ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large accelerated filer | ☐ | ☒ | ||||
Non-accelerated filer |
☐ |
Smaller reporting company | ||||
Emerging growth company |
Item 1. |
Business |
TFE Products |
Applications and Features | |
HDD Equipment Market | ||
200 Lean ® Disk Sputtering System |
• Uses PVD and chemical vapor deposition (“CVD”) technologies. • Deposits magnetic films, non-magnetic films and protective carbon-based overcoats.• Provides high-throughput for small-substrate processing. • Over 164 units installed. | |
Upgrades, spares, consumables and services (non-systems business) |
• Upgrades to the installed base to support the continued growth in areal density or reduce the manufacturing cost per disk. | |
DCP Market | ||
INTEVAC VERTEX ® System |
• Utilizes vertical sputtering for multiple film types. • Provides high-throughput for small-substrate processing. • Uses patented carbon deposition source. • Modular design enables expandability. • Enables low-temperature processing. | |
INTEVAC VERTEX ® Spectra System |
• Extension of the VERTEX system. • Incorporates multiple source technologies in a single system. • Uses proprietary ion beam processing for deposition and etching. • Enables unique patterned NCVM and hard AR coatings. | |
INTEVAC VERTEX ® Marathon System |
• Versatile platform for high volume manufacturing of multi-step, multi-layer optical coatings. • Enables diverse coatings — DiamondClad, patterned NCVM and AR films. | |
DIAMOND DOG ® |
• Screen protectors for mobile devices, a consumer product line with DiamondClad tempered glass. • Provides long lasting protection against scratches and abrasion. • Preserves screen clarity and anti-fingerprint performance. | |
Solar PV Market | ||
INTEVAC MATRIX PVD System |
• Deposits electrical contacts and conductor layers, reflective layers, and transparent conductive oxide layers, all of which are critical to the efficiency of solar cells. • Includes patented Linear Scanning Magnetic Array (“LSMA”) magnetron source, with industry-leading target utilization rate of over 65 percent. • Provides high-throughput for small-substrate processing. | |
INTEVAC MATRIX Implant System |
• Utilizes the chambers and transport mechanism of the MATRIX platform while using the implant sources from the ENERG i | |
ENERG i ® Implant System |
• Supports both phosphorus and boron dopant technologies. • Extendable to new advanced solar cell structures. |
TFE Products |
Applications and Features | |
Fan-Out Packaging Market | ||
INTEVAC MATRIX PVD System |
• Deposits barrier/seed layers for fan-out RDL.• Includes LSMA magnetron source, with industry-leading target utilization rate of over 65 percent. • Provides high-throughput and low cost of ownership for small-substrate or large panel processing. • Provides flexibility for handling round, square, or rectangular substrates for fan-out packaging. | |
Adjacent Markets | ||
INTEVAC MATRIX System |
• Incorporates multiple thin-film deposition techniques such as PVD, CVD, Etch, Implant, heating and cooling. • Consists of high-speed linear transport. • Flexible design enables handling of various different small substrate sizes and shapes. • Performs double-sided coating within vacuum. |
2020 |
2019 |
|||||||
Seagate Technology |
42 | % | 49 | % | ||||
U.S. Government |
29 | % | 20 | % | ||||
Elbit Systems of America |
12 | % | * | |||||
Jolywood (Hongkong) Industrial Holdings Co., Limited |
* | 14 | % |
Name |
Age |
Position | ||||
Executive Officers: |
||||||
Wendell T. Blonigan |
59 | President and Chief Executive Officer | ||||
James Moniz |
63 | Executive Vice President, Finance and Administration, Chief Financial Officer, Secretary and Treasurer | ||||
Timothy Justyn |
58 | Executive Vice President and General Manager, Photonics | ||||
Jay Cho |
56 | Executive Vice President and General Manager, TFE | ||||
Other Key Officers: |
||||||
Verle Aebi |
66 | Chief Technology Officer, Photonics | ||||
Terry Bluck |
61 | Chief Technology Officer, TFE | ||||
Kimberly Burk |
55 | Senior Vice President, Global Human Resources |
Item 1A. |
Risk Factors |
Item 1B. |
Unresolved Staff Comments |
Item 2. |
Properties |
Location |
Square Footage |
Principal Use | ||||
Santa Clara, California |
169,583 | Corporate Headquarters; TFE and Photonics Marketing, Manufacturing, Engineering and Customer Support | ||||
Singapore |
31,947 | TFE Manufacturing and Customer Support | ||||
Malaysia |
1,291 | TFE Customer Support | ||||
Shenzhen, China |
2,568 | TFE Customer Support |
Item 3. |
Legal Proceedings |
Item 4. |
Mine Safety Disclosures |
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Item 6. |
Selected Financial Data |
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | Overview: |
• | Results of Operations: |
• | Liquidity and Capital Resources: |
• | Critical Accounting Policies: |
Fiscal Year |
2020 |
2019 |
Change 2020 vs. 2019 |
|||||||||
(in thousands, except percentages and per share amounts) |
||||||||||||
Net revenues |
$ | 97,824 | $ | 108,885 | $ | (11,061 | ) | |||||
Gross profit |
$ | 40,545 | $ | 40,868 | $ | (323 | ) | |||||
Gross margin percent |
41.4 | % | 37.5 | % | 3.9 points | |||||||
Operating income |
$ | 2,555 | $ | 3,925 | $ | (1,370 | ) | |||||
Net income |
$ | 1,056 | $ | 1,148 | $ | (92 | ) | |||||
Net income per diluted share |
$ | 0.04 | $ | 0.05 | $ | (0.01 | ) |
2020 |
2019 |
Change 2020 vs. 2019 |
||||||||||
(in thousands) |
||||||||||||
TFE |
$ | 52,128 | $ | 73,678 | $ | (21,550 | ) | |||||
Photonics |
||||||||||||
Contract R&D |
22,945 | 19,657 | 3,288 | |||||||||
Products |
22,751 | 15,550 | 7,201 | |||||||||
|
|
|
|
|
|
|||||||
45,696 | 35,207 | 10,489 | ||||||||||
|
|
|
|
|
|
|||||||
Total net revenues |
$ | 97,824 | $ | 108,885 | $ | (11,061 | ) | |||||
|
|
|
|
|
|
January 2, 2021 |
December 28, 2019 |
|||||||
(in thousands) |
||||||||
TFE |
$ | 5,623 | $ | 21,391 | ||||
Photonics |
41,317 | 71,015 | ||||||
|
|
|
|
|||||
Total backlog |
$ | 46,940 | $ | 92,406 | ||||
|
|
|
|
2020 |
2019 |
|||||||
Seagate Technology |
42 | % | 49 | % | ||||
U.S. Government |
29 | % | 20 | % | ||||
Elbit Systems of America |
12 | % | * | |||||
Jolywood (Hongkong) Industrial Holdings Co., Limited |
* | 14 | % |
2020 |
2019 |
|||||||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
TFE |
Photonics |
Total |
TFE |
Photonics |
Total |
|||||||||||||||||||
United States |
$ | 6,450 | $ | 45,363 | $ | 51,813 | $ | 1,306 | $ | 34,664 | $ | 35,970 | ||||||||||||
Asia |
45,611 | — | 45,611 | 72,372 | — | 72,372 | ||||||||||||||||||
Europe |
67 | 333 | 400 | — | 543 | 543 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total net revenues |
$ | 52,128 | $ | 45,696 | $ | 97,824 | $ | 73,678 | $ | 35,207 | $ | 108,885 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year |
Change 2020 vs. 2019 |
|||||||||||
2020 |
2019 |
|||||||||||
(in thousands, except percentages) |
||||||||||||
TFE gross profit |
$ | 22,417 | $ | 27,377 | $ | (4,960 | ) | |||||
% of TFE net revenues |
43.0 | % | 37.2 | % | ||||||||
Photonics gross profit |
$ | 18,128 | $ | 13,491 | $ | 4,637 | ||||||
% of Photonics net revenues |
39.7 | % | 38.3 | % | ||||||||
Total gross profit |
$ | 40,545 | $ | 40,868 | $ | (323 | ) | |||||
% of net revenues |
41.4 | % | 37.5 | % |
Fiscal Year |
Change 2020 vs. 2019 |
|||||||||||
2020 |
2019 |
|||||||||||
(in thousands) |
||||||||||||
Research and development expense |
$ | 14,093 | $ | 14,309 | $ | (216 | ) |
Fiscal Year |
Change 2020 vs. 2019 |
|||||||||||
2020 |
2019 |
|||||||||||
(in thousands) |
||||||||||||
Selling, general and administrative expense |
$ | 23,897 | $ | 22,634 | $ | 1,263 |
Fiscal Year |
Change 2020 vs. 2019 |
|||||||||||
2020 |
2019 |
|||||||||||
(in thousands) |
||||||||||||
Interest income and other income (expense), net |
$ | 212 | $ | 582 | $ | (370 | ) |
Fiscal Year |
Change 2020 vs. 2019 |
|||||||||||
2020 |
2019 |
|||||||||||
(in thousands) |
||||||||||||
Provision for income taxes |
$ | 1,711 | $ | 3,359 | $ | (1,648 | ) |
January 2, 2021 |
December 28, 2019 |
|||||||
(in thousands) |
||||||||
Cash and cash equivalents |
$ | 29,341 | $ | 19,767 | ||||
Restricted cash |
787 | 787 | ||||||
Short-term investments |
14,839 | 16,720 | ||||||
Long-term investments |
5,388 | 5,537 | ||||||
|
|
|
|
|||||
Total cash, cash-equivalents, restricted cash and investments |
$ | 50,355 | $ | 42,811 | ||||
|
|
|
|
Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk |
Item 8. |
Financial Statements and Supplementary Data |
Page |
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35 | ||||
37 | ||||
38 | ||||
39 | ||||
40 | ||||
41 | ||||
42 |
/s/ BPM LLP |
We have served as the Company’s auditor since 2015. |
San Jose, California |
February 17, 2021 |
January 2, 2021 |
December 28, 2019 |
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(In thousands, except par |
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ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Short-term investments |
||||||||
Trade and other accounts receivable, net of allowances of $ |
||||||||
Inventories |
||||||||
Prepaid expenses and other current assets |
||||||||
Total current assets |
||||||||
Property, plant and equipment, net |
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Operating lease right-of-use-assets |
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Long-term investments |
||||||||
Restricted cash |
||||||||
Deferred income taxes and other long-term assets |
||||||||
Total assets |
$ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Current operating lease liabilities |
$ | $ | ||||||
Accounts payable |
||||||||
Accrued payroll and related liabilities |
||||||||
Other accrued liabilities |
||||||||
Customer advances |
||||||||
Total current liabilities |
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Noncurrent liabilities: |
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Noncurrent operating lease liabilities |
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Other long-term liabilities |
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Total noncurrent liabilities |
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Commitments and contingencies |
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Stockholders’ equity: |
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Undesignated preferred stock, $ |
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Common stock, $ |
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Authorized shares — — |
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Additional paid-in capital |
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Treasury stock, |
( |
) | ( |
) | ||||
Accumulated other comprehensive income |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total stockholders’ equity |
||||||||
Total liabilities and stockholders’ equity |
$ | $ | ||||||
Year Ended, |
||||||||
January 2, 2021 |
December 28, 2019 |
|||||||
(In thousands, except per share amounts) |
||||||||
Net revenues: |
||||||||
Systems and components |
$ | $ | ||||||
Technology development |
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|
|
|
|
|||||
Total net revenues |
||||||||
Cost of net revenues: |
||||||||
Systems and components |
||||||||
Technology development |
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|
|
|||||
Total cost of net revenues |
||||||||
Gross profit |
||||||||
Operating expenses: |
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Research and development |
||||||||
Selling, general and administrative |
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Total operating expenses |
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|
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Operating income |
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Interest income |
||||||||
Other income (expense), net |
( |
) | ||||||
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|
|||||
Income before provision for income taxes |
||||||||
Provision for income taxes |
||||||||
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Net income |
$ | $ | ||||||
|
|
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|
|||||
Net income per share: |
||||||||
Basic |
$ | $ | ||||||
Diluted |
$ | $ | ||||||
Weighted average shares outstanding: |
||||||||
Basic |
||||||||
Diluted |
Year Ended, |
||||||||
January 2, 2021 |
December 28, 2019 |
|||||||
(In thousands) |
||||||||
Net income |
$ | $ | ||||||
Other comprehensive income (loss), before tax |
||||||||
Change in unrealized net gain on available-for-sale |
( |
) | ||||||
Foreign currency translation gains and (losses) |
( |
) | ||||||
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|
|||||
Other comprehensive income, before tax |
||||||||
Income tax expense related to items in other comprehensive income |
— | |||||||
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Other comprehensive income, net of tax |
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|
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Comprehensive income |
$ | $ | ||||||
|
|
|
|
Common Stock |
Additional Paid-In Capital |
Treasury Stock |
Accumulated Other Comprehensive Income |
Accumulated Deficit |
Total Stockholders’ Equity |
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Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||
Balance at December 28, 2019 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||||||||||
Shares issued in connection with: |
||||||||||||||||||||||||||||||||
Exercise of stock options |
— | — | — | — | — | |||||||||||||||||||||||||||
Settlement of RSUs |
— | — | — | — | — | — | — | |||||||||||||||||||||||||
Employee stock purchase plan |
— | — | — | — | — | |||||||||||||||||||||||||||
Shares withheld in connection with net share settlement of RSUs |
( |
) | — | ( |
) | — | — | — | — | ( |
) | |||||||||||||||||||||
Equity-based compensation expense |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Other comprehensive income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Common stock repurchases |
( |
) | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||
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Balance at December 28, 2019 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||||||||||
Shares issued in connection with: |
||||||||||||||||||||||||||||||||
Exercise of stock options |
— | — | — | — | — | |||||||||||||||||||||||||||
Settlement of RSUs |
— | — | — | — | — | — | — | |||||||||||||||||||||||||
Employee stock purchase plan |
— | — | — | — | ||||||||||||||||||||||||||||
Shares withheld in connection with net share settlement of RSUs |
( |
) | — | ( |
) | — | — | — | — | ( |
) | |||||||||||||||||||||
Equity-based compensation expense |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Other comprehensive income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Common stock repurchases |
( |
) | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||
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|
|||||||||||||||||
Balance at January 2, 2021 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||||||||||
|
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|
Year Ended |
||||||||
January 2, 2021 |
December 28, 2019 |
|||||||
(In thousands) |
||||||||
Operating activities |
||||||||
Net income |
$ | $ | ||||||
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: |
||||||||
Depreciation and amortization |
||||||||
Net amortization (accretion) of investment premiums and discounts |
( |
) | ||||||
Amortization of intangible assets |
||||||||
Equity-based compensation |
||||||||
Straight-line rent adjustment and amortization of lease incentives |
( |
) | ( |
) | ||||
Deferred income taxes |
||||||||
Change in the fair value of acquisition-related contingent consideration |
— | |||||||
Loss on disposal of equipment |
— | |||||||
Changes in assets and liabilities: |
||||||||
Accounts receivable |
( |
) | ( |
) | ||||
Inventories |
||||||||
Prepaid expenses and other assets |
( |
) | ||||||
Accounts payable |
( |
) | ||||||
Accrued payroll and other accrued liabilities |
||||||||
Customer advances |
( |
) | ( |
) | ||||
|
|
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|
|||||
Total adjustments |
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|
|||||
Net cash and cash equivalents provided by operating activities |
||||||||
Investing activities |
||||||||
Purchase of investments |
( |
) | ( |
) | ||||
Proceeds from sales and maturities of investments |
||||||||
Purchase of leasehold improvements and equipment |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net cash and cash equivalents used in investing activities |
( |
) | ( |
) | ||||
Financing activities |
||||||||
Proceeds from issuance of common stock |
||||||||
Common stock repurchases |
( |
) | ( |
) | ||||
Taxes paid related to net share settlement |
( |
) | ( |
) | ||||
Payment of acquisition-related contingent consideration |
— | ( |
) | |||||
|
|
|
|
|||||
Net cash and cash equivalents provided by financing activities |
||||||||
Effect of exchange rate changes on cash |
( |
) | ||||||
|
|
|
|
|||||
Net increase in cash, cash equivalents and restricted cash |
||||||||
Cash, cash equivalents and restricted cash at beginning of period |
||||||||
|
|
|
|
|||||
Cash, cash equivalents and restricted cash at end of period |
$ | $ | ||||||
|
|
|
|
|||||
Cash paid (received) for: |
||||||||
Income taxes |
$ | $ | ||||||
Income tax refund |
$ | ( |
) | $ | ( |
) |
Foreign currency |
Unrealized holding gains (losses) on available-for-sale investments |
Total |
||||||||||
(in thousands) |
||||||||||||
Balance at December 29, 2018 |
$ | $ | ( |
) | $ | |||||||
Other comprehensive income (loss) before reclassification |
( |
) | ||||||||||
Amounts reclassified from other comprehensive income (loss) |
— | — | — | |||||||||
Net current-period other comprehensive income (loss) |
( |
) | ||||||||||
Balance at December 28, 2019 |
$ | $ | $ | |||||||||
Other comprehensive income (loss) before reclassification |
( |
) | ||||||||||
Amounts reclassified from other comprehensive income (loss) |
— | — | — | |||||||||
Net current-period other comprehensive income (loss) |
( |
) | ||||||||||
Balance at January 2, 2021 |
$ | $ | $ | |||||||||
TFE |
2020 |
2019 |
||||||||||||||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||||||||||
HDD |
DCP |
PV |
Total |