UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20569
FORM 10-Q
[X ] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 2001 Commission file number 0-23150
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IBIS TECHNOLOGY CORPORATION
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(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2987600
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
32 CHERRY HILL DRIVE, DANVERS, MA 01923
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(Address of principal executive offices) (Zip Code)
(978) 777-4247
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
8,368,261 shares of Common Stock, par value $.008, were outstanding on
May 10, 2001.
Total Number of Pages 16
Exhibit Index at Page __
IBIS TECHNOLOGY CORPORATION
INDEX
PART I - FINANCIAL INFORMATION PAGE
NUMBER
Item 1 - Financial Statements:
Balance Sheets
December 31, 2000 and March 31, 2001 (unaudited)............................................ 3
Statements of Operations
Three Months Ended March 31, 2000 and 2001 (unaudited)...................................... 4
Statements of Cash Flows
Three Months Ended March 31, 2000 and 2001 (unaudited)........................................ 5
Notes to Unaudited Interim Financial Statements ............................................... 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................................................... 10
Item 3 - Quantitative and Qualitative Disclosure About Market Risk................................. 14
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings........................................................................... 15
Item 2 - Changes in Securities....................................................................... 15
Item 3 - Defaults upon Senior Securities............................................................. 15
Item 4 - Submission of Matters to a Vote of Security Holders......................................... 15
Item 5 - Other Information........................................................................... 15
Item 6 - Exhibits and Reports on Form 8-K ........................................................... 15
Signatures........................................................................................... 16
2
IBIS TECHNOLOGY CORPORATION
BALANCE SHEETS
DECEMBER 31, MARCH 31,
2000 2001
-------------------- -----------------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................................................. $26,366,299 $22,548,847
Accounts receivable, trade, net............................................ 1,209,916 2,089,548
Unbilled revenue........................................................... 510,500 255,693
Inventories (note 3)....................................................... 10,932,859 10,436,387
Prepaid expenses and other current assets.................................. 326,103 359,409
------------- -------------
Total current assets................................................. 39,345,677 35,689,884
------------- -------------
Property and equipment........................................................ 25,416,692 29,886,659
Less: Accumulated depreciation and amortization........................... (10,875,048) (11,454,296)
------------- -------------
Net property and equipment........................................... 14,541,644 18,432,363
Patents and other assets, net................................................. 2,411,203 2,322,646
------------- -------------
Total assets......................................................... $56,298,524 $56,444,893
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Capital lease obligation, current.......................................... $ 11,593 $ 11,913
Accounts payable........................................................... 1,046,960 2,223,213
Accrued liabilities........................................................ 2,718,240 2,479,946
Deferred revenue........................................................... 2,984,094 2,920,296
------------- -------------
Total current liabilities............................................ 6,760,887 7,635,368
Capital lease obligation, noncurrent...................................... 18,479 15,604
------------- -------------
Total liabilities.................................................... 6,779,366 7,650,972
------------- -------------
STOCKHOLDERS' EQUITY:
Undesignated preferred stock, $.01 par value
Authorized 2,000,000 shares; none issued.................................. -- --
Common stock, $.008 par value
Authorized 50,000,000 shares; issued 8,342,709 shares and
8,365,507 shares in 2000 and 2001, respectively........................ 66,742 66,924
Additional paid-in capital................................................ 66,183,143 66,242,882
Accumulated deficit....................................................... (16,730,727) (17,515,885)
------------- -------------
Total stockholders' equity........................................... 49,519,158 48,793,921
------------- -------------
Total liabilities and stockholders' equity........................... $56,298,524 $56,444,893
============= =============
See accompanying notes to unaudited interim financial statements.
3
IBIS TECHNOLOGY CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31
-----------------------------
2000 2001
------------- -----------
SALES AND REVENUE:
Product sales ................................................................ $1,643,760 $2,463,395
Contract and other revenue.................................................... 79,408 200,887
Equipment revenue............................................................. 315,944 536,223
----------- -----------
Total sales and revenue (notes 2 and 4).................................... 2,039,112 3,200,505
COST OF SALES AND REVENUE:
Cost of product sales......................................................... 933,020 1,792,608
Cost of contract and other revenue............................................ 52,244 66,789
Cost of equipment revenue..................................................... 132,254 251,444
----------- -----------
Total cost of sales and revenue............................................ 1,117,518 2,110,841
----------- -----------
Gross profit............................................................... 921,594 1,089,664
----------- -----------
OPERATING EXPENSES:
General and administrative.................................................... 446,744 542,976
Marketing and selling......................................................... 427,020 491,652
Research and development...................................................... 913,085 1,181,329
----------- -----------
Total operating expenses................................................... 1,786,849 2,215,957
----------- -----------
Loss from operations....................................................... (865,255) (1,126,293)
----------- -----------
OTHER INCOME (EXPENSE):
Interest income............................................................... 501,660 343,157
Interest expense.............................................................. (7,328) (766)
Other......................................................................... 880 --
----------- -----------
Total other income......................................................... 495,212 342,391
----------- -----------
Loss before income taxes................................................... (370,043) (783,902)
Income tax expense.............................................................. 1,256 1,256
----------- -----------
Net loss................................................................... $ (371,299) $ (785,158)
=========== ===========
Net loss per common share:
Basic.......................................................................... $ (0.05) $ (0.09)
=========== ===========
Diluted........................................................................ $ (0.05) $ (0.09)
=========== ===========
Weighted average number of common shares outstanding:
Basic.......................................................................... 8,210,655 8,352,450
=========== ===========
Diluted........................................................................ 8,210,655 8,352,450
=========== ===========
See accompanying notes to unaudited interim financial statements.
4
IBIS TECHNOLOGY CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-----------------------------
2000 2001
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................................... $ (371,299) $ (785,158)
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
Depreciation and amortization .................................... 307,462 696,496
Gain on sale of equipment ........................................ 880 --
Changes in operating assets and liabilities:
Accounts receivable, trade ................................... 57,828 (879,632)
Unbilled revenue ............................................. (187,238) 254,807
Inventories .................................................. (975,224) 496,472
Prepaid expenses and other current assets .................... 137,544 (33,306)
Accounts payable ............................................. 74,597 1,176,253
Accrued liabilities and deferred revenue ..................... (680,871) (302,092)
------------ ------------
Net cash (used in) provided by operating activities .......... (1,636,321) 623,840
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net ........................... (2,923,264) (4,504,315)
Other assets ....................................................... (256,385) 5,657
------------ ------------
Net cash used in investing activities ........................ (3,179,649) (4,498,658)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of capital lease obligations .............................. (2,294) (2,555)
Exercise of stock options and warrants ............................. 529,630 59,921
------------ ------------
Net cash provided by financing activities .................... 527,336 57,366
------------ ------------
Net increase (decrease) in cash and cash equivalents ......... 4,288,634 (3,817,452)
Cash and cash equivalents, beginning of period ........................ 36,361,621 26,366,299
------------ ------------
Cash and cash equivalents, end of period .............................. $ 32,072,987 $ 22,548,847
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest ........................... $ 7,328 $ 767
============ ============
See accompanying notes to unaudited interim financial statements.
5
IBIS TECHNOLOGY CORPORATION
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
(1) INTERIM FINANCIAL STATEMENTS
The accompanying financial statements are unaudited, except for the
Balance Sheet as of December 31, 2000, and have been prepared by the Company in
accordance with generally accepted accounting principles.
In the opinion of management, the interim financial statements include
all adjustments which consist only of normal and recurring adjustments necessary
for a fair presentation of the Company's financial position and results of
operations. Results of operations for the interim periods are not necessarily
indicative of the results to be expected for the full year. These financial
statements should be read in conjunction with the financial statements of the
Company as of and for the year ended December 31, 2000 which are included in the
Annual Report on Form 10-K.
(2) REVENUE RECOGNITION
Product sales, equipment and the sales of spare parts sales are
recognized upon delivery. Revenue derived from services is recognized upon
performance. Contract revenue is recognized on the percentage-of-completion
method. Provisions for anticipated losses are made in the period in which such
losses become determinable. Unbilled revenue under customer contracts represents
revenue earned under the percentage-of-completion method but not yet billable
under the terms of the contract. These amounts are billable based on the terms
of the contract, which can include shipment of the product, achievement of
milestones or completion of the contract. The Company's policies comply with SAB
101.
(3) INVENTORIES
Inventories consist of the following:
DECEMBER 31, MARCH 31,
2000 2001
Raw materials ............ $ 392,708 $ 508,646
Work in process .......... 332,844 361,704
Finished goods ........... 218,210 986,437
----------- -----------
Subtotal wafer inventory $ 943,762 $ 1,856,787
Equipment inventory ...... 9,989,097 8,579,600
----------- -----------
Total inventories ...... $10,932,859 $10,436,387
=========== ===========
Equipment inventory includes Ibis 1000 implanters under construction for
the Company's own use. Such implanters will be transferred to property and
equipment upon completion.
6
IBIS TECHNOLOGY CORPORATION
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
(4) NET LOSS PER SHARE
Net loss per share of common stock is computed based upon the weighted
average number of shares outstanding during each period and including the
dilutive effect, if any, of stock options and warrants. SFAS 128 requires the
presentation of basic and diluted earnings (loss) per share for all periods
presented. As Ibis was in a net loss position for the three months ended March
31, 2000 and March 31, 2001 common stock equivalents of 570,574 and 290,076,
respectively, were excluded from the diluted loss per share calculation, as they
would be antidilutive. As a result, diluted loss per share is the same as basic
loss per share for the three months ended March 31, 2000 and March 31, 2001.
(5) INDUSTRY SEGMENTS
The Company's reportable segments are SIMOX Wafer Products, SIMOX
Equipment and Other Products or Services. For purposes of segment reporting,
equipment, equipment spares and field service revenue are combined and reported
as SIMOX Equipment. Government contracts, other services and license revenue are
combined and reported as Other Products or Services.
The table below provides information for the three months ended March 31,
2000 and 2001 and as of March 31, 2001 pertaining to the Company's three
industry segments.
SIMOX WAFER SIMOX OTHER PRODUCTS
PRODUCTS EQUIPMENT OR SERVICES TOTAL
----------- --------- -------------- -----
NET SALES AND REVENUE
Three Months Ended March 31, 2000 $ 1,643,760 $ 315,944 $ 79,408 $ 2,039,112
Three Months Ended March 31, 2001 2,463,395 536,223 200,887 3,200,505
OPERATING INCOME (LOSS)
Three Months Ended March 31, 2000 314,997 (760,672) 27,164 (418,511)
Three Months Ended March 31, 2001 126,382 (843,796) 134,097 (583,317)
ASSETS
March 31, 2001 20,811,287 12,043,530 194,374 33,049,191
CAPITAL EXPENDITURES
Three Months Ended March 31, 2000 2,836,915 29,645 -- 2,866,560
Three Months Ended March 31, 2001 2,766,695 1,691,024 -- 4,457,719
DEPRECIATION AND AMORTIZATION
OF PROPERTY AND EQUIPMENT
Three Months Ended March 31, 2000 249,231 10,946 860 261,037
Three Months Ended March 31, 2001 591,217 76,718 -- 667,935
7
IBIS TECHNOLOGY CORPORATION
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
The table below provides the reconciliation of reportable segment
operating loss and assets to Ibis' totals.
THREE MONTHS ENDED MARCH 31,
----------------------------
SEGMENT RECONCILIATION 2000 2001
- ---------------------- ---- ----
Loss Before Income Taxes:
Total operating loss for reportable segments $ (418,511) $ (583,317)
Corporate general & administrative expenses (446,744) (542,976)
Net other income 495,212 342,391
------------- -----------
Loss before income taxes (370,043) (783,902)
============== ============
Capital Expenditures:
Total capital expenditures for reportable segments 2,866,560 4,457,719
Corporate capital expenditures 56,704 46,596
----------- ----------
Total capital expenditures 2,923,264 4,504,315
========= =========
Depreciation and Amortization:
Total depreciation and amortization for reportable segments 261,037 667,935
Corporate depreciation and amortization 46,425 28,561
----------- ----------
Total depreciation and amortization $ 307,462 $ 696,496
========== =========
BALANCES AS OF
-------------------------------
12/31/00 3/31/01
-------- -------
Assets:
Total assets for reportable segments $29,123,321 $33,049,191
Cash & cash equivalents not allocated to segments 26,366,299 22,548,847
Other unallocated assets 808,904 846,855
---------- ----------
Total assets $56,298,524 $56,444,893
========== ==========
(6) NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") that
establishes accounting and reporting requirements for derivative instruments and
for hedging activities. SFAS 133 requires companies to recognize all derivatives
as either assets or liabilities in the statement of financial position at fair
value. If certain conditions are met, a derivative may be specifically
designated as a hedge of the exposures to changes in fair value of recognized
assets or liabilities or unrecognized firm commitments, a hedge of the exposure
to variable cash flows of a forecasted transaction, or a hedge of the foreign
currency exposure of a net investment in a foreign operation, unrecognized firm
commitments, an available-for-sale security or a foreign-currency denominated
forecasted transaction. The accounting for changes in fair value under SFAS 133
depends on the intended use of the derivative and the resulting designation. In
June 1999, the FASB decided that the effective date for adopting the
requirements of
8
IBIS TECHNOLOGY CORPORATION
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
SFAS 133 should be delayed to fiscal years beginning after June 15, 2000. This
delay, published as SFAS 137, applies to quarterly and annual financial
statements. In June 2000, the FASB issued SFAS 138, which addresses a limited
number of issues causing implementation difficulties for numerous entities that
apply SFAS 133. Ibis adopted the provisions of SFAS 133 as amended, on January
1, 2001. The adoption of these provisions did not have a material impact on its
financial condition or results of operations.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB No. 101"), "Revenue Recognition in Financial
Statements". This bulletin, as amended, established guidelines for revenue
recognition and was originally effective for periods beginning after March 15,
2000. In June 2000, the SEC announced that the effective date of SAB 101 was
being delayed until no later than the quarter ending December 31, 2000. Ibis
adopted the provisions of SAB 101, as amended, on December 31, 2000. The
adoption of these provisions did not have a material impact on its financial
condition or results of operations.
In March 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation", an interpretation of APB
Opinion No. 25, "Accounting for Stock Issued to Employees". This
interpretation clarified the application of Opinion 25 with respect to,
among other issues: (a) the definition of an employee for purposes of
applying Opinion 25, (b) the criteria for determining whether a stock
ownership plan qualifies as noncompensatory, (c) the accounting implications
of various modifications to the terms of a previously fixed stock option or
award, and (d) the accounting for the exchange of stock compensation awards
in a business combination. The Interpretation is effective July 1, 2000 and
the effects of applying the Interpretation are recognized on a prospective
basis. Ibis adopted the provisions of FASB Interpretation No. 44 on July 1,
2000. The adoption of this Interpretation did not have a material impact on
its financial condition or results of operations.
9
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Ibis Technology Corporation ("Ibis") was formed in October 1987 and
commenced operations in January 1988. Ibis' initial activities consisted of
producing and selling SIMOX-SOI wafers and conducting research and development
activities. This research led to the development of a proprietary second
generation oxygen implanter, the Ibis 1000, and to other proprietary process
technology.
Initially, much of our revenue was derived from research and development
contracts and sales of wafers for military applications. Over the years, there
was a shift in revenue to sales of SIMOX-SOI wafers for commercial applications
and the nature of our business has evolved through stages where sometimes our
revenues primarily resulted from selling wafers for evaluation purposes, and
sometimes our revenue was generated primarily from equipment sales. This is a
normal path to follow while developing and promoting a fundamental new
technology, especially when it relates to the semiconductor industry embracing
any change that affects fabrication operations. We believe that we are in the
technology rollout stage of our corporate life cycle. Our fundamental SIMOX-SOI
technology has been developed, refined and proven over the last dozen years. We
believe we are now at a stage where customers are actively and seriously taking
steps toward adopting our SIMOX-SOI technology in their mainstream manufacturing
processes.
Looking at it from our customer's perspective, the pathway to SOI
adoption is complex and time consuming. Typically, a customer will go through
three major stages:
o Sampling, where preliminary performance characteristics are explored and
verified;
o R&D, where specific customer specifications are tested and developed; and
o Production, where yield and cost benefits are optimized.
There are many steps within each of these stages, as the customers are
evaluating a new wafer technology that essentially puts a new foundation under
every other process they have spent billions of dollars and decades of time
developing. This process takes anywhere from 12 to 36 months for a customer to
proceed from initial sampling through R&D to initial production, which is not
unlike the standard process for qualifying any new wafer material. These steps
apply each time there is a change in the customer's fabrication process, such as
a feature-size change or new material. Ibis has a number of customers going
through this process right now. We have several customers in the sampling and
R&D stages and four customers are already in the production stage.
Since most of our customers have purchased wafers for the purpose of
characterizing and evaluating the wafers, developing prototype products or for
pilot production, historical sales are not necessarily indicative of future
operations because such sales would not be considered of a recurring nature.
Ibis has experienced quarterly and annual fluctuations in revenue and
results of operations due to the timing of receipt of equipment orders and
dependence on a limited number of customers. We may continue to experience
fluctuations in revenue and results of operations due to equipment sales and
shifts in customer demands during the various stages of the SIMOX-SOI adoption
cycle.
10
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
During the first quarter of 2001, three to four of our Ibis 1000 oxygen
implanters were used by Ibis to generate SIMOX-SOI wafer sales and three to four
implanters were used for non-revenue generating activities, such as research and
development. Ibis currently has ten Ibis 1000 oxygen implanters, including two
owned by a customer which reside at Ibis pursuant to terms of a consignment
agreement.
On April 12, 2001, Ibis announced in a press release that one of our
largest customers had informed us that it expects to order substantially reduced
quantities of wafers for the remainder of 2001. As a result, we expect second
quarter and full year revenues to be substantially reduced from our earlier
estimates.
RESULTS OF OPERATIONS
FIRST QUARTER ENDED MARCH 31, 2001 COMPARED TO FIRST QUARTER ENDED
MARCH 31, 2000
PRODUCT SALES. Wafer product sales increased $819,635 or 50%, to
$2,463,395 for the first quarter ended March 31, 2001 from $1,643,760 for the
first quarter ended March 31, 2000. The increase in product sales is
attributable to increased wafer sales by Ibis in the Pacific Rim and in Europe
where one customer is using Ibis' SIMOX-SOI wafers in its commercial products.
Sales by Ibis in the United States decreased overall during this quarter,
primarily because our largest domestic customer is delaying further SIMOX-SOI
wafer purchases until our new Advantox MLD process is qualified. In December
2000, Ibis entered into a royalty-bearing license agreement with this customer
which gives Ibis the right to manufacture and sell SIMOX-SOI wafers using the
licensed process.
CONTRACT AND OTHER REVENUE. Contract and other revenue includes revenue
derived from government contracts, license agreements, characterization and
other services. Contract and other revenue increased for the first quarter ended
March 31, 2001 to $200,887 from $79,408 for the first quarter ended March 31,
2000, an increase of $121,479 or 153%. This increase is primarily attributable
to an increase in revenues derived from royalty revenue.
EQUIPMENT REVENUE. Equipment revenue represents revenue recognized
from sales of implanters, spare parts and field service revenue. Equipment
revenue increased to $536,223 for the first quarter ended March 31, 2001 from
$315,944 for the first quarter ended March 31, 2000, an increase of $220,279
or 70%. This increase is primarily attributable to an increase in field
service revenue this quarter. Field Service revenue accounted for $293,150 of
equipment revenue for the first quarter ended March 31, 2001 as compared to
$73,800 of equipment revenue for the first quarter ended March 31, 2000.
Sales of spare parts accounted for $243,073 of equipment revenue for the
first quarter ended March 31, 2001 as compared to $242,144 of equipment
revenue for the first quarter ended March 31, 2000. We recognized no revenue
from the sales of implanters during the first quarter of 2000 or 2001.
TOTAL SALES AND REVENUE. Total revenue for the first quarter ended March
31, 2001 was $3,200,505, an increase of $1,161,393, or 57%, from total revenue
of $2,039,112 for the first quarter ended March 31, 2000. This increase resulted
primarily from increased wafer product sales.
TOTAL COST OF SALES AND REVENUE. Cost of wafer product sales for the
first quarter ended March 31, 2001 was $1,792,608, as compared to $933,020 for
the first quarter ended March 31, 2000, an increase of $859,588 or
11
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
92%. This increase is primarily attributable to the increase in fixed costs
associated with production, which include depreciation and amortization,
utilities, occupancy expenses, and repair and maintenance. Cost of contract
and other revenue consists of labor and materials expended during the
quarter. Cost of contract and other revenue for the first quarter ended March
31, 2001 was $66,789, as compared to $52,244 for the first quarter ended
March 31, 2000, an increase of $14,545, or 28%. This increase is primarily
attributable to subcontract work on contracts. Cost of equipment revenue
represents the cost for spare parts along with labor incurred for field
service. Cost of equipment revenue for the first quarter ended March 31, 2001
was $251,444 as compared to $132,254 for the first quarter ended March 31,
2000, an increase of $119,190 or 90%. This increase is primarily attributable
to the increase in volume of spare parts shipped in the quarter. As a result
of the foregoing, the total cost of sales and revenue for the first quarter
ended March 31, 2001 was $2,110,841 as compared to $1,117,518 for the first
quarter ended March 31, 2000, an increase of $993,323 or 89%. The gross
margin for all sales was 34% for the first quarter ended March 31, 2001 as
compared to 45% for the first quarter ended March 31, 2000. This decrease in
gross margin for all sales is primarily attributable to the increase in the
cost of wafer product sales. The gross margin for wafer product sales was 27%
in the first quarter of 2001 compared to 43% in the prior year quarter. This
decrease is primarily due to the expansion of our wafer operations during the
second half of 2000, which included additional space, clean rooms and
equipment. This resulted in higher depreciation and occupancy costs. In
addition, cost of wafer product sales for the first quarter ended March 31,
2001 includes amortization of technology which was licensed by Ibis in
December 2000.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
for the first quarter ended March 31, 2001 were $542,976 (or 17% of total
revenue) as compared to $446,744 (or 22% of total revenue) for the first quarter
ended March 31, 2000, an increase of $96,232, or 22%. This is primarily a result
of an increase in personnel and professional service fees.
MARKETING AND SELLING EXPENSES. Marketing and selling expenses for the
first quarter ended March 31, 2001 were $491,652 (or 15% of total revenue) as
compared to $427,020 (or 21% of total revenue) for the first quarter ended March
31, 2000, an increase of $64,632, or 15%. The increase in marketing and selling
expenses is primarily a result of an increase in public relations and product
samples.
RESEARCH AND DEVELOPMENT EXPENSES. Internally funded research and
development expenses increased by $268,244 or 29%, to $1,181,329 (or 37% of
total revenue) for the first quarter ended March 31, 2001, as compared to
$913,085 (or 45% of total revenue) for the first quarter ended March 31, 2000.
This increase is primarily due to an increase in personnel and consultants hired
for the Ibis design and development effort on our next generation oxygen
implanter, the Ibis 2000, and increased material expenses on Ibis' SIMOX-SOI
wafer development programs.
OTHER INCOME (EXPENSE). Total other income for the first quarter ended
March 31, 2001 was $342,391 as compared to $495,212 for the first quarter ended
March 31, 2000, a decrease of $152,821, or 31%. The decrease in total other
income is primarily attributable to decreased interest income earned as a result
of lower average cash balances and a reduction in interest rates.
12
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2001, Ibis had cash and cash equivalents of $22,548,847,
reflecting in large part our receipt of approximately $25 million in net
proceeds from the August 1999 public sale of 1,000,000 shares of Common Stock.
During the three months ended March 31, 2001, the Company generated $623,840 in
cash from operating activities as compared to cash used by operations in the
amount of $1,636,321 for the same period in 2000. Depreciation and amortization
expense for the three months ended March 31, 2001 and 2000 was $696,496 and
$307,462, respectively. This accounted for 22% and 15% of total revenue,
respectively. Due to the capital intensive nature of Ibis' business and the
anticipated expansion of its facilities and production capacity, management
expects that depreciation and amortization will continue to be a significant
portion of its expenses. To date, Ibis' working capital requirements have been
funded primarily through debt and equity financings. The principal use of cash
during the three months ended March 31, 2001 was to fund additions to property
and equipment which totaled $4,504,315. At March 31, 2001, Ibis had commitments
to purchase approximately $3,290,000 in material or subassemblies to be used for
manufacturing Ibis 1000 implanters and $1,810,000 in capital equipment
purchases.
Our existing cash resources together with funds generated from operations
are believed to be sufficient to support Ibis' operations on our anticipated
scale for at least the next 18 months. Management of Ibis currently believes
that this anticipated scale of operations will include the addition of Ibis 1000
oxygen implanters, the purchase of support equipment, the expansion of Ibis'
facilities, and the design and development of the next generation oxygen
implanter, the Ibis 2000. Additional implanters are expected to be transferred
to production at various times as additional capacity is needed to meet demand.
We anticipate that we may be required to raise substantial additional capital in
the future in order to finance further expansion of our manufacturing capacity
and our research and development programs.
EFFECTS OF INFLATION
The Company believes that over the past three years inflation has not had
a significant impact on the Company's sales or operating results.
BUSINESS OUTLOOK
This Form 10-Q contains forward-looking statements within the meaning
of the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995 including statements regarding the adoption by our customers of
SIMOX-SOI technology in their mainstream manufacturing processes, the
continuation of fluctuations in revenue, the expectation that depreciation
and amortization will continue to be a significant portion of expenses, the
need for future additional capital and the sufficiency of our current
capital, the anticipated scale of Ibis' operations and the changes in our
expectations for revenues in the second quarter of fiscal 2001 and full-year
2001. Such statements are based on our current expectations and are subject
to a number of factors and uncertainties which could cause actual results to
differ materially from those described in the forward-looking statements.
Such factors and uncertainties include, but are not limited to, the
uncertainty that the performance advantages of SIMOX-SOI wafers will continue
to be realized commercially or that a commercial market for SIMOX-SOI wafers
will continue
13
IBIS TECHNOLOGY CORPORATION
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
to develop; the dependence by Ibis on key customers (during 1998, 1999 and
2000, revenues from two customers averaged in the aggregate between 78% and
81% of our revenues, so that the loss of one or more of these major customers
and the failure of Ibis to obtain other sources of revenue could have a
material adverse impact on us); the loss of the services of one or more of
our key individuals, which could have a material adverse impact on Ibis; the
dependence by Ibis on key suppliers, so that the loss of services of one or
more suppliers could have a material adverse impact on us; the development of
competing or superior technologies and products from manufacturers, many of
which have substantially greater financial, technical and other resources
than us; Ibis' lack of experience in producing commercial quantities of our
products at acceptable costs; our ability to successfully complete the
manufacture of our implanters and that these implanters will be accepted by
our customers; Ibis' ability to develop and maintain strategic alliances for
the manufacturing, marketing and distribution of our products and sale of
equipment; the cyclical nature of the semiconductor industry, which has
negatively affected our sales of SIMOX-SOI wafers during industry downturns
and which could continue to do so in the future; the limited availability of
critical materials and components for wafer products and implanters, as a
shortage of such materials and components or a significant increase in the
price thereof could have a material adverse effect on our business and
results of operations; the availability of additional capital to fund
expansion on acceptable terms, if at all; and general economic conditions.
All information set forth in this Form 10-Q is as of the date of this Form
10-Q, and Ibis undertakes no duty to update the information, unless required
by law.
PART I - ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The exposure of market risk associated with risk-sensitive instruments is
not material to the Company, as the Company does not transact its sales
denominated in other than United States dollars, invests primarily in short-term
commercial paper, holds its investments until maturity and has not entered into
hedging transactions.
14
IBIS TECHNOLOGY CORPORATION
PART II
OTHER INFORMATION
Item 1 - LEGAL PROCEEDINGS
None
Item 2 - CHANGES IN SECURITIES
None
Item 3 - DEFAULTS UPON SENIOR SECURITIES
None
Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5 - OTHER INFORMATION
None
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits furnished as Exhibits hereto:
None
(b) Reports on Form 8-K:
The Company filed with the Securities and Exchange Commission
on February 14, 2001 a Current Report on Form 8-K for the
February 13, 2001 event announcing its alliance with MEMC.
The Company filed with the Securities and Exchange Commission
on February 14, 2001 a Current Report on Form 8-K for the
February 14, 2001 event announcing Fourth Quarter and Fiscal
Year 2000 Results.
15
IBIS TECHNOLOGY CORPORATION
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.
Ibis Technology Corporation
Date: May 11, 2001 By: /s/ DEBRA L. NELSON
--------------------------------------------
Debra L. Nelson
Chief Financial Officer, Treasurer and Clerk
(principal financial and accounting officer)
Date: May 11, 2001 By: /s/ THOMAS F. LACEY
--------------------------------------------
Thomas F. Lacey
Controller and Assistant Treasurer
16