-----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, U/d298ElTKL2t4uPJudTyXsYAHjwn9QhO9z8z/eoSLmZh88zvqER/jPGx60+WZII 1TD30i/to/6v+fHBplgh4Q== 0000837913-96-000004.txt : 19960517 0000837913-96-000004.hdr.sgml : 19960517 ACCESSION NUMBER: 0000837913-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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: 96565703 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 March 31, 1996 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 May 13, 1996: 16,249,389 GENUS, INC. Index PART I. FINANCIAL INFORMATION Page No. Item 1. Financial Statements Consolidated Statements of Operations - Three months ended March 31, 1996 and March 31, 1995 3 Consolidated Balance Sheets - March 31, 1996 and December 31, 1995 4 Consolidated Statements of Cash Flows - Three months ended March 31, 1996 and March 31, 1995 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 6. Exhibits and Reports on Form 8-K 10 Signatures 11 Index to Exhibits 12
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 March 31, 1996 1995 Net sales $26,360 $ 22,526 Costs and expenses: Cost of goods sold 16,922 13,306 Research and development 3,970 2,976 Selling, general & administrative 4,520 4,218 ------- -------- Income from operations 948 2,026 Other income, net 17 58 ------- -------- Income before provision for income taxes 965 2,084 Provision for income taxes 372 146 ------- -------- Net income $ 593 $ 1,938 ======= ======== Net income per share $ 0.04 $ 0.13 ======= ======== Shares used in per share calculation 16,540 14,579 ======= ========
The accompanying notes are an integral part of these financial statements. 3 GENUS, INC. Consolidated Balance Sheets (Unaudited) (Amounts in thousands, except share data)
March 31, December 31, 1996 1995 ASSETS Current assets: Cash and cash equivalents $15,259 $12,630 Accounts receivable (net of allowance for doubtful accounts of $250 in 1996 and 1995) 23,180 26,796 Inventories, net 24,517 24,437 Other current assets 802 623 Current deferred taxes 4,427 4,427 ------- ------- Total current assets 68,185 68,913 Property and equipment, net 15,153 14,627 Other assets, net 3,998 3,824 Noncurrent deferred taxes 7,543 7,883 ------- ------- $94,879 $95,247 ======= ======= LIABILITIES Current liabilities: Accounts payable 6,365 7,129 Accrued expenses 10,524 11,042 Current portion of long-term debt 784 681 ------- ------- Total current liabilities 17,673 18,852 Long-term debt, less current portion 1,031 1,034 ------- ------- 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, 16,250,811 shares at March 31, 1996 and 16,163,539 shares at December 31, 1995 95,904 95,683 Accumulated deficit (19,729) (20,322) ------- ------- Total shareholders' equity 76,175 75,361 ------- ------- $94,879 $95,247 ======= =======
4 The accompanying notes are an integral part of these financial statements. GENUS, INC Consolidated Statements of Cash Flows (Unaudited) (Amounts in thousands)
Three Months Ended March 31, 1996 1995 Cash flows from operating activities: Net income $ 593 $1,938 Adjustments to reconcile to net cash from operating activities: Depreciation and amortization 1,765 934 Changes in assets and liabilities: Accounts receivable 3,616 (6,784) Inventories (80) (2,922) Other current assets (179) (229) Accounts payable (764) 2,775 Accrued expenses (518) 243 Other, net 138 44 ------ ------ Net cash provided by (used in) operating activities 4,571 (4,001) ====== ====== Cash flows from investing activities: Acquisition of property and equipment (1,752) (640) Capitalization of software development costs (185) (263) ------ ------ Net cash used in investing activities (1,937) (903) ====== ====== Cash flows from financing activities: Proceeds from issuance of common stock 221 16,387 Payment of short-term bank borrowings - (3,800) Payments of long-term debt (226) (340) ------ ------ Net cash provided by (used in) financing activities (5) 12,247 ====== ====== Increase in cash 2,629 7,343 Cash and cash equivalents, beginning of period 12,630 10,188 ------- ------- Cash and cash equivalents, end of period $15,259 $17,531 ======= =======
The accompanying notes are an integral part of these financial statements. 5 GENUS, INC. Notes to Consolidated Financial Statements (Unaudited) March 31, 1996 (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 1995 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, 1995. 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 the consolidated 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. Reclassification Certain amounts in prior years' financial statements have been reclassified to conform to the current year's presentation. These reclassifications did not change previously reported results. Statement of Cash Flows Information (Unaudited)
Three Months Ended March 31, 1996 1995 Supplemental Cash Flow Information: Cash paid during the period for: Interest $59 $59 Income taxes $41 $25 Noncash investing activities: Purchase of property and equipment under long-term debt obligations $326 $365
Line of Credit The Company has a revolving line of credit agreement with a bank that provides for maximum borrowings of $10.0 million and expires in July 1996. 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. The line of credit agreement requires the Company to comply with certain financial covenants and restricts the payment of dividends. At March 31, 1996, the Company had no borrowings outstanding under the line of credit 6 GENUS, INC. Notes to Consolidated Financial Statements (Unaudited) (continued) (Amounts in thousands) Inventories Inventories comprise the following:
March 31, December 31, 1996 1995 Raw materials and spare parts $13,608 $12,922 Work in process 8,698 10,048 Finished goods 2,211 1,467 ------- ------- $24,517 $24,437 ======= =======
Property and Equipment Property and equipment are stated at cost and comprise the following:
March 31, December 31, 1996 1995 Demonstration equipment $14,337 $12,877 Equipment 13,439 12,512 Furniture and fixtures 1,962 1,960 Leasehold improvements 6,239 6,366 ------- ------- 35,977 33,715 Less accumulated depreciation and amortization (21,307) (19,944) ------- ------- 14,670 13,771 Construction in process 483 856 ------- ------- $15,153 $14,627 ======= =======
Accrued Expenses Accrued expenses comprise the following:
March 31, December 31, 1996 1995 System installation and warranty $4,958 $4,318 Accrued commissions and incentives 1,942 3,227 Accrued payroll and related items 1,634 1,104 Other 1,990 2,393 ------- ------- $10,524 $11,042 ======= =======
7 GENUS, INC. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Net sales for the quarter ended March 31, 1996 were $26.4 million compared with net sales of $22.5 million in the same period of 1995, representing a 17 percent increase. This increase was primarily due to higher unit sales of ion implantation systems with higher average selling prices (ASP), and greater spares revenue. The Company's net sales results continue to benefit from strong market conditions in Korea. Gross margin for the quarter ended March 31, 1996 was 36 percent compared to 41 percent for the same period in 1995. The decline in gross margin was primarily due to higher costs on the initial shipments of the Company's ion implantation (MeV) 1520 systems, higher product costs on the Company's tungsten chemical vapor deposition (CVD) system shipments as a result of a change in product mix and higher service costs associated with the opening of Genus Korea, Ltd. The Company's gross margins have historically been affected by variations in ASP, changes in the mix of product sales, unit shipment levels, the level of foreign sales, and competitive pricing pressures. During the first quarter of 1996, research and development (R&D) expenses as a percentage of net sales, were 15 percent compared to 13 percent in the same period of 1995. On an absolute dollar basis, R&D expenses during the first quarter of 1996 increased $1.0 million when compared with the same period in 1995. The increases in absolute dollars and as a percentage of sales were primarily due to increased headcount and associated payroll costs, higher product development material costs and depreciation expenses on engineering tools for new product development. The Company continually evaluates its R&D investment in view of evolving competitive and market conditions. Selling, general and administrative expenses (S,G&A) were 17 percent of net sales during the first quarter of 1996 compared to 19 percent in the same period of 1995. The change was primarily due to higher sales volume. On an absolute dollar basis, S,G&A increased $0.3 million when compared with the same period in 1995. The change was primarily due to increased headcount and related payroll costs, higher sales commissions and increased depreciation expense. During the first quarter of 1996, the Company earned $17 thousand in other income compared to $58 thousand for the same period in 1995. The decrease was principally due to lower interest income as a result of lower cash balances. The effective tax rate for the first quarter of 1996 was 38.5 percent compared with the effective tax rate of 7 percent during the same period in 1995. The significant increase was a result of the one-time recognition of deferred tax assets during the fourth quarter of 1995 in accordance with Financial Accounting Standard No. 109, "Accounting for Income Taxes". The Company has continued to experience positive financial performance in recent quarters. These results have been primarily due to strong market conditions for the Company's products in Korea, and one Korean customer in particular, as a result of investments in semiconductor manufacturing facilities in this region. However, due to the fluctuation in the Company's order rates in the last nine months, the Company's continued reliance on one customer for a significant portion of its orders, the continued competitive market environment for the Company's products and the historically cyclical 8 nature of the semiconductor equipment market, the Company remains cautious about the short-term prospects for its business. The Company continues to make strategic investments in new product development and manufacturing improvements with a view to improving 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 first quarter ended March 31, 1996, the Company's cash and cash equivalents increased $2.6 million principally due to cash provided by operating activities of $4.6 million, offset by the purchase of property and equipment of $1.8 million. The positive change in cash from operating activities primarily resulted from a decrease of $3.6 million in accounts receivable due to improved cash collections, depreciation and amortization of $1.8 million and net income of $0.6 million. The increase in cash from operating activities was offset by a decrease in accounts payable of $0.8 million as a result of lower inventory purchases and a $0.5 million decrease in accrued expenses related primarily to the payment of year ended 1995 incentives and profit sharing plans during the first quarter of 1996, offset by increased warranty accruals. The Company's primary source of funds at March 31, 1996 consisted of $15.3 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 July 1996. At March 31, 1996, the Company had no borrowings outstanding under the line of credit. Capital expenditures during the first quarter of 1996 were $1.8 million and related primarily to acquisition of machinery and equipment for the Company's R&D and Applications Laboratories. In September 1995, the Company entered into an agreement to lease a new facility in Newburyport, Massachusetts for its Ion Technology Division. The Company estimates that it will expend approximately $3.0 million for leasehold improvements and equipment associated with the new facility. The Company intends to finance these expenditures through new or existing lease lines. Furthermore, the Company anticipates that it will continue to make additional capital expenditures during 1996 that will be funded through existing working capital or lease financing. The Company believes that cash generated from operations, if any, and existing credit facilities will be sufficient to satisfy its cash needs for the foreseeable future. 9 GENUS, INC. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 11.1 - Computation of Net Income Per Share (b) Report on Form 8-K No report on Form 8-K was filed during the quarter ended March 31, 1996. 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: May 10, 1996 GENUS, INC. William W.R. Elder ------------------------------------ William W.R. Elder Chairman and Chief Executive Officer Ernest P. Quinones ----------------------------------- Ernest P. Quinones Acting Chief Financial Officer 11 GENUS, INC. Index to Exhibits Exhibit Description Page Exhibit 11.1 Computation of Net Income per Share 13 12 Exhibit 11.1 GENUS, INC. Computation of Net Income Per Share (a) (Amounts in thousands, except per share amounts)
Quarter Ended March 31, 1996 1995 Average common shares outstanding 16,207 13,725 Computation of incremental outstanding shares Net effect of dilutive stock options based on treasury stock method 333 854 ------ ------ 16,540 14,579 ====== ====== Net income $593 $1,938 ====== ====== Net income per share (a) $ 0.04 $ 0.13 ====== ======
Computation Notes: (a) Presentation of fully diluted earnings per share for the three months ended March 31, 1996 and 1995 is omitted because such amounts are materially the same as those presented above. 13 EX-27 2 ART.5 FDS FOR 1ST QUARTER 10-Q
5 1000 US 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 1 15259 0 23430 250 24517 68185 36460 21307 94879 17673 0 95904 0 0 19729 94879 26360 26360 16922 25412 0 0 0 965 372 0 0 0 0 593 .04 .04
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