Intevac(IVAC) - 2018 Q4 - Annual Report

Financial Performance - Total net revenues for the year ended December 29, 2018, were $95.1 million, a decrease of 15.7% from $112.8 million in the previous year[248] - Gross profit for 2018 was $32.7 million, down from $45.7 million in 2017, reflecting a gross margin decline[248] - Operating loss for 2018 was $4.2 million compared to an operating income of $4.8 million in 2017[248] - Net income for 2018 was $3.6 million, a decrease from $4.1 million in 2017, resulting in a diluted net income per share of $0.16[248] - Total net revenues for fiscal 2018 were $95.114 million, a decrease of 15.7% from $112.847 million in fiscal 2017[332] - TFE segment net revenues were $69.348 million in 2018, down from $79.004 million in 2017, reflecting a decline of 12.4%[333] - Photonics segment net revenues decreased to $25.766 million in 2018 from $33.843 million in 2017, a decline of 23.8%[333] - Military products revenue in the Photonics segment dropped to $13.828 million in 2018 from $24.373 million in 2017, a decrease of 43.5%[332] Assets and Liabilities - Total current assets increased to $95.6 million in 2018 from $92.4 million in 2017, primarily due to higher trade and other accounts receivable[246] - Total liabilities increased slightly to $30.0 million in 2018 from $29.5 million in 2017, with accounts payable rising to $6.1 million[246] - Stockholders' equity rose to $89.6 million in 2018, up from $82.7 million in 2017, indicating a stronger equity position[246] - Total cash, cash equivalents, and restricted cash at the end of the period was $19,884,000, down from $20,941,000 at the beginning of the period, representing a decrease of 5.1%[257] - Trade receivables and other accounts totaled $27.7 million as of December 29, 2018, compared to $20.5 million in 2017[377] - Inventories decreased from $33,792,000 in 2017 to $30,597,000 in 2018, representing a decline of approximately 6.5%[378] - Total property, plant, and equipment, net decreased from $12,478,000 in 2017 to $11,198,000 in 2018, a reduction of about 10.3%[382] Cash Flow and Investments - The company reported a net cash used in operating activities of $1,716,000 for 2018, compared to $2,378,000 in 2017, indicating an improvement of 28.0%[257] - Cash used in investing activities was $1,030,000 in 2018, significantly lower than $5,773,000 in 2017, indicating a decrease of 82.1%[257] - Total cash, cash equivalents, and investments amounted to $39,163,000 as of December 29, 2018, compared to $42,488,000 in 2017, reflecting a decrease of about 7.8%[401] Taxation - The company reported a provision for income taxes of $(7.2) million in 2018, indicating a tax benefit compared to a tax expense in the previous year[248] - The effective tax rate for fiscal 2018 was 199.6%, with a total income tax benefit of $(7,176,000) compared to an income tax expense of $1,103,000 in fiscal 2017[420] - The company recognized a non-cash income tax benefit of $7.9 million in fiscal 2018 due to the reversal of a valuation allowance for deferred tax assets in Singapore[425] - Intevac's net operating loss carryforward was approximately $68.6 million for federal tax purposes, $45.3 million for foreign tax purposes, and $59.9 million for state tax purposes as of December 29, 2018[430] Revenue Recognition and Accounting Standards - The company adopted a new revenue standard in 2018, changing its method of accounting for revenues from contracts with customers[241] - The adoption of the new revenue standard ASC 606 resulted in a cumulative effect adjustment, increasing other accrued liabilities from $7,688,000 to $9,322,000 and the accumulated deficit from $(66,881,000) to $(68,515,000)[305] - Intevac's revenue recognition for equipment sales in the TFE segment occurs upon shipment, maintaining consistency with historical practices[289] - Revenue for CPFF contracts is recognized based on costs incurred plus a proportionate amount of the fee earned, while FFP contracts use milestone or percentage-of-completion methods[304] - The company expects the impact of the new revenue standard to be immaterial to net income on an ongoing basis[288] Research and Development - Research and development expenses were $16.9 million in 2018, slightly down from $17.7 million in 2017, reflecting cost management efforts[248] Stock and Equity - Proceeds from the issuance of common stock amounted to $3,208,000 in 2018, an increase from $2,429,000 in 2017, representing a growth of 32.0%[257] - Common stock repurchases totaled $558,000 in 2018, while there were no repurchases in 2017[257] - Intevac's stock repurchase program has $10.9 million remaining for future repurchases, with 120,000 shares repurchased in fiscal 2018 at an average price of $4.63 per share, totaling $558,000[419] Other Financial Metrics - Depreciation and amortization expenses increased to $3,999,000 in 2018 from $3,116,000 in 2017, reflecting a rise of 28.3%[257] - Total adjustments to reconcile net income to net cash used in operating activities were $(5,297,000) in 2018, compared to $(6,496,000) in 2017, showing a reduction of 18.5%[257] - Total technology development net revenues in the Photonics segment rose to $9.794 million in 2018, up from $7.991 million in 2017, an increase of 22.6%[332] - The company has a contingent consideration obligation of up to $9,000,000 based on future revenue from certain products, indicating potential future liabilities[394]