Attached files
file | filename |
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EX-32.2 - EX-32.2 - CASCADE MICROTECH INC | d545845dex322.htm |
EX-31.2 - EX-31.2 - CASCADE MICROTECH INC | d545845dex312.htm |
EX-31.1 - EX-31.1 - CASCADE MICROTECH INC | d545845dex311.htm |
EXCEL - IDEA: XBRL DOCUMENT - CASCADE MICROTECH INC | Financial_Report.xls |
EX-32.1 - EX-32.1 - CASCADE MICROTECH INC | d545845dex321.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2013
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No. 000-51072
CASCADE MICROTECH, INC.
(Exact name of registrant as specified in its charter)
Oregon | 93-0856709 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
9100 S.W. Gemini Drive Beaverton, Oregon |
97008 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (503) 601-1000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
The number of shares of common stock outstanding as of August 1, 2013 was 14,429,926.
Table of Contents
INDEX TO FORM 10-Q
Page | ||||||
Item 1. |
Financial Statements | |||||
Condensed Consolidated Balance Sheets (unaudited) June 30, 2013 and December 31, 2012 |
2 | |||||
3 | ||||||
4 | ||||||
5 | ||||||
Notes to Condensed Consolidated Financial Statements (unaudited) |
6 | |||||
Item 2. |
Managements Discussion and Analysis of Financial Condition and Results of Operations |
11 | ||||
Item 3. |
18 | |||||
Item 4. |
18 | |||||
Item 1A. |
19 | |||||
Item 6. |
19 | |||||
20 |
1
Table of Contents
PART I FINANCIAL INFORMATION
Item 1. | Financial Statements |
Condensed Consolidated Balance Sheets
(Unaudited, In thousands, except per share amounts)
June 30, 2013 |
December 31, 2012 |
|||||||
Assets |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | 23,769 | $ | 17,927 | ||||
Short-term marketable securities |
5,030 | 5,322 | ||||||
Restricted cash |
| 1,069 | ||||||
Accounts receivable, net of allowances of $373 and $345 |
21,585 | 21,087 | ||||||
Inventories |
22,241 | 24,277 | ||||||
Prepaid expenses and other |
2,340 | 2,503 | ||||||
|
|
|
|
|||||
Total Current Assets |
74,965 | 72,185 | ||||||
Fixed assets, net of accumulated depreciation of $26,432 and $24,575 |
7,093 | 8,271 | ||||||
Goodwill |
976 | 990 | ||||||
Purchased intangible assets, net of accumulated amortization of $4,300 and $3,986 |
1,296 | 1,610 | ||||||
Other assets, net of accumulated amortization of $4,230 and $4,064 |
1,736 | 2,224 | ||||||
|
|
|
|
|||||
Total Assets |
$ | 86,066 | $ | 85,280 | ||||
|
|
|
|
|||||
Liabilities and Shareholders Equity |
||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ | 5,954 | $ | 5,900 | ||||
Deferred revenue |
1,245 | 3,526 | ||||||
Accrued liabilities |
6,386 | 6,640 | ||||||
|
|
|
|
|||||
Total Current Liabilities |
13,585 | 16,066 | ||||||
Deferred revenue |
542 | 356 | ||||||
Other long-term liabilities |
2,154 | 2,940 | ||||||
|
|
|
|
|||||
Total Liabilities |
16,281 | 19,362 | ||||||
Shareholders Equity: |
||||||||
Common stock, $0.01 par value. Authorized 100,000 shares; issued and outstanding: 14,407 and 14,199 |
144 | 142 | ||||||
Additional paid-in capital |
92,085 | 90,897 | ||||||
Accumulated other comprehensive loss |
(972 | ) | (716 | ) | ||||
Accumulated deficit |
(21,472 | ) | (24,405 | ) | ||||
|
|
|
|
|||||
Total Shareholders Equity |
69,785 | 65,918 | ||||||
|
|
|
|
|||||
Total Liabilities and Shareholders Equity |
$ | 86,066 | $ | 85,280 | ||||
|
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
2
Table of Contents
Condensed Consolidated Statements of Operations
(Unaudited, In thousands, except per share amounts)
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenue |
$ | 30,307 | $ | 27,638 | $ | 57,778 | $ | 55,181 | ||||||||
Cost of sales |
16,032 | 14,897 | 31,960 | 30,489 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
14,275 | 12,741 | 25,818 | 24,692 | ||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
2,694 | 2,438 | 5,150 | 5,217 | ||||||||||||
Selling, general and administrative |
9,064 | 8,042 | 17,110 | 15,953 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
11,758 | 10,480 | 22,260 | 21,170 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income from operations |
2,517 | 2,261 | 3,558 | 3,522 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest income, net |
2 | 9 | 22 | 19 | ||||||||||||
Other, net |
(112 | ) | (45 | ) | (356 | ) | (452 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other income (expense), net |
(110 | ) | (36 | ) | (334 | ) | (433 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before income taxes |
2,407 | 2,225 | 3,224 | 3,089 | ||||||||||||
Income tax expense |
221 | 52 | 291 | 176 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 2,186 | $ | 2,173 | $ | 2,933 | $ | 2,913 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic net income per share |
$ | 0.15 | $ | 0.15 | $ | 0.21 | $ | 0.21 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted net income per share |
$ | 0.15 | $ | 0.15 | $ | 0.20 | $ | 0.20 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Shares used in per share calculations: |
||||||||||||||||
Basic |
14,342 | 14,158 | 14,283 | 14,173 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted |
14,652 | 14,350 | 14,626 | 14,332 | ||||||||||||
|
|
|
|
|
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
3
Table of Contents
Condensed Consolidated Statements of Comprehensive Income
(Unaudited, In thousands)
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net income |
$ | 2,186 | $ | 2,173 | $ | 2,933 | $ | 2,913 | ||||||||
Unrealized holding losses |
(1 | ) | (3 | ) | (1 | ) | (4 | ) | ||||||||
Change in cumulative translation adjustment |
267 | (875 | ) | (255 | ) | (378 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive income |
$ | 2,452 | $ | 1,295 | $ | 2,677 | $ | 2,531 | ||||||||
|
|
|
|
|
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
4
Table of Contents
Condensed Consolidated Statements of Cash Flows
(Unaudited, In thousands)
For the Six Months Ended June 30, |
||||||||
2013 | 2012 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 2,933 | $ | 2,913 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
2,376 | 2,303 | ||||||
Stock-based compensation |
872 | 830 | ||||||
Loss on write-down or disposal of long-lived assets |
1 | 58 | ||||||
Deferred income taxes |
49 | 12 | ||||||
(Increase) decrease in: |
||||||||
Accounts receivable, net |
(504 | ) | 2,290 | |||||
Inventories |
1,973 | (2,933 | ) | |||||
Prepaid expenses and other |
433 | 1,643 | ||||||
Increase (decrease) in: |
||||||||
Accounts payable |
88 | 71 | ||||||
Deferred revenue |
(2,092 | ) | (1,216 | ) | ||||
Accrued and other long-term liabilities |
(1,023 | ) | (1,081 | ) | ||||
|
|
|
|
|||||
Net cash provided by operating activities |
5,106 | 4,890 | ||||||
Cash flows from investing activities: |
||||||||
Purchase of marketable securities |
(5,374 | ) | (5,349 | ) | ||||
Proceeds from sale of marketable securities |
5,665 | 3,525 | ||||||
Purchase of fixed assets |
(851 | ) | (541 | ) | ||||
Proceeds from sale of fixed assets |
13 | | ||||||
Decrease in restricted cash |
1,061 | 401 | ||||||
|
|
|
|
|||||
Net cash provided by (used in) investing activities |
514 | (1,964 | ) | |||||
Cash flows from financing activities: |
||||||||
Principal payments on capital lease obligations |
(2 | ) | (9 | ) | ||||
Withholding taxes paid on net settlement of vested restricted stock units |
(202 | ) | (148 | ) | ||||
Proceeds from issuances of common stock |
578 | 238 | ||||||
Cash paid for repurchase of common stock |
(58 | ) | (1,000 | ) | ||||
|
|
|
|
|||||
Net cash provided by (used in) financing activities |
316 | (919 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents |
(94 | ) | (128 | ) | ||||
|
|
|
|
|||||
Increase in cash and cash equivalents |
5,842 | 1,879 | ||||||
Cash and cash equivalents: |
||||||||
Beginning of period |
17,927 | 10,656 | ||||||
|
|
|
|
|||||
End of period |
$ | 23,769 | $ | 12,535 | ||||
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|
|||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid for income taxes, net |
$ | 440 | $ | 943 |
See accompanying Notes to Condensed Consolidated Financial Statements.
5
Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The condensed consolidated financial information included herein has been prepared by Cascade Microtech, Inc. without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). However, such information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The financial information as of December 31, 2012 is derived from our 2012 Annual Report on Form 10-K. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2012 Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.
Note 2. Inventories
Inventories are stated at the lower of standard cost, which approximates cost computed on a first-in, first-out basis, or market, and include materials, labor and manufacturing overhead. Demonstration goods, which are included as a component of finished goods, represent inventory that is used for customer demonstration purposes. This inventory is typically sold after 12 to 18 months. We analyze the carrying value of our inventory quarterly, considering a combination of factors including, but not limited to, the following: forecasted sales or usage, historical usage rates, estimated service period, product end-of-life dates, estimated current and future market values, service inventory requirements and new product introductions. We estimate market value based on factors including, but not limited to, replacement cost and estimated resale value. Based on these analyses, we recorded inventory charges as follows (in thousands):
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Inventory charges |
$ | 356 | $ | 258 | $ | 749 | $ | 737 |
Inventories consisted of the following (in thousands):
June 30, 2013 |
December 31, 2012 |
|||||||
Raw materials |
$ | 14,456 | $ | 14,783 | ||||
Work-in-process |
2,644 | 2,684 | ||||||
Finished goods |
5,141 | 6,810 | ||||||
|
|
|
|
|||||
$ | 22,241 | $ | 24,277 | |||||
|
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|
|
Note 3. Net Income Per Share
The following table reconciles the shares used in calculating basic net income per share and diluted net income per share (in thousands):
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Shares used to calculate basic net income per share |
14,342 | 14,158 | 14,283 | 14,173 | ||||||||||||
Dilutive effect of outstanding options and restricted stock units (RSUs) |
310 | 192 | 343 | 159 | ||||||||||||
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Shares used to calculate diluted net income per share |
14,652 | 14,350 | 14,626 | 14,332 | ||||||||||||
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|||||||||
Securities not considered as they would have been antidilutive |
1,132 | 1,235 | 1,099 | 1,268 | ||||||||||||
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|
6
Table of Contents
Note 4. Product Warranty
We estimate a liability for costs to repair or replace products under warranty for a period of approximately twelve months when the related product revenue is recognized. The liability for product warranties is calculated as a percentage of sales. The percentage is based on historical product repair costs. The liability for product warranties is included in Accrued liabilities on our Condensed Consolidated Balance Sheets.
Product warranty activity was as follows (in thousands):
Six Months Ended June 30, |
||||||||
2013 | 2012 | |||||||
Warranty accrual, beginning of period |
$ | 716 | $ | 729 | ||||
Reductions for warranty charges |
(399 | ) | (589 | ) | ||||
Additions to warranty reserve |
288 | 730 | ||||||
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|
|
|||||
Warranty accrual, end of period |
$ | 605 | $ | 870 | ||||
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|
Note 5. Goodwill and Purchased Intangible Assets
Goodwill
The change in goodwill was as follows (in thousands):
Six Months Ended June 30, 2013 |
Year Ended December 31, 2012 |
|||||||
Balance, beginning of period |
$ | 990 | $ | 971 | ||||
Effect of exchange rate changes |
(14 | ) | 19 | |||||
|
|
|
|
|||||
Balance, end of period |
$ | 976 | $ | 990 | ||||
|
|
|
|
Purchased Intangible Assets
Purchased intangible assets, net included the following (in thousands):
June 30, 2013 |
December 31, 2012 |
|||||||
Customer relationships |
$ | 3,265 | $ | 3,265 | ||||
Other |
2,331 | 2,331 | ||||||
|
|
|
|
|||||
5,596 | 5,596 | |||||||
Less accumulated amortization |
(4,300 | ) | (3,986 | ) | ||||
|
|
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|
|||||
$ | 1,296 | $ | 1,610 | |||||
|
|
|
|
Purchased intangible amortization was as follows (in thousands):
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Intangible amortization |
$ | 157 | $ | 203 | $ | 314 | $ | 406 |
The estimated amortization of purchased intangible assets is as follows over the next five years and thereafter (in thousands):
Remainder of 2013 |
$ | 258 | ||
2014 |
378 | |||
2015 |
288 | |||
2016 |
88 | |||
2017 |
70 | |||
Thereafter |
214 | |||
|
|
|||
$ | 1,296 | |||
|
|
7
Table of Contents
Note 6. Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
June 30, 2013 |
December 31, 2012 |
|||||||
Accrued compensation and benefits |
$ | 3,017 | $ | 2,750 | ||||
Accrued taxes |
307 | 800 | ||||||
Accrued warranty |
605 | 716 | ||||||
Accrued commissions |
382 | 374 | ||||||
Accrued restructuring costs |
1,153 | 1,144 | ||||||
Other |
922 | 856 | ||||||
|
|
|
|
|||||
$ | 6,386 | $ | 6,640 | |||||
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|
Note 7. Stock-Based Compensation and Stock-Based Plans
Stock-based compensation was included in our Condensed Consolidated Statements of Operations as follows (in thousands):
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Cost of sales |
$ | 45 | $ | 38 | $ | 96 | $ | 84 | ||||||||
Research and development |
47 | 68 | 100 | 141 | ||||||||||||
Selling, general and administrative |
446 | 347 | 676 | 605 | ||||||||||||
|
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|
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|
|||||||||
$ | 538 | $ | 453 | $ | 872 | $ | 830 | |||||||||
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Stock Incentive Plans
Stock option activity for the first six months of 2013 was as follows:
Options Outstanding |
Weighted Average Exercise Price |
|||||||
Outstanding at December 31, 2012 |
1,128,077 | $ | 5.77 | |||||
Granted |
85,000 | 7.53 | ||||||
Exercised |
(90,195 | ) | 3.83 | |||||
Forfeited |
(60,144 | ) | 4.37 | |||||
|
|
|||||||
Outstanding at June 30, 2013 |
1,062,738 | 6.15 | ||||||
|
|
RSU activity for the first six months of 2013 was as follows:
Restricted Stock Units |
Weighted Average Grant Date Per Share Fair Value |
|||||||
Outstanding at December 31, 2012 |
350,655 | $ | 4.91 | |||||
Granted |
154,875 | 7.26 | ||||||
Vested |
(104,395 | ) | 5.71 | |||||
Forfeited |
(21,744 | ) | 5.44 | |||||
|
|
|||||||
Outstanding at June 30, 2013 |
379,391 | 5.62 | ||||||
|
|
As of June 30, 2013, total unrecognized stock-based compensation related to outstanding, but unvested, options and RSUs was $2.9 million, which will be recognized over the weighted average remaining vesting period of 2.6 years.
Employee Stock Purchase Plan
In January 2013, pursuant to the terms of our 2004 Employee Stock Purchase Plan (ESPP), and upon approval by our board of directors, the number of shares of our common stock available for purchase under the 2004 ESPP was increased from 850,000 to 950,000. Employees purchased 52,161 shares in the first six months of 2013 for $0.2 million under the ESPP.
8
Table of Contents
Note 8. Stock Repurchase Program
In November 2012, our board of directors authorized a stock repurchase program under which up to $2.0 million of our common stock could be repurchased from time to time in the open market or in privately negotiated transactions. In the first six months of 2013, we repurchased $58,000, or 9,800 shares, of our common stock at a weighted-average price of $5.87 per share. As of June 30, 2013, $1.6 million remained available for repurchase under this program.
Note 9. Segment Reporting
The segment data below is presented in the same manner that management currently organizes the segments for assessing certain performance trends. Our Chief Operating Decision Maker monitors the revenue streams and the operating income of our Systems sales and our Probes sales. We do not track our assets on a segment level, and, accordingly, that information is not provided.
Revenue and operating income information by segment was as follows (dollars in thousands):
Three Months Ended June 30, 2013 |
Systems | Probes | Corporate Unallocated |
Total | ||||||||||||
Revenue |
$ | 19,847 | $ | 10,460 | $ | | $ | 30,307 | ||||||||
Gross profit |
$ | 8,760 | $ | 5,515 | $ | | $ | 14,275 | ||||||||
Gross margin |
44.1 | % | 52.7 | % | | 47.1 | % | |||||||||
Income (loss) from operations |
$ | 3,268 | $ | 2,990 | $ | (3,741 | ) | $ | 2,517 | |||||||
Three Months Ended June 30, 2012 |
||||||||||||||||
Revenue |
$ | 17,960 | $ | 9,678 | $ | | $ | 27,638 | ||||||||
Gross profit |
$ | 7,381 | $ | 5,360 | $ | | $ | 12,741 | ||||||||
Gross margin |
41.1 | % | 55.4 | % | | 46.1 | % | |||||||||
Income (loss) from operations |
$ | 2,684 | $ | 2,899 | $ | (3,322 | ) | $ | 2,261 |
Six Months Ended June 30, 2013 |
Systems | Probes | Corporate Unallocated |
Total | ||||||||||||
Revenue |
$ | 37,547 | $ | 20,231 | $ | | $ | 57,778 | ||||||||
Gross profit |
$ | 15,472 | $ | 10,346 | $ | | $ | 25,818 | ||||||||
Gross margin |
41.2 | % | 51.1 | % | | 44.7 | % | |||||||||
Income (loss) from operations |
$ | 4,910 | $ | 5,414 | $ | (6,766 | ) | $ | 3,558 | |||||||
Six Months Ended June 30, 2012 |
||||||||||||||||
Revenue |
$ | 36,186 | $ | 18,995 | $ | | $ | 55,181 | ||||||||
Gross profit |
$ | 14,601 | $ | 10,091 | $ | | $ | 24,692 | ||||||||
Gross margin |
40.3 | % | 53.1 | % | | 44.7 | % | |||||||||
Income (loss) from operations |
$ | 5,469 | $ | 4,774 | $ | (6,721 | ) | $ | 3,522 |
In preparing this financial information, certain expenses were allocated between the segments based on management estimates, while others were based on specific factors such as headcount. These factors can have a significant impact on the amount of income (loss) from operations for each segment. While we believe we have applied a reasonable methodology, assignment of other reasonable cost allocations to each segment could result in materially different segment income (loss) from operations.
No customer accounted for 10% or greater of our total revenue in the six-month periods ended June 30, 2013 or 2012, or in the three-month period ended June 30, 2012. However, we had one customer which represented 11.3% of our total revenue in the three-month period ended June 30, 2013.
9
Table of Contents
Note 10. Fair Value Measurements
Various inputs are used in determining the fair value of our financial assets and liabilities and are summarized into three broad categories:
| Level 1 quoted prices in active markets for identical securities; |
| Level 2 other significant observable inputs, including quoted prices for similar securities, interest rates, prepayment speeds, and credit risk; and |
| Level 3 significant unobservable inputs, including our own assumptions in determining fair value. |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The disclosures related to our financial assets that are reported at fair value on a recurring basis are as follows (in thousands):
June 30, 2013 | December 31, 2012 | |||||||||||
Fair Value | Input Level | Fair Value | Input Level | |||||||||
Marketable securities corporate obligations |
$ | 4,530 | Level 2 | $ | 3,818 | Level 2 | ||||||
Marketable securities corporate equities |
$ | | Level 1 | $ | 2 | Level 1 | ||||||
Marketable securities U.S. treasury and agency securities |
$ | 500 | Level 2 | $ | 1,502 | Level 2 | ||||||
Forward sale contracts for Japanese yen |
$ | 606 | Level 2 | $ | 1,385 | Level 2 | ||||||
Forward purchase contracts for euro |
$ | 1,431 | Level 2 | $ | 1,451 | Level 2 |
The fair value of our marketable securities is determined based on quoted market prices for similar or identical securities. The fair value of our forward contracts is based on quoted market prices for similar securities and is used for the purpose of determining any gain or loss on our foreign currency positions. We do not record the full value of the forward contracts on our Condensed Consolidated Balance Sheets. We record the net unrealized gain or loss in our Condensed Consolidated Statements of Operations and as a component of Other income (expense).
The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities.
No changes were made to our valuation techniques during the first six months of 2013.
Note 11. Recent Accounting Guidance
ASU 2013-11
In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU 2013-11 amends the guidance related to the presentation of unrecognized tax benefits and allows for the reduction of a deferred tax asset for a net operating loss (NOL) carryforward whenever the NOL or tax credit carryforward would be available to reduce the additional taxable income or tax due if the tax position is disallowed. ASU 2013-11 is effective for annual and interim periods for fiscal years beginning after December 15, 2013, and early adoption is permitted. Since ASU 2013-11 relates only to the presentation of unrecognized tax benefits, we do not expect our adoption of ASU 2013-11 in January 2014 will have a material effect on our financial position, results of operations or cash flows.
ASU 2012-02
In July 2012, the FASB issued ASU 2012-02, Intangibles Goodwill and Other: Testing Indefinite-Lived Intangible Assets for Impairment, which permits an entity to make a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset, other than goodwill, is impaired. Entities are required to test indefinite-lived intangible assets for impairment at least annually and more frequently if indicators of impairment exist. If an entity concludes, based on an evaluation of all relevant qualitative factors, that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, it is not required to perform the quantitative impairment test for that asset. Because the qualitative assessment is optional, an entity is permitted to bypass it for any indefinite-lived
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intangible asset in any period and apply the quantitative test. ASU 2012-02 also permits the entity to resume performing the qualitative assessment in any subsequent period. ASU 2012-02 is effective for impairment tests performed for fiscal years beginning after September 15, 2012 and early adoption is permitted. The adoption of ASU 2012-02 in January 2013 did not have any impact on our financial position, results of operations or cash flows.
ASU 2013-02
In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. Under ASU 2013-02, an entity is required to provide information about the amounts reclassified out of Accumulated Other Comprehensive Income (AOCI) by component. In addition, an entity is required to present, either on the face of the financial statements or in the notes, significant amounts reclassified out of AOCI by the respective line items of net income, but only if the amount reclassified is required to be reclassified in its entirety in the same reporting period. For amounts that are not required to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about those amounts. The adoption of ASU 2013-02 in January 2013 did not have any impact on our financial position, results of operations or cash flows.
Note 12. Restructuring Accrual
The following tables summarize the charges, expenditures and write-offs and adjustments related to our restructuring accruals (in thousands):
Six Months Ended June 30, 2013 |
Beginning Accrued Liability |
Charged to Expense, Net |
Expenditures | Write-Offs and Adjustments |
Ending Accrued Liability |
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Lease abandonment |
$ | 3,034 | $ | 112 | $ | (559 | ) | $ | | $ | 2,587 |
As of June 30, 2013, approximately $1.4 million of total accrued restructuring costs are included in other long-term liabilities. The remainder is classified as a current liability. We expect the lease abandonment costs will be paid by the end of 2015.
Note 13. Subsequent Events
On July 31, 2013, we acquired certain assets of the Reliability Test Product (RTP) division of Aetrium Incorporated for $1.9 million in cash, and contingent consideration of up to $1.5 million payable between 9 and 18 months from the date of acquisition.
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
Forward Looking Statements and Risk Factors
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact made in this Quarterly Report on Form10-Q are forward-looking including, among others, statements regarding: industry prospects; future results of operations, including estimated revenue for the quarter ending September 30, 2013; our future financial position; our expectations and beliefs regarding future revenue growth; our estimated timeline for payment of lease abandonment costs; the future capabilities and functionality of our products and services; our strategies and intentions and potential sources of funds regarding acquisitions; our accounting and tax policies and the impact of adoption of accounting guidance, if any, on our financial position, results of operations or cash flows; potential charges to write down inventory in future periods; our future capital requirements and fixed asset additions for 2013, including for production-related equipment, facility improvements, research and development tools, business information systems and information technology equipment; seasonality of our revenues and expected increases in revenue recognition in the last month of each quarter; and our ability to meet our cash requirements for the next 12 months and for the foreseeable future. These statements relate to future events of our future financial performance. In some cases, you can identify forward-looking statements by terminology, including intend, could, may, will, should, expect, plan, anticipate, believe, estimate, predict, potential, future, or continue, the
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negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially from those expressed or implied such forward-looking statements. In evaluating these statements, you should specifically consider various factors, including: changes in demand for our products; changes in product mix; the timing of shipments and customer orders; constraints on availability of components; excess or shortage of production capacity; potential failure of expected market opportunities to materialize; changes in foreign exchange rates; and other risks included in Item 1A to our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 4, 2013.
General
We design, develop, manufacture and market advanced wafer probing solutions for the electrical measurement and testing of high performance semiconductor devices. Our products enable precision on-wafer measurement of integrated circuits. Our products are typically used in the early phases of the development of semiconductor processes where the accuracy and repeatability of measurements is critical to achieving yield from advanced process nodes. We design, manufacture and assemble our products in Beaverton, Oregon and Dresden, Germany and maintain global sales, service and support centers in North America, Germany, Japan, Taiwan, China and Singapore.
We operate in two business segments: Systems and Probes. Sales of our probe stations are included in the Systems segment and sales of our analytical probes and production probe cards are included in the Probes segment.
Probe stations provide precise and accurate measurement of semiconductor electrical characteristics during device design or when optimizing the chip fabrication process. Our probe stations are highly configurable and are typically sold with various accessories, including our analytical probes, as well as accessories from third parties. In addition, we design and build custom probe stations to address the specific requirements of our customers. We also generate revenue through the sales of service contracts for our stations.
Our analytical probes are sold to serve as components of our probe stations, or less often, to serve as components of test equipment manufactured by third parties. Our production probe cards are designed and sold for high-volume production test applications, ranging from very low current parametric testing to sophisticated, high-speed radio frequency integrated circuit (RFIC) testing. These probe cards are used in conjunction with third party equipment from manufacturers such as Advantest, Agilent and Teradyne.
Overview
Revenue in the first six months of 2013 increased to $57.8 million compared to $55.2 million in the first six months of 2012, as a result of increased revenue in both our Probes segment and our Systems segment. Income from operations was $3.6 million in the first six months of 2013 compared to $3.5 million in the first six months of 2012.
Outlook
Based on our current backlog, projected bookings and scheduled shipments, we anticipate revenues will be in the range of $28 million to $31 million for the third quarter of 2013.
Critical Accounting Policies and the Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that have become increasingly difficult to make in the current economic environment. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period.
On an on-going basis we evaluate our estimates, including those related to revenue recognition, bad debts, inventory, lives and recoverability of equipment and other long-lived assets, warranty obligations, deferred income tax assets, unrecognized income tax benefits, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
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We reaffirm the critical accounting policies and estimates as reported in our Annual Report on Form 10-K for the year ended December 31, 2012, which was filed with the Securities and Exchange Commission on March 4, 2013.
Results of Operations
The following table sets forth our condensed consolidated statement of operations data for the periods indicated as a percentage of revenue.(1)
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
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2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenue |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of sales |
52.9 | 53.9 | 55.3 | 55.3 | ||||||||||||
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Gross profit |
47.1 | 46.1 | 44.7 | 44.7 | ||||||||||||
Operating expenses: |
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Research and development |
8.9 | 8.8 | 8.9 | 9.5 | ||||||||||||
Selling, general and administrative |
29.9 | 29.1 | 29.6 | 28.9 | ||||||||||||
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Total operating expenses |
38.8 | 37.9 | 38.5 | 38.4 | ||||||||||||
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Income from operations |
8.3 | 8.2 | 6.2 | 6.4 | ||||||||||||
Other income (expense), net |
(0.4 | ) | (0.1 | ) | (0.6 | ) | (0.8 | ) | ||||||||
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Income before income taxes |
7.9 | 8.1 | 5.6 | 5.6 | ||||||||||||
Income tax expense |
0.7 | 0.2 | 0.5 | 0.3 | ||||||||||||
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Net income |
7.2 | % | 7.9 | % | 5.1 | % | 5.3 | % | ||||||||
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(1) | Percentages may not add due to rounding. |
Certain financial information by segment was as follows (dollars in thousands):
Three Months Ended June 30, 2013 |
Systems | Probes | Corporate Unallocated |
Total | ||||||||||||
Revenue |
$ | 19,847 | $ | 10,460 | $ | | $ | 30,307 | ||||||||
Gross profit |
$ | 8,760 | $ | 5,515 | $ | | $ | 14,275 | ||||||||
Gross margin |
44.1 | % | 52.7 | % | | 47.1 | % | |||||||||
Income (loss) from operations |
$ | 3,268 | $ | 2,990 | $ | (3,741 | ) | $ | 2,517 | |||||||
Three Months Ended June 30, 2012 |
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Revenue |
$ | 17,960 | $ | 9,678 | $ | | $ | 27,638 | ||||||||
Gross profit |
$ | 7,381 | $ | 5,360 | $ | | $ | 12,741 | ||||||||
Gross margin |
41.1 | % | 55.4 | % | | 46.1 | % | |||||||||
Income (loss) from operations |
$ | 2,684 | $ | 2,899 | $ | (3,322 | ) | $ | 2,261 |
Six Months Ended June 30, 2013 |
Systems | Probes | Corporate Unallocated |
Total | ||||||||||||
Revenue |
$ | 37,547 | $ | 20,231 | $ | | $ | 57,778 | ||||||||
Gross profit |
$ | 15,472 | $ | 10,346 | $ | | $ | 25,818 | ||||||||
Gross margin |
41.2 | % | 51.1 | % | | 44.7 | % | |||||||||
Income (loss) from operations |
$ | 4,910 | $ | 5,414 | $ | (6,766 | ) | $ | 3,558 | |||||||
Six Months Ended June 30, 2012 |
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Revenue |
$ | 36,186 | $ | 18,995 | $ | | $ | 55,181 | ||||||||
Gross profit |
$ | 14,601 | $ | 10,091 | $ | | $ | 24,692 | ||||||||
Gross margin |
40.3 | % | 53.1 | % | | 44.7 | % | |||||||||
Income (loss) from operations |
$ | 5,469 | $ | 4,774 | $ | (6,721 | ) | $ | 3,522 |
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Revenue
Revenue information was as follows (dollars in thousands):
Three Months Ended June 30, |
Dollar Change |
% Change | ||||||||||||||
Revenue |
2013 | 2012 | ||||||||||||||
Systems |
$ | 19,847 | $ | 17,960 | $ | 1,887 | 10.5 | % | ||||||||
Probes |
10,460 | 9,678 | 782 | 8.1 | % | |||||||||||
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Total |
$ | 30,307 | $ | 27,638 | $ | 2,669 | 9.7 | % | ||||||||
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Six Months Ended June 30, |
Dollar Change |
% Change | ||||||||||||||
Revenue |
2013 | 2012 | ||||||||||||||
Systems |
$ | 37,547 | $ | 36,186 | $ | 1,361 | 3.8 | % | ||||||||
Probes |
20,231 | 18,995 | 1,236 | 6.5 | % | |||||||||||
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Total |
$ | 57,778 | $ | 55,181 | $ | 2,597 | 4.7 | % | ||||||||
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Systems
The increases in Systems revenue in the three and six-month periods ended June 30, 2013 compared to the same periods of 2012 were primarily related to increases in the average selling price (ASP) due to product sales mix and decreases in discounts. We sold a higher number of 300mm and special application systems as a percentage of total sales in the three and six-month periods ended June 30, 2013 than in the comparable periods of 2012. The increases in revenue were negatively impacted by overall decreases in unit sales.
Probes
The increases in Probes revenue in the three and six-month periods ended June 30, 2013 compared to the same periods of 2012 were primarily the result of increases in sales volume, partially offset by decreases in ASP due to changes in sales mix, increased discounts and changes in foreign currency exchange rates.
Cost of Sales and Gross Margin
Cost of sales includes purchased materials, fabrication, assembly, test, installation labor, overhead, customer-specific engineering costs, warranty costs, royalties and provision for inventory valuation reserves.
Cost of sales information was as follows (dollars in thousands):
Three Months Ended June 30, |
Dollar Change |
% Change | ||||||||||||||
Cost of Sales |
2013 | 2012 | ||||||||||||||
Systems |
$ | 11,087 | $ | 10,579 | $ | 508 | 4.8 | % | ||||||||
Probes |
4,945 | 4,318 | 627 | 14.5 | % | |||||||||||
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Total |
$ | 16,032 | $ | 14,897 | $ | 1,135 | 7.6 | % | ||||||||
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Six Months Ended June 30, |
Dollar Change |
% Change | ||||||||||||||
Cost of Sales |
2013 | 2012 | ||||||||||||||
Systems |
$ | 22,075 | $ | 21,585 | $ | 490 | 2.3 | % | ||||||||
Probes |
9,885 | 8,904 | 981 | 11.0 | % | |||||||||||
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Total |
$ | 31,960 | $ | 30,489 | $ | 1,471 | 4.8 | % | ||||||||
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Cost of sales was affected by changes in sales as discussed above combined with the factors that caused fluctuations in our gross margin (gross profit as a percentage of revenue), as discussed below.
Gross margins were as follows:
Three Months Ended June 30, |
Six Months Ended June 30, |
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Gross Margins |
2013 | 2012 | 2013 | 2012 | ||||||||||||
Systems |
44.1 | % | 41.1 | % | 41.2 | % | 40.3 | % | ||||||||
Probes |
52.7 | % | 55.4 | % | 51.1 | % | 53.1 | % | ||||||||
Overall |
47.1 | % | 46.1 | % | 44.7 | % | 44.7 | % |
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Systems
The increases in Systems gross margins in the three and six-month periods ended June 30, 2013 compared to the same periods of 2012 were primarily due to increases in ASP, decreases in warranty costs and increases in factory utilization due to shifts in product mix, which resulted in lower unallocated fixed cost recorded as a period expense in cost of sales.
Probes
The decreases in Probes gross margins in the three and six-month periods ended June 30, 2013 compared to the same periods of 2012 were primarily due to decreases in ASP, partially offset by higher sales volume, which resulted in lower unallocated fixed overhead costs recorded as a period expense in cost of sales.
Overall
The overall gross margins in the three and six-month periods ended June 30, 2013 compared to the same periods of 2012 were positively affected by the increase in Systems gross margin, and were negatively affected by the decline in Probes gross margin.
Research and Development
Research and development costs are expensed as incurred and include compensation and related expenses for personnel, materials, consultants and overhead.
Information regarding our research and development expense was as follows (dollars in thousands):
Three Months Ended June 30, |
Dollar Change |
% Change | ||||||||||||||
2013 | 2012 | |||||||||||||||
Research and development |
$ | 2,694 | $ | 2,438 | $ | 256 | 10.5 | % |
Six Months Ended June 30, |
Dollar Change |
% Change | ||||||||||||||
2013 | 2012 | |||||||||||||||
Research and development |
$ | 5,150 | $ | 5,217 | $ | (67 | ) | (1.3 | )% |
The increase in research and development in the three-month period ended June 30, 2013 compared to the same period of 2012 was primarily due to a $0.2 million increase in project-related expenses and a $0.1 million decrease in government grant reimbursements.
The decrease in research and development in the six-month period ended June 30, 2013 compared to the same period of 2012 was primarily due to a $0.1 million decrease in project-related expenses and a $0.1 million decrease in incentive and stock based compensation, partially offset by a $0.1 million increase in depreciation expense.
Selling, General and Administrative
Selling, general and administrative, or SG&A, expense includes compensation and related expenses for personnel, travel, outside services, manufacturers representative commissions, purchased intangible asset amortization and overhead incurred in our sales, marketing, customer support, management, legal and other professional and administrative support functions, as well as costs to operate as a public company.
Information regarding our SG&A expense was as follows (dollars in thousands):
Three Months Ended June 30, |
Dollar Change |
% Change | ||||||||||||||
2013 | 2012 | |||||||||||||||
Selling, general and administrative |
$ | 9,064 | $ | 8,042 | $ | 1,022 | 12.7 | % |
Six Months Ended June 30, | Dollar Change |
% Change | ||||||||||||||
2013 | 2012 | |||||||||||||||
Selling, general and administrative |
$ | 17,110 | $ | 15,953 | $ | 1,157 | 7.3 | % |
The increases in SG&A in the three and six-month periods ended June 30, 2013 compared to the same periods of 2012 were primarily due to a $0.4 million and a $0.6 million increase, respectively, in salaries and
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benefits, a $0.1 million and a $0.4 million increase, respectively, in travel, meals and entertainment expenses, and a $0.2 million and a $0.2 million increase, respectively, in demo expense, partially offset by a $0.1 million and a $0.1 million decrease, respectively, in amortization expense and a $0.1 million and a $(0.1) million increase (decrease), respectively, in severance expense. In addition, the 2013 periods include a $0.1 million charge related to an adjustment to our lease restructuring reserve, compared to no similar charge in the 2012 periods, and the three-month period of 2013 includes a $0.2 million increase in incentive and stock-based compensation.
Other Income (Expense)
Other income (expense) typically includes interest income, interest expense, gains and losses on foreign currency forward contracts and foreign currency gains and losses. Other income (expense) can also include other miscellaneous non-operating gains and losses.
Other income (expense) was comprised of the following (in thousands):
Three Months Ended June 30, |
Six Months Ended June 30, |
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2013 | 2012 | 2013 | 2012 | |||||||||||||
Interest income, net |
$ | 2 | $ | 9 | $ | 22 | $ | 19 | ||||||||
Foreign currency gains (losses) |
(249 | ) | 23 | (690 | ) | (434 | ) | |||||||||
Gains (losses) on foreign currency forward contracts |
147 | (68 | ) | 350 | (6 | ) | ||||||||||
Other |
(10 | ) | | (16 | ) | (12 | ) | |||||||||
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$ | (110 | ) | $ | (36 | ) | $ | (334 | ) | $ | (433 | ) | |||||
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Interest income represents interest earned on cash and cash equivalents and investments in marketable securities.
Foreign currency gains and losses primarily result from a combination of changes in foreign currency exchange rates and the net value of monetary assets and liabilities denominated in yen, euro and other foreign currencies.
Income Taxes
Information regarding our income tax expense was as follows (dollars in thousands):
Three Months Ended June 30, |
Six Months Ended June 30, |
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2013 | 2012 | 2013 | 2012 | |||||||||||||
Income tax provision |
$ | 221 | $ | 52 | $ | 291 | $ | 176 | ||||||||
Income tax provision as a percentage of income before income taxes |
9.2 | % | 2.3 | % | 9.0 | % | 5.7 | % |
Our income tax expense in the three and six-months periods ended June 30, 2013 and 2012 primarily related to estimated tax expense on income in foreign tax jurisdictions.
We periodically evaluate the potential realization of our deferred income tax assets and, if necessary, record a valuation allowance to reduce the net carrying value of such assets to the amount expected to be realized. We evaluated the potential realization of deferred income tax assets as of June 30, 2013 and concluded that the existing valuation allowance was required. It is at least reasonably possible that, within the next twelve months, a review of the objective evidence may indicate that a portion, or all, of our valuation allowance will no longer be required. If such a determination is made, release of the valuation allowance would be recognized as an income tax benefit to continuing operations in the period in which such assessment is made and the amount recognized could be material.
As of June 30, 2013 and December 31, 2012, deferred tax assets totaled $10.4 million and our valuation allowance totaled $9.8 million. Net operating loss carryforwards, on a tax effected basis, totaled $3.5 million as of June 30, 2013. Unless significant changes occur, we do not update our deferred tax assets or net operating loss carryforwards on a quarterly basis.
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Liquidity and Capital Resources
Net cash provided by operating activities in the first six months of 2013 was $5.1 million and primarily consisted of our net income of $2.9 million, net non-cash expenses of $3.3 million and net changes in our operating assets and liabilities as described below.
Accounts receivable, net increased by $0.5 million to $21.6 million at June 30, 2013 compared to $21.1 million at December 31, 2012, primarily due to the timing of sales and collections.
Inventories decreased by $2.1 million to $22.2 million at June 30, 2013, compared to $24.3 million at December 31, 2012. The decrease in inventory was primarily related to sales of finished goods and inventory charges of $0.7 million in the first six months of 2013 for excess and obsolete inventory. If our actual results are significantly different than our current expectations for 2013, we may incur additional charges to write down inventory in future periods.
Deferred revenue decreased by $2.1 million to $1.8 million at June 30, 2013, compared to $3.9 million at December 31, 2012, primarily due to a decrease in customer deposits. The decrease was primarily related to two large orders recognized in the first six months of 2013 that had previously been deferred.
Other long-term liabilities decreased by $0.7 million to $2.2 million at June 30, 2013, compared to $2.9 million at December 31, 2012, primarily due to a decrease in accrued lease abandonment costs.
Fixed asset purchases of $0.9 million in the first six months of 2013 primarily related to production-related equipment. We anticipate fixed asset additions for all of 2013 to be approximately $3.6 million, primarily for production-related equipment, facility improvements, research and development tools, business information systems and information technology equipment.
In November 2012, our board of directors authorized a stock repurchase program under which up to $2.0 million of our common stock could be repurchased from time to time in the open market or in privately negotiated transactions. During the first six months of 2013, a total of 9,800 shares were repurchased at an average price of $5.87 per share, for a total purchase price of $0.1 million. As of June 30, 2013, $1.6 million remained available for repurchases. This plan does not have an expiration date.
Changes in our assets and liabilities as presented on our Condensed Consolidated Statements of Cash Flows do not equal the changes in such assets and liabilities as calculated for our Condensed Consolidated Balance Sheets due to the effects of fluctuating foreign exchange rates.
We anticipate meeting our cash requirements for the next 12 months and for the foreseeable future from existing cash and cash equivalents and short-term marketable securities, which totaled $28.8 million at June 30, 2013.
We continue to evaluate opportunities for acquisition and expansion and any such transactions, if consummated, may use a portion of our cash and marketable securities or may result in the issuance by us of debt or equity securities. Issuances of debt securities would increase our leverage and interest exposure; issuances of equity securities could dilute the ownership interest of equity shareholders.
Recent Accounting Guidance
See Note 11 of Notes to Condensed Consolidated Financial Statements.
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Contractual Commitments
The following is a summary of our contractual commitments and obligations as of June 30, 2013 (in thousands):
Payments Due By Period | ||||||||||||||||||||
Contractual Obligation |
Total | Remainder Of 2013 |
2014 and 2015 |
2016 and 2017 |
2018 and beyond |
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Operating leases |
$ | 14,657 | $ | 1,669 | $ | 6,763 | $ | 3,454 | $ | 2,771 | ||||||||||
Purchase order commitments(1) |
7,057 | 6,830 | 227 | | | |||||||||||||||
Forward contracts |
2,037 | 2,037 | | | | |||||||||||||||
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$ | 23,751 | $ | 10,536 | $ | 6,990 | $ | 3,454 | $ | 2,771 | |||||||||||
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(1) | Purchase order commitments primarily represent open orders for inventory. |
Seasonality
Typically, our first quarter revenues are lower than our revenues from the preceding fourth quarter. In addition, as is typical in our industry, we recognize a large percentage of our quarterly revenue in the last month of the quarter. However, our seasonality can be affected by general economic trends and it should not be expected that historical revenue patterns will continue.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
There have been no material changes in our reported market risks or risk management policies since the filing of our 2012 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 4, 2013.
Item 4. | Controls and Procedures |
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Disclosure Controls and Procedures
Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Limitation on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all occurrences of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of all controls must be considered relative to their costs. Control systems can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. In
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addition, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that the control systems will detect all control issues, including instances of fraud, if any.
Item 1A. | Risk Factors |
Our Annual Report on Form 10-K for the year ended December 31, 2012 includes a detailed discussion of our risk factors. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K. Accordingly, the information in this Form 10-Q should be read in conjunction with the risk factors and information disclosed in our Annual Report on Form 10-K for the year ended December 31, 2012, which was filed with the Securities and Exchange Commission on March 4, 2013.
Item 6. | Exhibits |
The following exhibits are filed herewith or incorporated by reference hereto and this list is intended to constitute the exhibit index:
31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934. | |
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934. | |
32.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. | |
32.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. | |
101.INS** | XBRL Instance Document. | |
101.SCH** | XBRL Taxonomy Extension Schema Document. | |
101.CAL** | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF** | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB** | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE** | XBRL Taxonomy Extension Presentation Linkbase Document. |
** | Pursuant to Rule 406T of Regulation S-T, the Interactive data Files on Exhibit 101, submitted electronically herewith, are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
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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 thereunto duly authorized.
Date: August 6, 2013 | CASCADE MICROTECH, INC. | |||||
(Registrant) | ||||||
By: | /s/ MICHAEL D. BURGER | |||||
Michael D. Burger | ||||||
Director, President and Chief Executive Officer | ||||||
(Principal Executive Officer) | ||||||
By: | /s/ JEFF KILLIAN | |||||
Jeff Killian | ||||||
Chief Financial Officer and Treasurer | ||||||
(Principal Financial and Accounting Officer) |
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