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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2019

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: 001-36083

Applied Optoelectronics, Inc.

(Exact name of registrant as specified in its charter)

Delaware

76-0533927

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

13139 Jess Pirtle Blvd.

Sugar Land, TX 77478

(Address of principal executive offices)

(281295-1800

(Registrant’s telephone number)

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 (“Exchange Act”) 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit 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

 

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  

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Trading Name of each exchange on which registered

Common Stock, Par value $0.001

AAOI

NASDAQ Global Market

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: as of August 2, 2019 there were 20,028,929 shares of the registrant’s Common Stock outstanding.

Table of Contents

Applied Optoelectronics, Inc.

Table of Contents

Page

Part I. Financial Information

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

3

 

Condensed Consolidated Balance Sheets as of June 30, 2019 (Unaudited) and December 31, 2018

3

 

Condensed Consolidated Statements of Operations for the Three and Six Months ended June 30, 2019 and 2018 (Unaudited)

4

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months ended June 30, 2019 and 2018 (Unaudited)

5

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months ended June 30, 2019 and 2018 (Unaudited)

6

 

Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2019 and 2018 (Unaudited)

7

 

Notes To Condensed Consolidated Financial Statements (Unaudited)

8

 

Item 2.

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

26

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

34

 

Item 4.

Controls and Procedures

34

 

Part II. Other Information

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

37

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

59

Item 3.

Defaults Upon Senior Securities

59

Item 4.

Mine Safety Disclosures

59

Item 5.

Other Information

59

Item 6.

Exhibits

59

Signatures

62

2

Table of Contents

Part I. Financial Information

Item 1. Condensed Consolidated Financial Statements

Applied Optoelectronics, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except per share data)

June 30, 

December 31, 

    

2019

    

2018

ASSETS

Current Assets

Cash and cash equivalents

$

81,070

$

55,646

Restricted cash

 

2,917

2,358

Accounts receivable - trade, net of allowance of $30 and $31, respectively

 

28,406

30,534

Notes receivable

136

Inventories

 

81,475

93,256

Prepaid income tax

 

1,312

1,188

Prepaid expenses and other current assets

 

5,719

11,293

Total current assets

 

201,035

194,275

Property, plant and equipment, net

 

247,887

234,211

Land use rights, net

 

5,743

5,814

Operating right of use asset

7,912

Intangible assets, net

 

4,028

3,977

Deferred income tax assets

27,437

21,714

Other assets, net

 

1,080

6,849

TOTAL ASSETS

$

495,122

$

466,840

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Current portion of notes payable and long-term debt

$

19,180

$

23,589

Accounts payable

 

31,526

29,910

Bank acceptance payable

 

2,532

4,628

Current lease liability

903

Accrued liabilities

 

13,986

19,291

Total current liabilities

 

68,127

77,418

Notes payable and long-term debt, less current portion

 

30,468

60,328

Convertible senior notes

76,630

Non-current lease liability

8,182

TOTAL LIABILITIES

 

183,407

137,746

Stockholders' equity:

Preferred Stock; 5,000 shares authorized at $0.001 par value; no shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively

 

Common Stock; 45,000 shares authorized at $0.001 par value; 19,951 and 19,810 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively

 

20

20

Additional paid-in capital

 

297,922

292,480

Accumulated other comprehensive income

 

(379)

602

Retained earnings

 

14,152

35,992

TOTAL STOCKHOLDERS' EQUITY

 

311,715

329,094

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

495,122

$

466,840

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Table of Contents

Applied Optoelectronics, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except share and per share data)

Three months ended June 30, 

Six months ended June 30, 

    

2019

    

2018

    

2019

    

2018

Revenue, net

$

43,411

$

87,822

$

96,130

$

153,061

Cost of goods sold

 

32,873

53,959

 

73,241

93,362

Gross profit

 

10,538

33,863

 

22,889

59,699

Operating expenses

Research and development

 

11,151

12,645

 

22,336

24,381

Sales and marketing

 

2,331

2,377

 

4,926

4,851

General and administrative

 

10,884

9,898

 

21,324

19,354

Total operating expenses

 

24,366

24,920

 

48,586

48,586

Income (loss) from operations

 

(13,828)

8,943

 

(25,697)

11,113

Other income (expense)

Interest income

 

310

85

 

382

137

Interest expense

 

(1,490)

(279)

 

(2,486)

(350)

Other expense, net

 

451

1,581

 

296

554

Total other expense, net

 

(729)

1,387

 

(1,808)

341

Income (loss) before income taxes

 

(14,557)

10,330

 

(27,505)

11,454

Income tax benefit

 

3,191

(2,296)

 

5,665

(1,300)

Net income (loss)

$

(11,366)

$

8,034

$

(21,840)

$

10,154

Net income (loss) per share

Basic

$

(0.57)

$

0.41

$

(1.10)

$

0.52

Diluted

$

(0.57)

$

0.40

$

(1.10)

$

0.51

Weighted average shares used to compute net income (loss) per share:

Basic

 

19,931,745

19,590,164

 

19,897,602

19,541,478

Diluted

 

19,931,745

20,079,702

 

19,897,602

20,012,344

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Table of Contents

Applied Optoelectronics, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in thousands)

Three months ended June 30, 

Six months ended June 30, 

    

2019

    

2018

    

2019

    

2018

Net income (loss)

$

(11,366)

$

8,034

$

(21,840)

$

10,154

Loss on foreign currency translation adjustment

 

(3,329)

(10,445)

 

(981)

 

(4,110)

Comprehensive income (loss)

$

(14,695)

$

(2,411)

$

(22,821)

$

6,044

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Table of Contents

Applied Optoelectronics, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three and Six Months ended June 30, 2019 and 2018

(Unaudited, in thousands)

Accumulated

Preferred Stock

Common Stock 

Additional

other

Number

Number

paid-in

comprehensive

Retained

Stockholders'

    

of shares

    

Amount

    

of shares

    

Amount

    

capital

    

gain (loss)

    

earnings

    

equity

April 1, 2019

$

19,888

$

20

$

295,130

$

2,950

$

25,518

$

323,618

Public offering of common stock, net

 

 

 

Stock options exercised, net of shares withheld for employee tax

Issuance of restricted stock, net of shares withheld for employee tax

 

63

(227)

(227)

Share-based compensation

 

3,019

3,019

Foreign currency translation adjustment

 

(3,329)

(3,329)

Other

 

Net income (loss)

 

(11,366)

(11,366)

June 30, 2019

$

19,951

$

20

$

297,922

$

(379)

$

14,152

$

311,715

Accumulated

Preferred Stock

Common Stock 

Additional

other

Number

Number

paid-in

comprehensive

Retained

Stockholders'

    

of shares

    

Amount

    

of shares

    

Amount

    

capital

    

gain (loss)

    

earnings

    

equity

April 1, 2018

$

19,538

$

20

$

286,938

$

16,078

$

40,258

$

343,294

Stock options exercised, net of shares withheld for employee tax

40

(619)

(619)

Issuance of restricted stock, net of shares withheld for employee tax

 

56

(532)

(532)

Share-based compensation

 

2,899

2,899

Foreign currency translation adjustment

 

(10,445)

(10,445)

Net income

 

8,034

8,034

June 30, 2018

$

19,634

$

20

$

288,686

$

5,633

$

48,292

$

342,631

Accumulated

Preferred Stock

Common Stock 

Additional

other

Number

Number

paid-in

comprehensive

Retained

Stockholders'

    

of shares

    

Amount

    

of shares

    

Amount

    

capital

    

gain (loss)

    

earnings

    

equity

January 1, 2019

$

19,810

$

20

$

292,480

$

602

$

35,992

$

329,094

Stock options exercised, net of shares withheld for employee tax

7

7

Issuance of restricted stock, net of shares withheld for employee tax

 

141

(526)

(526)

Share-based compensation

 

5,961

5,961

Foreign currency translation adjustment

 

(981)

(981)

Other

 

Net loss

 

(21,840)

(21,840)

June 30, 2019

$

19,951

$

20

$

297,922

$

(379)

$

14,152

$

311,715

Accumulated

Preferred Stock

Common Stock 

Additional

other

Number

Number

paid-in

comprehensive

Retained

Stockholders'

    

of shares

    

Amount

    

of shares

    

Amount

    

capital

    

gain (loss)

    

earnings

    

equity

January 1, 2018

$

19,451

$

19

$

285,376

$

9,743

$

38,138

$

333,276

Stock options exercised, net of shares withheld for employee tax

78

(1,228)

(1,228)

Issuance of restricted stock, net of shares withheld for employee tax

 

105

1

(930)

(929)

Share-based compensation

 

5,468

5,468

Foreign currency translation adjustment

 

(4,110)

(4,110)

Net income

 

10,154

10,154

June 30, 2018

$

19,634

$

20

$

288,686

$

5,633

$

48,292

$

342,631

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Table of Contents

Applied Optoelectronics, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

Six months ended June 30, 

    

2019

    

2018

    

Operating activities:

Net income (loss)

$

(21,840)

$

10,154

Adjustments to reconcile net income to net cash provided by operating activities:

Lower of cost or market reserve adjustment to inventory

 

5,207

 

2,356

Depreciation and amortization

 

11,964

 

14,291

Amortization of debt issuance costs

457

Deferred income taxes, net

(5,770)

(381)

Loss (gain) on disposal of assets

 

10

 

(5)

Share-based compensation

 

5,961

 

5,468

Unrealized foreign exchange gain

 

(171)

 

(1,254)

Changes in operating assets and liabilities:

Accounts receivable, trade

 

2,128

 

11,182

Notes receivable

 

(137)

 

Prepaid income tax

(127)

781

Inventories

 

6,346

 

(21,614)

Other current assets

 

5,579

 

(1,489)

Operating right of use asset

561

Accounts payable

 

1,615

 

7,805

Accrued liabilities

 

(4,043)

 

(6,926)

Lease liability

(573)

(2,289)

Net cash provided by operating activities

 

7,167

 

18,079

Investing activities:

Maturities of short-term investments

36

Purchase of property, plant and equipment

 

(26,286)

 

(30,895)

Purchase of land use rights

(5,591)

Proceeds from disposal of equipment

 

1

 

11

Deposits and prepaid for equipment

 

5,763

 

1,444

Purchase of intangible assets

 

(316)

 

(225)

Net cash used in investing activities

 

(20,838)

 

(35,220)

Financing activities:

Proceeds from issuance of notes payable and long-term debt, net of debt issuance costs

 

10,537

 

26,556

Principal payments of long-term debt and notes payable

 

(41,203)

 

(1,093)

Proceeds from line of credit borrowings

 

38,473

 

79,953

Repayments of line of credit borrowings

 

(42,211)

 

(93,953)

Proceeds from bank acceptance payable

 

4,471

 

Repayments of bank acceptance payable

 

(6,575)

 

Proceeds from issuance of convertible senior notes, net of debt issuance costs

 

76,364

 

Exercise of stock options

 

7

 

53

Payments of tax withholding on behalf of employees related to share-based compensation

(526)

(2,212)

Net cash provided by financing activities

 

39,337

 

9,304

Effect of exchange rate changes on cash

 

317

 

1,832

Net increase (decrease) in cash, cash equivalents and restricted cash

 

25,983

 

(6,005)

Cash, cash equivalents and restricted cash at beginning of period

 

58,004

 

83,948

Cash, cash equivalents and restricted cash at end of period

$

83,987

$

77,943

Supplemental disclosure of cash flow information:

Cash paid for:

Interest

$

498

$

255

Income taxes

 

224

 

7,783

Non-cash investing and financing activities:

Net change in accounts payable related to property and equipment additions

 

777

 

214

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

Table of Contents

Applied Optoelectronics, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1.   Description of Business

Business Overview

Applied Optoelectronics, Inc. (“AOI” or the “Company”) is a Delaware corporation. The Company is a leading, vertically integrated provider of fiber-optic networking products, primarily for four networking end-markets: internet data center, cable television, telecommunications and fiber-to-the-home. The Company designs and manufactures a wide range of optical communications products at varying levels of integration, from components, subassemblies and modules to complete turn-key equipment.

The Company has manufacturing and research and development facilities located in the U.S., Taiwan and China. In the U.S., at its corporate headquarters and manufacturing facilities in Sugar Land, Texas, the Company primarily manufactures lasers and laser components and performs research and development activities for laser component and optical module products. In addition, the Company also has a research and development facility in Duluth, Georgia. The Company operates in Taipei, Taiwan and Ningbo, China through its wholly-owned subsidiary Prime World International Holdings, Ltd. (“Prime World”, incorporated in the British Virgin Islands). Prime World operates a branch in Taipei, Taiwan, which primarily manufactures transceivers and performs research and development activities for the transceiver products. Prime World is also the parent of Global Technology, Inc. (“Global”, incorporated in the People’s Republic of China). Through Global, the Company primarily manufactures certain of its data center transceiver products, including subassemblies, as well as Cable TV Broadband (“CATV”) systems and equipment, and performs research and development activities for the CATV products.

Interim Financial Statements

The unaudited condensed consolidated financial statements of the Company as of June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and June 30, 2018, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim information and with the instructions on Form 10-Q and Rule 10-01 of Regulation S-X pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In accordance with those rules and regulations, the Company has omitted certain information and notes required by GAAP for annual consolidated financial statements. In the opinion of management, the condensed consolidated financial statements contain all adjustments, except as otherwise noted, necessary for the fair presentation of the Company’s financial position and results of operations for the periods presented. The year-end condensed balance sheet data was derived from audited financial statements. These condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K (“Annual Report”) for the fiscal year ended December 31, 2018. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results expected for the entire fiscal year. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates in the consolidated financial statements and accompanying notes. Significant estimates and assumptions that impact these financial statements and the accompanying notes relate to, among other things, allowance for doubtful accounts, inventory reserve, product warranty costs, share-based compensation expense, estimated useful lives of property and equipment, and taxes.

Note 2.   Significant Accounting Policies

There have been no changes in the Company’s significant accounting policies for the three and six months ended June 30, 2019, as compared to the significant accounting policies described in its 2018 Annual Report, except as described below.

8

Table of Contents

Recent Accounting Pronouncements

Recent Accounting Pronouncements Adopted in 2019 

On February 25, 2016, the FASB released Accounting Standards Update (ASU) No. 2016-02, Leases, to complete its project to overhaul lease accounting. The ASU codifies ASC 842, Leases, which will replace the guidance in ASC 840. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. The Company adopted this ASU on January 1, 2019 without any impact to beginning retained earnings. Upon adoption of the new lease standard, the Company elected the package of practical expedients which allowed it to carry forward the historical lease classification on existing leases at adoption. In addition, the Company elected the short-term lease recognition exemption for all leases that qualify. The Company also elected the practical expedient to not separate lease and non-lease components for all of its leases. The Company has implemented internal controls to enable the presentation of financial information on adoption. The standard has a material impact on the Company’s consolidated balance sheet, but did not have an impact in its consolidated income statements. The most significant effects of adopting the new standard relate to the recognition of new ROU assets and lease liabilities on its balance sheet for its Taiwan branch. See Note 4, "Operating Leases" for additional information on the required disclosures related to the impact of adopting this standard.

In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for nonemployee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The Company adopted this ASU on January 1, 2019 with no impact on its consolidated financial statements.

Recent Accounting Pronouncements Yet to be Adopted

In June 2016, the FASB issued ASU 2016-13 Financial Instruments - Credit Losses, Measurement of Credit Losses on Financial Instruments, which changes the way entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net earnings. The new standard is effective for annual periods beginning after December 15, 2019, including interim periods within those annual periods. Based on the composition of the Company’s investment portfolio, current market conditions, and historical credit loss activity, the adoption of ASU 2016-13 is not expected to have a material impact on its consolidated financial statements.

Note 3. Revenue Recognition

The adoption of Topic 606 represents a change in accounting principle that will provide financial statement readers with enhanced revenue recognition disclosures. In accordance with Topic 606, revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally, this occurs with the transfer of control of products or services. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or providing services. Certain customers may receive cash and/or non-cash incentives, which are accounted for as variable consideration. To achieve this core principle, the Company applies the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to performance obligations in the contract; and (v) recognize revenue when or as the Company satisfies a performance obligation. The Company generally satisfies performance obligations at a point in time. Revenue is recognized based on the transaction price at the time the related performance obligation is satisfied by transferring a promised product or service to a customer.

Disaggregation of Revenue

Revenue is classified based on the location of where the product is manufactured. For additional information on the disaggregated revenues by geographical region, see Note 17, "Geographic Information.”

9

Table of Contents

Revenue is also classified by major product category and is presented below (in thousands):

Three months ended June 30, 

    

2019

    

% of Revenue

2018

% of Revenue

Data Center

$

31,806

73.3%

$

69,040

78.6%

CATV

9,818

22.6%

14,184

16.2%

Telecom

1,630

3.8%

4,157

4.7%

FTTH

 

16

0.0%

 

166

0.2%

Other

 

141

0.3%

 

275

0.3%

Total Revenue

$

43,411

100.0%

$

87,822

100.0%

Six months ended June 30, 

2019

% of Revenue

    

2018

% of Revenue

Data Center

$

70,305

73.1%

$

119,623

78.2%

CATV

21,780

22.7%

24,752

16.2%

Telecom

3,368

3.5%

7,743

5.1%

FTTH

 

110

0.1%

 

277

0.2%

Other

 

567

0.6%

 

666

0.4%

Total Revenue

$

96,130

100.0%

$

153,061

100.0%

Note 4. Operating Leases

The Company leases space under non-cancelable operating leases for manufacturing facilities, research and development offices and certain storage facilities and apartments. These leases do not contain contingent rent provisions. The Company also leases certain machinery, office equipment and a vehicle under operating leases. Many of its leases include both lease (e.g. fixed payments including rent, taxes, and insurance costs) and non-lease components (e.g. common-area or other maintenance costs) which are accounted for as a single lease component as the Company has elected the practical expedient to group lease and non-lease components for all leases. Several of the leases include one or more options to renew which have been assessed and either includes or excludes from the calculation of the lease liability of the ROU asset based on management’s intentions and individual fact patterns. Several warehouses and apartments have non-cancelable lease terms of less than one-year and therefore, the Company has elected the practical expedient to exclude these short-term leases from its ROU asset and lease liabilities.

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Based on the applicable lease terms and current economic environment, the Company applies a location approach for determining the incremental borrowing rate.

The Components of lease expense were as follows for the periods indicated (in thousands):

Three months ended June 30, 

Six months ended June 30, 

2019

2019

Operating lease expense

$

318

$

641

Short Term lease expense

51

80

Total lease expense

$

369

$

721

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Table of Contents

Maturities of lease liabilities are as follows for the future one-year periods ending June 30, (in thousands):

2020

$

1,212

2021

 

1,146

2022

 

1,092

2023

 

1,042

2024

1,055

2025 and thereafter

5,397

Total lease payments

$

10,944

Less imputed interest

(1,859)

Present value

$

9,085

 

The weighted average remaining lease term and discount rate for operating leases were as follows for the periods indicated:

June 30, 

2019

Weighted Average Remaining Lease Term (Years)

9.69

Weighted Average Discount Rate

3.13%

Supplemental cash flow information related to operating leases was as follows for the periods indicated (in thousands):

Six months ended June 30, 

2019

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating leases

676

Operating cash flows from financing lease

Financing cash flows from financing lease

Right-of-use assets obtained in exchange for new operating lease liabilities

15

Right-of-use assets obtained in exchange for new finance lease liabilities

Note 5. Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the statement of financial position that sum to the total of the same such amounts in the statement of cash flows (in thousands):

June 30, 

December 31, 

    

2019

2018

Cash and cash equivalents

$

81,070

$

55,646

Restricted cash

 

2,917

 

2,358

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

$

83,987

$

58,004

Restricted cash includes guarantee deposits for customs duties and compensating balances required for certain credit facilities.

Note 6.   Earnings Per Share

Basic net income (loss) per share has been computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share has been computed using the weighted-average number of shares of common stock and dilutive potential common shares from stock options, restricted stock units and senior convertible notes outstanding during the period. In periods with net losses, normally dilutive shares become anti-dilutive. Therefore, basic and diluted earnings per share are the same.

11

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The following table sets forth the computation of the basic and diluted net income (loss) per share for the periods indicated (in thousands, except per share amounts):