-----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, NiWgGaCrQfC8tCdsmLBWmWKtCENVLHu7cpITrpnNeusE2ovr3sQz1LKjsOu/hDoc pl8D/dT8iKtvieQRlyPV/Q== 0000950005-96-000857.txt : 19961106 0000950005-96-000857.hdr.sgml : 19961106 ACCESSION NUMBER: 0000950005-96-000857 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961105 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: 1934 Act SEC FILE NUMBER: 000-13470 FILM NUMBER: 96654329 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, D. C. 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, 1996 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 11, 1996 there were 8,090,670 shares of common stock, no par value, issued and outstanding. NANOMETRICS INCORPORATED INDEX Part I. Financial Information Page ---- Item 1. Financial Statements Consolidated Balance Sheets - September 30, 1996 and December 31, 1995 . . . . . . . . . . . 3 Consolidated Statements of Operations - Three months and nine months ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . 5 Consolidated Statements of Cash Flows - Nine months ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Notes to Consolidated Financial Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . 8 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) ASSETS September 30, December 31, 1996 1995 ------------- ------------ Current assets: Cash and equivalents ......................... $ 957 $ 3,625 Short-term investments ....................... 8,127 4,458 Accounts receivable, less allowance for doubtful accounts of $404 and $380 ......... 9,485 7,567 Inventories .................................. 4,998 3,955 Prepaid and deferred income taxes ............ 1,673 2,069 Prepaid expenses and other ................... 658 428 ------- ------- Total current assets ............................ 25,898 22,102 Property, plant and equipment, net .............. 2,756 2,900 Other assets .................................... 282 165 ------- ------- $28,936 $25,167 ======= ======= See Notes to Consolidated Financial Statements 3 NANOMETRICS INCORPORATED CONSOLIDATED BALANCE SHEETS (Continued) (Amounts in thousands except share amounts) (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY September 30, December 31, 1996 1995 ------------- ------------ Current liabilities: Accounts payable ............................ $ 1,281 $ 1,111 Accrued payroll and related expenses ........ 565 486 Other current liabilities ................... 1,501 1,216 Income taxes payable ........................ 1,164 398 Current portion of long-term debt ........... 361 553 Total current liabilities ............... 4,872 3,764 Long-term debt ................................. 3,519 3,528 Deferred income taxes .......................... 185 301 ------- ------- Total liabilities ........................ 8,576 7,593 Shareholders' equity: Common stock, no par value; 25,000,000 shares authorized; 8,085,337 and 7,883,910 outstanding ....... 11,168 10,983 Retained earnings .......................... 9,215 6,394 Cumulative translation adjustment ........... (23) 197 ------- ------- Total shareholders' equity ..................... 20,360 17,574 ------- ------- $28,936 $25,167 ======= ======= See Notes to Consolidated Financial Statements 4 NANOMETRICS INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share amounts) (Unaudited)
Three Month Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 1996 1995 1996 1995 ------- ------- ------- ------- Revenues: Net sales ............................. $ 6,481 $ 4,945 $18,026 $12,501 Service ............................... 1,258 1,161 4,338 3,351 ------- ------- ------- ------- Total revenues .................... 7,739 6,106 22,364 15,852 Costs and expenses: Cost of sales ......................... 2,589 2,124 7,491 5,705 Cost of service ....................... 998 928 3,046 2,482 Research and development .............. 713 654 2,048 1,843 Selling ............................... 1,158 978 3,424 2,602 General and administrative ............ 639 557 1,791 1,583 ------- ------- ------- ------- Total costs and expenses ........... 6,097 5,241 17,800 14,215 ------- ------- ------- ------- Operating income ......................... 1,642 865 4,564 1,637 Other income, net ....................... 113 222 302 690 ------- ------- ------- ------- Income before provision for income taxes ........................ 1,755 1,087 4,866 2,327 Provision for income taxes ............... 728 245 2,044 599 ------- ------- ------- ------- Net income ............................... $ 1,027 $ 842 $ 2,822 $ 1,728 ======= ======= ======= ======= Per share amounts: Net income per share ..................... $ .12 $ .10 $ .33 $ .21 ======= ======= ======= ======= Weighted average shares outstanding ............................ 8,514 8,444 8,549 8,167 ======= ======= ======= ======= See Notes to Consolidated Financial Statements
5 NANOMETRICS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited) Nine Months Ended September 30, ----------------------- 1996 1995 -------- -------- Operating activities: Net income ....................................... $ 2,822 $ 1,728 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization .................. 227 241 Deferred income taxes .......................... 425 (218) Changes in assets and liabilities: Accounts receivable .......................... (2,039) (2,541) Inventories .................................. (1,106) 634 Prepaid expenses and other ................... (572) (342) Accounts payable and other liabilities ....... 575 363 Income taxes payable ......................... 683 579 -------- -------- Net cash provided by operating activities ........... 1,015 444 -------- -------- Investing activities: Purchase of short-term investments ............... (10,546) (7,601) Sales/maturities of short-term investments ....... 6,877 2,459 Capital expenditures ............................. (254) (93) -------- -------- Net cash used in investing activities ............... (3,923) (5,235) -------- -------- Financing activities: Proceeds from long-term borrowings ............... 762 4,700 Repayments of long-term debt ..................... (688) (588) Issuance of common stock ......................... 185 290 -------- -------- Net cash provided by financing activities ........... 259 4,402 -------- -------- Effect of exchange rate changes on cash ............. (19) (508) -------- -------- Net change in cash and equivalents .................. (2,668) (897) Cash and equivalents at beginning of period ......... 3,625 2,135 -------- -------- Cash and equivalents at end of period ............... $ 957 $ 1,238 ======== ======== Supplemental Disclosure of Cash Flow Information: Cash paid for interest ........................... $ 91 $ 76 ======== ======== Cash paid for income taxes ....................... $ 767 $ 23 ======== ======== See Notes to Consolidated Financial Statements 6 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 intercompany 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 1995 Annual Report on Form 10-K filed with the Securities and Exchange Commission. Note 2. Per Share Information Net income per share is based on the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares include dilutive common stock options (using the treasury stock method) and shares subscribed 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: September 30, December 31, 1996 1995 ------------- ------------ (Amounts in thousands) Raw materials and subassemblies ...... $1,640 $1,727 Work in process ...................... 2,162 830 Finished goods ....................... 1,196 1,398 ------ ------ $4,998 $3,955 ====== ====== Note 4. Borrowing Arrangements In April 1996, the Company borrowed approximately $762,000 (80,000,000 Yen) from the Japan Development Bank in Tokyo, Japan to provide supplemental working capital for the Company's operations. The loan was secured using the Company's factory and adjacent land in Japan as collateral. This obligation bears interest at the rate of 3.4% and is due in quarterly installments of principal and interest through 2006. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Total revenues for the three months ended September 30, 1996 were $7,739,000, an increase of $1,633,000 or 27% from the comparable period in 1995. For the nine months ended September 30, 1996, total revenues of $22,364,000 increased by $6,512,000 or 41% from the comparable period in 1995. Net sales of $6,481,000 and $18,026,000 for the three months and nine months ended September 30, 1996, respectively, increased $1,536,000 or 31% and $5,525,000 or 44%, respectively, as compared with the same periods during 1995. The increases in net sales resulted from stronger demand for, and increased shipments of, the Company's products, especially its automated products, to its customers in the U.S. and the Far East. Service revenue of $1,258,000 and $4,338,000 for the three months and nine months ended September 30, 1996, respectively, increased $97,000 or 8% and $987,000 or 29%, respectively, as compared to the same periods in 1995. These increases in service revenue are primarily attributable to increased sales of accessories and upgrades in the U.S. and Japan in 1996. The Company believes that its revenue growth for the three and nine month periods ended September 30, 1996 is not necessarily indicative of future results. Cost of sales as a percentage of net sales decreased from 43% in the third quarter of 1995 to 40% in the third quarter of 1996 primarily because of higher sales volume resulting in lower per unit manufacturing costs. Cost of service as a percentage of service revenue decreased slightly from 80% in the third quarter of 1995 to 79% in the third quarter of 1996. Cost of sales as a percentage of net sales for the nine months ended September 30, 1996 decreased to 42% from 46% a year ago as a result of higher sales volume resulting in lower per unit manufacturing costs. Cost of service as a percentage of service revenue for the nine months ended September 30, 1996 decreased slightly to 70% from 74% a year ago. This decrease was primarily attributable to relatively higher margins on the increased sales of accessories in 1996. Research and development expenses for the three month and nine month periods ended September 30, 1996 increased $59,000 or 9% and $205,000 or 11%, respectively, compared to the same periods in 1995 due primarily to the addition of software engineers in the U.S. Selling expenses for the three month and nine month periods ended September 30, 1996 increased by $180,000 or 18% and $822,000 or 32%, respectively, compared to the same periods in 1995 primarily because of higher commission expenses resulting from higher sales and the cost of opening additional sales offices during the past 12 months. General and administrative expenses for the three month and nine month periods ended September 30, 1996 increased by $82,000 or 15% and 208,000 or 13%, respectively, compared to the same periods in 1995 primarily as a result of spending associated with increased operating activity. Other income for the three month and nine month periods ended September 30, 1996 decreased $109,000 and $388,000, respectively, from the comparable periods in 1995 due primarily to lower exchange rate gains in 1996. The Company's effective tax rate for the three month and nine month periods ended September 30, 1996 was 41% and 42%, respectively, compared to 23% and 26% for the comparable prior year periods. 8 The Company's effective tax rate was lower in 1995 due primarily to the utilization of net operating loss carryforwards. The Company reported an operating income of $1,642,000 and net income of $1,026,000 for the third quarter of 1996 compared to an operating income of $865,000 and net income of $842,000 for the same period in 1995. For the first nine months of 1996, the Company reported an operating income of $4,574,000 and net income of $2,821,000 which compared to an operating income of $1,637,000 and net income of $1,728,000 for the same period in 1995. Liquidity and Capital Resources At September 30, 1996, the Company had working capital of $21,026,000 compared to $18,338,000 at December 31, 1995. The current ratio at September 30, 1996 was 5.3 to 1. The Company believes working capital including cash and short-term investments of $9,084,000 will be sufficient to meet its needs at least through the next twelve months. Operating activities for the first nine months of 1996 provided cash of $1,015,000 primarily from net income which was offset to some extent by increased accounts receivable and inventory, while the purchase of short-term investments used $3,669,000, capital expenditures used $254,000, a long-term loan from a Japanese bank provided $762,000, debt repayment used $688,000 and issuance of common stock provided $185,000. 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 on Form 10-K. The Company's actual results could differ materially from the results anticipated in such forward-looking statements. 9 NANOMETRICS INCORPORATED PART II OTHER INFORMATION ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K A. Exhibits None 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 and Chief Executive Officer /s/ Paul B. Nolan - ------------------------------------- Paul B. Nolan Chief Financial Officer Dated: November 5, 1996 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1996 JUL-01-1996 SEP-30-1996 957 8,127 9,889 404 4,998 25,898 2,756 0 28,936 4,872 3,519 11,168 0 0 9,192 28,936 18,026 22,364 7,491 10,537 7,263 0 0 4,866 2,044 2,822 0 0 0 2,822 .33 .33
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