☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
April 2, 2022
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 94-3125814 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock ($0.001 par value) | IVAC | The Nasdaq Stock Market LLC (Nasdaq) Global Select |
Large accelerated filer | ☐ | Accelerated filer | ☒ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☒ | |||
Emerging growth company | ☐ |
No. | Page | |||||
Item 1. | ||||||
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Item 2. | ||||||
Item 3. | ||||||
Item 4. | ||||||
Item 1. | ||||||
Item 1A. | ||||||
Item 2. | ||||||
Item 3. | ||||||
Item 4. | ||||||
Item 5. | ||||||
Item 6. | ||||||
Item 1. | Financial Statements |
(In thousands, except par value) Current assets: Cash and cash equivalents Short-term investments Trade and other accounts receivable, net of allowances of $0 at both September 30, 2017 and at December 31, 2016 Inventories Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Long-term investments Restricted cash Intangible assets, net of amortization of $6,725 at September 30, 2017 and $6,129 at December 31, 2016 Deferred income taxes and other long-term assets Total assets Current liabilities: Accounts payable Accrued payroll and related liabilities Other accrued liabilities Customer advances Total current liabilities Other long-term liabilities Stockholders’ equity: Common stock, $0.001 par value Additionalpaid-in capital Treasury stock, 4,845 shares at both September 30, 2017 and December 31, 2016 Accumulated other comprehensive income Accumulated deficit Total stockholders’ equity Total liabilities and stockholders’ equity notes. September 30,
2017 December 31,
2016 (Unaudited) ASSETS $ 19,197 $ 27,043 18,037 17,602 22,311 17,447 32,581 24,876 2,825 1,768 94,951 88,736 12,509 11,237 6,165 3,593 1,400 1,602 1,662 2,258 745 898 $ 117,432 $ 108,324 LIABILITIES AND STOCKHOLDERS’ EQUITY $ 7,036 $ 5,323 5,781 4,220 7,856 17,011 12,347 5,422 33,020 31,976 2,994 3,082 22 21 176,282 171,314 (28,489 ) (28,489 ) 443 321 (66,840 ) (69,901 ) 81,418 73,266 $ 117,432 $ 108,324 $ 98,034 $ 102,728 8,941 10,221 17,054 14,261 8,908 5,791 1,778 1,827 134,715 134,828 9,407 7,427 786 786 3,372 4,759 3,966 4,520 5,406 5,449 $ 157,652 $ 157,769 $ 3,188 $ 3,119 3,915 5,320 3,319 5,505 2,971 3,665 15,320 2,107 28,713 19,716 2,854 3,675 270 363 3,124 4,038 25 25 198,935 199,073 (29,551 ) (29,551 ) 371 578 (43,965 ) (36,110 ) 125,815 134,015 $ 157,652 $ 157,769 December 31, 2016January 1, 2022 are derived from the December 31, 2016January 1, 2022 audited consolidated financial statements.notes to the condensed consolidated financial statements.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | |||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Net revenues: | ||||||||||||||||
Systems and components | $ | 24,537 | $ | 20,961 | $ | 82,822 | $ | 47,326 | ||||||||
Technology development | 2,189 | 1,598 | 5,255 | 3,816 | ||||||||||||
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Total net revenues | 26,726 | 22,559 | 88,077 | 51,142 | ||||||||||||
Cost of net revenues: | ||||||||||||||||
Systems and components | 13,402 | 13,025 | 47,419 | 29,490 | ||||||||||||
Technology development | 2,026 | 1,019 | 4,842 | 3,155 | ||||||||||||
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Total cost of net revenues | 15,428 | 14,044 | 52,261 | 32,645 | ||||||||||||
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Gross profit | 11,298 | 8,515 | 35,816 | 18,497 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 4,535 | 4,067 | 13,635 | 14,220 | ||||||||||||
Selling, general and administrative | 5,495 | 4,772 | 17,482 | 14,724 | ||||||||||||
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Total operating expenses | 10,030 | 8,839 | 31,117 | 28,944 | ||||||||||||
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Income (loss) from operations | 1,268 | (324 | ) | 4,699 | (10,447 | ) | ||||||||||
Interest income and other income (expense), net | 28 | 60 | 265 | 184 | ||||||||||||
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Income (loss) before income taxes | 1,296 | (264 | ) | 4,964 | (10,263 | ) | ||||||||||
Provision for income taxes | 66 | 217 | 805 | 13 | ||||||||||||
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Net income (loss) | $ | 1,230 | $ | (481 | ) | $ | 4,159 | $ | (10,276 | ) | ||||||
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Net income (loss) per share: | ||||||||||||||||
Basic | $ | 0.06 | $ | (0.02 | ) | $ | 0.19 | $ | (0.50 | ) | ||||||
Diluted | $ | 0.05 | $ | (0.02 | ) | $ | 0.18 | $ | (0.50 | ) | ||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 21,714 | 20,869 | 21,475 | 20,704 | ||||||||||||
Diluted | 22,970 | 20,869 | 22,989 | 20,704 |
Three Months Ended | ||||||||
April 2, 2022 | April 3, 2021 | |||||||
(Unaudited) | ||||||||
(In thousands, except per share amounts) | ||||||||
Net revenues | $ | 4,445 | $ | 9,238 | ||||
Cost of net revenues | 3,722 | 7,104 | ||||||
Gross profit | 723 | 2,134 | ||||||
Operating expenses: | ||||||||
Research and development | 4,160 | 3,365 | ||||||
Selling, general and administrative | 4,249 | 4,334 | ||||||
Total operating expenses | 8,409 | 7,699 | ||||||
Loss from operations | (7,686 | ) | (5,565 | ) | ||||
Interest income and other income (expense), net | (8 | ) | 29 | |||||
Loss from continuing operations before provision for income taxes | (7,694 | ) | (5,536 | ) | ||||
Provision for income taxes | 26 | 32 | ||||||
Net loss from continuing operations | (7,720 | ) | (5,568 | ) | ||||
Net loss from discontinued operations, net of taxes | (135 | ) | (936 | ) | ||||
Net loss | (7,855 | ) | (6,504 | ) | ||||
Net loss per share: | ||||||||
Basic and diluted – continuing operations | $ | (0.31 | ) | $ | (0.23 | ) | ||
Basic and diluted – discontinued operations | $ | (0.01 | ) | $ | (0.04 | ) | ||
Basic and diluted – net loss | $ | (0.32 | ) | $ | (0.27 | ) | ||
Weighted average common shares outstanding: | ||||||||
Basic and diluted | 24,800 | 24,033 |
notes.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | |||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands) | ||||||||||||||||
Net income (loss) | $ | 1,230 | $ | (481 | ) | $ | 4,159 | $ | (10,276 | ) | ||||||
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Other comprehensive income (loss), before tax | ||||||||||||||||
Change in unrealized net gain onavailable-for-sale investments | 5 | (16 | ) | 8 | 41 | |||||||||||
Foreign currency translation gains (losses) | 39 | (17 | ) | 114 | 5 | |||||||||||
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Other comprehensive income (loss), before tax | 44 | (33 | ) | 122 | 46 | |||||||||||
Income tax (expense) benefit related to items in other comprehensive income (loss) | — | — | — | — | ||||||||||||
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Other comprehensive income (loss), net of tax | 44 | (33 | ) | 122 | 46 | |||||||||||
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Comprehensive income (loss) | $ | 1,274 | $ | (514 | ) | $ | 4,281 | $ | (10,230 | ) | ||||||
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LOSS
Three Months Ended | ||||||||
April 2, 2022 | April 3, 2021 | |||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
Net loss | $ | (7,855 | ) | $ | (6,504 | ) | ||
Other comprehensive loss, before tax: | ||||||||
Change in unrealized net gain (loss) on available-for-sale | (174 | ) | (20 | ) | ||||
Foreign currency translation losses | (33 | ) | (68 | ) | ||||
Other comprehensive loss, before tax | (207 | ) | (88 | ) | ||||
Income tax provision related to items in other comprehensive loss | 0— | 0— | ||||||
Other comprehensive loss, net of tax | (207 | ) | (88 | ) | ||||
Comprehensive loss | $ | (8,062 | ) | $ | (6,592 | ) | ||
notes.
Nine months ended | ||||||||
September 30, 2017 | October 1, 2016 | |||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
Operating activities | ||||||||
Net income (loss) | $ | 4,159 | $ | (10,276 | ) | |||
Adjustments to reconcile net income (loss) to net cash and cash equivalents used in operating activities: | ||||||||
Depreciation and amortization | 2,877 | 3,744 | ||||||
Net amortization of investment premiums and discounts | 53 | 96 | ||||||
Equity-based compensation | 3,012 | 2,896 | ||||||
Change in the fair value of acquisition-related contingent consideration | (181 | ) | (90 | ) | ||||
Deferred income taxes | (1 | ) | 9 | |||||
Gain on disposal of equipment | — | (8 | ) | |||||
Changes in operating assets and liabilities | (11,658 | ) | 577 | |||||
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Total adjustments | (5,898 | ) | 7,224 | |||||
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Net cash and cash equivalents used in operating activities | (1,739 | ) | (3,052 | ) | ||||
Investing activities | ||||||||
Purchases of investments | (21,968 | ) | (10,433 | ) | ||||
Proceeds from sales and maturities of investments | 18,916 | 22,180 | ||||||
Proceeds from sale of equipment | — | 8 | ||||||
Purchases of leasehold improvements and equipment | (3,553 | ) | (2,535 | ) | ||||
Decrease (increase) in restricted cash | 202 | (178 | ) | |||||
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Net cash and cash equivalents (used in) provided by investing activities | (6,403 | ) | 9,042 | |||||
Financing activities | ||||||||
Net proceeds from issuance of common stock | 2,344 | 1,482 | ||||||
Taxes paid related to net share settlement | (1,988 | ) | (403 | ) | ||||
Payment of acquisition-related contingent consideration | (174 | ) | — | |||||
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Net cash and cash equivalents provided by financing activities | 182 | 1,079 | ||||||
Effect of exchange rate changes on cash | 114 | 8 | ||||||
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Net increase (decrease) in cash and cash equivalents | (7,846 | ) | 7,077 | |||||
Cash and cash equivalents at beginning of period | 27,043 | 13,746 | ||||||
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Cash and cash equivalents at end of period | $ | 19,197 | $ | 20,823 | ||||
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Three Months Ended | ||||||||
April 2, 2022 | April 3, 2021 | |||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
Operating activities | ||||||||
Net loss | $ | (7,855 | ) | $ | (6,504 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 445 | 791 | ||||||
Net amortization (accretion) of investment premiums and discounts | 17 | 33 | ||||||
Equity-based compensation | (1,036 | ) | 968 | |||||
Straight-line rent adjustment and amortization of lease incentives | (198 | ) | (115 | ) | ||||
Loss on disposal of fixed assets | 1,453 | 0— | ||||||
Deferred income taxes | (6 | ) | (40 | ) | ||||
Changes in operating assets and liabilities | 3,130 | 7,399 | ||||||
Total adjustments | 3,805 | 9,036 | ||||||
Net cash provided by (used in) operating activities | (4,050 | ) | 2,532 | |||||
Investing activities | ||||||||
Purchases of investments | (6,525 | ) | (5,962 | ) | ||||
Proceeds from sales and maturities of investments | 5,634 | 6,140 | ||||||
Purchases of leasehold improvements and equipment | (618 | ) | (243 | ) | ||||
Net cash used in investing activities | (1,509 | ) | (65 | ) | ||||
Financing activities | ||||||||
Proceeds from issuance of common stock | 1,033 | 1,096 | ||||||
Taxes paid related to net share settlement | (135 | ) | (20 | ) | ||||
Net cash provided by financing activities | 898 | 1,076 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (33 | ) | (68 | ) | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (4,694 | ) | 3,475 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 103,514 | 30,128 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 98,820 | $ | 33,603 | ||||
notes.
1. | Description of Business and Basis of Presentation |
2. | Divestiture and Discontinued Operations |
In March 2016,
In May 2014,Photonics segment that have been eliminated from continuing operations. Previously reported expenses for the FASB issued ASU2014-09(Topic 606) Revenue from Contracts with Customers. Topic 606 supersedes the revenue recognition requirements in Accounting Standards Codification Topic 605, “Revenue Recognition”, and requires entitiesPhotonics segment have been recast to recognize revenue when they transfer control of promised goods or services to customers in an amountexclude certain allocated expenses that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We expect revenue recognition for our equipment sales arrangements, which includes systems, technology upgrades, service and spare parts, to remain materially consistent with our historical practice.
We expect to recognize revenue for equipment sales at a point in time following the transfer of control of such productsare not directly attributable to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. Our contracts with customers may include multiple performance obligations. For such arrangements, we expect to allocate revenue to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the prices charged to customers or using expected cost plus margin.Photonics segment. The expected costs associated with our base warranties will continue to be recognized as expense when the equipment is sold.
We expect to recognize revenue for cost plus fixed fee and firm fixed priced government contracts over time under thecost-to-cost method for the majority of our government contracts, which is consistent with our current revenue recognition model. Revenue on the majority of our government contracts will continue to be recognized over time because of the continuous transfer of controlkey components from discontinued operations related to the customer. For U.S. government contracts, this continuous transferPhotonics segment are as follows:
Three Months Ended | ||||||||
April 2, 2022 | April 3, 2021 | |||||||
(in thousands) | ||||||||
Net revenues: | ||||||||
Systems and components | $ | — | $ | 3,822 | ||||
Technology development | — | 3,181 | ||||||
Total net revenues | — | 7,003 | ||||||
Cost of net revenues: | ||||||||
Systems and components | — | 2,860 | ||||||
Technology development | — | 3,223 | ||||||
Total cost of net revenues | — | 6,083 | ||||||
Gross profit | — | 920 | ||||||
Operating expenses: | ||||||||
Research and development | — | 260 | ||||||
Selling, general and administrative | 135 | 1,596 | ||||||
Total operating expenses | 135 | 1,856 | ||||||
Operating loss – discontinued operations | (135 | ) | (936 | ) | ||||
Other income (expense) – discontinued operations | 0— | 0— | ||||||
Loss from discontinued operations before provision for (benefit from) income taxes | (135 | ) | (936 | ) | ||||
Provision for (benefit from) income taxes | 0 | 0 | ||||||
Net loss from discontinued operations net of taxes | $ | (135 | ) | $ | (936 | ) | ||
Three Months Ended | ||||||||
April 2, | April 3, | |||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Depreciation and amortization | $ | — | $ | 285 | ||||
Equity-based compensation | $ | (330 | ) | $ | 272 | |||
Purchase of leasehold improvements and equipment | $ | — | $ | 73 |
3. | Revenue |
Three Months Ended April 2, 2022 | Three Months Ended April 3, 2021 | |||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||
HDD | DCP | PV | Total | HDD | DCP | PV | ASP | Total | ||||||||||||||||||||||||||||
Systems, upgrades and spare parts | $ | 3,123 | $ | 0 | $ | 53 | $ | 3,176 | $ | 3,585 | $ | 0 | $ | 111 | $ | 3,850 | $ | 7,546 | ||||||||||||||||||
Field service | 1,263 | 0 | 6 | 1,269 | 1,636 | 14 | 42 | 0 | 1,692 | |||||||||||||||||||||||||||
Total TFE net revenues | $ | 4,386 | $ | 0 | $ | 59 | $ | 4,445 | $ | 5,221 | $ | 14 | $ | 153 | $ | 3,850 | $ | 9,238 | ||||||||||||||||||
Three Months Ended | ||||||||
April 2, 2022 | April 3, 2021 | |||||||
(in thousands) | ||||||||
United States | $ | 294 | $ | 367 | ||||
Asia | 4,151 | 5,021 | ||||||
Europe | 0 | 3,850 | ||||||
Total net revenues | $ | 4,445 | $ | 9,238 | ||||
Three Months Ended | ||||||||
April 2, 2022 | April 3, 2021 | |||||||
(in thousands) | ||||||||
Products transferred at a point in time | $ | 4,445 | $ | 9,238 | ||||
Products and services transferred over time | 0 | 0 | ||||||
Total net revenues | $ | 4,445 | $ | 9,238 | ||||
April 2, 2022 | January 1, 2022 | Three Months Change | ||||||||||
(in thousands) | ||||||||||||
Contract assets: | ||||||||||||
Accounts receivable, unbilled | $ | 0 | $ | 99 | $ | (99 | ) | |||||
Contract liabilities: | ||||||||||||
Deferred revenue | $ | 55 | $ | 65 | $ | (10 | ) | |||||
Customer advances | 15,320 | 2,107 | 13,213 | |||||||||
$ | 15,375 | $ | 2,172 | $ | 13,203 | |||||||
4. | Inventories |
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
(In thousands) | ||||||||
Raw materials | $ | 16,385 | $ | 10,290 | ||||
Work-in-progress | 12,452 | 6,470 | ||||||
Finished goods | 3,744 | 8,116 | ||||||
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$ | 32,581 | $ | 24,876 | |||||
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Finished goods inventory consists primarily of completed systems that are undergoing installation and acceptance testing.
April 2, | January 1, | |||||||
2022 | 2022 | |||||||
(in thousands) | ||||||||
Raw materials | $ | 6,346 | $ | 5,323 | ||||
Work-in-progress | 2,562 | 468 | ||||||
$ | 8,908 | $ | 5,791 | |||||
5. | Equity-Based Compensation |
stock (not to exceed $25,000 per year).
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | |||||||||||||
(In thousands) | ||||||||||||||||
Equity-based compensation by type of award: | ||||||||||||||||
Stock options | $ | 350 | $ | 211 | $ | 808 | $ | 696 | ||||||||
RSUs | 731 | 543 | 1,943 | 1,657 | ||||||||||||
ESPP awards | 67 | 151 | 261 | 543 | ||||||||||||
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Total equity-based compensation | $ | 1,148 | $ | 905 | $ | 3,012 | $ | 2,896 | ||||||||
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Equity-based compensation expense is based on awards ultimately expected to vest and such amount has been historically reduced for estimated forfeitures. Beginning January 1, 2017, Intevac accounts for forfeitures as they occur, rather than estimating expected forfeitures. The net cumulative effect of this change was recognized as a $1.1 million increase to
Three Months Ended | ||||||||
April 2, 2022 | April 3, 2021 | |||||||
(In thousands) | ||||||||
Equity-based compensation by type of award: | ||||||||
Stock options | $ | (171 | ) | $ | 75 | |||
RSUs | (728 | ) | 543 | |||||
ESPP purchase rights | (137 | ) | 350 | |||||
Total equity-based compensation | $ | (1,036 | ) | $ | 968 |
INTEVAC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
table above are:
(a) | A reversal of $1.3 million in equity-based compensation expense related to forfeitures of awards due to our reduction in workforce and a $37,000 benefit related to the modification of certain stock-based awards for the three months ended April 2, 2022. (See Note 13. Restructuring and Other Costs, Net.); and |
(b) | Equity-based compensation reported in discontinued operations of ($330,000) and $272,000 for the three months ended April 2, 2022 and April 3, 2021, respectively. Equity-based compensation expense allocated to discontinued operations for the three months ended April 2, 2022 includes $75,000 related to the modification of certain stock-based awards and is net of a divestiture-related forfeiture benefit of $446,000 that was recognized when employees were conveyed to the Buyer upon closing. (See Note 2. Divestiture and Discontinued Operations.) |
Shares | Weighted Average Exercise Price | |||||||
Options outstanding at December 31, 2016 | 2,740,364 | $ | 7.00 | |||||
Options granted | 413,075 | $ | 12.33 | |||||
Options cancelled and forfeited | (61,753 | ) | $ | 12.07 | ||||
Options exercised | (115,273 | ) | $ | 6.88 | ||||
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Options outstanding at September 30, 2017 | 2,976,413 | $ | 7.64 | |||||
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Options exercisable at September 30, 2017 | 2,127,940 | $ | 7.16 |
Shares | Weighted-Average Exercise Price | |||||||
Options outstanding at January 1, 2022 | 1,457,587 | $ | 6.55 | |||||
Options granted | 0 | $ | 0 | |||||
Options cancelled and forfeited | (102,152 | ) | $ | 5.43 | ||||
Options exercised | (65,563 | ) | $ | 5.06 | ||||
Options outstanding at April 2, 2022 | 1,289,872 | $ | 6.72 | |||||
Options exercisable at April 2, 2022 | 1,223,472 | $ | 6.79 |
April 2, 2022.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | |||||||||||||
Stock Options: | ||||||||||||||||
Weighted-average fair value of grants per share | $ | 3.89 | $ | 1.90 | $ | 4.54 | $ | 1.75 | ||||||||
Expected volatility | 42.10 | % | 40.53 | % | 40.54 | % | 44.00 | % | ||||||||
Risk free interest rate | 1.84 | % | 0.97 | % | 1.77 | % | 0.94 | % | ||||||||
Expected term of options (in years) | 4.08 | 3.96 | 4.10 | 4.29 | ||||||||||||
Dividend yield | None | None | None | None | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | |||||||||||||
Stock Purchase Rights: | ||||||||||||||||
Weighted-average fair value of grants per share | $ | 2.76 | $ | 1.69 | $ | 2.75 | $ | 1.55 | ||||||||
Expected volatility | 48.59 | % | 37.51 | % | 43.51 | % | 39.22 | % | ||||||||
Risk free interest rate | 1.36 | % | 0.63 | % | 1.22 | % | 0.75 | % | ||||||||
Expected term of purchase rights (in years) | 0.50 | 1.00 | 0.65 | 1.87 | ||||||||||||
Dividend yield | None | None | None | None |
INTEVAC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Three Months Ended | ||||||||
April 2, 2022 | April 3, 2021 | |||||||
ESPP Purchase Rights: | ||||||||
Weighted-average fair value of grants per share | $ | 1.85 | $ | 2.69 | ||||
Expected volatility | 60.36 | % | 58.56 | % | ||||
Risk-free interest rate | 0.98 | % | 0.08 | % | ||||
Expected term of purchase rights (in years) | 1.2 | 1.0 | ||||||
Dividend yield | NaN | NaN |
Intevac accounts for forfeitures as they occur, rather than by estimating expected forfeitures.
Shares | Weighted Average Grant Date Fair Value | |||||||
Non-vested RSUs at December 31, 2016 | 949,455 | $ | 4.64 | |||||
Granted | 363,846 | $ | 11.44 | |||||
Vested | (500,621 | ) | $ | 4.46 | ||||
Cancelled and forfeited | (14,292 | ) | $ | 7.97 | ||||
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Non-vested RSUs at September 30, 2017 | 798,388 | $ | 7.79 | |||||
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Shares | Weighted-Average Grant Date Fair Value | |||||||
Non-vested RSUs at January 1, 2022 | 1,033,436 | $ | 5.59 | |||||
Granted | 300,928 | $ | 5.11 | |||||
Vested | (66,704 | ) | $ | 5.45 | ||||
Cancelled and forfeited | (533,199 | ) | $ | 5.65 | ||||
Non-vested RSUs at April 2, 2022 | 734,461 | $ | 5.37 | |||||
Market condition-based RSUs vest upon the achievement of certain market conditions (our stock performance) during a set performance period (typically five years) subject to the grantee’s continued service with Intevac through the date the applicable market condition is achieved. The fair value is based on the values calculated under the Monte Carlo simulation model on the grant date. Compensation cost is not adjusted in future periods for subsequent changes in the expected outcome of market related conditions. The compensation expense is recognized over the derived service period. We granted 125,000 of such awards to certain executive officers in the nine months ended October 1, 2016. These awards have a derived service period of 2.8 years.
Intevac estimated the weighted-average fair value of market condition-based RSUs using the following weighted-average assumptions:
Nine Months Ended October 1, 2016 | ||||
Weighted-average fair value of grants per share | $ | 2.46 | ||
Expected volatility | 47.65 | % | ||
Risk free interest rate | 1.35 | % | ||
Expected term (in years) | 4.79 | |||
Dividend yield | None |
INTEVAC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
In fiscal 2016, the annual bonus for certain participants in the Company’s annual incentive plan was settled with RSUs with one year vesting. The Company accrued for the payment of bonuses at the expected company-wide payout percentage amount at October 1, 2016, which amounts were less than the target bonus amounts for each participant. The bonus accrual was classified as a liability until the number of shares was determined on the date the awards were granted, at which time the Company classified the awards into equity. In February 2017, the annual 2016 bonus for certain participants was settled with RSUs withone-year vesting. 33 participants were granted stock awards to receive an aggregate of 134,000 shares of common stock with a weighted average grant date fair value of $9.63 per share. In February 2016, the annual 2015 bonus for certain participants was settled with RSUs with one year vesting. 34 participants were granted stock awards to receive an aggregate of 266,000 shares of common stock with a weighted average grant date fair value of $4.40 per share. The Company recorded equity-based compensation expense related to the annual incentive plans of $102,000 for the nine months ended September 30, 2017. The Company recorded equity-based compensation expense related to the annual incentive plan of $120,000 and $364,000, respectively, for the three and nine months ended October 1, 2016.
6. | Warranty |
Details of finite-lived intangible assets by segment as of September 30, 2017 are as follows.
September 30, 2017 | ||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
(In thousands) | ||||||||||||
Equipment | $ | 7,172 | $ | (5,648 | ) | $ | 1,524 | |||||
Photonics | 1,215 | (1,077 | ) | 138 | ||||||||
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|
|
|
|
| |||||||
$ | 8,387 | $ | (6,725 | ) | $ | 1,662 | ||||||
|
|
|
|
|
|
Total amortization expense of finite-lived intangibles for the three and nine months ended September 30, 2017 was $169,000 and $596,000, respectively.
As of September 30, 2017, future amortization expense is expected to be as follows.
(In thousands) | ||||
2017 | $ | 159 | ||
2018 | 615 | |||
2019 | 615 | |||
2020 | 273 | |||
|
| |||
$ | 1,662 | |||
|
|
In connection with the acquisition of Solar Implant Technologies, Inc. (“SIT”), Intevac agreed to pay to the selling shareholders in cash a revenue earnout on Intevac’s net revenue from commercial sales of certain products over a specified period up to an aggregate of $9.0 million. Intevac estimated the fair value of this contingent consideration on September 30, 2017 based on probability-based forecasted revenues reflecting Intevac’s own assumptions concerning future revenue from such products.
The fair value measurement of contingent consideration is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Any change in fair value of the contingent consideration subsequent to the acquisition date is recognized in income (loss) from operations within the condensed consolidated statement of operations. The following table represents a reconciliation of the change in the fair value measurement of the contingent consideration liability for the three and nine month periods ended September 30, 2017 and October 1, 2016:
INTEVAC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | |||||||||||||
(In thousands) | ||||||||||||||||
Opening balance | $ | 859 | $ | 748 | $ | 759 | $ | 890 | ||||||||
Changes in fair value | (283 | ) | 52 | (181 | ) | (90 | ) | |||||||||
Cash payments made | (172 | ) | — | (174 | ) | — | ||||||||||
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| |||||||||
Closing balance | $ | 404 | $ | 800 | $ | 404 | $ | 800 | ||||||||
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The following table displays the balance sheet classification of the contingent consideration liability account at September 30, 2017 and at December 31, 2016:
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
(In thousands) | ||||||||
Other accrued liabilities | $ | 36 | $ | 329 | ||||
Other long-term liabilities | 368 | 430 | ||||||
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|
|
| |||||
Total acquisition-related contingent consideration | $ | 404 | $ | 759 | ||||
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|
The following table represents the quantitative range of the significant unobservable inputs used in the calculation of fair value of the continent consideration liability as of September 30, 2017. Significant increases or decreases in any of these inputs in isolation would result in a significantly lower or higher fair value measurement.
Quantitative Information about Level 3 Fair Value Measurements at September 30, 2017 | ||||||||||
Fair Value | Valuation Technique | Unobservable Input | Range (Weighted Average) | |||||||
(In thousands, except for percentages) | ||||||||||
Revenue Earnout | $ | 404 | Discounted cash flow | Weighted average cost of capital Probability weighting of achieving revenue forecasts | 11.9% 10.0% - 80.0% (30.0%) |
INTEVAC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | |||||||||||||
(In thousands) | ||||||||||||||||
Opening balance | $ | 1,220 | $ | 592 | $ | 1,007 | $ | 982 | ||||||||
Expenditures incurred under warranties | (360 | ) | (80 | ) | (640 | ) | (384 | ) | ||||||||
Accruals for product warranties issued during the reporting period | 169 | 320 | 675 | 494 | ||||||||||||
Adjustments to previously existing warranty accruals | 106 | (110 | ) | 93 | (370 | ) | ||||||||||
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| |||||||||
Closing balance | $ | 1,135 | $ | 722 | $ | 1,135 | $ | 722 | ||||||||
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April 3, 2021.
Three Months Ended | ||||||||
April 2, 2022 | April 3, 2021 | |||||||
(in thousands) | ||||||||
Opening balance | $ | 346 | $ | 480 | ||||
Expenditures incurred under warranties | (171 | ) | (153 | ) | ||||
Expenditures incurred under warranties included in discontinued operations | 0 | (46 | ) | |||||
Accruals for product warranties issued during the reporting period | 36 | 255 | ||||||
Accruals for product warranties issued during the reporting period included in discontinued operations | 0 | 20 | ||||||
Adjustments to previously existing warranty accruals | 38 | (10 | ) | |||||
Adjustments to previously existing warranty accruals included in discontinued operations | 0 | 44 | ||||||
Closing balance | $ | 249 | $ | 590 | ||||
September 30, 2017 | December 31, 2016 | |||||||
(In thousands) | ||||||||
Other accrued liabilities | $ | 915 | $ | 829 | ||||
Other long-term liabilities | 220 | 178 | ||||||
|
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|
| |||||
Total warranty provision | $ | 1,135 | $ | 1,007 | ||||
|
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|
|
April 2 2022 | January 1 2022 | |||||||
(in thousands) | ||||||||
Other accrued liabilities | $ | 219 | $ | 301 | ||||
Other long-term liabilities | 30 | 45 | ||||||
Total warranty provision | $ | 249 | $ | 346 | ||||
7. | Guarantees |
September 30, 2017,April 2, 2022, we had letters of credit and bank guarantees outstanding totaling $1.4 million,$786,000, including athe standby letter of credit outstanding under the Santa Clara, California facility lease and various other guarantees with our bank. These letters of credit and bank guarantees are collateralized by $1.4 million$786,000 of restricted cash.
8. | Cash, Cash Equivalents and Investments |
September 30, 2017 | ||||||||||||||||
Amortized Cost | Unrealized Holding Gains | Unrealized Holding Losses | Fair Value | |||||||||||||
(In thousands) | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash | $ | 14,159 | $ | — | $ | — | $ | 14,159 | ||||||||
Money market funds | 5,038 | — | — | 5,038 | ||||||||||||
|
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|
|
|
|
|
| |||||||||
Total cash and cash equivalents | $ | 19,197 | $ | — | $ | — | $ | 19,197 | ||||||||
Short-term investments: | ||||||||||||||||
Certificates of deposit | $ | 4,498 | $ | 1 | $ | 1 | $ | 4,498 | ||||||||
Commercial paper | 1,990 | — | — | 1,990 | ||||||||||||
Corporate bonds and medium-term notes | 6,252 | 1 | 5 | 6,248 | ||||||||||||
Municipal bonds | 1,004 | — | 3 | 1,001 | ||||||||||||
U.S. treasury and agency securities | 4,300 | — | — | 4,300 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total short-term investments | $ | 18,044 | $ | 2 | $ | 9 | $ | 18,037 | ||||||||
Long-term investments: | ||||||||||||||||
Corporate bonds and medium-term notes | $ | 3,576 | $ | — | $ | 3 | $ | 3,573 | ||||||||
U.S. treasury and agency securities | 2,596 | — | 4 | 2,592 | ||||||||||||
|
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|
|
|
|
|
| |||||||||
Total long-term investments | $ | 6,172 | $ | — | $ | 7 | $ | 6,165 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total cash, cash equivalents, and investments | $ | 43,413 | $ | 2 | $ | 16 | $ | 43,399 | ||||||||
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|
|
| |||||||||
December 31, 2016 | ||||||||||||||||
Amortized Cost | Unrealized Holding Gains | Unrealized Holding Losses | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash | $ | 18,726 | $ | — | $ | — | $ | 18,726 | ||||||||
Money market funds | 8,317 | — | — | 8,317 | ||||||||||||
|
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|
|
|
|
|
| |||||||||
Total cash and cash equivalents | $ | 27,043 | $ | — | $ | — | $ | 27,043 | ||||||||
Short-term investments: | ||||||||||||||||
Commercial paper | $ | 1,992 | $ | — | $ | 1 | $ | 1,991 | ||||||||
Corporate bonds and medium-term notes | 8,586 | — | 6 | 8,580 | ||||||||||||
Municipal bonds | 600 | — | — | 600 | ||||||||||||
U.S. treasury and agency securities | 6,432 | — | 1 | 6,431 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total short-term investments | $ | 17,610 | $ | — | $ | 8 | $ | 17,602 | ||||||||
Long-term investments: | ||||||||||||||||
Corporate bonds and medium-term notes | $ | 2,510 | $ | — | $ | 11 | $ | 2,499 | ||||||||
Municipal bonds | 500 | — | 4 | 496 | ||||||||||||
U.S. treasury and agency securities | 597 | 1 | — | 598 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total long-term investments | $ | 3,607 | $ | 1 | $ | 15 | $ | 3,593 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total cash, cash equivalents, and investments | $ | 48,260 | $ | 1 | $ | 23 | $ | 48,238 | ||||||||
|
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|
|
|
|
|
April 2, 2022 | ||||||||||||||||
Amortized Cost | Unrealized Holding Gains | Unrealized Holding Losses | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash | $ | 93,662 | $ | 0 | $ | 0 | $ | 93,662 | ||||||||
Money market funds | 3,042 | 0 | 0 | 3,042 | ||||||||||||
Certificates of deposit | 500 | 0 | 0 | 500 | ||||||||||||
Commercial paper | 300 | 0 | 0 | 300 | ||||||||||||
U.S. treasury securities | 530 | 0 | 0 | 530 | ||||||||||||
Total cash and cash equivalents | $ | 98,034 | $ | 0 | $ | 0 | $ | 98,034 | ||||||||
Short-term investments: | ||||||||||||||||
Certificates of deposit | $ | 2,750 | $ | 0 | $ | 11 | $ | 2,739 | ||||||||
Commercial paper | 898 | 0 | 0 | 898 | ||||||||||||
Corporate bonds and medium-term notes | 3,293 | 0 | 27 | 3,266 | ||||||||||||
Municipal bonds | 145 | 0 | 2 | 143 | ||||||||||||
U.S. treasury securities | 1,909 | 0 | 14 | 1,895 | ||||||||||||
Total short-term investments | $ | 8,995 | $ | 0 | $ | 54 | $ | 8,941 | ||||||||
Long-term investments: | ||||||||||||||||
Asset backed securities | $ | 3,745 | $ | 0 | $ | 30 | $ | 3,715 | ||||||||
Corporate bonds and medium-term notes | 1,718 | 0 | 22 | 1,696 | ||||||||||||
Municipal bonds | 347 | 0 | 2 | 345 | ||||||||||||
U.S. treasury securities | 3,747 | 0 | 96 | 3,651 | ||||||||||||
Total long-term investments | $ | 9,557 | $ | 0 | $ | 150 | $ | 9,407 | ||||||||
Total cash, cash equivalents, and investments | $ | 116,586 | $ | 0 | $ | 204 | $ | 116,382 | ||||||||
January 1, 2022 | ||||||||||||||||
Amortized Cost | Unrealized Holding Gains | Unrealized Holding Losses | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash | $ | 102,494 | $ | 0 | $ | 0 | $ | 102,494 | ||||||||
Money market funds | 234 | 0 | 0 | 234 | ||||||||||||
Total cash and cash equivalents | $ | 102,728 | $ | 0 | $ | 0 | $ | 102,728 | ||||||||
Short-term investments: | ||||||||||||||||
Certificates of deposit | $ | 4,300 | $ | 0 | $ | 0 | $ | 4,300 | ||||||||
Commercial paper | 400 | 0 | 0 | 400 | ||||||||||||
Corporate bonds and medium-term notes | 2,916 | 0 | 3 | 2,913 | ||||||||||||
Municipal bonds | 700 | 0 | 0 | 700 | ||||||||||||
U.S. treasury securities | 1,910 | 0 | 2 | 1,908 | ||||||||||||
Total short-term investments | $ | 10,226 | $ | 0 | $ | 5 | $ | 10,221 | ||||||||
Long-term investments: | ||||||||||||||||
Asset backed securities | $ | 2,040 | $ | 0 | $ | 3 | $ | 2,037 | ||||||||
Certificates of deposit | 500 | 0 | 3 | 497 | ||||||||||||
Corporate bonds and medium-term notes | 1,521 | 0 | 6 | 1,515 | ||||||||||||
Municipal bonds | 145 | 0 | 1 | 144 | ||||||||||||
U.S. treasury securities | 3,246 | 0 | 12 | 3,234 | ||||||||||||
Total long-term investments | $ | 7,452 | $ | 0 | $ | 25 | $ | 7,427 | ||||||||
Total cash, cash equivalents, and investments | $ | 120,406 | $ | 0 | $ | 30 | $ | 120,376 | ||||||||
Amortized Cost | Fair Value | |||||||
(In thousands) | ||||||||
Due in one year or less | $ | 23,082 | $ | 23,075 | ||||
Due after one through two years | 6,172 | 6,165 | ||||||
|
|
|
| |||||
$ | 29,254 | $ | 29,240 | |||||
|
|
|
|
Amortized Cost | Fair Value | |||||||
(in thousands) | ||||||||
Due in one year or less | $ | 13,367 | $ | 13,313 | ||||
Due after one through five years | 9,557 | 9,407 | ||||||
$ | 22,924 | $ | 22,720 | |||||
September 30, 2017 | ||||||||||||||||
In Loss Position for Less than 12 Months | In Loss Position for Greater than 12 Months | |||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||
(In thousands) | ||||||||||||||||
Certificates of deposit | $ | 1,249 | $ | 1 | $ | — | $ | — | ||||||||
Corporate bonds and medium-term notes | 5,882 | 7 | 1,200 | 1 | ||||||||||||
Municipal bonds | 504 | 1 | 497 | 2 | ||||||||||||
U.S. treasury and agency securities | 4,118 | 4 | — | — | ||||||||||||
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|
|
|
|
|
|
| |||||||||
$ | 11,753 | $ | 13 | $ | 1,697 | $ | 3 | |||||||||
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|
|
|
|
|
|
|
April 2, 2022.
April 2, 2022 | ||||||||||||||||
In Loss Position for Less than 12 Months | In Loss Position for Greater than 12 Months | |||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||
(in thousands) | ||||||||||||||||
Asset backed securities | $ | 3,715 | $ | 30 | $ | 0 | $ | 0 | ||||||||
Certificates of deposit | 2,739 | 11 | 0 | 0 | ||||||||||||
Corporate bonds and medium-term notes | 4,460 | 44 | 502 | 5 | ||||||||||||
Municipal bonds | 488 | 4 | 0 | 0 | ||||||||||||
U.S. treasury securities | 5,546 | 110 | 0 | 0 | ||||||||||||
$ | 16,948 | $ | 199 | $ | 502 | $ | 5 | |||||||||
INTEVAC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Fair Value Measurements at September 30, 2017 | ||||||||||||
Total | Level 1 | Level 2 | ||||||||||
(In thousands) | ||||||||||||
Recurring fair value measurements: | ||||||||||||
Available-for-sale securities | ||||||||||||
Money market funds | $ | 5,038 | $ | 5,038 | $ | — | ||||||
U.S. treasury and agency securities | 6,892 | 4,865 | 2,027 | |||||||||
Certificates of deposit | 4,498 | — | 4,498 | |||||||||
Commercial paper | 1,990 | — | 1,990 | |||||||||
Corporate bonds and medium-term notes | 9,821 | — | 9,821 | |||||||||
Municipal bonds | 1,001 | — | 1,001 | |||||||||
|
|
|
|
|
| |||||||
Total recurring fair value measurements | $ | 29,240 | $ | 9,903 | $ | 19,337 | ||||||
|
|
|
|
|
|
Fair Value Measurements at April 2, 2022 | ||||||||||||
Total | Level 1 | Level 2 | ||||||||||
(in thousands) | ||||||||||||
Recurring fair value measurements: | ||||||||||||
Investment securities | ||||||||||||
Money market funds | $ | 3,042 | $ | 3,042 | $ | 0 | ||||||
U.S. treasury securities | 6,076 | 6,076 | 0 | |||||||||
Asset backed securities | 3,715 | 0 | 3,715 | |||||||||
Certificates of deposit | 3,239 | 0 | 3,239 | |||||||||
Commercial paper | 1,198 | 0 | 1,198 | |||||||||
Corporate bonds and medium-term notes | 4,962 | 0 | 4,962 | |||||||||
Municipal bonds | 488 | 0 | 488 | |||||||||
Total recurring fair value measurements | $ | 22,720 | $ | 9,118 | $ | 13,602 | ||||||
9. | Derivative Instruments |
Notional Amounts | Derivative Liabilities | |||||||||||||||||||||||
Derivative Instrument | September 30 2017 | December 31, 2016 | September 30, 2017 | December 31, 2016 | ||||||||||||||||||||
Balance Sheet Line | Fair Value | Balance Sheet Line | Fair Value | |||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Undesignated Hedges: | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 1,418 | $ | 1,146 | (a | ) | $ | 2 | (a | ) | $ | 8 | ||||||||||||
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|
|
|
|
|
|
| |||||||||||||||||
Total Hedges | $ | 1,418 | $ | 1,146 | $ | 2 | $ | 8 | ||||||||||||||||
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|
|
|
|
|
|
|
January 1, 2022.
Notional Amounts | Derivative Liabilities | Derivative Assets | ||||||||||||||||||||||
Derivative Instrument | April 2, 2022 | January 1, 2022 | April 2, 2022 | January 1, 2022 | ||||||||||||||||||||
Balance Sheet Line | Fair Value | Balance Sheet Line | Fair Value | |||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Undesignated Hedges: | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 1,179 | 815 | (b ) | $ | 0 | (a ) | $ | 1 | |||||||||||||||
Total Hedges | $ | 1,179 | 815 | $ | 0 | $ | 1 | |||||||||||||||||
Three Months Ended April 2, 2022 | ||||||||||||||||||||
Common Stock and Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||
Balance at January 1, 2022 | $ | 199,098 | $ | (29,551 | ) | $ | 578 | $ | (36,110 | ) | $ | 134,015 | ||||||||
Common stock issued under employee plans | 1,033 | — | — | — | 1,033 | |||||||||||||||
Shares withheld for net share settlement of RSUs | (135 | ) | — | — | — | (135 | ) | |||||||||||||
Equity-based compensation expense | (1,036 | ) | — | — | — | (1,036 | ) | |||||||||||||
Net loss | — | — | — | (7,855 | ) | (7,855 | ) | |||||||||||||
Other comprehensive loss | — | — | (207 | ) | — | (207 | ) | |||||||||||||
Balance at April 2, 2022 | $ | 198,960 | $ | (29,551 | ) | $ | 371 | $ | (43,965 | ) | $ | 125,815 | ||||||||
Three Months Ended April 3, 2021 | ||||||||||||||||||||
Common Stock and Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||
Balance at January 2, 2021 | $ | 193,197 | $ | (29,551 | ) | $ | 640 | $ | (62,730 | ) | $ | 101,556 | ||||||||
Common stock issued under employee plans | 1,243 | — | — | — | 1,243 | |||||||||||||||
Shares withheld for net share settlement of RSUs | (20 | ) | — | — | — | (20 | ) | |||||||||||||
Equity-based compensation expense | 968 | — | — | — | 968 | |||||||||||||||
Net loss | — | — | — | (6,504 | ) | (6,504 | ) | |||||||||||||
Other comprehensive loss | — | — | (88 | ) | — | (88 | ) | |||||||||||||
Balance at April 3, 2021 | $ | 195,388 | $ | (29,551 | ) | $ | 552 | $ | (69,234 | ) | $ | 97,155 |
Three Months Ended | ||||||||||||||||||||||||
April 2, 2022 | April 3, 2021 | |||||||||||||||||||||||
Foreign currency | Unrealized holding gains (losses) on available-for-sale investments | Total | Foreign currency | Unrealized holding gains (losses) on available-for-sale investments | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Beginning balance | $ | 608 | $ | (30 | ) | $ | 578 | $ | 602 | $ | 38 | $ | 640 | |||||||||||
Other comprehensive income (loss) before reclassification | (33 | ) | (174 | ) | (207 | ) | (68 | ) | (20 | ) | (88 | ) | ||||||||||||
Amounts reclassified from other comprehensive income (loss) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Net current-period other comprehensive income (loss) | (33 | ) | (174 | ) | (207 | ) | (68 | ) | (20 | ) | (88 | ) | ||||||||||||
Ending balance | $ | 575 | $ | (204 | ) | $ | 371 | $ | 534 | $ | 18 | $ | 552 | |||||||||||
INTEVAC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
April 3, 2021.
Accumulated Other Comprehensive Income
The changes in accumulated other comprehensive income by component for the three and nine months ended September 30, 2017 and October 1, 2016, are as follows.
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, 2017 | ||||||||||||||||||||||||
Foreign currency | Unrealized holding losses on available-for-sale investments | Total | Foreign currency | Unrealized holding losses on available-for-sale investments | Total | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Beginning balance | $ | 418 | $ | (19 | ) | $ | 399 | $ | 343 | $ | (22 | ) | $ | 321 | ||||||||||
Other comprehensive income before reclassification | 39 | 5 | 44 | 114 | 8 | 122 | ||||||||||||||||||
Amounts reclassified from other comprehensive income | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net current-period other comprehensive income | 39 | 5 | 44 | 114 | 8 | 122 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending balance | $ | 457 | $ | (14 | ) | $ | 443 | $ | 457 | $ | (14 | ) | $ | 443 | ||||||||||
|
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|
|
| |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
October 1, 2016 | ||||||||||||||||||||||||
Foreign currency | Unrealized holding gains on available-for-sale investments | Total | Foreign currency | Unrealized holding gains on available-for-sale investments | Total | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Beginning balance | $ | 474 | $ | 17 | $ | 491 | $ | 452 | $ | (40 | ) | $ | 412 | |||||||||||
Other comprehensive income (loss) before reclassification | (17 | ) | (16 | ) | (33 | ) | 5 | 41 | 46 | |||||||||||||||
Amounts reclassified from other comprehensive income | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net current-period other comprehensive income (loss) | (17 | ) | (16 | ) | (33 | ) | 5 | 41 | 46 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending balance | $ | 457 | $ | 1 | $ | 458 | $ | 457 | $ | 1 | $ | 458 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
INTEVAC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
11. | Net |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Net income (loss) | $ | 1,230 | $ | (481 | ) | $ | 4,159 | $ | (10,276 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Weighted-average shares – basic | 21,714 | 20,869 | 21,475 | 20,704 | ||||||||||||
Effect of dilutive potential common shares | 1,256 | — | 1,514 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Weighted-average shares – diluted | 22,970 | 20,869 | 22,989 | 20,704 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income (loss) per share – basic | $ | 0.06 | $ | (0.02 | ) | $ | 0.19 | $ | (0.50 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Net income (loss) per share –diluted | $ | 0.05 | $ | (0.02 | ) | $ | 0.18 | $ | (0.50 | ) | ||||||
|
|
|
|
|
|
|
|
The following potentially dilutive securities were excluded (as common stock equivalents) fromshare.
Three Months Ended | ||||||||
April 2, 2022 | April 3, 2021 | |||||||
(in thousands) | ||||||||
Net loss from continuing operations | $ | (7,720 | ) | $ | (5,568 | ) | ||
Net loss from discontinued operations, net of tax | (135 | ) | (936 | ) | ||||
Net loss | $ | (7,855 | ) | $ | (6,504 | ) | ||
Weighted-average shares – basic | 24,800 | 24,033 | ||||||
Effect of dilutive potential common shares | 0 | 0 | ||||||
Weighted-average shares – diluted | 24,800 | 24,033 | ||||||
Basic and diluted net loss per share: | ||||||||
Continuing operations | $ | (0.31 | ) | $ | (0.23 | ) | ||
Discontinued operations | $ | (0.01 | ) | $ | (0.04 | ) | ||
Net loss per share | $ | (0.32 | ) | $ | (0.27 | ) | ||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | |||||||||||||
(In thousands) | ||||||||||||||||
Stock options to purchase common stock | 826 | 2,743 | 834 | 2,743 | ||||||||||||
RSUs | — | 955 | — | 955 | ||||||||||||
Employee stock purchase plan | — | 82 | — | 82 |
Intevac’s two reportable segments are: Thin-film Equipment and Photonics. Intevac’s chief operating decision-maker has been identified as the President and CEO, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Segment information is presented based upon Intevac’s management organization structure as of September 30, 2017 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to the reportable segments disclosed.
Each reportable segment is separately managed and has separate financial results that are reviewed by Intevac’s chief operating decision-maker. Each reportable segment contains closely related products that are unique to the particular segment. Segment operating profit is determined based upon internal performance measures used by the chief operating decision-maker.
Intevac derives the segment results from its internal management reporting system. The accounting policies Intevac uses to derive reportable segment results are substantially the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics, including orders, net revenues and operating income. Management uses these results to evaluate the performance of, and to assign resources to, eachloss position, all of the reportable segments. Intevac manages certain operating expenses separately at the corporate level. Intevac allocates certainCompany’s equity instruments are considered antidilutive.
The Thin-film Equipment segment designs, develops and markets vacuum process equipment solutions for high-volume manufacturing of small substrates with precise thin-film properties, such as for the hard drive, solar cell and DCP industries, as well as other adjacent thin-film markets.
The Photonics segment develops compact, cost-effective, high-sensitivity digital-optical products for the capture and display oflow-light images. Intevac provides sensors, cameras and systems for government applications such as night vision.
Information for each reportable segment for the three and nine months ended September 30, 2017 and October 1, 2016 is as follows:
Net Revenues
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | |||||||||||||
(In thousands) | ||||||||||||||||
Thin-film Equipment | $ | 17,177 | $ | 14,272 | $ | 61,087 | $ | 25,941 | ||||||||
Photonics | 9,549 | 8,287 | 26,990 | 25,201 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total segment net revenues | $ | 26,726 | $ | 22,559 | $ | 88,077 | $ | 51,142 | ||||||||
|
|
|
|
|
|
|
|
Operating Income (Loss)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | |||||||||||||
(In thousands) | ||||||||||||||||
Thin-film Equipment | $ | 1,213 | $ | (998 | ) | $ | 4,821 | $ | (10,117 | ) | ||||||
Photonics | 1,417 | 1,737 | 3,646 | 3,656 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total segment operating income (loss) | 2,630 | 739 | 8,467 | (6,461 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Unallocated costs | (1,362 | ) | (1,063 | ) | (3,768 | ) | (3,986 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Income (loss) from operations | 1,268 | (324 | ) | 4,699 | (10,447 | ) | ||||||||||
Interest income and other income (expense), net | 28 | 60 | 265 | 184 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Income (loss) before income taxes | $ | 1,296 | $ | (264 | ) | $ | 4,964 | $ | (10,263 | ) | ||||||
|
|
|
|
|
|
|
|
INTEVAC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Total assets for each reportable segment as of September 30, 2017 and December 31, 2016 are as follows:
Assets
September 30, 2017 | December 31, 2016 | |||||||
(In thousands) | ||||||||
Thin-film Equipment | $ | 52,620 | $ | 39,503 | ||||
Photonics | 16,563 | 16,071 | ||||||
|
|
|
| |||||
Total segment assets | 69,183 | 55,574 | ||||||
|
|
|
| |||||
Cash, cash equivalents and investments | 43,399 | 48,238 | ||||||
Restricted cash | 1,400 | 1,602 | ||||||
Deferred income taxes | 4 | 3 | ||||||
Other current assets | 1,024 | 997 | ||||||
Common property, plant and equipment | 1,698 | 1,039 | ||||||
Other assets | 724 | 871 | ||||||
|
|
|
| |||||
Consolidated total assets | $ | 117,432 | $ | 108,324 | ||||
|
|
|
|
12. | Income Taxes |
13. | Restructuring and Other Costs, Net |
Employee Termination Costs | ||||
(in thousands) | ||||
Balance at January 1, 2022 | $ | 0 | ||
Provision for restructuring charges under the 2022 Cost Reduction Plan | 1,232 | |||
Cash payments made | (757 | ) | ||
Non-cash utilization (a) | 37 | |||
Balance at April 2, 2022 (b) | $ | 512 | ||
Employee Termination Costs | Other Exit Costs | Total | ||||||||||
(in thousands) | ||||||||||||
Balance at January 1, 2022 | $ | 358 | $ | 665 | $ | 1,023 | ||||||
Provision for restructuring charges associated with Photonics divestiture (a) | 112 | 2 | 114 | |||||||||
Cash payments made | (137 | ) | (128 | ) | (265 | ) | ||||||
Non-cash utilization (b) | (75 | ) | 0 | (75 | ) | |||||||
Balance at April 2, 2022 | $ | 258 | (c) | $ | 539 | $ | 797 | |||||
Three Months Ended April 3, 2021 | ||||
(in thousands) | ||||
Beginning balance | $ | 0 | ||
Provision for restructuring reserves | 43 | |||
Cash payments made | (43 | ) | ||
Ending balance | $ | 0 | ||
14. | Commitments and Contingencies |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
operates in a single segment: TFE. Product development and manufacturing activities occur in North America and Asia. Intevac also has field offices in Asia to support its Thin-film Equipment customers. Intevac’s products are highly technical and are sold primarily through Intevac’s direct sales force. Intevac also sells its products through distributors in Japan and China.
Three months ended | Nine months ended | |||||||||||||||||||||||
September 30, 2017 | October 1, 2016 | Change over prior period | September 30, 2017 | October 1, 2016 | Change over prior period | |||||||||||||||||||
(In thousands, except percentages and per share amounts) | ||||||||||||||||||||||||
Net revenues | $ | 26,726 | $ | 22,559 | $ | 4,167 | $ | 88,077 | $ | 51,142 | $ | 36,935 | ||||||||||||
Gross profit | $ | 11,298 | $ | 8,515 | $ | 2,783 | $ | 35,816 | $ | 18,497 | $ | 17,319 | ||||||||||||
Gross margin percent | 42.3 | % | 37.7 | % | 4.6 points | 40.7 | % | 36.2 | % | 4.5 points | ||||||||||||||
Income (loss) from operations | $ | 1,268 | $ | (324 | ) | $ | 1,592 | $ | 4,699 | $ | (10,447 | ) | $ | 15,146 | ||||||||||
Net income (loss) | $ | 1,230 | $ | (481 | ) | $ | 1,711 | $ | 4,159 | $ | (10,276 | ) | $ | 14,435 | ||||||||||
Net income (loss) per diluted share | $ | 0.05 | $ | (0.02 | ) | $ | 0.07 | $ | 0.18 | $ | (0.50 | ) | $ | 0.68 |
April 3, 2021.
Three Months Ended | ||||||||||||
April 3, 2021 | April 3, 2021 | Change over prior period | ||||||||||
(In thousands, except percentages and per share amounts) | ||||||||||||
Net revenues | $ | 4,445 | $ | 9,238 | $ | (4,793 | ) | |||||
Gross profit | $ | 723 | $ | 2,134 | $ | (1,411 | ) | |||||
Gross margin percent | 16.3 | % | 23.1 | % | (6.8) points | |||||||
Loss from operations | $ | (7,686 | ) | $ | (5,565 | ) | $ | (2,121 | ) | |||
Net loss from continuing operations | $ | (7,720 | ) | $ | (5,568 | ) | $ | (2,152 | ) | |||
Net loss from discontinued operations, net of taxes | $ | (135 | ) | $ | (936 | ) | $ | 801 | ||||
Net loss | $ | (7,855 | ) | $ | (6,504 | ) | $ | (1,351 | ) | |||
Net loss per diluted share | $ | (0.32 | ) | $ | (0.27 | ) | $ | (0.05 | ) |
Net revenues for the first nine months of fiscal 2017 increased compared to the same periodwork is thoughtful, prudent, and handled with a safety-first approach. All employees in the prior year primarily dueUnited States who could work from home did so through the middle of June 2021, when we fully reopened our offices as restrictions were lifted by the applicable authorities. Effective March 29, 2022, 75% of the employees are allowed to higher equipment saleswork onsite in Singapore. Our employees’ health and safety is our top priority, and we will continue to HDD, PVmonitor local restrictions across the world, the administration and cell phone manufacturers, higher Photonics contract R&Defficacy of vaccines and by higher Photonics product sales. Thin-film Equipment recognized revenuethe number of new cases.
Given the momentum we have builtactions taken in our business, we believe that we are currently on the path response
Intevac’s trademarks, include the following: “200 Lean®,” “AccuLuber™,” “EBAPS®,” “ENERGi™,”“I-Port™,” “LIVAR®,” “INTEVAC LSMA™,” “INTEVAC MATRIX™,” “MicroVista®,” “NightVista®,” “Night Port™,” “oDLC™” and “INTEVAC VERTEX™”.
COVID-19.
Three months ended | Nine months ended | |||||||||||||||||||||||
September 30, 2017 | October 1, 2016 | Change over prior period | September 30, 2017 | October 1, 2016 | Change over prior period | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Thin-film Equipment | $ | 17,177 | $ | 14,272 | $ | 2,905 | $ | 61,087 | $ | 25,941 | $ | 35,146 | ||||||||||||
Photonics: | ||||||||||||||||||||||||
Products | $ | 7,360 | $ | 6,689 | $ | 671 | $ | 21,735 | $ | 21,385 | $ | 350 | ||||||||||||
Contract R&D | 2,189 | 1,598 | 591 | 5,255 | 3,816 | 1,439 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
9,549 | 8,287 | 1,262 | 26,990 | 25,201 | 1,789 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total net revenues | $ | 26,726 | $ | 22,559 | $ | 4,167 | $ | 88,077 | $ | 51,142 | $ | 36,935 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Thin-film Equipment
Three Months Ended | ||||||||||||
April 2, 2022 | April 3, 2021 | Change over prior period | ||||||||||
(In thousands) | ||||||||||||
Total net revenues | $ | 4,445 | $ | 9,238 | $ | (4,793 | ) | |||||
April 2, 2022 | January 1, 2022 | April 3, 2021 | ||||||||||
(In thousands) | ||||||||||||
Total backlog | $ | 87,162 | $ | 24,725 | $ | 4,221 | ||||||
Photonics revenue for the three and nine month periods ended September 30, 2017 increased from the same periods in the prior year as a result of higher product sales revenues and by increased contract R&D work.
Backlog
September 30, 2017 | December 31, 2016 | October 1, 2016 | ||||||||||
(In thousands) | ||||||||||||
Thin-film Equipment | $ | 59,375 | $ | 46,283 | $ | 49,234 | ||||||
Photonics | 13,457 | 22,244 | 23,703 | |||||||||
|
|
|
|
|
| |||||||
Total backlog | $ | 72,832 | $ | 68,527 | $ | 72,937 | ||||||
|
|
|
|
|
|
Thin-film Equipment backlog at September 30, 2017 included five 200 Lean HDD systems and twelve ENERGi solar ion implant systems. Thin-film Equipment backlogBacklog at December 31, 2016January 1, 2022 included fourone 200 Lean HDD systems, four VERTEX systems for DCP, one pilot MATRIX solar ion implant system, and two ENERGi solar ion implant systems. Thin-film Equipment backlogsystem. Backlog at October 1, 2016 included fourApril 3, 2021 did not include any 200 Lean HDD systems, one MATRIX solar PVD system, three VERTEX systems for DCP, one pilot MATRIX solar ion implant system, and two ENERGi solar ion implant systems.
Three months ended | Nine months ended | |||||||||||||||||||||||
September 30, 2017 | October 1, 2016 | Change over prior period | September 30, 2017 | October 1, 2016 | Change over prior period | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
United States | $ | 10,294 | $ | 9,066 | $ | 1,228 | $ | 29,879 | $ | 27,603 | $ | 2,276 | ||||||||||||
Asia | 15,807 | 13,311 | 2,496 | 57,062 | 22,801 | 34,261 | ||||||||||||||||||
Europe | 94 | 182 | (88 | ) | 605 | 738 | (133 | ) | ||||||||||||||||
Rest of World | 531 | — | 531 | 531 | — | 531 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total net revenues | $ | 26,726 | $ | 22,559 | $ | 4,167 | $ | 88,077 | $ | 51,142 | $ | 36,935 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended | ||||||||
April 2, 2022 | April 3, 2021 | |||||||
(in thousands) | ||||||||
United States | $ | 294 | $ | 367 | ||||
Asia | 4,151 | 5,021 | ||||||
Europe | — | 3,850 | ||||||
Total net revenues | $ | 4,445 | $ | 9,238 | ||||
advanced semiconductor packaging.
Three months ended | Nine months ended | |||||||||||||||||||||||
September 30, 2017 | October 1, 2016 | Change over prior period | September 30, 2017 | October 1, 2016 | Change over prior period | |||||||||||||||||||
(In thousands, except percentages) | ||||||||||||||||||||||||
Thin-film Equipment gross profit | $ | 7,812 | $ | 4,628 | $ | 3,184 | $ | 25,686 | $ | 7,337 | $ | 18,349 | ||||||||||||
% of Thin-film Equipment net revenues | 45.5 | % | 32.4 | % | 42.0 | % | 28.3 | % | ||||||||||||||||
Photonics gross profit | $ | 3,486 | $ | 3,887 | $ | (401 | ) | $ | 10,130 | $ | 11,160 | $ | (1,030 | ) | ||||||||||
% of Photonics net revenues | 36.5 | % | 46.9 | % | 37.5 | % | 44.3 | % | ||||||||||||||||
Total gross profit | $ | 11,298 | $ | 8,515 | $ | 2,783 | $ | 35,816 | $ | 18,497 | $ | 17,319 | ||||||||||||
% of net revenues | 42.3 | % | 37.7 | % | 40.7 | % | 36.2 | % |
Three Months Ended | ||||||||||||
April 2, 2022 | April 3, 2021 | Change over prior period | ||||||||||
(In thousands, except percentages) | ||||||||||||
TFE gross profit | $ | 723 | $ | 2,134 | $ | (1,411 | ) | |||||
% of TFE net revenues | 16.3 | % | 23.1 | % |
Thin-film Equipment gross
Photonics gross margin was 36.5% in
Three Months Ended | ||||||||||||
April 2, 2022 | April 3, 2021 | Change over prior period | ||||||||||
(In thousands) | ||||||||||||
Research and development expense | $ | 4,160 | $ | 3,365 | $ | 795 |
Research and development
Three months ended | Nine months ended | |||||||||||||||||||||||
September 30, 2017 | October 1, 2016 | Change over prior period | September 30, 2017 | October 1, 2016 | Change over prior period | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Research and development expense | $ | 4,535 | $ | 4,067 | $ | 468 | $ | 13,635 | $ | 14,220 | $ | (585 | ) |
Research and development spending in Thin-film Equipment during the three and nine months ended September 30, 2017 increased compared to the same periods in the prior year. Thin-film Equipment spending consisted primarily of PV and DCP development. Research and development spending decreased in Photonics during the three and nine months ended September 30, 2017 as compared to the same periods in the prior year. Photonics spending during the three and nine months ended October 1, 2016 reflected incremental spending on demonstrators developed for evaluation by the U.S. Army and U.S. Navy which were self-funded by Intevac. Research and development expenses do not include costs of $2.0 million and $4.8 million for the three and nine months ended September 30, 2017 respectively, or $1.0 million and $3.2 million for the three and nine months ended October 1, 2016 respectively, which are related to customer-funded contract R&D programs at Photonics and therefore included in cost of net revenues.
programs.
Three months ended | Nine months ended | |||||||||||||||||||||||
September 30, 2017 | October 1, 2016 | Change over prior period | September 30, 2017 | October 1, 2016 | Change over prior period | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Selling, general and administrative expense | $ | 5,495 | $ | 4,772 | $ | 723 | $ | 17,482 | $ | 14,724 | $ | 2,758 |
expense
Three Months Ended | ||||||||||||
April 2, 2022 | April 3, 2021 | Change over prior period | ||||||||||
(In thousands) | ||||||||||||
Selling, general and administrative expense | $ | 4,249 | $ | 4,334 | $ | (85 | ) |
stock-based compensation forfeitures related to the employees affected by the reduction in workforce, (ii) $1.5 million for fixed asset disposals and (iii) $755,000 for write-offs of excess inventory. The 2022 Cost Reduction Plan reduced the workforce by 6 percent. The cost of implementing the 2022 Cost Reduction Plan was reported under cost of net revenues and operating expenses in the condensed consolidated statements of operations. Implementation of the 2022 Cost Reduction Plan is expected to reduce salary, wages and other employee-related expenses by approximately $2.1 million on an annual basis and reduce depreciation expense by $720,000 on an annual basis.
Three months ended | Nine months ended | |||||||||||||||||||||||
September 30, 2017 | October 1, 2016 | Change over prior period | September 30, 2017 | October 1, 2016 | Change over prior period | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Interest income and other income (expense), net | $ | 28 | $ | 60 | $ | (32 | ) | $ | 265 | $ | 184 | $ | 81 |
Three Months Ended | ||||||||||||
April 3, 2021 | April 3, 2021 | Change over prior period | ||||||||||
(In thousands) | ||||||||||||
Interest income and other income (expense), net | $ | (8 | ) | $ | 29 | $ | (37 | ) |
Provision for income taxes
Three months ended | Nine months ended | |||||||||||||||||||||||
September 30, 2017 | October 1, 2016 | Change over prior period | September 30, 2017 | October 1, 2016 | Change over prior period | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Provision for income taxes | $ | 66 | $ | 217 | $ | (151 | ) | $ | 805 | $ | 13 | $ | 792 |
lower interest rates, offset in part by higher invested balances.
Three Months Ended | ||||||||||||
April 2, 2022 | April 3, 2021 | Change over prior period | ||||||||||
(In thousands) | ||||||||||||
Income tax provision | $ | 26 | $ | 32 | $ | (6 | ) |
Three Months Ended | ||||||||||||
April 2, 2022 | April 3, 2021 | Change over prior period | ||||||||||
(In thousands) | ||||||||||||
Loss from discontinued operations, net of taxes | $ | 135 | $ | 936 | $ | (801 | ) |
September 30, 2017 | December 31, 2016 | |||||||
(In thousands) | ||||||||
Cash and cash equivalents | $ | 19,197 | $ | 27,043 | ||||
Short-term investments | 18,037 | 17,602 | ||||||
Long-term investments | 6,165 | 3,593 | ||||||
|
|
|
| |||||
Total cash, cash equivalents and investments | $ | 43,399 | $ | 48,238 | ||||
|
|
|
|
April 2, 2022 | January 2, 2021 | |||||||
(In thousands) | ||||||||
Cash and cash equivalents | $ | 98,034 | $ | 102,728 | ||||
Restricted cash | 786 | 786 | ||||||
Short-term investments | 8,941 | 10,221 | ||||||
Long-term investments | 9,407 | 7,427 | ||||||
Total cash, cash equivalents, restricted cash and investments | $ | 117,168 | $ | 121,162 | ||||
fiscal 2021.
$618,000.
$135,000.
Intevac believessubject to foreign withholding taxes.
fiscal 2022 are projected to be approximately $4.0 million related to network infrastructure and security, and laboratory and test equipment to support our R&D programs.
For further information about Intevac’s otheroperations.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Interest rate risk.Intevac’s exposure
The table below presents principal amounts and related weighted-average interest rates by year of expected maturity for Intevac’s investment portfolio at September 30, 2017.
2017 | 2018 | 2019 | Total | Fair Value | ||||||||||||||||
(In thousands, except percentages) | ||||||||||||||||||||
Cash equivalents Variable rate amounts | $ | 5,038 | $ | — | $ | — | $ | 5,038 | $ | 5,038 | ||||||||||
Weighted-average rate | 0.93 | % | — | — | ||||||||||||||||
Short-term investments Fixed rate amounts | $ | 6,247 | $ | 11,797 | $ | — | $ | 18,044 | $ | 18,037 | ||||||||||
Weighted-average rate | 1.49 | % | 1.37 | % | — | |||||||||||||||
Long-term investments Fixed rate amounts | $ | — | $ | 598 | $ | 5,574 | $ | 6,172 | $ | 6,165 | ||||||||||
Weighted-average rate | — | 1.00 | % | 1.87 | % | |||||||||||||||
Total investment portfolio | $ | 11,285 | $ | 12,395 | $ | 5,574 | $ | 29,254 | $ | 29,240 |
Foreign exchange risk.From time to time, Intevac enters into foreign currency forward exchange contracts to hedge certain of its anticipated foreign currencyre-measurement exposures and to offset certain operational exposures from the impact of changes in foreign currency exchange rates. The objective of these contracts is to minimize the impact of foreign currency exchange rate movements on Intevac’s operating results. The derivatives have original maturities of approximately 30 days. The notional amount of Company’s foreign currency derivatives was $1.4 million at September 30, 2017 and $1.1 million at December 31, 2016.
Item 4. | Controls and Procedures |
April 2, 2022.
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
levels in 2021.
In recent years Reductions in capital investment could be particularly pronounced as the photovoltaic (solar) market has undergone a downturn, which is likely to impact our salescost of PV equipment. The solar industry from time to time experiencesobtaining capital increases during periods of structural imbalance between supply and demand. And such periods put intense pressure on our customers’ pricing. The solar industry is currently in such a period. Competition in solar markets globally and across the solar value chain is intense, and could remain that way for an extended period of time. During any such period, solar module manufacturers may reduce their sales prices in response to competition, even below their manufacturing costs, in order to generate sales and may do so for a sustained period of time. As a result, our customers may be unable to sell their solar modules or systems at attractive prices or for a profit during a period of excess supply of solar modules, which would adversely affect their results of operations and their ability to make capital investments such as purchasing our products.
rapidly rising interest rates.
In some cases, orders are also subject to customer acceptance or other criteria even in the case of a binding agreement.
Our 200 LeanHDD customers also experience competition from companies that produce alternative storage technologies like flash memory, which offer smaller size, lower power consumption and more rugged designs. These storage technologies are being used increasingly in enterprise applications and smaller form factors such as tablets, smart-phones, ultra-books, and notebook PCs instead of hard disk drives. Tablet computing devices and smart-phones have never contained, nor are they likely in the future to contain, a disk drive. Products using alternative technologies, such as flash memory, optical storage and other storage technologies are becoming increasingly common and could become a significant source of competition to particular applications of the products of our 200 Lean HDD customers, which could adversely affect our results of operations. If alternative technologies, such as flash memory, replace hard disk drives as a significant method of digital storage, then demand for our hard disk manufacturing products would decrease.
The Photonics business is also subject to long sales cycles because many of its products, such as our military imaging products, often must be designed into the customers’ end products, which are often complexstate-of-the-art products. These development cycles are typically multi-year, and our sales are contingent on our customers successfully integrating our product into their product, completing development of their product and then obtaining production orders for their product from the U.S. government or its allies.
Our growth depends on development of technically advanced new products and processes.
We have invested heavily, and continue to invest, in the development of new products, such as our 200 Lean and other PVD systems, our coating systems for DCP, our solar systems for PV applications, our digital night-vision products and ournear-eye display products. Our success in developing and selling new products depends upon a variety of factors, including our ability to: predict future customer requirements; make technological advances; achieve a low total cost of ownership for our products; introduce new products on schedule; manufacture products cost-effectively including transitioning production to volume manufacturing; commercialize and attain customer acceptance of our products; and achieve acceptable and reliable performance of our new products in the field. Our new product decisions and development commitments must anticipate continuously evolving industry requirements significantly in advance of sales. In addition, we are attempting to expand into new or related markets, including the PV and cell phone cover glass markets. Our expansion into the PV market is dependent upon the success of our customers’ development plans. To date we have not recognized material revenue from such products. Failure to correctly assess the size of the markets, to successfully develop cost effective products to address the markets or to establish effective sales and support of the new products would have a material adverse effect on future revenues and profits. In addition, if we invest in products for which the market does not develop as anticipated, we may incur significant charges related to such investments.
Rapid technological change in our served markets requires us to rapidly develop new technically advanced products. Our future success depends in part on our ability to develop and offer new products with improved capabilities and to continue to enhance our existing products. If new products have reliability or quality problems, our performance may be impacted by reduced orders, higher manufacturing costs, delays in acceptance and payment for new products and additional service and warranty expenses.
We may not be able to obtain export licenses from the U.S. government permitting delivery of our products to international customers.
Many of our products, especially Photonics products, require export licenses from U.S. government agencies under the Export Administration Act, the Trading with the Enemy Act of 1917, the Arms Export Act of 1976 or the International Traffic in Arms Regulations. These regulations limit the potential market for some of our products. We can give no assurance that we will be successful in obtaining all the licenses necessary to export our products. Heightened government scrutiny of export licenses for defense related products has resulted in lengthened review periods for our license applications. Exports to countries that are not considered by the U.S. government to be allies are likely to be prohibited, and even sales to U.S. allies may be limited. Failure to comply with export control laws, including identification and reporting of all exports andre-exports of controlled technology or exports made without correct license approval or improper license use could result in severe penalties and revocation of licenses. Failure to obtain export licenses, delays in obtaining licenses, or revocation of previously issued licenses would prevent us from selling the affected products outside the United States and could negatively impact our results of operations.
The Photonics business is dependent on U.S. government contracts, which are subject to fixed pricing, immediate termination and a number of procurement rules and regulations.
We sell our Photonics products and services directly to the U.S. government, as well as to prime contractors for various U.S. government programs. The U.S government is considering significant changes in the level of existing,follow-on or replacement programs. We cannot predict the impact of potential changes in priorities due to military transformations and/or the nature of futurewar-related activities. A shift of government priorities to programs in which we do not participate and/or reductions in funding for or the termination of programs in which we do participate, unless offset by other programs and opportunities, could have a material adverse effect on our financial position, results of operations, or cash flows.
Funding of multi-year government programs is subject to congressional appropriations, and there is no guarantee that the U.S. government will make further appropriations, particularly given the U.S. government’s recent focus on spending in other areas and spending reductions. Sales to the U.S. government and its prime contractors may also be affected by changes in procurement policies, budget considerations and political developments in the United States or abroad. For example, if the U.S. government is less focused on defense spending or there is a decrease in hostilities, demand for our products could decrease. The loss of funding for a government program would result in a loss of future revenues attributable to that program. The influence of any of these factors, which are beyond our control, could negatively impact our results of operations.
A significant portion of our U.S. government revenue is derived from fixed-price development and production contracts. Under fixed-price contracts, unexpected increases in the cost to develop or manufacture a product, whether due to inaccurate estimates in the bidding process, unanticipated increases in material costs, reduced production volumes, inefficiencies or other factors, are borne by us. We have experienced cost overruns in the past that have resulted in losses on certain contracts, and may experience additional cost overruns in the future. We are required to recognize the total estimated impact of cost overruns in the period in which they are first identified. Such cost overruns could have a material adverse effect on our results of operations.
Generally, government contracts contain provisions permitting termination, in whole or in part, without prior notice at the government’s convenience upon the payment of compensation only for work done and commitments made at the time of termination. We cannot ensure that one or more of the government contracts under which we, or our customers, operate will not be terminated under these circumstances. Also, we cannot ensure that we, or our customers, would be able to procure new government contracts to offset the revenues lost as a result of any termination of existing contracts, nor can we ensure that we, or our customers, will continue to remain in good standing as federal contractors.
As a U.S. government contractor we must comply with specific government rules and regulations and are subject to routine audits and investigations by U.S. government agencies. If we fail to comply with these rules and regulations, the results could include: (1) reductions in the value of our contracts; (2) reductions in amounts previously billed and recognized as revenue; (3) contract modifications or termination; (4) the assessment of penalties and fines; and (5) suspension or debarment from government contracting or subcontracting for a period of time or permanently.
Changes to our effective tax rate affect our results of operations.
As a global company, we are subject to taxation in the United States, Singapore and various other countries. Significant judgment is required to determine and estimate worldwide tax liabilities. Our future effective tax rate could be affected by: (1) changes in tax laws; (2) the allocation of earnings to countries with differing tax rates; (3) changes in worldwide projected annual earnings in current and future years: (4) accounting pronouncements; or (5) changes in the valuation of our deferred tax assets and liabilities. Although we believe our tax estimates are reasonable, there can be no assurance that any final determination will not be different from the treatment reflected in our historical income tax provisions and accruals, which could result in additional payments by Intevac.
Difficulties in integrating past or future acquisitions could adversely affect our business.
We have completed a number of acquisitions and dispositions during our operating history. For example, in 2007, we acquired certain assets of DeltaNu, LLC and certain assets of Creative Display Systems, LLC, in 2008 we acquired certain assets of OC Oerlikon Balzers Ltd., in 2010 we acquired the outstanding shares of SIT, in 2012 we completed the sale of certain semiconductor mainframe technology assets and in 2013 we completed the sale of the assets of DeltaNu. We have spent and may continue to spend significant resources identifying and pursuing future acquisition opportunities. Acquisitions involve numerous risks including: (1) difficulties in integrating the operations, technologies and products of the acquired companies or achieving the desires outcomes; (2) the diversion of our management’s attention from other business concerns; and (3) the potential loss of key employees of the acquired companies. Failure to achieve the anticipated benefits of the prior and any future acquisitions or to successfully integrate the operations of the companies we acquire could have a material and adverse effect on our business, financial condition and results of operations. Any future acquisitions could also result in potentially dilutive issuance of equity securities, acquisition or divestiture-related write-offs or the assumption of debt and contingent liabilities. In addition, we have made and will continue to consider making strategic divestitures. With any divestiture, there are risks that future operating results could be unfavorably impacted if targeted objectives, such as cost savings, are not achieved or if other business disruptions occur as a result of the divestiture or activities related to the divestiture.
We may be subject to additional impairment charges due to potential declines in the fair value of our assets.
As a result of our acquisitions, we have significant intangible assets and had significant goodwill on our balance sheet. We test these assets for impairment on a periodic basis as required, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The events or changes that could require us to test our intangible assets for impairment include: a significant reduction in our stock price, and as a result market capitalization, changes in our estimated future cash flows, as well as changes in rates of growth in our industry or in any of our reporting units. In the fourth quarter of 2012, as a result of a decline in our market capitalization and a reduction in our revenue expectations we recorded a goodwill impairment charge in the amount of $18.4 million. We will continue to evaluate the carrying value of our intangible assets and if we determine in the future that there is a potential further impairment, we may be required to record additional charges to earnings which could materially adversely affect our financial results and could also materially adversely affect our business.
We are a manufacturing business. Purchased parts constitute the largest component of Our future success depends in part on our product cost. Our ability to manufacture depends on the timely delivery of parts, componentsdevelop and subassemblies from suppliers. We obtain some of the key componentsoffer new products with improved capabilities and subassemblies used into continue to enhance our existing products. If new products from a single supplierhave reliability or a limited group of suppliers. If any ofquality problems, our suppliers fail to deliver quality parts on a timely basis, weperformance may experiencebe impacted by reduced orders, higher manufacturing costs, delays in manufacturing, which could result in delayed product deliveries, increased costs to expedite deliveries or develop alternative suppliers, or require redesign of ouracceptance and payment for new products to accommodate alternative suppliers. Some of our suppliers are thinly capitalized and may be vulnerable to failure.
additional service and warranty expenses.
From timesevere penalties and revocation of licenses. Failure to time we may be involvedobtain export licenses, delays in litigationobtaining licenses, or revocation of various types, including litigation alleging infringement of intellectual property rights and other claims. Litigation is expensive, subjectspreviously issued licenses would prevent us tofrom selling the risk of significant damages and requires significant management time and attentionaffected products outside the United States and could have a material and adverse effect onnegatively impact our business, financial condition and results of operations.
We are also subject to
have made and will continue to consider making strategic divestitures, such as the disposition of our Photonics business. With any divestiture, there are risks that future operating results could be unfavorably impacted if targeted objectives, such as cost savings or earnout payments associated with the financial performance of the divested business, are not achieved or if other business disruptions occur as a result of the divestiture or activities related to the divestiture.
or electronic security breaches and computer viruses, and other events beyond our control. We do not have a detailed disaster recovery plan. Despite our implementation of network security measures, our tools and servers may be vulnerable to computer viruses,
We have completed the evaluation of our internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act. Although our assessment, testing, and evaluation resulted in our conclusion that as of December 31, 2016,January 1, 2022, our internal controlscontrol over financial reporting werewas effective, we cannot predict the outcome of our testing in future periods. Ongoing compliance with this requirement is complex, costly and time-consuming. If Intevac fails to maintain effective internal control over financial reporting; our management does not timely assess the adequacy of such internal control; or our independent registered public accounting firm does not deliver an unqualified opinion as to the effectiveness of our internal control over financial reporting, then we could be subject to restatement of previously reported financial results, regulatory sanctions and a decline in the public’s perception of Intevac, which could have a material and adverse effect on our business, financial condition and results of operations.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
* | The certification attached as Exhibit 32.1 is deemed “furnished” and not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and is not to be incorporated by reference into any filing of Intevac, Inc. under the Securities Exchange Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof, irrespective of any general incorporation by reference language contained in any such filing, except to the extent that the registrant specifically incorporates it by reference. |
INTEVAC, INC. | ||||||
Date: | ||||||
By: | /s/ | |||||
Nigel D. Hunton | ||||||
President, Chief Executive Officer and Director
|
(Principal Executive Officer) | ||||||
Date: May 10, 2022 | ||||||
By: | /s/ JAMES MONIZ | |||||
James Moniz | ||||||
Executive Vice President, Finance and Administration, | ||||||
Chief Financial Officer, Secretary and Treasurer | ||||||
(Principal Financial and Accounting Officer) |
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