0000950103-19-014518.txt : 20191030 0000950103-19-014518.hdr.sgml : 20191030 20191030161508 ACCESSION NUMBER: 0000950103-19-014518 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20191030 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20191030 DATE AS OF CHANGE: 20191030 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Ultra Clean Holdings, Inc. CENTRAL INDEX KEY: 0001275014 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 611430858 STATE OF INCORPORATION: DE FISCAL YEAR END: 1227 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50646 FILM NUMBER: 191180256 BUSINESS ADDRESS: STREET 1: 26462 CORPORATE AVENUE CITY: HAYWARD STATE: CA ZIP: 94545 BUSINESS PHONE: (510) 576-4400 MAIL ADDRESS: STREET 1: 26462 CORPORATE AVENUE CITY: HAYWARD STATE: CA ZIP: 94545 FORMER COMPANY: FORMER CONFORMED NAME: ULTRA CLEAN HOLDINGS INC DATE OF NAME CHANGE: 20031231 8-K 1 dp114627_8k.htm FORM 8-K

 

 

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): October 30, 2019
 
ULTRA CLEAN HOLDINGS, INC.
(Exact Name of Registrant
as Specified in Charter)
 
  Delaware  
  (State or Other Jurisdiction of Incorporation)  
 
000-50646   61-1430858
(Commission File Number)   (IRS Employer Identification No.)
 

26462 CORPORATE AVENUE  

HAYWARD, CA 

   94545
(Address of Principal Executive Offices)   (Zip Code)
 
     
Registrant’s telephone number, including area code:  (510) 576-4400
 
n/a
(Former Name or Former Address, if Changed Since Last Report)

 ______________________

  

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading
Symbol(s)		 Name of each exchange on which registered
Common stock, par value $0.001 per share UCTT

The NASDAQ Stock Market LLC 

(NASDAQ Global Select Market)

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

 

Item 2.02 Results of Operations and Financial Condition

 

On October 30, 2019, Ultra Clean Holdings, Inc. (the “Company”) issued a press release announcing its financial results for its third fiscal quarter ended September 27, 2019. A copy of the Company’s press release is attached hereto as Exhibit 99.1.

 

The information furnished under Item 2.02 of this Current Report on Form 8-K, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference into the Company’s filings with the SEC under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

Exhibit
No.   

  

Exhibit Description   

99.1   Press Release dated October 30, 2019

 

 

 

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 hereunto duly authorized.

 

    ULTRA CLEAN HOLDINGS, INC.  
       
       
Date: October 30, 2019   By: /s/ Sheri Savage  
        Name: Sheri Savage  
        Title: Chief Financial Officer and Senior Vice President of Finance  

 

 

 

 

 EX-99.1 2 dp114627_ex9901.htm EXHIBIT 99.1

Exhibit 99.1

 

Press Release     Source: Ultra Clean Holdings, Inc.

 

Ultra Clean Reports Third Quarter 2019 Financial Results

 

 

HAYWARD, Calif., October 30, 2019 /PRNewswire/ Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the third quarter ended September 27, 2019.

 

“UCT again delivered strong performance in the third quarter with top and bottom line results at the high end of our guided range,” said Jim Scholhamer, CEO. “We continue to focus on execution while driving towards improved profitability over the longer term.”

 

In the third quarter, the Company generated $23.0 million of cash from operations, paid down an additional $25.0 million in debt and ended the quarter with a cash balance of $158.7 million.

 

Third Quarter 2019 GAAP Financial Results

 

Total revenue was $254.3 million, a decrease of 4.2% compared to the prior quarter and an increase of 8.6% over the same period a year ago. SPS contributed $200.0 million and SSB added $54.3 million.

 

Total gross margin was 18.7% compared to 18.2% last quarter and 15.0% for the same period a year ago. GAAP operating margin was 3.2% compared to 3.4% last quarter and 0.4% a year ago.

 

Net income was $0.5 million or $0.01 per basic and diluted share. This compares to a net loss of $0.2 million or ($0.01) per basic and diluted share in the previous quarter, and net loss of $6.0 million or ($0.15) per basic and diluted share for the same period last year.

 

Third Quarter 2019 Non-GAAP Financial Results

 

Non-GAAP gross margin was 19.2% compared to 18.8% last quarter and 15.7% for the prior year. Non-GAAP operating margin was 5.8% compared to 6.2% in the previous quarter and 6.4% in the same period a year ago.

 

Non-GAAP net income was $8.5 million or $0.21 per diluted share. Non-GAAP net income for the prior quarter was $8.2 million, or $0.21 per diluted share and $11.9 million or $0.30 for the prior year.

 

The Company has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables included in this press release.

 

Fourth Quarter 2019 Outlook

 

The Company expects revenue in the range of $260.0 million to $280.0 million and GAAP diluted net income per share to be between $0.02 and $0.04. The Company expects non-GAAP diluted net income per share to be between $0.20 and $0.30. Excluding stock-based compensation, non-GAAP net income per share is expected to be between $0.26 and $0.36.

 

Conference Call

 

The call will take place at 1:45 p.m. PT today and can be accessed by dialing 1-844-826-3034 or 1-412-317-5179. No passcode is required. A replay of the call will be available by dialing 1-877-344-7529 or 1-412-317-0088 and entering the confirmation code 10135270. For international replay numbers, select from this link https://services.choruscall.com/ccforms/replay.html. The Webcast will be available on the Investor Relations section of the Company's website at http://uct.com/investors/events/.

 

About Ultra Clean Holdings, Inc.

 

Ultra Clean Holdings, Inc. is a leading developer and supplier of critical subsystems, ultra-high purity cleaning and analytical services primarily for the semiconductor industry. Ultra Clean offers its customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times,

 

 

 

 

design for manufacturability, prototyping and component manufacturing, and tool chamber parts cleaning and coating, as well as micro-contamination analytical services. Ultra Clean is headquartered in Hayward, California. Additional information is available at www.uct.com.

 

Use of Non-GAAP Measures

 

In addition to providing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), management uses non-GAAP net income, non-GAAP gross margin, non-GAAP operating margin and non-GAAP net income to evaluate the Company's operating and financial results. We believe the presentation of non-GAAP results is useful to investors for analyzing our core business and business trends and comparing performance to prior periods, along with enhancing investors' ability to view the Company's results from management's perspective. The presentation of this additional information should not be considered a substitute for results prepared in accordance with GAAP. Tables presenting reconciliations from GAAP results to non-GAAP results are included at the end of this press release.

 

The Company currently defines non-GAAP net income as net income (loss) before amortization of intangible assets, restructuring charges, executive transition costs, acquisition costs, fair value adjustments, depreciation adjustments and the tax effects of the foregoing adjustments. In our first quarter of fiscal 2020, we will begin reporting non-GAAP net income under a new definition that excludes the foregoing adjustments, as well as the impact of stock-based compensation.

 

A reconciliation of our guidance for non-GAAP net income per diluted share for the following quarter is not available due to fluctuations in the geographic mix of our earnings from quarter to quarter, which impacts our tax rate and cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable efforts and we are unable to determine the probable significance of the unavailable information.

 

Safe Harbor Statement

 

The foregoing information contains, or may be deemed to contain, "forward-looking statements" (as defined in the US Private Securities Litigation Reform Act of 1995) which reflect our current views with respect to future events and financial performance. We use words such as "anticipates," “projection,” “outlook,” “forecast,” "believes," "plan," "expect," "future," "intends," "may," "will," "estimates," “see,” "predicts," and similar expressions to identify these forward-looking statements. Forward looking statements included in this press release include our expectations about the semiconductor capital equipment market and outlook. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, the Company’s actual results may differ materially from the results predicted or implied by these forward-looking statements. These risks, uncertainties and other factors also include, among others, those identified in "Risk Factors,” "Management's Discussion and Analysis of Financial Condition and Results of Operations'' and elsewhere in our annual report on Form 10-K for the year ended December 28, 2018 as filed with the Securities and Exchange Commission and subsequently filed quarterly reports on Form 10-Q. Ultra Clean Holdings, Inc. undertakes no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise unless required by law.

 

Contact:

 

Rhonda Bennetto

Vice President Investor Relations

rbennetto@uct.com

 

 
 

 

ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share data)
                       
  Three months ended   Nine months ended
  September 27,    September 28,    September 27,    September 28, 
2019   2018 2019   2018
                       
Revenues $        254,323   $        234,079   $        779,831   $        839,134
Cost of goods sold          206,819            199,084            639,361            709,270
Gross profit            47,504              34,995            140,470            129,864
                       
Operating expenses:                      
  Research and development               3,634                 3,284              10,986                 9,228
  Sales and marketing               5,877                 3,839              16,638              11,274
  General and administrative            29,735              26,950              87,437              58,868
    Total operating expenses            39,246              34,073            115,061              79,370
Income from operations               8,258                    922              25,409              50,494
  Interest and other income (expense), net             (3,492)               (2,766)             (15,201)               (3,249)
Income (loss) before provision for income taxes               4,766               (1,844)              10,208              47,245
  Income tax provision               3,878                 4,596                 8,220                 9,984
Net income (loss)                  888               (6,440)                 1,988              37,261
Net income (loss) attributable to non-controlling interest                  375                  (443)                 1,072                  (443)
Net income (loss) attributable to Ultra Clean Holdings, Inc.  $                513   $           (5,997)   $                916   $          37,704
                       
Net income (loss) per share attributable to Ultra Clean Holdings, Inc. common stockholders:                      
  Basic  $             0.01    $           (0.15)       $             0.02    $             0.99
  Diluted  $                0.01    $              (0.15)       $                0.02    $                0.97
Shares used in computing net income (loss) per share:                      
  Basic            39,557              38,930              39,363              38,152
  Diluted            40,025              38,930              39,746              38,745

 

 

 

 

 

ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands)
             
    September 27,   December 28,
2019 2018
ASSETS            
Current assets:            
  Cash and cash equivalents   $           158,690   $           144,145
  Accounts receivable, net of allowance               110,388               106,956
  Inventories               153,549               186,116
  Prepaid expenses and other                 20,283                 25,708
    Total current assets               442,910               462,925
             
Property, plant and equipment, net               143,719               143,459
Goodwill               169,557               150,226
Purchased intangibles, net               185,409               193,507
Deferred tax assets, net                 12,274                 10,167
Operating lease right-of-use assets                 33,055      —     
Other non-current assets                    5,953                    5,193
Total assets   $           992,877   $           965,477
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current liabilities:            
  Bank borrowings   $                9,013   $                9,671
  Accounts payable               101,008                 99,011
  Operating lease liabilities                 11,578      —     
  Other current liabilities                 41,048                 30,616
    Total current liabilities               162,647               139,298
             
Bank borrowings, net of current portion               304,172               331,549
Deferred tax liability                 23,411                 15,834
Operating lease liabilities                 23,809      —     
Other long-term liabilities                 22,112                 27,808
    Total liabilities               536,151               514,489
             
Stockholders’ equity:            
  Common stock               294,679               287,127
  Retained earnings               150,634               149,718
  Accumulated other comprehensive loss                  (4,349)                     (547)
  Ultra Clean Holdings, Inc. stockholders' equity               440,964               436,298
  Noncontrolling interest                 15,762                 14,690
    Total stockholders’ equity               456,726               450,988
Total liabilities and stockholders’ equity   $           992,877   $           965,477

 

 

 

 

ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in thousands)
       
  Nine Months Ended
  September 27,   September 28,
  2019   2018
Cash flows from operating activities:      
Net income including noncontrolling interests  $              1,988    $           37,261
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization                32,152                  10,730
Stock-based compensation                  9,078                    7,133
Others                (3,695)                       853
Changes in assets and liabilities:      
Accounts receivable                (2,376)                  13,730
Inventories                42,489                  37,816
Prepaid expenses and other                  1,994                  (6,292)
Deferred income taxes                (2,115)                          68
Other non-current assets                    (776)                      (297)
Accounts payable                    (282)                (86,699)
Accrued compensation and related benefits                  8,757                    5,332
Income taxes payable                (1,473)                  (3,969)
Other liabilities                  3,332                      (335)
Net cash provided by operating activities                89,073                  15,331
Cash flows from investing activities:      
Purchases of property, plant and equipment              (12,665)                (15,526)
Acquisition of businesses, net of cash acquired              (29,873)              (290,462)
Proceeds from sale of equipment, including insurance proceeds                  2,698                          —
Net cash used for investing activities              (39,840)              (305,988)
Cash flows from financing activities:      
Proceeds from bank borrowings                34,805               382,184
Proceeds from issuance of common stock                     126                  94,471
Payments on bank borrowings and finance leases              (64,534)                (78,608)
Debt issuance costs paid                        —                (12,118)
Employees’ taxes paid upon vesting of restricted stock units                (1,652)                  (2,945)
Net cash provided by (used for) financing activities              (31,255)               382,984
Effect of exchange rate changes on cash and cash equivalents                (3,433)                      (293)
Net increase in cash and cash equivalents  $           14,545    $           92,034
Cash and cash equivalents at beginning of period             144,145                  68,306
Cash and cash equivalents at end of period  $         158,690    $         160,340

 

 

 

 

ULTRA CLEAN HOLDINGS, INC.
REPORTABLE SEGMENTS
GAAP TO NON-GAAP RECONCILIATION 
(Unaudited; Dollars in thousands)
                         
    GAAP   Non-GAAP
    Three months ended   Three months ended
    September 27, 2019   September 27, 2019
    SPS   SSB   Consolidated   SPS   SSB   Consolidated
Revenues    $          200,025    $            54,298    $          254,323    $          200,025    $            54,298    $          254,323
Gross profit    $            29,880    $            17,624    $            47,504    $            30,163    $            18,647    $            48,810
Gross margin   14.9%   32.5%   18.7%   15.1%   34.3%   19.2%
Operating profit    $              7,365    $                 893    $              8,258    $              9,289    $              5,345    $            14,634
Operating margin   3.7%   1.6%   3.2%   4.6%   9.8%   5.8%
                         
                Three months ended
                September 27, 2019
                SPS   SSB   Consolidated
Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands)            
Reported gross profit on a GAAP basis            $            29,880    $            17,624    $            47,504
Amortization of intangible assets (1)                                   -                       1,023                    1,023
Restructuring charges (2)               154                         -                          154
Fair value adjustments (4)               129                         -                          129
Non-GAAP gross profit                $            30,163    $            18,647  $            48,810
                         
Reconciliation of GAAP Gross margin to Non-GAAP Gross margin              
Reported gross margin on a GAAP basis             14.9%   32.5%   18.7%
Amortization of intangible assets (1)             0.0%   1.9%   0.4%
Restructuring charges (2)               0.1%                         -      0.1%
Fair value adjustments (4)               0.1%                         -      0.1%
Non-GAAP gross margin               15.1%   34.3%   19.2%
                         
Reconciliation of GAAP Income from operations to Non-GAAP Income from operations (in thousands)            
Reported income from operations on a GAAP basis            $              7,365    $                 893    $              8,258
Amortization of intangible assets (1)                              1,268                    3,825                    5,093
Restructuring charges (2)                                   327                       627                       954
Acquisition related costs (3)                                   200                         -                          200
Fair value adjustments (4)                                   129                         -                          129
Non-GAAP income from operations              $              9,289    $              5,345    $            14,634
                         
Reconciliation of GAAP Operating margin to Non-GAAP Operating margin            
Reported operating margin on a GAAP basis           3.7%   1.6%   3.2%
Amortization of intangible assets (1)             0.6%   7.0%   2.0%
Restructuring charges (2)               0.2%   1.2%   0.4%
Acquisition related costs (3)               0.1%   0.0%   0.1%
Fair value adjustments (4)               0.1%   0.0%   0.1%
Non-GAAP operating margin               4.6%   9.8%   5.8%
                         
1    Amortization of intangible assets related to the Company's acquisitions of AIT, Thermal, FDS, QGT and DMS
2    Represents severance costs and costs related to facility closures
3    Represents costs related to the QGT and DMS acquisitions    
4    Fair value adjustment related to DMS' sold inventories

 

 

 

 

ULTRA CLEAN HOLDINGS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
               
    Three Months Ended  
    September 27,   September 28,   June 28,  
    2019   2018   2019  
Reconciliation of GAAP Net Income (loss) to Non-GAAP Net Income (in thousands)  
Reported net income (loss) attributable to Ultra Clean Holdings, Inc. on a GAAP basis    $                513    $            (5,997)    $               (202)  
Amortization of intangible assets (1)                   5,093                   2,411                   5,053  
Restructuring charges (2)                   1,393                   1,565                      774  
Acquisition related costs (3)                      200                   9,490                   1,211  
Fair value adjustments (4)                      129                         -                         766  
Depreciation adjustments (5)                         -                            -                        (360)  
Product transition fees (6)                         -                         657                         -     
Disposal of business unit (7)                         -                      1,082                         -     
Income tax effect of non-GAAP adjustments (8)                  (1,567)                  (2,220)                  (1,407)  
Income tax effect of valuation allowance (9)                   2,781                   4,865                   2,344  
Non-GAAP net income attributable to Ultra Clean Holdings, Inc.    $             8,542    $           11,853    $             8,179  
               
Reconciliation of GAAP Income from operations to Non-GAAP Income from operations (in thousands)  
Reported income from operations on a GAAP basis    $             8,258    $                922    $             8,971  
Amortization of intangible assets (1)                   5,093                   2,411                   5,053  
Restructuring charges (2)                      954                   1,565                      749  
Acquisition related costs (3)                      200                   9,391                   1,211  
Fair value adjustments (4)                      129                         -                         766  
Depreciation adjustments (5)                         -                            -                        (360)  
Product transition fees (6)                         -                         657                         -     
Non-GAAP income from operations    $           14,634    $           14,946    $           16,390  
               
Reconciliation of GAAP Operating margin to Non-GAAP Operating margin  
Reported operating margin on a GAAP basis   3.2%   0.4%   3.4%  
Amortization of intangible assets (1)   2.0%   1.0%   1.9%  
Restructuring charges (2)   0.4%   0.7%   0.2%  
Acquisition related costs (3)   0.1%   4.0%   0.5%  
Fair value adjustments (4)   0.1%   0.0%   0.3%  
Depreciation adjustments (5)   0.0%   0.0%   -0.1%  
Product transition fees (6)   0.0%   0.3%   0.0%  
Non-GAAP operating margin   5.8%   6.4%   6.2%  
               
Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands)              
Reported gross profit on a GAAP basis    $           47,504    $           34,995    $           48,169  
Amortization of intangible assets (1)                   1,023                         -                      1,023  
Restructuring charges (2)                      154                   1,197                      350  
Fair value adjustments (4)                      129                         -                         766  
Depreciation adjustments (5)                         -                            -                        (316)  
Product transition fees (6)                         -                         657                         -     
Non-GAAP gross profit    $           48,810    $           36,849    $           49,992  
               
Reconciliation of GAAP Gross margin to Non-GAAP Gross margin              
Reported gross margin on a GAAP basis   18.7%   15.0%   18.2%  
Amortization of intangible assets (1)   0.4%   0.0%   0.4%  
Restructuring charges (2)   0.1%   0.4%   0.1%  
Fair value adjustments (4)   0.0%   0.0%   0.2%  
Depreciation adjustments (5)   0.0%   0.0%   -0.1%  
Product transition fees (6)   0.0%   0.3%   0.0%  
Non-GAAP gross margin   19.2%   15.7%   18.8%  
               
Reconciliation of GAAP Interest and other income (expense) to Non-GAAP Interest and other income (expense)
(in thousands)		          
Reported interest and other income (expense) on a GAAP basis    $            (3,492)    $            (2,766)    $            (6,390)  
Restructuring charges (2)                      439                         -                          (25)  
Acquisition related costs (3)                         -                           99                         -     
Disposal of business unit (7)                         -                      1,082                         -     
Non-GAAP interest and other income (expense)    $            (3,053)    $            (1,585)    $            (6,415)  
               
1    Amortization of intangible assets related to the Company's acquisitions of AIT, Thermal, FDS, QGT and DMS  
2    Represents severance costs and costs related to facility closures              
3    Represents costs related to the QGT and DMS acquisitions              
4    Fair value adjustment related to DMS' sold inventories              
5    Depreciation adjustments related to QGT's fixed assets              
6    One-time product transition payment                
7    Represents the loss on disposal of the Company’s 3D printing operations in Singapore  
8    Tax effect of items (1) through (7) above based on the non-GAAP tax rate shown below  

9The Company's GAAP tax expense is generally higher than the Company's non-GAAP tax expense, primarily due to losses in the U.S. with full federal and state valuation allowances. The Company's non-GAAP tax rate and resulting non-GAAP tax expense considers the tax implications as if there was no federal or state valuation allowance position in effect.

 

 

    Three Months Ended  
    September 27,   September 28,   June 28,  
    2019   2018   2019  
Reconciliation of GAAP Earnings Per Diluted Share to Non-GAAP Earnings Per Diluted Share  
Reported net income (loss) on a GAAP basis    $               0.01    $              (0.15)    $              (0.01)  
Amortization of intangible assets                     0.13                     0.06                     0.13  
Restructuring charges                     0.03                     0.04                     0.02  
Acquisition related costs                     0.01                     0.24                     0.03  
Fair value adjustments                         -                            -                        0.02  
Depreciation adjustments                         -                            -                       (0.01)  
Product transition fees                         -                        0.02                         -     
Disposal of business unit                         -                        0.03                         -     
Income tax effect of non-GAAP adjustments                    (0.04)                    (0.06)                    (0.03)  
Income tax effect of valuation allowance                     0.07                     0.12                     0.06  
Non-GAAP net income    $               0.21    $               0.30    $               0.21  
Weighted average number of diluted shares (thousands) on a non-GAAP basis               40,025                 38,930                 39,734  
               

 

 

 

 

ULTRA CLEAN HOLDINGS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE
    Three Months Ended  
    September 27,   September 28,   June 28,  
    2019   2018   2019  
(in thousands, except percentages)              
Provision for income taxes on a GAAP basis    $             3,878    $             4,596    $             2,835  
Income tax effect of non-GAAP adjustments (1)                   1,567                   2,220                   1,407  
Income tax effect of valuation allowance (2)                  (2,781)                  (4,865)                  (2,344)  
Non-GAAP provision for income taxes    $             2,664    $             1,951    $             1,898  
               
Income (loss) before income taxes on a GAAP basis    $             4,766    $            (1,844)    $             2,581  
Amortization of intangible assets                   5,093                   2,411                   5,053  
Restructuring charges                   1,393                   1,565                      774  
Acquisition related costs                      200                   9,490                   1,211  
Fair value adjustments                      129                         -                         766  
Depreciation adjustments                         -                            -                        (360)  
Product transition fees                         -                         657                         -     
Disposal of business unit                         -                      1,082                         -     
Non-GAAP income before income taxes    $           11,581    $           13,361    $           10,025  
Effective income tax rate on a GAAP basis   81.4%   -249.2%   109.8%  
Non-GAAP effective income tax rate   23.0%   14.6%   18.9%  

 

1Tax effect of items (1) through (7) above based on the non-GAAP tax rate

2The Company's GAAP tax expense is generally higher than the Company's non-GAAP tax expense, primarily due to losses in the U.S. with full federal and state valuation allowances. The Company's non-GAAP tax rate and resulting non-GAAP tax expense considers the tax implications as if there was no federal or state valuation allowance position in effect.