UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended: March 31, 1999
----------------
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: 0-11412
AMTECH SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)
Arizona 86-0411215
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
131 South Clark Drive, Tempe, Arizona 85281
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 602-967-5146
--------------
Common Stock, $.01 Par Value
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(Title of Class)
2,111,279 Shares
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Outstanding as of March 31, 1999
<PAGE>
AMTECH SYSTEMS, INC.
AND SUBSIDIARIES
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1999 and September 30, 1998.................... 3
Condensed Consolidated Statements of Operations -
Three and Six Months Ended March 31, 1999 and 1998....... 4
Condensed Consolidated Statements of Stockholders' Equity...5
Condensed Consolidated Statements of Cash Flows -
Six Months Ended March 31, 1999 and 1998................. 6
Notes to Condensed Consolidated Financial Statements....... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................10
Results of Operations......................................10
Liquidity and Financial Condition .........................13
Year 2000 Compliance ......................................13
Forward-Looking Statements.................................14
PART II. OTHER INFORMATION.
Item 1. Legal Proceedings..........................................15
Item 4. Submission of Matters to a Vote of Security Holders........15
Item 6. Exhibits and Reports on Form 8-K...........................15
SIGNATURES..................................................................15
2
<PAGE>
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1999 1998
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 1,158,462 $ 1,351,542
Accounts receivable - net 3,417,928 2,894,217
Inventories 2,409,679 2,393,708
Deferred income taxes 372,000 393,000
Income taxes refundable 96,000 404,000
Prepaid expenses 76,091 87,711
----------- -----------
Total current assets 7,530,160 7,524,178
PROPERTY, PLANT AND EQUIPMENT - net 1,213,149 1,243,016
PURCHASE PRICE IN EXCESS OF NET ASSETS
ACQUIRED AND OTHER ASSETS - net 541,228 558,285
----------- -----------
TOTAL ASSETS $ 9,284,537 $ 9,325,479
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 806,355 $ 1,229,451
Accrued compensation and related taxes 654,645 573,294
Accrued warranty expense 135,992 166,839
Accrued installation expense 159,210 183,909
Customer deposits 604,912 249,795
Other accrued liabilities 123,120 127,435
----------- -----------
Total current liabilities 2,484,234 2,530,723
LONG-TERM OBLIGATIONS 324,665 347,667
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock; no specified terms;
100,000,000 shares authorized; none issued -- --
Common stock; $.01 par value; 100,000,000 shares authorized;
2,111,279 (2,110,303 in 1998) shares issued and outstanding 21,113 21,103
Additional paid-in capital 7,406,579 7,406,589
Cumulative foreign currency translation adjustment (302,293) (216,338)
Accumulated deficit (649,761) (764,265)
----------- -----------
Total stockholders' equity 6,475,638 6,447,089
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,284,537 $ 9,325,479
=========== ===========
</TABLE>
3
<PAGE>
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For Three and Six Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
Three Months Ended March 31 Six Months Ended March 31
-------------------------- --------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net product sales $3,593,204 $4,738,521 $6,971,912 $8,799,347
Cost of product sales 2,443,918 3,254,942 5,038,713 6,074,084
---------- ---------- ---------- ----------
Gross margin 1,149,286 1,483,579 1,933,199 2,725,263
Selling, general and administrative 811,806 1,055,014 1,603,620 2,056,980
Research and development 82,202 98,215 164,160 166,709
---------- ---------- ---------- ----------
Operating profit 255,278 330,350 165,419 501,574
Interest income-net 10,248 17,595 20,085 35,711
---------- ---------- ---------- ----------
Income before income taxes 265,526 347,945 185,504 537,285
Income tax provision 98,000 156,000 71,000 236,000
---------- ---------- ---------- ----------
NET INCOME $ 167,526 $ 191,945 $ 114,504 $ 301,285
========== ========== ========== ==========
EARNINGS PER SHARE :
Basic $ .08 $ .09 $ .05 $ .14
Weighted average shares outstanding 2,110,510 2,103,154 2,110,429 2,103,185
Diluted $ .08 $ .09 $ .05 $ .13
Weighted average shares outstanding 2,147,591 2,118,039 2,150,478 2,145,999
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE>
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
ACCUMULATED OTHER
COMPREHENSIVE
INCOME (LOSSES)
COMMON STOCK (I.E. FOREIGN
------------------- ADDITIONAL CURRENCY TOTAL
NUMBER OF PAID-IN TRANSLATION ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL ADJUSTMENTS) DEFICIT EQUITY
--------- -------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT
SEPTEMBER 30, 1997 2,092,553 $ 20,926 $7,366,111 $ (284,453) $ (174,378) $ 6,928,206
Net income - - - - 301,285 301,285
Translation adjustment - - - (64,481) - (64,481)
--------
Comprehensive income 236,804
--------
Employee stock bonus 8,725 87 632 - - 719
--------- -------- ---------- ---------- ---------- -----------
BALANCE AT
MARCH 31, 1998 2,101,278 $ 21,013 $7,366,743 $ (348,934) $ 126,907 $ 7,165,729
========= ======== ========== ========== ========== ===========
BALANCE AT
SEPTEMBER 30, 1998 2,110,303 $ 21,103 $7,406,589 $ (216,338) $ (764,265) $ 6,447,089
Net income - - - - 114,504 114,504
Translation adjustment - - - (85,955) - (85,955)
--------
Comprehensive income 28,549
--------
Other items 976 10 (10) - - -
--------- -------- ---------- ---------- ---------- -----------
BALANCE AT
MARCH 31, 1999 2,111,279 $ 21,113 $7,406,579 $ (302,293) $ (649,761) $ 6,475,638
========= ======== ========== ========== ========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
5
<PAGE>
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Six Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------
1999 1998
----------- -----------
Unaudited) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 114,504 $ 301,285
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 156,984 166,793
Inventory and accounts receivable write-offs 49,336 24,038
Loss (gain) on disposals of long-lived assets -- (2,241)
Deferred income taxes 21,000 (45,000)
(Increase) decrease in:
Accounts receivable (675,244) (297,820)
Inventories, prepaids and other assets (125,641) (301,343)
Increase (decrease) in:
Accounts payable (347,776) 308,529
Accrued liabilities 433,045 (24,809)
Income taxes payable/refundable 301,309 48,916
----------- -----------
Net Cash Provided By (Used In) Operating Activities (72,483) 178,348
----------- -----------
INVESTING ACTIVITIES:
Maturities of short-term investments - net -- 579,191
Proceeds from sale of assets -- 2,241
Purchases of property, plant and equipment (143,275) (177,023)
----------- -----------
Net Cash Provided By (Used In) Investing Activities (143,275) 404,409
----------- -----------
FINANCING ACTIVITIES:
Proceeds from stock options exercised -- 719
Payments on mortgage loan (5,901) (6,018)
----------- -----------
Net Cash Used In Financing Activities (5,901) (5,299)
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 28,579 6,447
----------- -----------
CASH AND EQUIVALENTS:
Net increase (decrease) (193,080) 583,905
Beginning of year 1,351,542 1,395,849
----------- -----------
END OF YEAR CASH AND EQUIVALENTS $ 1,158,462 $ 1,979,754
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 5,806 $ 7,958
Income taxes, net of refunds (209,000) 232,000
</TABLE>
See accompanying notes to condensed financial statements.
6
<PAGE>
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED MARCH 31, 1999
(1) BASIS OF PRESENTATION
---------------------
The accompanying consolidated financial statements include the accounts
of Amtech Systems, Inc. and its wholly-owned subsidiaries, Tempress
Systems, Inc., based in Heerde, The Netherlands, and P. R. Hoffman
Machine Products, Inc. formed July 1, 1997 ("P.R. Hoffman")
(collectively, the "Company"). All significant intercompany balances
and transactions have been eliminated in consolidation.
The accompanying consolidated financial statements have been prepared
in accordance with generally accepted accounting principles, pursuant
to the rules and regulations of the Securities and Exchange Commission
(the "Commission"), and are unaudited. In the opinion of management,
all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of
operations, and cash flows for the periods presented have been made.
Certain information and footnote disclosure normally included in
financial statements have been condensed or omitted pursuant to the
rules and regulations of the Commission. These condensed consolidated
financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998, which are incorporated herein by reference.
The consolidated results of operations for the three and six months
ended March 31, 1999, are not necessarily indicative of the results to
be expected for the full year.
(2) INVENTORIES
-----------
The components of inventories are as follows:
March 31, September 30,
1999 1998
------------ ------------
Purchased parts and
raw material $ 1,045,447 $ 1,174,570
Work-in-process 759,478 612,646
Finished goods 604,754 606,492
------------ ------------
Totals $ 2,409,679 $ 2,393,708
============ ============
7
<PAGE>
(3) EARNINGS PER SHARE
------------------
Earnings per share were calculated as follows:
Three Months Ended Six Months Ended
March 31, March 31,
------------------------ ----------------------
1999 1998 1999 1998
----------- ----------- ----------- ---------
Net income $ 167,526 $ 191,945 $ 114,504 $ 301,285
After-tax amortization of
contingent goodwill -- (7,667) -- (15,780)
----------- ----------- ----------- ---------
Income used in
in the calculations $ 167,526 $ 184,278 $ 114,504 $ 285,505
=========== =========== =========== =========
Weighted average
Shares outstanding:
Common shares 2,110,510 2,103,154 2,110,429 2,103,185
Common
equivalents
issuable upon
exercise of
warrants and
stock options(1) 37,081 14,885 40,049 42,814
----------- ----------- ----------- ---------
2,147,591 2,118,039 2,150,478 2,145,999
=========== =========== =========== =========
Earnings Per Share:
Basic $ .08 $ .09 $ .05 $ .14
=========== =========== =========== =========
Diluted $ .08 $ .09 $ .05 $ .13
=========== =========== =========== =========
- -------------
(1) Number of shares calculated using the treasury stock method and the average
market price during the period. Options and warrants on 1,501,500 shares
had an exercise price greater than the average market price during the
period and therefore did not enter into the calculation.
(2) All share amounts above have been restated to give effect to the one for
two reverse stock split that became effective in March 1999. See Note 4,
regarding the reverse stock split.
8
<PAGE>
4. REVERSE STOCK SPLIT
-------------------
Effective with the close of business on March 15, 1999, each two shares
of the $.01 par value common stock ("Common Stock") of the Company was
combined and reclassified into one share of the Common Stock. All
shares and per share amounts have been restated to give effect for this
one for two reverse stock split. Any fractional shares resulting from
the reverse split were rounded to the next highest whole number.
5. COMPREHENSIVE INCOME
--------------------
As of October 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes new rules for reporting and
displaying of comprehensive income and its components. SFAS No. 130
requires foreign currency translation adjustments to be included in
other comprehensive income. SFAS No. 130 had no effect on the Company's
consolidated net income or stockholders' equity. Comprehensive income
and components of accumulated other comprehensive income are presented
in the Condensed Consolidated Statements of Stockholders' Equity.
6. RECLASSIFICATIONS
-----------------
Certain reclassifications have been made to the amounts for fiscal 1998
to conform to the fiscal 1999 presentation.
9
<PAGE>
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth certain operational data as a
percentage of net revenue for the periods indicated:
Three Months Ended Six Months Ended
March 31, March 31,
------------------ -------------------
1999 1998 1999 1998
Net revenue 100.0% 100.0% 100.0% 100.0%
Cost of product sales (68.0) (68.7) (72.3) (69.0)
------ ------- ------ -------
Gross profit 32.0 31.3 27.7 31.0
Selling, general and
administrative expenses (22.6) (22.2) (22.9) (23.4)
Research and development (2.3) (2.1) (2.4) (1.9)
------ ------- ------ -------
Operating profit 7.1% 7.0% 2.4% 5.7%
====== ======= ====== =======
NET REVENUE. The Company's net revenue for the three months ended
March 31, 1999 was $3,593,000, a decline of $1,145,000, or 24%, from net revenue
of $4,739,000 for the corresponding period of the previous fiscal year. The
decline in revenue for quarter ended March 31, 1999 was caused by the continuing
effects of the slowdown in the semiconductor industry, which began to affect
operations during the latter part of fiscal 1998. The industry slowdown
adversely effected the revenue of all operations during the most recently
completed quarter when compared to the prior year. However, consolidated revenue
for the second quarter was 6% higher than in the first quarter of the current
fiscal year, reflecting a slight improvement in the industry.
Revenue for the first six months of fiscal 1999 was $6,972,000, a
decline of $1,827,000, or 21%, from the corresponding period in fiscal 1998. The
decline in revenue for the six months ended March 31, 1999 was caused by the
continuing effects of the slowdown in the semiconductor industry, which began to
affect operations during the latter part of fiscal 1998. The industry slowdown
adversely effected the revenue of all operations, except for the Tempress
diffusion operations. The revenue increase from Tempress diffusion products
during the first quarter of the fiscal year caused this operation to have
increased revenue for the first half of this fiscal year.
10
<PAGE>
GROSS PROFIT. The Company's gross profit decreased by approximately
$334,000 to $1,149,000 for the three months ended March 31, 1999, from
$1,484,000 during the comparable period of the previous fiscal year. The decline
in gross profit during the second quarter resulted primarily from reduced sales
volume, discussed above. Gross profit as a percentage of sales was 32% for the
second quarter, a slight improvement over the 31% for the second quarter of
fiscal 1998, the net result of several nearly offsetting factors.
The Company's gross profit decreased by approximately $792,000 to
$1,933,000 for the six months ended March 31, 1999, from $2,725,000 during the
comparable period of the previous fiscal year. The decline is primarily
attributable to the 21% decline in the sales volume discussed above. Gross
profit as a percentage of revenue was 28% in the first six months of fiscal
1999, compared to 31% in the first six months of fiscal 1998. The gross profit
percentage for all products was lower in the first half of the current fiscal
year than in the comparable period of fiscal 1998, primarily due to competitive
pressures on pricing during the first quarter of this fiscal year, caused by the
industry slowdown.
Comparing the gross profit for the second quarter to the first quarter
of the current fiscal year provides and indication of some improvement in the
industry. For the second quarter of fiscal 1999, gross profit increased by
$365,000, or 47%, over the first quarter on the 6% increase in revenue discussed
above. This improvement also demonstrates the effectiveness of the Company's
cost reductions implemented late in the first quarter of this fiscal year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the second quarter of fiscal 1999 were $243,000, or
23%, less than the level of such expenses incurred in the second quarter of
fiscal 1998. A reduction in acquisition activity and in the associated expenses
also contributed to this decline. Selling, general and administrative expenses
were reduced by approximately the same percentage as the decline in consolidated
revenue when compared to the same quarter of fiscal 1998, and amounted to 23%
and 22% of sales during the second quarter of fiscal years 1999 and 1998,
respectively.
For the six months ended March 31, 1999, the Company reduced selling,
general and administrative expense by $453,000 from $2,057,000, a decrease of
22%. Since these expenses were reduced by approximately the same percentage as
the decline in sales volume, these expenses amounted to approximately 23% of
sales for both periods.
RESEARCH AND DEVELOPMENT. Research and development costs decreased by
$16,000, to $82,000, during the second quarter of fiscal 1999, compared to
$98,000 during the comparable quarter of fiscal 1998. For the first six months
of fiscal 1999, research & development costs were $164,000, compared to $167,000
in the first six months of fiscal 1998. Research and development efforts were
stepped-up in order to develop improved models of existing products, such as
robotic loading systems and the furnace control interface. Costs of
investigating potential new technologies replaced the costs incurred in fiscal
1998 for the now suspended photo assisted CVD (chemical vapor deposition)
research project.
11
<PAGE>
OPERATING PROFIT. The $75,000 decline in operating profit for the
second quarter of fiscal 1999 is primarily attributable to the decline in sales
volume discussed above. Expenses, including research and development, declined
$259,000. As a result, operating profit of $255,000 was realized during the
quarter ended March 31, 1999, a decrease of $75,000 from the $330,000 operating
profit earned during the comparable period in fiscal 1998.
For the six months ended March 31, 1999, operating profit declined
$336,000, or 67%, to $165,000 from $502,000 in the comparable period in fiscal
1998. This decline is primarily attributable to the operating loss in the first
quarter of fiscal 1999. Reductions in expenses, including research and
development, were $456,000 in the first six months of fiscal 1999 over the same
period in 1998.
Net income includes the operating profit discussed above, net interest
income and the provision for income taxes. During the second quarter of fiscal
1999, net interest income was $10,000, a decrease of $8,000 from the $18,000 of
net interest income for the corresponding quarter of fiscal 1998. For the six
months ended March 31, 1999, net interest income was $20,000, a decrease of
$16,000 from the $36,000 of net interest income for the corresponding period of
fiscal 1998. The decrease in net interest income is attributable to the Company
beginning fiscal 1999 with less cash and short-term investments, as funds were
used to finance the increase in inventories and refundable income taxes during
fiscal 1998. As a result of the above factors, income before income taxes for
the second quarter of fiscal 1999 was $266,000, compared to income before taxes
of $348,000 in the second quarter of fiscal 1998, a decline of $82,000.
NET INCOME. Net income in the second quarter of fiscal 1999 declined
by $24,000 to $168,000, or 13%, from the second quarter of fiscal 1998. Income
tax expense of $98,000, recorded at an effective tax rate of 37%, reduced net
income for the second quarter of fiscal 1999 to $168,000, or $.08 per share.
During the second quarter of fiscal 1998, the Company recorded income tax
expense of $156,000, reflecting a 45% effective tax rate, resulting in net
income of $192,000, or $.09 per share. The lower effective tax rate in the
current fiscal year is primarily attributable to the fact that a significantly
higher percentage of earnings during the second quarter of fiscal 1999 were in
jurisdictions that have lower income tax rates and due the utilization of state
net operating carryforwards, which previously had been offset by a valuation
allowance.
For the six months ended March 31, 1999, the Company recorded income
tax expense of $71,000, an effective rate of 38%, reducing net income to
$115,000, or $.05 per share. For the same period in fiscal 1998, income taxes of
$236,000, an effective rate of 44%, reduced net income to $301,000. The lower
effective tax rate in the current fiscal year is attributable to factors
discussed above.
The increase in net earnings for the second quarter over the first
quarter of fiscal 1999 is due to cost reductions implemented during the fourth
quarter of fiscal 1998 and the first quarter of fiscal 1999 and to the 6%
increase in revenue. The $168,000 net income for the second quarter of fiscal
1999 is an improvement of $221,000, compared to the $53,000 net loss for the
first quarter of fiscal 1999 and also reflects a turnaround from the net losses
of $185,000 and $707,000, for the third and fourth quarters of fiscal 1998,
respectively.
12
<PAGE>
BACKLOG. At March 31, 1999 the order backlog was $4,433,000, a
reduction of 26% from the $5,986,000 backlog at March 31, 1998. The backlog as
of March 31, 1999 was approximately $315,000 higher than at September 30, 1998,
but it was down $780,000 from the $5,213,000 backlog at December 31, 1998.
Orders are generally shipped within three to six months of receipt. Accordingly,
the order backlog may not be a valid measure of revenue or earnings for a future
period.
LIQUIDITY AND FINANCIAL CONDITION.
At March 31, 1999, the Company had $1,158,000 of readily available
liquidity in the form of cash and cash equivalents, compared to cash and
equivalents of $1,352,000 at September 30, 1998, a decrease of approximately
$193,000. For the first six months of fiscal 1999, net income plus amortization
and depreciation (i.e. cash flow) was a positive $271,000. The Company continues
to believe that there is sufficient liquidity for existing operations.
At March 31, 1999, working capital was $5,046,000, up slightly from
$4,993,000, at September 30, 1998. The Company's current ratio, 3.0:1 at the end
of the second quarter of fiscal 1999, was unchanged from the beginning of the
year. Also, at the end of the second quarter of fiscal 1999, cash and short-term
investments comprised 12% of total assets and stockholders' equity accounted for
70% of total capitalization. The Company believes that it continues to posses
the financial strength to plan for future growth, while actively managing the
current industry slowdown.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are
coded to accept two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. Any programs that have time-sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000. This could result
in the computer shutting down or performing incorrect computations. As a result,
in less than eight months, computer systems and software used by many companies
may need to be upgraded to comply with such "Year 2000" requirements. Certain of
the Company's systems, including information and computer systems and automated
equipment, will be affected by the Year 2000 issue.
The Company is in the process of identifying the programs,
infrastructure, and products that could be affected by the Year 2000 issue and
is developing and implementing a plan to resolve the problem on a timely basis.
Based on a preliminary, informal review of the hardware and software components
of its systems and products, the Company anticipates that the plan will not
require it to devote a considerable amount of internal resources or otherwise
hire substantial external resources to assist with the implementation of such
plan. The Company expects that the costs to be incurred by it to deal with this
issue will be not be material, as many of the issues were resolved before the
end of fiscal 1998, through installation of regular software updates provided by
licensors under standard maintenance agreements. The Company does not anticipate
that any problems encountered by suppliers and vendors in connection with the
Year 2000 will have a material adverse effect on the Company's financial
condition and results of operations.
13
<PAGE>
FORWARD-LOOKING STATEMENTS
The statements contained in this report on Form 10-Q that are not
historical fact are forward-looking statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995). These statements can be
identified by the use of forward looking terminology such as "believes,"
"expects," "may," "will," "should," or "anticipates," or the negative thereof or
other written variations thereof or comparable terminology. The forward-looking
statements contained herein are based on current expectations that involve a
number of risks and uncertainties. Among others, these forward-looking
statements are based on assumptions that (a) the Company will not lose a
significant customer or customers, (b) the Company will not experience
significant further reductions in demand or rescheduling of customer purchase
orders that have occurred recently due to equipment buyers' caution resulting
from over-capacity for the production of semiconductor chips, (c) that the
Company's products will remain accepted within their respective markets and will
not be significantly further replaced by newer technology equipment, (d) that
competitive conditions within the Company's markets will not materially
deteriorate further, (e) that the Company's efforts to improve its products and
maintain its competitiveness in the markets it competes will continue to
progress and that the savings associated with these expenditures and/or the
increased product demand resulting therefrom justifies these development costs,
(f) that the Company will be able to retain, and when needed, add key technical
and management personnel, (g) that business or product acquisitions, if any,
will be successfully integrated and the results of operations therefrom will
support the acquisition price, (h) that the Company's forecasts will accurately
anticipate market demand, (i) that there will be no material adverse changes in
the Company's exiting operations, (j) the Company will be able to obtain
sufficient equity or debt funding to increase its capital resources by the
amount needed for new business or product acquisitions, if any, (k) the
semiconductor equipment industry will recover from the current slowdown, (l) the
turmoil in the Asian markets will not spread to other geographic regions or
further deteriorate, (m) the Company has or will be able to reduce costs
sufficiently to avoid using a substantial portion of its current liquidity to
fund losses, (n) the Company will not, either directly or indirectly, incur any
material Year 2000 issues and (o) that demand for the Company's products will
not be adversely and significantly influenced by trends within the semiconductor
industries, including consolidation of semiconductor manufacturing operations
through mergers and the subcontracting out of the production of semiconductors
to foundries. Assumptions related to the foregoing involve judgments with
respect to, among other things, future economic, competitive and market
conditions, all of which are beyond the control of the Company. Although the
Company believes that the assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore,
there can be no assurance that the results contemplated in forward-looking
statements will be realized. In addition, the business and operations of the
Company are subject to substantial risks, which increase the uncertainty
inherent in such forward-looking statements. In light of the significant
uncertainties inherent in the forward-looking information included herein, the
inclusion of such information should not be regarded as a representation by the
Company, or any other person, that the objectives or plans for the Company will
be achieved.
14
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
On February 26, 1999, the Company held its annual meeting of
shareholders at which 3,771,053, or 89.09% of the 4,232,632 shares outstanding
were represented by proxy or in person. The following persons where elected to
the board of directors with shares voted as follows:
Election of Directors For Withheld
--------------------- ----------- -----------
Jong S. Whang 3,722,713 48,340
Robert T. Hass 3,723,413 47,640
Donald F. Johnston 3,722,963 48,090
Alvin Katz 3,723,387 47,666
Bruce R. Thaw 3,723,437 47,616
At that meeting, the shareholders also approved the proposed amendment
to the Articles of Incorporation to effect a one for two reverse split of the
Company's $.01 par value common stock. Shareholders voted 3,584,459 shares for
approval of the proposed amendment; 173,279 shares were voted against proposed
amendment; and proxies representing 13,315 shares abstained from voting.
Item 5. Other Matters.
--------------
None.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits -
None.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the three
months ended March 31, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMTECH SYSTEMS, INC.
By /s/ Robert T. Hass Dated: May 17, 1999
------------------------------------------- --------------
Robert T. Hass, Vice-President-Finance and
(Chief Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 1999, AND THE STATEMENT OF OPERATION AND THE STATEMENT OF
CASH FLOW FOR THE SIX MONTHS ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER
ENDED MARCH 31, 1999.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 1,158,462
<SECURITIES> 0
<RECEIVABLES> 3,547,928
<ALLOWANCES> 130,000
<INVENTORY> 2,409,679
<CURRENT-ASSETS> 7,530,160
<PP&E> 2,112,339
<DEPRECIATION> 899,190
<TOTAL-ASSETS> 9,284,537
<CURRENT-LIABILITIES> 2,484,233
<BONDS> 324,665
0
0
<COMMON> 21,113
<OTHER-SE> 6,454,526
<TOTAL-LIABILITY-AND-EQUITY> 9,284,537
<SALES> 6,971,912
<TOTAL-REVENUES> 6,971,912
<CGS> 5,038,713
<TOTAL-COSTS> 5,038,713
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 49,336
<INTEREST-EXPENSE> 5,806
<INCOME-PRETAX> 185,504
<INCOME-TAX> 71,000
<INCOME-CONTINUING> 114,504
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 114,504
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