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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
February 5, 2008
Date of Report (date of earliest event reported)
INTEVAC, INC.
(Exact name of Registrant as specified in its charter)
         
State of Delaware   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
EXHIBIT 99.1

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Item 2.02. Results of Operations and Financial Condition
     On February 5, 2008, Intevac, Inc. issued a press release reporting its financial results for the three and twelve months ended December 31, 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
     (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: February 5, 2008
  By:   /s/ JEFFREY ANDRESON
 
   
 
      Jeffrey Andreson    
        Vice President, Finance and Administration,
        Chief Financial Officer, Treasurer and Secretary

 

 

Exhibit 99.1
         
(INTEVAC LOGO)
  3560 Bassett Street, Santa Clara CA 95054
     
Jeff Andreson
  Claire McAdams
Chief Financial Officer
  Headgate Partners LLC
(408) 986-9888
  (530) 274-0551
INTEVAC ANNOUNCES FOURTH QUARTER AND
FULL YEAR 2007 FINANCIAL RESULTS
Exceeding Expectations in a Difficult Business Environment
Santa Clara, Calif.—February 5, 2008—Intevac, Inc. (Nasdaq: IVAC) today reported financial results for the fourth quarter and year ended December 31, 2007.
Net loss for the quarter was $2.4 million, or $0.11 per diluted share, on 21.6 million weighted-average shares outstanding. The net loss included $1.7 million of stock-based compensation expense, equivalent to $0.05 per diluted share. Fourth quarter earnings include a $1.5 million one-time gain on the sale of a real estate investment, equivalent to $0.05 per diluted share. For the fourth quarter of 2006, net income was $21.3 million, or $0.97 per diluted share, on 22.1 million weighted average shares outstanding, which included $1.3 million of stock-based compensation expense, equivalent to $0.05 per diluted share.
Revenues for the quarter were $16.8 million, including $10.8 million of Equipment revenues and record Imaging revenues of $6.0 million. As no 200 Lean ® systems were shipped in the quarter, equipment revenues consisted of disk lubrication systems, equipment upgrades, spares, consumables and service. Imaging revenues consisted of $4.1 million of research and development contracts and a record $1.9 million of product sales. In the fourth quarter of 2006, revenues were $95.9 million, including $92.8 million of Equipment revenues and $3.1 million of Imaging revenues, which included $331,000 of product sales.
Equipment and Imaging gross margins for the fourth quarter of 2007 rose to 46.7% and 46.7%, respectively, from 40.9% and 37.9% for the fourth quarter of 2006. Equipment margins improved because Equipment revenues were driven primarily by technology upgrades and spares business. Imaging margins improved as a result of securing higher-margin development contracts and an increased percentage of revenue derived from higher-margin product shipments. Consolidated gross margins improved to 46.7%, from 40.8% in the fourth quarter of 2006.
Operating expenses for the quarter totaled $14.9 million, or 89% of revenues, versus $16.9 million, or 17.6% of revenues, in the fourth quarter of 2006 and $16.5 million, or 32.6% of revenues, in the third quarter of 2007. For the third sequential quarter, operating expenses have declined. Total operating expenses decreased versus the fourth quarter of 2006 primarily because of reductions in R&D and general and administrative expenses.
Net income for the full year 2007 was $27.3 million, or $1.23 per diluted share, on 22.2 million weighted-average shares outstanding. Net income included $6.2 million of stock-based compensation expense, equivalent to $0.22 per diluted share, and a $1.5 million one-time gain on the sale of an investment, equivalent to $0.05 per diluted share. For the full year 2006, net income was $46.7 million, or $2.13 per diluted share, on 21.9 million weighted average shares outstanding, which included $3.4 million of stock-based compensation expense, equivalent to $0.13 per diluted share.

 

 

Revenues for the full year were $215.8 million, including $196.7 million of Equipment revenues and $19.1 million of Imaging revenues. Equipment revenues consisted of twenty-nine 200 Lean ® systems as well as disk lubrication systems, equipment upgrades, spares, consumables and service. Imaging revenues consisted of $13.9 million of research and development contracts and $5.2 million of product sales. For the full year 2006, revenues were $259.9 million, including $248.5 million of Equipment revenues and $11.4 million of Imaging revenues, which included $1.7 million of product sales.
Equipment and Imaging gross margins for the year increased to 44.7% and 42.6%, respectively, from 39.1% and 33.3% in 2006. Equipment margins improved primarily due to record high sales of technology upgrades and spares as well as reduced manufacturing costs. Imaging margins increased primarily as the result of securing higher-margin development contracts, higher factory utilization and an increased percentage of revenue derived from higher-margin product shipments. Consolidated gross margins improved to 44.5%, from 38.8% in 2006.
Operating expenses for the year totaled $68.6 million, or 31.8% of revenues, versus $53.0 million, or 20.4% of revenues, in 2006. Operating expenses grew primarily as the result of increased spending on development of new Equipment products, increased business development expense, legal expenses associated with patent litigation and higher stock-based compensation expense.
Order backlog totaled $34.2 million on December 31, 2007, compared to $31.2 million on September 29, 2007 and $125.0 million on December 31, 2006. Backlog at year end includes two 200 Lean ® systems, compared to one on September 29, 2007 and twenty-four on December 31, 2006.
“We delivered stronger-than-expected results for the fourth quarter, as we responded to a challenging market environment by reducing our cost structure without slowing down the development of our future growth products,” commented Kevin Fairbairn, president and chief executive officer of Intevac. “Fourth quarter revenues declined 83% from last year’s record-setting fourth quarter, yet we delivered higher gross margins, lower operating expenses and another profitable quarter for our Imaging business. We also completed the acquisition of Creative Display Systems, which we expect to be accretive to earnings by the end of 2008, to expand our served markets and contribute to the competitiveness of our future night vision products.”
Conference Call Information
The Company will discuss its financial results and outlook in a conference call today at 1:30 p.m. PT (4:30 p.m. ET). 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 7:30 p.m. ET. You may access the playback by calling (800) 642-1687, or for international callers (706) 645-9291, and providing conference ID 30259361.
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 compact, cost-effective, high-sensitivity digital-optical products for the capture and display of low-light images and the optical analysis of materials. We provide sensors, cameras and systems for commercial applications in the inspection, medical, scientific and security industries, and for government applications such as night vision and long-range target identification.
For more information call 408-986-9888, or visit the Company’s website at www.intevac.com .
200 Lean ® is a registered trademark of Intevac, Inc.
Safe Harbor Statement
This press release includes statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Intevac claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by the terms “may,” “believes,” “projects,” “expects,” or “anticipates,” and do not reflect historical facts. Specific forward-looking statements contained in this press release include, but are not limited to, the progress and expected growth relating to new product development, expected growth of its Imaging Instrumentation business and success of the CDS acquisition and management of the Company’s operating expenses. The forward-looking statements contained herein involve risks and uncertainties that could cause actual results to differ materially from the Company’s expectations. These risks include, but are not limited to: failure to increase Imaging Instrumentation revenues, manage operating expenses or introduce new products, each of which could have a material impact on our business, our financial results, and the Company’s stock price. These risks and other factors are detailed in the Company’s regular filings with the U.S. Securities and Exchange Commission.
[Financial tables on following pages]

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
                                 
    3 months ended     12 months ended  
    Dec 31,     Dec. 31,     Dec 31,     Dec. 31,  
    2007     2006     2007     2006  
    (Unaudited)     (Unaudited)     (Unaudited)          
Net revenues
                               
Equipment
  $ 10,801     $ 92,819     $ 196,686     $ 248,482  
Imaging
    5,950       3,065       19,148       11,393  
             
Total net revenues
  $ 16,751     $ 95,884     $ 215,834     $ 259,875  
 
                               
Gross profit
    7,819       39,111       96,043       100,959  
Gross margin
                               
Equipment
    46.7 %     40.9 %     44.7 %     39.1 %
Imaging
    46.7 %     37.9 %     42.6 %     33.3 %
             
Consolidated
    46.7 %     40.8 %     44.5 %     38.8 %
 
                               
Operating expenses
                               
Research and development
    8,860       9,614       40,137       30,036  
Selling, general and administrative
    6,056       7,241       28,470       22,924  
             
Total operating expenses
    14,916       16,855       68,607       52,960  
 
                               
Operating income (loss)
                               
Equipment
    (6,405 )     22,936       32,903       52,223  
Imaging
    161       (1,125 )     (2,919 )     (4,826 )
Corporate
    (853 )     445       (2,548 )     602  
             
Total operating income (loss)
    (7,097 )     22,256       27,436       47,999  
 
                               
Other income
    3,487       1,338       8,142       3,778  
             
Income (loss) before provision for income taxes
    (3,610 )     23,594       35,578       51,777  
Provision for income taxes
    (1,194 )     2,253       8,233       5,079  
             
Net income (loss)
    ($2,416 )   $ 21,341     $ 27,345     $ 46,698  
 
                       
 
                               
Income (loss) per share
                               
Basic
    ($0.11 )   $ 1.01     $ 1.28     $ 2.22  
Diluted
    ($0.11 )   $ 0.97     $ 1.23     $ 2.13  
Weighted average common shares outstanding
                               
Basic
    21,580       21,161       21,447       21,016  
Diluted
    21,580       22,083       22,150       21,937  
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CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                 
    Dec. 31     Dec. 31,  
    2007     2006  
    (Unaudited)          
ASSETS
               
 
               
Current assets
               
Cash, cash equivalents and short term investments
  $ 138,658     $ 95,035  
Accounts receivable, net
    14,142       39,927  
Inventories
    22,133       37,942  
Deferred tax assets
    5,744       3,269  
Prepaid expenses and other current assets
    1,866       2,506  
       
Total current assets
    182,543       178,679  
 
               
Long term investments
    2,009       8,000  
Property, plant and equipment, net
    15,402       13,546  
Investment in 601 California Avenue LLC
    —       2,431  
Deferred tax assets
    1,601       1,312  
Goodwill
    7,905       —  
Other long-term assets
    3,653       2,035  
       
Total assets
  $ 213,113     $ 206,003  
 
           
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
 
               
Current liabilities
               
Notes payable
  $ 1,992       —  
Accounts payable
    7,678     $ 15,994  
Accrued payroll and related liabilities
    8,610       11,769  
Other accrued liabilities
    3,236       6,612  
Customer advances
    4,340       26,243  
       
Total current liabilities
    25,856       60,618  
 
               
Other long-term liabilities
    2,176       1,075  
Shareholders’ equity
               
Common stock (a) ($0.001 par value)
    22       99,468  
Paid in capital (a)
    119,974       7,319  
Accumulated other comprehensive income
    571       354  
Retained earnings
    64,514       37,169  
       
Total shareholders’ equity
    185,081       144,310  
       
Total liabilities and shareholders’ equity
  $ 213,113     $ 206,003  
 
           
 
(a)   Reclassification related to Company’s Reincorporation in the State of Delaware.
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SUPPLEMENTAL INFORMATION REGARDING IMPACT OF THE ADOPTION OF SFAS 123(R)
The effect of recording stock-based compensation for the three- and twelve-month periods ended December 31, 2007 and December 31, 2006 were as follows (in Thousands, except per share amounts):
                                 
    Three Months Ended     Twelve Months Ended  
    Dec. 31,     Dec. 31     Dec. 31,     Dec. 31,  
    2007     2006     2007     2006  
    (Unaudited)     (Unaudited)     (Unaudited)          
Stock-based compensation by type of award:
                               
Stock options
  $ 1,525     $ 1,117     $ 5,517     $ 2,803  
Employee Stock Purchase Plan
    246       190       864       622  
Amounts capitalized as inventory
    (74 )     (8 )     (179 )     (69 )
 
                       
Total stock-based compensation
    1,697       1,299       6,202       3,356  
 
                             
Tax effect on stock-based compensation
    582       186       1,426       403  
 
                       
Net effect on net income
  $ 1,115     $ 1,113     $ 4,776     $ 2,953  
 
                       
 
                               
Effect on earnings per share:
                               
Basic
  $ 0.05     $ 0.05     $ 0.22     $ 0.14  
Diluted
  $ 0.05     $ 0.05     $ 0.22     $ 0.13  
Approximately $179,000 and $69,000 of stock-based compensation was capitalized to inventory during the years ending December 31, 2007 and December 31, 2006, respectively.