<PAGE>
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 March 31, 1996 or
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission file number 0-13470
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NANOMETRICS INCORPORATED
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(Exact name of registrant as specified in its charter)
California 94-2276314
- ------------------------------- -------------------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
310 DeGuigne Drive, Sunnyvale, CA 94086
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 746-1600
-------------------
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
--- ---
At April 26, 1996 there were 8,035,674 shares of common stock, no par value,
issued and outstanding.
<PAGE>
NANOMETRICS INCORPORATED
INDEX
<TABLE>
<CAPTION>
Part I. Financial Information Page
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 1996 (unaudited) and December 31, 1995. . . . . . . . 3
Consolidated Statements of Operations -
Three months ended March 31, 1996
and 1995 (unaudited)............. . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows -
Three months ended March 31, 1996
and 1995 (unaudited). . . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial
Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . 9
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
2
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
NANOMETRICS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(unaudited)
----------- ------------
<S> <C> <C>
Current assets:
Cash and equivalents $ 2,943 $ 3,625
Short-term investments 4,753 4,458
Accounts receivable, less allowance for
doubtful accounts of $380 and $380 7,877 7,567
Inventories 4,308 3,955
Prepaid and deferred income taxes 1,605 2,069
Prepaid expenses and other 695 428
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Total current assets 22,181 22,102
Property, plant and equipment, net 2,756 2,900
Other assets 160 165
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$25,097 $25,167
======= =======
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
NANOMETRICS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
(Amounts in thousands except share amounts)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(unaudited)
----------- -------------
<S> <C> <C>
Current liabilities:
Acounts payable $ 1,332 $ 1,111
Accrued payroll and related expenses 524 486
Other current liabilities 1,045 1,216
Income taxes payable 158 398
Current portion of long-term debt 373 553
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Total current liabilities 3,432 3,764
Long-term debt 3,076 3,528
Deferred income taxes 241 301
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Total liabilities 6,749 7,593
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Shareholders' equity:
Common stock, no par value;
25,000,000 shares authorized;
7,988,309 and 7,883,910 outstanding 11,053 10,983
Retained earnings 7,226 6,394
Accumulated translation adjustment 69 197
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Total shareholders' equity 18,348 17,574
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$25,097 $25,167
======= =======
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
NANOMETRICS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
---- ----
<S> <C> <C>
Revenues:
Net sales $5,554 $3,609
Service 1,514 933
------ ------
Total revenues $7,068 $4,542
Costs and expenses:
Cost of sales 2,369 1,750
Cost of service 1,003 744
Research and development 670 505
Selling 1,011 752
General and administrative 570 497
------ ------
Total costs and expenses 5,623 4,248
------ ------
Operating income 1,445 294
Other income, net 72 172
------ ------
Income before provision for income taxes 1,517 466
Provision for income taxes 683 160
------ ------
Net income $ 834 $ 306
====== ======
Net income per common and equivalent share $ 0.10 $ 0.04
====== ======
Weighted average common and equivalent
shares outstanding 8,551 7,709
====== ======
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
NANOMETRICS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1996 1995
---- ----
<S> <C> <C>
Operating activities:
Net income $ 835 $ 306
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 72 77
Deferred taxes 495 (98)
Changes in assets and liabilities:
Accounts receivable (468) (210)
Other receivables (64) 90
Inventories (387) 507
Prepaid expenses and other (245) (246)
Accounts payable and other liabilities 119 370
Income taxes payable (279) 144
------ ------
Net cash provided by operating activities 78 940
Investing activities:
Purchase of short-term investments (1,185) (1,083)
Sales/maturities of short-term investments 890 293
Capital expenditures (18) -
------ ------
Net cash used in investing activities (313) (790)
====== ======
Financing activities:
Repayments of long-term debt (492) (137)
Issuance of common stock 70 15
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Net cash used in financing activities (422) (122)
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Effect of exchange rate changes on cash (25) (66)
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Net change in cash and equivalents (682) (38)
Cash and equivalents at beginning of period 3,625 2,135
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Cash and equivalents at end of period $2,943 $2,097
====== ======
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 31 $ 9
====== ======
Cash paid for income taxes $ 392 $ 1
======= ======
</TABLE>
See Notes to Consolidated Financial Statements
6
<PAGE>
NANOMETRICS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Consolidated Financial Statements
The consolidated financial statements include the accounts of Nanometrics
Incorporated and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
While the quarterly financial information is unaudited, the financial
statements included in this report reflect all adjustments (consisting only of
normal recurring adjustments) which the Company considers necessary for a fair
presentation of the results of operations for the interim periods covered and of
the financial condition of the Company at the date of the interim balance sheet.
The operating results for interim periods are not necessarily indicative of the
operating results for the entire year. The information included in this report
should be read in conjunction with the information included in the Company's
1995 Form 10-K.
Note 2. Net Income Per Share
Net income per share is based on the weighted average number of common and
common equivalent shares outstanding during the period. Common equivalent
shares include dilutive common stock options (using the treasury stock method).
Note 3. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market
and consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
(Amounts in thousands)
<S> <C> <C>
Raw materials and subassemblies $1,579 $1,727
Work in process 1,597 830
Finished goods 1,132 1,398
------ ------
$4,308 $3,955
====== ======
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Total revenues for the first quarter of 1996 were $7,068,000, an increase of
$2,526,000 or 56% from the same quarter in 1995. Net sales of $5,554,000
increased $1,945,000 or 54% for the first quarter of 1996 compared to the same
period in 1995 resulting from increased demand for the Company's products
especially from customers in the U.S., Korea and Japan. Service revenue of
$1,514,000 increased $581,000 or 62% for the first quarter of 1996 compared to
the same period in 1995. This increase in service revenue are primarily
attributable to increased sales of accessories in the U.S. and Japan in 1996.
The Company believes that its revenue growth for the three months ended March
31, 1996 is not necessarily indicative of future results.
Cost of sales as a percentage of net sales decreased to 43% in the first
quarter of 1996 from 48% in the first quarter of 1995. This improved cost of
sales ratio resulted primarily from higher sales volumes resulting in lower per
unit manufacturing costs. Cost of service as a percentage of service revenue
decreased to 66% in the first quarter of 1996 from 80% in the first quarter of
1995. This decrease was primarily attributable to relatively higher margins on
the additional sales of accessories.
Research and development expenses for the first quarter 1996 increased
$165,000 or 33% compared to the same period in 1995. This increase was mainly
due to higher material costs associated with new product development at the
Japanese subsidiary and the addition of software engineers in the U.S.
Selling expenses for the first quarter of 1996 increased by $259,000 or 34%
compared to the same period in 1995 primarily because of the addition of sales
offices and sales staff in the second half of 1995.
General and administrative expenses for the first quarter of 1996 increased
by $73,000 or 15% primarily as a result of spending associated with increased
operating activity.
Other income decreased $100,000 during the first quarter of 1996 compared to
the same period in 1995 due primarily to lower exchange rate gains in 1996.
The Company reported an operating income of $1,445,000 and net income of
$834,000 for the first quarter of 1996 compared to an operating income of
$294,000 and net income of $306,000 for the same period in 1995.
Liquidity and Capital Resources
- -------------------------------
At March 31, 1996, the Company had working capital of $18,749,000 compared to
$18,338,000 at December 31, 1995. The current ratio at March 31, 1996 was 6.5 to
1. The Company believes working capital including cash and short-term
investments of $7,696,000 will be sufficient to meet its needs at least through
the next twelve months. Operating activities for the first three months of 1996
provided cash of $78,000 primarily from net income offset to some extent by
higher accounts receivable and higher inventories, while the purchase of short-
term investments net of sales/maturities used $295,000, capital expenditures
used $18,000, debt repayment used $492,000 and issuance of common stock provided
$70,000.
8
<PAGE>
NANOMETRICS INCORPORATED
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
See page 11.
B. Reports on Form 8-K.
None.
9
<PAGE>
NANOMETRICS INCORPORATED
SIGNATURES
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.
NANOMETRICS INCORPORATED
(Registrant)
/s/ Vincent J. Coates
- ------------------------------------
Vincent J. Coates
Chairman and Chief Executive Officer
/s/ Paul B. Nolan
- -----------------------
Paul B. Nolan
Chief Financial Officer
Dated: May 2, 1996
10
<PAGE>
Index To Exhibits
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 2,943
<SECURITIES> 4,753
<RECEIVABLES> 7,877
<ALLOWANCES> 380
<INVENTORY> 4,308
<CURRENT-ASSETS> 22,181
<PP&E> 2,756
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,097
<CURRENT-LIABILITIES> 3,432
<BONDS> 3,076
0
0
<COMMON> 11,053
<OTHER-SE> 7,295
<TOTAL-LIABILITY-AND-EQUITY> 25,097
<SALES> 5,554
<TOTAL-REVENUES> 7,068
<CGS> 2,369
<TOTAL-COSTS> 3,372
<OTHER-EXPENSES> 2,251
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,517
<INCOME-TAX> 683
<INCOME-CONTINUING> 834
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 834
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
