SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
October 30, 2006
Date of Report (date of earliest event reported)
INTEVAC, INC.
(Exact name of Registrant as specified in its charter)
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State of California
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0-26946
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94-3125814
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(State or other jurisdiction
of incorporation or organization)
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(Commission File Number)
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(IRS Employer
Identification Number)
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3560 Bassett Street
Santa Clara, CA 95054
(Address of principal executive offices)
(408) 986-9888
(Registrants telephone number, including area code)
N/A
(Former name or former address if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On October 30, 2006, Intevac, Inc. issued a press release reporting its financial results for
the three and nine months ended September 30, 2006. A copy of the press release issued by the
Company concerning the foregoing results is furnished herewith as Exhibit 99.1 and is incorporated
herein by reference.
The foregoing information is intended to be furnished under Item 2.02 of Form 8-K, Results of
Operations and Financial Condition. This information shall not be deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated
by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act,
except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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INTEVAC, INC.
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Date: October 30, 2006
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By:
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/s/ CHARLES B. EDDY III
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Charles B. Eddy III
Vice President, Finance and Administration,
Chief Financial Officer, Treasurer and Secretary
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Exhibit Index
99.1 Press Release.
Exhibit 99.1
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3560 Bassett Street, Santa Clara CA 95054
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Charles Eddy
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Dan Matsui/Gene
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Heller
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Chief Financial Officer
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Silverman Heller
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Associates
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(408) 986-9888
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(310) 208-2550
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INTEVAC INC. REPORTS FINANCIAL RESULTS FOR THIRD-QUARTER 2006
Revenue and Net Income Significantly Exceed Expectations
Santa Clara, Calif.Oct. 30, 2006Intevac, Inc. (Nasdaq: IVAC) reported financial results for the
third quarter and nine months ended September 30, 2006.
Net income for the quarter was $9.0 million, or $0.41 per diluted share on 21.9 million
weighted-average shares outstanding, which included $878,000 of non-cash stock-based compensation
expense. For third-quarter 2005, net income was $6.2 million, or $0.29 per share on 21.4 million
weighted-average shares outstanding, which did not include non-cash stock-based compensation
expense.
Revenues for the quarter were $54.8 million, including $51.6 million of Equipment revenues and $3.2
million of Imaging revenues. Equipment revenues consisted of nine magnetic media manufacturing
systems, disk lubrication systems, equipment upgrades, spares, consumables, and service. Imaging
revenues consisted of $2.7 million of research and development contracts and $465,000 of product
sales. In third-quarter 2005, net revenues were $43.5 million, including $41.5 million of Equipment
revenues and $2.0 million of Imaging revenues, which included $343,000 of product sales.
Equipment gross margins for the quarter rose to 42.5% from 32.0% in third-quarter 2005, and Imaging
gross margins increased to 41.1% from 13.8% in third-quarter 2005. Equipment margins improved
primarily from lower manufacturing costs, higher average selling prices for 200 Lean
®
systems, and higher sales of spares and upgrades. Imaging margins improved primarily as the result
of favorable adjustments related to closing our prior year government rate audits and a higher
percentage of revenue being derived from fully funded development contracts. Consolidated gross
margins improved to 42.5% from 31.2% in third-quarter 2005.
Operating expenses for the quarter totaled $14.1 million, or 26% of revenues, versus $7.6 million,
or 18% of revenues, in third-quarter 2005. Operating expenses increased as the result of higher
spending in Equipment related to research and development and business development, provisions for
employee profit sharing and bonus plans, and the inclusion of stock-based compensation expense in
third-quarter 2006 results.
Net income for the first nine months of 2006 was $25.4 million, or $1.16 per diluted share on 21.9
million weighted-average shares outstanding, which included $2.0 million of non-cash stock-based
compensation expense. For the first nine-months of 2005, net income was $6.2 million, or $0.29 per
diluted
share on 21.1 million weighted-average shares outstanding, which did not include non-cash
stock-based compensation expense.
Revenues for the first nine months of 2006 were $164.0 million, including $155.7 million of
Equipment revenues and $8.3 million of Imaging revenues. Equipment revenues consisted of
29 magnetic media manufacturing systems, disk lubrication systems, equipment upgrades, spares,
consumables, and service. Imaging revenues consisted of $7.0 million of research and development
contracts and $1.3 million of product sales. In the first nine months of 2005, net revenues were
$84.5 million, including $78.4 million of Equipment revenues and $6.1 million of Imaging revenues.
Equipment and Imaging gross margins for the first nine-months of 2006 increased to 38.0% and 31.6%,
respectively, from 31.2% and 12.7%, respectively, in the first nine months of 2005. Equipment
margins for the quarter improved primarily from lower manufacturing costs, higher average selling
prices for 200 Lean
®
systems, and increased sales of spares and upgrades. Imaging
margins improved primarily as the result of favorable adjustments related to closing our prior year
government rate audits and a higher percentage of revenue being derived from fully funded
development contracts. Consolidated gross margins improved to 37.7% from 29.8% in the
first nine months of 2005.
Order backlog totaled $129.7 million on September 30, 2006, compared to $96.2 million on July 1,
2006, and $65.4 million on October 1, 2005. Backlog as of September 30, 2006, included twenty-four
200 Lean systems and excludes orders for two 200 Lean systems subsequently received.
Intevac Chief Executive Kevin Fairbairn commented: This was a tremendous quarter for Intevac. We
delivered significantly more revenue and net income than we expected at the beginning of the
quarter. Our Imaging business significantly improved its financial performance and received its
first volume production order for LIVAR
®
cameras. Good progress was made in both
Equipment and Imaging in new product development activities that will drive the future growth of
the company.
Conference Call Information
The Company will discuss its financial results in a conference call today at 1:30 p.m. PST (4:30
p.m. EST). To participate in the teleconference, please call toll-free (800) 291-8929 prior to the
start time. For international callers, the dial-in number is (706) 634-0478. You may also listen
live via the Internet at the Companys website, www.Intevac.com, under the Investors link, or at
www.earnings.com. For those unable to attend, these web sites will host an archive of the call.
Additionally, a telephone replay of the call will be available for 48 hours beginning today at 3:30
p.m. PST. You may access the playback by calling (800) 642-1687 or, for international callers (706)
645-9291, and providing conference ID 8532356.
About Intevac
Intevac is the worlds leading supplier of disk sputtering equipment to manufacturers of magnetic
media used in hard disk drives and a developer and provider of leading edge extreme low light
imaging sensors, cameras and systems. For more information please visit our website at
www.intevac.com
.
200 Lean
®
and LIVAR
®
are registered trademarks of Intevac,
Inc.
[Financial tables on following pages]
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
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3 months ended
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9 months ended
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Sept. 30,
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Oct. 1,
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Sept. 30,
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Oct. 1,
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2006
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2005
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2006
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2005
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(Unaudited)
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(Unaudited)
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(Unaudited)
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(Unaudited)
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Net revenues
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Equipment
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$
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51,625
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$
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41,519
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155,663
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$
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78,392
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Imaging
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3,204
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1,988
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8,328
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6,138
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Total net revenues
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54,829
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43,507
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163,991
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84,530
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Gross profit
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23,280
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13,554
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61,848
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25,210
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Gross margin
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Equipment
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42.5
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%
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32.0
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%
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38.0
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%
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31.2
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%
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Imaging
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41.1
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%
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13.8
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%
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31.6
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%
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12.7
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%
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Consolidated
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42.5
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%
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31.2
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%
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37.7
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%
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29.8
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%
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Operating expenses
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|
|
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Research and development
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8,571
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3,897
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20,422
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10,435
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Selling, general and administrative
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5,565
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3,746
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15,683
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9,678
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Total operating expenses
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14,136
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7,643
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36,105
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20,113
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Operating income/(loss)
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|
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Equipment Products
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9,833
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7,177
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29,287
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9,178
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Imaging
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(673
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)
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(1,415
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)
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|
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(3,701
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)
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(3,874
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)
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Corporate
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(16
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)
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149
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157
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|
(207
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)
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Total operating profit
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9,144
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|
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5,911
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25,743
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5,097
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|
|
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|
|
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|
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Other income
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1,113
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|
|
438
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2,440
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1,292
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Profit before provision for income taxes
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10,257
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6,349
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28,183
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|
|
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6,389
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|
Provision for income taxes
|
|
|
1,244
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|
|
|
158
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|
|
|
2,826
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|
|
|
168
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|
|
|
|
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Net income
|
|
$
|
9,013
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|
|
$
|
6,191
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|
|
$
|
25,357
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|
|
$
|
6,221
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|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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Income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Basic
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|
$
|
0.43
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|
|
$
|
0.30
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|
|
$
|
1.21
|
|
|
$
|
0.30
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Diluted
|
|
$
|
0.41
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|
|
$
|
0.29
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|
|
$
|
1.16
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|
|
$
|
0.29
|
|
Weighted average common shares outstanding
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
21,082
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|
|
|
20,567
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|
|
|
20,967
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|
|
|
20,400
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|
Diluted
|
|
|
21,889
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|
|
|
21,438
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|
|
|
21,888
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|
|
|
21,138
|
|
-more-
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Sept 30,
|
|
|
Dec. 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
|
(Unaudited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Current assets
|
|
|
|
|
|
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|
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Cash, cash equivalents and short term investments
|
|
$
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85,857
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|
$
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49,731
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Accounts receivable, net
|
|
|
33,999
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|
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|
42,847
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Inventories
|
|
|
41,372
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|
|
|
24,837
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|
Deferred tax assets
|
|
|
2,479
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|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
2,272
|
|
|
|
1,814
|
|
|
|
|
Total current assets
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|
|
165,979
|
|
|
|
119,229
|
|
|
|
|
|
|
|
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Long term investments
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|
4,000
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|
|
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|
|
Property, plant and equipment, net
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|
|
11,392
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|
|
|
7,980
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Investment in 601 California Avenue LLC
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|
|
2,431
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|
2,431
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Other long-term assets
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1,770
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|
|
804
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Total assets
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|
$
|
185,572
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|
|
$
|
130,444
|
|
|
|
|
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|
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LIABILITIES AND SHAREHOLDERS EQUITY
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|
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Current liabilities
|
|
|
|
|
|
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|
|
Accounts payable
|
|
$
|
17,924
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|
|
$
|
7,049
|
|
Accrued payroll and related liabilities
|
|
|
8,026
|
|
|
|
5,509
|
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Other accrued liabilities
|
|
|
6,383
|
|
|
|
6,182
|
|
Customer advances
|
|
|
33,849
|
|
|
|
23,136
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|
|
|
|
Total current liabilities
|
|
|
66,182
|
|
|
|
41,876
|
|
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
|
955
|
|
|
|
694
|
|
Shareholders equity
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
100,193
|
|
|
|
97,165
|
|
Paid in Capital Stock Compensation
|
|
|
2,119
|
|
|
|
|
|
Accumulated other comprehensive income
|
|
|
295
|
|
|
|
238
|
|
Retained earnings (deficit)
|
|
|
15,828
|
|
|
|
(9,529
|
)
|
|
|
|
Total shareholders equity
|
|
|
118,435
|
|
|
|
87,874
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
185,572
|
|
|
$
|
130,444
|
|
|
|
|
|
|
|
|
-more-
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION TO GAAP
(in thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended Sept. 30, 2006
|
|
|
|
GAAP
|
|
|
Non-GAAP
Adjustment
|
|
|
Non-GAAP
|
|
Revenues
|
|
$
|
54,829
|
|
|
|
|
|
|
$
|
54,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
31,549
|
|
|
|
(70
|
)
A
|
|
|
31,479
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
23,280
|
|
|
|
70
|
|
|
|
23,350
|
|
Gross margin
|
|
|
42.5
|
%
|
|
|
|
|
|
|
42.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
8,571
|
|
|
|
(376
|
)
A
|
|
|
8,195
|
|
Selling, general and administrative
|
|
|
5,565
|
|
|
|
(432
|
)
A
|
|
|
5,133
|
|
|
|
|
|
|
|
|
Total operating expense
|
|
|
14,136
|
|
|
|
(808
|
)
|
|
|
13,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
9,144
|
|
|
|
878
|
|
|
|
10,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
1,113
|
|
|
|
|
|
|
|
1,113
|
|
|
|
|
|
|
|
|
Profit before provision for income taxes
|
|
|
10,257
|
|
|
|
878
|
|
|
|
11,135
|
|
Provision for income taxes
|
|
|
1,244
|
|
|
|
106
|
|
|
|
1,350
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
9,013
|
|
|
$
|
772
|
|
|
$
|
9,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.43
|
|
|
$
|
0.03
|
|
|
$
|
0.46
|
|
Diluted
|
|
$
|
0.41
|
|
|
$
|
0.04
|
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
21,082
|
|
|
|
|
|
|
|
21,082
|
|
Diluted
|
|
|
21,889
|
|
|
|
|
|
|
|
21,889
|
|
Footnotes for the three-months ended September 30, 2006
A
To exclude stock-based compensation expense (Cost of Revenue $70, Research and Development $376, Selling, General and
Administrative $432) for the three-months ended September 30, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine-Months Ended Sept. 30, 2006
|
|
|
|
GAAP
|
|
|
Non-GAAP
Adjustment
|
|
|
Non-GAAP
|
|
Revenues
|
|
$
|
163,991
|
|
|
|
|
|
|
$
|
163,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
102,143
|
|
|
$
|
(242
|
)
A
|
|
|
101,901
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
61,848
|
|
|
|
242
|
|
|
|
62,090
|
|
Gross margin
|
|
|
37.7
|
%
|
|
|
|
|
|
|
37.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
20,422
|
|
|
|
(908
|
)
A
|
|
|
19,514
|
|
Selling, general and administrative
|
|
|
15,683
|
|
|
|
(884
|
)
A
|
|
|
14,799
|
|
|
|
|
|
|
|
|
Total operating expense
|
|
|
36,105
|
|
|
|
(1,792
|
)
|
|
|
34,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
25,743
|
|
|
|
2,034
|
|
|
|
27,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
2,440
|
|
|
|
|
|
|
|
2,440
|
|
|
|
|
|
|
|
|
Profit before provision for income taxes
|
|
|
28,183
|
|
|
|
2,034
|
|
|
|
30,217
|
|
Provision for income taxes
|
|
|
2,826
|
|
|
|
203
|
|
|
|
3,029
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
25,357
|
|
|
$
|
1,831
|
|
|
$
|
27,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.21
|
|
|
$
|
0.09
|
|
|
$
|
1.30
|
|
Diluted
|
|
$
|
1.16
|
|
|
$
|
0.08
|
|
|
$
|
1.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
20,967
|
|
|
|
|
|
|
|
20,967
|
|
Diluted
|
|
|
21,888
|
|
|
|
|
|
|
|
21,888
|
|
Footnotes for the nine-months ended September 30, 2006
A
To exclude stock-based compensation expense (Cost of Revenue $242, Research and Development $908, Selling General and
Administrative $884 for the nine-months ended September 30, 2006.
The non-GAAP measures provided herein exclude the impact of non-cash charges related to stock-based compensation expense. We
believe these measures are useful to investors because they provide an alternative method for measuring the operating
performance of the Companys business, excluding stock-based compensation expense, and provide for comparability between
periods due the absence of stock-based compensation in comparative prior year periods.
The non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be
different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a
substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.