<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 1996
-----------------
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 Number 0-12353
PLASMA-THERM, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 04-2554632
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10050 16th Street North, St. Petersburg, Florida 33716
- ------------------------------------------------------
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (813) 577-4999
--------------
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
----------------------------
(Title of Class)
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
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<PAGE> 2
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
As of January 22, 1997, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $44,782,496.*
As of January 22, 1997, 10,396,061 shares of Common Stock, $.01 par value, were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III -- The Registrant's definitive Proxy Statement for its Annual Meeting
of Stockholders presently scheduled to be held on May 6, 1997.
*Calculated by using the applicable closing trade price and by excluding all
shares that may be deemed to be beneficially owned by executive officers and
directors of the Registrant, without conceding that all such persons are
"affiliates" of the Registrant for purposes of the Federal securities laws.
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PART I
ITEM 1. BUSINESS
GENERAL
Plasma-Therm, Inc., together with its subsidiary, (the "Company") is
engaged in the design and production of thin film etching and deposition
manufacturing equipment. The Company sells this equipment directly to
manufacturers in the semiconductor, compound semiconductor, thin film head,
photomask, microeletectromechanical systems (MEMS) and flat panel display
industries. The Company's products are marketed, together with service and
technical support, by the Company's direct sales force, its Japanese distributor
and independent domestic and foreign manufacturer's representatives. The
Company's business was founded in 1975.
RECENT DEVELOPMENTS
In June of 1996 Plasma-Therm's common stock, which traded on the Nasdaq
SmallCap Market, began trading on the Nasdaq National Market. The move to the
Nasdaq National Market is part of the Company's plan to increase awareness of
its stock to the analyst and broker investment communities. Additionally, the
National Market listing affords the Company increased visibility and
credibility due to its more stringent listing requirements.
In June the Company entered into a patent license agreement with Robert
Bosch GmbH, a German company. The license embodies advanced plasma process
technology for the etching of silicon and is an enabling technology for the
microelectromechanical systems (MEMS) market. This technology was developed by
the Robert Bosch Corporate Research center. Plasma-Therm intends to offer this
technology in conjunction with its proprietary Inductively Coupled Plasma source
(ICP). This technology will be available on the Company's Versalock(R) 700 and
Shuttlelock(R) 700 plasma processing systems.
During 1996 the Company began volume shipments of its newest product, the
Versalock(R) 700 thin film etching and deposition system. The Versalock(R) 700
is a natural extension of its Shuttlelock(R) Series of plasma processing
systems. All processes developed on the Company's Shuttlelock(R) chamber
platform can be transferred directly to the Versalock(R) 700 system. The
Versalock(R) 700 is the Company's second cluster tool style system and its first
where multiple product generations will be developed on the same substrate
handling platform. The Versalock(R) 700 is perceived by management to be a
potential source of growth in revenue and income, although such growth cannot be
assured. See "Product Lines".
Additionally, during 1996 the Company completed the integration of its
proprietary Inductively Coupled Plasma (ICP) source to its 790, Shuttlelock(R)
700 and Versalock(R) 700 plasma processing systems. This ICP source provides
high density, high performance plasma processing. The ICP source increases the
technical performance of the Company's products and allows the Company to offer
the affected products at favorable
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margins and competitive prices. The development of this source represents
innovation in basic technology brought to market in a compressed time frame.
In July of 1996, the Company completed its move into its new state of the
art manufacturing facility. The Company's operations are now housed under one
roof in a 60,000 sq. ft. facility. The entire assembly and test area is
contained in a class 10,000 to class 1,000 clean room. Additionally, the
Company's demonstration and applications laboratories are housed in a class 100
clean room. These clean room manufacturing and demonstration areas are necessary
to address the cleanliness requirements of the Company's customer base. The
design of the new building accommodates increased production capacity and is
expected to improve efficiencies due to enhanced manufacturing flow. The land
and the building design will also accommodate a 30,000 sq. ft. expansion for
future growth. The Company's subsidiary, Magnetran, Inc., continues to operate
in one facility located in New Jersey.
The Company secured financing for the construction of the facility in
August 1995 (see Note 4 to the Consolidated Financial Statements for further
detail).
PLASMA-THERM PRODUCT LINES
The Company manufactures various product lines that perform thin film
etching and deposition. Several products utilize batch processing in which
wafers or substrates are placed into the plasma chamber and processed
simultaneously. Also, the Company's products permit single wafer or substrate
processing.
The Company's thin film etching systems provide a combination of Reactive
Ion Etching (RIE), Plasma-Etching (PE), Electron Cyclotron Resonance (ECR), and
Inductively Coupled Plasma (ICP) capability, which permits advanced process
applications for Gallium Arsenide, Indium Phosphide, Chrome, Quartz, Silicon
Dioxide, Amorphous Silicon, Silicon, Indium Tin Oxide, Molybdenum, Aluminum,
Aluminum Oxide and various other materials.
The Company also offers Plasma Enhanced Chemical Vapor Deposition (PECVD)
systems for depositing Amorphous Silicon, Silicon Nitride, Silicon Dioxide,
diamond-like carbon and other materials.
The Company's plasma systems are divided into two groups. The core (batch)
group consists of three products lines: (1) 790 Series, (2) Shuttlelock(R)
Series, and (3) the 7000 Series. The second or automated group of products
consists of the Versalock(R) 700 and Clusterlock(R) 7000 Series. These groups
of products permit our customers to go from research and development to pilot
production and then on to high volume manufacturing, utilizing the Company as
their primary supplier.
The three core product lines are marketed as related products to a wide
range of industries (see Item 1, Business, General). They are modular in design
with components that are largely interchangeable. The automated group of
products are targeted specifically to high volume manufacturers of thin film
heads, compound semiconductors and flat panel displays.
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In addition to plasma systems, the Company produces specialty power
subsystems and devices.
790 Series
The 790 Series RIE, PECVD and ICP plasma system are the most widely
accepted research and development plasma processing systems. The 790 Series has
been extremely successful in the marketplace as the successor to the System VII
70 and 700 Series. The 790's advanced 80486 control system coupled with
increased flexibility has significantly improved its marketability. The 790
Series is primarily used for advanced research and development and pilot
production of compound semiconductor devices.
Shuttlelock(R) Series
The Shuttlelock(R) Series RIE, PECVD, ECR and ICP plasma systems continue
to be the Company's most successful products. The Shuttlelock(R) Series
enhanced 80486 control system and other unique features, continues to provide
excellent marketability. The Shuttlelock(R) is a loadlocked single or dual
chamber plasma processing system. The loadlock allows the processing chambers
to remain under vacuum, thus permitting increased process integrity. The
Shuttlelock(R) is used for pilot production and production of compound
semiconductor devices, opto-electronics, photomasks, MEMS systems and thin film
head manufacturing.
7000 Series
The 7000 Series RIE and PECVD systems were originally introduced in 1987
and received a complete redesign in 1995. This series of manually loaded plasma
systems are unique because of their 24 inch diameter electrode areas. This
makes the product attractive for use on either large area substrates or large
load batches of medium or small substrates. The 7000 Series is primarily used
for high volume manufacturers of thin film heads and compound semiconductor
devices .
Versalock(R) 700 Series
The Versalock(R) 700 Series RIE, PECVD, and ICP plasma systems are among
the Company's newest products and are a natural extension of the Shuttlelock(R)
Series. All processes developed using the Company's Shuttlelock(R) chamber
platform can be transferred directly to the Versalock(R) 700 system. The
Versalock(R) 700 is the Company's first plasma system platform where multiple
product generations will be developed using the same substrate handling
mechanisms. The Versalock(R) 700 has a central handler (square loadlock) that
permits up to three processing modules. The Versalock(R) 700 is available with
manual or cassette-to-cassette capability allowing it to meet advanced research
and development and or volume production requirements of the compound
semiconductor, thin film head, photomask, MEMS system markets.
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Clusterlock(R) 7000 Series
The Clusterlock(R) 7000 (CLR-7000) Series flat panel display plasma
processing system was introduced in late 1993. The CLR-7000 system was designed
to penetrate the flat panel display manufacturing industry. The CLR-7000 is
used by manufacturers of flat panel displays during the micro-structure
formation process. This formation process is essential in the production of flat
panel displays for notebook computers, personal computers, work stations,
avionics and marine navigation equipment. The potential exists for flat panel
displays to be used for televisions in the future.
The CLR-7000 offers a multi-chamber system configuration that combines
cassette-to-cassette vacuum transfer and "Class One" cleanliness with reduced
contamination, high throughput (yield) and ultimately lower costs of ownership.
Specialty Power Subsystems and Devices
The Company's wholly-owned subsidiary, Magnetran, Inc., is in the business
of manufacturing transformers, reactors, power centers and related components.
These products are used by manufacturers of induction melting furnaces, RF power
supplies and AM/FM broadcast transmitters.
MANUFACTURING AND SUPPLIES
The Company designs and develops a substantial portion of its systems'
components. The Company has multiple potential commercial sources for all of
its components and sub-assemblies that it acquires from outside vendors,
although it often uses a single vendor for a given item to achieve consistency,
favorable pricing and dependable close relationships. The Company maintains a
significant inventory due to lengthy lead times of certain components,
aggressive customer delivery requirements and the need to provide quality parts
and service to its customers.
PATENTS AND TRADEMARKS
The Company believes that its success is generally less dependent upon
patent protection than on the scientific and engineering skills which are
applied to its products. The Company believes that licenses for products or
processes that are developed in the future could be valuable components of its
business strategy and intends to grant or seek such licenses and agreements and
seek possible patent protection, wherever it deems appropriate.
RESEARCH AND DEVELOPMENT
The market served by the Company is characterized by rapid and constant
technological change. There is no assurance that the Company's current products
will be
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viable for extended time periods. Accordingly, the Company spends substantial
resources for research and product development directed toward improving
existing products and developing new products.
During fiscal years ended November 30, 1996, 1995 and 1994, the Company
spent approximately $2,880,000, $2,570,000 and $2,266,000, respectively, for
research and product development.
No assurance can be given that the Company will be technologically or
commercially successful in these or in any other research and product
development efforts. As of November 30, 1996, 30 employees were engaged
primarily in research and product development activities.
MARKETING, SALES AND SERVICE
In the United States, the Company sells its products through a combination
of direct sales (West Coast, Southwest, Mid-Atlantic, Northeast) and one
manufacturer's representative. Service is provided directly with locations in
Vermont, New Jersey, Michigan, Minnesota, Texas, Florida, California, Arizona
and Idaho.
A substantial portion of the Company's markets is outside of the United
States. In Japan, the Company distributes its products exclusively through its
distributor, Hakuto Co., Ltd., located in Tokyo. Hakuto purchases the Company's
products for resale for its own account and provides sales and service through
several locations in Japan.
Sales of the Company's products in Europe are handled through a network of
manufacturer's representatives managed by the Company's direct sales office
located in Somerset, England. Service is provided by locations in England and
Ireland.
In the Far East (other than in Japan), sales are handled exclusively by
manufacturer's representatives. Far Eastern service is supported by the
manufacturer's representatives and the Company directly.
The Company's marketing efforts include the operation of a process
demonstration laboratory in Florida. The Company's exclusive Japanese
distributor, Hakuto Co., Ltd. operates a system demonstration facility. Process
and demonstration laboratories are used to demonstrate system performance on
customer wafers and substrates as part of the sales process, as well as in
research and development.
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The following table sets forth the estimated percentages of revenues
represented by the Company's principal areas of activity for the periods
indicated:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
----------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Area Revenues
- -------------
Domestic ............................ 61% 69% 69%
Foreign ............................ 39% 31% 31%
--- --- ---
Total 100% 100% 100%
Product Revenues
- ----------------
Plasma systems (1)................... 94% 94% 94%
Other (2) ........................... 6% 6% 6%
--- --- ---
Total 100% 100% 100%
</TABLE>
See Note 8 to the Financial Statements under Item 8 for additional foreign and
domestic operations and export sales information.
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(1) Includes core products and automated products.
(2) Includes transformers and other systems.
A substantial amount of equipment is sold by the Company with applications
support and warranties of the systems' ability to perform the desired process
within specified limits. In substantiating those warranties, the Company offers
customers the opportunity to perform tests on the customers' sample wafers and
substrates in the Company's process laboratories. The warranty period is
approximately one year from date of shipment.
Sales to Hakuto Co., Ltd., the Company's current Japanese distributor
(since September 1995), amounted to 8% of total revenues in 1996. Sales to
Nissin Hi-Tech, Inc./Nissin Electric Co., Ltd., the Company's Japanese
distributor until August 1995, amounted to 7% and 13% of total revenues in 1995
and 1994, respectively.
Backlog
The Company's backlog, as of November 30, 1996 and 1995 was approximately
$12,000,000. Backlog orders consist solely of those items for which a delivery
schedule has been specified and to which the customer has assigned a purchase
order number. Orders generally are subject to cancellation by the customer upon
payment of charges which vary depending on the nature of the order and the
timing of the cancellation. It is expected that substantially all of the
November 30, 1996 backlog will be shipped during fiscal year 1997.
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COMPETITION
Core Products
The Company experiences substantial competition in marketing all of its
core products. Competition comes mainly from Oxford Plasma Technology and
Surface Technology Systems (STS) based in Europe and SamCo Corporation located
in Japan. Due to the Company's locally available Applications Laboratory and
substantially larger service organization and installed base, it maintains
competitive advantages in selling its products in the United States. Conversely,
the Company experiences significantly greater competition in Europe and Japan
because of its competitors' locations.
Automated Products
The competition for the Versalock(R) 700 system is Surface Technology
Systems (STS), Electrotech, Anelva and Ulvac. The Company experiences global
competition for the CLR-7000 flat panel display manufacturing system. Several
competitors include Tokyo Electron LTD (TEL), ULVAC, Lam Research and Applied
Komatsu Technology.
Principal competitive factors include system performance, cost of
ownership, size of installed base, diversity of product line and overall
customer support. The Company's competitors have more experience with complex
high-volume manufacturing, broader name recognition, substantially larger
customer bases and greater financial, technical, and marketing resources.
Therefore, there can be no assurance that the Company's competitors will not
develop systems and features that are superior to the Company's.
EMPLOYEES
As of November 30, 1996, the Company had 151 full-time employees, 119 of
whom are employed in Florida, 16 in New Jersey, 6 in Europe, with the remaining
10 located in its sales and service offices throughout the United States. Of
such employees, 25 are executive or administrative, 29 are sales and service, 67
are manufacturing and 30 are research and development personnel. Management
believes, that in general, its employee relations are good. The Company
currently does not have any collective bargaining agreements.
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EXECUTIVE OFFICERS OF THE COMPANY AND KEY EMPLOYEES
Executive Officers
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Ronald H. Deferrari 56 Chairman of the Board,
Chief Executive Officer, Treasurer,
Ronald S. Deferrari 33 President, Chief Operating Officer
Diana M. DeFerrari 34 Senior Vice President, Secretary
Edmond A. Richards 46 Vice President of Engineering
Stacy L. Wagner 33 Vice President of Finance, Controller
</TABLE>
- ----------------------
Ronald H. Deferrari is the founder of the Company and the father of Ronald
S. Deferrari and Diana M. DeFerrari. Mr. Deferrari served as President of the
Company since its formation in 1975 until Ronald S. Deferrari became President
in 1995.
Ronald S. Deferrari was named President in June 1995 and has been employed
with the Company in various capacities since 1983. Mr. Deferrari was appointed
Chief Operating Officer in 1993. Prior to his current position, he was
Executive Vice President and Director of Sales and Marketing.
Diana M. DeFerrari was named Senior Vice President in September 1996 and
has been employed with the Company for seven years. Ms. DeFerrari was appointed
Secretary of the Corporation in May 1994. Prior to her current position, she was
Vice President of Administration and has worked for the Company in related
administrative capacities since 1990. Ms. DeFerrari holds a Masters Degree in
Business Administration.
Edmond A. Richards, PE, was appointed Vice President of Engineering in
October 1996. Mr. Richards has been Director of Engineering since 1994 and has
been employed with the Company for twenty years. Since 1991 Mr. Richards has
held various engineering management positions and prior to this, he served as
General Manager of the Company for 11 years. Mr. Richards holds a BS in
Electrical Engineering.
Stacy L. Wagner, CPA, was named Vice President of Finance in June 1995 and
has been with the Company as Controller since July 1993. Prior to joining
Plasma-Therm, Ms. Wagner was Audit Supervisor/Manager for Grant Thornton for
over two years.
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Other Key Employees
Dr. David J. Johnson, Process Scientist, has sixteen years experience in
the plasma processing field and has been employed with Plasma-Therm since 1979.
Dr. Johnson was recently named Director of Research and Development with
responsibility for overall Company's research and development. He is a widely
acknowledged expert in the area of metal etching for the manufacture of silicon
integrated circuits and complements this with knowledge and publications in
virtually every aspect of plasma processing.
Dr. Christopher Constantine, Applications Manager, has been employed with
the Company since 1984. He has acquired considerable experience working in the
ECR and ICP plasma processes after an extensive career in traditional parallel
plate plasmas, and is widely acknowledged for his expertise.
ITEM 2. PROPERTIES
The Company constructed a 60,000 square foot building in St. Petersburg,
Florida where its operations are conducted. The building was completed in June
1996. In August, 1995 the Company executed a promissory note for $3,375,000
with its bank for the construction of the facility. In June 1996, the
completion of the construction phase, the note converted to a five year term
loan, amortized over a fifteen year period. The loan is payable in monthly
installments of $33,235, including interest at 8.5% beginning in July 1996. The
loan is collateralized by the land, the building and its contents. The
Company's subsidiary, Magnetran, Inc., continues to operate in one facility
located in New Jersey.
Prior to the completion of the construction of the new manufacturing
facility in June 1996, the Company conducted a majority of its operations from
leased facilities. Since October 1995, when the lease term of its Florida
corporate and manufacturing facilities expired, the Company began leasing the
facilities on a month-to-month basis and continued do so until the completion of
the construction of the new facility. The monthly rental amount was
approximately $43,000.
In August 1996 the Company executed a lease with its bank for furniture for
its new manufacturing facility. Total minimum lease payments are $466,080 to be
paid in 60 monthly installments beginning in August 1996. At the end of the
initial term the Company has the option to extend the lease for an additional
twelve months or purchase the furniture at the then fair market value.
In addition, the Company leased approximately 48,360 square feet in New
Jersey where the Company's subsidiary, Magnetran, Inc. resides. The leases
expired October 31, 1994. The premises were leased from the CEO of the Company
at an aggregate base rental of $135,207 for 1994. In addition to the minimum
base rent, the Company paid taxes, insurance and maintenance relating to the
leased properties. Magnetran, Inc. entered into a 5 year gross lease, with the
Company's CEO, commencing November 1, 1994 for approximately 17,750 square feet
in New Jersey. The premises are leased at an aggregate annual base rental of
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$86,841, which escalates 3% annually. After the initial term of the lease,
Magnetran has an option to renew for five years with a 3% increase each year.
The aggregate rentals paid to the CEO for all leases for the years ended
November 30, 1996, 1995 and 1994, were approximately $90,000, $87,000 and
$225,500, respectively.
ITEM 3. LEGAL PROCEEDINGS
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No material litigation is pending.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the NASDAQ National Market
under the symbol PTIS. The following table sets forth the range of high and
low trade prices for the Common Stock for fiscal 1995 and fiscal 1996 as
reported by NASDAQ. The Company began trading on the NASDAQ National Market
on June 6, 1996 and previously traded on the NASDAQ SmallCap Market. As of
January 22, 1997, the closing price of the Company's Common Stock was $5.50.
<TABLE>
<CAPTION>
FISCAL 1995 HIGH LOW
----------- ---------- ------------
<S> <C> <C>
First quarter $ 9-1/16 $ 4-1/2
Second quarter 5-5/8 3-1/4
Third quarter 4-15/16 3-1/2
Fourth quarter 4-5/16 2-9/16
FISCAL 1996 HIGH LOW
----------- ---------- ------------
First quarter $ 3-1/4 $ 2
Second quarter 4-11/16 2-1/8
Third quarter 5-11/16 3-1/4
Fourth quarter 4-3/4 2-13/16
</TABLE>
As of January 22, 1997, there were 696 record holders of the shares of
Common Stock.
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There have been no dividends declared during 1996. The Company entered
into a new loan agreement with NationsBank of Florida, N.A. (NationsBank) in
November 1995. That agreement contains covenants which relate to the Company's
operating performance and financial condition. In addition, the loan
agreement requires prior consent from the lender before declaring any cash
dividends. Under the most restrictive covenant, none of the Company's retained
earnings at November 30, 1996 are free of limitations on payment of cash
dividends. For the foreseeable future, the Company anticipates that any net
earnings will continue to be retained by the Company as working capital.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
---------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ------------- -------- ------------ ------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Statement of
Operations:
Revenues $37,862 $29,612 $23,318 $16,401 $17,497
Net Income 2,994 1,089 1,963 233 55
Net Income per
common share .28 .10 .22(1) .03 .01
</TABLE>
(1) Includes .04 increase (from .18 to .22) as a result of the cumulative effect
of adopting SFAS 109 (see Note 1 to the Consolidated Financial Statements).
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Balance Sheet at end
of period:
Working Capital $16,319 $15,102 $10,114 $ 7,647 $ 6,953
Total assets 31,475 26,909 16,583 10,824 11,539
Total long-term
obligations 3,589 1,147 811 66 332
Shareholders' Equity 22,219 18,972 11,105 8,623 8,266
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The dollar amounts referenced throughout this section are
approximations, rounded to the nearest ten thousand ($10,000). References to
years are to the Company's fiscal years ended November 30 of the year referred
to.
RESULTS OF OPERATIONS
Comparison of Fiscal 1996 and Fiscal 1995
For fiscal 1996 the Company reported net sales of $37,860,000, 28%
higher than sales of $29,610,000 for fiscal 1995. The increase in sales was
attributable to higher product demand and sales of the Company's newest
products, the Versalock(R) 700 Series and the Shuttlelock(R) 770 ICP Series.
Sales of the Versalock(R) 700 Series began in the fourth quarter of 1995 while
sales of the Shuttlelock (R) 770 ICP Series began in fiscal 1996. Total sales
related to Versalock(R) 700 Series in 1996 and 1995 was $16,210,000 and
$2,560,000, respectively. Total sales related to the Shuttlelock(R) 770 ICP
Series was $2,390,000 in 1996.
Cost of products sold of $23,480,000 for fiscal 1996 is 62% of net
sales, compared to $20,240,000 for fiscal 1995 which is 68% of net sales. The
decrease is primarily due to a combination of higher margins related to the
sales of the Versalock(R) 700 Series in 1996 and lower margins on the
Clusterlock(R) 7000 sales in 1995.
For comparative purposes and to be consistent with the Company's peer
groups, in 1995 and 1994 field service costs, including warranty, have been
reclassified entirely from selling and administrative to cost of products sold.
Warranty expense in 1996 was $660,000 as compared to $1,200,000 in
1995 . A large component of the $540,000 difference between the years relates
to a provision established in 1995 for Clusterlock(R) 7000 systems sold. In
1996 the Clusterlock(R) 7000 sales were substantially lower. The Company's
increase in net sales in 1996 did not result in a corresponding increase in
warranty provision because the increase in sales related primarily to the
Versalock(R) 700 series which has lower warranty costs compared to the
Clusterlock(R) 7000 and certain other of the Company's products. On an ongoing
basis management analyzes the Company's actual warranty experience, along with
its industry's experience and other factors, and will accordingly adjust its
warranty reserves as deemed necessary.
Also included in cost of products sold in 1996 and 1995 is a provision
for inventory obsolescence of $390,000 and $340,000, respectively. The
Company's inventory provisions are determined by management considering, among
other factors, the results of an ongoing review of inventory and analysis of
product lines.
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Research and development expenses for fiscal 1996 were $2,880,000 compared
to $2,570,000 in fiscal 1995, which are 8% and 9% of net sales, respectively.
Although the percentage of research and development expense to net sales has
decreased slightly, total dollars spent has increased by $310,000. A portion of
research and development expenses are fixed costs; therefore the percentage as
it relates to net sales is lower in fiscal 1996 as compared to fiscal 1995 since
net sales increased significantly by 28% from 1995 to 1996. As new products
continue to be introduced, total dollars expended on research and development
are expected to increase.
Selling and administrative expense for the year ended November 30, 1996 was
$6,540,000 up from $5,090,000 for the year ended November 30, 1995 which is 17%
of net sales for both years. A portion of the dollar increase relates to
increased sales volume and costs associated with the move to the Company's new
manufacturing facility in June, 1996. In addition, $270,000 relates to
termination payments which will be paid in 1997 and 1998, to a former officer of
the Company under his employment agreement. Also, in 1996 commissions paid to
international sales representatives amounted to $950,000, a $550,000 increase
over 1995 commissions of $400,000. The increase in international sales
representative commissions directly relates to a 60% increase international
sales from $9,190,000 to $14,760,000 in 1996. In addition, foreign sales as a
percentage of total sales increased 8% from 31% in 1995 to 39% in 1996.
Income before income taxes for fiscal 1996 was $4,850,000, an increase of
approximately $3,050,000 from $1,800,000 earned in fiscal 1995. Net income per
share was $.28 for 1996, an increase of $.18 from $.10 for the year ended
November 30, 1995. The components of this increase are described above.
Statement of Financial Accounting Standards (SFAS) No. 123 "Accounting for
Stock-Based Compensation" was issued by the Financial Accounting Standards Board
in October 1995. Management has the option to continue using the accounting
method promulgated by the Accounting Principals Board No. 25 "Accounting for
Stock Issued to Employees" to measure compensation as it relates to employee
stock options granted or to adopt the method prescribed by SFAS No. 123.
Management has made the determination not to adopt SFAS No. 123's accounting
recognition provisions for employee stock options. Therefore, only proforma
disclosures under SFAS No. 123 are required after December 1, 1996.
Comparison of Fiscal 1995 and Fiscal 1994
For fiscal 1995, the Company reported sales of $29,610,000, 27% higher than
sales of $23,320,000 for fiscal 1994. The increase in sales was attributable to
higher product demand, increase in Clusterlock(R) 7000 sales and sales of the
newly introduced Versalock(R) product line.
Cost of products sold of $20,240,000 for fiscal 1995 was 68% of net sales,
compared to 66% in the prior year. The increase related primarily to lower
margins on Clusterlock(R) 7000 orders. The initial Clusterlock(R) 7000 sales
were taken at lower margins
-13-
<PAGE> 16
to enable the Company to gain market share. In addition, the planned
recognition of $550,000 for field service costs (principally warranty costs for
both the Clusterlock(R) 7000 sales and the Company's other product lines) and a
write-off of slow-moving inventory of $340,000 contributed to higher cost of
products sold.
Research and development expense for fiscal 1995 was $2,570,000 compared to
$2,270,000 in fiscal 1994, which were 9% and 10% of net sales, respectively.
Although the percentage of research and development expense to net sales
decreased slightly, total dollars spent increased.
Selling and administrative expense for the year ended November 30, 1995 was
$5,090,000, up from $3,660,000 for the year ended November 30, 1994 which was
17% and 16% of net sales, respectively. In 1995 additional expenditures were
incurred related to the evaluation, initial purchase and implementation of new
manufacturing and financial computer software.
Income before income taxes for fiscal 1995 was $1,800,000 , a slight
decrease of approximately $150,000 from $1,950,000 earned in fiscal 1994. The
decrease was due primarily to a 2% increase in cost of products sold, as
discussed above.
Net income per share was $.10 and $.22 for the years ended November 30,
1995 and 1994, respectively. Net income per share, before the cumulative effect
of change in accounting principle in 1994 was $.18. Furthermore, the reduction
of the income tax valuation allowance of $330,000, which reduced income tax
expense for 1994, had the effect of increasing income before the cumulative
effect from $.14 to $.18 per share. The remaining $.04 decrease from fiscal
1994 to fiscal 1995 was primarily the result of a slight decrease in income
before income taxes discussed above and an increase of shares of common stock
outstanding as a result of the private placement offering in December 1994 for
the sale of 1,500,000 shares.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL REQUIREMENTS
Working capital at November 30, 1996 was $16,320,000, which is an increase
of $1,220,000 over $15,100,000 at November 30, 1995. Working capital in 1996
benefited from, among other things, funds provided by the Company's increased
earnings from its operations in 1996 which also allowed the Company to pay down
short term borrowings by $1,000,000. See the following discussion of the
Company's cash position which also supplements this commentary on working
capital.
-14-
<PAGE> 17
Cash at November 30, 1996 was $5,270,000 which is an increase of $210,000
over $5,060,000 at November 30, 1995. The primary components of this increase
are described herein. The following discussion highlights certain aspects of
the Company's cashflow activities impacting cash along with certain related
balance sheet line items. The activities to be discussed are as follows:
<TABLE>
<CAPTION>
NET CASH PROVIDED BY
(USED IN)
----------------------------
1996 1995 INC(DEC)
------------- ------------- -------------
<S> <C> <C> <C>
Operating Activities $ 4,010,000 $ (840,000) $ 4,850,000
Investing Activities (5,560,000) (4,150,000) (1,410,000)
Financing Activities 1,760,000 7,430,000 (5,670,000)
</TABLE>
Net cash provided by operating activities in 1996 was $4,010,000 compared
to net cash used in operating activities of ($840,000) in 1995. This $4,850,000
change, which is an increase, consists of various components including the
increase in net income in 1996 compared to 1995 of almost $2 million and
approximately a $3 million decrease in the change in accounts receivable between
the years. Accounts receivable only increased $160,000 in 1996. The explanation
for this small increase in accounts receivable includes, among other things,
enhanced collection policies in 1996 and timing of sales and related payments.
While net sales increased approximately 28% between fiscal year 1995 and 1996,
the Company's accounts receivable and inventory at November 30, 1996 do not
reflect a corresponding increase of a similar magnitude. The reason accounts
receivable did not noticeably increase has been discussed above. Inventory
actually decreased by $100,000 which is primarily due to refined material
requirements planning and enhanced inventory management as it relates to the
implementation of the Company's new manufacturing software in 1996.
Net cash used in investing activities for 1996 was $5,560,000 compared to
$4,150,000 in 1995. This $1,410,000 change, which is an increase, relates
primarily to additional costs in 1996 of $770,000 for the construction of the
Company's new facility and $500,000 for additional software and hardware
purchases of its new manufacturing system. In 1996 the Company incurred
$5,380,000 in capital expenditures of which $2,980,000 consist of the costs
relating to the construction of the new facility discussed elsewhere herein (See
Item 1, Recent Developments), $1,180,000 relates to outlays for manufacturing
software, computer hardware, telephone system and inventory storage system, and
$1,220,000 relates to lab systems used for research and development.
Net cash provided by financing activities for 1996 was $1,760,000 compared
to $7,430,000 in 1995. This $5,670,000 change, which is a decrease, relates
primarily to the receipt of proceeds of $5,760,000 from a private placement in
1995. In 1996 cash used for financing activities included the principal
repayment of $570,000 of notes payable and capital lease obligations and the
reduction of the line of credit by $1,000,000.
-15-
<PAGE> 18
In 1996 the Company incurred $2,600,000 of debt related to the construction
of the new building. On June 14, 1996, the completion of the construction
phase, the construction loan, which totaled $3,375,000 at the date of
completion, converted to a five year term loan, amortized over fifteen years.
The loan is payable in monthly installments of $33,235, including interest at
8.5% beginning July 15, 1996. The loan is collateralized by the land, the
building and its contents and includes covenants which relate to the Company's
operating performance and financial condition loan (See Note 3 to the
Consolidated Financial Statements). At November 30, 1996 the Company is in
compliance with the financial covenants contained in the loan. The Company also
incurred $500,000 of debt related to the purchase of software and hardware.
The Company has extensive ongoing capital requirements for research and
development, the repayment of debt, capital equipment and inventory. The
Company believes that its current cash reserves, working capital expected to be
generated by operations and additional funds available under its line of credit,
should be sufficient to meet its capital requirements for the immediate future.
Should order input exceed projected 1997 levels, additional working capital may
be required.
FORWARD LOOKING INFORMATION
From time to time, the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products, research and development
activities and similar matters. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. In order to comply
with the terms of the safe harbor, the Company notes that a variety of factors
could cause the Company's actual results and experience to differ materially
from the anticipated results or other expectations expressed in the Company's
forward-looking statements. The risks and uncertainties that may affect the
operations, performance, development and results of the Company's business
include but is not limited to the following:
The Company sells relatively expensive capital equipment, and in any given
quarter or financial period, any one customer or any individual shipment may
represent a significant portion of revenue in that period. Therefore a delay or
cancellation of that shipment could cause the Company to experience a revenue or
earnings shortfall for a given financial period.
The Company relies on distributors and representatives, which complement
its direct sales and service staff, to sell and service its products in various
geographic locations. Should these sales and service channels be rendered
ineffective, it could materially impact the Company's business. Some of the
Company's competitors have more extensive direct sales and service locations in
the Company's distributor's and representatives' channels, which could provide
these competitors with a competitive advantage in certain geographic areas.
-16-
<PAGE> 19
Plasma-Therm depends heavily on the success and growth of the high
technology marketplace. In particular, a slowdown in personal computer
consumption could cause a slowdown of disk drive production, resulting in lower
output of thin film heads, which could materially effect the Company's business.
The Company also relies on the health of the general semiconductor
equipment marketplace. A slowdown in the semiconductor capital equipment
purchases could also affect the Company's business from time to time.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX
-----
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Accountants' Report 18
Consolidated Financial Statements
Balance Sheets - November 30, 1996, and 1995 19
Statements of Income - Years Ended 21
November 30, 1996, 1995, and 1994
Statements of Shareholders' Equity - Years Ended 22
November 30, 1996, 1995, and 1994
Statements of Cash Flows - Years Ended 23
November 30, 1996, 1995, and 1994
Notes to the Financial Statements 25
</TABLE>
-17-
<PAGE> 20
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Shareholders and Board of Directors
Plasma-Therm, Inc.
We have audited the accompanying consolidated balance sheets of Plasma-Therm,
Inc. and Subsidiary as of November 30, 1996 and 1995, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended November 30, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Plasma-Therm, Inc.
and Subsidiary as of November 30, 1996 and 1995, and the consolidated results of
their operations and their consolidated cash flows for each of the three years
in the period ended November 30, 1996 in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the financial statements, effective December 1, 1993
the Company changed its method of accounting for income taxes from the deferred
method to the liability method required by Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes".
GRANT THORNTON LLP
Tampa, Florida
January 14, 1997
-18-
<PAGE> 21
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Plasma-Therm, Inc., a Florida corporation, together with its
subsidiary (the "Company"), is engaged in the design and production
of semiconductor and flat panel display manufacturing equipment. The
Company sells this equipment directly to manufacturers in the
semiconductor, thin film head, computer, flat panel display,
telecommunications and other industries. The Company's products are
marketed, together with service and technical support, by the
Company's domestic sales force, its Japanese distributor and
independent domestic and foreign manufacturer's representatives.
Principles of Consolidation
The consolidated financial statements include the accounts of
Plasma-Therm, Inc. and its wholly-owned subsidiary, Magnetran, Inc..
All significant intercompany transactions and balances have been
eliminated.
Use of Estimates in Financial Statements
In preparing financial statements in conformity with generally
accepted accounting principles, management makes estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements, as well as the reported amounts
of revenues and expenses during the reporting period. While actual
results could differ from those estimates, management does not expect
the variances, if any, to have a material effect on the financial
statements.
Cash Equivalents
For purposes of the consolidated statements of cash flows, the
Company considers all highly liquid investments purchased with
maturities of three months or less to be cash equivalents. The
Company utilizes an overnight automated investment account for
sweeping of funds. The overnight investment account is held in
repurchase agreements backed by U.S. government securities.
Accounts Receivable and Bad Debts
The Company considers accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts is required. If
amounts become uncollectible, they will be charged to operations when
that determination is made. Bad debts have not been material.
Inventories
Inventories are stated at the lower of cost or market. Cost was
determined using the first-in, first-out (FIFO) method for
substantially all inventories.
-25-
<PAGE> 22
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
November 30,
<TABLE>
<CAPTION>
ASSETS 1996 1995
----------- -----------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 5,266,279 $ 5,058,718
Accounts receivable 8,046,130 7,882,427
Prepaid income taxes 94,233 18,048
Inventories 7,958,620 8,059,333
Prepaid expenses and other 232,650 269,875
Deferred tax asset 388,313 603,000
----------- -----------
Total current assets 21,986,225 21,891,401
----------- -----------
Property, plant and equipment
Building 4,394,649 -
Machinery and equipment 6,026,387 4,074,793
Leasehold improvements 142,915 419,263
----------- -----------
10,563,951 4,494,056
Less accumulated depreciation and
amortization 2,155,143 1,954,377
----------- -----------
8,408,808 2,539,679
Land 786,017 786,017
Construction in process - 1,417,353
----------- -----------
9,194,825 4,743,049
----------- -----------
Other assets
Deferred tax asset - 182,850
Other 294,126 91,720
----------- -----------
294,126 274,570
----------- -----------
$31,475,176 $26,909,020
=========== ===========
</TABLE>
See accompanying notes to these consolidated financial statements.
-19-
<PAGE> 23
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
November 30,
<TABLE>
<CAPTION>
LIABILITIES 1996 1995
----------- -----------
<S> <C> <C>
Current liabilities
Short-term borrowings $ 1,000,000 $ 2,000,000
Current portion of notes payable 443,946 343,647
Current maturities of obligations under
capital leases 80,955 73,010
Accounts payable 2,223,826 2,920,079
Accrued payroll and related 676,674 402,649
Accrued expenses 414,094 356,895
Accrued warranty reserve 610,000 693,515
Customer deposits 218,000 -
----------- -----------
Total current liabilities 5,667,495 6,789,795
----------- -----------
Long-term obligations
Notes payable 3,431,475 908,485
Obligations under capital leases 157,519 238,475
----------- -----------
3,588,994 1,146,960
----------- -----------
SHAREHOLDERS' EQUITY
Shareholders' equity
Common stock
$.01 par value
Authorized - 25,000,000 shares
Issued and outstanding - 10,396,061
shares - 1996 and 10,279,561 shares -
1995 103,962 102,797
Additional paid-in capital 14,897,446 14,645,775
Retained earnings 7,217,279 4,223,693
----------- -----------
22,218,687 18,972,265
----------- -----------
$31,475,176 $26,909,020
=========== ===========
</TABLE>
See accompanying notes to these consolidated financial statements.
-20-
<PAGE> 24
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Year Ended November 30,
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net sales $ 37,862,185 $ 29,611,625 $ 23,318,465
------------ ------------ ------------
Costs and expenses
Cost of products sold 23,480,636 20,236,670 15,434,128
Research and development 2,880,226 2,569,700 2,266,133
Selling and administrative 6,540,588 5,090,944 3,655,400
Interest expense 342,203 203,211 101,483
Interest income (269,791) (336,435) (94,839)
Other (income) expense, net 33,948 51,736 4,272
------------ ------------ ------------
33,007,810 27,815,826 21,366,577
------------ ------------ ------------
Income before income taxes and cumulative
effect of change in accounting principle 4,854,375 1,795,799 1,951,888
Income taxes (current and deferred) 1,860,789 706,857 338,869
------------ ------------ ------------
Income before cumulative effect of change
in accounting principle 2,993,586 1,088,942 1,613,019
Cumulative effect of change in
accounting for income taxes - - 350,000
------------ ------------ ------------
Net income $ 2,993,586 $ 1,088,942 $ 1,963,019
============ ============ ============
Income per share (primary and fully dilutive)
Income before cumulative effect of
change in accounting principle $ 0.28 $ 0.10 $ 0.18
Cumulative effect of change
in accounting principle - - 0.04
------------ ------------ ------------
$ 0.28 $ 0.10 $ 0.22
============ ============ ============
</TABLE>
See accompanying notes to these consolidated financial statements.
-21-
<PAGE> 25
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Years Ended November 30, 1996
<TABLE>
<CAPTION>
Additional
Paid-in Retained
Common Stock Capital Earnings
------------------------------------- -------------- -------------
Shares
Issued Amount Amount Amount
--------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Balance at November 30, 1993 8,225,561 82,257 7,368,679 1,171,732
Exercise of stock options
(inclusive of income tax benefits) 203,000 2,030 324,925 -
Compensation on unexercised
stock options - - 192,253 -
Net income - - - 1,963,019
--------------- -------------- -------------- -------------
Balance at November 30, 1994 8,428,561 84,287 7,885,857 3,134,751
Exercise of stock options
(inclusive of income tax benefits) 101,000 1,010 222,621 -
Exercise of warrants
(inclusive of income tax benefits) 250,000 2,500 524,939 -
Compensation on unexercised
stock options - - 183,908 -
Sale of 1,500,000 shares of
common stock, net of
offering costs 1,500,000 15,000 5,744,097 -
Repayment of obligations under
Section 16(b) of the Securities
Exchange Act of 1934 - - 84,353 -
Net income - - - 1,088,942
--------------- -------------- -------------- -------------
Balance at November 30, 1995 10,279,561 102,797 14,645,775 4,223,693
Exercise of stock options
(inclusive of income tax benefits) 116,500 1,165 240,466 -
Compensation on unexercised
stock options - - 11,205 -
Net income - - - 2,993,586
--------------- -------------- -------------- -------------
Balance at November 30, 1996 10,396,061 $ 103,962 $ 14,897,446 $ 7,217,279
=============== ============== ============== =============
</TABLE>
See accompanying notes to these consolidated financial statements.
-22-
<PAGE> 26
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended November 30,
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 2,993,586 $ 1,088,942 $ 1,963,019
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 934,464 692,944 424,018
(Gain) loss on disposal of assets 14,066 15,323 (16,097)
Deferred taxes 397,537 (79,470) (295,469)
Compensation - stock options 33,306 183,908 192,253
Cumulative effect of change in accounting for
income taxes - - (350,000)
Changes in assets and liabilities
Increase in accounts receivable (163,703) (3,156,551) (1,191,771)
(Increase) decrease in prepaid income taxes
(exclusive of tax benefits derived from
exercise of options/warrants) (65,745) 416,748 231,965
(Increase) decrease in inventories 100,713 (1,277,135) (2,293,064)
Increase in prepaid expenses and other (7,775) (6,306) (35,694)
Increase (decrease) in accounts payable (696,253) 1,462,166 75,230
Increase (decrease) in billings in excess of costs and
estimated earnings on uncompleted contracts - (27,330) 27,330
Increase in accrued payroll and related 274,025 11,736 172,164
Increase (decrease) in accrued warranty reserve (83,515) 550,515 143,000
Increase (decrease) in accrued expenses 57,199 171,937 (24,547)
Increase (decrease) in income taxes payable - (151,962) 127,036
Increase (decrease) in customer deposits 218,000 (738,000) 738,000
----------- ----------- -----------
Net cash provided by (used in)
operating activities 4,005,905 (842,535) (112,627)
----------- ----------- -----------
Cash flows from investing activities
Capital expenditures (5,382,421) (4,154,073) (453,592)
Proceeds from sales of assets 12,115 - 63,300
Payments received on note receivable 45,000 60,000 60,000
License acquisition (297,462) - -
Other 65,056 (55,816) (24,887)
----------- ----------- -----------
Net cash used in
investing activities (5,557,712) (4,149,889) (355,179)
----------- ----------- -----------
</TABLE>
See accompanying notes to these consolidated financial statements.
-23-
<PAGE> 27
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Year Ended November 30,
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from financing activities
Proceeds from issuance of notes payable 3,118,900 752,132 1,000,000
Principal payments on notes payable (495,611) (375,000) (426,897)
Principal payments under capital lease obligations (73,011) (111,564) (70,550)
Net proceeds (payments) under line of credit agreements (1,000,000) 1,000,000 1,000,000
Issuance of common stock and warrants 209,090 400,627 94,990
Issuance of common stock in private placement - 5,759,097 -
----------- ----------- -----------
Net cash provided by
financing activities 1,759,368 7,425,292 1,597,543
----------- ----------- -----------
Net increase in cash
and cash equivalents 207,561 2,432,868 1,129,737
----------- ----------- -----------
Cash and cash equivalents, beginning of year 5,058,718 2,625,850 1,496,113
----------- ----------- -----------
Cash and cash equivalents, end of year $ 5,226,279 $ 5,058,718 $ 2,625,850
=========== =========== ===========
</TABLE>
SUPPLEMENTAL CASH FLOW INFORMATION
The following is supplemental cash flow information for the years ended
November 30:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash paid for:
Interest $ 347,956 $ 197,458 $ 101,483
Income Taxes 1,528,019 525,755 276,388
</TABLE>
See accompanying notes to these consolidated financial statements.
-24-
<PAGE> 28
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation and
amortization of property, plant and equipment is provided by
generally using the straight-line method over the useful lives of the
related assets (machinery and equipment principally over three to
five years and building over 39 years). Machinery and equipment
category includes certain of the Company's current products which are
used two to three years on various research and development projects
and subsequently sold. The items are depreciated over three years to
reflect their use and correspondingly adjust the items to their
estimated net realizable value. At November 30, 1996 and 1995 the
cost and accumulated depreciation related to these items are
approximately $2,997,000 and $576,000, and $1,774,000 and $161,000,
respectively.
Revenue and Cost Recognition
Sales of the Company's products are generally recognized upon
shipment, except for the first orders related to the Clusterlock7000
systems in 1994, which initially had a longer manufacturing cycle
than the other products. In order to better match revenues and
expenses, the Company used the percentage of completion method of
revenue recognition for these initial Clusterlock7000 orders. Sales
related to subsequent Clusterlock7000 orders have shorter
manufacturing cycles similar to the Company's other products, and
therefore have been recognized upon shipment.
Revenue recognized on the percentage of completion is measured by
total costs incurred to date to estimated total cost for each order.
Costs include all direct material and labor costs and those indirect
costs related to performance, such as indirect labor, supplies,
tools, repairs and depreciation costs. Selling and administrative
costs are charged to expense as incurred.
Field Service Costs (Principally Warranty)
Field service costs related principally to warranty are accrued upon
the shipment of the products. The warranty expense recorded in 1996,
1995, and 1994 of approximately $661,000, $1,211,000 and 367,000,
respectively, was determined by management, using current and
historical experience, industry experience and other factors.
Research and Development
Research and development costs are expensed as incurred.
Income Per Share
Earnings per share is computed based on the weighted average number
of shares of common stock adjusted for the conversion of dilutive
common stock equivalents. The primary and fully
-26-
<PAGE> 29
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
dilutive income per share are the same for all periods presented. The
following is the weighted average outstanding share information.
<TABLE>
<CAPTION>
NOVEMBER 30,
---------------------------------
1996 1995 1994
---------- ---------- ---------
<S> <C> <C> <C>
Primary 10,731,927 10,542,114 9,057,751
Fully Dilutive 10,762,945 10,571,995 9,092,991
</TABLE>
Reclassifications
Certain reclassifications have been made to the 1994 and 1995
financial statements to conform to the 1996 presentation. In 1995
and 1994 field service costs have been reclassified from selling and
administrative to cost of products sold to be consistent with the
Company's peer groups.
Accounting for Stock-Based Compensation
Statement of Financial Accounting Standards (SFAS) No. 123
"Accounting for Stock-Based Compensation" has been issued by the
Financial Accounting Standards Board in October, 1995. As it relates
to stock options granted to employees, SFAS No. 123 permits companies
to continue using the accounting method promulgated by the Accounting
Principals Board (APB) No. 25 "Accounting for Stock Issued to
Employees" to measure compensation or to adopt the fair value based
method prescribed by SFAS No. 123. If APB No. 25's method is
continued, proforma disclosures are required as if SFAS No. 123
accounting provisions were followed. SFAS No. 123's accounting
recognition method can be adopted subsequent to the issuance of the
Statement in October 1995, with a mandatory implementation date of
December 1, 1996, and would pertain to employee stock option awards
granted or modified or settled for cash after the date of adoption.
Management has made the determination not to adopt SFAS No. 123's
accounting recognition provisions for employee stock options.
Therefore, only proforma disclosures under SFAS No. 123 are required
after December 1, 1996.
Fair Value Presentation
The carrying amounts of cash, accounts receivable, prepaid expenses,
accounts payable, and accrued expenses approximate fair value because
of the short maturity of these items. The carrying amounts of the
short-term borrowings and certain notes payable approximate fair
value because the interest rates on these instruments change with
market interest rates. Certain notes payable with fixed interest
rates and obligations under capital leases approximate fair value
because the interest rates on these instruments are approximately
comparable to market rates.
-27-
<PAGE> 30
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
License Agreement
In June 1996, the Company entered into a license agreement with a
German company for the non-exclusive rights to its patent on a new
plasma process technology. In exchange for the use of the patent, the
Company paid an initial license fee of 450,000 deutsche marks which is
approximately $300,000 at the then current exchange rates. The
initial fee is being amortized using the straight line method and a
five year useful life (unamortized license fee is classified in other
assets). In addition, during the first five years of the agreement or
the shipment of the first fifty plasma processing chambers including
the licensed technology, whichever comes first, the Company will pay a
royalty fee of 35,000 deutsche marks per plasma processing chamber.
Thereafter, the royalty fee will be reduced to 25,000 deutsche marks
per plasma processing chamber. In 1996 approximately $20,000 in
royalty fees were paid by the Company.
Change in Accounting Principle for Income Taxes
The Company adopted, effective December 1, 1993, Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes". Under the liability method specified by SFAS 109, deferred tax
assets and liabilities are determined based on the difference between
the financial statement and tax basis of assets and liabilities as
measured by the enacted tax rates which will be in effect when these
differences reverse. The cumulative effect of adopting SFAS No. 109,
as of December 1, 1993, was to increase net income by $350,000. This
amount represents the recording of additional deferred tax assets
related to tax credit carryforwards of approximately $750,000, net of
a valuation allowance for $400,000. Under the previous accounting
method of accounting for income taxes (APB No. 11), the income tax
provision for 1994 would have been approximately $432,000 which
differs from that determined under SFAS No. 109 of approximately
$93,000. The principal difference in the accounting methods is that
SFAS No. 109 has provided an earlier recognition of the tax credit
carryforwards than provided by APB No. 11, as can be seen by the
deferred tax asset recorded when SFAS No. 109 was adopted.
NOTE 2 INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------------
1996 1995
------------ -----------
<S> <C> <C>
Raw materials $ 6,085,531 $ 5,066,621
Work-in-process 1,835,722 2,583,040
Finished goods 37,367 409,672
------------ -----------
$ 7,958,620 $ 8,059,333
============ ===========
</TABLE>
-28-
<PAGE> 31
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
NOTE 3 SHORT-TERM AND LONG-TERM BORROWINGS
Line of Credit
In November 1995, the Company increased its existing line of credit
with its bank from $2,000,000 to $3,000,000. The term of the line of
credit agreement is through May 19, 1997, and for a period of sixty
(60) consecutive days during the term of the loan, the Company must
repay the principal below $100 which will occur in fiscal year 1997.
Interest is payable monthly at the bank's prime rate (8.25% at
November 30, 1996). The line is collateralized by accounts
receivable and the bank has a security interest in the proceeds for
the collection of accounts receivable in the Company's depository
accounts. The unused balance on the line of credit at November 30,
1996 and 1995 was $2,000,000 and $1,000,000 respectively.
Notes Payable
Notes payable consist of the following:
<TABLE>
<CAPTION>
NOVEMBER 30,
---------------------------
1996 1995
---------- ---------------
<S> <C> <C>
Notes payable with a bank, payable in
monthly installments of $15,423 including
interest at 7.92% payable through February
1999. The notes are secured by various
machinery and equipment. $ 380,300 $ -
Note payable with a bank, payable in monthly
installments of $27,778 plus interest at
8.28% payable through May 1997. The note
is secured by accounts receivable and
inventory and includes financial covenants
relating to the Company's operating
performance and financial condition. 166,667 500,000
Note payable with a bank, payable in monthly
installments of $33,235 including interest at
8.5% payable through July 2001 (see below) 3,328,454 752,132
---------- ----------
3,875,421 1,252,132
Less current portion 443,946 343,647
---------- ----------
$3,431,475 $ 908,485
========== ==========
</TABLE>
-29-
<PAGE> 32
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
The Company is subject to the bank agreement described above. Under
the most restrictive covenant, none of the Company's consolidated
retained earnings is free of limitation for payment of cash dividends
at November 30, 1996.
In August, 1995 the Company executed a promissory note for $3,375,000
with its bank for the construction of its new manufacturing facility.
On June 14, 1996, the completion of the construction phase, the note
converted to a five year term loan, amortized over a fifteen year
period. The loan is payable in monthly installments of $33,235,
including interest at 8.5% beginning July 15, 1996. The loan is
collateralized by the land, the building and its contents.
Aggregate maturities of notes payable for five years following
November 30, 1996 are as follows:
<TABLE>
<S> <C>
1997 $ 443,946
1998 300,933
1999 184,072
2000 150,087
2001 2,796,383
----------
$3,875,421
==========
</TABLE>
Capitalized Leases
The Company conducts a portion of its operations utilizing leased
equipment consisting of primarily computer equipment. For financial
statement purposes, minimum lease rentals relating to the equipment
have been capitalized.
The related assets and obligations have been recorded using the
Company's incremental borrowing rate at the inception of the leases.
The leases, which are non-cancelable, expire in 1999. The following
is a schedule of leased property under capital leases:
<TABLE>
<CAPTION>
NOVEMBER 30,
------------------
1996 1995
-------- --------
<S> <C> <C>
Machinery and equipment $331,920 $331,920
Less accumulated depreciation 126,251 59,865
-------- --------
205,669 272,055
</TABLE> ======== ========
-30-
<PAGE> 33
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
The following is a schedule by years of future minimum lease payments
under capital leases together with the present value of the net
minimum lease payments as of November 30, 1996:
<TABLE>
<S> <C>
Year ended November 30,
1997 $101,757
1998 101,757
1999 70,489
--------
Total minimum lease payments 274,003
Less amount representing interest 35,529
--------
Present value of net minimum lease payments $238,474
========
Current portion $ 80,955
Noncurrent portion 157,519
--------
$238,474
========
</TABLE>
NOTE 4 SHAREHOLDERS' EQUITY
Private Placement
The Company completed a private placement offering of its Common
Stock in December 1994, raising $6,375,000 from the sale of 1,500,000
shares. Costs, including commissions, associated with the offering
were approximately $616,000.
1995 Stock Incentive Plan
In June 1995, the Company's shareholders approved the 1995 Stock
Incentive Plan (the Plan). The Plan authorizes the granting of both
incentive stock options and non-qualified stock options up to a total
of 1,000,000 shares, increased annually by an additional number of
shares equal to 1% of the number of shares outstanding on the last
day of each fiscal year, commencing November 30, 1995, provided that
the maximum aggregate number of shares to be issued shall not exceed
3,000,000 (1,010,397 authorized as of November 30, 1996). The option
price for non-qualified stock options may be less than, equal to, or
greater than the fair market value on the date the option is granted,
whereas for incentive stock options, the price will be at least 100%
of the fair market value. Compensation expense, representing the
difference between the exercise price and the fair market value at
date of grant, is recognized over the vesting or service period.
Stock option activity under the 1995 Plan was as follows:
-31-
<PAGE> 34
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
<TABLE>
<CAPTION>
NOVEMBER 30,
----------------
1996 1995
------- -------
<S> <C> <C>
Outstanding - beginning of year 223,000 -
Granted 817,500 223,000
Exercised 94,500 -
Canceled 137,000 -
------- -------
Outstanding - end of year 809,000 223,000
======= =======
Options exercisable - end of year 732,000 27,000
======= =======
</TABLE>
Option prices per share:
<TABLE>
<CAPTION>
NOVEMBER 30,
---------------
1996
---------------
<S> <C>
Exercised during the year $1.02 - 2.68
Exercisable end of year $1.02 - 4.31
</TABLE>
1988 Stock Option Plan
The 1988 Stock Option Plan authorized the granting of both incentive
stock options and non-qualified stock options up to a total of
850,000 shares of the Company's common stock to employees and
directors. Upon adoption of the 1995 Stock Incentive Plan, the
Company determined that no additional options were granted under the
1988 Plan. Under the 1988 Plan non-qualified stock options were
granted at less than the fair market value of the Company's common
stock. Compensation expense, representing the difference between the
exercise price and the fair market value at date of grant, was
recognized over the vesting or service period (e.g. six months to one
year after the date of grant). In 1995 and 1994 income taxes payable
was reduced and paid-in-capital was increased by approximately
$151,000 and $232,000, respectively, related to an incremental tax
benefit associated with the stock options exercised during the year.
Stock option activity was as follows under the 1988 Plan:
<TABLE>
<CAPTION>
NOVEMBER 30,
------------------------
1996 1995 1994
------ ------- -------
<S> <C> <C> <C>
Outstanding - beginning of year 50,000 154,000 323,000
Granted - - 34,000
Exercised 22,000 101,000 203,000
Canceled 28,000 3,000 -
------ ------- -------
Outstanding - end of year - 50,000 154,000
====== ======= =======
Options exercisable - end of year - 50,000 149,000
====== ======= =======
</TABLE>
-32-
<PAGE> 35
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
Option prices per share:
<TABLE>
<CAPTION>
NOVEMBER 30,
---------------------------------------
1996 1995 1994
------------ ------------ -----------
<S> <C> <C> <C>
Exercised during the year $1.41 - 2.50 $ .26 -1.90 $ .24- 1.90
Exercisable end of year - $1.41 -2.50 $ .26 -1.90
</TABLE>
Incentive Stock Option Plan
The Incentive Stock Option Plan authorized the granting of options to
purchase 200,000 shares of the Company's common stock. The Plan
expired on September 15, 1991, and therefore no further options could
be granted under this Plan. For the three years ended November 30,
1996, the activity under the Incentive Stock Plan was as follows:
<TABLE>
<CAPTION>
NOVEMBER 30,
----------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Options outstanding - beginning of year 13,000 13,000 23,000
Options exercised
Options surrendered, unexercised 13,000 - 10,000
------ ------ ------
Options outstanding - end of year - 13,000 13,000
====== ====== ======
</TABLE>
Option prices were $1.50 a share, the equivalent of the market price
on the dates the options were granted and all options were
exercisable for each year presented.
Common Stock Warrants
In connection with the Company's borrowing from its former primary
bank, the Company's Chief Executive Officer (CEO) executed a limited
guarantee of the Company's indebtedness which was subsequently
released in 1989. The Company agreed to compensate the Company's CEO
for giving such guarantee by issuing to him a warrant expiring in
April 2002, for the purchase of 500,000 shares of the Company's
common stock at a purchase price per share of $.875. In accordance
with the anti-dilution provisions contained in the above warrants,
the exercise price of the warrants was adjusted as a result of the
spin-off of the Company's subsidiary in 1992. The adjusted conversion
price of the warrants is $.7721 per share. Warrants totaling 100,000
were exercised in April 1995 for $77,210 leaving a balance of 400,000
warrants outstanding at $.7721 per share at November 30, 1996 and
1995.
In conjunction with previous financing agreements, two warrants
expiring in 1995 were issued to an investment company in November
1988 and June 1989 to purchase 50,000 and 100,000 shares of common
stock, respectively, at a price of $1.25 per share. In accordance
with the
-33-
<PAGE> 36
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
anti-dilution provisions contained in the above warrants, the
exercise price of the warrants was adjusted as a result of the
spin-off of the Company's subsidiary in 1992. The adjusted
conversion price of the warrants is $1.1029 per share. Both warrants
were exercised in February 1995 for $165,435. As a result of the
exercise of these warrants in 1995, income taxes payable was reduced
and paid-in capital was increased by approximately $285,000 related
to an incremental tax benefit associated with the exercise of the
warrants.
NOTE 5 INCOME TAXES
The provisions for income taxes consist of the following:
<TABLE>
<CAPTION>
NOVEMBER 30,
-----------------------------------
1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
Current
Federal $1,279,668 $ 279,380 $ 342,308
State 181,951 63,455 60,000
---------- --------- ---------
1,461,619 342,835 402,308
---------- --------- ---------
Deferred (benefit)
Federal 154,818 (239,739) (187,060)
State 18,000 (30,327) (20,013)
---------- --------- ---------
172,818 (270,066) (207,073)
---------- --------- ---------
Investment tax credits 223,476 200,666 239,616
Tax benefit from the
exercise of employee
stock options 10,442 150,001 231,965
Tax benefit from the
exercise of warrants - 284,794 -
Adjustment to valuation
allowance - - (332,475)
Other (7,566) (1,373) 4,528
---------- --------- ---------
$1,860,789 $ 706,857 $ 338,869
========== ========= =========
</TABLE>
-34-
<PAGE> 37
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
The income tax provision reconciled to the tax computed at the
statutory Federal rate of 34% is as follows:
<TABLE>
<CAPTION>
NOVEMBER 30,
-----------------------------------
1996 1995 1994
---------- ----------- ----------
<S> <C> <C> <C>
Tax expense at statutory rate $1,650,488 $612,768 $ 663,642
State income taxes, net of federal
income tax benefit 139,175 60,379 49,358
Non-deductible charges 61,172 35,084 36,641
Adjustment to deferred tax credit
item (recorded in fourth quarter) - - (81,592)
Reduction of valuation allowance
(recorded in fourth quarter) - - (332,475)
Other 9,954 (1,374) 3,295
---------- ---------- ---------
$1,860,789 $706,857 $ 338,869
========== ========== =========
</TABLE>
The deferred tax asset consists of the following:
<TABLE>
<CAPTION>
NOVEMBER 30,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Vacation accrual $ 87,037 $100,929
Depreciation (14,378) 113,400
Stock options 2,393 86,326
Warranty reserve 231,513 265,623
Tax credit carryforwards - 219,572
Deferred compensation 81,748 -
Capital loss carryforward 42,208 66,402
--------- ---------
$430,521 $852,252
Less: valuation allowance (42,208) (66,402)
--------- ---------
$388,313 $785,850
========= =========
</TABLE>
Factors that management considered in deriving the additional
deferred tax asset and valuation allowance included the Company's
historical taxable income patterns and expected future taxable income
through the period that the tax credit carryforwards expire. In this
determination, greater weight was given to the two most recent years'
average taxable income.
-35-
<PAGE> 38
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
For income tax purposes at November 30, 1996, there were no net
operating loss carryforwards and approximately $211,040 of capital
loss carryforwards. These capital loss carryforwards expire in 1997.
At November 30, 1996, there are no significant tax credit
carryforwards.
NOTE 6 COMMITMENTS
Operating Leases
Prior to the completion of the construction of the new Florida
corporate and manufacturing facility in June 1996, the Company
conducted the majority of its operations from leased facilities.
Since October 1995, when the lease term of its Florida corporate and
manufacturing facilities expired, the Company began leasing the
facilities on a month-to-month basis and continued do so until the
completion of the construction of the new facility. The monthly
rental amount was approximately $43,000.
In addition, the Company leased approximately 48,360 square feet in
New Jersey where the Company's subsidiary, Magnetran, Inc. resides.
The leases expired October 31, 1994. The premises were leased from
the CEO of the Company at an aggregate base rental of $135,207 for
1994. In addition to the minimum base rent, the Company paid taxes,
insurance and maintenance relating to the leased properties.
Magnetran, Inc. entered into a 5 year gross lease, with the Company's
CEO, commencing November 1, 1994 for approximately 17,750 square feet
in New Jersey. The premises are leased at an aggregate annual base
rental of $86,841, which escalates 3% annually. After the initial
term of the lease, Magnetran has an option to renew for five years
with a 3% increase each year. The aggregate rentals paid to the CEO
for all leases for the years ended November 30, 1996, 1995 and 1994,
were approximately $90,000, $87,000 and $225,500, respectively.
In August 1996 the Company executed a lease with its bank for
furniture for its new manufacturing facility. Total minimum lease
payments are $466,080 to be paid in 60 monthly installments beginning
in August 1996. At the end of the initial term the Company has the
option to extend the lease for an additional twelve months or
purchase the furniture at the then fair market value. Also, the
Company uses office equipment under non-cancelable operating leases
expiring through 2001.
-36-
<PAGE> 39
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
The future minimum rental payments required under operating leases
that have an initial or remaining non-cancelable lease term in excess
of one year are as follows:
<TABLE>
<S> <C>
Year ended November 30,
1997 $265,532
1998 248,534
1999 232,082
2000 142,487
2000 69,859
--------
Total minimum lease payments $958,494
========
</TABLE>
The total rental expense for all operating leases was $553,188,
$398,529, and $605,197 for the years ended November 30, 1996,
1995 and 1994, respectively.
Distributorship Agreement
The Company has an exclusive distributorship agreement with a
Japanese company. If the Company terminates the agreement for
reasons other than breach of contract, the Company is required
to repurchase the demonstration systems and spare parts
inventory sold to the distributor at a purchase price equal to a
percentage of the original sales price, discounted each year the
equipment is held by the distributor. Although there is no
intent at November 30, 1996 to terminate the agreement, the
obligation to repurchase the demonstration equipment held by the
distributor would be approximately $400,000 if terminated.
Contractual Obligations
The Company has employment agreements with its key executive
officers, the terms of which expire at various times through
February 28, 1998. The agreements provide for minimum annual
total compensation of approximately $560,000. In addition, key
officers receive an annual bonus as a percent of net income up
to a certain cap.
In accordance with an employment and subsequent termination
agreement with a former officer, during the fourth quarter of
1996 approximately $270,000 of termination payments due
1997-1998 to the former officer were recorded. This obligation
is outstanding at November 30, 1996 and the costs are classified
in selling and administration expense.
NOTE 7 AFFILIATE TRANSACTIONS
During 1992 the Company loaned RF Power Products (RFPP, a former
subsidiary which was spun off in 1992) $200,000 in a secured,
subordinated loan to be repaid in equal monthly
-37-
<PAGE> 40
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
installments of $5,000 commencing May 1993 through August 1996.
Interest at the prime rate plus 1% is to be paid monthly. The
remaining balance at November 30, 1996 and 1995 is $0 and $45,000,
respectively, and included in prepaid expenses and other in 1995. The
Company's CEO currently owns approximately 9.5% of RFPP shares which
he received via the spin-off.
During 1996, 1995 and 1994, the Company had sales to and purchases
from RFPP, respectively, as follows: $871,573 and $1,490,559 in
1996, $844,000 and $942,000 in 1995 and $551,000 and $708,000 in
1994; respectively. At November 30, 1996, 1995, and 1994, the
Company's accounts receivables and payables included the following
amounts related to RFPP, respectively, as follows: $109,293 and
$209,871 at 1996, $197,000 and $247,000 at 1995 and $86,000 and
$129,000 at 1994.
NOTE 8 SEGMENT INFORMATION
Geographic Sales
<TABLE>
<CAPTION>
NOVEMBER 30,
1996 1995 1994
<S> <C> <C> <C>
Export revenues from the
United States to unaffiliated
foreign customers $14,761,397 $9,190,317 $7,233,203
----------- ---------- ----------
</TABLE>
All foreign sales are denominated in U.S. dollars.
Customer Sales
In 1996 and 1994 approximately 24% and 18%, respectively, of
consolidated net sales were to one customer. No sales in excess of
10% of revenue were made to a single customer in 1995. Additionally,
in 1995 and 1994, 7% and 13%, respectively, of net sales were to the
Company's former distributor in Japan. In 1996 and 1995 net sales to
the Company's new Japanese distributor were 8% and less than 1% of
revenue, respectively.
NOTE 9 DEFINED CONTRIBUTION PLAN
The Company has a defined contribution plan which is qualified under
Section 401(k) of the Internal Revenue Code. This plan covers
substantially all employees over the age of twenty-one. The plan
consists of an employee elective contribution and a company matching
contribution for each eligible participant. The Company's matching
contribution is specified by the Company's Board of Directors, is
discretionary and can change from year to year.
-38-
<PAGE> 41
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED NOVEMBER 30, 1996
Forfeitures resulting from a terminated participant's failure to be
fully vested in the Company's matching contribution will be used to
reduce future contributions of the Company. The Company's
contribution for this plan for 1996, 1995 and 1994 was $23,616,
$18,459 and $11,596, respectively.
-39-
<PAGE> 42
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable
PART III
Except for the information regarding executive officers called for by
Item 401 of Regulation S-K, which is included in Item 1, "Executive Officers of
the Company," Items 10, 11, 12 and 13 are hereby incorporated by reference to
the Company's definitive proxy statement for its Annual Meeting of Stockholders
presently scheduled for May 6, 1997 which proxy statement will be filed pursuant
to Regulation 14A not later than 120 days after the end of the Company's fiscal
year, in accordance with General Instruction G(3) to Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A. The following documents are filed as part of this Form 10-K:
(1) Consolidated Financial Statements
The index to the Consolidated Financial Statements of the
Company is included on page 17 in Part II, Item 8.
(2) Financial Statement Schedules
(a) Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted either because the schedule
is inapplicable or the required information is included
elsewhere in the Financial Statements.
(3) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended November 30, 1996.
(4) Exhibits
-40-
<PAGE> 43
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibits
- ----------- -----------------------
<S> <C>
3.1* Articles of Incorporation of the Registrant, as amended May 6,
1994 (Exhibit 3.1 to the Registrant's 1994 Form 10-K).
3.2* By-laws of the Registrant (Exhibit 3.2 to the Registrant's 1994
Form 10-K).
3.3* Amendment to the Registrant's Articles of Incorporation (Exhibit
3.1 to the Registrant's May 31, 1995 Form 10-Q).
3.4* Amendment to the Registrant's Articles of Incorporation (Exhibit
3.4 to the Registrant's May 31, 1996 Form 10Q).
4.1* Notes and Warrant Agreements dated July 1, 1980 and February 17,
1981, and amendments thereto, between the Registrant and Atalanta
Investment Company, Inc. and related consents (Exhibits 3.3, 3.4
and 3.5 to the 1981 Registration Statement, Exhibit 3.5.1 to
Amendment No. 1 to the Registration Statement No. 2-73281-NY filed
on July 20, 1981 and Exhibit 4.3 to the Registration Statement
No. 2-82980 filed on April 11, 1983).
4.2* Amendment, dated November 1, 1988, to the Note and Warrant
Agreements between the Registrant and Atalanta Investment Company
(Exhibit 4.2 to the Registrant's Annual Report Form 10-K for the
year ended November 30, 1988).
4.3* Amendment, dated July 21, 1989 to the Note and Warrant Agreements
between the Registrant and Atalanta Investment Company (Exhibit
4.3 to Registrant's Annual Report on Form 10-K for the year ended
November 30, 1989).
4.4* Warrant dated as of July 24, 1987 between the Registrant and
Ronald H. Deferrari (Exhibit 4.6 to the Registrant's Annual Report
on Form 10-K for the year ended November 30, 1987).
4.5* Stock Option Plan of the Registrant, dated December 1, 1988.
(Exhibit 4.4 to the Registrant's 1988 Form 10-K).
4.6* 1995 Stock Incentive Plan of the Registrant, dated June 14, 1995
(Exhibit 4 to the Registrant's 1995 Form S-8).
4.7* Form of stock certificate (Exhibit 4.6 to the Registrant's 1994
Form 10-K).
</TABLE>
-41-
<PAGE> 44
<TABLE>
<S> <C>
10.1* Employment Agreement dated May 3, 1994 between the Registrant and
Ronald H. Deferrari (Exhibit 10.1 to the Registrant's 1994 Form
10-K).
10.2* Amendment to Employment Agreement between the Registrant and
Ronald H. Deferrari, dated June 26, 1995 (Exhibit 10.30 to the
Registrant's August 31, 1995 Form 10-Q).
10.3 Amendment between the Registrant and Diana M. DeFerrari, dated
September 18, 1996.
10.4* Employment Agreement between the Registrant and Diana M.
DeFerrari, dated February 9, 1995 (Exhibit 10.1 to the
Registrant's May 31, 1995 Form 10-Q).
10.5* Employment Agreement dated May 18, 1994 between the Registrant and
Ronald S. Deferrari (Exhibit 10.3 to the Registrant's 1994 Form
10-K).
10.6* Amendment to Employment Agreement between the Registrant and
Ronald S. Deferrari, dated June 26, 1995 (Exhibit 10.31 to the
August 31, 1995 Form 10-Q).
10.7* Lease dated as of November 1, 1994 between Magnetran, Inc., and
Ronald H. Deferrari for property located at 136 Route 73,
Voorhees, New Jersey.
10.8 Amendment to Employment Agreement between the Registrant and
Ronald S. Deferrari, dated June 26, 1995.
10.9 Employment Agreement dated December 1, 1992 between the Registrant
and Edmond A. Richards.
10.10 Amendment to Employment Agreement between the Registrant and
Curtis A. Barratt, dated September 18, 1996.
10.11 Amendment to Employment Agreement between the Registrant and
Edmond A. Richards, dated October 9, 1996.
10.19* Loan Agreement dated January 19, 1995 between the Registrant and
NationsBank of Florida, N.A. (including Revolving Credit
Agreement, Security Agreement, Term Promissory Note and Line of
Credit Note), (Exhibit 10.16 to the Registrant's 1994 Form 10-K).
10.20* Promissory Note dated August 14, 1995 between the Registrant and
NationsBank of Florida, N.A. (Exhibit 10.23 to the Registrant's
August 31, 1995 Form 10-Q).
10.21* Mortgage, Assignment of Rents and Security Agreement dated August
14, 1995 between the Registrant and NationsBank of Florida, N.A.
(Exhibit 10.24 to the Registrant's August 31, 1995 Form 10-Q).
</TABLE>
-42-
<PAGE> 45
<TABLE>
<S> <C>
10.22* Environmental Indemnity Agreement dated August 14, 1995 between
the Registrant and NationsBank of Florida, N.A. (Exhibit 10.25 to
the Registrant's August 31, 1995 Form 10-Q).
10.23* Amendment dated August 14, 1995 (to Amended and Restated Revolving
Credit Agreement between Plasma-Therm, Inc. and NationsBank of
Florida, N.A., dated January 19, 1995) between the Registrant and
NationsBank of Florida, N.A. (Exhibit 10.26 to the Registrant's
August 31, 1995 Form 10-Q).
10.24* Construction Loan Agreement dated August 14, 1995 between the
Registrant and NationsBank of Florida, N.A. (Exhibit 10.27 to the
Registrant's August 31, 1995 Form 10-Q).
10.25* Collateral Assignment of General Construction Contract,
Subcontracts, Plans and Specifications and Permits dated August
14, 1995 between the Registrant and NationsBank of Florida, N.A.
(Exhibit 10.28 to the Registrant's August 31, 1995 Form 10-Q).
10.26* Collateral Assignment of Professional Agreements and Plans and
Specifications dated August 14, 1995 between the Registrant and
NationsBank of Florida, N.A. (Exhibit 10.29 to the Registrant's
August 31, 1995 Form 10-Q).
10.27* Third Future Advance Promissory Note dated November 17, 1995
between the Registrant and NationsBank of Florida, N.A. (Exhibit
10.27 to the Registrant's 1995 Form 10-K).
10.28* Third Consolidation Line of Credit Promissory Note dated November
17, 1995 between the Registrant and NationsBank of Florida, N.A.
(Exhibit 10.28 to the Registrant's 1995 10-K).
10.29* Future Advance Consolidation and Modification Agreement dated
November 17, 1995 between the Registrant and NationsBank of
Florida, N.A. (Exhibit 10.29 to the Registrant's 1995 10-K).
10.30* Second Amendment (to Amended and Restated Revolving Credit
Agreement) dated November 17, 1995 between the Registrant and
NationsBank of Florida, N.A. (Exhibit 10.30 to the Registrant's
1995 10-K).
10.31* Amendment to Amended and Restated Security Agreement dated
November 17, 1995 between the Registrant and NationsBank of
Florida, N.A. (Exhibit 10.31 to the Registrant's 1995 10-K).
10.36* Registrant's 401(k) Savings Plan Summary Plan Description dated
July 1, 1992 (Exhibit 10.25 to the Registrant's 1992 Form 10-K).
</TABLE>
-43-
<PAGE> 46
<TABLE>
<S> <C>
10.37 Registrant's 401(k) Adoption and Trust Agreement dated January 1,
1995.
10.38* Distributorship Agreement between the Registrant and Hakuto Co.,
Ltd., dated August 1, 1995 (Exhibit 10.38 to the Registrant's 1995
Form 10-K).
10.39* Note and Security Agreement dated March 6, 1996 between the
Registrant and NationsBanc Leasing Corporation. (Exhibit 10.39 to
the February 29, 1996 Form 10-Q).
10.40* Employment Agreement between the Registrant and Curtis A. Barratt,
dated February 28, 1996 (Exhibit 10.40 to the February 29, 1996
Form 10-Q).
10.41* Note and Security Agreement dated March 20, 1996 between the
Registrant and NationsBanc Leasing Corporation (Exhibit 10.41 to
the May 31, 1996 Form 10-Q).
10.42* Extension Agreement dated June 14, 1996 and Addendum Letter to
Extension Agreement dated June 17, 1996 between the Registrant and
NationsBank, N.A. (South) (Exhibit 10.42 to the May 31, 1996 Form
10-Q).
10.43* License Agreement dated June 19, 1996 between the Registrant and
Robert Bosch GmbH (Exhibit 10.43 to the May 31, 1996 form 10-Q).
10.44* Equipment Lease Agreement dated August 27, 1996 between the
Registrant and NationsBanc Leasing Corporation (Exhibit 10.44 to
the August 31, 1996 Form 10-Q).
11. Statement RE: Computation of per share earnings.
21. Subsidiary of the Registrant.
23. Consent of Grant Thornton LLP.
27. Financial Data Schedule (for SEC use only).
</TABLE>
- ------------------
* Incorporated by reference.
-44-
<PAGE> 47
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PLASMA-THERM, INC.
/s/ RONALD H. DEFERRARI
-------------------------------------
Ronald H. Deferrari, Chairman of the
Board, Chief Executive Officer
and Treasurer
Date: January 27, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities on the dates indicated.
By: /s/ RONALD H. DEFERRARI
-----------------------
Ronald H. Deferrari, Chairman of the Board,
Chief Executive Officer and Treasurer
(Principal Executive Officer and
Principal Financial Officer)
Date: January 27, 1997
By: /s/ A.S. GIANOPLUS
------------------
A.S. Gianoplus, Director
Date: January 27, 1997
By: /s/ STACY WAGNER
----------------
Stacy Wagner, Vice President of Finance
and Controller
(Principal Accounting Officer)
Date: January 27, 1997
-45-
<PAGE> 48
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON THE SCHEDULE
Board of Directors
Plasma-Therm, Inc.
In connection with our audit of the consolidated financial statements of
Plasma-Therm, Inc. and Subsidiary referred to in our report dated January
14, 1997, which is included in the Annual Report on Form 10-K for the years
ended November 30, 1996, we have also audited Schedule II for each of the
three years in the period ended November 30, 1996. In our opinion, the
schedules present fairly, in all material respects, the information
required to be set forth therein.
GRANT THORNTON LLP
Tampa, Florida
January 14, 1997
-46-
<PAGE> 49
PLASMA-THERM, INC. AND SUBSIDIARY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ----------------------------------------------------------------------------------------------------------
Additions
Balance at Charged to Charged to Balance at
Beginning of Costs and Other Accounts Deductions - End of
Description Period Expenses - Describe Describe Period
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended November 30, 1996:
Warranty Liability $ 693,515 $ 661,147 $ - $ 744,662 (1) $ 610,000
Deferred Tax Asset
Valuation Allowance $ 66,402 $ - $ - $ 24,194 (4) $ 42,208
Year ended November 30, 1995:
Warranty Liability $ 143,000 $1,211,289 $ - $ 660,774 (1) $ 693,515
Deferred Tax Asset
Valuation Allowance $ 67,525 $ - $ - $ 1,123 (4) $ 66,402
Year ended November 30, 1994:
Warranty Liability $ - $ 366,664 $ - $ 223,664 (1) $ 143,000
Deferred Tax Asset
Valuation Allowance $ - $ - $ 400,000 (2) $ 332,475 (3) $ 67,525
</TABLE>
(1) Costs incurred for warranty repair during the year.
(2) Consists of an addition to the valuation allowance which is a contra
account to the deferred tax asset account.
(3) Reduction of the valuation allowance based on expected future years'
utilization of tax credits.
(4) Reduction of the valuation allowance for capital loss carryforwards which
expired in 1995 and 1996.
-47-
<PAGE> 1
EXHIBIT 10.3
AMENDMENT TO EMPLOYMENT AGREEMENT (DATED 5/3/94)
EFFECTIVE SEPTEMBER 18, 1996
This shall serve as an Amendment to DIANA M. DEFERRARI'S Employment
Agreement dated February 9, 1995. This document is hereby amended to reflect
the following changes to section 3 of the Agreement:
3. DUTIES
The Employee shall be Senior Vice President and Secretary of the
Corporation and her particular duties and power in such capacity shall be such
as may be determined from time to time by the President of Corporation,
provided, however, such duties and powers shall be consistent with the position
of an executive employee of a Florida business corporation. In the performance
of her duties the Employer shall make available to the Employee, offices,
secretarial and other support as necessary, facilities and amenities
commensurate with her position and duties. Except with the written consent of
Employee, her principal office in performing her duties hereunder shall be
situated at Corporation's headquarters in St. Petersburg, Florida.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
FOR PLASMA-THERM, INC.
/s/ Ronald S. Deferrari
-----------------------
Ronald S. Deferrari,
President and Chief Operating Officer
EMPLOYEE
/s/ Diana M. DeFerrari
- ----------------------
Diana M. DeFerrari
<PAGE> 1
EXHIBIT 10.8
AMENDMENT TO EMPLOYMENT AGREEMENT (DATED 5/18/94)
EFFECTIVE JUNE 26, 1995
This shall serve as an Amendment to Ronald S. Deferrari's Employment
Agreement dated May 18, 1994. This document is hereby amended to reflect the
following changes to sections 3 and 5 of the Agreement:
3. DUTIES
The Employee shall be President and Chief Operating Officer and his
particular duties and power in such capacity shall be such as may be determined
from time to time by the Chief Executive Officer of the Corporation, provided,
however, such duties and powers shall be consistent with the position of an
executive employee of a Florida business corporation. In the performance of his
duties the Employer shall make available to the Employee, offices, secretarial
and other support as necessary, facilities and amenities commensurate with his
position and duties. Except with the written consent of Employee, his principal
office in performing his duties hereunder shall be situated at Corporation's
headquarters in St. Petersburg, Florida.
5. COMPENSATION
5.1 a base annual salary, payable in weekly installments, in the amount
of $160,000.
5.2 an annual bonus based on 5% of fiscal year net earnings not to exceed
$150,000, to be paid on a quarterly basis and reconciled at year end.
5.3 reimbursement for two automobiles, and other reasonable car-related
expenses including fuel, oil, maintenance and repair items.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
FOR PLASMA-THERM, INC.
/s/ Ronald H. Deferrari
-----------------------------
Ronald H. Deferrari,
CEO and Chairman of the Board
EMPLOYEE
/s/ Ronald S. Deferrari
- -----------------------
Ronald S. Deferrari
<PAGE> 1
EXHIBIT 10.9
EMPLOYMENT AGREEMENT
AGREEMENT made this December 1, 1992, by and between Plasma-Therm I.P.
Inc., a Delaware Corporation (herein referred to as "Corporation") and Edmond A.
Richards (herein referred to as "Employee").
BACKGROUND OF AGREEMENT
Employee is presently employed by Corporation. Corporation desires to
employ Employee and Employee desires to continue to accept such employment and
both parties are entering into this Agreement to set forth their entire
understanding with respect to such employment.
NOW, THEREFORE, the parties hereto intending to be legally bound hereby,
and in consideration of the mutual covenants herein contained, agree as
follows:
1. EMPLOYMENT
Corporation hereby employs Employee, and Employee hereby accepts such
employment, upon the terms and subject to the conditions herein set forth.
2. TERM
The term of this agreement shall commence on December 1, 1992 and shall
continue for a period of three years until December 1, 1995 (the "Term"). Upon
the expiration of the Term, the employment of Employee shall continue in full
force and effect for an additional period of three years and thereafter for
three year extension periods unless at least ninety (90) days prior to the end
of the then current term, either Corporation or Employee has given written
notice to the other of his/her or its election to terminate the employment at
the end of such term.
3. DUTIES
The Employee shall be General Manager and his/her particular duties and
power in such capacity shall be such as may be determined from time to time by
the President of Corporation, provided, however, such duties and powers shall be
consistent with the position of an executive employee of a Delaware business
corporation. In the performance of his/her duties the Employer shall make
available to the Employee offices, secretarial and other support as necessary,
facilities and amenities commensurate with his/her position and duties. Except
with the written consent of Employee, his/her principal office in performing her
duties hereunder shall be situated at Corporation's headquarters in St.
Petersburg, Florida.
4. EXTENT OF SERVICES
Employee agrees to devote substantially all of his/her business time,
attention and energies to the business of the Corporation and shall not during
the Term of this Agreement be
<PAGE> 2
engaged in any other business activity requiring any substantial amount of
his/her business time (whether or not such business is pursued for gain, profit
or pecuniary advantage).
5. COMPENSATION
The Corporation agrees to pay and Employee agrees to accept as
compensation for all services rendered hereunder:
5.1 a base annual salary, payable in weekly installments, in the amount
of $135,500.00.
5.2 a monthly car allowance in the amount of $540.00 plus reimbursement
for other reasonable car-related expenses including fuel and oil, but not
maintenance or repair items.
6. EXPENSES
The parties recognize that in the course of performing his/her duties
hereunder, Employee may incur expenses. Corporation agrees to reimburse Employee
upon presentation of vouchers for reasonable expenses incurred by Employee in
the performance of his/her duties hereunder.
7. FRINGE BENEFITS
Employee shall be entitled to such fringe benefits paid for or supplied
by the Corporation and shall be further entitled to the following provisions:
7.1 participation in retirement and employee benefit plans such as
401k, stock options, education reimbursement, health, accident, disability,
life, or group insurance plans and other plans as the President of Corporation
determines from time to time to make available generally to the other executive
employees of Corporation.
7.2 the Corporation may elect to pay for the employee's entire health
insurance premium payments to the extent that this is offered to the other
executive employees of the Corporation.
7.3 those plans in which the Employee participates at the time of the
execution hereof shall not be terminated or otherwise discontinued or amended in
a manner having a detrimental effect on the Employee during the term of this
Agreement without the prior written consent of the Employee. In the event of the
termination of the Employee's employment by the Corporation for any reason other
than for cause or in the event the Employee terminates the agreement for cause
or for any reason other than for cause, as set forth herein, the Corporation
shall continue to provide the benefits and make the payments under those plans
for the remaining term of this agreement.
<PAGE> 3
7.3.1 The Employee may at any time direct the Corporation in writing to
assign the insurance policy or policies to the Employee in the event of his
termination for any reason whatsoever, whether or not for cause, following which
the Employee shall be fully responsible for payments on the policy or policies
and the Corporation's obligations under the policy or policies shall cease.
8. DEATH OR DISABILITY
In the event Employee dies or becomes physically or mentally disabled
so that he/she is unable to perform his/her duties hereunder, this Agreement
shall not terminate and the compensation then payable by Corporation to Employee
pursuant to Section 5 hereof shall continue to be paid as if Employee were not
disabled in any way or had not died, until the end of the then current term of
employment pursuant to Section 2 hereof, provided however, Corporation shall be
entitled to credit against its obligation hereunder the amount of any and all
disability benefits received by Employee provided or paid for by Corporation,
pursuant to Section 7 hereof.
9. TERMINATION
9.1 Notwithstanding anything herein contained to the contrary, subject
to Section 8 hereof, Corporation shall have the right to terminate this
Agreement upon one day's notice for reasonable cause. Reasonable cause shall
consist of the following events: commitment of fraud, dishonesty or other
material acts of misconduct in the performance of his/her duties hereunder,
commitment of or participant in a willful violation of any law, or regulations
(other than those relating to traffic violations or similar offenses) having a
material negative impact on the Corporation, or commitment or participation in
any other injurious act or omission wantonly, willfully or recklessly or in a
manner which was grossly negligent against the Corporation or its customers.
9.2 Corporation and Employee shall have the right to terminate the
agreement hereunder without cause provided that all of the obligations of
Corporation hereunder shall continue to be fully and timely performed until the
end of the then current term of employment pursuant to Section 2 hereof.
Employee shall receive the full compensation hereunder for the then remaining
term of this Agreement including the continuation of benefits as defined in
Section 7 and Section 13 hereof, which is in addition to aforesaid compensation
and not to be reduced by these amounts, as if this Agreement had not been
terminated and in no event shall a termination for other than cause prejudice,
eliminate, decrease, diminish or otherwise adversely affect the Employee's right
to receive full compensation under this Agreement to the same extent and amount
as if this Agreement had not been terminated.
9.3 Employee shall have the right to terminate the Agreement hereunder with
cause upon not less than 30 days written notice for the following reasons: a) in
the event of a change in control of the Corporation as described in Section 12,
b) in the event of a change in control of the Corporation as described in
Section 12, in conjunction with any of the following: (i) failure of the
Corporation to provide the employee with any one or more of the provisions of
<PAGE> 4
this Agreement, (ii) any change in the position of Employee set forth in Section
3 without prior written consent of employee, or, (iii) any material decrease in
the Employee's duties, responsibilities and authorities, without the prior
written consent of the Employee.
9.3.1 In the event of termination for cause by the Employee for the
reasons stated in 9.3, employee will receive full compensation hereunder for the
then remaining term of this Agreement including the continuation of benefits as
defined in Section 7 and Section 13 hereof, which is in addition to aforesaid
compensation and not to be reduced by these amounts, as if this Agreement had
not been terminated and in no event shall a termination for other than cause
prejudice, eliminate, decrease, diminish or otherwise adversely affect the
Employee's right to receive full compensation under this Agreement to the same
extent and amount as if this Agreement had not been terminated.
10. COVENANTS BY EMPLOYEE
10.1 Employee hereby agrees that he/she shall not compete with
Corporation, as defined below, whether directly or indirectly, as a principal,
partner, stockholder, officer, director, employee, or in any other capacity, for
the following periods of time: (i) if the Corporation terminates employment
without cause as defined in Section 9.2 or if the employee terminates employment
with cause as defined in Section 9.3, the employee agrees not to compete for a
period of 45 days from the date of termination of this contract; or (ii) if the
Corporation terminates employment with cause pursuant to Section 9.1 or if the
employee terminates employment without cause, the employee agrees not to compete
for a period of 6 months from the date of termination of this contract.
10.1.1 Compete in any manner whatsoever with the business now or
hereafter conducted by Corporation or any Affiliate (as hereinafter defined);
and
10.1.2 Solicit or attempt to solicit, sell, lease or offer to sell or
offer to lease, except on behalf of Corporation or any affiliate, any present or
future customer of Corporation or Affiliate any goods or services competitive to
the goods and services now or hereafter offered for sale or lease by Corporation
or any Affiliate.
10.2 The parties hereto recognize that the covenants of Employee herein
contained are unique and that in the event there is a breach or threatened
breach of such covenants, Corporation shall be entitled, in addition to any
other remedies available to it, to institute and prosecute proceedings in any
court of competent jurisdiction either in law or in equity, to obtain damages
for any breach of covenants or to enforce a specific performance thereof by
Employee, or to enjoin Employee from performing services or doing any act in
breach of such covenants.
10.3 For the purposes of this Agreement, an "Affiliate" of Corporation
shall mean any person, partnership or corporation which is controlled by, in
common control with or controlling Corporation.
<PAGE> 5
10.4 Employee agrees during the Term hereof and after the termination
of employment of Employee for any reason whatsoever the Employee shall not
disclose to any person, firm, partnership or corporation any information
concerning any of the methods of conducting business of Corporation or any
affiliate or any details relating thereto including the names of suppliers,
customers and methods of operation of Corporation or any of its Affiliates which
information is hereby acknowledged to be confidential in nature. This provision
shall not be construed to prevent Employee from using any knowledge which he/she
possessed at the time he commenced his/her employment with corporation or from
using any information which is not confidential.
11. INDEMNIFICATION
11.1 If litigation is brought to enforce or interpret any provision
hereof in the event of a change in control as described in section 12, the
Corporation shall indemnify the Employee for his/her reasonable attorney's fees
and disbursements incurred in such litigation.
11.2 The Corporation shall further indemnify the Employee to the extent
of the greater of the indemnification provided for in any agreement, bylaw or
charter provision of the Corporation, or any provision of law, rule or
regulation, any of which may be applicable to the Employee or generally
applicable to other executive officers of the Employee's class.
12. CHANGE OF CONTROL
"Change in control" as used in this agreement shall refer to any one or
more of the following: (i) the acquisition in any manner of the beneficial
ownership of shares of the Corporation having 20% or more of the total number of
votes that may be cast for the election of one or more directors of the
Corporation by any person, or persons acting as a group within the meaning of
Section 13 (d) of the Securities and Exchange Act of 1934, if the Board has made
a determination that such acquisition constitutes or will constitute control of
the Corporation; (ii) any liquidation, dissolution or sale of all or
substantially all of the assets of the Corporation; or (iii) any action taken
following, as a result of, or in connection with, any tender or exchange, offer,
merger or other business combination, sale of assets, proxy contest or any
combination of the foregoing whereby the persons who were the Directors of the
Corporation immediately prior to such action shall cease to constitute a
majority of the Board of the Corporation or any successor to the Corporation.
The term "person" refers to an individual, corporation, company or other entity.
13. VACATION
Employee shall be entitled to take vacations at such time as shall
reasonably be approved by Corporation which shall be not more than four weeks
per annum. Vacation over four weeks per annum not used is forfeited. In the
event of termination without cause by Corporation or by Employee or with cause
by Employee, Employee will receive cash equivalent of vacation time not yet
taken in accordance with Company policy.
<PAGE> 6
14. MISCELLANEOUS PROVISIONS
14.1 NOTICES
Any notice required or permitted to be given under this Agreement shall
be in writing, and shall be deemed to have been given when delivered personally
or sent by registered or certified mail, postage prepaid, addressed as follows:
14.1.1 If to Corporation:
Ronald H. Deferrari, President
Plasma-Therm I.P. Inc.
9509 International Court
St. Petersburg, FL 33716
14.1.2 If to Employee:
Edmond Richards
908 Lake Placido Ct. NE
St. Petersburg, FL 33703
The designation of the person to be so notified or the address of such
person for the purposes of such notice may be changed from time to time by a
similar notice to be effective ten (10) days after such changed designation is
supplied.
14.2 SITUS
This Agreement shall be governed by and construed in accordance with
the applicable laws of the States of Delaware and Florida.
14.3 ENTIRE AGREEMENT
This Agreement constitutes the full and complete understanding and
agreement of the parties and supersedes all prior understandings and agreements,
and may not be modified or amended orally, but only by an agreement in writing,
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
14.4 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
Corporation, its successors and assigns, and Employee, his/her heirs and
personal representatives.
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
FOR PLASMA-THERM I.P. INC.
/s/Ronald H. Deferrari
-------------------------------
Ronald H. Deferrari, President
EMPLOYEE
/s/ Edmond Richards
- --------------------------
Edmond Richards
<PAGE> 1
EXHIBIT 10.10
AMENDMENT TO EMPLOYMENT AGREEMENT (DATED 2/28/96)
EFFECTIVE SEPTEMBER 18, 1996
This shall serve as an Amendment to CURTIS A. BARRATT'S Employment
Agreement dated February 28, 1996. This document is hereby amended to reflect
the following changes to sections 3 and 5 of the Agreement:
3. DUTIES
The Employee shall be Senior Vice President and Chief Technical Officer
with responsibility for the Company's Manufacturing Operations function, and
particular duties and power in such capacity as may be determined from time to
time by the President of Corporation, provided, however, such duties and powers
shall be consistent with the position of an executive employee of a Florida
business corporation. In the performance of his duties the Employer shall make
available to the Employee, offices, secretarial and other support as necessary,
facilities and amenities commensurate with his position and duties. Except
with the written consent of Employee, his principal office in performing his
duties hereunder shall be situated at Corporation's headquarters in St.
Petersburg, Florida.
5. COMPENSATION
5.1 a base annual salary, payable in weekly or bi-weekly installments, in
the amount of $125,000.
5.2 an annual bonus based on 2.5% of fiscal year net earnings not to
exceed $75,000, to be paid on a quarterly basis and reconciled at year end.
5.3 reimbursement for reasonable car-related expenses including fuel and
oil, but not maintenance or repair items.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
FOR PLASMA-THERM, INC.
/s/ Ronald S. Deferrari
------------------------------------
Ronald S. Deferrari,
President and Chief Operating Officer
EMPLOYEE
/s/ Curtis A. Barratt
- ---------------------
Curtis A. Barratt
<PAGE> 1
EXHIBIT 10.11
AMENDMENT TO EMPLOYMENT AGREEMENT (DATED 12/1/92)
EFFECTIVE OCTOBER 9, 1996
This shall serve as an Amendment to EDMOND A. RICHARD'S Employment
Agreement dated December 1, 1992. This document is hereby amended to reflect
the following changes to sections 3 and 5 of the Agreement:
3. DUTIES
The Employee shall be Vice President of Engineering of the Corporation and
his particular duties and power in such capacity shall be such as may be
determined from time to time by the President of Corporation, provided, however,
such duties and powers shall be consistent with the position of an executive
employee of a Florida business corporation. In the performance of his duties
the Employer shall make available to the Employee, offices, secretarial and
other support as necessary, facilities and amenities commensurate with his
position and duties. Except with the written consent of Employee, his principal
office in performing his duties hereunder shall be situated at Corporation's
headquarters in St. Petersburg, Florida.
5. COMPENSATION
5.1 a base annual salary, payable in weekly or bi-weekly installments, in
the amount of $146,772.
5.2 an annual bonus based on .5% (1/2%) of fiscal year net earnings not
to exceed $50,000, to be paid on a quarterly basis and reconciled at year end.
5.3 reimbursement for reasonable car-related expenses including fuel and
oil, but not maintenance or repair items.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
FOR PLASMA-THERM, INC.
/s/ Ronald S. Deferrari
------------------------------------
Ronald S. Deferrari,
President and Chief Operating Officer
EMPLOYEE
/s/ Edmond A. Richards
- ----------------------
Edmond A. Richards
<PAGE> 1
EXHIBIT 10.37
ADOPTION AGREEMENT TO
THE GUARDIAN DEFINED CONTRIBUTION
PROTOTYPE PLAN AND TRUST AGREEMENT
FOR A PROFIT SHARING 401(K) PLAN
NAME OF EMPLOYER Plasma - Therm, Inc.
ADDRESS 9509 International Court
(Number and Street)
St. Petersburg, FL 33716
(City) (State and Zip Code)
NAME OF PLAN Plasma - Therm, Inc. 401K Savings Plan
NAME OF TRUSTEE(S) Frontier Trust Company
NAMES OF COMMITTEE
INTRODUCTION
This Adoption Agreement and the provisions of THE GUARDIAN DEFINED
CONTRIBUTION PROTOTYPE PLAN AND TRUST AGREEMENT of which this Agreement is a
part, are hereby adopted by the Employer or Employers executing this Agreement
for the benefit of Employees and their Beneficiaries.
COMPLETE (A), (B), OR (C) BELOW:
___ (A) This Adoption Agreement is part of the adoption of a new Plan
X (B) This Adoption Agreement is an amendment to THE GUARDIAN DEFINED
- --- CONTRIBUTION PROTOTYPE PLAN, previously adopted, as provided in SECTION
12.02.
Complete only Items amended.
___ (C) This Adoption Agreement is a restatement of a previously adopted Plan
other than THE GUARDIAN DEFINED CONTRIBUTION PROTOTYPE PLAN, as provided
in SECTION 12.06.
The PLAN ADMINISTRATOR shall be [SELECT ONE]
___ the Committee.
<PAGE> 2
X the Employer.
- ---
___ the following individuals: [INSERT NAMES]
_______________________________________________________________________________
_______________________________________________________________________________
ITEM 1: EFFECTIVE DATE
EFFECTIVE DATE shall mean [INSERT DATE] January l, 1995.
If this Agreement is a restatement of a previously adopted plan, the EFFECTIVE
DATE of the previously adopted Plan is [INSERT DATE] July l, 1992.
ITEM 2: ELIGIBLE EMPLOYEE
A. ELIGIBLE EMPLOYEE means any Employee who satisfies the ELIGIBILITY
CONDITIONS set forth in ITEM 3. If elected in this Item, the term "ELIGIBLE
EMPLOYEE" shall include [CHECK ONLY IF EMPLOYEES IN THE LISTED CATEGORY ARE TO
BE INCLUDED]
_____ any Employee who is a member of a unit of Employees covered by a
collective bargaining agreement with an Employee representative if the Employer
and the Employee representative have engaged in good faith bargaining for
retirement benefits and if two (2%) percent or less of the Employees of the
Employer who are covered pursuant to that agreement are professionals as
defined in SECTION 1.410(B)-9(G) of the Regulations. For this purpose, the term
"employee representative" does not include any organization more than half of
whose members are Employees who are officers, owners or executives of the
Employer.
_____ any Employee who is a nonresident alien provided the Employee receives no
earned income from the Employer, within the meaning of SECTION 911(D)(2) of the
Code, which constitutes income from sources within the United States within the
meaning of SECTION 861(A)(3) of the Code.
B. If elected in this Item, the term "ELIGIBLE EMPLOYEE" shall exclude [CHECK
ONLY IF EMPLOYEES IN THE CATEGORY ARE TO BE EXCLUDED]
____ Employees compensated on a salaried basis.
____ Employees who are hourly paid.
____ Employees who are paid solely on a commission basis.
____ Employees who are paid partially on a commission basis.
C. The term "ELIGIBLE EMPLOYEE" shall exclude the following Employees: [INSERT
SPECIFIC IDENTIFICATION OF EXCLUDED EMPLOYEES, E.G. JOB CLASSIFICATION,
GEOGRAPHIC LOCATION, ETC.]
2
<PAGE> 3
________________ ________________ _________________
________________ ________________ _________________
ITEM 3: ELIGIBILITY CONDITIONS
A. AGE REQUIREMENT: An Employee who qualifies as an ELIGIBLE EMPLOYEE under
ITEM 2 shall be eligible to participate on the EFFECTIVE DATE only if he or she
has attained Age 21. [DO NOT INSERT AGE ABOVE 21]
An Employee who does not qualify as an ELIGIBLE EMPLOYEE on the EFFECTIVE DATE
shall be eligible to participate as of the first Entry Date on which he or she
otherwise qualifies for Participation and only if he or she has then attained
Age 21. [DO NOT INSERT AGE ABOVE 21]
B. SERVICE REQUIREMENT: An Employee who qualifies as an ELIGIBLE EMPLOYEE under
ITEM 2 shall be eligible to participate on the EFFECTIVE DATE only if he or she
has completed 1 Years of Service. [DO NOT INSERT MORE THAN ONE (1) YEAR UNLESS
ALL PARTICIPANTS ARE IMMEDIATELY FULLY VESTED; DO NOT INSERT MORE THAN TWO (2)
YEARS IN ANY EVENT].
An Employee who does not qualify as an ELIGIBLE EMPLOYEE on the EFFECTIVE DATE
shall be eligible to participate as of the first Entry Date on which he or she
otherwise qualifies for participation and only if as of such Entry Date he or
she has completed 1 Years of Service. [DO NOT INSERT MORE THAN ONE (1) YEAR
UNLESS ALL PARTICIPANTS ARE IMMEDIATELY FULLY VESTED; DO NOT INSERT MORE THAN
TWO (2) YEARS IN ANY EVENT]
C. For 401(k) Plans only, an Employee who qualifies as an Eligible Employee
under ITEM 2 shall be eligible to participate on an Entry Date determined as
follows: [SELECT ONE]
___ the Entry Date shall be the first day of the PLAN YEAR.
___ the Entry Date shall be [INSERT DAY AND MONTH] in each PLAN YEAR.
___ the Entry Date shall be twice each PLAN YEAR, on the first day of the PLAN
YEAR and six (6) months following the first day of the PLAN YEAR.
___ the Entry Date shall be twice each PLAN YEAR, on [INSERT DAY AND MONTH]
and six (6) months after such date.
___ the Entry Date shall be the first day of the month coincident with or next
following the Employee's completion of the eligibility requirements selected in
ITEM 1.
___ the Entry Date shall be the day the Employee completes his or her first
Hour of Service.
3
<PAGE> 4
____ the Entry Date shall be the first day of the sixth (6th) month following
the day the Employee completes his or her first Hour of Service.
X the Entry Date shall be the following date(s) [INSERT DATE OR SERIES OF
- --- DATES]:
January 1 or July 1
--------------------------
D. [Complete if applicable] For purposes of measuring a Year of Service for
eligibility purposes, an Employee will be credited with a Year of Service only
if he or she completes at least 1,000 [INSERT NUMBER OF HOURS NOT GREATER THAN
1000] Hours of Service during the eligibility computation period defined in
SECTION 1.78.D.
E. For purposes of the SERVICE REQUIREMENT, Years of Service as a Proprietor or
Partner, or Years of Service with a corporate predecessor [CHECK ONE IF
APPLICABLE, OTHERWISE LEAVE BLANK]
X shall be taken into account.
- ---
___ shall not be taken into account.
___ shall be taken into account only for Years of Service completed after
[INSERT DATE].
If Years of Service with a predecessor are to be counted, the name of the
predecessor is ____________________________________.
F. YEARS OF SERVICE shall be determined [SELECT ONE]
____ on the basis of actual Hours for which an Employee is paid or entitled to
payment.
____ on the basis of days worked. An Employee shall be credited with ten (10)
Hours of Service if under SECTION 1.41 of the Plan such Employee would be
credited with at least one (1) Hour of Service during the day.
____ on the basis of weeks worked. An Employee shall be credited with
forty-five (45) Hours of Service if under SECTION 1.41 of the Plan such
Employee would be credited with at least one (1) Hour of Service during the
week.
____ on the basis of semi-monthly payroll periods. An Employee shall be
credited with ninety-five (95) Hours of Service if under SECTION 1.41 of the
Plan such Employee would be credited with at least one (1) Hour of Service
during the semi-monthly payroll period.
X on the basis of months worked. An Employee shall be credited with one
- --- hundred ninety (190) Hours of Service if under SECTION 1.41 of the Plan such
Employee would be credited with at least one (1) Hour of Service during the
month.
4
<PAGE> 5
G. Hours of Service [SELECT ONE]
X shall
- ---
___ shall not
be credited for periods prior to the date an employer was part of an affliated
service group, controlled group of corporations, or a group of trades or
businesses under common control with a participating Employer.
If such Hours of Service shall be credited,
____ all Hours of Service with such employer
____ Hours of Service with such employer after [INSERT DATE] shall be counted.
ITEM 4: COMPENSATION
A. Employer contributions made pursuant to a salary reduction agreement which
are not includible in the gross income of the Employee under [CHECK WHERE
APPLICABLE]
X SECTION 125,
- ---
X SECTION 402(A)(8),
- ---
X SECTION 402(H), or
- ---
X SECTION 403(B)
- ---
of the Code shall be included as COMPENSATION for Plan purposes.
B. COMPENSATION shall not include [CHECK ONLY IF INDICATED TYPE OF COMPENSATION
IS TO BE EXCLUDED]
___ overtime.
X bonuses.
- ---
___ commissions.
X other extraordinary remuneration [SPECIFY BELOW]
- ---
car allowances stock options severance
--------------------------------------------------------
5
<PAGE> 6
--------------------------------------------------------
X COMPENSATION earned by a Participant prior to his or her ENTRY DATE.
- ---
COMPENSATION exclusions shall not apply to an integrated allocation under ITEM
8B or to Top Heavy minimum contributions, if applicable.
C. COMPENSATION for purposes of determining Employer contributions shall be
measured over a twelve (12) consecutive month period [SELECT ONE]
X measured by the PLAN YEAR beginning in the fiscal year of the Employer.
- ---
X measured by the PLAN YEAR ending in the fiscal year of the Employer.
- ---
___ measured by the calendar year beginning in the fiscal year of the
Employer.
___ measured by the calendar year ending in the fiscal year of the Employer.
___ measured by the calendar year [SELECT ONE]
_____ ending immediately prior to
_____ ending during
the PLAN YEAR for which the determination is made.
___ beginning with each_________________________[INSERT MONTH AND DAY].
D. If the COMPENSATION of a Highly Compensated Employee and certain Family
Members is limited by the provisions of SECTION 1.15(D), COMPENSATION available
for Plan purposes shall be allocated as follows: [COMPLETE AS APPLICABLE]
____ % of available COMPENSATION to the oldest Highly Compensated Employee in
the family unit;
____ % of available COMPENSATION to such oldest Highly Compensated Employee's
spouse;
____ % of available COMPENSATION to ; [INSERT NAME OF SUCH OLDEST HIGHLY
COMPENSATED EMPLOYEE'S CHILD]
____ % of available COMPENSATION to ; [INSERT NAME OF SUCH OLDEST HIGHLY
COMPENSATED EMPLOYEE'S CHILD]
6
<PAGE> 7
____ X as determined in accordance with the provisions of SECTION 1.15(D) which
apply if no election is made.
If specific percentages are selected, and a Family Member ceases to be a
Participant, the remaining percentages shall be adjusted proportionately.
ITEM 5: NORMAL RETIREMENT AGE shall mean [SELECT ONE]
X the day and month of the Participant's 65th [INSERT AGE NOT LATER THAN
- --- 65] birthday.
___ the later of the day on which the Participant attains Age _________
[INSERT AGE NO LATER THAN 65] or the______________[INSERT NUMBER NO GREATER
THAN 5] anniversary of the Participation Commencement Date.
___ the later of the day on which the Participant attains Age _________
[INSERT AGE NO LATER THAN 65] or the Anniversary Date following his or her
completion of __________Years of Service, but in no event later than the
Participant's attainment of Age sixty-five (65).
___ the later of the day on which the Participant attains Age __________
[INSERT AGE NO LATER THAN 65] or the Anniversary Date following his or her
completion of __________ Years of Service, but in no event later than the later
of the Participant's attainment of Age sixty-five (65) or the fifth (5th)
anniversary of the Participation Commencement Date.
___ the day on which the Participant attains Age ____________[INSERT AGE NO
LATER THAN 65] and completes Years of Participation, but in no event later than
the Participant's attainment of Age sixty-five (65).
___ the day on which the Participant attains Age ___________ [INSERT AGE NO
LATER THAN 65] and completes _____________ Years of Participation, but in no
event later than the later of the Participant's attainment of Age sixty-five
(65) or the fifth (5th) anniversary of the Participation Commencement Date.
[CHECK IF APPLICABLE] if, for PLAN YEARS beginning before January 1, 1988,
a Participant's Normal Retirement Age was determined with reference to an
anniversary of his or her Participation Commencement Date that was more than
five (5) but no greater than ten (10) years, and an anniversary of the
Participation Commencement Date is relevant in determining a Participant's
Normal Retirement Age, the anniversary of a Participant's Participation
Commencement Date used to determine the Participant's Normal Retirement Age for
a Participant who first commenced participation under the Plan before the first
PLAN YEAR beginning on or after January 1, 1988, shall be the earlier of the
tenth (l0th) anniversary of the Participant's Participation Commencement Date
(or the anniversary set forth in the Plan as applicable prior to that PLAN
YEAR) or the fifth (5th) anniversary of the first day of the first PLAN YEAR
beginning on or after January 1, 1988.
7
<PAGE> 8
ITEM 6: DISABILITY PROVISION [SELECT ONE]
A. Except as to any Elective Deferrals made by a Participant
X A Participant shall be fully vested on disability in accordance with
- --- SECTION 5.02.
___ A Participant's vesting and distribution rights in the event of his or her
disability will be the same as the benefits and distribution rights applicable
on his or her termination of employment.
B. A Participant who makes Elective Deferrals [SELECT ONE]
X shall
- ---
___ shall not
receive the value of his Accrued Benefit on his Disability Date.
ITEM 7: EMPLOYER CONTRIBUTION
A. This Plan [SELECT ONE]
X shall
- ---
___ shall not
include a cash or deferred arrangement.
The provisions of the cash or deferred arrangement may be made effective as of
the first day of the PLAN YEAR in which the cash or deferred arrangement is
adopted. However, under no circumstances may a Salary Reduction Agreement or
other deferral mechanism be adopted retroactively.
NOTE: IF THE PLAN DOES NOT INCLUDE A CASH OR DEFERRED ARRANGEMENT, ITEMS 7C
THROUGH 7J SHOULD BE LEFT BLANK.
B. The Employer shall contribute [SELECT ONE]
X the amount determined each year by its governing body.
- ---
___ % [INSERT PERCENTAGE] of each Participant's COMPENSATION.
___ % [INSERT PERCENTAGE] of the Employer's Net Profits for the fiscal year
ending with or within the PLAN YEAR in excess of $________________.
8
<PAGE> 9
___ no contribution.
The Employer contribution shall be made [SELECT ONE]
X whether or not the Employer has Net Profits for the year.
- ---
___ only if the Employer has Net Profits for the year.
The Employer contribution shall be allocated [SELECT ONE]
X to all ELIGIBLE EMPLOYEES, whether or not the Employee has executed a
- --- Salary Reduction Agreement.
___ only to those Employees who have executed a Salary Reduction Agreement.
C. If the Employer shall make contributions, such contributions may include
[CHECK APPLICABLE SELECTIONS]
X Matching Contributions.
- ---
___ Qualified Non-elective Contributions.
X Non-Qualified Employer Contributions.
- ---
C.1. If the Employer shall make Matching Contributions, such contributions
shall be [SELECT ONE]
___ Qualified Matching Contributions at all times.
X Qualified Matching Contributions only if, at the time the contribution
- --- is made, the Employer advises the Committee that such contributions are
Qualified Matching Contributions; otherwise, such contributions shall be
Non-qualified Matching Contributions.
___ Non-qualified Matching Contributions.
C.2. If the Employer shall make contributions other than Matching
Contributions, such contributions shall be [SELECT ONE]
___ Qualified Non-elective Contributions at all times.
___ Qualified Non-elective Contributions only if, at the time the contribution
is made, the Employer advises the Committee that such contributions are
Qualified Non-elective Contributions; otherwise such contributions shall be
Non-qualified Matching Contributions.
X Non-Qualified Employer Contributions.
- ---
9
<PAGE> 10
C.3. If the Employer shall make Matching Contributions, such contributions
[SELECT ONE]
C.3.a. X shall be determined to be Matching Contributions only if, at the time
---
the contribution is made, the Employer advises the Committee that such
contributions are Matching Contributions, in which event such contributions
shall be allocated to the Account of each Participant in accordance with the
Elective Deferrals of such Participant for the PLAN YEAR for which the Matching
Contribution is made.
C.3.b. ____shall equal _________% [INSERT PERCENTAGE] of the Elective Deferrals
of each Participant for the PLAN YEAR, but in no event greater than ______%
[INSERT PERCENTAGE, IF APPLICABLE] of the Participant's COMPENSATION determined
for the PLAN YEAR by the Employer.
C.3.c._____shall equal [SELECT ONE IF APPLICABLE]
_____% [INSERT PERCENTAGE] of the Elective Deferrals of each Participant
for the PLAN YEAR up to % [INSERT PERCENTAGE] of the Participant's COMPENSATION,
_____% [INSERT PERCENTAGE] of the next______________% [INSERT PERCENTAGE]
of the Elective Deferrals of each Participant for the PLAN YEAR up to
% [INSERT PERCENTAGE] of the Participant's COMPENSATION, and
______% [INSERT PERCENTAGE] of the next____________ % [INSERT PERCENTAGE]
of the Elective Deferrals of each Participant for the PLAN YEAR up to
_____________% [INSERT PERCENTAGE] of the Participant's COMPENSATION.
C.3.d. ___ shall be equal to the percentage of Elective Deferrals of a
Participant based on his COMPENSATION for the PLAN YEAR as follows: [SELECT ONE
IF APPLICABLE]
_____% [INSERT PERCENTAGE] if his COMPENSATION is less than $_____________;
[INSERT DOLLAR AMOUNT]
_____% [INSERT PERCENTAGE] if his COMPENSATION is more than the dollar
amount chosen in the preceding selection, but less than $______________; [INSERT
DOLLAR AMOUNT]
_____% [INSERT PERCENTAGE] if his COMPENSATION is more than the dollar
amount chosen in the preceding selection, but less than $_____________; [INSERT
DOLLAR AMOUNT]
_____% [INSERT PERCENTAGE] if his COMPENSATION is more than the dollar
amount chosen in the preceding selection.
C.3.e.___ shall be equal to the percentage of Elective Deferrals of a
Participant based on his [SELECT ONE]
10
<PAGE> 11
_____Years of Service
_____Years of Participation
as of the last day of the PLAN YEAR as follows: [SELECT ONE IF APPLICABLE]
_____% [INSERT PERCENTAGE] if the number of Years is less than__________
[INSERT NUMBER OF YEARS]:
_____% [INSERT PERCENTAGE] if the number of Years is more than the number
of Years chosen in the preceding selection, but less than ______________[INSERT
NUMBER OF YEARS];.
_____% [INSERT PERCENTAGE] if the number of Years is more than the number
of Years chosen in the preceding selection.
C.4. If the Employer shall make Matching Contributions which are not qualified,
such contributions shall be [SELECT ONE]
X vested in accordance with the applicable schedule elected under ITEM 15.
- ---
___ fully vested at all times.
C.5. In no event shall the Matching Contribution for any Employee exceed
[COMPLETE IF APPLICABLE]
$____________________.
% of the Participant's COMPENSATION.
___
15 % of the Elective Deferral of the Participant.
- ---
D.1. The amount of Qualified Non-elective Contributions that are made under
ITEM 7C.2 of this Adoption Agreement and taken into account as Contribution
Percentage Amounts for purposes of calculating the Average Contribution
Percentage, subject to such other requirements as may be prescribed by the
Secretary of the Treasury, shall be:
___ All such Qualified Non-elective Contributions.
Such Qualified Non-elective Contributions that are needed to meet the
- --- Average Contribution Percentage test stated in SECTION 7.12 of the Plan.
D.2. The amount of Elective Deferrals made under ITEM 7A of the Adoption
Agreement and taken into account as Contribution Percentage Amounts for
purposes of calculating the Average Contribution Percentage, subject to such
other requirements as may be prescribed by the Secretary of the Treasury, shall
be
11
<PAGE> 12
___ All such Elective Deferrals.
X Such Elective Deferrals that are needed to meet the Average Contribution
- --- Percentage test stated in SECTION 7.13 of the Plan.
E.1. Qualified Matching Contributions and Qualified Non-elective Contributions
may be taken into account as Elective Deferrals for purposes of calculating the
Actual Deferral Percentages. In determining Elective Deferrals for the purpose
of the ADP test, the Employer shall include:
X Qualified Matching Contributions
- ---
___ Qualified Non-elective Contributions under this Plan or any other plan of
the Employer, as provided by regulations under the Code.
E.2. The amount of Qualified Matching Contributions made under ITEM 7C.3 of
this Adoption Agreement and taken into account as Elective Deferrals for
purposes of calculating the Actual Deferral Percentage, subject to such other
requirements as may be prescribed by the Secretary of the Treasury, shall be
[SELECT ONE]:
___ All such Qualified Matching Contributions.
X Such Qualified Matching Contributions that are needed to meet the Actual
- --- Deferral Percentage test stated in SECTION 7.12 of the Plan.
E.3. The amount of Qualified Non-elective Contributions made under ITEM 7C.2.
of the Adoption Agreement and taken into account as Elective Deferrals for
purposes of calculating the Actual Deferral Percentages, subject to such other
requirements as may be prescribed by the Secretary of the Treasury, shall be
[SELECT ONE]:
___ All such Qualified Non-elective Contributions.
___ Such Qualified Non-elective Contributions that are needed to meet the
Actual Deferral Percentage test stated in SECTION 7.13 of the Plan.
F. If Elective Deferrals are permitted, a Participant may change the elections
in his or her Salary Reduction Agreement [SELECT ONE]
___ annually, on the last day of the prior PLAN YEAR.
___ annually, on the first day of the PLAN YEAR.
___ on the last day of the sixth (6th) month of the PLAN YEAR, and on the last
day of the PLAN YEAR.
12
<PAGE> 13
___ on the first day of the PLAN YEAR, and six months following the first day
of the PLAN YEAR.
___ on the last day of each quarter of the PLAN YEAR.
___ on the frst day of each quarter of the PLAN YEAR.
X at such times as the Committee may determine.
- ---
G. If Elective Deferrals are permitted, a Participant may elect to defer up to
[SELECT ONE IF APPLICABLE]
15 % of his or her COMPENSATION.
- ---
___ % of his or her COMPENSATION, up to $ .
In no event shall a Participant be permitted to make Elective Deferrals unless
the Elective
Deferral selected is at least [COMPLETE IF APPLICABLE]
2 % [insert percentage, if applicable] of his or her COMPENSATION.
- ---
$___. [INSERT DOLLAR AMOUNT, IF APPLICABLE]
H. A Participant [SELECT ONE]
___ shall
X shall not
- ---
be able to assign Excess Elective Deferrals to the Plan.
If the Participant can assign Excess Elective Deferrals to the Plan, such
assignment must be made prior to ___________[INSERT MONTH AND DAY] of each year.
I. Forfeitures of Excess Aggregate Contributions shall be [SELECT ONE]
___ reallocated to the accounts of Participants who are not Highly Compensated
Employees.
X applied to reduce Employer contributions.
- ---
J. Forfeitures of Matching Contributions shall be [SELECT ONE]
___ reallocated to the accounts of Participants who are not Highly Compensated
Employees.
X applied to reduce Employer contributions.
- ---
13
<PAGE> 14
K. All other forfeitures shall be [SELECT ONE]
___ allocated to Participant Accounts in the same manner as Non-qualified
Employer Contributions in the PLAN YEAR in which the forfeiture is first
recognized.
___ used to reduce Non-qualified Employer Contributions in the PLAN YEAR in
which the forfeiture is recognized. [SELECT ONLY IF NON-QUALIFIED EMPLOYER
CONTRIBUTIONS ARE REQUIRED]
X first used to reduce Matching EmpIoyer Contributions in the PLAN YEAR in
- --- which the forfeiture is recognized, then to reduce Non-qualified Employer
Contributions, and then allocated to Participant Accounts in the same manner as
Non-Qualified Employer Contributions.
L. Forfeitures shall be deemed to occur [SELECT ONE]
X on the last day of the PLAN YEAR in which termination of employment
- --- occurs.
___ on the VALUATION DATE coincident with or next following a Participant's
termination of employment.
___ on the last day of the PLAN YEAR following a Participant's __________
[INSERT NUMBER NOT IN EXCESS OF FIVE (5)] consecutive one-year Breaks in
Service.
___ On the VALUATION DATE coincident with or next following a Participant's
[INSERT NUMBER NOT IN EXCESS OF FIVE (5)] consecutive one-year Breaks in
Service.
ITEM 8: ALLOCATION OF CONTRIBUTIONS
A. Employer contributions, other than Matching Contributions, shall be
allocated [SELECT ONE]
X to each Participant in the same proportion as his or her COMPENSATION
- --- bears to the COMPENSATION of all Participants
___ on an integrated basis.
B. If Employer contributions other than Matching Contributions are to be
allocated on an integrated basis, the percentage of COMPENSATION in excess of
the Integration Level shall be [SELECT ONE]
___ % [INSERT PERCENTAGE NOT GREATER THAN 5.7% IF THE INTEGRATION LEVEL IS THE
TAXABLE WAGE BASE, LESS THAN 20% OF THE TAXABLE WAGE BASE OR $10,000]
___ % [INSERT PERCENTAGE NOT GREATER THAN 5.4% IF THE INTEGRATION LEVEL IS
MORE THAN 80% OF THE TAXABLE WAGE BASE BUT LESS THAN THE TAXABLE WAGE BASE]
14
<PAGE> 15
___ % [INSERT PERCENTAGE NOT GREATER THAN 4.3% IF THE INTEGRATION LEVEL IS
MORE THAN $10,000 AND MORE THAN 20% OF THE TAXABLE WAGE BASE BUT LESS THAN 80%
OF THE TAXABLE WAGE BASE]
___ 4.3% if the Integration Level is more than $10,000 and more than 20% of
the Taxable Wage Base but less than 80% of the Taxable Wage Base for the Year,
5.4% if the Integration Level is more than 80% of the Taxable Wage Base but
less than the Taxable Wage Base, and 5.7% if the Integration Level is either
$10,000, 20% of the Taxable Wage Base or the Taxable Wage Base.
The Integration Level shall be [SELECT ONE]
___ the Taxable Wage Base.
$_______. [INSERT DOLLAR AMOUNT LESS THAN THE TAXABLE WAGE BASE]
___ % of the Taxable Wage Base [INSERT PERCENTAGE NOT IN EXCESS OF 100%]
C.1.Non-Qualified Employer Contributions shall be allocated to Participant
Accounts as of an Allocation Date, which shall be [SELECT ONE]
X the last day of the PLAN YEAR.
- ---
___ the first day of the PLAN YEAR.
___ the following date or dates in each PLAN YEAR:___________ [INSERT DATE(S)].
Subject to the provisions of SECTION 2.09, an allocation of Non-qualified
Employer Contributions [SELECT ONE]
___ shall
X shall not
- ---
be made to the Account of a Participant who completes less than one thousand
(1000) Hours of Service during the PLAN YEAR.
Subject to the provisions of SECTION 2.09, an allocation of Non-qualified
Employer Contributions [SELECT ONE]
___ shall
X shall not
- ---
15
<PAGE> 16
be made to the account of a Participant who is not employed on the [SELECT ONE]
___ Allocation Date.
X last day of the PLAN YEAR.
- ---
C.2. Qualified Non-elective Contributions shall be allocated to Participant
Accounts as of an Allocation Date, which shall be [SELECT ONE]
___ the last day of the PLAN YEAR.
___ the first day of the PLAN YEAR.
___ the following date or dates in each PLAN YEAR:____________ [INSERT DATE(S)].
Subject to the provisions of SECTION 2.09, an allocation of Qualified
Non-elective Contributions [SELECT ONE]
___ shall
___ shall not
be made to the Account of a Participant who completes less than one thousand
(1000) Hours of Service during the PLAN YEAR.
Subject to the provisions of SECTION 2.09, an allocation of Qualified
Non-elective Contributions [SELECT ONE]
___ shall
___ shall not
be made to the account of a Participant who is not employed on the last day of
the PLAN YEAR.
C.3. Matching Contributions shall be allocated to Participant Accounts as of an
Allocation Date, which shall be [SELECT ONE]
___ the last day of the PLAN YEAR.
___ the first day of the PLAN YEAR.
X the following date or dates in each PLAN YEAR: the last day of each month
- --- [INSERT DATE(S)].
Subject to the provisions of SECTION 2.09, an allocation of Matching
Contributions [SELECT ONE]
16
<PAGE> 17
X shall
- ---
___ shall not
be made to the Account of a Participant who completes less than one thousand
(1000) Hours of Service during the PLAN YEAR.
Subject to the provisions of SECTION 2.09, an allocation of Matching
Contributions [SELECT ONE]
X shall
- ---
___ shall not
be made to the account of a Participant who is not employed on the [SELECT ONE]
___ VALUATION DATE.
X last day of the PLAN YEAR.
- ---
D. A Participant shall be permitted to direct the investment of [SELECT ONE]
___ no part of his or her Account.
___ his or her Elective Deferrals only.
X his or her Account.
- ---
E. If directed investments are permitted, the investment alternatives shall be
[SELECT ONE]
X selected by the Committee in its sole discretion.
- ---
___ such investments as the Participant may select.
If directed investments are permitted, changes in investment decisions shall be
made [SELECT ONE]
___ whenever the Participant wishes.
X at such times during the PLAN YEAR as the Committee shall determine, in
- --- its sole discretion.
F. For purposes of allocating gains and losses pursuant to SECTIONS 10.02 AND
10.03 [SELECT ONE]
17
<PAGE> 18
X a weighted average shall be used with reference to amounts attributable
- --- to contributions made during the PLAN YEAR.
___ all contributions shall be treated as made on the last day of the PLAN
YEAR.
ITEM 9: MINIMUM AND MAXIMUM CONTRIBUTIONS
A. In no event shall the Employer Contribution for the PLAN YEAR for any
Participant be in an amount less than [SELECT ONE OR LEAVE BLANK]
$___________ [INSERT DOLLAR AMOUNT].
______% [INSERT PERCENTAGE] of his or her COMPENSATION for the LIMITATION YEAR
which [SELECT ONE]
________ends
________begins
in the PLAN YEAR.
B. In no event shall the Employer Contribution for the PLAN YEAR for any
Participant be in an amount greater than [SELECT ONE OR LEAVE BLANK]
$30,000 [INSERT DOLLAR AMOUNT].
- -------
25 % [INSERT PERCENTAGE] of his or her COMPENSATION for the LIMITATION
- ------ YEAR which [SELECT ONE]
X ends
-----
_____ begins
in the PLAN YEAR.
ITEM 10: VALUATION DATE
The VALUATION DATE shall be [CHECK ONE AND COMPLETE AS NECESSARY]
___ the first day of the PLAN YEAR.
___ the last day of the PLAN YEAR.
___ the first day of the PLAN YEAR and the first day of the month beginning
six (6) months later.
18
<PAGE> 19
___ the last day of the sixth (6th) month of the PLAN YEAR and the last day of
the PLAN YEAR.
___ the first day of each quarter of the PLAN YEAR.
___ the last day of each quarter of the PLAN YEAR.
X [INSERT DATE OR SERIES OF DATES]
- --- Daily
ITEM 11: METHOD OF FUNDING
The Plan shall be funded as [SELECT ONE]
X an Uninsured Plan.
- ---
___ a Plan funded in part with life insurance or annuity Policies.
___ a Fully Insured Plan.
ITEM 12: PRERETIREMENT DEATH BENEFIT
A. If the Plan is an Uninsured Plan, the PRERETIREMENT DEATH BENEFIT shall be
[SELECT ONE]
___ the Qualified Preretirement Survivor Annuity.
___ the Participant's vested Accrued Benefit.
X the Participant's Accrued Benefit.
- ---
B. If the Plan is a Plan funded in part with life insurance Policies the
PRERETIREMENT DEATH BENEFIT shall be [SELECT ONE]
___ the death benefit provided under any life insurance Policies issued on the
Participant's life, but in no event less than the Qualified Preretirement
Survivor Annuity.
___ the death benefit provided under any life insurance Policies issued on the
Participant's life, plus the value of the Participant's Account.
C. If the Plan is a Fully Insured Plan, the PRERETIREMENT DEATH BENEFIT shall
be [SELECT ONE]
___ the death benefit provided under any life insurance Policies issued on the
Participant's life, but in no event less than the Qualified Preretirement
Survivor Annuity.
19
<PAGE> 20
___ the death benefit provided under any life insurance Policies issued on the
Participant's life, plus the cash value of any annuity Policies held in the
Participant's Account.
In all cases, the Qualified Preretirement Survivor Annuity shall be paid in
accordance with the provisions of SECTION 5.06(B) and any PRERETIREMENT DEATH
BENEFIT in excess of the value of the Qualified Preretirement Survivor Annuity
shall be paid in accordance with the provisions of SECTION 4.07.
D. The Spouse of a Participant [SELECT ONE; IF THE GUARANTEE IS PROVIDED, THE
SPOUSE NEED NOT BE THE BENEFICIARY OF ALL LIFE INSURANCE PROCEEDS]
___ shall
___ shall not
be paid at least one-half (1/2) of the total death benefit payable as a result
of the death of the Participant.
ITEM 13: LIFE INSURANCE
A. If the Plan is an Insured Plan, the amount of life insurance to be purchased
shall be [SELECT ONE]
___ determined in accordance with the elections made in Item 13B.
___ determined by each Participant in accordance with the elections made in
Item 13C.
___ determined by the Committee in a nondiscriminatory manner.
B. In the event life insurance is to be purchased pursuant to the elections
made in this Item 13B, the Committee shall direct the Trustee to use [SELECT
ONE IF APPLICABLE]
___ % [INSERT PERCENTAGE] of each annual Employer contribution to purchase
ordinary life insurance.
___ % [INSERT PERCENTAGE] of each annual Employer contribution to purchase
term insurance.
___ % [INSERT PERCENTAGE] of each annual Employer contribution to purchase a
combination of ordinary life and term life insurance in such proportion as
shall be determined by the committee.
In the event the percentage of annual Employer contribution set forth above
shall be insufficient to pay the premium on Policies in force on a
Participant's life during the PLAN YEAR
20
<PAGE> 21
immediately preceding the PLAN YEAR for which the determination is being made,
the Committee shall, subject to the provisions of SECTION 3.07 [SELECT ONE]
___ direct the Trustee to pay such amount of the premium as is necessary from
the Account of the Participant.
___ direct the Trustee to surrender so much of the life insurance as is
necessary to prevent the premium from exceeding the percentages elected in Item
13B.
___ exercise its discretion to determine whether the premium should be paid or
part of the life insurance surrendered.
In addition to amounts available for insurance under other elections in the
Adoption Agreement, amounts held in a Participant's Account for at least two
(2) years [SELECT ONE]
___ shall
___ shall not.
be available for the payment of life insurance premiums. If no election is
made, such amounts shall be available.
In addition to amounts available for insurance under other elections in the
Adoption Agreement, amounts held in the account of a Participant who has been
such for at least five (5) years [SELECT ONE]
___ shall
___ shall not
be available for the payment of life insurance premiums. If no election is
made, such amounts shall be available.
C. If the Participant elects to have part of his or her Account invested in
life insurance, such life insurance shall insure [SELECT ONE]
___ only the Participant's life.
___ the Participant's life and/or the lives of others in whom the Participant
has an insurable interest and on whose life the Participant elects to purchase
such insurance.
In the event the provisions of SECTION 3.07 shall prevent the payment of the
premiums on Policies purchased in accordance with the direction of a
Participant, the Committee shall direct the Trustee to surrender so much of the
life insurance as is necessary to prevent the premium from exceeding the
limitations set forth in SECTION 3.07 unless the Participant or some other
21
<PAGE> 22
person agrees to purchase such insurance from the Plan in accordance with the
procedures set forth in applicable Prohibited Transaction Exemptions.
D. [COMPLETE IF APPLICABLE] In the event a Participant is entitled on initial
entry to less than $________ [INSERT AMOUNT NOT LESS THAN $2,000 OR IN EXCESS OF
$5,000] of life insurance, until the Participant is entitled to such amount no
Policy shall be issued on the life of such Participant.
E. [COMPLETE IF APPLICABLE] In the event a Participant is entitled as of any
date to an increase in life insurance benefits that is less than $ [INSERT
AMOUNT NOT MORE THAN $1,000] no life insurance Policy need be purchased until
the Participant is entitled to at least the amount set forth as additional life
insurance.
F. Additional life insurance shall be purchased on the life of a Participant
until the Participant [SELECT ONE]
___ is within [INSERT NUMBER NOT GREATER THAN 5] years of his or her NORMAL
RETIREMENT DATE.
___ reaches his NORMAL RETIREMENT AGE.
___ actually retires.
G. The Committee [SELECT ONE]
___ shall purchase key man insurance.
___ shall have the right to purchase key man insurance.
___ shall not have the right to purchase key man insurance.
ITEM 14: VOLUNTARY EMPLOYEE CONTRIBUTIONS [COMPLETE IF APPLICABLE]
If a voluntary contributions account is held under the Plan for a Participant,
the Participant [SELECT ONE IF APPLICABLE]
X shall
- ---
___ shall not
have the right to direct the investment of such account.
ITEM 15: VESTING
A. In any PLAN YEAR during which the Plan is a Top-Heavy Plan, the following
vesting schedule shall apply: [SELECT ONE]
22
<PAGE> 23
____Vesting in the Accrued Benefit from Employer Contributions shall be twenty
(20%) percent after two (2) Years of Service, with an additional twenty (20%)
percent vesting for each additional Year of Service thereafter, up to a maximum
vesting in the Accrued Benefit of one hundred (100%) percent.
X Vesting in the Accrued Benefit from Employer Contributions shall be
- --- [COMPLETE EACH PERCENTAGE]
10 % [INSERT ANY PERCENTAGE NOT LESS THAN ZERO] after one (1) Year of
-- Service;
20 % [NOT LESS THAN 20%] after two (2) Years of Service;
--
40 % [NOT LESS THAN 40%] after three (3) Years of Service;
--
60 % [NOT LESS THAN 60%] after four (4) Years of Service;
--
80 % [NOT LESS THAN 80%] after five (5) Years of Service;
--
100% after six (6) Years of Service.
Vesting in the Accrued Benefit from Employer Contributions shall be one
hundred (100%) percent after_____________ [INSERT A NUMBER NO GREATER THAN 3]
Years of Service.
Vesting in the Accrued Benefit from Employer Contributions shall be one
hundred (100%) percent at all times.
If the vesting schedule under the Plan shifts in or out of the above schedule
for any PLAN YEAR because of the Plan's Top-Heavy status, such shift is an
amendment to the vesting schedule and the provisions of SECTION 12.07 of the
Plan apply.
B. In any PLAN YEAR in which the Plan is not a Top-Heavy Plan, the following
vesting schedule shall apply: [SELECT ONE]
X the schedule selected in ITEM 15A.
- ---
___ Vesting in the Accrued Benefit from Employer Contributions shall be twenty
(20%) percent after three (3) Years of Service, with an additional twenty (20%)
percent vesting for each additional Year of Service thereafter, up to a maximum
vesting in the Accrued Benefit of one hundred (100%) percent.
___ Vesting in the Accrued Benefit from Employer Contributions shall be
[COMPLETE EACH PERCENTAGE]
____ % [INSERT ANY PERCENTAGE NOT LESS THAN ZERO] after one (1) Year of
Service;
23
<PAGE> 24
____ % [INSERT ANY PERCENTAGE NOT LESS THAN ZERO] after two (2) Years of
Service;
____ % [NOT LESS THAN 20%] after three (3) Years of Service;
____ % [NOT LESS THAN 40%] after four (4) Years of Service;
____ % [NOT LESS THAN 60%] after five (5) Years of Service;
____ % [NOT LESS THAN 80%] after six (6) Years of Service;
100% after seven (7) Years of Service.
____Vesting in the Accrued Benefit from Employer Contributions shall be one
hundred (100%) percent after_________________ [INSERT A NUMBER NO GREATER THAN
5] Years of Service.
____Vesting in the Accrued Benefit from Employer Contributions shall be one
hundred (100%) percent at all times. [NOTE: THIS ITEM MUST BE SELECTED IF THE
PLAN EXCLUDES EMPLOYEES WHO HAVE COMPLETED MORE THAN ONE (1) YEAR OF SERVICE
BASED ON A SERVICE REQUIREMENT]
C. Years of Service with the Employer shall be counted to determine the
nonforfeitable percentage in such Employee's Accrued Benefit from Employer
Contributions based on the following elections: [SELECT APPLICABLE EXCLUSIONS]
X all Years of Service will be counted.
- ---
___ Years of Service completed before the Participant attained Age eighteen
(18) shall not be included.
___ Years of Service during a period for which the Employee made no mandatory
contributions shall not be included.
___ Years of Service completed before the Employer maintained this Plan or a
predecessor Plan shall not be included.
___ Years of Service before January 1, 1971, unless the Employee has at least
three (3) Years of Service after December 31, 1970 shall not be included.
___ Years of Service before the effective date of ERISA shall not be included
if such Years would have been disregarded under the break in service rules of
the Plan or prior plan in effect from time to time before such date. For this
purpose, break in service rules are rules which result in the loss of prior
vesting or benefit accruals, or deny an Employee eligibility to participate by
reason of separation or failure to complete a required period of service within
a specified period of time.
24
<PAGE> 25
D. Years of Service for purposes of determining a Participant's nonforfeitable
percentage in his or her Accrued Benefit (the vesting computation period) shall
be measured over [SELECT ONE]
X the PLAN YEAR.
- ---
___ the twelve (12) consecutive month periods measured from the date the
Participant performs his or her first Hour of Service and each anniversary
thereof.
___ the twelve (12) consecutive month period measured from each [INSERT MONTH
AND DAY].
E. [COMPLETE IF APPLICABLE] For purposes of measuring a Year of Participation
or Service for accrual purposes, a Participant will be credited with a Year of
Participation or Service only if he or she completes at least
1.000[INSERT NUMBER] Hours of Service during the accrual computation period.
- -----
[COMPLETE IF APPLICABLE] For purposes of measuring a Year of
Participation or Service for vesting purposes, a Participant will be credited
with a Year of Participation or Service only if he or she completes at least
1.000[INSERT NUMBER NOT LESS THAN 1,000] Hours of Senice during the vesting
- ----- computation period.
ITEM 16: PLAN YEAR and LIMITATION YEAR
The PLAN YEAR shall be [SELECT ONE]
___ the twelve (12) consecutive month period which coincides with the
LIMITATION YEAR.
___ the twelve (12) consecutive month period commencing on the EFFECTIVE DATE
and each anniversary thereof.
X the twelve (12) consecutive month period commencing on January 1 [INSERT
- --- MONTH AND DAY] and each anniversary thereof.
The LIMITATION YEAR shall be [SELECT ONE]
X the PLAN YEAR.
- ---
___ the twelve (12) consecutive month period commencing on
[INSERT MONTH AND DAY] and each anniversary thereof.
ITEM 17: TOP-HEAVY DETERMINATIONS
25
<PAGE> 26
A. For purposes of establishing present value to compute the Top-Heavy Ratio,
any benefit shall be discounted based on the following assumptions: [SELECT
ONE]
X the UP-84 mortality table and interest at the rate of six (6%) percent
- --- for both reretirement and post-retirement purposes.
___ Preretirement [COMPLETE BOTH ITEMS; IF NO MORTALITY TABLE IS USED, INSERT
"NONE"]
Interest rate_______%
Mortality Table___________
Other [INSERT ASSUMPTIONS]_______________
Post-Retirement [COMPLETE BOTH INTEREST AND MORTALITY ITEMS; COMPLETE COST
OF LIVING ONLY IF APPLICABLE]
Interest rate_______%
Mortality Table___________
Cost of Living____________
Other [INSERT ASSUMPTIONS]_______________
B. For purposes of computing the Top-Heavy Ratio, the Valuation Date shall be
[SELECT ONE]
[INSERT DATE USED FOR COMPUTING PLAN COSTS FOR MINIMUM FUNDING, REGARDLESS
OF WHETHER A VALUATION IS PERFORMED EVERY YEAR].
___ the Valuation Date of the defined benefit plan.
C. Top-Heavy Minimums will be satisfied by [SELECT ONE]
X this Plan.
- ---
___ another Plan.
If the Top-Heavy Minimums will be satisfied by another plan insert the name of
such other plan:__________________________________________.
D. An Employer who maintains both a defined benefit and defined contribution
plan which are Top-Heavy Plans shall provide a minimum benefit or contribution
in the [SELECT ONE]
___ defined benefit
26
<PAGE> 27
___ defined contribution
plan equal to
[IF THE DEFINED BENEFIT PLAN IS SELECTED]
___ % of average COMPENSATION for the five (5) highest consecutive years after
January 1, 1984, expressed as a life annuity commencing at the Participant's
NORMAL RETIREMENT DATE, for each PLAN YEAR after [INSERT DATE]______________
up to a maximum monthly pension of__________________% [INSERT PERCENTAGE NOT
LESS THAN 20%] of such average COMPENSATION.
[IF THE DEFINED CONTRIBUTION PLAN IS SELECTED]
___ % of Annual COMPENSATION for each PLAN YEAR after [INSERT DATE]
ITEM 18: PARTICIPANT LOANS
Loans to Participants and their Beneficiaries [SELECT ONE]
X are allowed.
- ---
___ are not allowed.
If loans are available to Participants interest paid on such loans
X shall
- ---
___ shall not
be allocated to the Accrued Benefit of the Participant or Beneficiary borrowing
the amount.
ITEM 19: BENEFIT DISTRIBUTIONS
A. A Participant who reaches his or her NORMAL RETIREMENT AGE but does not
retire shall commence to receive his or her benefits [SELECT ONE]
___ at his or her NORMAL RETIREMENT DATE.
___ at his or her Actual Retirement Date.
X at any time elected by the Participant after his or her NORMAL RETIREMENT
- --- DATE.
27
<PAGE> 28
B. If benefits are not paid to a Participant who reaches his or her NORMAL
RETIREMENT AGE but does not retire such benefits shall be [SELECT ONE]
___ invested as part of Trust assets with gains and losses allocated
proportionately to the Participant's Account.
X invested in the manner directed by the Participant with the assets chosen
- --- by the Participant held in the Participant's Account.
C. A Participant who terminates employment prior to his or her NORMAL
RETIREMENT DATE shall be entitled to a distribution of his or her benefits
[SELECT ONE]
___ upon termination of employment.
___ upon the last day of the PLAN YEAR in which termination of employment
occurs.
___ upon termination of employment as a result of a disability as defined in
SECTION 5.03.
___ upon the occurrence of a one-year Break in Service.
___ upon the occurrence of five one-year Breaks in Service.
___ only upon the earlier of his or her death or attainment of his or her
NORMAL RETIREMENT AGE.
X upon the VALUATION DATE coincident with or next following termination of
- --- employment.
D. A Spouse who is entitled to a Qualified Preretirement Survivor Annuity
[SELECT ONE]
X shall
- ---
___ shall not
be entitled to receive the Annuity in the form of a lump sum.
E. A Participant shall be entitled to receive a distribution of his rollover
account as defined in Section 5.12 [SELECT ONE]
___ at any time he or she requests.
X at the same time as a distribution can be made from the Plan of all or any
- --- part of his Accrued Benefit.
28
<PAGE> 29
F. [INSERT PERCENTAGE IF APPLICABLE] In lieu of a Qualified Joint and Survivor
Annuity paying a survivor annuity of fifty (50%) percent, the survivor annuity
payable under the Qualified Joint and Survivor Annuity Form shall be ____ % [NOT
LESS THAN FIFTY (50%) PERCENT OR MORE THAN ONE HUNDRED (100%) PERCENT] of the
amount of the annuity payable during the joint lives of the Participant and
spouse.
G. Distributions to a Participant in a profit sharing Plan shall be available
[SELECT APPLICABLE CHOICES]
___ of any amounts held in the Participant's Account for at least two (2)
years.
___ of any amounts held in the Participant's Account if the Participant has
participated in the Plan for at least five (5) years.
X only at the times and to the extent selected for distributions of Employer
- --- contributions in other Items in the Adoption Agreement.
ITEM 20: OPTIONAL FORMS
A. Benefits shall be payable to a Participant only in one of the following
forms: [COMPLETE ONLY IF THE SAFE HARBOR RULE OF SECTION 5.06(B)(6) IS TO
APPLY]
___ a lump sum.
___ a period certain as elected by the Participant, but not in excess of
[INSERT PERIOD NO GREATER THAN 20] years.
B. If the safe harbor rule of SECTION 5.06(B)(6) is not to apply, benefits
payable to a Participant shall be payable in any one of the following forms, in
addition to the form of a Qualified Joint and Survivor Annuity: [CHECK ALL
APPLICABLE FORMS]
X a lump sum.
- ---
X a joint and survivor annuity with spouse with 75% or 100% [INSERT % NOT
- --- MORE THAN 100%, OR INSERT THE WORD "ANY"] of the monthly pension payable
to the Participant to be paid to the spouse following the death of the
Participant.
X subject to the provisions of SECTION 5.06, a joint and survivor annuity
- --- with any person with 75% or 100%[INSERT % NOT MORE THAN 100%, OR INSERT THE
WORD "ANY"] of the monthly pension payable to the Participant to be paid to
such person on the death of the Participant.
X all of the optional forms listed above.
- ---
X the following additional optional forms: [COMPLETE AS APPLICABLE]
- ---
29
<PAGE> 30
1. an annuity for the life of the participant
2. 5 or 10 year certain annuity
3. equal monthly, quarterly or annual installments not to exceed the
life expectancy of the participant or the joint lives expectancies of the
participant and baneficiary
4.
5.
C. If benefits are payable in a lump sum under any optional form, such
benefits shall be payable [SELECT AS APPLICABLE]
X in any case in which the Participant so elects.
- ---
___ only if the lump sum benefit has a value less than $__________ [INSERT
DOLLAR AMOUNT].
___ only if the Participant executes an agreement not to compete with the
Employer.
D. Benefits payable to a Participant
___ can only be paid in one of the optional forms set forth in ITEM 20A.
X can be converted to an account balance and paid in accordance with the
- --- provisions of SECTION 401(A)(9) of the Code as they apply to distributions
from an account balance.
ITEM 21: ROLLOVER ACCOUNTS
A. Rollover accounts [SELECT ONE]
X are permitted.
- ---
___ are not permitted.
B. If rollover accounts are permitted, the directed in vestment of rollover
accounts by the Participant [SELECT ONE, IF APPLICABLE]
X is permitted.
- ---
___ is not permitted.
ITEM 22: LIMITATIONS ON BENEFITS
30
<PAGE> 31
If the Employer maintains or ever maintained another qualified plan other than
a paired plan 01-001, 01-005, 02-001 or 02-003 in which any Participant in this
Plan is or was a Participant or could possibly become a Participant, the
Employer adopting this Plan must complete this Item. The Employer must also
complete this Item if it maintains a welfare benefit fund, as defined in
SECTION 419(E) of the Code, or an individual medical account, as defined in
SECTION 415(1)(2) of the Code, under which amounts are treated as Annual
Additions with respect to any Participant in this Plan.
A. If the Participant is covered under another qualified defined contribution
Plan maintained by the Employer, other than a master or prototype plan [SELECT
ONE]
X the provisions of SECTION 8.02 shall apply as if the other plan were a
- --- master or prototype plan.
___ [STATE METHOD UNDER WHICH THE PLANS WILL LIMIT TOTAL ANNUAL ADDITIONS TO
THE MAXIMUM PERMISSIBLE AMOUNT, AND WILL PROPERLY REDUCE ANY EXCESS AMOUNTS, IN
A MANNER THAT PRECLUDES EMPLOYER DISCRETION]
B. If the Participant is or has ever been a Participant in a defined benefit
plan maintained by the Employer [STATE METHOD WHICH SATISFIES THE 1.0
LIMITATION OF SECTION 415(E) OF THE CODE AND PRECLUDES EMPLOYER DISCRETION]
ITEM 23: MISCELLANEOUS
A. The adopting Employer may not rely on an opinion letter issued by the
National Office of the Internal Revenue Service as evidence that the Plan is
qualified under SECTION 401 of the Code. In order to obtain reliance with
respect to Plan qualification, the Employer must apply to the appropriate Key
District Office for a determination letter.
B. This Adoption Agreement may be used only in conjunction with THE GUARDIAN
DEFINED CONTRIBUTION PROTOTYPE PLAN AND TRUST AGREEMENT.
C. In the event this Adoption Agreement is improperly completed, the Plan may
not be qualified under SECTION 401(A) of the Internal Revenue Code.
D. The Sponsor will inform each adopting Employer of any amendments made to the
Plan or the abandonment or discontinuance of the Plan.
E. The name, address and telephone number of the Sponsor are:
The Guardian Life Insurance Company of America
201 Park Avenue South
New York, New York 10003
(212) 598-8000
31
<PAGE> 32
If life insurance policies have been purchased from the Guardian, ask for
the Pension Division Service Department.
If annuities or investments have been purchased from either the Guardian
Insurance & Annuity Company, Inc. or the Park Avenue Portfolio, ask for the
Equities Department.
If no products have been purchased from the Guardian, the Guardian can not
respond to any communications concerning this document.
THESE DOCUMENTS ARE INTENDED TO BE PART OF A PROTOTYPE PLAN. THE INTERNAL
REVENUE SERVICE GIVES PROTOTYPE PLANS SPECIAL RELIANCE BY PRE-APPROVING PLAN
LANGUAGE. THAT RELIANCE IS ONLY AVAILABLE IF EACH EMPLOYER SPONSORING THE PLAN
MAKES AMENDMENTS ON A TIMELY BASIS WHEN SUCH AMENDMENTS ARE REQUIRED. SUCH
AMENDMENTS ARE MADE BY THE PLAN SPONSOR, AND FORWARDED TO EACH INDIVIDUAL
EMPLOYER SPONSORING THE PLAN. THE PLAN CAN LOSE ITS QUALIFICATION IF THE
EMPLOYER FAILS TO MAKE THE NECESSARY AMENDMENTS.
AS SPONSOR OF THIS PROTOTYPE, THE GUARDIAN LIFE INSURANCE COMPANY OF
AMERICA WILL ACCEPT THE RESPONSIBILITY FOR ADVISING YOU OF THE AMENDMENTS MADE
TO THE PLAN ONLY IF YOU TAKE THE FOLLOWING STEPS:
1. AFTER YOU ADOPT THE PROTOTYPE, IF SUCH ADOPTION IS THE FIRST TIME YOU
HAVE USED THE GUARDIAN PROFIT SHARING 401 (K) PLAN, YOU MUST FORWARD AN
ORIGINAL COPY OF THE ADOPTION AGREEMENT TO THE GUARDIAN AT THE ADDRESS LISTED
BELOW:
The Guardian Life Insurance Company of America
201 Park Avenue South
New York, New York 10003
Attn: Pension Division Service Deparunent 13-A
PLEASE NOTE: IF YOU HAVE PURCHASED NEITHER LIFE INSURANCE OR INVESTMENTS
FROM THE GUARDIAN LIFE INSURANCE COMPANY, THE GUARDIAN INSURANCE & ANNUITY
COMPANY, INC. OR THE PARK AVENUE PORTFOLIO AS PART OF THE FUNDING OF THIS PLAN
OR ANOTHER QUALIFIED PLAN YOU MAINTAIN FOR YOUR EMPLOYEES, YOU MAY NOT USE THIS
DOCUMENT AS A PROTOTYPE PLAN.
2. WHEN THE GUARDIAN RECEIVES THE EXECUTED DOCUMENTS, THE DOCUMENTS WILL
BE COUNTERSIGNED AND A COPY RETURN TO YOU. UNTIL YOU RECEIVE THE COUNTERSIGNED
COPY, YOU CAN NOT RELY UPON THE GUARDIAN TO NOTIFY YOU OF ANY AMENDMENTS
NECESSARY TO MAINTAIN THE QUALIFICATION OF YOUR PLAN UNDER APPLICABLE
PROVISIONS OF THE
32
<PAGE> 33
TAX AND PENSION LAW. THE GUARDIAN WILL ACCEPT NO RESPONSIBILITY FOR SUCH
COMPLIANCE UNLESS YOU HAVE IN YOUR POSSESSION A COPY OF THE ADOPTION AGREEMENT
COIJNT SIGNED BY AN OFFICER OF THE GUARDIAN. OFFICERS OF THE GUARDIAN INCLUDE
ONLY HOME OFFICE PERSONNEL, AND DO NOT INCLUDE ANY FIELD SERVICE PERSONNEL.
3. THE GUARDIAN WILL ACCEPT NO RESPONSIBILITY IN THE EVENT YOU DO NOT RECEIVE
A COUNTERSIGNED COPY OF THE ADOPTION AGREEMENT AFTER FORWARDING SAME TO THE
GUARDIAN. YOU ARE SOLELY RESPONSIBLE FOR OBTAINING SUCH COUNTERSIGNED COPY, AND
IF YOU DO NOT OBTAIN SAME FOR ANY REASON, WHETHER OR NOT THE FAULT OF THE
GUARDIAN, THE GUARDIAN SHALL HAVE NO RESPONSIBILITY FOR ANY DIRECT, INDIRECT OR
CONSEQUENTIAL DAMAGES RESULTING FROM THE FAILURE TO MAINTAIN PLAN
QUALIFICATION.
IN WITNESS WHEREOF, the Employer and the Committee, respectively, have
caused these presents to be signed by their duly authorized representatives and
have caused their respective corporate seals, where required, to be hereunto
affixed, the day and year written below.
7/28/95 Plasma-Therm, Inc.
- -------------------------------- -----------------------------------
(DATE) Employer
BY: /s/ Diana DeFerrari
-------------------------------
Authorized Signature Title
VP of Administration/Corp. Sec.
-----------------------------------
Committee Member
-----------------------------------
Committee Member
-----------------------------------
Committee Member
If no separate trust agreement is signed, the Trustees should sign below.
Unless the Trustee is a corporate Trustee, there must a least two Trustees.
-----------------------------------
Trustee
-----------------------------------
33
<PAGE> 34
-----------------------------------
Trustee
-----------------------------------
Trustee
This plan is a prototype sponsored by The
Guardian Life Insurance Company of
America. However, the following counter-
signature shall not be construed as
approval of the plan or its terms, nor a
representation that the undersigned has
reviewed the plan in any manner or to any
extent.
/s/ Joyce V. Gordon
- -----------------------------------------
Authorized Signature
2nd Vice President, Pensions
APPENDIX
The following Employers, by execution of this Appendix, hereby adopt the terms
and conditions of the Plan to which this Appendix is attached:
Name of Employer: PLASMA-THERM, INC.
Address of Employer: 9509 INTERNATIONAL COURT
ST. PETERSBURG, FL 33716
Signature of Authorized Representative: /s/ Diana DeFerrari
---------------------------------------
Title: SECRETARY/PLAN ADMINISTRATOR
Name of Employer: MAGNETRAN
Address of Employer: 134 ROUTE 73
VOORBEES,.NJ 08043
Signature of Authorized Representative: /s/ Diana DeFerrari
---------------------------------------
Title: SECRETARY/PLAN ADMINISTRATOR
Name of Employer:
Address of Employer:
34
<PAGE> 35
Signature of Authorized Representative:
---------------------------------------
Title:
<PAGE> 1
EXHIBIT 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
---------------------------------------------
1996 1995 1994
------------ ------------ ------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
PRIMARY
Average shares outstanding 10,329 10,093 8,382
Net effect of dilutive stock options and
warrants based on the treasury stock
method using average market price 403 449 676
------------ ------------ ------------
TOTAL 10,732 10,542 9,058
============ ============ ============
Income before cumulative effect of change
in accounting principle $2,994 $1,089 $1,613
============ ============ ============
Net income $2,994 $1,089 $1,963
============ ============ ============
Income before cumulative effect of change
in accounting principle $0.28 $0.10 $0.18
Cumulative effect of change in
accounting principle - - 0.04
------------ ------------ ------------
Net income per share $0.28 $0.10 $0.22
============ ============ ============
FULLY DILUTED
Average shares outstanding 10,329 10,093 8,382
Net effect of dilutive stock options and
warrants based on the treasury stock
method using the year-end market price,
if higher thanprice 434 479 711
------------ ------------ ------------
TOTAL 10,763 10,572 9,093
============ ============ ============
Income before cumulative effect of change
in accounting principle $2,994 $1,089 $1,613
============ ============ ============
Net income $2,994 $1,089 $1,963
============ ============ ============
Income before cumulative effect of change
in accounting principle $0.28 $0.10 $0.18
Cumulative effect of change in
accounting principle - - 0.04
------------ ------------ ------------
Net income pershare $ 0.28 $ 0.10 $ 0.22
============ ============ ============
</TABLE>
<PAGE> 1
EXHIBIT 21
SUBSIDIARY OF THE REGISTRANT
<TABLE>
<CAPTION>
STATE OR OTHER JURISDICTION
NAME OF INCORPORATION
- ---- ----------------
<S> <C>
Magnetran, Inc. New Jersey
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated January 10, 1996, accompanying the consolidated
financial statements and schedules of Plasma-Therm, Inc. and Subsidiary included
in the Annual Report on Form 10-K of Plasma-Therm, Inc. and Subsidiary for the
year ended November 30, 1995. We hereby consent to the incorporation by
reference of said reports in the Registration Statements of Plasma-Therm, Inc.
and Subsidiary on Form S-3 (File No. 33-88836, effective February 1, 1995) and
Forms S-8 (File No. 33-29104, effective June 22, 1989 and File 33-60375,
effective June 14, 1995).
GRANT THORNTON LLP
Tampa, Florida
January 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AS OF NOVEMBER, 1996 AND CONSOLIDATED STATEMENTS OF
INCOME FOR THE YEAR ENDED NOVEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-1-1995
<PERIOD-END> NOV-30-1996
<CASH> 5,266,279
<SECURITIES> 0
<RECEIVABLES> 8,046,130
<ALLOWANCES> 0
<INVENTORY> 7,958,620
<CURRENT-ASSETS> 21,986,225
<PP&E> 11,349,968
<DEPRECIATION> 2,155,143
<TOTAL-ASSETS> 31,475,176
<CURRENT-LIABILITIES> 5,667,495
<BONDS> 4,113,895
0
0
<COMMON> 103,962
<OTHER-SE> 22,114,725
<TOTAL-LIABILITY-AND-EQUITY> 31,475,176
<SALES> 37,862,185
<TOTAL-REVENUES> 37,862,185
<CGS> 23,480,636
<TOTAL-COSTS> 32,901,450
<OTHER-EXPENSES> (235,843)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 342,203
<INCOME-PRETAX> 4,854,375
<INCOME-TAX> 1,860,789
<INCOME-CONTINUING> 2,933,586
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,993,586
<EPS-PRIMARY> 0.28
<EPS-DILUTED> 0.28
</TABLE>
