Table of Contents

 
 
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
July 30, 2007
 
Date of Report (date of earliest event reported)
INTEVAC, INC.
 
(Exact name of Registrant as specified in its charter)
         
Delaware
(State or other jurisdiction
of incorporation or organization) 		  0-26946
(Commission File Number) 		  94-3125814
(IRS Employer
Identification Number)
3560 Bassett Street
Santa Clara, CA 95054
 
(Address of principal executive offices)
(408) 986-9888
 
(Registrant’s 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 communication 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))
 
 

 

TABLE OF CONTENTS

Item 2.02. Results of Operations and Financial Condition
Item 9.01. Financial Statements and Exhibits
EXHIBIT INDEX
EXHIBIT 99.1

Table of Contents

Item 2.02. Results of Operations and Financial Condition
     On July 30, 2007, Intevac, Inc. issued a press release reporting its financial results for the three and six months ended June 30, 2007. 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
     (d) Exhibits
  99.1      Press Release

 

Table of Contents

     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.
         
  INTEVAC, INC.
  		 
Date: July 30, 2007   By:   /s/ Charles B. Eddy III    
    Charles B. Eddy III   
    Vice President, Finance and Administration,
Chief Financial Officer, Treasurer and Secretary  		 
 

 

Table of Contents

EXHIBIT INDEX
     
Exhibit    
No   Description
 
   
99.1
  Press Release

 

 

Exhibit 99.1
     
(INTEVAC LOGO)
  3560 Bassett Street, Santa Clara CA 95054
 
     
Charles Eddy
  Claire McAdams
Chief Financial Officer
  Headgate Partners LLC
(408) 986-9888
  (530) 274-0551
INTEVAC ANNOUNCES RESULTS FOR THE SECOND QUARTER OF 2007
Santa Clara, Calif.—July 30, 2007—Intevac, Inc. (Company) (Nasdaq: IVAC) reported financial results for the quarter and six months ended June 30, 2007.
Net income for the quarter was $11.6 million, or $0.52 per diluted share, on 22.1 million weighted-average shares outstanding. Net income included $1.3 million of stock-based compensation expense, equivalent to $0.05 per diluted share. Second quarter earnings include the effect of adjusting the Company’s 2007 year-to-date income tax provision to an effective tax rate of 26.9%, from the 31.6% tax rate provided for in the first quarter of 2007. For the second quarter of 2006, net income was $9.3 million, or $0.42 per diluted share, on 22.0 million weighted average shares outstanding, which included $695,000 of stock-based compensation expense, equivalent to $0.03 per diluted share.
Revenues for the quarter were $72.1 million, including $68.5 million of Equipment revenues and Imaging revenues of $3.6 million. Equipment revenues consisted of twelve 200 Lean ® systems as well as disk lubrication systems, equipment upgrades, spares, consumables and service. Imaging revenues consisted of $2.5 million of research and development contracts and $1.1 million of product sales. In the second quarter of 2006, revenues were $59.5 million, including $56.4 million of Equipment revenues and $3.1 million of Imaging revenues, which included $378,000 of product sales.
Equipment and Imaging gross margins for the second quarter of 2007 rose to 43.1% and 39.5%, respectively, from 36.4% and 25.4% in the second quarter of 2006. Equipment margins improved primarily due to lower manufacturing costs as well as higher sales of spares and upgrades. Imaging margins improved primarily as the result of higher margins on development contracts and products. Consolidated gross margins improved to 42.8% from 35.7% in second quarter 2006.
Operating expenses for the quarter totaled $17.5 million, or 24.3% of revenues, versus $11.3 million, or 19.0% of revenues, in the second quarter of 2006. Operating expenses grew primarily as the result of increased spending on development of new Equipment products, increased business development expense and higher stock-based compensation expense.
Net income for the first six months of 2007 was $21.4 million, or $0.97 per diluted share, on 22.2 million weighted-average shares outstanding. Net income included $2.7 million of stock-based compensation expense, equivalent to $0.09 per diluted share. For the first six months of 2006, net income was $16.3 million, or $0.75 per diluted share, on 21.9 million weighted average shares outstanding, which included $1.1 million of stock-based compensation expense, equivalent to $0.04 per diluted share.
Revenues for the first six months were $148.5 million, including $141.0 million of Equipment revenues and Imaging revenues of $7.5 million. Equipment revenues consisted of twenty-five 200 Lean ® systems as well as disk lubrication systems, equipment upgrades, spares, consumables and service. Imaging revenues consisted of $5.3 million of research and development contracts and $2.2 million of product sales. In the first six months of 2006,

 

 

revenues were $109.2 million, including $104.1 million of Equipment revenues and $5.1 million of Imaging revenues, which included $879,000 of product sales.
Equipment and Imaging gross margins for the first six months of 2007 increased to 43.2% and 38.0%, respectively, from 35.8% and 25.7% in the first six months of 2006. Equipment margins improved primarily due to lower manufacturing costs as well as higher sales of spares and upgrades. Imaging margins improved primarily as the result of higher margins on development contracts and favorable adjustments related to contract closeouts. Consolidated gross margins improved to 42.8% from 35.3% in first six months of 2006.
Operating expenses for the first six months of 2007 totaled $37.2 million, or 25.0% of revenues, versus $22.0 million, or 20.1% of revenues, in the first six months of 2006. Operating expenses grew primarily as the result of increased spending on development of new Equipment products, increased business development expense and higher stock-based compensation expense.
Order backlog totaled $57.5 million on June 30, 2007, compared to $92.8 million on March 31, 2007, and $96.2 million on July 1, 2006. Backlog as of June 30, 2007 includes four 200 Lean ® systems.
“We are pleased to deliver strong financial results again this quarter, with gross margin and earnings per share exceeding guidance,” commented Kevin Fairbairn, president and chief executive officer of Intevac. “In the second quarter we accomplished two milestones of our growth strategy: the official launch of our Lean Etch™ semiconductor manufacturing system during SEMICON West and approval by the U.S. government to ship large quantities of our digital night vision modules to our NATO customer.”
Conference Call Information
The Company will discuss its financial results and outlook in a conference call today at 1:30 p.m. PDT (4:30 p.m. EDT). 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 Company’s 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 4:30 p.m. PDT. You may access the playback by calling (800) 642-1687 or, for international callers (706) 645-9291, and providing conference ID 6224367.
About Intevac
Intevac was founded in 1991 and has two businesses: Equipment and Imaging Instrumentation.
Equipment Business: Intevac is a leader in the design, manufacture and marketing of high-productivity “lean” manufacturing systems and has been producing “Lean Thinking” platforms since 1994. We are the leading supplier of magnetic media sputtering equipment to the hard disk drive industry and offer leading-edge, high-productivity etch systems to the semiconductor industry.
Imaging Instrumentation Business: Intevac is a leader in the development of leading-edge, high-sensitivity imaging products and miniature Raman instruments. We provide sensors, cameras and systems for government applications such as night vision and long-range target identification and we provide cameras and Raman systems to the industrial, physical science and life science markets.
For more information call 408-986-9888, or visit the Company’s website at www.intevac.com .
Lean Etch™ is a trademark, and 200 Lean ® is a registered trademark, of Intevac, Inc.
[Financial tables on following pages]

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
                                 
    3 months ended     6 months ended  
         
    June 30, 2007     July 1, 2006     June 30, 2007     July 1, 2006  
         
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
Net revenues
                               
Equipment
  $ 68,519     $ 56,465     $ 140,965     $ 104,038  
Imaging
    3,586       3,077       7,514       5,124  
         
Total net revenues
    72,105       59,542       148,479       109,162  
 
                               
Gross profit
    30,827       21,262       63,609       38,568  
Gross margin
                               
Equipment
    43.1 %     36.4 %     43.2 %     35.8 %
Imaging
    39.5 %     25.4 %     38.0 %     25.7 %
         
Consolidated
    42.8 %     35.7 %     42.8 %     35.3 %
 
                               
Operating expenses
                               
Research and development
    9,648       6,290       21,840       11,851  
Selling, general and administrative
    7,839       5,004       15,352       10,118  
     
Total operating expenses
    17,487       11,294       37,192       21,969  
 
                               
Operating income/(loss)
                               
Equipment Products
    15,842       10,974       30,831       19,454  
Imaging
    (1,515 )     (1,159 )     (3,115 )     (3,028 )
Corporate
    (987 )     153       (1,299 )     173  
         
Total operating profit
    13,340       9,968       26,417       16,599  
 
                               
Other income
    1,538       729       2,858       1,327  
         
Profit before provision for income taxes
    14,878       10,697       29,275       17,926  
Provision for income taxes
    3,326       1,364       7,878       1,582  
         
Net income
  $ 11,552     $ 9,333     $ 21,397     $ 16,344  
 
                       
 
                               
Income per share
                               
Basic
  $ 0.54     $ 0.44     $ 1.00     $ 0.78  
Diluted
  $ 0.52     $ 0.42     $ 0.97     $ 0.75  
Weighted average common shares outstanding
                               
Basic
    21,396       20,987       21,345       20,910  
Diluted
    22,146       21,972       22,167       21,883  
-more-

 

 

                 
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                 
    June 30, 2007     Dec. 31, 2006  
     
    (Unaudited)          
ASSETS
               
Current assets
               
Cash, cash equivalents and short term investments
  $ 105,435     $ 95,035  
Accounts receivable, net
    38,981       39,927  
Inventories
    27,870       37,942  
Deferred tax assets
    4,100       3,269  
Prepaid expenses and other current assets
    2,044       2,506  
     
Total current assets
    178,430       178,679  
 
               
Long term investments
    12,000       8,000  
Property, plant and equipment, net
    15,004       13,546  
Investment in 601 California Avenue LLC
    2,431       2,431  
Deferred tax assets
    1,312       1,312  
Goodwill
    5,434       —  
Other long-term assets
    2,432       2,035  
     
Total assets
  $ 217,043     $ 206,003  
 
           
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
 
               
Current liabilities
               
Notes payable
  $ 1,945       —  
Accounts payable
    9,815     $ 15,994  
Accrued payroll and related liabilities
    8,541       11,769  
Other accrued liabilities
    7,467       6,612  
Customer advances
    15,387       26,243  
     
Total current liabilities
    43,155       60,618  
 
               
Other long-term liabilities
    2,787       1,075  
Shareholders’ equity
               
Common stock
    101,346       99,468  
Paid in Capital
    10,825       7,319  
Accumulated other comprehensive income
    364       354  
Retained earnings
    58,566       37,169  
     
Total shareholders’ equity
    171,101       144,310  
     
Total liabilities and shareholders’ equity
  $ 217,043     $ 206,003  
 
           
-more-

 

 

SUPPLEMENTAL INFORMATION REGARDING IMPACT OF THE ADOPTION OF SFAS 123(R)
(In Thousands, except per share amounts)
(Unaudited)
     The effect of recording stock-based compensation for the three- and six-month periods ended June 30, 2007 and July 1, 2006 were as follows:
                                 
    Three Months Ended     Six Months Ended  
    June 30, 2007     July 1, 2006     June 30, 2007     July 1, 2006  
Stock-based compensation by type of award:
                               
Stock options
  $ 1,169     $ 552     $ 2,314     $ 896  
Employee Stock Purchase Plan
    214       167       427       283  
Amounts capitalized as inventory
    (68 )     (24 )     (72 )     (56 )
 
                       
Total stock-based compensation
    1,315       695       2,669       1,123  
Tax effect on stock-based compensation
    (290 )     (61 )     (718 )     (99 )
 
                       
Net effect on net income
    1,025       634       1,951       1,024  
 
                       
 
                               
Effect on earnings per share:
                               
Basic
  $ 0.05     $ 0.03     $ 0.09     $ 0.05  
Diluted
  $ 0.05     $ 0.03     $ 0.09     $ 0.04  
     Approximately $72,000 and $56,000 of stock-based compensation was capitalized in inventory at June 30, 2007 and July 1, 2006, respectively.