UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-26274
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INTEGRATED MEASUREMENT SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
OREGON 93-0840631
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
9525 S.W. GEMINI DRIVE, BEAVERTON, OR 97008
(Address of principal executive offices) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (503) 626-7117
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NO CHANGE
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 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
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At October 31, 1996, there were 6,720,801 shares of Integrated Measurement
Systems, Inc. common stock, $0.01 par value, outstanding.
(Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.)
INTEGRATED MEASUREMENT SYSTEMS, INC.
INDEX TO FORM 10-Q
PART I FINANCIAL INFORMATION PAGE NUMBER
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Item 1. Financial Statements
Statements of Income for the three months and the nine
months ended September 30, 1996 and 1995
Balance Sheets as of September 30, 1996 and
December 31, 1995
Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995
Notes to the Financial Statements
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
PART II OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
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2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTEGRATED MEASUREMENT SYSTEMS, INC.
STATEMENTS OF INCOME
(In thousands, except net income per share)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
Product sales $10,183 $ 8,642 $29,425 $24,024
Service and other sales 2,554 1,854 7,839 5,405
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Net sales 12,737 10,496 37,264 29,429
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Cost of product sales 3,515 3,197 10,360 9,382
Cost of service and other sales 932 729 3,003 2,045
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Total cost of sales 4,447 3,926 13,363 11,427
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Gross margin 8,290 6,570 23,901 18,002
Operating expenses:
Research, development and engineering 1,750 1,557 5,667 4,275
Selling, general and administrative 4,158 3,621 11,462 10,181
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Total operating expenses 5,908 5,178 17,129 14,456
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Operating income 2,382 1,392 6,772 3,546
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Other income (expense), net 98 135 135 248
------- ------- ------- -------
Income before income taxes 2,480 1,527 6,907 3,794
Provision for income taxes 843 586 2,526 1,455
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Net income $ 1,637 $ 941 $ 4,381 $ 2,339
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Net income per share $ 0.23 $ 0.14 $ 0.63 $ 0.36
------- ------- ------- -------
------- ------- ------- -------
Weighted average number of common and common equivalent
shares outstanding 6,975 6,768 6,972 6,587
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------- ------- ------- -------
SEE ACCOMPANYING NOTES TO UNAUDITED FINANCIAL STATEMENTS
3
INTEGRATED MEASUREMENT SYSTEMS, INC.
BALANCE SHEETS
(In thousands, except per share data)
As of As of
September 30, December 31,
1996 1995
---- ----
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 8,532 $ 8,930
Trade receivables, less allowance for doubtful accounts
of $339 and $338 11,874 8,117
Receivable from affiliate, net 132 1,094
Inventories, net 7,830 5,830
Deferred income taxes 1,976 1,237
Prepaid expenses and other current assets 1,232 735
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Total current assets 31,576 25,943
Property, plant and equipment, net 5,825 5,178
Service spare parts, net 2,464 2,223
Software development costs, net 1,603 1,573
Other assets, net 411 84
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$41,879 $35,001
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,401 $ 2,660
Accrued compensation 1,886 1,629
Accrued warranty 741 801
Deferred revenue 1,473 2,291
Accrued income taxes 937 -
Other current liabilities 939 810
Capital lease obligations - current 221 164
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Total current liabilities 8,598 8,355
Deferred income taxes 374 108
Capital lease obligations, net of current portion 91 54
Deferred compensation 122 -
Shareholders' equity:
Preferred stock, $.01 par value, authorized 10,000,000 shares;
none issued and outstanding - -
Common stock, $.01 par value, authorized 15,000,000 shares;
issued and outstanding 6,720,685 and 6,699,803 67 67
Additional paid-in capital 22,296 20,467
Retained earnings 10,331 5,950
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Total shareholders' equity 32,694 26,484
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$41,879 $35,001
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SEE ACCOMPANYING NOTES TO UNAUDITED FINANCIAL STATEMENTS.
4
INTEGRATED MEASUREMENT SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 34,631 $ 26,774
Payments to suppliers (16,728) (13,603)
Payments to employees (12,874) (10,033)
Income taxes paid (315) --
Other taxes paid (887) (481)
Interest received 318 246
Interest paid (24) (24)
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Net cash provided by operating activities 4,121 2,879
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and software (2,922) (909)
Purchases of long-term investments (123) --
Additions to service spare parts (870) (450)
Software development costs (629) (842)
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Net cash used in investing activities (4,544) (2,201)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital leases (208) (181)
Net proceeds from initial public offering -- 3,257
Proceeds from stock issued to employees 233 --
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Net cash provided by in financing activities 25 3,076
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Net increase (decrease) in cash and cash equivalents (398) 3,754
Beginning cash and cash equivalents balance 8,930 4,384
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Ending cash and cash equivalents balance $ 8,532 $ 8,138
-------- --------
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,381 $ 2,339
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 2,600 2,409
Contributed capital -- 177
Provision for deferred income taxes (473) (101)
Net change in payable to or receivable from affiliate 962 (526)
Increase in trade receivables (3,757) (3,343)
Increase in inventories (2,000) (2,164)
Increase in prepaid expenses and other current assets (497) (408)
Increase in current income tax liability 2,533 1,175
Increase in accounts payable and accrued liabilities 1,068 2,484
Increase in deferred compensation 122 --
(Decrease) increase in deferred revenue (818) 837
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Net cash provided by operating activities $ 4,121 $ 2,879
-------- --------
-------- --------
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Purchase of assets through capital lease $ 302 $ 174
-------- --------
-------- --------
Tax benefit from stock option transactions $ 1,596 $ --
-------- --------
-------- --------
Noncash dividend to Cadence $ -- $ 1,027
-------- --------
-------- --------
SEE ACCOMPANYING NOTES TO UNAUDITED FINANCIAL STATEMENTS.
5
INTEGRATED MEASUREMENT SYSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS
(In thousands)
(Unaudited)
(1) BASIS OF PRESENTATION
The interim financial statements included herein have been prepared,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations, although the management of the Company believes
that the disclosures are adequate to make the information presented not
misleading. Interim financial statements are by nature tentative to a
certain degree; judgments are used to estimate interim amounts for items
that are normally determinable only on an annual basis. The financial
information as of December 31, 1995 is derived from the Company's audited
financial statements.
The interim period information presented herein includes normally recurring
adjustments which are, in the opinion of the management of the Company,
only necessary for a fair statement of the results of the respective
interim periods. Results of operations for interim periods are not
necessarily indicative of results to be expected for an entire year.
Net income per common and common equivalent share is calculated by dividing
net income by the weighted average number of common stock and common stock
equivalents outstanding during the period. Common stock equivalents are
calculated using the treasury stock method, and consist of dilutive shares
issuable upon the exercise of outstanding common stock options.
(2) INVENTORIES
Inventories, consisting principally of computer hardware, electronic sub-
assemblies and test equipment, are valued at standard costs which
approximate the lower of cost (first-in, first-out) or market. Costs
utilized for inventory valuation purposes include material, labor and
manufacturing overhead. Inventories consists of the following:
September 30, December 31,
1996 1995
---- ----
Raw Materials. . . . . . . . . . . . . $ 4,210 $ 2,613
Work-in-progress . . . . . . . . . . . 2,446 2,945
Finished Goods . . . . . . . . . . . . 1,174 272
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$ 7,830 $ 5,830
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(3) NON-QUALIFIED DEFERRED COMPENSATION PLAN
On July 1, 1996, the Company implemented an Executive Deferred Compensation
Plan (the "Plan") for the purpose of providing its eligible executives with
a program for deferring compensation that otherwise would be paid during
employment. The Plan is intended to constitute a deferred compensation
arrangement for the benefit of a select group of management or highly
compensated employees of the Company. Under the terms of the Plan,
eligible executives and employees of the Company may make voluntary
contributions to the Plan as a percentage of compensation, but not in
excess of limitations stated in the plan. The Company has invested these
voluntary contributions in a variety of investment funds for the intended
use of paying plan benefits when participating executives and employees
become eligible to receive such benefits under the terms of the Plan.
These investments have been included in Other Assets in the accompanying
balance sheets. The Company currently does not match executive or employee
contributions and does not intend to do so in the near future.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
NET SALES. Net sales of $12.7 million for the three months ended September
30, 1996 increased 21% from $10.5 million recorded during the three months
ended September 30, 1995. The increase in net sales included an increase of
18% in product sales from $8.6 million in the third quarter of 1995 to $10.2
million for third quarter of 1996. Service and other sales increased 38%
from $1.9 million during the three months ended September 30, 1995 to $2.6
million for the three months ended September 30, 1996. The increase in
product sales reflects increases in sales of the Company's ATS FT Test
Stations, which contributed 25% of net sales for the third quarter of 1996
compared to 17% of net sales for the third quarter of 1995, and a continued
significant contribution to net sales by the Company's ATS Blazer Test
Stations. The increase in service and other sales resulted primarily from
revenues generated by Virtual Test Software related services. During the
third quarter of 1996, sales of Virtual Test Software and related services
amounted to 8% of net sales, compared to 4% of net sales during the third
quarter of 1995.
Sales to Intel Corporation and Advanced Micro Devices, Inc., amounted to 28% and
18% of net sales, respectively, during the third quarter of 1996. Customers
individually providing less than 10% of net sales generated the remaining 54% of
the Company's net sales for the three months ended September 30, 1996.
COST OF SALES. Total cost of sales increased 13% from $3.9 million in the
third quarter of 1995 to $4.4 million for the third quarter of 1996. Product
cost of sales increased 10% from $3.2 million for the three months ended
September 30, 1995 to $3.5 million for the three months ended September 30,
1996, primarily due to higher sales volume, partially offset by benefits from
lower costs of materials and manufacturing efficiencies. Service and other cost
of sales increased 28% from $729,000 in the third quarter of 1995 to $932,000 in
the third quarter of 1996, reflecting costs associated with expanding Virtual
Test Software related services.
GROSS MARGIN. The Company's gross margin increased 26% from $6.6 million in
the three months ended September 30, 1995 to $8.3 million in the three months
ended September 30, 1996. As a percent of net sales, gross margin increased
from 62.6% for the third quarter of 1995 to 65.1% for the third quarter of
1996. Product gross margin, as a percent of product sales, increased from
63.0% for the three months ended September 30, 1995 to 65.5% for the three
months ended September 30, 1996. The increase in product gross margin
resulted primarily from increased sales of higher margin ATS FT Test Stations
and Virtual Test Software, combined with lower material costs during the
third quarter of 1996. Service and other gross margin, as a percent of
service and other sales, increased to 63.5% during the third quarter of 1996,
compared to 60.7% during the third quarter of 1995, due primarily to
increased sales of higher gross margin Virtual Test Software related services.
RESEARCH, DEVELOPMENT AND ENGINEERING. Expenses associated with research,
development and engineering increased 12% from $1.6 million in the three months
ended September 30, 1995 to $1.8 million for the three months ended
September 30, 1996. As a percentage of net sales, research, development and
engineering expenses decreased from 14.8% in the third quarter of 1995 to
13.7% in the third quarter of 1996. This decrease was principally attributable
to lower non-recurring engineering costs during the third quarter of 1996, which
more than offset increased expenditures related to enhancements of the Company's
existing products and development of future generation hardware and software
products.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses increased 15% from $3.6 million for the quarter ended September 30,
1995 to $4.2 million for the quarter ended September 30, 1996. The increase was
principally attributable to higher commissions associated with increased net
sales and increased investment in the Company's selling and marketing functions.
As a percentage of net sales, selling, general and administrative expenses have
decreased from 34.5% of net sales in the three months ended September 30, 1995
to 32.6% of net sales in three months ended September 30, 1996, as a result of
control over increases in expenses as net sales increased.
7
OTHER INCOME (EXPENSE), NET. Other income, net decreased to $98,000 for the
three months ended September 30, 1996, from $135,000 for the three months ended
September 30, 1995. The change from the third quarter of 1995 to the third
quarter of 1996 was due to changes in the investment mix for the Company's cash
and cash equivalent balances.
INCOME TAXES. The Company's effective rate for Federal and state income taxes
was 34.0% and 38.4% for the three months ended June 30, 1996 and 1995,
respectively. The decrease in the effective tax rate from 1995 to 1996 reflects
the benefits of research and development credits in 1996 which were not present
in 1995.
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
NET SALES. Net sales of $37.3 million for the nine months ended September 30,
1996 increased 27% from $29.4 million recorded during the nine months ended
September 30, 1995. The increase in net sales included an increase of 22% in
product sales from $24.0 million in the first nine months of 1995 to $29.4
million for first nine months of 1996. Service and other sales increased 45%
from $5.4 million during the nine months ended September 30, 1995 to $7.8
million for the nine months ended September 30, 1996. The increase in product
sales was partially driven by the introduction of the Company's ATS FT Test
Stations, which contributed 33% of net sales for the first nine months of 1996,
and continued contribution by the Company's ATS Blazer Test Station products.
The increase in service and other sales resulted primarily from revenues
generated by refurbishment services and Virtual Test Software related services.
During the first nine months of 1996, sales of Virtual Test Software and related
services amounted to 8% of net sales, compared to 4% of net sales during the
first nine months of 1995.
Sales to the Company's largest customer, Intel Corporation, amounted to 39% of
net sales during the first nine months of 1996. Customers individually providing
less than 10% of net sales generated the remaining 61% of the Company's net
sales for the first nine months of 1996.
COST OF SALES. Total cost of sales increased 17% from $11.4 million in the
first nine months of 1995 to $13.4 million for the first nine months of 1996.
Product cost of sales increased 10% from $9.4 million for the nine months ended
September 30, 1995 to $10.4 million for the nine months ended September 30,
1996, primarily due to higher sales volume, partially offset by benefits from
lower costs of materials and manufacturing efficiencies. Service and other cost
of sales increased 47% from $2.1 million in the first nine months of 1995 to
$3.0 million in the first nine months of 1996, due to higher costs associated
with refurbishment services, increased labor costs associated with expanding
Virtual Test Software related services, and a one-time cumulative
depreciation adjustment of the Company's service parts during the first
quarter of 1996.
GROSS MARGIN. The Company's gross margin increased 33% from $18.0 million
in the nine months ended September 30, 1995 to $23.9 million in the nine
months ended September 30, 1996. As a percent of net sales, gross margin
increased from 61.2% for the first nine months of 1995 to 64.1% for the first
nine months of 1996. Product gross margin, as a percent of related sales,
increased from 60.9% for the nine months ended September 30, 1995 to 64.8%
for the nine months ended September 30, 1996. The increase in product gross
margin resulted primarily from increased sales of higher margin ATS FT Test
Stations and lower material costs during the first nine months of 1996.
Service and other gross margin, as a percent of related sales, decreased to
61.7% during the first nine months of 1996, compared to 62.2% during the
first nine months of 1995, due primarily to the impact of the cumulative
depreciation adjustment of the Company's service parts during the first
quarter of 1996, partially offset by improved cost efficiencies in the
Company's systems service business and higher gross margin associated with
increased sales of Virtual Test Software related services.
RESEARCH, DEVELOPMENT AND ENGINEERING. Research, development and engineering
expenses increased 33% from $4.3 million in the nine months ended September 30,
1995 to $5.7 million for the nine months ended September 30, 1996. As a
percentage of net sales, research, development and engineering expenses
increased from 14.5% in the first nine months of 1995 to 15.2% in the first nine
months of 1996. This increase resulted from increased spending related to
enhancements of the Company's existing products and development of future
generation hardware and software products.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses increased 13% from $10.2 million for the nine months ended
September 30, 1995 to $11.5 million for the nine months ended
September 30, 1996. The increase was principally attributable to higher
commissions driven by increased net sales and increased
8
investment in the Company's selling and marketing infrastructure. As a
percentage of net sales, selling, general and administrative expenses have
decreased from 34.6% of net sales in the nine months ended September 30, 1995
to 30.8% of net sales in nine months ended September 30, 1996, as a result of
control over increases in expenses as net sales increased.
OTHER INCOME, NET. Other income, net decreased from $248,000 for the nine
months ended September 30, 1995 to $135,000 for the nine months ended
September 30, 1996. The decrease from the first nine months of 1995 to the
first nine months of 1996 was due principally to a non-recurring write-off of
expenses associated with the Company's withdrawn secondary public stock
offering during the second quarter of 1996 due to unfavorable stock market
conditions, partially offset by higher interest income generated on higher
average cash and cash equivalent balances.
INCOME TAXES. The Company's effective rate for Federal and state income taxes
was 36.6% and 38.4% for the nine months ended September 30, 1996 and 1995,
respectively. The rate decrease reflects the favorable impact of research and
development credits.
FUTURE OPERATING RESULTS
Future operating results will depend on many factors, including demand for the
Company's products, introduction of new products by the Company and by its
competitors, and industry acceptance of Virtual Test Software and new Test
Station products. There can be no guarantee that the Company's net sales will
continue to grow or that such growth will be sustained in future periods or that
the Company will remain profitable in any future period.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1996, the Company's principal sources of liquidity consisted
of cash and cash equivalents of $8.5 million, and funds available under an
existing bank line of credit of $10.0 million.
OPERATING ACTIVITIES. The Company's net cash provided by operating activities
increased to $4.1 million during the first nine months of 1996 from $2.9 million
for the nine-month period ended September 30, 1995. Cash received from
customers increased 29% from $26.8 million during the first nine months of 1995
to $34.6 million during the first nine months of 1996. Combined payments to
suppliers and employees increased 25% from $23.7 million during the first nine
months of 1995 to $29.6 million for the first nine months of 1996. The
increases in cash received from customers and payments to suppliers and
employees are directly related to the increase in net sales and inventories and
expenses associated with those sales. The Company's trade receivables have
increased by $3.8 million during the first nine months of 1996 as a direct
result of timing of shipments late in the third quarter of 1996. Inventories
have increased by $2.0 million during the first nine months of 1996 reflecting
the increase in volume of the ATS FT Test Stations introduced late in 1995, and
the introduction of the MTS Test Stations during the second quarter of 1996.
Deferred revenue has decreased during the first nine months of 1996 by $818,000,
reflecting the recognition of revenue associated with FOB destination shipments
which had been deferred at the end of 1995. The effect of the increases in
trade receivables and inventories, and decreases in deferred revenue, has been
partially offset by an increase of $1.1 million in trade payables and accrued
liabilities during the first half of 1996, which has been primarily driven by
higher costs and expenses associated with the Company's increased sales volume.
INVESTING ACTIVITIES. During the first nine months of 1996, cash flows for
investments in equipment and software necessary to develop, maintain and
distribute new and existing Test Station and Virtual Test products amounted to
$2.9 million. Capitalization of software development costs of $629,000 during
the first nine months of 1996 was only slightly higher than related amortization
of $600,000. Additions to the Company's pool of service spare parts amounted to
$870,000 during the first three quarters of 1996, driven primarily by the need
to stock parts to support the Company's new ATS FT and MTS Test Stations
introduced in late 1995 and the first half of 1996. The Company occupied
additional leased facility space to meet the volume-driven demands for
manufacturing and engineering capacity during the second quarter of 1996. In
addition, the Company is continuing with the implementation of new information
systems for the manufacturing, service and finance functions during the final
quarter of 1996.
9
FINANCING ACTIVITIES. During the first nine months of 1996, cash flows
provided by financing activities amounted to $25,000, compared to $3.1 million
during the first nine months of 1995. This decrease reflects the proceeds of
$3.3 million from the Company's initial public offering of common stock in July
1995, while proceeds from the sale of stock to employees during the first nine
months of 1996 have amounted to $233,000. Cash outflows for principal payments
on capital leases have increased slightly, from $181,000 for the first three
quarters of 1995 to $208,000 during the first three quarters of 1996.
NON-CASH FINANCING ACTIVITIES. During the first nine months of 1996, the
Company realized noncash reductions in current tax liabilities of $1.6 million
resulting from the benefit of tax deductions of employee gains from the exercise
of stock options of Cadence Design Systems, Inc. (Cadence), the Company's
majority shareholder. The benefit of the stock option deduction is reflected as
an increase to Additional Paid-in Capital in the accompanying Balance Sheets.
The employee gains are not expenses of the Company for financial reporting
purposes, and since these options are related to Cadence stock, the exercise of
these stock options does not increase the number of shares of the Company's
common stock outstanding. Additionally, the Company used non-cash capital lease
financing for equipment acquisitions totaling $302,000 during the first half of
1996.
The Company believes that cash on hand and cash generated from operations, as
well as cash available from the Company's existing $10.0 million short-term line
of credit, will be sufficient to meet the Company's working capital and other
cash requirements for at least the next twelve months. Company management is
continually evaluating opportunities to develop and introduce new products, and
to acquire complementary businesses or technologies. At present, the Company
has no understandings, commitments or agreements with respect to any such
opportunities. Any transactions resulting from such opportunities, if
consummated, may require the use of some of the Company's cash or necessitate
funding from other sources.
FORWARD LOOKING STATEMENTS
Results of operations for the periods discussed above should not be considered
indicative of the results to be expected for any future period, and fluctuations
in the operating results may also result in fluctuations in the market price of
the Company's common stock.
Like most high technology and high growth companies, the Company faces certain
business risks that could have adverse effects on the Company's results of
operations. Sales of the Company's products to a limited number of customers is
expected to continue to account for a significant percentage of net sales over
the foreseeable future. The Company purchases some key components from sole or
single source vendors for which alternative sources are not currently available.
The Company is dependent on high dollar customer orders, deriving a substantial
portion of its net sales from the sale of Test Stations which typically range in
price from $0.2 to $1.2 million per unit and may be priced as high as $1.8
million for a single unit. Significant delays of such orders, should they
occur, could have an adverse impact on the Company's results of operations. In
addition, the Company's future operating results and financial condition are
subject to influences driven by rapid technological changes, a highly
competitive industry, a lengthy sales cycle, and the cyclical nature of general
economic conditions.
The Company has thus far avoided any material adverse impact on its results of
operations resulting from such risks. However, no assurance can be given that
such risks will not affect the Company's financial position or results of
operations in future periods.
Additionally, all statements in this Quarterly Report (Form 10-Q) relative to
future levels of sales, gross margins, and expenses shall be considered to be
"forward looking statements" within the meaning of the Private Securities
Reform Act of 1995. These forward looking statements are subject to the above
business and economic risks the Company faces.
10
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (exhibit reference numbers refer to Item 601 of
Regulation S-K)
10. Integrated Measurement Systems, Inc. Executive Deferred
Compensation Plan
27. Financial Data Schedule
(b) Reports on Form 8-K:
One report on Form 8-K was filed on August 14, 1996 and is incorporated
herein by reference. The contents of the report are summarized below:
On July 16, 1996, Integrated Measurement Systems, Inc. and LTX announced
an OEM and joint R&D agreement. Under the non-exclusive distribution
agreement, IMS will distribute LTX's Synchro Models Toolbox and Device
Tool software products. Also, under this agreement, IMS will help
develop portions of the Synchro Models Toolbox. IMS and LTX will work
together to integrate IMS' Dantes-TM-, and Device Tool and Synchro
Models Toolbox products.
On July 15, 1996, Integrated Measurement Systems, Inc. announced the
introduction of their new multimedia mixed-signal, MTS-TM-Test Station
for verifying and characterizing high-speed components used in
multimedia applications.
On July 16, 1996, Integrated Measurement Systems, Inc. announced that,
for the fourth consecutive year, it has received the VLSI Research Inc.
10 BEST Award for Test and Material Handling Equipment award in customer
satisfaction.
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 on November 12, 1996.
INTEGRATED MEASUREMENT SYSTEMS, INC.
(Registrant)
/s/ Sar Ramadan
----------------------------------
Sar Ramadan
On behalf of the Registrant,
and as Principal Financial Officer
11