Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
MTSN > SEC Filings for MTSN > Form 10-Q on 1-Aug-2014All Recent SEC Filings

Show all filings for MATTSON TECHNOLOGY INC

Form 10-Q for MATTSON TECHNOLOGY INC


1-Aug-2014

Quarterly Report


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This quarterly report on Form 10-Q contains forward-looking statements, which are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs, including estimates and projections about our industry. Our forward-looking statements may include statements that relate to our future net revenue, earnings, cash flow and cash position; growth of the industry and the size of our served available market; market demand for our products, the timing of significant customer orders for our products; our ability to attract new customers, customer acceptance of delivered products and our ability to collect amounts due upon shipment and upon acceptance; end-user demand for semiconductors, including the growing mobile device industry; customer demand for semiconductor manufacturing equipment; our ability to timely manufacture, deliver and support ordered products; our ability to bring new products to market, to gain market share with such products and the overall mix of our products; our ability to generate significant net revenue, customer rate of adoption of new technologies; risks inherent in the development of complex technology; the timing and competitiveness of new product releases by our competitors; margins; product development plans and levels of research, development and engineering activity; our ability to align our cost structure with market conditions, including operating expenses, and our quarterly break-even point; tax expenses; excess inventory reserves, including the level of our vendor commitments compared to our requirements; economic conditions in general and in our industry; our dependence on international sales and our expectation of growth in international markets; the impact of any litigation or investigation on our operating results or financial position; any offering and sale of securities pursuant to our shelf registration statement or otherwise; volatility in our stock price and any delisting of our stock from NASDAQ for the failure to maintain a minimum bid price; the sufficiency of our financial resources, including availability under our revolving credit agreement, to support future operations and capital expenditures and the availability of all financing resources; compliance with financial covenants related to our revolving credit facility and our control environment including our disclosure control and procedures, internal control over our financial reporting, and our related remediation efforts. Forward-looking statements typically are identified by use of terms such as "anticipates," "expects," "intends," "plans," "seeks," "estimates," "believes" and similar expressions, although some forward-looking statements are expressed differently. These statements are not guarantees of future performance and are subject to numerous risks, uncertainties and assumptions that are difficult to predict. Such risks and uncertainties include those set forth in Part II, Item 1A under "Risk Factors" and this Part I, Item 2 under "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our actual results could differ materially from those anticipated by these forward-looking statements. The forward-looking statements in this report speak only as of the time they are made and do not necessarily reflect our outlook at any other point in time. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future event, or for any other reason. This discussion should be read in conjunction with the condensed consolidated financial statements and notes presented in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes in our last filed Annual Report on Form 10-K for the year ended December 31, 2013.
Overview
We are a supplier of semiconductor wafer processing equipment used in the fabrication of integrated circuits ("ICs"). Our manufacturing equipment is primarily used for semiconductor manufacturing, utilizing innovative technology to deliver advanced processing capabilities and high productivity for the fabrication of current and next-generation ICs. We were incorporated in California in 1988 and reincorporated in Delaware in 1997. Our business depends upon capital expenditures by the manufacturers of semiconductor devices. The level of capital expenditures by these manufacturers depends upon the current and anticipated market demand for such devices which is dependent upon the consumer product industry. Since the demand for semiconductor devices is highly cyclical, the demand for wafer processing equipment also is highly cyclical. The semiconductor equipment industry is typically characterized by wide swings in operating results as the industry rotates between cycles. We continue to focus on the advances we have made in the market position for each of our major products.

         Our etch products, specifically our paradigmE XP, are established
          process tools of record in advanced DRAM, NAND and 3D-NAND production
          fabs. We are also establishing a development tool of record in advanced
          foundry for sub-20 nanometer front-end of line processes. The
          combination of the paradigmE XP's technical capabilities and high
          productivity have established a growing etch market position in the
          memory segment.


         Our conventional RTP, specifically our Helios XP product, continues to
          run high-volume production for DRAM, NAND and foundry customers. The
          Helios XP has established industry leading technical performance in 20
          nanometer production with its dual side wafer heating and differential
          thermal energy control. When the transition to sub-20 nanometer
          technologies ramps up, we anticipate increasing shipments of our Helios
          XP products in the foundry and DRAM segments.


         Our millisecond anneal system ("Millios"), has been qualified and
          released for high volume advanced foundry/logic production at multiple
          manufacturing sites. The Millios, with our proprietary arc lamp
          technology, has achieved leading device performance as well as higher
          production throughput and system availability. We continue to expect
          the Millios to play an important role in the volume production of
          sub-20 nanometer devices.


         Our dry strip products continue to make a steady contribution to our
          business as our established customers in foundry/logic and memory are
          expected to continue to make investments, maintaining our position in
          the dry strip market during the remainder of 2014.

In February 2014, we completed a registered public offering of 14.1 million newly issued shares of our common stock. The common stock was issued at a price to the public of $2.45 per share. We received net proceeds of approximately $31.7 million from the offering after deducting underwriting discounts and estimated offering expenses. We intend to use the net proceeds from this stock offering for general corporate purposes, which may include working capital, capital expenditures and other corporate expenses.
The future success of our business will depend on numerous factors, including, but not limited to, the market demand for semiconductors and semiconductor wafer processing equipment. Such factors also will include our ability to (a) enhance our competitiveness and profitability; (b) develop and bring to market new products that address our customers' needs; (c) grow customer loyalty through collaboration with and support of our customers; (d) maintain a cost structure that will enable us to operate effectively and profitably throughout changing industry cycles; and (e) generate the gross margin necessary to enable us to make the necessary investments in our business.

Critical Accounting Policies and Use of Estimates Management's discussion and analysis of financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses during the reporting periods.
On an on-going basis, we evaluate our estimates and judgments, including those related to reserves for excess and obsolete inventory, warranty, bad debts, intangible assets, income taxes, restructuring costs, stock-based compensation, contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. These form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
There were no significant changes to our critical accounting policies during the six months ended June 29, 2014. For information about critical accounting policies, see Note 1. Basis of Presentation and Summary of Significant Accounting Policies of notes to consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2013.


Results of Operations
A summary of our results of operations for the three and six months ended June
29, 2014 and June 30, 2013 are as follows (in thousands, except for
percentages):
                                        Three Months Ended
                              June 29, 2014            June 30, 2013           Increase (Decrease)
                            Amount      Percent      Amount      Percent        Amount        Percent
Net revenue               $ 42,029       100.0     $ 24,574       100.0     $    17,455         71.0
Cost of goods sold          28,733        68.4       16,107        65.5          12,626         78.4
Gross margin                13,296        31.6        8,467        34.5           4,829         57.0
Operating expenses:
Research, development and
engineering                  4,446        10.6        4,170        17.0             276          6.6
Selling, general and
administrative               6,690        15.9        6,952        28.3            (262 )       (3.8 )
Restructuring and other        111         0.3          404         1.6            (293 )      (72.5 )
charges
   Total operating          11,247        26.8       11,526        46.9            (279 )       (2.4 )
expenses
Income (loss) from
operations                   2,049         4.8       (3,059 )     (12.4 )         5,108          n/m   (1)
Interest income
(expense), net                 (21 )         -         (137 )      (0.6 )           116        (84.7 )
Other income (expense),       (142 )      (0.3 )       (359 )      (1.5 )           217        (60.4 )
net
Income (loss) before
income taxes                 1,886         4.5       (3,555 )     (14.5 )         5,441          n/m   (1)
Provision for (benefit         (30 )      (0.1 )         12           -             (42 )        n/m
from) income taxes                                                                                     (1)
Net income (loss)         $  1,916         4.6     $ (3,567 )     (14.5 )   $     5,483          n/m   (1)


(1)Not meaningful.

                                          Six Months Ended
                              June 29, 2014             June 30, 2013          Increase (Decrease)
                            Amount      Percent       Amount     Percent         Amount     Percent
Net revenue               $ 85,227       100.0     $  44,811       100.0     $   40,416        90.2
Cost of goods sold          57,285        67.2        31,976        71.4         25,309        79.1
Gross margin                27,942        32.8        12,835        28.6         15,107       117.7
Operating expenses:
Research, development and
engineering                  8,970        10.5         8,483        18.9            487         5.7
Selling, general and
administrative              14,111        16.6        14,502        32.4           (391 )      (2.7 )
Restructuring and other        111         0.1         2,662         5.9         (2,551 )     (95.8 )
charges
   Total operating          23,192        27.2        25,647        57.2         (2,455 )      (9.6 )
expenses
Income (loss) from
operations                   4,750         5.6       (12,812 )     (28.6 )       17,562         n/m   (1)
Interest income
(expense), net                (147 )      (0.2 )        (121 )      (0.3 )          (26 )      21.5
Other income (expense),        (63 )      (0.1 )         (76 )      (0.2 )           13       (17.1 )
net
Income (loss) before
income taxes                 4,540         5.3       (13,009 )     (29.1 )       17,549         n/m   (1)
Provision for income           159         0.2            66         0.1             93       140.9
taxes
Net income (loss)         $  4,381         5.1     $ (13,075 )     (29.2 )   $   17,456         n/m   (1)

(1)Not meaningful.


Net Revenue
A summary of our net revenue for the three and six months ended June 29, 2014
and June 30, 2013 are as follows (in thousands, except for percentages):
                                    Three Months Ended                                        Six Months Ended
                   June 29,      June 30,        Increase (Decrease)         June 29,       June 30,        Increase (Decrease)
                     2014          2013           Amount        Percent        2014           2013           Amount       Percent
Net revenue:
United States     $   6,392     $   3,252     $     3,140           97     $   10,575     $    6,336     $     4,239          67
International:
South Korea          23,863         1,407          22,456        1,596         34,122          2,275          31,847       1,400
China                 2,268         2,008             260           13         15,349          3,960          11,389         288
Taiwan                5,498        14,659          (9,161 )        (62 )       16,320         26,724         (10,404 )       (39 )
Other Asia            1,589         2,292            (703 )        (31 )        3,870          3,358             512          15
Europe and others     2,419           956           1,463          153          4,991          2,158           2,833         131
                     35,637        21,322          14,315           67         74,652         38,475          36,177          94
Total net revenue $  42,029     $  24,574     $    17,455           71     $   85,227     $   44,811     $    40,416          90

Net revenue was $42.0 million for the three months ended June 29, 2014, an increase of $17.5 million, or 71 percent, compared to $24.6 million for the three months ended June 30, 2013. The increase in net revenue during the three months ended June 29, 2014 compared to the three months ended June 30, 2013 was largely attributable to higher overall net revenue of our etch systems into memory applications.
During the second quarter of 2014, net revenue from customers in Asia continued to account for a significant portion of our total net revenue. For the three months ended June 29, 2014 and June 30, 2013, international sales comprised approximately 85 percent and 87 percent, respectively, of our total net revenue. For the three months ended June 29, 2014, two customers accounted for 10 percent or more of our total net revenue, representing approximately 60 percent and 14 percent of our total net revenue, respectively. For the three months ended June 30, 2013, two customers accounted for 10 percent or more of our total net revenue, representing approximately 49 percent and 11 percent of our total net revenue, respectively.
Net revenue was $85.2 million for the six months ended June 29, 2014, an increase of $40.4 million, or 90 percent, compared to $44.8 million for the six months ended June 30, 2013. The increase in net revenue during the six months ended June 29, 2014 compared to the six months ended June 30, 2013 was largely attributable to higher overall net revenue of our etch systems into memory applications.
For the six months ended June 29, 2014 and June 30, 2013, international sales comprised approximately 88 percent and 86 percent, respectively, of our total net revenue.
For the six months ended June 29, 2014, two customers accounted for 10 percent or more of our total net revenue, representing approximately 60 percent and 10 percent of our total net revenue, respectively. For the six months ended June 30, 2013, one customer accounted for 10 percent or more of our total net revenue, representing approximately 48 percent of our total net revenue. We have seen improvements in market conditions and customer demand since the third quarter of 2013. However, primarily due to a change in the sub 20-nanometer foundry product ramp and a pause in 3D-NAND spending, we expect our revenues for the third quarter of 2014 to decrease as compared to each of the first and second quarter of fiscal year 2014. On a long-term basis, we expect investment in capital equipment to remain positive, predominately driven by a memory investment cycle and foundry spending for 20- and sub 20-nanometer processing technologies.


Cost of Goods Sold and Gross Margin
A summary of our cost of goods sold and gross margin for the three and six
months ended June 29, 2014 and June 30, 2013 are as follows (in thousands,
except for percentages):
                                Three Months Ended                                        Six Months Ended
               June 29,      June 30,        Increase (Decrease)        June 29,      June 30,        Increase (Decrease)
                 2014          2013            Amount        Percent      2014          2013            Amount        Percent
Cost of goods
sold          $  28,733     $  16,107     $    12,626         78.4     $  57,285     $  31,976     $    25,309           79.1
Gross margin  $  13,296     $   8,467     $     4,829         57.0     $  27,942     $  12,835     $    15,107          117.7
Gross margin
percentage         31.6          34.5                                       32.8          28.6

Our cost of goods sold consists of the costs associated with manufacturing our products, and includes the purchase of raw materials and related overhead, labor, warranty costs, charges for excess and obsolete inventory and costs incurred by our contract manufacturers in the production of our components and major sub-assemblies/modules.
Our gross margin percentage decreased from 34.5 percent during the three months ended June 30, 2013 to 31.6 percent during the three months ended June 29, 2014, primarily attributable to a less favorable product mix and higher than expected installation and warranty costs for certain of our newer products. Our gross margin percentage increased from 28.6 percent during the six months ended June 30, 2013 to 32.8 percent during the six months ended June 29, 2014, primarily attributable to the increase in total net revenue and improvement in the product mix, partially offset by higher than expected installation and warranty costs for certain of our newer products.
Our gross margin has varied over the years and will continue to be affected by many factors, including competitive pressures, product mix, inventory reserves, economies of scale, material and other costs, overhead absorption levels and the timing of revenue recognition.
Research, Development and Engineering
A summary of our research, development and engineering expenses for the three and six months ended June 29, 2014 and June 30, 2013 are as follows (in thousands, except for percentages):

                                Three Months Ended                                  Six Months Ended
                  June 29,      June 30,     Increase (Decrease)     June 29,      June 30,     Increase (Decrease)
                    2014          2013         Amount     Percent      2014          2013         Amount     Percent
Research,
development and
engineering      $   4,446     $   4,170     $    276         6.6   $   8,970     $   8,483     $    487         5.7
Percentage of
net revenue           10.6 %        17.0 %                               10.5 %        18.9 %

Research, development and engineering expenses consist primarily of salaries and related costs of employees engaged in research, development and engineering activities, costs of product development and depreciation on equipment used in the course of research, development and engineering activities.
Research, development and engineering expenses increased by $0.3 million, or 7 percent, in the three months ended June 29, 2014 compared to the three months ended June 30, 2013. This increase was largely attributable to an increase in activity resulting from the development of new process applications for our products.
Research, development and engineering expenses increased by $0.5 million, or 6 percent, in the six months ended June 29, 2014 compared to the six months ended June 30, 2013. This increase was largely attributable to an increase in activity resulting from the development of new process applications for our products.


Selling, General and Administrative
A summary of our selling, general and administrative expenses for the three and
six months ended June 29, 2014 and June 30, 2013 are as follows (in thousands,
except for percentages):
                                     Three Months Ended                                      Six Months Ended
                     June 29,     June 30,       Increase (Decrease)        June 29,     June 30,       Increase (Decrease)
                       2014         2013         Amount         Percent       2014         2013         Amount         Percent
Selling, general
and administrative  $  6,690     $  6,952     $     (262 )        (3.8 )   $ 14,111     $ 14,502     $     (391 )        (2.7 )
Percentage of net
revenue                 15.9 %       28.3 %                                    16.6 %       32.4 %

Selling, general and administrative expenses consist primarily of employee-related expenses, as well as legal and professional fees, insurance costs, amortization of evaluation systems and certain facilities and information technology costs.
Selling, general and administrative expenses decreased by $0.3 million, or 4 percent during the three months ended June 29, 2014 as compared with the three months ended June 30, 2013, primarily due to a decrease in depreciation and amortization expense and a decrease in outside services, including audit and tax professional services.
Selling, general and administrative expenses decreased by $0.4 million, or 3 percent percent during the six months ended June 29, 2014 as compared with the six months ended June 30, 2013, primarily due to a decrease in depreciation and amortization expense and a decrease in outside services, including audit and tax professional services.
Restructuring and Other Charges
In December 2011, we initiated a broad-based cost reduction plan ("2011 Restructuring Plan"). During 2012, we completed the first three phases of our cost reduction plan, which included the consolidation of our manufacturing and research and development facilities, moving a portion of our outsourced spare parts logistics operations in-house, and workforce reductions. The fourth phase of the 2011 Restructuring Plan primarily consisted of further workforce reductions across all areas of the Company and additional contract termination costs related to two vacant facilities. The fourth phase of the 2011 Restructuring Plan was completed during the third quarter of 2013. We incurred $10.6 million in restructuring and other charges under the 2011 Restructuring Plan since its inception in the fourth quarter of 2011, of which $0.4 million and $2.7 million was recorded during the three and six months ended June 30, 2013, respectively. We also recorded $0.1 million during the three and six months ended June 29, 2014, which represents severance payments for certain workforce reductions as we continue to implement our cost reduction initiatives. Interest Income (Expense), net
Interest income (expense), net was minimal for all periods presented. The net expense for the three and six months ended June 29, 2014 and three and six months ended June 30, 2013 primarily resulted from interest charges on borrowings under our Credit Facility.
Other Income (Expense), net
Other income (expense), net was $0.1 million net expense for each of the three and six months ended June 29, 2014, which primarily consisted of foreign exchange losses from foreign currency denominated inter-company balances. Other income (expense), net was $0.4 million and $0.1 million net expense for the three and six months ended June 30, 2013, respectively, which primarily consisted of foreign exchange losses from foreign currency denominated inter-company balances.
Provision for (Benefit from) Income Taxes On a quarterly basis, we record our income tax expense or benefit based on our year-to-date results and expected results for the remainder of the year. We recorded a minimal income tax benefit and a $0.2 million income tax provision for the three and six months ended June 29, 2014, respectively. We recorded minimal income tax provisions for the three and six months ended June 30, 2013. The net tax provision was the result of the mix of profits earned by us in tax jurisdictions with a broad range of income tax rates.


Liquidity and Capital Resources
Our cash and cash equivalents as of June 29, 2014 and December 31, 2013 were
$20.7 million and $14.6 million, respectively. Working capital as of June 29,
2014 was $63.5 million, compared to $27.0 million as of December 31, 2013.
Stockholders' equity as of June 29, 2014 was $70.7 million, compared to $34.1
million as of December 31, 2013. The aforementioned increases in working capital
and stockholders' equity are primarily related to a registered public offering
in February 2014 of 14.1 million newly issued common stock shares which resulted
in net proceeds to us of approximately $31.7 million.
                                                                         Six Months Ended
                                                                 June 29, 2014      June 30, 2013
Net cash used in operating activities                           $      (10,884 )   $      (8,609 )
Net cash used in investing activities                                     (451 )            (736 )
Net cash provided by financing activities                               17,921             9,871
Effect of exchange rate changes on cash and cash equivalents              (497 )              44
Net increase in cash and cash equivalents                       $        6,089     $         570

Liquidity and Capital Resources Outlook
As of June 29, 2014, our primary sources of liquidity were $20.7 million of cash and cash equivalents, as well as $25.0 million available to us under our Credit Facility. . . .

  Add MTSN to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for MTSN - All Recent SEC Filings
Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.