altr-10q_20180630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission File Number: 001-38263

 

ALTAIR ENGINEERING INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

38-2591828

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

1820 East Big Beaver Road, Troy, Michigan

 

48083

(Address of principal executive offices)

 

(Zip Code)

(248) 614-2400

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

Non-accelerated filer

(Do not check if a smaller reporting company)

 

Smaller reporting company

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

On August 3, 2018 there were 36,739,344 shares of the registrant’s Class A common stock outstanding and 33,170,732 shares of the registrant’s Class B common stock outstanding.

 

 

 

 

 


ALTAIR ENGINEERING INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2018

INDEX

 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

 

 

PART I.

FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

Item 1.

 

Financial Statements – Unaudited

 

3

 

 

 

 

 

 

 

 

 

 

 

a)

 

Consolidated balance sheets

 

4

 

 

 

 

 

 

 

 

 

 

 

b)

 

Consolidated statements of operations

 

4

 

 

 

 

 

 

 

 

 

 

 

c)

 

Consolidated statements of comprehensive income (loss)

 

5

 

 

 

 

 

 

 

 

 

 

 

d)

 

Consolidated statement of changes in stockholders’ equity

 

6

 

 

 

 

 

 

 

 

 

 

 

e)

 

Consolidated statements of cash flows

 

7

 

 

 

 

 

 

 

 

 

 

 

f)

 

Notes to consolidated financial statements

 

8

 

 

 

 

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

 

 

 

 

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

39

 

 

 

 

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

39

 

 

 

 

 

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

40

 

 

 

 

 

 

 

 

 

Item 1A.

 

Risk Factors

 

40

 

 

 

 

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

41

 

 

 

 

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

41

 

 

 

 

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

41

 

 

 

 

 

 

 

 

 

Item 5.

 

Other Information

 

41

 

 

 

 

 

 

 

 

 

Item 6.

 

Exhibits

 

42

 

 

 

 

 

 

 

 

SIGNATURES

 

 

 

 

 

43

 

 

 

 


 

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

 

Altair Engineering Inc. and subsidiaries

Consolidated balance sheets

 

 

 

June 30, 2018

 

 

December 31, 2017

 

(In thousands, except per share data)

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

199,230

 

 

$

39,213

 

Accounts receivable, net

 

 

73,793

 

 

 

86,635

 

Inventory, net

 

 

1,786

 

 

 

1,980

 

Income tax receivable

 

 

7,260

 

 

 

6,054

 

Prepaid expenses and other current assets

 

 

13,290

 

 

 

10,006

 

Total current assets

 

 

295,359

 

 

 

143,888

 

Property and equipment, net

 

 

30,112

 

 

 

31,446

 

Goodwill

 

 

63,263

 

 

 

62,706

 

Other intangible assets, net

 

 

24,846

 

 

 

24,461

 

Deferred tax assets

 

 

8,113

 

 

 

8,351

 

Other long-term assets

 

 

16,077

 

 

 

17,019

 

TOTAL ASSETS

 

$

437,770

 

 

$

287,871

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

390

 

 

$

232

 

Accounts payable

 

 

5,957

 

 

 

4,880

 

Accrued compensation and benefits

 

 

26,393

 

 

 

26,560

 

Obligations for acquisition of businesses

 

 

9,842

 

 

 

13,925

 

Other accrued expenses and current liabilities

 

 

20,443

 

 

 

21,744

 

Deferred revenue

 

 

147,261

 

 

 

130,122

 

Total current liabilities

 

 

210,286

 

 

 

197,463

 

Long-term debt, net of current portion

 

 

690

 

 

 

178

 

Deferred revenue, non-current

 

 

9,256

 

 

 

9,640

 

Other long-term liabilities

 

 

13,474

 

 

 

17,647

 

TOTAL LIABILITIES

 

 

233,706

 

 

 

224,928

 

Commitments and contingencies

 

 

 

 

 

 

 

 

MEZZANINE EQUITY

 

 

2,352

 

 

 

2,352

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding

 

 

 

 

 

 

Common stock ($0.0001 par value)

 

 

 

 

 

 

 

 

Class A common stock, authorized 513,797 shares, issued and outstanding 36,518

   and 26,725 shares as of June 30, 2018 and December 31, 2017, respectively

 

 

4

 

 

 

2

 

Class B common stock, authorized 41,203 shares, issued and outstanding 33,171

   and 36,508 shares as of June 30, 2018 and December 31, 2017, respectively

 

 

3

 

 

 

4

 

Additional paid-in capital

 

 

369,579

 

 

 

232,156

 

Accumulated deficit

 

 

(161,066

)

 

 

(166,499

)

Accumulated other comprehensive loss

 

 

(6,808

)

 

 

(5,072

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

201,712

 

 

 

60,591

 

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

$

437,770

 

 

$

287,871

 

 

See accompanying notes to consolidated financial statements.

 

 

 

3


 

 

Altair Engineering Inc. and subsidiaries

Consolidated statements of operations

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(in thousands, except per share data)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

$

72,813

 

 

$

59,600

 

 

$

140,956

 

 

$

113,697

 

Software related services

 

 

8,707

 

 

 

8,204

 

 

 

18,180

 

 

 

17,175

 

Total software

 

 

81,520

 

 

 

67,804

 

 

 

159,136

 

 

 

130,872

 

Client engineering services

 

 

12,417

 

 

 

12,365

 

 

 

24,497

 

 

 

24,594

 

Other

 

 

1,629

 

 

 

1,477

 

 

 

3,664

 

 

 

3,062

 

Total revenue

 

 

95,566

 

 

 

81,646

 

 

 

187,297

 

 

 

158,528

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

 

11,983

 

 

 

8,729

 

 

 

22,905

 

 

 

17,633

 

Software related services

 

 

6,512

 

 

 

7,114

 

 

 

13,221

 

 

 

13,773

 

Total software

 

 

18,495

 

 

 

15,843

 

 

 

36,126

 

 

 

31,406

 

Client engineering services

 

 

9,960

 

 

 

9,828

 

 

 

20,160

 

 

 

19,969

 

Other

 

 

1,001

 

 

 

1,247

 

 

 

2,212

 

 

 

2,297

 

Total cost of revenue

 

 

29,456

 

 

 

26,918

 

 

 

58,498

 

 

 

53,672

 

Gross profit

 

 

66,110

 

 

 

54,728

 

 

 

128,799

 

 

 

104,856

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

24,744

 

 

 

22,838

 

 

 

47,447

 

 

 

41,608

 

Sales and marketing

 

 

20,183

 

 

 

19,428

 

 

 

39,160

 

 

 

36,338

 

General and administrative

 

 

17,412

 

 

 

21,201

 

 

 

34,402

 

 

 

37,290

 

Amortization of intangible assets

 

 

1,986

 

 

 

1,155

 

 

 

3,926

 

 

 

2,098

 

Other operating income

 

 

(392

)

 

 

(2,736

)

 

 

(2,583

)

 

 

(3,330

)

Total operating expenses

 

 

63,933

 

 

 

61,886

 

 

 

122,352

 

 

 

114,004

 

Operating income (loss)

 

 

2,177

 

 

 

(7,158

)

 

 

6,447

 

 

 

(9,148

)

Interest expense

 

 

45

 

 

 

548

 

 

 

61

 

 

 

1,159

 

Other (income) expense, net

 

 

(176

)

 

 

427

 

 

 

(1,076

)

 

 

786

 

Income (loss) before income taxes

 

 

2,308

 

 

 

(8,133

)

 

 

7,462

 

 

 

(11,093

)

Income tax expense (benefit)

 

 

795

 

 

 

(887

)

 

 

2,029

 

 

 

(1,659

)

Net income (loss)

 

$

1,513

 

 

$

(7,246

)

 

$

5,433

 

 

$

(9,434

)

Income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to common stockholders, basic

 

$

0.02

 

 

$

(0.14

)

 

$

0.08

 

 

$

(0.19

)

Net income (loss) per share attributable to common stockholders, diluted

 

$

0.02

 

 

$

(0.14

)

 

$

0.07

 

 

$

(0.19

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares used in computing net income (loss) per share, basic

 

 

65,580

 

 

 

50,374

 

 

 

64,614

 

 

 

50,255

 

Weighted average number of shares used in computing net income (loss) per share, diluted

 

 

73,391

 

 

 

50,374

 

 

 

72,881

 

 

 

50,255

 

 

See accompanying notes to consolidated financial statements.

 

 

4


 

Altair Engineering Inc. and subsidiaries

Consolidated statements of comprehensive income (loss)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(in thousands)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income (loss)

 

$

1,513

 

 

$

(7,246

)

 

$

5,433

 

 

$

(9,434

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation (net of tax effect of $0,

  $0, $0 and $0, respectively)

 

 

(2,047

)

 

 

1,154

 

 

 

(1,842

)

 

 

1,511

 

Retirement related benefit plans (net of tax effect of $(17),

  $0, $(7) and $0, respectively)

 

 

118

 

 

 

(33

)

 

 

106

 

 

 

(44

)

Total other comprehensive income (loss)

 

 

(1,929

)

 

 

1,121

 

 

 

(1,736

)

 

 

1,467

 

Comprehensive income (loss)

 

$

(416

)

 

$

(6,125

)

 

$

3,697

 

 

$

(7,967

)

 

See accompanying notes to consolidated financial statements.

 

 

 

5


 

Altair Engineering Inc. and subsidiaries

Consolidated statement of changes in stockholders’ equity

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Common stock

 

 

Additional

 

 

 

 

 

 

other

 

 

Total

 

 

 

Class A

 

 

Class B

 

 

paid-in

 

 

Accumulated

 

 

comprehensive

 

 

stockholders’

 

(in thousands)

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

deficit

 

 

loss

 

 

equity

 

Balance at January 1, 2018

 

 

26,725

 

 

$

2

 

 

 

36,508

 

 

$

4

 

 

$

232,156

 

 

$

(166,499

)

 

$

(5,072

)

 

$

60,591

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,433

 

 

 

 

 

 

5,433

 

Follow-on public offering, net of offering costs of $370

 

 

5,731

 

 

 

1

 

 

 

(1,675

)

 

 

(1

)

 

 

135,201

 

 

 

 

 

 

 

 

 

 

 

135,201

 

Adjustment for acquisitions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(96

)

 

 

 

 

 

 

 

 

(96

)

Conversion from Class B to Class A

 

 

1,662

 

 

 

 

 

 

(1,662

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

2,400

 

 

 

1

 

 

 

 

 

 

 

 

 

1,668

 

 

 

 

 

 

 

 

 

1,669

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

650

 

 

 

 

 

 

 

 

 

650

 

Foreign currency translation, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,842

)

 

 

(1,842

)

Retirement related benefit plans, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

106

 

 

 

106

 

Balance at June 30, 2018

 

 

36,518

 

 

$

4

 

 

 

33,171

 

 

$

3

 

 

$

369,579

 

 

$

(161,066

)

 

$

(6,808

)

 

$

201,712

 

 

 

See accompanying notes to consolidated financial statements.

 

 

6


 

Altair Engineering Inc. and subsidiaries

Consolidated statements of cash flows

(Unaudited)

 

 

 

Six Months Ended June 30,

 

(In thousands)

 

2018

 

 

2017

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

5,433

 

 

$

(9,434

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,525

 

 

 

5,084

 

Provision for bad debt

 

 

269

 

 

 

116

 

Stock-based compensation expense

 

 

650

 

 

 

14,037

 

Deferred income taxes

 

 

(283

)

 

 

(3,679

)

Other, net

 

 

(154

)

 

 

34

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

11,743

 

 

 

11,412

 

Prepaid expenses and other current assets

 

 

(2,927

)

 

 

(3,850

)

Other long-term assets

 

 

(278

)

 

 

(2,567

)

Accounts payable

 

 

335

 

 

 

955

 

Accrued compensation and benefits

 

 

73

 

 

 

(1,531

)

Other accrued expenses and current liabilities

 

 

(4,496

)

 

 

(2,331

)

Deferred revenue

 

 

19,423

 

 

 

17,871

 

Net cash provided by operating activities

 

 

37,313

 

 

 

26,117

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Payments for acquisition of businesses, net of cash acquired

 

 

(7,028

)

 

 

(6,437

)

Capital expenditures

 

 

(3,130

)

 

 

(2,335

)

Payments for acquisition of developed technology

 

 

(2,738

)

 

 

(2,120

)

Other investing activities, net

 

 

38

 

 

 

(28

)

Net cash used in investing activities

 

 

(12,858

)

 

 

(10,920

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from issuance of Class A common stock in follow-on public offering,

    net of underwriters' discounts and commissions

 

 

135,572

 

 

 

 

Proceeds from the exercise of stock options

 

 

1,668

 

 

 

476

 

Payments for follow-on public offering and initial public offering costs

 

 

(468

)

 

 

(869

)

Payments for redemption of common stock

 

 

(119

)

 

 

(611

)

Principal payments on long-term debt

 

 

(76

)

 

 

(5,248

)

Payments on revolving commitment

 

 

 

 

 

(53,564

)

Borrowings under revolving commitment

 

 

 

 

 

44,227

 

Other financing activities

 

 

(147

)

 

 

(20

)

Net cash provided by (used in) financing activities

 

 

136,430

 

 

 

(15,609

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(877

)

 

 

962

 

Net increase in cash, cash equivalents and restricted cash

 

 

160,008

 

 

 

550

 

Cash, cash equivalents and restricted cash at beginning of year

 

 

39,578

 

 

 

17,139

 

Cash, cash equivalents and restricted cash at end of period

 

$

199,586

 

 

$

17,689

 

Supplemental disclosure of cash flow:

 

 

 

 

 

 

 

 

Interest paid

 

$

41

 

 

$

1,163

 

Income taxes paid

 

$

3,660

 

 

$

2,352

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Capital leases

 

$

1,010

 

 

$

 

Property and equipment in accounts payable and other accrued expenses

    and current liabilities

 

$

935

 

 

$

155

 

Follow-on public offering costs in accounts payable

 

$

88

 

 

$

 

Promissory notes issued and deferred payment obligations for acquisitions

 

$

278

 

 

$

2,728

 

Issuance of common stock with put rights

 

$

 

 

$

2,345

 

Initial public offering costs in other long-term assets

 

$

 

 

$

1,522

 

Issuance of common stock in connection with acquisitions

 

$

 

 

$

415

 

 

See accompanying notes to consolidated financial statements.

 

 

7


 

Altair Engineering Inc. and subsidiaries

Notes to consolidated financial statements (unaudited)

 

1.

Organization and description of business

Altair Engineering Inc. (“Altair” or the “Company”) is incorporated in the state of Delaware. The Company is a provider of enterprise-class engineering software enabling innovation across the entire product lifecycle from concept design to in-service operation. Altair transforms design and decision making by applying simulation, machine learning, and optimization throughout product lifecycles. The Company is headquartered in Troy, Michigan.

Follow-on public offering

In June 2018, the Company closed its follow-on public offering (the “Offering”), in which the Company issued and sold 4,056,004 shares of Class A common stock (inclusive of 763,424 shares sold upon the exercise by the underwriters of their option to purchase additional shares of our Class A common stock). The price per share to the public was $35.00. The Company received aggregate proceeds of $135.6 million from the Offering, net of underwriters’ discounts and commissions, before deducting offering costs of approximately $0.4 million.

The Offering also included the sale of 2,307,420 shares of Class A common stock by selling stockholders, giving effect to the conversion of 1,675,420 shares of the Company’s Class B common stock into an equivalent number of shares of Class A common stock and the exercise of 257,000 options to purchase Class A common stock. The Company did not receive any proceeds from the sale of shares of Class A common stock by the selling stockholders other than the $0.5 million in proceeds from exercises of stock options by certain selling stockholders.  

 

2.

Accounting policies

Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial information.   Accordingly, the accompanying statements do not include all the information and notes required by GAAP for complete financial statements.  The accompanying consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements (and notes thereto) for the year ended December 31, 2017, included in the most recent Annual Report on Form 10-K filed with the SEC.  In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements have been included, and all adjustments are of a normal and recurring nature. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting periods.  Considerable judgment is often involved in making these determinations; use of different assumptions could result in significantly different results.  Management believes its assumptions and estimates are reasonable and appropriate.  However, actual results may differ from those estimates.  In addition, the results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for any future period.  

There have been no material changes to Altair’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.  

The Company has concluded that all material transactions that have occurred that require disclosure or adjustments to the consolidated financial statements have been reported herein.  See Note 17 – Subsequent events for additional information.

 


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Cash, cash equivalents and restricted cash

The Company considers all highly liquid investments with original or remaining maturities of 90 days or less at the date of purchase to be cash equivalents. Cash and cash equivalents are recorded at cost, which approximates fair value.

Restricted cash is included in other long-term assets on the consolidated balance sheets. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheet that sum to the total of the amounts reported in the consolidated statement of cash flows (in thousands):

 

 

 

June 30, 2018

 

December 31, 2017

 

Cash and cash equivalents

 

$

199,230

 

$

39,213

 

Restricted cash included in other long-term assets

 

 

356

 

 

365

 

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows

 

$

199,586

 

$

39,578

 

 

Restricted cash represents amounts required for a contractual agreement with an insurer for the payment of potential health insurance claims, and term deposits for bank guarantees.

Receivable for R&D credit

The French government provides a research and development (“R&D”) tax credit known as Credit Impôt Recherche, or CIR, in order to encourage Companies to invest in R&D activities.  The tax credit is deductible from French income tax and any excess is carried forward three years.  After three years, any unused credit may be reimbursed to the Company by the French government.  As of June 30, 2018, the Company had approximately $10.4 million in receivables from the French government related to CIR, of which $2.3 million is recorded in income tax receivable and the remaining $8.1 million is recorded in other long-term assets. CIR is subject to customary audit by French tax authorities.

Assets held for sale

Assets held for sale are reported at the lower of the carrying amount or fair value less costs to sell. Depreciation expense is not recognized on assets held for sale. On March 30, 2018, the Company signed a letter of intent to sell the building that is used as the headquarters for the Company’s toggled subsidiary. A purchase agreement has been executed including provisions governing the lease back of a part of the facility primarily for continued use as a distribution center for toggled’s operational needs. As of June 30, 2018, the building and related assets of $2.1 million were recorded in prepaid expenses and other current assets. See Note 17 – Subsequent events for information regarding the sale of the building in August 2018.

Mezzanine equity

In 2017, the Company issued 200,000 shares of Class A common stock to a third party as partial consideration for the purchase of developed technology. These shares have a put right that can be exercised by the holder five years from date of purchase at $12.50 per share that requires the shares to be recorded at fair value and classified as mezzanine equity in the consolidated balance sheet. The put right option is terminated if the shareholders sell their shares. Classification of the of instrument shall remain as mezzanine equity until one of the following three events take place: (1) shares are sold on the open market; (2) a redemption feature lapses; or (3) there is a modification of the terms of the instrument.

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Income (loss) per share

Basic income (loss) per share attributable to common stockholders is computed using the weighted average number of shares of common stock outstanding for the period, excluding stock options and restricted stock units (“RSUs”). Diluted income (loss) per share attributable to common stockholders is based upon the weighted average number of shares of common stock outstanding for the period and potentially dilutive common shares, including the effect of stock options and RSUs under the treasury stock method. The following table sets forth the computation of the numerators and denominators used in the basic and diluted income (loss) per share amounts (in thousands, except per share data):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

1,513

 

 

$

(7,246

)

 

$

5,433

 

 

$

(9,434

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator for basic income (loss) per share—weighted average shares

 

 

65,580

 

 

 

50,374

 

 

 

64,614

 

 

 

50,255

 

Effect of dilutive securities, stock options and RSUs

 

 

7,811

 

 

 

 

 

 

8,267

 

 

 

 

Denominator for dilutive income (loss) per share

 

 

73,391

 

 

 

50,374

 

 

 

72,881

 

 

 

50,255

 

Net income (loss) per share attributable to common stockholders, basic

 

$

0.02

 

 

$

(0.14

)

 

$

0.08

 

 

$

(0.19

)

Net income (loss) per share attributable to common stockholders, diluted

 

$

0.02

 

 

$

(0.14

)

 

$

0.07

 

 

$

(0.19

)

 

The computation of diluted income (loss) per share does not include shares that are anti-dilutive under the treasury stock method because their exercise prices are higher than the average fair value of the Company’s stock during the period or due to a net loss in the period. For the three and six months ended June 30, 2018, there were no anti-dilutive shares excluded from the computation of income (loss) per share. For both the three and six months ended June 30, 2017, there were 9.6 million anti-dilutive shares excluded from the computation of income (loss) per share.