UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 22, 2018
Xcerra Corporation
(Exact name of registrant as specified in its charter)
Massachusetts | 000-10761 | 04-2594045 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
825 University Avenue
Norwood, MA 02062
(Address of principal executive offices, including zip code)
Registrants telephone number, including area code: (781) 461-1000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.02. | Termination of a Material Definitive Agreement. |
As previously reported, on April 7, 2017, Xcerra Corporation (the Company) entered into an Agreement and Plan of Merger with Unic Capital Management Co., Ltd. (Unic Capital) and China Integrated Circuit Industry Investment Fund Co., Ltd., as joined by Unic Acquisition Corporation (Merger Sub) (as amended, the Merger Agreement), providing for the merger of Merger Sub with and into the Company (the Merger), with the Company surviving the Merger. Unic Capital subsequently assigned all of its rights under the Merger Agreement to Hubei Xinyan Equity Investment Partnership (Limited Partnership) (Parent) on August 4, 2017.
The closing of the Merger was subject to certain conditions, including clearance by the Committee on Foreign Investment in the United States (CFIUS). As previously reported, in December 2017, the Company and Parent submitted a request to withdraw and re-file their joint voluntary notice to CFIUS to allow more time for review and discussion with CFIUS in connection with the Merger.
After careful review of feedback received from CFIUS that approval of the Merger is highly unlikely and further discussions between the Company and Parent, the parties determined to cease efforts to seek CFIUS clearance and entered into a Termination Agreement, dated February 22, 2018 (the Termination Agreement), pursuant to which they mutually terminated the Merger Agreement and agreed to release each other and certain related parties from certain claims and liabilities relating to the Merger Agreement and the transactions contemplated thereby. Neither the Company nor Parent will incur any termination fees in connection with the termination of the Merger Agreement.
The foregoing description of the Termination Agreement does not purport to be complete and is qualified in its entirety by reference to the Termination Agreement, which is attached hereto as Exhibit 10.1 and is incorporated in its entirety herein by reference.
Item 2.02. | Results of Operations and Financial Condition. |
On February 22, 2018, the Company announced its financial results for its second fiscal quarter ended January 31, 2018. The full text of the press release issued in connection with the Companys announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The Company will host a conference call (the Earnings Call) on February 23, 2018 at 8:30 a.m. Eastern Time to discuss the Companys second quarter fiscal 2018 financial results and to provide third quarter fiscal 2018 guidance.
The Earnings Call may be accessed via telephone by dialing 877.853.5334. The call will be simulcast via the Companys website http://www.xcerra.com/events-presentations.html. Audio replays of the call can be heard through March 8, 2018, via telephone, by dialing 855.859.2056; conference ID number 1687266. A replay of the webcast can be accessed by visiting the Companys website 90 minutes following the conference call at http://www.xcerra.com/events-presentations.html.
The information contained in Item 2.02 of this Current Report on Form 8-K (including in Exhibit 99.1) shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibit 99.1 relating to Item 2.02 shall be deemed to be furnished, and not filed. |
SIGNATURE
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: February 22, 2018
Xcerra Corporation | ||
By: |
/s/ David G. Tacelli |
|
Name: | David G. Tacelli | |
Title: | President and Chief Executive Officer |
Exhibit 10.1
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT (this Agreement ), dated as of February 22, 2018, is entered into by and among Hubei Xinyan Equity Investment Partnership (Limited Partnership) ( ( )), a Chinese limited partnership ( Parent ) and Xcerra Corporation, a Massachusetts corporation (the Company ). Each of Parent and the Company are hereinafter referred to as a Party and collectively as the Parties . Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Merger Agreement (as defined below).
RECITALS
WHEREAS, Unic Capital Management Co., Ltd. ( ( ) ), a Chinese company ( Unic Capital ), China Integrated Circuit Industry Investment Fund Co., Ltd. ( ), a Chinese company ( Sponsor ) and the Company entered into that certain Agreement and Plan of Merger (as amended, the Merger Agreement ), dated as of April 7, 2017;
WHEREAS, concurrent with the execution of the Merger Agreement, Sponsor and Unic Capital entered into that certain Equity Commitment Letter, dated as of April 7, 2017 (the ECL );
WHEREAS, concurrent with the execution of the Merger Agreement, Sino IC Leasing Co., Ltd., a Chinese company ( Lender ), and Unic Capital entered into that certain Debt Commitment Letter, dated as of April 7, 2017 (the DCL );
WHEREAS, on April 11, 2017, Unic Capital delivered to the Company a letter of guarantee (the Guarantee , and together with the ECL and DCL, the Financing Agreements ) from the Bank of Beijing Co., Ltd. (the Bank ) in favor of Test Solutions (Suzhou) Co., Ltd., a Chinese company and wholly owned subsidiary of the Company ( Test Solutions );
WHEREAS, on August 4, 2017, Unic Capital assigned all of its rights and obligations under (i) the Merger Agreement to Parent pursuant to that certain Assignment and Assumption Agreement, dated as of August 4, 2017, by and among Unic Capital, Parent and the Company, (ii) the ECL to Parent pursuant to that certain Assignment and Assumption Agreement, dated as of August 4, 2017, by and among Unic Capital, Parent, Sponsor and the Company and (iii) the DCL to Parent pursuant to that certain Assignment and Assumption Agreement, dated as of August 4, 2017, by and among Unic Capital, Parent, Lender and the Company;
WHEREAS, Unic Acquisition Corporation, a Massachusetts corporation and controlled Subsidiary of Parent ( Merger Sub ) was joined as a party to the Merger Agreement pursuant to that certain Joinder Agreement, dated as of August 4, 2017, by and among Parent, Merger Sub, Sponsor and the Company;
WHEREAS, the obligations of Lender and Sponsor under the DCL and ECL, respectively, terminate upon the valid termination of the Merger Agreement in accordance with its terms;
WHEREAS, the Guarantee remains valid until the Banks receipt of a written notice issued by Test Solutions upon the valid termination of the Merger Agreement in circumstances not requiring payment of the Reverse Termination Fee;
WHEREAS, pursuant to Section 8.1(a) of the Merger Agreement, the Merger Agreement may be terminated by mutual written agreement of Parent and the Company; and
WHEREAS, the Parties desire to terminate the Merger Agreement on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Termination of Merger Agreement . Pursuant to Section 8.1(a) of the Merger Agreement, the Merger Agreement is hereby terminated in its entirety by the mutual written agreement of Parent and the Company effective as of 4:01 p.m. (Eastern time) on February 22, 2018 (the Termination ). The Merger Agreement shall be of no further force and effect and no party to the Merger Agreement shall have any further liability or obligation with respect to the Merger Agreement or the transactions contemplated thereby, other than as expressly set forth in this Agreement. Notwithstanding anything to the contrary in this Agreement, the Confidentiality Agreement, dated December 11, 2016, between the Company and Sino IC (the Confidentiality Agreement ) shall remain in full force and effect in accordance with its terms and Parent, for and on behalf of itself, Merger Sub and Sponsor hereby agrees to be bound by the terms and provisions of the Confidentiality Agreement applicable to Sino IC thereunder, with the same force and effect as if originally named therein.
2. No Termination Fees . The Parties acknowledge and agree that neither a Termination Fee nor a Reverse Termination Fee shall be payable in connection with the Termination.
3. Mutual Releases .
(a) Company Release . To the fullest extent permitted by Law, the Company, for and on behalf of itself, each of its Subsidiaries and Affiliates, and each of its and their respective future, present and former general or limited partners, stockholders, members, managers, directors, officers, employees, representatives, advisors, agents, attorneys, successors and assigns and any and all Persons claiming by or through each of the foregoing (collectively, the Company Related Parties ), hereby knowingly, voluntarily and irrevocably fully releases and forever discharges Parent, Merger Sub, Sponsor, Sino IC, Lender and the Bank, each Subsidiary and Affiliate of Parent, Merger Sub, Sponsor, Sino IC, Lender or the Bank and each of its and their respective future, present and former general or limited partners, stockholders,
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members, managers, directors, officers, employees, representatives, advisors, agents, attorneys, successors, assigns and any and all Persons claiming by or through each of the foregoing (collectively, the Parent Related Parties ) from any and all liabilities, claims, actions, causes of action, obligations, demands, costs, damages, expenses, fees and charges of every kind and any nature whatsoever (collectively, Claims ), in each case, whether known or unknown, mature or unmatured, contingent or fixed, liquidated or unliquidated, or accrued or unaccrued, in connection with, arising out of or relating to the Merger Agreement, the Financing Agreements or the transactions contemplated by the Merger Agreement or the Financing Agreements, including (i) any Claim that the Company is entitled to any Reverse Termination Fee, (ii) any acts, omissions, disclosures or communications related to the Merger Agreement or any Financing Agreement or the transactions contemplated thereby and (iii) any acts, omissions, disclosures or communications related to the termination of the Merger Agreement or any Financing Agreement or the negotiation of this Agreement (the claims released pursuant to this Section 3(a), the Company Released Claims ); provided , that the foregoing shall not release, or limit the rights or obligations of, any Parent Related Party under (x) this Agreement, (y) the Confidentiality Agreement or (z) any agreements entered into following the date hereof. The Company, for and on behalf of itself and each of the Company Related Parties, hereby irrevocably covenants to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced, any proceeding, action or arbitration of any kind against any Parent Related Party based upon any Company Released Claim. If the Company (or any of the Company Related Parties) brings any claim, demand, proceeding, action or arbitration against any Parent Related Party in any legal or arbitral proceeding of any kind with respect to any Company Released Claim, then the Company shall indemnify such Parent Related Party in the amount or value of any final judgment or settlement (monetary or other) and any related cost (including reasonable attorneys fees and expenses) entered against, paid or incurred by such Parent Related Party.
(b) Parent Party Release . To the fullest extent permitted by Law, Parent, for and on behalf of itself and each of the Parent Related Parties hereby knowingly, voluntarily and irrevocably fully releases and forever discharges the Company and all Company Related Parties from any and all Claims, in each case, whether known or unknown, mature or unmatured, contingent or fixed, liquidated or unliquidated, or accrued or unaccrued, in connection with, arising out of or relating to the Merger Agreement, the Financing Agreements or the transactions contemplated by the Merger Agreement or the Financing Agreements, including (A) any Claim that Parent is entitled to any Termination Fee, (B) any acts, omissions, disclosures or communications related to the Merger Agreement or any Financing Agreement or the transactions contemplated thereby and (C) any acts, omissions, disclosures or communications related to the termination of the Merger Agreement or any Financing Agreement or the negotiation of this Agreement (the claims released pursuant to this Section 3(b), the Parent Released Claims and together with the Company Released Claims, the Released Claims ); provided , that the foregoing shall not release, or limit the rights or obligations of, any Company Related Party under (x) this Agreement, (y) the Confidentiality Agreement or (z) any agreements entered into following the date hereof. Parent, for and on behalf of itself and each of the Parent Related Parties hereby irrevocably covenants to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced, any proceeding, action or arbitration of any kind against any Company Related Party based upon any Parent Released Claim. If Parent (or any of the Parent Related Parties) brings any claim, demand,
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proceeding, action or arbitration against any Company Related Party in any legal or arbitral proceeding of any kind with respect to any Parent Released Claim, then Parent shall indemnify such Company Related Party in the amount or value of any final judgment or settlement (monetary or other) and any related cost (including reasonable attorneys fees and expenses) entered against, paid or incurred by such Company Related Party.
(c) Release and Waiver of Known and Unknown Claims by the Parties . With respect to the Released Claims, each Party, for and on behalf of itself and the Company Related Parties, in the case of the Company, and the Parent Related Parties, in the case of Parent, expressly waive, to the fullest extent permitted by Law, the provisions, rights and benefits of § 1542 of the California Civil Code (and any similar Law of any other state, territory or jurisdiction), which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
4. Representations and Warranties . Each Party represents and warrants to the other Parties that: (i) such Party has all requisite power and authority to enter into this Agreement and to take the actions contemplated hereby; (ii) the execution and delivery of this Agreement and the actions contemplated hereby have been duly authorized by all necessary corporate or other action on the part of such Party; and (iii) this Agreement has been duly executed and delivered by such Party and, assuming the due authorization, execution and delivery by the other Parties, constitutes a legal, valid and binding obligation of such, enforceable against such Party in accordance with its terms, subject to the Enforceability Limitations.
5. Further Assurances . Each Party shall cooperate with each other Party in the taking of all actions necessary, proper or advisable under this Agreement and applicable Laws to effectuate the transactions contemplated by this Agreement. Without limiting the generality of the foregoing, (a) the Parties shall cooperate with each other in connection with the withdrawal of any applications to or termination of proceedings before any Governmental Authority or under any Antitrust Law, in each case to the extent applicable, in connection with the transactions contemplated by the Merger Agreement and (b) the Company shall cause Test Solutions to promptly (and in any event no later than 4:01 p.m. (Eastern time) on February 22, 2018) execute and deliver to the Bank a written notice in the form attached as Schedule D to the Guarantee.
6. Entire Agreement; No Third-Party Beneficiaries . This Agreement and the Confidentiality Agreement constitute the entire agreement of the Parties with respect to the subject matter hereof, and supersede all other prior agreements and understandings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof and thereof. Each Party acknowledges and agrees that each of the Company Related Parties and Parent Related Parties are express third party beneficiaries of the releases and covenants not to sue contained in Sections 3(a) and 3(b) of this Agreement and are entitled to enforce rights under such sections to the same extent that such Persons could enforce such rights if they were a party to this Agreement. Except as provided in the preceding sentence, there are no third party beneficiaries to this Agreement, and this Agreement is not otherwise intended to and shall not otherwise confer upon any person other than the Parties any rights or remedies hereunder.
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7. Amendment; Assignment . This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each of the Parties. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Parties. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.
8. Governing Law . This Agreement shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts without giving effect to any choice or conflict of law provision or rule (whether of the Commonwealth of Massachusetts or any other jurisdiction) that would cause the application of Laws of any jurisdictions other than those of the Commonwealth of Massachusetts. The Parties acknowledge that this Agreement evidences a transaction involving interstate commerce. The Federal Arbitration Act shall govern the interpretation, enforcement, and proceedings pursuant to the dispute resolution clause in this Agreement.
9. Dispute Resolution; Waiver of Jury Trial .
(a) All disputes arising out of or in connection with this Agreement shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by three (3) arbitrators. If the two party-nominated arbitrators are unable to agree on the third arbitrator who shall serve as the President of the Tribunal within thirty (30) days after the appointment of the two party-nominated arbitrators, the ICC Court or Secretariat shall appoint the third arbitrator. The place of the arbitration shall be New York, New York. The language of the arbitration shall be English. The arbitrators shall award to the prevailing party, if any, as determined by the arbitrators, its reasonable attorneys fees and costs. Judgment upon any award(s) rendered by the arbitrators may be entered in any court having jurisdiction thereof.
(b) The Parties undertake to keep confidential all awards in their arbitration, together with all materials in the proceedings created for the purpose of the arbitration and all other documents produced by another Party in the proceedings not otherwise in the public domain, save and to the extent that disclosure may be required of a Party by legal duty, to protect or pursue a legal right or to enforce or challenge an award in legal proceedings before a court or other judicial authority.
(c) EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
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10. Specific Performance . The Parties hereby agree that irreparable damage would occur in the event that any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached, and that money damages or other legal remedies would not be an adequate remedy for any such damages. Accordingly, the Parties acknowledge and hereby agree that in the event of any breach or threatened breach by the Company, on the one hand, or Parent, on the other hand, of any of their respective covenants or obligations set forth in this Agreement, the Company, on the one hand, and Parent, on the other hand, shall be entitled to an injunction or injunctions to prevent or restrain breaches or threatened breaches of this Agreement, by the other Party, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the other under this Agreement. The Company, on the one hand, and Parent, on the other hand, agree not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of this Agreement by such Party, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of such Party under this Agreement. Any Party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement shall not be required to provide any bond or other security in connection with any such order or injunction.
11. Severability . In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the Parties. The Parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.
12. Counterparts; Effectiveness . This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties, it being understood that all Parties need not sign the same counterpart. This Agreement may be executed by facsimile or .pdf signature, and a facsimile or .pdf signature shall constitute an original for all purposes.
13. Interpretation .
(a) Unless otherwise indicated, the words include, includes and including, when used herein, shall be deemed in each case to be followed by the words without limitation.
(b) Whenever the context may require, the singular form of nouns and pronouns shall include the plural, and vice versa.
(c) When used herein, the word extent and the phrase to the extent shall mean the degree to which a subject or other thing extends, and such word or phrase shall not
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simply mean if. The words hereof, herein and hereunder and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision in this Agreement. The term or is not exclusive. The word will shall be construed to have the same meaning and effect as the word shall.
(d) The Parties agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any Law, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the Party drafting such agreement or document.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed and delivered as of the date first above written.
PARENT : | ||||
HUBEI XINYAN EQUITY INVESTMENT PARTNERSHIP (LIMITED PARTNERSHIP) |
By: |
/s/ Du Yang |
|||
Name: | Du Yang | |||
Title: | Authorised Representative |
[Signature Page to Termination Agreement]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed and delivered as of the date first above written.
COMPANY : | ||
XCERRA CORPORATION | ||
By: |
/s/ David G. Tacelli |
|
Name: | David G. Tacelli | |
Title: | President & Chief Executive Officer |
[Signature Page to Termination Agreement]
Exhibit 99.1
Xcerra Announces Second Quarter Results
Second Fiscal Quarter Notables:
| Second quarter sales of $110.3 million |
| GAAP net income of $7.9 million or $0.14 per diluted share |
| Non-GAAP net income of $10.6 million or $0.19 per diluted share |
| Record sales and earnings for a second fiscal quarter |
Norwood, Mass, February 22, 2018 Xcerra Corporation (NASDAQ:XCRA) today announced financial results for its second fiscal quarter ended January 31, 2018.
Net sales for the quarter were $110,276,000 compared to the prior quarters net sales of $120,286,000. GAAP net income for the quarter was $7,931,000, or $0.14 per diluted share. Excluding restructuring and related provision charges of $1,070,000, acceleration of debt financing costs of $891,000, amortization of purchased intangible assets of $137,000, and deal related expenses of $536,000, non-GAAP net income for the quarter was $10,565,000, or $0.19 per diluted share.
Dave Tacelli, president and chief executive officer, commented, We reported record second quarter sales and profit for what is usually our seasonally slow fiscal quarter. Our sales were up nearly 40% and non-GAAP net income up approximately 200% compared to fiscal Q2FY17. Early indications for calendar 2018 are that the favorable business cycle will continue, driven by the automotive, industrial and mobility markets. In addition to the strong business environment, we gained share in all of our major product areas in calendar year 2017, and look to extend those gains in 2018.
During the fiscal year, we made an investment in a Malaysian-based handler company which will expand our addressable market. We expect to launch a new product from this investment in the second half of the calendar year.
Third Quarter Fiscal 2018 Outlook
For the fiscal quarter ending April 30, 2018, net sales are expected to be in the range of $110 million to $115 million. Non-GAAP net income per share is expected to be in the range of $0.19 to $0.23 per share, assuming 56 million shares outstanding. The non-GAAP net income per share guidance excludes amortization of purchased intangible assets of approximately $0.1 million.
The Company will conduct a conference call tomorrow, February 23, 2018, at 8:30AM EST to discuss this release. The conference call may be accessed via telephone by dialing 877.853.5334. The call will be simulcast via the Xcerra web site http://www.xcerra.com/events-presentations.html. Audio replays of the call can be heard through March 2, 2018, via telephone by dialing 855.859.2056; conference ID number 1687266. A replay of the webcast can be accessed by visiting our web site 90 minutes following the conference call at http://www.xcerra.com/events-presentations.html .
Information About Non-GAAP Measures
Xcerra supplements its GAAP financial results by providing non-GAAP measures to evaluate the operating performance of the Company. Non-GAAP net income for the quarter ended January 31, 2018 excludes the amortization of purchased intangible assets, restructuring charges, and other one-time adjustments. Management believes these non-GAAP measures are useful for internal comparison to historical operating results as well as to the operating results of its competitors, and believes that this information is useful to investors for the same purposes. A reconciliation between the Companys GAAP and non-GAAP results is provided in the attached tables. Readers are reminded that non-GAAP information is merely a supplement to, and not a replacement for, GAAP financial measures.
Safe Harbor for Forward-Looking Statements
Any statements in this presentation about future expectations, plans and prospects for the Company, financial guidance on revenue, financial operating results (including net income or loss), and earnings or loss per share, continued customer adoption of recent product introductions, product developments, potential customer expansion and any other statements about managements future expectations, beliefs, goals, plans or prospects constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the Companys use of the words believes, anticipates, plans, expects, may, will, would, should, intends, estimates, seeks or similar expressions, whether negative or affirmative. Forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results or events to differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, the fluctuations in the demand for semiconductor devices, the ability of the Company to win orders from customers for the testing and handling of their new generation semiconductor devices, the fluctuations in the demand of our customers devices in the marketplace, the Companys ability to timely develop new products, options and software applications, the level of customer demand for such products, options and software applications, the Companys ability to meet acceptance requirements for newly developed products, the conditions affecting the markets in
which we compete, as well as the other important factors as are described in the Companys filings with the U.S. Securities and Exchange Commission, including those included under the heading Risk Factors in the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2017. The Company disclaims any intention or obligation to update any forward-looking statements after the date of this presentation.
About Xcerra
Xcerra Corporation is comprised of four businesses in the semiconductor and electronics manufacturing test markets: atg-Luther & Maelzer, Everett Charles Technologies, LTX-Credence and Multitest. The combination of these businesses creates a company with a broad spectrum of semiconductor and PCB test expertise that drives innovative new products and services, and the ability to deliver to customers fully integrated semiconductor test cell solutions. The Company addresses the broad, divergent requirements of the mobility, industrial, automotive and consumer end markets, offering a comprehensive portfolio of solutions and technologies, and a global network of strategically deployed applications and support resources. Additional information can be found at www.xcerra.com or at each product groups website; www.atg-lm.com , www.ectinfo.com , www.ltxc.com and www.multitest.com
Investor Contact:
Richard Yerganian,
Vice President, Investor Relations
Xcerra Corporation
Tel. 781.467.5063
Email rich.yerganian@xcerra.com
Xcerra is a trademark of Xcerra Corporation.
All other trademarks are the property of their respective owners.
Source: Xcerra Corporation.
Xcerra Corporation
Consolidated Balance Sheets
(in thousands)
January 31, 2018 | July 31, 2017 | |||||||
ASSETS | ||||||||
Current assets |
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Cash and cash equivalents |
$ | 118,223 | $ | 103,637 | ||||
Marketable securities |
52,825 | 57,087 | ||||||
Accounts receivable, net |
77,138 | 92,963 | ||||||
Inventories, net |
87,240 | 81,509 | ||||||
Prepaid expenses and other current assets |
10,486 | 19,087 | ||||||
Assets held for sale |
850 | 994 | ||||||
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Total current assets |
346,762 | 355,277 | ||||||
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Property and equipment, net |
30,091 | 28,509 | ||||||
Intangible assets, net |
8,458 | 8,752 | ||||||
Goodwill |
45,873 | 43,850 | ||||||
Other assets |
2,191 | 2,225 | ||||||
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Total assets |
$ | 433,375 | $ | 438,613 | ||||
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LIABILITIES AND EQUITY | ||||||||
Current liabilities |
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Current portion of long-term debt |
$ | 362 | $ | 3,779 | ||||
Accounts payable |
24,005 | 36,249 | ||||||
Other accrued expenses |
39,843 | 50,262 | ||||||
Deferred revenues |
8,123 | 8,085 | ||||||
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Total current liabilities |
72,333 | 98,375 | ||||||
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Term Loan |
2,276 | 17,547 | ||||||
Other long-term liabilities |
9,203 | 9,012 | ||||||
Stockholders equity |
347,828 | 313,679 | ||||||
Noncontrolling interest |
1,735 | | ||||||
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Total liabilities and equity |
$ | 433,375 | $ | 438,613 | ||||
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Xcerra Corporation
Consolidated Statements of Operations
(in thousands, except earnings per share data)
(unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
January 31, | January 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net sales |
$ | 110,276 | $ | 80,124 | $ | 230,562 | $ | 160,209 | ||||||||
Cost of sales |
59,726 | 45,338 | 120,597 | 91,063 | ||||||||||||
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Gross profit |
50,550 | 34,786 | 109,965 | 69,146 | ||||||||||||
Engineering and product development expenses |
16,592 | 15,013 | 33,731 | 30,309 | ||||||||||||
Selling, general, and administrative expenses |
21,986 | 18,084 | 43,271 | 36,545 | ||||||||||||
Amortization of purchased intangible assets |
137 | 180 | 294 | 370 | ||||||||||||
Restructuring |
550 | 299 | 685 | 406 | ||||||||||||
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Income from operations |
11,285 | 1,210 | 31,984 | 1,516 | ||||||||||||
Other (expense) income, net |
(2,123 | ) | 1,123 | (2,333 | ) | 1,443 | ||||||||||
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Income before provision for (benefit from) income taxes |
9,162 | 2,333 | 29,651 | 2,959 | ||||||||||||
Provision for (benefit from) income taxes |
1,388 | (239 | ) | 4,176 | 369 | |||||||||||
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Net income |
$ | 7,774 | $ | 2,572 | $ | 25,475 | $ | 2,590 | ||||||||
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Net (loss) income attributable to noncontrolling interest |
$ | (157 | ) | $ | | $ | 13 | $ | | |||||||
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Net income attributable to Xcerra |
$ | 7,931 | $ | 2,572 | $ | 25,462 | $ | 2,590 | ||||||||
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Basic and diluted net income per share attributable to Xcerra: |
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Basic net income per share |
$ | 0.14 | $ | 0.05 | $ | 0.47 | $ | 0.05 | ||||||||
Diluted net income per share |
$ | 0.14 | $ | 0.05 | $ | 0.46 | $ | 0.05 | ||||||||
Weighted-average common shares used in computing net income per share: |
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Basic |
54,836 | 54,120 | 54,720 | 53,993 | ||||||||||||
Diluted |
55,450 | 54,562 | 55,659 | 54,472 |
Xcerra Corporation
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(In thousands, except per share amounts)
(unaudited)
Three Months | Basic | Diluted | Three Months | Basic | Diluted | |||||||||||||||||||
Ended | Earnings | Earnings | Ended | Earnings | Earnings | |||||||||||||||||||
January 31, 2018 | Per Share | Per Share | January 31, 2017 | Per Share | Per Share | |||||||||||||||||||
GAAP net income attributable to Xcerra |
$ | 7,931 | $ | 0.14 | $ | 0.14 | $ | 2,572 | $ | 0.05 | $ | 0.05 | ||||||||||||
Legal and transaction fees |
536 | 0.01 | 0.01 | 503 | 0.01 | 0.01 | ||||||||||||||||||
Acceleration of debt financing costs |
891 | 0.02 | 0.02 | | | | ||||||||||||||||||
Amortization of purchased intangible assets |
137 | 0.00 | 0.00 | 180 | 0.00 | 0.00 | ||||||||||||||||||
Restructuring and related provisions |
1,070 | 0.02 | 0.02 | 299 | 0.01 | 0.01 | ||||||||||||||||||
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Non-GAAP net income attributable to Xcerra |
$ | 10,565 | $ | 0.19 | $ | 0.19 | $ | 3,554 | $ | 0.07 | $ | 0.07 | ||||||||||||
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Weighted average shares outstanding |
54,836 | 55,450 | 54,120 | 54,562 | ||||||||||||||||||||
Six Months | Basic | Diluted | Six Months | Basic | Diluted | |||||||||||||||||||
Ended | Earnings | Earnings | Ended | Earnings | Earnings | |||||||||||||||||||
January 31, 2018 | Per Share | Per Share | January 31, 2017 | Per Share | Per Share | |||||||||||||||||||
GAAP net income attributable to Xcerra |
$ | 25,462 | $ | 0.47 | $ | 0.46 | $ | 2,590 | $ | 0.05 | $ | 0.05 | ||||||||||||
Legal and transaction fees |
1,171 | 0.02 | 0.02 | 503 | 0.01 | 0.01 | ||||||||||||||||||
Acceleration of debt financing costs |
891 | 0.02 | 0.02 | | | | ||||||||||||||||||
Amortization of purchased intangible assets |
294 | 0.01 | 0.01 | 370 | 0.01 | 0.01 | ||||||||||||||||||
Restructuring and related provisions |
1,205 | 0.02 | 0.02 | 406 | 0.01 | 0.01 | ||||||||||||||||||
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Non-GAAP net income attributable to Xcerra |
$ | 29,023 | $ | 0.53 | $ | 0.52 | $ | 3,869 | $ | 0.07 | $ | 0.07 | ||||||||||||
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Weighted average shares outstanding |
54,720 | 55,659 | 53,993 | 54,472 |