SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A Amendment No. 1 (Mark One) [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1995 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ___ to ___ Commission file number 0-17139 GENUS, INC. (Exact name of registrant as specified in its charter) California 94-279080 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1139 Karlstad Drive, Sunnyvale, California 94089 (Address of principal executive offices) (Zip code) (408) 747-7120 ---------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable ------------------------------------------------------------- (Former name, former address and former fiscal year,if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ___X____ No ________ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common shares outstanding at May 10, 1995: 15,674,329 GENUS, INC. Index PART I. FINANCIAL INFORMATION Page No. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Signatures 12 3 4 5 6 7 8 GENUS, INC. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Net sales for the quarter ended March 31, 1995 were $22.5 million compared with net sales of $13.8 million in the same period of 1994, a 63 percent increase. The increase was primarily due to the introduction of the tungsten chemical vapor deposition (CVD) 7000 product line with higher average selling prices (ASP), higher unit sales of ion implantation systems and greater spares revenue. The Company's net sales results continue to benefit from strong market conditions in Korea. Gross margin for the quarter ended March 31, 1995 was 41 percent compared to 39 percent for the same period in 1994. The improvement in gross margin was primarily due to higher ASP, higher unit sales volumes, greater absorption of manufacturing costs, and other gross margin improvement programs. The Company's gross margins have historically been affected by variations in ASP, changes in the mix of product sales, unit shipments levels, the level of foreign sales, and competitive pricing pressures. During the first quarter of 1995, Research and Development (R&D) expenses as a percentage of net sales, were 13 percent compared to 15 percent in the same period of 1994. The change was primarily due to higher net sales volumes. On an absolute dollar basis, R&D expenses during the first quarter of 1995 increased $1.0 million when compared with the same period in 1994. The increase was primarily due to higher development material cost and depreciation expense for new product development. The Company continually evaluates its R&D investment in view of evolving competitive and market conditions. Selling, general and administrative expenses (S,G&A) were 19 percent of net sales during the first quarter of 1995 compared to 20 percent in the same period of 1994. The change was primarily due to higher sales volume. On an absolute dollar basis, S,G&A increased $1.5 million when compared with the same period in 1994. The change was primarily due to increased headcount and related payroll costs, higher sales commissions and increased depreciation expense. During the first quarter of 1995, the Company earned the same amount in other income when compared with the same period in 1994. The effective tax rate for the first quarter of 1995 was 7 percent compared with the effective tax rate of 4 percent during the same period in 1994. In recent quarters, the Company has recorded positive financial performance and consistently solid order rates. These results have been primarily due to strong market conditions for the Company's products in Korea, as a result of increased investments in DRAM manufacturing facilities in this region. The Company anticipates that these positive trends will continue in the near-term. However, due to the continued competitive market 9 environment for the Company's products, the cyclical nature of the semiconductor equipment market and the Company's reliance on a limited number of customers for a significant portion of its orders, the Company remains cautiously optimistic about the future prospects for its business. The Company continues to make strategic investments for new product development and manufacturing improvements with a view to improve future performance by enhancing product offerings; however, such investment may adversely affect short-term operating performance. The Company is also continuing its efforts to implement productivity improvements for future operating performance. The Company believes that the future economic environment could continue to lengthen the order and sales cycles for its products, causing it to continue to simultaneously book and ship some orders during the same quarter. LIQUIDITY AND CAPITAL RESOURCES During the first quarter ended March 31, 1995, the Company's cash and cash equivalents increased $7.3 million principally due to the net proceeds from the issuance of common stock of $16.4 million, offset by cash used in operating activities of $4.3 million, payment of short-term bank borrowings of $3.8 million and the purchase of property and equipment of $0.6 million. The negative change in cash from operating activities primarily resulted from an increase of $6.8 million in accounts receivable due to higher net sales, and the inability to collect shipments made late in the quarter, and an increase in inventories of $2.9 million as a result of inventory purchases received late in the quarter to support shipments early in the second quarter of 1995. The reduction in cash from operating activities was offset by the increase in accounts payable of $2.8 million as a result of higher inventory purchases and the cash management practices of the Company; depreciation and amortization of $0.9 million and net income of $1.9 million. The Company's primary source of funds at March 31, 1995 consisted of $17.5 million in cash and cash equivalents, and funds available under a $10.0 million revolving line of credit. The line of credit is secured by substantially all of the assets of the Company and expires in May 1996. At March 31, 1995, the Company had no borrowings outstanding under the line of credit. Capital expenditures during the first quarter of 1995 were $1.0 million and related primarily to acquisition of machinery and equipment for the Company's R&D and Applications Laboratories. The Company anticipates that it will continue to make capital expenditures during the remainder of 1995. These expenditures, primarily for the R&D and Applications Laboratories are anticipated to be funded through existing working capital or lease financing. On February 17, 1995, the Company sold 2,539,018 shares of Common Stock through a private placement offering, which generated gross proceeds of approximately $17.5 million. The Company believes that cash generated from operations, if any, proceeds from the private placement offering and existing credit facilities will be sufficient to satisfy its cash needs during the next twelve months and for the foreseeable future. 10 11 GENUS, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 24, 1995 GENUS, INC. William W.R. Elder _____________________ William W.R. Elder Chairman and Chief Executive Officer Todd S. Myhre _____________________ Todd S. Myhre, President and Chief Operating Officer Acting Chief Financial Officer 12