-----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, Bf2pLSSIaSK3r16S0WH7ig412YF0v+ku6jL3nKQjO2QFDzmrfJgJmuvcd58W1wYA ppYs1aanvZ5fwNKDqpjejw== 0001032210-97-000197.txt : 19971111 0001032210-97-000197.hdr.sgml : 19971111 ACCESSION NUMBER: 0001032210-97-000197 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971110 SROS: NASD 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: 97710805 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, 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, 1997 ------------------ 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 13, 1997 there were 8,392,425 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, 1997 and December 31, 1996.............................. 3 Consolidated Statements of Income - Three months and nine months ended September 30, 1997 and 1996........................................... 4 Consolidated Statements of Cash Flows - Nine months ended September 30, 1997 and 1996.............................................................. 5 Notes to Consolidated Financial Statements............................................................ 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................... 7 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K................................... 9 Signatures................................................................... 10
2 PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS NANOMETRICS INCORPORATED CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS) September 30, December 31, 1997 1996 (Unaudited) ------------- ------------ ASSETS CURRENT ASSETS: $ 1,798 $ 1,725 Cash and equivalents Short-term investments 9,622 6,657 Accounts receivable, less allowance for doubtful accounts of $416 and $419 10,422 11,100 Inventories 6,250 5,078 Prepaid and deferred income taxes 1,918 1,648 Prepaid expenses and other 417 882 ------- ------- Total current assets 30,427 27,090 PROPERTY, PLANT AND EQUIPMENT, NET 2,393 2,600 OTHER 274 274 ------- ------- TOTAL $33,094 $29,964 ------- ------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 1,469 $ 1,563 Accrued payroll and related expenses 710 533 Other current liabilities 1,266 763 Income taxes payable 51 1,271 Current portion of long-term debt 330 347 ------- ------- Total current liabilities 3,826 4,477 LONG-TERM DEBT 2,888 3,296 DEFERRED INCOME TAXES 37 131 ------- ------- Total liabilities 6,751 7,904 SHAREHOLDERS' EQUITY: Common stock, no par value; 25,000,000 shares authorized; 8,357,195 and 8,258,061 outstanding 12,132 11,833 Retained earnings 14,537 10,387 Accumulated translation adjustment (326) (160) ------- ------- Total shareholders' equity 26,343 22,060 ------- ------- TOTAL $33,094 $29,964 ------- ------- 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, 1997 1996 1997 1996 ------ ------ ------ ------ NET REVENUES: Product sales $8,433 6,481 $23,475 $18,026 Service 983 1,258 2,899 4,338 ------ ------ ------- ------- Total net revenues 9,416 7,739 26,374 22,364 ------ ------ ------- ------- COSTS AND EXPENSES: Cost of product sales 3,019 2,589 8,658 7,491 Cost of service 988 998 2,725 3,046 Research and development 772 713 2,111 2,048 Selling 1,508 1,158 4,397 3,424 General and administrative 716 639 1,965 1,791 ------ ------ ------- ------- Total costs and expenses 7,003 6,097 19,856 17,800 ------ ------ ------- ------- INCOME FROM OPERATIONS 2,413 1,642 6,518 4,564 OTHER INCOME (EXPENSES) Interest income 132 95 373 280 Interest expense (36) (30) (85) (91) Other, net (32) 48 (38) 113 ------ ------ ------- ------- Total other income, net 64 113 250 302 ------ ------ ------- ------- INCOME BEFORE PROVISION FOR INCOME TAXES 2,477 1,755 6,768 4,866 PROVISION FOR INCOME TAXES 973 728 2,618 2,044 ------ ------ ------- ------- NET INCOME $1,504 1,027 4,150 $ 2,822 ====== ====== ======= ======= NET INCOME PER COMMON AND EQUIVALENT SHARE $ .17 .12 .47 .33 ====== ====== ======= ======= COMMON AND EQUIVALENT SHARES USED IN PER SHARE COMPUTATION $9,002 8,514 8,780 8,549 ====== ====== ======= ======= See Notes to Consolidated Financial Statements
4 NANOMETRICS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited)
Nine Months Ended September 30, 1997 1996 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,150 $ 2,822 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 161 227 Deferred income taxes 367 425 Changes in assets and liabilities: Accounts receivable (10) (2,039) Inventories (1,230) (1,106) Prepaid expenses and other (501) (572) Accounts payable and other liabilities 624 575 Income taxes payable (1,221) 683 -------- --------- Net cash provided by operating activities 2,340 1,015 -------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of short-term investments (13,547) (10,546) Sales/maturities of short-term investments 10,583 6,877 Capital expenditures (64) (254) -------- --------- Net cash used in investing activities (3,028) (3,923) -------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term borrowings -- 762 Repayments of long-term borrowings (251) (688) Issuance of common stock 299 185 -------- --------- Net cash provided by financing activities 48 259 -------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 713 (19) -------- --------- NET CHANGE IN CASH AND EQUIVALENTS 73 (2,668) CASH AND EQUIVALENTS, at beginning of period 1,725 3,625 -------- --------- CASH AND EQUIVALENTS, at end of period $ 1,798 $ 957 ======== ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest 85 $ 91 ======== ========= Cash paid for income taxes $ 4,161 $ 767 ======== =========
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 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 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 1996 Form 10-K filed with the Securities and Exchange Commission. Note 2. Net Income Per Common and Equivalent Share Net income per share is based on the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares include dilutive common stock options (using the treasury stock method) and shares issuable under the employee stock purchase plan. Note 3. 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, 1997 1996 ------------- ------------ Raw materials and subassemblies $3,945 $1,855 Work in process 1,376 1,414 Finished goods 929 1,809 ------ ------ $6,250 $5,078 ====== ======
Note 4. Recently Issued Accounting Standards In February 1997, the Financial Accounting Standards Board issued a Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share". The Company is required to adopt SFAS 128 in the fourth quarter of fiscal 1997 and will restate at that time earnings per share (EPS) data for prior periods to conform with SFAS 128. Earlier application is not permitted. SFAS 128 replaces current EPS reporting requirements and requires a dual presentation of basic and diluted EPS. Basic EPS excludes dilution and is computed by dividing net income by the weighted average of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. If SFAS 128 had been in effect during the current and prior year periods, basic EPS would have been $ 0.18 and $ 0.13 for the quarters ended September 30, 1997 and 1996, respectively, and $ 0.50 and $ 0.35 for the year to date periods, respectively. Diluted EPS under SFAS 128 would not have been different than primary EPS currently reported for the periods. In June 1997, the Financial Accounting Standards Board issued SFAS No. 130, "Reporting Comprehensive Income", which requires that an enterprise report, by major components and as a single total, the change in its net assets during the period from nonowner sources; and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information", which establishes annual and interim reporting standards for an enterprise's business segments and related disclosures about its products, services, geographic areas and major customers. Adoption of these statements will not impact the Company's consolidated financial position, results of operations or cash flows. Both statements are effective for fiscal years beginning after December 15, 1997, with earlier application permitted. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - --------------------- Total net revenues increased by 17.9% from $22.4 million for the nine months ended September 30, 1996 to $26.4 million for the nine months ended September 30, 1997. Product sales increased by 30.2% from $18.0 million for the nine months ended September 30, 1996 to $23.5 million for the nine months ended September 30, 1997. The increases in product sales resulted from stronger worldwide demand for, and increased shipments of, the Company's products, especially its automated products. Service revenue decreased 33.2% from $4.3 million for the nine months ended September 30, 1996 to $2.9 million for the nine months ended September 30, 1997. The decrease in service revenue is primarily attributable to lower sales of parts, services and upgrades in the U.S. and Asia in 1997 due in part to increased functionality and reliability of the Company's new products. The product gross profit percentage of product sales increased from 53.4% for the nine months ended September 30, 1996 to 63.1% for the nine months ended September 30, 1997. The increase was caused primarily by higher sales volumes in 1997 resulting in lower per unit manufacturing costs. The service gross profit percentage decreased from 29.8% for the nine months ended September 30, 1996 to 6.0% for the nine months ended September 30, 1997. The decrease was primarily attributable to the decline in the sales of accessories and upgrades while fixed service costs increased to support the Company's growing installed base of systems at customer locations in 1997. Research and development expenses increased 3.1% from $2.0 million for the nine months ended September 30, 1996 to $2.1 million for the nine months ended September 30, 1997 to support the continued development of new products and product enhancements. Selling expenses increased 28.4% from $3.4 million for the nine months ended September 30, 1996 to $4.4 million for the nine months ended September 30, 1997 primarily because of higher commission expenses resulting from higher sales, the addition of sales and marketing staff and the opening of an office in Scotland during the past 12 months. General and administrative expenses increased 9.7% from $1.8 million for the nine months ended September 30, 1996 to $2.0 million for the nine months ended September 30, 1997 as a result of higher spending associated with the increase in total net revenues. Other income, net, decreased 17.2% from $302,000 for the nine months ended September 30, 1996 to $250,000 for the nine months ended September 30, 1997 due primarily to higher royalty income and exchange rate gains in the prior year. The Company's effective income tax rate decreased from 42.0% for the nine months ended September 30, 1996 to 38.7% for the nine months ended September 30, 1997 primarily due to an increased benefit from the Company's foreign sales corporation. The Company reported income from operations of $2,413,000 and net income of $1,504,000 for the third quarter of 1997 compared to income from operations of $1,642,000 and net income of $1,027,000 for the same period in 1996. For the first nine months of 1997, the Company reported income from operations of $6,518,000 and net income of $4,150,000 which compared to income from operations of $4,564,000 and net income of $2,822,000 for the same period in 1996. 7 Liquidity and Capital Resources - ------------------------------- At September 30, 1997, the Company had working capital of $26,601,000 compared to $22,613,000 at December 31, 1996. The current ratio at September 30, 1997 was 8.0 to 1. The Company believes working capital including cash and short-term investments of $11,420,000 will be sufficient to meet its needs at least through the next twelve months. Operating activities for the first nine months of 1997 provided cash of $2,340,000 primarily from profits, which were offset to some extent by increased inventories and income tax payments, while the net purchases of short-term investments used $2,964,000, capital expenditures used $64,000, debt repayment used $251,000 and issuance of common stock provided $299,000. Exchange rate changes favorably impacted cash for the first nine months of 1997 by $713,000. The foregoing Management 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 as set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Factors" in the 1995 Annual Report. The Company's actual results could differ materially from the results anticipated in such forward-looking statements. 8 NANOMETRICS INCORPORATED PART II OTHER INFORMATION ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K A. Exhibits 27 Financial Data Schedule B. Reports on Form 8-K. None. 9 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: November 7, 1997 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1997 JUL-01-1997 SEP-30-1997 1,798 9,622 10,422 416 6,250 30,427 2,393 3,324 33,094 3,826 2,888 0 0 12,132 14,211 33,094 23,475 26,374 8,658 11,383 8,473 0 85 6,768 2,618 4,150 0 0 0 4,150 .47 .47
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