SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended January 31, 2003
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 number 0-22366
CREDENCE SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware |
94-2878499 | |
| (State or other jurisdiction) |
(IRS Employer | |
| of incorporation or organization) |
Identification No.) |
| 215 Fourier Ave., Fremont, California |
94539 | |
| (Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code (510) 657-7400
Former name, former address and former fiscal year, if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 ¨
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
APPLICABLE ONLY TO CORPORATE ISSUERS:
At March 3, 2003, there were approximately 63,095,530 shares of the Registrant’s common stock, $0.001 par value per share, outstanding.
1
| PART I. FINANCIAL INFORMATION |
PAGE NO. | |||
| Item 1. |
3 | |||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12 | ||
| Item 3. |
30 | |||
| Item 4. |
30 | |||
| PART II. OTHER INFORMATION |
||||
| Item 1. |
30 | |||
| Item 2. |
30 | |||
| Item 3. |
30 | |||
| Item 4. |
31 | |||
| Item 5. |
31 | |||
| Item 6. |
31 | |||
2
PART I - FINANCIAL INFORMATION
Item 1. - FINANCIAL STATEMENTS
CREDENCE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| January 31, 2003 |
October 31, 2002a | |||||
| (unaudited) | ||||||
| ASSETS |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ |
24,874 |
$ |
50,192 | ||
| Short-term investments |
|
76,527 |
|
82,223 | ||
| Accounts receivable, net |
|
32,579 |
|
32,426 | ||
| Inventories |
|
107,394 |
|
105,636 | ||
| Income tax receivable |
|
20,481 |
|
17,463 | ||
| Deferred income taxes and other current assets |
|
9,580 |
|
7,520 | ||
| Total current assets |
|
271,435 |
|
295,460 | ||
| Long-term investments |
|
107,105 |
|
109,247 | ||
| Property and equipment, net |
|
108,840 |
|
112,256 | ||
| Goodwill, net |
|
34,740 |
|
34,313 | ||
| Other intangible assets, net |
|
41,139 |
|
25,208 | ||
| Other assets |
|
7,062 |
|
5,765 | ||
| Total assets |
$ |
570,321 |
$ |
582,249 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||
| Current liabilities: |
||||||
| Accounts payable |
$ |
17,641 |
$ |
14,870 | ||
| Accrued expenses and other liabilities |
|
42,417 |
|
40,816 | ||
| Deferred profit |
|
2,062 |
|
5,724 | ||
| Total current liabilities |
|
62,120 |
|
61,410 | ||
| Other liabilities |
|
820 |
|
1,602 | ||
| Stockholders’ equity |
|
507,381 |
|
519,237 | ||
| Total liabilities and stockholders’ equity |
$ |
570,321 |
$ |
582,249 | ||
| a) | Derived from the audited consolidated balance sheet included in our Form 10-K for the year ended October 31, 2002. |
See accompanying notes.
3
CREDENCE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended January 31, |
||||||||
| 2003 |
2002 |
|||||||
| Net sales |
$ |
36,672 |
|
$ |
34,627 |
| ||
| Cost of goods sold |
|
24,208 |
|
|
21,466 |
| ||
| Gross margin |
|
12,464 |
|
|
13,161 |
| ||
| Operating expenses: |
||||||||
| Research and development |
|
19,496 |
|
|
20,492 |
| ||
| Selling, general and administrative |
|
20,566 |
|
|
21,649 |
| ||
| Amortization of purchased intangibles |
|
1,590 |
|
|
5,146 |
| ||
| In-Process research and development |
|
1,510 |
|
|
— |
| ||
| Special charges |
|
1,392 |
|
|
— |
| ||
| Total operating expenses |
|
44,554 |
|
|
47,287 |
| ||
| Operating income (loss) |
|
(32,090 |
) |
|
(34,126 |
) | ||
| Interest and other income, net |
|
1,927 |
|
|
3,371 |
| ||
| Income (loss) before income tax provision |
|
(30,163 |
) |
|
(30,755 |
) | ||
| Income tax (benefit) |
|
82 |
|
|
(10,764 |
) | ||
| Minority interest (benefit) |
|
(81 |
) |
|
110 |
| ||
| Net income (loss) |
($ |
30,164 |
) |
($ |
20,101 |
) | ||
| Net income (loss) per share |
||||||||
| Basic |
($ |
0.49 |
) |
($ |
0.33 |
) | ||
| Diluted |
($ |
0.49 |
) |
($ |
0.33 |
) | ||
| Number of shares used in computing per share amount |
||||||||
| Basic |
|
61,145 |
|
|
60,233 |
| ||
| Diluted |
|
61,145 |
|
|
60,233 |
| ||
See accompanying notes.
4
CREDENCE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(in thousands)
(unaudited)
| Three Months Ended January 31, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ |
(30,164 |
) |
$ |
(20,101 |
) | ||
| Adjustments to reconcile net income to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
|
7,496 |
|
|
12,425 |
| ||
| Special non-cash IPR&D charge |
|
1,510 |
|
|
— |
| ||
| Loss on disposal of property and equipment |
|
227 |
|
|
1,326 |
| ||
| Unrealized gain/loss on investment, translation adjustment |
|
899 |
|
|||||
| Minority interest |
|
(81 |
) |
|
108 |
| ||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable, inventories and other current assets |
|
(3,389 |
) |
|
1,776 |
| ||
| Accounts payable, accrued liabilities and income taxes payable |
|
(2,319 |
) |
|
(11,598 |
) | ||
| Net cash provided by (used in) operating activities |
|
(25,821 |
) |
|
(16,064 |
) | ||
| Cash flows from investing activities: |
||||||||
| Purchases of available-for-sale securities |
|
(45,398 |
) |
|
(10,209 |
) | ||
| Sales of available-for-sale securities |
|
53,236 |
|
|
26,204 |
| ||
| Acquisition of property and equipment |
|
(1,697 |
) |
|
(2,472 |
) | ||
| Acquisition of other assets |
|
(5,880 |
) |
|
(3,382 |
) | ||
| Net cash provided by (used in) investing activities |
|
261 |
|
|
10,141 |
| ||
| Cash flows from financing activities: |
||||||||
| Issuance of common & treasury stock |
|
242 |
|
|
2,153 |
| ||
| Other |
|
— |
|
|
4 |
| ||
| Net cash provided by (used in) financing activities |
|
242 |
|
|
2,157 |
| ||
| Net (decrease) in cash and cash equivalents |
|
(25,318 |
) |
|
(3,766 |
) | ||
| Cash and cash equivalents at beginning of period |
|
50,192 |
|
|
44,309 |
| ||
| Cash and cash equivalents at end of period |
$ |
24,874 |
|
$ |
40,543 |
| ||
| Supplemental disclosures of cash flow information: |
||||||||
| Income taxes paid (received) |
$ |
2,912 |
|
$ |
(9,539 |
) | ||
| Noncash investing activities: |
||||||||
| Net transfers of inventory to property and equipment |
|
— |
|
|
— |
| ||
| Acquisition of Optonics using Credence common stock |
$ |
(17,139 |
) |
|
— |
| ||
| Noncash financing activities: |
||||||||
| Income tax benefit from stock option exercises | ||||||||