<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 28, 1998
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 0-17297
BTU INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 04-2781248
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
23 Esquire Road, North Billerica, Massachusetts 01862-2596
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (978) 667-4111
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 the number of shares outstanding of the Registrant's Common Stock,
par value $.01 per share, as of the latest practicable date: As of August 5,
1998: 7,081,162 shares.
<PAGE> 2
BTU INTERNATIONAL, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets 1-2
Condensed Consolidated Statements of Operations 3
Condensed Consolidated Statement of Stockholders' Investment 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6-7
Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-10
PART II. OTHER INFORMATION
Exhibits and Reports on Form 8-K 11-12
Signatures 13
Calculation of Net Income per Common and Common
Equivalent Share 14
<PAGE> 3
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
<TABLE>
<CAPTION>
(Unaudited)
June 28, December 31,
1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 9,181 $11,873
Accounts receivable, less reserves of
$160 in 1998 and $160 in 1997 12,690 12,334
Inventories (Note 2) 10,078 10,028
Other current assets 973 1,124
- --------------------------------------------------------------------------------
Total current assets 32,922 35,359
- --------------------------------------------------------------------------------
Property, plant and equipment, at cost
Land 210 210
Buildings and improvements 5,953 5,949
Machinery and equipment 6,583 5,783
Furniture and fixtures 810 749
- --------------------------------------------------------------------------------
13,556 12,691
Less-Accumulated depreciation 8,587 8,077
- --------------------------------------------------------------------------------
Net property, plant and equipment 4,969 4,614
Other assets, net of accumulated amortization
of $442 in 1998 and $437 in 1997 432 406
- --------------------------------------------------------------------------------
$38,323 $40,379
================================================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
1
<PAGE> 4
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except share data)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
(Unaudited)
June 28, December 31,
1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities
Current maturities of long-term debt and
capital lease obligations (Note 3) $ 225 $ 224
Accounts payable 4,751 6,013
Other current liabilities 2,726 3,024
- --------------------------------------------------------------------------------
Total current liabilities 7,702 9,261
- --------------------------------------------------------------------------------
Long-term debt and capital lease obligations,
less current maturities (Note 3) 5,251 5,313
Deferred income taxes 2,247 2,247
- --------------------------------------------------------------------------------
15,200 16,821
- --------------------------------------------------------------------------------
Stockholders' investment (Note 4)
Series preferred stock, $1 par value-
Authorized - 5,000,000 shares;
Issued and outstanding - none -- --
Common stock, $.01 par value-
Authorized - 25,000,000 shares;
Issued - 7,677,943 and 7,674,923 shares
at June 28, 1998 and December 31, 1997,
respectively 77 77
Additional paid-in capital 20,266 20,250
Accumulated earnings 4,667 4,061
Treasury stock- 571,781 and 355,281 shares
at cost, at June 28, 1998 and
December 31, 1997, respectively (2,195) (1,183)
- --------------------------------------------------------------------------------
22,815 23,205
Accumulated Other Comprehensive Income 308 353
- --------------------------------------------------------------------------------
Total stockholders' investment 23,123 23,558
- --------------------------------------------------------------------------------
$ 38,323 $ 40,379
================================================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE> 5
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATION
FOR THE THREE AND SIX MONTHS ENDED JUNE 28, 1998 AND JUNE 29, 1997
(Dollars in thousands, except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------- -------------------------
June 28, June 29, June 28, June 29,
1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 14,314 $ 12,799 $ 26,415 $ 23,825
Cost of goods sold 8,533 7,631 15,695 13,866
- --------------------------------------------------------------------------------------------------
Gross profit 5,781 5,168 10,720 9,959
Operating expenses:
Selling, general and administrative 3,974 3,639 7,647 7,276
Research, development and engineering 1,235 904 2,407 1,933
Restructuring Charge -- -- -- 530
- --------------------------------------------------------------------------------------------------
Income from operations 572 625 666 220
- --------------------------------------------------------------------------------------------------
Interest income 94 90 212 195
Interest expense (116) (102) (228) (229)
Other income (expense), net 40 (262) 44 (253)
- --------------------------------------------------------------------------------------------------
Income before taxes 590 351 694 (67)
Income tax provision 110 48 88 (94)
- --------------------------------------------------------------------------------------------------
Net income $ 480 $ 303 $ 606 $ 27
==================================================================================================
Earnings Per Share:
Basic $ 0.07 $ 0.04 $ 0.08 $ 0.00
Diluted $ 0.07 $ 0.04 $ 0.08 $ 0.00
==================================================================================================
Weighted Average Number of
Shares Outstanding:
Basic 7,153,569 7,280,739 7,214,396 7,280,336
Effect of Dilutive Options 57,945 26,070 71,644 25,078
- --------------------------------------------------------------------------------------------------
Diluted Shares 7,211,514 7,306,809 7,286,040 7,305,414
==================================================================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE> 6
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
FOR THE SIX MONTHS ENDED JUNE 28, 1998
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER TOTAL
COMMON PAID-IN ACCUMULATED TREASURY COMPREHENSIVE STOCKHOLDERS'
STOCK CAPITAL EARNINGS STOCK INCOME INVESTMENT
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance,
beginning of
the period $77 $20,250 $4,061 $(1,183) $353 $23,558
Net income - - 606 - - 606
Sale of
common stock - 16 - - - 16
Purchase of
Treasury Stock - - - (1,012) - (1,012)
Translation
Adjustment - - - - (45) (45)
- ---------------------------------------------------------------------------------------------------
Balance,
end of
the period $77 $20,266 $4,667 $(2,195) $308 $23,123
===================================================================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE> 7
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 28, 1998 AND JUNE 29, 1997
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
JUNE 28, JUNE 29,
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 606 $ 27
Adjustments to reconcile net income to net cash
provided by(used in) operating activities -
Depreciation and amortization 533 428
Net changes in operating assets and liabilities-
Accounts receivable (356) (1,345)
Inventories (50) 355
Other current assets 151 987
Accounts payable (1,262) 635
Other current liabilities (298) 84
Other assets (26) 2
- --------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (702) 1,173
- --------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of property, plant and equipment, net (888) (358)
- --------------------------------------------------------------------------------
Net cash used in investing activities (888) (358)
- --------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments under long-term debt
and capital lease obligations (61) (178)
Proceeds from issuance of common stock 16 5
Purchase of treasury stock (1,012) -
- --------------------------------------------------------------------------------
Net cash used in financing activities (1,057) (173)
- --------------------------------------------------------------------------------
Effect of exchange rates on cash (45) (29)
- --------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (2,692) 613
Cash and cash equivalents, at beginning of the period 11,873 10,218
- --------------------------------------------------------------------------------
Cash and cash equivalents, at end of the period $ 9,181 $10,831
================================================================================
Supplemental disclosures of cash flow information
Cash paid during the periods for -
Interest $ 228 $ 229
Income taxes 12 (642)
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE> 8
BTU INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis for presentation
The condensed consolidated balance sheet as of June 28, 1998, the condensed
consolidated statement of stockholders' investment for the six months ended June
28, 1998, the condensed consolidated statement of cash flows for the six months
ended June 28, 1998 and June 29, 1997, and the related condensed consolidated
statements of operations for the three and six months ended June 28, 1998 and
June 29, 1997 are unaudited. In the opinion of management, all adjustments
necessary for the fair presentation of such financial statements have been
included. Such adjustments consisted only of normal recurring items. Interim
results are not necessarily indicative of results for the full year. These
financial statements do not include all disclosures associated with annual
financial statements, and accordingly, should be read in conjunction with the
footnotes contained in the Company's consolidated financial statements for the
period ended December 31, 1997, together with the auditors' report, included in
the Company's "1997 Annual Report," and filed in conjunction with Form 10K.
(2) Inventories
Inventories at June 28, 1998 and December 31, 1997 consisted of:
<TABLE>
<CAPTION>
($000)
-------------------------
June 28, December 31,
1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C>
Raw materials and manufactured components $ 4,884 $ 4,883
Work-in-process 3,658 3,723
Finished goods 1,536 1,422
- -----------------------------------------------------------------------------
$10,078 $10,028
=============================================================================
</TABLE>
(3) Debt
Debt at June 28, 1998 and December 31,1997 consisted of:
<TABLE>
<CAPTION>
($000)
-------------------------
June 28, December 31,
1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C>
Mortgage note payable $5,418 $5,519
Capital lease obligations, interest rates
ranging from 6.9% to 11.0%, net of interest
of $18,000 and $2,000 in 1998 and 1997,
respectively 58 18
- -----------------------------------------------------------------------------
5,476 5,537
Less-current maturities 225 224
- -----------------------------------------------------------------------------
$5,251 $5,313
=============================================================================
</TABLE>
The mortgage note payable is secured by the Company's land and building and
required monthly payments of $53,922, including interest at 8.125%. This
mortgage note payable has a balloon payment of $3,825,00 due and payable at
maturity on July 1, 2004.
6
<PAGE> 9
BTU INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(4) Earnings Per Share
Earnings per share is presented in compliance with the Statement of
Financial Accounting Standards (SFAS) No. 128 "Earnings Per Share." Under SFAS
No. 128, Earnings Per Share (EPS) is presented under two calculations, Basic and
Diluted. Basic EPS is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding during
the period. Diluted EPS is computed using the weighted average number of common
and dilutive potential common shares outstanding during the period, using the
treasury stock method. Options outstanding which were not included in the
determination of diluted EPS because they were antidilutive, were 52,500 and
42,500 as of June 28, 1998 and December 31, 1997 respectively.
(5) Reporting Comprehensive Income
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This Statement establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. The Statement is effective for fiscal years beginning
after December 31, 1997. As of June 28, 1998 the Company's only disclosure
requirement under this SFAS is Foreign currency translation adjustment, which is
currently reported in the equity section of the Balance Sheet. For the Three and
Six months ended June 28, 1998 and June 29, 1997, Comprehensive income was as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------------------------
June 28, June 29, June 28, June 29,
1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $480 $303 $606 $ 27
-------------------------------------------------
Change in cumulative translation adjustment (42) (5) (45) (29)
-------------------------------------------------
Comprehensive income (loss) $438 $298 $561 $ (2)
=================================================
</TABLE>
7
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net Sales - In the second quarter of 1998, net sales increased by
$1,515,000 to $14.3 million, an increase of 11.8% when compared to the second
quarter of 1997. For the first six months of 1998, net sales increased by
$2,590,000 to $26.4 million, an increase of 10.9% over the comparable 1997
period. The increase in sales for both the second quarter and year to date 1998
versus 1997 reflected an increase in demand for our products primarily used by
our large multinational customers.
During the second quarter and first six months of 1998 as compared to the
same periods in 1997, the percentage of total sales decreased in Asia Pacific.
The sales percentage increased in North America. The Asian sales do not include
sales to a United States multinational company that directed shipments to their
Asian operations.
Gross Profit - Gross profit increased by $613,000, or 11.9%, in the second
quarter of 1998, compared to the second quarter of 1997. Gross profit as a
percent of sales for the second quarter of both 1998 and 1997 remained at 40.4%.
For the first six months of 1998, gross profit increased by $761,000 or 7.6%,
compared to the first half of 1997 but decreased as a percentage of sales from
41.8% to 40.6. The increase in gross profit dollars for both the second quarter
and first six months of 1998 was due to the increase in revenues. The decrease
in gross margin percentage for the year to date period was a result of product
mix.
Selling, General and Administrative - In the second quarter of 1998,
selling, general and administrative (SG&A) expense increased by $335,000, or
9.2%, as compared to the same period in 1997. For the first six months of 1998
SG&A expense increased by $371,000, or 5.1%, as compared to the same period in
1997. SG&A as a percentage of sales decreased by 0.7% for the second quarter of
1998, and 1.6% for the first six month of 1998 as compared to the same periods
in 1997. These decreases were attained primarily due to the lowering of the
overall commission percentage as the Company has increased its direct sales
activity in certain areas of the world.
Research, Development and Engineering - In the second quarter of 1998,
research, development and engineering expenses increased by $331,000, or 36.6%,
as compared to the second quarter of 1997. For the first six months of 1998,
research, development and engineering expenses increased by $474,000, or 24.5%,
as compared to the first six months of 1997. The increase in spending during
both the second quarter and first six months of 1998 versus the same periods in
1997 was the result of a continued investment in new technologies and new
product development to support growing customer requirements. Additionally the
increase in the second quarter of the 1998 included development costs related to
a prototype, flat panel display equipment.
Restructuring Charge - During the first quarter of 1997 the Company
incurred a restructuring charge of $530,000 related primarily to severance costs
incurred as a result of certain changes in the manner in which the Company
conducts its business. This charge represented one-time costs regarding actions
taken in response to a shift in the amount of out-sourced material and a change
to a direct approach to sales and service support in certain Far East
territories. This charge is reflected in the six months ended June 29, 1997
Statement of Operations.
Interest Income - In the second quarter and first six months of 1998
interest income increased by $4,000, or 4.4%, and $17,000 or 8.7% respectively,
as compared to the same periods in of 1997. The increase in interest income is
due to the higher average investment balance in 1998 versus 1997.
8
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Interest Expense - Interest expense increased by $14,000, or 13.7%, for the
second quarter of 1998, and decreased by $1,000 or 0.4% for the first six months
of 1998 as compared to the same periods in 1997.
Income Taxes - In the second quarter of 1998 the Company recorded a tax
provision of $110,000 versus a tax provision of $48,000 for the second quarter
of 1997. For the first six months of 1998 the Company recorded a tax provision
of $88,000 as compared to a tax benefit for the first six months of 1997 of
$94,000. For both the second quarter and year to date tax calculations in 1998
and 1997, the effective tax rates reflects the use of certain NOL carryforwards
available to the Company's U.K. subsidiary, which was profitable in the second
quarter and first six months of 1998 and 1997. The Company's statutory USA
Federal rate is 34%.
LIQUIDITY AND CAPITAL RESOURCES
The Company has an unsecured revolving line of credit with a bank which
allows for the aggregate of borrowings and/or letters of credit of up to
$14,000,000. Borrowings are available to the Company at either the Bank's base
rate or a Eurodollar rate, as elected by the Company. This loan agreement is
available to the Company until April 30, 2002, and is subject to certain
financial covenants. No amounts were outstanding under this loan agreement as of
June 28, 1998.
The Company has a mortgage note, which is secured by its land and
building. The Mortgage note payable had an outstanding balance at June 28, 1998
of $5,418,000. The mortgage requires monthly payments of $53,922, including
interest at 8.125%. A final balloon payment of $3,825,000 is due at maturity on
July 1, 2004.
For the six months ending June 28, 1998 the Company's cash balance
decreased by $2,692,000. The major factors in this decrease were a capital
investment of $888,000 primarily to modernize our factory facility and the
re-purchase of 216,500 shares of the Company's common stock for $1,012,000.
The Company expects its current cash position, ability to borrow
necessary funds, as well as cash flows from operations will be sufficient to
meet its corporate, operating and capital requirements into 1999.
Other matters
The impact of inflation and the effect of foreign exchange rate changes
during 1998 has had an immaterial impact on the Company's business and financial
results.
The efficient operation of the Company's business is dependent in part on
its computer software and hardware. These systems are used in several key areas
of the Company's business, including sales, purchasing, engineering, inventory
control and financial reporting. The Company has been evaluating its Programs
and Systems to identify potential Year 2000 compliance problems. These actions
are necessary to ensure that the Programs and Systems will recognize and process
the year 2000 and beyond. Based on present information, the Company believes its
systems will be Year 2000 compliant.
The Company has assessed and continues to assess the impact of the Year
2000 issue on its operations from both a product and operational basis.
Additionally, the Company is currently assessing its suppliers' compliance
with Year 2000 issues. Although final costs have not yet been determined, it is
anticipated that these Year 2000 costs will not materially impact the financial
results of the Company.
9
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
RECENT ACCOUNTING DEVELOPMENTS
In March, 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1). SOP 98-1
requires computer software costs associated with internal use software to be
expensed as incurred until certain capitalization criteria are met. The Company
does not believe that adoption of SOP 98-1 will have a material impact on the
Company's financial statements.
In April, 1998, the AICPA issued Statement of Position 98-5, "Reporting on
the Costs of Start-Up Activities" (SOP 98-5). SOP 98-5 requires all costs
associated with pre-opening, pre-operating and organization activities to be
expensed as incurred. The Company will adopt SOP 98-5 beginning January 1, 1999.
The Company believes that adoption of SOP 98-5 will have no material impact on
the Company's financial statements.
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are based on
the Company's current plans and expectations and involve risks and uncertainties
that could cause actual future activities and results of operations to be
materially different from those set forth in the forward-looking statements.
Important factors that could cause actual results to differ include, among
others, general market conditions governing supply and demand, the timely
availability and acceptance of new products, and the impact of competitive
products and pricing and other risks detailed in the Company's SEC reports.
10
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO VOTE SECURITY HOLDERS
(a) The annual meeting of stockholders was held on May 22, 1998.
(b) All directors of the Company were re-elected at the annual meeting. The
actual vote is set forth in paragraph (c) below.
(c) The voting for the directors was as follows:
For Withheld
--------- --------
Paul J. van der Wansem 6,845,652 36,498
Alexander V. d'Arbeloff 6,731,954 150,196
David A.B. Brown 6,846,165 35,985
J. Chuan Chu 6,826,783 55,367
(d) The Stockholders approved an amendment to the Company's 1993 Equity
Incentive Plan, increasing the shares available under the plan.
The voting for the amendment was as follows:
For 3,419,268
Against 539,956
Abstain 269,969
Non-Votes 2,652,957
(e) The Stockholders approve the 1998 Stock Option Plan for Non-Employee
Directors.
The voting for the plan was as follows:
For 3,355,366
Against 542,631
Abstain 279,061
Non-Votes 2,705,092
ITEM 5. OTHER INFORMATION
Under recent changes to the Federal proxy rules, if a stockholder who
wishes to present a proposal at the Company's 1999 Annual Meeting that will not
be included in the Company's proxy statement fails to notify the Company by
March 10, 1999, then the proxies that management solicits for the 1999 Annual
Meeting will include discretionary authority to vote on the stockholder's
proposal, if it is properly brought before the meeting.
11
<PAGE> 14
PART II. OTHER INFORMATION (continued)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 10.44 - Amendment to the Company's 1993 Equity Incentive
Plan.
Exhibit 10.45 - 1998 Stock Option Plan for Non-Employee Directors.
Exhibit 11.0 - Calculation of net income per common and common
equivalent share.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the period
covered by this report.
12
<PAGE> 15
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.
BTU INTERNATIONAL, INC.
DATE: August 10, 1998 BY: /s/ Paul J. van der Wansem
--------------------------------------
Paul J. van der Wansem
President, Chief Executive Officer
(principal executive officer) and Director
DATE: August 10, 1998 BY: /s/ Thomas P. Kealy
--------------------------------------
Thomas P. Kealy
Vice President, Corporate Controller and
Chief Accounting Officer (principal
financial and accounting officer)
13
<PAGE> 1
Exhibit 10.44
AMENDMENT NO. 2
BTU INTERNATIONAL, INC.
1993 EQUITY INCENTIVE PLAN
1. REFERENCE TO THE PLAN.
Reference is hereby made to the BTU International, Inc. (the "Company")
1993 Equity Incentive Plan as amended by Amendment No. 1 to the BTU
International, Inc. 1993 Equity Incentive Plan (as amended, the "Plan"). Terms
defined in the Plan and not otherwise defined herein are used herein with the
meanings so defined.
2. AMENDMENT TO THE PLAN.
Subject to the approval of the stockholders of the Company, Section 4 of
the Plan is hereby amended by deleting the first sentence thereof and replacing
it with the following sentence:
"Subject to the adjustment as provided in Section 8.6 below, the
aggregate number of shares of Stock that may be delivered under the Plan
will be 1,041,183."
<PAGE> 1
Exhibit 10.45
BTU INTERNATIONAL, INC.
1998 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE
The purpose of this 1998 Stock Option Plan for Non-Employee Directors (the
"Plan") is to advance the interests of BTU International, Inc. (the "Company")
by enhancing the ability of the Company to attract and retain non-employee
directors who are in a position to make significant contributions to the success
of the Company and to reward directors for such contributions through the
awarding of options ("Options") to purchase shares of the Company's common stock
(the "Stock").
2. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") of the
Board of Directors (the "Board") of the Company designated by the Board for that
purpose. Unless and until a Committee is appointed the Plan shall be
administered by the entire Board, and references in the Plan to the "Committee"
shall be deemed references to the Board. The Committee shall have authority, not
inconsistent with the express provisions of the Plan, (a) to grant Options in
accordance with the Plan to such directors as are eligible to receive Options;
(b) to prescribe the form or forms of instruments evidencing Options and any
other instruments required under the Plan and to change such forms from time to
time; (c) to adopt, amend and rescind rules and regulations for the
administration of the Plan; and (d) to interpret the Plan and to decide any
questions and settle all controversies and disputes that may arise in connection
with the Plan. Such determinations of the Committee shall be conclusive and
shall bind all parties. Subject to Section 7, the Committee shall also have the
authority, both generally and in particular instances, to waive compliance by a
director with any obligation to be performed by him or her under an Option and
to waive any condition or provision of an Option.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective on the date on which the Plan is approved
by the Board of Directors of the Company, subject to approval by the
stockholders of the Company. No Option shall be granted under the Plan after the
completion of ten years from the date on which the Plan was adopted by the
Board, but Options previously granted may extend beyond that date.
<PAGE> 2
4. SHARES SUBJECT TO THE PLAN
(a) Number of Shares. Subject to adjustment as provided in Section 4(c),
the aggregate number of shares of Stock that may be delivered upon the exercise
of Options granted under the Plan shall be 50,000. If any Option granted under
the Plan terminates without having been exercised in full, the number of shares
of Stock as to which such Option was not exercised shall be available for future
grants within the limits set forth in this Section 4(a).
(b) Shares to be Delivered. Shares delivered under the Plan shall be
authorized but unissued Stock or, if the Board so decides in its sole
discretion, previously issued Stock acquired by the Company and held in
treasury. No fractional shares of Stock shall be delivered under the Plan.
(c) Changes in Stock. In the event of a stock dividend, stock split or
combination of shares, recapitalization or other change in the Company's capital
stock, after the effective date of the Plan, the number and kind of shares of
stock or securities of the Company subject to Options then outstanding or
subsequently granted under the Plan, the maximum number of shares or securities
that may be delivered under the Plan, the exercise price, and other relevant
provisions shall be appropriately adjusted by the Committee, whose determination
shall be binding on all persons.
The Committee may also adjust the number of shares subject to outstanding
awards and the exercise price and the terms of outstanding awards to take into
consideration material changes in accounting practices or principles,
extraordinary dividends, consolidations or mergers (except those described in
Section 6(j)), acquisitions or dispositions of stock or property or any other
event if it is determined by the Board that such adjustment is appropriate to
avoid distortion in the operation of the Plan.
5. ELIGIBILITY FOR OPTIONS
A Director eligible to receive Options under the Plan (an "Eligible
Director") shall be any director who is not an employee of the Company or of any
subsidiary of the Company, and (ii) is not a holder of more than 5% of the
outstanding shares of the Stock, or a person who is in control of such holder.
6. TERMS AND CONDITIONS OF OPTIONS
(a) Formula Options. On the date that the Board approves this Plan, each
person who is then an Eligible Director shall be awarded on such date an Option
covering 1,000 shares of Stock, subject to stockholder approval of the Plan.
Each Eligible Director elected for the first time thereafter shall also be
awarded on the date of his or her first election an Option covering 2,000 shares
of Stock. Thereafter, immediately following the annual meeting of stockholders,
each Eligible Director shall be awarded an Option covering 1,000 shares of
Stock. The Options awarded under this paragraph (a) are referred to as "Formula
Options."
<PAGE> 3
(b) Discretionary Options. The Committee shall also have the authority
under this Plan to award Options to purchase Stock to Eligible Directors in such
amounts and on such terms not inconsistent with this Plan as it shall determine
at the time of the award. The Options awarded under this paragraph (b) are
referred to herein as "Discretionary Options."
(c) Exercise Price. The exercise price of each Formula Option shall be 100%
of the fair market value per share of the Stock at the time the Option is
granted. The exercise price of each Discretionary Options shall be set by the
Committee. In no event, however, shall the Option price be less, in the case of
an original issue of authorized stock, than par value per share. For purposes of
this paragraph, the fair market value of a share of Stock will be the mean
between the high and low sale prices as reported on the principal market on
which the Stock is traded or, if no sales are reported, the fair market value as
determined in good faith by the Committee.
(d) Duration of Options. The latest date on which a Option may be exercised
(the "Final Exercise Date") shall be (i) in the case of Formula Options, the
date which is seven years from the date the Option was granted and (ii) in the
case of Discretionary Options, such date as the Committee may determine, but in
no event later than seven years from the date the Option was granted.
(e) Exercise of Options.
(1) Each Formula Option shall become exercisable as to one-fourth of the
shares covered thereby on each anniversary of the date of the grant.
Each Discretionary Option shall become exercisable at such time or
times as the Committee shall determine.
(2) Any exercise of an Option shall be in writing, signed by the proper
person and delivered or mailed to the Company, accompanied by (i) any
documentation required by the Committee and (ii) payment in full for
the number of shares for which the Option is exercised.
(3) If an Option is exercised by the executor or administrator of a
deceased director, or by the person or persons to whom the Option has
been transferred by the director's will or the applicable laws of
descent and distribution, the Company shall be under no obligation to
deliver Stock pursuant to such exercise until the Company is satisfied
as to the authority of the person or persons exercising the Option.
(f) Payment for and Delivery of Stock. Stock purchased under the Plan shall
be paid for as follows: (i) in cash or by check (acceptable to the Company in
accordance with guidelines established for this purpose), bank draft or money
order payable to the order of the Company or (ii) if so permitted by the
Committee, (A) through the delivery of shares of Stock (which, in the case of
shares of Stock acquired from the Company, have been outstanding for at least
six months) having a fair market value on the last business day preceding the
date of exercise equal to the purchase price or (B) by having the Company hold
back from the shares transferred upon exercise Stock having a fair market value
on the last business day preceding the date of exercise equal to the purchase
price or
<PAGE> 4
(C) by delivery of a promissory note of the Option holder to the Company, such
note to be payable on such terms as are specified or (D) by delivery of an
unconditional and irrevocable undertaking by a broker to deliver promptly to the
Company sufficient funds to pay the exercise price or (E) by any combination of
the permissible forms of payment; provided, that if the Stock delivered upon
exercise of the Option is an original issue of authorized Stock, at least so
much of the exercise price as represents the par value of such Stock shall be
paid other than with a personal check or promissory note of the Option holder.
An Option holder shall not have the rights of a shareholder with regard to
awards under the Plan except as to Stock actually received by him or her under
the Plan.
The Company shall not be obligated to deliver any shares of Stock (a)
until, in the opinion of the Company's counsel, all applicable federal and state
laws and regulations have been complied with, and (b) if the outstanding Stock
is at the time listed on any stock exchange, until the shares to be delivered
have been listed or authorized to be listed on such exchange upon official
notice of issuance, and (c) until all other legal matters in connection with the
issuance and delivery of such shares have been approved by the Company's
counsel. If the sale of Stock has not been registered under the Securities Act
of 1933, as amended, the Company may require, as a condition to exercise of the
Option, such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require that the
certificates evidencing such Stock bear an appropriate legend restricting
transfer.
(g) Nontransferability of Options. Except as the Committee shall otherwise
provide, no Option may be transferred other than by will or by the laws of
descent and distribution, and during a director's lifetime an Option may be
exercised only by him or her.
(h) Death. Except as the Committee shall otherwise provide, upon the death
of any director granted Options under this Plan, all Options not then
exercisable shall terminate. All Options held by the director that are
exercisable immediately prior to death may be exercised by his or her executor
or administrator, or by the person or persons to whom the Option is transferred
by will or the applicable laws of descent and distribution, at any time within
six months after the director's death (subject, however, to the limitations of
Section 6(d) regarding the maximum exercise period for such Option). After
completion of that six-month period, such Options shall terminate to the extent
not previously exercised.
(i) Other Termination of Service. Except as the Committee shall otherwise
provide, if a director's service with the Company terminates for any reason
other than death, all Options held by the director that are not then exercisable
shall terminate. Options that are exercisable on the date of termination shall
continue to be exercisable for a period of three months (subject to Section
6(d)), but shall terminate immediately if the director was removed for cause or
resigned under circumstances which, in the opinion of the Committee, casts such
discredit on him or her as to justify termination of his Options. After
completion of that three-month period, such Options shall terminate to the
extent not previously exercised, expired or terminated.
<PAGE> 5
(j) Mergers, etc. Subject to the second paragraph of this paragraph 6(j),
in the event of a consolidation or merger in which the Company is not the
surviving corporation (other than a consolidation or merger in which the holders
of Stock of the Company acquire a majority of the voting stock of the surviving
corporation) or which results in the acquisition of substantially all the
Company's outstanding Stock by a single person or entity or by a group of
persons and/or entities acting in concert, or in the event of a sale or transfer
of substantially all of the Company's assets or a dissolution or liquidation of
the Company, all Options hereunder will terminate, but 20 days prior to the
anticipated effective date of any such merger, consolidation, sale, dissolution,
or liquidation, all Options outstanding hereunder that are not otherwise
exercisable shall become immediately exercisable, provided, that if the
transaction is a merger or consolidation that is accounted for as a pooling of
interests the Committee shall arrange to have the successor or surviving
corporation assume all Options outstanding under this Plan, with such
adjustments to the number of shares covered by such Options and the exercise
price thereof as may be necessary to reflect the exchange ratio provided for in
the transaction. Such assumed options shall otherwise be on terms and conditions
substantially equivalent to those set forth in this Plan, shall be immediately
exercisable and, except as to Eligible Directors who become directors of the
acquiring or surviving corporation, shall terminate on the 180th day following
the consummation of the transaction. Options held by Eligible Directors who
become directors of the acquiring or surviving corporation shall be governed,
mutatis mutandis, by the provisions of this Plan and the agreement evidencing
the Option surrendered in substitution.
Notwithstanding any other provision of this Plan, in the event of a Change
in Control of the Company as defined in Exhibit A hereto each Option held by
each Eligible Director will immediately become fully exercisable.
7. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT, TERMINATION AND
EFFECTIVENESS
Neither adoption of the Plan nor the grant of Options to a director shall
affect the Company's right to grant to such director Options that are not
subject to the Plan, to issue to such directors Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued to
directors.
The Committee may at any time terminate the Plan as to any further grants
of Options. The Committee may at any time or times, amend the Plan for any
purpose which may at the time be permitted by law, but no such amendment shall
adversely affect the rights of any Optionee (without the Optionee's consent)
under any Option previously granted.
<PAGE> 6
EXHIBIT A
A Change in Control will occur for purposes of this Plan if (i) any
individual, corporation, partnership, company or other entity (a "Person")
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of securities of the
Company representing more than 30% of the combined voting power of the Company's
then outstanding securities (other than as a result of acquisitions of such
securities from the Company), (ii) there is a change in control of the Company
of a kind which would be required to be reported under Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Exchange Act (or a similar item in a
similar schedule or form), whether or not the Company is then subject to such
reporting requirement, (iii) the Company is a party to, or the stockholders
approve, a merger, consolidation, or other reorganization (other than (a) a
merger, consolidation or other reorganization which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent, either by remaining outstanding or by being converted into voting
securities of the surviving entity, more than 50% of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger, consolidation, or other reorganization, or (b) a
merger, consolidation, or other reorganization effected to implement a
recapitalization of the Company, or similar transaction, in which no Person
acquires more than 20% of the combined voting power of the Company's then
outstanding securities), a sale of all or substantially all assets, or a plan of
liquidation, or (iv) individuals who, at the date hereof, constitute the Board
cease for any reason to constitute a majority thereof, PROVIDED, HOWEVER, that
any director who is not in office at the date hereof but whose election by the
Board or whose nomination for election by the Company's shareholders was
approved by a vote of at least a majority of the directors then still in office
who either were directors at the date hereof or whose election or nomination for
election was previously so approved (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) shall be deemed to have been in office at the date
hereof for purposes of this definition.
Notwithstanding the foregoing provisions of this Exhibit A, a "Change in
Control" will not be deemed to have occurred solely because of the acquisition
of beneficial ownership of securities of the Company by an employment benefit
plan maintained by the Company for its employees.
<PAGE> 1
Exhibit 11.0
BTU INTERNATIONAL , INC.
CALCULATION OF NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
(Dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
-------------------------- --------------------------
June 28, June 29, June 28, June 29,
1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $ 480 $ 303 $ 606 $ 27
- --------------------------------------------------------------------------------------------------------------
Net income applicable to common stockholders $ 480 $ 303 $ 606 $ 27
==============================================================================================================
Weighted average number of shares outstanding:
Basic Shares 7,153,569 7,280,739 7,214,396 7,280,336
Effect of Dilutive Options 57,945 26,070 71,644 25,078
- --------------------------------------------------------------------------------------------------------------
Diluted Shares 7,211,514 7,306,809 7,286,040 7,305,414
==============================================================================================================
Earnings per Share
Basic $ 0.07 $ 0.04 $ 0.08 $ 0.00
Diluted $ 0.07 $ 0.04 $ 0.08 $ 0.00
==============================================================================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-28-1998
<EXCHANGE-RATE> 1
<CASH> 9,181
<SECURITIES> 0
<RECEIVABLES> 12,850
<ALLOWANCES> 160
<INVENTORY> 10,078
<CURRENT-ASSETS> 32,922
<PP&E> 13,556
<DEPRECIATION> 8,587
<TOTAL-ASSETS> 38,323
<CURRENT-LIABILITIES> 7,702
<BONDS> 5,251
0
0
<COMMON> 77
<OTHER-SE> 22,738
<TOTAL-LIABILITY-AND-EQUITY> 38,323
<SALES> 26,415
<TOTAL-REVENUES> 26,415
<CGS> 15,695
<TOTAL-COSTS> 15,695
<OTHER-EXPENSES> 2,407
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 228
<INCOME-PRETAX> 694
<INCOME-TAX> 88
<INCOME-CONTINUING> 606
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 606
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
