SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q SB/A
|X| Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended: March 31, 1996
|_| Transition report under Section 13 or 15(d) of the Exchange Act.
For the transition period from _________________ to _______________
Commission file number: 0-11370
Cerprobe Corporation
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer As Specified In Its Charter)
Delaware 86-0312814
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(State of Incorporation) (IRS Employee Identification Number)
600 South Rockford Drive, Tempe, Arizona 85281
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(Address of Principal Executive Offices) (Zip Code)
(602) 967-7885
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(Issuer's Telephone Number, Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
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4,314,053 Shares of Common Stock issued and outstanding as of May 13, 1996
- --------------------------------------------------------------------------------
(Number of Shares of Common Stock Outstanding)
Traditional Small Business Disclosure Format (check one):
Yes No X
------
This Report Consists of 17 Pages
<PAGE>
CERPROBE CORPORATION
--------------------
(INDEX)
Page Number
-----------
Part I.
Financial Information
Condensed Consolidated Balance Sheets -
at March, 31 1996 and December 31, 1995 3
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 1996 and March 31,1995 4
Condensed Consolidated Statements of Cash Flows - Three Months
Ended March 31, 1996, and March 31, 1995 5
Notes To Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II
Other Information 16
2
<PAGE>
CERPROBE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 December 31
ASSETS 1996 1995
------
----------------- -----------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $9,036,839 $263,681
Accounts receivable, net of allowances for
doubtful accounts (Notes B & F) 6,064,746 4,377,041
Inventories (Notes C & F) 3,161,909 2,802,081
Prepaid expenses 22,221 111,673
Income taxes receivable 163,464 163,464
Deferred income taxes 135,134 270,599
----------------- -----------------
TOTAL CURRENT ASSETS 18,584,313 7,988,539
----------------- -----------------
PROPERTY AND EQUIPMENT, net (Notes D and G) 5,890,909 4,667,786
GOODWILL, net of amortization 1,857,072 1,923,396
PATENTS AND TECHNOLOGY, net of amortization 68,405 74,013
OTHER ASSETS 183,169 313,716
----------------- -----------------
TOTAL ASSETS $26,583,868 $14,967,450
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $1,679,687 $1,499,853
Accrued expenses (Note E) 1,787,967 788,599
Convertible subordinated debentures 485,000 595,000
Current portion of notes payable (Note G) 118,725 123,743
Current portion of capital leases (Note G) 199,022 209,885
----------------- -----------------
TOTAL CURRENT LIABILITIES 4,270,401 3,217,080
----------------- -----------------
Notes payable, less current portion 377,354 408,376
Capital leases, less current portion 527,056 572,830
Deferred income taxes 66,123 66,123
Other liabilities 32,443 46,801
----------------- -----------------
TOTAL LIABILITIES 5,273,377 4,311,210
----------------- -----------------
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.05 per share:
Authorized, 10,000,000 shares;
Issued and outstanding 9,780,000 shares at March 31, 1996 489,000 -
Common stock, par value $.05 per share:
Authorized, 10,000,000 shares;
Issued and outstanding 4,295,960 and 4,095,851 214,799 204,792
Additional paid-in-capital 16,377,387 7,239,410
Retained earnings 4,447,324 3,466,464
Unearned compensation (191,487) (241,872)
Foreign currency translation adjustment (26,532) (12,554)
----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 21,310,491 10,656,240
----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $26,583,868 $14,967,450
================= =================
</TABLE>
3
<PAGE>
CERPROBE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------------------
1996 1995
---------------- ----------------
<S> <C> <C>
NET SALES $9,699,939 $4,962,665
COST OF GOODS SOLD 5,172,951 2,690,801
---------------- ----------------
GROSS MARGIN 4,526,988 2,271,864
---------------- ----------------
EXPENSES:
Engineering and product development 102,684 121,137
Selling, general and administrative 2,607,938 1,149,423
---------------- ----------------
2,710,622 1,270,560
---------------- ----------------
OPERATING INCOME 1,816,366 1,001,304
---------------- ----------------
OTHER REVENUE AND (EXPENSES):
Interest expense (58,856) (36,468)
Other income 100,350 62,899
---------------- ----------------
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 1,857,860 1,027,735
MINORITY INTEREST 25,361 0
PROVISION FOR INCOME TAXES 877,000 463,000
---------------- ----------------
NET INCOME 1,006,221 564,735
================ ================
NET INCOME PER COMMON EQUIVALENT SHARE
PRIMARY:
NET INCOME PER SHARE $0.20 $0.16
================ ================
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 5,063,196 3,446,342
================ ================
FULLY DILUTED:
NET INCOME PER SHARE $0.18 $0.14
================ ================
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 5,645,349 4,041,342
================ ================
</TABLE>
4
<PAGE>
CERPROBE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31
-------------------------------------
1996 1995
---------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income before minority interest $1,006,221 $564,735
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 404,138 149,485
Tax benefit from stock options exercised 0 6,500
Deferred income taxes 135,465 24,680
Provision for losses on accounts receivable 3,000 3,000
Provision for obsolete inventory 10,000 7,000
Compensation expense 32,753 0
Loss applicable to minority interest (25,361) 0
Changes in operating assets and liabilities:
Accounts receivable (1,690,705) (269,939)
Inventories (369,828) (138,940)
Prepaid expenses and other assets 219,999 (436,297)
Accounts payable and other accrued expenses 437,666 342,035
Accrued income taxes 741,536 36,364
Other liabilities (14,358) 99,042
---------------- ----------------
Net cash provided by operating activities 890,526 387,665
---------------- ----------------
INVESTING ACTIVITIES:
Capital expenditures (1,555,329) (159,599)
---------------- ----------------
FINANCING ACTIVITIES:
Principal payments on notes payable and capital leases (92,677) (24,959)
Net proceeds from issuance of preferred stock 9,400,000 0
Net proceeds from issuance of common stock 144,616 0
---------------- ----------------
Net cash provided by (used in) financing activities 9,451,939 (24,959)
---------------- ----------------
EFFECT OF EXCHANGE RATES ON CASH (13,978) 2,092
NET INCREASE IN CASH AND CASH EQUIVALENTS 8,773,158 205,199
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 263,681 738,319
---------------- ----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $9,036,839 $943,518
================ ================
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Conversion of subordinated debentures to common stock $110,000 0
================ ================
================ ================
Conversion of preferred stock to common stock $11,000 0
================ ================
================ ================
Property acquired under capital leases and issuance of notes payable $0 $95,200
================ ================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION :
Interest paid $33,617 $29,935
================ ================
Income taxes paid $0 $395,456
================ ================
</TABLE>
5
<PAGE>
CERPROBE CORPORATION
--------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
MARCH 31, 1996
--------------
A. NOTE TO FINANCIAL STATEMENTS (UNAUDITED)
----------------------------------------
The balance sheet as of March 31, 1996, the statements of operations
for the three month periods ended March 31, 1996 and March 31, 1995,
and the statements of cash flows for the three month periods ended
March 31, 1996 and March 31, 1995 have been prepared by the Company
without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows for all
periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's 1995
10KSB. The results of operations of the interim periods are not
necessarily indicative of the results to be obtained for the entire
year.
On April 25, 1996, the Company opened a full-service manufacturing
plant in Singapore which operates under the name Cerprobe Singapore
PTE. LTD. The Company holds a majority interest in Cerprobe Asia PTE.
LTD., which is a joint venture with several Asian investors.
B. ALLOWANCE FOR DOUBTFUL ACCOUNTS
-------------------------------
The allowance for doubtful accounts at March 31, 1996 and December 31,
1995 was $176,000 and $173,000, respectively.
C. INVENTORIES
-----------
Inventories are stated at the lower of cost (determined on the
first-in, first-out method) or market and consist of the following:
March 31, December 31,
1996 1995
Raw Materials $2,125,563 $1,655,974
Work-In-Process 1,129,346 $1,229,107
Reserve for Obsolete Inventory (93,000) (83,000)
---------- ----------
Total $3,161,909 $2,802,081
========== ==========
6
<PAGE>
D. PROPERTY AND EQUIPMENT
----------------------
<TABLE>
<CAPTION>
Property and Equipment consist of the following:
March 31, December 31,
1996 1995
--------------------- -----------------------
<S> <C> <C>
Manufacturing tools and equipment $ 5,723,942 $ 4,825,724
Office furniture and equipment 2,077,609 1,722,312
Leasehold improvements 830,549 759,843
Construction in progress 619,803 398,838
Computer software 39,775 39,775
Accumulated depreciation and amortization (3,400,769) (3,078,706)
-------------------- ----------------------
$ 5,890,909 $ 4,667,786
==================== ======================
E. ACCRUED EXPENSES
----------------
Accrued expenses consist of the following:
March 31, December 31,
1996 1995
-------------------- ---------------------
Accrued payroll and related taxes $ 834,796 $ 482,866
Accrued income taxes 741,536 -
Other accrued expenses 211,635 305,733
-------------------- --------------------
$ 1,787,967 $ 788,599
==================== ====================
</TABLE>
F. NOTES PAYABLE
-------------
On April 30, 1996, Cerprobe Corporation (the "Company") signed a Loan
Agreement with First Interstate Bank. The Loan Agreement provides up to
$3,000,000 in revolving credit for accounts receivable financing and
inventory.
The revolving credit agreement expires April 28, 1997. The revolving
credit agreement has a negative pledge agreement on all accounts
receivable, inventories, unpledged equipment, and real estate. The
non-use fee under the line of credit is .125% of the unused portion,
calculated per annum. At March 31, 1996, there was no amount
outstanding under this agreement.
The interest rate under the revolving credit agreement will be the
lower of First Interstate Bank's prime rate, which was 8.25% at March
31, 1996, or LIBOR (London Interbank Rate). The LIBOR rate was 8.00% at
March 31, 1996.
On April 3, 1995, due to the acquisition of Fresh Test Technology
Corporation ("Fresh Test"), the Company acquired three notes payable.
One note is for an exclusive license for probe card technology which
provides for monthly payments of $2,500 per month. This note was paid
in full on March 14, 1996. The other notes were payable to a former
officer and director of Fresh Test. These two notes were paid in full
on July 17, 1995.
7
<PAGE>
G. LONG-TERM DEBT AND COMMITMENTS
------------------------------
In March and April 1991, the Company issued $1,000,000 in aggregate
principal amount of Convertible Subordinated Debentures. The Debentures
are convertible into shares of the Company's Common Stock at a
conversion price equal to $1.00 per share, subject to adjustment. To
assist the Company in meeting the minimum stockholders' equity
requirement for listing on Nasdaq, certain holders of the Debentures
agreed to convert $360,000 in principal amount of the Debentures into
360,000 shares of the Company's Common Stock in October 1992. On
September 3, 1993, $5,000 in principal amount of the Debentures was
converted into 5,000 shares of the Company's Common Stock. On September
21, 1994, an additional $40,000 in principal amount of the Debentures
was converted into 40,000 shares of the Company's Common Stock. On
February 23, 1996, an additional $10,000 in principal amount of the
Debentures was converted into 10,000 shares of the Company's Common
Stock. On March 29, 1996, an additional $100,000 in principal amount of
the Debentures was converted into 100,000 shares of the Company's
Common Stock. Accordingly, $485,000 in principal amount of the
Debentures was outstanding at March 31, 1996, all of which is due in
December 1996 ($480,000 of which bears interest at 12 1/2% and $5,000
of which bears interest at 25%, payable semi-annually in June and
December of each year). The proceeds from the sale of the Debentures
were used by the Company to refinance $440,000 of short term
indebtedness, purchase capital equipment, and provide additional
working capital.
In June 1994, the Company signed a Lease Agreement with First
Interstate Bank of Arizona ("First Interstate"). The agreement provides
up to $2,000,000 on open credit for a term of 11 months for equipment
leasing. In accordance with this agreement, on March 15, 1995, the
Company leased various manufacturing equipment with an aggregate cost
of $95,200 from First Interstate. The interest rate for this lease is
9.18%. On March 31, 1996, the long term portion of this lease was
$61,789. In addition, on April 11, 1995, the Company leased additional
manufacturing equipment with an aggregate cost of $171,255 from First
Interstate purchased under a second lease. The interest rate for the
second lease is 8.96%. The long term portion of the second lease was
$113,982 on March 31, 1996.
In June 1995, the Company renewed the Lease Agreement with First
Interstate. The new agreement provides up to $1,000,000 on open credit
for a term of 11 months for equipment leasing. In accordance with this
agreement, on July 24, 1995, the Company leased various equipment with
an aggregate cost of $281,157 from First Interstate. The interest rate
on this lease is 7.54%. On March 31, 1996, the long term portion of
this lease was $200,207.
In August 1994, the Company signed a Lease Agreement with PFC, Inc. The
agreement provides up to $1,000,000 on open credit for a term of 11
months for equipment leasing. The interest rate is 8.777%. In
accordance with this agreement, on August 9, 1994, the Company leased
various manufacturing equipment with an aggregate cost of $190,233 from
PFC, Inc. On March 31, 1996, the long term portion of the PFC, Inc.
lease was $100,198.
8
<PAGE>
On December 27, 1995, the Company signed an agreement with Zions Credit
Corporation to finance various manufacturing equipment with an
aggregate cost of $533,823. On March 31, 1996, the long term portion of
this note was $375,803.
On September 17, 1995 the Company signed a sublease for a portion of
the Santa Clara, California facility to Advanced Point Corporation. The
sublease is for four years and nine months commencing October 1, 1995
and ending July 31, 2002. On September 19, 1995, the Company signed a
sublease for the remaining portion of the Santa Clara facility to
Silicon Electronics Inc. The sublease is for two years and one month
commencing on October 1, 1995 and ending November 30, 1997.
On July 18, 1995, the Company signed a new building lease for the San
Jose, California facility for seven years and one month commencing on
August 1, 1995, and ending on August 30, 2002. The Company moved the
Santa Clara facility to San Jose, California in September of 1995.
On June 30, 1995, the Company signed a new building lease for the
Westboro, Massachusetts facility for five years commencing on July 1,
1995 and ending June 30, 2000.
On June 29, 1995, the Company signed a month-to-month lease for the
Colorado customer service office. The lease provides that either the
landlord or the tenant, without cause or approval of the other party,
may terminate this lease upon 30 days written notice. This lease was
terminated on April 30, 1996.
On June 23, 1995, the Company signed a letter of intent to lease the
building for the Singapore facility for three years commencing on
September 3, 1995 and ending on September 2, 1998.
On April 15, 1996, the Company signed a month to month lease on the
Oregon customer service office. The lease provides that either the
landlord or the tenant, without cause or approval of the other party,
may terminate this lease upon 30 days written notice.
Pursuant to the acquisition of Fresh Test Technology on April 3, 1995,
the Company acquired a building lease for the Chandler, Arizona
facility for two years commencing on November 1, 1993 and ending
October 31, 1995. This lease was subsequently amended for an additional
one year and two months commencing on November 1, 1995 and ending
December 31, 1996. The Company leased additional building space for the
Chandler, Arizona facility for five years commencing on December 1,
1993 and ending on November 30, 1998.
9
<PAGE>
Convertible Preferred Stock
On January 18, 1996, the Company issued 10,000,000 shares of
Convertible Preferred Stock for $10,000,000. Net proceeds from the
private placement, after deducting expenses, were $9,400,000. The
Preferred Stock is convertible into Common Stock at the option of the
holder in increments of 25% of the shares held by the holder beginning
March 3, 1996 through June 1, 1996. Automatic conversion occurs at the
end of two years. The Preferred Stock converts at the lesser of 110% of
the fixed strike price of $16.55 or 90% of the average five day closing
price prior to the conversion date. The Company may call the Preferred
Stock at any time in minimum amounts of $2,000,000 at a price of 125%
of par beginning July 18, 1996 or upon a merger, buyout or acquisition.
Additionally, the Company issued 52,000 Common Stock warrants on
January 18,1996, which are exercisable at the fixed strike price of
$16.55 and expire in four years.
During March 1996, 220,000 shares of Preferred Stock were converted
into 17,655 shares of Common Stock. During April 1996, 380,000 shares
of Preferred Stock were converted into 28,876 shares of Common Stock.
On May 2, 1996, 120,000 shares of Preferred Stock were converted into
9,097 shares of Common Stock. Accordingly, 9,280,000 shares of
Preferred Stock were outstanding at May 10, 1996.
Acquisition
On January 23, 1996, the Company signed a letter of intent to acquire
the stock of CompuRoute, Inc., a manufacturer of printed circuit
boards, and its affiliates. As consideration for the acquisition, the
Company plans to issue 995,000 shares of Common Stock. The Company
anticipates recording the acquisition under the pooling-of-interests
method of accounting. This transaction is subject to a number of
conditions, however, including approval by the stockholders of both
companies, and there can be no assurance that it will be completed.
H. PRO FORMA DATA - FRESH TEST TECHNOLOGY ACQUISITION
--------------------------------------------------
Three Months Ended March 31
---------------------------
1995
----
Net sales 6,465,823
Net income 706,178
Primary earnings per share .17
Fully diluted earnings per share .15
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
GENERAL
Cerprobe Corporation designs, manufactures, and markets high performance probing
and interface products used in electronic screening and verification of
integrated circuits (IC) and hybrid substrates (MCM) for the semiconductor
industry. Cerprobe's probe cards generally range from $500 to $10,000, but may
cost more depending upon the complexity and performance specifications of the
probe cards. Cerprobe's interface assemblies range in price from $1,000 to
$65,000. Most probe cards are delivered within one to three weeks of the receipt
of a customer's order and appropriate specifications.
Cerprobe was founded in 1976. Following a change in the Company's management
team in 1990, the Company has experienced significant internal expansion, with
revenues exceeding $26 million in 1995. Cerprobe has doubled its share of the
domestic probe card market during the past five years to become a major supplier
of probe cards in the United States and on a worldwide basis. The Company took
steps in 1994 to expand its presence in the international market by opening a
full service manufacturing and repair facility in Scotland to serve Europe. The
Scotland facility is now fully operational. In 1995, the Company continued this
expansion by opening an office in Singapore pursuant to a joint venture
agreement. Management believes that the fastest growing region for the
semiconductor industry is Southeast Asia, and plans to continue expanding into
this area during 1996.
The Company operates manufacturing facilities in Tempe and Chandler, Arizona;
San Jose, California; Austin, Texas; and Westboro, Massachusetts, and maintains
sales offices in Beaverton, Oregon; Colorado Springs, Colorado; and Boca Raton,
Florida. Product sales are made both by Company employed sales personnel and
independent distributors.
On April 3, 1995, the Company completed the acquisition of Fresh Test Technology
Corporation ("Fresh Test"). In connection with the acquisition, Cerprobe issued
712,500 shares of its Common Stock to the shareholders of Fresh Test. Fresh
Test, based in Chandler, Arizona, was founded in 1987 and specializes in the
design and manufacturing of controlled impedance, high frequency, ATE interface
boards and systems for testing digital, mixed signals and analog integrated
circuits. The Company believes that this acquisition allowed the combination of
product lines and the consolidation of engineering expertise.
11
<PAGE>
In order to continue to broaden the Company's product line, the Company has
entered into a letter of intent to acquire CompuRoute, Inc. (and certain
affiliated companies) ("CompuRoute") located in Richardson, Texas for
approximately 920,000 shares of the Company's Common Stock. The letter of intent
also provides for the issuance of 75,000 shares of the Company's Common Stock to
CompuRoute's largest stockholder in exchange for certain real estate associated
with CompuRoute's operations. CompuRoute is a leading designer and fabricator of
printed circuit boards and assemblies used in the testing of semiconductors. If
completed, the acquisition of CompuRoute would expand the Company's current
product line both internally and externally, and increase the Company's
distribution network. This transaction is subject to a number of conditions,
however, including approval by the stockholders of both companies, and there can
be no assurance that it will be completed.
FIRST QUARTER OF 1996 AND 1995 COMPARISONS
- - RESULTS OF OPERATIONS
Net sales for the first quarter of 1996 were $9,699,939, an increase of 95% over
net sales for the first quarter of 1995 of $4,962,665. The increase in net sales
reflects a continuation of higher order rates for the Company's probe card
products and the contribution from the acquisition of Fresh Test.
Gross margin for the first quarter of 1996 was 47% of sales compared to 46% of
sales for the comparable period in 1995. The increase in gross margin is
primarily a result of the increase in net sales and the positive effect of fixed
manufacturing costs being spread over a larger revenue base.
Engineering and product development expenses decreased 15% for the first quarter
of 1996 over the first quarter of 1995. This decrease represents a controlled
expansion of research and development efforts to pursue the development of new
integrated circuit testing systems for the future.
Selling, general and administrative (SG&A) expenses for the first quarter of
1996 were $2,607,938, an increase of 127% compared with $1,149,423 for the
comparable period in 1995. The increase in total SG&A expenses resulted
primarily from the increase in fixed general and administrative costs due to the
Company's continued facility expansion and the acquisition of Fresh Test.
Operating income for the first quarter of 1996 was $1,816,366, an increase of
81% compared to $1,001,304 for the first quarter of 1995. The increase in
operating income resulted primarily from the increase in net sales and an
increase in the gross margin.
Interest expense for the first quarter of 1996 was $58,856, an increase of 61%
over the comparable period in 1995. The increase in interest expense is
primarily attributable to the increase in lease equipment financing and the
additional debt financing.
12
<PAGE>
Other income for the first quarter of 1996 was $100,350, an increase of 60% over
the comparable period in 1995. This increase was primarily due to the interest
income earned on cash from a private placement of Preferred Stock that occured
in the first quarter of 1996, and also the Company's ability to maximize
available vendor discounts.
Income before income taxes and minority interest for the first quarter of 1996
was $1,857,860, an increase of 81% over the comparable period in 1995. Net
income for the first quarter of 1996 was $1,006,221, an increase of 78% over the
comparable period in 1995. Once again, the increase is primarily due to the
increase in net sales and the increase in gross margin.
Cerprobe Singapore PTE. LTD. is in the process of set up, training and the build
up of inventory in the first quarter of 1996. Minority interest Cerprobe Asia
PTE. LTD. for the first quarter of 1996 was $25,361, which resulted from the
loss due to facility start up costs.
The Company has used all of its available loss carryforwards and has begun to
feel the full impact of income tax rates. The current estimated income tax rate
in the U.S. is 42%; on a consolidated basis, however, it is 47% due to the
nondeductible tax loss from the Scotland subsidiary.
13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased from $4,771,459 at December 31, 1995 to $14,313,912 at
March 31, 1996. The current ratio increased from 2.5 to 1 at December 31, 1995
to 4.3 to 1 at March 31, 1996, primarily as a result of an increase in accounts
payable and other accrued expenses and the cash received from the private
placement of Preferred Stock.
On April 30, 1996, the Company renewed a Loan Agreement with First Interstate
Bank of Arizona. First Interstate's Loan Agreement provides up to $3,000,000 in
revolving credit for accounts receivable financing. The interest rate on the
revolving credit agreement is equal to the lower of First Interstate's prime
rate or LIBOR.
The Company entered into an equipment financing arrangement with Norwest
Equipment Finance in May 1993. The Company has leased equipment valued at
$160,798 for a term of 36 months. The interest rate is 7.785%. At the end of the
lease term, the Company may purchase the equipment for $1.00.
The Company entered into an equipment financing arrangement with First
Interstate in June 1994. On March 15, 1995, the Company leased equipment valued
at $95,200 for a term of 60 months. The interest rate is 9.18%. At the end of
the lease term, the Company may purchase the equipment for $1.00. On June 12,
1995, the Company renewed the Lease Agreement with First Interstate. The Company
leased additional equipment valued at $281,158 for a term of 60 months, with an
interest rate of 7.54%. At the end of the lease term, the Company may purchase
the equipment for $1.00.
The Company entered into an equipment financing arrangement with PFC, Inc. in
August 1994. The Company leased equipment valued at $190,233 for a term of 60
months. The interest rate is 8.777%. At the end of the lease term, the Company
may purchase the equipment for $1.00.
On July 7, 1994, Cerprobe Europe Ltd. signed a month-to-month building lease for
the East Kilbride, Scotland facility. In November 1994, the Company approved a
formal lease for five years commencing on August 28, 1994 and ending August 27,
1999. The lease provides that unless the tenant gives a six week notice prior to
the end of the term, the lease will continue to run year to year.
In 1994, the Company received a grant from Locate in Scotland, an economic
development agency of the British government. The Company has already met 2 of
the 3 tiers with respect to the grant and has received pound 70,000
(approximately $107,000 at the exchange rate in effect on March 31, 1996). The
receipt of the funds pursuant to the grant has helped the Company defray
start-up expenses in connection with establishing this facility.
On June 23, 1995, the Company signed a letter of intent to lease the building
for its Singapore facility for three years commencing on September 3, 1995 and
ending on September 2, 1998.
14
<PAGE>
The Company operates a manufacturing, repair and sales facility at its Singapore
location. The Company estimates that up to $400,000 will be used to acquire
necessary equipment and to modify the facility to meet the Company's
specifications.
The coverage ratio of total debt to net worth was .40 at December 31, 1995
compared to .25 at March 31, 1996. This decrease indicates longer term financial
security and a greater flexibility to borrow in the future. The Company believes
that its existing line of credit and lease line combined with cash generated
from operations will be sufficient to meet the Company's currently anticipated
cash requirements for at least the next twelve months.
15
<PAGE>
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
a. None
Item 2 Changes in Securities
a. None
Item 3 Defaults on Senior Securities
a. None
Item 4 Submission of Matters to Vote of Security Holders
a. None
Item 5 Other Information
a. On March 31, 1996, Robert Bench tendered his
resignation as Chief Financial Officer.
Item 6 Exhibits and Reports on Form 8K
a. Exhibits required by Item 601 of Regulation S-B
10(a) Loan Agreement between the Company and First
Interstate Bank of Arizona, NA dated April
27, 1996 and related Promissory Note.*
10(b) Lease Agreement between the Company and
Shared Secretarial Service Inc. dated April
19, 1996.*
27 Financial Data Schedule.
b. Reports on Form 8-K
5 Form 8K, filed on January 18, 1996, to
report the placement of $10 million in
convertible preferred stock to a group of
institutional investors.
c. 11 Statement regarding computation of per share
earnings.
- ----------
* Previously filed.
16
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CERPROBE CORPORATION
/s/ Randel L. Buness
---------------------------------
Randel L. Buness
Vice President- Chief Financial Officer
November 22, 1996
Computation of Per Share Earnings
Exhibit 11
(Unaudited)
(In thousands, except EPS data)
Three Months Ended
March 31,
-------------------
1995 1996
-------- --------
Net Income $ 565 $ 1,006
======== ========
Weighted average common shares outstanding 3,223 4,152
Common equivalent shares:
Shares issuable upon exercise
of stock options (1) 223 309
Convertible perferred stock 0 602
-------- --------
Total weighted average shares - primary 3,446 5,063
-------- --------
Fully diluted incremental shares:
Stock options (calculated using the higher
of end of period or average market value) 0 2
Convertible subordinated debentures 595 580
-------- --------
Total weighted average shares - fully diluted 4,041 5,645
-------- --------
Primary net income per common and
common equivalent share 0.16 0.20
-------- --------
Fully diluted net income per common and
common equivalent share 0.14 0.18
-------- --------
(1) Amount calculated under the treasury stock method and fair market values for
stock
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial
information extracted from the Condensed
Consolidated Balance Sheet at March 31, 1996 and
the Condensed Consolidated Statements of
Operations and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 9,036,839
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 3,161,909
<CURRENT-ASSETS> 18,584,313
<PP&E> 5,890,909
<DEPRECIATION> 3,400,769
<TOTAL-ASSETS> 26,583,868
<CURRENT-LIABILITIES> 4,270,401
<BONDS> 1,389,410
489,000
0
<COMMON> 214,799
<OTHER-SE> 20,606,692
<TOTAL-LIABILITY-AND-EQUITY> 26,583,868
<SALES> 9,699,939
<TOTAL-REVENUES> 9,699,939
<CGS> 5,172,951
<TOTAL-COSTS> 5,172,951
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,857,860
<INCOME-TAX> 877,000
<INCOME-CONTINUING> 1,006,221
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,006,221
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.18
</TABLE>
