<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K/A
Amendment No. 1
/ / Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 1994, or
/X/ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NO.0-17139
GENUS, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-2790804
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1139 KARLSTAD DRIVE
Sunnyvale, CA 94089
(Address of principal executive offices)
Registrant's telephone number, including area code: (408) 747-7120
-------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, no par value
Common Share Purchase Rights
(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
--- ---
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. / /
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based on the closing sale price of the Common Stock on March 29,
1995, in the over-the-counter market as reported by the Nasdaq National Market,
was approximately $133,276,877 shares of Common Stock held by each officer and
director and by each person who owns 5% or more of the outstanding voting stock
have been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
As of March 29, 1995, Registrant had 15,400,483 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the following documents are incorporated by reference in Parts II, III
and IV of this Form 10-K Report:
(1) Registrant's 1994 Annual Report to Shareholders - Items 5, 6, 7, 8 and 14;
and
(2) Proxy Statement for Registrant's 1995 Annual Meeting of Shareholders - Items
10, 11, 12 and 13.
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PART I
ITEM 1.BUSINESS
GENERAL
Genus, Inc. ("Genus" or "the Company") designs, manufactures, markets, and
services high energy MeV (millions of electron volts) ion implantation and
advanced thin-film deposition equipment used in the production of complex
ultra-large scale integration ("ULSI") semiconductor devices. The Company was
the first to market high energy MeV ion implantation and chemical vapor
deposition ("CVD") tungsten silicide, which perform two critical steps in the
manufacture of semiconductors.
Genus' products are used as part of the process to create integrated
circuits ("ICs") for the computer, aerospace, communications, medical, military,
aeronautical, automotive, and consumer electronics industries. The Company's
global customer base consists of semiconductor manufacturers in the United
States, Japan, Europe and countries in the Pacific Rim including Korea and
Taiwan.
PRODUCTS
The primary products manufactured by Genus include one MeV ion
implantation model and six CVD models. Each of these products is available with
a variety of options and/or upgrades.
MeV ION IMPLANTATION
Ion implanters accelerate and drive electrically charged atoms (ions) into
the surface of a silicon wafer to convert silicon into semiconductor material as
part of the process of manufacturing integrated circuits. The market for ion
implanters consists of three primary segments: high current, medium current and
high energy (MeV). Currently, high and medium current ion implanters make up
approximately 94 percent of the total ion implantation market. However, the
Company believes that high energy ion implantation is the fastest growing
segment due to its use in emerging advanced technology applications and low cost
of ownership.
CURRENT MeV ION IMPLANT PRODUCTS
The Company's G1510 MeV ion implantation system was designed to meet low
and medium dose requirements in the 40 keV (thousands of electron volts) to 3
MeV range. Introduced in September 1992, the 1510 is Genus' second generation
MeV ion implanter and incorporates the basic design and field experience of its
predecessor, the G1500, introduced in 1988. It is a fully automated, highly
reliable implanter with strong beam purity at specified throughput of up to 180
- - 200mm wafers per hour. One of the key differentiating features is that,
currently, the G1510 is the only commercially viable implanter capable of
performing the full range of implants required for the Buried Implanted Layer
for Lateral Isolation ("BILLI") structure, which Genus believes is critical to
the future of MeV technology for advanced memory and logic applications.
THIN FILM (CVD)
To manufacture an IC, there are a series of steps during which layers of
conductive and non-conductive materials are deposited onto the surface of wafers
made of semiconducting material. Deposited thin films include those used for
interconnect layers (conductors of electrical current) and those used for
dielectrics (insulating or nonconductive layers). The interconnect or metal
layer is deposited on the wafer surface to provide the electrical connection
between the various circuit elements, while the dielectric layer is deposited on
top of the interconnect layer to provide electrical insulation between
conductive interconnect layers.
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CURRENT THIN FILM PRODUCTS
Genus' CVD products are designed for the deposition of tungsten silicide
or blanket tungsten to create multiple interconnect layers. The Company offers
three basic hardware architectures. The first hardware architecture is the 7000
series, a single wafer, DCS tungsten silicide cluster tool. The Company other
two basic hardware architectures are the 8700 Series and the 6000 Series, which
deposit tungsten silicide and blanket tungsten films. This hardware, combined
with the two types of film, comprises four basic product models.
GENUS 7000 SYSTEM. To meet the advanced technology requirements of the
64M DRAM generation and beyond, in December 1994, the Company introduced the
Genus 7000, a single wafer, open architecture cluster tool. The initial
processes on this platform are silane and DCS tungsten silicide. The modular
design of the 7000 provides customers with the flexibility of multiple process
configurations while offering standard mechanical interfaces, statistical
process control, diagnostics and industry standard interfaces for factory host
computers. The 7000 uses a small volume, computer-modeled process chamber with
specialized gas distribution which yields a high productivity process and low
downtime for cleaning. This new system has been in beta site testing with
Samsung since June 1994.
GENUS 8700 SERIES. A second generation CVD tungsten silicide product,
the 8700 Series incorporates six heated chucks in the batch chamber and six gas
injection ports, which enable individual wafer process adjustment of gas flows
and chuck temperature for superior wafer-to-wafer repeatability. The dual
cassette load lock system provides continuous wafer loading and unloading
capability, which results in high system throughput (wafers per hour). The
system is also equipped with wafer clamping hardware which enables deposition of
blanket tungsten films.
The cold wall reaction chamber and robotic wafer handling system are
designed to ensure highly reliable operation with a minimum of foreign material
generation. Its through-the-wall mounted main frame design is ideally suited
for use in Class 1 or above cleanrooms. All models of the 8700 can be
configured to process from 100mm (4") to 200mm (8") wafers.
GENUS 6000 SERIES. Similar in design to the 8700 Series, the 6000
Series is a third-generation tool incorporating new designs to ensure
reliability and ease of maintenance. It was designed to meet the factory
automation needs of the industry. The 6000 Series consists of a closed
architecture cluster system which incorporates the 8700-style six-chuck batch
CVD chamber and up to two single wafer etch modules. The etch modules are used
to etch back the blanket tungsten film in the wafer surface for complete
tungsten plug processing. This system also offers dual cassette load lock
architecture which enables continuous batch processing. A new robotic handling
system allows mechanical set-up through computer-controlled recipes. The
overall design features component upgrades which provide production-worthy
processing of 100mm (4") to 200mm (8") wafers.
MARKETING, SALES AND SERVICE
Genus sells and supports its ion implantation and CVD products through
direct sales and customer support organizations in the U.S. and Western Europe
and through five independent exclusive sales representatives and distributors
in the U.S., Japan, Korea, Taiwan and Hong Kong. Yarbrough Southwest provides
sales distribution in the southwestern region of the United States. Innotech
Corporation, a value-added distributor, offers sales distribution and field
service in Japan. The Korean and Taiwanese markets are served through the
representative organizations of Aju-Exim and Spirox, respectively. Hong Kong,
Singapore and the Peoples Republic of China are served by Katech International,
LTD., based in Hong Kong. The Asia/Pacific organizations provide sales and
service, as well as distribution assistance for spare parts.
Genus distributes spare parts from several worldwide depots including:
Sunnyvale, California; Tokyo, Japan; Seoul, Korea; Hsin-Chu City, Taiwan; and
Evry, France. To facilitate its marketing efforts, the Company has a clean room
applications laboratory in Sunnyvale, California.
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Genus' products are sold primarily to domestic and foreign device
manufacturers, including both "captive" (companies producing semiconductors
principally for internal consumption) and "merchant" (companies producing
semiconductors mainly for outside sales) manufacturers. Genus has sold,
installed and supported equipment to almost every major semiconductor
manufacturer in the world.
The Company maintains sales, technical support and service personnel at
its principal executive offices located in Sunnyvale, California, and in
Newburyport, Massachusetts. Genus has also established several foreign
subsidiaries to facilitate its sales and service activities abroad: Genus
Europa SARL in Evry, France; Genus Europa Ltd. in Melbourn, Herts, England;
Genus Europa GmbH in Stuttgart, Germany; and Genus Europa Srl. in Milan, Italy.
These subsidiaries provide installation, field service, and maintenance, as well
as additional technical support to assist Genus' customers in effectively
utilizing the Company's products. Such services are also provided by the
Company's distributors in Austin, Texas; Tokyo; Seoul; Taipei; and Hong Kong.
The Company warrants its products against defects in material and workmanship
for twelve months.
Samsung, Innotech and SGS Thomson accounted for 33%, 19% and 14% of net
sales in 1994. In 1993, Innotech, Samsung and SGS Thomson accounted for 26%,
23% and 14% of net sales. Innotech and IBM accounted for 32% and 16% of net
sales in 1992. See Note 14 of Notes to Consolidated Financial Statements.
Although export sales are subject to certain control restrictions, including
approval by the Office of Export and Administration of the U.S. Department of
Commerce, Genus has not experienced any significant difficulties related to such
limitations.
BACKLOG. The Company's backlog at December 31, 1994, was
approximately $44.0 million, compared with approximately $18.9 million at
December 31, 1993. The primary reason for the increase in backlog was due to
increased sales to Korean customers, and, in particular, Samsung. The Company's
backlog at March 31, 1995 was approximately $41.8 million. Genus includes in
its backlog only those orders for which a customer purchase order has been
received and a delivery date within twelve months has been specified. The
Company's backlog at December 31, 1994 consisted of product shipments expected
to be delivered during calendar year 1995. However, because of the possibility
of customer changes in delivery schedules or cancellations of orders, the
Company's backlog as of any particular date may not be representative of actual
sales for any succeeding period.
RESEARCH AND DEVELOPMENT
Constant technological change, fierce competition and a high rate of
technical obsolescence are key characteristics of the semiconductor equipment
industry. Genus' future prospects depend in part on the Company's ability to
broaden its market acceptance by differentiating its products on the basis of
production-worthiness, technical capability, productivity, particle control, and
customer support. To maintain close relationships with its customers and remain
responsive to their requirements, continued investment is needed for research
and development. In 1992, 1993 and 1994, the Company's research and development
expenditures were approximately $9.8 million, $7.8 million and $9.0 million,
respectively.
As part of its research and development program, the Company has
established technical research relationships with the Interuniversity
Microelectronics Centre at the University of Louven (Belgium), Sandia Labs,
SEMATECH, Stanford University, and certain major semiconductor manufacturers to
further enhance its products for advanced ULSI devices.
COMPETITION
The Company believes that the principal competitive factors in the
semiconductor equipment market are product performance, quality and reliability,
wafer throughput, customer support, equipment automation and price.
Genus competes with a number of companies which historically have had
wider name recognition, broader product acceptance within the industry and
substantially greater resources. In addition, the rapid rate of technological
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change in the industry creates opportunities for firms to enter this market and
apply new technologies to meet its needs. Accordingly, the Company anticipates
that it will face competition in the domestic as well as foreign marketplace
from both well-established and new competitors.
In the ion implantation marketplace, the Company's MeV ion implantation
system competes with MeV systems marketed by other manufacturers. The Company
believes that its high energy MeV system currently has certain technological
advantages over competing MeV systems which allow it to attain deeper ion
implantation. This is required in some processes used to manufacture low cost
sub-micron, integrated circuits. Genus has new applications for MeV ion
implantation technology which it believes will see widespread use in the future
since they enable significant manufacturing cost reduction and improved
integrated circuit performance. The Company faces direct competition from Eaton
Corporation and Nissin Electric Company, Ltd. The presence of Eaton in the MeV
market place has increased during 1994. There can be no assurance that
competition in the Company's particular MeV product market will not intensify or
that Genus' technical advantages may not be reduced or lost as a result of
technical advances made by competitors or changes in semiconductor processing
technology.
In the CVD market, Genus competes with other producers of CVD systems, as
well as alternative methods of deposition, such as sputtering, and thin films
other than tungsten silicide. The Company faces direct competition in tungsten
silicide from Applied Materials, Inc. and Tokyo Electron, Ltd. The impact of
their presence in the CVD tungsten silicide market continued to increase during
1994. There can be no assurance that levels of competition in each of the
Company's particular CVD product markets will not intensify or that Genus'
technical advantages may not be reduced or lost as a result of technical
advances made by competitors or changes in semiconductor processing technology.
MANUFACTURING AND SUPPLIERS
Most of the components for the Company's CVD tungsten systems are produced
in subassemblies by independent domestic suppliers according to the Company's
design and procurement specifications. Many components of the Company's MeV ion
implantation systems are also acquired as subassemblies from outside domestic
vendors. The Company anticipates that the use of such subassemblies will
continue to increase in order to achieve additional manufacturing efficiencies.
The Company has or can obtain alternate sources of supply for the components and
parts purchased from outside suppliers, including certain components used in its
CVD tungsten and MeV ion implantation products which are presently available
only from single sources. To date, the Company has been able to obtain adequate
supplies of such components in a timely manner from existing sources. However,
the inability to develop alternate sources or to obtain sufficient source
components as required in the future, could result in delays of product
shipments which could have a material adverse affect on the Company's operating
results.
The Company's thin film CVD operation is located in Sunnyvale, California,
while its MeV ion implantation technology manufacturing operation is located in
Newburyport, Massachusetts.
INTELLECTUAL PROPERTY
The Company believes that because of the rapid technological change in the
industry its future prospects will depend primarily upon the expertise and
creative skills of its personnel in process technology, new product development,
marketing, application engineering, and product engineering, rather than on
patent protection. Nevertheless, the Company has a policy to actively pursue
domestic and foreign patent protection to cover technology developed by the
Company. The Company currently has 28 patents issued and has 9 patent
applications pending in the U.S. and 10 patents in foreign countries. The
Company's current patents include technology relating to cold wall CVD of
tungsten silicide, CVD of blanket tungsten, ion beam formation, high energy ion
acceleration, ion implant angle control, wafer cleaning, and wafer heating and
handling in vacuum.
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In 1987, the Company's Ion Technology Division (formerly General Ionex)
and Eaton Corporation entered into a cross-licensing agreement whereby each
granted to the other licenses to use certain ion implantation related
technologies.
EMPLOYEES
As of December 31, 1994, the Company employed 264 people on a full-time
basis. The Company believes that its relations with its employees are
satisfactory. None of the employees are covered by a collective bargaining
agreement.
ENVIRONMENTAL REGULATION
Federal, state and local regulations impose various environmental controls
on the discharge of chemicals and gases used in the manufacturing process. The
Company believes that its activities conform to present environmental
regulations. Increasing public attention has, however, been focused on the
environmental impact of semiconductor operations. While the Company has not
experienced any materially adverse effects on its operations from governmental
regulations, there can be no assurance that changes in such regulations will not
impose the need for additional capital equipment or other requirements. Any
failure by the Company to adequately restrict the discharge of hazardous
substances could subject it to future liabilities or could cause its
manufacturing operations to be suspended.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Sunnyvale, State of California, on the 24th day of May, 1995.
GENUS, INC.
By: William W.R. Elder
---------------------------
William W. R. Elder
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints, William W. R. Elder and Todd S. Myhre, jointly
and severally, his attorneys-in-fact, each with the power of substitution, for
him in any and all capacities, to sign any amendments to this Amendment, and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
William W.R. Elder Chairman, Chief Executive Officer May 24, 1995
- -------------------- and Director (Principal Executive Officer)
William W. R. Elder
Todd S. Myhre President, Chief Operating Officer, May 24, 1995
- -------------------- Acting Chief Financial Officer,
Todd S. Myhre Assistant Secretary and Director
(Principal Financial Officer)
Ernest P. Quinones Corporate Controller, Chief Accounting May 24, 1995
- -------------------- Officer and Treasurer
Ernest P. Quinones (Principal Accounting Officer)
Mario M. Rosati Director May 24, 1995
- --------------------
Mario M. Rosati
Steve Fisher Director May 24, 1995
- --------------------
Steve Fisher
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