0000837913-95-000008.txt : 19950815 0000837913-95-000008.hdr.sgml : 19950815 ACCESSION NUMBER: 0000837913-95-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENUS INC CENTRAL INDEX KEY: 0000837913 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 942790804 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17139 FILM NUMBER: 95562725 BUSINESS ADDRESS: STREET 1: 1139 KARLSTAD DR CITY: SUNNYVALE STATE: CA ZIP: 94089-2117 BUSINESS PHONE: 4087477120 MAIL ADDRESS: STREET 2: 1139 KARLSTAD DR CITY: SUNNYVALE STATE: CA ZIP: 94089-2117 10-Q 1 10-Q FILING SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [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 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 0-17139 GENUS, INC. (Exact name of registrant as specified in its charter) California 94-279080 ________________________________________________________________________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1139 Karlstad Drive, Sunnyvale, California 94089 ________________________________________________________________________________ (Address of principal executive offices) (Zip code) (408) 747-7120 ________________________________________________________________________________ (Registrant's telephone number, including area code) Not Applicable _______________________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such 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 ________ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common shares outstanding at August 9, 1995: 15,924,473 GENUS, INC. Index
PART I. FINANCIAL INFORMATION Page No. Item 1. Financial Statements Consolidated Statements of Operations - Three and six months ended June 30, 1995 and 1994 3 Consolidated Balance Sheets - June 30, 1995 and December 31, 1994 4 Consolidated Statements of Cash Flows - Six months ended June 30, 1995 and 1994 5 Notes to Consolidated Financial Statements 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-9 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 Index to exhibits 12 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements GENUS, INC. Consolidated Statements of Operations (Unaudited) (Amounts in thousands, except per share data)
Three Months Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 Net sales $25,057 $14,966 $47,583 $28,739 Costs and expenses: Cost of goods sold 14,889 8,949 28,195 17,405 Research and development 2,858 2,425 5,834 4,424 Selling, general & administrative 4,934 2,960 9,152 5,710 _____ _____ _____ _____ Income from operations 2,376 632 4,402 1,200 Other income, net 140 475 198 585 _____ _____ _____ _____ Income before provision for income taxes 2,516 1,107 4,600 1,785 Provision for income taxes 176 56 322 82 _____ _____ _____ _____ Net income $2,340 $1,051 $4,278 $1,703 ===== ===== ===== ===== Net income per share $0.14 $0.08 $0.28 $0.13 ===== ===== ===== ===== Shares used in per share calculation 16,458 12,915 15,521 12,918 ====== ====== ====== ======
The accompanying notes are an integral part of these financial statements. 3 GENUS, INC. Consolidated Balance Sheets (Unaudited) (Amounts in thousands, except share data)
June 30, December 31, 1995 1994 ASSETS Current assets: Cash and cash equivalents $25,424 $10,188 Accounts receivable (net of allowance for doubtful accounts of $250 in 1995 and 1994) 14,416 15,169 Inventories, net 21,184 14,677 Other current assets 606 655 ______ ______ Total current assets 61,630 40,689 Property and equipment, net 13,393 11,492 Other assets, net 2,948 2,816 ______ ______ $77,971 $54,997 ======= ======= LIABILITIES Current liabilities: Short-term bank borrowings - 3,800 Accounts payable 8,410 5,858 Accrued expenses 9,301 6,625 Current portion of long-term debt 906 1,205 ______ ______ Total current liabilities 18,617 17,488 ______ ______ Long-term debt, less current portion 631 523 ______ ______ SHAREHOLDERS' EQUITY Preferred stock, no par value: Authorized, 2,000,000 shares; Issued and outstanding, none Common stock, no par value: Authorized, 20,000,000 shares; Issued and outstanding, 15,884,154 shares at June 30, 1995 and 12,813,028 shares at December 31, 1994 94,049 76,590 Accumulated deficit (35,326) (39,604) ________ _______ Total shareholders' equity 58,723 36,986 ________ _______ $77,971 $54,997 ======== =======
The accompanying notes are an integral part of these financial statements. 4 GENUS, INC. Consolidated Statements of Cash Flows (Unaudited) (Amounts in thousands)
Six months Ended June 30, 1995 1994 Cash flows from operating activities: Net income $4,278 $1,703 Adjustments to reconcile to net cash from operating activities: Depreciation and amortization 1,879 1,235 Gain on sale of property and equipment - (461) Changes in assets and liabilities: Accounts receivable 753 (1,823) Inventories (6,507) (3,334) Other current assets 49 74 Accounts payable 2,552 3,966 Accrued expenses 2,676 (1,526) Other, net (419) (174) ______ ______ Net cash provided by (used in) operating activities 5,261 (340) ______ ______ Cash flows from investing activities: Acquisition of property and equipment (3,011) (773) Proceeds from disposition of property and equipment - 544 ______ ______ cash used in investing activities (3,011) (229) ______ ______ Cash flows from financing activities: Net proceeds from issuance of common stock 17,459 403 Payment of short-term bank borrowings (3,800) (461) Payments of long-term debt (673) 700 _______ _____ Net cash provided by financing activities 12,986 642 _______ _____ Increase in cash and cash equivalents 15,236 73 Cash and cash equivalents, beginning of period 10,188 10,423 ______ ______ Cash and cash equivalents, end of period $25,424 $10,496 ====== ======
The accompanying notes are an integral part of these financial statements. 5 GENUS, INC. Notes to Consolidated Financial Statements (Unaudited) June 30, 1995 (Amounts in thousands) Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with SEC requirements for interim financial statements. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 1994 Annual Report to Shareholders which is incorporated by reference into the Company's Annual Report on Form 10-K for the year ended December 31, 1994. The information furnished reflects all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for the fair statement of financial position, results of operations and cash flows for the interim periods. The results of operations for the periods presented are not necessarily indicative of results to be expected for the full year. Net Income Per Share Net income per share is computed by dividing net income by the weighted average number of common and common equivalent shares of common stock outstanding during each period. Statement of Cash Flows Information
Six Months Ended June 30, December 31, 1995 1994 Supplemental Cash Flow Information: Cash paid during the period for: Interest $163 $92 Income taxes $136 $86 Non cash investing activities: Purchase of property and equipment under long-term debt obligations $480 $114
Line of Credit In May 1994, the Company renewed its revolving line of credit agreement with a bank that provides for maximum borrowings of $10 million and expires in May 1996. The borrowing base under the line of credit is limited to 80% of eligible accounts receivable. Borrowings under the line of credit, which are secured by substantially all of the assets of the Company, bear interest at the bank's prime rate plus 0.75%. The agreement requires the Company to comply with certain financial covenants and restricts the the payment of dividends. At June 30, 1995, the Company had no borrowings outstanding under the line of credit. The Company has a Term Loan Agreement with the same bank which provides $3 million to fund leasehold improvements to its facility. At June 30, 1995, $461,000 under the Term Loan Agreement was outstanding. This agreement requires the Company to comply with the same covenants and restrictions as those under the line of credit. 6 GENUS, INC. Notes to Consolidated Financial Statements (Unaudited) (continued) (Amounts in thousands)
Inventories Inventories comprise the following: June 30, December 31, 1995 1994 Raw materials and parts $9,781 $8,156 Work in process 7,539 6,118 Finished goods 3,864 403 _____ _____ $21,184 $14,677 ====== ======
Property and Equipment Property and equipment are stated at cost and comprise the following:
June 30, December 31, 1995 1994 Building and improvements $273 $248 Demonstration equipment 12,678 11,909 Equipment 10,013 8,460 Furniture and fixtures 1,956 1,952 Leasehold improvements 5,939 5,653 ______ ______ 30,859 28,222 Less accumulated depreciation and amortization (19,854) (18,262) ______ ______ 11,005 9,960 Construction in progress 2,388 1,532 ______ _____ $13,393 $11,492 ====== ======
Accrued Expenses Accrued expenses comprise the following:
June 30, December 31, 1995 1994 System installation and warranty $3,094 $2,394 Accrued commissions and incentives 1,826 1,527 Customer advances and deferred revenue 1,809 502 Accrued payroll and related items 1,193 966 Other 1,379 1,236 _____ _____ $9,301 $6,625 ===== =====
Sale of Common Stock On February 17, 1995, the Company sold 2,539,018 shares of common stock through a private placement offering, which generated gross proceeds of approximately $17.5 million. 7 GENUS, INC. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Net sales for the three and six months ended June 30, 1995 were $25.1 million and $47.6 million, respectively, compared to net sales of $15.0 million and $28.7 million, respectively, for the corresponding periods in 1994. On a percentage basis, net sales for the three and six months ended June 30, 1995 increased 67 percent and 66 percent respectively, when compared to the same periods in 1994. The increase during the three and six months ended June 30, 1995 was due primarily to the introduction of the tunsten chemical vapor deposition (CVD) 7000 product line with higher average selling prices (ASP) and higher unit sales of ion implantation systems. The improvements in net sales during these periods were achieved as a result of continued strong market conditions in Korea. Gross margin for the quarter and six months ended June 30, 1995 was 41 percent compared to 40 percent and 39 percent, respectively, for the same periods in 1994. The improvements were due primarily to higher ASP on CVD system sales, improved production cycle times, greater absorption of manufacturing costs and other gross margin improvement programs. The Company's cost of goods sold and gross margins have historically been affected by variations in ASP, changes in the mix of product sales, unit shipments levels, the level of foreign sales and competitive pricing pressures. As a percentage of sales, research and development (R&D) expenses for the three and six months ended June 30, 1995 were 11 percent and 12 percent of net sales, respectively, compared to 16 percent and 15 percent, respectively during the same periods in 1994. The percentage decrease for the quarter end and six month periods was due primarily to higher net sales volumes. On an absolute dollar basis, R&D expenses for the quarter and six months ended June 30, 1995 increased by $0.4 million and $1.4 million, respectively, when compaired to the same periods in 1994. The increases were primarily related to additional headcount and related payroll costs, higher material costs and depreciation expense for new product development. The Company continually evaluates its R&D investment in view of evolving competitive and market conditions. Selling, general and administrative (S,G&A) expenses were 20 percent and 19 percent for the three and six months ended June 30, 1995, compared to 20 percent for the same periods in 1994. On an absolute dollar basis, S,G&A expenses for the three and six months ended June 30, 1995 increased $2.0 million and $3.4 million, respectively, when compared to the same periods in 1994. The dollar increases were primarily due to headcount additions and related payroll costs, higher sales commissions, and increased depreciation. During the three months ended June 30, 1995, the Company had $0.1 million in other income, compared to $0.5 million in other income for the comparable period in 1994. For the six months ended June 30, 1995, the Company had other income of $0.2 million, compared to $0.6 million of other income for the same period in 1994. The change during these periods was primarily a result of the gain on the sale of property and equipment of approximately $0.5 million in the second quarter of 1994. The effective tax for the three and six months of 1995 was 7 percent compared to an effective tax rate of 5 percent in 1994. The Company has continued to experience positive financial performance and solid order rates in recent quarters. These results have been primarily due to strong market conditions for the Company's products in Korea as a result of increased investments in DRAM manufacturing facilities in this region. However, due to the Company's reliance on a limited number of customers for a significant portion of its orders, the continued competitive market environment for the 8 Company's products and the historically cyclical nature of the semiconductor equipment market, the Company remains cautiously optimistic about the future prospects for its business. The Company continues to make strategic investments in new product development and manufacturing improvements with a view to improve future performance by enhancing product offerings; however, such investment may adversely affect short-term operating performance. The Company is also continuing its efforts to implement productivity improvements for future operating performance. The Company believes that the future economic environment could continue to lengthen the order and sales cycles for its products, causing it to continue to simultaneously book and ship some orders during the same quarter. LIQUIDITY AND CAPITAL RESOURCES During the six months ended June 30, 1995, the Company's cash and cash equivalents increased $15.2 million principally due to the issuance of common stock of $17.5 million and cash generated from operating activities of $5.3 million; offset by the repayment of short-term bank borrowings of $3.8 million and the purchase of property and equipment of $3.0 million. The positive change in cash from operating activities primarily resulted from a decrease of $0.8 million in accounts receivable due to improved account collection activity; an increase in accounts payable of $2.6 million as a result of inventory pruchases made late in the quarter for early third quarter shipments and the cash management practices of the Company; an increase of $2.7 million in accrued expenses due to cash received in advance for a system order and increased warranty and commission accruals as a result of increased sales volumes; depreciation and amortization of $1.9 million and net income of $4.3 million; offset by an increase in inventories of $6.5 million as a result of inventory purchases received late in the quarter to support shipments early in the third quarter of 1995. The Company's primary source of funds at June 30, 1995 consisted of $25.4 million in cash and cash equivalents, and funds available under a $10.0 million revolving line of credit. The line of credit is secured by substantially all of the assets of the Company and expires in May 1996. At June 30, 1995, the Company had no borrowings outstanding under the line of credit. Capital expenditures during the first half of 1995 were $3.0 million and related primarily to acquisition of machinery and equipment for the Company's R&D and Applications Laboratories. The Company anticipates that it will continue to make capital expenditures during the remainder of 1995 and will be funded through existing working capital or lease financing. On February 17, 1995, the Company sold 2,539,018 shares of Common Stock through a private placement offering, which generated net proceeds of approximately $16.4 million. The Company believes that cash generated from operations, if any, proceeds from the private placement offering and existing credit facilities will be sufficient to satisfy its cash needs in the near term and for the foreseeable future. 9 GENUS, INC. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Company's Annual Meeting of Shareholders was held on May 23, 1995 in Santa Clara, California. Proxies for the meeting were solicited pursuant to Regulation 14A. At the Company's Annual Meeting, the shareholders approved the following resolutions: (1) Amendment to the 1991 Incentive Stock Option Plan to increase the number of shares reserved for issuance thereunder by 500,000 shares. For: 9,490,076 shares Against: 2,110,300 shares Abstaining: 147,957 shares
(2) Amendment to the 1989 Employee Stock Purchase Plan to increase the number of shares reserved for issuance thereunder by 250,000 shares. For: 11,253,719 shares Against: 337,177 shares Abstaining: 157,437 shares
In addition, all management nominees for director were elected and the re-appointment of Coopers & Lybrand as independent accountants was approved. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 11.1 - Computation of Net Income per Share. (b) No Reports on Form 8-K were filed during the period from April 1, 1995 to June 30, 1995. 10 GENUS, INC. 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. Date: August 14, 1995 GENUS, INC. William W.R. Elder _________________________ William W.R. Elder, Chairman and Chief Executive Officer Todd S. Myhre _________________________ Todd S. Myhre President and Chief Operating Officer 11 GENUS, INC. Index to Exhibits
Exhibits Description Page Exhibit 11.1 Computation of Net Income per Share 13
12 GENUS, INC. Exhibit 11.1 Computation of Net Income Per Share (Unaudited) (Amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 Average common shares outstanding 15,633 12,473 14,680 12,455 Computation of incremental outstanding shares Net effect of dilutive stock options based on treasury stock method 825 442 841 463 ______ ______ ______ ______ 16,458 12,915 15,521 12,918 ====== ====== ====== ====== Net income $2,340 $1,051 $4,278 $1,703 ====== ====== ====== ====== Net income per share (a) $ 0.14 $ 0.08 $ 0.28 $ 0.13 ====== ====== ====== ======
Computation Notes: (a) Presentation of fully diluted earnings per share for the three and six months ended June 30, 1995 and 1994 is omitted because such amounts are materially the same as those presented above. 13 EX-27 2 ART.5 FDS FOR 2ND QUARTER 10-Q
5 6-MOS DEC-31-1995 JUN-30-1995 25424 0 14666 250 21184 61630 33247 19854 77971 18617 0 94049 0 0 35326 77971 47583 47583 28195 43181 0 0 0 4600 322 0 0 0 0 4278 .28 .28