.</font> </p> <p style="margin:13.5pt 0pt 0pt;text-align:justify;text-justify:inter-ideograph;font-weight:bold;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-weight:normal;font-style:italic;">Other Proceedings</font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">From time to time, we may also be involved in a variety of other claims, lawsuits, investigations and proceedings relating to securities laws, product liability, patent infringement, contract disputes, employment and other matters that arise in the normal course of our business. In addition, third parties may, from time to time, assert claims against us in the form of letters and other communications. We record a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We currently do not believe that the ultimate outcome of any of the matters described above is probable or reasonably estimable, or that these matters will have a material adverse effect on our business; however, the results of litigation and claims are inherently unpredictable. Regardless of the outcome, litigation can have an adverse impact on us because of litigation and settlement costs, diversion of management resources and other factors.</font> </p> <p style="margin:13.5pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-weight:bold;font-style:italic;">Indemnification</font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">Pursuant to Delaware law and agreements entered into with each of our directors and officers, we may have obligations, under certain circumstances, to hold harmless and indemnify each of our directors and officers against losses suffered or incurred by the indemnified party in connection with their service to us, and judgements, fines, settlements and expenses related to claims arising against such directors and officers to the fullest extent permitted under Delaware law, our bylaws and certificate of incorporation. We also enter and have entered into indemnification agreements with our directors and officers that may require us to indemnify them against liabilities that arise by reason of their status or service as directors or officers, except as prohibited by applicable law. In addition, we may have obligations to hold harmless and indemnify third parties involved with our fund raising efforts and their respective affiliates, directors, officers, employees, agents or other representatives against any and all losses, claims, damages and liabilities related to claims arising against such parties pursuant to the terms of agreements entered into between such third parties and us in connection with such fund raising efforts. To the extent that any such indemnification obligations apply to the lawsuits described above, any associated expenses incurred are included within the related accrued litigation expense amounts. </font><font style="display: inline;">No</font><font style="display: inline;"> additional liability associated with such indemnification obligations has been recorded at December 31, 2019.</font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">&#xFEFF;</font> </p> <p><font size="1"> </font></p> </div> </div>
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<div> <div style="margin-left:0pt;margin-right:0pt;"> <p style="margin:13.5pt 0pt 0pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;font-weight:bold;font-style:italic;">Use of Estimates </font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes to the financial statements. Our estimates include, but are not limited to, the valuation of inventory, the determination of stand-alone selling prices for revenue recognition, the valuation of a financing derivative and long-term notes, the probability of repaying the Continuation Advances to Illumina, the valuation and recognition of share-based compensation, the expected renewal period for service contracts to derive the amortization period for capitalized commissions, the useful lives assigned to long-lived assets, the computation of provisions for income taxes and the determination of the internal borrowing rate used in calculating the operating lease right-of-use assets and operating lease liabilities. Actual results could differ materially from these estimates. </font> </p> <p style="margin:4.5pt 0pt 0pt;text-indent:24.5pt;font-family:Times New Roman;font-size: 10pt"> <font style="display: inline;">During 2017, we recorded a charge to cost of service and other revenue of </font><font style="display: inline;">$1.6</font><font style="display: inline;"> million relating to leased RS II instruments primarily due to a change in the estimated useful life of these instruments. The charge of </font><font style="display: inline;">$1.6</font><font style="display: inline;"> million increased loss per share by </font><font style="display: inline;">$0.01</font><font style="display: inline;"> for the year ended December 31, 2017.&nbsp; </font> </p> <p><font size="1"> </font></p> </div> </div>
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153051

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