☒ | 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 incorporation or organization) | (IRS Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock ($0.001 par value) | IVAC | The Nasdaq Stock Market LLC (Nasdaq) Global Select |
Large accelerated filer | ☐ | Accelerated filer | ||||
Non-accelerated filer | Smaller reporting company | ☒ | ||||
Emerging growth company | ☐ |
INTEVAC, INC.
INDEX
No. | Page | |||||
Item 1. | ||||||
3 | ||||||
4 | ||||||
5 | ||||||
6 | ||||||
7 | ||||||
Item 2. | ||||||
Item 3. | ||||||
31 | ||||||
Item | 31 | |||||
PART II. OTHER INFORMATION | ||||||
Item 1. | Legal Proceedings | 32 | ||||
Item 1A. | Risk Factors | 32 | ||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||||
38 | ||||||
Item 3. | Defaults Upon Senior Securities | 38 | ||||
Item 4. | Mine Safety Disclosures | 38 | ||||
Item 5. | Other Information | 38 | ||||
Item 6. | Exhibits | 38 | ||||
40 |
2
Item 1. | Financial Statements |
July 1, 2023 | December 31, 2022 | |||||||
(Unaudited) | ||||||||
(In thousands, except par value) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 43,976 | $ | 68,904 | ||||
Short-term investments | 23,626 | 25,541 | ||||||
Trade and other accounts receivable, net of allowances of $0 at both July 1, 2023 and December 31, 2022 | 20,211 | 15,823 | ||||||
Inventories | 46,293 | 30,003 | ||||||
Prepaid expenses and other current assets | 1,914 | 1,898 | ||||||
Total current assets | 136,020 | 142,169 | ||||||
Long-term investments | 5,550 | 17,585 | ||||||
Restricted cash | 785 | 786 | ||||||
Property, plant and equipment, net | 7,288 | 3,658 | ||||||
Operating lease right-of-use-assets | 2,266 | 3,390 | ||||||
Intangible assets, net of amortization of $ 110,000 at July 1, 2023 and $42,000 at December 31, 2022 | 1,022 | 1,090 | ||||||
Deferred income taxes and other long-term assets | 4,187 | 4,381 | ||||||
Total assets | $ | 157,118 | $ | 173,059 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current operating lease liabilities | $ | 2,456 | $ | 3,404 | ||||
Accounts payable | 10,421 | 11,610 | ||||||
Accrued payroll and related liabilities | 3,416 | 3,087 | ||||||
Other accrued liabilities | 1,376 | 5,430 | ||||||
Customer advances | 20,248 | 2,444 | ||||||
Total current liabilities | 37,917 | 25,975 | ||||||
Noncurrent liabilities: | ||||||||
Noncurrent operating lease liabilities | 687 | 1,417 | ||||||
Customer advances | 1,482 | 22,215 | ||||||
Other noncurrent liabilities | 29 | — | ||||||
Total noncurrent liabilities | 2,198 | 23,632 | ||||||
Stockholders’ equity: | ||||||||
Common stock, $0.001 par value | 26 | 26 | ||||||
Additional paid-in capital | 208,672 | 206,355 | ||||||
Treasury stock, 5,087 shares at both July 1, 2023 and at December 31, 2022 | (29,551 | ) | (29,551 | ) | ||||
Accumulated other comprehensive loss | (190 | ) | (193 | ) | ||||
Accumulated deficit | (61,954 | ) | (53,185 | ) | ||||
Total stockholders’ equity | 117,003 | 123,452 | ||||||
Total liabilities and stockholders’ equity | $ | 157,118 | $ | 173,059 | ||||
July 2, 2022 | January 1, 2022 | |||||||
(Unaudited) | ||||||||
(In thousands, except par value) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 53,669 | $ | 102,728 | ||||
Short-term investments | 31,168 | 10,221 | ||||||
Trade and other accounts receivable, net of allowances of $0 at both July 2, 2022 and January 1, 2022 | 30,321 | 14,261 | ||||||
Inventories | 11,771 | 5,791 | ||||||
Prepaid expenses and other current assets | 1,532 | 1,827 | ||||||
Total current assets | 128,461 | 134,828 | ||||||
Long-term investments | 24,565 | 7,427 | ||||||
Restricted cash | 786 | 786 | ||||||
Property, plant and equipment, net | 3,311 | 4,759 | ||||||
Operating lease right-of-use-assets | 3,510 | 4,520 | ||||||
Deferred income taxes and other long-term assets | 5,018 | 5,449 | ||||||
Total assets | $ | 165,651 | $ | 157,769 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current operating lease liabilities | $ | 3,199 | $ | 3,119 | ||||
Accounts payable | 3,609 | 5,320 | ||||||
Accrued payroll and related liabilities | 3,542 | 5,505 | ||||||
Other accrued liabilities | 3,042 | 3,665 | ||||||
Customer advances | 24,760 | 2,107 | ||||||
Total current liabilities | 38,152 | 19,716 | ||||||
Noncurrent liabilities: | ||||||||
Noncurrent operating lease liabilities | 2,102 | 3,675 | ||||||
Other long-term liabilities | 237 | 363 | ||||||
Total noncurrent liabilities | 2,339 | 4,038 | ||||||
Stockholders’ equity: | ||||||||
Common stock, $0.001 par value | 25 | 25 | ||||||
Additional paid-in capital | 201,478 | 199,073 | ||||||
Treasury stock, 5,087 shares at both July 2, 2022 and at January 1, 2022 | (29,551 | ) | (29,551 | ) | ||||
Accumulated other comprehensive income (loss) | (9 | ) | 578 | |||||
Accumulated deficit | (46,783 | ) | (36,110 | ) | ||||
Total stockholders’ equity | 125,160 | 134,015 | ||||||
Total liabilities and stockholders’ equity | $ | 165,651 | $ | 157,769 | ||||
Note: | Amounts as of December 31, 2022 are derived from the December 31, 2022 audited consolidated financial statements. |
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 | Six Months Ended | |||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | |||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Net revenues | $ | 10,301 | $ | 9,307 | $ | 21,843 | $ | 13,752 | ||||||||
Cost of net revenues | 7,731 | 4,820 | 14,554 | 8,543 | ||||||||||||
Gross profit | 2,570 | 4,487 | 7,289 | 5,209 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 3,647 | 2,868 | 7,620 | 7,028 | ||||||||||||
Selling, general and administrative | 4,375 | 4,016 | 9,575 | 8,265 | ||||||||||||
Total operating expenses | 8,022 | 6,884 | 17,195 | 15,293 | ||||||||||||
Loss from operations | (5,452 | ) | (2,397 | ) | (9,906 | ) | (10,084 | ) | ||||||||
Interest income and other income (expense), net | 650 | 317 | 1,322 | 310 | ||||||||||||
Loss from continuing operations before provision for income taxes | (4,802 | ) | (2,080 | ) | (8,584 | ) | (9,774 | ) | ||||||||
Provision for income taxes | 116 | 500 | 502 | 526 | ||||||||||||
Net loss from continuing operations, net of taxes | (4,918 | ) | (2,580 | ) | (9,086 | ) | (10,300 | ) | ||||||||
Net income (loss) from discontinued operations, net of taxes | 40 | (238 | ) | 317 | (373 | ) | ||||||||||
Net loss | $ | (4,878 | ) | $ | (2,818 | ) | $ | (8,769 | ) | $ | (10,673 | ) | ||||
Net income (loss) per share: | ||||||||||||||||
Basic and diluted – continuing operations | $ | (0.19 | ) | $ | (0.10 | ) | $ | (0.35 | ) | $ | (0.41 | ) | ||||
Basic and diluted – discontinued operations | $ | 0.00 | $ | (0.01 | ) | $ | 0.01 | $ | (0.01 | ) | ||||||
Basic and diluted – net loss | $ | (0.19 | ) | $ | (0.11 | ) | $ | (0.34 | ) | $ | (0.43 | ) | ||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic and diluted | 26,032 | 25,141 | 25,907 | 24,970 |
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 | ) | ||||
Three Months Ended | Six Months Ended | |||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | |||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands) | ||||||||||||||||
Net loss | $ | (4,878 | ) | $ | (2,818 | ) | $ | (8,769 | ) | $ | (10,673 | ) | ||||
Other comprehensive income (loss), before tax: | ||||||||||||||||
Change in unrealized net gain (loss) on available-for-sale | 53 | (161 | ) | 222 | (335 | ) | ||||||||||
Foreign currency translation losses | (229 | ) | (219 | ) | (219 | ) | (252 | ) | ||||||||
Other comprehensive income (loss), before tax | (176 | ) | (380 | ) | 3 | (587 | ) | |||||||||
Income taxes related to items in other comprehensive income (loss) | — | — | — | — | ||||||||||||
Other comprehensive income (loss), net of tax | (176 | ) | (380 | ) | 3 | (587 | ) | |||||||||
Comprehensive loss | $ | (5,054 | ) | $ | (3,198 | ) | $ | (8,766 | ) | $ | (11,260 | ) | ||||
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 | $ | — | ||||
Six months ended | ||||||||
July 1, 2023 | July 2, 2022 | |||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
Operating activities | ||||||||
Net loss | $ | (8,769 | ) | $ | (10,673 | ) | ||
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: | ||||||||
Depreciation and amortization | 681 | 776 | ||||||
Amortization of intangible assets | 68 | — | ||||||
Net amortization (accretion) of investment premiums and discounts | (108 | ) | (20 | ) | ||||
Equity-based compensation | 3,076 | 489 | ||||||
Straight-line rent adjustment and amortization of lease incentives | (554 | ) | (483 | ) | ||||
Deferred income taxes | 183 | 345 | ||||||
(Gain) loss on disposal of equipment | (41 | ) | 1,453 | |||||
Changes in operating assets and liabilities | (27,931 | ) | (3,322 | ) | ||||
Total adjustments | (24,626 | ) | (762 | ) | ||||
Net cash and cash equivalents used in operating activities | (33,395 | ) | (11,435 | ) | ||||
Investing activities | ||||||||
Purchases of investments | (9,099 | ) | (45,663 | ) | ||||
Proceeds from sales and maturities of investments | 23,029 | 7,263 | ||||||
Proceeds from sales of fixed assets | 65 | — | ||||||
Purchases of leasehold improvements and equipment | (4,335 | ) | (888 | ) | ||||
Net cash and cash equivalents provided by (used in) investing activities | 9,660 | (39,288 | ) | |||||
Financing activities | ||||||||
Net proceeds from issuance of common stock | 838 | 2,211 | ||||||
Payment of acquisition-related contingent consideration | (250 | ) | — | |||||
Taxes paid related to net share settlement | (1,563 | ) | (295 | ) | ||||
Net cash and cash equivalents provided by (used in) financing activities | (975 | ) | 1,916 | |||||
Effect of exchange rate changes on cash and cash equivalents | (219 | ) | (252 | ) | ||||
Net decrease in cash, cash equivalents and restricted cash | (24,929 | ) | (49,059 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 69,690 | 103,514 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 44,761 | $ | 54,455 | ||||
Non-cash investing and financing activity | ||||||||
Additions to right-of-use-assets | $ | — | $ | 94 | ||||
1. | Description of Business, and Significant Accounting Policy |
2. | Divestiture and Discontinued Operations |
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 1, 2023 | July 2, 2022 | July 1, 2023 | July, 2022 | |||||||||||||
(In thousands) | ||||||||||||||||
Selling, general and administrative | $ | (40 | ) | $ | 238 | $ | (317 | ) | $ | 373 | ||||||
Total operating expenses | (40 | ) | 238 | (317 | ) | 373 | ||||||||||
Operating income (loss) – discontinued operations | 40 | (238 | ) | 317 | (373 | ) | ||||||||||
Other income (expense) – discontinued operations | — | — | — | — | ||||||||||||
Income (loss) from discontinued operations before provision for income taxes | 40 | (238 | ) | 317 | (373 | ) | ||||||||||
Provision for income taxes | — | — | — | — | ||||||||||||
Net income (loss) from discontinued operations, net of taxes | $ | 40 | $ | (238 | ) | $ | 317 | $ | (373 | ) | ||||||
Three Months Ended | Six Months Ended | |||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | |||||||||||||
(In thousands) | ||||||||||||||||
Equity-based compensation | $ | — | $ | 39 | $ | (260 | ) | $ | (291 | ) |
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 | ||||||||||||||||
Three Months Ended July 1, 2023 | Three Months Ended July 2, 2022 | |||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
HDD | PV | ASP | Total | HDD | DCP | PV | Total | |||||||||||||||||||||||||
Systems, upgrades and spare parts | $ | 9,351 | $ | 10 | $ | 11 | $ | 9,372 | $ | 7,756 | $ | 1 | $ | 82 | $ | 7,839 | ||||||||||||||||
Field service | 929 | — | — | 929 | 1,421 | 43 | 4 | 1,468 | ||||||||||||||||||||||||
Total net revenues | $ | 10,280 | $ | 10 | $ | 11 | $ | 10,301 | $ | 9,177 | $ | 44 | $ | 86 | $ | 9,307 | ||||||||||||||||
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 | ||||||||||||||||||
Six Months Ended July 1, 2023 | Six Months Ended July 2, 2022 | |||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
HDD | PV | ASP | Total | HDD | DCP | PV | Total | |||||||||||||||||||||||||
Systems, upgrades and spare parts | $ | 19,868 | $ | 28 | $ | 11 | $ | 19,907 | $ | 10,879 | $ | 1 | $ | 135 | $ | 11,015 | ||||||||||||||||
Field service | 1,936 | — | — | 1,936 | 2,684 | 43 | 10 | 2,737 | ||||||||||||||||||||||||
Total net revenues | $ | 21,804 | $ | 28 | $ | 11 | $ | 21,843 | $ | 13,563 | $ | 44 | $ | 145 | $ | 13,752 | ||||||||||||||||
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 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | |||||||||||||
(In thousands) | ||||||||||||||||
United States | $ | 662 | $ | 1,656 | $ | 2,276 | $ | 1,950 | ||||||||
Asia | 9,628 | 7,651 | 19,556 | 11,802 | ||||||||||||
Europe | 11 | — | 11 | — | ||||||||||||
Total net revenues | $ | 10,301 | $ | 9,307 | $ | 21,843 | $ | 13,752 | ||||||||
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 | ||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | |||||||||||||
(In thousands) | ||||||||||||||||
Products transferred at a point in time | $ | 10,301 | $ | 9,307 | $ | 21,843 | $ | 13,752 | ||||||||
Products and services transferred over time | — | — | — | — | ||||||||||||
Total net revenues | $ | 10,301 | $ | 9,307 | $ | 21,843 | $ | 13,752 | ||||||||
July 1, 2023 | December 31, 2022 | Six Months Change | ||||||||||
(In thousands) | ||||||||||||
Contract assets: | ||||||||||||
Accounts receivable, unbilled | $ | 1,023 | $ | 424 | $ | 599 | ||||||
Contract liabilities: | ||||||||||||
Deferred revenue | $ | 310 | $ | 2,446 | $ | (2,136 | ) | |||||
Customer advances | 21,730 | 24,659 | (2,929 | ) | ||||||||
$ | 22,040 | $ | 27,105 | $ | (5,065 | ) | ||||||
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 |
July 1, | December 31, | |||||||
2023 | 2022 | |||||||
(In thousands) | ||||||||
Raw materials | $ | 35,419 | $ | 19,116 | ||||
Work-in-progress | 10,860 | 9,499 | ||||||
Finished goods | 14 | 1,388 | ||||||
$ | 46,293 | $ | 30,003 | |||||
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 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
July 2, 2022 | July 3, 2021 | July 2, 2022 | July 3, 2021 | July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | |||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||||||
Equity-based compensation by type of award: | ||||||||||||||||||||||||||||||||
Stock options | $ | 8 | $ | 57 | $ | (163 | ) | $ | 132 | $ | 2 | $ | 8 | $ | (11 | ) | $ | (163 | ) | |||||||||||||
RSUs | 1,295 | 656 | 567 | 1,200 | 756 | 729 | 1,355 | 336 | ||||||||||||||||||||||||
PRSUs | 534 | 566 | 1,332 | 231 | ||||||||||||||||||||||||||||
ESPP purchase rights | 222 | 306 | 85 | 655 | 203 | 222 | 400 | 85 | ||||||||||||||||||||||||
Total equity-based compensation | $ | 1,525 | $ | 1,019 | $ | 489 | $ | 1,987 | $ | 1,495 | $ | 1,525 | $ | 3,076 | $ | 489 | ||||||||||||||||
(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 ($260,000) for the six months ended July 1, 2023. Equity-based compensation reported in discontinued operations of $39,000 and ($291,000) for the three and six months ended July 2, 2022, 2. Divestiture and Discontinued Operations.) |
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 | |||||
Shares | Weighted-Average Exercise Price | |||||||
Options outstanding at December 31, 2022 | 383,099 | $ | 7.07 | |||||
Options cancelled and forfeited | (41,593 | ) | $ | 10.59 | ||||
Options exercised | (52,813 | ) | $ | 5.15 | ||||
Options outstanding at July 1, 2023 | 288,693 | $ | 6.91 | |||||
Options exercisable at July 1, 2023 | 288,568 | $ | 6.91 | |||||
Six Months Ended | ||||||||||||||||
July 2, 2022 | July 3, 2021 | Six Months Ended | ||||||||||||||
July 1, 2023 | July 2, 2022 | |||||||||||||||
ESPP Purchase Rights: | ||||||||||||||||
Weighted-average fair value of grants per share | $ | 1.85 | $ | 2.69 | $ | 2.23 | $ | 1.85 | ||||||||
Expected volatility | 60.36 | % | 58.56 | % | 34.20 | % | 60.36 | % | ||||||||
Risk-free interest rate | 0.98 | % | 0.08 | % | 4.47 | % | 0.98 | % | ||||||||
Expected term of purchase rights (in years) | 1.2 | 1.0 | 1.0 | 1.2 | ||||||||||||
Dividend yield | NaN | NaN | None | None |
Shares | Weighted-Average Grant Date Fair Value | Shares | Weighted-Average Grant Date Fair Value | |||||||||||||
Non-vested RSUs at January 1, 2022 | 1,033,436 | $ | 5.59 | |||||||||||||
Non-vested RSUs at December 31, 2022 | 1,309,792 | $ | 5.14 | |||||||||||||
Granted | 1,756,267 | $ | 4.36 | 277,269 | $ | 5.40 | ||||||||||
Vested | (211,889 | ) | $ | 5.47 | (442,823 | ) | $ | 5.21 | ||||||||
Cancelled and forfeited | (533,199 | ) | $ | 5.65 | (74,185 | ) | $ | 5.49 | ||||||||
Non-vested RSUs at July 2, 2022 | 2,044,615 | $ | 4.53 | |||||||||||||
Non-vested RSUs at July 1, 2023 | 1,070,053 | $ | 5.15 | |||||||||||||
Shares | Weighted-Average Grant Date Fair Value | |||||||
Non-vested PRSUs at December 31, 2022 | 1,089,339 | $ | 3.54 | |||||
Granted | 525,656 | $ | 4.92 | |||||
Vested | (190,903 | ) | $ | 4.26 | ||||
Cancelled and forfeited | (7,929 | ) | $ | 6.13 | ||||
Non-vested PRSUs at July 1, 2023 | 1,416,163 | $ | 3.94 | |||||
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 |
Three and Six 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 | None |
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 | 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 | ||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | |||||||||||||
(In thousands) | ||||||||||||||||
Opening balance | $ | 177 | $ | 249 | $ | 163 | $ | 346 | ||||||||
Expenditures incurred under warranties | (67 | ) | (54 | ) | (165 | ) | (225 | ) | ||||||||
Accruals for product warranties issued during the reporting period | 72 | 36 | 172 | 72 | ||||||||||||
Adjustments to previously existing warranty accruals | (1 | ) | (17 | ) | 11 | 21 | ||||||||||
Closing balance | $ | 181 | $ | 214 | $ | 181 | $ | 214 | ||||||||
July 2 2022 | January 1 2022 | July 1 2023 | December 31 2022 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Other accrued liabilities | $ | 199 | $ | 301 | $ | 152 | $ | 163 | ||||||||
Other long-term liabilities | 15 | 45 | ||||||||||||||
Other noncurrent liabilities | 29 | — | ||||||||||||||
Total warranty provision | $ | 214 | $ | 346 | $ | 181 | $ | 163 | ||||||||
7. | Guarantees |
8. | Cash, Cash Equivalents and Investments |
July 1, 2023 | ||||||||||||||||
Amortized Cost | Unrealized Holding Gains | Unrealized Holding Losses | Fair Value | |||||||||||||
(In thousands) | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash | $ | 22,389 | $ | — | $ | — | $ | 22,389 | ||||||||
Money market funds | 16,188 | — | — | 16,188 | ||||||||||||
Commercial paper | 5,401 | — | 2 | 5,399 | ||||||||||||
Total cash and cash equivalents | $ | 43,978 | $ | — | $ | 2 | $ | 43,976 | ||||||||
Short-term investments: | ||||||||||||||||
Asset-backed securities | $ | 1,015 | $ | — | $ | 1 | $ | 1,014 | ||||||||
Certificates of deposit | 1,700 | — | 1 | 1,699 | ||||||||||||
Commercial paper | 5,212 | — | 3 | 5,209 | ||||||||||||
Corporate bonds and medium-term notes | 5,673 | — | 101 | 5,572 | ||||||||||||
Municipal bonds | 1,220 | — | 13 | 1,207 | ||||||||||||
U.S. treasury securities | 9,024 | — | 99 | 8,925 | ||||||||||||
Total short-term investments | $ | 23,844 | $ | — | $ | 218 | $ | 23,626 | ||||||||
Long-term investments: | ||||||||||||||||
Asset-backed securities | $ | 3,162 | $ | — | $ | 29 | $ | 3,133 | ||||||||
Corporate bonds and medium-term notes | 2,430 | — | 13 | 2,417 | ||||||||||||
Total long-term investments | $ | 5,592 | $ | — | $ | 42 | $ | 5,550 | ||||||||
Total cash, cash equivalents, and investments | $ | 73,414 | $ | — | $ | 262 | $ | 73,152 | ||||||||
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 | ||||||||
December 31, 2022 | ||||||||||||||||
Amortized Cost | Unrealized Holding Gains | Unrealized Holding Losses | Fair Value | |||||||||||||
(In thousands) | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash | $ | 26,465 | $ | — | $ | — | $ | 26,465 | ||||||||
Money market funds | 9,589 | — | — | 9,589 | ||||||||||||
Commercial paper | 32,856 | — | 6 | 32,850 | ||||||||||||
Total cash and cash equivalents | $ | 68,910 | $ | — | $ | 6 | $ | 68,904 | ||||||||
Short-term investments: | ||||||||||||||||
Asset-backed securities | $ | 2,012 | $ | — | $ | 13 | $ | 1,999 | ||||||||
Certificates of deposit | 3,850 | — | 10 | 3,840 | ||||||||||||
Commercial paper | 9,443 | — | 28 | 9,415 | ||||||||||||
Corporate bonds and medium-term notes | 4,210 | — | 32 | 4,178 | ||||||||||||
Municipal bonds | 1,486 | — | 25 | 1,461 | ||||||||||||
U.S. treasury securities | 4,771 | — | 123 | 4,648 | ||||||||||||
Total short-term investments | $ | 25,772 | $ | — | $ | 231 | $ | 25,541 | ||||||||
Long-term investments: | ||||||||||||||||
Asset-backed securities | $ | 6,749 | $ | — | $ | 85 | $ | 6,664 | ||||||||
Corporate bonds and medium-term notes | 5,366 | — | 102 | 5,264 | ||||||||||||
Municipal bonds | 224 | — | 6 | 218 | ||||||||||||
U.S. treasury and agency securities | 5,493 | — | 54 | 5,439 | ||||||||||||
Total long-term investments | $ | 17,832 | $ | — | $ | 247 | $ | 17,585 | ||||||||
Total cash, cash equivalents, and investments | $ | 112,514 | $ | — | $ | 484 | $ | 112,030 | ||||||||
Amortized Cost | Fair Value | |||||||
(In thousands) | ||||||||
Due in one year or less | $ | 45,433 | $ | 45,213 | ||||
Due after one through five years | 5,592 | 5,550 | ||||||
$ | 51,025 | $ | 50,763 | |||||
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 | |||||
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 | |||||||||
July 1, 2023 | ||||||||||||||||
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 | $ | 288 | $ | 2 | $ | 3,778 | $ | 28 | ||||||||
Certificates of deposit | 499 | 1 | — | — | ||||||||||||
Commercial paper | 9,458 | 5 | — | — | ||||||||||||
Corporate bonds and medium-term notes | 3,171 | 30 | 4,103 | 84 | ||||||||||||
Municipal bonds | — | — | 1,207 | 13 | ||||||||||||
U.S. treasury securities | 4,025 | 4 | 4,900 | 95 | ||||||||||||
$ | 17,441 | $ | 42 | $ | 13,988 | $ | 220 | |||||||||
Fair Value Measurements at July 1, 2023 | ||||||||||||
Total | Level 1 | Level 2 | ||||||||||
(In thousands) | ||||||||||||
Recurring fair value measurements: | ||||||||||||
Investment securities | ||||||||||||
Money market funds | $ | 16,188 | $ | 16,188 | $ | — | ||||||
U.S. treasury and agency securities | 8,925 | 5,429 | 3,496 | |||||||||
Asset-backed securities | 4,147 | — | 4,147 | |||||||||
Certificates of deposit | 1,699 | — | 1,699 | |||||||||
Commercial paper | 10,608 | — | 10,608 | |||||||||
Corporate bonds and medium-term notes | 7,989 | — | 7,989 | |||||||||
Municipal bonds | 1,207 | — | 1,207 | |||||||||
Total recurring fair value measurements | $ | 50,763 | $ | 21,617 | $ | 29,146 | ||||||
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 | ||||||
9. | Derivative Instruments |
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 | ||||||||||||||||
Notional Amounts | Derivative Liabilities | Derivative Assets | ||||||||||||||||||||||
Derivative Instrument | July 1, 2023 | December 31, 2022 | July 1, 2023 | December 31, 2022 | ||||||||||||||||||||
Balance Sheet Line | Fair Value | Balance Sheet Line | Fair Value | |||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Undesignated Hedges: | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 1,258 | 2,240 | b | $ | 6 | a | $ | 44 | |||||||||||||||
Total Hedges | $ | 1,258 | 2,240 | $ | 6 | $ | 44 | |||||||||||||||||
Other current assets |
b | Other accrued liabilities |
10. | Equity |
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 | |||||||
Three Months Ended July 1, 2023 | ||||||||||||||||||||
Common Stock and Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||
Balance at April 1, 2023 | $ | 207,489 | $ | (29,551 | ) | $ | (14 | ) | $ | (57,076 | ) | $ | 120,848 | |||||||
Common stock issued under employee plans | 3 | — | — | — | 3 | |||||||||||||||
Shares withheld for net share settlement of RSUs | (289 | ) | — | — | — | (289 | ) | |||||||||||||
Equity-based compensation expense | 1,495 | — | — | — | 1,495 | |||||||||||||||
Net loss | — | — | — | (4,878 | ) | (4,878 | ) | |||||||||||||
Other comprehensive loss | — | — | (176 | ) | — | (176 | ) | |||||||||||||
Balance at July 1, 2023 | $ | 208,698 | $ | (29,551 | ) | $ | (190 | ) | $ | (61,954 | ) | $ | 117,003 | |||||||
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 | |||||||
Six Months Ended July 1, 2023 | ||||||||||||||||||||
Common Stock and Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||
Balance at December 31, 2022 | $ | 206,381 | $ | (29,551 | ) | $ | (193 | ) | $ | (53,185 | ) | $ | 123,452 | |||||||
Common stock issued under employee plans | 804 | — | — | — | 804 | |||||||||||||||
Shares withheld for net share settlement of RSUs | (1,563 | ) | — | — | — | (1,563 | ) | |||||||||||||
Equity-based compensation expense | 3,076 | — | — | — | 3,076 | |||||||||||||||
Net loss | — | — | — | (8,769 | ) | (8,769 | ) | |||||||||||||
Other comprehensive loss | — | — | 3 | — | 3 | |||||||||||||||
Balance at July 1, 2023 | $ | 208,698 | $ | (29,551 | ) | $ | (190 | ) | $ | (61,954 | ) | $ | 117,003 | |||||||
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 | ||||||||
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 | 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 1, 2023 | ||||||||||||||||||||||||
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 | $ | 301 | $ | (315 | ) | $ | (14 | ) | $ | 291 | $ | (484 | ) | $ | (193 | ) | ||||||||
Other comprehensive income (loss) before reclassification | (229 | ) | 53 | (176 | ) | (219 | ) | 222 | 3 | |||||||||||||||
Amounts reclassified from other comprehensive income (loss) | — | — | — | — | — | — | ||||||||||||||||||
Net current-period other comprehensive income (loss) | (229 | ) | 53 | (176 | ) | (219 | ) | 222 | 3 | |||||||||||||||
Ending balance | $ | 72 | $ | (262 | ) | $ | (190 | ) | $ | 72 | $ | (262 | ) | $ | (190 | ) | ||||||||
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 | 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 | ) | ||||||||
11. | Net Loss Per Share |
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 | Six Months Ended | |||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Net loss from continuing operations | $ | (4,918 | ) | $ | (2,580 | ) | $ | (9,086 | ) | $ | (10,300 | ) | ||||
Net income (loss) from discontinued operations, net of taxes | $ | 40 | $ | (238 | ) | $ | 317 | $ | (373 | ) | ||||||
Net loss | $ | (4,878 | ) | $ | (2,818 | ) | $ | (8,769 | ) | $ | (10,673 | ) | ||||
Weighted-average shares – basic | 26,032 | 25,141 | 25,907 | 24,970 | ||||||||||||
Effect of dilutive potential common shares | — | — | — | — | ||||||||||||
Weighted-average shares – diluted | 26,032 | 25,141 | 25,907 | 24,970 | ||||||||||||
Basic and diluted net income (loss) per share: | ||||||||||||||||
Continuing operations | $ | (0.19 | ) | $ | (0.10 | ) | $ | (0.35 | ) | $ | (0.41 | ) | ||||
Discontinued operations | $ | 0.00 | $ | (0.01 | ) | $ | 0.01 | $ | (0.01 | ) | ||||||
Net loss per share | $ | (0.19 | ) | $ | (0.11 | ) | $ | (0.34 | ) | $ | (0.43 | ) | ||||
12. | Income Taxes |
13. | Restructuring and Other Costs, Net |
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 | Other Exit Costs | |||||||||||||
(In thousands) | ||||||||||||||||
(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 | ||||||||||
Balance at December 31, 2022 | $ | 318 | ||||||||||||||
Provision for restructuring charges associated with Photonics divestiture (a) | — | 4 | 4 | 3 | ||||||||||||
Cash payments made | (90 | ) | (77 | ) | (167 | ) | (81 | ) | ||||||||
Balance at July 2, 2022 | $ | 168 | (c) | $ | 466 | $ | 634 | |||||||||
Balance at April 1, 2023 | $ | 240 | ||||||||||||||
Provision for restructuring charges associated with Photonics divestiture (a) | 2 | |||||||||||||||
Cash payments made | (80 | ) | ||||||||||||||
Balance at July 1, 2023 | $ | 162 | ||||||||||||||
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. |
14. | Acquisition of Hia, Inc. |
Gross carrying amount at July 1, 2023 | $ | 1,132 | ||
Accumulated amortization | (110 | ) | ||
Net carrying amount at July 1, 2023 | $ | 1,022 | ||
15. | Commitments and Contingencies | |||
Subsequent Event |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
This Quarterly Report on Form
Intevac’s trademarks include the following: “200 Lean
Discontinued Operations
On December 30, 2021, the Company completed the sale of its Photonics business to EOTECH, LLC, a Michigan limited liability company (“EOTECH”). As a result of the disposition, the results of operations from the Photonics reporting segment are reported as “Net loss from discontinued operations, net of taxes” in the condensed consolidated financial statements. The Company has recast prior period amounts presented to provide visibility and comparability. All discussion herein, unless otherwise noted, refers to Intevac’s remaining operating segment after the disposition, the Thin Film Equipment (“TFE”) business. See Note 2 “Divestiture and Discontinued Operations” to the condensed consolidated financial statements in Item 1 of this Quarterly Report on Form
Overview
Intevac is a provider of vacuum deposition equipment for a wide variety of thin-film applications. The Company leverages its core capabilities in high-volume manufacturing of small substrates to provide process manufacturing equipment solutions to the hard disk drive (“HDD”) and display cover panel (“DCP”) industries. Intevac’s customers include manufacturers of hard disk media and DCPs. Intevac 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 customers. Intevac’s products are highly technical and are sold primarily through Intevac’s direct sales force.
Intevac’s results of operations are driven by a number of factors including success in its equipment growth initiatives in the DCP market and by worldwide demand for HDDs. Demand for HDDs depends on the growth in digital data creation and storage, the rate of areal density improvements, and the
In March 2022, the Company’s managementCompany approved and implemented a restructuring planprogram to realign the Company’s operational focus, scale the business and improve costs. The restructuring program includes (i) reducing the Company’s headcount and (ii) eliminating several research and development (“R&D”) programs and product offerings. As part of this realignment effort, the Company will no longer be pursuingceased its efforts to develop and market several of its manufacturing platforms for the DCP, projects including the coating of the backside covers of smartphones, solar ion implantation (also known as ENERGi
24
The following table presents certain significant measurements for the three and six months ended July 2, 20221, 2023 and 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 |
Three months ended | Six months ended | |||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | Change over prior period | July 1, 2023 | July 2, 2022 | Change over prior period | |||||||||||||||||||
(In thousands, except percentages and per share amounts) | ||||||||||||||||||||||||
Net revenues | $ | 10,301 | $ | 9,307 | $ | 994 | $ | 21,843 | $ | 13,752 | $ | 8,091 | ||||||||||||
Gross profit | $ | 2,570 | $ | 4,487 | $ | (1,917 | ) | $ | 7,289 | $ | 5,209 | $ | 2,080 | |||||||||||
Gross margin percent | 24.9 | % | 48.2 | % | (23.3) points | 33.4 | % | 37.9 | % | (4.5) points | ||||||||||||||
Loss from operations | $ | (5,452 | ) | $ | (2,397 | ) | $ | (3,055 | ) | $ | (9,906 | ) | $ | (10,084 | ) | $ | 178 | |||||||
Loss from continuing operations | $ | (4,918 | ) | $ | (2,580 | ) | $ | (2,338 | ) | $ | (9,086 | ) | $ | (10,300 | ) | $ | 1,214 | |||||||
Income (loss) from discontinued operations | $ | 40 | $ | (238 | ) | $ | 278 | $ | 317 | $ | (373 | ) | $ | 690 | ||||||||||
Net loss | $ | (4,878 | ) | $ | (2,818 | ) | $ | (2,060 | ) | $ | (8,769 | ) | $ | (10,673 | ) | $ | 1,904 | |||||||
Net loss per diluted share | $ | (0.19 | ) | $ | (0.11 | ) | $ | (0.08 | ) | $ | (0.34 | ) | $ | (0.43 | ) | $ | 0.09 |
Net revenues increased during the second quarter of fiscal 2022three and six months ended July 1, 2023 compared to the same periodperiods in the prior year primarily due to higher equipment sales tosystems sales. We recognized revenue on one 200 Lean HDD manufacturers. Higher gross marginsystem and one refurbished 200 Lean HDD system 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 $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 revenues, higher gross margins and lower operating costs as a result of the cost reduction actions taken in the first quarter of fiscal 2022.
We believe fiscal 20222023 will continue to be a challenging year, and Intevac does not expect to be profitable in fiscal 2022. Intevac expects2023. While we expect that 2022 HDD equipment sales will be similar to 2021higher in 2023 than 2022 levels, as we expect a customer to take delivery of one system in backlog. We believe there will be improvements to ourthat HDD equipment sales in 2024 will be lower than 2023 levels. We expect to begin recognizing revenue from our TRIO platform in fiscal 2024. In May 2023, a customer cancelled an order for eight 200 Lean HDD systems and we recorded a backlog reduction of $54.6 million. Additionally, in the future assecond half of 2023 and into the beginning of 2024, we expect ato recognize cancellation charges associated with the cancelled order as the associated customer contract requires the customer to start taking deliveries frompay us a prorated price based upon the remaining ten systems in backlog starting in fiscal 2023. However, our operatingpercentage of work completed on the order.
Our results of operations 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, risingRising inflation and interest rates may impact demand for our products and services and our cost to provide products and services.
Results of Operations
Net revenues
Three months ended | Six months ended | |||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | Change over prior period | July 1, 2023 | July 2, 2022 | Change over prior period | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Net revenues | $ | 10,301 | $ | 9,307 | $ | 994 | $ | 21,843 | $ | 13,752 | $ | 8,091 | ||||||||||||
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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 | ) | |||||||||||
Revenue for the three months ended July 2, 20221, 2023 increased compared to the same period in the prior year as a result of higher sales of systems, offset in part by lower sales of technology upgrades, spare parts and field service. Revenue for the six months ended July 2, 2022 decreased1, 2023 increased compared to the same period in the prior year as a result of lowerhigher sales of systems spare parts and service,technology upgrades, offset in part by higherlower sales technology upgrades.of spare parts and field service.We recognized revenue on one 200 Lean HDD system and one refurbished 200 Lean HDD system for each of the three and six months ended July 1, 2023. Revenue for the three months ended July 2, 2022 and July 3, 2021 did not include revenue recognized for any systems. Revenue for the six months ended July 2, 2022 did not include revenue recognized for any systems compared to revenue recognized on one MATRIX PVD system for advanced semiconductor packaging in the first half of fiscal 2021.
Backlog
July 2, 2022 | January 1, 2022 | July 3, 2021 | ||||||||||
(In thousands) | ||||||||||||
Backlog | $ | 100,194 | $ | 24,725 | $ | 18,943 | ||||||
July 1, 2023 | December 31, 2022 | July 2, 2022 | ||||||||||
(In thousands) | ||||||||||||
Backlog | $ | 58,157 | $ | 121,743 | $ | 100,194 | ||||||
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Backlog at July1, 2023 included two 200 Lean HDD systems. Backlog at both December 31, 2022 and July 2, 2022 included eleven 200 Lean HDD systems. Backlog at January 1, 2022 included oneIn May 2023, a customer cancelled an order for eight 200 Lean HDD system. Backlog atsystems and we recorded a backlog reduction of $54.6 million. Our HDD revenues through the remainder of 2023 are expected to consist primarily of HDD upgrade sales, spare parts sales and field service sales. On July 3, 2021 did1, 2023, we had $58.2 million of backlog and expect to recognize as revenue: 37.9% in 2023 and 62.1% in 2024. However, our customers may cancel their contracts with us prior to contract completion. In the case of a termination for convenience, we would not include any 200 Lean HDD systems.
Revenue by geographic region
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 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | |||||||||||||
(In thousands) | ||||||||||||||||
United States | $ | 662 | $ | 1,656 | $ | 2,276 | $ | 1,950 | ||||||||
Asia | 9,628 | 7,651 | 19,556 | 11,802 | ||||||||||||
Europe | 11 | — | 11 | — | ||||||||||||
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Total net revenues | $ | 10,301 | $ | 9,307 | $ | 21,843 | $ | 13,752 | ||||||||
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International sales include products shipped to overseas operations of U.S. companies. The decrease in sales to the U.S. region in the three months ended July 1, 2023 versus the three months ended July 2, 2022, reflected lower HDD upgrade sales, lower spare parts and lower field service sales. The increase in sales to the U.S. region in the six months ended July 1, 2023 versus the six months ended July 2, 2022, reflected higher HDD upgrade sales, offset in part by lower spare parts and lower field service sales. The increase in sales to the Asia region in the three months ended July 1, 2023 versus the three months ended July 2, 2022, reflected higher HDD system sales, offset in part by lower upgrade, spare parts and field service sales. The increase in sales to the Asia region in the six months ended July 1, 2023 versus the six months ended July 2, 2022, reflected higher HDD system and higher upgrade sales, offset in part by lower spare parts and field service sales. Sales to the Asia region for each of the three and six months ended July 3, 2021, reflected lower1, 2023 included one 200 Lean HDD upgrade sales, offset in part by higher spare partssystem and service sales. The increase in salesone refurbished 200 Lean HDD system. Sales to the Asia region in the three and six months ended July 2, 2022, versus the three and six months ended July 3, 2021, reflected higher HDD upgrade, spare parts and service sales. Sales to the Asia region in all periods presented did not include any systems. Sales to the Europe region in the six months ended July 3, 2021 included one MATRIX PVD system for advanced semiconductor packaging.
Gross profit
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(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 | % |
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(In thousands, except percentages) | ||||||||||||||||||||||||
Gross profit | $ | 2,570 | $ | 4,487 | $ | (1,917 | ) | $ | 7,289 | $ | 5,209 | $ | 2,080 | |||||||||||
% of net revenues | 24.9 | % | 48.2 | % | 33.4 | % | 37.9 | % |
Cost of net revenues consists primarily of purchased materials, and also includes fabrication, assembly, test and installation labor and overhead, customer-specific engineering costs, warranty costs, royalties, provisions for inventory reserves and scrap.
Gross margin was 24.9% in the three months ended July 1, 2023 compared to 48.2% in the three months ended July 2, 2022 compared to 18.7%and was 33.4% in the threesix months ended July 3, 2021 and was1, 2023 compared to 37.9% in the six months ended July 2, 2022 compared to 21.5% in the six months ended July 3, 2021.2022. The improvementdecrease in the gross margin percentage for the three and six months ended July 2, 20221, 2023 compared to the same periodperiods in the prior year was due primarily to higher revenues, the higher-margin contributionlower-margin contributions from the 200 Lean HDD upgrades,system and higherthe refurbished 200 Lean HDD system, and lower factory utilization. The improvement in the gross margin percentage for the six months ended July 2, 2022 was due primarily to the higher-margin contribution from HDD upgrades, offset in part by $755,000 in charges for excess and obsolete inventory as part of the Company’s realignment effort. Gross margin for the six months ended July 3, 2021 reflects the lower margin on the first MATRIX PVD system for advanced semiconductor packaging. Gross margins will vary depending on a number of factors, including revenue levels, product mix, product cost, system configuration and pricing, factory utilization, and provisions for excess and obsolete inventory.
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Research and development expense
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Research and development expense | $ | 2,868 | $ | 3,118 | $ | (250 | ) | $ | 7,028 | $ | 6,483 | $ | 545 |
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Research and development expense | $ | 3,647 | $ | 2,868 | $ | 779 | $ | 7,620 | $ | 7,028 | $ | 592 |
Research and development spending during the three and six months ended July 2, 2022 decreased1, 2023 increased compared to the same periods in the prior year primarily due to savings from cost reduction activities completed in the first quarter of fiscal 2022, offset in part by higher spending on DCP development.TRIO and HDD R&D programs. R&D spending during the six months ended July 2, 2022 increased compared to the six months ended July 3, 2021 primarily due toincluded $1.5 million in expenditures related to the disposal of certain lab equipment as part of the realignment effort, offset by lower spending on R&D programs.
Selling, general and administrative expense
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Selling, general and administrative expense | $ | 4,016 | $ | 4,197 | $ | (181 | ) | $ | 8,265 | $ | 8,531 | $ | (266 | ) |
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Selling, general and administrative expense | $ | 4,375 | $ | 4,016 | $ | 359 | $ | 9,575 | $ | 8,265 | $ | 1,310 |
Selling, general and administrative expense consists primarily of selling, marketing, customer support, financial and management costs. Selling, general and administrative expense for the three months ended July 2, 2022 decreased1, 2023 increased compared to the three months ended July 3, 2021 due to cost savings as a result of the realignment program implementedsame period in the first quarter of fiscal 2022, reimbursement under the TSA,prior year as higher legal fees, higher consulting fees and lower variable compensationhigher travel expenses were offset in part by higher stocklower variable compensation expenses. Selling, general and administrative expense for the six months ended July 2, 2022 decreased1, 2023 increased compared to the same period in the prior year as higher stock compensation expenses, higher variable compensation expenses, higher consulting fees, higher training expenses and higher travel expenses were offset in part by lower legal fees. Selling, general and administrative expense for the six months ended July 3, 2021 as lower variable compensation expenses, lower stock compensation expenses, and TSA reimbursements were offset
Cost reduction plans
In March 2022, the Company’s management approved a restructuring plan to realign the Company’s operational focus, scale the business and improve costs. The restructuring program includes (i) reducing the Company’s headcount and (ii) eliminating several R&D programs and product offerings. As part of this
Interest income and other income (expense), net
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Interest income and other, income (expense), net | $ | 650 | $ | 317 | $ | 333 | $ | 1,322 | $ | 310 | $ | 1,012 |
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Interest income and other, income (expense), net | $ | 317 | $ | 20 | $ | 297 | $ | 310 | $ | 50 | $ | 260 |
Interest income and other income (expense), net in the three months ended July 1, 2023 included $567,000 of interest income on investments, $24,000 of various other income and $59,000 of foreign currency gains. Interest income and other income (expense), net in the six months ended July 1, 2023 included $1.3 million of interest income on investments and $64,000 of various other income, offset in part by $19,000 of foreign currency losses. Interest income and other income (expense), net in the three months ended July 2, 2022 included $166,000 of interest income on investments, $11,000 of various other income of $11,000 and $140,000 of foreign currency gains. Interest income and other income (expense), net in the six months ended July 2, 2022 included $175,000 of interest income on investments, $28,000 of various other income of $28,000 and $107,000 of foreign currency gains. Interest income and other income (expense), net in the three months ended July 3, 2021 included $10,000 of interest income on investments, various other income of $5,000 and $5,000 of foreign currency gains. Interest income and other income (expense), net in the six months ended July 3, 2021 included $27,000 of interest income on investments and various other income of $25,000, offset in part by $2,000 of foreign currency losses. The increase in interest income in the three and six months ended July 2, 20221, 2023 compared to the same periods in the prior year resulted from higher interest rates on Intevac’s investments, offset in part by lower invested balances and higher interest rates.
Provision for (benefit from) income taxes
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Provision for (benefit from) income taxes | $ | 500 | $ | (165 | ) | $ | 665 | $ | 526 | $ | (132 | ) | $ | 658 |
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Provision for income taxes | $ | 116 | $ | 500 | $ | (384 | ) | $ | 502 | $ | 526 | $ | (24 | ) |
Intevac recorded income tax provisions of $116,000 and $502,000 for the three and six months ended July 1, 2023, respectively, and income tax provisions of $500,000 and $526,000 for the three and six months ended July 2, 2022, respectively, and income tax benefits of $165,000 and $132,000 for the three and six months ended July 3, 2021, respectively. The income tax provisions (benefits) for these three and six month periods are based upon estimates of annual income (loss), annual permanent differences and statutory tax rates in the various jurisdictions in which Intevac operates. For the three month period ended July 1, 2023, Intevac recorded a $44,000 income tax benefit on losses of its international subsidiaries and recorded $158,000 for withholding taxes on royalties paid to the United States from Intevac’s Singapore subsidiary as a discrete item. For the six month period ended July 1, 2023, Intevac recorded a $180,000 income tax provision on income of its international subsidiaries and recorded $320,000 for withholding taxes on royalties paid to the United States from Intevac’s Singapore subsidiary as a discrete item. For the three and six month periods ended July 2, 2022, Intevac recorded income tax provisions on profits of its international subsidiaries of $390,000 and $364,000, respectively, and recorded $107,000 and $158,000, respectively, for withholding taxes on royalties paid to the United States from Intevac’s Singapore subsidiary as discrete items. For the three and six month periods ended July 3, 2021, Intevac recorded income tax benefits on losses of its international subsidiaries
The income tax expense (benefit) consists primarily of income taxes in foreign jurisdictions in which we conduct business and foreign withholding taxes. We maintain a full valuation allowance for domestic deferred tax assets, including net operating loss carry-forwards and certain domestic tax credits. Intevac’s effective tax rate differs from the U.S. statutory rate in both 20222023 and 20212022 primarily due to the Company not recognizing an income tax benefit on the domestic loss.
Income (loss) from discontinued operations, net of taxes
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Loss from discontinued operations, net of taxes | $ | 238 | $ | 2 | $ | 236 | $ | 373 | $ | 938 | $ | (565 | ) |
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Income (loss) from discontinued operations, net of taxes | $ | 40 | $ | (238 | ) | $ | 278 | $ | 317 | $ | (373 | ) | $ | 690 |
The lossincome (loss) from discontinued operations consists primarily of the results of operations of the Photonics business which was sold to EOTECH on December 30, 2021. LossIncome from discontinued operations for the three months ended July 2, 2022 includes contract termination costs associated with certain software maintenance contracts, settlement1, 2023 is comprised primarily of accretion on the closing net working capital adjustmentlease liability that was assigned to EOTECH. Income from discontinued operations for the salesix months ended July 1, 2023 is comprised primarily of the Photonics business to EOTECH anda stock based compensation associated with 16forfeiture benefit recognized upon the termination of certain mutual employees of both the Company and EOTECH that were terminated by the Buyer that are assisting inCompany upon the completion of the assignment and novation of all government contracts and to sponsorEOTECH in the Buyer’s facility clearance from the Defense Counterintelligence and Security Agencyfirst quarter of the U.S. government.fiscal 2023. Loss from discontinued operations for the three and six months ended July 2, 2022 includes salaries and wages and employee benefits up to and including January, 4, 2022, the date when employees were conveyed to the Buyer,EOTECH, severance for several employees that were not hired by the Buyer, stock-basedEOTECH, stock based compensation expense associated with the acceleration of stock awards contract termination costs associated with software maintenance agreements, settlement of the net working capital adjustment and incremental legal expenses associated with the divestiture, offset in part by a stock based compensation divestiture-related forfeiture benefit. Loss from discontinued operations for the three and six months ended July 3, 2021 represents the loss from the Photonics division, net of tax.
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Liquidity and Capital Resources
At July 2, 2022,1, 2023, Intevac had $110.2$73.9 million in cash, cash equivalents, restricted cash and investments compared to $121.2$112.8 million at January 1,December 31, 2022. During the first six months of fiscal 2022,2023, cash, cash equivalents, restricted cash and investments decreased by $11.0$38.9 million due primarily to cash used inby operating activities, purchases of fixed assetsleasehold improvements and equipment, payment of contingent consideration and tax payments on net share settlements partially offset in part by cash received from the sale of Intevac common stock to Intevac’s employees through Intevac’s employee benefit plans.
Cash, cash equivalents, restricted cash and investments consist of the following:
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 | ||||
July 1, 2023 | December 31, 2022 | |||||||
(In thousands) | ||||||||
Cash and cash equivalents | $ | 43,976 | $ | 68,904 | ||||
Restricted cash | 785 | 786 | ||||||
Short-term investments | 23,626 | 25,541 | ||||||
Long-term investments | 5,550 | 17,585 | ||||||
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Total cash, cash equivalents, restricted cash and investments | $ | 73,937 | $ | 112,816 | ||||
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Operating activities used cash of $33.4 million during the first six months of fiscal 2023 compared to cash used of $11.4 million during the first six months of fiscal 2022.
Accounts receivable increased to $20.2 million at July 1, 2023 compared to $15.8 million at December 31, 2022 as a result of sales from the first half of 2023 as well as the impact of offering our customers in good standing extended payment terms on a portion of the sales on selected products in the fourth quarter of 2022 and the first half of 2023. Net inventories increased to $46.3 million at July 1, 2023 compared to $30.0 million at December 31, 2022 due to purchases of inventory to support our investments in TRIO inventory and the build out of our HDD backlog. In the second half of 2023 and into the beginning of 2024, as part of the cancellation of an order for eight 200 Lean HDD systems, the customer is expected to take delivery of $12.5 million of inventory on hand at July 1, 2023 and $11.4 million of inventory on order, plus reimburse us for any supplier cancellation charges. Accounts payable decreased to $10.4 million at July 1, 2023 from $11.6 million at December 31, 2022 as a result of decreased inventory purchases, offset in part by changing our standard payment terms from 30 days to 60 days. Accrued payroll and related liabilities increased to $3.4 million at July 1, 2023 compared to $3.1 million at December 31, 2022. Other accrued liabilities decreased to $1.4 million at July 1, 2023 compared to $5.4 million at December 31, 2022 primarily due to the recognition of revenue on a 200 Lean HDD refurbished tool in deferred revenue as well as the settlement of the PAGA lawsuit which was paid on January 20, 2023. Customer advances decreased from $24.7 million at December 31, 2022 to $21.7 million at July 1, 2023 primarily as a result of recognition of revenue.
Investing activities generated cash of $3.4$9.7 million during the first six months of fiscal 2021.
Financing activities generatedused cash of $1.9 million$975,000 in the first six months of fiscal 2022. The2023. Cash generated from the sale of Intevac common stock to Intevac’s employees through Intevac’s employee benefit plans generated cash of $2.2 million.was $838,000. Tax payments related to the net share settlement of restricted stock units were $295,000.was $1.6 million.
In connection with the acquisition of Hia Inc., Intevac agreed to make contingent consideration payments to the selling shareholders upon achievement of certain development and commercialization milestones, which consideration is estimated to be up to $500,000. The first milestone was achieved and contingent consideration in the amount of $250,000 was paid on January 17, 2023. The Company is also obligated to pay a royalty of $1,500 for each magnetic bar sold through December 31, 2030. If at any time prior to December 31, 2030, the Company effects a change of control or a sale, license, transfer or other disposition to a third party (other than an affiliate of Intevac) of all or substantially all of the assets or rights associated with the magnetic bars, then, upon the closing of such transaction, a payment of $1.7 million (minus any royalty payments previously paid) will immediately become due and payable, which payment shall fulfill the Company’s royalty obligations. As of July 1, 2023, no royalty payments have been earned or paid.
29
Intevac’s investment portfolio consists principally of investment grade money market mutual funds, U.S. Treasury and agency securities, certificates of deposit, asset-backed securities, commercial paper, municipal bonds and corporate bonds. Intevac regularly monitors the credit risk in its investment portfolio and takes measures, which may include the sale of certain securities, to manage such risks in accordance with its investment policies.
As of July 2, 2022,1, 2023, approximately $27.7$22.7 million of cash and cash equivalents and $2.9$4.9 million of investments were domiciled in foreign tax jurisdictions. Intevac expects a significant portion of these funds to remain offshore in the short term. If the Company chose to repatriate these funds to the United States, it would be required to accrue and pay additional taxes on any portion of the repatriation subject to foreign withholding taxes.
We believe that our existing cash, cash equivalents and investments and cash flows from operating activities will be adequate to meet our liquidity needs for the next twelve months and for the foreseeable future beyond the next twelve months. Our significant funding requirements include procurement of manufacturing inventories, operating expenses,
Off-Balance
Off-balance
Climate Change
We believe that neither climate change, nor governmental regulations related to climate change, have had any material effect on our business, financial condition or results of operations.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make judgments, assumptions and estimates that affect the amounts reported. Intevac’s significant accounting policies are described in Note 1 to the consolidated financial statements included in Item 8 of Intevac’s Annual Report on Form
A critical accounting policy is defined as one that is both material to the presentation of Intevac’s financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on Intevac’s financial conditions and results of operations. Specifically, critical accounting estimates have the following attributes: 1) Intevac is required to make assumptions about matters that are highly uncertain at the time of the estimate; and 2) different estimates Intevac could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on Intevac’s financial condition or results of operations.
Estimates and assumptions about future events and their effects cannot be determined with certainty. Intevac bases its estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as Intevac’s operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they become known. In addition, management is periodically faced with uncertainties, the outcomes of which are not within its control and will not be known for prolonged periods of time. Many of these uncertainties are discussed in the section below entitled “Risk Factors.” Based on a critical assessment of Intevac’s accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that Intevac’s consolidated financial statements are fairly stated in accordance with US GAAP, and provide a meaningful presentation of Intevac’s financial condition and results of operations.
Beginning January 1, 2023, we implemented ASC 326, Financial Instruments - Credit Losses. For a description of our critical accounting policies and estimates affecting accounting for credit losses, see Note 1. “Description of Business, Basis of Presentation and Significant Accounting Policy” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. With the exception of the changes to our credit loss recognition policies referenced above, there have been no material changes to our critical accounting policies during the six months ended July 2, 2022.1, 2023.
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Not applicable to smaller reporting companies.
Item 4. | Controls and Procedures |
Evaluation of Disclosure Controlsdisclosure controls and Procedures
Intevac maintains a set of disclosure controls and procedures that are designed to ensure that information relating to Intevac required to be disclosed in periodic filings under the Securities Exchange Act of 1934, or Exchange Act, is recorded, processed, summarized and reported in a timely manner under the Exchange Act. In connection with the filing of this Quarterly Report on Form
Attached as exhibits to this Quarterly Report on Form
Definition of disclosure controls
Disclosure controls are controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report on Form
Limitations on the effectiveness of controls
Intevac’s management, including the CEO and CFO, does not expect that Intevac’s disclosure controls or Intevac’s internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Intevac have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in internal control over financial reporting
Beginning January 1, 2023, we implemented ASC 326, Financial Instruments - Credit Losses. Although the new standard is expected to have an immaterial impact on our ongoing net income, we did implement changes to our processes related to the assessment of credit losses, including the utilization of an expected credit loss model, which requires consideration of a broader range of information to estimate expected credit losses over the entire lifetime of the asset, including losses where probability is considered remote, reporting of credit losses and the control activities within them. There were no other changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form
31
PART II. OTHER INFORMATION
Item 1. | Legal Proceedings |
From time to time, Intevac is involved in claims and legal proceedings that arise in the ordinary course of business. Intevac expects that the number and significance of these matters will increase as Intevac’s business expands. Any claims or proceedings against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time, result in the diversion of significant operational resources, or require us to enter into royalty or licensing agreements which, if required, may not be available on terms favorable to us or at all. Intevac is not presently a party to any lawsuit or proceeding that, in Intevac’s opinion, is likely to seriously harm Intevac’s business. For a description of our material pending legal proceedings, see Note 14 “Commitments and Contingencies” to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form
Item 1A. | Risk Factors |
The following factors could materially affect Intevac’s business, financial condition or results of operations and should be carefully considered in evaluating the Company and its business, in addition to other information presented elsewhere in this report.
Risks Related to Our Business
The industries we serve are cyclical, volatile and unpredictable.
A significant portion of our revenue is derived from the sale of equipment used to manufacture commodity technology products such as disk drives and cell phones. This subjects us to business cycles, the timing, length and volatility of which can be difficult to predict. When demand for commodity technology products exceeds production capacity, then demand for new capital equipment such as ours tends to be amplified. Conversely, when supply of commodity technology products exceeds demand, then demand for new capital equipment such as ours tends to be depressed. We cannot predict with any certainty when these cycles will begin or end. For example, our sales of systems for magnetic disk production increased in 2016 as a customer began upgrading the technology level of its manufacturing capacity. Sales of systems and upgrades for magnetic disk production in 2017 and 2018 were higher than in 2016 as this customer’s technology upgrade continued. However, sales of systems and upgrades for magnetic disk production in 2019, 2020 and 2021 and 2022 were down from the levels in 2018 as this customer took delivery of fewer or no (in the case of 2021)2021 and 2022) systems. In May 2023, this customer cancelled an order for eight 200 Lean HDD systems due to the customer postponing previously planned media capacity additions, and we recorded a backlog reduction of $54.6 million. Intevac expects sales of systems and upgrades for magnetic disk production in 20222023 will be at levels similar tohigher than the levels in 2021.
Our equipment represents only a portion of the capital expenditure that our customers incur when they upgrade or add production capacity. Accordingly, our customers generally commit to making large capital expenditures far in excess of the cost of our systems alone when they decide to purchase our systems. The magnitude of these capital expenditures requires our customers to have access to large amounts of capital. Our customers generally reduce their level of capital investment during downturns in the overall economy or during a downturn in their industries. Reductions in capital investment could be particularly pronounced as the cost of obtaining capital increases during periods of rapidly rising interest rates.
We must effectively manage our resources and production capacity to meet rapidly changing demand. Our business experiences rapid growth and contraction, which stresses our infrastructure, internal systems and managerial resources. During periods of increasing demand for our products, we must have sufficient manufacturing capacity and inventory to meet customer demand; attract, retain and motivate a sufficient number of qualified individuals; and effectively manage our supply chain. During periods of decreasing demand for our products, we must be able to align our cost structure with prevailing market conditions; motivate and retain key employees and effectively manage our supply chain.
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Supply chain and shipping disruptions could result in shipping delays, and increased product costs which may have a material adverse effect on our business, financial condition and results of operations.
Supply chain disruptions resulting from factors such as the
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, particularly during economic downturns and periods of rapidly rising interest rates and inflation.
Global economic conditions may harm our industry, business and results of operations.
We operate globally and as a result our business, revenues and profitability are impacted by global macroeconomic conditions. The success of our activities is affected by general economic and market conditions, including, among others, inflation rate fluctuations, interest rates, tax rates, economic uncertainty, political instability, changes in laws, and trade barriers and sanctions. Recently, inflation rates in the U.S. have increased to levels not seen in several years. Such economic volatility could adversely affect our business, financial condition, results of operations and cash flows, and future market disruptions could negatively impact us. Geopolitical destabilization could continue to impact global currency exchange rates, commodity prices, trade and movement of resources, which may adversely affect the ability of our customers and potential customers to incur the capital expenditures necessary to purchase our products and services.
Sales of our equipment are primarily dependent on our customers’ upgrade and capacity expansion plans and whether our customers select our equipment.
We have no control over our customers’ upgrade and capacity expansion plans, and we cannot be sure they will select, or continue to select, our equipment when they upgrade or expand their capacity. The sales cycle for our equipment systems can be a year or longer, involving individuals from many different areas of Intevac and numerous product presentations and demonstrations for our prospective customers. Our sales process also commonly includes production of samples and customization of our products. We do not typically enter into long-term contracts with our customers, and until an order is actually submitted by a customer there is no binding commitment to purchase our systems. In some cases, orders are also subject to customer acceptance or other criteria even in the case of a binding agreement.
Sales of new manufacturing systems are also dependent on obsolescence and replacement of the installed base of our customers’ existing equipment with newer, more capable equipment. If upgrades are developed that extend the useful life of the installed base of systems, then we tend to sell more upgrade products and fewer new systems, which can significantly reduce total revenue.
Our 200 Lean HDD 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
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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.
Our results of operations could be materially harmed if we are unable to accurately forecast demand for our products and manage product inventory in an effective and efficient manner.
To ensure adequate inventory supply, we must forecast inventory needs and place orders with our suppliers before orders are placed by our customers. If we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of product to deliver to our customers. Factors that could affect our ability to accurately forecast demand for our products include: (1) an increase or decrease in customer demand for our products; (2) a failure to accurately forecast consumer acceptance for our new products such as the TRIO platform; (3) product introductions by competitors; (4) unanticipated changes in general market conditions or other factors (for example, because of effects on inventory supply and consumer demand caused by high inflation rates or other adverse macroeconomic conditions); (5) the uncertainties and logistical challenges that accompany operations on a global scale; and (6) terrorism or acts of war, or the threat thereof, or political or labor instability or unrest, civil unrest, riots or insurrections, public health crises such as the COVID-19 pandemic (or other future pandemics or epidemics), including the severity and transmission rates of new variants, which could adversely affect customer confidence and spending or interrupt production and distribution of product and raw materials.
Inventory levels in excess of customer demand may result in inventory write-downs or write-offs, and the sale of excess inventory at discounted prices, which could harm our gross margin. In addition, if we underestimate the demand for our products, we may not be able to produce products to meet our customer requirements, and this could result in delays in the shipment of our products, therefore impacting our ability to recognize revenue, generate lost sales, and cause damage to our reputation and relationships with our customers. Inaccurate forecasts may also adversely impact our ability to prepare forward-looking statements and meet investor expectations.
Challenges in forecasting demand can also make it difficult to estimate future results of operations and financial condition from period to period. A failure to accurately predict the level of demand for our products or manage product inventory in an effective and efficient manner could adversely impact our results of operations and cause us not to achieve our expected financial results.
We operate in an intensely competitive marketplace, and our competitors have greater resources than we do.
In the market for our disk sputtering systems, we experience competition primarily from Canon Anelva, which has sold a substantial number of systems worldwide. Some of our competitors have substantially greater financial, technical, marketing, manufacturing and other resources than we do, especially in the DCP equipment market. Our competitors may develop enhancements to, or future generations of, competitive products that offer superior price or performance features, and new competitors may enter our markets and develop such enhanced products. Moreover, competition for our customers is intense, and our competitors have historically offered substantial pricing concessions and incentives to attract our customers or retain their existing customers.
We are exposed to risks associated with a highly concentrated customer base.
Historically, a significant portion of our revenue in any particular period has been attributable to sales of our disk sputtering systems to a limited number of customers. Our reliance on sales to relatively few customers has increased with the disposition of our Photonics business, and we expect that sales of our products to relatively few customers will continue to account for a high percentage of our revenues in the foreseeable future.future, particularly as we realign our operations to focus on the HDD and DCP markets. This concentration of customers, when combined with changes in the customers’ specific capacity plans and market share shifts can lead to extreme variability in our revenue and financial results from period to period.
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 or issues with 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, would 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 our customers produce with our systems; (2) delays or problems in the introduction and acceptance of our new products, or delivery of existing products; (3) timing of orders, acceptance of new systems by our customers or cancellation or delay of those
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orders; (4) new products, services or technological innovations by our competitors or us; (5) changes in our manufacturing costs and operating expense; (6) changes in general economic, political, stock market and industry conditions; and (7) any failure of our operating results to meet the expectations of investment research analysts or investors.
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.
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
We must regularly assess the size, capability and location of our global infrastructure and make appropriate changes to address these issues.
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 to
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.
Risks Related to Our Intellectual Property
Our growth depends on development of technically advanced new products and processes.
We have invested heavily, and continue to invest, in the development of new products, such as our 200 Lean HDD and our TRIO coating systemsplatform for DCP. Our success in developing and selling new products depends upon a variety of factors, including our ability to: predict future customer requirements; make technological advances; achieve a low total cost of ownership for our products; introduce new products on schedule; manufacture products cost-effectively including transitioning production to volume manufacturing; commercialize and attain customer acceptance of our products; and achieve acceptable and reliable performance of our new products in the field. Our new product decisions and development commitments must anticipate continuously evolving industry requirements significantly in advance of sales. In addition, we are attempting to expand into new or related markets, including the display cover glass market. Our expansion into the cover glass market is dependent upon the success of our customers’ development plans. To date we have not recognized material revenue from such products. Failure to correctly assess the size of the market, to successfully develop products on a timely basis, to successfully develop cost effective products to address the market or to establish effective sales and support of the new products would have a material adverse effect on future revenues and profits. In addition, if we invest in products for which the market does not develop as anticipated, we may incur significant charges related to such investments.
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Rapid technological change in our served markets requires us to rapidly develop new technically advanced products. Our future success depends in part on our ability to develop and offer new products with improved capabilities and to continue to enhance our existing products. If new products have reliability or quality problems, our performance may be impacted by reduced orders, higher manufacturing costs, delays in acceptance and payment for new products and additional service and warranty expenses.
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.
Risks Related to Government Regulation
We may not be able to obtain export licenses from the U.S. government permitting delivery of our products to international customers.
Many of our products, require export licenses from U.S. government agencies under the Export Administration Act. These regulations limit the potential market for some of our products. We can give no assurance that we will be successful in obtaining all the licenses necessary to export our products. Heightened government scrutiny of export licenses for defense related products has resulted in lengthened review periods for our license applications. Failure to comply with export control laws, including identification and reporting of all exports and
We are subject to risks of
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 incur substantial expenses to comply with them.
In addition, climate change legislation is a significant topic of recent discussion and has generated and may continue to generate federal, international or other regulatory responses in the near future. If we or our suppliers, customers or partners fail to timely comply with applicable legislation, certain customers may refuse to purchase our products or we may face increased operating costs as a result of taxes, fines or penalties, or incur legal liability and reputational damage, which could harm our business, financial condition and results of operations.
General Risk Factors
Our business could be negatively impacted by cyber and other security threats or disruptions.
We face various cyber and other security threats, including attempts to gain unauthorized access to sensitive information and networks. Although we utilize various procedures and controls to monitor and mitigate the risk of these threats, there can be no assurance that these procedures and controls will be sufficient. These threats could lead to losses of sensitive information or capabilities; financial liabilities and damage to our reputation. If we are unable to maintain compliance with security standards applicable to defense contractors, we could lose business or suffer reputational harm. Cyber threats to businesses are evolving and include, but are not limited to, malicious software, destructive malware, attempts to gain unauthorized access to data, disruption or denial of service attacks, and other electronic security breaches that could lead to disruptions in our systems, unauthorized release of confidential, personal or otherwise protected information (ours or that of our employees, customers or partners), and corruption of data, networks or systems. We have experienced cybersecurity threats and incidents involving our systems and expect these incidents to continue. While none of the
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cybersecurity events have been material to date, a successful breach or attack could have a material adverse effect on our results of 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 products we use or in our 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 business, regulatory actions, potential liability and other financial losses.
Changes to our effective tax rate affect our results of operations.
As a global company, we are subject to taxation in the United States, Singapore and various other countries. Significant judgment is required to determine and estimate worldwide tax liabilities. Our future effective tax rate could be affected by: (1) changes in tax laws; (2) the allocation of earnings to countries with differing tax rates; (3) changes in worldwide projected annual earnings in current and future years: (4) accounting pronouncements; or (5) changes in the valuation of our deferred tax assets and liabilities. Although we believe our tax estimates are reasonable, there can be no assurance that any final determination will not be different from the treatment reflected in our historical income tax provisions and accruals, which could result in additional payments by Intevac.
Difficulties in integrating past or future acquisitions or implementing strategic divestitures could adversely affect our business.
We have completed a number of acquisitions and dispositions during our operating history. We have spent and may continue to
We could be involved in litigation.
From time to time, we may be involved in litigation of various types, including litigation alleging infringement of intellectual property rights and other claims and customer disputes. For example, we recently settled an action against us under the Private Attorneys General Act (“PAGA”) for $1.0 million, pending approval by the court.million. Litigation is expensive, subjects us to the risk of significant damages and requires significant management time and attention and could have a material and adverse effect on our business, financial condition and results of operations.
Business interruptions could adversely affect our operations.
Our operations are vulnerable to interruption by fire, earthquake, floods or other natural disaster, quarantines or other disruptions associated with infectious diseases, national catastrophe, terrorist activities, war, disruptions in our computing and communications infrastructure due to power loss, telecommunications failure, human error, physical 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 could be negatively affected as a result of a proxy contest and the actions of activist stockholders.
A proxy contest with respect to election of our directors, or other activist stockholder activities, could adversely affect our business because: (1) responding to a proxy contest and other actions by activist stockholders can be costly and time-consuming, disruptive to our operations and divert the attention of management and our employees; (2) perceived uncertainties as to our future direction caused by activist activities may result in the loss of potential business opportunities, and may make it more difficult to attract and retain qualified personnel and business partners; and (3) if individuals are elected to our Board of Directors with a specific agenda, it may adversely affect our ability to effectively and timely implement our strategic plans.
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We are required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, our management must perform evaluations of our internal control over financial reporting. Although our assessment, testing, and evaluation resulted in our conclusion that as of January 1,December 31, 2022, our internal control over financial reporting was 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, 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 |
On November 21, 2013, Intevac announced that its Board of Directors approved a stock repurchase program authorizing up to $30.0 million in repurchases. On August 20, 2018, Intevac announced that its Board of Directors approved a $10.0 million increase to the original stock repurchase program for an aggregate authorized amount of $40.0 million. At July 2, 2022,1, 2023, $10.4 million remains available for future stock repurchases under the repurchase program. Intevac did not make any common stock repurchases during the three months ended July 2, 2022.
Item 3. | Defaults upon Senior Securities |
None.
Item 4. | Mine Safety Disclosures |
Not applicable.
Item 5. | Other Information |
Transition Agreement and Release with Retired CFO
As previously announced, on July 18, 2023, James Moniz retired from his positions as the Executive Vice President, Finance and Administration, Chief Financial Officer, Secretary and Treasurer of Intevac, Inc., and from all other positions he held in the Company or any of its subsidiaries effective August 4, 2023. On August 2, 2023, the Company entered into a Transition Agreement and Release (the “Transition Agreement”) with Mr. Moniz. Under the terms of the Transition Agreement, Mr. Moniz will receive accelerated vesting with respect to: (a) 8,875 shares of restricted stock units granted to Mr. Moniz in May 2020, (b) 7,826 shares of restricted stock units granted to Mr. Moniz in May 2021 and (c) 14,600 shares of restricted stock units granted to Mr. Moniz in May 2022, which represents the number of shares that would have vested under each such restricted stock unit grant had Mr. Moniz remain employed with the Company through May 31, 2024. As part of the Transition Agreement, and as a condition to receiving the foregoing benefits, the parties agreed to provisions relating to a release and waiver of claims in favor of the Company, including a supplemental release of claims to be entered into following Mr. Moniz’s termination date, confidentiality, non-disparagement, tax consequences and post-separation cooperation with respect to certain Company efforts. The foregoing summary is qualified in its entirety by reference to the full text of the Transition Agreement which is filed as Exhibit 10.3 and is incorporated herein by reference.
Item 6. | Exhibits |
The following exhibits are filed herewith:
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101.INS | XBRL Instance | |
101.SCH | Inline XBRL Schema Document | |
101.CAL | Inline XBRL Calculation Linkbase Document | |
101.DEF | Inline XBRL Definition Linkbase Document | |
101.LAB | Inline XBRL Label Linkbase Document | |
101.PRE | Inline XBRL Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* |
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. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
INTEVAC, INC. | ||||||
Date: August 3, 2023 | By: | /s/ NIGEL HUNTON | ||||
Nigel Hunton |
President and Chief Executive Officer | ||||||
(Principal Executive Officer) | ||||||
Date: August 3, 2023 | By: | /s/ JAMES MONIZ | ||||
James Moniz | ||||||
Executive Vice President, Finance and Administration, | ||||||
Chief Financial Officer, Secretary and Treasurer | ||||||
(Principal Financial and Accounting Officer) |
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