☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 94-3125814 | |
(State or other jurisdiction of
| (IRS Employer
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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 | |||||
PART I. FINANCIAL INFORMATION | ||||||
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PART II. OTHER INFORMATION | ||||||
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Item 2. | 37 | |||||
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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 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 $ 53,669 $ 102,728 31,168 10,221 30,321 14,261 11,771 5,791 1,532 1,827 128,461 134,828 24,565 7,427 786 786 3,311 4,759 3,510 4,520 5,018 5,449 $ 165,651 $ 157,769 $ 3,199 $ 3,119 3,609 5,320 3,542 5,505 3,042 3,665 24,760 2,107 38,152 19,716 2,102 3,675 237 363 2,339 4,038 25 25 201,478 199,073 (29,551 ) (29,551 ) (9 ) 578 (46,783 ) (36,110 ) 125,160 134,015 $ 165,651 $ 157,769 December 31, 2016January 1, 2022 are derived from the December 31, 2016January 1, 2022 audited 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 | Six Months Ended | |||||||||||||||
July 2, 2022 | July 3, 2021 | July 2, 2022 | July 3, 2021 | |||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Net revenues | $ | 9,307 | $ | 5,369 | $ | 13,752 | $ | 14,607 | ||||||||
Cost of net revenues | 4,820 | 4,363 | 8,543 | 11,467 | ||||||||||||
Gross profit | 4,487 | 1,006 | 5,209 | 3,140 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 2,868 | 3,118 | 7,028 | 6,483 | ||||||||||||
Selling, general and administrative | 4,016 | 4,197 | 8,265 | 8,531 | ||||||||||||
Total operating expenses | 6,884 | 7,315 | 15,293 | 15,014 | ||||||||||||
Loss from operations | (2,397 | ) | (6,309 | ) | (10,084 | ) | (11,874 | ) | ||||||||
Interest income and other income (expense), net | 317 | 20 | 310 | 50 | ||||||||||||
Loss from continuing operations before provision for (benefit from) income taxes | (2,080 | ) | (6,289 | ) | (9,774 | ) | (11,824 | ) | ||||||||
Provision for (benefit from) income taxes | 500 | (165 | ) | 526 | (132 | ) | ||||||||||
Net loss from continuing operations, net of taxes | (2,580 | ) | (6,124 | ) | (10,300 | ) | (11,692 | ) | ||||||||
Net loss from discontinued operations, net of taxes | (238 | ) | (2 | ) | (373 | ) | (938 | ) | ||||||||
Net loss | $ | (2,818 | ) | $ | (6,126 | ) | $ | (10,673 | ) | $ | (12,630 | ) | ||||
Net loss per share: | ||||||||||||||||
Basic and diluted – continuing operations | $ | (0.10 | ) | $ | (0.25 | ) | $ | (0.41 | ) | $ | (0.48 | ) | ||||
Basic and diluted – discontinued operations | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.04 | ) | ||||
Basic and diluted – net loss | $ | (0.11 | ) | $ | (0.25 | ) | $ | (0.43 | ) | $ | (0.52 | ) | ||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic and diluted | 25,141 | 24,241 | 24,970 | 24,137 |
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 | Six Months Ended | |||||||||||||||
July 2, 2022 | July 3, 2021 | July 2, 2022 | July 3, 2021 | |||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands) | ||||||||||||||||
Net loss | $ | (2,818 | ) | $ | (6,126 | ) | $ | (10,673 | ) | $ | (12,630 | ) | ||||
Other comprehensive income (loss), before tax: | ||||||||||||||||
Change in unrealized net gain (loss) on available-for-sale | (161 | ) | (9 | ) | (335 | ) | (29 | ) | ||||||||
Foreign currency translation gains (losses) | (219 | ) | 28 | (252 | ) | (40 | ) | |||||||||
Other comprehensive income (loss), before tax | (380 | ) | 19 | (587 | ) | (69 | ) | |||||||||
Income taxes related to items in other comprehensive income (loss) | 0— | 0— | 0 — | 0 — | ||||||||||||
Other comprehensive income (loss), net of tax | (380 | ) | 19 | (587 | ) | (69 | ) | |||||||||
Comprehensive loss | $ | (3,198 | ) | $ | (6,107 | ) | $ | (11,260 | ) | $ | (12,699 | ) | ||||
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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Six months ended | ||||||||
July 2, 2022 | July 3, 2021 | |||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
Operating activities | ||||||||
Net loss | $ | (10,673 | ) | $ | (12,630 | ) | ||
Adjustments to reconcile net loss to net cash and cash equivalents provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 776 | 1,686 | ||||||
Net amortization (accretion) of investment premiums and discounts | (20 | ) | 62 | |||||
Equity-based compensation | 489 | 1,987 | ||||||
Straight-line rent adjustment and amortization of lease incentives | (483 | ) | (231 | ) | ||||
Deferred income taxes | 345 | (202 | ) | |||||
Loss on disposal of equipment | 1,453 | 0— | ||||||
Changes in operating assets and liabilities | (3,322 | ) | 12,692 | |||||
Total adjustments | (762 | ) | 15,994 | |||||
Net cash and cash equivalents provided by (used in) operating activities | (11,435 | ) | 3,364 | |||||
Investing activities | ||||||||
Purchases of investments | (45,663 | ) | (10,163 | ) | ||||
Proceeds from sales and maturities of investments | 7,263 | 9,815 | ||||||
Purchases of leasehold improvements and equipment | (888 | ) | (365 | ) | ||||
Net cash and cash equivalents used in investing activities | (39,288 | ) | (713 | ) | ||||
Financing activities | ||||||||
Net proceeds from issuance of common stock | 2,211 | 1,436 | ||||||
Taxes paid related to net share settlement | (295 | ) | (532 | ) | ||||
Net cash and cash equivalents provided by financing activities | 1,916 | 904 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (252 | ) | (40 | ) | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (49,059 | ) | 3,515 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 103,514 | 30,128 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 54,455 | $ | 33,643 | ||||
Non-cash investing and financing activity | ||||||||
Additions to right-of-use-assets | $ | 94 | $ | — | ||||
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 | Six Months Ended | |||||||||||||||
July 2, 2022 | July 3, 2021 | July 2, 2022 | July 3, 2021 | |||||||||||||
(In thousands) | ||||||||||||||||
Net revenues: | ||||||||||||||||
Systems and components | $ | — | $ | 5,282 | $ | — | $ | 9,103 | ||||||||
Technology development | — | 3,162 | — | 6,344 | ||||||||||||
Total net revenues | — | 8,444 | — | 15,447 | ||||||||||||
Cost of net revenues: | ||||||||||||||||
Systems and components | — | 4,261 | — | 7,121 | ||||||||||||
Technology development | — | 2,081 | — | 5,304 | ||||||||||||
Total cost of net revenues | — | 6,342 | — | 12,425 | ||||||||||||
Gross profit | — | 2,102 | — | 3,022 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | — | 776 | — | 1,036 | ||||||||||||
Selling, general and administrative | 238 | 1,328 | 373 | 2,924 | ||||||||||||
Total operating expenses | 238 | 2,104 | 373 | 3,960 | ||||||||||||
Operating loss – discontinued operations | (238 | ) | (2 | ) | (373 | ) | (938 | ) | ||||||||
Other income (expense) – discontinued operations | 0— | 0— | 0— | 0— | ||||||||||||
Loss from discontinued operations before provision for income taxes | (238 | ) | (2 | ) | (373 | ) | (938 | ) | ||||||||
Provision for income taxes | — | — | — | — | ||||||||||||
Net loss from discontinued operations, net of taxes | $ | (238 | ) | $ | (2 | ) | $ | (373 | ) | $ | (938 | ) | ||||
Three Months Ended | Six Months Ended | |||||||||||||||
July 2, 2022 | July 3, 2021 | July 2, 2022 | July 3, 2021 | |||||||||||||
1 | 1 | |||||||||||||||
(In thousands) | ||||||||||||||||
Depreciation and amortization | $ | — | $ | 375 | $ | — | $ | 661 | ||||||||
Equity-based compensation | $ | 39 | $ | 247 | $ | (291 | ) | $ | 518 | |||||||
Purchase of leasehold improvements and equipment | $ | — | $ | 76 | $ | — | $ | 149 |
3. | Revenue |
Three Months Ended July 2, 2022 | Three Months Ended July 3, 2021 | |||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
HDD | DCP | PV | Total | HDD | DCP | PV | Total | |||||||||||||||||||||||||
Systems, upgrades and spare parts | $ | 7,756 | $ | 1 | $ | 82 | $ | 7,839 | $ | 3,955 | $ | 3 | $ | 47 | $ | 4,005 | ||||||||||||||||
Field service | 1,421 | 43 | 4 | 1,468 | 1,364 | — | — | 1,364 | ||||||||||||||||||||||||
Total net revenues | $ | 9,177 | $ | 44 | $ | 86 | $ | 9,307 | $ | 5,319 | $ | 3 | $ | 47 | $ | 5,369 | ||||||||||||||||
Six Months Ended July 2, 2022 | Six Months Ended July 3, 2021 | |||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||
HDD | DCP | PV | Total | HDD | DCP | PV | ASP | Total | ||||||||||||||||||||||||||||
Systems, upgrades and spare parts | $ | 10,879 | $ | 1 | $ | 135 | $ | 11,015 | $ | 7,539 | $ | 3 | $ | 158 | $ | 3,850 | $ | 11,550 | ||||||||||||||||||
Field service | 2,684 | 43 | 10 | 2,737 | 3,001 | 14 | 42 | — | 3,057 | |||||||||||||||||||||||||||
Total net revenues | $ | 13,563 | $ | 44 | $ | 145 | $ | 13,752 | $ | 10,540 | $ | 17 | $ | 200 | $ | 3,850 | $ | 14,607 | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
July 2, 2022 | July 3, 2021 | July 2, 2022 | July 3, 2021 | |||||||||||||
(In thousands) | ||||||||||||||||
United States | $ | 1,656 | $ | 2,121 | $ | 1,950 | $ | 2,488 | ||||||||
Asia | 7,651 | 3,248 | 11,802 | 8,269 | ||||||||||||
Europe | — | — | — | 3,850 | ||||||||||||
Total net revenues | $ | 9,307 | $ | 5,369 | $ | 13,752 | $ | 14,607 | ||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
July 2, 2022 | July 3, 2021 | July 2, 2022 | July 3, 2021 | |||||||||||||
(In thousands) | ||||||||||||||||
Products transferred at a point in time | $ | 9,307 | $ | 5,369 | $ | 13,752 | $ | 14,607 | ||||||||
Products and services transferred over time | — | — | — | — | ||||||||||||
Total net revenues | $ | 9,307 | $ | 5,369 | $ | 13,752 | $ | 14,607 | ||||||||
July 2, 2022 | January 1, 2022 | Six Months Change | ||||||||||
(In thousands) | ||||||||||||
Contract assets: | ||||||||||||
Accounts receivable, unbilled | $ | — | $ | 99 | $ | (99 | ) | |||||
Contract liabilities: | ||||||||||||
Deferred revenue | $ | 129 | $ | 65 | $ | 64 | ||||||
Customer advances | 24,760 | 2,107 | 22,653 | |||||||||
$ | 24,889 | $ | 2,172 | $ | 22,717 | |||||||
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.
July 2, 2022 | January 1, 2022 | |||||||
(In thousands) | ||||||||
Raw materials | $ | 6,728 | $ | 5,323 | ||||
Work-in-progress | 5,043 | 468 | ||||||
$ | 11,771 | $ | 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 | Six Months Ended | |||||||||||||||
July 2, 2022 | July 3, 2021 | July 2, 2022 | July 3, 2021 | |||||||||||||
(In thousands) | ||||||||||||||||
Equity-based compensation by type of award: | ||||||||||||||||
Stock options | $ | 8 | $ | 57 | $ | (163 | ) | $ | 132 | |||||||
RSUs | 1,295 | 656 | 567 | 1,200 | ||||||||||||
ESPP purchase rights | 222 | 306 | 85 | 655 | ||||||||||||
Total equity-based compensation | $ | 1,525 | $ | 1,019 | $ | 489 | $ | 1,987 | ||||||||
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 six months ended July 2, 2022. (See Note 13. Restructuring and Other Costs, Net.); and |
(b) | Equity-based compensation reported in discontinued operations of $39,000 and ($291,000) for the three and six months ended July 2, 2022, respectively, and $247,000 and $518,000 for the three and six months ended July 3, 2021, respectively. Equity-based compensation expense allocated to discontinued operations for the six months ended July 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.) |
Intevac accounts for forfeitures as they occur, rather than estimating expected forfeitures.
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 | ||||
|
| |||||||
Options outstanding at September 30, 2017 | 2,976,413 | $ | 7.64 | |||||
|
| |||||||
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 cancelled and forfeited | (550,332 | ) | $ | 7.31 | ||||
Options exercised | (313,000 | ) | $ | 4.83 | ||||
Options outstanding at July 2, 2022 | 594,255 | $ | 6.76 | |||||
Options exercisable at July 2, 2022 | 564,979 | $ | 6.82 | |||||
July 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)
Six Months Ended | ||||||||
July 2, 2022 | July 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 |
A summary of the
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 | ||||
|
| |||||||
Non-vested RSUs at September 30, 2017 | 798,388 | $ | 7.79 | |||||
|
|
Shares | Weighted-Average Grant Date Fair Value | |||||||
Non-vested RSUs at January 1, 2022 | 1,033,436 | $ | 5.59 | |||||
Granted | 1,756,267 | $ | 4.36 | |||||
Vested | (211,889 | ) | $ | 5.47 | ||||
Cancelled and forfeited | (533,199 | ) | $ | 5.65 | ||||
Non-vested RSUs at July 2, 2022 | 2,044,615 | $ | 4.53 | |||||
Market condition-based RSUs vest upon the
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)
Three Months Ended | ||||
July 2, 2022 | ||||
Weighted-average fair value of grants per share | $ | 3.67 | ||
Expected volatility | 54.42 | % | ||
Risk-free interest rate | 2.82 | % | ||
Dividend yield | NaN |
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 | ||||||||
|
|
|
|
|
| |||||||
$ | 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. initial grant.
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 inweighted-average fair value of the contingent consideration subsequent toPRSU Awards granted in May 2021 using 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 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Closing balance | $ | 404 | $ | 800 | $ | 404 | $ | 800 | ||||||||
|
|
|
|
|
|
|
|
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 | ||||||
|
|
|
| |||||
Total acquisition-related contingent consideration | $ | 404 | $ | 759 | ||||
|
|
|
|
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%) |
Three Months Ended | ||||
July 3, 2021 | ||||
Weighted-average fair value of grants per share | $ | 7.65 | ||
Expected volatility | 56.26 | % | ||
Risk-free interest rate | 0.15 | % | ||
Dividend yield | NaN |
6. | Warranty |
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 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Closing balance | $ | 1,135 | $ | 722 | $ | 1,135 | $ | 722 | ||||||||
|
|
|
|
|
|
|
|
July 3, 2021:
Three Months Ended | Six Months Ended | |||||||||||||||
July 2, 2022 | July 3, 2021 | July 2, 2022 | July 3, 2021 | |||||||||||||
(In thousands) | ||||||||||||||||
Opening balance | $ | 249 | $ | 590 | $ | 346 | $ | 480 | ||||||||
Expenditures incurred under warranties | (54 | ) | (195 | ) | (225 | ) | (346 | ) | ||||||||
Expenditures incurred under warranties included in discontinued operations | — | (22 | ) | — | (69 | ) | ||||||||||
Accruals for product warranties issued during the reporting period | 36 | 155 | 72 | 410 | ||||||||||||
Accruals for product warranties issued during the reporting period included in discontinued operations | — | 43 | — | 63 | ||||||||||||
Adjustments to previously existing warranty accruals | (17 | ) | (15 | ) | 21 | (25 | ) | |||||||||
Adjustments to previously existing warranty accruals included in discontinued operations | — | 16 | — | 59 | ||||||||||||
Closing balance | $ | 214 | $ | 572 | $ | 214 | $ | 572 | ||||||||
September 30, 2017 | December 31, 2016 | |||||||
(In thousands) | ||||||||
Other accrued liabilities | $ | 915 | $ | 829 | ||||
Other long-term liabilities | 220 | 178 | ||||||
|
|
|
| |||||
Total warranty provision | $ | 1,135 | $ | 1,007 | ||||
|
|
|
|
July 2 2022 | January 1 2022 | |||||||
(In thousands) | ||||||||
Other accrued liabilities | $ | 199 | $ | 301 | ||||
Other long-term liabilities | 15 | 45 | ||||||
Total warranty provision | $ | 214 | $ | 346 | ||||
7. | Guarantees |
September 30, 2017,July 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.INTEVAC, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)(Unaudited)9.
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 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
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 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total long-term investments | $ | 6,172 | $ | — | $ | 7 | $ | 6,165 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total cash, cash equivalents, and investments | $ | 43,413 | $ | 2 | $ | 16 | $ | 43,399 | ||||||||
|
|
|
|
|
|
|
| |||||||||
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 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
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 | ||||||||
|
|
|
|
|
|
|
|
July 2, 2022 | ||||||||||||||||
Amortized Cost | Unrealized Holding Gains | Unrealized Holding Losses | Fair Value | |||||||||||||
(In thousands) | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash | $ | 46,732 | $ | — | $ | — | $ | 46,732 | ||||||||
Money market funds | 3,591 | — | — | 3,591 | ||||||||||||
Commercial paper | 3,348 | — | 2 | 3,346 | ||||||||||||
Total cash and cash equivalents | $ | 53,671 | $ | — | $ | 2 | $ | 53,669 | ||||||||
Short-term investments: | ||||||||||||||||
Asset backed securities | $ | 1,003 | $ | — | $ | 2 | $ | 1,001 | ||||||||
Certificates of deposit | 7,850 | — | 23 | 7,827 | ||||||||||||
Commercial paper | 14,586 | 2 | 37 | 14,551 | ||||||||||||
Corporate bonds and medium-term notes | 4,725 | — | 52 | 4,673 | ||||||||||||
Municipal bonds | 493 | — | 7 | 486 | ||||||||||||
U.S. treasury securities | 2,661 | — | 31 | 2,630 | ||||||||||||
Total short-term investments | $ | 31,318 | $ | 2 | $ | 152 | $ | 31,168 | ||||||||
Long-term investments: | ||||||||||||||||
Asset backed securities | $ | 9,876 | $ | — | $ | 80 | $ | 9,796 | ||||||||
Corporate bonds and medium-term notes | 5,204 | 7 | 32 | 5,179 | ||||||||||||
Municipal bonds | 1,212 | — | 9 | 1,203 | ||||||||||||
U.S. treasury and agency securities | 8,486 | — | 99 | 8,387 | ||||||||||||
Total long-term investments | $ | 24,778 | $ | 7 | $ | 220 | $ | 24,565 | ||||||||
Total cash, cash equivalents, and investments | $ | 109,767 | $ | 9 | $ | 374 | $ | 109,402 | ||||||||
January 1, 2022 | ||||||||||||||||
Amortized Cost | Unrealized Holding Gains | Unrealized Holding Losses | Fair Value | |||||||||||||
(In thousands) | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash | $ | 102,494 | $ | — | $ | — | $ | 102,494 | ||||||||
Money market funds | 234 | — | — | 234 | ||||||||||||
Total cash and cash equivalents | $ | 102,728 | $ | — | $ | — | $ | 102,728 | ||||||||
Short-term investments: | ||||||||||||||||
Certificates of deposit | $ | 4,300 | $ | — | $ | — | $ | 4,300 | ||||||||
Commercial paper | 400 | — | — | 400 | ||||||||||||
Corporate bonds and medium-term notes | 2,916 | — | 3 | 2,913 | ||||||||||||
Municipal bonds | 700 | — | — | 700 | ||||||||||||
U.S. treasury securities | 1,910 | — | 2 | 1,908 | ||||||||||||
Total short-term investments | $ | 10,226 | $ | — | $ | 5 | $ | 10,221 | ||||||||
Long-term investments: | ||||||||||||||||
Asset backed securities | $ | 2,040 | $ | — | $ | 3 | $ | 2,037 | ||||||||
Certificates of deposit | 500 | — | 3 | 497 | ||||||||||||
Corporate bonds and medium-term notes | 1,521 | — | 6 | 1,515 | ||||||||||||
Municipal bonds | 145 | — | 1 | 144 | ||||||||||||
U.S. treasury securities | 3,246 | — | 12 | 3,234 | ||||||||||||
Total long-term investments | $ | 7,452 | $ | — | $ | 25 | $ | 7,427 | ||||||||
Total cash, cash equivalents, and investments | $ | 120,406 | $ | — | $ | 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 | $ | 38,257 | $ | 38,105 | ||||
Due after one through five years | 24,778 | 24,565 | ||||||
$ | 63,035 | $ | 62,670 | |||||
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 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 11,753 | $ | 13 | $ | 1,697 | $ | 3 | |||||||||
|
|
|
|
|
|
|
|
July 2, 2022.
July 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 | $ | 10,180 | $ | 82 | $ | — | $ | — | ||||||||
Certificates of deposit | 6,827 | 23 | — | — | ||||||||||||
Commercial paper | 15,932 | 39 | — | — | ||||||||||||
Corporate bonds and medium-term notes | 8,345 | 80 | 500 | 4 | ||||||||||||
Municipal bonds | 1,698 | 16 | — | — | ||||||||||||
U.S. treasury and agency securities | 11,017 | 130 | — | — | ||||||||||||
$ | 53,990 | $ | 370 | $ | 500 | $ | 4 | |||||||||
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 | ||||||
|
|
|
|
|
|
July 2, 2022.
Fair Value Measurements at July 2, 2022 | ||||||||||||
Total | Level 1 | Level 2 | ||||||||||
(In thousands) | ||||||||||||
Recurring fair value measurements: | ||||||||||||
Investment securities | ||||||||||||
Money market funds | $ | 3,591 | $ | 3,591 | $ | — | ||||||
U.S. treasury and agency securities | 11,017 | 7,521 | 3,496 | |||||||||
Asset backed securities | 10,797 | — | 10,797 | |||||||||
Certificates of deposit | 7,827 | — | 7,827 | |||||||||
Commercial paper | 17,897 | — | 17,897 | |||||||||
Corporate bonds and medium-term notes | 9,852 | — | 9,852 | |||||||||
Municipal bonds | 1,689 | — | 1,689 | |||||||||
Total recurring fair value measurements | $ | 62,670 | $ | 11,112 | $ | 51,558 | ||||||
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 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total Hedges | $ | 1,418 | $ | 1,146 | $ | 2 | $ | 8 | ||||||||||||||||
|
|
|
|
|
|
|
|
Notional Amounts | Derivative Liabilities | Derivative Assets | ||||||||||||||||||||||
Derivative Instrument | July 2, 2022 | January 1, 2022 | July 2, 2022 | January 1, 2022 | ||||||||||||||||||||
Balance Sheet Line | Fair Value | Balance Sheet Line | Fair Value | |||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Undesignated Hedges: | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 1,074 | $ | 815 | (b) | $ | 11 | (a) | $ | 14 | ||||||||||||||
Total Hedges | $ | 1,074 | $ | 815 | $ | 11 | $ | 14 | ||||||||||||||||
(a) | Other current assets |
(b) | Other accrued liabilities |
July 3, 2021.Intevac’sIntevac announced that its Board of Directors approved a stock repurchase program authorizing up to $30.0 million in repurchases. On August 20, 2018, Intevac’s Board of Directors approved a $10.0 million increase to the original stock repurchase program for an aggregate authorized amount of up to $40.0 million. At September 30, 2017, $1.5July 2, 2022, $10.4 million remains available for future stock repurchases under the repurchase program. Intevac did not make any common stock repurchases during the three and ninesix months ended September 30, 2017July 2, 2022 and October 1, 2016, respectively.
Intevac records treasury stock purchases under
Three Months Ended July 2, 2022 | ||||||||||||||||||||
Common Stock and Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||
Balance at April 2, 2022 | $ | 198,960 | $ | (29,551 | ) | $ | 371 | $ | (43,965 | ) | $ | 125,815 | ||||||||
Common stock issued under employee plans | 1,178 | — | — | — | 1,178 | |||||||||||||||
Shares withheld for net share settlement of RSUs | (160 | ) | — | — | — | (160 | ) | |||||||||||||
Equity-based compensation expense | 1,525 | — | — | — | 1,525 | |||||||||||||||
Net loss | — | — | — | (2,818 | ) | (2,818 | ) | |||||||||||||
Other comprehensive loss | — | — | (380 | ) | — | (380 | ) | |||||||||||||
Balance at July 2, 2022 | $ | 201,503 | $ | (29,551 | ) | $ | (9 | ) | $ | (46,783 | ) | $ | 125,160 | |||||||
Six Months Ended July 2, 2022 | ||||||||||||||||||||
Common Stock and Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | 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 | 2,211 | — | — | — | 2,211 | |||||||||||||||
Shares withheld for net share settlement of RSUs | (295 | ) | — | — | — | (295 | ) | |||||||||||||
Equity-based compensation expense | 489 | — | — | — | �� | 489 | ||||||||||||||
Net loss | — | — | — | (10,673 | ) | (10,673 | ) | |||||||||||||
Other comprehensive loss | — | — | (587 | ) | — | (587 | ) | |||||||||||||
Balance at July 2, 2022 | $ | 201,503 | $ | (29,551 | ) | $ | (9 | ) | $ | (46,783 | ) | $ | 125,160 | |||||||
Three Months Ended July 3, 2021 | ||||||||||||||||||||
Common Stock and Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||
Balance at April 3, 2021 | $ | 195,388 | $ | (29,551 | ) | $ | 552 | $ | (69,234 | ) | $ | 97,155 | ||||||||
Common stock issued under employee plans | 193 | — | — | — | 193 | |||||||||||||||
Shares withheld for net share settlement of RSUs | (512 | ) | — | — | — | (512 | ) | |||||||||||||
Equity-based compensation expense | 1,019 | — | — | — | 1,019 | |||||||||||||||
Net loss | — | — | — | (6,126 | ) | (6,126 | ) | |||||||||||||
Other comprehensive income | — | — | 19 | — | 19 | |||||||||||||||
Balance at July 3, 2021 | $ | 196,088 | $ | (29,551 | ) | $ | 571 | $ | (75,360 | ) | $ | 91,748 | ||||||||
Six Months Ended July 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 | 1,436 | — | — | — | 1,436 | |||||||||||||||
Shares withheld for net share settlement of RSUs | (532 | ) | — | — | — | (532 | ) | |||||||||||||
Equity-based compensation expense | 1,987 | — | — | — | 1,987 | |||||||||||||||
Net loss | — | — | — | (12,630 | ) | (12,630 | ) | |||||||||||||
Other comprehensive loss | — | — | (69 | ) | — | (69 | ) | |||||||||||||
Balance at July 3, 2021 | $ | 196,088 | $ | (29,551 | ) | $ | 571 | $ | (75,360 | ) | $ | 91,748 | ||||||||
(Loss)
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 | — | — | — | — | — | — | ||||||||||||||||||
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Net current-period other comprehensive income | 39 | 5 | 44 | 114 | 8 | 122 | ||||||||||||||||||
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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 | — | — | — | — | — | — | ||||||||||||||||||
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Net current-period other comprehensive income (loss) | (17 | ) | (16 | ) | (33 | ) | 5 | 41 | 46 | |||||||||||||||
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Ending balance | $ | 457 | $ | 1 | $ | 458 | $ | 457 | $ | 1 | $ | 458 | ||||||||||||
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INTEVAC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
July 2, 2022 | ||||||||||||||||||||||||
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 | $ | 575 | $ | (204 | ) | $ | 371 | $ | 608 | $ | (30 | ) | $ | 578 | ||||||||||
Other comprehensive loss before reclassification | (219 | ) | (161 | ) | (380 | ) | (252 | ) | (335 | ) | (587 | ) | ||||||||||||
Amounts reclassified from other comprehensive loss | — | — | — | — | — | — | ||||||||||||||||||
Net current-period other comprehensive loss | (219 | ) | (161 | ) | (380 | ) | (252 | ) | (335 | ) | (587 | ) | ||||||||||||
Ending balance | $ | 356 | $ | (365 | ) | $ | (9 | ) | $ | 356 | $ | (365 | ) | $ | (9 | ) | ||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
July 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 | $ | 534 | $ | 18 | $ | 552 | $ | 602 | $ | 38 | $ | 640 | ||||||||||||
Other comprehensive income (loss) before reclassification | 28 | (9 | ) | 19 | (40 | ) | (29 | ) | (69 | ) | ||||||||||||||
Amounts reclassified from other comprehensive income (loss) | — | — | — | — | — | — | ||||||||||||||||||
Net current-period other comprehensive income (loss) | 28 | (9 | ) | 19 | (40 | ) | (29 | ) | (69 | ) | ||||||||||||||
Ending balance | $ | 562 | $ | 9 | $ | 571 | $ | 562 | $ | 9 | $ | 571 | ||||||||||||
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 | ) | ||||||
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Weighted-average shares – basic | 21,714 | 20,869 | 21,475 | 20,704 | ||||||||||||
Effect of dilutive potential common shares | 1,256 | — | 1,514 | — | ||||||||||||
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Weighted-average shares – diluted | 22,970 | 20,869 | 22,989 | 20,704 | ||||||||||||
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Net income (loss) per share – basic | $ | 0.06 | $ | (0.02 | ) | $ | 0.19 | $ | (0.50 | ) | ||||||
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Net income (loss) per share –diluted | $ | 0.05 | $ | (0.02 | ) | $ | 0.18 | $ | (0.50 | ) | ||||||
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The following potentially dilutive securities were excluded (as common stock equivalents) from the computation
Three Months Ended | Six Months Ended | |||||||||||||||
July 2, 2022 | July 3, 2021 | July 2, 2022 | July 3, 2021 | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Net loss from continuing operations | $ | (2,580 | ) | $ | (6,124 | ) | $ | (10,300 | ) | $ | (11,692 | ) | ||||
Net loss from discontinued operations, net of taxes | $ | (238 | ) | $ | (2 | ) | $ | (373 | ) | $ | (938 | ) | ||||
Net loss | $ | (2,818 | ) | $ | (6,126 | ) | $ | (10,673 | ) | $ | (12,630 | ) | ||||
Weighted-average shares – basic | 25,141 | 24,241 | 24,970 | 24,137 | ||||||||||||
Effect of dilutive potential common shares | — | — | — | — | ||||||||||||
Weighted-average shares – diluted | 25,141 | 24,241 | 24,970 | 24,137 | ||||||||||||
Basic and diluted net loss per share: | ||||||||||||||||
Continuing operations | $ | (0.10 | ) | $ | (0.25 | ) | $ | (0.41 | ) | $ | (0.48 | ) | ||||
Discontinued operations | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.04 | ) | ||||
Net loss per share | $ | (0.11 | ) | $ | (0.25 | ) | $ | (0.43 | ) | $ | (0.52 | ) | ||||
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, each of the reportable segments. Intevac manages certain operating expenses separately at the corporate level. Intevac allocates certain of these corporate expenses to the segments in an amount equal to 3% of net revenues. Segment operating income excludes interest income/expense and other financial charges and income taxes according to how a particular reportable segment’s management is measured. Management does not consider impairment charges, gains and losses on divestitures and sales of intellectual property, and unallocated costs in measuring the performance of the reportable segments.
Contents
The Thin-film Equipment segment designs, develops and markets vacuum process equipment solutions for high-volume manufacturing
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 | ||||||||||||
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Total segment net revenues | $ | 26,726 | $ | 22,559 | $ | 88,077 | $ | 51,142 | ||||||||
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OperatingCompany’s equity instruments are considered antidilutive.
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 | ||||||||||||
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Total segment operating income (loss) | 2,630 | 739 | 8,467 | (6,461 | ) | |||||||||||
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Unallocated costs | (1,362 | ) | (1,063 | ) | (3,768 | ) | (3,986 | ) | ||||||||
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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 | ) | ||||||
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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 | ||||||
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Total segment assets | 69,183 | 55,574 | ||||||
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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 | ||||||
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Consolidated total assets | $ | 117,432 | $ | 108,324 | ||||
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Taxes
Employee Termination Costs | ||||
(In thousands) | ||||
Balance at January 1, 2022 | $ | — | ||
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 | 512 | |||
Cash payments made | (179 | ) | ||
Balance at July 2, 2022 (b) | $ | 333 | ||
(a) | Acceleration of equity awards. |
(b) | Liability for employee termination costs is included in accrued payroll and related liabilities. |
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 | ) | — | (75 | ) | |||||||
Balance at April 2, 2022 | $ | 258 | $ | 539 | $ | 797 | ||||||
Provision for restructuring charges associated with Photonics divestiture (a) | — | 4 | 4 | |||||||||
Cash payments made | (90 | ) | (77 | ) | (167 | ) | ||||||
Balance at July 2, 2022 | $ | 168 | (c) | $ | 466 | $ | 634 | |||||
(a) | Included in loss from discontinued operations (See Note 2). |
(b) | Acceleration of equity awards. |
(c) | Liability for employee termination costs is included in accrued payroll and related liabilities. |
Six Months Ended July 3, 2021 | ||||
(In thousands) | ||||
Beginning balance | $ | — | ||
Provision for restructuring reserves | 43 | |||
Cash payments made | (43 | ) | ||
Ending balance | $ | — | ||
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 |
July 3, 2021:
Three months ended | Six months ended | |||||||||||||||||||||||
July 2, 2022 | July 3, 2021 | Change over prior period | July 2, 2022 | July 3, 2021 | Change over prior period | |||||||||||||||||||
(In thousands, except percentages and per share amounts) | ||||||||||||||||||||||||
Net revenues | $ | 9,307 | $ | 5,369 | $ | 3,938 | $ | 13,752 | $ | 14,607 | $ | (855 | ) | |||||||||||
Gross profit | $ | 4,487 | $ | 1,006 | $ | 3,481 | $ | 5,209 | $ | 3,140 | $ | 2,069 | ||||||||||||
Gross margin percent | 48.2 | % | 18.7 | % | 29 points | 37.9 | % | 21.5 | % | 16 points | ||||||||||||||
Loss from operations | $ | (2,397 | ) | $ | (6,309 | ) | $ | 3,912 | $ | (10,084 | ) | $ | (11,874 | ) | $ | 1,790 | ||||||||
Loss from continuing operations | $ | (2,580 | ) | $ | (6,124 | ) | $ | 3,544 | $ | (10,300 | ) | $ | (11,692 | ) | $ | 1,392 | ||||||||
Loss from discontinued operations | $ | (238 | ) | $ | (2 | ) | $ | (236 | ) | $ | (373 | ) | $ | (938 | ) | $ | 565 | |||||||
Net loss | $ | (2,818 | ) | $ | (6,126 | ) | $ | 3,308 | $ | (10,673 | ) | $ | (12,630 | ) | $ | 1,957 | ||||||||
Net loss per diluted share | $ | (0.11 | ) | $ | (0.25 | ) | $ | 0.14 | $ | (0.43 | ) | $ | (0.52 | ) | $ | 0.09 |
Net revenues for the first nine months of fiscal 2017 increased2022 compared to the same period in the prior year primarily due to higher equipment sales to HDD PVmanufacturers. Higher gross margin in the second quarter of fiscal 2022 reflected the higher-margin contribution from HDD upgrades. Fees earned pursuant to the TSA with EOTECH since the divestiture of Photonics (“TSA fees”) were $408,000 for the three months ended July 2, 2022, of which $14,000 was reported as a reduction of cost of net revenues and cell phone manufacturers,$394,000 was reported as a reduction of selling, general and administrative expenses. The agreed-upon charges for such services are generally intended to allow the service provider to recover all costs and expenses of providing such services. The Company reported a smaller net loss for the second quarter of fiscal 2022 compared to the second quarter of fiscal 2021 due to higher Photonics contract R&Drevenues, higher gross margins and by higher Photonics product sales. Thin-film Equipment recognized revenuelower operating costs as a result of the cost reduction actions taken in the first nine monthsquarter of fiscal 2017 on four 200 LeanHDD systems, one pilot INTEVAC MATRIX™ solar ion implant system, two ENERGi solar ion implant systems and four INTEVAC VERTEX™ coating systems for DCP. Thin-film Equipment recognized revenue in2022.
Given the momentum we have built in our business, we believe that we are currently on the path to profitabilityIntevac does not expect be profitable in fiscal 2017. Intevac expects higher sales of new Thin-film Equipment products for DCP and PV and higher sales of HDD equipment. For fiscal 2017,2022. Intevac expects that Photonics business levels2022 HDD equipment sales will be at about the samesimilar to 2021 levels as 2016we expect a customer to take delivery of one system in backlog. We believe there will be improvements to our HDD equipment sales in the future as Photonics continueswe expect a customer to deliver production shipmentsstart taking deliveries from the remaining ten systems in backlog starting in fiscal 2023. However, our operating results and growth prospects could be impacted by macroeconomic conditions such as a global economic slowdown, global economic instability and political conflicts, wars, and public health crises. In addition, rising inflation and interest rates may impact demand for our products and services and our cost to provide products and services.
Intevac’s trademarks, includefiscal 2021. The Company did not receive any JSS grants in the following: “200 Lean®,” “AccuLuber™,” “EBAPS®,” “ENERGi™,”“I-Port™,” “LIVAR®,” “INTEVAC LSMA™,” “INTEVAC MATRIX™,” “MicroVista®,” “NightVista®,” “Night Port™,” “oDLC™”first half of fiscal 2022.
six months ended July 2, 2022, the Company’s expenses included approximately $16,000 and $34,000, respectively, due to costs related to actions taken in response to
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 | ||||||||||||||||||
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9,549 | 8,287 | 1,262 | 26,990 | 25,201 | 1,789 | |||||||||||||||||||
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Total net revenues | $ | 26,726 | $ | 22,559 | $ | 4,167 | $ | 88,077 | $ | 51,142 | $ | 36,935 | ||||||||||||
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Thin-film Equipment revenue
Three months ended | Six months ended | |||||||||||||||||||||||
July 2, 2022 | July 3, 2021 | Change over prior period | July 2, 2022 | July 3, 2021 | Change over prior period | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Net revenues | $ | 9,307 | $ | 5,369 | $ | 3,938 | $ | 13,752 | $ | 14,607 | $ | (855 | ) | |||||||||||
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.
2021.
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 | |||||||||
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Total backlog | $ | 72,832 | $ | 68,527 | $ | 72,937 | ||||||
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Thin-film Equipment backlog
July 2, 2022 | January 1, 2022 | July 3, 2021 | ||||||||||
(In thousands) | ||||||||||||
Backlog | $ | 100,194 | $ | 24,725 | $ | 18,943 | ||||||
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 | ||||||||||||||||||
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Total net revenues | $ | 26,726 | $ | 22,559 | $ | 4,167 | $ | 88,077 | $ | 51,142 | $ | 36,935 | ||||||||||||
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Three Months Ended | Six Months Ended | |||||||||||||||
July 2, 2022 | July 3, 2021 | July 2, 2022 | July 3, 2021 | |||||||||||||
(In thousands) | ||||||||||||||||
United States | $ | 1,656 | $ | 2,121 | $ | 1,950 | $ | 2,488 | ||||||||
Asia | 7,651 | 3,248 | 11,802 | 8,269 | ||||||||||||
Europe | — | — | — | 3,850 | ||||||||||||
Total net revenues | $ | 9,307 | $ | 5,369 | $ | 13,752 | $ | 14,607 | ||||||||
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 | Six months ended | |||||||||||||||||||||||
July 2, 2022 | July 3, 2021 | Change over prior period | July 2, 2022 | July 3, 2021 | Change over prior period | |||||||||||||||||||
(In thousands, except percentages) | ||||||||||||||||||||||||
Gross profit | $ | 4,487 | $ | 1,006 | $ | 3,481 | $ | 5,209 | $ | 3,140 | $ | 2,069 | ||||||||||||
% of net revenues | 48.2 | % | 18.7 | % | 37.9 | % | 21.5 | % |
Thin-film Equipment gross
Photonics gross margin was 36.5% in
Three months ended | Six months ended | |||||||||||||||||||||||
July 2, 2022 | July 3, 2021 | Change over prior period | July 2, 2022 | July 3, 2021 | Change over prior period | |||||||||||||||||||
1 | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Research and development expense | $ | 2,868 | $ | 3,118 | $ | (250 | ) | $ | 7,028 | $ | 6,483 | $ | 545 |
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 increasedJuly 2, 2022 decreased compared to the same periods in the prior year. Thin-film Equipmentyear primarily due to savings from cost reduction activities completed in the first quarter of fiscal 2022, offset in part by higher spending consisted primarily of PV andon DCP development. Research and developmentR&D spending decreased in Photonics during the three and ninesix months ended September 30, 2017 asJuly 2, 2022 increased compared to the same periods in the prior year. Photonics spending during the three and ninesix months ended October 1, 2016 reflected incrementalJuly 3, 2021 primarily due to $1.5 million in expenditures related to the disposal of certain lab equipment as part of the realignment effort, offset by lower 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 | Six months ended | |||||||||||||||||||||||
July 2, 2022 | July 3, 2021 | Change over prior period | July 2, 2022 | July 3, 2021 | Change over prior period | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Selling, general and administrative expense | $ | 4,016 | $ | 4,197 | $ | (181 | ) | $ | 8,265 | $ | 8,531 | $ | (266 | ) |
Three months ended | Six months ended | |||||||||||||||||||||||
July 2, 2022 | July 3, 2021 | Change over prior period | July 2, 2022 | July 3, 2021 | Change over prior period | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Interest income and other, income (expense), net | $ | 317 | $ | 20 | $ | 297 | $ | 310 | $ | 50 | $ | 260 |
Interest income and other income (expense), net
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 |
Interest income and other income (expense), net is comprised ofhigher interest income, foreign currency gains and losses, and other income and expense such as gains and losses on sales of fixed assets and earnout income from divestitures.
rates.
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 |
Three months ended | Six months ended | |||||||||||||||||||||||
July 2, 2022 | July 3, 2021 | Change over prior period | July 2, 2022 | July 3, 2021 | Change over prior period | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Provision for (benefit from) income taxes | $ | 500 | $ | (165 | ) | $ | 665 | $ | 526 | $ | (132 | ) | $ | 658 |
Three months ended | Six months ended | |||||||||||||||||||||||
July 2, 2022 | July 3, 2021 | Change over prior period | July 2, 2022 | July 3, 2021 | Change over prior period | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Loss from discontinued operations, net of taxes | $ | 238 | $ | 2 | $ | 236 | $ | 373 | $ | 938 | $ | (565 | ) |
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 | ||||||
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Total cash, cash equivalents and investments | $ | 43,399 | $ | 48,238 | ||||
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July 2, 2022 | January 1, 2022 | |||||||
(In thousands) | ||||||||
Cash and cash equivalents | $ | 53,669 | $ | 102,728 | ||||
Restricted cash | 786 | 786 | ||||||
Short-term investments | 31,168 | 10,221 | ||||||
Long-term investments | 24,565 | 7,427 | ||||||
Total cash, cash equivalents, restricted cash and investments | $ | 110,188 | $ | 121,162 | ||||
$888,000.
$295,000.
Intevac believessubject to foreign withholding taxes.
fiscal 2022 are projected to be approximately $3.7 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 |
Procedures
July 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.
We are exposed to risks associated with a highly concentrated customer base.
Historically, a significant portion
The concentration of our customer base may enable our customers to demand pricing and other terms unfavorable to Intevac, and makes us more vulnerable to changes in demand by a given customer. Orders from a relatively limited number of manufacturers have accounted for, and will likely continue to account for, a substantial portion of our revenues. The loss of one of these large customers, or delays in purchasing by them, could have a material and adverse effect on our revenues.
Our operating results fluctuate significantly from quarter to quarter, which can lead to volatility in the price of our common stock.
Our quarterly revenues and common stock price have fluctuated significantly. We anticipate that our revenues, operating margins and common stock price will continue to fluctuate for a variety of reasons, including: (1) changes in the demand, due to seasonality, cyclicality and other factors in the markets for computer systems, storage subsystems and consumer electronics containing disks as well as cell phones and PV solar cells our customers produce with our systems; (2)costly litigation, cause product shipment delays or problems in the introduction and acceptancerequire us to enter into royalty or licensing agreements. Such royalty or licensing agreements, if required, may not be available on terms acceptable to us.
Any of these, or other factors, could lead to volatility and/or a rapid change in the trading price of our common shares. In the past, securities class action litigation has been instituted against companies following periods of volatility in the market price of their securities. Any such litigation, if instituted against Intevac, could result in substantial costs and diversion of management time and attention.
Government Regulation
The Photonics business is dependent on U.S. government contracts, which
We sell our Photonics products and services directlygovernmental regulations relating to the U.S. government, as well asuse, storage, discharge, handling, emission, generation, manufacture, treatment and disposal of toxic or otherwise hazardous substances, chemicals, materials or waste. If we fail to prime contractors for various U.S. government programs. The U.S governmentcomply with current or future regulations, such failure could result in suspension of our operations, alteration of our manufacturing process, remediation costs or substantial civil penalties or criminal fines against us or our officers, directors or employees. Additionally, these regulations could require us to acquire expensive remediation or abatement equipment and incur substantial expenses to comply with them.
Funding of multi-year government programs is subjectdisruptions.
A significant portionconfidential, personal or otherwise protected information (ours or that of our U.S. government revenue is derived from fixed-price developmentemployees, customers or partners), and production contracts. Under fixed-price contracts, unexpected increases in the cost to developcorruption of data, networks 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.systems. We have experienced cost overruns incybersecurity threats and incidents involving our systems and expect these incidents to continue. While none of the past thatcybersecurity events have resulted in losses on certain contracts, and may experience additional cost overruns in the future. We are requiredbeen material to recognize the total estimated impact of cost overruns in the period in which they are first identified. Such cost overrunsdate, a successful breach or attack could have a material adverse effect on our results of operations.
Generally, government contracts contain provisions permitting termination,operations, financial condition or business, harm our reputation and relationships with our customers, business partners, employees or other third parties, and subject us to consequences such as litigation and direct costs associated with incident response. In addition, we could be impacted by cyber threats or other disruptions or vulnerabilities found in wholeproducts we use or in part, without prior notice at the government’s convenience upon the paymentour partners’ or customers’ systems that are used in connection with our business. These events, if not prevented or effectively mitigated, could damage our reputation, require remedial actions and lead to loss of compensation only for work donebusiness, regulatory actions, potential liability 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.
other financial losses.
Our success depends on international sales and the management of global operations.
In previous years, the majority of our revenues have come from regions outside the United States. Most of our international sales are to customers in Asia, which includes products shipped to overseas operations of U.S. companies. We currently have manufacturing facilities in California and Singapore and international customer support offices in Singapore, China, and Malaysia. We expect that international sales will continue to account for a significant portion of our total revenue in future years. Certain of our suppliers are also located outside the United States.
Managing our global operations presents challenges including, but not limited to, those arising from: (1) global trade issues; (2) variations in protection of intellectual property and other legal rights in different countries; (3) concerns of U.S. governmental agencies regarding possible national commercial and/or security issues posed by growing manufacturing business in Asia; (4) fluctuation of interest rates, raw material costs, labor and operating costs, and exchange rates; (5) variations in the ability to develop relationships with suppliers and other local businesses; (6) changes in the laws and regulations of the United States, including export restrictions, and other countries, as well as their interpretation and application; (7) the need to provide technical and spares support in different locations; (8) political and economic instability; (9) cultural differences; (10) varying government incentives to promote development; (11) shipping costs and delays; (12) adverse conditions in credit markets; (13) variations in tariffs, quotas, tax codes and other market barriers; and (14) barriers to movement of cash.
We must regularly assess the size, capability and location of our global infrastructure and make appropriate changes to address these issues.
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.
Our success is dependent on recruiting and retaining a highly talented work force.
Our employees are vital to our success, and our key management, engineering and other employees are difficult to replace. We do not maintain key person life insurance on any of our employees. The expansion of high technology companies worldwide has increased demand and competition for qualified personnel, and has made companies increasingly protective of prior employees. It may be difficult for us to locate employees who are not subject tonon-competition agreements and other restrictions.
The majority of our U.S. operations are located in California where the cost of living and of recruiting employees is high. Our operating results depend, in large part, upon our ability to retain and attract qualified management, engineering, marketing, manufacturing, customer support, sales and administrative personnel. Furthermore, we compete with industries such as the hard disk drive, semiconductor, and solar industries for skilled employees. Failure to retain existing key personnel, or to attract, assimilate or retain additional highly qualified employees to meet our needs in the future, could have a material and adverse effect on our business, financial condition and results of operations.
We are dependent on certain suppliers for parts used in our products.
We are a manufacturing business. Purchased parts constitute the largest component of our product cost. Our ability to manufacture depends on the timely delivery of parts, components and subassemblies from suppliers. We obtain some of the key components and subassemblies used in our products from a single supplier or a limited group of suppliers. If any of our suppliers fail to deliver quality parts on a timely basis, we may experience delays in manufacturing, which could result in delayed product deliveries, increased costs to expedite deliveries or develop alternative suppliers, or require redesign of our products to accommodate alternative suppliers. Some of our suppliers are thinly capitalized and may be vulnerable to failure.
Our business depends on the integrity of our intellectual property rights.
The success of our business depends upon the integrity of our intellectual property rights, and we cannot ensure that: (1) any of our pending or future patent applications will be allowed or that any of the allowed applications will be issued as patents or will issue with claims of the scope we sought; (2) any of our patents will not be invalidated, deemed unenforceable, circumvented or challenged; (3) the rights granted under our patents will provide competitive advantages to us; (4) other parties will not develop similar products, duplicate our products or design around our patents; or (5) our patent rights, intellectual property laws or our agreements will adequately protect our intellectual property or competitive position.
From time to time, we have received claims that we are infringing third parties’ intellectual property rights or seeking to invalidate our rights. We cannot ensure that third parties will not in the future claim that we have infringed current or future patents, trademarks or other proprietary rights relating to our products. Any claims, with or without merit, could be time-consuming, result in costly litigation, cause product shipment delays or require us to enter into royalty or licensing agreements. Such royalty or licensing agreements, if required, may not be available on terms acceptable to us.
We are subject to risks ofnon-compliance with environmental and other governmental regulations.
We are subject to a variety of governmental regulations relating to the use, storage, discharge, handling, emission, generation, manufacture, treatment and disposal of toxic or otherwise hazardous substances, chemicals, materials or waste. If we fail to comply with current or future regulations, such failure could result in suspension of our operations, alteration of our manufacturing process, remediation costs or substantial civil penalties or criminal fines against us or our officers, directors or employees. Additionally, these regulations could require us to acquire expensive remediation or abatement equipment and to incur substantial expenses to comply with them.
We are also subject to a variety of other governmental regulations and may incur significant costs associated with the compliance with these regulations. For example rules adopted by the SEC to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act impose diligence and disclosure requirements regarding the use of “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries in the products we manufacture. Compliance with these regulations is likely to result in additional costs and expenses or may affect the sourcing and availability of the components used in the products we manufacture.
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; or 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 |
* | Previously filed as an exhibit to the Company’s Report on Form 8-K filed May 19, 2022. |
** | 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. |
Date: August 4, 2022 | ||||||||
By: | /s/ | |||||||
Nigel Hunton President and Chief Executive Officer
(Principal Executive Officer) |
Date: | By: | /s/ JAMES MONIZ | ||||||
James Moniz | ||||||||
Executive Vice President, Finance and Administration, Chief Financial Officer, Secretary and Treasurer
(Principal Financial and Accounting Officer) |
40