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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

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 No. 000-51072

 

 

CASCADE MICROTECH, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Oregon   93-0856709

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

9100 S.W. Gemini Drive

Beaverton, Oregon

  97008
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (503) 601-1000

 

 

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   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨    Accelerated filer   ¨
Non-accelerated filer.   ¨   (Do not check if a smaller reporting company)    Smaller reporting company   x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

The number of shares of common stock outstanding as of May 2, 2013 was 14,294,287.

 

 

 

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CASCADE MICROTECH, INC.

INDEX TO FORM 10-Q

 

     Page  

PART I - FINANCIAL INFORMATION

  
Item 1.    Financial Statements      2   
   Condensed Consolidated Balance Sheets (unaudited) - March 31, 2013 and December 31, 2012      2   
   Condensed Consolidated Statements of Operations (unaudited) - Three Months Ended March 31, 2013 and 2012      3   
   Condensed Consolidated Statements of Comprehensive Income (unaudited) - Three Months Ended March 31, 2013 and 2012      4   
   Condensed Consolidated Statements of Cash Flows (unaudited) - Three Months Ended March 31, 2013 and 2012      5   
   Notes to Condensed Consolidated Financial Statements (unaudited)      6   
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations      10   
Item 3.    Quantitative and Qualitative Disclosures About Market Risk      16   
Item 4.    Controls and Procedures      16   

PART II - OTHER INFORMATION

  
Item 1A.    Risk Factors      17   
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds      17   
Item 6.    Exhibits      17   
Signatures      18   

 

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PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

Cascade Microtech, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, In thousands)

 

     March 31,
2013 		    December 31,
2012 		 

Assets

    

Current Assets:

    

Cash and cash equivalents

   $ 18,588      $ 17,927   

Short-term marketable securities

     5,291        5,322   

Restricted cash

     1,038        1,069   

Accounts receivable, net of allowances of $338 and $345

     21,147        21,087   

Inventories

     23,472        24,277   

Prepaid expenses and other

     2,180        2,503   
  

 

 

   

 

 

 

Total Current Assets

     71,716        72,185   

Fixed assets, net of accumulated depreciation of $25,487 and $24,575

     7,821        8,271   

Goodwill

     961        990   

Purchased intangible assets, net of accumulated amortization of $4,144 and $3,986

     1,452        1,610   

Other assets, net of accumulated amortization of $4,143 and $4,064

     2,066        2,224   
  

 

 

   

 

 

 

Total Assets

   $ 84,016      $ 85,280   
  

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

    

Current Liabilities:

    

Accounts payable

   $ 7,264      $ 5,900   

Deferred revenue

     2,387        3,526   

Accrued liabilities

     5,098        6,640   
  

 

 

   

 

 

 

Total Current Liabilities

     14,749        16,066   

Deferred revenue

     433        356   

Other long-term liabilities

     2,443        2,940   
  

 

 

   

 

 

 

Total Liabilities

     17,625        19,362   

Shareholders’ Equity:

    

Common stock, $0.01 par value. Authorized 100,000 shares; issued and outstanding: 14,244 and 14,199

     142        142   

Additional paid-in capital

     91,145        90,897   

Accumulated other comprehensive loss

     (1,238 )      (716 ) 

Accumulated deficit

     (23,658 )      (24,405 ) 
  

 

 

   

 

 

 

Total Shareholders’ Equity

     66,391        65,918   
  

 

 

   

 

 

 

Total Liabilities and Shareholders’ Equity

   $ 84,016      $ 85,280   
  

 

 

   

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

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Cascade Microtech, Inc.

Condensed Consolidated Statements of Operations

(Unaudited, In thousands, except per share amounts)

 

     For the Three Months Ended March 31,  
     2013     2012  

Revenue

   $ 27,471      $ 27,543   

Cost of sales

     15,928        15,592   
  

 

 

   

 

 

 

Gross profit

     11,543        11,951   

Operating expenses:

    

Research and development

     2,456        2,779   

Selling, general and administrative

     8,046        7,911   
  

 

 

   

 

 

 

Total operating expenses

     10,502        10,690   
  

 

 

   

 

 

 

Income from operations

     1,041        1,261   

Other income (expense):

    

Interest income, net

     20        10   

Other, net

     (244 )      (407 ) 
  

 

 

   

 

 

 

Total other income (expense), net

     (224 )      (397 ) 
  

 

 

   

 

 

 

Income before income taxes

     817        864   

Income tax expense

     70        124   
  

 

 

   

 

 

 

Net income

   $ 747      $ 740   
  

 

 

   

 

 

 

Basic net income per share

   $ 0.05      $ 0.05   
  

 

 

   

 

 

 

Diluted net income per share

   $ 0.05      $ 0.05   
  

 

 

   

 

 

 

Shares used in per share calculations:

    

Basic

     14,227        14,188   
  

 

 

   

 

 

 

Diluted

     14,599        14,301   
  

 

 

   

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

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Cascade Microtech, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited, In thousands)

 

     For the Three Months Ended March 31,  
     2013     2012  

Net income

   $ 747      $ 740   

Unrealized holding gains (losses)

     —          (1 ) 

Change in cumulative translation adjustment

     (522 )      497   
  

 

 

   

 

 

 

Comprehensive income

   $ 225      $ 1,236   
  

 

 

   

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

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Cascade Microtech, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, In thousands)

 

     For the Three Months Ended March 31,  
     2013     2012  

Cash flows from operating activities:

    

Net income

   $ 747      $ 740   

Adjustments to reconcile net income to net cash flows provided by operating activities:

    

Depreciation and amortization

     1,200        1,192   

Stock-based compensation

     334        377   

Loss on write-down or disposal of long-lived assets

     1        56   

Deferred income taxes

     30        20   

(Increase) decrease in:

    

Accounts receivable, net

     (63 )      4,409   

Inventories

     483        (1,401 ) 

Prepaid expenses and other

     344        (368 ) 

Increase (decrease) in:

    

Accounts payable

     1,441        450   

Deferred revenue

     (1,050 )      (1,031 ) 

Accrued and other long-term liabilities

     (2,008 )      4   
  

 

 

   

 

 

 

Net cash provided by operating activities

     1,459        4,448   

Cash flows from investing activities:

    

Purchase of marketable securities

     (3,405 )      (3,404 ) 

Proceeds from sale of marketable securities

     3,436        1,405   

Purchase of fixed assets

     (559 )      (82 ) 

Proceeds from sale of fixed assets

     13        —     

(Increase) decrease in restricted cash

     —          412   
  

 

 

   

 

 

 

Net cash used in investing activities

     (515 )      (1,669 ) 

Cash flows from financing activities:

    

Principal payments on capital lease obligations

     (1 )      (5 ) 

Witholding taxes paid on net settlement of vested restricted stock units

     (141 )      (72 ) 

Proceeds from issuances of common stock

     113        22   

Cash paid for repurchase of common stock

     (58 )      (97 ) 
  

 

 

   

 

 

 

Net cash used in financing activities

     (87 )      (152 ) 

Effect of exchange rate changes on cash and cash equivalents

     (196 )      177   
  

 

 

   

 

 

 

Increase in cash and cash equivalents

     661        2,804   

Cash and cash equivalents:

    

Beginning of period

     17,927        10,656   
  

 

 

   

 

 

 

End of period

   $ 18,588      $ 13,460   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information:

    

Taxes paid for income taxes, net

   $ 246      $ —     

See accompanying Notes to Condensed Consolidated Financial Statements.

 

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CASCADE MICROTECH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The condensed consolidated financial information included herein has been prepared by Cascade Microtech, Inc. without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). However, such information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The financial information as of December 31, 2012 is derived from our 2012 Annual Report on Form 10-K. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2012 Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Note 2. Inventories

Inventories are stated at the lower of standard cost, which approximates cost computed on a first-in, first-out basis, or market, and include materials, labor and manufacturing overhead. Demonstration goods, which are included as a component of finished goods, represent inventory that is used for customer demonstration purposes. This inventory is typically sold after 12 to 18 months. We analyze the carrying value of our inventory quarterly, considering a combination of factors including, but not limited to, the following: forecasted sales or usage, historical usage rates, estimated service period, product end-of-life dates, estimated current and future market values, service inventory requirements and new product introductions. We estimate market value based on factors including, but not limited to, replacement cost and estimated resale value. Inventory reserve charges totaled $0.4 million and $0.5 million, respectively, in the first quarter of 2013 and 2012. Inventory reserve charges are recorded quarterly as a component of cost of sales and establish a new cost basis for the inventory.

Inventories consisted of the following (in thousands):

 

     March 31,
2013 		     December 31
2012 		 
Raw materials    $ 14,924       $ 14,783   
Work-in-process      2,301         2,684   
Finished goods      6,247         6,810   
  

 

 

    

 

 

 
   $ 23,472       $ 24,277   
  

 

 

    

 

 

 

Note 3. Net Income Per Share

The following table reconciles the shares used in calculating basic net income per share and diluted net income per share (in thousands):

 

Three Months Ended March 31,

   2013      2012  

Shares used to calculate basic net income per share

     14,227         14,188   

Dilutive effect of outstanding stock options and restricted stock units (“RSUs”)

     372         113   
  

 

 

    

 

 

 

Shares used to calculate diluted net income per share

     14,599         14,301   
  

 

 

    

 

 

 

Securities not considered as they would have been antidilutive

     1,239         1,377   
  

 

 

    

 

 

 

Note 4. Product Warranty

We estimate a liability for costs to repair or replace products under warranty for periods ranging from 90 days to one year when the related product revenue is recognized. The liability for product warranties is calculated as a percentage of sales. The percentage is based on historical product repair costs. The liability for product warranties is included in Accrued liabilities on our Condensed Consolidated Balance Sheets.

 

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Product warranty activity was as follows (in thousands):

 

Three Months Ended March 31,

   2013     2012  

Warranty accrual, beginning of period

   $ 716      $ 729   

Reductions for warranty charges

     (366 )      (271 ) 

Additions to warranty reserve

     327        338   
  

 

 

   

 

 

 

Warranty accrual, end of period

   $ 677      $ 796   
  

 

 

   

 

 

 

Note 5. Goodwill and Purchased Intangible Assets

Goodwill

The change in goodwill was as follows (in thousands):

 

     Three Months
Ended
March 31, 2013 		    Year Ended
December 31,
2012 		 

Balance, beginning of period

   $ 990      $ 971   

Effect of exchange rate changes

     (29 )      19   
  

 

 

   

 

 

 

Balance, end of period

   $ 961      $ 990   
  

 

 

   

 

 

 

Purchased Intangible Assets

Purchased intangible assets, net included the following (in thousands):

 

     March 31,
2013 		    December 31,
2012 		 

Customer relationships

   $ 3,265      $ 3,265   

Other

     2,331        2,331   
  

 

 

   

 

 

 
     5,596        5,596   

Less accumulated amortization

     (4,144 )      (3,986 ) 
  

 

 

   

 

 

 
   $ 1,452      $ 1,610   
  

 

 

   

 

 

 

Purchased intangible asset amortization totaled $0.2 million in the first quarter of 2013 and 2012.

The estimated amortization of purchased intangible assets is as follows over the next five years and thereafter (in thousands):

 

Remainder of 2013

   $ 416   

2014

     378   

2015

     288   

2016

     87   

2017

     69   

Thereafter

     214   
  

 

 

 
   $ 1,452   
  

 

 

 

Note 6. Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

 

     March 31,
2013 		     December 31,
2012 		 

Accrued compensation and benefits

   $ 1,756       $ 2,750   

Accrued taxes

     350         800   

Accrued warranty

     677         716   

Accrued commissions

     319         374   

Accrued restructuring costs

     1,092         1,144   

Other

     904         856   
  

 

 

    

 

 

 
   $ 5,098       $ 6,640   
  

 

 

    

 

 

 

 

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Note 7. Stock-Based Compensation and Stock-Based Plans

Stock-based compensation was included in our Condensed Consolidated Statements of Operations as follows (in thousands):

 

Three Months Ended March 31,

   2013      2012  

Cost of sales

   $ 51       $ 46   

Research and development

     53         73   

Selling, general and administrative

     230         258   
  

 

 

    

 

 

 
   $ 334       $ 377   
  

 

 

    

 

 

 

Stock Incentive Plans

Stock option activity for the first three months of 2013 was as follows:

 

     Options
Outstanding 		    Weighted
Average
Exercise Price 		 

Outstanding at December 31, 2012

     1,128,077      $ 5.77   

Granted

     85,000        7.53   

Exercised

     (25,679 )      4.31   

Forfeited

     —          —     
  

 

 

   

Outstanding at March 31, 2013

     1,187,398        5.92   
  

 

 

   

RSU activity for the first three months of 2013 was as follows:

 

     Restricted
Stock
Units 		    Weighted
Average
Grant  Date
Per Share
Fair Value 		 

Outstanding at December 31, 2012

     350,655      $ 4.91   

Granted

     121,875        7.41   

Vested

     (47,770 )      5.43   

Forfeited

     (1,500 )      5.40   
  

 

 

   

Outstanding at March 31, 2013

     423,260        5.57   
  

 

 

   

Of the options and RSUs granted during the first quarter of 2013, 85,000 options and 19,000 RSUs were granted to our Chief Executive Officer.

As of March 31, 2013, total unrecognized stock-based compensation related to outstanding, but unvested, options and RSUs was $3.2 million, which will be recognized over the weighted average remaining vesting period of 2.8 years.

Employee Stock Purchase Plan

In January 2013, pursuant to the terms of our 2004 Employee Stock Purchase Plan (“ESPP”), and upon approval by our board of directors, the number of shares of our common stock available for purchase under the 2004 ESPP was increased from 850,000 to 950,000. There were no purchases of stock in the first quarter of 2013 under the ESPP.

Note 8. Stock Repurchase Plan

In November 2012, our board of directors authorized a stock repurchase program under which up to $2.0 million of our common stock could be repurchased from time to time in the open market or in privately negotiated transactions. In the first quarter of 2013, we repurchased $58,000, or 9,800 shares, of our common stock at a weighted-average price of $5.87 per share. As of March 31, 2013, $1.6 million remained available for repurchase under this program.

 

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Note 9. Segment Reporting

The segment data below is presented in the same manner that management currently organizes the segments for assessing certain performance trends. Our Chief Operating Decision Maker monitors the revenue streams and the operating income of our Systems sales and our Probes sales. We do not track our assets on a segment level, and, accordingly, that information is not provided.

Revenue and operating income information by segment was as follows (dollars in thousands):

 

Three Months Ended March 31, 2013

   Systems     Probes     Corporate
Unallocated 		    Total  

Revenue

   $ 17,700      $ 9,771      $ —        $ 27,471   

Gross profit

   $ 6,712      $ 4,831      $ —        $ 11,543   

Gross margin

     37.9 %      49.4 %      —          42.0 % 

Income (loss) from operations

   $ 1,642      $ 2,424      $ (3,025 )    $ 1,041   

Three Months Ended March 31, 2012

                        

Revenue

   $ 18,226      $ 9,317      $ —        $ 27,543   

Gross profit

   $ 7,220      $ 4,731      $ —        $ 11,951   

Gross margin

     39.6 %      50.8 %      —          43.4 % 

Income (loss) from operations

   $ 2,785      $ 1,875      $ (3,399 )    $ 1,261   

In preparing this financial information, certain expenses were allocated between the segments based on management estimates, while others were based on specific factors such as headcount. These factors can have a significant impact on the amount of income (loss) from operations for each segment. While we believe we have applied a reasonable methodology, assignment of other reasonable cost allocations to each segment could result in materially different segment income (loss) from operations.

No customer accounted for 10% or greater of our total revenue in the three-month periods ended March 31, 2013 or 2012.

Note 10. Fair Value Measurements

Various inputs are used in determining the fair value of our financial assets and liabilities and are summarized into three broad categories:

 

  •  

Level 1 – quoted prices in active markets for identical securities;

 

  •  

Level 2 – other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk, etc.; and

 

  •  

Level 3 – significant unobservable inputs, including our own assumptions in determining fair value.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The disclosures related to our financial assets that are reported at fair value on a recurring basis are as follows (in thousands):

 

     March 31, 2013      December 31, 2012  
     Fair Value      Input Level      Fair Value      Input Level  

Marketable securities – corporate obligations

   $ 4,789         Level 2       $ 3,818         Level 2   

Marketable securities – corporate equities

   $ 2         Level 1       $ 2         Level 1   

Marketable securities – U.S. treasury and agency securities

   $ 500         Level 2       $ 1,502         Level 2   

Forward sale contracts for Japanese yen

   $ 956         Level 2       $ 1,385         Level 2   

Forward purchase contracts for euro

   $ 1,795         Level 2       $ 1,451         Level 2   

The fair value of our marketable securities is determined based on quoted market prices for similar or identical securities. The fair value of our forward contracts is based on quoted market prices for similar securities and is used for the purpose of determining any gain or loss on our foreign currency positions. We do not record the full value of the forward contracts on our Condensed Consolidated Balance Sheets. We record the net unrealized gain or loss in our Condensed Consolidated Balance Sheet and as a component of Other income (expense).

 

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The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities.

No changes were made to our valuation techniques during the first quarter of 2013.

Note 11. Recent Accounting Guidance

ASU 2012-02

In July 2012, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2012-02, “Intangibles – Goodwill and Other: Testing Indefinite-Lived Intangible Assets for Impairment,” which permits an entity to make a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset, other than goodwill, is impaired. Entities are required to test indefinite-lived intangible assets for impairment at least annually and more frequently if indicators of impairment exist. If an entity concludes, based on an evaluation of all relevant qualitative factors, that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, it is not required to perform the quantitative impairment test for that asset. Because the qualitative assessment is optional, an entity is permitted to bypass it for any indefinite-lived intangible asset in any period and apply the quantitative test. ASU 2012-02 also permits the entity to resume performing the qualitative assessment in any subsequent period. ASU 2012-02 is effective for impairment tests performed for fiscal years beginning after September 15, 2012 and early adoption is permitted. The adoption of ASU 2012-02 in January 2013 did not have any impact on our financial position, results of operations or cash flows.

ASU 2013-02

In February 2013, the FASB issued ASU No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” Under ASU 2013-02, an entity is required to provide information about the amounts reclassified out of Accumulated Other Comprehensive Income (“AOCI”) by component. In addition, an entity is required to present, either on the face of the financial statements or in the notes, significant amounts reclassified out of AOCI by the respective line items of net income, but only if the amount reclassified is required to be reclassified in its entirety in the same reporting period. For amounts that are not required to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about those amounts. The adoption of ASU 2013-02 in January 2013 did not have any impact on our financial position, results of operations or cash flows.

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact made in this Quarterly Report on Form10-Q are forward-looking including, among others, statements regarding: industry prospects; future results of operations, including estimated revenue for the quarter ending June 30, 2013; our future financial position; our expectations and beliefs regarding future revenue growth; our estimated timeline for payment of lease abandonment costs; the future capabilities and functionality of our products and services; our strategies and intentions and potential sources of funds regarding acquisitions; our accounting and tax policies and the impact of adoption of accounting guidance, if any, on our financial position, results of operations or cash flows; potential charges to write down inventory in future periods; build-up of finished goods in preparation for orders ready to ship during the remainder of 2013; our future capital requirements and fixed asset additions for 2013, including for production-related equipment, facility improvements, research and development tools, business information systems and information technology equipment; seasonality of our revenues and expected increases in revenue recognition in the last month of each quarter; and our ability to meet our cash requirements for the next 12 months and for the foreseeable future. These statements relate to future events of our future financial performance. In some cases, you can identify forward-looking statements by terminology, including “intend,” “could,” “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “future,” or “continue,” the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially

 

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from those expressed or implied such forward-looking statements. In evaluating these statements, you should specifically consider various factors, including: changes in demand for our products; changes in product mix; the timing of shipments and customer orders; constraints on supplies of components; excess or shortage of production capacity; potential failure of expected market opportunities to materialize; changes in foreign exchange rates; and other risks included in Item 1A to our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 4, 2013.

General

We design, develop, manufacture and market advanced wafer probing solutions for the electrical measurement and testing of high performance semiconductor devices. Our products enable precision on-wafer measurement of integrated circuits. Our products are typically used in the early phases of the development of semiconductor processes where the accuracy and repeatability of measurements is critical to achieving yield from advanced process nodes. We design, manufacture and assemble our products in Beaverton, Oregon and Dresden, Germany and maintain global sales, service and support centers in North America, Germany, Japan, Taiwan, China and Singapore.

We operate in two business segments: Systems and Probes. Sales of our probe stations are included in the Systems segment and sales of our analytical probes and production probe cards are included in the Probes segment.

Probe stations provide precise and accurate measurement of semiconductor electrical characteristics during device design or when optimizing the chip fabrication process. Our probe stations are highly configurable and are typically sold with various accessories, including our analytical probes, as well as accessories from third parties. In addition, we design and build custom probe stations to address the specific requirements of our customers. We also generate revenue through the sales of service contracts for our stations.

Our analytical probes are sold to serve as components of our probe stations, or less often, to serve as components of test equipment manufactured by third parties. Our production probe cards are designed and sold for high-volume production test applications, ranging from very low current parametric testing to sophisticated, high-speed radio frequency integrated circuit (“RFIC”) testing. These probe cards are used in conjunction with third party equipment from manufacturers such as Advantest, Agilent and Teradyne.

Overview

Revenue in the first quarter of 2013 was flat at $27.5 million compared to the first quarter of 2012, primarily as a result of increased revenue in our Probes segment, partially offset by lower revenue from our Systems segment. Income from continuing operations was $0.7 million in both the first quarter of 2013 and 2012.

Outlook

Based on our current backlog, projected bookings and scheduled shipments, we anticipate revenues will be in the range of $27 million to $30 million for the second quarter of 2013.

Critical Accounting Policies and the Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that have become increasingly difficult to make in the current economic environment. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period.

On an on-going basis we evaluate our estimates, including those related to revenue recognition, bad debts, inventory, lives and recoverability of equipment and other long-lived assets, warranty obligations, deferred income tax assets, unrecognized income tax benefits, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which 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.

 

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We reaffirm the critical accounting policies and estimates as reported in our Annual Report on Form 10-K for the year ended December 31, 2012, which was filed with the Securities and Exchange Commission on March 4, 2013.

Results of Operations

The following table sets forth our consolidated statement of operations data for the periods indicated as a percentage of revenue. (1)

 

     For the Three Months
Ended March 31, 		 
     2013     2012  

Revenue

     100.0 %      100.0 % 

Cost of sales

     58.0        56.6   
  

 

 

   

 

 

 

Gross profit

     42.0        43.4   

Operating expenses:

    

Research and development

     8.9        10.1   

Selling, general and administrative

     29.3        28.7   
  

 

 

   

 

 

 

Total operating expenses

     38.2        38.8   
  

 

 

   

 

 

 

Income from operations

     3.8        4.6   

Other income (expense), net

     (0.8 )      (1.4 ) 
  

 

 

   

 

 

 

Income before income taxes

     3.0        3.1   

Income tax expense

     0.3        0.5   
  

 

 

   

 

 

 

Net income

     2.7 %      2.7 % 
  

 

 

   

 

 

 

 

(1) Percentages may not add due to rounding.

Revenue and operating income information by segment was as follows (dollars in thousands):

 

Three Months Ended March 31, 2013

   Systems     Probes     Corporate
Unallocated 		    Total  

Revenue

   $ 17,700      $ 9,771      $ —        $ 27,471   

Gross profit

   $ 6,712      $ 4,831      $ —        $ 11,543   

Gross margin

     37.9 %      49.4 %      —          42.0 % 

Income (loss) from operations

   $ 1,642      $ 2,424      $ (3,025 )    $ 1,041   

Three Months Ended March 31, 2012

                        

Revenue

   $ 18,226      $ 9,317      $ —        $ 27,543   

Gross profit

   $ 7,220      $ 4,731      $ —        $ 11,951   

Gross margin

     39.6 %      50.8 %      —          43.4 % 

Income (loss) from operations

   $ 2,785      $ 1,875      $ (3,399 )    $ 1,261   

Revenue

Revenue information was as follows (dollars in thousands):

 

     Three Months Ended March 31,      Dollar
Change 		    % Change  

Revenue

   2013      2012       

Systems

   $ 17,700       $ 18,226       $ (526 )      (2.9 )% 

Probes

     9,771         9,317         454        4.9 % 
  

 

 

    

 

 

    

 

 

   

Total

   $ 27,471       $ 27,543       $ (72 )      (0.3 )% 
  

 

 

    

 

 

    

 

 

   

Systems

The decrease in Systems revenue in the first quarter of 2013 compared to the first quarter of 2012 was primarily due to a decrease in unit sales, partially offset by an increase in average selling price (“ASP”) due to product sales mix. We sold a higher number of 300mm and special application systems as a percentage of total sales in the first quarter of 2013 than in the comparable period of 2012. The increase in ASP was negatively impacted by changes in foreign currency exchange rates.

Probes

The increase in Probes revenue in the first quarter of 2013 compared to the first quarter of 2012 was primarily the result of an increase in sales volume, partially offset by a decrease in ASP due to discounts and changes in foreign currency exchange rates.

 

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Cost of Sales and Gross Margin

Cost of sales includes purchased materials, fabrication, assembly, test, installation labor, overhead, customer-specific engineering costs, warranty costs, royalties and provision for inventory valuation reserves.

Cost of sales information was as follows (dollars in thousands):

 

       Three Months Ended March 31,      Dollar
Change 		    % Change  

Cost of Sales

   2013      2012       

Systems

   $ 10,988       $ 11,006       $ (18 )      (0.2 )% 

Probes

     4,940         4,586         354        7.7 % 
  

 

 

    

 

 

    

 

 

   

Total

   $ 15,928       $ 15,592       $ 336        2.2 % 
  

 

 

    

 

 

    

 

 

   

Cost of sales was affected by changes in sales as discussed above combined with the factors that caused fluctuations in our gross margin (gross profit as a percentage of revenue), as discussed below.

Gross margins were as follows:

 

       Three Months Ended March 31,  

Gross Margins

   2013     2012  

Systems

     37.9 %      39.6 % 

Probes

     49.4 %      50.8 % 

Overall

     42.0 %      43.4 % 

Systems

The decrease in Systems gross margins in the first quarter of 2013 compared to the first quarter of 2012 was primarily due to the decrease in sales volume, which resulted in higher unallocated fixed overhead costs recorded as a period expense in cost of sales.

Probes

The decrease in Probes gross margins in the first quarter of 2013 compared to the first quarter of 2012 was primarily due to a decrease in ASP, partially offset by higher sales volume, which resulted in lower unallocated fixed overhead costs recorded as a period expense in cost of sales.

Overall

The overall decrease in gross margins in the first quarter of 2013 compared to the first quarter of 2012 was attributable to the decreases in gross margin of both operating segments, partially offset by a mix shift to a higher percentage of Probes revenue in relation to total revenue.

Research and Development

Research and development costs are expensed as incurred and include compensation and related expenses for personnel, materials, consultants and overhead.

Information regarding our research and development expense was as follows (dollars in thousands):

 

     Three Months Ended March 31,      Dollar
Change 		    % Change  
     2013      2012       

Research and development

   $ 2,456       $ 2,779       $ (323 )      (11.6 )% 

The decrease in research and development in the first quarter of 2013 compared to the first quarter of 2012 was primarily due to a $0.2 million decrease in project related expenses and a $0.1 million increase in government grant reimbursements.

 

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Selling, General and Administrative

Selling, general and administrative, or SG&A, expense includes compensation and related expenses for personnel, travel, outside services, manufacturers’ representative commissions, purchased intangible asset amortization and overhead incurred in our sales, marketing, customer support, management, legal and other professional and administrative support functions, as well as costs to operate as a public company.

Information regarding our SG&A expense was as follows (dollars in thousands):

 

     Three Months Ended March 31,      Dollar
Change 		     % Change  
     2013      2012        

Selling, general and administrative

   $ 8,046       $ 7,911       $ 135         1.7 % 

The increase in SG&A in the first quarter of 2013 compared to the first quarter of 2012 was primarily due to a $0.3 million increase in travel, meals and entertainment expenses, partially offset by a $0.1 million decrease in amortization expense and $0.1 million decrease in severance expense.

Other Income (Expense)

Other income (expense) typically includes interest income, interest expense, gains and losses on foreign currency forward contracts and foreign currency gains and losses. Other income (expense) may also include other miscellaneous non-operating gains and losses.

Other income (expense), net was comprised of the following (in thousands):

 

     Three Months Ended March 31,  
     2013     2012  

Interest income, net

   $ 20      $ 10   

Foreign currency losses

     (441 )      (457 ) 

Gains on foreign currency forward contracts

     203        62   

Other

     (6 )      (12 ) 
  

 

 

   

 

 

 
   $ (224 )    $ (397 ) 
  

 

 

   

 

 

 

Interest income represents interest earned on cash and cash equivalents and investments in marketable securities.

Foreign currency gains and losses primarily result from a combination of changes in foreign currency exchange rates and the net value of monetary assets and liabilities denominated in yen, euro and other foreign currencies.

Income Taxes

Information regarding our income tax expense was as follows:

 

     Three Months Ended March 31,  
     2013     2012  

Income tax provision

   $ 70      $ 124   

Income tax provision as a percentage of income from operations

     8.6 %      14.4 % 

Our income tax expense in the first quarters of 2013 and 2012 primarily related to estimated tax expense on income in foreign tax jurisdictions.

We periodically evaluate the potential realization of our deferred income tax assets and, if necessary, record a valuation allowance to reduce the net carrying value of such assets to the amount expected to be realized. We evaluated the potential realization of deferred income tax assets as of March 31, 2013 and concluded that the existing valuation allowance was required. It is at least reasonably possible that, within the next twelve months, a review of the objective evidence may indicate that a portion, or all, of our valuation allowance will no longer be appropriate. If such a determination is made, release of the valuation allowance would be recognized as an income tax benefit to continuing operations in the period in which such assessment is made and the amount recognized could be material.

 

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As of March 31, 2013, deferred tax assets totaled $10.4 million and our valuation allowance totaled $9.8 million. Net operating loss carryforwards, on a tax effected basis, totaled $3.5 million as of March 31, 2013.

Liquidity and Capital Resources

Net cash provided by operating activities in the first quarter of 2013 was $1.5 million and primarily consisted of our net income of $0.7 million, net non-cash expenses of $1.6 million and net changes in our operating assets and liabilities as described below.

Accounts receivable, net was flat at $21.1 million at both March 31, 2013 and December 31, 2012.

Inventories decreased by $0.8 million to $23.5 million at March 31, 2013, compared to $24.3 million at December 31, 2012. The decrease in inventory was primarily due to Inventory charges of $0.4 million in the first quarter of 2013 for excess and obsolete inventory and the effect of exchange rate changes on euro-denominated inventory. Shipments of inventory during the first quarter of 2013 were partially offset by purchases of raw materials in preparation for orders expected to ship during the next two quarters of 2013. If our actual results are significantly different than our current expectations for 2013, we may incur additional charges to write down inventory in future periods.

Accounts payable increased by $1.4 million to $7.3 million at March 31, 2013, compared to $5.9 million at December 31, 2012, primarily due to the timing of vendor payments and increased purchases of raw materials inventory for orders expected to ship during the first two quarters of 2013.

Deferred revenue decreased by $1.1 million to $2.8 million at March 31, 2013, compared to $3.9 million at December 31, 2012, primarily due to a decrease in customer deposits. The decrease was primarily related to a large order recognized in the first quarter of 2013 that had previously been deferred.

Accrued liabilities decreased by $1.5 million to $5.1 million at March 31, 2013, compared to $6.6 million at December 31, 2012, primarily due to decreases in accrued compensation and benefits, and decreases in accrued income taxes, sales taxes and value added tax.

Other long-term liabilities decreased by $0.5 million to $2.4 million at March 31, 2013, compared to $2.9 million at December 31, 2012, primarily due to the decrease in accrued lease abandonment costs.

Fixed asset purchases of $0.6 million in the first quarter of 2013 primarily related to production-related equipment. We anticipate fixed asset additions for all of 2013 to be approximately $3.6 million, primarily for production-related equipment, facility improvements, research and development tools, business information systems and information technology equipment.

In November 2012, our board of directors authorized a stock repurchase program under which up to $2.0 million of our common stock could be repurchased from time to time in the open market or in privately negotiated transactions. During the first quarter of 2013, a total of 9,800 shares were repurchased at an average price of $5.87 per share, for a total purchase price of $0.1 million. As of March 31, 2013, $1.6 million remained available for repurchases. This plan does not have an expiration date.

Changes in our assets and liabilities as presented on our Condensed Consolidated Statements of Cash Flows do not equal the changes in such assets and liabilities as calculated for our Condensed Consolidated Balance Sheets due to the effects of fluctuating foreign exchange rates.

We anticipate meeting our cash requirements for the next 12 months and for the foreseeable future from existing cash and cash equivalents and short-term marketable securities, which totaled $23.9 million at March 31, 2013.

We continue to evaluate opportunities for acquisition and expansion and any such transactions, if consummated, may use a portion of our cash and marketable securities or may result in the issuance by us of debt or equity securities. Issuances of debt securities would increase our leverage and interest exposure; issuances of equity securities could dilute the ownership interest of equity shareholders.

 

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Recent Accounting Guidance

See Note 11 of Notes to Condensed Consolidated Financial Statements.

Contractual Commitments

The following is a summary of our contractual commitments and obligations as of March 31, 2012 (in thousands):

 

     Payments Due By Period  

Contractual Obligation

   Total      Remainder
Of 2013 		     2014 and
2015 		     2016 and
2017 		     2018 and
beyond 		 

Operating leases

   $ 15,593       $ 2,564       $ 6,817       $ 3,441       $ 2,771   

Purchase order commitments (1)

     6,286         6,258         28         —           —     

Forward contracts

     2,751         2,751         —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 24,630       $ 11,573       $ 6,845       $ 3,441       $ 2,771   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Purchase order commitments primarily represent open orders for inventory.

Seasonality

Typically, our first quarter revenues are lower than our revenues from the preceding fourth quarter. In addition, as is typical in our industry, we recognize a large percentage of our quarterly revenue in the last month of the quarter. However, our seasonality can be affected by general economic trends and it should not be expected that historical revenue patterns will continue.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our reported market risks or risk management policies since the filing of our 2012 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 4, 2013.

 

Item 4. Controls and Procedures

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

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Limitation on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all occurrences of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of all controls must be considered relative to their costs. Control systems can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. In addition, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that the control systems will detect all control issues, including instances of fraud, if any.

PART II – OTHER INFORMATION

 

Item 1A. Risk Factors

Our Annual Report on Form 10-K for the year ended December 31, 2012 includes a detailed discussion of our risk factors. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K. Accordingly, the information in this Form 10-Q should be read in conjunction with the risk factors and information disclosed in our Annual Report on Form 10-K for the year ended December 31, 2012, which was filed with the Securities and Exchange Commission on March 4, 2013.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Equity Securities

We made the following repurchases of our common stock during the first quarter of 2013:

 

     Total number
of shares
purchased 		     Average
price paid
per share 		     Total number of
shares purchased as
part of publicly
announced plan 		     Maximum dollar
amount of shares that
may yet be  purchased
under the plan 		 

January 1 to January 31

     9,800       $ 5.87         9,800       $ 1.6 million   

February 1 to February 28

     —           —           —         $ 1.6 million   

March 1 to March 31

     —           —           —         $ 1.6 million   
  

 

 

       

 

 

    

Total

     9,800       $ 5.87         9,800       $ 1.6 million   
  

 

 

       

 

 

    

These shares were repurchased pursuant to a plan approved by our board of directors in November 2012, which authorized the repurchase of up to $2.0 million of our common stock from time to time in the open market or in privately negotiated transactions. This plan does not have an expiration date.

 

Item 6. Exhibits

The following exhibits are filed herewith or incorporated by reference hereto and this list is intended to constitute the exhibit index:

 

  10.1*   Cascade Microtech, Inc. 2013 Employee Incentive Plan.
  10.2   Second Amendment to Lease dated February 25, 2013 between Cascade Microtech, Inc. and Nimbus Center LLC.
  31.1   Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
  31.2   Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
  32.1   Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
  32.2   Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
101.INS**   XBRL Instance Document.
101.SCH**   XBRL Taxonomy Extension Schema Document.
101.CAL**   XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**   XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**   XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**   XBRL Taxonomy Extension Presentation Linkbase Document.
*   Management or compensatory arrangement.
**   Pursuant to Rule 406T of Regulation S-T, the Interactive data Files on Exhibit 101, submitted electronically herewith, are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

 

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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.

 

Date: May 8, 2013     CASCADE MICROTECH, INC.
    (Registrant)
    By:  

/s/ MICHAEL D. BURGER

      Michael D. Burger
      Director, President
      and Chief Executive Officer
      (Principal Executive Officer)
    By:  

/s/ JEFF KILLIAN

      Jeff Killian
      Chief Financial Officer and Treasurer
      (Principal Financial and Accounting Officer)

 

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Exhibit 10.1

Cascade Microtech, Inc.

2013 Employee Incentive Plan

Overview:

The objective of the Cascade Microtech, Inc. 2013 Employee Incentive Plan (“the Plan”) is to motivate and reward performing employees of Cascade Microtech, Inc. and its wholly-owned subsidiaries (the “Company”) for their contributions to the Company’s success by aligning the goals of each employee with those of the Company.

Effective Date:

This Plan is effective as of January 1, 2013. This Plan replaces or supersedes all previous Cascade Incentive Plan (“CIP”) documents and plan descriptions, under which employees were previously eligible.

Definitions:

“Compensation” means wages paid to an employee exclusive of allowances, discretionary bonuses and service or recognition awards; in compliance and consistent with the regulations and regular business practices in each location where Company does business as determined by the Plan Administrator.

“Executive” means the Chief Executive Officer (“CEO”) and each Vice President who reports directly to the CEO.

“EMT” means executive management team.

“MDCC” means the Management Development and Compensation Committee of the Company’s Board of Directors.

“Function or Group” means any one of the following (1) Finance/IT/Legal, (2) Human Resources, (3) Administrative Staff, (4) Sales Support, (5) Operations, (6) Marketing and (7) Engineering or any other groups as determined by the Plan Administrator.

“Plan Administrator” means the MDCC or the person(s) appointed by the MDCC, the CEO or the VP of HR who are responsible for carrying out the terms of this Plan.

Eligibility:

Each Company employee is eligible to participate in the Plan if the employee meets all of the criteria listed below:

 

  •  

Is an active, regular, full-time or part time employee of the Company during the Incentive Period (as defined below).

 

  •  

Is on the Company’s payroll on the date of the incentive payment(s).

 

  •  

Is meeting performance expectations.

 

  •  

Is not participating in the sales plan or other incentive plan.

Incentive Periods:

There are two incentive periods each year: (1) January 1 through June 30, and (2) July 1 through December 31 (each, an “Incentive Period”).

Target Incentive:

The annual target incentive (“Annual Target Incentive”) is a percentage of each eligible employee’s Compensation, based on their salary grade or equivalent. The target incentive percentage for each salary grade or equivalent will be determined by management and will be communicated to each individual.

 

 

 

Cascade Microtech, Inc.   2013 Employee Incentive Plan   Page 1

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Performance Criteria and Metrics:

The Plan is designed to motivate and reward two types of performance: (1) financial performance and (2) team performance. The financial goal for each Incentive Period will be a Revenue target set by the Board. The Team Performance Goals are quantifiable performance objectives for each Function. The payouts for each Incentive Period will be determined based on the level of achievement of the performance targets established for that Incentive Period.

Incentive Award Determination:

For each Incentive Period, the incentive award will be based on the level of achievement of the Revenue Target. Achievement of Team Performance Goals may increase the total incentive payout by up to 10%.

Revenue Target:

Any payout on the Revenue Target is contingent upon achieving at least a threshold of 80% the applicable target. If the Revenue Target threshold is achieved, the payout will be an agreed upon amount of the total possible payout for the Incentive Period. The payout increases linearly at an agreed upon rate until the Revenue Target is achieved. For revenue levels in excess of the Revenue Target the payout increases linearly at a faster rate. There is a 200% cap on possible payout.

Team Performance Goals:

Completion or achievement of Team Performance Goals will be evaluated at the end of each Incentive Period. Accomplishment will be scaled from 1 to 10 with 10 being the best score. Based on the rating, the corresponding percentage will be applied to the earned incentive and added to the payout.

Timing:

Any incentive payable under the Plan shall be paid as soon as administratively practicable following the date of the public earnings release.

Funding of Incentive Pool:

In order to ensure that the cash awards are balanced between Company and shareholder needs, the Board approves a minimum annual operating profit threshold for the incentive period. The operating profit threshold must be achieved before there can be an incentive payout. In calculating whether the threshold is met, the financial impact from M&A or divestiture activity may be removed from all calculations. Other changes may be made for significant one-time adjustment. Once the threshold has been reached, the funding increases linearly at an agreed upon rate. For operating profits in excess of the target, the funding increases linearly at a faster rate

Administrative Discretion:

Notwithstanding the foregoing, incentives will be paid at the sole discretion of the Company. The amount of an award for non-Executive employees is at the discretion of the CEO. The CEO has authority to increase, decrease or eliminate any incentive award to non-Executive employees under the Plan. The MDCC and Board retain the right to amend any incentive awards as deemed necessary. The previous timing or payment of incentives does not dictate timing of future incentive periods, nor guarantee payment of future incentives or compensation of any kind.

Pro-Rated Awards:

For employees hired after the beginning of an Incentive Period, awards, if any, will be pro-rated based on the date of hire.

Leaves of Absence :

Employees who are on an approved leave of absence during an Incentive Period may be eligible for a pro-rated incentive amount provided they have been actively employed during the period, have received an acceptable performance rating, the pool has funded, and the employee is an active employee of the Company when incentives are paid.

 

 

Cascade Microtech, Inc.   2013 Employee Incentive Plan   Page 2

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Promotions/Transfers:

If any employee transfers from one position to another position (with a higher, lower, or same target incentive), or to another Functional Group during an Incentive Period, the incentive amount will be apportioned based on the amount of time spent at each incentive target or with each group.

Termination of Employment:

An employee who ceases employment with the Company for any reason prior to the last day of an Incentive Period ceases to be an eligible employee in this Plan and is not eligible for any payments. In addition, an employee who ceases employment with the Company for any reason prior to the date incentives are paid will not be eligible for any payments.

An employee’s employment ceases as of the date he/she is no longer actively providing services to the Company or one of its Subsidiaries or Affiliates. The employee’s eligibility under the Plan will terminate on that date and will not be extended by any notice period ( e.g. , the employment period would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the employee is employed or the terms of the Participant’s employment agreement); the Plan Administrators shall have the exclusive discretion to determine when the employee is no longer employed for purposes of the incentive award.

Tax Withholding:

The Company shall deduct or withhold amounts for applicable Country, Federal, State, local, employment and other taxes or amounts required to be withheld with respect to any payment under the Plan.

Administration:

The Plan Administrators shall have complete discretion and authority to administer the Plan. The Plan Administrators may delegate the administration of the Plan to such persons as deemed appropriate. Any determination, decision or action of the Plan Administrators or any delegate in connection with the administration or application of the Plan shall be final.

Modification, Interpretation, and/or Termination of the Plan:

The Company reserves the right to modify or terminate the Plan at its sole discretion, at any time, with or without written notification.

At Will:

The existence of, or an employee’s eligibility to participate in, this Plan shall not be deemed to give the employee any unique or additional right to be retained in the employ of the Company and shall not change employees’ employment status.

 

 

Cascade Microtech, Inc.   2013 Employee Incentive Plan   Page 3

Exhibit 10.2

SECOND AMENDMENT TO LEASE

(Extension of Term)

THIS SECOND AMENDMENT TO LEASE (this “Second Amendment”) is dated as of the 25th day of February, 2013, between NIMBUS CENTER LLC, a Delaware limited liability company (“Landlord”), and CASCADE MICROTECH, INC., an Oregon corporation (“Tenant”).

RECITALS

A.        Landlord (as successor-in-interest to OR-Nimbus Corporate Center, L.L.C.) and Tenant are parties to a lease dated as of April 2, 1999 (the “Original Lease”), as amended by First Amendment dated as of January 10, 2007 (the “First Amendment”, and together with the Original Lease, collectively referred to herein as the “Lease”), pursuant to which Tenant leases from Landlord certain premises (the “Existing Premises”) consisting of the entire building located at 9100 SW Gemini Drive, Beaverton, Oregon commonly known as Nimbus Building 6 (the “Building”). Capitalized terms not otherwise defined herein shall have the meanings set forth in the Lease.

B.        The Term is currently scheduled to expire on December 31, 2014.

C.        Landlord and Tenant presently desire to amend the Lease to (i) extend the Term for an additional period of five (5) years, (ii) add additional space in the Project to the Premises, (ii) grant Tenant a right of first offer with respect to certain space in the Project, and (iv) provide for certain other Lease modifications, all as more particularly set forth herein.

NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as follows:

1.         Extension of Term .    The Term is hereby extended for a period (the “Extension Term”) of five (5) years commencing as of January 1, 2015 and ending on December 31, 2019 (the “New Termination Date”). Effective as of the date hereof, all references in the Lease to the termination or expiration date of the Lease shall be deemed to be references to the New Termination Date. During the Extension Term, all of the terms, covenants and conditions of the Lease shall be applicable, except as set forth herein. Except as set forth in Paragraph 9 below, Tenant shall not have any option or right to extend the Term beyond the New Termination Date.

2.         Base Rent .    Prior to the commencement of the Extension Term, Tenant shall continue to pay Base Rent in the amount set forth in the Lease. Effective as of January 1, 2015 and continuing thereafter during the Extension Term, Tenant shall pay Base Rent for the Premises equal to the Prevailing Market (hereinafter defined) rate per rentable square foot for the Premises, which shall be determined as set forth in this Paragraph 2. Base Rent during the Extension Term shall change, if at all, in accordance with the changes assumed in the determination of Prevailing Market rate.

a.         Procedure for Determining Prevailing Market .    The Prevailing Market rate for the Premises shall be mutually agreed upon by Landlord and Tenant in writing within the period commencing June 1, 2014 and ending July 31, 2014. When Landlord and Tenant have agreed upon the Prevailing Market rate for the Premises, such agreement shall be reflected in a written agreement between Landlord and Tenant, whether in a letter or otherwise, and Landlord and Tenant shall enter into the Renewal Amendment (as defined below) in accordance with the terms and conditions hereof. If Landlord and Tenant are unable to agree upon the Prevailing Market rate for the Premises on or before July 31, 2014, then the Prevailing Market rate for the Premises shall be established by appraisal in accordance with the procedures set forth in Exhibit A attached hereto.

b.         Renewal Amendment .    Once the Prevailing Market rate for the Premises has been determined, Landlord shall prepare an amendment (the “Renewal Amendment”) to reflect changes in the Base Rent and other appropriate terms. The Renewal Amendment shall be sent to Tenant within a reasonable time after the agreement (or deemed agreement) by Landlord and Tenant regarding the Prevailing Market rate, and Tenant shall execute and return the Renewal Amendment to Landlord within fifteen (15) days after Tenant’s receipt of same, subject to any extensions in such time during which the parties are negotiating the terms of such Renewal Amendment in good faith.

 

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c.         Definition of Prevailing Market .    For purposes of this Paragraph 2, “Prevailing Market” shall mean the arm’s length fair market annual rental rate per rentable square foot under leases and renewal amendments entered into on or about the date on which the Prevailing Market is being determined hereunder for comparable use for flex/office space and a comparable term for space comparable to the Premises in the Project and flex/office buildings comparable to the building in which the Premises is located in the Beaverton, Oregon / Highway 217 submarket. The determination of Prevailing Market shall take into account any material economic differences between the terms of the Lease and any comparison lease or amendment, such as rent abatements, construction costs and other concessions and the manner, if any, in which the landlord under any such lease is reimbursed for operating expenses and taxes. The determination of Prevailing Market shall also take into consideration any reasonably anticipated changes in the Prevailing Market rate from the time such Prevailing Market rate is being determined and the time such Prevailing Market rate will become effective under the Lease.

3.         Additional Premises .

a.         Additional Premises .    Effective as of January 1, 2013 (the “Additional Premises Commencement Date”), and continuing through the New Termination Date, the space on the first (1st) floor of the building within the Project located at 9203-9295 SW Nimbus Avenue, Beaverton, Oregon (“Nimbus Building 9”), and shown outlined on the attached Exhibit B (the “Additional Premises”) shall be added to the premises covered by the Lease. The Additional Premises shall be known as Suite 9203 B. Commencing on January 1, 2013, all references in the Lease and in this Second Amendment to the “Premises” shall be deemed to refer to the Existing Premises and the Additional Premises, collectively. Landlord and Tenant hereby stipulate for all purposes of the Lease that the rentable square footage of the Additional Premises is deemed to be 1,602 rentable square feet.

b.         Condition of Additional Premises .    Tenant shall accept the Additional Premises in their as-is condition as of the Additional Premises Commencement Date, and Landlord shall have no obligation to make or pay for any alterations, additions, improvement or renovations in or to the Additional Premises.

c.         Base Rent; Additional Premises .    Commencing as of the Additional Premises Commencement Date and continuing through the New Termination Date, Tenant shall pay Base Rent for the Additional Premises pursuant to the Lease in the following amounts:

 

Period

   Annual Rate Per SF    Monthly Base Rent

Additional Premises Commencement Date – 12/31/13

   $4.80    $640.80

1/01/14 – 12/31/14

   $4.94    $660.02

1/01/15 – 12/31/15

   $5.09    $679.83

1/01/16 – 12/31/16

   $5.25    $700.22

1/01/17 – 12/31/17

   $5.40    $721.23

1/01/18 – 12/31/18

   $5.57    $742.86

1/01/19 – 12/31/19

   $5.73    $765.15

d.         Expenses and Taxes; Additional Premises .    Effective as of the Additional Premises Commencement Date, the provisions of Paragraph 4 of the First Amendment shall apply to the Additional Premises, and for such purposes Tenant’s Proportionate Share of the Project shall mean .2322% with respect to the Additional Premises.

4.         Suites 9225 and 9215 Must Take Space .

a.         Suites 9225 and 9215 Must Take Space .    Effective as of the Suites 9225 and 9215 Must Take Space Commencement Date (as defined below), and continuing for the balance of the Term as applicable to the Premises and any extension thereof, the space consisting of 2,313 rentable square feet on the first (1st) floor of Nimbus

 

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Building 9, as shown on the demising plan attached hereto as Exhibit C-1 with respect to Suite 9225 and the space consisting of 6,799 rentable square feet on the first (1st) floor of Nimbus Building 9, as shown on the demising plan attached hereto as Exhibit C-2 with respect to Suite 9215 (the “Suites 9225 and 9215 Must Take Space”) shall be added to the Premises covered by the Lease. Commencing on the Suites 9225 and 9215 Must Take Space Commencement Date, all references in the Lease to the “Premises” shall be deemed to include the Suites 9225 and 9215 Must Take Space. All terms, covenants and conditions of the Lease applicable to the Premises, as modified hereunder, shall apply to the Suites 9225 and 9215 Must Take Space, except as expressly set forth in this Paragraph 4.

The “Suites 9225 and 9215 Must Take Space Commencement Date” shall mean the date on which Landlord shall deliver the Suites 9225 and 9215 Must Take Space to Tenant in the condition required by Paragraph 4.b. below. The scheduled Suites 9225 and 9215 Must Take Space Commencement Date is April 1, 2014. The parties agree that the Suites 9225 and 9215 Must Take Space Commencement Date will not occur prior to April 1, 2014, unless agreed to in writing by Landlord and Tenant. If Landlord is unable to deliver possession of the Suites 9225 and 9215 Must Take Space to Tenant on or before such scheduled Suites 9225 and 9215 Must Take Space Commencement Date for any reason whatsoever, then (except as otherwise expressly set forth herein) neither the Lease nor Tenant’s obligation to lease the Suites 9225 and 9215 Must Take Space hereunder shall be void or voidable, nor shall any such delay in delivery of possession of the Suites 9225 and 9215 Must Take Space operate to extend the Term with respect to the Suites 9225 and 9215 Must Take Space or the balance of the Premises, or amend the Suites 9225 and 9215 Must Take Space Rent Commencement Date (as defined below) or Tenant’s other obligations with respect to the Suites 9225 and 9215 Must Take Space or under the Lease. If Landlord is unable to deliver possession of the Suites 9225 and 9215 Must Take Space to Tenant by July 1, 2014, Landlord shall not incur any liability under the Lease, but Tenant shall have the right to terminate Tenant’s obligation to lease the Suites 9225 and 9215 Must Take Space by providing Landlord with written notice on or before July 15, 2014. So long as Tenant is not in default under the Lease, during the period commencing on the date of this Second Amendment and ending on the earlier of (i) Tenant’s delivery to Landlord of Tenant’s termination notice pursuant to the terms of this Paragraph 4.a. or (ii) the Suites 9225 and 9215 Must Take Space Commencement Date, Landlord shall not enter into any new lease or amend any existing lease which term or extension term extends beyond April 1, 2014.

b.         Condition of the Suites 9225 and 9215 Must Take Space .    Tenant shall accept the Suites 9225 and 9215 Must Take Space in its present (as of the date of this Amendment) as-is condition, wear and tear excepted, and, except as provided in the Work Letter attached hereto as Exhibit D (the “Suites 9225 and 9215 Work Letter”) Landlord shall have no obligation to make or pay for any alterations, additions, improvement or renovations in or to the Suites 9225 and 9215 Must Take Space to prepare the same for Tenant’s occupancy. Following the Suites 9225 and 9215 Must Take Space Commencement Date, Tenant shall perform certain tenant improvements to Suites 9225 and 9215 (the “Suites 9225 and 9215 Tenant Improvements”) as described in the Suites 9225 and 9215 Work Letter.

c.         Base Rent; Operating Expenses .     Tenant’s obligation to pay Base Rent and Tenant’s Proportionate Share of Operating Expenses for the Suites 9225 and 9215 Must Take Space pursuant to the Lease shall commence as of the date (the “Suites 9225 and 9215 Must Take Space Rent Commencement Date”) that is the earlier to occur of (i) 90 days following the Suites 9225 and 9215 Must Take Space Commencement Date or (ii) the date Tenant shall commence the conduct of business in the Suites 9225 and 9215 Must Take Space or any portion thereof. From and after the Suites 9225 and 9215 Must Take Space Rent Commencement Date, and for the balance of the Term, the Base Rent payable by Tenant for the Suites 9225 and 9215 Must Take Space shall be the Prevailing Market (defined in Paragraph 2 above) rate per rentable square foot for the Suites 9225 and 9215 Must Take Space, which shall be determined as set forth Paragraph 2 above. Base Rent for the Suites 9225 and 9215 Must Take Space shall change, if at all, in accordance with the changes assumed in the determination of Prevailing Market rate.

d.         Tenant’s Proportionate Share .    Tenant’s Proportionate Share of the Project with respect to the Suites 9225 and 9215 Must Take Space shall be .3353% with respect to Suite 9225 and .9856% with respect to Suite 9215.

e.         Parking .    With respect the Suites 9225 and 9215 Must Take Space, the parking provisions set forth in the Lease shall continue to apply on the terms and conditions set forth therein, except that effective as of the Suites 9225 and 9215 Must Take Space Commencement Date (i) the parking made available to Tenant shall be increased by 26 unreserved parking spaces in the surface parking lot serving the Building, and (ii) Tenant shall be entitled to the use of such unreserved parking spaces at no additional charge.

 

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f.         Suites 9225 and 9215 Must Take Space Amendment .    Promptly following the Suites 9225 and 9215 Must Take Space Commencement Date, Landlord and Tenant shall enter into an amendment to the Lease, which amendment shall confirm the monthly Base Rent applicable to the Suites 9225 and 9215 Must Take Space and the other terms and conditions set forth in this Paragraph 4, as applicable.

g.         Definition of Prevailing Market .    With respect to the Suites 9225 and 9215 Must Take Space, “Prevailing Market” shall have the meaning set forth in Paragraph 2.c. above with references to the “Premises” being deemed references to the Suites 9225 and 9215 Must Take Space.

h.         Procedure for Determining Prevailing Market .    The Prevailing Market rate for the Suites 9225 and 9215 Must Take Space shall be mutually agreed upon by Landlord and Tenant within the period commencing September 1, 2013 and ending October 31, 2013. If Landlord and Tenant are unable to agree upon the Prevailing Market rate for the Suites 9225 and 9215 Must Take Space on or before October 31, 2013, then the Prevailing Market rate for the Suites 9225 and 9215 Must Take Space shall be established by appraisal in accordance with the procedures set forth in Exhibit A attached hereto.

i.         Permitted Use .    Tenant shall use the Suites 9225 and 9215 Must Take Space for the Permitted Use, as such term is defined in the Basic Lease Information of the Lease, as modified by Section 8 of the First Amendment.

5.         Suite 9205 Must Take Space .

a.         Suite 9205 Must Take Space .    Effective as of the Suite 9205 Must Take Space Commencement Date (as defined below), and continuing for the balance of the Term as applicable to the Premises and any extension thereof, the space consisting of 3,634 rentable square feet on the first (1st) floor of Nimbus Building 9, as shown on the demising plan attached hereto as Exhibit E (the “Suite 9205 Must Take Space”) shall be added to the premises covered by the Lease. Commencing on the Suite 9205 Must Take Space Commencement Date, all references in the Lease to the “Premises” shall be deemed to include the Suite 9205 Must Take Space. All terms, covenants and conditions of the Lease applicable to the Premises, as modified hereunder, shall apply to the Suite 9205 Must Take Space, except as expressly set forth in this Paragraph 5.

The “Suite 9205 Must Take Space Commencement Date” shall mean the date on which Landlord shall deliver the Suite 9205 Must Take Space to Tenant in the condition required by Paragraph 5.b. below. The scheduled Suite 9205 Must Take Space Commencement Date is August 1, 2014. The parties agree that the Suite 9205 Must Take Space Commencement Date will not occur prior to August 1, 2014 unless agreed to in writing by Landlord and Tenant. If Landlord is unable to deliver possession of the Suite 9205 Must Take Space to Tenant on or before such scheduled Suite 9205 Must Take Space Commencement Date for any reason whatsoever, neither the Lease nor Tenant’s obligation to lease the Suite 9205 Must Take Space hereunder shall be void or voidable, nor shall any such delay in delivery of possession of the Suite 9205 Must Take Space operate to extend the Term with respect to the Suite 9205 Must Take Space or the balance of the Premises, or amend the Suite 9205 Must Take Space Rent Commencement Date (as defined below) or Tenant’s other obligations with respect to the Suite 9205 Must Take Space or under the Lease. If Landlord is unable to deliver possession of the Suite 9205 Must Take Space to Tenant by November 1, 2014, Landlord shall not incur any liability under the Lease, but Tenant shall have the right to terminate Tenant’s obligation to lease the Suite 9205 Must Take Space by providing Landlord with written notice on or before November 15, 2014. So long as Tenant is not in default under the Lease, during the period commencing on the date of this Second Amendment and ending on the earlier of (i) Tenant’s delivery to Landlord of Tenant’s termination notice pursuant to the terms of this Paragraph 5.a. or (ii) the Suite 9205 Take Space Commencement Date, Landlord shall not enter into any new lease or amend an existing lease which term or extension term extends beyond August 1, 2014.

b.         Condition of the Suite 9205 Must Take Space .    Tenant shall accept the Suite 9205 Must Take Space in its present (as of the date of this Amendment) as-is condition, wear and tear excepted, and, except as provided in the Work Letter attached hereto as Exhibit F (the “ Suite 9205 Work Letter”), Landlord shall have no obligation to make or pay for any alterations, additions, improvement or renovations in or to the Suite 9205 Must Take Space to prepare the same for Tenant’s occupancy. Following the Suite 9205 Must Take Space Commencement Date, Tenant shall perform certain tenant improvements to Suite 9205 Must Take Space (the “Suite 9205 Improvements”) as described in the Suite 9205 Work Letter.

 

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c.         Base Rent; Operating Expenses .    Tenant’s obligation to pay Base Rent and Tenant’s Proportionate Share of Operating Expenses for the Suite 9205 Must Take Space pursuant to the Lease shall commence as of the date (the “Suite 9205 Must Take Space Rent Commencement Date”) that is the earlier to occur of (i) 90 days following the Suite 9205 Must Take Space Commencement Date or (ii) the date Tenant shall commence the conduct of business in the Suite 9205 Must Take Space or any portion thereof. From and after the Suite 9205 Must Take Space Rent Commencement Date, and for the balance of the Term, the Base Rent payable by Tenant for the Suite 9205 Must Take Space shall be the Prevailing Market (defined in Paragraph 2 above) rate per rentable square foot for the Suite 9205 Must Take Space, which shall be determined as set forth Paragraph 2 above. Base Rent for the Suite 9205 Must Take Space shall change, if at all, in accordance with the changes assumed in the determination of Prevailing Market rate.

d.         Tenant’s Proportionate Share .    Tenant’s Proportionate Share of the Project with respect to the Suite 9205 Must Take Space shall be .5268%.

e.         Parking .    With respect the Suite 9205 Must Take Space, the parking provisions set forth in the Lease shall continue to apply on the terms and conditions set forth therein, except that effective as of the Suite 9205 Must Take Space Commencement Date (i) the parking made available to Tenant shall be increased by 15 unreserved parking spaces in the surface parking lot serving the Building, and (ii) Tenant shall be entitled to the use of such unreserved parking spaces at no additional charge.

f.         Suite 9205 Must Take Space Amendment .    Promptly following the Suite 9205 Must Take Space Commencement Date, Landlord and Tenant shall enter into an amendment to the Lease, which amendment shall confirm the monthly Base Rent applicable to the Suite 9205 Must Take Space and the other terms and conditions set forth in this Paragraph 5, as applicable.

g.         Definition of Prevailing Market .    With respect to the Suite 9205 Must Take Space, “Prevailing Market” shall have the meaning set forth in Paragraph 2.c. above with references to the Premises being deemed references to the Suite 9205 Must Take Space.

h.         Procedure for Determining Prevailing Market .    The Prevailing Market rate for the Suite 9205 Must Take Space shall be mutually agreed upon by Landlord and Tenant within the period commencing January 1, 2014 and ending February 28, 2014. If Landlord and Tenant are unable to agree upon the Prevailing Market rate for the Suite 9205 Must Take Space on or before February 28, 2014, then the Prevailing Market rate for the Suite 9205 Must Take Space shall be established by appraisal in accordance with the procedures set forth in Exhibit A attached hereto.

i.         Permitted Use .    Tenant shall use the Suite 9205 Must Take Space for the Permitted Use, as such term is defined in the Basic Lease Information of the Lease, as modified by Section 8 of the First Amendment.

6.         Suite 9500 Must Take Space .

a.         Suite 9500 Must Take Space .    Effective as of the Suite 9500 Must Take Space Commencement Date (as defined below), and continuing for the balance of the Term as applicable to the Premises and any extension thereof, the space consisting of 12,173 rentable square feet on the first (1st) floor of the Building located at 9500 SW Gemini Drive, Beaverton, Oregon, commonly known as Nimbus Building 3, and shown on the demising plan attached hereto as Exhibit G (the “Suite 9500 Must Take Space”) shall be added to the premises covered by the Lease. Commencing on the Suite 9500 Must Take Space Commencement Date, all references in the Lease to the “Premises” shall be deemed to include the Suite 9500 Must Take Space. All terms, covenants and conditions of the Lease applicable to the Premises, as modified hereunder, shall apply to the Suite 9500 Must Take Space, except as expressly set forth in this Paragraph 5.

The “Suite 9500 Must Take Space Commencement Date” shall mean the date on which Landlord shall deliver the Suite 9500 Must Take Space to Tenant in the condition required by Paragraph 6.b. below. The scheduled Suite 9500 Must Take Space Commencement Date is April 1, 2014. The parties agree that the Suite 9500 Must Take Space Commencement Date will not be before April 1, 2014 unless agreed to in writing by Landlord and Tenant. If Landlord is unable to deliver possession of the Suite 9500 Must Take Space to Tenant on or before such scheduled Suite 9500 Must Take Space Commencement Date for any reason whatsoever, neither the Lease nor Tenant’s

 

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obligation to lease the Suite 9500 Must Take Space hereunder shall be void or voidable, nor shall any such delay in delivery of possession of the Suite 9500 Must Take Space operate to extend the Term with respect to the Suite 9500 Must Take Space or the balance of the Premises, or amend the Suite 9500 Must Take Space Rent Commencement Date (as defined below) or Tenant’s other obligations with respect to the Suite 9500 Must Take Space or under the Lease. If Landlord is unable to deliver possession of the Suite 9500 Must Take Space to Tenant by July 1, 2014, Landlord shall not incur any liability under the Lease, but Tenant shall have the right to terminate Tenant’s obligation to lease the Suite 9500 Must Take Space by providing Landlord with written notice on or before July 15, 2014. So long as Tenant is not in default under the Lease, during the period commencing on the date of this Second Amendment and ending on the earlier of (i) Tenant’s delivery to Landlord of Tenant’s termination notice pursuant to the terms of this Paragraph 6.a. or (ii) the Suite 9500 Take Space Commencement Date, Landlord shall not enter into any new lease or amend an existing lease which term or extension term extends beyond July 1, 2014.

b.         Condition of the Suite 9500 Must Take Space .    Tenant shall accept the Suite 9500 Must Take Space in its present (as of the date of this Amendment) as-is condition, wear and tear excepted, and, except as provided in the Work Letter attached hereto as Exhibit H (the “ Suite 9500 Work Letter”), Landlord shall have no obligation to make or pay for any alterations, additions, improvement or renovations in or to the Suite 9500 Must Take Space to prepare the same for Tenant’s occupancy. Following the Suite 9500 Must Take Space Commencement Date, Tenant shall perform certain tenant improvements to Suite 9500 Must Take Space (the “Suite 9500 Improvements”) as described in the Suite 9500 Work Letter.

c.         Base Rent; Operating Expenses .    Tenant’s obligation to pay Base Rent and Tenant’s Proportionate Share of Operating Expenses for the Suite 9500 Must Take Space pursuant to the Lease shall commence as of the date (the “Suite 9500 Must Take Space Rent Commencement Date”) that is the earlier to occur of (i) 90 days following the Suite 9500 Must Take Space Commencement Date or (ii) the date Tenant shall commence the conduct of business in the Suite 9500 Must Take Space or any portion thereof. From and after the Suite 9500 Must Take Space Rent Commencement Date, and for the balance of the Term, the Base Rent payable by Tenant for the Suite 9500 Must Take Space shall be the Prevailing Market (defined in Paragraph 2 above) rate per rentable square foot for the Suite 9500 Must Take Space, which shall be determined as set forth Paragraph 2 above. Base Rent for the Suite 9500 Must Take Space shall change, if at all, in accordance with the changes assumed in the determination of Prevailing Market rate.

d.         Tenant’s Proportionate Share .    Tenant’s Proportionate Share of the Project with respect to the Suite 9500 Must Take Space shall be 1.7647%.

e.         Parking .    With respect the Suite 9500 Must Take Space, the parking provisions set forth in the Lease shall continue to apply on the terms and conditions set forth therein, except that effective as of the Suite 9500 Must Take Space Commencement Date (i) the parking made available to Tenant shall be increased by 48 unreserved parking spaces in the surface parking lot serving the Building, and (ii) Tenant shall be entitled to the use of such unreserved parking spaces at no additional charge.

f.         Suite 9500 Must Take Space Amendment .    Promptly following the Suite 9500 Must Take Space Commencement Date, Landlord and Tenant shall enter into an amendment to the Lease, which amendment shall confirm the monthly Base Rent applicable to the Suite 9500 Must Take Space and the other terms and conditions set forth in this Paragraph 6, as applicable.

g.         Definition of Prevailing Market .    With respect to the Suite 9500 Must Take Space, “Prevailing Market” shall have the meaning set forth in Paragraph 2.c. above with references to the Premises being deemed references to the Suite 9500 Must Take Space.

h.         Procedure for Determining Prevailing Market .    The Prevailing Market rate for the Suite 9500 Must Take Space shall be mutually agreed upon by Landlord and Tenant within the period commencing September 1, 2013 and ending October 31, 2013. If Landlord and Tenant are unable to agree upon the Prevailing Market rate for the Suite 9500 Must Take Space on or before October 31, 2013, then the Prevailing Market rate for the Suite 9500 Must Take Space shall be established by appraisal in accordance with the procedures set forth in Exhibit A attached hereto.

 

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i.         Permitted Use .    Tenant shall use the Suite 9500 Must Take Space for the Permitted Use, as such term is defined in the Basic Lease Information of the Lease, as modified by Section 8 of the First Amendment.

7.         Right of First Offer .

a.         Grant of Option; Conditions .    Tenant shall have the one time right of first offer (the “Right of First Offer”) with respect to each of the following spaces (each, an “Offering Space”): (i) the space consisting of 5,255 rentable square feet on the first (1 st ) floor of the building located at 9000, 9020, 9030, 9040, and 9090 SW Gemini Drive, Beaverton, Oregon, commonly known as Nimbus Building 8 (“Building 8”), and shown on the demising plan attached hereto as Exhibit I-1 ; and (ii) the space consisting of 3,233 rentable square feet on the first (1 st ) floor of Building 8, and shown on the demising plan attached hereto as Exhibit I-2 , (iii) the space consisting of 3,233 rentable square feet on the first (1st) floor of Building 8, and shown on the demising plan attached hereto as Exhibit I-3 , and (iv) the space consisting of 4,000 rentable square feet on the first (1st) floor of Building 8, as shown on the demising plan attached hereto as Exhibit I-4 . Tenant’s Right of First Offer shall be exercised, if at all, as follows: at any time after Landlord has determined that the existing tenant in an Offering Space will not extend or renew the term of its lease for such Offering Space, whether pursuant to a then existing right or pursuant to new arrangements with Landlord, and prior to leasing such Offering Space to a party other than the existing tenant, Landlord shall advise Tenant (the “Advice”) of the terms under which Landlord is prepared to lease such Offering Space to Tenant for the remainder of the Term, which terms shall reflect the Prevailing Market (hereinafter defined) rate for such Offering Space as reasonably determined by Landlord. Tenant may lease such Offering Space in its entirety only, under such terms (but with a term expiring coterminously with the term of the Lease), by delivering written notice of exercise to Landlord (the “Notice of Exercise”) within ten (10) business days after the date of the Advice, except that Tenant shall have no such Right of First Offer and Landlord need not provide Tenant with an Advice, if:

(1)        Tenant is in default under the Lease beyond any applicable cure periods at the time that Landlord would otherwise deliver the Advice; or

(2)         More than 20,000 rentable square feet of the Premises is sublet by Tenant, other than to an affiliate or subsidiary with Landlord’s prior written consent pursuant to Article 21 of the Lease, at the time Landlord would otherwise deliver the Advice; or

(3)        The Lease has been assigned prior to the date Landlord would otherwise deliver the Advice; or

(4)        Tenant is not occupying the Premises on the date Landlord would otherwise deliver the Advice; or

(5)        The Offering Space is not intended for the exclusive use of Tenant during the Term; or

(6)        The existing tenant in the Offering Space is interested in extending or renewing its lease for the Offering Space or entering into a new lease for such Offering Space, whether pursuant to a then existing right or pursuant to new arrangements with Landlord.

b.         Terms for Offering Space .

(1)        The term for an Offering Space shall commence upon the commencement date stated in the Advice and thereupon such Offering Space shall be considered a part of the Premises, provided that all of the terms stated in the Advice shall govern Tenant’s leasing of the Offering Space and only to the extent that they do not conflict with the Advice, the terms and conditions of this Lease shall apply to the Offering Space.

(2)        Tenant shall pay Base Rent and Additional Rent for an Offering Space in accordance with the terms and conditions of the Advice, which terms and conditions shall reflect the Prevailing Market rate for such Offering Space as determined in Landlord’s reasonable judgment.

 

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(3)        An Offering Space (including improvements and personalty, if any) shall be accepted by Tenant in its condition and as-built configuration existing on the earlier of the date Tenant takes possession of such Offering Space or as of the date the term for such Offering Space commences, unless the Advice specifies any work to be performed or improvement allowances to be given by Landlord in such Offering Space, in which case Landlord shall perform such work or give such improvement allowances in such Offering Space. If Landlord is delayed delivering possession of an Offering Space due to the holdover or unlawful possession of such space by any party, Landlord shall use reasonable efforts to obtain possession of the space, and the commencement of the term for such Offering Space shall be postponed until the date Landlord delivers possession of such Offering Space to Tenant free from occupancy by any party.

c.         Termination of Right of First Offer .    The rights of Tenant hereunder with respect to each Offering Space that is subject to an Advice shall terminate on the earlier to occur of: (ii) Tenant’s failure to exercise its Right of First Offer within the fifteen (15) day period provided in Paragraph 2.a. above; and (iii) the date Landlord would have provided Tenant an Advice if Tenant had not been in violation of one or more of the conditions set forth in Paragraph 2.a. above; provided that all of Tenant’s rights under this Paragraph 2 shall terminate on December 31, 2015.

d.         Offering Amendment .    If Tenant exercises its Right of First Offer, Landlord shall prepare an amendment (the “Offering Amendment”) adding the Offering Space to the Premises on the terms set forth in the Advice and reflecting the changes in the Base Rent, rentable square footage of the Premises, Tenant’s Proportionate Share and other appropriate terms. A copy of the Offering Amendment shall be sent to Tenant within a reasonable time after Landlord’s receipt of the Notice of Exercise executed by Tenant, and Tenant shall execute and return the Offering Amendment to Landlord within fifteen (15) days thereafter, but an otherwise valid exercise of the Right of First Offer shall be fully effective whether or not the Offering Amendment is executed.

e.         Definition of Prevailing Market .    For purposes of this Right of First Offer provision, “Prevailing Market” shall have the meaning set forth in Paragraph 1.c. above, with references to the “Premises” being deemed references to the “Offering Space”, and for such purposes, the determination of Prevailing Market shall also include any tenant improvement allowance with respect to each Offering Space.

f.         Subordination .    Notwithstanding anything herein to the contrary, Tenant’s Right of First Offer is subject and subordinate to the expansion rights existing on the date hereof (whether such rights are designated as a right of first offer, right of first refusal, expansion option or otherwise) of any tenant of the Building.

8.         Landlord Work; Existing Premises “As Is” .    Tenant shall accept the Existing Premises in its as-is condition as of the date of this Second Amendment, and, except as provided in the Work Letter attached hereto as Exhibit J (the “Work Letter”), Landlord shall have no obligation to make or pay for any alterations, additions, improvements or renovations in or to the Existing Premises. Following the full execution of this Second Amendment, Tenant shall be permitted to perform certain improvements to the Existing Premises (the “Existing Premises Improvements”) as described in the Work Letter.

9.         Renewal Option .    The Renewal Option set forth in Section 6 of the First Amendment shall apply on the terms and conditions set forth therein, except that (i) Tenant shall be entitled to two (2) consecutive options of five (5) years each to renew the Term (each a “Renewal Term”), (ii) the Initial Renewal Notice with respect to the first Renewal Term must be delivered, if at all, no later than December 31, 2018 and no earlier than October 1, 2018, (iii) the Initial Renewal Notice with respect to the second Renewal Term must be delivered, if at all, no later than December 31, 2023 and no earlier than October 1, 2023, (iv) the first Renewal Term shall be one (1) additional period of five (5) years commencing on January 1, 2020 and ending on December 31, 2024, (v) the second Renewal Term shall be one (1) additional period of five (5) years commencing on January 1, 2025 and ending on December 31, 2029, and (vi) the last sentence of Section 6.03 shall be deleted and the following shall be substituted: “Notwithstanding the foregoing, if Landlord and Tenant are unable to agree upon the Prevailing Market rate for the Premises within 30 days after the date Tenant provides Landlord with the Rejection Notice, the Prevailing Market rate for the Premises shall be established by appraisal in accordance with the procedure set forth in Exhibit A attached hereto.”. In addition to the foregoing, Tenant may, at the time Tenant delivers its Renewal Notice for either Renewal Term, notify Landlord that Tenant intends to exercise the Renewal Option respect to only a portion of the Premises then leased by Tenant; provided that if the portion of the Premises being renewed by Tenant results in Tenant leasing less than 3,000 square feet in any suite in Building 9, Tenant shall be responsible, at Tenant’s sole cost and expense, for the costs of all construction Landlord determines

 

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necessary, in Landlord’s sole discretion, to properly demise the portion of the Premises located in Building 9 being renewed by Tenant, and provided that the portion of the Premises being renewed must include all of Building 6.

10.         Liquid Nitrogen Tank .    Section 9.02 of the First Amendment is amended as follows: “Notwithstanding anything to the contrary set forth in the Lease, Landlord acknowledges that Tenant currently stores liquid nitrogen in one tank (the “Liquid Nitrogen Tank”) outside of the Premises at the location outlined in Exhibit B attached hereto and made a part hereof (the “Liquid Nitrogen Storage Area”). Tenant shall use the Liquid Nitrogen Tank and Liquid Nitrogen Area in a safe and clean manner and in accordance with all applicable Regulations. Tenant shall be solely responsible for obtaining all necessary governmental and regulatory approvals and for the cost of installing, operating, maintaining and removing the Liquid Nitrogen Tank. Tenant shall also be responsible for the cost of all utilities consumed in the operation of the Liquid Nitrogen Tank. Any increase in the size or number of the Liquid Nitrogen Tanks shall be subject to Landlord’s prior written consent.”

11.         Condensing Unit .    Section 23A of the First Amendment is replaced with the following: “With Landlord’s approval, Tenant has installed a compressor-condensing unit (the “Condensing Unit”) for the purpose of providing an external cooling source for the interior air-handling unit shown as shaded and labeled “AHU” on Exhibit C attached hereto and made a part hereof. Tenant shall be solely responsible for obtaining all necessary governmental and regulatory approvals and for the cost of operating, maintaining and removing the Condensing Unit. In addition to and without limiting Tenant’s obligations under the Lease, Tenant shall comply with all applicable environmental and fire prevention laws pertaining to Tenant’s use of the Condensing Unit Area. Tenant shall also be responsible for the cost of all utilities consumed in the operation of the Condensing Unit. Notwithstanding anything herein to the contrary, if Tenant removes the Condensing Unit from the Condensing Unit Area for reasons other than the repair and replacement of the Condensing Unit, Tenant’s right to install and maintain the Condensing Unit and to use the Condensing Unit Area shall be null and void.”

12.         HVAC Units .    Landlord agrees that Tenant shall be required to remove any existing and new HVAC units located in Building 6 as set forth in the Lease upon the expiration of the Term. Tenant shall not be required to remove any existing (as of the date of this Amendment) HVAC units from Building 9 upon the expiration of the Term; provided, however, that Tenant shall be required to restore any supplemental HVAC units which Tenant has installed in Building 9 after the date of this Amendment upon the expiration of the Term.

13.         Insurance .    Section 8(B) of the Lease is hereby deleted in its entirety and replaced with the following: “Tenant shall maintain the following insurance (“Tenant’s Insurance”): (a) Commercial General Liability Insurance applicable to the Premises and its appurtenances providing, on an occurrence basis, a minimum combined single limit of $2,000,000.00; (b) Property and Income Coverage Insurance written on an All Risk or Special Cause of Loss Form, including earthquake sprinkler leakage, at replacement cost value and with a replacement cost endorsement covering all of Tenant’s business and trade fixtures, equipment, movable partitions, furniture, merchandise and other personal property within the Premises (“Tenant’s Property”) and any Leasehold Improvements performed by or for the benefit of Tenant; (c) Workers’ Compensation Insurance in amounts required by Law; and (d) Employers Liability Coverage of at least $1,000,000.00 per occurrence. Any company writing Tenant’s Insurance shall have an A.M. Best rating of not less than A-VIII. All Commercial General Liability Insurance policies shall name as additional insureds Landlord (or its successors and assignees), the managing agent for the Building (or any successor), and their respective members, principals, beneficiaries, partners, officers, directors, employees, and agents, and other designees of Landlord and its successors as the interest of such designees shall appear. In addition, Landlord shall be named as a loss payee with respect to Tenant’s Property Insurance on the Leasehold Improvements. All policies of Tenant’s Insurance shall contain endorsements that the insurer(s) shall give Landlord and its designees at least 30 days’ advance written notice of any cancellation, termination, material change or lapse of insurance. Tenant shall provide Landlord with a certificate of insurance evidencing Tenant’s Insurance within five days of Landlord’s request and thereafter as necessary to assure that Landlord always has current certificates evidencing Tenant’s Insurance. So long as the same is available at commercially reasonable rates, Landlord shall maintain so called All Risk property insurance on the Building at replacement cost value as reasonably estimated by Landlord, together with such other insurance coverage as Landlord, in its reasonable judgment, may elect to maintain.”

14.         Hazardous Materials .    The fourth sentence of Section 4(D) of the Original Lease is hereby deleted in its entirety and replaced with the following: “Notwithstanding the foregoing, Tenant may handle, store, use and dispose of (i) products containing small quantities of Hazardous Materials for “general office purposes” (such as toner for

 

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copiers) to the extent customary and necessary for the Permitted Use of the Premises, and (ii) those products listed on the Hazardous Substances Questionnaire attached hereto as Exhibit F which are reasonably required by Tenant to be used and/or kept in the Premises in connection with Tenant’s Permitted Use; provided that Tenant shall always handle, store, use and dispose of any such Hazardous Materials in a safe and lawful manner and never allow such Hazardous Materials to contaminate the Premises, Building or Project or surrounding land or environment.” Exhibit E to the Lease shall be deleted and replaced with the attached Exhibit K.

15.         Deleted Provision .    The conditional obligation to repay Abated Base Rent under Section 2 of the First Amendment in the event of default expires upon execution of this Second Amendment.

16.         Real Estate Brokers .    Tenant represents and warrants that it has negotiated this Amendment directly with Shorenstein Realty Services, L.P., on behalf of Landlord, and Cresa Portland, LLC, on behalf of Tenant (collectively, the “Brokers”), and Tenant has not authorized or employed, or acted by implication to authorize or to employ, any other real estate broker or salesman to act for Tenant in connection with this Second Amendment. Tenant shall indemnify, defend and hold Landlord harmless from and against any and all claims by any real estate broker or salesman other than the Brokers for a commission, finder’s fee or other compensation as a result of Tenant’s entering into this Amendment.

17.         No Offer .    Submission of this instrument for examination and signature by Tenant does not constitute an offer to amend the Lease or a reservation of or option to amend the Lease, and this instrument is not effective as a lease amendment or otherwise until executed and delivered by both Landlord and Tenant.

18.         Authority .    If Tenant is a corporation, partnership, trust, association or other entity, Tenant and each person executing this Second Amendment on behalf of Tenant, hereby covenants and warrants that (a) Tenant is duly incorporated or otherwise established or formed and validly existing under the laws of its state of incorporation, establishment or formation, (b) Tenant has and is duly qualified to do business in the state in which the Building is located, (c) Tenant has full corporate, partnership, trust, association or other appropriate power and authority to enter into this Amendment and to perform all Tenant’s obligations under the Lease, as amended by this Second Amendment, and (d) each person (and all of the persons if more than one signs) signing this Second Amendment on behalf of Tenant is duly and validly authorized to do so.

19.         Lease in Full Force and Effect .    Except as provided above, the Lease is unmodified hereby and remains in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date and year first above written.

 

LANDLORD:   TENANT:
NIMBUS CENTER LLC,   CASCADE MICROTECH, INC.,
a Delaware limited liability company   an Oregon corporation
By: /s/ Gregg Meyer   By: /s/ Jeff Killian
Name: Gregg Meyer   Name: Jeff Killian
Title: Vice President   Title: Chief Financial Officer and Treasurer

 

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EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Michael D. Burger, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Cascade Microtech, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 8, 2013

 

/s/ Michael D. Burger

Michael D. Burger
Director, President and Chief Executive Officer
Cascade Microtech, Inc.

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Jeff Killian, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Cascade Microtech, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 8, 2013

 

/s/ Jeff Killian

Jeff Killian
Chief Financial Officer and Treasurer
Cascade Microtech, Inc.

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)

OF THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Cascade Microtech, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael D. Burger, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

/s/ Michael D. Burger

Michael D. Burger
Chief Executive Officer
Cascade Microtech, Inc.
May 8, 2013

This certification is made solely for the purpose of 18 U.S.C. Section 1350, and not for any other purpose. A signed original of this written statement required by Section 906 has been provided to Cascade Microtech, Inc. and will be retained by Cascade Microtech, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)

OF THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Cascade Microtech, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeff Killian, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

/s/ Jeff Killian

Jeff Killian
Chief Financial Officer
Cascade Microtech, Inc.
May 8, 2013

This certification is made solely for the purpose of 18 U.S.C. Section 1350, and not for any other purpose. A signed original of this written statement required by Section 906 has been provided to Cascade Microtech, Inc. and will be retained by Cascade Microtech, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.