-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NgoEd/W0pBot6cFTUq77AAu0ojS2j+gPpBNp92RbzquKwn6N2OToNGapmiGfuEpv VWl1Jp1oF1dH5+Cqu1u5gg== 0000950005-00-000599.txt : 20000508 0000950005-00-000599.hdr.sgml : 20000508 ACCESSION NUMBER: 0000950005-00-000599 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NANOMETRICS INC CENTRAL INDEX KEY: 0000704532 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 942276314 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-13470 FILM NUMBER: 619667 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 FORM 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 March 31, 2000 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 0-13470 ------- 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 April 12, 2000 there were 11,284,754 shares of common stock, no par value, issued and outstanding. NANOMETRICS INCORPORATED INDEX Part I. Financial Information Page ---- Item 1. Financial Statements Condensed Consolidated Balance Sheets - March 31, 2000 and December 31, 1999 ....................... 3 Condensed Consolidated Statements of Operations - Three months ended March 31, 2000 and 1999 ............... 4 Condensed Consolidated Statements of Cash Flows - Three months ended March 31, 2000 and 1999 ............... 5 Notes to Consolidated Financial Statements ................ 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ............. 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk .......................................... 9 Part II. Other Information Item 2. Changes in Securities and Use of Proceeds .................. 10 Item 6. Exhibits and Reports on Form 8-K ............................. 10 Signatures ................................................................ 11 2 PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS NANOMETRICS INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands except share amounts) (Unaudited)
March 31, December 31, ASSETS 2000 1999 -------- -------- CURRENT ASSETS: Cash and cash equivalents $ 26,587 $ 3,442 Short-term investments 66,197 14,698 Accounts receivable, net of allowances of $424 and $425 12,749 11,435 Inventories 10,492 9,460 Deferred income taxes 1,726 1,722 Prepaid expenses and other 1,787 1,196 -------- -------- Total current assets 119,538 41,953 PROPERTY, PLANT AND EQUIPMENT, Net 3,023 2,998 DEFERRED INCOME TAXES 125 135 OTHER ASSETS 1,573 1,324 -------- -------- TOTAL $124,259 $ 46,410 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 3,213 $ 2,412 Accrued payroll and related expenses 1,365 751 Other current liabilities 1,976 1,721 Income taxes payable 1,032 464 Current portion of debt obligations 482 584 -------- -------- Total current liabilities 8,068 5,932 DEFERRED RENT 28 35 DEBT OBLIGATIONS 2,148 2,288 -------- -------- Total liabilities 10,244 8,255 -------- -------- SHAREHOLDERS' EQUITY: Common stock, no par value; 25,000,000 shares authorized; 11,271,743 and 9,163,998 outstanding 90,851 17,277 Retained earnings 22,861 20,608 Accumulated other comprehensive income 303 270 -------- -------- Total shareholders' equity 114,015 38,155 -------- -------- TOTAL $124,259 $ 46,410 ======== ======== See Notes to Condensed Consolidated Financial Statements
3 NANOMETRICS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share amounts) (Unaudited) Three Months Ended March 31, 2000 1999 -------- -------- NET REVENUES: Product sales $ 14,945 $ 5,265 Service 1,111 924 -------- -------- Total net revenues 16,056 6,189 -------- -------- COSTS AND EXPENSES: Cost of product sales 6,178 2,552 Cost of service 1,395 1,104 Research and development 1,745 1,016 Selling 2,360 1,277 General and administrative 999 641 -------- -------- Total costs and expenses 12,677 6,590 -------- -------- INCOME (LOSS) FROM OPERATIONS 3,379 (401) -------- -------- OTHER INCOME (EXPENSE): Interest income 476 138 Interest expense (21) (21) Other, net (140) (51) -------- -------- Total other income, net 315 66 -------- -------- INCOME (LOSS) BEFORE INCOME TAXES 3,694 (335) PROVISION (BENEFIT) FOR INCOME TAXES 1,441 (134) -------- -------- NET INCOME (LOSS) $ 2,253 $ (201) ======== ======== NET INCOME (LOSS) PER SHARE: Basic $ 0.23 $ (0.02) ======== ======== Diluted $ 0.21 $ (0.02) ======== ======== SHARES USED IN PER SHARE COMPUTATION: Basic 9,693 8,701 ======== ======== Diluted 10,880 8,701 ======== ======== See Notes to Condensed Consolidated Financial Statements 4 NANOMETRICS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited)
Three Months Ended March 31, 2000 1999 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 2,253 $ (201) Reconciliation of net income (loss) to net cash provided by operating activities: Depreciation and amortization 117 51 Deferred rent (7) 7 Deferred income taxes 29 10 Changes in assets and liabilities: Accounts receivable (1,308) 1,582 Inventories (1,005) 881 Prepaid income taxes -- 745 Prepaid expenses and other (900) (237) Accounts payable accrued and other current liabilities 1,652 (322) Income taxes payable 1,390 -- -------- -------- Net cash provided by operating activities 2,221 2,516 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of short-term investments (54,395) (2,984) Sales/maturities of short-term investments 2,865 3,000 Purchases of property, plant and equipment (101) (23) Other assets -- 53 -------- -------- Net cash provided by (used in) investing activities (51,631) 46 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of debt obligations (209) (364) Issuance of common stock 72,752 139 -------- -------- Net cash provided by (used in) financing activities 72,543 (225) -------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 12 141 -------- -------- NET CHANGE IN CASH AND EQUIVALENTS 23,145 2,478 CASH AND EQUIVALENTS, beginning of period 3,442 1,518 -------- -------- CASH AND EQUIVALENTS, end of period $ 26,587 $ 3,996 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 17 $ 56 ======== ======== Cash paid for income taxes $ -- $ -- ======== ======== See Notes to Condensed Consolidated Financial Statements
5 NANOMETRICS INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. Condensed Consolidated Financial Statements The condensed 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 consolidated financial statements are unaudited, the financial statements included in this report reflect all adjustments (consisting only of normal recurring adjustments) which Nanometrics considers necessary for a fair presentation of the results of operations for the interim periods covered and of our financial condition at the date of the interim balance sheet. The operating results for interim periods are not necessarily indicative of the operating results that may be expected for the entire year. The information included in this report should be read in conjunction with the information included in Nanometrics' 1999 Annual Report on Form 10-K filed with the Securities and Exchange Commission. Note 2. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following (in thousands): March 31, December 31, 2000 1999 ------- ------- Raw materials and subassemblies $ 6,986 $ 3,775 Work in process 1,914 1,092 Finished goods 1,592 4,593 ------- ------- Total inventories $10,492 $ 9,460 ======= ======= Note 3. Other Current Liabilities Other current liabilities consist of the following (in thousands): March 31, December 31, 2000 1999 ------ ------ Commissions payable $ 295 $ 247 Accrued warranty 521 482 Other 1,160 992 ------ ------ Total other current liabilities $1,976 $1,721 ====== ====== 6 Note 4. Shareholder' Equity Secondary Offering - In March 1999, Nanometrics completed a public stock offering and issued 2,012,500 shares of its Common Stock to the public at a price of $38.50 per share. Nanometrics received net proceeds of approximately $72.4 million in cash. Net Income (Loss) Per Share - The reconciliation of the share denominator used in the basic and diluted net income (loss) per share computations for the three months ended March 31 are as follows (in thousands): 2000 1999 ------ ------ Weighted average common shares outstanding-shares used in basic net income per share computations 9,693 8,701 Dilutive effect of common stock equivalents, using the treasury stock method 1,187 -- ------ ------ Shares used in diluted net income per share computation 10,880 8,701 ====== ====== During the three months ended March 31, 2000 and 1999, Nanometrics had common stock options outstanding which could potentially dilute basic net income (loss) per share in the future, but were excluded from the computation of diluted net income (loss) per share as the inclusion of such common stock options would be antidilutive. At March 31, 2000, 289,000 common stock options with a weighted average exercise price of $41.45 per share were excluded from the diluted net loss per share computation as their exercise prices were greater than the average market price of the common shares for the period. Note 5. Comprehensive Income (Loss) Comprehensive income (loss), which consisted of net income (loss) and changes in accumulated translation adjustments, was $2,286,000 for the three months ended March 31, 2000 compared to $(321,000) for the same period in 1999. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Total net revenues for the first quarter of 2000 were $16,056,000, an increase of $9,867,000 or 159% from the same quarter in 1999. Product sales of $14,945,000 increased $9,680,000 or 184% for the first quarter of 2000 compared to the same period in 1999 resulting from increased shipments of Nanometrics' products, particularly in the U.S. and Far East. Service revenue of $1,111,000 increased $187,000 or 20% in the first quarter of 2000 compared to the same period in 1999 primarily due to higher spare parts sales in the Far East. Cost of product sales as a percentage of product sales decreased to 41% in the first quarter of 2000 from 48% in the first quarter of 1999 primarily because of higher sales volume in 2000 resulting in lower per unit manufacturing costs. Cost of service as a percentage of service revenue increased to 126% in the first quarter of 2000 from 119% in the first quarter of 1999. This increase was primarily attributable to higher fixed service costs needed to support our growing installed base of systems at customer locations. Research and development expenses for the first quarter of 2000 increased $729,000 or 72% compared to the same period in 1999 resulting primarily from increased headcount and related expenses for the development of new and enhanced products. Selling expenses for the first quarter of 2000 increased by $1,083,000 or 85% compared to the same period in 1999 primarily because of increased headcount, commission expenses and other expenses associated with higher sales levels. General and administrative expenses for the first quarter of 2000 increased by $358,000 or 56% compared to the same period in 1999 primarily as a result of higher spending associated with the increased level of operations. Total other income, net increased $249,000 or 377% during the first quarter of 2000 compared to the same period in 1999 due primarily to higher interest income resulting from a higher average cash basis from the net proceeds of the offering. Nanometrics' income from operations was $3,379,000 and net income was $2,253,000 or $0.21 per diluted share in the first quarter of 2000 compared to a loss from operations of $401,000 and a net loss of $201,000 or $0.02 per diluted share in the first quarter of 1999. Liquidity and Capital Resources At March 31, 2000, Nanometrics had working capital of $111,470,000 compared to $36,021,000 at December 31, 1999 an increase of $75,449,000. This increase is primarily a result of cash generated from financing activities of $72,543,000 million during the quarter resulting from the $72,752,000 million in net proceeds received from the public offering of Common Stock in March 2000 and option exercises during the quarter. Operating activities for the first three months of 2000 provided cash of $2,222,000 primarily from net income and higher accounts payable, other current liabilities and income taxes payable, while the sales/maturities of short-term investments net of purchases used $51,530,000, capital expenditures used $101,000 and debt repayment used $209,000. We believe working capital including cash, cash equivalents and short-term investments of $92,784,000 will be sufficient to meet our needs at least through the next twelve months. The current ratio at March 31, 2000 was 14.8 to 1. 8 Forward Looking Statements The foregoing Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements involve risks and uncertainties and actual results could differ materially as a result of a number of factors including customer demand for Nanometrics' products, which is affected by factors including the cyclicality of the semiconductor, magnetic recording head and flat panel display industries served by Nanometrics, patterns of capital spending by customers, technological changes in the markets served by Nanometrics and its customers, market acceptance of products of both Nanometrics and its customers, the timing, cancellation or delay of customer orders and shipments, competition, including competitive pressures on product prices and changes in pricing by Nanometrics' customers or suppliers, fluctuations in foreign currency exchange rates, particularly the Japanese yen, the proportion of direct sales versus sales through distributors and representatives, market acceptance of new and enhanced versions of Nanometrics' products, the timing of new product announcements and releases of products by Nanometrics or its competitors, including our ability to design, introduce and manufacture new products on a timely and cost effective basis, the size and timing acquisitions of businesses, products or technologies and fluctuations in the availability and cost of components and subassemblies and the factors set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Factors" in the 1999 Annual Report on Form 10-K. Nanometrics undertakes no obligation to update forward looking statements made in this report to reflect events or circumstances after the date of this report or to update reasons why actual results could differ from those anticipated in such forward-looking statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to financial market risks, which include changes in foreign currency exchange rates and interest rates. We do not use derivative financial instruments. Instead, we actively manage the balances of current assets and liabilities denominated in foreign currencies to minimize currency fluctuation risk. As a result, a hypothetical 10% change in the foreign currency exchange rates at March 31, 2000 would not have a material impact on our results of operations. Our investments in marketable securities are subject to interest rate risk but due to the short-term nature of these investments, interest rate changes would not have a material impact on their value at March 31, 2000. We also have fixed rate yen denominated debt obligations in Japan that have no interest rate risk. At March 31, 2000, our total debt obligation was $2,630,000 with a long-term portion of $2,148,000. A hypothetical 10% change in interest rates at March 31, 2000 would not have a material impact on our results of operations. 9 NANOMETRICS INCORPORATED PART II OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS D. Use of Proceeds from Sales of registered Securities. In March 2000, Nanometrics completed a public offering of its Common Stock. The managing underwriters in the Offering were Salomon Smith Barney, Wit SoundView, Tucker Anthony Cleary Gull and Needham & Company, Inc. (the "Underwriters"). The shares of Common Stock sold in the Offering were registered under the Securities Act of 1933, as amended, on a Registration Statement of Form S-2. A total of 4,025,000 shares of Common Stock (of which 2,012,500 were offered by Nanometrics and 2,012,500 were offered by a selling shareholder) were registered under the Registration Statement and were sold at a price of $38.50 per share. In connection with the Offering, Nanometrics paid $4,447,625 in underwriting discounts and commissions to the Underwriters. In addition, the following table sets forth an estimate of all expenses incurred in connection with the Offering: Legal fees and expenses $277,732 Auditing fees and expenses 173,250 Printing expenses 157,026 SEC Registration fee 22,880 NASD filing fee 9,167 Miscellaneous 26,515 -------- Total $666,570 ======== After deducting the underwriting discounts and commission and the Offering expenses listed above, Nanometrics received net proceeds from the Offering of approximately $72,367,054. Nanometrics has used the net proceeds from its public offering of Common Stock to invest in short-term treasury bills and has used its existing cash balances to fund its general operations. The proceeds from the Offering will be used for general corporate purposes, including facilities expansion. None of Nanometrics' net proceeds from the Offering were paid directly or indirectly to any director or officer of Nanometrics. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A. Exhibits Ex. 27 - Financial Data Schedule B. Reports on Form 8-K. None. 10 NANOMETRICS INCORPORATED 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. NANOMETRICS INCORPORATED (Registrant) /s/ Vincent J. Coates - ----------------------- Vincent J. Coates Chairman of the Board /s/ John Heaton - ----------------------- John Heaton Chief Executive Officer /s/ Paul B. Nolan - ----------------------- Paul B. Nolan Chief Financial Officer Dated: May 5, 2000 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 26,587 66,197 13,173 424 10,492 119,538 6,673 3,650 124,259 8,068 2,148 0 0 90,851 23,164 124,259 14,945 16,056 6,178 7,573 5,104 0 21 3,694 1,441 2,253 0 0 0 2,253 .23 .21
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