☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
January 2, 2021
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 94-3125814 | |
(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 | ||
Common Stock ($0.001 par value) | IVAC | The Nasdaq Stock Market LLC |
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K(§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to thisForm 10-K. ☒
Large accelerated filer | ☐ | Accelerated filer | ☒ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ||||
Emerging growth company | ☐ |
Item 1. | Business |
Thin-film Equipment
Intevac has developed and is currently marketing a SP coating known as Optical Diamond-like-Carbon (“oDLC
needed to display the image which results in extending the battery life. A significant drawback to using AR coatings is their susceptibility to scratch. AR coatings are typically soft and must be applied to the outer surface of the DCP. These coatings generally scratch easily, and as such, smartphone manufacturers have been reluctant to implement AR coatings on their products.
Intevac has developed and is currently marketing a SP coating known as Optical Diamond-like-Carbon (“oDLC™”) utilizing its production-proven carbon film technology that is also used on HDD media. This coating provides a hard protective layer which significantly improves the DCP’s resistance to scratches and breakage. The scratch protection benefits with the oDLC coating has demonstrated a greater than 20 times improvement over current standard cover glass under stainless steel ball Taber scratch testing. Furthermore using aRing-on-Ring (“RoR”) test, cover glass with our oDLC coating provides a greater than 20 percent increase in breakage resistance strength over cover glass without the oDLC coating. Intevac expects that the adoption of AR and NCVM coatings on mobile devices will create an increased need for SP coatings and provide a significant demand opportunity for oDLC.
oDLC and DiamondClad coatings.
redistributed
Smartphones of the iPhone 8 generationfrom OEMs including Apple, Samsung, Xiaomi, OPPO and others incorporate
Thin-Film Equipment
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 | |
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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. | |
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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. |
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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. |
kilometers. Photonics’ LIVAR camera is incorporated into long range target identification systems manufactured by a major defense contractor.
Soldier Mobility
Both the U.S. Army and Special Operations Command sponsored programs to develop binocular night-vision goggles incorporating digitally fusedlow-light level and thermal image sensors. Both head-mounted digital imaging systems will allowlow-light level and thermal imagery to be viewed individually or to be overlaid. Our solution targets the fused night-vision monocular for U.S. Army ground forces, which is the program of record to replace analog night vision. We delivered our first demonstrator monocular to the Army in 2016, for evaluation of alternatives for the fused mobility vision program. We will be demonstrating not only superior night-vision capability, but the advantage of digital, such as zoom, information overlay, and wireless digital image transmission and reception.
HMDs
Rifle Sight
. An AR HMD overlays symbology and other information on and tracked in a view of the real world, creating the illusion that they occupy the same space. Intevac provided EBAPS moduleshas developed and demonstrated wide FOV AR displays for use in HMDs.
squad-level combat training capability.
Backlog
Intevac’s backlog of orders at December 30, 2017 was $64.0 million, as compared to $68.5 million at December 31, 2016. Backlog at December 30, 2017 consisted of $51.7 million of Thin-film Equipment backlog and $12.3 million of Photonics backlog. Backlog at December 31, 2016 consisted of $46.3 million of Thin-film Equipment backlog and $22.2 million of Photonics backlog. Backlog at December 30, 2017 includes three 200 Lean systems and twelve PV implant systems.
2017 | 2016 | 2015 | ||||||||||
Seagate Technology | 40 | % | 34 | % | 22 | % | ||||||
U.S. Government | 15 | % | 22 | % | 26 | % | ||||||
Elbit Systems of America | * | 10 | % | * | ||||||||
HGST | * | * | 15 | % |
2019.
2020 | 2019 | |||||||
Seagate Technology | 42 | % | 49 | % | ||||
U.S. Government | 29 | % | 20 | % | ||||
Elbit Systems of America | 12 | % | * | |||||
Jolywood (Hongkong) Industrial Holdings Co., Limited | * | 14 | % |
Thin-film Equipment
Intevac invested $17.7 million (15.7% of net revenue) in fiscal 2017, $18.2 million (22.7% of net revenue) in fiscal 2016, and $15.7 million (20.8% of net revenue) in fiscal 2015 for product development and engineering programs to create new products and to improve existing technologies and products. Intevac has spent an average of 21.9% of net revenues on product development and engineering over the last five years.
Employees
At December 30, 2017, Intevac had 298 employees, including 17 contract employees.
Compliance with Environmental
Intevac is
Executive Officers We are also subject to import/export controls, tariffs, and other trade-related regulations and restrictions in the countries in which we have operations or otherwise do business. These controls, tariffs, regulations, and restrictions (including those related to, or affected by, United States-China relations) have had, and we believe may continue to have, a material impact on our business, including our ability to sell products and to manufacture or source components. Our business is affected by numerous laws and regulations relating to the award, administration and performance of U.S. Government contracts. In addition, many federal and state laws materially affect our operations. These laws relate to ethics, labor, tax, and employment matters. As any employer is, we are subject to federal and state statutes and regulations governing their standards of business conduct with the government, including that government contracts typically contain provisions permitting government clients to terminate contracts without cause with limited notice or compensation. The development of additional statutes and regulations and interpretation of existing statutes and regulations with respect to our industry can be expected to evolve over time. As with any commercial enterprise, we cannot predict with certainty the nature or direction of the Registrant
development of federal statutes and regulations that will affect its business operations.
Name | Age | Position | ||||
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Wendell T. Blonigan | President and Chief Executive Officer | |||||
James Moniz | Executive Vice President, Finance and Administration, Chief Financial Officer, Secretary and Treasurer | |||||
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Timothy Justyn | 58 | Executive Vice President | ||||
Jay Cho | 56 | Executive Vice President and General Manager, TFE | ||||
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Verle Aebi | Chief Technology Officer, Photonics | |||||
Terry Bluck | Chief Technology Officer, | |||||
Kimberly Burk | ||||||
| 55 | Senior Vice President, |
University of California, Santa Barbara. Brugaljoined Intevacin January 2012. Before joining Intevac,from February 2018. Mr. Brugal was employed at Vision Systems International, a joint venture between Rockwell Collins and Elbit SystemsJustyn served as Senior Vice President of America,Global Operations from 2006February 2015 to 2012, servingFebruary 2018. Mr. Justyn served as Vice President, and Chief Executive OfficerPhotonics from October 2008 to February 2015. Mr. Justyn served as Vice President, TFE Manufacturing from April 20071997 to January 2012. From 2005 to 2006,October 2008. Mr. Brugal was employed as a consultant for DRS Technologies, a subsidiary of Finmeccanica SPA.Justyn joined Intevac in February 1991 and has served in various roles in our TFE Products Division and our former night-vision business. Mr. Brugal retired from active service with the U.S. Navy in October 2005 with the rank of Captain. Mr. BrugalJustyn holds an MS in strategic studies and security affairs from the U.S. Naval War College and a BS in generalchemical engineering from the U.S. Naval Academy.Thin-Film Equipment.TFE. Prior to joining Intevac, Mr. Cho was President, Chief Executive Officer and Smithjoined Intevac in August 2010 and currently serves as Vice President, Business Development. Prior to joining Intevac, Mr. Smith served as Senior Vice President Sales and Customer Support at OerlikonSolar, from November 2007 to August 2010. From 2006 to 2007 he served as Senior Vice President of Sales and Service with Cymer. Previously, Mr. Smith was employed by Applied Materials from 1994 to 2006. While at Applied Materials he held a variety of executive-level customer support and operations positions. He also served as product business group general manager for Chemical Mechanical Polishing and was managing director of Global Business Development for the Dielectric and Physical Vapor Deposition Product Business Groups. Mr. Smith earned his BS in Business Administration / Material Management from San Jose State University.Mr.
Mr. Justyn has served as Senior Vice President of Global Operations from February 2015. Mr. Justyn served as Vice President, Photonics from October 2008 to February 2015. Mr. Justyn served as Vice President, Thin-film Equipment Manufacturing from April 1997 to October 2008. Mr. Justyn joined Intevac in February 1991 and has served in various roles in our Thin-film Equipment Products Division and our former night-vision business. Mr. Justyn holds a BS in chemical engineering from the University of California, Santa Barbara.
Item 1A. | Risk Factors |
Sales of systems and upgrades for magnetic disk production in 2019 were slightly down from the levels in 2018 as this customer took delivery of four systems. Sales of systems and upgrades for magnetic disk production in 2020 were down from the levels in 2019 as this customer took delivery of only two systems. Intevac expects sales of systems and upgrades for magnetic disk production in 2021 will be at levels lower than the levels in 2020.
In some cases, orders are also subject to customer acceptance or other criteria even in the case of a binding agreement.
Our growth depends on development of technically advanced new products and processes.
We have invested heavily, and continue to invest, in the development of new products, such as our 200 Lean and other PVD systems, our coating systems for DCP, our solar systems for PV applications, our digital night-vision products and ournear-eye display products. Our success in developing and selling new products depends upon a variety of factors, including our ability to: predict future customer requirements; make technological advances; achieve a low total cost of ownership for our products; introduce new products on schedule; manufacture products cost-effectively including transitioning production to volume manufacturing; commercialize and attain customer acceptance of our products; and achieve acceptable and reliable performance of our new products in the field. Our new product decisions and development commitments must anticipate continuously evolving industry requirements significantly in advance of sales. In addition, we are attempting to expand into new or related markets, including the PV and display cover glass markets. Our expansion into the PV and cover glass markets is dependent upon the success of our customers’ development plans. To date we have not recognized material revenue from such products. Failure to correctly assess the size of the markets, to successfully develop cost effective products to address the markets or to establish effective sales and support of the new products would have a material adverse effect on future revenues and profits. In addition, if we invest in
products for which the market does not develop as anticipated, we may incur significant charges related to such investments.
Rapid technological change in our served markets requires us to rapidly develop new technically advanced products. Our future success depends in part on our ability to develop and offer new products with improved capabilities and to continue to enhance our existing products. If new products have reliability or quality problems, our performance may be impacted by reduced orders, higher manufacturing costs, delays in acceptance and payment for new products and additional service and warranty expenses.
We may not be able to obtain export licenses from the U.S. government permitting delivery of our products to international customers.
Many of our products, especially Photonics products, require export licenses from U.S. government agencies under the Export Administration Act, the Trading with the Enemy Act of 1917, the Arms Export Act of 1976 or the International Traffic in Arms Regulations. These regulations limit the potential market for some of our products. We can give no assurance that we will be successful in obtaining all the licenses necessary to export our products. Heightened government scrutiny of export licenses for defense related products has resulted in lengthened review periods for our license applications. Exports to countries that are not considered by the U.S. government to be allies are likely to be prohibited, and even sales to U.S. allies may be limited. Failure to comply with export control laws, including identification and reporting of all exports andre-exports of controlled
technology or exports made without correct license approval or improper license use could result in severe penalties and revocation of licenses. Failure to obtain export licenses, delays in obtaining licenses, or revocation of previously issued licenses would prevent us from selling the affected products outside the United States and could negatively impact our results of operations.
The Photonics business is dependent on U.S. government contracts, which are subject to fixed pricing, immediate termination and a number of procurement rules and regulations.
We sell our Photonics products and services directly to the U.S. government, as well as to prime contractors for various U.S. government programs. The U.S government is considering significant changes in the level of existing,follow-on or replacement programs. We cannot predict the impact of potential changes in priorities due to military transformations and/or the nature of futurewar-related activities. A shift of government priorities to programs in which we do not participate and/or reductions in funding for or the termination of programs in which we do participate, unless offset by other programs and opportunities, could have a material adverse effect on our financial position, results of operations, or cash flows.
Funding of multi-year government programs is subject to congressional appropriations, and there is no guarantee that the U.S. government will make further appropriations, particularly given the U.S. government’s recent focus on spending in other areas and spending reductions. Sales to the U.S. government and its prime contractors may also be affected by changes in procurement policies, budget considerations and political developments in the United States or abroad. For example, if the U.S. government is less focused on defense spending or there is a decrease in hostilities, demand for our products could decrease. The loss of funding for a government program would result in a loss of future revenues attributable to that program. The influence of any of these factors, which are beyond our control, could negatively impact our results of operations.
A significant portion of our U.S. government revenue is derived from fixed-price development and production contracts. Under fixed-price contracts, unexpected increases in the cost to develop or manufacture a product, whether due to inaccurate estimates in the bidding process, unanticipated increases in material costs, reduced production volumes, inefficiencies or other factors, are borne by us. We have experienced cost overruns in the past that have resulted in losses on certain contracts, and may experience additional cost overruns in the future. We are required to recognize the total estimated impact of cost overruns in the period in which they are first identified. Such cost overruns could have a material adverse effect on our results of operations.
Generally, government contracts contain provisions permitting termination, in whole or in part, without prior notice at the government’s convenience upon the payment of compensation only for work done and commitments made at the time of termination. We cannot ensure that one or more of the government contracts under which we, or our customers, operate will not be terminated under these circumstances. Also, we cannot ensure that we, or our customers, would be able to procure new government contracts to offset the revenues lost as a result of any termination of existing contracts, nor can we ensure that we, or our customers, will continue to remain in good standing as federal contractors.
As a U.S. government contractor we must comply with specific government rules and regulations and are subject to routine audits and investigations by U.S. government agencies. If we fail to comply with these rules and regulations, the results could include: (1) reductions in the value of our contracts; (2) reductions in amounts previously billed and recognized as revenue; (3) contract modifications or termination; (4) the assessment of penalties and fines; and (5) suspension or debarment from government contracting or subcontracting for a period of time or permanently.
Changes to our effective tax rate affect our results of operations.
As a global company, we are subject to taxation in the United States, Singapore and various other countries. Significant judgment is required to determine and estimate worldwide tax liabilities. Our future effective tax rate
could be affected by: (1) changes in tax laws; (2) the allocation of earnings to countries with differing tax rates; (3) changes in worldwide projected annual earnings in current and future years: (4) accounting pronouncements; or (5) changes in the valuation of our deferred tax assets and liabilities. Although we believe our tax estimates are reasonable, there can be no assurance that any final determination will not be different from the treatment reflected in our historical income tax provisions and accruals, which could result in additional payments by Intevac.
Comprehensive tax reform could adversely affect the company’s business and financial condition.
The Tax and Jobs Act (“the Act”) was enacted on December 22, 2017 and significantly reforms the Internal Revenue Code of 1986, as amended. The Act contains significant changes to corporate taxation, including reduction of the corporate tax rate from 35% to 21%, limitation of the tax deduction for interest expense to 30% of earnings, limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, one time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits. Notwithstanding the reduction in the corporate income tax rate, the overall impact of the Act is uncertain, and the combined Company’s business and financial condition could be adversely affected.
integrating the operations, technologies and products of the acquired companies; (2) the diversion of our management’s attention from other business concerns; and (3) the potential loss of key employees of the acquired companies. Failure to achieve the anticipated benefits of the prior and any future acquisitions or to successfully integrate the operations of the companies we acquire could have a material and adverse effect on our business, financial condition and results of operations. Any future acquisitions could also result in potentially dilutive issuance of equity securities, acquisition or divestiture-related write-offs or the assumption of debt and contingent liabilities. In addition, we have made and will continue to consider making strategic divestitures. With any divestiture, there are risks that future operating results could be unfavorably impacted if targeted objectives, such as cost savings, are not achieved or if other business disruptions occur as a result of the divestiture or activities related to the divestiture.
We may be subject to additional impairment charges due to potential declines in the fair value of our assets.
As a result of our acquisitions, we have significant intangible assets and had significant goodwill on our balance sheet. We test these assets for impairment on a periodic basis as required, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The events or changes that could require us to test our intangible assets for impairment include: a significant reduction in our stock price, and as a result market capitalization, changes in our estimated future cash flows, as well as changes in rates of growth in our industry or in any of our reporting units. In the fourth quarter of 2012, as a result of a decline in our market capitalization and a reduction in our revenue expectations we recorded a goodwill impairment charge in the amount of $18.4 million. We will continue to evaluate the carrying value of our intangible assets and if we determine in the future that there is a potential further impairment, we may be required to record additional charges to earnings which could materially adversely affect our financial results and could also materially adversely affect our business.
Our success is dependent on recruiting and retaining a highly talented work force.
Our employees are vital to our success, and our key management, engineering and other employees are difficult to replace. We do not maintain key person life insurance on any of our employees. The expansion of high technology companies worldwide has increased demand and competition for qualified personnel, and has made companies increasingly protective of prior employees. It may be difficult for us to locate employees who are not subject tonon-competition agreements and other restrictions.
The majority of our U.S. operations are located in California where the cost of living and of recruiting employees is high. Our operating results depend, in large part, upon our ability to retain and attract qualified management, engineering, marketing, manufacturing, customer support, sales and administrative personnel. Furthermore, we compete with industries such as the hard disk drive, semiconductor, and solar industries for skilled employees. Failure to retain existing key personnel, or to attract, assimilate or retain additional highly qualified employees to meet our needs in the future, could have a material and adverse effect on our business, financial condition and results of operations.
We are dependent on certain suppliers for parts used in our products.
We are a manufacturing business. Purchased parts constitute the largest component of our product cost. Our ability to manufacture depends on the timely delivery of parts, components and subassemblies from suppliers. We obtain some of the key components and subassemblies used in our products from a single supplier or a limited group of suppliers. If any of our suppliers fail to deliver quality parts on a timely basis, we may experience delays in manufacturing, which could result in delayed product deliveries, increased costs to expedite deliveries or develop alternative suppliers, or require redesign of our products to accommodate alternative suppliers. Some of our suppliers are thinly capitalized and may be vulnerable to failure.
Our business depends on the integrity of our intellectual property rights.
The success of our business depends upon the integrity of our intellectual property rights, and we cannot ensure that: (1) any of our pending or future patent applications will be allowed or that any of the allowed applications will be issued as patents or will issue with claims of the scope we sought; (2) any of our patents will not be invalidated, deemed unenforceable, circumvented or challenged; (3) the rights granted under our patents will provide competitive advantages to us; (4) other parties will not develop similar products, duplicate our products or design around our patents; or (5) our patent rights, intellectual property laws or our agreements will adequately protect our intellectual property or competitive position.
From time to time, we have received claims that we are infringing third parties’ intellectual property rights or seeking to invalidate our rights. We cannot ensure that third parties will not in the future claim that we have infringed current or future patents, trademarks or other proprietary rights relating to our products. Any claims, with or without merit, could be time-consuming, result in costly litigation, cause product shipment delays or require us to enter into royalty or licensing agreements. Such royalty or licensing agreements, if required, may not be available on terms acceptable to us.
We are subject to risks ofnon-compliance with environmental and other governmental regulations.
We are subject to a variety of governmental regulations relating to the use, storage, discharge, handling, emission, generation, manufacture, treatment and disposal of toxic or otherwise hazardous substances, chemicals, materials or waste. If we fail to comply with current or future regulations, such failure could result in suspension of our operations, alteration of our manufacturing process, remediation costs or substantial civil penalties or criminal fines against us or our officers, directors or employees. Additionally, these regulations could require us to acquire expensive remediation or abatement equipment and incur substantial expenses to comply with them.
Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
Location | Square Footage | Principal Use | ||||
Santa Clara, | 169,583 | Corporate Headquarters; TFE and Photonics Marketing, Manufacturing, Engineering and Customer Support | ||||
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Singapore | 31,947 | |||||
Malaysia | 1,291 | |||||
Shenzhen, China | 2,568 |
Item 3. | Legal Proceedings |
expands. Any claims or proceedings against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time, result in the diversion of significant operational resources, or require us to enter into royalty or licensing agreements which, if required, may not be available on terms favorable to us or at all. Intevac is not presently a party to any lawsuit or proceeding that, in Intevac’s opinion, is likely to seriously harm Intevac’s business.
Item 4. | Mine Safety Disclosures |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Price Range of Common Stock
The following table sets forth the high and low closing sale prices per share as reported on The Nasdaq Stock Market for the periods indicated.
High | Low | |||||||
Fiscal 2017: | ||||||||
First Quarter | $ | 12.50 | $ | 8.05 | ||||
Second Quarter | 13.75 | 11.10 | ||||||
Third Quarter | 12.20 | 8.40 | ||||||
Fourth Quarter | 9.00 | 6.80 | ||||||
Fiscal 2016: | ||||||||
First Quarter | $ | 5.08 | $ | 4.21 | ||||
Second Quarter | 5.74 | 4.35 | ||||||
Third Quarter | 6.25 | 5.49 | ||||||
Fourth Quarter | 8.55 | 5.65 |
Performance Graph
The following graph compares the cumulative total stockholder return on Intevac’s Common Stock with
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE DECEMBER 31, 2012
AMONG INTEVAC, NASDAQ US BENCHMARK TOTAL RETURN INDEX AND
NASDAQ COMPUTER HARDWARE (SUBSECTOR) TOTAL RETURN INDEX
12/31/12 | 12/31/13 | 01/03/15 | 01/02/16 | 12/31/16 | 12/30/17 | |||||||||||||||||||
Intevac, Inc. | $ | 100 | $ | 163 | $ | 162 | $ | 103 | $ | 187 | $ | 150 | ||||||||||||
Nasdaq US Benchmark Total Return Index | 100 | 134 | 150 | 151 | 171 | 207 | ||||||||||||||||||
Nasdaq Computer Hardware Total Return Index | 100 | 118 | 158 | 145 | 167 | 241 |
expect to pay cash dividends on our capital stock in the foreseeable future.
January 2, 2021.
Item 6. | Selected Financial Data |
The following selected financial information has been derived from Intevac’s historical audited consolidated financial statements and should be read in conjunction with the consolidated financial statements, the accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations
Fiscal Year (1) | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Net revenues | $ | 112,847 | $ | 80,124 | $ | 75,160 | $ | 65,550 | $ | 69,632 | ||||||||||
Gross profit | $ | 45,663 | $ | 30,409 | $ | 26,317 | $ | 17,433 | $ | 21,973 | ||||||||||
Operating income (loss) | $ | 4,848 | $ | (7,563 | ) | $ | (8,738 | ) | $ | (19,354 | ) | $ | (17,823 | ) | ||||||
Net income (loss) | $ | 4,118 | $ | (7,441 | ) | $ | (9,166 | ) | $ | (27,445 | ) | $ | (15,696 | ) | ||||||
Net income (loss) per share: | ||||||||||||||||||||
Basic | $ | 0.19 | $ | (0.36 | ) | $ | (0.41 | ) | $ | (1.16 | ) | $ | (0.66 | ) | ||||||
Diluted | $ | 0.18 | $ | (0.36 | ) | $ | (0.41 | ) | $ | (1.16 | ) | $ | (0.66 | ) | ||||||
At year end: | ||||||||||||||||||||
Total assets | $ | 115,023 | $ | 108,324 | $ | 97,681 | $ | 120,275 | $ | 148,276 |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Fiscal Year | 2017 | 2016 | 2015 | Change 2017 vs. 2016 | Change 2016 vs. 2015 | |||||||||||||||
(in thousands, except percentages and per share amounts) | ||||||||||||||||||||
Net revenues | $ | 112,847 | $ | 80,124 | $ | 75,160 | $ | 32,723 | $ | 4,964 | ||||||||||
Gross profit | 45,663 | 30,409 | 26,317 | 15,254 | 4,092 | |||||||||||||||
Gross margin percent | 40.5 | % | 38.0 | % | 35.0 | % | 2.5 points | 3.0 points | ||||||||||||
Operating income (loss) | 4,848 | (7,563 | ) | (8,738 | ) | 12,411 | 1,175 | |||||||||||||
Net income (loss) | 4,118 | (7,441 | ) | (9,166 | ) | 11,559 | 1,725 | |||||||||||||
Net income (loss) per diluted share | $ | 0.18 | $ | (0.36 | ) | $ | (0.41 | ) | $ | 0.54 | $ | 0.05 |
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 | ) |
Fiscal 2016 financial results reflected an improved environment. In 2016 the HDD industry began to show signs of improvement as media unit shipments and PC sales increased in the second half of the year. Intevac revenue recognized four 200 Lean systems with an additional four in backlog at the end of the year as one of our HDD customers upgraded the technology level of its manufacturing capacity. In 2016 Intevac gained traction with its entry into the DCP market and booked its first production capacity order. In 2016, Intevac recognized revenue on one VERTEX coating system for DCPs and shipped an additional four VERTEX systems that were undergoing installation and acceptance testing at 2016year-end. In 2016 the PV market showed signs of stress as utility-scale solar projects came under pricing pressure and retail deployments were below expectations as U.S. consumers delayed spending as a result of the extension of the investment tax credit. In 2016, Intevac recognized revenue on one MATRIX PVD system and one implant system for solar cell manufacturing and shipped an additional two ENERGi implant systems that were undergoing installation and acceptance testing at the end of fiscal 2016. In fiscal 2016, Photonics business levels were at similar levels compared to the prior year as increased Photonics’ product sales were offset by lower Photonics’ contract R&D. The fiscal 2016 net loss reflected higher net revenues and higher gross margins, offset in part by higher operating expenses as the Company made incremental R&D investments in both its business units. During fiscal 2016, as part of a continued effort to lower cash expenditures, the Company settled certain executive incentive variable compensation programs with restricted stock units with a one year vesting. During fiscal 2016, the Company did not recognize an income tax benefit on the U.S. net operating loss.
Fiscal 20172019 financial results reflected an improved environment andas the Company returned to profitability. Intevac recognized revenue on six 200 Lean systems with an additional three in backlog at the end of the year as one of our HDD customers continued to upgrade the technology level ofresumed its manufacturing capacity. In 2017,growth trajectory. Intevac recognized revenue on four VERTEX coating system for DCPs, one MATRIX200 Lean HDD systems. In 2019, Intevac recognized revenue on nine solar implant pilot systemENERG
We believe that we will continue to be profitable in fiscal 2018. Intevac expects that HDD equipment sales will be approximately at the same levels as 2017 as a HDD manufacturer takes delivery of the three 200 Lean
systems in backlog and we expect additional 200 Lean system orders. In 2018, Intevac expects higher sales of new Thin-film Equipment products as we expect follow on production orders for our VERTEX coating system for DCPs and we recognize the three ENERGi implant systems that are pending installation at our customer’s fab. We are also in discussions with our solar customer to determine a delivery schedule for the remaining nine ENERGi implant systems in backlog. Photonics will continuecontinued to deliver production shipments of the night-vision camera modules for the F35 Joint Strike Fighter program in fiscal 2018. Deliveries under the multi-year Apache arrangement were completed in 2017. With the completion2019 and resumed shipments of the Apache program, our Photonics revenue profile is now moving from a product-driven one,camera in the second half of 2019. Fiscal 2019 net income was the result of higher net revenues and higher gross margins. During 2019, the Company received an unfavorable decision on its appeal to a funded
revenue as development work on the multi-year IVAS contract award for the development and production of digital night-vision cameras to support the U.S. Army’s IVAS program comes to a conclusion in early 2021. During fiscal 2021, the Company expects to receive $108,000 in government assistance related to
Fiscal Year | Change 2017 vs. 2016 | Change 2016 vs. 2015 | ||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Thin-film Equipment | $ | 79,004 | $ | 45,253 | $ | 39,622 | $ | 33,751 | $ | 5,631 | ||||||||||
Photonics | ||||||||||||||||||||
Products | 25,852 | 29,089 | 28,450 | (3,237 | ) | 639 | ||||||||||||||
Contract R&D | 7,991 | 5,782 | 7,088 | 2,209 | (1,306 | ) | ||||||||||||||
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33,843 | 34,871 | 35,538 | (1,028 | ) | (667 | ) | ||||||||||||||
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Total net revenues | $ | 112,847 | $ | 80,124 | $ | 75,160 | $ | 32,723 | $ | 4,964 | ||||||||||
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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 | ) | |||||
2019. Photonics product revenue decreased in fiscal 2017 versus fiscal 2016 due to lowerreflected higher unit shipments and lower average sales prices for the Apache pilot night-viewing camera shipments and lower average sales prices for the F35 Joint Strike Fighter program night-vision camera offset in part by increased F35 camera shipments. Photonics product revenue increased in fiscal 2016 versus fiscal 2015 due to increased F35 camera shipments, offset in part by lower shipments and lower average sales prices for the Apache camera. Photonics productContract R&D revenue in fiscal 2015 reflected the lower average sales prices for the Apache camera. Deliveries under the multi-year Apache arrangement were completed in the third quarter2020 increased as a result of fiscal 2017.
For fiscal 2018, Intevac expects that Photonics revenue will be at similar levels as fiscal 2017. With the completion of the multi-year Apache arrangement in 2017, we expect our Photonics revenue profile in the near term to transition from a product-driven one, to a funded R&D profile. Substantial growth in future Photonics revenues is dependentdevelopment on the proliferation of Intevac’s technology into major military programs, continued defense spending, the ability to obtain export licenses for foreign customers and obtaining production subcontracts for these programs.
IVAS program.
December 30, 2017 | December 31, 2016 | |||||||
(in thousands) | ||||||||
Thin-film Equipment | $ | 51,719 | $ | 46,283 | ||||
Photonics | 12,302 | 22,244 | ||||||
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Total backlog | $ | 64,021 | $ | 68,527 | ||||
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Thin-film Equipment
January 2, 2021 | December 28, 2019 | |||||||
(in thousands) | ||||||||
TFE | $ | 5,623 | $ | 21,391 | ||||
Photonics | 41,317 | 71,015 | ||||||
Total backlog | $ | 46,940 | $ | 92,406 | ||||
2017 | 2016 | 2015 | ||||||||||
Seagate Technology | 40% | 34% | 22% | |||||||||
U.S. Government | 15% | 22% | 26% | |||||||||
Elbit Systems of America | * | 10% | * | |||||||||
HGST | * | * | 15% |
2019.
2020 | 2019 | |||||||
Seagate Technology | 42 | % | 49 | % | ||||
U.S. Government | 29 | % | 20 | % | ||||
Elbit Systems of America | 12 | % | * | |||||
Jolywood (Hongkong) Industrial Holdings Co., Limited | * | 14 | % |
Fiscal Year | Change 2017 vs. 2016 | Change 2016 vs. 2015 | ||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||
United States | $ | 37,311 | $ | 42,048 | $ | 49,034 | $ | (4,737 | ) | $ | (6,986 | ) | ||||||||
Asia | 73,525 | 37,143 | 23,855 | 36,382 | 13,288 | |||||||||||||||
Europe | 884 | 933 | 2,271 | (49 | ) | (1,388 | ) | |||||||||||||
Rest of World | 1,127 | — | — | 1,127 | — | |||||||||||||||
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Total net revenues | $ | 112,847 | $ | 80,124 | $ | 75,160 | $ | 32,723 | $ | 4,964 | ||||||||||
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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 | ||||||||||||
The increase in sales to the Asia region in 20172020 versus 20162019 reflected higherlower system sales, and increasedoffset in part by higher technology upgrade, service and spare parts sales. Sales to the Asia region in 20172020 included sixtwo 200 Lean HDD systems, four VERTEX coating systems for DCP, one pilot MATRIX solar ion implant system and two ENERGi solar ion implant systems versussystems. Sales to the Asia region in 2019 included four 200 Lean HDD systems oneand nine solar implant ENERG system and one VERTEX coating system for DCPs in 2016. The increase in sales to the Asia region in 2016 versus 2015 was primarily due to increased equipment sales including four 200 Lean systems, one solar implant ENERGi system and one VERTEX coating system for DCPs, offset in part by a decrease in revenue recognized on technology upgrades and spare parts.
Rest of World includes contract R&D for the Australian government as part of a program under the Department of Defense’s Coalition Warfare Program which is funded by the U.S. government and several foreign nation coalition partners.
Fiscal Year | Change 2017 vs. 2016 | Change 2016 vs. 2015 | ||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||
Thin-film Equipment gross profit | $33,750 | $14,847 | $12,852 | $18,903 | $1,995 | |||||||||||||||
% of Thin-film Equipment net revenues | 42.7 | % | 32.8 | % | 32.4 | % | ||||||||||||||
Photonics gross profit | $11,913 | $15,562 | $13,465 | $(3,649) | $2,097 | |||||||||||||||
% of Photonics net revenues | 35.2 | % | 44.6 | % | 37.9 | % | ||||||||||||||
Total gross profit | $45,663 | $30,409 | $26,317 | $15,254 | $4,092 | |||||||||||||||
% of net revenues | 40.5 | % | 38.0 | % | 35.0 | % |
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 | % |
Thin-film Equipment
Fiscal Year | Change 2017 vs. 2016 | Change 2016 vs. 2015 | ||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Research and development expense | $17,724 | $18,156 | $15,661 | $ | (432) | $2,495 |
Fiscal Year | Change 2020 vs. 2019 | |||||||||||
2020 | 2019 | |||||||||||
(in thousands) | ||||||||||||
Research and development expense | $ | 14,093 | $ | 14,309 | $ | (216 | ) |
Research and development spendingPhotonics decreased for Photonics during 20172020 as compared to 2016. Photonics research and development spending during 2016 reflected incrementalfiscal 2019 primarily due to lower spending on demonstrators developed for evaluation by the U.S. Army and U.S. Navy which were self-funded by Intevac.development of the next generation of our low light level CMOS camera. Research and development expenses do not include costs of $7.1 million, $4.5$15.0 million and $5.1$12.3 million in 2017, 2016,2020 and 2015,2019, respectively, which are related to customer-funded contract R&D programs and therefore included in cost of net revenues.
Fiscal Year | Change 2017 vs. 2016 | Change 2016 vs. 2015 | ||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Selling, general and administrative expense | $23,314 | $19,916 | $19,638 | $3,398 | $278 |
Fiscal Year | Change 2020 vs. 2019 | |||||||||||
2020 | 2019 | |||||||||||
(in thousands) | ||||||||||||
Selling, general and administrative expense | $ | 23,897 | $ | 22,634 | $ | 1,263 |
Acquisition-related (benefit), net
Fiscal Year | Change 2017 vs. 2016 | Change 2016 vs. 2015 | ||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Acquisition-related (benefit), net | $ | (223 | ) | $ | (100 | ) | $ | (244 | ) | $ | (123 | ) | $ | 144 |
Acquisition-related (benefit), net, represents the change in the fair value of contingent consideration arrangements related to the SIT acquisition. See Note 7 “Contingent Consideration” in the notes to the consolidated financial statements for additional information related to the fair value of contingent consideration. Increases in the assessed likelihood of a higher payout under a contingent consideration arrangement contribute
to increases in the fair value of the related liability. Conversely, decreases in the assessed likelihood of a higher payout under a contingent consideration arrangement contribute to decreases in the fair value of the related liability.
The benefits recognized during fiscal 2017, fiscal 2016 and fiscal 2015 are associated with changes in the fair value of the contingent consideration related to the revenue earnout obligation. We recorded liabilities on our consolidated balance sheet of $4.1 million as of the original acquisition date for this contingent consideration arrangement and subsequently remeasured the liability to fair value, with changes in fair value reported in earnings. As a result of this remeasurement, we recorded a net gain of $223,000, $100,000 and $244,000, respectively during fiscal 2017, fiscal 2016 and fiscal 2015.
customer evaluation.
Fiscal Year | Change 2017 vs. 2016 | Change 2016 vs. 2015 | ||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Interest income and other, net | $373 | $373 | $127 | $— | $246 |
Fiscal Year | Change 2020 vs. 2019 | |||||||||||
2020 | 2019 | |||||||||||
(in thousands) | ||||||||||||
Interest income and other income (expense), net | $ | 212 | $ | 582 | $ | (370 | ) |
Fiscal Year | Change 2017 vs. 2016 | Change 2016 vs. 2015 | ||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Provision for income taxes | $1,103 | $251 | $555 | $852 | $(304 | ) |
Fiscal Year | Change 2020 vs. 2019 | |||||||||||
2020 | 2019 | |||||||||||
(in thousands) | ||||||||||||
Provision for income taxes | $ | 1,711 | $ | 3,359 | $ | (1,648 | ) |
On December 22, 2017,expense for 2020 was largely the “Tax Cutsresult of foreign withholding taxes and Jobs Act” (“ACT”)income taxes in foreign jurisdictions. The income tax expense for 2019 was signed into law that significantly reformslargely the Internal Revenue Coderesult of 1986, as amended. The Act, among other things, permanently lowers the U.S. federalforeign withholding taxes, income taxes in foreign jurisdictions, and fully reserving a contested tax rate to 21% from the existing maximum rate of 35%, allows for the expensing of capital expenditures, and puts into effect the migration from a “worldwide” system of taxationdeposit related to a territorial system. Our net deferred tax assets and liabilities have been revalued ataudit in Singapore.
Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. In fiscal 2014, based upon an analysis,longer support a valuation allowance of $9.4 million was recorded for the portion of the Singapore deferred tax asset that more likely than not will be realized. For fiscal 2017 and 2016, valuation allowance decreasesposition. Accordingly, the Company recorded a charge of $603,000 and $136,000, respectively,$732,000 in provision for income taxes. During 2020 the Company appealed the decision to the Singapore deferredHigh Court, which was denied. Management decided not to pursue additional appeals and the matter is fully settled. Presently, there are no other active income tax asset were recorded. For fiscal 2015, a valuation allowance increase of $631,000 forexaminations in the Singapore deferred tax asset was recorded.
In fiscal 2012, a valuation allowance of $23.4 million was added to record onlyjurisdictions where Intevac operates.
The amount of the deferred tax asset considered realizable, however, could be adjusted if estimatescurrent economic climate, our expectations of future taxable income, during the carryforward period are increased, or if objective negative evidence in the formand our ability to project such income. We maintain a full valuation allowance for our U.S. deferred tax assets due to uncertainty regarding their realization as of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth.
January 2, 2021.
units.
December 30, 2017 | December 31, 2016 | |||||||
(in thousands) | ||||||||
Cash and cash equivalents | $ | 19,941 | $ | 27,043 | ||||
Short-term investments | 15,698 | 17,602 | ||||||
Long-term investments | 6,849 | 3,593 | ||||||
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Total cash, cash-equivalents and investments | $ | 42,488 | $ | 48,238 | ||||
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Cash used in operating activities totaled $2.4 million in 2017.
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 | ||||
management.
include three ENERGiimplant systems at28, 2019 included one VERTEX SPECTRA system for DCP under evaluation in a customer sitecustomer’s factory and one MATRIX PVD system for which installation procedures have not begun and four ENERGiimplant systemsadvance semiconductor packaging under evaluation in work in process that are virtually complete, pending customer shipment.a customer’s factory. Net inventories at December 31, 2016January 2, 2021 also included fourone VERTEX systemsSPECTRA system for DCP and two ENERGiimplant systems at customer sites that were undergoing installation and acceptance testing.Intevac’s factory. Inventory turns were 1.81.6 in fiscal 20172020 and were 2.32.5 in fiscal 2016.2019. Accounts payable totaled $3.9increased to $4.3 million at January 2, 2021 compared to $4.2 million at December 30, 2017 and $5.3 million at December 31, 2016.28, 2019. Other accrued liabilities decreasedwere $3.6 million at both January 2, 2021 and December 28, 2019. Accrued payroll and related liabilities increased to $7.7 million at December 30, 2017January 2, 2021 compared to $17.0$6.5 million at December 31, 2016. Other accrued28, 2019 as a result of higher variable compensation accruals and the deferral of payroll tax liabilities at December 30, 2017 includes $5.1 million in deferred revenue related to three ENERGiimplant systems at a customer site for which installation procedures have not begun. Other accrued liabilities at December 31, 2016 includes $14.2 million in deferred revenue related to four VERTEX systems for DCP and two ENERGiimplant systems at customer sites that were undergoing installation and acceptance testing.under the CARES Act. Customer advances increaseddecreased from $5.4$4.0 million at December 31, 201628, 2019 to $11.0 million$33,000 at January 2, 2021 as a result of recognition of revenue. Other long term liabilities increased to $457,000 at January 2, 2021 compared to $186,000 at December 30, 2017.
28, 2019 as a result of the deferral of payroll tax liabilities under the CARES Act.
2019.
2020 and $111,000 in 2019.
2019.
Contractual Obligations
The following table summarizes Intevac’s contractual obligations as of December 30, 2017:
Payments due by period | ||||||||||||||||||||
Total | < 1 Year | 1–3 Years | 3-5 Years | > 5 Years | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Operating lease obligations | $ | 18,877 | $ | 3,154 | $ | 6,073 | $ | 5,834 | $ | 3,816 | ||||||||||
Purchase obligations and commitments1 | 10,209 | 10,209 | — | — | — | |||||||||||||||
Other long-term liabilities 2, 4 | 237 | 237 | — | — | — | |||||||||||||||
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Total 3, 4 | $ | 29,323 | $ | 13,600 | $ | 6,073 | $ | 5,834 | $ | 3,816 | ||||||||||
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have been included in the consolidated financial statements as soon as they became known. In addition, management is periodically faced with uncertainties, the outcomes of which are not within its control and will not be known for prolonged periods of time. These uncertainties are discussed in the section above entitled “Risk Factors.” Based on a critical assessment of its accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that Intevac’s consolidated financial statements are fairly stated in accordance with accounting principles generally accepted in the United States of America, and provide a meaningful presentation of Intevac’s financial condition and results of operations.
Intevac recognizes
Intevac performs research and development work under various government-sponsored research contracts. Revenue oncost-plus-feeour government contracts is recognized over time because of the continuous transfer of control to the extentcustomer. For U.S. government contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay us for costs actually incurred plus a proportionatereasonable profit and take control of any work in process. Similarly, for
completion of the contract. When estimates of total costs to be incurred on a contract exceed estimatesis recognized in the period the adjustment is identified. Revenue and profit in future periods of total revenue to be earned, a provision forcontract performance are recognized using the entireadjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, is recordedwe recognize the total loss in the period the lossquarter it is determined.
identified.
consideration expected to be transferred (probability-weighted), discounted back to present value. The discount rate used is determined at the time of the acquisition in accordance with accepted valuation methods. The fair value of the acquisition-related contingent consideration is remeasured at the estimated fair value at each reporting period with the change in fair value recognized as income or expense in the consolidated statements of operations.
income.
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
Interest rate risk.Intevac’s exposure to market risk
The table below presents principal amounts and related weighted-average interest rates by year of expected maturity for Intevac’s investment portfolio at December 30, 2017.
2018 | 2019 | 2020 | Total | Fair Value | ||||||||||||||||
(In thousands, except percentages) | ||||||||||||||||||||
Cash equivalents | ||||||||||||||||||||
Variable rate amounts | $ | 6,746 | $ | — | $ | — | $ | 6,746 | $ | 6,746 | ||||||||||
Weighted-average rate | 1.18 | % | — | — | — | |||||||||||||||
Short-term investments | ||||||||||||||||||||
Fixed rate amounts | $ | 15,710 | $ | — | $ | — | $ | 15,710 | $ | 15,698 | ||||||||||
Weighted-average rate | 1.27 | % | — | — | — | |||||||||||||||
Long-term investments | ||||||||||||||||||||
Fixed rate amounts | $ | — | $ | 6,382 | $ | 500 | $ | 6,882 | $ | 6,849 | ||||||||||
Weighted-average rate | — | 1.90 | % | 1.99 | % | |||||||||||||||
Total investment portfolio | $ | 22,456 | $ | 6,382 | $ | 500 | $ | 29,338 | $ | 29,293 |
Foreign exchange risk.From time to time, Intevac enters into foreign currency forward exchange contracts to hedge certain of its anticipated foreign currencyre-measurement exposures and to offset certain operational exposures from the impact of changes in foreign currency exchange rates. The objective of these contracts is to minimize the impact of foreign currency exchange rate movements on Intevac’s operating results. The derivatives have maturities of approximately 30 days. The notional amount of the Company’s foreign currency derivatives was $1.3 million at December 30, 2017 and $1.1 million at December 31, 2016.
smaller reporting companies.
Item 8. | Financial Statements and Supplementary Data |
Page | ||||
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of
/s/ BPM LLP
We have served
San Jose, California
February 14, 2018
judgement, subjectivity, and effort in performing audit procedures and evaluating audit evidence relating to the forecasted product demand. Additionally, for certain new product launches there may be limited historical data with which to evaluate forecasts.
/s/ BPM LLP |
We have served as the Company’s auditor since 2015. |
San Jose, California |
February 17, 2021 |
December 30, 2017 | December 31, 2016 | |||||||
(In thousands, except par value) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 19,941 | $ | 27,043 | ||||
Short-term investments | 15,698 | 17,602 | ||||||
Trade and other accounts receivable, net of allowances of $0 at both December 30, 2017 and December 31, 2016 | 20,474 | 17,447 | ||||||
Inventories | 33,792 | 24,876 | ||||||
Prepaid expenses and other current assets | 2,524 | 1,768 | ||||||
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| |||||
Total current assets | 92,429 | 88,736 | ||||||
Property, plant and equipment, net | 12,478 | 11,237 | ||||||
Long-term investments | 6,849 | 3,593 | ||||||
Restricted cash | 1,000 | 1,602 | ||||||
Intangible assets, net of amortization of $6,884 and $6,129 at December 30, 2017 and December 31, 2016, respectively | 1,503 | 2,258 | ||||||
Other long-term assets | 764 | 898 | ||||||
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Total assets | $ | 115,023 | $ | 108,324 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,949 | $ | 5,323 | ||||
Accrued payroll and related liabilities | 6,818 | 4,220 | ||||||
Other accrued liabilities | 7,688 | 17,011 | ||||||
Customer advances | 11,026 | 5,422 | ||||||
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| |||||
Total current liabilities | 29,481 | 31,976 | ||||||
Other long-term liabilities | 2,879 | 3,082 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Undesignated preferred stock, $0.001 par value, 10,000 shares authorized, no shares issued and outstanding | — | — | ||||||
Common stock, $0.001 par value : | ||||||||
Authorized shares — 50,000 issued and outstanding shares — 21,811 and 20,939 at December 30, 2017 and December 31, 2016, respectively | 22 | 21 | ||||||
Additionalpaid-in capital | 177,521 | 171,314 | ||||||
Treasury stock, 4,845 shares at both December 30, 2017 and December 31, 2016 | (28,489 | ) | (28,489 | ) | ||||
Accumulated other comprehensive income | 490 | 321 | ||||||
Accumulated deficit | (66,881 | ) | (69,901 | ) | ||||
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| |||||
Total stockholders’ equity | 82,663 | 73,266 | ||||||
|
|
|
| |||||
Total liabilities and stockholders’ equity | $ | 115,023 | $ | 108,324 | ||||
|
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|
|
January 2, 2021 | December 28, 2019 | |||||||
(In thousands, except par | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 29,341 | $ | 19,767 | ||||
Short-term investments | 14,839 | 16,720 | ||||||
Trade and other accounts receivable, net of allowances of $0 at both January 2, 2021 and December 28, 2019 | 28,646 | 28,619 | ||||||
Inventories | 21,689 | 24,907 | ||||||
Prepaid expenses and other current assets | 1,893 | 1,504 | ||||||
Total current assets | 96,408 | 91,517 | ||||||
Property, plant and equipment, net | 11,004 | 11,598 | ||||||
Operating lease right-of-use-assets | 8,165 | 10,279 | ||||||
Long-term investments | 5,388 | 5,537 | ||||||
Restricted cash | 787 | 787 | ||||||
Deferred income taxes and other long-term assets | 5,486 | 6,604 | ||||||
Total assets | $ | 127,238 | $ | 126,322 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current operating lease liabilities | $ | 2,853 | $ | 2,524 | ||||
Accounts payable | 4,259 | 4,199 | ||||||
Accrued payroll and related liabilities | 7,679 | 6,488 | ||||||
Other accrued liabilities | 3,598 | 3,593 | ||||||
Customer advances | 33 | 4,007 | ||||||
Total current liabilities | 18,422 | 20,811 | ||||||
Noncurrent liabilities: | ||||||||
Noncurrent operating lease liabilities | 6,803 | 9,532 | ||||||
Other long-term liabilities | 457 | 186 | ||||||
Total noncurrent liabilities | 7,260 | 9,718 | ||||||
Commitments and contingencies | 0 | 0 | ||||||
Stockholders’ equity: | ||||||||
Undesignated preferred stock, $0.001 par value, 10,000 shares authorized, 0 shares issued and outstanding | 0— | 0— | ||||||
Common stock, $0.001 par value : | ||||||||
Authorized shares — 50,000 issued and outstanding shares — 23,874 and 23,346 at January 2, 2021 and December 28, 2019, respectively | 24 | 23 | ||||||
Additional paid-in capital | 193,173 | 188,290 | ||||||
Treasury stock, 5,087 shares at January 2, 2021 and 4,989 shares at December 28, 2019 | (29,551 | ) | (29,158 | ) | ||||
Accumulated other comprehensive income | 640 | 424 | ||||||
Accumulated deficit | (62,730 | ) | (63,786 | ) | ||||
Total stockholders’ equity | 101,556 | 95,793 | ||||||
Total liabilities and stockholders’ equity | $ | 127,238 | $ | 126,322 | ||||
Year Ended, | ||||||||||||
December 30, 2017 | December 31, 2016 | January 2, 2016 | ||||||||||
(In thousands, except per share amounts) | ||||||||||||
Net revenues: | ||||||||||||
Systems and components | $ | 104,856 | $ | 74,342 | $ | 68,072 | ||||||
Technology development | 7,991 | 5,782 | 7,088 | |||||||||
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|
|
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| |||||||
Total net revenues | 112,847 | 80,124 | 75,160 | |||||||||
Cost of net revenues: | ||||||||||||
Systems and components | 60,120 | 45,263 | 43,700 | |||||||||
Technology development | 7,064 | 4,452 | 5,143 | |||||||||
|
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|
|
|
| |||||||
Total cost of net revenues | 67,184 | 49,715 | 48,843 | |||||||||
Gross profit | 45,663 | 30,409 | 26,317 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 17,724 | 18,156 | 15,661 | |||||||||
Selling, general and administrative | 23,314 | 19,916 | 19,638 | |||||||||
Acquisition-related (benefit), net | (223 | ) | (100 | ) | (244 | ) | ||||||
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|
|
| |||||||
Total operating expenses | 40,815 | 37,972 | 35,055 | |||||||||
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| |||||||
Operating income (loss) | 4,848 | (7,563 | ) | (8,738 | ) | |||||||
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| |||||||
Interest income | 291 | 195 | 179 | |||||||||
Other income (expense), net | 82 | 178 | (52 | ) | ||||||||
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|
|
| |||||||
Income (loss) before income taxes | 5,221 | (7,190 | ) | (8,611 | ) | |||||||
Provision for income taxes | 1,103 | 251 | 555 | |||||||||
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|
|
|
| |||||||
Net income (loss) | $ | 4,118 | $ | (7,441 | ) | $ | (9,166 | ) | ||||
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| |||||||
Net income (loss) per share: | ||||||||||||
Basic | $ | 0.19 | $ | (0.36 | ) | $ | (0.41 | ) | ||||
Diluted | $ | 0.18 | $ | (0.36 | ) | $ | (0.41 | ) | ||||
Weighted average shares outstanding: | ||||||||||||
Basic | 21,555 | 20,761 | 22,218 | |||||||||
Diluted | 22,920 | 20,761 | 22,218 |
INCOME
Year Ended, | ||||||||
January 2, 2021 | December 28, 2019 | |||||||
(In thousands, except per share amounts) | ||||||||
Net revenues: | ||||||||
Systems and components | $ | 74,879 | $ | 89,228 | ||||
Technology development | 22,945 | 19,657 | ||||||
Total net revenues | 97,824 | 108,885 | ||||||
Cost of net revenues: | ||||||||
Systems and components | 42,231 | 55,678 | ||||||
Technology development | 15,048 | 12,339 | ||||||
Total cost of net revenues | 57,279 | 68,017 | ||||||
Gross profit | 40,545 | 40,868 | ||||||
Operating expenses: | ||||||||
Research and development | 14,093 | 14,309 | ||||||
Selling, general and administrative | 23,897 | 22,634 | ||||||
Total operating expenses | 37,990 | 36,943 | ||||||
Operating income | 2,555 | 3,925 | ||||||
Interest income | 284 | 574 | ||||||
Other income (expense), net | (72 | ) | 8 | |||||
Income before provision for income taxes | 2,767 | 4,507 | ||||||
Provision for income taxes | 1,711 | 3,359 | ||||||
Net income | $ | 1,056 | $ | 1,148 | ||||
Net income per share: | ||||||||
Basic | $ | 0.04 | $ | 0.05 | ||||
Diluted | $ | 0.04 | $ | 0.05 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 23,669 | 23,063 | ||||||
Diluted | 24,151 | 23,340 |
Year Ended, | ||||||||||||
December 30, 2017 | December 31, 2016 | January 2, 2016 | ||||||||||
(In thousands) | ||||||||||||
Net income (loss) | $ | 4,118 | $ | (7,441 | ) | $ | (9,166 | ) | ||||
Other comprehensive income (loss), before tax | ||||||||||||
Change in unrealized net loss onavailable-for-sale investments | (23 | ) | 18 | (39 | ) | |||||||
Foreign currency translation gains and losses | 192 | (109 | ) | (168 | ) | |||||||
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|
|
|
|
| |||||||
Other comprehensive income (loss), before tax | 169 | (91 | ) | (207 | ) | |||||||
Income tax expense related to items in other comprehensive income (loss) | — | — | — | |||||||||
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|
|
|
|
| |||||||
Other comprehensive income (loss), net of tax | 169 | (91 | ) | (207 | ) | |||||||
|
|
|
|
|
| |||||||
Comprehensive income (loss) | $ | 4,287 | $ | (7,532 | ) | $ | (9,373 | ) | ||||
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|
|
|
|
Year Ended, | ||||||||
January 2, 2021 | December 28, 2019 | |||||||
(In thousands) | ||||||||
Net income | $ | 1,056 | $ | 1,148 | ||||
Other comprehensive income (loss), before tax | ||||||||
Change in unrealized net gain on available-for-sale | (5 | ) | 70 | |||||
Foreign currency translation gains and (losses) | 221 | (24 | ) | |||||
Other comprehensive income, before tax | 216 | 46 | ||||||
Income tax expense related to items in other comprehensive income | 0 | — | ||||||
Other comprehensive income, net of tax | 216 | 46 | ||||||
Comprehensive income | $ | 1,272 | $ | 1,194 | ||||
Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
Balance at January 3, 2015 | 23,275 | $ | 23 | $ | 161,271 | 1,426 | $ | (9,989 | ) | $ | 619 | $ | (53,294 | ) | $ | 98,630 | ||||||||||||||||
Shares issued in connection with: | ||||||||||||||||||||||||||||||||
Exercise of stock options | 54 | — | 239 | — | — | — | — | 239 | ||||||||||||||||||||||||
Settlement of RSUs | 113 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Employee stock purchase plan | 374 | — | 1,460 | — | — | — | — | 1,460 | ||||||||||||||||||||||||
Shares withheld in connection with net share settlement of RSUs | (25 | ) | — | (132 | ) | — | — | — | — | (132 | ) | |||||||||||||||||||||
Equity-based compensation expense | — | — | 3,296 | — | — | — | — | 3,296 | ||||||||||||||||||||||||
Grant of RSUs to settle accrued bonus | — | — | 380 | — | — | — | — | 380 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (9,166 | ) | (9,166 | ) | ||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | (207 | ) | — | (207 | ) | ||||||||||||||||||||||
Common stock repurchases | (3,419 | ) | (3 | ) | — | 3,419 | (18,500 | ) | — | — | (18,503 | ) | ||||||||||||||||||||
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| |||||||||||||||||
Balance at January 2, 2016 | 20,372 | $ | 20 | $ | 166,514 | 4,845 | $ | (28,489 | ) | $ | 412 | $ | (62,460 | ) | $ | 75,997 | ||||||||||||||||
Shares issued in connection with: | ||||||||||||||||||||||||||||||||
Exercise of stock options | 9 | — | 38 | — | — | — | — | 38 | ||||||||||||||||||||||||
Settlement of RSUs | 269 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Employee stock purchase plan | 384 | 1 | 1,450 | — | — | — | — | 1,451 | ||||||||||||||||||||||||
Shares withheld in connection with net share settlement of RSUs | (95 | ) | — | (426 | ) | — | — | — | — | (426 | ) | |||||||||||||||||||||
Equity-based compensation expense | — | — | 3,254 | — | — | — | — | 3,254 | ||||||||||||||||||||||||
Grant of RSUs to settle accrued bonus | — | — | 484 | — | — | — | — | 484 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (7,441 | ) | (7,441 | ) | ||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | (91 | ) | — | (91 | ) | ||||||||||||||||||||||
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| |||||||||||||||||
Balance at December 31, 2016 | 20,939 | $ | 21 | $ | 171,314 | 4,845 | $ | (28,489 | ) | $ | 321 | $ | (69,901 | ) | $ | 73,266 | ||||||||||||||||
Cumulative effect of accounting change | — | — | 1,098 | — | — | — | (1,098 | ) | — | |||||||||||||||||||||||
Shares issued in connection with: | ||||||||||||||||||||||||||||||||
Exercise of stock options | 135 | — | 878 | — | — | — | — | 878 | ||||||||||||||||||||||||
Settlement of RSUs | 505 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Employee stock purchase plan | 406 | 1 | 1,550 | — | — | — | — | 1,551 | ||||||||||||||||||||||||
Shares withheld in connection with net share settlement of RSUs | (174 | ) | — | (1,999 | ) | — | — | — | — | (1,999 | ) | |||||||||||||||||||||
Equity-based compensation expense | — | — | 4,075 | — | — | — | — | 4,075 | ||||||||||||||||||||||||
Grant of RSUs to settle accrued bonus | — | — | 605 | — | — | — | — | 605 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 4,118 | 4,118 | ||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 169 | — | 169 | ||||||||||||||||||||||||
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Balance at December 30, 2017 | 21,811 | $ | 22 | $ | 177,521 | 4,845 | $ | (28,489 | ) | $ | 490 | $ | (66,881 | ) | $ | 82,663 | ||||||||||||||||
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Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
Balance at December 28, 2019 | 22,700 | $ | 23 | $ | 183,204 | 4,965 | $ | (29,047 | ) | $ | 378 | $ | (64,934 | ) | $ | 89,624 | ||||||||||||||||
Shares issued in connection with: | ||||||||||||||||||||||||||||||||
Exercise of stock options | 175 | — | 799 | — | — | — | — | 799 | ||||||||||||||||||||||||
Settlement of RSUs | 199 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Employee stock purchase plan | 370 | — | 1,466 | — | — | — | — | 1,466 | ||||||||||||||||||||||||
Shares withheld in connection with net share settlement of RSUs | (74 | ) | — | (404 | ) | — | — | — | — | (404 | ) | |||||||||||||||||||||
Equity-based compensation expense | — | — | 3,225 | — | — | — | — | 3,225 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 1,148 | 1,148 | ||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 46 | — | 46 | ||||||||||||||||||||||||
Common stock repurchases | (24 | ) | — | — | 24 | (111 | ) | — | — | (111 | ) | |||||||||||||||||||||
Balance at December 28, 2019 | 23,346 | $ | 23 | $ | 188,290 | 4,989 | $ | (29,158 | ) | $ | 424 | $ | (63,786 | ) | $ | 95,793 | ||||||||||||||||
Shares issued in connection with: | ||||||||||||||||||||||||||||||||
Exercise of stock options | 67 | — | 326 | — | — | — | — | 326 | ||||||||||||||||||||||||
Settlement of RSUs | 244 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Employee stock purchase plan | 392 | 1 | 1,570 | — | — | — | — | 1,571 | ||||||||||||||||||||||||
Shares withheld in connection with net share settlement of RSUs | (77 | ) | — | (402 | ) | — | — | — | — | (402 | ) | |||||||||||||||||||||
Equity-based compensation expense | — | — | 3,389 | — | — | — | — | 3,389 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 1,056 | 1,056 | ||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 216 | — | 216 | ||||||||||||||||||||||||
Common stock repurchases | (98 | ) | — | — | 98 | (393 | ) | — | — | (393 | ) | |||||||||||||||||||||
Balance at January 2, 2021 | 23,874 | $ | 24 | $ | 193,173 | 5,087 | $ | (29,551 | ) | $ | 640 | $ | (62,730 | ) | $ | 101,556 | ||||||||||||||||
Year Ended | ||||||||||||
December 30, 2017 | December 31, 2016 | January 2, 2016 | ||||||||||
(In thousands) | ||||||||||||
Operating activities | ||||||||||||
Net income (loss) | $ | 4,118 | $ | (7,441 | ) | $ | (9,166 | ) | ||||
Adjustments to reconcile net income (loss) to net cash and cash equivalents provided by (used in) operating activities: | ||||||||||||
Depreciation & amortization | 3,116 | 3,983 | 3,743 | |||||||||
Net amortization (accretion) of investment premiums and discounts | 42 | 128 | 319 | |||||||||
Amortization of intangible assets | 755 | 854 | 854 | |||||||||
Equity-based compensation | 4,178 | 3,744 | 3,620 | |||||||||
Deferred income taxes | (1 | ) | 9 | (12 | ) | |||||||
Change in the fair value of acquisition-related contingent consideration | (223 | ) | (100 | ) | (244 | ) | ||||||
Loss (gain) on disposal of equipment | — | (136 | ) | 271 | ||||||||
Changes in assets and liabilities: | ||||||||||||
Accounts receivable | (3,027 | ) | (5,137 | ) | (223 | ) | ||||||
Inventories | (8,916 | ) | (6,116 | ) | 452 | |||||||
Prepaid expenses and other assets | (621 | ) | 496 | (1,382 | ) | |||||||
Accounts payable | (1,374 | ) | (627 | ) | 1,310 | |||||||
Accrued payroll and other accrued liabilities | (6,029 | ) | 12,329 | 19 | ||||||||
Customer advances | 5,604 | 1,797 | 1,074 | |||||||||
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|
|
|
|
| |||||||
Total adjustments | (6,496 | ) | 11,224 | 9,801 | ||||||||
|
|
|
|
|
| |||||||
Net cash and cash equivalents provided by (used in) operating activities | (2,378 | ) | 3,783 | 635 | ||||||||
Investing activities | ||||||||||||
Purchase of investments | (26,581 | ) | (12,429 | ) | (21,058 | ) | ||||||
Proceeds from sales and maturities of investments | 25,164 | 24,005 | 32,900 | |||||||||
Proceeds from sale of equipment | — | 208 | 11 | |||||||||
Decrease in restricted cash | 602 | 178 | — | |||||||||
Purchase of equipment | (4,356 | ) | (3,373 | ) | (3,117 | ) | ||||||
|
|
|
|
|
| |||||||
Net cash and cash equivalents provided by (used in) investing activities | (5,171 | ) | 8,589 | 8,736 | ||||||||
Financing activities | ||||||||||||
Proceeds from issuance of common stock | 2,429 | 1,489 | 1,699 | |||||||||
Common stock repurchases | — | — | (18,503 | ) | ||||||||
Taxes paid related to net share settlement | (1,999 | ) | (426 | ) | (132 | ) | ||||||
Payment of acquisition-related contingent consideration | (174 | ) | (31 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net cash and cash equivalents provided by (used in) financing activities | 256 | 1,032 | (16,936 | ) | ||||||||
Effect of exchange rate changes on cash | 191 | (107 | ) | (171 | ) | |||||||
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|
|
|
|
| |||||||
Net increase (decrease) in cash and cash equivalents | (7,102 | ) | 13,297 | (7,736 | ) | |||||||
Cash and cash equivalents at beginning of period | 27,043 | 13,746 | 21,482 | |||||||||
|
|
|
|
|
| |||||||
Cash and cash equivalents at end of period | $ | 19,941 | $ | 27,043 | $ | 13,746 | ||||||
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|
|
|
| |||||||
Cash paid (received) for: | ||||||||||||
Income taxes | $ | 902 | $ | 516 | $ | 1,190 | ||||||
Income tax refund | $ | (19 | ) | $ | (524 | ) | $ | — |
Year Ended | ||||||||
January 2, 2021 | December 28, 2019 | |||||||
(In thousands) | ||||||||
Operating activities | ||||||||
Net income | $ | 1,056 | $ | 1,148 | ||||
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: | ||||||||
Depreciation and amortization | 3,206 | 2,976 | ||||||
Net amortization (accretion) of investment premiums and discounts | 12 | (75 | ) | |||||
Amortization of intangible assets | 274 | 615 | ||||||
Equity-based compensation | 3,389 | 3,225 | ||||||
Straight-line rent adjustment and amortization of lease incentives | (286 | ) | (289 | ) | ||||
Deferred income taxes | 917 | 1,661 | ||||||
Change in the fair value of acquisition-related contingent consideration | — | 7 | ||||||
Loss on disposal of equipment | — | 120 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (27 | ) | (902 | ) | ||||
Inventories | 3,218 | 6,301 | ||||||
Prepaid expenses and other assets | (462 | ) | 1,621 | |||||
Accounts payable | 60 | (1,850 | ) | |||||
Accrued payroll and other accrued liabilities | 1,467 | 694 | ||||||
Customer advances | (3,974 | ) | (10,307 | ) | ||||
Total adjustments | 7,794 | 3,797 | ||||||
Net cash and cash equivalents provided by operating activities | 8,850 | 4,945 | ||||||
Investing activities | ||||||||
Purchase of investments | (23,342 | ) | (23,306 | ) | ||||
Proceeds from sales and maturities of investments | 25,355 | 21,642 | ||||||
Purchase of leasehold improvements and equipment | (2,612 | ) | (4,107 | ) | ||||
Net cash and cash equivalents used in investing activities | (599 | ) | (5,771 | ) | ||||
Financing activities | ||||||||
Proceeds from issuance of common stock | 1,897 | 2,265 | ||||||
Common stock repurchases | (393 | ) | (111 | ) | ||||
Taxes paid related to net share settlement | (402 | ) | (404 | ) | ||||
Payment of acquisition-related contingent consideration | — | (230 | ) | |||||
Net cash and cash equivalents provided by financing activities | 1,102 | 1,520 | ||||||
Effect of exchange rate changes on cash | 221 | (24 | ) | |||||
Net increase in cash, cash equivalents and restricted cash | 9,574 | 670 | ||||||
Cash, cash equivalents and restricted cash at beginning of period | 20,554 | 19,884 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 30,128 | $ | 20,554 | ||||
Cash paid (received) for: | ||||||||
Income taxes | $ | 850 | $ | 1,016 | ||||
Income tax refund | $ | (157 | ) | $ | (157 | ) |
Change in
On February 19, 2014, the Board of Directors of the Company approved the Company’s change to
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
income.
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
2019.
income.
Intevac recognizes
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
on its VSOE if available, TPE if VSOE is not available, or best ESP if neither VSOE nor TPE is available. Intevac generally utilizes the ESP due to the nature of its products. In certain cases, technology upgrade sales are accounted for as multiple-element arrangements, usually split between delivery of the parts and installation on the customer’s systems. In these cases, Intevac recognizes revenue for the relative sales price of the parts upon shipment and transfer of title, and recognizes revenue for the relative sales price of installation services when those services are completed. Revenue related to sales of spare parts is generally recognized upon shipment.underlying contracts. Intevac recognizes revenue in certain circumstances before delivery has occurred (commonly referred to as bill and hold transactions). In such circumstances, among other things, risk of ownership has passed to the customer, the customer has made a written fixed commitment to purchase the finished goods, the customer has requested the finished goods be held for future delivery as scheduled and designated by them, and no additional performance obligations exist by Intevac. For these transactions, the finished goods are segregated from inventory and normal billing and credit terms granted. Revenue related to services is generally recognized upon completion of the services. In addition, Intevac uses the installment method to record revenue based on cash receipts in situations where the account receivable is collected over an extended period of time and in management’s judgment the degree of collectibility is uncertain.
Intevac performs research and development work under various government-sponsored research contracts. Revenue oncost-plus-fee contracts is recognized to the extent of costs actually incurred plus a proportionate amount of the fee earned. Intevac considers fixed fees undercost-plus-fee contracts to be earned in proportion to the allowable costs actually incurred in performance of the contract. Revenue on fixed-price contracts is recognized on a milestone method orpercentage-of-completion method of contract accounting. For contracts structured as milestone agreements, revenue is recognized when a specified milestone is achieved, provided that (1) the milestone event is substantive in nature and there is substantial uncertainty about the achievement of the milestone at the inception of the agreement, (2) the milestone payment isnon-refundable, and (3) there is no continuing performance obligations associated with the milestone payment. Any milestone payments received prior to satisfying these revenue recognition criteria are deferred. Intevac generally determines the percentage completed based on the percentage of costs incurred to date in relation to total estimated costs expected through completion of the contract. When estimates of total costs to be incurred on a contract exceed estimates of total revenue to be earned, a provision for the entire loss on the contract is recorded in the period the loss is determined.
Advertising Costs
Advertising costs are expensed as incurred. Advertising costs were not material for all periods presented.
Foreign Currency Translation
The functional currency of Intevac’s foreign subsidiaries in Singapore and Hong Kong and the Taiwan branch is the U.S. dollar. The functional currency of Intevac’s foreign subsidiaries in China, Malaysia and Korea is the local currency of the country in which the respective subsidiary operates. Assets and liabilities recorded in foreign currencies are translated atyear-end exchange rates; revenues and expenses are translated at average exchange rates during the year. The effect of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets. The effects of foreign currency transactions are included in other income in the determination of net loss. Net income (losses) from foreign currency transactions were ($107,000), ($99,000), and $80,000 in 2017, 2016 and 2015, respectively.
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Comprehensive Income
The changes in accumulated other comprehensive income by component, were as follows for the years ended December 30, 2017 and December 31, 2016:
Foreign currency | Unrealized holding gains (losses) on available- for-sale investments | Total | ||||||||||
(in thousands) | ||||||||||||
Balance at January 2, 2016 | $ | 452 | $ | (40 | ) | $ | 412 | |||||
|
|
|
|
|
| |||||||
Other comprehensive income (loss) before reclassification | (109 | ) | 18 | (91 | ) | |||||||
Amounts reclassified from other comprehensive income (loss) | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Net current-period other comprehensive income (loss) | (109 | ) | 18 | (91 | ) | |||||||
|
|
|
|
|
| |||||||
Balance at December 31, 2016 | $ | 343 | $ | (22 | ) | $ | 321 | |||||
|
|
|
|
|
| |||||||
Other comprehensive income (loss) before reclassification | 192 | (23 | ) | 169 | ||||||||
Amounts reclassified from other comprehensive income (loss) | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Net current-period other comprehensive income (loss) | 192 | (23 | ) | 169 | ||||||||
|
|
|
|
|
| |||||||
Balance at December 30, 2017 | $ | 535 | $ | (45 | ) | $ | 490 | |||||
|
|
|
|
|
|
Employee Stock Plans
Intevac has equity-based compensation plans that provide for the grant to employees of equity-based awards, including incentive ornon-statutory stock options, restricted stock, stock appreciation rights, restricted stock units (“RSUs”), performance units and performance bonus awards. In addition, these plans provide for the grant ofnon-statutory stock options and RSUs tonon-employee directors and consultants. Intevac also has an employee stock purchase plan, which provides Intevac’s employees with the opportunity to purchase Intevac common stock at a discount through payroll deductions. See Note 2 for a complete description of these plans and their accounting treatment.
Recent Accounting Pronouncements
In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2017-09,Compensation—Stock Compensation: Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity will account for the effects of a modification unless the fair value of the modified award is the same as the original award, the vesting conditions of the modified award are the same as the original award and the classification of the modified award as an equity instrument or liability instrument is the same as the original award. This update becomes effective and will be adopted by Intevac in the first quarter of fiscal 2019. The update is to be adopted prospectively to an award modified on or after the adoption date. Early adoption is permitted. Intevac does not expect the adoption of this update to have a material impact on its consolidated financial statements.
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
In March 2017, the FASB issued ASU2017-08,Receivables – Nonrefundable Fees and Other Costs (Subtopic310-20): Premium Amortization on Purchased Callable Debt Securities. ASU2017-08 amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. This update becomes effective and will be adopted by Intevac in the first quarter of fiscal 2019. Intevac does not expect the adoption of this update to have a material impact on its consolidated financial statements.
In January 2017, the FASB issued ASU2017-04,Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU2017-04 eliminates Step 2 from the goodwill impairment test. Under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in ASU2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This update becomes effective and will be adopted by Intevac in the first quarter of fiscal 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Intevac does not expect the adoption of this update to have a material impact on its consolidated financial statements.
In March 2016, the FASB issued ASU2016-09Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. We have adopted these amendments beginning in the first quarter of 2017. Starting in the first quarter of fiscal 2017, stock-based compensation excess tax benefits or deficiencies are reflected in the Consolidated Statements of Operations as a component of the provision for income taxes, whereas they previously were recognized in equity. Additionally, our Consolidated Statements of Cash Flows now presents excess tax benefits as an operating activity. Finally, we have elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The net cumulative effect of this change was recognized as a $1.1 million charge to the accumulated deficit as of January 1, 2017.
In May 2014, the FASB issued ASU2014-09(Topic 606) Revenue from Contracts with Customers. Topic 606 supersedes the revenue recognition requirements in Accounting Standards Codification Topic 605, “Revenue Recognition”, and requires entities to recognize revenue when they transfer control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We expect revenue recognition for our equipment sales arrangements, which includes systems, technology upgrades, service and spare parts, to remain materially consistent with our historical practice.
We expect to recognize revenue for equipment sales at a point in time following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. Our contracts with customers may include multiple performance obligations. For such arrangements, under the revenue standard we expect to allocate revenue to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the prices charged to customers or by using expected cost plus margin. TheUnder the revenue standard, the expected costs associated with our base warranties will continue to beare recognized as expense when the equipment is sold.
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
We expect to
Foreign currency | Unrealized holding gains (losses) on available-for-sale investments | Total | ||||||||||
(in thousands) | ||||||||||||
Balance at December 29, 2018 | $ | 405 | $ | (27 | ) | $ | 378 | |||||
Other comprehensive income (loss) before reclassification | (24 | ) | 70 | 46 | ||||||||
Amounts reclassified from other comprehensive income (loss) | — | — | — | |||||||||
Net current-period other comprehensive income (loss) | (24 | ) | 70 | 46 | ||||||||
Balance at December 28, 2019 | $ | 381 | $ | 43 | $ | 424 | ||||||
Other comprehensive income (loss) before reclassification | 221 | (5 | ) | 216 | ||||||||
Amounts reclassified from other comprehensive income (loss) | — | — | — | |||||||||
Net current-period other comprehensive income (loss) | 221 | (5 | ) | 216 | ||||||||
Balance at January 2, 2021 | $ | 602 | $ | 38 | $ | 640 | ||||||
TFE | 2020 | 2019 | ||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
HDD | DCP | PV | Total | HDD | DCP | PV | Total | |||||||||||||||||||||||||
Systems, upgrades and spare parts | $ | 45,620 | $ | — | $ | 426 | $ | 46,046 | $ | 52,759 | $ | 0 | $ | 15,653 | $ | 68,412 | ||||||||||||||||
Field service | 6,080 | 0 | 2 | 6,082 | 5,210 | 2 | 54 | 5,266 | ||||||||||||||||||||||||
Total TFE net revenues | $ | 51,700 | $ | 0— | $ | 428 | $ | 52,128 | $ | 57,969 | $ | 02 | $ | 15,707 | $ | 73,678 | ||||||||||||||||
Photonics | 2020 | 2019 | ||||||
(in thousands) | ||||||||
Products: | ||||||||
Military products | $ | 20,409 | $ | 12,480 | ||||
Commercial products | 395 | 640 | ||||||
Repair and other services | 1,947 | 2,430 | ||||||
Total Photonics product net revenues | 22,751 | 15,550 | ||||||
Technology development: | ||||||||
FFP | 19,648 | 12,521 | ||||||
CPFF | 3,297 | 7,134 | ||||||
Time and materials | 0 | 2 | ||||||
Total technology development net revenues | 22,945 | 19,657 | ||||||
Total Photonics net revenues | $ | 45,696 | $ | 35,207 | ||||
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 | 0— | 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 | ||||||||||||
2020 | 2019 | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
TFE | Photonics | Total | TFE | Photonics | Total | |||||||||||||||||||
Products transferred at a point in time | $ | 52,128 | $ | 1,947 | $ | 54,075 | $ | 73,678 | $ | 2,430 | $ | 76,108 | ||||||||||||
Products and services transferred over time | — | 43,749 | 43,749 | — | 32,777 | 32,777 | ||||||||||||||||||
Total net revenues | $52,128 | $ | 45,696 | $ | 97,824 | $ | 73,678 | $ | 35,207 | $ | 108,885 | |||||||||||||
January 2, 2021 | December 28, 2019 | Change | ||||||||||
(In thousands) | ||||||||||||
TFE: | ||||||||||||
Contract assets: | ||||||||||||
Accounts receivable, unbilled | $ | 369 | $ | 760 | $ | (391 | ) | |||||
Contract liabilities: | ||||||||||||
Deferred revenue | $ | 482 | $ | 320 | $ | 162 | ||||||
Customer advances | 33 | 4,007 | (3,974 | ) | ||||||||
$ | 515 | $ | 4,327 | $ | (3,812 | ) | ||||||
Photonics: | ||||||||||||
Contract assets: | ||||||||||||
Accounts receivable, unbilled | $ | 5,439 | $ | 3,210 | $ | 2,229 | ||||||
Retainage | 126 | 99 | 27 | |||||||||
$ | 5,565 | $ | 3,309 | $ | 2,256 | |||||||
Contract liabilities: | ||||||||||||
Deferred revenue | $ | 779 | $ | — | $ | 779 | ||||||
2.$5.6 million of TFE backlog and $41.3 million of Photonics backlog. We expect to recognize approximately 61% of our remaining performance obligations as revenue in 2021, 26% in 2022, 12% in 2023 and 1% in 2024.
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
13, 2030.
In 2003, Intevac’s stockholders approved adoption of the ESPP, which serves as the successor to the Employee Stock Purchase Plan originally adopted in 1995. Upon adoption of the ESPP, all shares available for issuance under the prior plan were transferred to the ESPP.
2017 | 2016 | 2015 | ||||||||||
Equity-based compensation by type of award: | ||||||||||||
Stock options | $ | 1,176 | $ | 880 | $ | 963 | ||||||
RSUs | 2,598 | 2,190 | 1,711 | |||||||||
Employee stock purchase plan | 404 | 674 | 946 | |||||||||
|
|
|
|
|
| |||||||
Total equity-based compensation | $ | 4,178 | $ | 3,744 | $ | 3,620 | ||||||
|
|
|
|
|
|
2020 | 2019 | |||||||
Equity-based compensation by type of award: | ||||||||
Stock options | $504 | $819 | ||||||
RSUs | 1,936 | 1,657 | ||||||
Employee stock purchase plan | 949 | 749 | ||||||
Total equity-based compensation | $ | 3,389 | $ | 3,225 | ||||
2017 | 2016 | 2015 | ||||||||||
Stock Options: | ||||||||||||
Weighted-average fair value of grants per share | $ | 4.52 | $ | 1.76 | $ | 2.05 | ||||||
Expected volatility | 40.49 | % | 43.86 | % | 46.12 | % | ||||||
Risk free interest rate | 1.81 | % | 0.97 | % | 1.42 | % | ||||||
Expected term of options (in years) | 4.22 | 4.28 | 3.99 | |||||||||
Dividend yield | None | None | None |
2020 | 2019 | |||||||
Stock Options: | ||||||||
Weighted-average fair value of grants per share | $ | 1.82 | $ | 2.06 | ||||
Expected volatility | 46.06 | % | 43.23 | % | ||||
Risk free interest rate | 0.44% | 1.86% | ||||||
Expected term of options (in years) | 4.39 | 4.60 | ||||||
Dividend yield | NaN | NaN |
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
represents the weighted-average period that the stock options are expected to remain outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards and vesting schedules. The dividend yield assumption is based on Intevac’s history of not paying dividends and the assumption of not paying dividends in the future.
2019 | ||||
Weighted-average fair value of grants per share | $ | 1.75 | ||
Expected volatility | 43.43 | % | ||
Risk free interest rate | 1.96% | |||
Expected term (in years) | 4.60 | |||
Dividend yield | NaN |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | |||||||||||||
Options outstanding at December 31, 2016 | 2,740,364 | $ | 7.00 | 3.64 | $ | 5,837,900 | ||||||||||
Options granted | 417,325 | $ | 12.28 | |||||||||||||
Options cancelled and forfeited | (96,546 | ) | $ | 11.82 | ||||||||||||
Options exercised | (135,282 | ) | $ | 6.49 | ||||||||||||
|
| |||||||||||||||
Options outstanding at December 30, 2017 | 2,925,861 | $ | 7.62 | 3.00 | $ | 2,292,521 | ||||||||||
|
| |||||||||||||||
Options exercisable at December 30, 2017 | 2,125,416 | $ | 7.17 | 2.04 | $ | 1,686,673 |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | |||||||||||||
Options outstanding at December 28, 2019 | 2,096,610 | $ | 6.63 | 3.75 | $ | 2,048,964 | ||||||||||
Options granted | 6,000 | $ | 4.88 | |||||||||||||
Options cancelled and forfeited | (220,971 | ) | $ | 6.88 | ||||||||||||
Options exercised | (67,172 | ) | $ | 4.85 | ||||||||||||
Options outstanding at January 2, 2021 | 1,814,467 | $ | 6.66 | 3.08 | $ | 2,520,722 | ||||||||||
Options exercisable at January 2, 2021 | 1,372,871 | $ | 6.77 | 2.52 | $ | 1,798,938 |
Shares | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | |||||||||||||
Non-vested RSUs at December 31, 2016 | 949,455 | $ | 4.64 | 1.04 | $ | 8,117,840 | ||||||||||
Granted | 370,221 | $ | 11.37 | |||||||||||||
Vested | (504,841 | ) | $ | 4.47 | ||||||||||||
Cancelled | (45,384 | ) | $ | 7.06 | ||||||||||||
|
| |||||||||||||||
Non-vested RSUs at December 30, 2017 | 769,451 | $ | 7.84 | 0.97 | $ | 5,270,739 | ||||||||||
|
|
Shares | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | |||||||||||||
Non-vested RSUs at December 28, 2019 | 553,355 | $ | 6.15 | 1.30 | $ | 3,713,012 | ||||||||||
Granted | 668,413 | $ | 4.87 | |||||||||||||
Vested | (243,312 | ) | $ | 6.38 | ||||||||||||
Cancelled | (76,822 | ) | $ | 4.26 | ||||||||||||
Non-vested RSUs at January 2, 2021 | 901,634 | $ | 5.30 | 1.50 | $ | 6,500,781 | ||||||||||
Market condition-based RSUs vest upon
Committee will determine the achievement against the performance objectives. Any earned PRSU awards will vest 100% after the end of the applicable performance measurement period.
2020 | ||||
Weighted-average fair value of grants per share | $ | 3.16 | ||
Expected volatility | 46.7 | % | ||
Risk-free interest rate | 0.25 | % | ||
Dividend yield | NaN |
periods for subsequent changes in the expected outcome of market related conditions. The compensation expense is recognized over the derived service period. Intevac granted 125,000 of such awards to certain executive officers in fiscal 2016. These awards have a derived service period of 2.8 years. The weighted-average assumptions used in the model are outlined in the following table.
2016 | ||||
Weighted-average fair value of grants per share | $ | 2.46 | ||
Expected volatility | 47.65 | % | ||
Risk free interest rate | 1.35 | % | ||
Expected term (in years) | 4.79 | |||
Dividend yield | None |
The annual bonus for certain participants in the Company’s annual incentive plan for fiscal 2016 was settled with RSUs with one year vesting issued in 2017. The Company recorded equity-based compensation expense related to the annual incentive plan of $102,000 in fiscal 2017 and $490,000 in fiscal 2016. In February 2017, 33 participants were granted stock awards to receive an aggregate of 134,000 shares of common stock with a weighted-average grant date fair value of $9.63 per share.
The annual bonus for certain participants in the Company’s annual incentive plan for fiscal 2015 was settled with RSUs with one year vesting issued in 2016. The Company recorded equity-based compensation expense related to the annual incentive plan of $324,000 in fiscal 2015. In February 2016, 34 participants were granted stock awards to receive an aggregate of 266,000 shares of common stock with a weighted-average grant date fair value of $4.40 per share.
2017 | 2016 | 2015 | ||||||||||
Stock Purchase Rights: | ||||||||||||
Weighted-average fair value of grants per share | $ | 2.75 | $ | 1.55 | $ | 2.14 | ||||||
Expected volatility | 43.51 | % | 39.22 | % | 43.45 | % | ||||||
Risk free interest rate | 1.22 | % | 0.75 | % | 0.45 | % | ||||||
Expected term of purchase rights (in years) | 0.65 | 1.87 | 1.36 | |||||||||
Dividend yield | None | None | None |
2020 | 2019 | |||||||
Stock Purchase Rights: | ||||||||
Weighted-average fair value of grants per share | $ | 2.20 | $ | 1.73 | ||||
Expected volatility | 51.49 | % | 45.81 | % | ||||
Risk free interest rate | 0.14 | % | 2.28 | % | ||||
Expected term of purchase rights (in years) | 1.24 | 0.91 | ||||||
Dividend yield | NaN | NaN |
2017 | 2016 | 2015 | ||||||||||
(in thousands, except per share amounts) | ||||||||||||
Shares purchased | 406 | 384 | 374 | |||||||||
Weighted-average purchase price per share | $ | 3.82 | $ | 3.78 | $ | 3.90 | ||||||
Aggregate intrinsic value of purchase rights exercised | $ | 2,673 | $ | 514 | $ | 688 |
2020 | 2019 | |||||||
(in thousands, except per share amounts) | ||||||||
Shares purchased | 392 | 370 | ||||||
Weighted-average purchase price per share | $ | 4.01 | $ | 3.96 | ||||
Aggregate intrinsic value of purchase rights exercised | $ | 765 | $ | 513 |
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
3.
2017 | 2016 | 2015 | ||||||||||
(in thousands, except per share amounts) | ||||||||||||
Net income (loss) | $ | 4,118 | $ | (7,441 | ) | $ | (9,166 | ) | ||||
|
|
|
|
|
| |||||||
Weighted-average shares – basic | 21,555 | 20,761 | 22,218 | |||||||||
Effect of dilutive potential common shares | 1,365 | — | — | |||||||||
|
|
|
|
|
| |||||||
Weighted-average shares – diluted | 22,920 | 20,761 | 22,218 | |||||||||
|
|
|
|
|
| |||||||
Net income (loss) per share – basic | $ | 0.19 | $ | (0.36 | ) | $ | (0.41 | ) | ||||
|
|
|
|
|
| |||||||
Net income (loss) per share – diluted | $ | 0.18 | $ | (0.36 | ) | $ | (0.41 | ) | ||||
|
|
|
|
|
|
2020 | 2019 | |||||||
(in thousands, except per share amounts) | ||||||||
Net income | $ | 1,056 | $ | 1,148 | ||||
Weighted-average shares – basic | 23,669 | 23,063 | ||||||
Effect of dilutive potential common shares | 482 | 277 | ||||||
Weighted-average shares – diluted | 24,151 | 23,340 | ||||||
Net income per share –basic | $ | 0.04 | $ | 0.05 | ||||
Net income per share –diluted | $ | 0.04 | $ | 0.05 | ||||
2017 | 2016 | 2015 | ||||||||||
(in thousands, except per share amounts) | ||||||||||||
Stock options to purchase common stock | 867 | 2,740 | 2,434 | |||||||||
RSUs | 218 | 949 | 554 | |||||||||
Employee stock purchase plan | — | 181 | 168 |
4.
2020 | 2019 | |||||||
(in thousands) | ||||||||
Stock options to purchase common stock | 935 | 1,235 | ||||||
RSUs | 5 | 5 | ||||||
Employee stock purchase plan | 103 | 3 |
2017 | 2016 | |||||||
Seagate Technology | 70 | % | 55 | % | ||||
HGST | * | 10 | % |
2020 | 2019 | |||||||
Seagate Technology | 45 | % | 60 | % | ||||
U.S. Government | 26 | % | 25 | % | ||||
HGST | 14 | % | 0* |
* | Less than 10% |
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
2017 | 2016 | 2015 | ||||||||||
Seagate Technology | 40 | % | 34 | % | 22 | % | ||||||
U.S. Government | 15 | % | 22 | % | 26 | % | ||||||
Elbit Systems of America | * | 10 | % | * | ||||||||
HGST | * | * | 15 | % |
2020 | 2019 | |||||||
Seagate Technology | 42 | % | 49 | % | ||||
U.S. Government | 29 | % | 20 | % | ||||
Elbit Systems of America | 12 | % | 0* | |||||
Jolywood (Hongkong) Industrial Holdings Co., Limited | 0* | 14 | % |
* | Less than 10% |
2017, 2016,2020 and 2015.2019. Intevac expects that the ability to maintain or expand its current levels of revenues in the future will depend upon continuing market demand for its products; its success in enhancing its existing systems and developing and manufacturing competitive disk manufacturing equipment, such as the 200 Lean; its success in utilizing Intevac’s expertise in complex manufacturing equipment to develop and sell new manufacturing equipment products for PV, DCP and DCP manufacturingadvanced semiconductor packaging and Intevac’s success in developing military products based on its5.
28, 2019:
Receivables consisted of the following components:
December 30, | December 31, | |||||||
2017 | 2016 | |||||||
(in thousands) | ||||||||
Trade receivables and other | $ | 17,479 | $ | 15,167 | ||||
Unbilled costs and accrued profits | 2,995 | 2,280 | ||||||
Less: allowance for doubtful accounts | — | — | ||||||
|
|
|
| |||||
$ | 20,474 | $ | 17,447 | |||||
|
|
|
|
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
January 2, | December 28, | |||||||
2021 | 2019 | |||||||
(in thousands) | ||||||||
Trade receivables and other | $ | 22,712 | $ | 24,472 | ||||
Unbilled costs and accrued profits | 5,934 | 4,069 | ||||||
Income tax receivable | — | 78 | ||||||
Less: allowance for doubtful accounts | — | — | ||||||
$ | 28,646 | $ | 28,619 | |||||
December 30, | December 31, | |||||||
2017 | 2016 | |||||||
(in thousands) | ||||||||
Raw materials | $ | 19,881 | $ | 10,290 | ||||
Work-in-progress | 9,433 | 6,470 | ||||||
Finished goods | 4,478 | 8,116 | ||||||
|
|
|
| |||||
$ | 33,792 | $ | 24,876 | |||||
|
|
|
|
January 2, | December 28, | |||||||
2021 | 2019 | |||||||
(in thousands) | ||||||||
Raw materials | $ | 9,999 | $ | 15,286 | ||||
Work-in-progress | 4,832 | 4,748 | ||||||
Finished goods | 6,858 | 4,873 | ||||||
$ | 21,689 | $ | 24,907 | |||||
December 28, 2019 included one VERTEX SPECTRA system for DCP under evaluation at a customer’s factory and one MATRIX PVD system for advanced semiconductor packaging under evaluation at a customer’s factory.
December 30, | December 31, | |||||||
2017 | 2016 | |||||||
(in thousands) | ||||||||
Leasehold improvements | $ | 15,035 | $ | 14,653 | ||||
Machinery and equipment | 44,766 | 41,678 | ||||||
|
|
|
| |||||
59,801 | 56,331 | |||||||
Less accumulated depreciation and amortization | 47,323 | 45,094 | ||||||
|
|
|
| |||||
Total property, plant and equipment, net | $ | 12,478 | $ | 11,237 | ||||
|
|
|
|
Customer Advances
Customer advances generally represent nonrefundable deposits invoiced by the Company in connection with receiving customer purchase orders
January 2, 2021 | December 28, 2019 | |||||||
(in thousands) | ||||||||
Leasehold improvements | $ | 16,323 | $ | 15,037 | ||||
Machinery and equipment | 46,846 | 46,674 | ||||||
63,169 | 61,711 | |||||||
Less accumulated depreciation and amortization | 52,165 | 50,113 | ||||||
Total property, plant and equipment, net | $ | 11,004 | $ | 11,598 | ||||
Accounts Payable
Included in accounts payable is $163,000 and $349,000 of book overdraft at December 30, 2017 and December 31, 2016, respectively.
Other Accrued Liabilities
December 30, 2017 | December 31, 2016 | |||||||
(in thousands) | ||||||||
Deferred revenue | $ | 5,287 | $ | 14,416 | ||||
Other taxes payable | 860 | 660 | ||||||
Accrued product warranties | 757 | 829 | ||||||
Income taxes payable | 262 | 246 | ||||||
Acquisition-related contingent consideration | 103 | 329 | ||||||
Other | 419 | 531 | ||||||
|
|
|
| |||||
Total other accrued liabilities | $ | 7,688 | $ | 17,011 | ||||
|
|
|
|
Long-Term Assets
January 2, 2021 | December 28, 2019 | |||||||
(in thousands) | ||||||||
Deferred income taxes | $ | 5,335 | $ | 6,252 | ||||
Prepaid expenses | 151 | — | ||||||
Purchased intangible assets, net | — | 274 | ||||||
Income tax receivable | — | 78 | ||||||
$ | 5,486 | $ | 6,604 | |||||
January 2, 2021 | December 28, 2019 | |||||||
(in thousands) | ||||||||
Deferred revenue | $ | 1,261 | $ | 320 | ||||
Other taxes payable | 935 | 1,155 | ||||||
Accrued product warranties | 405 | 846 | ||||||
Income taxes payable | 263 | 403 | ||||||
Other | 734 | 869 | ||||||
Total other accrued liabilities | $ | 3,598 | $ | 3,593 | ||||
December 30, 2017 | December 31 2016 | |||||||
(in thousands) | ||||||||
Deferred rent | $ | 2,299 | $ | 2,392 | ||||
Acquisition-related contingent consideration | 259 | 430 | ||||||
Accrued product warranties | 237 | 178 | ||||||
Accrued income taxes | 84 | 82 | ||||||
|
|
|
| |||||
Total other long-term liabilities | $ | 2,879 | $ | 3,082 | ||||
|
|
|
|
6.
January 2, 2021 | December 28, 2019 | |||||||
(in thousands) | ||||||||
Employer payroll taxes | $ | 382 | $ | — | ||||
Accrued product warranties | 75 | 176 | ||||||
Accrued income taxes | — | 10 | ||||||
Total other long-term liabilities | $ | 457 | $ | 186 | ||||
Information regarding
December 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Customer relationships | $ | 3,119 | $ | 2,997 | $ | 122 | $ | 3,119 | $ | 2,869 | $ | 250 | ||||||||||||
Purchased technology | 5,148 | 3,767 | 1,381 | 5,148 | 3,140 | 2,008 | ||||||||||||||||||
Covenants not to compete | 40 | 40 | — | 40 | 40 | — | ||||||||||||||||||
Backlog | 80 | 80 | — | 80 | 80 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total amortizable intangible assets | $ | 8,387 | $ | 6,884 | $ | 1,503 | $ | 8,387 | $ | 6,129 | $ | 2,258 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Intangiblehad reached the end of their useful lives and did not have any remaining carrying value. The carrying value of acquisition-related intangible assets by segmentsubject to amortization, excluding fully amortized intangible assets, as of December 30, 2017 are as follows: Thin-film Equipment; $1.4 million and Photonics; $122,000.
28, 2019 is set forth in the following table:
December 28, 2019 | ||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
(in thousands) | ||||||||||||
Customer relationships | $ | 560 | $ | 524 | $ | 36 | ||||||
Purchased technology | 4,000 | 3,762 | 238 | |||||||||
Total amortizable intangible assets | $ | 4,560 | $ | 4,286 | $ | 274 | ||||||
Estimated future amortization expense related to finite-lived purchased intangible assets as of December 30, 2017, is as follows.
(in thousands) | ||||
2018 | $ | 615 | ||
2019 | 615 | |||
2020 | 273 | |||
|
| |||
$ | 1,503 | |||
|
|
7.$615,000 for fiscal 2019.
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
In connection with the acquisition of SIT, Intevac also agreed to pay to the selling shareholders in cash a revenue earnout on Intevac’s net revenuerevenues from commercial sales of certain products over a specified period up to an aggregate of $9.0 million. Intevac estimated the fair value of thisThe earnout period terminated on June 30, 2019. There is 0 remaining contingent consideration on December 30, 2017 based on probability-based forecasted revenues reflecting Intevac’s own assumptions concerning future revenue from such products.
The fair value measurement of contingent consideration is based on significant inputs not observable inobligation associated with the market and thus represents a Level 3 measurement. The following table represents the quantitative range of the significant unobservable inputs used in the calculation of fair value of the contingent consideration liability as of December 30, 2017. Significant increases or decreases in any of these inputs even in isolation would result in a significantly lower (higher) fair value measurement.
Quantitative Information about Level 3 Fair Value Measurements at December 30, 2017 | ||||||||
Fair Value | Valuation Technique | Unobservable Input | Range (Weighted Average) | |||||
(in thousands, except for percentages) | ||||||||
Revenue Earnout | $362 | Discounted cash flow | Weighted-average cost of capital | 12.1% | ||||
Probability weighting of achieving revenue forecasts | 10.0% - 80.0% (37.1%) |
Any change in fair value of the contingent consideration subsequent to the acquisition date is recognized in operating income within the consolidated statement of operations. earnout agreement at January 2, 2021.
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Beginning balance | $ | 759 | $ | 890 | $ | 1,134 | ||||||
Changes in fair value | (223 | ) | (100 | ) | (244 | ) | ||||||
Cash payments made | (174 | ) | (31 | ) | — | |||||||
|
|
|
|
|
| |||||||
Ending balance | $ | 362 | $ | 759 | $ | 890 | ||||||
|
|
|
|
|
|
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
8.2019:
2019 | ||||
(in thousands) | ||||
Beginning balance | $ | 223 | ||
Changes in fair value | 7 | |||
Cash payments made | (230 | ) | ||
Ending balance | $ | — | ||
December 30, 2017 | ||||||||||||||||
Amortized Cost | Unrealized Holding Gains | Unrealized Holding Losses | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash | $ | 13,195 | $ | — | $ | — | $ | 13,195 | ||||||||
Money market funds | 6,746 | — | — | 6,746 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total cash and cash equivalents | $ | 19,941 | $ | — | $ | — | $ | 19,941 | ||||||||
Short-term investments: | ||||||||||||||||
Certificates of deposit | $ | 2,500 | $ | 1 | $ | 1 | $ | 2,500 | ||||||||
Commercial paper | 3,291 | — | — | 3,291 | ||||||||||||
Corporate bonds and medium-term notes | 4,502 | — | 5 | 4,497 | ||||||||||||
Municipal bonds | 500 | — | 3 | 497 | ||||||||||||
U.S. treasury and agency securities | 4,917 | — | 4 | 4,913 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total short-term investments | $ | 15,710 | $ | 1 | $ | 13 | $ | 15,698 | ||||||||
Long-term investments: | ||||||||||||||||
Asset backed securities | $ | 500 | $ | — | $ | — | $ | 500 | ||||||||
Corporate bonds and medium-term notes | 4,384 | — | 21 | 4,363 | ||||||||||||
U.S. treasury and agency securities | 1,998 | — | 12 | 1,986 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total long-term investments | $ | 6,882 | $ | — | $ | 33 | $ | 6,849 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total cash, cash equivalents, and investments | $ | 42,533 | $ | 1 | $ | 46 | $ | 42,488 | ||||||||
|
|
|
|
|
|
|
|
January 2, 2021 | ||||||||||||||||
Amortized Cost | Unrealized Holding Gains | Unrealized Holding Losses | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash | $ | 24,729 | $ | — | $ | — | $ | 24,729 | ||||||||
Money market funds | 3,612 | — | — | 3,612 | ||||||||||||
Certificates of deposit | 1,000 | — | — | 1,000 | ||||||||||||
Total cash and cash equivalents | $ | 29,341 | $ | — | $ | — | $ | 29,341 | ||||||||
Short-term investments: | ||||||||||||||||
Certificates of deposit | $ | 6,450 | $ | 2 | $ | — | $ | 6,452 | ||||||||
Commercial paper | 500 | — | — | 500 | ||||||||||||
Corporate bonds and medium-term notes | 2,929 | 6 | — | 2,935 | ||||||||||||
Municipal bonds | 400 | — | — | 400 | ||||||||||||
U.S. treasury securities | 4,527 | 25 | — | 4,552 | ||||||||||||
Total short-term investments | $ | 14,806 | $ | 33 | $ | — | $ | 14,839 | ||||||||
Long-term investments: | ||||||||||||||||
Certificates of deposit | $ | 500 | $ | — | $ | — | $ | 500 | ||||||||
Corporate bonds and medium-term notes | 3,474 | 4 | — | 3,478 | ||||||||||||
U.S. treasury securities | 1,409 | 1 | — | 1,410 | ||||||||||||
Total long-term investments | $ | 5,383 | $ | 5 | $ | — | $ | 5,388 | ||||||||
Total cash, cash equivalents, and investments | $ | 49,530 | $ | 38 | $ | — | $ | 49,568 | ||||||||
December 31, 2016 | ||||||||||||||||
Amortized Cost | Unrealized Holding Gains | Unrealized Holding Losses | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash | $ | 18,726 | $ | — | $ | — | $ | 18,726 | ||||||||
Money market funds | 8,317 | — | — | 8,317 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total cash and cash equivalents | $ | 27,043 | $ | — | $ | — | $ | 27,043 | ||||||||
Short-term investments: | ||||||||||||||||
Commercial paper | $ | 1,992 | $ | — | $ | 1 | $ | 1,991 | ||||||||
Corporate bonds and medium-term notes | 8,586 | — | 6 | 8,580 | ||||||||||||
Municipal bonds | 600 | — | — | 600 | ||||||||||||
U.S. treasury and agency securities | 6,432 | — | 1 | 6,431 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total short-term investments | $ | 17,610 | $ | — | $ | 8 | $ | 17,602 | ||||||||
Long-term investments: | ||||||||||||||||
Corporate bonds and medium-term notes | $ | 2,510 | $ | — | $ | 11 | $ | 2,499 | ||||||||
Municipal bonds | 500 | — | 4 | 496 | ||||||||||||
U.S. treasury and agency securities | 597 | 1 | — | 598 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total long-term investments | $ | 3,607 | $ | 1 | $ | 15 | $ | 3,593 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total cash, cash equivalents, and investments | $ | 48,260 | $ | 1 | $ | 23 | $ | 48,238 | ||||||||
|
|
|
|
|
|
|
|
December 28, 2019 | ||||||||||||||||
Amortized Cost | Unrealized Holding Gains | Unrealized Holding Losses | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash | $ | 16,512 | $ | — | $ | — | $ | 16,512 | ||||||||
Money market funds | 3,255 | — | — | 3,255 | ||||||||||||
Total cash and cash equivalents | $ | 19,767 | $ | — | $ | — | $ | 19,767 | ||||||||
Short-term investments: | ||||||||||||||||
Certificates of deposit | $ | 3,000 | $ | 1 | $ | — | $ | 3,001 | ||||||||
Commercial paper | 1,891 | 2 | — | 1,893 | ||||||||||||
Corporate bonds and medium-term notes | 6,383 | 25 | — | 6,408 | ||||||||||||
U.S. treasury securities | 5,417 | 1 | — | 5,418 | ||||||||||||
Total short-term investments | $ | 16,691 | $ | 29 | $ | — | $ | 16,720 | ||||||||
Long-term investments: | ||||||||||||||||
Certificates of deposit | $ | 499 | $ | 1 | $ | — | $ | 500 | ||||||||
Corporate bonds and medium-term notes | 2,530 | 12 | — | 2,542 | ||||||||||||
U.S. treasury securities | 2,494 | 1 | — | 2,495 | ||||||||||||
Total long-term investments | $ | 5,523 | $ | 14 | $ | — | $ | 5,537 | ||||||||
Total cash, cash equivalents, and investments | $ | 41,981 | $ | 43 | $ | — | $ | 42,024 | ||||||||
Amortized Cost | Fair Value | |||||||
(in thousands) | ||||||||
Due in one year or less | $ | 22,456 | $ | 22,444 | ||||
Due after one through five years | 6,882 | 6,849 | ||||||
|
|
|
| |||||
$ | 29,338 | $ | 29,293 | |||||
|
|
|
|
The following table provides the fair market value of Intevac’s investments with unrealized losses that are not deemed to be other-than temporarily impaired as of December 30, 2017.
December 30, 2017 | ||||||||||||||||
In Loss Position for Less than 12 Months | In Loss Position for Greater than 12 Months | |||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||
(in thousands) | ||||||||||||||||
Certificates of deposit | $ | 1,249 | $ | 1 | $ | — | $ | — | ||||||||
Corporate bonds and medium-term notes | 7,446 | 23 | 1,099 | 3 | ||||||||||||
Municipal bonds | — | — | 497 | 3 | ||||||||||||
U.S. treasury and agency securities | 5,882 | 16 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 14,577 | $ | 40 | $ | 1,596 | $ | 6 | |||||||||
|
|
|
|
|
|
|
|
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Amortized Cost | Fair Value | |||||||
(in thousands) | ||||||||
Due in one year or less | $ | 19,418 | $ | 19,451 | ||||
Due after one through five years | 5,383 | 5,388 | ||||||
$ | 24,801 | $ | 24,839 | |||||
Fair Value Measurements at December 30, 2017 | ||||||||||||
Total | Level 1 | Level 2 | ||||||||||
(in thousands) | ||||||||||||
Recurring fair value measurements: | ||||||||||||
Available-for-sale securities | ||||||||||||
Money market funds | $ | 6,746 | $ | 6,746 | $ | — | ||||||
U.S. treasury and agency securities | 6,899 | 4,876 | 2,023 | |||||||||
Certificates of deposit | 2,500 | — | 2,500 | |||||||||
Commercial paper | 3,291 | — | 3,291 | |||||||||
Asset backed securities | 500 | — | 500 | |||||||||
Corporate bonds and medium-term notes | 8,860 | — | 8,860 | |||||||||
Municipal bonds | 497 | — | 497 | |||||||||
|
|
|
|
|
| |||||||
Total recurring fair value measurements | $ | 29,293 | $ | 11,622 | $ | 17,671 | ||||||
|
|
|
|
|
|
January 2, 2021.
Fair Value Measurements at January 2, 2021 | ||||||||||||
Total | Level 1 | Level 2 | ||||||||||
(in thousands) | ||||||||||||
Recurring fair value measurements: | ||||||||||||
Available-for-sale | ||||||||||||
Money market funds | $ | 3,612 | $ | 3,612 | $ | — | ||||||
U.S. treasury securities | 5,962 | 5,962 | — | |||||||||
Certificates of deposit | 7,952 | — | 7,952 | |||||||||
Commercial paper | 500 | — | 500 | |||||||||
Corporate bonds and medium-term notes | 6,413 | — | 6,413 | |||||||||
Municipal bonds | 400 | — | 400 | |||||||||
Total recurring fair value measurements | $ | 24,839 | $ | 9,574 | $ | 15,265 | ||||||
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Notional Amounts | Derivative Liabilities | |||||||||||||||||||||||
Derivative Instrument | December 30, 2017 | December 31, 2016 | December 30, 2017 | December 31, 2016 | ||||||||||||||||||||
Balance Sheet Line | Fair Value | Balance Sheet Line | Fair Value | |||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Undesignated Hedges: | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $1,276 | $1,146 | (a) | $5 | (a) | $8 | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total Hedges | $1,276 | $1,146 | $5 | $8 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
Notional Amounts | Derivative Liabilities | |||||||||||||||||||||||
Derivative Instrument | January 2, 2021 | December 28, 2019 | January 2, 2021 | December 28, 2019 | ||||||||||||||||||||
Balance Sheet Line | Fair Value | Balance Sheet Line | Fair Value | |||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Undesignated Hedges: | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 983 | 1,035 | * | $ | 3 | * | $ | 4 | |||||||||||||||
Total Hedges | $ | 983 | 1,035 | $ | 3 | $ | 4 | |||||||||||||||||
Other accrued liabilities |
9.
On November 12, 2015, Intevac entered into a Share Repurchase Agreement with Northern Right Capital Management, L.P. and certain of its affiliated funds, including on behalf of a managed account (collectively, “NRC”), whereby Intevac repurchased 1,483,171 shares of its common stock from NRC in a privately negotiated transaction at a purchase price of $4.98 per share, for an aggregate purchase price of $7.4 million. The repurchase was made in conjunction with Intevac’s stock repurchase program.
2017 | 2016 | 2015 | ||||||||||
(in thousands, except per share amounts) | ||||||||||||
Shares of common stock repurchased | — | — | 3,419 | |||||||||
Cost of stock repurchased | $ | — | $ | — | $ | 18,503 | ||||||
Average price paid per share | $ | — | $ | — | $ | 5.39 |
2019:
2020 | 2019 | |||||||
(in thousands, except per share amounts) | ||||||||
Shares of common stock repurchased | 98 | 24 | ||||||
Cost of stock repurchased | $ | 393 | $ | 111 | ||||
Average price paid per share | $ | 3.97 | $ | 4.67 |
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
10.the accumulated deficit.
2017 | 2016 | 2015 | ||||||||||
Federal: | ||||||||||||
Current | $ | — | $ | — | $ | — | ||||||
Deferred | — | — | — | |||||||||
|
|
|
|
|
| |||||||
— | — | — | ||||||||||
State: | ||||||||||||
Current | 13 | 5 | 6 | |||||||||
Deferred | — | — | — | |||||||||
|
|
|
|
|
| |||||||
13 | 5 | 6 | ||||||||||
Foreign: | ||||||||||||
Current | 1,091 | 237 | 561 | |||||||||
Deferred | (1 | ) | 9 | (12 | ) | |||||||
|
|
|
|
|
| |||||||
1,090 | 246 | 549 | ||||||||||
Total | $ | 1,103 | $ | 251 | $ | 555 | ||||||
|
|
|
|
|
|
2020 | 2019 | |||||||
Federal: | ||||||||
Current | $ | (915 | ) | $ | — | |||
Deferred | 0 | 0 | ||||||
(915 | ) | — | ||||||
State: | ||||||||
Current | 4 | 4 | ||||||
Deferred | 0 | 0 | ||||||
4 | 4 | |||||||
Foreign: | ||||||||
Current | 1,705 | 1,694 | ||||||
Deferred | 917 | 1,661 | ||||||
2,622 | 3,355 | |||||||
Total | $ | 1,711 | $ | 3,359 | ||||
2017 | 2016 | 2015 | ||||||||||
U.S | $ | (794 | ) | $ | (8,703 | ) | $ | (9,538 | ) | |||
Foreign | 6,015 | 1,513 | 927 | |||||||||
|
|
|
|
|
| |||||||
$ | 5,221 | $ | (7,190 | ) | $ | (8,611 | ) | |||||
|
|
|
|
|
| |||||||
Effective tax rate | 21.1 | % | (3.5 | )% | (6.4 | )% | ||||||
|
|
|
|
|
|
2020 | 2019 | |||||||
U.S | $ | (3,293 | ) | $ | (4,875 | ) | ||
Foreign | 6,060 | 9,382 | ||||||
$ | 2,767 | $ | 4,507 | |||||
Effective tax rate | 61.8 | % | 74.5 | % | ||||
December 30, 2017 | December 31, 2016 | |||||||
Deferred tax assets: | ||||||||
Vacation, warranty and other accruals | $ | 601 | $ | 926 | ||||
Depreciation and amortization | 91 | 600 | ||||||
Intangible amortization | 1,071 | 2,060 | ||||||
Inventory valuation | 1,341 | 3,091 | ||||||
Deferred income | 22 | 29 | ||||||
Equity-based compensation | 2,636 | 3,821 | ||||||
Net operating loss, research and other tax credit carryforwards | 52,882 | 54,844 | ||||||
Other | 543 | 918 | ||||||
|
|
|
| |||||
59,187 | 66,289 | |||||||
Valuation allowance for deferred tax assets | (58,455 | ) | (65,189 | ) | ||||
|
|
|
| |||||
Total deferred tax assets | 732 | 1,100 | ||||||
|
|
|
| |||||
Deferred tax liabilities: | ||||||||
Purchased technology | (307 | ) | (720 | ) | ||||
Unbilled revenue | (421 | ) | (377 | ) | ||||
|
|
|
| |||||
Total deferred tax liabilities | (728 | ) | (1,097 | ) | ||||
|
|
|
| |||||
Net deferred tax assets | $ | 4 | $ | 3 | ||||
|
|
|
| |||||
As reported on the balance sheet: | ||||||||
Non-current deferred tax assets | $ | 4 | $ | 3 | ||||
|
|
|
|
January 2, 2021 | December 28, 2019 | |||||||
Deferred tax assets: | ||||||||
Vacation, warranty and other accruals | $ | 651 | $ | 635 | ||||
Depreciation and amortization | — | 89 | ||||||
Intangible amortization | 551 | 804 | ||||||
Purchased technology | 14 | — | ||||||
Inventory valuation | 1,101 | 1,288 | ||||||
Equity-based compensation | 1,494 | 1,593 | ||||||
Net operating loss, research and other tax credit carryforwards | 55,322 | 54,818 | ||||||
Other | 30 | 43 | ||||||
59,163 | 59,270 | |||||||
Valuation allowance for deferred tax assets | (52,088 | ) | (52,099 | ) | ||||
Total deferred tax assets | 7,075 | 7,171 | ||||||
Deferred tax liabilities: | ||||||||
Depreciation and amortization | (341 | ) | — | |||||
Purchased technology | — | (45 | ) | |||||
Unbilled revenue | (1,399 | ) | (874 | ) | ||||
Total deferred tax liabilities | (1,740 | ) | (919 | ) | ||||
Net deferred tax assets | $ | 5,335 | $ | 6,252 | ||||
As reported on the balance sheet: | ||||||||
Non-current deferred tax assets | $ | 5,335 | $ | 6,252 | ||||
assets in Singapore at January 2, 2021.
The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth.
Deferred tax assets$149,000 is reported as a reduction of selling, general and liabilities: Were-measured certain deferred tax assets and liabilities basedadministrative expenses on the rates at which they are expected to reverse in the future, which is generally 21%. However, we are still analyzing certain aspectsconsolidated statement of the Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional amount recorded related to there-measurement of our deferred tax balance was $9.2 million.
Foreign tax effects: Theone-time transition tax is based on our total post-1986 earnings and profits (“E&P”) for which we have previously deferred from U.S. income taxes. We recorded a provisional amount for ourone-time transition tax liability for seven of our foreign subsidiaries, resulting in no increase in income tax expense due to current losses. We have not yet completed our calculation of the total post-1986 foreign E&P for these foreign subsidiaries. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when we finalize the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalize the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax and any additional outside basis difference inherent in these entities as these amounts continue to be indefinitely reinvested in foreign operations. The Company did not have the necessary information prepared or analyzed to develop a reasonable estimate of the tax liability, if any, for its remaining outside basis difference including any deferred tax accounting that may be required due to other provisions in the Act beyond theone-time transition tax, including how that accounting may be affected by the Company’s ongoing accounting position to indefinitely reinvest unremitted foreign earnings.
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
income.
2017 | 2016 | 2015 | ||||||||||
Income tax (benefit) at the federal statutory rate | $ | 1,827 | $ | (2,517 | ) | $ | (3,014 | ) | ||||
State income taxes, net of federal benefit | 13 | 5 | 6 | �� | ||||||||
Change in valuation allowance: | ||||||||||||
U.S | (6,873 | ) | 3,333 | 1,625 | ||||||||
Foreign | (603 | ) | (136 | ) | 631 | |||||||
Effect of foreign operations taxed at various rates | (1,036 | ) | (232 | ) | (140 | ) | ||||||
Research tax credits | (2,267 | ) | (1,058 | ) | (931 | ) | ||||||
Change in federal tax rate | 9,201 | — | — | |||||||||
Effect of tax rate changes, permanent differences and adjustments of prior deferrals | 639 | 1,137 | 2,114 | |||||||||
Unrecognized tax benefits | 202 | (281 | ) | 264 | ||||||||
|
|
|
|
|
| |||||||
Total | $ | 1,103 | $ | 251 | $ | 555 | ||||||
|
|
|
|
|
|
2020 | 2019 | |||||||
Income tax at the federal statutory rate | $ | 581 | $ | 947 | ||||
State income taxes, net of federal benefit | 4 | 4 | ||||||
Change in valuation allowance: | ||||||||
U.S | (416 | ) | (689 | ) | ||||
Foreign | 0— | — | ||||||
Effect of foreign operations taxed at various rates | (235 | ) | (397 | ) | ||||
Research tax credits | (1,306 | ) | (1,710 | ) | ||||
Effect of tax rate changes, permanent differences and adjustments of prior deferrals | 2,504 | 3,685 | ||||||
Unrecognized tax benefits | 579 | 1,519 | ||||||
Total | $ | 1,711 | $ | 3,359 | ||||
United States.
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Beginning balance | $ | 7,544 | $ | 7,173 | $ | 6,578 | ||||||
Additions based on tax positions related to the current year | 898 | 652 | 574 | |||||||||
Additions for tax positions of prior years | — | — | 21 | |||||||||
Settlements | — | (281 | ) | — | ||||||||
Change in federal tax rate | (2,764 | ) | — | — | ||||||||
Lapse of statute of limitations | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Ending balance | $ | 5,678 | $ | 7,544 | $ | 7,173 | ||||||
|
|
|
|
|
|
2019:
2020 | 2019 | |||||||
Beginning balance | $ | 7,683 | $ | 6,164 | ||||
Additions based on tax positions related to the current year | 589 | 1,519 | ||||||
Settlements | 0— | — | ||||||
Lapse of statute of limitations | (945 | ) | — | |||||
Ending balance | $ | 7,327 | $ | 7,683 | ||||
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
and require significant judgment to apply. The material jurisdictions whereIntevac has certain tax attributes that are subject to adjustment back to 1999. Intevac is subject to potential income tax return examination by tax authorities for tax years after 2009 includein the following material jurisdictions: U.S. (Federal and California) and Singapore.
Intevac has certain tax attributes that are subject to adjustment back to 1999.
11.
2019.
12.
January 2, 2021 | December 28, 2019 | |||||||
(in thousands) | ||||||||
Assets: | ||||||||
Operating lease right-of-use | $ | 8,165 | $ | 10,279 | ||||
Liabilities: | ||||||||
Current operating lease liabilities | $ | 2,853 | $ | 2,524 | ||||
Noncurrent operating lease liabilities | 6,803 | 9,532 | ||||||
$ | 9,656 | $ | 12,056 | |||||
follows:
2020 | 2019 | |||||||
(in thousands) | ||||||||
Operating lease cost | $ | 2,942 | $ | 3,112 | ||||
Short-term lease cost | 93 | 78 | ||||||
Total lease cost | $ | 3,035 | $ | 3,190 | ||||
(in thousands) | ||||
2018 | $ | 3,154 | ||
2019 | 3,215 | |||
2020 | 2,858 | |||
2021 | 2,874 | |||
2022 | 2,960 | |||
Thereafter | 3,816 | |||
|
| |||
$ | 18,877 | |||
|
|
follows:
(In thousands) | ||||
2021 | $ | 3,388 | ||
2022 | 3,474 | |||
2023 | 3,289 | |||
2024 | 541 | |||
Total lease payments | 10,692 | |||
Less: Interest | (1,036 | ) | ||
Present value of lease liabilities | $ | 9,656 | ||
January 2, 2021 | December 28, 2019 | |||||||
Weighted-average remaining lease term (in years) | 3.09 | 4.08 | ||||||
Weighted-average discount rate | 6.39 | % | 6.37 | % |
2020 | 2019 | |||||||
(in thousands) | ||||||||
Operating cash outflows from operating leases | $ | 3,332 | $ | 3,484 | ||||
Right-of-use | $ | 128 | $ | 934 | ||||
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
income.
2017 | 2016 | |||||||
(in thousands) | ||||||||
Beginning balance | $ | 1,007 | $ | 982 | ||||
Expenditures incurred under warranties | (773 | ) | (488 | ) | ||||
Accruals for product warranties | 854 | 943 | ||||||
Adjustments to previously existing warranty accruals | (94 | ) | (430 | ) | ||||
|
|
|
| |||||
Ending balance | $ | 994 | $ | 1,007 | ||||
|
|
|
|
2019:
2020 | 2019 | |||||||
(in thousands) | ||||||||
Beginning balance | $ | 1,022 | $ | 997 | ||||
Expenditures incurred under warranties | (512 | ) | (625 | ) | ||||
Accruals for product warranties | 280 | 955 | ||||||
Adjustments to previously existing warranty accruals | (310 | ) | (305 | ) | ||||
Ending balance | $ | 480 | $ | 1,022 | ||||
13.
Intevac’s two
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
about allocating resources and assessing performance for the entire Company. Segment information is presented based upon Intevac’s management organization structure as of December 30, 2017January 2, 2021 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to the reportable segments disclosed.
vision.
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Net evenues | ||||||||||||
Thin-film Equipment | $ | 79,004 | $ | 45,253 | $ | 39,622 | ||||||
Photonics | 33,843 | 34,871 | 35,538 | |||||||||
|
|
|
|
|
| |||||||
Total segment net revenues | $ | 112,847 | $ | 80,124 | $ | 75,160 | ||||||
|
|
|
|
|
|
Net Revenues | 2020 | 2019 | ||||||
(in thousands) | ||||||||
TFE | $ | 52,128 | $ | 73,678 | ||||
Photonics | 45,696 | 35,207 | ||||||
Total segment net revenues | $ | 97,824 | $ | 108,885 | ||||
Operating Profit (Loss) | 2020 | 2019 | ||||||
(in thousands) | ||||||||
TFE | $ | (1,978 | ) | $ | 1,747 | |||
Photonics | 10,064 | 6,434 | ||||||
Total segment operating profit | 8,086 | 8,181 | ||||||
Unallocated costs | (5,531 | ) | (4,256 | ) | ||||
Operating income | 2,555 | 3,925 | ||||||
Interest income | 284 | 574 | ||||||
Other income (expense), net | (72 | ) | 8 | |||||
Income before provision for income taxes | $ | 2,767 | $ | 4,507 | ||||
Depreciation and Amortization | 2020 | 2019 | ||||||
(in thousands) | ||||||||
TFE | $ | 1,817 | $ | 1,909 | ||||
Photonics | 1,159 | 1,310 | ||||||
Total segment depreciation and amortization | 2,976 | 3,219 | ||||||
Unallocated costs | 504 | 372 | ||||||
Total consolidated depreciation and amortization | $ | 3,480 | $ | 3,591 | ||||
Capital Additions | 2020 | 2019 | ||||||
(in thousands) | ||||||||
TFE | $ | 1,336 | $ | 2,611 | ||||
Photonics | 636 | 832 | ||||||
Total segment capital additions | 1,972 | 3,443 | ||||||
Unallocated | 640 | 664 | ||||||
Total consolidated capital additions | $ | 2,612 | $ | 4,107 | ||||
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Operating Profit (Loss) | ||||||||||||
Thin-film Equipment | $ | 6,116 | $ | (8,309 | ) | $ | (9,345 | ) | ||||
Photonics | 3,900 | 5,813 | 5,206 | |||||||||
|
|
|
|
|
| |||||||
Total segment operating profit (loss) | 10,016 | (2,496 | ) | (4,139 | ) | |||||||
|
|
|
|
|
| |||||||
Unallocated costs | (5,168 | ) | (5,067 | ) | (4,599 | ) | ||||||
|
|
|
|
|
| |||||||
Operating income (loss) | 4,848 | (7,563 | ) | (8,738 | ) | |||||||
|
|
|
|
|
| |||||||
Interest income | 291 | 195 | 179 | |||||||||
Other income (expense), net | 82 | 178 | (52 | ) | ||||||||
|
|
|
|
|
| |||||||
Income (loss) before income taxes | $ | 5,221 | $ | (7,190 | ) | $ | (8,611 | ) | ||||
|
|
|
|
|
|
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Depreciation and Amortization | ||||||||||||
Thin-film Equipment | $ | 1,773 | $ | 2,710 | $ | 2,443 | ||||||
Photonics | 1,750 | 1,736 | 1,737 | |||||||||
|
|
|
|
|
| |||||||
Total segment depreciation and amortization | 3,523 | 4,446 | 4,180 | |||||||||
|
|
|
|
|
| |||||||
Unallocated costs | 348 | 391 | 417 | |||||||||
|
|
|
|
|
| |||||||
Total consolidated depreciation and amortization | $ | 3,871 | $ | 4,837 | $ | 4,597 | ||||||
|
|
|
|
|
|
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
Capital Additions | ||||||||||||
Thin-film Equipment | $ | 2,137 | $ | 700 | $ | 1,433 | ||||||
Photonics | 1,643 | 2,463 | 749 | |||||||||
|
|
|
|
|
| |||||||
Total segment capital additions | 3,780 | 3,163 | 2,182 | |||||||||
|
|
|
|
|
| |||||||
Unallocated | 576 | 210 | 935 | |||||||||
|
|
|
|
|
| |||||||
Total consolidated capital additions | $ | 4,356 | $ | 3,373 | $ | 3,117 | ||||||
|
|
|
|
|
|
2017 | 2016 | |||||||
(in thousands) | ||||||||
Segment Assets | ||||||||
Thin-film Equipment | $ | 52,156 | $ | 39,503 | ||||
Photonics | 16,364 | 16,071 | ||||||
|
|
|
| |||||
Total segment assets | 68,520 | 55,574 | ||||||
|
|
|
| |||||
Cash and investments | 42,488 | 48,238 | ||||||
Restricted cash | 1,000 | 1,602 | ||||||
Deferred income taxes | 4 | 3 | ||||||
Other current assets | 1,001 | 997 | ||||||
Common property, plant and equipment | 1,267 | 1,039 | ||||||
Other assets | 743 | 871 | ||||||
|
|
|
| |||||
Consolidated total assets | $ | 115,023 | $ | 108,324 | ||||
|
|
|
|
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Geographic revenue information for fiscal 2017, 2016 and 2015 is based on the location of the customer. Revenue from unaffiliated customers by geographic region/country was as follows:
2017 | 2016 | 2015 | ||||||||||
(in thousands) | ||||||||||||
United States | $ | 37,311 | $ | 42,048 | $ | 49,034 | ||||||
Asia (*) | 73,525 | 37,143 | 23,855 | |||||||||
Europe | 884 | 933 | 2,271 | |||||||||
Rest of World | 1,127 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total net revenues | $ | 112,847 | $ | 80,124 | $ | 75,160 | ||||||
|
|
|
|
|
|
Segment Assets | 2020 | 2019 | ||||||
(in thousands) | ||||||||
TFE | $ | 44,335 | $ | 51,153 | ||||
Photonics | 22,923 | 22,071 | ||||||
Total segment assets | 67,258 | 73,224 | ||||||
Cash and investments | 49,568 | 42,024 | ||||||
Restricted cash | 787 | 787 | ||||||
Deferred income taxes | 5,335 | 6,252 | ||||||
Other current assets | 1,093 | 752 | ||||||
Common property, plant and equipment | 1,443 | 1,307 | ||||||
Common operating lease right-of-use | 1,603 | 1,898 | ||||||
Other assets | 151 | 78 | ||||||
Consolidated total assets | $ | 127,238 | $ | 126,322 | ||||
December 30, | December 31, | |||||||
2017 | 2016 | |||||||
(in thousands) | ||||||||
United States | $ | 12,363 | $ | 11,148 | ||||
Asia | 115 | 89 | ||||||
|
|
|
| |||||
Net property, plant & equipment | $ | 12,478 | $ | 11,237 | ||||
|
|
|
|
14.
January 2, 2021 | December 28, 2019 | |||||||
(in thousands) | ||||||||
United States | $ | 10,678 | $ | 11,420 | ||||
Asia | 326 | 178 | ||||||
Net property, plant & equipment | $ | 11,004 | $ | 11,598 | ||||
2020 | ||||
(in thousands) | ||||
Balance at the beginning of the year | $ | — | ||
Provision for restructuring charges | ||||
Cash payments made | ( | ) | ||
Balance at the end of the year | $ | — | ||
15. Related Party Transaction
On November 12, 2015, Intevac entered into a Share Repurchase Agreement with Northern Right Capital Management, L.P. and certain of its affiliated funds, including on behalf of a managed account
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(collectively, “NRC”), whereby Intevac repurchased 1,483,171 shares of its common stock from NRC in a privately negotiated transaction at a purchase price of $4.98 per share, for an aggregate purchase price of $7.4 million. The repurchase was made in conjunction with Intevac’s stock repurchase program. Matthew Drapkin, a former member of Intevac’s Board of Directors, is a principal of NRC and a member of BC Advisors, LLC, which is the general partner of NRC.
16. Selected Quarterly Consolidated Financial Data (Unaudited)
Three Months Ended | ||||||||||||||||
Apr. 1, 2017 | July 1, 2017 | Sept. 30, 2017 | Dec. 30, 2017 | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Net sales | $ | 30,388 | $ | 30,963 | $ | 26,726 | $ | 24,769 | ||||||||
Gross profit | 13,047 | 11,470 | 11,298 | 9,847 | ||||||||||||
Net income (loss) | 1,829 | 1,100 | 1,230 | (41 | ) | |||||||||||
Basic net income (loss) per share | $ | 0.09 | $ | 0.05 | $ | 0.06 | $ | 0.00 | ||||||||
Diluted net income (loss) per share | $ | 0.08 | $ | 0.05 | $ | 0.05 | $ | 0.00 |
Three Months Ended | ||||||||||||||||
Apr. 2, 2016 | July 2, 2016 | Oct. 1, 2016 | Dec. 31, 2016 | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Net sales | $ | 13,664 | $ | 14,918 | $ | 22,559 | $ | 28,982 | ||||||||
Gross profit | 3,856 | 6,127 | 8,515 | 11,912 | ||||||||||||
Net income (loss) | (6,305 | ) | (3,490 | ) | (481 | ) | 2,835 | |||||||||
Basic net income (loss) per share | $ | (0.31 | ) | $ | (0.17 | ) | $ | (0.02 | ) | $ | 0.14 | |||||
Diluted net income (loss) per share | $ | (0.31 | ) | $ | (0.17 | ) | $ | (0.02 | ) | $ | 0.13 |
Item 9. | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
of
/s/ BPM LLP |
San Jose, California |
February |
Item 9B. | Other Information |
Item 10. | Directors, Executive Officers and Corporate Governance |
Item 11. | Executive Compensation |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Securities authorized for issuance under equity compensation plans.
(a) | (b) | (c) | ||||||||||
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans | |||||||||
(1) | ||||||||||||
Equity compensation plans approved by security holders (2) | 3,695,312 | $ | 7.62 | 1,501,645 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | 3,695,312 | $ | 7.62 | 1,501,645 | ||||||||
|
|
|
|
|
|
The other information required by this item is included under the caption “Ownership of Securities” in the Company’s Proxy Statement for the 20182021 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 13. | Certain Relationships and Related Transactions, and Director Independence |
Item 14. | Principal Accountant Fees and Services |
Item 15. | Exhibits and Financial Statements |
Exhibit Number | Description | |
| Change in Control Agreement with Jay Cho dated December 10, 2013 |
|
| |
| Offer Letter with James Moniz | |
| Change in Control Agreement with James Moniz dated October 29, 2014 | |
| Change in Control Agreement with Timothy Justyn dated March 2, 2018 | |
10.24+ (17) | Form of Change in Control Agreement | |
21.1 | Subsidiaries of the Registrant | |
23.1 | Consent of Independent Registered Public Accounting Firm | |
24.1 | Power of Attorney (see page | |
31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Vice-President, Finance and Administration, Chief Financial Officer | |
32.1 | Certifications Pursuant to U.S.C. 1350, adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
The following financial statements from the Registrant’s Annual Report on Form 10-K for the year ended January 2, 2021, formatted in Inline XBRL | ||
Cover Page Interactive Data File (formatted as inline XBRL | ||
(1) | Previously filed as an exhibit to the Company’s Report on Form 8-K filed July 23, 2007 |
(2) | Previously filed as an exhibit to the Company’s Report on Form 8-K filed March 15, 2012 |
(3) | Previously filed as an exhibit to the Registration Statement on Form S-1 (No.33-97806) |
(4) | Previously filed as an exhibit to the Company’s Form 10-K filed February 12, 2020 |
(5) | Previously filed as an exhibit to the Company’s Form 10-Q filed May 3, 2011 |
Previously filed as an exhibit to the Company’s Definitive Proxy Statement filed April |
Previously filed as an exhibit to the Company’s Definitive Proxy Statement filed April 11, 2018 |
(8) | Previously filed as an exhibit to the Company’s Form 10-Q filed May 1, 2012 |
Previously filed as an exhibit to the Company’s Form 10-Q filed |
Previously filed as an exhibit to the Company’s Form 10-Q filed April 29, 2014 |
(11) | Previously filed as an exhibit to the Registration Statement on Form S-8 filed May 14, 2020 (No.33-238262) |
(12) | Previously filed as an exhibit to the Company’s Form 10-K filed March 14, 2008 |
Previously filed as an exhibit to the Company’s Report on Form 8-K filed July 9, 2013 |
Previously filed as an exhibit to the Company’s Form 10-Q filed October 28, 2014 |
Previously filed as an exhibit to the Company’s Report on Form 8-K filed October 31, 2014 |
Previously filed as an exhibit to the Company’s Form 10-Q filed May 1, 2018 |
(17) | Previously filed as an exhibit to the Company’s Report on Form 8-K filed November 15, 2016 |
(P) | Paper exhibit. |
+ | Management compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K |
INTEVAC, INC. |
|
James Moniz |
Executive Vice President, Finance and Administration |
Chief Financial Officer, Secretary and Treasurer |
Signature Title Date /s/ WENDELL T. BLONIGAN /s/ JAMES MONIZ /s/ DAVID S. DURY /s/ President, February 14, 201817, 2021(Wendell T. Blonigan) Executive Vice President, Finance and February 14, 201817, 2021(James Moniz) Secretary Chairman of Board February 14, 201817, 2021(David S. Dury) THOMAS M. ROHRS Director February 14, 201817, 2021(Kevin D. Barber) /s/ DOROTHY D. HAYES Director February 17, 2021 (Dorothy D. Hayes) /s/ STEPHEN A. JAMISON Director February 17, 2021 (Stephen A. Jamison) /s/ MICHELE F. KLEIN Director February 17, 2021 (Michele F. Klein) /s/ MARK P. POPOVICH Director February 17, 2021 (Mark P. Popovich) /s/ THOMAS M. ROHRS Director February 17, 2021 (Thomas M. Rohrs) /s/ JOHN F. SCHAEFERDirectorFebruary 14, 2018(John F. Schaefer)
82