Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jan. 31, 2015

The components of inventories are as follows:


	January 31, 2015		July 31, 2014
	(in thousands)
Material and purchased components	$	25,509	$	22,394
Work-in-process		20,514		23,806
Finished equipment, including inventory consigned to customers		15,808		23,470

Total inventories	$	61,831	$	69,670

Goodwill

The Company’s goodwill consists of the following:


Goodwill	January 31, 2015		July 31, 2014
	(in thousands)
Merger with Credence Systems Corporation (August 29, 2008)	$	28,662	$	28,662
Acquisition of Step Tech Inc. (June 10, 2003)		14,368		14,368

Total goodwill	$	43,030	$	43,030

Amortizable Intangible Assets

Amortizable intangible assets which relate to the acquisition of the Acquired Businesses and the merger with Credence Systems Corporation (“Credence”), consist of the following, and are included in intangibles asset, net on the Company’s Consolidated Balance Sheets:


			As of January 31, 2015
Description	Estimated Useful Life		Gross Carrying Amount		Accumulated Amortization		Net Amount
	(in years)		(in thousands)		(in thousands)		(in thousands)
Developed technology		6.0-10.0	$	29,400	$	(26,439)	$	2,961
Customer Relationships – ECT, Multitest, atg-Luther & Maelzer		2.0		1,300		(839)		461
Maintenance agreements—ASL & Diamond		7.0		1,900		(1,493)		407

Total intangible assets			$	32,600	$	(28,771)	$	3,829


			As of July 31, 2014
Description	Estimated Useful Life		Gross Carrying Amount		Accumulated Amortization		Net Amount
	(in years)		(in thousands)		(in thousands)		(in thousands)
Developed technology		6.0-10.0		29,400	$	(25,880)	$	3,520
Customer Relationships – ECT, Multitest, atg-Luther & Maelzer		2.0		1,300		(498)		802
Maintenance agreements—ASL & Diamond		7.0		1,900		(1,357)		543

Total intangible assets			$	32,600	$	(27,735)	$	4,865

Expected Amortization of Intangible Assets

The Company expects amortization for these intangible assets to be:


Year ending July 31,	Amount (in thousands)
2015	$	856
2016		1,171
2017		617
2018		414
Thereafter		771

Total	$	3,829

Change in Product Warranty Liability

The following table shows the change in the Company’s product warranty liability, as required by Topic 460, Guarantees, to the FASB ASC for the six months ended January 31, 2015 and 2014:


	Six Months Ended January 31,
Product Warranty Activity	2015		2014
	(in thousands)
Balance at beginning of period	$	3,240	$	1,217
Warranty reserve acquired from ECT and Multitest		—		1,970
Warranty expenditures for current period		(2,750)		(1,966)
Changes in liability related to pre-existing warranties		(280)		(98)
Provision for warranty costs in the period		2,843		1,782

Balance at end of period	$	3,053	$	2,905

Reconciliation Between Basic and Diluted Net Income (Loss) Per Common Share

Reconciliation between basic and diluted net income (loss) per common share is as follows:


	Three Months Ended January 31,						Six Months Ended January 31,
	2015			2014			2015			2014
	(in thousands, except per share data)
Net income (loss)		$	3,929		$	(1,604)		$	15,991		$	(8,504	)
Basic EPS:
Weighted average shares outstanding- basic			54,362			48,220			52,745			48,060
Basic income (loss) per share		$	0.07		$	(0.03)		$	0.30		$	(0.18	)
Diluted EPS:
Weighted average shares outstanding- basic			54,362			48,220			52,745			48,060
Plus: impact of stock options and unvested RSUs			305			—			765			—

Weighted average shares outstanding- diluted			54,667			48,220			53,510			48,060
Diluted income (loss) per share		$	0.07		$	(0.03)		$	0.30		$	(0.18	)

Market Value and Maturities of Marketable Securities

The market value and maturities of the Company’s marketable securities are as follows:


	Total Amount
	(in thousands)
January 31, 2015
Due in less than one year	$	26,548
Due in 1 to 3 years		30,342

Total marketable securities	$	56,890


	Total Amount
	(in thousands)
July 31, 2014
Due in less than one year	$	21,778
Due in 1 to 3 years		17,881

Total marketable securities	$	39,659

Market Value and Amortized Cost of Marketable Securities

The market value and amortized cost of marketable securities are as follows:


	Market Value		Amortized Cost
	(in thousands)
January 31, 2015
Corporate	$	10,787	$	10,744
Government		27,905		27,625
Mortgage-Backed		2,454		2,467
Asset-Backed		15,744		15,717

Total	$	56,890	$	56,553


	Market Value		Amortized Cost
	(in thousands)
July 31, 2014
Corporate	$	21,070	$	20,884
Government		5,045		5,038
Mortgage-Backed		1,920		1,923
Asset-Backed		11,624		11,609

Total	$	39,659	$	39,454

Summary of Marketable Securities and Related Unrealized Gains and Losses

The following table summarizes marketable securities and related unrealized gains and losses as of January 31, 2015 and July 31, 2014:


January 31, 2015	Market Value		Unrealized Gain/(Loss)
	(in thousands)
Securities < 12 months unrealized losses	$	9,578		$ (27)
Securities > 12 months unrealized losses		10,365		(24)
Securities < 12 months unrealized gains		16,970		10
Securities > 12 months unrealized gains		19,977		43

Total	$	56,890		$ 2


July 31, 2014	Market Value		Unrealized Gain/(Loss)
	(in thousands)
Securities < 12 months unrealized losses	$	5,101	$	(19)
Securities > 12 months unrealized losses		9,739		(24)
Securities < 12 months unrealized gains		16,677		20
Securities > 12 months unrealized gains		8,142		23

Total	$	39,659	$	—

Summary of Property and Equipment

The Company’s property and equipment as of January 31, 2015 and July 31, 2014 are summarized as follows:


	January 31, 2015		July 31, 2014		Estimated Useful Lives
	(in thousands)				(in years)
Equipment spares	$	38,195	$	45,572	5 or 7
Machinery, equipment and internally manufactured systems		42,112		43,388	3-7
Land		8,641		8,152	-
Building		10,668		11,157	10-40
Office furniture and equipment		2,765		3,209	3-8
Purchased software		457		455	3
Leasehold improvements		10,339		7,414	Lesser of lease term or useful life, not to exceed 10 years

Property and equipment, gross		113,177		119,347
Less: accumulated depreciation and amortization		(72,555)		(78,464)

Property and equipment, net	$	40,622	$	40,883