0000912057-95-006151.txt : 19950811 0000912057-95-006151.hdr.sgml : 19950811 ACCESSION NUMBER: 0000912057-95-006151 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950810 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NANOMETRICS INC CENTRAL INDEX KEY: 0000704532 STANDARD INDUSTRIAL CLASSIFICATION: OPTICAL INSTRUMENTS & LENSES [3827] IRS NUMBER: 942276314 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13470 FILM NUMBER: 95560289 BUSINESS ADDRESS: STREET 1: 310 DEGUIGNE DR CITY: SUNNYVALE STATE: CA ZIP: 94086 BUSINESS PHONE: 4087461600 MAIL ADDRESS: STREET 1: 310 DEGUIGNE DRIVE CITY: SUNNYVALE STATE: CA ZIP: 94086 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange ---- Act of 1934 For the quarterly period ended JUNE 30, 1995 ---- --- ---- 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 0-13470 --------------------------------------------------- NANOMETRICS INCORPORATED ------------------------------------------------------------------- (Exact name of registrant as specified in its charter) CALIFORNIA 94-2276314 --------------------------------- -------------------- (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) 310 DEGUIGNE DRIVE, SUNNYVALE, CA 94086 ----------------------------------- --------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (408) 746-1600 -------------------- 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 ------- ------ At July 12, 1995 there were 7,604,129 shares of common stock, no par value, issued and outstanding. NANOMETRICS INCORPORATED INDEX Part I. Financial Information PAGE ---- Item 1. Financial Statements Consolidated Balance Sheets - June 30, 1995 and December 31, 1994 . . . . . . . . . . . . .3 Consolidated Statements of Operations - Three months and six months ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . .5 Consolidated Statements of Cash Flows - Six months ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Notes to Consolidated Financial Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of . . . . . . . . . . . . .8 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders . . . . 10 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 10 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2 PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS NANOMETRICS INCORPORATION CONSOLIDATED BALANCE SHEETS (Amounts in thousands except share amounts) (Unaudited) ASSETS
June 30, December 31, 1995 1994 ---------- ------------ Current assets: Cash and equivalents $ 2,303 $ 2,135 Short-term investments 5,631 493 Accounts receivable, less allowance for doubtful accounts of $293 and $270 6,591 4,881 Other receivables 43 115 Inventories 4,457 4,752 Deferred income taxes and prepaid expenses 471 112 ------ ------ Total current assets 19,496 12,488 Property, plant and equipment, net 3,535 3,179 Other assets 192 119 ------ ------ $ 23,223 $ 15,786 ------- ------- ------- -------
See Notes to Consolidated Financial Statements 3 NANOMETRICS INCORPORATED CONSOLIDATED BALANCE SHEETS (CONTINUED) (Amounts in thousands except share amounts) (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY
June 30, December 31, 1995 1994 ---------- ------------ Current liabilities: Accounts payable $ 1,077 $ 696 Accrued payroll and related expenses 658 236 Other current liabilities 982 1,117 Income taxes payable 343 7 Current portion of long-term debt 679 227 ------- ------- Total current liabilities 3,739 2,283 Long-term debt 4,668 421 Deferred income taxes 91 87 Shareholders' equity: Common stock, no par value; 25,000,000 shares authorized; 7,576,379 and 7,370,978 outstanding 10,159 10,018 Retained earnings 3,001 2,117 Cumulative translation adjustment 1,565 860 ------- ------- Total shareholders' equity 14,725 12,995 ------- ------- $23,223 $15,786 ------- ------- ------- -------
See Notes to Consolidated Financial Statements 4 NANOMETRICS INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share amounts) (Unaudited)
Three Month Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 ---------- ---------- --------- --------- Revenues: Net sales $ 3,947 $ 2,446 $ 7,556 $ 4,127 Service 1,257 968 2,190 1,926 --------- --------- --------- --------- Total revenues 5,204 3,414 9,746 6,053 Costs and expenses: Cost of sales 1,831 1,235 3,581 2,178 Cost of service 810 679 1,554 1,351 Research and development 684 609 1,189 1,240 Selling 872 681 1,624 1,317 General and administrative 529 475 1,026 943 --------- --------- --------- -------- Total costs and expenses 4,726 3,679 8,974 7,029 --------- --------- --------- -------- Operating income (loss) 478 (265) 772 (976) Other income, net 296 18 468 92 --------- --------- --------- -------- Income (loss) before provision for income taxes 774 (247) 1,240 (884) Provision for income taxes 194 6 354 13 --------- --------- --------- -------- Net income (loss) $ 580 $ (253) $ 886 $ (897) --------- --------- --------- -------- --------- --------- --------- -------- Per share amounts: Net income (loss) per share $ .07 $ (.03) $ .11 $ (.12) --------- --------- --------- -------- --------- --------- --------- -------- Weighted average shares outstanding 8,349 7,326 8,029 7,240 --------- --------- --------- -------- --------- --------- --------- --------
See Notes to Consolidated Financial Statements 5 NANOMETRICS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited)
Six Months Ended June 30, 1995 1994 ---------- ---------- Operating activities: Net income (loss) $ 886 $ (897) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 157 169 Deferred income taxes (214) - Changes in assets and liabilities: Accounts receivable (1,065) (65) Other receivables 75 (10) Inventories 489 (430) Prepaid expense (144) (57) Other assets (59) 10 Accounts payable and other liabilities 571 (340) Income taxes payable 320 (136) ---------- ---------- Net cash provided by (used in) operating activities 1,016 (1,756) ---------- ---------- Investing activities: Short term investments, net (5,138) 1,981 Capital expenditures (6) (19) ---------- ---------- Net cash provided by (used in) investing activities (5,144) 1,962 ---------- ---------- Financing activities: Proceeds from long-term borrowings 4,700 - Repayments of long-term debt (160) (265) Issuance of common stock 141 155 ---------- ---------- Net cash provided by (used in) financing activities 4,681 (110) ---------- ---------- Effect of exchange rate changes on cash (385) (19) ---------- ---------- Net change in cash and equivalents 168 77 Cash and equivalents at beginning of period 2,135 1,210 ---------- ---------- Cash and equivalents at end of period $ 2,303 $ 1,287 ---------- ---------- ---------- ---------- Supplemental Disclosure of Cash Flow Information: Cash paid for interest $ 35 $ 29 ---------- ---------- ---------- ---------- Cash paid for income taxes $ 23 $ 136 ---------- ---------- ---------- ----------
See Notes to Consolidated Financial Statements 6 NANOMETRICS INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. Consolidated Financial Statements The consolidated financial statements include the accounts of Nanometrics Incorporated and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. While the quarterly financial information is unaudited, the financial statements included in this report reflect all adjustments (consisting only of normal recurring adjustments) which the Company considers necessary for a fair presentation of the results of operations for the interim periods covered and of the financial condition of the Company at the date of the interim balance sheet. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. The information included in this report should be read in conjunction with the information included in the Company's 1994 Form 10-K. Note 2. Per Share Information Net income (loss) per share is based on the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares include dilutive common stock options (using the treasury stock method) and are excluded in loss periods as they are anti-dilutive. Note 3. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following:
June 30, December 31, 1995 1994 --------- ------------ (Amounts in thousands) Raw materials and subassemblies $ 1,917 $ 1,225 Work in process 1,418 735 Finished goods 1,122 2,792 --------- ------------ $ 4,457 $ 4,752 --------- ------------ --------- ------------
Note 4. Borrowing Arrangements The Company, in June 1995, borrowed $4.7 million (400,000,000 Yen) from the Mitsubishi Bank, Ltd in Chiba, Japan to provide supplemental working capital for the Company's operations. The loan was secured using the Company's factory and adjacent land in Japan as collateral. This obligation bears interest at the bank's prime rate (2.375% at June 30, 1995) plus 1.3% and is due in quarterly installments of principal and interest through 2005. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Total revenues for the three months ended June 30, 1995 were $5,204,000, an increase of $1,790,000 or 52% from the comparable period in 1994. For the six months ended June 30, 1995, total revenues of $9,746,000 increased by $3,693,000 or 61% from the comparable period in 1994. Net sales of $3,947,000 and $7,556,000 for the three months and six months ended June 30, 1995, respectively, increased $1,501,000 or 61% and $3,429,000 or 83%, respectively, as compared with the same periods during 1994. The increases in net sales resulted from stronger demand for all of the Company's products especially from semiconductor manufacturers in the U.S., Europe and Japan. Service revenue of $1,257,000 and $2,190,000 for the three months and six months ended June 30, 1995, respectively, increased $289,000 or 30% and $264,000 or 14%, respectively, as compared to the same periods in 1994. These increases in service revenue are primarily attributable to increased sales of accessories and upgrades in the U.S. and Japan in 1995. The Company believes that its revenue growth for the three and six month periods ended June 30, 1995 is not necessarily indicative of future results. Cost of sales as a percentage of net sales decreased from 50% in the second quarter of 1994 to 46% in the second quarter of 1995 primarily because of higher sales volume resulting in lower per unit manufacturing costs. Cost of service as a percentage of service revenue decreased from 70% in the second quarter of 1994 to 64% in the second quarter of 1995. This decrease was primarily attributable to to strong margins on the additional sales of accessories and upgrades in 1995. Cost of sales as a percentage of net sales for the six months ended June 30, 1995 decreased to 47% from 53% a year ago as a result of higher sales volume resulting in lower per unit manufacturing costs. Cost of service as a percentage of service revenue for the six months ended June 30, 1995 increased slightly to 71% from 70% a year ago. Research and development expenses for the three months ended June 30, 1995 increased $75,000 or 12% compared to the same period in 1994 resulting from higher development costs at the Japanese subsidiary. Research and development expenses for the six months ended June 30, 1995 decreased $51,000 or 4% compared to the same period in 1994 primarily due to lower materials expenses, especially in the first quarter of 1995, as the Company directs more of its efforts on software development. Selling expenses for the three month and six month periods ended June 30, 1995 increased by $191,000 or 28% and $307,000 or 23%, respectively, compared to the same periods in 1994 primarily because of higher commission expenses resulting from higher sales and the cost of opening a sales office in Austin, Texas. General and administrative expenses for the three month and six month periods ended June 30, 1995 increased by $54,000 or 11% and $83,000 or 9%, respectively, compared to the same periods in 1994 as a result of higher overhead expenses mainly at the Japanese subsidiary. Other income for the three month and six month periods ended June 30, 1995 increased $278,000 and $376,000, respectively, from the comparable periods in 1994 due to more favorable exchange rate results. For the quarter and the six months ended June 30, 1995, the effective income tax rates were 25% and 29%, respectively. The income tax provision for interim periods reflects the Company's estimated 8 annual income tax rate. The difference between income taxes computed at the federal statutory rate and the effective tax rate in the second quarter and the first six months of 1995 is due to the effect of foreign income taxed at a lower overall effective rate due to the utilization of previously reserved net operating loss carryforwards and foreign tax credits. The Company reported an operating income of $478,000 and net income of $580,000 for the second quarter of 1995 compared to an operating loss of $265,000 and a net loss of $253,000 for the same period in 1994. For the first six months of 1995, the Company reported an operating income of $772,000 and net income of $886,000 which compared to an operating loss of $976,000 and a net loss of $897,000 for the same period in 1994. With sufficient capital, the introduction of new products and increased demand for established products, the Company is optimistic about its prospects for the third quarter. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1995, the Company had working capital of $15,757,000 compared to $10,205,000 at December 31, 1994. The current ratio at June 30, 1995 was 5.2 to 1. The Company believes working capital including cash and short-term investments of $7,934,000 will be sufficient to meet its needs at least through the next twelve months. Operating activities for the first six months of 1995 provided cash of $1,016,000 primarily from net income, increased liabilities and reduced inventory while the purchase of short-term investments used $5,138,000, capital expenditures used $6,000, a long-term loan from a Japanese bank provided $4,700,000, debt repayment used $160,000 and issuance of common stock provided $141,000. 9 NANOMETRICS INCORPORATE PART II OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS A. The annual meeting of shareholders was held on May 23, 1995. B. The following directors were elected to the board of directors: Vincent J. Coates Nathaniel Brenner Norman V. Coastes Roger G. Novesky C. The following matters were voted upon at the annual meeting: For Against Abstain ---------- ---------- ---------- 1. To elect the following directors to serve for the ensuing year: Vincent J. Coates, Chairman 5,425,755 0 2,029,540 Nathaniel Brenner, Director 5,426,388 0 2,028,907 Norman V. Coates, Director 5,426,388 0 2,028,907 Roger G. Novesky, Director 5,426,388 0 2,028,907 2. To ratify the appointment of Deloitte & Touche LLP as independent auditors for the fiscal year ending December 31, 1995. 5,425,766 100 2,029,429 ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K A. Exhibits None B. Reports on Form 8-K. None. 10 NANOMETRICS INCORPORATED SIGNATURE 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. NANOMETRICS INCORPORATED (Registrant) /s/ Vincent J. Coates --------------------------- Vincent J. Coates Chairman and Chief Executive Officer /s/ Paul B. Nolan --------------------------- Paul B. Nolan Chief Financial Officer Dated: August 9, 1995 11 EX-27 2 EXHIBIT 27
5 1,000 6-MOS DEC-31-1995 APR-01-1995 JUN-30-1995 2,303 5,631 6,884 293 4,457 19,496 3,535 0 23,223 3,739 4,668 10,159 0 0 4,566 23,223 7,556 9,746 3,581 5,135 3,839 0 0 1,240 354 886 0 0 0 886 .11 .11