ONTO INNOVATION INC. - FORM 8-K - EX-99.99.1 - EXHIBIT - July 30, 2013

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8-K - 8-K - ONTO INNOVATION INC.a8-kq22013.htm
        
Nanometrics Incorporated
1550 Buckeye Drive
Milpitas, CA 95035
Tel: 408.545.6000
Fax: 408.232.5910
www.nanometrics.com
    


Investor Relations Contact:
Company Contact:
Claire McAdams
Ronald Kisling, CFO
Headgate Partners LLC
Nanometrics Incorporated
530.265.9899, 530.265.9699 fax
408.545.6143, 408.521.9490 fax
email: claire@headgatepartners.com
email: rkisling@nanometrics.com

Nanometrics Reports Second Quarter 2013 Financial Results

MILPITAS, Calif., July 30, 2013 - Nanometrics Incorporated (NASDAQ: NANO), a leading provider of advanced process control metrology and inspection systems, today announced financial results for its second quarter ended June 29, 2013.

Second Quarter Highlights
•
Order received from a leading pure-play foundry in Asia for an Atlas® II system with NanoDiffract® OCD (optical critical dimension) software for 20nm pilot production;
•
Qualification of multiple UniFire™ systems by a new pure-play foundry customer at multiple global fab locations, addressing through-silicon-via metrology for advanced 3D packaging as well as critical front-end-of-line topography control for 20nm devices;
•
Receipt of multiple IMPULSE® orders for the fan-out of integrated metrology control of critical layer etch processes for the first phase of the 20nm ramp at a leading pure-play foundry; and
•
NanoDiffract OCD software selected by a leading memory customer for the 2014 upgrade of their global fleet of IMPULSE integrated metrology modules, in support of high-volume production of 2X/2Y DRAM and 1X/1Y NAND devices.
 
GAAP Results
 
 
 
 
Q2 2013
 
Q1 2013
 
Q2 2012
 
 
 
 
 
 
 
 
 
Revenues
 
$
34,552

 
$
24.552

 
$
53,181

 
 
 
 
 
 
 
 
 
Gross Profit
 
$
14,480

 
$
10,486

 
$
24,759

 
 
 
 
 
 
 
 
 
Income (Loss) from Operations
 
$
(6,156
)
 
$
(9,603
)
 
$
4,296

 
 
 
 
 
 
 
 
 
Net Income (Loss)
 
$
(4,566
)
 
$
(5,582
)
 
$
4,506

 
 
 
 
 
 
 
 
 
Earnings (Loss) per Diluted Share
 
$
(0.20
)
 
$
(0.24
)
 
$
0.19

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Results
 
 
 
 
 
 
 
 
 
 
 
 Q2 2013
 
Q1 2013
 
Q2 2012 (1)
 
 
 
 
 
 
 
 
 
Gross Profit
 
$
15,127

 
$
11,144

 
$
25,396

 
 
 
 
 
 
 
 
 
Income (Loss) from Operations
 
$
(5,314
)
 
$
(8,747
)
 
$
5,128

 
 
 
 
 
 
 
 
 
Net Income (Loss)
 
$
(4,023
)
 
$
(5,032
)
 
$
3,079

 
Earnings (Loss) per Diluted Share
 
$
(0.17
)
 
$
(0.22
)
 
$
0.13


A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements that are part of this release and on the investor page of Nanometrics' website. Non-GAAP results exclude the impact of amortization of acquired intangible assets and certain discrete tax items.


Commenting on the company's results, president and chief executive officer Dr. Timothy J. Stultz said, "Increased spending by our largest customers and resumption of investments in memory devices led to 41% growth in revenues -- and a doubling in product sales -- over the previous quarter. During the second quarter we also saw meaningful progress against a number of our strategic objectives, including increased adoption of our leading-edge products by pure-play foundry customers. Looking forward, we continue to see improvement in our business outlook, growth in second half revenues over the first half, and an optimistic outlook for 2014 driven by investments in emerging technologies and increasing capacity across all device types."

Second Quarter 2013 Summary
Revenues for the second quarter of 2013 were $34.6 million, up 41% from $24.6 million in the first quarter of 2013 and down 35% from $53.2 million in the second quarter of 2012. Gross margin was 41.9% compared to 42.7% in the prior quarter and 46.6% in the year-ago period. The operating loss was $6.2 million compared to an operating loss of $9.6 million in the prior quarter and operating income of $4.3 million in the year-ago period. The net loss was $4.6 million or $0.20 per share, compared to a net loss of $5.6 million or $0.24 per share in the prior quarter and net income of $4.5 million or $0.19 per diluted share in the second quarter of 2012.


        
Nanometrics Incorporated
1550 Buckeye Drive
Milpitas, CA 95035
Tel: 408.545.6000
Fax: 408.232.5910
www.nanometrics.com
    



On a non-GAAP basis, which excludes the impact of amortization of acquired intangible assets, gross margin was 43.8% compared to 45.4% in the prior quarter and 47.8% in the year-ago period. The operating loss was $5.3 million, compared to an operating loss of $8.7 million in the prior quarter and operating income of $5.1 million in the second quarter of 2012. The non-GAAP net loss, which also adjusts for the income tax effect of non-GAAP adjustments as well as discrete tax items, was $4.0 million or $0.17 per share, compared to a net loss of $5.0 million or $0.22 per share in the prior quarter and net income of $3.1 million or $0.13 per diluted share in the second quarter of 2012.
Balance Sheet Strength
At June 29, 2013, Nanometrics had $86.3 million in cash, cash equivalents and marketable securities and $143.5 million in working capital. Stockholders' equity, excluding intangible assets, was $183.8 million, or $7.93 per share based on 23.2 million shares outstanding at quarter end.
Business Outlook
Management expects total revenues for the third quarter of 2013 to be in the range of $36 to $40 million, with GAAP gross margin in the range of 41% to 45%, non-GAAP gross margin in the range of 43% to 47%, and operating expenses up $0.2 to $0.9 million from the second quarter. Management expects the third quarter GAAP net loss to be $0.16 to $0.05 per share and the non-GAAP net loss to be $0.14 to $0.03 per share.
Conference Call Details
A conference call to discuss second quarter 2013 results will be held today at 4:30 p.m. EDT (1:30 p.m. PDT). To participate in the conference call, the dial-in numbers are (877) 374-4041 for domestic callers and (253) 237-1156 for international callers. A live and recorded webcast and supplemental financial information will be made available on the investor page of the Nanometrics website at www.nanometrics.com.
Use of Non-GAAP Financial Information
Financial results such as non-GAAP gross profit, gross margin, operating income, net income, and net income per share, which exclude certain expenses, charges and special items, were not prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Management uses non-GAAP financial results, which exclude acquisition-related expenses such as amortization of acquired intangibles and transaction costs, asset impairments, restructuring charges, legal settlements, certain discrete tax items and the impact of the timing of the approval of elections related to tax treatment of certain foreign subsidiaries, and other unusual and infrequent items to evaluate the company's ongoing performance and to enable comparison to other periods that did not include these unusual and infrequent items. The company believes the presentation of non-GAAP results is useful to investors for analyzing ongoing business trends, comparing performance to prior periods, and enhancing the investor's ability to view the company's results from management's perspective. A table presenting a reconciliation of GAAP results to non-GAAP results is included at the end of this press release and is available on the investor page of the Nanometrics website at www.nanometrics.com.
About Nanometrics
Nanometrics is a leading provider of advanced, high-performance process control metrology and inspection systems used primarily in the fabrication of semiconductors and other solid-state devices, such as data storage components and discretes including high-brightness LEDs and power management components. Nanometrics' automated and integrated metrology systems measure critical dimensions, device structures, overlay registration, topography and various thin film properties, including film thickness as well as optical, electrical and material properties. The company's process control solutions are deployed throughout the fabrication process, from front-end-of-line substrate manufacturing, to high-volume production of semiconductors and other devices, to advanced wafer-scale packaging applications. Nanometrics' systems enable advanced process control for device manufacturers, providing improved device yield at reduced manufacturing cycle time, supporting the accelerated product life cycles in the semiconductor market. The company maintains its headquarters in Milpitas, California, with sales and service offices worldwide. Nanometrics is traded on NASDAQ Global Select Market under the symbol NANO. Nanometrics' website is http://www.nanometrics.com.
Forward Looking Statements
This press release contains forward-looking statements including, but not limited to, statements included in the quotation from management and statements included in the business outlook section, such as the statements regarding future financial results, including revenue, margins and profitability, customer spending and future levels of business. These forward-looking statements may also be identified by words such as “expect,” “anticipate,” “believe,” “estimate,” “forecasts,” “looking forward” “plan,” “predict,” “see,” “view,” and similar terms. Although Nanometrics believes that the expectations reflected in the forward-looking statements are reasonable, actual results could differ materially from these expectations due to a variety of factors, including economic conditions, levels of industry spending, shifts in the timing of customer orders and product shipments, market adoption rates, changes in product mix and changes in operating expenses. For additional information and considerations regarding the risks faced by Nanometrics, see its annual report on Form 10-K for the year ended December 29, 2012 as filed with the Securities and Exchange Commission on March 12, 2013, as well as other periodic reports filed with the SEC from time to time. Nanometrics disclaims any obligation to update information contained in any forward-looking statement.



        
Nanometrics Incorporated
1550 Buckeye Drive
Milpitas, CA 95035
Tel: 408.545.6000
Fax: 408.232.5910
www.nanometrics.com
    



NANOMETRICS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
 
 
 
 As of Jun 29,
 
As of Dec 29,
 
 
 
2013
 
2012
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
39,102

 
$
62,915

 
Marketable securities
47,162

 
46,993

 
Accounts receivable, net of allowances of $174 and $82, respectively
32,191

 
21,388

 
Inventories
 
39,248

 
39,659

 
Inventories-delivered systems
 
2,444

 
2,274

 
Prepaid expenses and other
 
8,221

 
7,492

 
Deferred income tax assets
 
15,083

 
8,593

 
       Total current assets
 
183,451

 
189,314

 
 
 
 
 
 
 
Property, plant and equipment, net
 
43,831

 
43,213

 
Goodwill
 
11,255

 
11,352

 
Intangible assets, net
 
9,226

 
10,980

 
Deferred income tax assets
 
3,582

 
3,671

 
Other assets
 
680

 
924

 
       Total assets
 
$
252,025

 
$
259,454

 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
 
$
8,630

 
$
6,398

 
Accrued payroll and related expenses
 
5,466

 
6,670

 
Deferred revenue
 
11,847

 
8,485

 
Other current liabilities
 
8,929

 
7,822

 
Income taxes payable
 
244

 
424

 
Current portion of debt obligations
 
4,846

 
928

 
       Total current liabilities
 
39,962

 
30,727

 
 
 
 
 
 
 
Deferred revenue
 
3,459

 
4,307

 
Income taxes payable
 
2,280

 
2,135

 
Other long-term liabilities
 
2,070

 
2,140

 
Debt obligations
 
—

 
4,374

 
       Total liabilities
 
47,771

 
43,683

 
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
Common stock, $0.001 par value, 47,000,000 shares authorized;
 
 
 
 
 
   23,186,957 and 23,250,429, respectively, issued and outstanding
 
23

 
23

 
Additional paid-in capital
 
238,939

 
238,326

 
Accumulated deficit
 
(33,998
)
 
(23,850
)
 
Accumulated other comprehensive income
 
(710
)
 
1,272

 
       Total stockholders’ equity
 
204,254

 
215,771

 
       Total liabilities and stockholders’ equity
 
$
252,025

 
$
259,454

 
 
 
 
 
 



        
Nanometrics Incorporated
1550 Buckeye Drive
Milpitas, CA 95035
Tel: 408.545.6000
Fax: 408.232.5910
www.nanometrics.com
    


NANOMETRICS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
 
 
Three Months Ended
 
Six Months Ended
 
 
 
Jun 29,
 
Jun 30,
 
Jun 29,
 
Jun 30,
 
 
 
2013
 
2012
 
2013
 
2012
Net revenues:
 
 
 
 
 
 
 
 
 
Products
 
$
26,533

 
$
41,556

 
$
39,612

 
$
89,414

 
Service
 
8,019

 
11,625

 
19,492

 
19,259

 
       Total net revenues
 
34,552

 
53,181

 
59,104

 
108,673

 
 
 
 
 
 
 
 
 
 
Costs of net revenues:
 
 
 
 
 
 
 
 
 
Cost of products
 
14,832

 
22,627

 
22,792

 
47,446

 
Cost of service
 
4,593

 
5,158

 
10,041

 
10,128

 
Amortization of intangible assets
 
647

 
637

 
1,305

 
1,274

 
       Total costs of net revenues
 
20,072

 
28,422

 
34,138

 
58,848

 
       Gross profit
 
14,480

 
24,759

 
24,966

 
49,825

 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
Research and development
 
8,321

 
7,644

 
15,768

 
15,120

 
Selling
 
6,613

 
7,041

 
13,545

 
14,252

 
General and administrative
 
5,507

 
5,583

 
11,019

 
11,664

 
Amortization of intangible assets
 
195

 
195

 
393

 
387

 
       Total operating expenses
 
20,636

 
20,463

 
40,725

 
41,423

 
       Income (loss) from operations
 
(6,156
)
 
4,296

 
(15,759
)
 
8,402

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
 
20

 
33

 
45

 
85

 
Interest expense
 
(205
)
 
(264
)
 
(431
)
 
(533
)
 
Other expense, net
 
(637
)
 
(49
)
 
(597
)
 
(224
)
 
       Total other expense, net
 
(822
)
 
(280
)
 
(983
)
 
(672
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
 
(6,978
)
 
4,016

 
(16,742
)
 
7,730

Provision for (benefit from) income taxes
 
(2,412
)
 
(490
)
 
(6,594
)
 
1,521

 
Net income (loss)
 
$
(4,566
)
 
$
4,506

 
$
(10,148
)
 
$
6,209

 
 
 
 
 
 
 
 
 
 
Net income (loss) per share:
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.20
)
 
$
0.19

 
$
(0.44
)
 
$
0.27

 
Diluted
 
$
(0.20
)
 
$
0.19

 
$
(0.44
)
 
$
0.26

 
 
 
 
 
 
 
 
 
 
Shares used in per share calculation:
 
 
 
 
 
 
 
 
 
Basic
 
23,138

 
23,395

 
23,240

 
23,372

 
Diluted
 
23,138

 
23,877

 
23,240

 
23,924




        
Nanometrics Incorporated
1550 Buckeye Drive
Milpitas, CA 95035
Tel: 408.545.6000
Fax: 408.232.5910
www.nanometrics.com
    


NANOMETRICS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Six-month Period Ended
 
June 29, 2013
 
June 30, 2012
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(10,148
)
 
$
6,209

Reconciliation of net income (loss) to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization
4,268

 
3,857

Stock-based compensation
3,208

 
3,054

Excess tax benefit from equity awards
367

 
(814
)
Loss on disposal of fixed assets
10

 
134

Inventory write down
2,764

 
1,740

Deferred income taxes
(6,657
)
 
995

Changes in fair value of contingent consideration
1,000

 
9

Changes in assets and liabilities:
 
 
 
Accounts receivable
(11,095
)
 
(11,141
)
Inventories
(4,121
)
 
(1,475
)
Inventories- delivered systems
(170
)
 
(229
)
Prepaid expenses and other
(109
)
 
(1,798
)
Accounts payable, accrued and other liabilities
1,566

 
(3,060
)
Deferred revenue
2,548

 
4,222

Income taxes payable
(389
)
 
466

                      Net cash provided by (used in) operations
(16,958
)
 
2,169

 
 
 
 
Cash flows from investing activities:
 
 
 
Maturities of marketable securities
22,788

 
—

Escrow payment received related to acquisition of Nanda
—

 
508

Purchases of marketable securities
(23,454
)
 
(13,764
)
Purchase of property, plant and equipment
(1,970
)
 
(2,635
)
Net cash used in investing activities
(2,636
)
 
(15,891
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Payments of contingent consideration
(216
)
 
(198
)
Repayments of debt obligations
(456
)
 
(374
)
Proceeds from sale of shares under employee stock option and purchase plans
2,858

 
2,632

Excess tax benefit from equity awards
(367
)
 
814

Taxes paid on net issuance of stock awards
(86
)
 
(16
)
Repurchases of common stock
(5,000
)
 
(4,960
)
                     Net cash used in financing activities
(3,267
)
 
(2,102
)
Effect of exchange rate changes on cash and cash equivalents
(952
)
 
115

Net decrease in cash and cash equivalents
(23,813
)
 
(15,709
)
Cash and cash equivalents, beginning of period
62,915

 
97,699

Cash and cash equivalents, end of period
$
39,102

 
$
81,990

 
 
 
 


        
Nanometrics Incorporated
1550 Buckeye Drive
Milpitas, CA 95035
Tel: 408.545.6000
Fax: 408.232.5910
www.nanometrics.com
    




NANOMETRICS INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share amounts)
(Unaudited)
 
 
 
Three Months Ended
 
Six Months Ended
 
 
 
 
Jun 29,
 
Mar 30,
 
Jun 30,
 
Jun 29,
 
Jun 30,
 
 
 
 
2013
 
2013
 
2012
 
2013
 
2012
 
Reconciliation of GAAP gross profit to non-GAAP gross profit
 
 
 
 
 
 
 
GAAP gross profit
 
$
14,480

 
$
10,486

 
$
24,759

 
$
24,966

 
$
49,825

 
 
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 Amortization of intangible assets
 
647

 
658

 
637

 
1,305

 
1,274

 
 Non-GAAP gross profit
 
$
15,127

 
$
11,144

 
$
25,396

 
$
26,271

 
$
51,099

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP operating income (loss) to non-GAAP operating income (loss)
 
 
 
 
 
 
 
GAAP operating income (loss)
 
$
(6,156
)
 
$
(9,603
)
 
$
4,296

 
$
(15,759
)
 
$
8,402

 
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 Amortization of intangible assets included in cost of revenues
 
647

 
658

 
637

 
1,305

 
1,274

 
 
 Amortization of intangible assets included in operating expenses
 
195

 
198

 
195

 
393

 
387

 
 
       Total non-GAAP adjustments to operating income (loss)
 
842

 
856

 
832

 
1,698

 
1,661

 
                   Non-GAAP operating income (loss)
 
$
(5,314
)
 
$
(8,747
)
 
$
5,128

 
$
(14,061
)
 
$
10,063

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP net income (loss) to non-GAAP net income (loss)
 
 
 
 
 
 
 
GAAP net income (loss)
 
$
(4,566
)
 
$
(5,582
)
 
$
4,506

 
$
(10,148
)
 
$
6,209

 
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 Total non-GAAP adjustments to non-GAAP operating income (loss)
 
842

 
856

 
832

 
1,698

 
1,661

 
 
 Income tax effect of non-GAAP adjustments
 
(299
)
 
(306
)
 
(304
)
 
(608
)
 
(607
)
 
 
 Discrete tax adjustment
 
—

 
—

 
(1,955
)
(a)
—

 
(1,300
)
(a)
                  Non-GAAP net income (loss)
 
$
(4,023
)
 
$
(5,032
)
 
$
3,079

 
$
(9,058
)
 
$
5,963

 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss) per diluted share
 
$
(0.20
)
 
$
(0.24
)
 
$
0.19

 
$
(0.44
)
 
$
0.26

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP net income (loss) per diluted share
 
$
(0.17
)
 
$
(0.22
)
 
$
0.13

 
$
(0.39
)
 
$
0.25

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares used in diluted income per share calculation
 
23,138

 
23,341

 
23,877

 
23,240

 
23,924

 

(a) Reflects the tax benefit for certain first quarter foreign losses related to entity classification elections that were approved by the IRS in the second quarter. The tax benefit of these first quarter losses was recorded as a decrease to the second quarter tax provision on a GAAP basis.







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