UNITED STATES
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 Quarter Ended March 31, 1997
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 0-11370
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CERPROBE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 86-0312814
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
600 South Rockford Drive, Tempe, Arizona 85281
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(602) 967-7885
----------------------------------------------------
(Registrant's telephone number, including area code)
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 and 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
------- -------
As of May 5, 1997, there were 6,353,047 shares of the Registrant's common stock
outstanding.
<PAGE>
CERPROBE CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
March 31, 1997 and December 31, 1996.......................3
Condensed Consolidated Statements of Operations -
Three Months Ended March 31, 1997 and 1996.................4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996.................5
Notes to Condensed Consolidated Financial Statements.......7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..........................17
Signatures ..........................................................18
2
<PAGE>
CERPROBE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1997 1996
------------- --------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,840,106 $ 5,564,557
Accounts receivable, net of allowance of $238,883
in 1997 and $223,000 in 1996 8,212,331 5,564,203
Inventories, net 6,912,631 3,862,753
Note receivable - 250,000
Prepaid expenses 280,857 377,003
Income taxes receivable - 214,097
Deferred tax asset 216,776 202,476
------------- --------------
Total current assets 17,462,701 16,035,089
------------- --------------
Property, plant and equipment, net 12,834,862 11,446,291
Intangibles, net 2,582,009 2,602,812
Other assets 1,444,563 1,326,592
------------- --------------
Total assets $ 34,324,135 $ 31,410,784
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,812,106 $ 2,739,064
Accrued expenses 3,601,024 1,600,120
Demand note payable 1,015,000 1,030,000
Current portion of notes payable 2,225,240 128,180
Current portion of capital leases 640,121 634,755
------------- --------------
Total current liabilities 10,293,491 6,132,119
Notes payable, less current portion 1,077,670 278,645
Capital leases, less current portion 1,305,654 1,462,799
Deferred tax liability 15,422 -
Other liabilities 421,858 394,011
------------- --------------
Total liabilities 13,114,095 8,267,574
------------- --------------
Minority interest - 12,851
------------- --------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.05 par value; authorized 10,000,000 shares; issued and
outstanding 330 shares of Series A Convertible Preferred Stock,
liquidation preference of $10,724 per share 16 16
Common stock, $.05 par value; authorized, 10,000,000 shares;
issued and outstanding 6,353,047 shares at March 31, 1997
and 6,027,714 at December 31, 1996 317,652 301,386
Additional paid-in capital 23,654,606 20,652,290
Retained earnings (accumulated deficit) (2,788,959) 2,105,674
Foreign currency translation adjustment 26,725 70,993
------------- --------------
Total stockholders' equity 21,210,040 23,130,359
------------- --------------
Total liabilities and stockholders' equity $ 34,324,135 $ 31,410,784
============= ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
CERPROBE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
-----------------------------------
1997 1996
------------- -------------
Net Sales $ 15,899,092 $ 9,699,939
Costs of goods sold 9,394,372 5,172,951
------------- -------------
Gross margin 6,504,720 4,526,988
------------- ------------
Expenses:
Selling, general and administrative 4,172,449 2,607,938
Engineering and product development 453,319 102,684
Acquisition related costs 6,164,156 -
------------- -------------
Total expenses 10,789,924 2,710,622
------------- -------------
Operating income (loss) (4,285,204) 1,816,366
------------- -------------
Other income (expense):
Interest income 35,160 59,492
Interest expense (134,611) (58,856)
Other income, net 58,891 40,858
------------- -------------
Total other income (expense) (40,560) 41,494
------------- -------------
Income (loss) before income taxes and
minority interest (4,325,764) 1,857,860
Minority interest share of (income) loss (12,569) 25,361
------------- -------------
Income (loss) before income taxes (4,338,333) 1,883,221
Provision for income taxes (556,300) (877,000)
------------- -------------
Net income (loss) $ (4,894,633) $ 1,006,221
============= =============
Net income (loss) per common and common
equivalent share:
Primary $ (0.78) $ 0.20
============= =============
Weighted average number of common
and common equivalent shares
outstanding 6,292,662 5,063,196
============= =============
Fully diluted $ (0.78) $ 0.18
============= =============
Weighted average number of common
and common equivalent shares
outstanding 6,292,662 5,645,349
============= =============
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
CERPROBE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
-------------------------------
1997 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (4,894,633) $ 1,006,221
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 772,390 404,138
Purchased research and development 5,664,156 -
Loss on sale of fixed assets 426 -
Deferred income taxes 92,041 135,465
Provision for losses on accounts receivable 6,000 3,000
Provision for obsolete inventory, net (20,868) 10,000
Compensation expense - 32,753
Income (loss) applicable to minority interest in consolidated subsidiaries 12,569 (25,361)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable (1,769,688) (1,690,705)
Inventories 329,738 (369,828)
Prepaid expenses 125,138 89,452
Other assets 17,670 130,547
Income taxes receivable 539,904 -
Accounts payable and accrued expenses (491,751) 437,666
Accrued income taxes 113,490 741,536
Other liabilities 52,400 (14,358)
------------- -------------
Net cash provided by operating activities 548,982 890,526
------------- -------------
Cash flows from investing activities:
Purchase of property, plant and equipment (1,405,273) (1,555,329)
Investment in CRPB Investors, L.L.C. (607) -
Supplemental acquisition costs for CompuRoute (80,102) -
Purchase of SVTR, net of cash acquired (2,565,697) -
Proceeds from sale of equipment 717 -
Decrease in notes receivable 250,000 -
------------- -------------
Net cash used in investing activities (3,800,962) (1,555,329)
------------- -------------
Cash flows from financing activities:
Principal payments on notes payable and capital leases (582,535) (92,677)
Net proceeds from issuance of convertible preferred stock - 9,400,000
Net proceeds from stock options exercised 154,332 144,616
------------- -------------
Net cash provided by (used in) financing activities (428,203) 9,451,939
------------- -------------
Effect of exchange rates on cash and cash equivalents (44,268) (13,978)
------------- -------------
Net increase (decrease) in cash and cash equivalents (3,724,451) 8,773,158
Cash and cash equivalents, beginning of period 5,564,557 263,681
------------- -------------
Cash and cash equivalents, end of period $ 1,840,106 $ 9,036,839
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
CERPROBE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Supplemental schedule of noncash investing and financing activities:
<S> <C> <C>
Conversion of subordinated debentures to common stock $ - $ 110,000
------------- -------------
Conversion of preferred stock to common stock $ - $ 11,000
------------- -------------
Equipment acquired under capital leases and issuances of notes payable $ 4,144 $ -
------------- -------------
Supplemental disclosures of cash flow information:
Interest paid $ 134,611 $ 33,617
------------- -------------
Income taxes paid $ 18,096 $ -
------------- -------------
Supplemental disclosures of noncash investing activities:
The Company acquired Silicon Valley Test & Repair, Inc. for $5.7 million in
the period ended March 31, 1997. The purchase price was allocated to
the assets acquired and the liabilities assumed based on their fair values as
indicated in the notes to the condensed consolidated financial statements.
A summary of the acquisition is as follows:
Purchase price $ 5,715,263
Less cash acquired (285,316)
Common stock issued (2,864,250)
=============
Cash invested $ 2,565,697
=============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
CERPROBE CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Basis of Preparation
The accompanying condensed consolidated financial statements as of
March 31, 1997 and for the three months ended March 31, 1997 and March
31, 1996 are unaudited and reflect all adjustments (consisting only of
normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of financial position and operating
results for the interim periods. The condensed consolidated balance
sheet as of December 31, 1996 was derived from the audited consolidated
financial statements at such date.
Pursuant to accounting requirements of the Securities and Exchange
Commission applicable to quarterly reports on Form 10-Q, the
accompanying condensed consolidated financial statements and notes do
not include all disclosures required by generally accepted accounting
principles for complete financial statements. Accordingly, these
statements should be read in conjunction with Cerprobe Corporation's
(the "Company") annual financial statements and notes thereto included
in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996.
Results of operations for interim periods are not necessarily
indicative of those to be achieved for full fiscal years.
Principles of Consolidation
The consolidated financial statements include the accounts of Cerprobe
and its wholly-owned subsidiaries: CompuRoute, Inc. ("CompuRoute"),
Cerprobe Europe Limited, and Cerprobe Asia Holdings PTE LTD. Cerprobe
Asia Holdings PTE LTD together with Asian investors, formed Cerprobe
Asia PTE LTD in 1995. Cerprobe Asia Holdings PTE LTD is a 70% owner of
Cerprobe Asia PTE LTD. Cerprobe Asia PTE LTD created wholly-owned
subsidiaries, Cerprobe Singapore PTE LTD and Cerprobe Taiwan Co. LTD,
to operate full service sales and manufacturing plants. Singapore
became operational in April of 1996 and Taiwan in January of 1997. All
significant intercompany transactions have been eliminated in
consolidation.
On January 15, 1997, the Company acquired all of the outstanding stock
of Silicon Valley Test & Repair, Inc. ("SVTR"), a company that
refurbishes, reconfigures, and services wafer probing equipment.
Accordingly, the condensed consolidated financial statements as of
March 31, 1997 and for the three months ended March 31, 1997 include
SVTR's activities since the date of acquisition.
7
<PAGE>
CERPROBE CORPORATION
Notes to Condensed Consolidated Financial Statements, Continued
(2) Inventories
Inventories consist of the following:
March 31, December 31,
1997 1996
------------ ------------
Raw materials $ 5,911,167 $ 3,328,422
Work-in-process 1,143,625 615,360
Finished goods 47,971 47,971
Reserve for obsolete inventory (190,132) (129,000)
------------ ------------
Total $ 6,912,631 $ 3,862,753
============ ============
(3) Property, Plant and Equipment
Property, plant and equipment consist of the following:
March 31, December 31,
1997 1996
------------ ------------
Land $ 364,017 $ 359,253
Building 1,973,704 1,947,877
Manufacturing tools and equipment 9,671,529 8,789,140
Office furniture and equipment 1,194,744 1,063,547
Leasehold improvements 1,307,230 l,112,576
Construction in progress 1,094,066 483,591
Computer hardware and software 2,609,851 2,402,551
Accumulated depreciation and amortization (5,380,279) (4,712,244)
------------ ------------
Total $ 12,834,862 $ 11,446,291
============ ============
(4) Intangibles
Goodwill from the acquisition of Fresh Test Technology and CompuRoute,
is $2,120,505 and $969,235, respectively.
8
<PAGE>
CERPROBE CORPORATION
Notes to Condensed Consolidated Financial Statements, Continued
(5) Related Party Transactions
Effective May 1, 1991, the Company entered into an agreement with a
former director and officer of the Company, whereby this officer left
the employ of the Company and agreed not to compete with the Company
for a two-year period. The agreement required the Company to pay $3,125
per month from May 1, 1991 through April 30, 1993 and to provide
certain other benefits to this individual. This agreement was extended
for an additional year, through April 30, 1994, and is presently on a
month-to-month basis. Beginning July 1, 1997 the monthly payment will
be reduced to $1,563 and the agreement will terminate on December 31,
1997, except for certain life insurance and health care benefits which
will continue under the terms of the original agreement.
(6) Commitments and Contingencies
Convertible Preferred Stock
If the holders of all outstanding shares of convertible preferred stock
had elected to convert their shares on April 25, 1997, Cerprobe
estimates that it would have been required to pay approximately
$3,800,000 to have redeemed all shares of convertible preferred stock
that, if converted, would have resulted in the issuance of more than
800,000 shares of common stock. Automatic conversion of the stock or
redemption must occur by January 18, 1998.
Upsys
Cerprobe Corporation has entered into a joint venture with Upsys Reseau
Eurisys, a French Company owned by IBM and GAME, a French test and
engineering company. The joint venture, to be managed by Cerprobe, will
assemble and repair the Cobra Probe in Arizona for distribution by
Cerprobe throughout the U.S. and Asia. Cerprobe will own 55% of the
joint venture and Upsys will own 45%. It is expected that the joint
venture will be operational by the end of the second quarter 1997.
(7) Acquisitions
CompuRoute, Inc.
On December 27, 1996, the Company acquired all of the outstanding stock
of CompuRoute, Inc., a manufacturer of printed circuit boards, for
$7,037,797. The purchase price consisted of $4,437,797 in cash and
400,000 shares of common stock.
9
<PAGE>
CERPROBE CORPORATION
Notes to Condensed Consolidated Financial Statements, Continued
The acquisition has been accounted for by the purchase method of
accounting. Accordingly, the purchase price has been allocated to the
assets acquired and the liabilities assumed based upon the fair value
at the date of acquisition. The excess of the purchase price over the
fair value of the net assets acquired was $969,235 and has been
recorded as goodwill, which is being amortized on a straight-line basis
over eight years. The results of operations of CompuRoute are included
in the Company's financial statements since the date of acquisition.
At acquisition, the state of the research and development products was
not yet at a technologically or commercially viable stage. The Company
did not believe that the research and development products had any
future alternative use because if these products were not finished and
brought to ultimate product completion, they would have no other value.
Therefore, consistent with generally accepted accounting principles,
the Company recorded a one-time charge of $4,584,000 on December 27,
1996 for the full value of the purchased in-process research and
development.
Silicon Valley Test & Repair, Inc.
On January 15, 1997, the Company acquired all of the outstanding stock
of SVTR. The purchase price paid by the Company consisted of $2,753,217
in cash and 300,000 shares of Cerprobe common stock.
Under the terms of the acquisition, the Company has agreed to pay up to
an additional $500,000 in cash and up to 50,000 additional shares of
common stock if certain sales and operating profit targets for calendar
year 1997 are achieved by SVTR.
The acquisition has been accounted for using the purchase method.
Accordingly, the purchase price has been allocated to assets acquired
and liabilities assumed based upon their estimated fair values at the
date of acquisition.
The purchase price of $5,617,467 plus acquisition costs of $97,796 was
allocated as follows.
Purchase price:
Cash $2,753,217
Common stock 2,864,250
Costs of acquisition 97,796
----------
$5,715,263
==========
10
<PAGE>
CERPROBE CORPORATION
Notes to Condensed Consolidated Financial Statements, Continued
Assets acquired and liabilities assumed:
Current assets $4,979,145
Property, plant and equipment 651,781
Other assets 185,007
Purchased research and development 5,664,156
Current liabilities (4,795,473)
Noncurrent liabilities (969,353)
-----------
$5,715,263
===========
At acquisition, the state of the research and development products was
not yet at a technologically or commercially viable stage. The Company
does not believe that the research and development products have any
future alternative use because if these products are not finished and
brought to ultimate product completion, they have no other value.
Therefore, consistent with generally accepted accounting principles,
the Company recorded a one-time charge of $5,664,156 on January 15,
1997 for the full value of the purchased research and development.
Pro forma Results
The following summary, prepared on a pro forma basis, excluding the
charges for purchased research and development, presents the results of
operations as if the acquisitions of CompuRoute and SVTR had occurred
January 1, 1996:
Three months ended
March 31,
--------------------------
1997 1996
--------------------------
(unaudited)
Net sales $15,952,472 $17,057,166
Net income $ 629,456 $ 1,374,443
Primary net income per share $ .10 $ .24
Fully diluted net income per share $ .10 $ .22
The pro forma results are not necessarily indicative of what the actual
consolidated results of operations might have been if the acquisitions
had been effective at the beginning of 1996 or as a projection of
future results.
11
<PAGE>
CERPROBE CORPORATION
Notes to Condensed Consolidated Financial Statements, Continued
(8) Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per
Share" (statement 12B). This Statement establishes standards for
computing and presenting earnings per share ("EPS"), and supersedes APB
Opinion No. 15. The Statement replaces primary EPS with basic EPS and
requires dual presentation of basic and diluted EPS. The Statement is
effective for both interim and annual periods ending after December 15,
1997. Earlier application is not permitted. After adoption, all
prior-period EPS data shall be restated to conform to statement 128.
Basic and diluted EPS, as calculated under statement No. 128 would have
been ($.78) and ($.78) for the fiscal three months ended March 31,
1997.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction and General Development of Business
Cerprobe was incorporated in California in 1976 and reincorporated in Delaware
in May 1987. The Company designs, manufactures, markets, and services high
performance products and equipment for use in the testing of integrated circuits
("ICs") for the semiconductor industry. Cerprobe's products and services enable
semiconductor manufacturers to test the integrity of their ICs during the batch
fabrication stage of the manufacturing process used in manufacturing ICs in
wafer form.
The Company has grown substantially over the last three years as the Company has
benefited from the substantial growth in the worldwide demand for ICs. Net sales
have increased from $14.3 million for 1994, to $26.1 million for 1995, and to
$37.3 million for 1996. Similarly, the Company's net income has increased from
$1.2 million for 1994, to $2.4 million for 1995, and to $3.2 million for 1996
(before a one-time charge for purchased in-process research and development of
$4.6 million, resulting in a net loss of $1.4 million). This growth resulted
primarily from internal product development and strategies. However, the Company
also benefited from its acquisition in April 1995 of Fresh Test Technology
Corporation, whose complementary products contributed approximately $4.0 million
to 1995 net sales, approximately $7.0 million to 1996 net sales, and
approximately $1.7 million to net sales for the first three months of 1997. To
further expand its semiconductor test product and service offerings, Cerprobe
acquired CompuRoute, Inc. ("CompuRoute"), a company engaged in the design,
manufacture, and marketing of complex, multilayer printed circuit boards
("PCBs") primarily for use in semiconductor testing applications, in December
1996 and Silicon Valley Test & Repair, Inc. ("SVTR"), a company that
refurbishes, reconfigures, and services wafer probers, in January 1997.
Together, these recent acquisitions contributed approximately $4.0 million to
net sales for the first three months of 1997.
The Company believes that it is positioned to continue its growth as a result of
its strength in designing, producing, and delivering, on a timely and
cost-efficient basis, a broad range of custom or customized, high quality test
products and services for semiconductor manufacturers in the U.S., Europe, and
Asia. The Company maintains regional full service facilities in Arizona,
California, and Texas as well as sales offices in Oregon, Colorado, Florida, and
Massachusetts to service the U.S. market for its products and services. The
Company maintains a full service facility in Scotland to serve the European
market, and opened full service facilities in Singapore and Taiwan in April 1996
and January 1997, respectively, to serve the Southeast Asia market. Each of the
Company's facilities is located in proximity to semiconductor manufacturing
centers.
13
<PAGE>
Results of Operations
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996.
Net sales for the three months ended March 31, 1997 were $15,899,092 an increase
of 64% over net sales of $9,699,939 for the three months ended March 31, 1996.
This increase in net sales is a result of Cerprobe's two recent acquisitions,
higher order rates for Cerprobe's probe card and interface products, and
increased sales from Cerprobe's international operations.
For the three months ended March 31, 1997, the gross margin was $6,504,720, an
increase of 44% over the gross margin of $4,526,988 for the same period in 1996.
Gross margin as a percentage of sales decreased from 47% for the three months
ended March 31, 1996 to 41% for the same period in 1997. The decrease in gross
margin, as a percentage of sales, is primarily a result of a change in product
mix due to the recent acquisitions. Approximately 25% of net sales within the
period were attributed to ATE test boards from the Company's CompuRoute
subsidiary and wafer prober products and services from the Company's SVTR
subsidiary. Both product lines currently have lower gross margins than the
Company's core products of probe cards and ATE interfaces.
Selling, general and administrative expenses were $4,172,449 for the three
months ended March 31, 1997 as compared to $2,607,938 for the same period in
1996, an increase of 60%. The increase in selling, general and administrative
expenses resulted primarily from the two recent acquisitions, and the continued
domestic and international facilities expansion. Of the increase, $946,490, or
60%, was attributable to CompuRoute and SVTR.
Engineering and product development expenses were $453,319 for the three months
ended March 31, 1997, an increase of 341% over $102,684 for the same period in
1996. This increase resulted from Cerprobe's continued emphasis on engineering
and product development in an effort to anticipate and address technological
advances in semiconductor testing as well as Cerprobe's recent acquisitions. Of
the increase approximately $189,457, or 54%, was attributable to CompuRoute and
SVTR.
Acquisition related costs totaled $6,164,156 and are related to the acquisition
of SVTR on January 15, 1997. The acquisition was accounted for using the
purchase method. Accordingly, the purchase price was allocated to the assets
acquired and the liabilities assumed based upon their estimated fair values. The
value of the purchased research and development in connection with the
acquisition was $5,664,156. The current state of the research and development
products/processes is not yet at a technologically feasible or commercially
viable stage. Cerprobe does not believe that the research and development
products/processes have any future alternative use because if they are not
finished and brought to ultimate product or process completion they have no
value. Therefore, consistent with generally accepted accounting principles,
Cerprobe took a one-time charge for the full value of the purchased research and
development. The remaining $500,000 of acquisition related costs is the
estimated cost to move SVTR's manufacturing operations to Arizona during 1997.
Interest income was $35,160 for the three months ended March 31, 1997 as
compared to $59,492 for the same period in 1996. The decrease was a result of
utilizing in the fourth quarter of 1996
14
<PAGE>
and in the first quarter of 1997, the net proceeds of the Convertible Preferred
Stock offering in the CompuRoute and SVTR acquisitions, respectively.
Interest expense was $134,611 for the three months ended March 31, 1997 as
compared to $58,856 for the same period in 1996, an increase of 129%. The
majority of the 1997 increase in interest expense was due to the debt acquired
in the acquisition of CompuRoute and SVTR.
The minority interest from Asian operations of $12,569, as of March 31, 1997,
represents the Company's joint venture partners' share (30%) of the income from
Cerprobe Asia PTE LTD.
The provision for income taxes was $556,300, which represents an effective tax
rate of 42%, excluding the acquisition costs of $6,164,156, for the three months
ended March 31, 1997, versus $877,000, which represents an effective rate of 47%
for 1996. The decreased effective tax rate, as adjusted for 1997, was from the
benefit of CompuRoute's net operating loss carryforward of $140,000 and partial
use of previous nondeductible losses from foreign subsidiaries.
Net loss for the three months ended March 31, 1997 was $4,894,633, a decrease in
net income of $5,900,854, or 586%, from the net income of $1,006,221 for the
same period in 1996. This decrease is primarily due to the recording of
approximately $500,000 of costs associated with the relocation of SVTR's
manufacturing operations and the write-off of the purchased research and
development of $5,664,156 from the SVTR acquisition. Excluding the acquisition
related expenses, net income for the three months ended March 31, 1997 would
have been $1,069,523 or 7% of net sales as compared to 10% of net sales for the
three months ended March 31, 1996.
Liquidity and Capital Resources
Cerprobe has financed its operations and capital requirements primarily through
cash flow from operations, equipment lease financing arrangements, and sales of
equity securities. In January 1996, Cerprobe completed a private placement of
Convertible Preferred Stock, which raised net proceeds of $9,400,000. The net
proceeds have been used in domestic and international expansion and acquisition
of companies and/or technologies. At March 31, 1997, cash and cash equivalents
were $1,840,106, compared to $5,564,557 at December 31, 1996.
Cerprobe generated $548,982 in cash flow from operating activities for the three
months ended March 31, 1997. Accounts receivable increased by $2,648,128, or
48%, to $8,212,331 at March 31, 1997. Of this increase, $884,440 resulted from
the acquisition of SVTR and $1,769,688 resulted from an increase in net sales.
This was offset by a $6,000 increase in the provision for losses on accounts
receivable. Inventories increased $3,049,878, or 79%, over December 31, 1996 to
$6,912,631 at March 31, 1997. The increase resulted primarily from the
acquisition of SVTR. Both accounts receivable days outstanding and inventory
turns improved during the three months ended March 31, 1997 as compared to the
same period in 1996.
Accounts payable and accrued expenses increased $2,073,946, or 48%, to
$6,413,130 at March 31, 1997. The increase resulted primarily from the
acquisition of SVTR.
The current portions of notes payable and capital leases increased to $2,865,361
at March 31, 1997 from $762,935 at December 31, 1996, primarily as a result of
Cerprobe's recent acquisition of SVTR.
15
<PAGE>
Working capital decreased $2,733,760, or 28%, to $7,169,210 at March 31, 1997
from December 31, 1996. The current ratio decreased from 2.6 to 1 at December
31, 1996 to 1.7 to 1 at March 31, 1997. These decreases were due to the use of
the net proceeds from the private placement of the Convertible Preferred Stock
in the two recent acquisitions. The acquisition of CompuRoute and SVTR used
$4,437,797 and $2,753,217 respectively.
Cerprobe increased its investment in property, plant, and equipment during the
three months ended March 31, 1997 by $1,388,571, or 12%, to $12,834,862. This
increase was attributable to the acquisition of SVTR and the Company's efforts
to expand capacity to meet customer demand for its products. These capital
expenditures were funded from cash flow from operations and proceeds from the
private placement of the Convertible Preferred Stock. Long-term debt, comprised
of the non-current portions of notes payable and capital leases, increased
$641,880, or 37%, to $2,383,324, primarily as a result of the acquisition of
SVTR.
If the holders of all outstanding shares of Convertible Preferred Stock had
elected to convert their shares on April 25, 1997, Cerprobe estimates that it
would have been required to pay approximately $3.8 million to have redeemed all
shares of Convertible Preferred Stock, that if converted, would have resulted in
the issuance of more than 800,000 shares of Cerprobe common stock. Redemption or
automatic conversion must occur on or before January 18, 1998.
In February 1997, Cerprobe entered into a $10,000,000 unsecured revolving line
of credit, which matures August 15, 1998, with its primary lender, Wells Fargo
Bank. Advances under the revolving line may be made as prime rate advances,
which accrue interest payable monthly, at the Bank's prime lending rate, or as
LIBOR rate advances, which bear interest at 175 basis points in excess of the
LIBOR base rate.
Cerprobe believes that its working capital, together with the loan commitments
described above and anticipated cash flow from operations, will provide adequate
sources to fund operations for at least the next 12 months. Cerprobe anticipates
that any additional cash requirements as the result of operations or capital
expenditures will be financed through cash flow from operations, by borrowing
from Cerprobe's primary lender, by lease financing arrangements, or by sales of
equity securities.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995
Statements in this section regarding the Company's prospects for continued
growth and the adequacy of sources of capital are forward-looking statements.
Words such as "adequate," "believes," and "anticipates," also identify
forward-looking statements. Actual results, however, could differ materially
from those anticipated for a number of reasons, including product demand and
development, technological advancements, impact of competitive products and
pricing, growth in targeted markets and other factors identified under "Special
Considerations" of the Company's 1996 Form 10-KSB as filed with the Securities
and Exchange Commission, as well as those reasons identified in the Company's
1997 press releases.
16
<PAGE>
PART II - OTHER INFORMATION
Item 2 Changes in Securities
a. Not applicable.
b. Not applicable.
c. Pursuant to a private placement under Section 4(2) of
the Securities Act of 1933, on January 15, 1997, the
Company issued 300,000 shares of Cerprobe common
stock to William E. Mayer and Carol Mayer, husband
and wife, in connection with the merger of SVTR with
and into a subsidiary of the Company.
Item 6 Exhibits and Reports on Form 8-K
a. Exhibits
(27) Financial Data Schedule.
(11) Statement regarding computation of net
earnings (loss) per share.
b. Reports on Form 8-K
Form 8-K, filed on January 15, 1997, to report the
acquisition of Silicon Valley Test & Repair, Inc.
Form 8-K/A, filed on March 31, 1997, amends Form 8-K
filed on January 15, 1997 reporting the acquisition
of Silicon Valley Test & Repair. The following
financial statements were filed with the Form 8-K/A:
SVTR's Audited Financial Statements as of December
31, 1996
Unaudited Pro Forma Combined Condensed Balance Sheet
as of December 31, 1996.
Unaudited Pro Forma Combined Condensed Statement of
Operations for the year ended December 31, 1996.
Notes to Unaudited Pro Forma Combined Condensed
Financial Statements.
17
<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 undersigning
thereunto duly authorized.
CERPROBE CORPORATION
/s/Randal L. Buness
----------------------------------------
Randal L. Buness
Vice President - Chief Financial Officer
May 15, 1997
18
Cerprobe Corporation
Computation of Net Earnings (Loss) Per Share
Exhibit 11
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------------
1997 1996
----------------- -----------------
<S> <C> <C>
Net income (loss) $ (4,894,633) $ 1,006,221
================= =================
Weighted average common shares outstanding 6,292,662 4,152,588
Common equivalent shares:
Shares issuable upon exercise
of stock options (1) 0 309,145
Convertible preferred stock 0 601,463
----------------- -----------------
Total weighted average shares-primary 6,292,662 5,063,196
----------------- -----------------
Fully diluted incremental shares:
Stock options (calculated using the higher
of end of period or average market value) 0 2,374
Convertible subordinated debentures 0 579,779
----------------- -----------------
Total weighted average shares-fully diluted 6,292,662 5,645,349
----------------- -----------------
Primary net income per common and
common equivalent share $ (0.78) $ 0.20
----------------- -----------------
Fully diluted net income per common and
common equivalent share $ (0.78) $ 0.18
----------------- -----------------
</TABLE>
(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, 1997 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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 1,840,106
<SECURITIES> 0
<RECEIVABLES> 8,451,214
<ALLOWANCES> 238,883
<INVENTORY> 6,912,631
<CURRENT-ASSETS> 17,462,701
<PP&E> 18,218,100
<DEPRECIATION> 5,383,238
<TOTAL-ASSETS> 34,324,135
<CURRENT-LIABILITIES> 10,293,491
<BONDS> 2,383,324
16
0
<COMMON> 317,652
<OTHER-SE> 20,892,372
<TOTAL-LIABILITY-AND-EQUITY> 34,324,135
<SALES> 15,899,092
<TOTAL-REVENUES> 15,899,092
<CGS> 9,394,372
<TOTAL-COSTS> 14,020,140
<OTHER-EXPENSES> 6,298,767
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 134,611
<INCOME-PRETAX> (4,325,764)
<INCOME-TAX> 556,300
<INCOME-CONTINUING> (4,894,633)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,894,633)
<EPS-PRIMARY> (0.78)
<EPS-DILUTED> (0.78)
</TABLE>
