UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

 

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

For the quarterly period ended September 30, 2014March 31, 2015

OR

 

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

For the transition period from                    to                    

Commission File No. 000-51072

 

 

CASCADE MICROTECH, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Oregon 93-0856709

(State or other jurisdiction of

incorporation or organization)

 (I.R.S. Employer
Identification No.)

9100 S.W. Gemini Drive

Beaverton, Oregon

 97008
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (503) 601-1000

 

 

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

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

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

 

Large accelerated filer ¨  Accelerated filer ¨x
Non-accelerated filer ¨  (Do not check if a smaller reporting company)  Smaller reporting company x¨

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

The number of shares of common stock outstanding as of October 31, 2014May 4, 2015 was 16,371,498.16,586,118.

 

 

 


CASCADE MICROTECH, INC.

INDEX TO FORM 10-Q

 

   

Page

PART I - FINANCIAL INFORMATION

  

Item 1.

  

Financial Statements

  
  

Condensed Consolidated Balance Sheets (unaudited) – September 30, 2014- March 31, 2015 and December 31, 20132014

  

2

  

Condensed Consolidated Statements of Operations (unaudited) - Three and Nine Months Ended September 30,March 31, 2015 and 2014 and 2013

  

3

  

Condensed Consolidated Statements of Comprehensive Income (unaudited) - Three and Nine Months Ended September 30,March 31, 2015 and 2014 and 2013

  

4

  

Condensed Consolidated Statements of Cash Flows (unaudited) - NineThree Months Ended September 30,March 31, 2015 and 2014 and 2013

  

5

  

Notes to Condensed Consolidated Financial Statements (unaudited)

  

6

Item 2.

  

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

  

12

Item 3.

  

Quantitative and Qualitative Disclosures About Market Risk

  

20

18

Item 4.

  

Controls and Procedures

  

20

18

PART II- OTHER INFORMATION

  

Item 1A.

Risk Factors

21

Item 6.

1A.
  

ExhibitsRisk Factors

  

21

19
Item 6.Exhibits19

Signatures

  

22

20

PART I - FINANCIAL INFORMATION

Item 1.Financial Statements

Item 1. Financial StatementsCascade Microtech, Inc.

Cascade Microtech, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, In thousands)

   March 31,
2015
  December 31,
2014
 

Assets

   

Current Assets:

   

Cash and cash equivalents

  $34,079   $38,107  

Short-term marketable securities

   6,854    1,626  

Restricted cash

   54    61  

Accounts receivable, net of allowances of $213 and $208

   21,197    20,763  

Inventories

   24,723    24,642  

Prepaid expenses and other

   4,584    4,454  

Deferred income taxes

   3,013    3,027  
  

 

 

  

 

 

 

Total Current Assets

 94,504   92,680  

Fixed assets, net of accumulated depreciation of $28,910 and $28,407

 9,196   8,100  

Goodwill

 11,419   12,823  

Purchased intangible assets, net of accumulated amortization of $5,609 and $5,324

 10,748   12,572  

Deferred income taxes

 1,573   1,262  

Other assets

 838   944  
  

 

 

  

 

 

 

Total Assets

$128,278  $128,381  
  

 

 

  

 

 

 

Liabilities and Shareholders’ Equity

Current Liabilities:

Accounts payable

$9,297  $7,505  

Deferred revenue

 1,750   2,070  

Accrued liabilities

 7,391   9,505  
  

 

 

  

 

 

 

Total Current Liabilities

 18,438   19,080  

Deferred revenue

 296   329  

Other long-term liabilities

 1,624   1,511  
  

 

 

  

 

 

 

Total Liabilities

 20,358   20,920  

Shareholders’ Equity:

Common stock, $0.01 par value. Authorized 100,000 shares; issued and outstanding: 16,550 and 16,466

 166   165  

Additional paid-in capital

 112,126   111,480  

Accumulated other comprehensive loss

 (5,488 (3,127

Retained earnings (accumulated deficit)

 1,116   (1,057
  

 

 

  

 

 

 

Total Shareholders’ Equity

 107,920   107,461  
  

 

 

  

 

 

 

Total Liabilities and Shareholders’ Equity

$128,278  $128,381  
  

 

 

  

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

Cascade Microtech, Inc.

Condensed Consolidated Statements of Operations

(Unaudited, In thousands, except per share amounts)

 

   September 30,  December 31, 
   2014  2013 

Assets

   

Current Assets:

   

Cash and cash equivalents

  $29,717   $17,172  

Short-term marketable securities

   1,703    4,278  

Restricted cash

   —      1,082  

Accounts receivable, net of allowances of $228 and $269

   22,332    26,520  

Inventories

   26,215    24,884  

Prepaid expenses and other

   2,262    2,147  

Deferred income taxes

   4,961    2,268  
  

 

 

  

 

 

 

Total Current Assets

   87,190    78,351  

Fixed assets, net of accumulated depreciation of $28,296 and $27,730

   7,537    6,403  

Goodwill

   13,309    14,471  

Purchased intangible assets, net of accumulated amortization of $7,235 and $5,228

   13,658    16,937  

Deferred income taxes

   1,553    1,235  

Other assets, net of accumulated amortization of $4,494 and $4,349

   1,191    1,114  
  

 

 

  

 

 

 

Total Assets

  $124,438   $118,511  
  

 

 

  

 

 

 

Liabilities and Shareholders’ Equity

   

Current Liabilities:

   

Accounts payable

  $7,259   $7,229  

Deferred revenue

   2,316    2,555  

Accrued liabilities

   10,279    8,859  
  

 

 

  

 

 

 

Total Current Liabilities

   19,854    18,643  

Deferred revenue

   309    548  

Other long-term liabilities

   1,845    2,119  
  

 

 

  

 

 

 

Total Liabilities

   22,008    21,310  

Shareholders’ Equity:

   

Common stock, $0.01 par value. Authorized 100,000 shares; issued and outstanding: 16,377 and 16,218

   164    162  

Additional paid-in capital

   109,649    107,908  

Accumulated other comprehensive income (loss)

   (2,023  118  

Accumulated deficit

   (5,360  (10,987
  

 

 

  

 

 

 

Total Shareholders’ Equity

   102,430    97,201  
  

 

 

  

 

 

 

Total Liabilities and Shareholders’ Equity

  $124,438   $118,511  
  

 

 

  

 

 

 
   For the Three Months Ended March 31, 
   2015  2014 

Revenue

  $31,742   $33,685  

Cost of sales

   14,720    17,412  
  

 

 

  

 

 

 

Gross profit

 17,022   16,273  

Operating expenses:

Research and development

 3,676   3,241  

Selling, general and administrative

 10,547   10,430  
  

 

 

  

 

 

 

Total operating expenses

 14,223   13,671  
  

 

 

  

 

 

 

Income from operations

 2,799   2,602  

Other income (expense):

Interest income (expense), net

 (14 2  

Other, net

 231   (69
  

 

 

  

 

 

 

Total other income (expense), net

 217   (67
  

 

 

  

 

 

 

Income before income taxes

 3,016   2,535  

Income tax expense

 843   943  
  

 

 

  

 

 

 

Net income

$2,173  $1,592  
  

 

 

  

 

 

 

Basic net income per share

$0.13  $0.10  
  

 

 

  

 

 

 

Diluted net income per share

$0.13  $0.10  
  

 

 

  

 

 

 

Shares used in per share calculations:

Basic

 16,523   16,242  
  

 

 

  

 

 

 

Diluted

 17,037   16,679  
  

 

 

  

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

Cascade Microtech, Inc.

Condensed Consolidated Statements of OperationsComprehensive Income (Loss)

(Unaudited, In thousands, except per share amounts)thousands)

 

   For the Three Months Ended September 30,  For the Nine Months Ended September 30, 
   2014  2013  2014  2013 

Revenue

  $33,473   $28,197   $100,735   $85,975  

Cost of sales

   15,953    14,779    49,956    46,739  
  

 

 

  

 

 

  

 

 

  

 

 

 

Gross profit

   17,520    13,418    50,779    39,236  

Operating expenses:

     

Research and development

   3,554    2,750    10,223    7,900  

Selling, general and administrative

   10,352    9,097    31,412    26,207  
  

 

 

  

 

 

  

 

 

  

 

 

 
   13,906    11,847    41,635    34,107  
  

 

 

  

 

 

  

 

 

  

 

 

 

Income from operations

   3,614    1,571    9,144    5,129  

Other income (expense):

     

Interest income, net

   16    18    25    40  

Other, net

   (235  87    (360  (269
  

 

 

  

 

 

  

 

 

  

 

 

 

Total other income (expense), net

   (219  105    (335  (229
  

 

 

  

 

 

  

 

 

  

 

 

 

Income before income taxes

   3,395    1,676    8,809    4,900  

Income tax expense (benefit)

   1,188    (7  3,182    284  
  

 

 

  

 

 

  

 

 

  

 

 

 

Net income

   2,207    1,683    5,627    4,616  
  

 

 

  

 

 

  

 

 

  

 

 

 

Basic net income per share

  $0.13   $0.12   $0.35   $0.32  
  

 

 

  

 

 

  

 

 

  

 

 

 

Diluted net income per share

  $0.13   $0.11   $0.34   $0.31  
  

 

 

  

 

 

  

 

 

  

 

 

 

Shares used in per share calculations:

     

Basic

   16,357    14,453    16,286    14,339  
  

 

 

  

 

 

  

 

 

  

 

 

 

Diluted

   16,851    14,797    16,775    14,688  
  

 

 

  

 

 

  

 

 

  

 

 

 
   For the Three Months Ended March 31, 
   2015  2014 

Net income

  $2,173   $1,592  

Other comprehensive income (loss):

   

Unrealized holding gains

   2    —    

Change in cumulative translation adjustment

   (2,363  14  
  

 

 

  

 

 

 
 (2,361 14  
  

 

 

  

 

 

 

Comprehensive income (loss)

$(188$1,606  
  

 

 

  

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

Cascade Microtech, Inc.

Condensed Consolidated Statements of Comprehensive IncomeCash Flows

(Unaudited, In thousands)

 

   For the Three Months Ended
September 30,
   For the Nine Months Ended
September 30,
 
   2014  2013   2014  2013 

Net income

  $2,207   $1,683    $5,627   $4,616  

Unrealized holding gains (losses), net of tax

   —      1     (3  —    

Change in cumulative translation adjustment, net of tax

   (2,042  735     (2,138  480  
  

 

 

  

 

 

   

 

 

  

 

 

 

Comprehensive income

  $165   $2,419    $3,486   $5,096  
  

 

 

  

 

 

   

 

 

  

 

 

 
   For the Three Months Ended March 31, 
   2015  2014 

Cash flows from operating activities:

   

Net income

  $2,173   $1,592  

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

   

Depreciation

   750    829  

Amortization

   647    785  

Stock-based compensation

   587    449  

Loss on write-down or disposal of long-lived assets

   —      63  

Deferred income taxes

   39    (4

(Increase) decrease in:

   

Accounts receivable, net

   (653  4,878  

Inventories

   498    (499

Prepaid expenses and other

   (160  (502

Increase (decrease) in:

   

Accounts payable

   619    (36

Deferred revenue

   (353  (445

Accrued and other long-term liabilities

   (1,636  303  
  

 

 

  

 

 

 

Net cash provided by operating activities

 2,511   7,413  

Cash flows from investing activities:

Purchase of marketable securities

 (5,829 (629

Proceeds from sale of marketable securities

 603   2,171  

Decrease in restricted cash

 —     251  

Purchase of fixed assets

 (543 (513

Proceeds from sale of fixed assets

 —     10  

Cash paid for acquisitions, net of cash acquired

 —     (226
  

 

 

  

 

 

 

Net cash provided by (used in) investing activities

 (5,769 1,064  

Cash flows from financing activities:

Witholding taxes paid on net settlement of vested restricted stock units

 (217 (174

Proceeds from issuances of common stock

 277   280  

Cash paid for repurchase of common stock

 —     (817
  

 

 

  

 

 

 

Net cash provided by (used in) financing activities

 60   (711

Effect of exchange rate changes on cash and cash equivalents

 (830 7  
  

 

 

  

 

 

 

Increase (decrease) in cash and cash equivalents

 (4,028 7,773  

Cash and cash equivalents:

Beginning of period

 38,107   17,172  
  

 

 

  

 

 

 

End of period

$34,079  $24,945  
  

 

 

  

 

 

 

Supplemental disclosure of cash flow information:

Cash paid for income taxes, net

$1,744  $146  

Supplemental disclosure of non-cash information:

Payable for fixed assets

$1,442  $—    

Transfer to inventory from fixed assets

 —     213  

See accompanying Notes to Condensed Consolidated Financial Statements.

Cascade Microtech, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, In thousands)

   For the Nine Months Ended September 30, 
   2014  2013 

Cash flows from operating activities:

   

Net income

  $5,627   $4,616  

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

   

Depreciation expense

   2,452    2,787  

Amortization of intangibles

   2,317    735  

Stock-based compensation

   1,918    1,215  

Loss on write-down or disposal of long-lived assets

   45    4  

Deferred income taxes

   (21  45  

(Increase) decrease, net of the effect of acquisition, in:

   

Accounts receivable, net

   3,919    3,025  

Inventories

   (2,160  2,053  

Prepaid expenses and other

   (1,370  264  

Increase (decrease), net of effect of acquisition, in:

   

Accounts payable

   (598  (30

Deferred revenue

   (473  (2,019

Accrued and other long-term liabilities

   2,088    (2,410
  

 

 

  

 

 

 

Net cash provided by operating activities

   13,744    10,285  

Cash flows from investing activities:

   

Purchase of marketable securities

   (2,127  (13,915

Proceeds from sale of marketable securities

   4,699    13,979  

Purchase of fixed assets

   (3,123  (1,107

Proceeds from sales of fixed assets

   34    13  

Decrease in restricted cash

   1,037    1,082  

Cash paid for acquisitions, net of cash acquired

   (654  (1,914
  

 

 

  

 

 

 

Net cash used in investing activities

   (134  (1,862

Cash flows from financing activities:

   

Principal payments on capital lease obligations

   1,392    (2

Withholding taxes paid on net settlement of vested restricted stock units

   (534  (354

Proceeds from issuances of common stock

   —      800  

Cash paid for repurchase of common stock

   (1,033  (58
  

 

 

  

 

 

 

Net cash provided by (used in) financing activities

   (175  386  

Effect of exchange rate changes on cash and cash equivalents

   (890  190  
  

 

 

  

 

 

 

Increase in cash and cash equivalents

   12,545    8,999  

Cash and cash equivalents:

   

Beginning of period

   17,172    17,927  
  

 

 

  

 

 

 

End of period

  $29,717   $26,926  
  

 

 

  

 

 

 

Supplemental disclosure of cash flow information:

   

Cash paid for income taxes, net

  $913   $593  

Supplemental disclosure of non-cash information:

   

Transfer from (to) inventory to (from) fixed assets

  $(213 $94  

See accompanying Notes to Condensed Consolidated Financial Statements.

CASCADE MICROTECH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The condensed consolidated financial information included herein has been prepared by Cascade Microtech, Inc. without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). However, such information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The financial information as of December 31, 20132014 is derived from our 20132014 Annual Report on Form 10-K. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our 20132014 Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Note 2. Inventories

Inventories are stated at the lower of standard cost which approximates cost computed on a first-in, first-out basis, or market, and include materials, labor and manufacturing overhead. Demonstration goods, which are included as a component of finished goods, represent inventory that is used for customer demonstration purposes. This inventory is typically sold after 12 to 18 months. We analyze the carrying value of our inventory quarterly, considering a combination of factors including, but not limited to, the following: forecasted sales or usage, historical usage rates, estimated service period, product end-of-life dates, estimated current and future market values, service inventory requirements and new product introductions. We estimate market value based on factors including, but not limited to, replacement cost and estimated resale value with declines in value below cost being recorded quarterly as a component of cost of sales, therefore establishing a new cost basis for the inventory.

Inventory charges were as follows (in thousands):

 

   Three Months Ended
September 30,
   Nine Months Ended
September 30,
 
   2014   2013   2014   2013 

Inventory charges

  $694    $352    $1,493    $1,101  
   Three Months Ended
March 31,
 
   2015   2014 

Inventory charges

  $100    $454  

Inventories consisted of the following (in thousands):

 

  September 30,   December 31   March 31,   December 31 
  2014   2013   2015   2014 

Raw materials

  $14,858    $15,234    $14,415    $14,120  

Work-in-process

   4,283     2,958     2,942     3,809  

Finished goods

   7,074     6,692     7,366     6,713  
  

 

   

 

   

 

   

 

 
  $26,215    $24,884  $24,723  $24,642  
  

 

   

 

   

 

   

 

 

Note 3. Net Income Per Share

The following table reconciles the shares used in calculating basic net income per share and diluted net income per share (in thousands):

 

  Three Months Ended
September 30,
   Nine Months Ended
September 30,
   Three Months Ended
March 31,
 
  2014   2013   2014   2013   2015   2014 

Shares used to calculate basic net income per share

   16,357     14,453     16,286     14,339     16,523     16,242  

Dilutive effect of outstanding options and restricted stock units (“RSUs”)

   494     344     489     349  

Dilutive effect of outstanding stock options and restricted stock units (“RSUs”)

   514     437  
  

 

   

 

   

 

   

 

   

 

   

 

 

Shares used to calculate diluted net income per share

   16,851     14,797     16,775     14,688   17,037   16,679  
  

 

   

 

   

 

   

 

   

 

   

 

 

Securities not considered as they would have been antidilutive

   978     1,049     984     1,044   886   1,056  
  

 

   

 

   

 

   

 

   

 

   

 

 

Note 4. Product Warranty

We estimate a liability for costs to repair or replace products under warranty for periods ranging from 90 days to one year when the related product revenue is recognized. The liability for product warranties is calculated as a percentage of sales. The percentage is based on historical product repair costs. The liability for product warranties is included in Accrued liabilities on our Condensed Consolidated Balance Sheets.

Product warranty activity was as follows (in thousands):

 

  Nine Months Ended
September 30,
   Three Months Ended
March 31,
 
  2014 2013   2015   2014 

Warranty accrual, beginning of period

  $745   $716    $797    $745  

Reductions for warranty charges

   (616 (564   (355   (264

Additions to warranty reserve

   690   367     379     261  
  

 

  

 

   

 

   

 

 

Warranty accrual, end of period

  $819   $519  $821  $742  
  

 

  

 

   

 

   

 

 

Note 5. Goodwill and Purchased Intangible Assets

Goodwill

The change in goodwill was as follows (in thousands):

 

  Nine Months
Ended
September 30,
2014
 Year Ended
December 31,
2013
   Three Months
Ended
March 31, 2015
   Year Ended
December 31,
2014
 

Balance, beginning of period

  $14,471   $990    $12,823    $14,471  

Acquisition of the Reliability Test Product division of Aetrium Incorporated (“RTP”)

   —     641  

Acquisition of ATT Advanced Temperature Test Systems GmbH ATT (“ATT Systems”)

   —     12,551  

Effect of exchange rate changes

   (1,162 289     (1,404   (1,648
  

 

  

 

   

 

   

 

 

Balance, end of period

  $13,309   $14,471  $11,419  $12,823  
  

 

  

 

   

 

   

 

 

Intangible Assets

Intangible assets, net included the following (in thousands):

 

   September 30,  December 31, 
   2014  2013 

Purchased Intangible Assets

   

Customer relationships

  $6,909   $7,198  

Core technology

   12,849    13,728  

Trademarks and tradenames

   1,135    1,239  
  

 

 

  

 

 

 
   20,893    22,165  

Less accumulated amortization

   (7,235  (5,228
  

 

 

  

 

 

 
  $13,658   $16,937  
  

 

 

  

 

 

 

Patents

   

Patents

  $4,632   $4,632  

Less accumulated amortization

   (4,494  (4,349
  

 

 

  

 

 

 
  $138   $283  
  

 

 

  

 

 

 

   March 31,
2015
   December 31,
2014
 

Purchased Intangible Assets

    

Customer relationships

  $3,973    $4,323  

Core technology

   11,418     12,481  

Trademarks and tradenames

   966     1,092  
  

 

 

   

 

 

 
 16,357   17,896  

Less accumulated amortization

 (5,609 (5,324
  

 

 

   

 

 

 
$10,748  $12,572  
  

 

 

   

 

 

 

Patents

Patents

$4,632  $4,632  

Less accumulated amortization

 (4,586 (4,540
  

 

 

   

 

 

 
$46  $92  
  

 

 

   

 

 

 

Intangible asset amortization is a component of Selling, general and administrative expense and was as follows (in thousands):

 

   Three Months Ended
September 30,
   Nine Months Ended
September 30,
 
   2014   2013   2014   2013 

Intangible amortization

  $752    $264    $2,317    $735  
   Three Months Ended
March 31,
 
   2015   2014 

Intangible amortization

  $647    $785  

The estimated amortization of intangible assets is as follows over the next five years and thereafter (in thousands):

 

Remainder of 2014

  $692  

2015

   2,721  

Remainder of 2015

$1,776  

2016

   2,420   2,106  

2017

   2,402   2,088  

2018

   2,324   2,010  

2019

 1,562  

Thereafter

   3,237   1,252  
  

 

   

 

 
  $13,796  $10,794  
  

 

   

 

 

Note 6. Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

 

  September 30,   December 31, 
  2014   2013   March 31,
2015
   December 31,
2014
 

Accrued compensation and benefits

  $3,177    $2,812    $3,147    $3,606  

Accrued sales taxes and VAT

   754     470     668     276  

Accrued income taxes

   2,700     492     286     1,628  

Accrued warranty

   819     745     821     797  

Contingent consideration related to our acquisition of RTP

   400     1,350  

Payable to seller related to our acquisition of ATT Systems

   451     746  

Payable to seller related to our acquisition of ATT Advanced Temperature Test Systems GmbH (“ATT Systems”)

   404     456  

Accrued restructuring costs

   1,007     1,163     1,371     1,959  

Other

   971     1,081     694     783  
  

 

   

 

   

 

   

 

 
  $10,279    $8,859  $7,391  $9,505  
  

 

   

 

   

 

   

 

 

Note 7. Stock-Based Compensation and Stock-Based Plans

Stock-based compensation was included in our Condensed Consolidated Statements of Operations as follows (in thousands):

 

  Three Months Ended
September 30,
   Nine Months Ended
September 30,
   Three Months Ended
March 31,
 
  2014   2013   2014   2013   2015   2014 

Cost of sales

  $70    $51    $190    $147    $27    $58  

Research and development

   88     42     228     142     64     64  

Selling, general and administrative

   490     250     1,500     926     496     327  
  

 

   

 

   

 

   

 

   

 

   

 

 
  $648    $343    $1,918    $1,215  $587  $449  
  

 

   

 

   

 

   

 

   

 

   

 

 

Stock Incentive Plans

Stock option activity for the first ninethree months of 20142015 was as follows:

 

  Options
Outstanding
 Weighted
Average
Exercise Price
   Stock Options
Outstanding
   Weighted
Average
Exercise Price
 

Outstanding at December 31, 2013

   1,042,937   $6.52  

Outstanding at December 31, 2014

   916,779    $6.10  

Granted

   90,000   9.61     82,300     14.34  

Exercised

   (118,686 9.06     (52,497   5.25  

Forfeited

   (1,800 10.17     (100   14.38  
  

 

    

 

   

Outstanding at September 30, 2014

   1,012,451    6.49  

Outstanding at March 31, 2015

 946,482   6.86  
  

 

    

 

   

RSU activity for the first ninethree months of 20142015 was as follows:

 

   Restricted
Stock

Units
  Weighted
Average

Grant Date
Per Share
Fair Value
 

Outstanding at December 31, 2013

   409,403   $6.87  

Granted

   219,900    10.41  

Vested

   (164,770  6.84  

Forfeited

   (4,600  7.56  
  

 

 

  

Outstanding at September 30, 2014

   459,933    8.56  
  

 

 

  
   RSUs   Weighted
Average
Grant Date
Per Share
Fair Value
 

Outstanding at December 31, 2014

   395,724    $8.83  

Granted – time-based

   62,050     14.34  

Granted – performance-based

   49,000     14.34  

Vested

   (46,727   8.18  

Forfeited

   (6,687   9.40  
  

 

 

   

Outstanding at March 31, 2015

 453,360   10.24  
  

 

 

   

The performance-based RSUs will vest if new product revenue as a percentage of total revenue meets a certain target for the second half of 2017. If the target is met, the performance-based RSUs will be earned and vested in the first quarter of 2018 at between 50% and 100% of the total granted based upon the target achievement level. Stock-based compensation expense is recognized over the vesting period based on our determination of the probability of the awards being earned. As of March 31, 2015, we determined that the target was not probable of achievement and accordingly, no expense was recognized.

As of September 30, 2014,March 31, 2015, total unrecognized stock-based compensation related to outstanding, but unvested, stock options and RSUs was $4.8$4.9 million, which will be recognized over the weighted average remaining vesting period of 2.42.5 years.

Employee Stock Purchase Plan

During the first nine months of 2014, we issued 35,722 shares of our common stock pursuant to our 2013 Employee Share Purchase Plan (the “2013 ESPP”) at a price of $8.88 per share, which represented a discount of $1.90 per share from the fair value of our common stock on the date of issuance. As of September 30, 2014, a total of 964,278 shares remained available for issuance pursuant to the 2013 ESPP.

Note 8. Segment Reporting

The segment data below is presented in the same manner that management currently organizes the segments for assessing certain performance trends. Our Chief Operating Decision Maker monitors the revenue streams and the operating income of our Systems salessegment and our Probes sales.segment. We do not track our assets on a segment level, and, accordingly, that information is not provided.

Revenue and operating income information by segment was as follows (dollars in thousands):

 

Three Months Ended September 30, 2014

  Systems  Probes  Corporate
Unallocated
  Total 

Revenue

  $19,411   $14,062   $—     $33,473  

Gross profit

  $8,162   $9,358   $—     $17,520  

Gross margin

   42.0  66.5  —      52.3

Income (loss) from operations

  $1,267   $6,459   $(4,112 $3,614  

Three Months Ended September 30, 2013

     

Revenue

  $17,500   $10,697   $—     $28,197  

Gross profit

  $7,470   $5,948   $—     $13,418  

Gross margin

   42.7  55.6  —      47.6

Income (loss) from operations

  $1,981   $3,462   $(3,872 $1,571  

Nine Months Ended September 30, 2014

  Systems  Probes  Corporate
Unallocated
  Total 

Revenue

  $62,795   $37,940   $—     $100,735  

Gross profit

  $27,499   $23,280   $—     $50,779  

Gross margin

   43.8  61.4  —      50.4

Income (loss) from operations

  $7,098   $14,785   $(12,739 $9,144  

Nine Months Ended September 30, 2013

     

Revenue

  $55,047   $30,928   $—     $85,975  

Gross profit

  $22,942   $16,294   $—     $39,236  

Gross margin

   41.7  52.7  —      45.6

Income (loss) from operations

  $6,891   $8,876   $(10,638 $5,129  

In preparing this financial information, certain expenses were allocated between the segments based on management estimates, while others were based on specific factors such as headcount. These factors can

have a significant impact on the amount of income (loss) from operations for each segment. While we believe we have applied a reasonable methodology, assignment of other reasonable cost allocations to each segment could result in materially different segment income (loss) from operations.

   Systems  Probes  Corporate
Unallocated
  Total 

Three Months Ended March 31, 2015

     

Revenue

  $17,470   $14,272   $—     $31,742  

Gross profit

  $8,494   $8,528   $—     $17,022  

Gross margin

   48.6  59.8  —      53.6

Income (loss) from operations

  $1,496   $5,087   $(3,784 $2,799  

Three Months Ended March 31, 2014

     

Revenue

  $21,435   $12,250   $—     $33,685  

Gross profit

  $9,198   $7,075   $—     $16,273  

Gross margin

   42.9  57.8  —      48.3

Income (loss) from operations

  $1,748   $4,426   $(3,572 $2,602  

No customer accounted for 10% or greater of our total revenue in the three or nine-monththree-month periods ended September 30, 2014March 31, 2015 or 2013.2014.

Note 9. Fair Value Measurements

Various inputs are used in determining the fair value of our financial assets and liabilities and are summarized into three broad categories:

 

Level 1 – quoted prices in active markets for identical securities;

 

Level 2 – other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk, etc.; and

 

Level 3 – significant unobservable inputs, including our own assumptions in determining fair value.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The disclosures related to our financial assets and (liabilities) that are reported at fair value on a recurring basis are as follows (in thousands):

 

  September 30, 2014   December 31, 2013   March 31, 2015   December 31, 2014 
  Fair Value Input Level   Fair Value Input Level   Fair Value   Input Level   Fair Value   Input Level 

Marketable securities – corporate equities

  $4   Level 1    $1   Level 1    $6     Level 1    $6     Level 1  

Marketable securities – corporate obligations

  $1,699   Level 2    $4,277   Level 2    $5,579     Level 2    $1,620     Level 2  

Marketable securities – U.S. treasury securities

  $1,269     Level 2    $—       Level 2  

Forward sale contracts for Japanese yen

  $2,735   Level 2    $523   Level 2    $3,495     Level 2    $2,510     Level 2  

Forward purchase contract for euro

  $758   Level 2    $2,061   Level 2    $858     Level 2    $726     Level 2  

Forward sale contract for euro

  $24,665   Level 2    $24,561   Level 2    $21,377     Level 2    $22,056     Level 2  

Contingent consideration related to our acquisition of RTP

  $(400 Level 3    $(1,350 Level 3  

The fair value of our marketable securities is determined based on quoted market prices for similar or identical securities. Any unrealized gain or loss is recorded as a component of Accumulated other comprehensive loss in our Condensed Consolidated Balance Sheets.

The fair value of our forward contracts is based on quoted market prices for similar securities and is used for the purpose of determining any gain or loss on our foreign currency positions. We do not record the full value of the forward contracts on our Condensed Consolidated Balance Sheets. We record the net unrealized gain or loss in our Condensed Consolidated Balance Sheet andStatements of Operations as a component of Other income (expense).

The fair value of the contingent consideration related to our acquisition of RTP is determined based on the present value of probability weighted payments expected to be made under the terms of the agreement.

The carrying values of Cash and cash equivalents, Restricted cash, Accounts receivable, Prepaid expenses and other, Accounts payable and Accrued liabilities approximate fair value due to their short maturities.

No changes were made to our valuation techniques during the first nine monthsquarter of 2014.2015.

The following table summarizes our Level 3 activity for our contingent consideration liability (in thousands):

   Level 3 

Balance at December 31, 2013

  $1,350  

Decrease in contingent consideration due to re-measurement

   (522

Payment of contingent consideration

   (428
  

 

 

 

Balance at September 30, 2014

  $400  
  

 

 

 

Note 10. Stock RepurchasesRepurchase Program

In November 2012, our Board of Directors authorized a stock repurchase program under which up to $2.0 million of our common stock could be repurchased from time to time in the open market or in privately negotiated transactions. In May 2014, our Board of Directors authorized an increase to the stock repurchase program of an additional $2.0 million. InWe did not repurchase any shares during the first nine monthsquarter of 2014 we repurchased 111,256 shares of our common stock

at a weighted average price of $9.28 per share, or a total of $1.0 million.2015. As of September 30, 2014, $2.6March 31, 2015, $2.5 million remained available for repurchasestock repurchases under the program. The repurchaseThis program does not have an expiration date.

Note 11. Restructuring Accrual

Restructuring charges (credits) relatedAccrued restructuring at March 31, 2015 relates to adjustments to our lease abandonment reserve were recorded as a componentthe consolidation of Selling, generalcertain manufacturing, research and administrative as follows:development operations, and the reorganization of business operations and the sales channel in Europe.

   Three Months Ended
September 30,
   Nine Months Ended
September 30,
 
   2014  2013   2014   2013 

Lease abandonment

  $(191 $—      $58    $112  
  

 

 

  

 

 

   

 

 

   

 

 

 

The following tables summarize the charges, expenditures and write-offs and adjustments related to our restructuring accruals (in thousands):

 

Nine Months Ended September 30, 2014

  Beginning
Accrued
Liability
   Charged to
Expense,
Net
   Expend-
itures
 Write-Offs
and
Adjust-
ments
   Ending
Accrued
Liability
 

Three Months Ended

March 31, 2015

  Beginning
Accrued
Liability
   Charged to
Expense,
Net
   Expenditures Write-Offs
and
Adjustments
   Ending
Accrued
Liability
 

Termination and severance related

  $308    $68    $(218 $—      $158  

Factory transition

   —       50     (50  —       —    

Lease abandonment

  $2,129    $58    $(873 $—      $1,314     1,651     —       (438  —       1,213  
  

 

   

 

   

 

  

 

   

 

 
$1,959  $118  $(706$—    $1,371  
  

 

   

 

   

 

  

 

   

 

 

As of September 30, 2014, approximately $0.3 million of total

Three Months Ended

March 31, 2014

  Beginning
Accrued
Liability
   Charged to
Expense,
Net
   Expenditures  Write-Offs
and
Adjustments
   Ending
Accrued
Liability
 

Lease abandonment

  $2,129    $—      $(289 $—      $1,840  
  

 

 

   

 

 

   

 

 

  

 

 

   

 

 

 

We expect all accrued restructuring costs are included in Other long-term liabilities. The remainder is classified as a component of Accrued liabilities. We expect the lease abandonment costs will be paid by the end of 2015.

Note 12. Recent Accounting Guidance

ASU 2014-122015-02

In June 2014,February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-02, “Consolidation (Topic 810).” ASU 2015-02 amends guidance regarding the consolidation of certain legal entities. ASU 2015-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We do not expect the adoption of ASU 2015-02 to have any effect on our financial position, results of operations or cash flows.

ASU 2015-01

In January 2015, the FASB issued ASU 2015-01, “Income Statement – Extraordinary and Unusual Items (Subtopic 225-20).” ASU 2015-01 simplifies income statement presentation by eliminating the concept of extraordinary items. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The adoption of ASU 2015-01 will not have any effect on our financial position, results of operations or cash flows.

ASU 2014-16

In November 2014, the FASB issued ASU 2014-16, “Derivatives and Hedging (Topic 815).” ASU 2014-16 addresses whether the host contract in a hybrid financial instrument issued in the form of a share should be accounted for as debt or equity. ASU 2014-16 is effective for annual periods and interim periods beginning after December 15, 2015. We do not currently have issued, nor are we investors in, hybrid financial instruments. Accordingly, we do not expect the adoption of ASU 2014-16 to have any effect on our financial position, results of operations or cash flows.

ASU 2014-12

In June 2014, the FASB issued ASU 2014-12, “Compensation – Stock Compensation (Topic 718).” ASU 2014-12 addresses accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. ASU 2014-12 indicates that, in such situations, the performance target should be treated as a performance condition and, accordingly, the performance target should not be reflected in estimating the grant-date fair value of the award. Instead, compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved. ASU 2014-12 is effective for annual periods and interim periods beginning after December 15, 2015. We do not expect the adoption of ASU 2014-12 to have a material effect on our financial position, results of operations or cash flows.

ASU 2014-09

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 clarifies the principles for recognizing revenue and develops a common revenue standard for GAAP and the International Accounting Standards Board. ASU 2014-09 is effective for annual and interim periods beginning on or after December 15, 2016. Early adoption is not permitted.On April 1, 2015, the FASB tentatively agreed to propose a one-year deferral of the effective date for ASU 2014-09, but would permit all entities to adopt the standard as of the original effective date for public business entities (i.e., annual periods beginning after December 15, 2016, and interim periods therein). The FASB expects to issue an Exposure Draft for this issue in the near term. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

ASU 2013-11

In July 2013, the FASB issued ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU 2013-11 amends the guidance related to the presentation of unrecognized tax benefits and allows for the reduction of a deferred tax asset for a net operating loss (“NOL”) carryforward whenever the NOL or tax credit carryforward would be available to reduce the additional taxable income or tax due if the tax position is disallowed. ASU 2013-11 is effective for annual and interim periods for fiscal years beginning after December 15, 2013, and early adoption is permitted. Since ASU 2013-11 relates only to the presentation of unrecognized tax benefits, our adoption of ASU 2013-11 in January 2014 did not have a material effect on our financial position, results of operations or cash flows.

Note 13. Subsequent Events

On October 1, 2014, we paid $0.5 million of the deferred purchase price related to our acquisition of ATT Systems. Following this payment, we owe an additional $0.5 million related to this acquisition, which will be paid on October 1, 2015.

On October 10, 2014, we paid $0.4 million of contingent consideration related to our acquisition of RTP. There are no additional payments related to this acquisition.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward LookingForward-Looking Statements and Risk Factors

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact made in this Quarterly Report on Form10-Q are forward-looking including, among others, statements regarding: industry prospects;our future financial position and results of operations, including the estimated revenue for the second quarter ending December 31, 2014; our future financial position; our expectations and beliefs regarding future revenue growth;of 2015; the future impact of any off-balance sheet arrangements; our estimated costs to repair or replace products under warranty; our strategies and intentions and potential sources of funds regarding any acquisitions; our accounting and tax policies and the impact of adoption ofadopting accounting guidance if any, on our financial position, results of operations or cash flows; potential charges to write down inventory in future periods;the anticipated cash required for our future capital requirements and fixed asset additionspurchases for 2014;2015; seasonality of our revenues and expected increases in revenue in the last month of each quarter; andthe anticipated renewal of our $10 million Letter of Credit with JPMorgan Chase Bank N.A., our ability to meet our cash requirements for the next 12 months and for the foreseeable future.future and the sources we anticipate using to meet these cash requirements. These statements relate to future events of our future financial performance. In some cases, you can identify forward-looking statements by terminology, including “intend,” “could,” “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “future,” or “continue,” the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially from those expressed or implied such forward-looking statements. In evaluating these statements, you should specifically consider various factors, including: changes in demand for our products; changes in product mix; the timing of shipments, customer orders and capital expenditures; constraints on availability of components; excess or shortage of production capacity; potential failure of expected market opportunities to materialize; changes in foreign exchange rates; and other risks included in Item 1A to our Annual Report on Form 10-K for the year ended December 31, 20132014 as filed with the Securities and Exchange Commission on March 5, 2014.12, 2015.

General

We design, develop, manufacture and market advanced wafer probing, thermal and reliability solutions for the electrical measurement and testing of high performance semiconductor devices. Our products enable precision on-wafer measurement of integrated circuits and are typicallyoften used in the early phases of the development of semiconductor processes where the accuracy and repeatability of measurements is critical to achieving yield from advanced process nodes. TheyMany of our products are also used in production applications to test semiconductor devices prior to completion of the manufacturing process. We design, manufacture and assemble our products in Beaverton, Oregon, North St. Paul, Minnesota, Munich, Germany, and Dresden, Germany and maintain global sales, service and support centers in North America, Germany, Japan, Taiwan, China and Singapore.

We operate in two business segments: Systems and Probes. Sales of our probe stations, thermal subsystems and reliability test systems are included in the Systems segment and sales of our analytical probes and production probe cards are included in the Probes segment.

Our probe stations provide precise and accurate measurement of semiconductor electrical characteristics during device design or when optimizing the chip fabrication process. Our probe stations are highly configurable and are typically sold with various accessories, including our analytical probes, as well as

accessories from third parties. In addition, we design and build custom probe stations to address the specific requirements of our customers. We also generate revenue through the sales of service contracts for our stations.

Our thermal subsystems are designed and produced by ATT Systems, a wholly-owned subsidiary based in Munich, Germany, which we acquired in October 2013. ATT Systems produces thermal chuck systems used in probe stations, as well as specific systems for testing electronic components, hybrids, PCBs or other assemblies at the test site. Designed for thermal and mechanical stability and precision, our thermal subsystems offer a broad range of modular solutions that can be used in new installations, as well as upgrades to existing equipment.

Our reliability test products were acquired in July 2013 from Aetrium Incorporated and are designed and manufactured in St. Paul, Minnesota. The 1164 Reliability Test System is a modular and scalable test platform that can be used in a wide range of reliability test applications, including Electro Migration (“EM”), Stress Migration (“SM”), Time Dependent Dielectric Breakdown (“TDDB”), Stress Induced Leakage Current (“SILC”) and Bias Temperature Instability (“BTI”). In addition to the 1164 Reliability Test System, we also offer the Symphony Wafer Level Reliability (“WLR”) Test System which, when combined with either an automated or semi-automated probe station, and our Conductor software, provides users with the necessary tools for automated and unattended WRL testing to shorten product development cycles and enhance product quality.

Our analytical probes are sold to serve as components of our probe stations, or, less often, to serve as components of test equipment manufactured by third parties. Our production probe cards are designed and sold for high-volume production test applications, ranging from very low current parametric testing to sophisticated, high-speed radio frequency integrated circuit (“RFIC”) testing. These probe cards are used in conjunction with third party equipment from manufacturers such as Advantest, Agilent and Teradyne.

Overview

Revenue and gross margin in the first nine months of 2014 increaseddecreased $2.0 million to $100.7 million and 50.4%, respectively, compared to $86.0 million and 45.6%, respectively, in the first nine months of 2013, reflecting increased sales and gross margins in both the Systems and Probes segments. Net income was $5.6$31.7 million in the first nine monthsquarter of 20142015 compared to $4.6$33.7 million in the first nine months of 2013.

During the second quarter of 2014, we settledprimarily due to a contingent liability related to our acquisition of the Reliability Test Product division of Aetrium Incorporated (“RTP”) for $0.4 million, resultingdecrease in a $0.4 million credit to Selling, general and administrative expense since we had $0.8 million accrued for such payment.

On October 10, 2014, we paid the final contingent liability related to RTP of $0.4 million. A credit of $0.1Systems sales, partially offset by an increase in Probes sales. Gross profit, however, increased $0.7 million to Selling, general and administrative expense was recognized$17.0 million in the thirdfirst quarter of 2014 since $0.52015 compared to $16.3 million had previously been accrued forin the payment. There are no additional payments related to this acquisition.

On October 1, 2014, we paid $0.5 million of the deferred purchase price related to our acquisition of ATT Advanced Temperature Test Systems GmbH (“ATT”). Following this payment, we owe an additional $0.5 million related to this acquisition, which will be paid on October 1, 2015.

Also during the thirdfirst quarter of 2014 we recorded a credit of $0.2 million to restructuring costs as a component of Selling, general and administrative expense as a result of a changean increase in our estimated incomegross margin to 53.6% from sub-leasing a property located in Oregon.48.3%.

Outlook

Based on our current backlog, projected bookings and scheduled shipments, we anticipate revenues will be in the range of $35$34 million to $38 million for the fourthsecond quarter of 2014.2015.

Critical Accounting Policies and the Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that have become increasingly difficult to make in

the current economic environment. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period.

On an on-going basis The estimates we evaluate our estimates, including those related to revenue recognition, bad debts, inventory, lives and recoverability of equipment and other long-lived assets, warranty obligations, deferred income tax assets, unrecognized income tax benefits, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable undermake may change in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.future.

We reaffirm the critical accounting policies and estimates as reported in our Annual Report on Form 10-K for the year ended December 31, 2013,2014, which was filed with the Securities and Exchange Commission on March 5, 2014.12, 2015.

Results of Continuing Operations

The following table sets forth our consolidated statement of operations data for the periods indicated as a percentage of revenue.(1)

 

  Three Months Ended
September 30,
 Nine Months Ended
September 30,
   For the Three Months
Ended March 31,
 
  2014 2013 2014 2013   2015 2014 

Revenue

   100.0 100.0 100.0 100.0   100.0 100.0

Cost of sales

   47.7   52.4   49.6   54.4     46.4   51.7  
  

 

  

 

  

 

  

 

   

 

  

 

 

Gross profit

   52.3    47.6    50.4    45.6   53.6   48.3  

Operating expenses:

     

Research and development

   10.6    9.8    10.1    9.2   11.6   9.6  

Selling, general and administrative

   30.9    32.3    31.2    30.5   33.2   31.0  
  

 

  

 

  

 

  

 

   

 

  

 

 

Total operating expenses

   41.5    42.0    41.3    39.7   44.8   40.6  
  

 

  

 

  

 

  

 

   

 

  

 

 

Income from operations

   10.8    5.6    9.1    6.0   8.8   7.7  

Other income (expense), net

   (0.7  0.4    (0.3  (0.3 0.7   (0.2
  

 

  

 

  

 

  

 

   

 

  

 

 

Income before income taxes

   10.1    5.9    8.7    5.7   9.5   7.5  

Income tax expense (benefit)

   3.5    —      3.2    0.3  

Income tax expense

 2.7   2.8  
  

 

  

 

  

 

  

 

   

 

  

 

 

Net income

   6.6  6.0  5.6  5.4 6.8 4.7
  

 

  

 

  

 

  

 

   

 

  

 

 

 

(1)Percentages may not add due to rounding.

Certain financial

Revenue and operating income information by segment was as follows (dollars in thousands):

 

Three Months Ended September 30, 2014

  Systems  Probes  Corporate
Unallocated
  Total 

Revenue

  $19,411   $14,062   $—     $33,473  

Gross profit

  $8,162   $9,358   $—     $17,520  

Gross margin

   42.0  66.5  —      52.3

Income (loss) from operations

  $1,267   $6,459   $(4,112 $3,614  

Three Months Ended September 30, 2013

    

Revenue

  $17,500   $10,697   $—     $28,197  

Gross profit

  $7,470   $5,948   $—     $13,418  

Gross margin

   42.7  55.6  —      47.6

Income (loss) from operations

  $1,981   $3,462   $(3,872 $1,571  

Nine Months Ended September 30, 2014

  Systems  Probes  Corporate
Unallocated
  Total 

Revenue

  $62,795   $37,940   $—     $100,735  

Gross profit

  $27,499   $23,280   $—     $50,779  

Gross margin

   43.8  61.4  —      50.4

Income (loss) from operations

  $7,098   $14,785   $(12,739 $9,144  

Nine Months Ended September 30, 2013

    

Revenue

  $55,047   $30,928   $—     $85,975  

Gross profit

  $22,942   $16,294   $—     $39,236  

Gross margin

   41.7  52.7  —      45.6

Income (loss) from operations

  $6,891   $8,876   $(10,638 $5,129  

   Systems  Probes  Corporate
Unallocated
   Total 

Three Months Ended March 31, 2015

      

Revenue

  $17,470   $14,272   $—      $31,742  

Gross profit

  $8,494   $8,528   $—      $17,022  

Gross margin

   48.6  59.8  —       53.6

Income (loss) from operations

  $1,496   $5,087   $(3,784  $2,799  

Three Months Ended March 31, 2014

      

Revenue

  $21,435   $12,250   $—      $33,685  

Gross profit

  $9,198   $7,075   $—      $16,273  

Gross margin

   42.9  57.8  —       48.3

Income (loss) from operations

  $1,748   $4,426   $(3,572  $2,602  

Revenue

Revenue information was as follows (dollars in thousands):

 

   Three Months Ended Sept. 30,   Dollar     

Revenue

  2014   2013   Change   % Change 

Systems

  $19,411    $17,500    $1,911     10.9

Probes

   14,062     10,697     3,365     31.5
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $33,473    $28,197    $5,276     18.7
  

 

 

   

 

 

   

 

 

   

 

 

 

  Nine Months Ended Sept. 30,   Dollar       Three Months Ended March 31,   Dollar     

Revenue

  2014   2013   Change   % Change   2015   2014   Change   % Change 

Systems

  $62,795    $55,047    $7,748     14.1  $17,470    $21,435    $(3,965   (18.5)% 

Probes

   37,940     30,928     7,012     22.7   14,272     12,250     2,022     16.5
  

 

   

 

   

 

   

 

   

 

   

 

   

 

   

Total

  $100,735    $85,975    $14,760     17.2$31,742  $33,685  $(1,943 (5.8)% 
  

 

   

 

   

 

   

 

   

 

   

 

   

 

   

Systems

The increasesdecrease in Systems revenue in the three- and nine-month periods ended September 30, 2014,first quarter of 2015, compared to the same periodsfirst quarter of 2013 were2014, was primarily relatedattributable to increaseda decrease in customer demand and unit sales from our acquisitions during the second half of 2013. These increases were partially offset by decreasesprobe stations, thermal sub-systems and reliability test systems, as well as changes in average selling prices as we sold fewer 300mm stations, which have higher average selling prices.foreign currency exchange rates.

Probes

The increasesincrease in Probes revenue in the three- and nine-month periods ended September 30, 2014,first quarter of 2015, compared to the same periodsfirst quarter of 2013, were2014, was primarily the result of increasesan increase in unit sales of both production probe cards driven by increased demand in the radio frequency (RF) and analytical probes.parametric markets.

Cost of Sales and Gross Margin

Cost of sales includes purchased materials, fabrication, assembly, test, installation labor, overhead, customer-specific engineering costs, warranty costs, royalties and provision for inventory valuation reserves.

Cost of sales information was as follows (dollars in thousands):

 

   Three Months Ended Sept. 30,   Dollar    

Cost of Sales

  2014   2013   Change  % Change 

Systems

  $11,249    $10,030    $1,219    12.2

Probes

   4,704     4,749     (45  (0.9)% 
  

 

 

   

 

 

   

 

 

  

 

 

 

Total

  $15,953    $14,779    $1,174    7.9
  

 

 

   

 

 

   

 

 

  

 

 

 

  Nine Months Ended Sept. 30,   Dollar       Three Months Ended March 31,   Dollar     

Cost of Sales

  2014   2013   Change   % Change   2015   2014   Change   % Change 

Systems

  $35,296    $32,105    $3,191     9.9  $8,976    $12,237    $(3,261   (26.6)% 

Probes

   14,660     14,634     26     0.2   5,744     5,175     569     11.0
  

 

   

 

   

 

   

 

   

 

   

 

   

 

   

Total

  $49,956    $46,739    $3,217     6.9$14,720  $17,412  $(2,692 (15.5)% 
  

 

   

 

   

 

   

 

   

 

   

 

   

 

   

Cost of sales was affected by changes in sales as discussed above combined with the factors that caused fluctuations in our gross margin (gross profit as a percentage of revenue), as discussed below.

Gross margins were as follows:

 

  Three Months Ended
September 30,
 Nine Months Ended
September 30,
   Three Months Ended March 31, 

Gross Margins

  2014 2013 2014 2013   2015 2014 

Systems

   42.0 42.7 43.8 41.7   48.6 42.9

Probes

   66.5 55.6 61.4 52.7   59.8 57.8

Overall

   52.3 47.6 50.4 45.6   53.6 48.3

Systems

The decrease in Systems gross margins in the three-month period ended September 30, 2014, compared to the same period of 2013 was primarily due to decreased unit sales of our probe stations, which decreased factory utilization and increased period costs. These factors were partially offset by our acquisitions during the second half of 2013. The acquired product lines increased the average gross margin of all Systems products.

The increase in Systems gross margins in the nine-month period ended September 30, 2014,first quarter of 2015, compared to the same periodfirst quarter of 20132014, was primarily dueattributable to our acquisitions duringdecreased manufacturing overhead costs and changes in foreign currency exchange rates. The impact of these changes was partially offset by the second half of 2013. The acquired product lines increased the average gross margin of all Systems products.decrease in unit sales, which decreased factory utilization.

Probes

The increasesincrease in Probes gross margins in the three- and nine-month periods ended September 30, 2014first quarter of 2015, compared to the same periodsfirst quarter of 2013 were2014, was primarily due to increasedthe increase in unit sales, which increased factory utilization and decreased unabsorbed period expenses.

Overall

The overall increasesincrease in gross margins in the three- and nine-month periods ended September 30, 2014first quarter of 2015, compared to the same periodsfirst quarter of 2013, were2014, was primarily attributable to producta shift in mix to a greater percentage of our revenue being derived from our Probes segment, as we sold a higher number of Probes relativewell as to total sales. The increases in gross margin were also positively affected by sales of products acquired in the second half of 2013 asindividual segment items discussed above.

Research and Development

Research and development costs are expensed as incurred and include compensation and related expenses for personnel, materials, consultants and overhead.

Information regarding our research and development expense was as follows (dollars in thousands):

 

   Three Months Ended Sept. 30,   Dollar     
   2014   2013   Change   % Change 

Research and development

  $3,554    $2,750    $804     29.2

   Nine Months Ended Sept. 30,   Dollar     
   2014   2013   Change   % Change 

Research and development

  $10,223    $7,900    $2,323     29.4
   Three Months Ended March 31,   Dollar     
   2015   2014   Change   % Change 

Research and development

  $3,676    $3,241    $435     13.4

The increasesincrease in research and development in the three- and nine-month periods ended September 30, 2014first quarter of 2015, compared to the same periodsfirst quarter of 2013 were2014, was primarily due to:

 

increases of $0.5a $0.2 million and $1.2 million, respectively,increase in salaries and benefits; and

 

increases of $0.3a $0.2 million and $0.9 million, respectively,increase in project-related expenses.

These increases were driven by new product development for our Probes segment.

Selling, General and Administrative

Selling, general and administrative (“SG&A”), expense includes compensation and related expenses for personnel, travel, outside services, manufacturers’ representative commissions, intangible asset amortization and overhead incurred in our sales, marketing, customer support, management, legal and other professional and administrative support functions, as well as costs to operate as a public company.

Information regarding our SG&A expense was as follows (dollars in thousands):

 

   Three Months Ended Sept. 30,   Dollar     
   2014   2013   Change   % Change 

Selling, general and administrative

  $10,352    $9,097    $1,255     13.8

   Nine Months Ended Sept. 30,   Dollar     
   2014   2013   Change   % Change 

Selling, general and administrative

  $31,412    $26,207    $5,205     19.9
   Three Months Ended March 31,   Dollar     
   2015   2014   Change   % Change 

Selling, general and administrative

  $10,547    $10,430    $117     1.1

The increasesincrease in SG&A in the three- and nine-month periods ended September 30, 2014first quarter of 2015, compared to the same periodsfirst quarter of 2013 were2014, was primarily due to:

 

increases of $0.9a $0.2 million and $2.5 million, respectively,increase in salaries and benefits;stock-based compensation; partially offset by

 

increases of $0.5a $0.1 million and $1.6 million, respectively,decrease in amortization of purchased intangibles;expense.

increases of $0.2 million and $0.6 million, respectively, in stock-based compensation;

increases of $0.2 million and $0.5 million, respectively, in selling expenses;

(decrease) increase of ($0.3) million and $0.1 million, respectively, in professional service fees;

decreases of $0.2 million and $0.1 million, respectively, in accrued restructuring costs; and

decreases of $0.1 million and $0.3 million, respectively, in accrued contingent consideration related to acquisitions.

Other Income (Expense)

Other income (expense) typically includes interest income, interest expense, gains and losses on foreign currency forward contracts and foreign currency gains and losses. Other income (expense) canmay also include other miscellaneous non-operating gains and losses.

Other income (expense), net was comprised of the following (in thousands):

 

   Three Months Ended September 30,  Nine Months Ended September 30, 
   2014  2013  2014  2013 

Interest income, net

  $16   $18   $25   $40  

Foreign currency losses

   (2,248  (15  (2,344  (705

Gains on foreign currency forward contracts

   2,013    111    2,020    461  

Other

   —      (9  (36  (25
  

 

 

  

 

 

  

 

 

  

 

 

 
  $(219 $105   $(335 $(229
  

 

 

  

 

 

  

 

 

  

 

 

 
   Three Months Ended March 31, 
   2015   2014 

Interest income (expense), net

  $(14  $2  

Foreign currency gains (losses)

   (2,178   18  

Gains (losses) on foreign currency forward contracts

   2,411     (53

Other

   (2   (34
  

 

 

   

 

 

 
$217  $(67
  

 

 

   

 

 

 

Interest income net primarily represents interest earned on cash and cash equivalents and investments in marketable securities. Interest expense in the first quarter of 2015 represents interest paid related to a tax audit in Germany.

Foreign currency gains and losses primarily result from a combination of changes in foreign currency exchange rates and the net value of monetary assets and liabilities denominated in yen, euro and other foreign currencies.

Income Taxes

Information regarding our income tax expense was as follows (dollars in thousands):follows:

 

   Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
   2014  2013  2014  2013 

Income tax provision (benefit)

  $1,188   $(7 $3,182   $284  

Income tax provision (benefit) as a percentage of income before income taxes

   35.0  (0.4)%   36.1  5.8
   Three Months Ended March 31, 
   2015  2014 

Income tax provision

  $843   $943  

Income tax provision as a percentage of income before income taxes

   28.0  37.2

Generally, the provision for income taxes is the result of the mix of profits and losses earned by us and our subsidiaries in tax jurisdictions with a broad range of income tax rates and changes in tax reserves.

Our income tax expense in the three-first quarters of 2015 and nine-month periods ended September 30, 2014 and 2013 primarily related to estimated tax expense on income in the U.S. and foreign tax jurisdictions. The first quarter of 2015 includes a $0.2 million discrete tax benefit resulting from the favorable resolution of a tax audit in Germany. The tax benefit in the first quarter of 2015 represents approximately 5.1% of income before income taxes.

Our effective tax rate may differ from the U.S. federal statutory rate primarily as a result of the effects of state and foreign income taxes and may be affected by changes in statutory tax rates and laws in the U.S. and foreign jurisdictions. The increasesIt is also affected by discrete items that may occur in our effective tax rate for the three- and nine-month periods ended September 30, 2014 comparedany given year, but are not consistent from year to the same periods of the prior year were primarily the result of releasing the majority of our valuation allowance on deferred tax assets in the fourth quarter of 2013.year. The tax benefit of these deferred tax assets, which consisted primarily of net operating loss carryforwards, were fully recognized in the fourth quarter of 2013 and, therefore, were no longer available to offset current tax expense in future periods. In addition, the effective tax rate in the first nine monthsquarter of 2014 does not include any federal benefit from research and experimentation tax credits since legislation related to such credits expired and has not been renewed.was renewed until the fourth quarter of 2014.

Deferred tax assets arise from the tax benefit of amounts expensed for financial reporting purposes but not yet realized for tax purposes and from unutilized tax credits and net operating loss carryforwards. We evaluate our deferred tax assets on a regular basis to determine if a valuation allowance is required. To the extent it is determined that it is more likely than not that we will not realize the benefit of our deferred tax assets, we record a valuation allowance against deferred tax assets.

As of September 30, 2014,March 31, 2015, the net deferred tax assets on our Consolidated Balance Sheets totaled $3.8 million, net of a valuation allowance of $0.2$4.6 million, and arerelated primarily related to tax credits and other temporary differences.

Liquidity and Capital Resources

Changes in our assets and liabilities as presented in our Consolidated Statements of Cash Flows do not equal the changes in such assets and liabilities as calculated from our Consolidated Balance Sheets due to the effects of fluctuating foreign currency exchange rates and acquisitions.rates.

Net cash provided by operating activities in the first nine monthsquarter of 20142015 was $13.7$2.5 million and primarily consisted of our net income of $5.6$2.2 million, netless non-cash charges of $6.7$2.0 million and netas adjusted for changes in our operating assets and liabilities as described below.

Accounts receivable, net decreasedincreased by $4.2$0.4 million to $22.3$21.2 million at September 30, 2014,March 31, 2015, compared to $26.5$20.8 million at December 31, 2013,2014, primarily due to decreased sales in the third quarter of 2014 compared to the fourth quarter of 2013, and the timing of collections.shipments and customer payments.

Inventories increased by $1.3$0.1 million to $26.2$24.7 million at September 30, 2014,March 31, 2015, compared to $24.9$24.6 million at December 31, 2013.2014. The increase in inventory was primarily related to lower than expected sales of probe stations, partially offset by inventory chargesthe impact of $1.5changes in foreign currency exchange rates.

Accounts payable increased by $1.8 million to $9.3 million at March 31, 2015, compared to $7.5 million at December 31, 2014, primarily due to the timing of payments to vendors.

Accrued liabilities decreased by $2.1 million to $7.4 million at March 31, 2015, compared to $9.5 million at December 31, 2014, primarily due to a $1.0 million decrease in the first nine months of 2014 for excess and obsolete inventoryaccrued income and sales of finished goods. If our actual results are significantly different than our current expectations for 2014, we may incur additional charges to write down inventorytaxes, a $0.6 million decrease in future periods.accrued restructuring costs, and a $0.5 million decrease in accrued compensation and benefits.

Long-term and short-term deferred revenue decreased by $0.5$0.4 million to $2.6$2.0 million at September 30, 2014,March 31, 2015, compared to $3.1$2.4 million at December 31, 2013,2014, primarily due to a decrease inthe timing of customer deposits on product orders.

Other long-term liabilities decreased by $0.3 million to $1.8 million at September 30, 2014, compared to $2.1 million at December 31, 2013, primarily due to a decrease in accrued lease abandonment costs.

Fixed asset purchases of $3.1$0.5 million in the first nine monthsquarter of 20142015 primarily related to production-related equipment research and development tools and leasehold improvements. We anticipate that cash used for fixed asset purchases for all of 20142015 will be between $4.0$8 million and $5.0$9 million, depending on the status of research and development projects and the timing of payments to vendors.

In November 2012, our Board of Directors authorized a stock repurchase program under which up to $2.0 million of our common stock could be repurchased from time to time in the open market or in privately negotiated transactions. In May 2014, our Board of Directors authorized an increase to the stock repurchase

program of an additional $2.0 million. InWe did not repurchase any shares during the first nine monthsquarter of 2014, we repurchased 111,256 shares of our common stock at a weighted average price of $9.28 per share, or a total of $1.0 million.2015. As of September 30, 2014, $2.6March 31, 2015, $2.5 million remained available for repurchasestock repurchases under the program. The repurchase program does not have an expiration date.

In August 2013, we entered into a line of credit agreement with JPMorgan Chase Bank, N.A. for a maximum $10.0 million line of credit facility (the “LOC”), which may be limited by a borrowing base. The LOC expires on August 31, 2015 and contains a $2.5 million sublimit for letters of credit. Interest is based primarily on the London Interbank Offered Rate (“LIBOR”). The LOC contains restrictive and financial covenants. On September 30, 2014,March 31, 2015, no amounts were outstanding under the LOC, no letters of credit were outstanding, $10.0 million was available for borrowing and we were in compliance with all covenants.

We anticipate meeting our cash requirements for the next 12 months and for the foreseeable future from existing Cash and cash equivalents, and Short-term marketable securities and Restricted cash, which totaled $31.4$41.0 million at September 30, 2014.March 31, 2015. In addition, we currently have $10 million available under the LOC as discussed above.above, which we plan to renew during 2015.

We continue to evaluate opportunities for acquisition and expansion and any such transactions, if consummated, may use a portion of our cash and marketable securities or may result in the issuance by us of debt or equity securities. Issuances of debt securities would increase our leverage and interest exposure; issuances of equity securities could dilute the ownership interest of our shareholders.

Recent Accounting Guidance

See Note 12 of Notes to Condensed Consolidated Financial Statements.

Contractual Commitments

The following is a summary of our contractual commitments and obligations as of September 30, 2014March 31, 2015 (in thousands):

 

  Payments Due By Period   Payments Due By Period 

Contractual Obligation

  Total   Remainder of
2014
   2015 and
2016
   2017 and
2018
   2019 and
beyond
   Total   Remainder
of 2015
   2016 and
2017
   2018 and
2019
   2020 and
beyond
 

Operating leases

  $11,560    $970    $5,684    $3,504    $1,402    $10,356    $2,703    $4,199    $2,854    $600  

Purchase order commitments(1)

   5,519     4,773     746     —       —       5,450     5,351     99     —       —    

Forward contracts

   28,158     28,158     —       —       —       25,730     25,730     —       —       —    

Fair value of contingent consideration related to our acquisition of RTP

   400     400     —       —       —    

Additional consideration related to our acquisition of ATT Systems

   948     474     474     —       —    

Additional consideration related to our acquisition of ATT

   404     404     —       —       —    
  

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

 
  $46,585    $34,775    $6,904    $3,504    $1,402  $41,940  $34,188  $4,298  $2,854  $600  
  

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

 

 

(1)Purchase order commitments primarily represent open orders for inventory.

Recent Accounting Guidance

See Note 12 of Notes to Condensed Consolidated Financial Statements.

Seasonality

Typically, our first quarter revenues are lower than our revenues from the preceding fourth quarter. In addition, as is typical in our industry, we recognize a large percentage of our quarterly revenue in the last month of the quarter. However, our seasonality can be affected by general economic trends and it should not be expected that historical revenue patterns will continue.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Item 3.Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our reported market risks or risk management policies since the filing of our 20132014 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 5, 2014.12, 2015.

Item 4. Controls and Procedures

Item 4.Controls and Procedures

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have 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 in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Limitation on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all

errors and all occurrences of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of all controls must be considered relative to their costs. Control systems can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. In addition, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that the control systems will detect all control issues, including instances of fraud, if any.

PART II – OTHER INFORMATION

Item 1A. Risk Factors

Item 1A.Risk Factors

Our Annual Report on Form 10-K for the year ended December 31, 20132014 includes a detailed discussion of our risk factors. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K. Accordingly, the information in this Form 10-Q should be read in conjunction with the risk factors and information disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013,2014, which was filed with the Securities and Exchange Commission on March 5, 2014.12, 2015.

Item 6. Exhibits

Item 6.Exhibits

The following exhibits are filed herewith or incorporated by reference hereto and this list is intended to constitute the exhibit index:

 

31.1    
  10.1Cascade Microtech, Inc. 2010 Stock Incentive Plan, as amended, effective as of May 9, 2014. Incorporated by reference to Appendix A to our Definitive Proxy Statement on Schedule 14A for the 2014 Annual Meeting of Shareholders filed on May 7, 2014.
  31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange

Act of 1934.

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange

Act of 1934.

32.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange

Act of 1934 and 18 U.S.C. Section 1350.

32.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange

Act of 1934 and 18 U.S.C. Section 1350.

101.INSXBRL Instance Document.
101.SCHXBRL Taxonomy Extension Schema Document.
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.
101.LABXBRL Taxonomy Extension Label Linkbase Document.
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.

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.

 

Date: November 5, 2014May 6, 2015CASCADE MICROTECH, INC.
(Registrant)
By:

/s/ MICHAEL D. BURGER

Michael D. Burger
Director, President
and Chief Executive Officer
(Principal Executive Officer)
By:

/s/ JEFF KILLIAN

Jeff Killian
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)

 

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