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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-26274
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INTEGRATED MEASUREMENT SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
OREGON 93-0840631
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9525 S.W. GEMINI DRIVE, BEAVERTON, OR 97008
(Address of principal executive offices) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (503) 626-7117
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NO CHANGE
Former name, former address, and former
fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by 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 30, 1998, there were 7,543,857 shares of Integrated Measurement
Systems, Inc. common stock, $0.01 par value, outstanding.
(Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.)
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INTEGRATED MEASUREMENT SYSTEMS, INC.
INDEX TO FORM 10-Q
PART 1 FINANCIAL INFORMATION PAGE NUMBER
-----------
Item 1. Financial Statements
Statements of Income for the three months
ended March 31, 1998 and 1997 3
Balance Sheets as of March 31, 1998 and December 31, 1997 4
Statements of Cash Flows for the three months
ended March 31, 1998 and 1997 5
Notes to the Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 8-11
PART II OTHER INFORMATION
Item 2. Changes in Securities. 12
Item 6. Exhibits and Reports on Form 8-K. 12
SIGNATURES 13
2
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTEGRATED MEASUREMENTS SYSTEMS, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
(In thousands, except net income per share)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
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<S> <C> <C>
SALES:
Systems $4,958 $ 9,850
Software 1,295 895
Service 2,239 2,535
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NET SALES 8,492 13,280
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COST OF SALES:
Systems 1,729 3,756
Software 145 48
Service 971 874
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Total cost of sales 2,845 4,678
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GROSS MARGIN 5,647 8,602
OPERATING EXPENSES:
Research, development and engineering 1,744 1,900
Selling, general and administrative 4,049 4,019
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Total operating expenses 5,793 5,919
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OPERATING INCOME (LOSS) (146) 2,683
Other income, net 218 192
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Income before income taxes 72 2,875
Provision for income taxes 24 1,050
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NET INCOME $ 48 $ 1,825
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BASIC EARNINGS PER SHARE $ 0.01 $ 0.26
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DILUTED EARNINGS PER SHARE $ 0.01 $ 0.25
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Weighted average number of common shares outstanding
for basic earnings per share 7,535 7,066
Incremental shares from assumed conversion
of employee stock options 187 310
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Adjusted weighted average shares for diluted earnings
per share 7,722 7,376
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</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED FINANCIAL STATEMENTS
3
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INTEGRATED MEASUREMENT SYSTEMS, INC. AND SUBSIDIARIES
BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
<CAPTION>
As of As of
March 31, December 31,
1998 1997
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(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 9,190 $17,464
Short-term investments 14,100 8,371
Trade receivables, less allowance for doubtful
accounts of $503 and $577 12,028 10,582
Receivable from Cadence, net - 219
Inventories, net 13,024 11,311
Income taxes receivable 985 336
Deferred income taxes 1,637 1,637
Prepaid expenses and other current assets 1,309 1,597
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Total current assets 52,273 51,517
PROPERTY, PLANT AND EQUIPMENT, NET 8,115 7,418
SERVICE SPARE PARTS, NET 3,659 3,395
OTHER ASSETS, NET 3,817 3,193
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Total assets $67,864 $65,523
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,233 $ 2,321
Payable to Cadence, net 64 -
Accrued compensation 1,217 1,354
Accrued warranty 289 442
Deferred revenue 2,669 1,852
Other current liabilities 367 475
Capital lease obligations - current 180 181
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Total current liabilities 8,019 6,625
DEFERRED INCOME TAXES 565 483
CAPITAL LEASE OBLIGATIONS, NET OF CURRENT PORTION 120 152
DEFERRED COMPENSATION 932 830
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value, authorized
10,000,000 shares; none issued and outstanding - -
Common stock, $.01 par value, authorized 15,000,000
shares; issued and outstanding 7,543,068 and
7,521,393 75 75
Additional paid-in capital 40,783 40,037
Retained earnings 17,370 17,321
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Total shareholders' equity 58,228 57,433
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Total liabilities and shareholders' equity $67,864 $65,523
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</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED FINANCIAL STATEMENTS.
4
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INTEGRATED MEASUREMENT SYSTEMS, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 8,954 $13,187
Interest received 247 200
Payments to suppliers (5,703) (5,279)
Payments to employees (4,142) (5,401)
Income taxes paid (56) (354)
Other taxes paid (168) (271)
Interest paid (6) (11)
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Net cash (used in) provided by operating activities (874) 2,071
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments (5,729) -
Purchases of equipment and software (824) (360)
Purchases of service spare parts (421) (309)
Software development costs (527) (148)
Purchases of long-term investments (102) (61)
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Net cash used in investing activities (7,603) (878)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital leases (33) (76)
Net proceeds from public stock offering - 13,626
Proceeds from employee stock plans 236 512
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Net cash provided by financing activities 203 14,062
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Net (decrease) increase in cash and cash equivalents (8,274) 15,255
Beginning cash and cash equivalents balance 17,464 9,545
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Ending cash and cash equivalents balance $ 9,190 $24,800
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 48 $ 1,825
Adjustments to reconcile net income to
cash (used in) provided by operating activities:
Depreciation and amortization 961 956
Provision for deferred income taxes 82 -
Deferred compensation 102 61
Net change in payable to or receivable from Cadence 283 458
Increase in trade receivables (1,446) (1,219)
Increase in inventories (1,713) (443)
Decrease (increase) in prepaid expenses and other
current assets 288 (240)
Net change in income taxes payable or receivable (139) 696
Decrease in accounts payable and accrued liabilities (157) (541)
Increase in deferred revenue 817 518
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Net cash (used in) provided by operating activities $ (874) $ 2,071
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SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Tax benefit from Cadence and IMS stock options $ 510 $ 1,010
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</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED FINANCIAL STATEMENTS.
5
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INTEGRATED MEASUREMENT SYSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS
(In thousands, except share data)
(Unaudited)
(1) INVENTORIES
Inventories, consisting principally of computer hardware, electronic
sub-assemblies and test equipment, are valued at standard costs which
approximate the lower of cost (first-in, first-out) or market. Costs
utilized for inventory valuation purposes include material, labor and
manufacturing overhead. Inventories consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
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<S> <C> <C>
Raw materials. . . . . . . . . . . $7,073 $5,665
Work-in-progress . . . . . . . . . 2,072 1,433
Finished goods . . . . . . . . 3,879 4,213
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$13,024 $11,311
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</TABLE>
(2) OTHER COMPREHENSIVE INCOME
In July 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income." The statement is effective for
the Company's fiscal year ending December 31, 1998. SFAS 130 sets
standards for reporting and display of comprehensive income and its
components in a full set of general purpose financial statements.
Comprehensive income is the total of net income and all other nonowner
changes in equity. The only nonowner changes in equity recorded by the
Company have been unrealized holding gains/losses on short-term
investment securities classified as available-for-sale under SFAS 115,
"Accounting for Certain Investments in Debt and Equity Securities."
These holding gains and losses were not material, and therefore are not
reported separately in the accompanying financial statements. The
accumulated unrealized gains/losses on short-term investments are
included in Additional Paid-in Capital in the accompanying Balance
Sheets.
(3) SHAREHOLDER RIGHTS PLAN
In March 1998, the Company adopted a Shareholder Rights Plan (the "Rights
Plan"). Under the Rights Plan, a dividend of one Share Purchase Right (a
"Right") was declared for each share of Company Common Stock outstanding at
the close of business on April 17, 1998. In the event that a person or
group acquires 20% or more of the Company's Common Stock without advance
approval by the Board of Directors, each Right will entitle the holder,
other than the acquirer, to buy Common Stock with a market value of twice
the Right's then current exercise price (initially $70.00, subject to
adjustment). In addition, if the new Rights are triggered by such a
non-approved acquisition and the Company is thereafter acquired in a merger
or other transaction in which the shareholders of the Company are not
treated equally, shareholders with unexercised Rights will be entitled to
purchase common stock of the acquirer with a value of twice the exercise
price of the Rights. The Company's Board of Directors may redeem the
Rights for a nominal amount at any time prior to an event that causes the
Rights to become exercisable. The Rights trade automatically with the
underlying Common Stock (unless and until a distribution event occurs under
the Rights Plan) and expire on March 25, 2008 if not redeemed earlier. The
Rights Plan includes grandfathering provisions that exempt Cadence Design
Systems, Inc. ("Cadence") at its level of Common Stock ownership at the
time the Rights Plan was adopted (approximately 37%) and further permit
Cadence and its subsidiaries to acquire up to an additional 7.5% of the
then outstanding shares of Company Common Stock without triggering the
Rights. However, dispositions of the shares it owned at the time of
adoption of the Rights Plan will reduce Cadence's maximum permissible level
of ownership share-for-share. In addition, the grandfathering provisions
terminate upon Cadence's ownership first falling below 20% of the Company's
Common Stock. Under a concurrently executed Amended and Restated
Shareholder Agreement
6
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(the "Restated Agreement"), the Company and Cadence also amended and
restated the Shareholder Agreement that was entered into in connection with
the Company's initial public offering in 1995, when Cadence owned 100% of
the Company's Common Stock. The Restated Agreement replaces prior
covenants generally related to voting on significant corporate events with
voting provisions whereby Cadence agrees not to vote any of its shares in
favor of redemption of the Rights Plan, any slate of directors intending to
redeem the Rights Plan or any transaction that would trigger the Rights
Plan. On other matters, Cadence may vote the shares it currently owns in
its discretion and has agreed to vote any new shares it acquires after the
date of the Restated Agreement in accordance with the recommendation of the
Board of Directors. The new agreement also eliminates certain restrictions
contained in the prior agreement with respect to private sales by Cadence
of 10% or more of the outstanding shares of the Company.
(4) BASIS OF PRESENTATION
The interim financial statements included herein have been prepared,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations, although the management of the Company believes
that the disclosures are adequate to make the information presented not
misleading. Interim financial statements are by necessity somewhat
tentative; judgments are used to estimate interim amounts for items that
are normally determinable only on an annual basis. The financial
information as of December 31, 1997 is derived from the Company's audited
financial statements.
The interim period information presented herein includes normally recurring
adjustments which are, in the opinion of the management of the Company,
only necessary for a fair statement of the results of the respective
interim periods. Results of operations for interim periods are not
necessarily indicative of results to be expected for an entire year.
(5) Earnings per share amounts presented in the accompanying Statements of
Income have been calculated in accordance with Statement of Financial
Accounting Standards No. 128, "Earnings per Share." For the three month
periods ended March 31, 1998 and 1997, 94,750 and 2,500 outstanding
common stock options, respectively, were not included in the computation
of diluted earnings per share because the options exercise price was
greater than the average market price of the common stock.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(All numerical references are in thousands, except for percentages and per share
data)
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
COMPANY'S FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN
THIS QUARTERLY REPORT, AS WELL AS THE COMPANY'S FINANCIAL STATEMENTS AND THE
NOTES THERETO, AND THE MANAGEMENT DISCUSSION AND ANALYSIS PRESENTED IN THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997.
THIS QUARTERLY REPORT, INCLUDING THE FOLLOWING DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTAINS CERTAIN STATEMENTS,
TREND ANALYSIS AND OTHER INFORMATION THAT CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM
ACT, WHICH MAY INVOLVE RISKS AND UNCERTAINTIES. SUCH FORWARD LOOKING
STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO, STATEMENTS INCLUDING THE WORDS
"ANTICIPATE," "BELIEVE," "PLAN," "ESTIMATE," "EXPECT," "INTEND" AND OTHER
SIMILAR EXPRESSIONS. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE DISCUSSED IN SUCH FORWARD LOOKING STATEMENTS DUE TO NUMEROUS
FACTORS INCLUDING, BUT NOT LIMITED TO, THOSE DISCUSSED IN THE FOLLOWING
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, AS
WELL AS THOSE DISCUSSED ELSEWHERE HEREIN AND IN THE COMPANY'S ANNUAL REPORT
ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997.
RESULTS OF OPERATIONS
NET SALES
Net sales of $8,492 for the three-month period ended March 31, 1998 reflected a
decrease of $4,788 or 36% from the first quarter of 1997.
The decline in net sales reflects a sudden curtailment in capital spending
for the Company's Test Station systems by certain of the Company's customers,
particularly Intel, near the end of the first quarter of 1998. As disclosed
in previous reports, given the high price per unit of the Company's Test
Stations, such a sudden loss or reduction of orders from Intel or other major
customers can have a material adverse effect on the Company's results of
operations.
This curtailment was more pronounced in the Company's international markets,
as export sales, which made up 34% of the Company's net sales during 1997
dropped to 12% of net sales during the first quarter of 1998. Sales to Intel
amounted to 11% versus 28% of net sales for the three months ended March 31,
1998 and 1997, respectively. During the first quarter of 1998 sales to
Lockheed-Martin and SGS Thomson accounted for 15% and 14% of net sales,
respectively. No other customer accounted for more than 10% of net sales
during the first quarters of 1998 and 1997. Systems sales decreased 50% in
the first quarter of 1998 as compared to the first quarter of 1997, primarily
due to slowdown in customer capital spending cited above. Software sales
increased 45% in the first three months of 1998, from the same period in
1997, reflecting increased sales of Virtual Test Software products. Sales of
services declined $296 or 12% during the first quarter of 1998 from the first
quarter of 1997, due primarily to the completion of certain Virtual Test
consulting services contracts during the latter half of 1997.
GROSS MARGIN
The Company's gross margin of $5,647 in the first quarter of 1998 decreased 34%
from $8,602 for the same period of 1997, as a direct result of the decrease in
net sales discussed above. As a percentage of net sales, gross margin improved
to 66% for the three months ended March 31, 1998 from 65% for the three months
ended March 31, 1997. The year-to-year increase in gross margin percent
reflects the benefits of an increase in the proportion of the sales mix coming
from higher-margin software sales, and improved systems gross margin, partially
offset by lower margins on services revenue. The gross margin from sales of the
Company's Test Station systems was 65% for the first quarter of 1998, compared
to 62% for the same period of 1997. Sales of software yielded gross margin of
89% during the first three months of 1998, as compared to 95% during the first
quarter of 1997. Sales of services yielded gross margins of 57% during the
first quarter of 1998, down from 66% during the first quarter of 1997 due
primarily to the completion of certain higher margin Virtual Test consulting
contracts completed in 1997.
8
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OPERATING EXPENSES
Research, development and engineering (R&D) expenses decreased to $1,744 for the
three months ended March 31, 1998 from $1,900 for the first quarter of 1997. R&D
expenses amounted to 21% of net sales in the three months ended March 31, 1998,
compared to 14% in the three months ended March 31, 1997. The decrease in R&D
spending was attributable to lower expenses for engineering materials relative
to prior year levels. In addition, capitalization of software development costs
increased reflecting significant investment in software technology to be
included in future new products currently under development. These factors were
partially offset by higher costs associated with headcount increases required to
execute the Company's plans for development of new systems and software
products.
Selling, general and administrative expenses of $4,049 for the first quarter of
1998 were essentially unchanged from $4,019 for the first quarter of 1997. As a
percentage of net sales, selling, general and administrative expense increased
to 48% in the three months ended March 31, 1998 from 30% in the three months
ended March 31, 1997. The increase in selling, general and administrative
expenses as a percent of net sales reflects the decrease in net sales discussed
above.
OTHER INCOME, NET
Other income, net, increased to $218 in the three months ended March 31, 1998,
from $192 in the quarter ended March 31, 1997, reflecting a full quarter of
interest income in the first three months of 1998, on higher cash balances
resulting from the net proceeds of the Company's secondary public offering of
common stock completed in February 1997.
INCOME TAXES
The Company's effective tax rate was 35.0% for the three-month period ended
March 31, 1998 and 36.5% for the three months ended March 31, 1997. The
reduction in the effective tax rate reflects increased research and development
tax credits anticipated in the effective tax rate for 1998.
NET INCOME
As a result of the various factors discussed above, net income for the first
quarter of 1998 decreased 97% to $48 or $0.01 per share (diluted) compared to
$1,825 or $0.25 per share (diluted) for the corresponding period in 1997.
FUTURE OPERATING RESULTS
Like most high technology and high growth companies, the Company faces
certain business risks that could have adverse effects on the Company's
results of operations, including, but not limited to the following. Sales of
the Company's products to a limited number of customers are expected to
continue to account for a significant percentage of net sales over the
foreseeable future. As discussed above, any sudden reduction or loss of
orders from Intel or any other major customer would have a material adverse
effect on the Company's financial condition and results of operations. The
Company purchases some key components from sole or single source vendors for
which alternative sources are not currently available. The Company is
dependent on high-dollar customer orders, deriving a substantial portion of
its net sales from the sale of Test Stations which typically range in price
from $0.2 to $1.2 million per unit and may be priced as high as $1.8 million
for a single unit. A substantial portion of the Company's net sales is
typically realized in the last few weeks of each quarter. As a result, the
timing of the receipt and shipment of a single order can have a material
impact on the Company's net sales and results of operations for a particular
quarter. Therefore, the Company's quarterly net sales and results of
operations may be negatively impacted if an order is received too late in a
given quarter to permit product shipment and the recognition of revenue
during that quarter. Most of the Company's operating expenses are relatively
fixed and planned expenditures are based, in part, on anticipated orders. In
addition, the need for continued expenditures for research, development and
engineering makes it difficult to reduce expenses in a particular quarter if
the Company's sales goals for that quarter are not met. The inability to
reduce the Company's expenses quickly enough to compensate for
9
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any revenue shortfall would magnify the adverse impact of such revenue
shortfall on the Company's results of operations. The Company's future
operating results and financial condition are also subject to influences
driven by rapid technological changes, operating in a highly competitive
industry, a lengthy sales cycle, and the cyclical nature of general economic
conditions.
Future operating results will depend on many factors, including demand for the
Company's products, the introduction of new products by the Company and by its
competitors, industry acceptance of Virtual Test software, the level and timing
of available shippable orders and backlog, and the business risks discussed
above. There can be no assurance that the Company's net sales will grow or that
such growth will be sustained in future periods or that the Company will remain
profitable in any future period.
Results of operations for the periods discussed above should not be considered
indicative of the results to be expected for any future period, and fluctuations
in the operating results may also result in fluctuations in the market price of
the Company's common stock.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1998, the Company's principal sources of liquidity consisted of
cash and short-term investments of approximately $23.3 million, and funds
available under an existing bank line of credit of $10.0 million.
The Company's operating activities used cash during the three months ended
March 31, 1998 of $874, compared to providing cash of $2,071 million for the
same period last year. This change was primarily attributable to lower
collections from customers resulting from lower net sales and extended
payment terms.
The Company's trade receivables have increased to $12.0 million from $10.6
million since December 31, 1997, reflecting the effect of extended payment terms
granted to certain customers and distributors, primarily in Asia-Pacific
countries. The financial difficulties facing the Asia-pacific region may cause
these receivables to age further during upcoming quarters. Inventories have
grown by $1.7 million during the first quarter of 1998, reflecting the
production of Test Station systems not shipped during the quarter as a result of
the reduction in net sales discussed above. Deferred revenue increased $817 to
$2.7 million, reflecting the invoicing associated with significant renewal of
annual customer maintenance contracts during the first quarter of 1998.
During the first quarter of 1998, the Company invested $1.8 million in
equipment, purchased software, service spare parts and software development
costs, as necessary to develop, distribute and service new and existing Test
Station and Virtual Test products.
During the first quarter of 1998, the Company realized reductions in current tax
liabilities of $510 resulting from the benefit of tax deductions of employee
gains upon exercise of stock options. Most of this amount resulted from
exercise of stock options of Cadence Design Systems, Inc. (Cadence), the
Company's former majority shareholder. The noncash benefit of the stock option
deduction is reflected as an increase to Additional Paid-in Capital in the
accompanying Balance Sheets. The employee gains are not expenses of the Company
for financial reporting purposes, and the exercise of Cadence stock options does
not increase the number of shares of the Company's Common Stock outstanding.
The tax benefits realized from the stock option deduction are expected to
decrease in the future as employee holdings of Cadence stock options decline due
to option exercises and cancellations. The timing and magnitude of this
decrease in tax benefits is uncertain as the number of employee stock options
which are exercised, and the amount of gains realized upon exercise, will be
determined by fluctuations in the market value of Cadence common stock. Such
future decreases in the tax benefits from the stock option deduction will
increase the amount of the Company's income tax payments and will, consequently,
reduce the Company's net cash flows from operating activities.
The Company believes that cash on hand, short-term investments, and cash
generated from operations, as well as cash available from the Company's
existing $10.0 million short-term line of credit, will be sufficient to meet
the Company's working capital and other cash requirements for at least the
next twelve months. Company management is continually evaluating
opportunities to develop and introduce new products, and to acquire
complementary businesses or technologies. At
10
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present, the Company has no understandings, commitments or agreements with
respect to any such opportunities. Any transactions resulting from such
opportunities, if consummated, may require the use of some of the Company's cash
or necessitate funding from other sources.
11
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PART II OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
During the quarter ended March 31, 1998, the Company made no sales of
securities that were not registered under the Securities Act of 1933.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (exhibit reference numbers refer to Item 601 of Regulation S-K)
27. Financial Data Schedule
(b) Reports on Form 8-K:
Three reports on Form 8-K were filed during the quarter ended March 31,
1998, and are incorporated herein by reference.
On January 6, 1998, a Form 8-K was filed. The contents of the report are
summarized below:
HP and IMS Virtual Test Division Announce Software Tools That Bridge
the Gap Between MCU Design and Test
On October 28, 1997, Hewlett-Packard Company and Integrated
Measurements Systems Virtual Test Division announced that IMS'
TestDirect(TM) pattern generator and Digital VirtualTester(TM) pattern
debugger will support HP's 83000 MCU series microcontroller test
systems, helping to speed the test process and shortening time to
market.
IMS Introduces TurboSTIL, Industry's First Standard Test Interface
Language Writer for Easy Data Transfer Between EDA and ATE Environments
On November 3, 1997, Integrated Measurement Systems Virtual Test
Division introduced TurboSTIL.
IMS' Digital VirtualTester Wins Best in Test Award from Test and
Measurement World; Award Reflects IMS' Virtual Test Division's
Leadership Role in Virtual Test Technology.
On December 15, 1997, Integrated Measurement Systems, Inc. announced
that Digital VirtualTester(TM) has been named a 1997 Best in Test
Award winner by Test & Measurement World magazine.
On January 6, 1998, a Form 8-K was filed. The contents of the report are
summarized below:
IMS Announces Sales and Earnings for the Fourth Quarter Will be Below
Analysts' Consensus.
On January 5, 1998, Integrated Measurement Systems, Inc. announced
Q4 1997 sales and earnings will not meet analysts' expectations.
On March 26, 1998 a Form 8-K was filed. The contents of the report are
summarized below:
Integrated Measurement Systems, Inc. Adopts Shareholder Rights Plan.
On March 25, 1998, Integrated Measurement Systems, Inc. (the
"Company") issued a press release relating to the adoption by its
Board of Directors (the "Board") of a Shareholder Rights Plan.
12
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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 on May 11, 1998.
INTEGRATED MEASUREMENT SYSTEMS, INC.
(Registrant)
/s/ SAR RAMADAN
----------------
Sar Ramadan
Chief Financial Officer
(on behalf of the Registrant and as Principal Financial Officer)
13
<TABLE> <S> <C>
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INCOME
STATEMENT FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1998 AND THE BALANCE SHEET
AS OF MARCH 31, 1998, AND IS QUALIFIED IN IT'S ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,190
<SECURITIES> 14,100
<RECEIVABLES> 12,531
<ALLOWANCES> 503
<INVENTORY> 13,024
<CURRENT-ASSETS> 52,273
<PP&E> 18,613
<DEPRECIATION> 10,498
<TOTAL-ASSETS> 67,864
<CURRENT-LIABILITIES> 8,019
<BONDS> 120
0
0
<COMMON> 75
<OTHER-SE> 58,153
<TOTAL-LIABILITY-AND-EQUITY> 67,864
<SALES> 6,253
<TOTAL-REVENUES> 8,492
<CGS> 1,874
<TOTAL-COSTS> 2,845
<OTHER-EXPENSES> 5,793
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6
<INCOME-PRETAX> 72
<INCOME-TAX> 24
<INCOME-CONTINUING> 48
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
