-----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, KWBIG7b2zOnCOME/YY4BM4cVS3MATvCSTrn0ZVbHyDs/AC/m9WbvHionIRYc/tI/ +0XACquMe6eLpMEL9g3mqA== /in/edgar/work/0000950005-00-001126/0000950005-00-001126.txt : 20001115 0000950005-00-001126.hdr.sgml : 20001115 ACCESSION NUMBER: 0000950005-00-001126 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NANOMETRICS INC CENTRAL INDEX KEY: 0000704532 STANDARD INDUSTRIAL CLASSIFICATION: [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: 762686 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 0001.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 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 September 30, 2000 ------------------ 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 October 12, 2000 there were 11,532,238 shares of common stock, no par value, issued and outstanding. 1 NANOMETRICS INCORPORATED INDEX Part I. Financial Information Page ---- Item 1. Financial Statements Consolidated Balance Sheets - September 30, 2000 and December 31, 1999 ............... 3 Consolidated Statements of Income - Three months and nine months ended September 30, 2000 and 1999 ............................ 4 Consolidated Statements of Cash Flows - Nine months ended September 30, 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 6. Exhibits and Reports on Form 8-K ....................... 10 Signatures ............................................................... 11 2 PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS NANOMETRICS INCORPORATED CONSOLIDATED BALANCE SHEETS (Amounts in thousands except share amounts) (Unaudited) Sept. 30, Dec. 31, 2000 1999 -------- -------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 14,411 $ 3,442 Short-term investments 59,542 14,698 Accounts receivable, net of allowances of $422 and $425 19,896 11,435 Inventories 11,370 9,460 Deferred income taxes 2,015 1,722 Prepaid expenses and other 2,783 1,196 -------- -------- Total current assets 110,017 41,953 PROPERTY, PLANT AND EQUIPMENT, Net 26,291 2,998 DEFERRED INCOME TAXES 88 135 OTHER ASSETS 1,304 1,324 -------- -------- TOTAL ASSETS $137,700 $ 46,410 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 4,186 $ 2,412 Accrued payroll and related expenses 1,940 751 Other current liabilities 2,394 1,721 Income taxes payable 772 464 Current portion of debt obligations 1,122 584 -------- -------- Total current liabilities 10,414 5,932 DEFERRED RENT 15 35 DEBT OBLIGATIONS 1,815 2,288 -------- -------- Total liabilities 12,244 8,255 -------- -------- SHAREHOLDERS' EQUITY: Common stock, no par value; 25,000,000 shares authorized; 11,514,643 and 9,163,998 outstanding 95,050 17,277 Retained earnings 30,405 20,608 Accumulated other comprehensive income 1 270 -------- -------- Total shareholders' equity 125,456 38,155 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $137,700 $ 46,410 ======== ======== See Notes to Consolidated Financial Statements 3 NANOMETRICS INCORPORATED CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except per share amounts) (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ---------------------------- ---------------------------- 2000 1999 2000 1999 -------- -------- -------- -------- NET REVENUES: Product sales $ 19,119 $ 8,717 $ 50,563 $ 20,450 Service 1,539 1,104 4,414 3,083 -------- -------- -------- -------- Total net revenues 20,658 9,821 54,977 23,533 -------- -------- -------- -------- COSTS AND EXPENSES: Cost of product sales 7,612 3,976 20,433 9,512 Cost of service 1,474 1,176 4,495 3,297 Research and development 2,438 1,099 6,557 3,209 Selling 2,544 1,519 7,300 4,105 General and administrative 983 730 2,988 2,095 -------- -------- -------- -------- Total costs and expenses 15,051 8,500 41,773 22,218 -------- -------- -------- -------- INCOME FROM OPERATIONS 5,607 1,321 13,204 1,315 -------- -------- -------- -------- OTHER INCOME (EXPENSE): Interest income 1,137 171 3,028 483 Interest expense (19) (22) (60) (63) Other, net (102) 67 (113) (26) -------- -------- -------- -------- Total other income, net 1,016 216 2,855 394 -------- -------- -------- -------- INCOME BEFORE PROVISION FOR INCOME TAXES 6,623 1,537 16,059 1,709 PROVISION FOR INCOME TAXES 2,583 637 6,262 706 -------- -------- -------- -------- NET INCOME $ 4,040 $ 900 $ 9,797 $ 1,003 ======== ======== ======== ======== NET INCOME PER SHARE: Basic $ .35 $ .10 $ .91 $ .11 ======== ======== ======== ======== Diluted $ .33 $ .10 $ .83 $ .11 ======== ======== ======== ======== SHARES USED IN PER SHARE COMPUTATION: Basic 11,393 8,823 10,794 8,760 ======== ======== ======== ======== Diluted 12,100 9,347 11,798 9,242 ======== ======== ======== ========
See Notes to Consolidated Financial Statements 4 NANOMETRICS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited)
Nine Months Ended September 30, -------------------------------- 2000 1999 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 9,797 $ 1,003 Reconciliation of net income to net cash provided by operating activities: Depreciation and amortization 422 159 Deferred rent (20) 20 Deferred income taxes (246) 19 Changes in assets and liabilities Accounts receivable (8,706) (1,201) Inventories (1,995) 1,906 Prepaid expenses and other current assets (1,693) 1,286 Accounts payable accrued and other current liabilities 3,693 501 Income taxes payable 3,960 211 --------- --------- Net cash provided by operating activities 5,212 3,904 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of short-term investments (109,127) (16,790) Sales/maturities of short-term investments 64,282 14,827 Purchases of property, plant and equipment (23,734) (100) Other assets -- -- --------- --------- Net cash used in investing activities (68,579) (2,063) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowing 576 -- Repayments of long-term debt (347) (1,106) Issuance of common stock 74,143 753 --------- --------- Net cash provided by (used in) financing activities 74,372 (353) --------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (36) 24 --------- --------- NET CHANGE IN CASH AND EQUIVALENTS 10,969 1,512 CASH AND EQUIVALENTS, beginning of period 3,442 1,518 --------- --------- CASH AND EQUIVALENTS, end of period $ 14,411 $ 3,030 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 57 $ 63 ========= ========= Cash paid for income taxes $ 3,352 $ -- ========= =========
See Notes to Consolidated Financial Statements 5 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 inter-company accounts and transactions have been eliminated. While the quarterly financial statements are 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 that may be expected for the entire year. The information included in this report should be read in conjunction with the information included in the Company's 1999 Annual Report on Form 10-K filed with the Securities and Exchange Commission. In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements," which provides the SEC staff's views on selected revenue recognition issues. The guidance in SAB 101 must be adopted during the fourth quarter of fiscal 2000 and the effects, if any, are required to be recorded through a retroactive, cumulative-effect adjustment as of the beginning of the fiscal year, with a restatement of all prior interim quarters in the year. Our management has not completed its evaluation of the effects, if any, that SAB 101 will have on the Company's income statement presentation, operating results or financial position. Note 2. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following (in thousands): September 30, December 31, 2000 1999 ------- ------- Raw materials and subassemblies $ 7,777 $ 3,775 Work in process 2,459 1,092 Finished goods 1,134 4,593 ------- ------- $11,370 $ 9,460 ======= ======= Note 3. Other Current Liabilities Other current liabilities consist of the following (in thousands): September 30, December 31, 2000 1999 ------- ------- Commissions payable $ 424 $ 247 Accrued warranty 655 482 Other 1,315 992 ------ ------ $2,394 $1,721 ====== ====== 6 Note 4. Shareholders' Equity Secondary Offering - In March 2000, Nanometrics completed a public 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 Per Share - The reconciliation of the share denominator used in the basic and diluted net income per share computations are as follows (in thousands): Three Months Ended Nine Months Ended September 30 September 30 --------------- --------------- 2000 1999 2000 1999 ------ ------ ------ ------ Weighted average common shares outstanding-shares used in basic net income per share computation 11,393 8,823 10,794 8,760 Dilutive effect of common stock equivalents, using the treasury stock method 707 524 1,004 482 ------ ------ ------ ------ Shares used in dilutive net income per share computation 12,100 9,347 11,798 9,242 ====== ====== ====== ====== During the three and nine month periods ended September 30, 2000 and 1999, Nanometrics had common stock options outstanding which could potentially dilute basic net income per share in the future, but were excluded from the computation of diluted net income per share as the common stock options' exercise prices were greater than the average market price of the common shares for the period. At September 30, 2000, 17,500 such common stock options with a weighted average exercise price of $47.63 per share were excluded from the diluted net income per share computations as their exercise prices were greater than the average market price of the common shares for the period. Note 5. Comprehensive Income For the three months ended September 30, 2000 and 1999, comprehensive income, which consisted of net income for the periods and changes in accumulated other comprehensive income, was $3,933,000 and $1,293,000, respectively. For the nine months ended September 30, 2000 and 1999, comprehensive income was $9,528,000 and $1,281,000, respectively. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Total net revenues for the three months ended September 30, 2000 were $20,658,000, an increase of $10,837,000 or 110% from the comparable period in 1999. For the nine months ended September 30, 2000, total net revenues of $54,977,000 increased by $31,444,000 or 134% from the comparable period in 1999. Product sales of $19,119,000 for the three months ended September 30, 2000, increased $10,402,000 or 119% as compared with the same period in 1999. Product sales of $50,563,000 for the nine months ended September 30, 2000, increased $30,113,000 or 147% as compared with the same period in 1999. The higher level of product sales resulted from increased shipments of Nanometrics' products in the U.S. and Far East due primarily to stronger demand in the semiconductor industry. Service revenue of $1,539,000 and $4,414,000 for the three months and nine months ended September 30, 2000, respectively, increased $435,000 or 39% and $1,331,000 or 43%, respectively, as compared to the same periods in 1999 primarily as a result of higher service sales in the U.S. and the Far East. Cost of product sales as a percentage of product sales decreased to 40% in the third quarter of 2000 from 46% in the third quarter of 1999 and decreased to 40% in the nine months ended September 30, 2000 from 47% for the same period in 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 decreased to 96% in the third quarter of 2000 from 107% in the third quarter of 1999 and decreased to 102% in the nine months ended September 30, 2000 from 107% for the same period in 1999 primarily as a result of higher service sales in the U.S. and the Far East. Research and development expenses for the three month and nine month periods ended September 30, 2000 increased $1,339,000 or 122% and $3,348,000 or 104% respectively, compared to the same periods in 1999 resulting primarily from increased headcount and related expenses for the development of new and enhanced products. Selling expenses for the three month and nine month periods ended September 30, 2000 increased by $1,025,000 or 67% and $3,195,000 or 78% respectively, compared to the same periods in 1999 primarily because of increased headcount, commission expenses and other expenses associated with higher sales levels. General and administrative expenses for the three month and nine month periods ended September 30, 2000 increased $253,000 or 35% and $893,000 or 43% respectively, compared to the same periods in 1999 primarily as a result of higher spending associated with the increased level of operations. Total other income, net for the three month and nine month periods ended September 30, 2000 increased $800,000 or 370% and $2,461,000 or 625% respectively, from the comparable periods in 1999 due primarily to higher interest income resulting from higher average short-term investments generated from the net proceeds received from the public offering of common stock in March 2000. As a result of the above, Nanometrics' income from operations was $5,607,000 and net income was $4,040,000 for the third quarter of 2000 compared to income from operations of $1,321,000 and net income of $900,000 for the same period in 1999. For the first nine months of 2000, Nanometrics' income from operations was $13,204,000 and net income was $9,797,000 which compared to income from operations of $1,315,000 and net income of $1,003,000 for the same period in 1999. 8 Liquidity and Capital Resources At September 30, 2000, Nanometrics had working capital of $99,603,000 compared to $36,021,000 at December 31, 1999. The current ratio at September 30, 2000 was 10.6 to 1. We believe working capital including cash and short-term investments of $73,953,000 will be sufficient to meet our needs at least through the next twelve months. Operating activities for the first nine months of 2000 provided cash of $5,212,000 primarily from net income offset to some extent by higher accounts receivable, while the net purchases of short-term investments used $44,845,000, capital expenditures used $23,734,000 primarily for the purchase of a building, debt repayment used $347,000 and issuance of common stock provided $74,143,000 which resulted primarily from a public offering of Common Stock in March 2000. 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 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 pressure on product prices and changes in pricing by Nanometrics' customers or suppliers, fluctuation 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 of acquisitions of business, products or technologies, fluctuations in the availability and cost of components and subassemblies, the outcome of patent infringement discussions 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 September 30, 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 September 30, 2000. We also have fixed rate yen denominated debt obligations in Japan that have no interest rate risk. At September 30, 2000, our total debt obligation was $2,937,000 with a long-term portion of $1,815,000. A hypothetical 10% change in interest rates at September 30, 2000 would not have a material impact on our results of operations. 9 NANOMETRICS INCORPORATED PART II OTHER INFORMATION 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 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 of the Board /s/ John Heaton - ---------------------------------------- John Heaton Chief Executive Officer /s/ Paul B. Nolan - ---------------------------------------- Paul B. Nolan Chief Financial Officer Dated: November 14, 2000 11 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 14,411 59,542 20,318 422 11,370 110,017 30,086 3,795 137,700 10,414 1,815 0 0 95,050 30,406 137,700 50,563 54,977 20,433 24,928 16,845 0 60 16,059 6,262 9,797 0 0 0 9,797 .91 .83
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