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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
August 1, 2006
Date of Report (date of earliest event reported)
INTEVAC, INC.
(Exact name of Registrant as specified in its charter)
         
State of California   0-26946   94-3125814
(State or other jurisdiction   (Commission File Number)   (IRS Employer
of incorporation or organization)       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 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))
 
 

 

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

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Item 2.02. Results of Operations and Financial Condition
     On August 1, 2006, Intevac, Inc. issued a press release reporting its financial results for the three and six months ended July 1, 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.

 

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     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: August 1, 2006
  By:   /s/ CHARLES B. EDDY III    
 
           
 
      Charles B. Eddy III    
 
      Vice President, Finance and Administration,    
 
      Chief Financial Officer, Treasurer and Secretary    

 

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INDEX TO EXHIBITS
     
Number   Description
99.1
  Press Release.

 

 

Exhibit 99.1
     
(INTEVAC LOGO)
  3560 Bassett Street, Santa Clara CA 95054
     
Charles Eddy
  Dan Matsui/Gene Heller
Chief Financial Officer
  Silverman Heller Associates
(408) 986-9888
  (310) 208-2550
INTEVAC INC. REPORTS FINANCIAL RESULTS FOR SECOND-QUARTER 2006
Record Quarterly Revenue
Santa Clara, Calif.—Aug. 1, 2006—Intevac, Inc. (Nasdaq: IVAC) reported financial results for the second quarter and six months ended July 1, 2006.
Net income for the quarter was $9.3 million, or $0.42 per diluted share on 22.0 million weighted-average shares outstanding, which included $695,000 of non-cash stock-based compensation expense. Second quarter earnings include the effect of adjusting the Company’s 2006 year-to-date income tax provision to an effective tax rate of 8.8% from the 3.0% tax rate provided for in the first quarter of 2006. The increase in the effective tax rate was a result of the Company projecting a higher level of income for 2006 than it had projected earlier in the year. For second-quarter 2005, net income was $3.9 million, or $0.19 per share on 21.1 million weighted-average shares outstanding, which did not include non-cash stock-based compensation expense.
Revenues for the quarter were $59.5 million, including $56.4 million of Equipment revenues and $3.1 million of Imaging revenues. Equipment revenues consisted of eleven 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 $378,000 of product sales. In second-quarter 2005, net revenues were $30.4 million, including $28.3 million of Equipment revenues and $2.1 million of Imaging revenues.
Equipment and Imaging gross margins for the quarter increased to 36.4% and 25.4%, respectively, from 33.4% and 9.2%, respectively, in second-quarter 2005. Equipment margins for the quarter improved primarily from lower manufacturing costs and higher average selling prices for 200 Lean ® systems. Imaging margins improved primarily as the result of a higher percentage of revenue being derived from fully funded development contracts. Consolidated gross margins improved to 35.7% from 31.8% in second-quarter 2005.
Operating expenses for the quarter totaled $11.3 million, or 19% of revenues, versus $6.2 million, or 20% of revenues, in second-quarter 2005. Operating expenses increased as the result of higher R&D spending in Equipment, provisions for employee profit sharing and bonus plans, the inclusion of stock-based compensation expense in second-quarter 2006 results, and higher costs in Equipment related to business development, customer service, and support.
Net income for the first six months of 2006 was $16.3 million, or $0.75 per diluted share on 21.9 million weighted-average shares outstanding, which included $1.1 million of non-cash stock- based compensation expense. For the first six-months of 2005, net income was $30,000, or less than one cent per share on 21.0 million weighted-average shares outstanding, which did not include non-cash stock-based compensation expense.
Revenues for the first six months of 2006 were $109.2 million, including $104.1 million of Equipment revenues and $5.1 million of Imaging revenues. Equipment revenues consisted of twenty magnetic media manufacturing systems, disk lubrication systems, equipment upgrades, spares, consumables, and service. Imaging revenues consisted of $4.2 million of research and

 

 

development contracts and $879,000 of product sales. In the first six months of 2005, net revenues were $41.0 million, including $36.9 million of Equipment revenues and $4.1 million of Imaging revenues.
Equipment and Imaging gross margins for the first six-months of 2006 increased to 35.8% and 25.7%, respectively, from 30.2% and 12.1%, respectively, in the first six months of 2005. Equipment margins improved primarily from lower manufacturing costs and higher average selling prices for 200 Lean ® systems. Imaging margins improved primarily as the result of a higher percentage of revenue being derived from fully funded development contracts. Consolidated gross margins improved to 35.3% from 28.4% in first six months of 2005.
Order backlog totaled $96.2 million on July 1, 2006, compared to $124.8 million on April 1, 2006, and $65.4 million on July 2, 2005. Backlog as of July 1, 2006, included twenty 200 Lean systems and excludes orders for twelve 200 Lean systems subsequently received. A portion of the thirty-two 200 Leans currently in backlog are scheduled for delivery in 2007.
Intevac Chief Executive Kevin Fairbairn commented: “We are pleased to report excellent second-quarter results, well above our prior guidance on revenue and net income. Record revenues of $59.5 million were achieved as we delivered eleven 200 Leans, all configured for perpendicular production, and multiple disk lubrication systems. Orders for spares and upgrades were also strong and contributed to the revenue upside. Cash grew by $20 million to $66 million. On top of this excellent financial performance we continued to invest heavily in developing new capabilities for the hard drive industry, an entirely new equipment product line, and extreme low light imaging products.”
Conference Call Information
The Company will discuss its financial results 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 3:30 p.m. PDT. You may access the playback by calling (800) 642-1687 or, for international callers (706) 645-9291, and providing conference ID 3098710.
About Intevac
Intevac is the world’s 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 ® 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  
    July 1,     July 2,     July 1,     July 2,  
    2006     2005     2006     2005  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
Net revenues
                               
Equipment
  $ 56,465     $ 28,337     $ 104,038     $ 36,873  
Imaging
    3,077       2,081       5,124       4,150  
         
Total net revenues
    59,542       30,418       109,162       41,023  
 
                               
Gross profit
    21,262       9,661       38,568       11,656  
Gross margin
                               
Equipment
    36.4 %     33.4 %     35.8 %     30.2 %
Imaging
    25.4 %     9.2 %     25.7 %     12.1 %
         
Consolidated
    35.7 %     31.8 %     35.3 %     28.4 %
 
                               
Operating expenses
                               
Research and development
    6,290       3,413       11,851       6,538  
Selling, general and administrative
    5,004       2,741       10,118       5,932  
         
Total operating expenses
    11,294       6,154       21,969       12,470  
 
                               
Operating income/(loss)
                               
Equipment Products
    10,974       4,672       19,454       2,001  
Imaging
    (1,159 )     (1,278 )     (3,028 )     (2,459 )
Corporate
    153       113       173       (356 )
         
Total operating profit/(loss)
    9,968       3,507       16,599       (814 )
 
                               
Other income
    729       423       1,327       854  
         
Profit before provision for income taxes
    10,697       3,930       17,926       40  
Provision for income taxes
    1,364       3       1,582       10  
         
Net income
  $ 9,333     $ 3,927     $ 16,344     $ 30  
                 
 
                               
Income per share
                               
Basic
  $ 0.44     $ 0.19     $ 0.78     $ 0.00  
Diluted
  $ 0.42     $ 0.19     $ 0.75     $ 0.00  
Weighted average common shares outstanding
                               
Basic
    20,987       20,391       20,910       20,317  
Diluted
    21,972       21,144       21,883       20,989  
-more-

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                 
    July 1,     Dec. 31,  
    2006     2005  
    (Unaudited)          
ASSETS
               
 
               
Current assets
               
Cash, cash equivalents and short term investments
  $ 65,633     $ 49,731  
Accounts receivable, net
    41,558       42,847  
Inventories — production
    30,991       21,373  
Inventories — pending acceptance at customer site
    2,866       3,464  
Deferred tax assets
    2,479       —  
Prepaid expenses and other current assets
    2,063       1,814  
     
Total current assets
    145,590       119,229  
 
               
Property, plant and equipment, net
    8,853       7,980  
Investment in 601 California Avenue LLC
    2,431       2,431  
Other long-term assets
    1,437       804  
     
Total assets
  $ 158,311     $ 130,444  
         
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
 
               
Current liabilities
               
Accounts payable
  $ 11,639     $ 7,049  
Accrued payroll and related liabilities
    6,634       5,509  
Other accrued liabilities
    5,852       6,182  
Customer advances
    25,569       23,136  
     
Total current liabilities
    49,694       41,876  
 
               
Other long-term liabilities
    933       694  
Shareholders’ equity
               
Common stock
    99,388       97,165  
Paid in Capital — Stock Compensation
    1,180       —  
Accumulated other comprehensive income
    301       238  
Retained earnings (deficit)
    6,815       (9,529 )
     
Total shareholders’ equity
    107,684       87,874  
     
Total liabilities and shareholders’ equity
  $ 158,311     $ 130,444  
         
-more-

 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION TO GAAP
(in thousands, except per share data)
(Unaudited)
                         
    Three-Months Ended July 1, 2006  
            Non-GAAP        
    GAAP     Adjustment     Non-GAAP  
Revenues
  $ 59,542             $ 59,542  
 
                       
Cost of revenue
    38,280       ($93 ) A     38,187  
             
Gross profit
    21,262       93       21,355  
Gross margin
    35.7 %             35.9 %
 
                       
Operating expense
                       
Research and development
    6,290       (328 ) A     5,962  
Selling, general and administrative
    5,004       (274 ) A     4,730  
             
Total operating expense
    11,294       (602 )     10,692  
 
                       
Operating income
    9,968       695       10,663  
 
                       
Other income
    729               729  
             
Profit before provision for income taxes
    10,697       695       11,392  
Provision for income taxes
    1,364       61       1,425  
             
Net Income
  $ 9,333     $ 634     $ 9,967  
                 
 
                       
Income per share
                       
Basic
  $ 0.44     $ 0.03     $ 0.47  
Diluted
  $ 0.42     $ 0.03     $ 0.45  
 
                       
Weighted average common shares outstanding
                       
Basic
    20,987               20,987  
Diluted
    21,972               21,972  
 
Footnotes — for the three-months ended July 1, 2006
 
A To exclude stock-based compensation expense (Cost of Revenue $93, Research and Development $328, Marketing and Administrative $274) for the three-months ended July 1, 2006.

 

 

                         
    Six-Months Ended July 1, 2006  
            Non-GAAP        
    GAAP     Adjustment     Non-GAAP  
Revenues
  $ 109,162             $ 109,162  
 
                       
Cost of revenue
    70,594       ($139 ) A     70,455  
             
Gross profit
    38,568       139       38,707  
Gross margin
    35.3 %             35.5 %
 
                       
Operating expense
                       
Research and development
    11,851       (532 ) A     11,319  
Selling, general and administrative
    10,118       (452 ) A     9,666  
             
Total operating expense
    21,969       (984 )     20,985  
 
                       
Operating income
    16,599       1,123       17,722  
 
                       
Other income
    1,327               1,327  
             
Profit before provision for income taxes
    17,926       1,123       19,049  
Provision for income taxes
    1,582       99       1,681  
             
Net Income
  $ 16,344     $ 1,024     $ 17,368  
                 
 
                       
Income per share
                       
Basic
  $ 0.78     $ 0.05     $ 0.83  
Diluted
  $ 0.75     $ 0.04     $ 0.79  
 
                       
Weighted average common shares outstanding
                       
Basic
    20,910               20,910  
Diluted
    21,883               21,883  
 
Footnotes — for the six-months ended July 1, 2006
 
A To exclude stock-based compensation expense (Cost of Revenue $139, Research and Development $532, Marketing and Administrative $452) for the six-months ended July 1, 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 Company’s business, excluding stock based compensation expense.
 
    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.