(Mark One) | ||
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended July 1, 2006 | ||
OR | ||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
California | 94-3125814 | |
(State or other jurisdiction of
incorporation or organization) |
(IRS Employer
Identification No.) |
No. | Page | |||||||
PART I. FINANCIAL INFORMATION | ||||||||
Item 1. | Financial Statements (unaudited) | 2 | ||||||
Condensed Consolidated Balance Sheets | 2 | |||||||
Condensed Consolidated Statements of Income and Comprehensive Income (Loss) | 3 | |||||||
Condensed Consolidated Statements of Cash Flows | 4 | |||||||
Notes to Condensed Consolidated Financial Statements | 5 | |||||||
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations | 16 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 24 | ||||||
Item 4. | Controls and Procedures | 25 | ||||||
PART II. OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | 26 | ||||||
Item 1A. | Risk Factors | 26 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 36 | ||||||
Item 3. | Defaults Upon Senior Securities | 36 | ||||||
Item 4. | Submission of Matters to a Vote of Security Holders | 37 | ||||||
Item 5. | Other Information | 37 | ||||||
Item 6. | Exhibits | 37 | ||||||
SIGNATURES
|
38 | |||||||
EXHIBIT 31.1 | ||||||||
EXHIBIT 31.2 | ||||||||
EXHIBIT 32.1 |
1
Item 1. | Financial Statements |
2
Three Months Ended
Six Months Ended
July 1,
July 2,
July 1,
July 2,
2006
2005
2006
2005
(Unaudited)
(In thousands, except per share amounts)
$
56,843
$
28,545
$
104,917
$
37,139
2,699
1,873
4,245
3,884
59,542
30,418
109,162
41,023
35,838
19,425
67,178
25,821
1,909
1,298
2,861
2,792
533
34
555
754
38,280
20,757
70,594
29,367
21,262
9,661
38,568
11,656
6,290
3,413
11,851
6,538
5,004
2,741
10,118
5,932
11,294
6,154
21,969
12,470
9,968
3,507
16,599
(814
)
729
423
1,327
854
10,697
3,930
17,926
40
1,364
3
1,582
10
$
9,333
$
3,927
$
16,344
$
30
34
(21
)
63
(37
)
$
9,367
$
3,906
$
16,407
$
(7
)
$
0.44
$
0.19
$
0.78
$
0.00
20,987
20,391
20,910
20,317
$
0.42
$
0.19
$
0.75
$
0.00
21,972
21,144
21,883
20,989
3
Six Months Ended
July 1,
July 2,
2006
2005
(Unaudited)
(In thousands)
$
16,344
$
30
1,240
1,049
555
754
1,180
5
4
(3,584
)
(10,253
)
(604
)
(8,446
)
15,740
(8,416
)
(183,453
)
(8,859
)
172,700
18,000
(2,196
)
(1,462
)
(12,949
)
7,679
2,223
1,427
2,223
1,427
52
(56
)
5,066
634
15,255
17,455
$
20,321
$
18,089
$
2,723
$
2
4
1. | Business Activities and Basis of Presentation |
2. | Concentrations |
3. | New Accounting Pronouncements |
5
4. | Inventories |
July 1, | December 31, | |||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Raw materials
|
$ | 17,234 | $ | 15,070 | ||||
Work-in-progress
|
13,757 | 6,303 | ||||||
Finished goods
|
2,866 | 3,464 | ||||||
$ | 33,857 | $ | 24,837 | |||||
6
Six Months Ended
July 1,
July 2,
2006
2005
(In thousands)
$
10,988
$
9,863
555
754
7
87
(2,058
)
(96
)
$
9,492
$
10,608
5. | Stock-Based Compensation |
7
Descriptions of Plans |
2004 Equity Incentive Plan |
2003 Employee Stock Purchase Plan |
Impact of the Adoption of SFAS 123(R) |
Three Months | Six Months | |||||||||
Ended | Ended | |||||||||
July 1, 2006 | July 1, 2006 | |||||||||
Stock-based compensation by type of award:
|
||||||||||
Stock options
|
$ | 552 | $ | 896 | ||||||
Employee stock purchase plan
|
167 | 283 | ||||||||
Amounts capitalized as inventory
|
(24 | ) | (56 | ) | ||||||
Total stock-based compensation
|
695 | 1,123 | ||||||||
Tax effect on stock-based compensation
|
(61 | ) | (99 | ) | ||||||
Net effect on net income
|
634 | 1,024 | ||||||||
Effect on earnings per share:
|
||||||||||
Basic
|
$ | 0.03 | $ | 0.05 | ||||||
Diluted
|
$ | 0.03 | $ | 0.04 |
8
Valuation Assumptions |
Three Months | ||||
Ended | ||||
July 1, 2006 | ||||
Stock Options | ||||
Expected volatility
|
81.71 | % | ||
Risk free interest rate
|
5.09 | % | ||
Expected term of options and purchase rights (in years)
|
5.76 | |||
Dividend yield
|
None |
Six Months Ended | ||||||||
July 1, 2006 | ||||||||
Employee | ||||||||
Stock | Stock Purchase | |||||||
Options | Plan | |||||||
Expected volatility
|
77.91 | % | 61.47 | % | ||||
Risk free interest rate
|
4.88 | % | 4.64 | % | ||||
Expected term of options and purchase rights (in years)
|
4.95 | 0.5 | ||||||
Dividend yield
|
None | None |
9
Expense Information Under SFAS 123(R) |
2004 Equity Incentive Plan |
Weighted Average | |||||||||||||||||
Remaining | |||||||||||||||||
Weighted Average | Contractual Term | Aggregate Intrinsic | |||||||||||||||
Shares | Exercise Price | (Years) | Value | ||||||||||||||
Options outstanding at December 31, 2005
|
1,867,570 | $ | 7.19 | 7.55 | $ | 11,482,717 | |||||||||||
Options granted
|
387,000 | $ | 19.40 | ||||||||||||||
Options forfeited
|
(38,760 | ) | $ | 8.06 | |||||||||||||
Options exercised
|
(260,700 | ) | $ | 7.18 | |||||||||||||
Options outstanding at July 1, 2006
|
1,955,110 | $ | 9.59 | 7.88 | $ | 23,781,813 | |||||||||||
Options exercisable at July 1, 2006
|
880,234 | $ | 7.79 | 6.93 | $ | 12,229,177 |
Options Outstanding | ||||||||||||||||||||
Options Exercisable | ||||||||||||||||||||
Weighted Average | ||||||||||||||||||||
Number of | Remaining | Weighted | Number | Weighted | ||||||||||||||||
Shares | Contractual Term | Average | Vested and | Average | ||||||||||||||||
Range of Exercise Prices | Outstanding | (In Years) | Exercise Price | Exercisable | Exercise Price | |||||||||||||||
$ 2.63 - $ 3.98
|
350,140 | 5.42 | $ | 2.88 | 277,049 | $ | 2.80 | |||||||||||||
$ 3.99 - $ 6.38
|
277,970 | 7.33 | $ | 4.55 | 86,885 | $ | 4.77 | |||||||||||||
$ 6.39 - $ 7.84
|
343,550 | 8.05 | $ | 7.57 | 45,150 | $ | 7.20 | |||||||||||||
$ 7.85 - $10.01
|
318,200 | 8.39 | $ | 9.04 | 202,900 | $ | 9.63 | |||||||||||||
$10.02 - $15.50
|
280,250 | 8.29 | $ | 12.60 | 268,250 | $ | 12.62 | |||||||||||||
$15.50 - $22.55
|
385,000 | 9.67 | $ | 19.39 | | $ | | |||||||||||||
$ 2.63 - $28.55
|
1,955,110 | 7.88 | $ | 9.59 | 880,234 | $ | 7.79 |
2003 Employee Stock Purchase Plan |
10
Prior to the Adoption of SFAS No. 123(R)
Three Months
Six Months
Ended
Ended
July 1, 2005
July 1, 2005
$
3,927
$
30
(717
)
(1,109
)
$
3,210
$
(1,079
)
$
0.19
$
0.00
$
0.16
$
(0.05
)
$
0.19
$
0.00
$
0.15
$
(0.05
)
Six Months Ended | ||||||||||||
Three Months | July 2, 2005 | July 2, 2005 | ||||||||||
Ended | ||||||||||||
July 2, 2005 | Employee | |||||||||||
Stock | ||||||||||||
Stock Options | Purchase Plan | Stock Options | ||||||||||
Expected volatility
|
91.43 | % | 93.02 | % | 92.65 | % | ||||||
Risk free interest rate
|
3.68 | % | 3.83 | % | 4.32 | % | ||||||
Expected term of options and purchase rights (in years)
|
5.0 | 1.5 | 6.6 | |||||||||
Dividend yield
|
None | None | None |
6. | Warranty |
11
Three Months
Six Months
Ended
Ended
July 1,
July 2,
July 1,
July 2,
2006
2005
2006
2005
(In thousands)
$
3,573
$
1,011
$
3,399
$
1,116
(720
)
(263
)
(1,844
)
(709
)
1,102
709
2,077
994
89
220
412
276
$
4,044
$
1,677
$
4,044
$
1,677
July 1, | December 31, | |||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Other accrued liabilities
|
$ | 3,111 | $ | 2,705 | ||||
Other long-term liabilities
|
933 | 694 | ||||||
Total warranty provision
|
$ | 4,044 | $ | 3,399 | ||||
7. | Guarantees |
8. | Cash, Cash Equivalents and Investments in Debt Securities |
12
July 1,
December 31,
2006
2005
(In thousands)
$
$
10,991
33,700
15,000
11,612
8,485
$
45,312
$
34,476
$
45,291
$
34,408
9. | Net Income Per Share |
Three Months Ended | Six Months Ended | |||||||||||||||||
July 1, | July 2, | July 1, | July 2, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||||
(In thousands) | ||||||||||||||||||
Numerator:
|
||||||||||||||||||
Numerator for diluted earnings per share income
available to common stockholders
|
$ | 9,333 | $ | 3,927 | $ | 16,344 | $ | 30 | ||||||||||
Denominator:
|
||||||||||||||||||
Denominator for basic earnings per share
weighted-average shares
|
20,987 | 20,391 | 20,910 | 20,317 | ||||||||||||||
Effect of dilutive securities:
|
||||||||||||||||||
Employee stock options(1)
|
985 | 753 | 973 | 672 | ||||||||||||||
Dilutive potential common shares
|
985 | 753 | 973 | 672 | ||||||||||||||
Denominator for diluted earnings per share adjusted
weighted-average shares and assumed conversions
|
21,972 | 21,144 | 21,883 | 20,989 | ||||||||||||||
(1) | Potentially dilutive securities, consisting of shares issuable upon exercise of employee stock options and weighted-average unamortized compensation expense, are excluded from the calculation of diluted EPS when their effect is anti-dilutive. The weighted average number of employee stock options excluded for the three-month periods ended July 1, 2006 and July 2, 2005 was 196,000 and 218,313, respectively, and the number of employee stock options excluded for the six-month periods ended July 1, 2006 and July 2, 2005 was 196,640 and 281,522, respectively. |
13
10. | Segment Reporting |
Segment Description |
Segment Profit or Loss and Segment Assets |
Business Segment Net Revenues |
Three Months Ended | Six Months Ended | ||||||||||||||||
July 1, | July 2, | July 1, | July 2 | ||||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||||||
(In thousands) | |||||||||||||||||
Equipment
|
$ | 56,465 | $ | 28,337 | $ | 104,038 | $ | 36,873 | |||||||||
Imaging
|
3,077 | 2,081 | 5,124 | 4,150 | |||||||||||||
Total
|
$ | 59,542 | $ | 30,418 | $ | 109,162 | $ | 41,023 | |||||||||
Business Segment Profit & Loss |
Three Months Ended | Six Months Ended | |||||||||||||||
July 1, | July 2, | July 1, | July 2, | |||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
(In thousands) | ||||||||||||||||
Equipment
|
$ | 10,974 | $ | 4,672 | $ | 19,454 | $ | 2,001 | ||||||||
Imaging
|
(1,159 | ) | (1,278 | ) | (3,028 | ) | (2,459 | ) | ||||||||
Corporate activities
|
153 | 113 | 173 | (356 | ) | |||||||||||
Operating income (loss)
|
9,968 | 3,507 | 16,599 | (814 | ) | |||||||||||
Interest income and other, net
|
729 | 423 | 1,327 | 854 | ||||||||||||
Income (loss) before income taxes
|
$ | 10,697 | $ | 3,930 | $ | 17,926 | $ | 40 | ||||||||
14
Business Segment Assets
July 1,
December 31,
2006
2005
(In thousands)
$
76,610
$
68,672
8,314
7,665
73,387
54,107
$
158,311
$
130,444
Geographic Area Net Trade Revenues |
Three Months Ended | Six Months Ended | ||||||||||||||||
July 1, | July 2, | July 1, | July 2, | ||||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||||||
(In thousands) | |||||||||||||||||
United States
|
$ | 8,073 | $ | 2,798 | $ | 16,629 | $ | 9,583 | |||||||||
Asia
|
51,452 | 27,332 | 92,516 | 30,967 | |||||||||||||
Europe
|
17 | 288 | 17 | 473 | |||||||||||||
Total
|
$ | 59,542 | $ | 30,418 | $ | 109,162 | $ | 41,023 | |||||||||
11. | Income Taxes |
12. | Capital Transactions |
13. | Financial Presentation |
15
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
Revenue Recognition |
16
Inventories |
Warranty |
Income Taxes |
17
Three Months Ended July 1, 2006 and July 2, 2005 |
Net revenues |
Three Months Ended | Change Over Prior | ||||||||||||||||
Period | |||||||||||||||||
July 1, | July 2, | ||||||||||||||||
2006 | 2005 | Amount | % | ||||||||||||||
(In thousands, except percentages) | |||||||||||||||||
Equipment net revenues
|
$ | 56,465 | $ | 28,337 | $ | 28,128 | 99% | ||||||||||
Imaging net revenues
|
3,077 | 2,081 | 996 | 48% | |||||||||||||
Total net revenues
|
$ | 59,542 | $ | 30,418 | $ | 29,124 | 96% | ||||||||||
18
Gross margin |
Three Months | |||||||||||||||||
Ended | Change Over | ||||||||||||||||
Prior Period | |||||||||||||||||
July 1, | July 2, | ||||||||||||||||
2006 | 2005 | Amount | % | ||||||||||||||
Equipment gross margin
|
36.4 | % | 33.4 | % | 3.0 pts | 8.8% | |||||||||||
Imaging gross margin
|
25.4 | % | 9.2 | % | 16.2 pts | 175.3% | |||||||||||
Total gross margin
|
35.7 | % | 31.8 | % | 3.9 pts | 12.4% | |||||||||||
Research and development |
19
Selling, general and administrative |
Interest income and other, net |
Three Months | ||||||||||||||||
Ended | Change Over | |||||||||||||||
Prior Period | ||||||||||||||||
July 1, | July 2, | |||||||||||||||
2006 | 2005 | Amount | % | |||||||||||||
(In thousands, except percentages) | ||||||||||||||||
Interest income and other, net
|
$ | 729 | $ | 423 | $ | 306 | 72 | % |
Provision for income taxes |
Three Months | ||||||||||||||||
Ended | Change Over | |||||||||||||||
Prior Period | ||||||||||||||||
July 1, | July 2, | |||||||||||||||
2005 | 2006 | Amount | % | |||||||||||||
(In thousands, except percentages) | ||||||||||||||||
Provision for income taxes
|
$ | 1,364 | $ | 3 | $ | 1,361 | 45,367 | % |
20
Six Months Ended July 1, 2006 and June 2, 2005 |
Net revenues |
Six Months Ended | Change Over | ||||||||||||||||
Prior Period | |||||||||||||||||
July 1, | July 2, | ||||||||||||||||
2006 | 2005 | Amount | % | ||||||||||||||
(In thousands, except percentages) | |||||||||||||||||
Equipment net revenues
|
$ | 104,038 | $ | 36,873 | $ | 67,165 | 182% | ||||||||||
Imaging net revenues
|
5,124 | 4,150 | 974 | 23% | |||||||||||||
Total net revenues
|
$ | 109,162 | $ | 41,023 | $ | 68,139 | 166% | ||||||||||
Gross margin |
Six Months | |||||||||||||||||
Ended | Change Over | ||||||||||||||||
Prior Period | |||||||||||||||||
July 1, | July 2, | ||||||||||||||||
2006 | 2005 | Amount | % | ||||||||||||||
Equipment gross margin
|
35.8 | % | 30.2 | % | 5.6 pts | 18.7% | |||||||||||
Imaging gross margin
|
25.7 | % | 12.1 | % | 13.6 pts | 112.7% | |||||||||||
Total gross margin
|
35.3 | % | 28.4 | % | 6.9 pts | 24.4% | |||||||||||
21
Research and development |
Six Months Ended | Change Over | |||||||||||||||
Prior Period | ||||||||||||||||
July 1, | July 2, | |||||||||||||||
2006 | 2005 | Amount | % | |||||||||||||
(In thousands, except percentages) | ||||||||||||||||
Research and development expense
|
$ | 11,851 | $ | 6,538 | $ | 5,313 | 81% | |||||||||
% of net revenues
|
10.9 | % | 15.9 | % |
Selling, general and administrative |
Six Months Ended | Change Over | |||||||||||||||
Prior Period | ||||||||||||||||
July 1, | July 2, | |||||||||||||||
2006 | 2005 | Amount | % | |||||||||||||
(In thousands, except percentages) | ||||||||||||||||
Selling, general and administrative expense
|
$ | 10,118 | $ | 5,932 | $ | 4,186 | 71% | |||||||||
% of net revenues
|
9.3 | % | 14.5 | % |
Interest income and other, net |
Six Months Ended | Change Over | |||||||||||||||
Prior Period | ||||||||||||||||
July 1, | July 2, | |||||||||||||||
2006 | 2005 | Amount | % | |||||||||||||
(In thousands, except percentages) | ||||||||||||||||
Interest income and other, net
|
$ | 1,327 | $ | 854 | $ | 473 | 55% |
Provision for income taxes |
Six Months Ended | Change Over | |||||||||||||||
Prior Period | ||||||||||||||||
July 1, | July 2, | |||||||||||||||
2006 | 2005 | Amount | % | |||||||||||||
(In thousands, except percentages) | ||||||||||||||||
Provision for income taxes
|
$ | 1,582 | $ | 10 | $ | 1,572 | 15,720% |
22
23
Payments Due by Period | ||||||||||||||||||||
Total | <1 Year | 1-3 Years | 3-5 Years | >5 Years | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Operating lease obligations
|
$ | 12,151 | $ | 3,249 | $ | 3,601 | $ | 3,713 | $ | 1,588 | ||||||||||
Purchase obligations
|
23,093 | 23,093 | | | | |||||||||||||||
Total
|
$ | 35,244 | $ | 26,342 | $ | 3,601 | $ | 3,713 | $ | 1,588 | ||||||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Fair | ||||||||||||||||||||||||||
2006 | 2007 | 2008 | Beyond | Total | Value | |||||||||||||||||||||
Cash equivalents
|
||||||||||||||||||||||||||
Fixed rate amounts
|
$ | 9,426 | | | | $ | 9,426 | $ | 9,421 | |||||||||||||||||
Weighted-average rate
|
5.12 | % | ||||||||||||||||||||||||
Variable rate amounts
|
$ | 4,860 | | | | $ | 4,860 | $ | 4,860 | |||||||||||||||||
Weighted-average rate
|
4.88 | % | ||||||||||||||||||||||||
Short-term investments
|
||||||||||||||||||||||||||
Fixed rate amounts
|
$ | 43,303 | $ | 2,009 | | | $ | 45,312 | $ | 45,291 | ||||||||||||||||
Weighted-average rate
|
5.12 | % | 4.8 | % | ||||||||||||||||||||||
Total investment portfolio
|
$ | 57,589 | $ | 2,009 | | | $ | 59,598 | $ | 59,572 |
24
Item 4. | Controls and Procedures |
25
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Our operating results fluctuate significantly from quarter to quarter, which may cause the price of our stock to decline. |
| changes in the demand, due to seasonality, cyclicality and other factors, for the computer systems, storage subsystems and consumer electronics containing disks our customers produce with our systems; and | |
| delays or problems in the introduction and acceptance of our new products, or delivery of existing products; | |
| announcements of new products, services or technological innovations by us or our competitors. |
26
We are exposed to risks associated with a highly concentrated customer base. |
Our long-term revenue growth is dependent on new products. If these new products are not successful, then our results of operations will be adversely affected. |
27
Demand for capital equipment is cyclical, which subjects our business to long periods of depressed revenues interspersed with periods of unusually high revenues. |
If the projected growth in demand for hard disk drives does not materialize and our customers do not replace or upgrade their installed base of disk sputtering systems, then future sales of our disk sputtering systems will suffer. |
28
Our products are complex, constantly evolving and often must be customized to individual customer requirements. |
Our sales cycle is long and unpredictable, which requires us to incur high sales and marketing expenses with no assurance that a sale will result. |
We operate in an intensely competitive marketplace, and our competitors have greater resources than we do. |
29
We experienced significant growth in our business and operations and if we do not appropriately manage this growth and any future growth, our operating results will be negatively affected. |
Our Imaging business depends heavily on government contracts, which are subject to immediate termination and are funded in increments. The termination of or failure to fund one or more of these contracts could have a negative impact on our operations. |
30
We may not be successful in maintaining and obtaining the necessary export licenses to conduct operations abroad, and the United States government may prevent proposed sales to foreign customers. |
Our sales of disk sputtering systems are dependent on substantial capital investment by our customers, far in excess of the cost of our products. |
Our stock price is volatile. |
| our perceived prospects; | |
| hard disk drive market expectations; | |
| variations in our operating results and whether we achieve our key business targets; | |
| sales or purchases of large blocks of our stock; | |
| changes in, or our failure to meet, our revenue and earnings estimates; | |
| changes in securities analysts buy or sell recommendations; | |
| differences between our reported results and those expected by investors and securities analysts; | |
| announcements of new contracts, products or technological innovations by us or our competitors; |
31
| market reaction to any acquisitions, joint ventures or strategic investments announced by us or our competitors; | |
| our high fixed operating expenses, including research and development expenses; | |
| developments in the financial markets; and | |
| general economic, political or stock market conditions in the United States and other major regions in which we do business. |
Changes in tax rates or tax liabilities could affect future results. |
Our future success depends on international sales and the management of global operations. |
| varying regional and geopolitical business conditions and demands; | |
| global trade issues; | |
| variations in protection of intellectual property and other legal rights in different countries; | |
| rising raw material and energy costs; | |
| variations in the ability to develop relationships with suppliers and other local businesses; | |
| changes in laws and regulations of the United States (including export restrictions) and other countries, as well as their interpretation and application; | |
| fluctuations in interest rates and currency exchange rates; |
32
| the need to provide sufficient levels of technical support in different locations; | |
| political instability, natural disasters (such as earthquakes, hurricanes or floods), pandemics, terrorism or acts of war where we have operations, suppliers or sales; | |
| cultural differences; and | |
| shipping delays. |
Changes in existing financial accounting standards or practices or taxation rules or practices may adversely affect our results of operations. |
We are required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price. |
Our dependence on suppliers for certain parts, some of them sole-sourced, makes us vulnerable to manufacturing interruptions and delays, which could affect our ability to meet customer demand. |
33
Our business depends on the integrity of our intellectual property rights. |
| any of our pending or future patent applications will be allowed or that any of the allowed applications will be issued as patents or will issue with claims of the scope we sought; | |
| any of our patents will not be invalidated, deemed unenforceable, circumvented or challenged; | |
| the rights granted under our patents will provide competitive advantages to us; | |
| other parties will not develop similar products, duplicate our products or design around our patents; or | |
| our patent rights, intellectual property laws or our agreements will adequately protect our intellectual property or competitive position. |
Failure to protect our intellectual property rights adequately could have a material adverse effect on our business. |
Our success is dependent on recruiting and retaining a highly talented work force. |
34
Changes in demand caused by fluctuations in interest and currency exchange rates may reduce our international sales. |
We may evaluate acquisition candidates and other diversification strategies. |
We use hazardous materials and are subject to risks of non-compliance with environmental and safety regulations. |
Future sales of shares of our common stock by our officers, directors and affiliates could cause our stock price to decline. |
35
Anti-takeover provisions in our charter documents and under California law could prevent or delay a change in control, which could negatively impact the value of our common stock by discouraging a favorable merger or acquisition of us. |
We could be involved in litigation. |
Business interruptions could adversely affect our operations. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults upon Senior Securities |
36
Item 4. | Submission of Matters to a Vote of Security-Holders |
Abstentions | |||||||||||||||||
Affirmative | Negative | Votes | and Broker | ||||||||||||||
Votes | Votes | Withheld | Non-Votes | ||||||||||||||
(a) Election of Directors
|
|||||||||||||||||
Norman H. Pond
|
19,296,325 | 471,708 | | 1,156,568 | |||||||||||||
Kevin Fairbairn
|
19,369,674 | 398,359 | | 1,156,568 | |||||||||||||
David S. Dury
|
18,814,164 | 953,869 | | 1,156,568 | |||||||||||||
Stanley J. Hill
|
18,887,373 | 880,660 | | 1,156,568 | |||||||||||||
Robert Lemos
|
18,664,418 | 1,103,615 | | 1,156,568 | |||||||||||||
Arthur L. Money
|
14,816,266 | 4,951,767 | | 1,156,568 | |||||||||||||
Ping Yang
|
19,369,224 | 398,809 | | 1,156,568 | |||||||||||||
(b) Proposal to approve an amendment to the 2004 Equity
Incentive Plan to increase the number of shares reserved for
issuance thereunder by 800,000
|
14,492,641 | 1,519,563 | | 3,755,829 | |||||||||||||
(c) Proposal to approve an amendment to the 2003 Employee
Stock Purchase Plan to increase the number of shares reserved
for issuance thereunder by 400,000 shares
|
15,499,675 | 512,329 | | 3,756,029 | |||||||||||||
(d) Ratification of Grant Thornton LLP as independent
public accountants for the fiscal year ending December 31,
2006
|
19,670,277 | 95,565 | | 2,191 |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit | ||||
Number | Description | |||
31 | .1 | Certification of President and 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, Treasurer and Secretary Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32 | .1 | Certification Pursuant to U.S.C. 1350 adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
37
INTEVAC, INC. |
By: | /s/ KEVIN FAIRBAIRN |
|
Kevin Fairbairn | |
President, Chief Executive Officer and Director | |
(Principal Executive Officer) |
By: | /s/ CHARLES B. EDDY III |
|
Charles B. Eddy III | |
Vice President, Finance and Administration, | |
Chief Financial Officer, Treasurer and Secretary | |
(Principal Financial and Accounting Officer) |
38
39
Exhibit
Number
Description
31
.1
Certification of President and 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, Treasurer and Secretary Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32
.1
Certification Pursuant to U.S.C. 1350 adopted Pursuant to
Section 906 of the Sarbanes- Oxley Act of 2002.
1. | I have reviewed this Quarterly Report on Form 10-Q of Intevac, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
|
/s/ KEVIN FAIRBAIRN | |||
|
||||
|
Kevin Fairbairn | |||
|
President, Chief Executive Officer and Director |
1. | I have reviewed this Quarterly Report on Form 10-Q of Intevac, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
|
/s/ CHARLES B. EDDY III | |||
|
||||
|
Charles B. Eddy III | |||
|
Vice President, Finance and Administration, | |||
|
Chief Financial Officer, Treasurer and Secretary |
|
By: | /s/ KEVIN FAIRBAIRN | ||||
|
||||||
|
Name: | Kevin Fairbairn | ||||
|
Title: | President, Chief Executive Officer and Director |
|
By: | /s/ CHARLES B. EDDY III | ||||
|
||||||
|
Name: | Charles B. Eddy III | ||||
|
Title: | Vice President, Finance and Administration, | ||||
|
Chief Financial Officer, Treasurer and Secretary |