10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
	FORM 10-Q
	(Check One)
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
o TRANSITION PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT
For the transition period from ______ to ______
	COMMISSION FILE NO. (0-16577)
CYBEROPTICS CORPORATION
(Exact name of registrant as specified in its charter)

Minnesota	41-1472057
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5900 Golden Hills Drive
MINNEAPOLIS, MINNESOTA	55416
(Address of principal executive offices)	(Zip Code)

	(763) 542-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	CYBE	NASDAQ Stock Market LLC

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 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 þ No o

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. At April 30, 2021, there were 7,299,376 shares of the registrant’s Common Stock, no par value, issued and outstanding.

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PART I. FINANCIAL INFORMATION

ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

CYBEROPTICS CORPORATION 

(Unaudited)

(In thousands, except share information)	March 31, 2021			December 31, 2020
ASSETS
Cash and cash equivalents	$	10,031		$	8,399
Marketable securities	8,680			8,121
Accounts receivable, less allowances of $332 at March 31, 2021 and $302 at December 31, 2020	15,914			14,735
Inventories	20,662			20,271
Prepaid expenses	901			686
Other current assets	754			890
Total current assets	56,942			53,102
Marketable securities, long-term	13,587			14,052
Equipment and leasehold improvements, net	3,446			3,235
Intangible assets, net	303			325
Goodwill	1,366			1,366
Right-of-use assets (operating leases)	2,469			2,621
Trade notes receivable, long-term	333			418
Deferred tax assets	4,488			4,597
Total assets	$	82,934		$	79,716
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	7,784		$	5,118
Advance customer payments	687			823
Accrued expenses	3,103			3,893
Current operating lease liabilities	827			819
Total current liabilities	12,401			10,653
Other liabilities	143			134
Long-term operating lease liabilities	3,025			3,244
Reserve for income taxes	209			157
Total liabilities	15,778			14,188
Commitments and contingencies
Stockholders’ equity:
Preferred stock, no par value, 5,000,000 shares authorized, none outstanding	—			—
Common stock, no par value, 25,000,000 shares authorized, 7,299,376 shares issued and outstanding at March 31, 2021 and 7,294,617 shares issued and outstanding at December 31, 2020	38,208			37,817
Accumulated other comprehensive loss	(1,306		)	(1,102		)
Retained earnings	30,254			28,813
Total stockholders’ equity	67,156			65,528
Total liabilities and stockholders’ equity	$	82,934		$	79,716

SEE THE ACCOMPANYING NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME

CYBEROPTICS CORPORATION

(Unaudited)

	Three Months Ended March 31,
(In thousands, except per share amounts)	2021		2020
Revenues	$	17,732	$	16,429
Cost of revenues		9,353		9,146
Gross margin		8,379		7,283
Research and development expenses		2,761		2,395
Selling, general and administrative expenses		3,888		4,159
Income from operations		1,730		729
Interest income and other		22		264
Income before income taxes		1,752		993
Income tax expense		311		149
Net income	$	1,441	$	844
Net income per share – Basic	$	0.20	$	0.12
Net income per share – Diluted	$	0.19	$	0.11
Weighted average shares outstanding – Basic		7,293		7,157
Weighted average shares outstanding – Diluted		7,463		7,367

SEE THE ACCOMPANYING NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 

CYBEROPTICS CORPORATION  

(Unaudited)

	Three Months Ended March 31,
(In thousands)	2021			2020
Net income	$	1,441		$	844
Other comprehensive loss before income taxes:
Foreign currency translation adjustments		(147	)		(600	)
Unrealized gains (losses) on available-for-sale securities		(72	)		140
Total other comprehensive loss before income taxes		(219	)		(460	)
Income tax provision		15			(30	)
Total other comprehensive loss after income taxes		(204	)		(490	)
Total comprehensive income	$	1,237		$	354

SEE THE ACCOMPANYING NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

4

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

CYBEROPTICS CORPORATION

(Unaudited) 

	Three Months Ended March 31,
(In thousands)	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,441		$	844
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	634			664
Non-cash operating lease expense	152			137
Provision (recovery) for doubtful accounts	30			(23		)
Deferred taxes	122			64
Foreign currency transaction losses (gains)	6			(381		)
Share-based compensation	334			272
Unrealized (gain) loss on available-for-sale equity security	(17		)	18
Changes in operating assets and liabilities:
Accounts and trade notes receivable	(1,124		)	1,841
Inventories	(721		)	(2,086		)
Prepaid expenses and other assets	(73		)	(111		)
Accounts payable	2,703			1,348
Advance customer payments and other	(120		)	51
Accrued expenses	(738		)	14
Operating leases	(211		)	(200		)
Net cash provided by operating activities	2,418			2,452
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of available-for-sale marketable securities	2,597			3,106
Purchases of available-for-sale marketable securities	(2,767		)	(5,294		)
Additions to equipment and leasehold improvements	(650		)	(129		)
Additions to patents	(34		)	(17		)
Net cash used in investing activities	(854		)	(2,334		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	57			85
Net cash provided by financing activities	57			85
Effects of exchange rate changes on cash and cash equivalents	11			30
Net increase in cash and cash equivalents	1,632			233
Cash and cash equivalents – beginning of period	8,399			5,836
Cash and cash equivalents – end of period	$	10,031		$	6,069

SEE THE ACCOMPANYING NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

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NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CYBEROPTICS CORPORATION

1. INTERIM REPORTING:

The interim condensed consolidated financial statements of CyberOptics Corporation and its wholly-owned subsidiaries ("we", "us" or "our") presented herein as of March 31, 2021, and for the three month periods ended March 31, 2021 and 2020, are unaudited but, in the opinion of management, include all adjustments, consisting of normal recurring adjustments necessary, for a fair presentation of financial position, results of operations and cash flows for the periods presented.

The results of operations for the three month period ended March 31, 2021 do not necessarily indicate the results to be expected for the full year. The December 31, 2020 consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). The unaudited interim condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2020.

2. COVID-19 PANDEMIC:

Effect of Covid-19 Outbreak on Business Operations

A novel strain of coronavirus ("Covid-19") was first identified in December 2019, and in March 2020, the World Health Organization categorized Covid-19 as a pandemic. The Covid-19 pandemic is affecting our customers, suppliers, service providers and employees, and the ultimate impacts of Covid-19 on our business, results of operations, liquidity and prospects are not fully known at this time. The Covid-19 outbreak has not had a significant impact on our business to date. However, the following factors have affected and may continue to affect our business:

· Our key factories are located in Minnesota and Singapore. Both of these locations have been subject to government mandated shelter-in-place orders. Because our operations have been deemed essential, we were able to keep our factories up and running while the shelter-in-place mandates were in effect. If the pandemic worsens, it is possible that our operations may not be deemed essential under future government mandated shelter-in-place orders, and we may be required to shut-down factory operations. We have periodically implemented split-shifts for our factory operations to minimize the number of employees in our facilities at any given time, but these measures have not affected our production capacity. Most of the time, our non-factory employees are working remotely. To date, the shelter-in-place mandates and remote work arrangements have had a minimal impact on operations, but material negative effects on our business could result if the pandemic worsens and continues for an extended period of time.

· Sales of some products, mainly our SQ3000 Multi-Function systems and MX memory module inspection products, require customer acceptance due to performance or other criteria that is considered more than a formality. Most of our customer’s factories have remained open during the Covid-19 pandemic because they are deemed to be essential under government shelter-in-place mandates. However, global travel restrictions and quarantine measures have hindered our ability to obtain customer acceptances of certain of our products at various times in 2020. Continuing or new global travel restrictions and quarantine measures could hinder our ability to obtain customer acceptances in a timely manner in the future, and therefore impact the timing of revenue recognition.

·
We have experienced some supply disruptions due to the Covid-19 pandemic, mainly from suppliers not deemed essential by shelter-in-place mandates in certain countries. Key supply chain disruptions have been resolved to date. However, supply chain disruptions could increase significantly if the pandemic worsens and continues for an extended period of time. To date, our on-hand inventories have been sufficient to enable us to mitigate supply disruptions. 

Although we cannot estimate the length or gravity of the impact of the Covid-19 outbreak at this time, if the pandemic continues as expected for the foreseeable future, it may have an adverse effect on our results of future operations, financial position and liquidity in the remainder of 2021 and beyond. 

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United States Covid-19 Relief Legislation  

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was signed into law in the United States. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods and alternative tax credit refunds. The CARES Act also appropriated funds for the Small Business Administration Paycheck Protection Program loans that are forgivable in certain circumstances to promote continued employment. Additional relief packages were passed in December 2020 and March 2021. We have analyzed these pieces of legislation and presently do not believe they will have a material impact on our financial condition, results of operations or liquidity. However, we will continue to monitor the impact these pieces of legislation could have on our business in the future.

Singapore Jobs Support Program

The Singapore Government implemented a jobs support program in 2020 that was intended to support businesses and encourage retention of employees during the period of economic uncertainty caused by the Covid-19 pandemic. Under the jobs support program, the Singapore Government co-funded a portion of the gross monthly wages paid to local employees, which reduced our operating expenses by $19,000 in the three months ended March 31, 2020. We did not receive any benefit from the Singapore jobs support program in the three months ended March 31, 2021, nor do we expect any benefit during the remainder of 2021.

3. RECENT ACCOUNTING DEVELOPMENTS: 

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which revises guidance for the accounting for credit losses on financial instruments within its scope, and in November 2018, issued ASU No. 2018-19, which amended the standard. The new standard introduces an approach to estimating credit losses that is based on expected losses (referred to as the current expected credit losses model), and applies to most financial assets measured at amortized cost and certain other instruments, including available-for-sale marketable debt securities, trade and other receivables. The new standard is effective for us on January 1, 2023, with early adoption permitted. We are required to apply the standard's provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. We presently do not believe the new standard will have a material impact on our consolidated financial statements. 

No other new accounting pronouncements are expected to have a significant impact on our consolidated financial statements. 

4. REVENUE RECOGNITION:

Our revenue performance obligations are primarily satisfied at a point in time and limited revenue streams are satisfied over time as work progresses.

The following is a summary of our revenue performance obligations:

	Three Months Ended March 31, 2021				Three Months Ended March 31, 2020
(In thousands except percentages)	Revenues		Percent of Revenues		Revenues		Percent of Revenues
Revenue recognized over time	$	403	2.3	%	$	193	1.2	%
Revenue recognized at a point in time		17,329	97.7	%		16,236	98.8	%
	$	17,732	100.0	%	$	16,429	100.0	%

See Note 11 for additional information regarding disaggregation of revenue.

Contract Balances

Contract assets consist of unbilled amounts from sales where we recognize the revenue over time and the revenue recognized exceeds the amount billed to the customer at a point in time. Accounts and trade notes receivable are recorded when the right to payment becomes unconditional. Contract liabilities consist of payments received in advance of performance under the contract. Contract liabilities are recognized as revenue when we perform under the contract. 

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The following summarizes our contract assets and contract liabilities:    

(In thousands)	March 31, 2021		December 31, 2020
Contract assets, included in other current assets	$	24	$	2
Contract liabilities - advance customer payments	$	406	$	567
Contract liabilities - deferred warranty revenue	$	385	$	344

Changes in contract assets in the three months ended March 31, 2021 and the three months ended March 31, 2020 resulted from unbilled amounts under sensor product arrangements and longer duration 3D scanning service projects in which revenue is recognized over time. Changes in contract liabilities primarily resulted from reclassification of beginning contract liabilities to revenue as performance obligations were satisfied or from cash received in advance and not recognized as revenue. See Note 9 for changes in contractual obligations related to deferred warranty revenue. Unsatisfied performance obligations for deferred warranty revenue are generally expected to be recognized as revenue over the next one to three years. There were no impairment losses for contract assets in the three months ended March 31, 2021 or the three months ended March 31, 2020. 

The following summarizes the amounts reclassified from beginning contract liabilities to revenue: 

	Three Months Ended March 31,
(In thousands)	2021		2020
Amounts reclassified from beginning contract liabilities to revenue	$	339	$	76
Amounts reclassified from deferred warranty revenue		90		100
Total	$	429	$	176

5. MARKETABLE SECURITIES:

Our investments in marketable securities are classified as available-for-sale and consist of the following:

	March 31, 2021
(In thousands)	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Short-Term
U.S. government and agency obligations	$	4,750	$	30	$	—		$	4,780
Corporate debt securities and certificates of deposit	3,746		24		—			3,770
Asset backed securities	130		—		—			130
Marketable securities – short-term	$	8,626	$	54	$	—		$	8,680
Long-Term
U.S. government and agency obligations	$	7,704	$	42	$	(5	)	$	7,741
Corporate debt securities and certificates of deposit	3,470		34		(2		)	3,502
Asset backed securities	2,263		34		—			2,297
Equity security	42		5		—			47
Marketable securities – long-term	$	13,479	$	115	$	(7	)	$	13,587

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	December 31, 2020
(In thousands)	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Short-Term
U.S. government and agency obligations	$	4,817	$	36	$	—		$	4,853
Corporate debt securities and certificates of deposit	3,113		21		—			3,134
Asset backed securities	133		1		—			134
Marketable securities – short-term	$	8,063	$	58	$	—		$	8,121
Long-Term
U.S. government and agency obligations	$	7,529	$	66	$	—		$	7,595
Corporate debt securities and certificates of deposit	3,975		61		(1		)	4,035
Asset backed securities	2,347		45		—			2,392
Equity security	42		—		(12		)	30
Marketable securities – long-term	$	13,893	$	172	$	(13	)	$	14,052

At March 31, 2021 and December 31, 2020, investments in marketable debt securities in an unrealized loss position were as follows:  

	In Unrealized Loss Position For Less Than 12 Months					In Unrealized Loss Position For Greater Than 12 Months
(In thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
March 31, 2021
U.S. government and agency obligations	$	3,637	$	(5	)	$	—	$	—
Corporate debt securities and certificates of deposit	1,455		(2		)	—		—
Asset backed securities	120		—			—		—
Marketable securities	$	5,212	$	(7	)	$	—	$	—
December 31, 2020
U.S. government and agency obligations	$	330	$	—		$	—	$	—
Corporate debt securities and certificates of deposit	411		(1		)	—		—
Marketable securities	$	741	$	(1	)	$	—	$	—

Our investments in marketable debt securities all have maturities of less than five years. Net pre-tax unrealized gains for marketable debt securities of $157,000 at March 31, 2021 and $229,000 at December 31, 2020 have been recorded as a component of accumulated other comprehensive loss in stockholders’ equity. We have determined that the net pre-tax unrealized losses for marketable debt securities at March 31, 2021 and December 31, 2020 were caused by fluctuations in interest rates and are temporary in nature. We review our marketable debt securities to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, credit quality and our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value. No marketable securities were sold in the three months ended March 31, 2021 or the three months ended March 31, 2020. See Note 6 for additional information regarding the fair value of our investments in marketable securities.

Investments in marketable securities classified as cash equivalents of $5.3 million at March 31, 2021 and $1.3 million at December 31, 2020, consist of corporate debt securities and certificates of deposit. There were no unrealized gains or losses associated with any of these securities at March 31, 2021 or December 31, 2020.

Cash and marketable securities held by foreign subsidiaries totaled $1.0 million at March 31, 2021 and $672,000 at December 31, 2020.

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6. FAIR VALUE MEASUREMENTS:

We determine the fair value of our assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. We use a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last is considered unobservable, to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1). The next highest priority is based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in non-active markets or other observable inputs (Level 2). The lowest priority is given to unobservable inputs (Level 3). The following provides information regarding fair value measurements for our marketable securities as of March 31, 2021 and December 31, 2020 according to the three-level fair value hierarchy:

	Fair Value Measurements at March 31, 2021 Using
(In thousands)	Balance March 31,  2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Marketable securities:
U.S. government and agency obligations	$	12,521	$	—	$	12,521	$	—
Corporate debt securities and certificates of deposit	7,272		—		7,272		—
Asset backed securities	2,427		—		2,427		—
Equity security	47		47		—		—
Total marketable securities	$	22,267	$	47	$	22,220	$	—

	Fair Value Measurements at December 31, 2020 Using
(In thousands)	Balance December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Marketable securities:
U.S. government and agency obligations	$	12,448	$	—	$	12,448	$	—
Corporate debt securities and certificates of deposit	7,169		—		7,169		—
Asset backed securities	2,526		—		2,526		—
Equity security	30		30		—		—
Total marketable securities	$	22,173	$	30	$	22,143	$	—

During the three months ended March 31, 2021 and the year ended December 31, 2020, we owned no Level 3 securities and there were no transfers within the three level hierarchy. A significant transfer is recognized when the inputs used to value a security have been changed which merit a transfer between the levels of the valuation hierarchy.    

The fair value for our U.S. government and agency obligations, corporate debt securities and certificates of deposit and asset backed securities are determined based on valuations provided by external investment managers who obtain them from a variety of industry standard data providers. The fair value for our equity security is based on a quoted market price obtained from an active market. The carrying amounts of financial instruments included in cash equivalents approximate their related fair values due to the short-term maturities of those instruments. See Note 5 for additional information regarding our investments in marketable securities.

Non-financial assets such as equipment and leasehold improvements, goodwill and intangible assets and right-of-use assets for operating leases are subject to non-recurring fair value measurements if they are deemed impaired. We had no re-measurements of non-financial assets to fair value in the three months ended March 31, 2021 or the three months ended March 31, 2020.  

10

The fair value for trade notes receivable is based on discounted future cash flows using current interest rates that would be offered for a similar transaction to a similarly situated customer. The difference between the carrying amount and estimated fair value for trade notes receivable is immaterial. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. At March 31, 2021, our trade notes receivable were deemed to be fully collectible, and no trade notes receivable were past due more than 90 days or in a non-accrual status with respect to interest income.

7. SHARE-BASED COMPENSATION:

We have three share-based compensation plans that are administered by the Compensation Committee of the Board of Directors. We have (a) an Employee Stock Incentive Plan for officers, other employees, consultants and independent contractors under which we have granted options and restricted stock units to officers and other employees, (b) an Employee Stock Purchase Plan under which shares of our common stock may be acquired by employees at discounted prices, and (c) a Non-Employee Director Stock Plan that provides for automatic grants of restricted shares of our common stock to non-employee directors. New shares of our common stock are issued upon stock option exercises, vesting of restricted stock units, issuances of shares to board members and issuances of shares under the Employee Stock Purchase Plan. 

Employee Stock Incentive Plan

As of March 31, 2021, there were 124,501 shares of common stock reserved in the aggregate for issuance pursuant to future awards under our Employee Stock Incentive Plan and 468,304 shares of common stock reserved in the aggregate for issuance pursuant to outstanding awards under such plan. Although our Compensation Committee has authority to issue options, restricted stock, restricted stock units, share grants and other share-based benefits under our Employee Stock Incentive Plan, to date only restricted stock units and stock options have been granted under the plan. Options have been granted at an option price per share equal to the market value of our common stock on the date of grant, vest over a four year period and expire seven years after the date of grant. Restricted stock units vest over a four year period and entitle the holders to one share of our common stock for each restricted stock unit. Reserved shares underlying outstanding awards, including options and restricted stock units, that are forfeited are available under the Employee Stock Incentive Plan for future grant.

Non-Employee Director Stock Plan

As of March 31, 2021, there were 44,000 shares of common stock reserved in the aggregate for issuance pursuant to future restricted share grants under our Non-Employee Director Stock Plan and 8,000 shares of common stock reserved in the aggregate for issuance pursuant to outstanding stock option awards under our Non-Employee Director Stock Plan (which previously authorized the granting of stock options to non-employee directors). Under the terms of the plan, each non-employee director receives annual restricted share grants of 2,000 shares of our common stock on the date of each annual meeting at which such director is elected to serve on the board. The annual restricted share grants of common stock vest in four equal quarterly installments during the year after the grant date, provided the non-employee director is still serving as a director on the applicable vesting date. 

On the date of our 2020 annual meeting, we issued 8,000 shares of our common stock to our non-employee directors, which were restricted as specified in the Non-Employee Director Stock Plan. The shares granted at the 2020 annual meeting had an aggregate fair market value on the date of grant equal to $227,000 (grant date fair value of $28.34 per share). As of March 31, 2021, 6,000 of these shares were vested. The aggregate fair value of the 2,000 unvested shares based on the closing price of our common stock on March 31, 2021 was $52,000. 

Stock Option Activity

The following is a summary of stock option activity in the three months ended March 31, 2021:

	Options Outstanding		Weighted Average Exercise Price Per Share
Outstanding, December 31, 2020	419,100		$	15.22
Exercised	(7,250	)	17.16
Outstanding, March 31, 2021	411,850		$	15.19
Exercisable, March 31, 2021	286,776		$	12.91

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The intrinsic value of an option is the amount by which the market price of the underlying common stock exceeds the option's exercise price. For options outstanding at March 31, 2021, the weighted average remaining contractual term of all outstanding options was 3.37 years and their aggregate intrinsic value was $4.5 million. At March 31, 2021, the weighted average remaining contractual term of options that were exercisable was 2.44 years and their aggregate intrinsic value was $3.8 million. The aggregate intrinsic value of stock options exercised was $78,000 in the three months ended March 31, 2021 and $140,000 in the three months ended March 31, 2020. We received proceeds from stock option exercises of $57,000 in the three months ended March 31, 2021 and $85,000 in the three months ended March 31, 2020. No stock options vested in the three months ended March 31, 2021 or the three months ended March 31, 2020. No stock options were granted, forfeited or expired in the three months ended March 31, 2021. 

Restricted Shares and Restricted Stock Units

Restricted shares are granted under our Non-Employee Director Stock Plan. Restricted stock units are granted under our Employee Stock Incentive Plan. The fair value of restricted shares and restricted stock units is equal to the fair market value of our common stock on the date of grant. The aggregate fair value of outstanding restricted shares and restricted stock units based on the closing share price of our common stock as of March 31, 2021 was $1.7 million. The aggregate fair value of restricted shares and restricted stock units that vested, based on the closing price of our common stock on the vesting date, was $56,000 in the three months ended March 31, 2021 and $45,000 in the three months ended March 31, 2020. No restricted shares or restricted stock units were granted or forfeited in the three months ended March 31, 2021.

The following is a summary of activity in restricted shares and restricted stock units in the three months ended March 31, 2021:

Restricted shares and restricted stock units	Shares		Weighted Average  Grant Date Fair Value
Non-vested at December 31, 2020	68,454		$	21.45
Vested	(2,000	)	28.34
Non-vested at March 31, 2021	66,454		$	21.24

Employee Stock Purchase Plan

We have an Employee Stock Purchase Plan available to eligible U.S. employees. Under the terms of the plan, eligible employees may designate from 1% to 10% of their compensation to be withheld through payroll deductions, up to a maximum of $6,500 in each plan year, for the purchase of common stock at 85% of the lower of the market price on the first or last day of the offering period (which begins on August 1st and ends on July 31st of each year). No shares were purchased under this plan in the three months ended March 31, 2021 or the three months ended March 31, 2020.  As of March 31, 2021, 136,971 shares remain available for future purchase under the Employee Stock Purchase Plan.

Share-Based Compensation Information 

All share-based payments to employees and non-employee directors, including grants of stock options, restricted stock units and restricted shares, are required to be recognized as an expense in our consolidated statements of income based on the grant date fair value of the award. We utilize the straight-line method of expense recognition over the award's service period for our graded vesting options. The fair value of stock options has been determined using the Black-Scholes model. We account for the impact of forfeitures related to employee share-based payment arrangements when the forfeitures occur. We have classified employee share-based compensation within our consolidated statements of income in the same manner as our cash-based employee compensation costs. 

Pre-tax share-based compensation expense in the three months ended March 31, 2021 totaled $334,000, and included $123,000 for stock options, $32,000 for our Employee Stock Purchase Plan, $123,000 for restricted stock units and $56,000 for restricted shares.

Pre-tax share-based compensation expense in the three months ended March 31, 2020 totaled $272,000, and included $114,000 for stock options, $23,000 for our Employee Stock Purchase Plan, $101,000 for restricted stock units and $34,000 for restricted shares.

At March 31, 2021, the total unrecognized compensation cost related to non-vested share-based compensation arrangements was $2.4 million and the related weighted average period over which such cost is expected to be recognized was 2.78 years.

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8. CHANGES IN STOCKHOLDERS’ EQUITY:

A reconciliation of the changes in our stockholders' equity is as follows:

Three Months Ended March 31, 2021:

	Common Stock			Accumulated Other Comprehensive Loss			Retained Earnings		Total Stockholders’ Equity
(In thousands)	Shares	Amount
Balance, December 31, 2020	7,295	$	37,817	$	(1,102	)	$	28,813	$	65,528
Exercise of stock options, net of shares exchanged as payment	4		57		—			—		57
Share-based compensation	—		334		—			—		334
Other comprehensive loss, net of tax	—		—		(204	)		—		(204	)
Net income	—		—		—			1,441		1,441
Balance, March 31, 2021	7,299	$	38,208	$	(1,306	)	$	30,254	$	67,156

Three Months Ended March 31, 2020:

	Common Stock			Accumulated Other Comprehensive Loss			Retained Earnings		Total Stockholders’ Equity
(In thousands)	Shares	Amount
Balance, December 31, 2019	7,155	$	36,659	$	(1,406	)	$	23,071	$	58,324
Exercise of stock options, net of shares exchanged as payment	10		85		—			—		85
Share-based compensation	—		272		—			—		272
Other comprehensive loss, net of tax	—		—		(490	)		—		(490	)
Net income	—		—		—			844		844
Balance, March 31, 2020	7,165	$	37,016	$	(1,896	)	$	23,915	$	59,035

9. OTHER FINANCIAL STATEMENT DATA:

Inventories consisted of the following:

(In thousands)	March 31, 2021		December 31, 2020
Raw materials and purchased parts	$	12,766	$	11,903
Work in process	3,038		2,459
Finished goods	3,328		4,208
Demonstration inventories, net	1,530		1,701
Total inventories	$	20,662	$	20,271

Demonstration inventories are stated at cost less accumulated amortization, generally based on a 36 month useful life. Accumulated amortization for demonstration inventories totaled $2.7 million at March 31, 2021 and $2.7 million at December 31, 2020. Amortization expense related to demonstration inventories was $154,000 in the three months ended March 31, 2021 and $230,000 in the three months ended March 31, 2020.

Accrued expenses consisted of the following:

(In thousands)	March 31, 2021		December 31, 2020
Wages and benefits	$	1,886	$	2,768
Warranty liability	851		793
Income taxes payable	245		269
Other	121		63
Total accrued expenses	$	3,103	$	3,893

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Warranty costs: 

We provide for the estimated cost of product warranties, which cover products for periods ranging from one to three years, at the time revenue is recognized. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of components provided by suppliers, warranty obligations do arise. These obligations are affected by product failure rates, the costs of materials used in correcting product failures and service delivery expenses incurred to make these corrections. If actual product failure rates and material or service delivery costs differ from our estimates, revisions to the estimated warranty liability are required and could be material. At the end of each reporting period, we revise our estimated warranty liability based on these factors. The current portion of our warranty liability is included as a component of accrued expenses. The long-term portion of our warranty liability is included as a component of other liabilities.

A reconciliation of the changes in our estimated warranty liability is as follows:

	Three Months Ended March 31,
(In thousands)	2021			2020
Balance at beginning of period	$	839		$	798
Accrual for warranties	272			230
Warranty revision	(40		)	1
Settlements made during the period	(181		)	(244		)
Balance at end of period	890			785
Current portion of estimated warranty liability	(851		)	(748		)
Long-term estimated warranty liability	$	39		$	37

Deferred warranty revenue:

The current portion of our deferred warranty revenue is included as a component of advance customer payments. The long-term portion of our deferred warranty revenue is included as a component of other liabilities. A reconciliation of the changes in our deferred warranty revenue is as follows:

	Three Months Ended March 31,
(In thousands)	2021			2020
Balance at beginning of period	$	344		$	275
Revenue deferrals	147			134
Amortization of deferred revenue	(106		)	(100		)
Total deferred warranty revenue	385			309
Current portion of deferred warranty revenue	(281		)	(227		)
Long-term deferred warranty revenue	$	104		$	82

10. INTANGIBLE ASSETS: 

Intangible assets consist of the following: 

	March 31, 2021							December 31, 2020
(In thousands)	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Patents	$	1,866	$	(1,585	)	$	281	$	1,832	$	(1,542	)	$	290
Software	206		(206		)	—		206		(200		)	6
Marketing assets and customer relationships	86		(64		)	22		101		(72		)	29
Total intangible assets	$	2,158	$	(1,855	)	$	303	$	2,139	$	(1,814	)	$	325

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Amortization expense in the three months ended March 31, 2021 and the three months ended March 31, 2020 was as follows:  

	Three Months Ended March 31,
(In thousands)	2021		2020
Patents	$	43	$	38
Software		6		8
Marketing assets and customer relationships		2		2
Total amortization expense	$	51	$	48

Estimated aggregate amortization expense based on current intangible assets for the next four years is expected to be as follows: $116,000 for the remainder of 2021; $113,000 in 2022; $64,000 in 2023; and $10,000 in 2024.

11. REVENUE CONCENTRATIONS, SIGNIFICANT CUSTOMERS AND GEOGRAPHIC AREAS:

The following summarizes our revenue by product line:

	Three Months Ended March 31,
(In thousands)	2021		2020
High Precision 3D and 2D Sensors	$	6,357	$	4,122
Inspection and Metrology Systems		6,339		8,361
Semiconductor Sensors		5,036		3,946
Total	$	17,732	$	16,429

In the three months ended March 31, 2021, sales to significant customer A accounted for 22% of our total revenues. As of March 31, 2021, accounts receivable from significant customer A were $3.0 million.

Export revenues as a percentage of total revenues were 82% in the three months ended March 31, 2021 and 72% in the three months ended March 31, 2020. Export revenues are attributed to the country where the product is shipped. Substantially all of our export revenues are negotiated, invoiced and paid in U.S. dollars. Export revenues by geographic area are summarized as follows:

	Three Months Ended March 31,
(In thousands)	2021		2020
Americas	$	783	$	401
Europe		3,500		2,103
China		5,163		3,880
Taiwan		730		1,716
Other Asia		4,143		3,680
Other		148		—
Total export sales	$	14,467	$	11,780

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12. NET INCOME PER SHARE:  

Net income per basic share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Net income per diluted share is computed by dividing net income by the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares consist of common shares to be issued upon exercise of stock options, vesting of restricted stock units, vesting of restricted shares and from purchases of shares under our Employee Stock Purchase Plan, as calculated using the treasury stock method. Common equivalent shares are excluded from the calculation of net income per diluted share if their effect is anti-dilutive. The components of net income per basic and diluted share were as follows:

(In thousands except per share amounts)	Net Income		Weighted Average Shares Outstanding	Per Share Amount
Three Months Ended March 31, 2021
Basic	$	1,441	7,293	$	0.20
Dilutive effect of common equivalent shares	—		170	(0.01		)
Dilutive	$	1,441	7,463	$	0.19

(In thousands except per share amounts)	Net Income		Weighted Average Shares Outstanding	Per Share Amount
Three Months Ended March 31, 2020
Basic	$	844	7,157	$	0.12
Dilutive effect of common equivalent shares	—		210	(0.01		)
Dilutive	$	844	7,367	$	0.11

Potentially dilutive shares consist of stock options, restricted stock units, restricted shares and purchases of shares under our Employee Stock Purchase Plan. Potentially dilutive shares excluded from the calculations of net income per diluted share due to their anti-dilutive effect were as follows: 97,000 shares in the three months ended March 31, 2021 and 145,000 shares in the three months ended March 31, 2020.

13. OTHER COMPREHENSIVE LOSS:

Changes in components of other comprehensive loss and taxes related to items of other comprehensive loss are as follows:  

	Three Months Ended March 31, 2021								Three Months Ended March 31, 2020
(In thousands)	Before Tax			Tax Effect		Net of Tax Amount			Before Tax			Tax Effect			Net of Tax Amount
Foreign currency translation adjustments	$	(147	)	$	—	$	(147	)	$	(600	)	$	—		$	(600	)
Unrealized gains (losses) on available-for-sale securities		(72	)		15		(57	)		140			(30	)		110
Other comprehensive loss	$	(219	)	$	15	$	(204	)	$	(460	)	$	(30	)	$	(490	)

At March 31, 2021 and 2020, components of accumulated other comprehensive loss is as follows: 

(In thousands)	Foreign Currency Translation Adjustments			Available- for-Sale Securities			Accumulated Other Comprehensive Loss
Balances at December 31, 2020	$	(1,285	)	$	183		$	(1,102	)
Other comprehensive loss for the three months ended March 31, 2021	(147		)	(57		)	(204		)
Balances at March 31, 2021	$	(1,432	)	$	126		$	(1,306	)

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(In thousands)	Foreign Currency Translation Adjustments			Available- for-Sale Securities		Accumulated Other Comprehensive Loss
Balances at December 31, 2019	$	(1,475	)	$	69	$	(1,406	)
Other comprehensive loss for the three months ended March 31, 2020	(600		)	110		(490		)
Balances at March 31, 2020	$	(2,075	)	$	179	$	(1,896	)

14. INCOME TAXES:

We recorded income tax expense of $311,000 in the three months ended March 31, 2021, compared to income tax expense of $149,000 in the three months ended March 31, 2020. Our income tax expense in the three months ended March 31, 2021 reflected an effective tax rate of approximately 18%, compared to an effective tax rate of approximately 15% in the three months ended March 31, 2020. Our effective tax rate is impacted by the U.S. federal R&D tax credit and foreign tax credit. The increase in effective tax rate in the three months ended March 31, 2021 was primarily due to a reduction in the impact of the U.S. federal R&D tax credit and foreign tax credit on our effective tax rate due to the higher level of profitability expected in 2021. 

We have significant deferred tax assets as a result of temporary differences between taxable income on our tax returns and U.S. GAAP income, R&D tax credit carry forwards and state net operating loss carry forwards. A deferred tax asset generally represents future tax benefits to be received when temporary differences previously reported in our consolidated financial statements become deductible for income tax purposes, when net operating loss carry forwards could be applied against future taxable income, or when tax credit carry forwards are utilized on our tax returns. We assess the realizability of our deferred tax assets and the need for a valuation allowance based on the guidance provided in current financial accounting standards. 

Significant judgment is required in determining the realizability of our deferred tax assets. The assessment of whether valuation allowances are required considers, among other matters, the nature, frequency and severity of any current and cumulative losses, forecasts of future profitability, the duration of statutory carry forward periods, our experience with loss carry forwards not expiring unused and tax planning alternatives. In analyzing the need for valuation allowances, we first considered our history of cumulative operating results for income tax purposes over the past three years in each of the tax jurisdictions in which we operate, our financial performance in recent quarters, statutory carry forward periods and tax planning alternatives. In addition, we considered both our near-term and long-term financial outlook. After considering all available evidence (both positive and negative), we concluded that recognition of valuation allowances for substantially all of our U.S. and Singapore based deferred tax assets was not required at March 31, 2021 or December 31, 2020.

The Inland Revenue Authority of Singapore has initiated a routine compliance review of our 2018 income tax return. We presently anticipate that the outcome of this audit will not have a significant impact on our financial position or results of operations.  

15. CONTINGENCIES: 

We are periodically a defendant in miscellaneous lawsuits, claims and disputes in the ordinary course of business. While the outcome of these matters cannot be predicted with certainty, management presently believes the disposition of these matters will not have a material effect on our financial position, results of operations or cash flows. 

In the normal course of business to facilitate sales of our products and services, we at times indemnify other parties, including customers, with respect to certain matters. In these instances, we have agreed to hold the other parties harmless against losses arising out of intellectual property infringement or other types of claims. These agreements may limit the time within which an indemnification claim can be made, and almost always limits the amount of the claim. It is not possible to determine the maximum potential amount of exposure under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made, if any, under these agreements have not had a material impact on our operating results, financial position or cash flows. However, there can be no assurance that intellectual property infringement and other claims against us or parties we have indemnified will not have a greater impact in the future.

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ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS:

The following management’s discussion and analysis of the financial condition and results of operations of CyberOptics Corporation and its wholly-owned subsidiaries ("we", "us" and "our") contains a number of estimates and predictions that are forward looking statements rather than statements based on historical fact. Among other matters, we discuss (i) a possible world-wide recession or depression resulting from the economic consequences of the Covid-19 pandemic; (ii) the negative effect on our revenue and operating results of the Covid-19 crisis on our customers and suppliers, the market for our products and the global supply chain; (iii) the availability of parts to meet customer orders; (iv) the level of anticipated revenues, gross margins, and expenses; (v) the timing of orders and shipments of our existing products, particularly our SQ3000™ Multi-Function systems for automated optical inspection ("AOI") and MX systems for memory module inspection; (vi) the level of orders from our original equipment manufacturer ("OEM") customers; (vii) the timing of initial revenue and projected improvements in gross margins from sales of new products that have been recently introduced, that we have under development or that we anticipate introducing in the future; (viii) the timing of and improvement in gross margins resulting from future cost reduction programs; (ix) market acceptance of our SQ3000 Multi-Function systems and products for semiconductor wafer and advanced packaging inspection and metrology; (x) our assessment of trends in the surface mount technology ("SMT") and semiconductor capital equipment markets; (xi) the impact of lower margin MX3000™ memory module inspection systems on our consolidated gross margin in any future period; (xii) risks related to cancellation or renegotiation of orders we have received; and (xiii) changes in the level of tariffs and other trade policies of the United States, and trade relations with other countries. Although we have made these statements based on our experience and expectations regarding future events, there may be events or factors that we have not anticipated. Therefore, the accuracy of our forward-looking statements and estimates are subject to a number of risks, including those risks identified in our Annual Report on Form 10-K for the year ended December 31, 2020.

RESULTS OF OPERATIONS

General

We are a leading global developer and manufacturer of high precision 3D sensors and system products for inspection and metrology. We also develop and manufacture our WaferSense® products, which is a family of wireless, wafer-shaped sensors that provide measurements of critical factors in the semiconductor fabrication process. We intend to leverage our sensor technologies in the SMT and semiconductor industries to deliver profitable growth. A key element of our strategy is the continued development and sale of high precision 3D sensors and system products based on our proprietary Multi-Reflection Suppression™ (MRS™) technology. We believe that our MRS technology is a breakthrough 3D optical technology for high-end inspection and metrology with the potential to significantly expand our markets. Another key element in our strategy is the continued development and introduction of new sensor applications for our WaferSense® family of products.

We believe that the three months ended September 30, 2019 marked the trough of the downturn in the SMT and semiconductor capital equipment markets. We believe that conditions in the SMT and semiconductor capital equipment markets started to strengthen in 2020 and will remain positive throughout 2021. Over the longer-term (i.e. the next several years), we expect a growing number of opportunities in the markets for SMT and semiconductor inspection and metrology. We believe that our 3D MRS sensor and system products and our WaferSense family of products have the potential to expand our presence in the markets for SMT and semiconductor capital equipment.  

Manufacturing yield challenges as electronics and semiconductors become more complex are driving the need for more precise inspection and metrology. We believe 3D inspection and metrology represent high-growth segments in both the SMT and semiconductor capital equipment markets. We believe our 3D MRS technology platform is well suited for many applications in these markets, particularly with respect to complex circuit boards and semiconductor wafer and advanced packaging inspection and metrology applications. We are taking advantage of current market trends by deploying our 3D MRS sensor technology in the following products:

· Our SQ3000™ Multi-Function systems for Automated Optical Inspection (AOI), Solder Paste Inspection (SPI) and coordinate measurement (CMM) applications, which are designed to expand our presence in markets requiring high precision inspection and metrology. In these markets, identifying defects has become highly challenging and critical due to smaller semiconductor and electronics packaging and increasing component density on circuit boards. We believe the 3D MRS sensor technology used in our products is uniquely suited for many of these applications because of its ability to offer microscopic image quality and superior measurement performance at production line speeds.

· Our next generation MX3000™ AOI system for 3D inspection of memory modules following the singulation step of the manufacturing process. We recognized our first revenue from the sale of the MX3000 in the first quarter of 2020. Since late 2020, we have received new purchase orders for the MX3000 valued at $7.3 million, of which $2.4 million are expected to be recognized as revenue in the second quarter of 2021.

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· Our next generation ultra-high resolution three micron pixel 3D NanoResolution MRS™ sensor, which is capable of measuring feature sizes down to 25 microns accurately and at high speeds, and is suitable for many semiconductor wafer and advanced packaging inspection and metrology applications. We have adapted the software used in our SQ3000 Multi-Function systems to work with wafer handling equipment to facilitate sales of our 3D NanoResolution MRS sensor to OEM's and system integrators.

· Our new WX3000™ metrology and inspection system for wafer and advanced packing applications, which incorporates our next generation ultra-high resolution 3D NanoResolution MRS sensor. The WX3000 performs 100% 3D and 2D inspection and metrology simultaneously at high speeds and delivers through-put of more than 25 wafers per hour. We believe the WX3000 performs two to three times faster than alternate technologies at data processing speeds in excess of 75 million 3D data points per second. The WX3000 is suitable for many semiconductor wafer and advanced packaging inspection and metrology applications for feature sizes down to 25-microns. We anticipate that sales of sensors and systems based on our 3D MRS technology for semiconductor wafer and advanced packaging inspection and metrology applications will provide us with long-term growth opportunities. 

Revenue from our MRS-based products, including 3D AOI systems and high precision 3D MRS sensors, increased by $1.1 million or 15% to $8.3 million in the first quarter of 2021, from $7.2 million in the first quarter of 2020. Over the long term, we anticipate continued increases in sales of products based on our MRS technology in the SMT and semiconductor capital equipment markets. In particular, we believe inspection and metrology for mini LED, memory modules and semiconductor wafer and advanced packaging applications represent significant long-term growth opportunities. We anticipate increasing sales of MRS-based products by selling them to new OEM customers and system integrators, and by expanding direct sales of inspection and metrology system products to end-user customers. 

We have continued to invest in our WaferSense family of products, because fabricators of semiconductors and other customers view these products as valuable tools for improving yields and productivity. We have recently introduced several new WaferSense products to further increase our revenue growth, including the In-Line Particle Sensor™ (IPS™). This sensor detects particles in gas and vacuum lines in semiconductor process equipment, and is particularly relevant for EUV lithography tools. Additional WaferSense applications are currently under development. Over the long-term, strong future sales growth is anticipated for our WaferSense family of products. 

Our order backlog was $32.4 million at March 31, 2021, up from $23.0 million at December 31, 2020, and up from $24.8 million at March 31, 2020. We are forecasting sales of $21.0 to $23.0 million for the second quarter of 2021. Our forecast for the second quarter of 2021 includes $2.4 million of sales from our order backlog for MX3000 memory module inspection systems. We believe that demand in the SMT and semiconductor capital equipment markets will remain strong throughout 2021. However, an increase in the severity of the current Covid-19 outbreak, or a resulting prolonged economic recession or depression, could cause a slow-down in demand for SMT and semiconductor capital equipment. Over the long term, we believe anticipated sales growth of our products based on 3D MRS technology and WaferSense sensors should increase revenues and net income. We believe that we have the resources required to attain our growth objectives, given our available cash and marketable securities balances totaling $32.3 million at March 31, 2021.

Impact from Covid-19

Effect of Covid-19 Outbreak on Business Operations

Covid-19 was first identified in December 2019, and in March 2020, the World Health Organization categorized Covid-19 as a pandemic. The Covid-19 pandemic is affecting our customers, suppliers, service providers and employees, and the ultimate impacts of Covid-19 on our business, results of operations, liquidity and prospects are not fully known at this time. However, the Covid-19 outbreak has had a relatively minimal impact on our business to date. Our revenues increased by 8% to $17.7 million in the first quarter of 2021, from $16.4 million in the first quarter of 2020. We are forecasting revenues of $21.0 to $23.0 million for the second quarter of 2021, compared to $16.0 million in the second quarter of 2020. Our forecast for the second quarter of 2021 could change if the Covid-19 pandemic worsens, or if unforeseen events related to the pandemic occur. The most significant impacts on our business from the Covid-19 pandemic include the following: 

· Our key factories are located in Minnesota and Singapore. Both of these locations have been subject to government mandated shelter-in-place orders. Because our operations have been deemed essential, we were able to keep our factories up and running while the shelter-in-place mandates were in effect. If the pandemic worsens, it is possible that our operations may not be deemed essential under future government mandated shelter-in-place orders, and we may be required to shut-down factory operations. We have periodically implemented split-shifts for our factory operations to minimize the number of employees in our facilities at any given time, but these measures have not affected our production capacity. Most of the time, our non-factory employees are working remotely. To date, the shelter-in-place mandates and remote work arrangements have had a minimal impact on operations, but that could change if the pandemic worsens and is more than temporary.

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· Sales of some products, mainly our SQ3000 Multi-Function systems and MX memory module inspection products, require customer acceptance due to performance or other criteria that is considered more than a formality. Most of our customer’s factories have remained open during the Covid-19 pandemic because they are deemed to be essential under government shelter-in-place mandates. However, global travel restrictions and quarantine measures have hindered our ability to obtain customer acceptances of certain of our products at various times in 2020. Continuing or new global travel restrictions and quarantine measures could hinder our ability to obtain customer acceptances in a timely manner in the future, and therefore impact the timing of revenue recognition.

· Total operating expenses were reduced in the three months ended March 31, 2021 due to the Covid-19 pandemic. Travel, trade show expenses and other costs were reduced due to changes in employee travel patterns and trade show cancellations.

·
We have experienced some supply disruptions due to the Covid-19 pandemic, mainly from suppliers not deemed essential by shelter-in-place mandates in certain countries. Key supply chain disruptions have been resolved to date. However, supply chain disruptions could increase significantly if the pandemic worsens and continues for an extended period of time. To date, our on-hand inventories have been sufficient to enable us to mitigate any supply disruptions with minimal impact on our sales or ability to service customers. We presently do not expect that Covid-19 related supply chain disruptions will have a significant impact on our revenue in the second quarter of 2021. 

We currently do not anticipate any significant credit losses or asset impairments resulting from the Covid-19 pandemic. As of March 31, 2021, our available balances of cash and marketable securities totaled $32.3 million. We believe that we have the resources required to attain our growth objectives and to meet any unforeseen difficulties resulting from the Covid-19 pandemic. However, we will continue to closely monitor the Covid-19 pandemic and its impact on our business in the coming months. 

United States Covid-19 Relief Legislation 

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was signed into law in the United States. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods and alternative tax credit refunds. The CARES Act also appropriated funds for the Small Business Administration Paycheck Protection Program loans that are forgivable in certain circumstances to promote continued employment. Additional relief packages were passed in December 2020 and March 2021. We have analyzed these pieces of legislation and presently do not believe they will have a material impact on our financial condition, results of operations or liquidity. However, we will continue to monitor the impact that these pieces of legislation could have on our business in the future.

Singapore Jobs Support Program

The Singapore Government implemented a jobs support program in 2020 that was intended to support businesses and encourage retention of employees during the period of economic uncertainty caused by the Covid-19 pandemic. Under the jobs support program, the Singapore Government co-funded a portion of the gross monthly wages paid to local employees, which reduced our operating expenses in the first quarter of 2020 by approximately $19,000. We did not receive any benefit from the Singapore jobs support program in the three months ended March 31, 2021, nor do we expect any benefit during the remainder of 2021.

Revenues

Our revenues increased by 8% to $17.7 million in the three months ended March 31, 2021, from $16.4 million in the three months ended March 31, 2020. The following table sets forth revenues by product line for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31,
(In thousands)	2021		2020		% Change
High Precision 3D and 2D Sensors	$	6,357	$	4,122		54		%
Inspection and Metrology Systems		6,339		8,361		(24	)	%
Semiconductor Sensors		5,036		3,946		28		%
Total	$	17,732	$	16,429		8		%

20

Revenues from sales of high precision 3D and 2D sensors increased by $2.2 million or 54% to $6.4 million in the three months ended March 31, 2021, from $4.1 million in the three months ended March 31, 2020. The increase was due to higher sales of both 3D MRS sensors and legacy 2D sensors resulting from improving conditions in the global semiconductor and SMT capital equipment markets. Sales of high precision 3D MRS sensors increased by $1.1 million or 37% to $4.2 million in the three months ended March 31, 2021 from $3.1 million in the three months ended March 31, 2020. 

Sales of high precision 3D and 2D sensors are dependent on the success of our OEM customers and system integrators selling products that incorporate our sensors. We believe sales of our 3D MRS sensors, including our next generation ultra-high resolution three micron pixel 3D NanoResolution MRS sensor, will represent an increasing percentage of our total high precision 3D and 2D sensor sales. Sales of high precision 3D and 2D sensors, including 3D MRS sensors, are prone to significant quarterly fluctuations due to variations in market demand and customer inventory levels. Revenues from sales of high precision 3D and 2D sensors are forecasted to post strong year-over-year growth in the second quarter of 2021.

Revenues from sales of inspection and metrology systems decreased by $2.0 million or 24% to $6.3 million in the three months ended March 31, 2021, from $8.4 million in the three months ended March 31, 2020. The revenue decreases were due to lower sales of legacy 2D systems and no sales of memory module inspection systems, due to normal quarter-to-quarter fluctuations in demand for these products. Sales of 2D and 3D MX memory module inspection systems totaled $1.4 million in the three months ended March 31, 2020. Sales of SQ3000™ Multi-Function systems increased by $761,000 or 23% to $4.1 million in the three months ended March 31, 2021, from $3.3 million in the three months ended March 31, 2020. Revenues from sales of inspection and metrology systems are forecasted to post strong double digit growth on both a sequential and year-over-year basis in the second quarter of 2021.

We believe the increase in sales of SQ3000™ Multi-Function systems in the three months ended March 31, 2021 was due to the competitive advantages offered by our SQ3000™ Multi-Function system products, and resulted from many companies transitioning from 2D AOI to 3D AOI systems to meet the increasingly demanding product inspection and metrology requirements in the SMT and semiconductor markets. The market transition away from 2D AOI systems is expected to result in an industry-wide 20% compound annual rate of growth in global sales of 3D AOI systems through 2025. Given these market dynamics and because of the competitive advantages of our 3D MRS sensor technology, we anticipate sales of SQ3000™ Multi-Function systems will represent an increasing percentage of our total inspection and metrology system sales in the future.

Since late 2020, we have received orders valued at $7.3 million for 3D MX3000 memory module inspection systems, of which $2.4 million are expected to be recognized as revenue in the second quarter of 2021. We believe memory manufacturers have determined that post singulation automated optical inspection of memory modules is an important step in their manufacturing process to improve yields and product quality. Two of the world's three largest memory manufacturers now use either our 2D MX600™ or 3D MX3000 memory module inspection systems. As a result, we believe the potential market opportunity for our 2D and 3D memory module inspection systems is significant and anticipate that sales of these systems will continue in the future.

Revenues from sales of semiconductor sensors, principally our WaferSense line of products, increased by $1.1 million or 28% to $5.0 million in the three months ended March 31, 2021, from $3.9 million in the three months ended March 31, 2020. The revenue increases were due to favorable market conditions for semiconductor capital equipment spending, growing acceptance of our WaferSense products as important productivity enhancement tools by semiconductor manufacturers, and improved account penetration at major semiconductor manufacturers and capital equipment suppliers. Over the long term, we anticipate that the benefits from growing market awareness of our WaferSense products, improved account penetration at major semiconductor manufacturers and capital equipment suppliers and new product introductions will lead to additional WaferSense product sales. Revenues from sales of semiconductor sensors are forecasted to post strong growth on both a sequential and year-over-year basis in the second quarter of 2021, driven in part by demand from two new semiconductor fabs during this period.

Export revenues totaled $14.5 million or 82% of our revenues in the three months ended March 31, 2021, compared to $11.8 million or 72% of total revenues in the three months ended March 31, 2020.  Export revenues as a percentage of total revenues increased in the three months ended March 31, 2021 due to higher sales of 3D and 2D high precision sensors and semiconductor sensors. A higher proportion of these products are generally sold outside the United States as compared to our other products. In addition, the Covid-19 pandemic has had a more negative impact on sales in the U.S., when compared to the effect on sales in Europe and Asia.

Cost of Revenues and Gross Margin 

Cost of revenues increased by $207,000 or 2% to $9.4 million in the three months ended March 31, 2021, from $9.1 million in the three months ended March 31, 2020. The increase in cost of revenues was due to higher revenues, offset in part by the impact of a more favorable sales mix of higher gross margin products. Revenues increased by 8% in the three months ended March 31, 2021, when compared to the three months ended March 31, 2020. Total gross margin as a percentage of revenues was 47% in the three months ended March 31, 2021, compared to 44% in the three months ended March 31, 2020. Higher margin 3D MRS sensors and semiconductor sensors were a larger percentage of our total revenues in the three months ended March 31, 2021, when compared to the three months ended March 31, 2020. 

21

Our total gross margin as a percentage of revenues in the second quarter of 2021 is expected to decline by roughly three percentage points from the level in the first quarter of 2021, reflecting an increased proportion of lower margin inspection and metrology system products in our revenue mix, including $2.4 million of MX3000 memory module inspection systems.  

Our markets are highly price competitive, particularly in the electronics assembly and SMT markets. As a result, we have experienced continual pressure on our gross margins. We compensate for the pressure to reduce the price of our products by introducing new products with more features and improved performance and through manufacturing cost reduction programs. Sales of many products that we have recently introduced or are about to introduce, including our current and future SQ3000 Multi-Function systems, WX3000 system for semiconductor wafer and advanced packaging inspection and metrology, next generation 3D MRS sensors and semiconductor sensors (consisting primarily of our WaferSense line of products) have, or are expected to have, more favorable gross margins than many of our existing products. Our next generation 3D MRS sensor and system products are being designed for more complex and demanding inspection and metrology applications in the SMT and semiconductor markets. Sales prices and gross profit margins for these applications tend to be higher than margins for products sold in the general purpose SMT market. However, the gross margin percentage for our 3D MX3000 system for inspection of memory modules will be lower than our current total gross margin percentage due to the significant costs for material handling and automation required for this product. We are working on cost reduction strategies for our SQ3000 Multi-Function system which should benefit gross margins for this product starting in 2022.

Operating Expenses

R&D expenses were $2.8 million or 16% of revenues in the three months ended March 31, 2021, compared to $2.4 million or 15% of revenues in the three months ended March 31, 2020. The increase in R&D expenses in the three months ended March 31, 2021 was mainly due to higher compensation costs for new and existing R&D employees and higher costs for engineering prototypes. Current R&D expenditures are primarily focused on the continued development of our portfolio of next generation 3D MRS sensor and system products and continued R&D work on WaferSense products. We also continue to enhance our SQ3000 Multi-Function systems and 3D MX3000 memory module inspection systems.  

Selling, general and administrative ("S,G&A") expenses were $3.9 million or 22% of revenues in the three months ended March 31, 2021, compared to $4.2 million or 25% of revenues in the three months ended March 31, 2020. The decrease in S,G&A expenses in the three months ended March 31, 2021 was due to lower third party channel commissions, as more sales were sold through distributors in the first quarter of 2021, lower costs for travel, trade shows and sales demonstrations due to the Covid-19 pandemic, and lower professional fees. 

Total operating expenses in the second quarter of 2021 are forecasted to increase by 5-8% from the level in the first quarter of 2021 due to higher channel commissions and incentive compensation, given the higher revenue levels being forecasted. 

Interest Income and Other

Interest income and other includes interest earned on investments and gains and losses associated with foreign currency transactions, primarily intercompany financing transactions associated with our subsidiaries in the United Kingdom, Singapore, China and Taiwan. We recognized losses from foreign currency transactions of $57,000 in the three months ended March 31, 2021, compared to gains from foreign currency transactions of $172,000 in the three months ended March 31, 2020.

Income Taxes

We recorded income tax expense of $311,000 in the three months ended March 31, 2021, compared to income tax expense of $149,000 in the three months ended March 31, 2020. Our income tax expense in the three months ended March 31, 2021 reflected an effective tax rate of approximately 18%, compared to an effective tax rate of approximately 15% in the three months ended March 31, 2020. Our effective tax rate is impacted by the U.S. federal R&D tax credit and foreign tax credit. The increase in effective tax rate in the three months ended March 31, 2021 was primarily due to a reduction in the impact of the U.S. federal R&D tax credit and foreign tax credit on our effective tax rate due to the higher level of profitability expected in 2021.

We have significant deferred tax assets as a result of temporary differences between the taxable income on our tax returns and U.S. GAAP income, R&D tax credit carry forwards and state net operating loss carry forwards. A deferred tax asset generally represents future tax benefits to be received when temporary differences previously reported in our consolidated financial statements become deductible for income tax purposes, when net operating loss carry forwards could be applied against future taxable income, or when tax credit carry forwards are utilized on our tax returns. We assess the realizability of our deferred tax assets and the need for a valuation allowance based on the guidance provided in current financial accounting standards. 

22

Significant judgment is required in determining the realizability of our deferred tax assets. The assessment of whether valuation allowances are required considers, among other matters, the nature, frequency and severity of any current and cumulative losses, forecasts of future profitability, the duration of statutory carry forward periods, our experience with credit and loss carry forwards not expiring unused and tax planning alternatives. In analyzing the need for valuation allowances, we first considered our history of cumulative operating results for income tax purposes over the past three years in each of the tax jurisdictions in which we operate, our financial performance in recent quarters, statutory carry forward periods and tax planning alternatives. In addition, we considered both our near-term and long-term financial outlook. After considering all available evidence (both positive and negative), we concluded that recognition of valuation allowances for substantially all of our U.S. and Singapore based deferred tax assets was not required at March 31, 2021 or December 31, 2020.

The Inland Revenue Authority of Singapore has initiated a routine compliance review of our 2018 income tax return. We presently anticipate that the outcome of this audit will not have a significant impact on our financial position or results of operations.

Liquidity and Capital Resources

Our cash and cash equivalents increased by $1.6 million in the three months ended March 31, 2021. Cash provided by operating activities of $2.4 million and proceeds of $2.6 million from maturities of marketable securities were partially offset by purchases of marketable securities totaling $2.8 million and purchases of fixed assets and capitalized patent costs totaling $684,000. Proceeds from stock option exercises totaled $57,000. Our cash and cash equivalents fluctuate in part because of sales and maturities of marketable securities and investment of cash balances in marketable securities, and from other sources of cash. Accordingly, we believe the combined balances of cash and marketable securities provide a more reliable indication of our available liquidity than cash balances alone. Combined balances of cash and marketable securities increased by $1.7 million to $32.3 million as of March 31, 2021, from $30.6 million as of December 31, 2020.

Operating activities provided $2.4 million of cash in the three months ended March 31, 2021. The amount of cash provided by operations was favorably impacted by net income of $1.4 million. Net income was affected by non-cash expenses totaling $1.3 million for depreciation and amortization, non-cash operating lease expense, provision for doubtful accounts, deferred taxes, non-cash losses from foreign currency transactions, share-based compensation costs and an unrealized gain on our available-for-sale equity security. Changes in operating assets and liabilities providing cash included an increase in accounts payable of $2.7 million. Changes in operating assets and liabilities using cash included an increase in accounts and trade notes receivable of $1.1 million, an increase in inventories of $721,000, a decrease in accrued expenses of $738,000, a decrease in operating lease liabilities of $211,000 and various changes in other operating assets and liabilities totaling $193,000. Increases in accounts payable and inventories at March 31, 2021 were due to planned purchases of raw materials to meet anticipated customer demand for inspection and metrology systems. The decrease in accrued expenses was mainly due to payment of 2020 bonus accruals in the first quarter of 2021. Accounts and trade notes receivable increased due to higher sales in the first quarter of 2021 when compared to the fourth quarter of 2020. The decrease in operating lease liabilities was due to monthly rental payments for facility leases. Other operating assets and liabilities used $193,000 of cash for prepaid expenses and a reduction in customer deposits for inventory. 

Investing activities used $854,000 of cash in the three months ended March 31, 2021. Changes in the level of investment in marketable securities, resulting from purchases and maturities of those securities, used $170,000 of cash in the three months ended March 31, 2021. We used $684,000 of cash in the three months ended March 31, 2021 for the purchase of fixed assets and capitalized patent costs.  

Financing activities provided $57,000 of cash in the three months ended March 31, 2021 from the exercise of employee stock options. 

At March 31, 2021, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities. These entities are established by some companies for the purpose of establishing off-balance sheet arrangements or for other contractually narrow or limited purposes.

We believe that on-hand cash, cash equivalents and marketable securities, coupled with anticipated future cash flow from operations, will be adequate to fund our cash flow needs for the foreseeable future.

23

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4 – CONTROLS AND PROCEDURES

a.          Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.

b.          There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

24

PART II. OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

None.

ITEM 1A – RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020. The risks identified in these risk factors could materially affect our business, financial condition or future results.  

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES 

None.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 – MINE SAFETY DISCLOSURES

None.

ITEM 5 – OTHER INFORMATION

None.

25

ITEM 6 – EXHIBITS

31.1:	Certification of Chief Executive Officer pursuant to Rule 15d-14(a) (17 CFR 240.15d-14(a)) and Section 302 of the Sarbanes Oxley Act of 2002
31.2:	Certification of Chief Financial Officer pursuant to Rule 15d-14(a) (17 CFR 240.15d-14(a)) and Section 302 of the Sarbanes Oxley Act of 2002
32:	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002
101:	Financial statements formatted in Inline Extensible Business Reporting Language: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Interim Condensed Consolidated Financial Statements

26

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CYBEROPTICS CORPORATION

/s/ Subodh Kulkarni

By Subodh Kulkarni, President and Chief Executive Officer

(Principal Executive Officer and Duly Authorized Officer)

/s/ Jeffrey A. Bertelsen

By Jeffrey A. Bertelsen, Vice President, Chief Financial

Officer and Chief Operating Officer

(Principal Accounting Officer and Duly Authorized Officer)

Dated: May 7, 2021

27

EX-31.1

EXHIBIT 31.1

I, Subodh Kulkarni, certify that:

1.          I have reviewed this Quarterly Report on Form 10-Q of CyberOptics Corporation.

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.          The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.          The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2021

/s/ Subodh Kulkarni

Signature

Name: Subodh Kulkarni

Title: President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

I, Jeffrey A. Bertelsen, certify that:

1.          I have reviewed this Quarterly Report on Form 10-Q of CyberOptics Corporation.

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.          The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.          The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2021

/s/ Jeffrey A. Bertelsen

Signature

Name: Jeffrey A. Bertelsen

Title: Vice President, Chief Financial Officer and Chief

Operating Officer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CyberOptics Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2021 as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), the undersigned, Subodh Kulkarni, Chief Executive Officer of the Company, and Jeffrey A. Bertelsen, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Subodh Kulkarni

Subodh Kulkarni

President and Chief Executive Officer

May 7, 2021

/s/ Jeffrey A. Bertelsen

Jeffrey A. Bertelsen

Vice President, Chief Financial Officer and Chief Operating Officer

May 7, 2021

END OF FILING

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Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2021	Apr. 30, 2021
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2021
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2020
Entity Registrant Name	CYBEROPTICS CORP
Entity Central Index Key	0000768411
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		7,299,376
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	0-16577
Entity Address, Address Line One	5900 Golden Hills Drive
Entity Address, City or Town	MINNEAPOLIS
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55416
Entity Tax Identification Number	41-1472057
City Area Code	(763)
Local Phone Number	542-5000
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	CYBE
Security Exchange Name	NASDAQ
Document Transition Report	false
Document Quarterly Report	true
Entity Incorporation, State or Country Code	MN
Entity Interactive Data Current	Yes

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
ASSETS
Cash and cash equivalents	$ 10,031	$ 8,399
Marketable securities	8,680	8,121
Accounts receivable, less allowances of $332 at March 31, 2021 and $302 at December 31, 2020	15,914	14,735
Inventories	20,662	20,271
Prepaid expenses	901	686
Other current assets	754	890
Total current assets	56,942	53,102
Marketable securities, long-term	13,587	14,052
Equipment and leasehold improvements, net	3,446	3,235
Intangible assets, net	303	325
Goodwill	1,366	1,366
Right-of-use assets (operating leases)	2,469	2,621
Trade notes receivable, long-term	333	418
Deferred tax assets	4,488	4,597
Total assets	82,934	79,716
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	7,784	5,118
Advance customer payments	687	823
Accrued expenses	3,103	3,893
Current operating lease liabilities	827	819
Total current liabilities	12,401	10,653
Other liabilities	143	134
Long-term operating lease liabilities	3,025	3,244
Reserve for income taxes	209	157
Total liabilities	15,778	14,188
Commitments and contingencies
Stockholders’ equity:
Preferred stock, no par value, 5,000,000 shares authorized, none outstanding	0	0
Common stock, no par value, 25,000,000 shares authorized, 7,299,376 shares issued and outstanding at March 31, 2021 and 7,294,617 shares issued and outstanding at December 31, 2020	38,208	37,817
Accumulated other comprehensive loss	(1,306)	(1,102)
Retained earnings	30,254	28,813
Total stockholders’ equity	67,156	65,528
Total liabilities and stockholders’ equity	$ 82,934	$ 79,716

XML

CONDENSED CONSOLDIATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Accounts receivable, allowances	$ 332	$ 302
Preferred stock, par value
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	7,299,376	7,294,617
Common stock, shares outstanding	7,299,376	7,294,617

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) shares in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Income Statement [Abstract]
Revenues	$ 17,732,000	$ 16,429,000
Cost of revenues	9,353,000	9,146,000
Gross margin	8,379,000	7,283,000
Research and development expenses	2,761,000	2,395,000
Selling, general and administrative expenses	3,888,000	4,159,000
Income (loss) from operations	1,730,000	729,000
Interest income and other	22,000	264,000
Income (loss) before income taxes	1,752,000	993,000
Income tax expense (benefit)	311,000	149,000
Net income (loss)	$ 1,441,000	$ 844,000
Net income (loss) per share – Basic	$ 0.20	$ 0.12
Net income (loss) per share – Diluted	$ 0.19	$ 0.11
Weighted average shares outstanding – Basic	7,293	7,157
Weighted average shares outstanding – Diluted	7,463	7,367

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 1,441	$ 844
Other comprehensive income (loss) before income taxes:
Foreign currency translation adjustments	(147)	(600)
Unrealized gains (losses) on available-for-sale securities:
Unrealized gains (losses) on available-for-sale securities	(72)	140
Total other comprehensive income (loss) before income taxes	(219)	(460)
Income tax provision	15	(30)
Total other comprehensive loss after income taxes	(204)	(490)
Total comprehensive income (loss)	$ 1,237	$ 354

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 1,441,000	$ 844,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	634,000	664,000
Non-cash operating lease expense	152,000	137,000
Provision (recovery) for doubtful accounts	30,000	(23,000)
Deferred taxes	122,000	64,000
Foreign currency transaction gains	6,000	(381,000)
Share-based compensation	334,000	272,000
Unrealized (gain) loss on available-for-sale equity security	(17,000)	18,000
Changes in operating assets and liabilities:
Accounts and trade notes receivable	(1,124,000)	1,841,000
Inventories	(721,000)	(2,086,000)
Prepaid expenses and other assets	(73,000)	(111,000)
Accounts payable	2,703,000	1,348,000
Advance customer payments and other	(120,000)	51,000
Accrued expenses	(738,000)	14,000
Operating leases	(211,000)	(200,000)
Net cash provided by operating activities	2,418,000	2,452,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of available-for-sale marketable securities	2,597,000	3,106,000
Purchases of available-for-sale marketable securities	(2,767,000)	(5,294,000)
Additions to equipment and leasehold improvements	(650,000)	(129,000)
Additions to patents	(34,000)	(17,000)
Net cash used in investing activities	(854,000)	(2,334,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	57,000	85,000
Net cash provided by financing activities	57,000	85,000
Effects of exchange rate changes on cash and cash equivalents	11,000	30,000
Net decrease in cash and cash equivalents	1,632,000	233,000
Cash and cash equivalents – beginning of period	8,399,000	5,836,000
Cash and cash equivalents – end of period	$ 10,031,000	$ 6,069,000

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Interim Reporting

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Interim Reporting

1. INTERIM REPORTING:

The interim condensed consolidated financial statements of CyberOptics Corporation and its wholly-owned subsidiaries ("we", "us" or "our") presented herein as of March 31, 2021, and for the three month periods ended March 31, 2021 and 2020, are unaudited but, in the opinion of management, include all adjustments, consisting of normal recurring adjustments necessary, for a fair presentation of financial position, results of operations and cash flows for the periods presented.

The results of operations for the three month period ended March 31, 2021 do not necessarily indicate the results to be expected for the full year. The December 31, 2020 consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). The unaudited interim condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2020.

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Covid-19 Pandemic

3 Months Ended

Mar. 31, 2021

Unusual or Infrequent Items, or Both [Abstract]

Covid-19 Pandemic

2. COVID-19 PANDEMIC:

Effect of Covid-19 Outbreak on Business Operations

A novel strain of coronavirus ("Covid-19") was first identified in December 2019, and in March 2020, the World Health Organization categorized Covid-19 as a pandemic. The Covid-19 pandemic is affecting our customers, suppliers, service providers and employees, and the ultimate impacts of Covid-19 on our business, results of operations, liquidity and prospects are not fully known at this time. The Covid-19 outbreak has not had a significant impact on our business to date. However, the following factors have affected and may continue to affect our business:

· Our key factories are located in Minnesota and Singapore. Both of these locations have been subject to government mandated shelter-in-place orders. Because our operations have been deemed essential, we were able to keep our factories up and running while the shelter-in-place mandates were in effect. If the pandemic worsens, it is possible that our operations may not be deemed essential under future government mandated shelter-in-place orders, and we may be required to shut-down factory operations. We have periodically implemented split-shifts for our factory operations to minimize the number of employees in our facilities at any given time, but these measures have not affected our production capacity. Most of the time, our non-factory employees are working remotely. To date, the shelter-in-place mandates and remote work arrangements have had a minimal impact on operations, but material negative effects on our business could result if the pandemic worsens and continues for an extended period of time.

· Sales of some products, mainly our SQ3000 Multi-Function systems and MX memory module inspection products, require customer acceptance due to performance or other criteria that is considered more than a formality. Most of our customer’s factories have remained open during the Covid-19 pandemic because they are deemed to be essential under government shelter-in-place mandates. However, global travel restrictions and quarantine measures have hindered our ability to obtain customer acceptances of certain of our products at various times in 2020. Continuing or new global travel restrictions and quarantine measures could hinder our ability to obtain customer acceptances in a timely manner in the future, and therefore impact the timing of revenue recognition.

·
We have experienced some supply disruptions due to the Covid-19 pandemic, mainly from suppliers not deemed essential by shelter-in-place mandates in certain countries. Key supply chain disruptions have been resolved to date. However, supply chain disruptions could increase significantly if the pandemic worsens and continues for an extended period of time. To date, our on-hand inventories have been sufficient to enable us to mitigate supply disruptions. 

Although we cannot estimate the length or gravity of the impact of the Covid-19 outbreak at this time, if the pandemic continues as expected for the foreseeable future, it may have an adverse effect on our results of future operations, financial position and liquidity in the remainder of 2021 and beyond. 

United States Covid-19 Relief Legislation  

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was signed into law in the United States. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods and alternative tax credit refunds. The CARES Act also appropriated funds for the Small Business Administration Paycheck Protection Program loans that are forgivable in certain circumstances to promote continued employment. Additional relief packages were passed in December 2020 and March 2021. We have analyzed these pieces of legislation and presently do not believe they will have a material impact on our financial condition, results of operations or liquidity. However, we will continue to monitor the impact these pieces of legislation could have on our business in the future.

Singapore Jobs Support Program

The Singapore Government implemented a jobs support program in 2020 that was intended to support businesses and encourage retention of employees during the period of economic uncertainty caused by the Covid-19 pandemic. Under the jobs support program, the Singapore Government co-funded a portion of the gross monthly wages paid to local employees, which reduced our operating expenses by $19,000 in the three months ended March 31, 2020. We did not receive any benefit from the Singapore jobs support program in the three months ended March 31, 2021, nor do we expect any benefit during the remainder of 2021.

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Recent Accounting Developments

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Recent Accounting Developments

3. RECENT ACCOUNTING DEVELOPMENTS: 

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which revises guidance for the accounting for credit losses on financial instruments within its scope, and in November 2018, issued ASU No. 2018-19, which amended the standard. The new standard introduces an approach to estimating credit losses that is based on expected losses (referred to as the current expected credit losses model), and applies to most financial assets measured at amortized cost and certain other instruments, including available-for-sale marketable debt securities, trade and other receivables. The new standard is effective for us on January 1, 2023, with early adoption permitted. We are required to apply the standard's provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. We presently do not believe the new standard will have a material impact on our consolidated financial statements. 

No other new accounting pronouncements are expected to have a significant impact on our consolidated financial statements. 

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Revenue Recognition

3 Months Ended

Mar. 31, 2021

Revenue Recognition [Abstract]

Revenue Recognition

4. REVENUE RECOGNITION:

Our revenue performance obligations are primarily satisfied at a point in time and limited revenue streams are satisfied over time as work progresses.

The following is a summary of our revenue performance obligations:

	Three Months Ended March 31, 2021				Three Months Ended March 31, 2020
(In thousands except percentages)	Revenues		Percent of Revenues		Revenues		Percent of Revenues
Revenue recognized over time	$	403	2.3	%	$	193	1.2	%
Revenue recognized at a point in time		17,329	97.7	%		16,236	98.8	%
	$	17,732	100.0	%	$	16,429	100.0	%

See Note 11 for additional information regarding disaggregation of revenue.

Contract Balances

Contract assets consist of unbilled amounts from sales where we recognize the revenue over time and the revenue recognized exceeds the amount billed to the customer at a point in time. Accounts and trade notes receivable are recorded when the right to payment becomes unconditional. Contract liabilities consist of payments received in advance of performance under the contract. Contract liabilities are recognized as revenue when we perform under the contract. 

The following summarizes our contract assets and contract liabilities:    

(In thousands)	March 31, 2021		December 31, 2020
Contract assets, included in other current assets	$	24	$	2
Contract liabilities - advance customer payments	$	406	$	567
Contract liabilities - deferred warranty revenue	$	385	$	344

Changes in contract assets in the three months ended March 31, 2021 and the three months ended March 31, 2020 resulted from unbilled amounts under sensor product arrangements and longer duration 3D scanning service projects in which revenue is recognized over time. Changes in contract liabilities primarily resulted from reclassification of beginning contract liabilities to revenue as performance obligations were satisfied or from cash received in advance and not recognized as revenue. See Note 9 for changes in contractual obligations related to deferred warranty revenue. Unsatisfied performance obligations for deferred warranty revenue are generally expected to be recognized as revenue over the next one to three years. There were no impairment losses for contract assets in the three months ended March 31, 2021 or the three months ended March 31, 2020. 

The following summarizes the amounts reclassified from beginning contract liabilities to revenue: 

	Three Months Ended March 31,
(In thousands)	2021		2020
Amounts reclassified from beginning contract liabilities to revenue	$	339	$	76
Amounts reclassified from deferred warranty revenue		90		100
Total	$	429	$	176

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Marketable Securities

3 Months Ended

Mar. 31, 2021

Marketable Securities [Abstract]

Marketable Securities

5. MARKETABLE SECURITIES:

Our investments in marketable securities are classified as available-for-sale and consist of the following:

	March 31, 2021
(In thousands)	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Short-Term
U.S. government and agency obligations	$	4,750	$	30	$	—		$	4,780
Corporate debt securities and certificates of deposit	3,746		24		—			3,770
Asset backed securities	130		—		—			130
Marketable securities – short-term	$	8,626	$	54	$	—		$	8,680
Long-Term
U.S. government and agency obligations	$	7,704	$	42	$	(5	)	$	7,741
Corporate debt securities and certificates of deposit	3,470		34		(2		)	3,502
Asset backed securities	2,263		34		—			2,297
Equity security	42		5		—			47
Marketable securities – long-term	$	13,479	$	115	$	(7	)	$	13,587

	December 31, 2020
(In thousands)	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Short-Term
U.S. government and agency obligations	$	4,817	$	36	$	—		$	4,853
Corporate debt securities and certificates of deposit	3,113		21		—			3,134
Asset backed securities	133		1		—			134
Marketable securities – short-term	$	8,063	$	58	$	—		$	8,121
Long-Term
U.S. government and agency obligations	$	7,529	$	66	$	—		$	7,595
Corporate debt securities and certificates of deposit	3,975		61		(1		)	4,035
Asset backed securities	2,347		45		—			2,392
Equity security	42		—		(12		)	30
Marketable securities – long-term	$	13,893	$	172	$	(13	)	$	14,052

At March 31, 2021 and December 31, 2020, investments in marketable debt securities in an unrealized loss position were as follows:  

	In Unrealized Loss Position For Less Than 12 Months					In Unrealized Loss Position For Greater Than 12 Months
(In thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
March 31, 2021
U.S. government and agency obligations	$	3,637	$	(5	)	$	—	$	—
Corporate debt securities and certificates of deposit	1,455		(2		)	—		—
Asset backed securities	120		—			—		—
Marketable securities	$	5,212	$	(7	)	$	—	$	—
December 31, 2020
U.S. government and agency obligations	$	330	$	—		$	—	$	—
Corporate debt securities and certificates of deposit	411		(1		)	—		—
Marketable securities	$	741	$	(1	)	$	—	$	—

Our investments in marketable debt securities all have maturities of less than five years. Net pre-tax unrealized gains for marketable debt securities of $157,000 at March 31, 2021 and $229,000 at December 31, 2020 have been recorded as a component of accumulated other comprehensive loss in stockholders’ equity. We have determined that the net pre-tax unrealized losses for marketable debt securities at March 31, 2021 and December 31, 2020 were caused by fluctuations in interest rates and are temporary in nature. We review our marketable debt securities to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, credit quality and our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value. No marketable securities were sold in the three months ended March 31, 2021 or the three months ended March 31, 2020. See Note 6 for additional information regarding the fair value of our investments in marketable securities.

Investments in marketable securities classified as cash equivalents of $5.3 million at March 31, 2021 and $1.3 million at December 31, 2020, consist of corporate debt securities and certificates of deposit. There were no unrealized gains or losses associated with any of these securities at March 31, 2021 or December 31, 2020.

Cash and marketable securities held by foreign subsidiaries totaled $1.0 million at March 31, 2021 and $672,000 at December 31, 2020.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

6. FAIR VALUE MEASUREMENTS:

We determine the fair value of our assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. We use a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last is considered unobservable, to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1). The next highest priority is based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in non-active markets or other observable inputs (Level 2). The lowest priority is given to unobservable inputs (Level 3). The following provides information regarding fair value measurements for our marketable securities as of March 31, 2021 and December 31, 2020 according to the three-level fair value hierarchy:

	Fair Value Measurements at March 31, 2021 Using
(In thousands)	Balance March 31,  2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Marketable securities:
U.S. government and agency obligations	$	12,521	$	—	$	12,521	$	—
Corporate debt securities and certificates of deposit	7,272		—		7,272		—
Asset backed securities	2,427		—		2,427		—
Equity security	47		47		—		—
Total marketable securities	$	22,267	$	47	$	22,220	$	—

	Fair Value Measurements at December 31, 2020 Using
(In thousands)	Balance December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Marketable securities:
U.S. government and agency obligations	$	12,448	$	—	$	12,448	$	—
Corporate debt securities and certificates of deposit	7,169		—		7,169		—
Asset backed securities	2,526		—		2,526		—
Equity security	30		30		—		—
Total marketable securities	$	22,173	$	30	$	22,143	$	—

During the three months ended March 31, 2021 and the year ended December 31, 2020, we owned no Level 3 securities and there were no transfers within the three level hierarchy. A significant transfer is recognized when the inputs used to value a security have been changed which merit a transfer between the levels of the valuation hierarchy.    

The fair value for our U.S. government and agency obligations, corporate debt securities and certificates of deposit and asset backed securities are determined based on valuations provided by external investment managers who obtain them from a variety of industry standard data providers. The fair value for our equity security is based on a quoted market price obtained from an active market. The carrying amounts of financial instruments included in cash equivalents approximate their related fair values due to the short-term maturities of those instruments. See Note 5 for additional information regarding our investments in marketable securities.

Non-financial assets such as equipment and leasehold improvements, goodwill and intangible assets and right-of-use assets for operating leases are subject to non-recurring fair value measurements if they are deemed impaired. We had no re-measurements of non-financial assets to fair value in the three months ended March 31, 2021 or the three months ended March 31, 2020.  

The fair value for trade notes receivable is based on discounted future cash flows using current interest rates that would be offered for a similar transaction to a similarly situated customer. The difference between the carrying amount and estimated fair value for trade notes receivable is immaterial. If measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. At March 31, 2021, our trade notes receivable were deemed to be fully collectible, and no trade notes receivable were past due more than 90 days or in a non-accrual status with respect to interest income.

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Share-Based Compensation

3 Months Ended

Mar. 31, 2021

Share-based Compensation [Abstract]

Share-Based Compensation

7. SHARE-BASED COMPENSATION:

We have three share-based compensation plans that are administered by the Compensation Committee of the Board of Directors. We have (a) an Employee Stock Incentive Plan for officers, other employees, consultants and independent contractors under which we have granted options and restricted stock units to officers and other employees, (b) an Employee Stock Purchase Plan under which shares of our common stock may be acquired by employees at discounted prices, and (c) a Non-Employee Director Stock Plan that provides for automatic grants of restricted shares of our common stock to non-employee directors. New shares of our common stock are issued upon stock option exercises, vesting of restricted stock units, issuances of shares to board members and issuances of shares under the Employee Stock Purchase Plan. 

Employee Stock Incentive Plan

As of March 31, 2021, there were 124,501 shares of common stock reserved in the aggregate for issuance pursuant to future awards under our Employee Stock Incentive Plan and 468,304 shares of common stock reserved in the aggregate for issuance pursuant to outstanding awards under such plan. Although our Compensation Committee has authority to issue options, restricted stock, restricted stock units, share grants and other share-based benefits under our Employee Stock Incentive Plan, to date only restricted stock units and stock options have been granted under the plan. Options have been granted at an option price per share equal to the market value of our common stock on the date of grant, vest over a four year period and expire seven years after the date of grant. Restricted stock units vest over a four year period and entitle the holders to one share of our common stock for each restricted stock unit. Reserved shares underlying outstanding awards, including options and restricted stock units, that are forfeited are available under the Employee Stock Incentive Plan for future grant.

Non-Employee Director Stock Plan

As of March 31, 2021, there were 44,000 shares of common stock reserved in the aggregate for issuance pursuant to future restricted share grants under our Non-Employee Director Stock Plan and 8,000 shares of common stock reserved in the aggregate for issuance pursuant to outstanding stock option awards under our Non-Employee Director Stock Plan (which previously authorized the granting of stock options to non-employee directors). Under the terms of the plan, each non-employee director receives annual restricted share grants of 2,000 shares of our common stock on the date of each annual meeting at which such director is elected to serve on the board. The annual restricted share grants of common stock vest in four equal quarterly installments during the year after the grant date, provided the non-employee director is still serving as a director on the applicable vesting date. 

On the date of our 2020 annual meeting, we issued 8,000 shares of our common stock to our non-employee directors, which were restricted as specified in the Non-Employee Director Stock Plan. The shares granted at the 2020 annual meeting had an aggregate fair market value on the date of grant equal to $227,000 (grant date fair value of $28.34 per share). As of March 31, 2021, 6,000 of these shares were vested. The aggregate fair value of the 2,000 unvested shares based on the closing price of our common stock on March 31, 2021 was $52,000. 

Stock Option Activity

The following is a summary of stock option activity in the three months ended March 31, 2021:

	Options Outstanding		Weighted Average Exercise Price Per Share
Outstanding, December 31, 2020	419,100		$	15.22
Exercised	(7,250	)	17.16
Outstanding, March 31, 2021	411,850		$	15.19
Exercisable, March 31, 2021	286,776		$	12.91

The intrinsic value of an option is the amount by which the market price of the underlying common stock exceeds the option's exercise price. For options outstanding at March 31, 2021, the weighted average remaining contractual term of all outstanding options was 3.37 years and their aggregate intrinsic value was $4.5 million. At March 31, 2021, the weighted average remaining contractual term of options that were exercisable was 2.44 years and their aggregate intrinsic value was $3.8 million. The aggregate intrinsic value of stock options exercised was $78,000 in the three months ended March 31, 2021 and $140,000 in the three months ended March 31, 2020. We received proceeds from stock option exercises of $57,000 in the three months ended March 31, 2021 and $85,000 in the three months ended March 31, 2020. No stock options vested in the three months ended March 31, 2021 or the three months ended March 31, 2020. No stock options were granted, forfeited or expired in the three months ended March 31, 2021. 

Restricted Shares and Restricted Stock Units

Restricted shares are granted under our Non-Employee Director Stock Plan. Restricted stock units are granted under our Employee Stock Incentive Plan. The fair value of restricted shares and restricted stock units is equal to the fair market value of our common stock on the date of grant. The aggregate fair value of outstanding restricted shares and restricted stock units based on the closing share price of our common stock as of March 31, 2021 was $1.7 million. The aggregate fair value of restricted shares and restricted stock units that vested, based on the closing price of our common stock on the vesting date, was $56,000 in the three months ended March 31, 2021 and $45,000 in the three months ended March 31, 2020. No restricted shares or restricted stock units were granted or forfeited in the three months ended March 31, 2021.

The following is a summary of activity in restricted shares and restricted stock units in the three months ended March 31, 2021:

Restricted shares and restricted stock units	Shares		Weighted Average  Grant Date Fair Value
Non-vested at December 31, 2020	68,454		$	21.45
Vested	(2,000	)	28.34
Non-vested at March 31, 2021	66,454		$	21.24

Employee Stock Purchase Plan

We have an Employee Stock Purchase Plan available to eligible U.S. employees. Under the terms of the plan, eligible employees may designate from 1% to 10% of their compensation to be withheld through payroll deductions, up to a maximum of $6,500 in each plan year, for the purchase of common stock at 85% of the lower of the market price on the first or last day of the offering period (which begins on August 1st and ends on July 31st of each year). No shares were purchased under this plan in the three months ended March 31, 2021 or the three months ended March 31, 2020.  As of March 31, 2021, 136,971 shares remain available for future purchase under the Employee Stock Purchase Plan.

Share-Based Compensation Information 

All share-based payments to employees and non-employee directors, including grants of stock options, restricted stock units and restricted shares, are required to be recognized as an expense in our consolidated statements of income based on the grant date fair value of the award. We utilize the straight-line method of expense recognition over the award's service period for our graded vesting options. The fair value of stock options has been determined using the Black-Scholes model. We account for the impact of forfeitures related to employee share-based payment arrangements when the forfeitures occur. We have classified employee share-based compensation within our consolidated statements of income in the same manner as our cash-based employee compensation costs. 

Pre-tax share-based compensation expense in the three months ended March 31, 2021 totaled $334,000, and included $123,000 for stock options, $32,000 for our Employee Stock Purchase Plan, $123,000 for restricted stock units and $56,000 for restricted shares.

Pre-tax share-based compensation expense in the three months ended March 31, 2020 totaled $272,000, and included $114,000 for stock options, $23,000 for our Employee Stock Purchase Plan, $101,000 for restricted stock units and $34,000 for restricted shares.

At March 31, 2021, the total unrecognized compensation cost related to non-vested share-based compensation arrangements was $2.4 million and the related weighted average period over which such cost is expected to be recognized was 2.78 years.

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Changes In Stockholders' Equity

3 Months Ended

Mar. 31, 2021

Stockholders' Equity Note [Abstract]

Changes In Stockholders' Equity

8. CHANGES IN STOCKHOLDERS’ EQUITY:

A reconciliation of the changes in our stockholders' equity is as follows:

Three Months Ended March 31, 2021:

	Common Stock			Accumulated Other Comprehensive Loss			Retained Earnings		Total Stockholders’ Equity
(In thousands)	Shares	Amount
Balance, December 31, 2020	7,295	$	37,817	$	(1,102	)	$	28,813	$	65,528
Exercise of stock options, net of shares exchanged as payment	4		57		—			—		57
Share-based compensation	—		334		—			—		334
Other comprehensive loss, net of tax	—		—		(204	)		—		(204	)
Net income	—		—		—			1,441		1,441
Balance, March 31, 2021	7,299	$	38,208	$	(1,306	)	$	30,254	$	67,156

Three Months Ended March 31, 2020:

	Common Stock			Accumulated Other Comprehensive Loss			Retained Earnings		Total Stockholders’ Equity
(In thousands)	Shares	Amount
Balance, December 31, 2019	7,155	$	36,659	$	(1,406	)	$	23,071	$	58,324
Exercise of stock options, net of shares exchanged as payment	10		85		—			—		85
Share-based compensation	—		272		—			—		272
Other comprehensive loss, net of tax	—		—		(490	)		—		(490	)
Net income	—		—		—			844		844
Balance, March 31, 2020	7,165	$	37,016	$	(1,896	)	$	23,915	$	59,035

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Other Financial Statement Data

3 Months Ended

Mar. 31, 2021

Balance Sheet Related Disclosures [Abstract]

Other Financial Statement Data

9. OTHER FINANCIAL STATEMENT DATA:

Inventories consisted of the following:

(In thousands)	March 31, 2021		December 31, 2020
Raw materials and purchased parts	$	12,766	$	11,903
Work in process	3,038		2,459
Finished goods	3,328		4,208
Demonstration inventories, net	1,530		1,701
Total inventories	$	20,662	$	20,271

Demonstration inventories are stated at cost less accumulated amortization, generally based on a 36 month useful life. Accumulated amortization for demonstration inventories totaled $2.7 million at March 31, 2021 and $2.7 million at December 31, 2020. Amortization expense related to demonstration inventories was $154,000 in the three months ended March 31, 2021 and $230,000 in the three months ended March 31, 2020.

Accrued expenses consisted of the following:

(In thousands)	March 31, 2021		December 31, 2020
Wages and benefits	$	1,886	$	2,768
Warranty liability	851		793
Income taxes payable	245		269
Other	121		63
Total accrued expenses	$	3,103	$	3,893

Warranty costs: 

We provide for the estimated cost of product warranties, which cover products for periods ranging from one to three years, at the time revenue is recognized. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of components provided by suppliers, warranty obligations do arise. These obligations are affected by product failure rates, the costs of materials used in correcting product failures and service delivery expenses incurred to make these corrections. If actual product failure rates and material or service delivery costs differ from our estimates, revisions to the estimated warranty liability are required and could be material. At the end of each reporting period, we revise our estimated warranty liability based on these factors. The current portion of our warranty liability is included as a component of accrued expenses. The long-term portion of our warranty liability is included as a component of other liabilities.

A reconciliation of the changes in our estimated warranty liability is as follows:

	Three Months Ended March 31,
(In thousands)	2021			2020
Balance at beginning of period	$	839		$	798
Accrual for warranties	272			230
Warranty revision	(40		)	1
Settlements made during the period	(181		)	(244		)
Balance at end of period	890			785
Current portion of estimated warranty liability	(851		)	(748		)
Long-term estimated warranty liability	$	39		$	37

Deferred warranty revenue:

The current portion of our deferred warranty revenue is included as a component of advance customer payments. The long-term portion of our deferred warranty revenue is included as a component of other liabilities. A reconciliation of the changes in our deferred warranty revenue is as follows:

	Three Months Ended March 31,
(In thousands)	2021			2020
Balance at beginning of period	$	344		$	275
Revenue deferrals	147			134
Amortization of deferred revenue	(106		)	(100		)
Total deferred warranty revenue	385			309
Current portion of deferred warranty revenue	(281		)	(227		)
Long-term deferred warranty revenue	$	104		$	82

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Intangible Assets

3 Months Ended

Mar. 31, 2021

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Intangible Assets

10. INTANGIBLE ASSETS: 

Intangible assets consist of the following: 

	March 31, 2021							December 31, 2020
(In thousands)	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Patents	$	1,866	$	(1,585	)	$	281	$	1,832	$	(1,542	)	$	290
Software	206		(206		)	—		206		(200		)	6
Marketing assets and customer relationships	86		(64		)	22		101		(72		)	29
Total intangible assets	$	2,158	$	(1,855	)	$	303	$	2,139	$	(1,814	)	$	325

Amortization expense in the three months ended March 31, 2021 and the three months ended March 31, 2020 was as follows:  

	Three Months Ended March 31,
(In thousands)	2021		2020
Patents	$	43	$	38
Software		6		8
Marketing assets and customer relationships		2		2
Total amortization expense	$	51	$	48

Estimated aggregate amortization expense based on current intangible assets for the next four years is expected to be as follows: $116,000 for the remainder of 2021; $113,000 in 2022; $64,000 in 2023; and $10,000 in 2024.

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Revenue Concentrations, Significant Customers And Geographic Areas

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Revenue Concentrations, Significant Customers And Geographic Areas

11. REVENUE CONCENTRATIONS, SIGNIFICANT CUSTOMERS AND GEOGRAPHIC AREAS:

The following summarizes our revenue by product line:

	Three Months Ended March 31,
(In thousands)	2021		2020
High Precision 3D and 2D Sensors	$	6,357	$	4,122
Inspection and Metrology Systems		6,339		8,361
Semiconductor Sensors		5,036		3,946
Total	$	17,732	$	16,429

In the three months ended March 31, 2021, sales to significant customer A accounted for 22% of our total revenues. As of March 31, 2021, accounts receivable from significant customer A were $3.0 million.

Export revenues as a percentage of total revenues were 82% in the three months ended March 31, 2021 and 72% in the three months ended March 31, 2020. Export revenues are attributed to the country where the product is shipped. Substantially all of our export revenues are negotiated, invoiced and paid in U.S. dollars. Export revenues by geographic area are summarized as follows:

	Three Months Ended March 31,
(In thousands)	2021		2020
Americas	$	783	$	401
Europe		3,500		2,103
China		5,163		3,880
Taiwan		730		1,716
Other Asia		4,143		3,680
Other		148		—
Total export sales	$	14,467	$	11,780

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Net Income Per Share

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Net Income Per Share

12. NET INCOME PER SHARE:  

Net income per basic share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Net income per diluted share is computed by dividing net income by the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares consist of common shares to be issued upon exercise of stock options, vesting of restricted stock units, vesting of restricted shares and from purchases of shares under our Employee Stock Purchase Plan, as calculated using the treasury stock method. Common equivalent shares are excluded from the calculation of net income per diluted share if their effect is anti-dilutive. The components of net income per basic and diluted share were as follows:

(In thousands except per share amounts)	Net Income		Weighted Average Shares Outstanding	Per Share Amount
Three Months Ended March 31, 2021
Basic	$	1,441	7,293	$	0.20
Dilutive effect of common equivalent shares	—		170	(0.01		)
Dilutive	$	1,441	7,463	$	0.19

(In thousands except per share amounts)	Net Income		Weighted Average Shares Outstanding	Per Share Amount
Three Months Ended March 31, 2020
Basic	$	844	7,157	$	0.12
Dilutive effect of common equivalent shares	—		210	(0.01		)
Dilutive	$	844	7,367	$	0.11

Potentially dilutive shares consist of stock options, restricted stock units, restricted shares and purchases of shares under our Employee Stock Purchase Plan. Potentially dilutive shares excluded from the calculations of net income per diluted share due to their anti-dilutive effect were as follows: 97,000 shares in the three months ended March 31, 2021 and 145,000 shares in the three months ended March 31, 2020.

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Other Comprehensive Loss

3 Months Ended

Mar. 31, 2021

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Other Comprehensive (Income) Loss

13. OTHER COMPREHENSIVE LOSS:

Changes in components of other comprehensive loss and taxes related to items of other comprehensive loss are as follows:  

	Three Months Ended March 31, 2021								Three Months Ended March 31, 2020
(In thousands)	Before Tax			Tax Effect		Net of Tax Amount			Before Tax			Tax Effect			Net of Tax Amount
Foreign currency translation adjustments	$	(147	)	$	—	$	(147	)	$	(600	)	$	—		$	(600	)
Unrealized gains (losses) on available-for-sale securities		(72	)		15		(57	)		140			(30	)		110
Other comprehensive loss	$	(219	)	$	15	$	(204	)	$	(460	)	$	(30	)	$	(490	)

At March 31, 2021 and 2020, components of accumulated other comprehensive loss is as follows: 

(In thousands)	Foreign Currency Translation Adjustments			Available- for-Sale Securities			Accumulated Other Comprehensive Loss
Balances at December 31, 2020	$	(1,285	)	$	183		$	(1,102	)
Other comprehensive loss for the three months ended March 31, 2021	(147		)	(57		)	(204		)
Balances at March 31, 2021	$	(1,432	)	$	126		$	(1,306	)

(In thousands)	Foreign Currency Translation Adjustments			Available- for-Sale Securities		Accumulated Other Comprehensive Loss
Balances at December 31, 2019	$	(1,475	)	$	69	$	(1,406	)
Other comprehensive loss for the three months ended March 31, 2020	(600		)	110		(490		)
Balances at March 31, 2020	$	(2,075	)	$	179	$	(1,896	)

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Income Taxes

3 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

14. INCOME TAXES:

We recorded income tax expense of $311,000 in the three months ended March 31, 2021, compared to income tax expense of $149,000 in the three months ended March 31, 2020. Our income tax expense in the three months ended March 31, 2021 reflected an effective tax rate of approximately 18%, compared to an effective tax rate of approximately 15% in the three months ended March 31, 2020. Our effective tax rate is impacted by the U.S. federal R&D tax credit and foreign tax credit. The increase in effective tax rate in the three months ended March 31, 2021 was primarily due to a reduction in the impact of the U.S. federal R&D tax credit and foreign tax credit on our effective tax rate due to the higher level of profitability expected in 2021. 

We have significant deferred tax assets as a result of temporary differences between taxable income on our tax returns and U.S. GAAP income, R&D tax credit carry forwards and state net operating loss carry forwards. A deferred tax asset generally represents future tax benefits to be received when temporary differences previously reported in our consolidated financial statements become deductible for income tax purposes, when net operating loss carry forwards could be applied against future taxable income, or when tax credit carry forwards are utilized on our tax returns. We assess the realizability of our deferred tax assets and the need for a valuation allowance based on the guidance provided in current financial accounting standards. 

Significant judgment is required in determining the realizability of our deferred tax assets. The assessment of whether valuation allowances are required considers, among other matters, the nature, frequency and severity of any current and cumulative losses, forecasts of future profitability, the duration of statutory carry forward periods, our experience with loss carry forwards not expiring unused and tax planning alternatives. In analyzing the need for valuation allowances, we first considered our history of cumulative operating results for income tax purposes over the past three years in each of the tax jurisdictions in which we operate, our financial performance in recent quarters, statutory carry forward periods and tax planning alternatives. In addition, we considered both our near-term and long-term financial outlook. After considering all available evidence (both positive and negative), we concluded that recognition of valuation allowances for substantially all of our U.S. and Singapore based deferred tax assets was not required at March 31, 2021 or December 31, 2020.

The Inland Revenue Authority of Singapore has initiated a routine compliance review of our 2018 income tax return. We presently anticipate that the outcome of this audit will not have a significant impact on our financial position or results of operations.  

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Contingencies

3 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Contingencies

15. CONTINGENCIES: 

We are periodically a defendant in miscellaneous lawsuits, claims and disputes in the ordinary course of business. While the outcome of these matters cannot be predicted with certainty, management presently believes the disposition of these matters will not have a material effect on our financial position, results of operations or cash flows. 

In the normal course of business to facilitate sales of our products and services, we at times indemnify other parties, including customers, with respect to certain matters. In these instances, we have agreed to hold the other parties harmless against losses arising out of intellectual property infringement or other types of claims. These agreements may limit the time within which an indemnification claim can be made, and almost always limits the amount of the claim. It is not possible to determine the maximum potential amount of exposure under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made, if any, under these agreements have not had a material impact on our operating results, financial position or cash flows. However, there can be no assurance that intellectual property infringement and other claims against us or parties we have indemnified will not have a greater impact in the future.

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Recent Accounting Developments (Policies)

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Recent Accounting Developments

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which revises guidance for the accounting for credit losses on financial instruments within its scope, and in November 2018, issued ASU No. 2018-19, which amended the standard. The new standard introduces an approach to estimating credit losses that is based on expected losses (referred to as the current expected credit losses model), and applies to most financial assets measured at amortized cost and certain other instruments, including available-for-sale marketable debt securities, trade and other receivables. The new standard is effective for us on January 1, 2023, with early adoption permitted. We are required to apply the standard's provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. We presently do not believe the new standard will have a material impact on our consolidated financial statements. 

No other new accounting pronouncements are expected to have a significant impact on our consolidated financial statements. 

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Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2021

Revenue Recognition [Abstract]

Summary of revenue performance obligations

The following is a summary of our revenue performance obligations:

	Three Months Ended March 31, 2021				Three Months Ended March 31, 2020
(In thousands except percentages)	Revenues		Percent of Revenues		Revenues		Percent of Revenues
Revenue recognized over time	$	403	2.3	%	$	193	1.2	%
Revenue recognized at a point in time		17,329	97.7	%		16,236	98.8	%
	$	17,732	100.0	%	$	16,429	100.0	%

Summary of contract assets and contract liabilities

The following summarizes our contract assets and contract liabilities:    

(In thousands)	March 31, 2021		December 31, 2020
Contract assets, included in other current assets	$	24	$	2
Contract liabilities - advance customer payments	$	406	$	567
Contract liabilities - deferred warranty revenue	$	385	$	344

Summary of the amounts reclassified from beginning contract liabilities to revenue

The following summarizes the amounts reclassified from beginning contract liabilities to revenue: 

	Three Months Ended March 31,
(In thousands)	2021		2020
Amounts reclassified from beginning contract liabilities to revenue	$	339	$	76
Amounts reclassified from deferred warranty revenue		90		100
Total	$	429	$	176

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Marketable Securities (Tables)

3 Months Ended

Mar. 31, 2021

Marketable Securities [Abstract]

Schedule of Marketable Securities

Our investments in marketable securities are classified as available-for-sale and consist of the following:

	March 31, 2021
(In thousands)	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Short-Term
U.S. government and agency obligations	$	4,750	$	30	$	—		$	4,780
Corporate debt securities and certificates of deposit	3,746		24		—			3,770
Asset backed securities	130		—		—			130
Marketable securities – short-term	$	8,626	$	54	$	—		$	8,680
Long-Term
U.S. government and agency obligations	$	7,704	$	42	$	(5	)	$	7,741
Corporate debt securities and certificates of deposit	3,470		34		(2		)	3,502
Asset backed securities	2,263		34		—			2,297
Equity security	42		5		—			47
Marketable securities – long-term	$	13,479	$	115	$	(7	)	$	13,587

	December 31, 2020
(In thousands)	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Short-Term
U.S. government and agency obligations	$	4,817	$	36	$	—		$	4,853
Corporate debt securities and certificates of deposit	3,113		21		—			3,134
Asset backed securities	133		1		—			134
Marketable securities – short-term	$	8,063	$	58	$	—		$	8,121
Long-Term
U.S. government and agency obligations	$	7,529	$	66	$	—		$	7,595
Corporate debt securities and certificates of deposit	3,975		61		(1		)	4,035
Asset backed securities	2,347		45		—			2,392
Equity security	42		—		(12		)	30
Marketable securities – long-term	$	13,893	$	172	$	(13	)	$	14,052

Schedule of Unrealized Loss Position

At March 31, 2021 and December 31, 2020, investments in marketable debt securities in an unrealized loss position were as follows:  

	In Unrealized Loss Position For Less Than 12 Months					In Unrealized Loss Position For Greater Than 12 Months
(In thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
March 31, 2021
U.S. government and agency obligations	$	3,637	$	(5	)	$	—	$	—
Corporate debt securities and certificates of deposit	1,455		(2		)	—		—
Asset backed securities	120		—			—		—
Marketable securities	$	5,212	$	(7	)	$	—	$	—
December 31, 2020
U.S. government and agency obligations	$	330	$	—		$	—	$	—
Corporate debt securities and certificates of deposit	411		(1		)	—		—
Marketable securities	$	741	$	(1	)	$	—	$	—

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements for Marketable Securities and Foreign Exchange Forward Contracts

The following provides information regarding fair value measurements for our marketable securities as of March 31, 2021 and December 31, 2020 according to the three-level fair value hierarchy:

	Fair Value Measurements at March 31, 2021 Using
(In thousands)	Balance March 31,  2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Marketable securities:
U.S. government and agency obligations	$	12,521	$	—	$	12,521	$	—
Corporate debt securities and certificates of deposit	7,272		—		7,272		—
Asset backed securities	2,427		—		2,427		—
Equity security	47		47		—		—
Total marketable securities	$	22,267	$	47	$	22,220	$	—

	Fair Value Measurements at December 31, 2020 Using
(In thousands)	Balance December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Marketable securities:
U.S. government and agency obligations	$	12,448	$	—	$	12,448	$	—
Corporate debt securities and certificates of deposit	7,169		—		7,169		—
Asset backed securities	2,526		—		2,526		—
Equity security	30		30		—		—
Total marketable securities	$	22,173	$	30	$	22,143	$	—

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Share-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2021

Share-based Compensation [Abstract]

Schedule of Stock Option Activity

The following is a summary of stock option activity in the three months ended March 31, 2021:

	Options Outstanding		Weighted Average Exercise Price Per Share
Outstanding, December 31, 2020	419,100		$	15.22
Exercised	(7,250	)	17.16
Outstanding, March 31, 2021	411,850		$	15.19
Exercisable, March 31, 2021	286,776		$	12.91

Schedule of Non-Vested Restricted Stock Activity

The following is a summary of activity in restricted shares and restricted stock units in the three months ended March 31, 2021:

Restricted shares and restricted stock units	Shares		Weighted Average  Grant Date Fair Value
Non-vested at December 31, 2020	68,454		$	21.45
Vested	(2,000	)	28.34
Non-vested at March 31, 2021	66,454		$	21.24

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Changes In Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2021

Stockholders' Equity Note [Abstract]

Schedule of changes in stockholders' equity

A reconciliation of the changes in our stockholders' equity is as follows:

Three Months Ended March 31, 2021:

	Common Stock			Accumulated Other Comprehensive Loss			Retained Earnings		Total Stockholders’ Equity
(In thousands)	Shares	Amount
Balance, December 31, 2020	7,295	$	37,817	$	(1,102	)	$	28,813	$	65,528
Exercise of stock options, net of shares exchanged as payment	4		57		—			—		57
Share-based compensation	—		334		—			—		334
Other comprehensive loss, net of tax	—		—		(204	)		—		(204	)
Net income	—		—		—			1,441		1,441
Balance, March 31, 2021	7,299	$	38,208	$	(1,306	)	$	30,254	$	67,156

Three Months Ended March 31, 2020:

	Common Stock			Accumulated Other Comprehensive Loss			Retained Earnings		Total Stockholders’ Equity
(In thousands)	Shares	Amount
Balance, December 31, 2019	7,155	$	36,659	$	(1,406	)	$	23,071	$	58,324
Exercise of stock options, net of shares exchanged as payment	10		85		—			—		85
Share-based compensation	—		272		—			—		272
Other comprehensive loss, net of tax	—		—		(490	)		—		(490	)
Net income	—		—		—			844		844
Balance, March 31, 2020	7,165	$	37,016	$	(1,896	)	$	23,915	$	59,035

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Other Financial Statement Data (Tables)

3 Months Ended

Mar. 31, 2021

Balance Sheet Related Disclosures [Abstract]

Schedule of Inventories

Inventories consisted of the following:

(In thousands)	March 31, 2021		December 31, 2020
Raw materials and purchased parts	$	12,766	$	11,903
Work in process	3,038		2,459
Finished goods	3,328		4,208
Demonstration inventories, net	1,530		1,701
Total inventories	$	20,662	$	20,271

Schedule of Accrued Liabilities

Accrued expenses consisted of the following:

(In thousands)	March 31, 2021		December 31, 2020
Wages and benefits	$	1,886	$	2,768
Warranty liability	851		793
Income taxes payable	245		269
Other	121		63
Total accrued expenses	$	3,103	$	3,893

Schedule of Changes In Estimated Warranty Liability

A reconciliation of the changes in our estimated warranty liability is as follows:

	Three Months Ended March 31,
(In thousands)	2021			2020
Balance at beginning of period	$	839		$	798
Accrual for warranties	272			230
Warranty revision	(40		)	1
Settlements made during the period	(181		)	(244		)
Balance at end of period	890			785
Current portion of estimated warranty liability	(851		)	(748		)
Long-term estimated warranty liability	$	39		$	37

Schedule Of Changes In Deferred Warranty Revenue

A reconciliation of the changes in our deferred warranty revenue is as follows:

	Three Months Ended March 31,
(In thousands)	2021			2020
Balance at beginning of period	$	344		$	275
Revenue deferrals	147			134
Amortization of deferred revenue	(106		)	(100		)
Total deferred warranty revenue	385			309
Current portion of deferred warranty revenue	(281		)	(227		)
Long-term deferred warranty revenue	$	104		$	82

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Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2021

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Schedule of Intangible Assets

Intangible assets consist of the following: 

	March 31, 2021							December 31, 2020
(In thousands)	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Patents	$	1,866	$	(1,585	)	$	281	$	1,832	$	(1,542	)	$	290
Software	206		(206		)	—		206		(200		)	6
Marketing assets and customer relationships	86		(64		)	22		101		(72		)	29
Total intangible assets	$	2,158	$	(1,855	)	$	303	$	2,139	$	(1,814	)	$	325

Schedule of Amortization Expense For Intangible Assets

Amortization expense in the three months ended March 31, 2021 and the three months ended March 31, 2020 was as follows:  

	Three Months Ended March 31,
(In thousands)	2021		2020
Patents	$	43	$	38
Software		6		8
Marketing assets and customer relationships		2		2
Total amortization expense	$	51	$	48

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Revenue Concentrations, Significant Customers And Geographic Areas (Tables)

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Summary Of Revenue By Product Line

The following summarizes our revenue by product line:

	Three Months Ended March 31,
(In thousands)	2021		2020
High Precision 3D and 2D Sensors	$	6,357	$	4,122
Inspection and Metrology Systems		6,339		8,361
Semiconductor Sensors		5,036		3,946
Total	$	17,732	$	16,429

Schedule of Sales By Geographic Area

	Three Months Ended March 31,
(In thousands)	2021		2020
Americas	$	783	$	401
Europe		3,500		2,103
China		5,163		3,880
Taiwan		730		1,716
Other Asia		4,143		3,680
Other		148		—
Total export sales	$	14,467	$	11,780

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Net Income Per Share (Tables)

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Schedule of Net Income per Basic and Diluted Shares

The components of net income per basic and diluted share were as follows:

(In thousands except per share amounts)	Net Income		Weighted Average Shares Outstanding	Per Share Amount
Three Months Ended March 31, 2021
Basic	$	1,441	7,293	$	0.20
Dilutive effect of common equivalent shares	—		170	(0.01		)
Dilutive	$	1,441	7,463	$	0.19

(In thousands except per share amounts)	Net Income		Weighted Average Shares Outstanding	Per Share Amount
Three Months Ended March 31, 2020
Basic	$	844	7,157	$	0.12
Dilutive effect of common equivalent shares	—		210	(0.01		)
Dilutive	$	844	7,367	$	0.11

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Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2021

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

The Effect of The Reclassifications From Comprehensive Loss To Earnings

	Three Months Ended March 31, 2021								Three Months Ended March 31, 2020
(In thousands)	Before Tax			Tax Effect		Net of Tax Amount			Before Tax			Tax Effect			Net of Tax Amount
Foreign currency translation adjustments	$	(147	)	$	—	$	(147	)	$	(600	)	$	—		$	(600	)
Unrealized gains (losses) on available-for-sale securities		(72	)		15		(57	)		140			(30	)		110
Other comprehensive loss	$	(219	)	$	15	$	(204	)	$	(460	)	$	(30	)	$	(490	)

Schedule of Accumulated Other Comprehensive Loss

At March 31, 2021 and 2020, components of accumulated other comprehensive loss is as follows: 

(In thousands)	Foreign Currency Translation Adjustments			Available- for-Sale Securities			Accumulated Other Comprehensive Loss
Balances at December 31, 2020	$	(1,285	)	$	183		$	(1,102	)
Other comprehensive loss for the three months ended March 31, 2021	(147		)	(57		)	(204		)
Balances at March 31, 2021	$	(1,432	)	$	126		$	(1,306	)

(In thousands)	Foreign Currency Translation Adjustments			Available- for-Sale Securities		Accumulated Other Comprehensive Loss
Balances at December 31, 2019	$	(1,475	)	$	69	$	(1,406	)
Other comprehensive loss for the three months ended March 31, 2020	(600		)	110		(490		)
Balances at March 31, 2020	$	(2,075	)	$	179	$	(1,896	)

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Covid-19 Pandemic (Narrative) (Details)	3 Months Ended
	Mar. 31, 2020 USD ($)
Singapore [Member] | Jobs Support Program [Member] | Reduced Employee Expenses [Member]
Effects on Future Earnings and Cash Flows Resulting from Exit Plan [Line Items]
Operating expenses	$ 19,000

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Revenue Recognition (Summary Of Revenue Performance Obligations) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Performance Obligations
Revenues	$ 17,732	$ 16,429
Percent of Revenues	100.00%	100.00%
Revenue recognized over time [Member]
Performance Obligations
Revenues	$ 403	$ 193
Percent of Revenues	2.30%	1.20%
Revenue recognized at a point in time [Member]
Performance Obligations
Revenues	$ 17,329	$ 16,236
Percent of Revenues	97.70%	98.80%

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Revenue Recognition (Schedule of contract assets and contract liabilities) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Revenue Recognition [Abstract]
Contract assets, included in other current assets	$ 24	$ 2
Contract liabilities - advance customer payments	406	567
Contract liabilities - deferred warranty revenue	$ 385	$ 344

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Revenue Recognition (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
REVENUE RECOGNITION
Gain (Loss) on Sale of Assets and Asset Impairment Charges	$ 0	$ 0
Minimum [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
REVENUE RECOGNITION
Period over which unsatisfied performance obligations are expected to be recognized	1 year
Maximum [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
REVENUE RECOGNITION
Period over which unsatisfied performance obligations are expected to be recognized	3 years

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Revenue Recognition (Summary of the amounts reclassified from beginning contract liabilities to revenue) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenue Recognition [Abstract]
Amounts reclassified from beginning contract liabilities to revenue	$ 339	$ 76
Amounts reclassified from deferred warranty revenue	90	100
Total	$ 429	$ 176

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Marketable Securities (Schedule Of Marketable Securities) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Marketable securities - Short-Term
Gain (Loss) on Investments [Line Items]
Cost	$ 8,626	$ 8,063
Unrealized Gains	54	58
Unrealized Losses	0	0
Fair Value	8,680	8,121
Marketable securities - Short-Term | U.S. government and agency obligations
Gain (Loss) on Investments [Line Items]
Cost	4,750	4,817
Unrealized Gains	30	36
Unrealized Losses	0	0
Fair Value	4,780	4,853
Marketable securities - Short-Term | Corporate debt securities and certificates of deposit
Gain (Loss) on Investments [Line Items]
Cost	3,746	3,113
Unrealized Gains	24	21
Unrealized Losses	0	0
Fair Value	3,770	3,134
Marketable securities - Short-Term | Asset backed securities
Gain (Loss) on Investments [Line Items]
Cost	130	133
Unrealized Gains	0	1
Unrealized Losses	0	0
Fair Value	130	134
Marketable securities - Long-Term
Gain (Loss) on Investments [Line Items]
Cost	13,479	13,893
Unrealized Gains	115	172
Unrealized Losses	(7)	(13)
Fair Value	13,587	14,052
Marketable securities - Long-Term | U.S. government and agency obligations
Gain (Loss) on Investments [Line Items]
Cost	7,704	7,529
Unrealized Gains	42	66
Unrealized Losses	(5)	0
Fair Value	7,741	7,595
Marketable securities - Long-Term | Corporate debt securities and certificates of deposit
Gain (Loss) on Investments [Line Items]
Cost	3,470	3,975
Unrealized Gains	34	61
Unrealized Losses	(2)	(1)
Fair Value	3,502	4,035
Marketable securities - Long-Term | Asset backed securities
Gain (Loss) on Investments [Line Items]
Cost	2,263	2,347
Unrealized Gains	34	45
Unrealized Losses	0	0
Fair Value	2,297	2,392
Marketable securities - Long-Term | Equity security
Gain (Loss) on Investments [Line Items]
Cost	42	42
Unrealized Gains	5	0
Unrealized Losses	0	(12)
Fair Value	$ 47	$ 30

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Marketable Securities (Schedule Of Unrealized Loss Position) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Fair Value
In Unrealized Loss Position For Less Than 12 Months	$ 5,212	$ 741
In Unrealized Loss Position For Greater Than 12 Months	0	0
Gross Unrealized Losses
In Unrealized Loss Position For Less Than 12 Months	(7)	(1)
In Unrealized Loss Position For Greater Than 12 Months	0	0
U.S. government and agency obligations [Member]
Fair Value
In Unrealized Loss Position For Less Than 12 Months	3,637	330
In Unrealized Loss Position For Greater Than 12 Months	0	0
Gross Unrealized Losses
In Unrealized Loss Position For Less Than 12 Months	(5)	0
In Unrealized Loss Position For Greater Than 12 Months	0	0
Corporate Debt Securities And Certificates Of Deposit [Member]
Fair Value
In Unrealized Loss Position For Less Than 12 Months	1,455	411
In Unrealized Loss Position For Greater Than 12 Months	0	0
Gross Unrealized Losses
In Unrealized Loss Position For Less Than 12 Months	(2)	(1)
In Unrealized Loss Position For Greater Than 12 Months	0	$ 0
Asset backed securities [Member]
Fair Value
In Unrealized Loss Position For Less Than 12 Months	120
In Unrealized Loss Position For Greater Than 12 Months	0
Gross Unrealized Losses
In Unrealized Loss Position For Less Than 12 Months	0
In Unrealized Loss Position For Greater Than 12 Months	$ 0

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Marketable Securities (Narrative) (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Gain (Loss) on Investments [Line Items]
Maximum maturity of debt securities (less than 5 years)	5 years
Accumulated pre-tax unrealized gains for marketable securities	$ 157,000		$ 229,000
Proceeds from sales of available-for-sale marketable securities	0	$ 0
Cost	5,300,000		1,300,000
Unrealized gains or losses on marketable securities	$ 0		$ 0

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Marketable Securities (Schedule Of Marketable Securities Classified As Cash Equivalents) (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Foreign Accounts
Gain (Loss) on Investments [Line Items]
Cash And Marketable Securities Held In Foreign Accounts	$ 1,000,000.0	$ 672,000

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Fair Value Measurements (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Fair Value Disclosures [Abstract]
Asset impairment charges	$ 0	$ 0

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Fair Value Measurements (Fair Value Measurements For Marketable Securities And Foreign Exchange Forward Contracts) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 22,267	$ 22,173
Quoted Prices In Active Markets For Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	47	30
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	22,220	22,143
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
U.S. government and agency obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	12,521	12,448
U.S. government and agency obligations | Quoted Prices In Active Markets For Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
U.S. government and agency obligations | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	12,521	12,448
U.S. government and agency obligations | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Corporate debt securities and certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	7,272	7,169
Corporate debt securities and certificates of deposit | Quoted Prices In Active Markets For Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Corporate debt securities and certificates of deposit | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	7,272	7,169
Corporate debt securities and certificates of deposit | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Asset backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	2,427	2,526
Asset backed securities | Quoted Prices In Active Markets For Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Asset backed securities | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	2,427	2,526
Asset backed securities | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Equity security
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	47	30
Equity security | Quoted Prices In Active Markets For Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	47	30
Equity security | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Equity security | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 0	$ 0

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Share-Based Compensation (Narrative) (Details)		3 Months Ended
	May 14, 2020 USD ($) $ / shares shares	Mar. 31, 2021 USD ($) qtr stock-based_complensation_plan shares	Mar. 31, 2020 USD ($) shares	Dec. 31, 2020 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock-based compensation plans | stock-based_complensation_plan		3
Common stock reserved for issuance pursuant to outstanding awards | shares		411,850		419,100
Number of shares vested | shares		2,000
Aggregate fair value of outstanding restricted shares and restricted stock units		$ 1,700,000
Aggregate fair value of restricted shares and restricted stock units		56,000	$ 45,000
Proceeds from exercise of stock options		$ 57,000	$ 85,000
Number of shares vested | shares		0	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants, Forfeitures and Expirations in Period | shares		0
Unvested shares | shares		66,454		68,454
Equity based compensation expense		$ 334,000	$ 272,000
Unrecognized compensation cost related to non-vested equity based compensation		$ 2,400,000
Unrecognized equity based compensation weighted average period, years		2 years 9 months 10 days
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for future issuance (in shares) | shares		124,501
Common stock reserved for issuance pursuant to outstanding awards | shares		468,304
Vesting period, years		4 years
Expiration of stock options from date of grant		7 years
Weighted average remaining contractual term, years		3 years 4 months 13 days
Aggregate intrinsic value for all options outstanding		$ 4,500,000
Weighted average remaining contractual term for exercisable options, years		2 years 5 months 8 days
Aggregate intrinsic value of exercisable options		$ 3,800,000
Aggregate intrinsic value of stock options exercised		78,000	140,000
Proceeds from exercise of stock options		57,000	85,000
Equity based compensation expense		$ 123,000	114,000
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period, years		4 years
Restricted stock units to common stock ratio, shares entitled, shares | shares		1
Equity based compensation expense		$ 123,000	101,000
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for future issuance (in shares) | shares		136,971
Maximum contribution per plan year		$ 6,500
Equity based compensation expense		$ 32,000	23,000
Employees can purchase stock at the percentage rate of the lower of the market price on the first or last day of the offering period (as a percent)		85.00%
Employee Stock Purchase Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payroll deduction for employee stock purchase plan percentage		1.00%
Employee Stock Purchase Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payroll deduction for employee stock purchase plan percentage		10.00%
Non Employee Director Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for future issuance (in shares) | shares		44,000
Common stock reserved for issuance pursuant to outstanding awards | shares		8,000
Number of shares granted for non-employee directors upon re-election, shares | shares		2,000
Number of quarterly installments in which awards will vest | qtr		4
Stock issued during period, shares | shares	8,000
Stock granted, value	$ 227,000
Weighted average grant date fair value (in dollars per share) | $ / shares	$ 28.34
Number of shares vested | shares		6,000
Unvested shares | shares		2,000
Aggregate fair value of the unvested shares based on the closing price of entity's common stock		$ 52,000
Equity based compensation expense		$ 56,000	$ 34,000

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Share-Based Compensation (Schedule Of Stock Option Activity) (Details)	3 Months Ended
	Mar. 31, 2021 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options Outstanding, Outstanding, December 31, 2019 (in shares) | shares	419,100
Options Outstanding, Exercised (in shares) | shares	(7,250)
Options Outstanding, Outstanding, September 30, 2020 (in shares) | shares	411,850
Options Outstanding, Exercisable, September 30, 2020 (in shares) | shares	286,776
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted-Average Exercise Price Per Share, Outstanding, December 31, 2019 (in dollars per share) | $ / shares	$ 15.22
Weighted-Average Exercise Price Per Share, Exercised (in dollars per share) | $ / shares	17.16
Weighted-Average Exercise Price Per Share, Outstanding, September 30, 2020 (in dollars per share) | $ / shares	15.19
Weighted-Average Exercise Price Per Share, Exercisable, September 30, 2020 (in dollars per share) | $ / shares	$ 12.91

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Share-Based Compensation (Schedule Of Non-Vested Restricted Stock Activity) (Details)	3 Months Ended
	Mar. 31, 2021 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Shares, Non-vested at December 31, 2019 (in shares) | shares	68,454
Shares, Vested (in shares) | shares	(2,000)
Shares, Non-vested at September 30, 2020 (in shares) | shares	66,454
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted Average Grant Date Fair Value, Non-vested at December 31, 2019 (in dollars per share) | $ / shares	$ 21.45
Weighted Average Grant Date Fair Value, Vested (in dollars per share) | $ / shares	28.34
Weighted Average Grant Date Fair Value, Non-vested at September 30, 2020 (in dollars per share) | $ / shares	$ 21.24

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Changes In Stockholders' Equity (Schedule of Changes in Stockholders' Equity) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Increase (Decrease) in Stockholders' Equity [Roll Forward]
BALANCE	$ 65,528	$ 58,324
BALANCE, shares	7,294,617
Exercise of stock options, net of shares exchanged as payment	$ 57	85
Exercise of stock options, net of shares exchanged as payment, shares	7,250
Share-based compensation	$ 334	272
Other comprehensive loss, net of tax	(204)	(490)
Net income	1,441	844
BALANCE	$ 67,156	59,035
BALANCE, shares	7,299,376
Common Stock [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
BALANCE	$ 37,817	$ 36,659
BALANCE, shares	7,295,000	7,155,000
Exercise of stock options, net of shares exchanged as payment	$ 57	$ 85
Exercise of stock options, net of shares exchanged as payment, shares	4,000	10,000
Share-based compensation	$ 334	$ 272
Other comprehensive loss, net of tax	0	0
Net income	0	0
BALANCE	$ 38,208	$ 37,016
BALANCE, shares	7,299,000	7,165,000
Accumulated Other Comprehensive Loss [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
BALANCE	$ (1,102)	$ (1,406)
Exercise of stock options, net of shares exchanged as payment	0	0
Share-based compensation	0	0
Other comprehensive loss, net of tax	(204)	(490)
Net income	0	0
BALANCE	(1,306)	(1,896)
Retained Earnings [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
BALANCE	28,813	23,071
Exercise of stock options, net of shares exchanged as payment	0	0
Share-based compensation	0	0
Other comprehensive loss, net of tax	0	0
Net income	1,441	844
BALANCE	$ 30,254	$ 23,915

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Other Financial Statement Data (Schedule Of Inventories) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Balance Sheet Related Disclosures [Abstract]
Raw materials and purchased parts	$ 12,766	$ 11,903
Work in process	3,038	2,459
Finished goods	3,328	4,208
Demonstration inventories, net	1,530	1,701
Total inventories	$ 20,662	$ 20,271

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Other Financial Statement Data (Schedule Of Accrued Expenses) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020
Balance Sheet Related Disclosures [Abstract]
Wages and benefits	$ 1,886	$ 2,768
Warranty liability	851	793	$ 748
Income taxes payable	245	269
Other	121	63
Accrued expenses	$ 3,103	$ 3,893

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Other Financial Statement Data (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Inventory [Line Items]
Demonstration inventory useful life (in months)	36 months
Accumulated amortization for demonstration inventories	$ 2,700,000		$ 2,700,000
Amortization expense related to demonstration inventories	$ 154,000	$ 230,000
Minimum
Inventory [Line Items]
Product warranties time frame, years	1 year
Maximum
Inventory [Line Items]
Product warranties time frame, years	3 years

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Other Financial Statement Data (Schedule Of Changes In Estimated Warranty Liability) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance at beginning of period	$ 839	$ 798
Accrual for warranties	272	230
Warranty revision	(40)	1
Settlements made during the period	(181)	(244)
Balance at end of period	890	785
Current portion of estimated warranty liability	(851)	(748)	$ (793)
Long-term estimated warranty liability	$ 39	$ 37

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Other Financial Statement Data (Schedule Of Changes In Deferred Warranty Revenue) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Movement in Extended Product Warranty Accrual [Roll Forward]
Balance at beginning of period	$ 344	$ 275
Revenue deferrals	147	134
Amortization of deferred revenue	(106)	(100)
Total deferred warranty revenue	385	309
Current portion of deferred warranty revenue	(281)	(227)
Long-term deferred warranty revenue	$ 104	$ 82

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Intangible Assets (Schedule Of Intangible Assets) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 2,158	$ 2,139
Accumulated Amortization	(1,855)	(1,814)
Net	303	325
Patents
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,866	1,832
Accumulated Amortization	(1,585)	(1,542)
Net	281	290
Software
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	206	206
Accumulated Amortization	(206)	(200)
Net	0	6
Marketing assets and customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	86	101
Accumulated Amortization	(64)	(72)
Net	$ 22	$ 29

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Intangible Assets (Schedule Of Amortization Expense For Intangible Assets) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Amortization of intangibles	$ 51	$ 48
Patents
Finite-Lived Intangible Assets [Line Items]
Amortization of intangibles	43	38
Software
Finite-Lived Intangible Assets [Line Items]
Amortization of intangibles	6	8
Marketing assets and customer relationships
Finite-Lived Intangible Assets [Line Items]
Amortization of intangibles	$ 2	$ 2

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Intangible Assets (Narrative) (Details)	Mar. 31, 2021 USD ($)
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Amortization expense, remainder of 2021	$ 116,000
Amortization expense, 2022	113,000
Amortization expense, 2023	64,000
Amortization expense, 2024	$ 10,000

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Revenue Concentrations, Significant Customers, and Geographic Areas (Summary Of Revenue By Product Line) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Concentration Risk [Line Items]
Revenues	$ 17,732	$ 16,429
High Precision 3D and 2D Sensors [Member]
Concentration Risk [Line Items]
Revenues	6,357	4,122
Inspection and Metrology Systems [Member]
Concentration Risk [Line Items]
Revenues	6,339	8,361
Semiconductor Sensors [Member]
Concentration Risk [Line Items]
Revenues	$ 5,036	$ 3,946

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Revenue Concentrations, Significant Customers And Geographic Areas (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenue, Major Customer [Line Items]
Revenue, export sales percentage	82.00%	72.00%
Customer Concentration Risk | Sales Revenue, net | Significant Customer A [Member]
Revenue, Major Customer [Line Items]
Concentration risk percentage	22.00%
Customer Concentration Risk | Accounts Receivable | Significant Customer A [Member]
Revenue, Major Customer [Line Items]
Accounts receivable, net	$ 3.0

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Revenue Concentrations, Significant Customers And Geographic Areas (Schedule Of Sales By Geographic Area) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenue, Major Customer [Line Items]
Total export sales	$ 14,467	$ 11,780
Americas
Revenue, Major Customer [Line Items]
Total export sales	783	401
Europe
Revenue, Major Customer [Line Items]
Total export sales	3,500	2,103
China
Revenue, Major Customer [Line Items]
Total export sales	5,163	3,880
Taiwan
Revenue, Major Customer [Line Items]
Total export sales	730	1,716
Other Asia
Revenue, Major Customer [Line Items]
Total export sales	4,143	3,680
Other
Revenue, Major Customer [Line Items]
Total export sales	$ 148	$ 0

XML

Net Income Per Share (Schedule of Net Income per Basic and Diluted Shares) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Earnings Per Share [Abstract]
Net income	$ 1,441	$ 844
Weighted Average Shares Outstanding, Basic (in shares)	7,293	7,157
Per Share Amount, Basic (in dollars per share)	$ 0.20	$ 0.12
Weighted Average Shares Outstanding, Dilutive effect of common equivalent shares (in shares)	170	210
Per Share Amount, Dilutive effect of common equivalent shares (in usd per share)	$ (0.01)	$ (0.01)
Weighted Average Shares Outstanding, Dilutive (in shares)	7,463	7,367
Per Share Amount, Dilutive (in dollars per share)	$ 0.19	$ 0.11

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Net Income Per Share (Narrative) (Details) - shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Earnings Per Share [Abstract]
Earnings per share, potentially dilutive shares (in shares)	97,000	145,000

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Other Comprehensive Income Loss (The Effect Of The Reclassifications From Other Comprehensive Loss To Earnings) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Accumulated Other Comprehensive Income (Loss) [Line Items]
Foreign currency translation adjustments, Before Tax	$ (147)	$ (600)
Foreign currency translation adjustments, Tax	0	0
Foreign currency translation adjustments, Net of Tax	(147)	(600)
Unrealized gains (losses) on available-for-sale securities	(72)	140
Unrealized gains (losses) on available-for-sale securities, Before Tax	(72)	140
Unrealized gains (losses) on available-for-sale securities, Tax	(15)	30
Unrealized gains (losses) on available-for-sale securities, Net of Tax	(57)	110
Total other comprehensive income (loss) before income taxes	(219)	(460)
Other comprehensive income (loss), Tax	15	(30)
Total other comprehensive loss after income taxes	$ (204)	$ (490)

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Other Comprehensive Income Loss (Schedule Of Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance	$ (1,102)	$ (1,406)
Other comprehensive loss	(204)	(490)
Balance	(1,306)	(1,896)
Foreign Currency Translation Adjustments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance	(1,285)	(1,475)
Other comprehensive loss	(147)	(600)
Balance	(1,432)	(2,075)
Available-for-sale Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance	183	69
Other comprehensive loss	(57)	110
Balance	$ 126	$ 179

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Income Taxes (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Income Tax Examination [Line Items]
Income tax expense	$ 311,000	$ 149,000
Effective income tax rate (as a percent)	18.00%	15.00%
Need for valuation allowance based on history of cumulative losses	3 years