☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
January 1, 2022
☐ | 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 | ☐ |
☒No
Annual Report.
Item 1. | Business |
Thin-film Equipment:this Annual Report.
Photonics:Intevac is a leading developer
HGST.
technologies.
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.
Fan-Out Packaging Market
redistributed
Thin-Film Equipment
Product Table
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. | |
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. |
| Applications and Features | |
ASP 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. |
Photonics Segment
Photonics Market
Intevac Photonics develops, manufactures and sells compact, cost-effective, high-sensitivity digital-optical products for the capture and display of extremelow-light images. These products incorporate high resolution digital night-image sensors operating in the visible and near infrared (“NIR”) light spectrums and are based on Intevac’s proprietary EBAPS® (Electron Bombarded Active Pixel Sensor) technology.
Photonics products primarily address the high performance military night-vision market. Our products provide digital imagery in extremelylow-light level conditions. Intevac provides these products for military aircraft including the U.S. ArmyAH-64 Apache Attack Helicopter and theF-35 Joint Strike Fighter. Additionally, the Company is developing applications to address ground vehicles, and soldier head-mounted and weapon-mounted applications.
Military Products
Intevac’s EBAPS sensors are incorporated into custom-designed cameras, modules and goggle products for high performance military applications. Intevac’s EBAPS sensors can be integrated at various levels with optics, electronics, software, and displays based upon customer specifications and requirements. Customization typically occurs in the areas of electronics,near-eye micro-displays, and mechanical packaging. Intevac’s products by application are:
Helicopter Pilotage
Intevac provides a night-vision camera with a 2.0 mega-pixel resolution EBAPS module which is gimbal turret-mounted on the nose of the Apache helicopter. Thelow-light level digital video is then viewable by the helicopter pilot on a Head-Mounted Display (“HMD”) enabling the pilot to have enhanced night vision and allowing the aircrew to view multiple aircraft-mounted sensor information. In addition, the U.S. Navy has funded a High Resolution Digital Night Vision Goggle (“HRDG”) development program incorporating a 4.0 mega-pixel resolution EBAPS module for aviation applications. The initial HRDG prototypes were delivered to the U.S. Navy in 2016. These goggles are under evaluation for an enhanced night vision program for Navy helicopters.
Fixed Wing Aircraft Pilotage
Intevac provides night-vision cameras with a 2.0 mega-pixel resolution EBAPS module which is integrated with theF-35 fighter pilot’s helmet and enables the pilot to have enhanced night vision incorporating navigational and tactical information. Additionally, a similar integrated night vision camera utilizing a2.0 mega-pixel resolution EBAPS is being designed into the Striker II helmet for the Typhoon Fighter aircraft.
Long-Range Target Identification
Intevac provides the Laser Illuminated Viewing and Ranging (“LIVAR®”) shortwave-infrared camera for long range military night time surveillance systems that can identify targets at distances of up to twenty
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.
Augmented Reality (“AR”) and Wireless Weapon Sights
Intevac provides HMDs for applications in AR and wireless weapon sights. The HMD is anear-eye, high definition, wide field of view micro-display system for portable viewing of video in military and commercial markets. Depending on the application, Intevac provides configuration choices that include monocular or binocular, mono or stereo video, and wired or wireless interfaces. Integral Inertial Measurement Units (“IMU”) are also offered.
Rifle Sight
Intevac provided EBAPS modules that were integrated by our customers into a weapon sight attached to weaponry, including rifles for night time aiming and targeting.
Commercial Products
Low-Light Cameras
Photonics’ MicroVista® product line of commercial compact and lightweightlow-light Complementary Metal–Oxide–Semiconductor (“CMOS”) cameras provides high sensitivity in the ultraviolet, visible or NIR regions of the spectrum for use in industrial inspection,bio-medical and scientific applications. These cameras are primarily sold through distribution channels and to original equipment manufacturers.
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 | % |
Intevac expects2020.
2021 | 2020 | |||||||
Seagate Technology | 60 | % | 79 | % | ||||
Western Digital Corporation | 25 | % | 18 | % | ||||
Amkor Technology, Inc. | 10 | % | * |
The principal competitive factors affecting Photonics products include price, extremelow-light level detection performance, power consumption, resolution, size, ease of integration, reliability, reputation and customer support and service. Intevac faces substantial competition for Photonics products, and many competitors have substantially greater resources and brand recognition. In the military market, Harris Corporation andL-3 Communications are large and well-established defense contractors and are the primary U.S. manufacturers of analog image intensifier tubes used inGeneration-III night-vision devices and their derivative products. Intevac expects that other companies will develop digital night-vision products and aggressively promote their sales. Within thenear-eye display market, Intevac also currently faces competition from Rockwell-Collins, Kopin and Six 15 Technologies in the defense space and anticipates that in the future it will experience competition from lower performance, niche commercial HMD providers expanding into defense applications, all of which can offer cost-competitive products.
Thin-film Equipment sales
Sales of Photonics products for military applications are primarily made to the end user through Intevac’s direct sales force. Intevac sells to the U.S. government and to leading defense contractors such as Lockheed Martin Corporation, Northrop Grumman Corporation, Elbit Systems of America, Raytheon, DRS Technologies, BAE and Safran Electronics and Defense.
Intevac is subject to long sales cycles in the Photonics segment because many of Intevac’s products, such as Intevac’s night-vision systems, typically must be designed into Intevac’s customers’ products, which are often complex andstate-of-the-art. These development cycles are generally multi-year, and Intevac’s sales are dependent on Intevac’s customer successfully integrating Intevac’s product into its product, completing development of its product and then obtaining production orders for its product. Sales of these products are also often dependent on ongoing funding of defense programs by the U.S. government and its allies. Additionally, sales to international customers are contingent on issuance of export licenses by the U.S. government.
Photonics generally invoices its research and development customers either as costs are incurred, or as program milestones are achieved, depending upon the particular contract terms. As a government contractor, Intevac invoices customers using estimated annual rates approved by the Defense Contracts Audit Agency (“DCAA”).
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.
Photonics products
Employees
At December 30, 2017, Intevac had 298 employees, including 17 contract employees.
Compliance with Environmental Regulations
Intevac is subject to a variety ofvarious government regulations in the United States as well as various international locations where we operate. These regulations cover several diverse areas including environmental compliance, import and export controls, economic sanctions, data and privacy protection, transfer pricing rules, anti-bribery, anti-trafficking and anti-trust provisions. Our policies mandate compliance with applicable laws and regulations administered by various state, federal and international agencies. We instituted various training programs to educate our employees on compliance with governmental regulations, as well as applied legal and ethical practices in our everyday work. We are subject to international, federal, state, and local legislation, regulations, and other requirements relating to the use, storage, discharge, handling, emission, generation, manufacture, treatment and disposal of toxic or otherwise hazardous substances, chemicals, materials or waste. Intevac treatswaste; recycling and product packaging; worker health and safety; and other activities affecting the environment, our workforce, and the management of our manufacturing operations. We believe that our operations and facilities comply in all material respects with applicable environmental laws and worker health and safety laws. We treat the cost of complying with government regulations and operating a safe workplace as a normal cost of business and allocates the cost of these activities to all functions, except where the cost can be isolated and charged to a specific function. The environmental standards and regulations promulgated by government agencies in California and Singapore are particularly rigorous and set a high standard of compliance. Intevac believes itsIn addition, climate change legislation is a significant topic of recent discussion and has generated and may continue to generate federal, international or other regulatory responses in the near future. We believe our costs of compliance with these regulations and standards are comparable to other companies operating similar facilities in these jurisdictions.
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. 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 our business operations.
Name | Age | Position | ||||
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Nigel D. Hunton | President and Chief Executive Officer | |||||
James Moniz | Executive Vice President, Finance and Administration, Chief Financial Officer, Secretary and Treasurer | |||||
Jay Cho | Executive Vice President and General Manager, | |||||
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Terry Bluck | Chief Technology Officer, | |||||
Kimberly Burk | ||||||
| Senior Vice President, Global Human Resources | |||||
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BloniganJuly 2013January 2022 as President and Chief Executive Officer.Officer and a member of the Board of Directors. Prior to joining Intevac, Mr. Bloniganco-founded Orbotech LT Solar in 2009 andHunton served as the company’sPresident and Chief Executive Officer until 2013.at Photon Control Inc., a fiber optics equipment manufacturing company, from May 2019 to July 2021. From 2006 until 2009,July 2017 to May 2019, he was the President and Chief OperatingExecutive Officer at Photon Dynamics,Ferrotec (USA) Corporation, an electronics component manufacturing company. From April 2017 to July 2017, Mr. Hunton served as Special Projects Manager at Ferrotec GmbH. Mr. Hunton served as Managing Director at Hunton Associates Ltd, a management consulting company, from January 2016 to July 2017. From 2012 to 2015, Mr. Hunton served as Chief Executive Officer of MBA Polymers, Inc. In 1991,, a recycling company. From 1985 to 2012, Mr. Blonigan joined Applied Materials’ AKT display subsidiary. During his tenure at AKT, he held various positions. In 2003, he was appointed President andHunton served in this role until 2006; from 1999 through 2003 he was Vice President, and prior to that time he was Directorvarious management roles at the Edwards Group, a global vacuum technology company. Additionally, Mr. Hunton is a member of Engineering and New Product Development.the advisory board of Arsenal Capital Partners, a private equity firm. Mr. BloniganHunton holds a BS in electronicmechanical engineering technology from DeVry University Missouriof Manchester Institute of Science and Technology. Brugaljoined Intevac as Executive Vice President and General Manager, Photonics in January 2012. Before joining Intevac, Mr. Brugal was employed at Vision Systems International, a joint venture between Rockwell Collins and Elbit Systems of America, from 2006 to 2012, serving as President and Chief Executive Officer from April 2007 to January 2012. From 2005 to 2006, Mr. Brugal was employed as a consultant for DRS Technologies, a subsidiary of Finmeccanica SPA. Mr. Brugal retired from active service with the U.S. Navy in October 2005 with the rank of Captain. Mr. Brugal holds an MS in strategic studies and security affairs from the U.S. Naval War College and a BS in general engineering from the U.S. Naval Academy.Mr.Thin-Film Equipment.TFE. Prior to joining Intevac, Mr. Cho was President, Chief Executive Officer andMr. 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
Mr. Aebihas served as Chief Technology Officer of the Photonics business since August 2006. Previously, Mr. Aebi served as President of the Photonics Division from July 2000 to July 2006 and as General Manager of the Photonics Division since May 1995. Mr. Aebi was elected as a Vice President of the Company in September 1995. From 1988 through 1994, Mr. Aebi was the Engineering Manager of the night-vision business Intevac acquired from Varian Associates in 1991, where he was responsible for new product development in the areas of advanced photocathodes and image intensifiers. Mr. Aebi holds a BS in physics and an MS in electrical engineering from Stanford 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 |
Annual Report.
However, sales of systems and upgrades for magnetic disk production in 2019, 2020 and 2021 were down from the levels in 2018 as this customer took delivery of fewer or no (in the case of 2021) systems. Intevac expects sales of systems and upgrades for magnetic disk production in 2022 will be at levels similar to the levels in 2021.
In some cases, orders are also subject to customer acceptance or other criteria even in the case of a binding agreement.
The Photonics business is also subject to long sales cycles because many of its products, such as our military imaging products, often must be designed into the customers’ end products, which are often complexstate-of-the-art products. These development cycles are typically multi-year, and our sales are contingent on our customers successfully integrating our product into their product, completing development of their product and then obtaining production orders for their product from the U.S. government or its allies.
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.
Difficulties in integrating past or future acquisitions could adversely affect our business.
We have completed a number of acquisitions and dispositions during our operating history. For example, in 2007, we acquired certain assets of DeltaNu, LLC and certain assets of Creative Display Systems, LLC, in 2008 we acquired certain assets of OC Oerlikon Balzers Ltd., in 2010 we acquired the outstanding shares of SIT, in 2012 we completed the sale of certain semiconductor mainframe technology assets and in 2013 we completed the sale of the assets of DeltaNu. We have spent and may continue to spend significant resources identifying and pursuing future acquisition opportunities. Acquisitions involve numerous risks including: (1) difficulties in
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.
From timesevere penalties and revocation of licenses. Failure to time we may be involvedobtain export licenses, delays in litigationobtaining licenses, or revocation of various types, including litigation alleging infringement of intellectual property rights and other claims. Litigation is expensive, subjectspreviously issued licenses would prevent us tofrom selling the risk of significant damages and requires significant management time and attentionaffected products outside the United States and could have a material and adverse effect onnegatively impact our business, financial condition and results of operations.
Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
Location | Square Footage | Principal Use | ||||
Santa Clara, | 169,583 | * | Corporate Headquarters; Marketing, Manufacturing, Engineering and Customer Support | |||
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Singapore | 31,947 | |||||
Malaysia | 1,291 | |||||
Shenzhen, China | 2,568 |
* | In connection with the disposition of our Photonics business, we entered into a lease assignment agreement with EOTECH that assigns the lease obligation for two buildings in our California campus consisting of 94,890 square feet of rentable space to EOTECH. As part of the assignment, we agreed to subsidize a portion of EOTECH’s lease payments through the remainder of the lease term which expires in March 2024. |
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.
For a description of our material pending legal proceedings, see Note 12 “Commitments and Contingencies” to the consolidated financial statements in Part II, Item 8 of this Annual Report. See also “Risk Factors” in Part I, Item 1A of this Annual Report.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 1, 2022. At January 1, 2022, $10.4 million remains available for future stock repurchases under the repurchase program.
Item 6. |
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
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
(“TFE”). Product development and manufacturing activities occur in North America and Asia. Intevac also has field offices in Asia to support its Thin-film Equipment customers. Intevac’s products are highly technical and are sold primarily through Intevac’s direct sales force. Intevac also sells its products through distributors in Japan and China.
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 | 2021 | 2020 | Change 2021 vs. 2020 | |||||||||
(in thousands, except percentages and per share amounts) | ||||||||||||
Net revenues | $ | 38,524 | $ | 52,128 | $ | (13,604 | ) | |||||
Gross profit | $ | 7,067 | $ | 22,417 | $ | (15,350 | ) | |||||
Gross margin percent | 18.3 | % | 43.0 | % | (24.7) points | |||||||
Operating loss | $ | (22,476 | ) | $ | (8,880 | ) | $ | (13,596 | ) | |||
Net loss from continuing operations | $ | (23,057 | ) | $ | (10,435 | ) | $ | (12,622 | ) | |||
Net income from discontinued operations, net of tax | $ | 49,677 | $ | 11,491 | $ | 38,186 | ||||||
Net income | $ | 26,620 | $ | 1,056 | $ | 25,564 | ||||||
Net income per basic and diluted share | $ | 1.09 | $ | 0.04 | $ | 1.05 |
Fiscal 2017 financial results reflected an improved environment and 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 of its manufacturing capacity. In 2017, Intevac recognized revenue on four VERTEX coating system for DCPs, one MATRIX implant pilot system and two ENERGi implant systems for solar cell manufacturing. In 2017 Intevac shipped an additional three ENERGi implant systems which as of the end of fiscal 2017 had yet to be installed and qualification of the tools had not started. In fiscal 2017, Photonics business levels were at similar levels compared to the prior year with lower Photonics’ product sales, offset by higher Photonics’ contract R&D. Photonics margins and operating results were negatively impacted by ahigher-mix of lower margin technology development contracts versus product sales. The fiscal 2017 net income reflected higher net revenues and higher gross margins, offset in part by higher operating expenses as the Company recorded higher variable compensation expenses as a result of the return to profitability. During fiscal 2017, the Company did not recognize an income tax benefit on the U.S. net operating loss.
We believe that we will continue to be profitable in fiscal 2018.
systems HDD system in backlog during the fiscal year. During the first half of fiscal 2022, the Company plans to streamline its organization and is embarking on a corporate restructuring process that reflects our new single segment structure, which no longer will include the complexity of managing two substantially different business units within one company. We believe that these changes will position the Company for profitability and positive cash flow generation.
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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2021 | 2020 | Change 2021 vs. 2020 | ||||||||||
(in thousands) | ||||||||||||
Total net revenues | $ | 38,524 | $ | 52,128 | $ | (13,604 | ) | |||||
equipment.
Photonics revenues decreased by 2.9% to $33.8 million in fiscal 2017 versus fiscal 2016 and decreased by 1.9% to $34.9 million in fiscal 2016 versus fiscal 2015. Contract R&D revenue increased in fiscal 2017 versus fiscal 2016 as a result of a higher volume of contracts. Contract R&D revenue decreased in fiscal 2016 versus fiscal 2015 as a result of a lower volume of contracts.
Photonics product revenue decreased in fiscal 2017 versus fiscal 2016 due to lower shipments and lower average sales prices for the Apache pilot night-viewing camera 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 product 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 quarter 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 dependent 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.
Backlog
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 backlog at December 30, 2017 included threetwo 200 Lean HDD systems, technology upgrades, service and twelve ENERGi solar ion implant systems. Three of the twelve ENERGi systems have been delivered to the customer’s fab and are awaiting installation. Delivery of the remaining nine tools is pending finalization of shipment dates with the customer. Thin-film Equipment backlogspare parts.
January 1, 2022 | January 2, 2021 | |||||||
(in thousands) | ||||||||
Total backlog | $ | 24,725 | $ | 5,623 | ||||
2017 | 2016 | 2015 | ||||||||||
Seagate Technology | 40% | 34% | 22% | |||||||||
U.S. Government | 15% | 22% | 26% | |||||||||
Elbit Systems of America | * | 10% | * | |||||||||
HGST | * | * | 15% |
2020.
2021 | 2020 | |||||||
Seagate Technology | 60 | % | 79 | % | ||||
Western Digital Corporation | 25 | % | 18 | % | ||||
Amkor Technology, Inc. | 10 | % | * |
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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2021 | 2020 | |||||||
(in thousands) | ||||||||
United States | $ | 3,670 | $ | 6,450 | ||||
Asia | 31,004 | 45,611 | ||||||
Europe | 3,850 | 67 | ||||||
Total net revenues | $ | 38,524 | $ | 52,128 | ||||
The increase in sales to the Asia region in 2017 versus 2016 reflected higher system sales and increased technology upgrade and spare parts sales.customers. Sales to the Asia region in 2017 included six2021 did not include any systems, as compared to two 200 Lean HDD systems four VERTEX coating systems for DCP, one pilot MATRIX solar ion implant system and two ENERGi solar ion implant systems versus four 200 Lean HDD systems, one solar implant ENERGi 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.
2020. Sales to the Europe region in 2017, 2016 and 2015 were not significant. The decrease in sales2021 included one MATRIX PVD system for ASP. Sales to the Europe region in 2016 versus 2015 was primarily due to lower sales2020 were not significant.
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 2021 vs. 2020 | |||||||||||
2021 | 2020 | |||||||||||
(in thousands, except percentages) | ||||||||||||
Total gross profit | $ | 7,067 | $ | 22,417 | $ | (15,350 | ) | |||||
% of net revenues | 18.3 | % | 43.0 | % |
Thin-film Equipment
Photonics gross margin was 35.2% in fiscal 2017 compared to 44.6% in fiscal 2016 and 37.9% in fiscal 2015. Fiscal 2017 gross margins declined over fiscal 2016 due primarily to a higher mix of lower-margin contract R&D versus product sales, lower margins on contract R&D, loss provisions recorded on firm fixed price contracts, higher inventory provisions and higher manufacturing engineering spending. Fiscal 2016 gross margins improved over fiscal 2015 due primarily to higher margins on products and lower inventory provisions, offset in part by lower margins on contract R&D. Manufacturing costs for digital night-vision products decreased in fiscal 2017, 2016 and 2015 as a result of cost reductions and yield improvements.
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 2021 vs. 2020 | |||||||||||
2021 | 2020 | |||||||||||
(in thousands) | ||||||||||||
Research and development expense | $ | 12,176 | $ | 13,205 | $ | (1,029 | ) |
semiconductor
Research and development spending decreased for Photonics during 2017 as compared to 2016. Photonics research and development spending during 2016 reflected incremental spending on demonstrators developed for evaluation by the U.S. Army and U.S. Navy which were self-funded by Intevac. Research and development expenses do not include costs of $7.1 million, $4.5 million, and $5.1 million, in 2017, 2016, and 2015, 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 2021 vs. 2020 | |||||||||||
2021 | 2020 | |||||||||||
(in thousands) | ||||||||||||
Selling, general and administrative expense | $ | 17,367 | $ | 18,092 | $ | (725 | ) |
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.
network security.
plans
completed in fiscal 2020. Implementation of the 2020 Cost Reduction Plan is expected to reduce salary, wages and other employee-related expenses by approximately $864,000 on an annual basis.
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 2021 vs. 2020 | |||||||||||
2021 | 2020 | |||||||||||
(in thousands) | ||||||||||||
Interest income and other income (expense), net | $ | (6 | ) | $ | 156 | $ | (162 | ) |
Fiscal Year | Change 2021 vs. 2020 | |||||||||||
2021 | 2020 | |||||||||||
(in thousands) | ||||||||||||
Provision for income taxes | $ | 575 | $ | 1,711 | $ | (1,136 | ) |
Fiscal Year | Change 2021 vs. 2020 | |||||||||||
2021 | 2020 | |||||||||||
(in thousands) | ||||||||||||
Income from discontinued operations, net of tax | $ | 49,677 | $ | 11,491 | $ | 38,186 |
Provision for income taxes
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 | ) |
Intevac’s effective income tax rate was 21.1% for fiscal 2017, (3.5%) for fiscal 2016 and (6.4%) for fiscal 2015. Intevac’s tax rate differs fromvariable compensation costs.
On December 22, 2017, the “Tax Cuts and Jobs Act” (“ACT”) was signed into law that significantly reforms the Internal Revenue Code of 1986, as amended. The Act, among other things, permanently lowers the U.S. federal 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 taxation to a territorial system. Our net deferred tax assets and liabilities have been revalued at the newly enacted U.S. federal tax rate. There was no impact to our tax expense in fiscal 2017, the year of enactment.
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, a valuation allowance of $9.4$12.4 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 decreases of $603,000 and $136,000, respectively, for the Singapore deferred tax asset were recorded. For fiscal 2015, a valuation allowance increase of $631,000 for the Singapore deferred tax asset was recorded.
In fiscal 2012, a valuation allowance of $23.4 million was added to record only the portion of the U.S. federal deferred tax asset that more likely than not will be realized. For fiscal 2017, a valuation allowance decrease of $6.9 million for the U.S. federal deferred tax asset was recorded. This decrease was a result of revaluing our deferred tax assets and liabilities at the newly enacted U.S federal tax rate. For fiscal 2016 and 2015, valuation allowance increases of $3.3 million and $1.6 million, respectively, for the U.S federal deferred tax asset were recorded.
The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are increased, or if objective negative evidencetransferred in the form of cumulative losses is no longer presenttransaction and additional weight may be given to subjective evidence such as our projections for growth.
(iii) $3.2 million in transaction-related costs.
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 1, 2022 | January 2, 2021 | |||||||
(in thousands) | ||||||||
Cash and cash equivalents | $ | 102,728 | $ | 29,341 | ||||
Restricted cash | 786 | 787 | ||||||
Short-term investments | 10,221 | 14,839 | ||||||
Long-term investments | 7,427 | 5,388 | ||||||
Total cash, cash-equivalents, restricted cash and investments | $ | 121,162 | $ | 50,355 | ||||
larger loss recognized from continuing operations.
include three ENERGiimplant systems at a customer site for which installation procedures have not begunJanuary 2, 2021. During fiscal 2021, we recorded an
January 1, 2022 compared to $457,000 at January 2, 2021 as a result of the payment of the first installment of the deferred payroll tax liabilities under the CARES Act.
fiscal 2020.
In connection with the acquisition of SIT, Intevac agreed to pay to the selling shareholders in cash a revenue earnout on Intevac’s net revenue from commercial sales of certain solar implant products over a specified period up to an aggregate of $9.0 million. Payments made associated with the revenue earnout obligation were $174,000 in 2017fiscal 2021 and $31,000 in 2016.
fiscal 2020, respectively.
Intevac believes
Contractual Obligations
The following table summarizes Intevac’s contractual obligations asand variable compensation. We have flexibility over some 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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these uses of cash, including capital expenditures and discretionary operating expenses, to preserve our liquidity position. Capital expenditures for fiscal 2022 are projected to be approximately $4.4 million related to network infrastructure and security, and laboratory and test equipment to support our R&D programs.
and Estimates
Note that these critical accounting policies and estimates relate solely to our continuing operations. The accounting policies related to our discontinued operations are discussed in Note 2, “Divestiture and Discontinued Operations,” to our consolidated financial statements.
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-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. Intevacits relative standalone selling price. We generally determines the percentage completeddetermine standalone selling prices based on the percentage ofprices charged to customers or by using expected cost plus margin. The expected costs incurred to date in relation to total estimated costs expected through
completion ofassociated with our base warranties are recognized as expense when 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 contractequipment is recorded in the period the loss is determined.
sold.
Valuation of Acquisition-Related Contingent Consideration
Contingent consideration related to a business combination is recorded at the acquisition date at the estimated fair value of the contingent payments. The acquisition date fair value is measured based on the
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.
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
Interest rate risk.Intevac’s exposure to market risk
Item 8. | Financial Statements and Supplementary Data |
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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, 2022 |
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 | ||||||
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Total liabilities and stockholders’ equity | $ | 115,023 | $ | 108,324 | ||||
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January 1, 2022 | January 2, 2021 | |||||||
(In thousands, except par value) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 102,728 | $ | 29,341 | ||||
Short-term investments | 10,221 | 14,839 | ||||||
Trade and other accounts receivable, net of allowances of $0 at both January 1, 2022 and January 2, 2021 | 14,261 | 28,646 | ||||||
Inventories | 5,791 | 21,689 | ||||||
Prepaid expenses and other current assets | 1,827 | 1,893 | ||||||
Total current assets | 134,828 | 96,408 | ||||||
Property, plant and equipment, net | 4,759 | 11,004 | ||||||
Operating lease right-of-use | 4,520 | 8,165 | ||||||
Long-term investments | 7,427 | 5,388 | ||||||
Restricted cash | 786 | 787 | ||||||
Deferred income taxes and other long-term assets | 5,449 | 5,486 | ||||||
Total assets | $ | 157,769 | $ | 127,238 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current operating lease liabilities | $ | 3,119 | $ | 2,853 | ||||
Accounts payable | 5,320 | 4,259 | ||||||
Accrued payroll and related liabilities | 5,505 | 7,679 | ||||||
Other accrued liabilities | 3,665 | 3,598 | ||||||
Customer advances | 2,107 | 33 | ||||||
Total current liabilities | 19,716 | 18,422 | ||||||
Noncurrent liabilities: | ||||||||
Noncurrent operating lease liabilities | 3,675 | 6,803 | ||||||
Other long-term liabilities | 363 | 457 | ||||||
Total noncurrent liabilities | 4,038 | 7,260 | ||||||
Commitments and contingencies | 0 | 0 | ||||||
Stockholders’ equity: | ||||||||
Undesignated preferred stock, $0.001 par value, 10,000 shares authorized, 0 | 0— | 0 | ||||||
Common stock, $0.001 par value: | ||||||||
Authorized shares — 50,000 issued and outstanding shares — 24,636 and 23,874 at January 1, 2022 and January 2, 2021, respectively | 25 | 24 | ||||||
Additional paid-in capital | 199,073 | 193,173 | ||||||
Treasury stock, 5,087 shares at both January 1, 2022 and January 2, 2021 | (29,551 | ) | (29,551 | ) | ||||
Accumulated other comprehensive income | 578 | 640 | ||||||
Accumulated deficit | (36,110 | ) | (62,730 | ) | ||||
Total stockholders’ equity | 134,015 | 101,556 | ||||||
Total liabilities and stockholders’ equity | $ | 157,769 | $ | 127,238 | ||||
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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|
|
|
|
| |||||||
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 | |||||||||
|
|
|
|
|
| |||||||
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 | ) | ||||||
|
|
|
|
|
| |||||||
Total operating expenses | 40,815 | 37,972 | 35,055 | |||||||||
|
|
|
|
|
| |||||||
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 | ) | |||||||
Provision for income taxes | 1,103 | 251 | 555 | |||||||||
|
|
|
|
|
| |||||||
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 1, 2022 | January 2, 2021 | |||||||
(In thousands, except per share amounts) | ||||||||
Net revenues | $ | 38,524 | $ | 52,128 | ||||
Cost of net revenues | 31,457 | 29,711 | ||||||
Gross profit | 7,067 | 22,417 | ||||||
Operating expenses: | ||||||||
Research and development | 12,176 | 13,205 | ||||||
Selling, general and administrative | 17,367 | 18,092 | ||||||
Total operating expenses | 29,543 | 31,297 | ||||||
Operating loss | (22,476 | ) | (8,880 | ) | ||||
Interest income | 29 | 284 | ||||||
Other income (expense), net | (35 | ) | (128 | ) | ||||
Loss from continuing operations before provision for income taxes | (22,482 | ) | (8,724 | ) | ||||
Provision for income taxes | 575 | 1,711 | ||||||
Net loss from continuing operations | (23,057 | ) | (10,435 | ) | ||||
Income from discontinued operations: | ||||||||
Income (loss) from Photonics division, net of tax | (4,664 | ) | 11,491 | |||||
Gain on sale of Photonics division, net of tax | 54,341 | 0 | ||||||
Total income from discontinued operations, net of tax | 49,677 | 11,491 | ||||||
Net income | $ | 26,620 | $ | 1,056 | ||||
Net income (loss) per share: | ||||||||
Basic and diluted—continuing operations | $ | (0.95 | ) | $ | (0.44 | ) | ||
Basic and diluted—discontinued operations | $ | 2.04 | $ | 0.49 | ||||
Basic and diluted—net income | $ | 1.09 | $ | 0.04 | ||||
Weighted average shares outstanding: | ||||||||
Basic and diluted | 24,348 | 23,669 |
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 | ) | |||||||
|
|
|
|
|
| |||||||
Other comprehensive income (loss), before tax | 169 | (91 | ) | (207 | ) | |||||||
Income tax expense related to items in other comprehensive income (loss) | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Other comprehensive income (loss), net of tax | 169 | (91 | ) | (207 | ) | |||||||
|
|
|
|
|
| |||||||
Comprehensive income (loss) | $ | 4,287 | $ | (7,532 | ) | $ | (9,373 | ) | ||||
|
|
|
|
|
|
Year Ended, | ||||||||
January 1, 2022 | January 2, 2021 | |||||||
(In thousands) | ||||||||
Net income | $ | 26,620 | $ | 1,056 | ||||
Other comprehensive income (loss), before tax | ||||||||
Change in unrealized net gain on available-for-sale | (68 | ) | (5 | ) | ||||
Foreign currency translation gains | 6 | 221 | ||||||
Other comprehensive income (loss), before tax | (62 | ) | 216 | |||||
Income tax expense related to items in other comprehensive income (loss) | 0 | 0 | ||||||
Other comprehensive income (loss), net of tax | (62 | ) | 216 | |||||
Comprehensive income | $ | 26,558 | $ | 1,272 | ||||
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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|
|
|
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|
|
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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 | 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 | ||||||||||||||||
Shares issued in connection with: | ||||||||||||||||||||||||||||||||
Exercise of stock options | 76 | — | 440 | — | — | — | — | 440 | ||||||||||||||||||||||||
Settlement of RSUs | 383 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Employee stock purchase plan | 435 | 1 | 2,191 | — | — | — | — | 2,192 | ||||||||||||||||||||||||
Shares withheld in connection with net share settlement of RSUs | (132 | ) | — | (734 | ) | — | — | — | — | (734 | ) | |||||||||||||||||||||
Equity-based compensation expense | — | — | 4,003 | — | — | — | — | 4,003 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 26,620 | 26,620 | ||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | (62 | ) | — | (62 | ) | ||||||||||||||||||||||
Balance at January 1 2022 | 24,636 | $ | 25 | $ | 199,073 | 5,087 | $ | (29,551 | ) | $ | 578 | $ | (36,110 | ) | $ | 134,015 | ||||||||||||||||
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 | |||||||||
|
|
|
|
|
| |||||||
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 | ) | |||||||
|
|
|
|
|
| |||||||
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 | ||||||
|
|
|
|
|
| |||||||
Cash paid (received) for: | ||||||||||||
Income taxes | $ | 902 | $ | 516 | $ | 1,190 | ||||||
Income tax refund | $ | (19 | ) | $ | (524 | ) | $ | — |
Year Ended | ||||||||
January 1 2022 | January 2, 2021 | |||||||
(In thousands) | ||||||||
Operating activities | ||||||||
Net income | $ | 26,620 | $ | 1,056 | ||||
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: | ||||||||
Depreciation and amortization | 3,456 | 3,206 | ||||||
Net amortization (accretion) of investment premiums and discounts | 109 | 12 | ||||||
Amortization of intangible assets | 0 | 274 | ||||||
Gain on sale of Photonics division | (54,341 | ) | 0 | |||||
Asset impairment charges | 1,246 | 0 | ||||||
Equity-based compensation | 4,003 | 3,389 | ||||||
Straight-line rent adjustment and amortization of lease incentives | (463 | ) | (286 | ) | ||||
Deferred income taxes | 25 | 917 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 10,850 | (27 | ) | |||||
Inventories | 9,597 | 3,218 | ||||||
Prepaid expenses and other assets | 6 | (462 | ) | |||||
Accounts payable | (932 | ) | 60 | |||||
Accrued payroll and other accrued liabilities | (1,972 | ) | 1,467 | |||||
Customer advances | 2,074 | (3,974 | ) | |||||
Total adjustments | (26,342 | ) | 7,794 | |||||
Net cash and cash equivalents provided by operating activities | 278 | 8,850 | ||||||
Investing activities | ||||||||
Purchase of investments | (17,148 | ) | (23,342 | ) | ||||
Proceeds from sales and maturities of investments | 19,550 | 25,355 | ||||||
Proceeds from sale of Photonics division | 70,000 | — | ||||||
Purchase of leasehold improvements and equipment | (1,198 | ) | (2,612 | ) | ||||
Net cash and cash equivalents provided by (used in) investing activities | 71,204 | (599 | ) | |||||
Financing activities | ||||||||
Proceeds from issuance of common stock | 2,632 | 1,897 | ||||||
Common stock repurchases | 0 | (393 | ) | |||||
Taxes paid related to net share settlement | (734 | ) | (402 | ) | ||||
Net cash and cash equivalents provided by financing activities | 1,898 | 1,102 | ||||||
Effect of exchange rate changes on cash | 6 | 221 | ||||||
Net increase in cash, cash equivalents and restricted cash | 73,386 | 9,574 | ||||||
Cash, cash equivalents and restricted cash at beginning of period | 30,128 | 20,554 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 103,514 | $ | 30,128 | ||||
Cash paid (received) for: | ||||||||
Income taxes | $ | 559 | $ | 850 | ||||
Income tax refund | $ | (18 | ) | $ | (157 | ) |
Change in
On February 19, 2014, the Board of Directors of the Company approved the Company’s change to
(iii) the assumption by EOTECH of certain liabilities of the Photonics business.
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Contingent Consideration and Purchased Intangible Assets
Contingent consideration related to a business combination is recorded at the acquisition date at the estimated fair value of the contingent payments. The acquisition date fair value is measured based on the 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.
Purchased intangible assets other than goodwill are amortized over their useful lives unless these lives are determined to be indefinite. Purchased intangible assets are carried at cost, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets, generally one to thirteen years using the straight line method. In 2012, as a result of its impairment analysis, Intevac wrote off all of the goodwill in both its Thin-film Equipment and Photonics reporting units.
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Income Taxes
liabilities using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. Deferred tax assets and liabilities are recognized using enacted tax rates for the effect of temporary differences between book and tax bases of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that a portion of the deferred tax asset will not be realized.
On
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. RevenueOur contracts with customers may include multiple performance obligations. For such arrangements, under the revenue standard we 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. Under the revenue standard, the expected costs associated with our base warranties are recognized as expense when the equipment is sold.
Intevac performsreported as a reduction of research and development work under various government-sponsored research contracts. Revenue oncost-plus-fee contracts(“R&D”) expenses and $17,000 is recognized to the extentreported as a reduction 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 natureselling, general 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 basedadministrative expenses on the percentageconsolidated statements of costs incurred to dateincome. During fiscal 2020, the Company received $567,000 in relation to total estimated costs expected through completionJSS grants of the contract. When estimateswhich $328,000 is reported as a reduction of total costs to be incurred oncost of net revenues, $90,000 is reported as a contract exceed estimatesreduction of total revenue to be earned,R&D expenses and $149,000 is reported as a provision for the entire lossreduction of selling, general and administrative expenses on the contract is recorded in the period the loss is determined.
consolidated statements of income.
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Loss)
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 | |||||
|
|
|
|
|
|
January 2, 2021:
Foreign currency | Unrealized holding gains (losses) on available-for-sale investments | Total | ||||||||||
(in thousands) | ||||||||||||
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 | |||||||||
Other comprehensive income (loss) before reclassification | 6 | (68 | ) | (62 | ) | |||||||
Amounts reclassified from other comprehensive income (loss) | — | — | — | |||||||||
Net current-period other comprehensive income (loss) | 6 | (68 | ) | (62 | ) | |||||||
Balance at January 1, 2022 | $ | 608 | $ | (30 | ) | $ | 578 | |||||
Not Yet Adopted
Cash proceeds | $ | 70,000 | ||
Working capital adjustment | (74 | ) | ||
69,926 | ||||
Assets sold: | ||||
Accounts receivable | 3,535 | |||
Inventories | 6,301 | |||
Other current assets | 72 | |||
Property, plant and equipment | 3,987 | |||
Total assets sold | 13,895 | |||
Liabilities divested: | ||||
Accounts payable | 888 | |||
Other accrued expenses | 594 | |||
Total liabilities divested | 1,482 | |||
Transaction and other costs | (3,172 | ) | ||
Gain on sale | $ | 54,341 | ||
In January 2017, the FASB issued ASU2017-04,Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU2017-04 eliminates Step 2been eliminated 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 chargecontinuing operations. Previously reported expenses for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized shouldPhotonics segment have been recast to exclude certain allocated expenses that are 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 chargedirectly attributable to the accumulated deficit as of January 1, 2017.
In May 2014, the FASB issued ASU2014-09(Topic 606) RevenuePhotonics segment. The key components 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 productsdiscontinued operations related to the customer, which typically occurs upon shipment or delivery depending on the termsPhotonics segment are as follows (in thousands):
Year Ended, | ||||||||
January 1, 2022 | January 2, 2021 | |||||||
(In thousands, except per share amounts) | ||||||||
Net revenues: | ||||||||
Systems and components | $ | 15,932 | $ | 22,751 | ||||
Technology development | 11,735 | 22,945 | ||||||
Total net revenues | 27,667 | 45,696 | ||||||
Cost of net revenues: | ||||||||
Systems and components | 12,252 | 12,520 | ||||||
Technology development | 8,885 | 15,048 | ||||||
Total cost of net revenues | 21,137 | 27,568 | ||||||
Gross profit | 6,530 | 18,128 |
We expect
Year Ended, | ||||||||
January 1, 2022 | January 2, 2021 | |||||||
(In thousands, except per share amounts) | ||||||||
Operating expenses: | ||||||||
Research and development | 2,653 | 888 | ||||||
Selling, general and administrative | 5,937 | 5,805 | ||||||
Asset impairment and restructuring charges | 2,604 | 0 | ||||||
Total operating expenses | 11,194 | 6,693 | ||||||
Operating income (loss)—discontinued operations | (4,664 | ) | 11,435 | |||||
Other income (expense)—discontinued operations | 0 | 56 | ||||||
Income (loss) discontinued operations before provision for (benefit from) income taxes | (4,664 | ) | 11,491 | |||||
Gain on disposal of discontinued operations before income taxes | 54,341 | 0 | ||||||
Total income from discontinued operations, before tax | 49,677 | 11,491 | ||||||
Provision for (benefit from) income taxes | 0 | 0 | ||||||
Net income from discontinued operations net of tax | $ | 49,677 | $ | 11,491 | ||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Depreciation and amortization | $ | 1,366 | $ | 1,123 | ||||
Amortization of intangible assets | $ | 0 | $ | 36 | ||||
Asset impairment charges | $ | 1,246 | $ | 0 | ||||
Equity-based compensation | $ | 1,167 | $ | 959 | ||||
Purchase of leasehold improvements and equipment | $ | 429 | $ | 636 |
For these contracts, the profit on a contract was estimated as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract. Contract estimates were based on various assumptions to project the outcome of future events. These assumptions included the complexity of the work to be performed; the cost and availability of materials; the performance of subcontractors; and the availability and timing of funding from the customer.
2021 | 2020 | |||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
HDD | DCP | PV | ASP | Total | HDD | PV | Total | |||||||||||||||||||||||||
Systems, upgrades and spare parts | $ 28,300 | $ 3 | $ 258 | $ 3,850 | $ 32,411 | $ 45,620 | $ 426 | $ 46,046 | ||||||||||||||||||||||||
Field service | 6,031 | 14 | 68 | 0 | 6,113 | 6,080 | 2 | 6,082 | ||||||||||||||||||||||||
Total TFE net revenues | $ | 34,331 | $ | 17 | $ | 326 | $ | 3,850 | $ | 38,524 | $ | 51,700 | $ | 428 | $ | 52,128 | ||||||||||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
United States | $ | 3,670 | $ | 6,450 | ||||
Asia | 31,004 | 45,611 | ||||||
Europe | 3,850 | 67 | ||||||
Total net revenues | $ | 38,524 | $ | 52,128 | ||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Products transferred at a point in time | $38,524 | $52,128 | ||||||
Products and services transferred over time | 0 | 0 | ||||||
Total net revenues | $ | 38,524 | $ | 52,128 | ||||
January 1, 2022 | January 2, 2021 | Change | ||||||||||
(In thousands) | ||||||||||||
TFE: | ||||||||||||
Contract assets: | ||||||||||||
Accounts receivable, unbilled | $ | 99 | $ | 369 | $ | (270 | ) | |||||
Contract liabilities: | ||||||||||||
Deferred revenue | $ | 65 | $ | 482 | $ | (417 | ) | |||||
Customer advances | 2,107 | 33 | 2,074 | |||||||||
$ | 2,172 | $ | 515 | $ | 1,657 | |||||||
Photonics (included in discontinued operations): | ||||||||||||
Contract assets: | ||||||||||||
Accounts receivable, unbilled | $ | 0 | $ | 5,439 | $ | (5,439 | ) | |||||
Retainage | 0 | 126 | (126 | ) | ||||||||
$ | 0 | $ | 5,565 | $ | (5,565 | ) | ||||||
Contract liabilities: | ||||||||||||
Deferred revenue | $ | 0 | $ | 779 | $ | (779 | ) | |||||
2.
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 | ||||||
|
|
|
|
|
|
2021 | 2020 | |||||||
Equity-based compensation by type of award: | ||||||||
Stock options | $198 | $504 | ||||||
RSUs | 2,819 | 1,936 | ||||||
Employee stock purchase plan | 986 | 949 | ||||||
Total equity-based compensation * | $ | 4,003 | $ | 3,389 | ||||
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 |
2021 | 2020 | |||||||
Stock Options: | ||||||||
Weighted-average fair value of grants per share | 0 | $ | 1.82 | |||||
Expected volatility | 0 | 46.06 | % | |||||
Risk free interest rate | 0 | 0.44% | ||||||
Expected term of options (in years) | — | 4.39 | ||||||
Dividend yield | 0 | None |
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.
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 January 2, 2021 | 1,814,467 | $ | 6.66 | 3.08 | $ | 2,520,722 | ||||||||||
Options cancelled and forfeited | (280,261 | ) | $ | 7.44 | ||||||||||||
Options exercised | (76,619 | ) | $ | 5.74 | ||||||||||||
Options outstanding at January 1, 2022 | 1,457,587 | $ | 6.55 | 2.31 | $ | 7,622 | ||||||||||
Options exercisable at January 1, 2022 | 1,267,664 | $ | 6.74 | 2.08 | $ | 3,513 |
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 January 2, 2021 | 901,634 | $ | 5.30 | 1.50 | $ | 6,500,781 | ||||||||||
Granted | 606,705 | $ | 6.03 | |||||||||||||
Vested | (382,747 | ) | $ | 5.71 | ||||||||||||
Cancelled | (92,156 | ) | $ | 4.79 | ||||||||||||
Non-vested RSUs at January 1, 2022 | 1,033,436 | $ | 5.59 | 1.39 | $ | 4,867,484 | ||||||||||
Market condition-based RSUs
can range from zero to 200% of the initial grant.
periods for subsequent changes in
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.
PRSUs using the following weighted-average assumptions:
2021 | ||||
Weighted-average fair value of grants per share | $ | 7.65 | ||
Expected volatility | 56.26 | % | ||
Risk-free interest rate | 0.15 | % | ||
Dividend yield | NaN |
each PRSU award was estimated on the date of grant using a Monte Carlo simulation. PRSU activity is included in the above RSU tables. At the end of each performance measurement period, the Compensation 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. The first performance measurement period ended in May 2021 and the metric was not achieved.
2020 | ||||
Weighted-average fair value of grants per share | $ | 3.16 | ||
Expected volatility | 46.7 | % | ||
Risk-free interest rate | 0.25 | % | ||
Dividend yield | NaN |
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 |
2021 | 2020 | |||||||
Stock Purchase Rights: | ||||||||
Weighted-average fair value of grants per share | $ | 2.59 | $ | 2.20 | ||||
Expected volatility | 60.88 | % | 51.49 | % | ||||
Risk free interest rate | 0.08 | % | 0.14 | % | ||||
Expected term of purchase rights (in years) | 0.91 | 1.24 | ||||||
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 |
2021 | 2020 | |||||||
(in thousands, except per share amounts) | ||||||||
Shares purchased | 435 | 392 | ||||||
Weighted-average purchase price per share | $ | 5.05 | $ | 4.01 | ||||
Aggregate intrinsic value of purchase rights exercised | $ | 671 | $ | 765 |
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 | ) | ||||
|
|
|
|
|
|
The potentially dilutive securities were excluded (as common stock equivalents)
2021 | 2020 | |||||||
(in thousands, except per share amounts) | ||||||||
Net loss from continuing operations | $ | (23,057 | ) | $ | (10,435 | ) | ||
Net income from discontinued operations, net of tax | 49,677 | 11,491 | ||||||
Net income | $ | 26,620 | $ | 1,056 | ||||
Weighted-average shares – basic | 24,348 | 23,669 | ||||||
Effect of dilutive potential common shares | 0 | 0 | ||||||
Weighted-average shares – diluted | 24,348 | 23,669 | ||||||
Basic and diluted net income (loss) per share: | ||||||||
Continuing operations | $ | (0.95 | ) | $ | (0.44 | ) | ||
Discontinued operations | $ | 2.04 | $ | 0.49 | ||||
Net income per share | $ | 1.09 | $ | 0.04 |
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.Company’s equity instruments are considered antidilutive.
2017 | 2016 | |||||||
Seagate Technology | 70 | % | 55 | % | ||||
HGST | * | 10 | % |
2021 | 2020 | |||||||
Seagate Technology | 47 | % | 45 | % | ||||
Western Digital Corporation | 30 | % | 16 | % | ||||
Amkor Technology, Inc. | 22 | % | * | |||||
U.S. Government (included in discontinued operations). | — | 26 | % |
* | 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 | % |
2021 | 2020 | |||||||
Seagate Technology | 60 | % | 79 | % | ||||
Western Digital Corporation | 25 | % | 18 | % | ||||
Amkor Technology, Inc. | 10 | % | * |
* | Less than 10% |
January 2, 2021: Trade receivables and other Unbilled costs and accrued profits Less: allowance for doubtful accounts Raw materials Work-in-progress Finished goods Leasehold improvements Machinery and equipment Less accumulated depreciation and amortization Total property, plant and equipment, net 2017, 2016,2021 and 2015.2020. 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 manufacturing and Intevac’s success in developing military products based on itslow-light technology.5.ASP.December 30, 2017January 1, 2022 and December 31, 2016:Receivables consisted of the following components: December 30, December 31, 2017 2016 (in thousands) $ 17,479 $ 15,167 2,995 2,280 — — $ 20,474 $ 17,447 INTEVAC, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
2022
2021 $ 14,162 $ 22,712 99 5,934 0 0 $ 14,261 $ 28,646 marketnet realizable value and consist of the following: December 30, December 31, 2017 2016 (in thousands) $ 19,881 $ 10,290 9,433 6,470 4,478 8,116 $ 33,792 $ 24,876 Finished goods inventory consists primarily of completed systems at customer sites that are undergoing installation and acceptance testing.
2022
2021 $ 5,323 $ 9,999 468 4,832 — 6,858 $ 5,791 $ 21,689 December 30, December 31, 2017 2016 (in thousands) $ 15,035 $ 14,653 44,766 41,678 59,801 56,331 47,323 45,094 $ 12,478 $ 11,237 Customer AdvancesCustomer advances generally represent nonrefundable deposits invoiced by the Company in connection with receiving customer purchase orders and other events preceding acceptance Net
2022
2021 $ 9,847 $ 16,323 23,818 46,846 33,665 63,169 28,906 52,165 $ 4,759 $ 11,004
January 1, 2022 | January 2, 2021 | |||||||
(in thousands) | ||||||||
United States | $ | 4,385 | $ | 10,678 | ||||
Asia | 374 | 326 | ||||||
Net property, plant & equipment | $ | 4,759 | $ | 11,004 | ||||
January 1, 2022 | January 2, 2021 | |||||||
(in thousands) | ||||||||
Deferred income taxes | $ | 5,310 | $ | 5,335 | ||||
Prepaid expenses | 139 | 151 | ||||||
$ | 5,449 | $ | 5,486 | |||||
January 1, 2022 | January 2, 2021 | |||||||
(in thousands) | ||||||||
Other taxes payable | $ | 1,318 | $ | 935 | ||||
Litigation settlement | 1,000 | — | ||||||
Income taxes payable | 370 | 263 | ||||||
Restructuring | 347 | — | ||||||
Accrued product warranties | 301 | 405 | ||||||
Other | 264 | 734 | ||||||
Deferred revenue | 65 | 1,261 | ||||||
Total other accrued liabilities | $ | 3,665 | $ | 3,598 | ||||
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. Purchased Intangible Assets, Net
Information regarding acquisition-related intangible assets is as follows:
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 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets by segment as
January 1, 2022 | January 2, 2021 | |||||||
(in thousands) | ||||||||
Restructuring | $ | 318 | $ | — | ||||
Accrued product warranties | 45 | 75 | ||||||
Employer payroll taxes | — | 382 | ||||||
Total other long-term liabilities | $ | 363 | $ | 457 | ||||
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 revenue from commercial sales of certain products over a specified period up to an aggregate of $9.0 million. Intevac estimated the fair value of this 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 in 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. The following table represents a reconciliation of the change in the fair value measurement of the contingent consideration liability for fiscal 2017, 2016 and 2015:
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)
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 1, 2022 | ||||||||||||||||
Amortized Cost | Unrealized Holding Gains | Unrealized Holding Losses | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash | $ | 102,494 | $ | — | $ | — | $ | 102,494 | ||||||||
Money market funds | 234 | — | — | 234 | ||||||||||||
Total cash and cash equivalents | $ | 102,728 | $ | — | $ | — | $ | 102,728 | ||||||||
Short-term investments: | ||||||||||||||||
Certificates of deposit | $ | 4,300 | $ | — | $ | — | $ | 4,300 | ||||||||
Commercial paper | 400 | — | — | 400 | ||||||||||||
Corporate bonds and medium-term notes | 2,916 | — | 3 | 2,913 | ||||||||||||
Municipal bonds | 700 | — | — | 700 | ||||||||||||
U.S. treasury securities | 1,910 | — | 2 | 1,908 | ||||||||||||
Total short-term investments | $ | 10,226 | $ | — | $ | 5 | $ | 10,221 | ||||||||
Long-term investments: | ||||||||||||||||
Asset backed securities | $ | 2,040 | $ | — | $ | 3 | $ | 2,037 | ||||||||
Certificates of deposit | 500 | — | 3 | 497 | ||||||||||||
Corporate bonds and medium-term notes | 1,521 | — | 6 | 1,515 | ||||||||||||
Municipal bonds | 145 | — | 1 | 144 | ||||||||||||
U.S. treasury securities | 3,246 | — | 12 | 3,234 | ||||||||||||
Total long-term investments | $ | 7,452 | $ | — | $ | 25 | $ | 7,427 | ||||||||
Total cash, cash equivalents, and investments | $ | 120,406 | $ | — | $ | 30 | $ | 120,376 | ||||||||
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 | ||||||||
|
|
|
|
|
|
|
|
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 | |||||
|
|
|
|
Amortized Cost | Fair Value | |||||||
(in thousands) | ||||||||
Due in one year or less | $ | 10,460 | $ | 10,455 | ||||
Due after one through five years | 7,452 | 7,427 | ||||||
$ | 17,912 | $ | 17,882 | |||||
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)
January 1, 2022.
January 1, 2022 | ||||||||||||||||
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) | ||||||||||||||||
Asset backed securities | $ | 2,037 | $ | 3 | $ | — | $ | — | ||||||||
Certificates of deposit | 1,497 | 3 | — | — | ||||||||||||
Corporate bonds and medium-term notes | 3,424 | 9 | — | — | ||||||||||||
Municipal bond | 464 | 1 | — | — | ||||||||||||
U.S. treasury securities | 4,642 | 14 | — | — | ||||||||||||
$ | 12,064 | $ | 30 | $ | — | $ | — | |||||||||
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 1, 2022.
Fair Value Measurements at January 1, 2022 | ||||||||||||
Total | Level 1 | Level 2 | ||||||||||
(in thousands) | ||||||||||||
Recurring fair value measurements: | ||||||||||||
Money market funds | $ | 234 | $ | 234 | $ | — | ||||||
U.S. treasury securities | 5,142 | 5,142 | — | |||||||||
Asset backed securities | 2,037 | — | 2,037 | |||||||||
Certificates of deposit | 4,797 | — | 4,797 | |||||||||
Commercial paper | 400 | — | 400 | |||||||||
Corporate bonds and medium-term notes | 4,428 | — | 4,428 | |||||||||
Municipal bonds | 844 | — | 844 | |||||||||
Total recurring fair value measurements | $ | 17,882 | $ | 5,376 | $ | 12,506 | ||||||
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 Assets | Derivative Liabilities | ||||||||||||||||||||||
Derivative Instrument | January 1, 2022 | January 2, 2021 | January 1, 2022 | January 2, 2021 | ||||||||||||||||||||
Balance Sheet Line | Fair Value | Balance Sheet Line | Fair Value | |||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Undesignated Hedges: | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 815 | 983 | a | $ | 1 | b | $ | 3 | |||||||||||||||
�� | ||||||||||||||||||||||||
Total Hedges | $ | 815 | 983 | $ | 1 | $ | 3 | |||||||||||||||||
Other current assets |
b | Other accrued liabilities |
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 |
2020:
2021 | 2020 | |||||||
(in thousands, except per share amounts) | ||||||||
Shares of common stock repurchased | 0 | 98 | ||||||
Cost of stock repurchased | $ | 0 | $ | 393 | ||||
Average price paid per share | $ | 0 | $ | 3.97 |
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 | ||||||
|
|
|
|
|
|
2021 | 2020 | |||||||
Federal: | ||||||||
Current | $ | 0 | $ | (915 | ) | |||
Deferred | 0 | 0 | ||||||
0 | (915 | ) | ||||||
State: | ||||||||
Current | 4 | 4 | ||||||
Deferred | 0 | 0 | ||||||
4 | 4 | |||||||
Foreign: | ||||||||
Current | 546 | 1,705 | ||||||
Deferred | 25 | 917 | ||||||
571 | 2,622 | |||||||
Total | $ | 575 | $ | 1,711 | ||||
Income taxes on discontinued operations | $ | 0 | $ | 0 | ||||
Income taxes on continuing operations | $ | 575 | $ | 1,711 |
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 | )% | ||||||
|
|
|
|
|
|
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
2021 | 2020 | |||||||
U.S | $ | (22,694 | ) | $ | (14,784 | ) | ||
Foreign | 212 | 6,060 | ||||||
$ | (22,482 | ) | $ | (8,724 | ) | |||
Effective tax rate | (2.6 | %) | (19.6 | %) | ||||
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 1, 2022 | January 2, 2021 | |||||||
Deferred tax assets: | ||||||||
Vacation, warranty and other accruals | $ | 627 | $ | 651 | ||||
Intangible amortization | 282 | 551 | ||||||
Purchased technology | 17 | 14 | ||||||
Inventory valuation | 1,653 | 1,101 | ||||||
Equity-based compensation | 1,343 | 1,494 | ||||||
Lease liability | 1,659 | 0 | ||||||
Net operating loss, research and other tax credit carryforwards | 53,684 | 55,322 | ||||||
Other | 22 | 30 | ||||||
59,287 | 59,163 | |||||||
Valuation allowance for deferred tax assets | (52,703 | ) | (52,088 | ) | ||||
Total deferred tax assets | 6,584 | 7,075 | ||||||
January 1, 2022 | January 2, 2021 | |||||||
Deferred tax liabilities: | ||||||||
Depreciation and amortization | (201 | ) | (341 | ) | ||||
ROU asset | (1,073 | ) | 0 | |||||
Unbilled revenue | 0 | (1,399 | ) | |||||
Total deferred tax liabilities | (1,274 | ) | (1,740 | ) | ||||
Net deferred tax assets | $ | 5,310 | $ | 5,335 | ||||
As reported on the consolidated balance sheets: | ||||||||
Non-current deferred tax assets | $ | 5,310 | $ | 5,335 | ||||
assets in Singapore at January 1, 2022.
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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 assetscash flows for fiscal 2021 and liabilities: Were-measured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, we are still analyzing certain aspects 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 continuefiscal 2020 to be indefinitely reinvested in foreign operations. The Company did not have the necessary information prepared or analyzed to develop a reasonable estimateas follows.
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 | ||||||
|
|
|
|
|
|
2021 | 2020 | |||||||
Income tax at the federal statutory rate | $ | (4,721 | ) | $ | (1,832 | ) | ||
State income taxes, net of federal benefit | 4 | 4 | ||||||
Change in valuation allowance: | ||||||||
U.S | 94 | 40 | ||||||
Foreign | 0— | — | ||||||
Effect of foreign operations taxed at various rates | 48 | (235 | ) | |||||
Research tax credits | (1,135 | ) | (1,306 | ) | ||||
Effect of tax rate changes, permanent differences and adjustments of prior deferrals | 6,285 | 4,461 | ||||||
Unrecognized tax benefits | 0 | 579 | ||||||
Total income tax expense on continuing operations | $ | 575 | $ | 1,711 | ||||
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 | ||||||
|
|
|
|
|
|
2020
2021 | 2020 | |||||||
Beginning balance | $ | 7,327 | $ | 7,683 | ||||
Additions based on tax positions related to the current year | 24 | 589 | ||||||
Decreases for tax positions of prior years | (6,622 | ) | 0 | |||||
Lapse of statute of limitations | (11 | ) | (945 | ) | ||||
Ending balance | $ | 718 | $ | 7,327 | ||||
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
and require significant judgment to apply. The material jurisdictions where Intevac is subjectAs of January 1, 2022, all of the tax years remained open to potential examination by taxthe federal and state taxing authorities, for three or four years from the tax years after 2009 include the U.S. (Federal and California) and Singapore.
year in which net operating losses or tax credits are utilized completely. Singapore is open to examination from 2017 forward.
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
2020.
January 1, 2022 | January 2, 2021 | |||||||
(in thousands) | ||||||||
Assets: | ||||||||
Operating lease ROU assets | $ | 4,520 | $ | 8,165 | ||||
Liabilities: | ||||||||
Current operating lease liabilities | $ | 3,119 | $ | 2,853 | ||||
Noncurrent operating lease liabilities | 3,675 | 6,803 | ||||||
$ | 6,794 | $ | 9,656 | |||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Operating lease cost | $ | 2,944 | $ | 2,942 | ||||
Short-term lease cost | 98 | 93 | ||||||
Total lease cost | $ | 3,042 | $ | 3,035 | ||||
Continuing Operations | Discontinued Operations | Total | ||||||||||
(in thousands) | ||||||||||||
2022 | $ | 1,805 | $ | 1,661 | $ | 3,466 | ||||||
2023 | 1,577 | 1,710 | 3,287 | |||||||||
2024 | 256 | 286 | 542 | |||||||||
Total lease payments | $ | 3,638 | $ | 3,657 | 7,295 | |||||||
Less: Interest | (242 | ) | (259 | ) | (501 | ) | ||||||
Present value of lease liabilities | $ | 3,396 | $ | 3,398 | 6,794 | |||||||
January 1, 2022 | January 2, 2021 | |||||||
Weighted-average remaining lease term (in years) | 2.11 | 3.09 | ||||||
Weighted-average discount rate | 6.40 | % | 6.39 | % |
As of December 30, 2017, future minimum lease payments are as follows.
(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 | 2020 | |||||||
(in thousands) | ||||||||
Operating cash outflows from operating leases | $ | 3,382 | $ | 3,332 | ||||
ROU asset impairment expense (reported in discontinued operations) | $ | 1,246 | $ | — | ||||
ROU assets obtained in exchange for new operating lease liabilities | $ | — | $ | 128 | ||||
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 | ||||
|
|
|
|
2020:
2021 | 2020 | |||||||
(in thousands) | ||||||||
Beginning balance | $ | 480 | $ | 1,022 | ||||
Expenditures incurred under warranties | (622 | ) | (493 | ) | ||||
Expenditures incurred under warranties included in discontinued operations | (89 | ) | (19 | ) | ||||
Accruals for product warranties | 502 | 237 | ||||||
Accruals for product warranties included in discontinued operations | 122 | 43 | ||||||
Adjustments to previously existing warranty accruals | 31 | (306 | ) | |||||
Adjustments to previously existing warranty accruals included in discontinued operations | (31 | ) | (4 | ) | ||||
Sale of Photonics division | (47 | ) | — | |||||
Ending balance | $ | 346 | $ | 480 | ||||
Intevac’s two reportable segments are: Thin-film Equipmentrestructuring charges associated with the sale of the Photonics division including (i) $693,000 in severance and Photonics. Intevac’s chief operating decision-maker has been identified asother employee-related costs related to the Presidenttermination of the Photonics general manager; (ii) $1.2 million in asset impairment charges on the Company’s ROU asset and CEO, who reviews operating results(iii) $665,000 in accruals for common area charges associated with an unused space commitment to make decisions
EOTECH. In consideration of EOTECH’s assumption of certain lease obligations related to the Company’s Santa Clara, California campus, which assumed lease obligations pertain in part to excess space beyond that required EOTECH’s currently anticipated operation of the Photonics division, the Company agreed to pay EOTECH the amount of $2.1 million, which is payable in (i) one initial installment of $308,000 on January 10, 2022 and (ii) 7 equal quarterly installments of $259,000. The Company recorded an asset impairment charge against its ROU asset in the amount of $1.2 million associated with the excess space noted above. The Company recorded a liability to EOTECH in the amount of $665,000, the amount related to common area charges which are not included in the base rental payments or the lease liability on the Company’s consolidated balance sheet.
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, 2017 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to the reportable segments disclosed.
Each reportable segment is separately managed and has separate financial results that are reviewed by Intevac’s chief operating decision-maker. Each reportable segment contains closely related products that are unique to the particular segment. Segment operating profit is determined based upon internal performance measures used by the chief operating decision-maker.
Intevac derives the segment results from its internal management reporting system. The accounting policies Intevac uses to derive reportable segment results are substantially the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics, including orders, net revenues and operating income. Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. Intevac manages certain operating expenses separately at the corporate level. Intevac allocates certain of these corporate expenses to the segments in an amount equal to 3% of net revenues. Segment operating income excludes interest income/expense and other financial charges and income taxes according to how a particular reportable segment’s management is measured. Management does not consider impairment charges, gains and losses on divestitures and sales of intellectual property, and unallocated costs in measuring the performance of the reportable segments.
The Thin-film Equipment segment designs, develops and markets vacuum process equipment solutions for high-volume manufacturing of small substrates with precise thin-film properties, such as for the hard drive, solar cell and DCP industries, as well as other adjacent thin-film markets.
The Photonics segment develops compact, cost-effective, high-sensitivity digital-optical products for the capture and display oflow-light images. Intevac provides sensors, cameras and systems for government applications such as night vision and long-range target identification.
Information for each reportable segment for fiscal 2017, 2016 and 2015 is as follows:
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 | ||||||
|
|
|
|
|
|
INTEVAC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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 | ||||||
|
|
|
|
|
|
Net property, plant and equipment by geographic region at December 30, 2017 and December 31, 2016 was as follows:
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. Restructuring Charges
Employee Termination Costs | Other Exit Costs | Total | ||||||||||
(in thousands) | ||||||||||||
Balance at December 28, 2019 | $ | 0 | $ | 0 | $ | 0 | ||||||
Provision for restructuring charges under the 2020 Cost Reduction Plan | 103 | 0 | 103 | |||||||||
Cash payments made | (103 | ) | — | (103 | ) | |||||||
Balance at January 2, 2021 | $ | 0 | $ | 0 | $ | 0 | ||||||
Provision for restructuring charges under the 2021 Cost Reduction Plan | 319 | — | 319 | |||||||||
Cash payments made | (319 | ) | 0 | (319 | ) | |||||||
Provision for restructuring charges associated with Photonics sale (a) | 693 | 1,911 | 2,604 | |||||||||
Cash payments made | (96 | ) | — | (96 | ) | |||||||
Non-cash utilization | (239 | )(b) | (1,246 | )(c) | (1,485 | ) | ||||||
Balance at January 1, 2022 | $ | 358 | (d) | $ | 665 | $ | 1,023 | |||||
| ||||
| ||||
| ||||
| ||||
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 |
Item 9A. | Controls and Procedures |
of
Item 9B. |
Other Information |
Item | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
None.
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 20182022 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 |
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 | |
| Professional Services Agreement with Timothy Justyn dated January 4, 2022 | |
10.30+ (18) | 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 1, 2022, 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 |
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-Q filed August 3, 2021 |
(13) | Previously filed as an exhibit to the Company’s Report on Form 8-K filed |
Previously filed as an exhibit to the Company’s Form 10-K filed |
Previously filed as an exhibit to the Company’s Report on Form 8-K filed February 1, 2022 |
(16) | Previously filed as an exhibit to the Company’s Form 10-Q filed October |
Previously filed as an exhibit to the Company’s Report on Form 8-K filed |
Previously filed as an exhibit to the Company’s Form 10-Q filed May 1, 2018 |
(19) | Previously filed as an exhibit to the Company’s Report on Form 8-K filed |
(20) | Previously filed as an exhibit to the Company’s Definitive Proxy Statement filed April 14, 2021 |
(P) | Paper exhibit. |
+ | Management compensatory plan or arrangement |
INTEVAC, INC. |
/s/ JAMES MONIZ |
James Moniz |
Executive Vice President, Finance and Administration |
Chief Financial Officer, Secretary and Treasurer |
Signature | Title | Date | ||
/s/ | President, | February | ||
( | Chief Executive Officer and Director | |||
(Principal Executive Officer) | ||||
/s/ JAMES MONIZ | Executive Vice President, Finance and | February | ||
(James Moniz) | Administration, Chief Financial Officer, | |||
Secretary and Treasurer (Principal Financial | ||||
and Accounting Officer) | ||||
/s/ DAVID S. DURY | Chairman of Board | February | ||
(David S. Dury) | ||||
/s/ | Director | February | ||
( | ||||
/s/ | Director | February | ||
( | ||||
/s/ STEPHEN A. JAMISON | Director | February 17, 2022 | ||
(Stephen A. Jamison) | ||||
/s/ MICHELE F. | Director | February 17, 2022 | ||
(Michele F. Klein) | ||||
/s/ MARK P. POPOVICH | Director | February 17, 2022 | ||
(Mark P. Popovich) | ||||
/s/ THOMAS M. ROHRS | Director | February 17, 2022 | ||
(Thomas M. Rohrs) |
82