<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
[Mark one]
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1997
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: 0-26482
TRIKON TECHNOLOGIES, INC.
------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-4054321
------------------- -----------------
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) number)
9255 Deering Avenue, Chatsworth, California 91311
------------------------------------------------------
(Address of principle executive offices) (Zip Code)
(818) 886-8000
--------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicated 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 periods 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
-- --
As of September 30, 1997, the total number of outstanding shares of the
Registrant's common stock was 15,118,168.
<PAGE>
Trikon Technologies, Inc.
<TABLE>
<CAPTION>
INDEX Page
----- Number
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Introduction 3
Condensed Consolidated Balance Sheets at September 30, 1997 (unaudited)
and December 31, 1996 3
Unaudited Condensed Consolidated Statements of Operations for the
Three Months ended September 30, 1997 and 1996 and for the Nine
Months ended September 30, 1997 and 1996 4
Unaudited Condensed Consolidated Statements of Cash Flows for the
Nine Months ended September 30, 1997 and 1996 5
Notes to Unaudited Condensed Consolidated Financial Statements 6
PART II. OTHER INFORMATION 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURE PAGE 12
EXHIBITS 13
</TABLE>
2
<PAGE>
Trikon Technologies, Inc.
The Registrant hereby amends Item 1 of Part I and Item 6 of Part II of its
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1997,
as set forth below, in order to correct entries for the net income (loss) per
share and the average common shares and equivalents, which were incorrect.
ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
INTRODUCTION
The Company has restated its financial information for the nine months ended
September 30, 1997, as reflected in this amendment to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997. A restatement was
required because the average common shares and equivalents for the three and
nine months ended September 30, 1997 were overstated as a result of the
incorrect inclusion of antidilutive common equivalents from preferred stock,
which resulted in incorrect reported net income (loss) per share.
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996 (1)
------------------ ------------------
(UNAUDITED)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents............................. $ 7,730,233 $ 20,187,662
Short-term investments................................ 6,353,292 1,464,165
Accounts receivable, net of reserves.................. 19,209,704 27,229,806
Inventories, net of reserves.......................... 45,041,241 53,837,131
Other current assets.................................. 3,552,765 4,723,449
------------- -------------
Total current assets........................... 81,887,235 107,442,213
Property, equipment and leasehold improvements,
net of accumulated depreciation and amortization...... 32,672,026 28,743,886
Demonstration systems, net of accumulated
depreciation.......................................... 6,395,910 6,080,431
Intangible assets, net of accumulated amortization...... 37,097,234 40,484,079
Other assets............................................ 1,217,147 429,596
------------- -------------
Total assets............................................ $ 159,269,552 $ 183,180,205
============= =============
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued expenses................. $ 16,646,184 $ 24,114,756
Bank credit line...................................... 14,567,366 14,151,000
Other current liabilities............................. 9,924,987 12,661,580
------------- -------------
Total current liabilities...................... 41,138,537 50,927,336
Convertible subordinated notes.......................... 86,250,000 86,250,000
Other non-current liabilities........................... 12,995,773 14,754,721
Commitments and contingencies
Shareholders' equity:
Preferred Stock
Authorized shares -- 20,000,000,
3,125,000 designated as Series G Preferred
Stock -- $6.75 per share liquidation
preference
Series G Preferred issued and outstanding --
2,962,032 at September 30, 1997.................. 19,547,592 --
Common Stock, no par value:
Authorized shares -- 50,000,000
Issued and outstanding -- 15,118,168 at
September 30, 1997 and 14,310,410 at
December 31, 1996................................ 137,766,446 131,873,023
Cumulative translation................................ (351,103) 1,412,200
Accumulated deficit................................... (138,077,693) (102,037,075)
------------- -------------
Total shareholders' equity.............................. 18,885,242 31,248,148
------------- -------------
Total liabilities and shareholders' equity.............. $ 159,269,552 $ 183,180,205
============= =============
</TABLE>
(1) The Balance Sheet at December 31, 1996 has been derived from the audited
consolidated financial statements at that date, but does not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
Trikon Technologies, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------------------- --------------------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1997 (1) 1996 1997 (1) 1996
------------------ ----------------- ------------------ -----------------
Revenues:
<S> <C> <C> <C> <C>
Product revenues.................... $ 12,656,560 $7,904,906 $ 43,719,799 $25,851,165
Contract revenues................... -- 918,449 -- 1,767,127
------------ ---------- ------------ -----------
12,656,560 8,823,355 43,719,799 27,618,292
Costs and expenses:
Cost of goods sold.................. 9,159,222 3,863,568 31,626,066 12,991,004
Research and development............ 4,259,185 1,992,661 13,413,880 5,449,346
Selling, general and administrative. 9,823,355 2,755,340 25,203,296 7,125,153
Purchased in-process technology..... -- -- 2,974,410 --
Amortization of intangibles......... 903,950 -- 2,711,848 --
------------ ---------- ------------ -----------
24,145,712 8,611,569 75,929,500 25,565,503
------------ ---------- ------------ -----------
Income (loss) from operations.......... (11,489,152) 211,786 (32,209,701) 2,052,789
Other:
Interest income (expense), net (2,812,824) 293,880 (7,578,695) 1,086,698
------------ ---------- ------------ -----------
Income (loss) before income tax
provision (benefit)................... (14,301,976) 505,666 (39,788,396) 3,139,487
Income tax provision (benefit)......... (841,475) 4,495 (3,747,778) 16,977
------------ ---------- ------------ -----------
Net income (loss)...................... $(13,460,501) $ 501,171 $(36,040,618) $ 3,122,510
============ ========== ============ ===========
Net income (loss) per share:
Primary....................... ($0.89) $0.06 ($2.47) $0.34
============ ========== ============ ===========
Average common shares and
equivalents..................... 15,114,764 9,103,103 14,617,416 9,120,709
============ ========== ============ ===========
</TABLE>
(1) Includes the results of operations of Trikon Equipments Limited and Trikon
Limited (collectively, "Trikon Limited"), which was acquired on November 15,
1996 (see Note A of Notes to Condensed Consolidated Financial Statements).
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
Trikon Technologies, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------------------------
SEPTEMBER 30, SEPTEMBER 30,
1997 (1) 1996
-------------------- -------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................. $(36,040,618) $ 3,122,510
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization of plant,
equipment, leasehold improvements and
demonstration systems...................... 5,177,973 1,199,912
Amortization of intangible assets............. 2,772,094 -
Amortization of financing costs............... 614,751 -
Purchased in-process technology............... 2,974,410 -
Deferred income taxes......................... (3,420,093) -
Changes in operating assets and liabilities:
Accounts receivable......................... 7,818,961 (8,096,151)
Inventories................................. 8,394,774 (10,311,960)
Demonstration systems....................... (1,326,587) (3,110,975)
Other current assets........................ 1,095,166 (270,949)
Accounts payable, accrued expenses
and other current liabilities........... (10,439,454) 7,965,165
Other liabilities........................... 1,883,137 -
------------ ------------
Net cash used in operating activities............. (20,495,486) (9,502,448)
INVESTING ACTIVITIES
Purchases of property, equipment and leasehold
improvements..................................... (8,571,543) (6,548,355)
Proceeds from sales of short-term investments..... 1,216,156 19,914,800
Purchases of short-term investments............... (6,113,072) (18,481,907)
Other assets...................................... (381,847) (2,476,735)
------------ ------------
Net cash used in investing activities............. (13,850,306) (7,592,197)
FINANCING ACTIVITIES
Net borrowings (repayments) under bank
credit line................................... 416,366 -
Proceeds from sale of Series G Preferred Stock,
net.............................................. 19,547,592 -
Proceeds from sale of common stock and warrants... 2,328,570 132,902
Payments on capital lease obligations............. (404,165) (358,977)
------------ ------------
Net cash provided by (used in) financing 21,888,363 (226,075)
activities....................................... ------------ ------------
Net decrease in cash and cash equivalents......... (12,457,429) (17,320,720)
Cash and cash equivalents at beginning of
period.......................................... 20,187,662 24,770,363
------------ ------------
Cash and cash equivalents at end of period........ $ 7,730,233 $ 7,449,643
============ ============
</TABLE>
(1) Includes the cash flows of Trikon Limited, which was acquired on November
15, 1996 (see Note A of Notes to Condensed Consolidated Financial
Statements).
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
Trikon Technologies, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1997
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. The operating results for the nine months ended September 30,
1997 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1997. For further information, refer to the
consolidated financial statements and footnotes thereto included in Trikon
Technologies, Inc.'s (the "Company") Annual Report on Form 10-K for the year
ended December 31, 1996.
The unaudited condensed consolidated financial statements for the nine months
ended September 30, 1997, as reported the Company's Quarterly Report on Form 10-
Q, reflect entries for net income (loss) per share and average common shares and
equivalents for the three months and nine months ended September 30, 1997 which
were subsequently determined to be incorrect. Accordingly, entries for net
income (loss) per share and average common shares and equivalents in the
consolidated unaudited condensed financial statements have been restated as
follows:
<TABLE>
<CAPTION>
As Previously Reported As Restated
------------------------------ ------------------------------
Three months Nine months Three months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
1997 1997 1997 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income (loss) per shares:
Primary...................... ($0.75) ($2.32) ($0.89) ($2.47)
========== ========== ========== ==========
Average common shares and
equivalents.................. 17,902,391 15,565,784 15,114,764 14,617,416
========== ========== ========== ==========
</TABLE>
On November 15, 1996, the Company acquired all the issued and outstanding shares
of Electrotech Limited and Electrotech Equipments Limited. During the second
quarter of 1997, Electrotech Limited and Electrotech Equipments Limited changed
their names to Trikon Limited and Trikon Equipments Limited (collectively
"Trikon Limited"). Trikon Limited develops, manufactures, markets and services
semiconductor fabrication equipment for the worldwide semiconductor
manufacturing industry. The aggregate purchase price paid by the Company,
excluding approximately $7,976,000 in acquisition costs, was $145,700,000
consisting of $75,000,000 paid in cash and the issuance of 5,600,000 shares of
Common Stock of the Company with an estimated fair market value of $70,700,000,
based on the quoted market price on the last day prior to the public
announcement of the parties' agreement to the acquisition terms. The acquisition
was accounted for as a purchase and, accordingly, the acquired assets and
liabilities were recorded at their estimated fair market values at the date of
acquisition. The Company's consolidated assets, liabilities and results of
operations include the assets, liabilities, and operating results of Trikon
Limited after, but not prior to, the November 15, 1996 acquisition date.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. A number of factors, including the Company's
history of significant losses, negative cash flows, the termination of the
company's Working Capital Facility (as defined below) and the debt service costs
associated with the Company's historically high level of debt, raise substantial
doubts about the Company's ability to continue as a going concern. (See Note J)
On November 12, 1997, the Company announced plans to reorganize the Company's
U.S. etch operations, with the goal of reducing costs, helping the Company to
return to profitability and to generate future postive cash flow. (See Note J)
NOTE B - INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or
market. The components of inventory consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Components........................... $22,114,737 $17,754,456
Work in process...................... 20,536,410 32,993,125
Finished goods....................... 2,390,094 3,089,550
----------- -----------
$45,041,241 $53,837,131
=========== ===========
</TABLE>
NOTE C - DEMONSTRATION SYSTEMS
Demonstration Systems represent completed systems at certain strategic customer
sites, "Beta Sites". The Company provides these demonstration systems at no
charge for a specified evaluation period. All operating costs incurred during
the evaluation period are paid by the customer. At the conclusion of the agreed
upon evaluation period, provided that the equipment performs to specifications,
management expects that the customer will purchase the system, though they are
not obligated to do so. If the system is returned, it is refurbished for resale
or used for research and development. Demonstration systems are
6
<PAGE>
Trikon Technologies, Inc.
NOTE C - DEMONSTRATION SYSTEMS (CONTINUED)
stated at the lower of cost or estimated net realizable value and are
depreciated on a straight line method over four years, if they are not sold
after one year.
NOTE D - PMT CVD PARTNERS, L.P. AGREEMENT
In the first quarter of fiscal 1997, the Company determined that certain
characteristics of the CVD technology of Trikon Limited, known as "Flowfill",
were superior to the high density plasma CVD processes then being pursued by a
limited partnership sponsored by the Company (the "Limited Partnership")
pursuant to an R&D Agreement (the "R&D Agreement") entered into as of March 29,
1996 between the Limited Partnership and the Company (under which the Company
performed all research and development work for the Limited Partnership). The
Company decided to discontinue further research and development work under the
R&D Agreement and instead focus its consolidated efforts, on its own behalf and
not on behalf of the Limited Partnership, upon the Flowfill CVD technology used
in the Trikon Limited equipment. Accordingly, a settlement of any and all rights
and claims by the limited partners of the Limited Partnership was made on June
30, 1997 to terminate the R&D Agreement and all related agreements, and purchase
all of the outstanding interests in the Limited Partnership for 679,680 shares
of common stock (the "LP Shares"). The assets acquired included approximately
$2.2 million of cash and approximately $3.0 million of in-process research and
development which was recorded as a one-time charge as purchased in-process
technology expense in the quarter ended June 30, 1997. In connection with the
purchase of all of the outstanding interests in the Limited Partnership, the
Company agreed to cause a registration statement covering the LP Shares filed
under the Securities Act of 1933, as amended (the "Securities Act"), to become
effective on or prior to September 1, 1997. As of the date hereof, the Company
has not filed such a registration statement, and as a result, the Company must
pay the holders of the LP Shares liquidated damages in the amount of a one-time
fee of $75,000, and an amount equal to $2,500 per day for each day after
September 1, 1997 that such a registration statement has not become effective.
NOTE E - IMPACT ON FINANCIAL STATEMENTS OF RECENTLY ISSUED ACCOUNTING
STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings Per Share, which is required to be adopted as of December 31,
1997. At that time, the Company will be required to change the method currently
used to compute earnings per share and to restate all prior periods. Under the
new requirements for calculating primary earnings per share, the dilutive effect
of stock options will be excluded and the calculation will be referred to as
basic earnings per share. Basic earnings (loss) per share under Statement 128
would have been $0.06 and $0.36 per share for the three and nine months ending
September 30, 1996 and would be the same as primary loss per share for the three
and nine months ending September 30, 1997. The impact of Statement 128 on the
calculation of fully diluted earnings per share for these quarters is not
expected to be material.
NOTE F - INCOME TAXES
The tax benefit represents the combination of a foreign tax benefit associated
with Trikon Limited's operating loss and the reversal of deferred tax credits
established at November 15, 1996 for the difference in the tax basis and
financial reporting basis of the Trikon Limited assets acquired. The effective
tax rate differs from the statutory Federal tax rate due to certain one-time
nondeductible charges and losses for which no benefit has been provided. The
Company's ability to use its domestic and foreign net operating losses and
credit carryforwards will depend upon future income and will be subject to an
annual limitation, required by the Internal Revenue Code of 1986 and similar
state provisions.
7
<PAGE>
Trikon Technologies, Inc.
NOTE F - INCOME TAXES (CONTINUED)
The Company has operating subsidiaries in several countries, and each subsidiary
is taxed based on the laws of the jurisdiction in which it operates. Because
taxes are incurred at the subsidiary level, and one subsidiary's tax losses
cannot be used to offset the taxable income of subsidiaries in other
jurisdictions, the Company's consolidated effective tax rate may increase to the
extent it reports tax losses in some subsidiaries and taxable income in others.
The subsidiaries are subject to taxation in countries where they operate, and
such operations generally are taxed at rates similar to or higher than tax rates
in the United States. The payment of dividends or distributions by the
subsidiaries to the United States would be subject to withholding taxes in the
country of domicile and may be mitigated under the terms of relevant double tax
treaties.
NOTE G - NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed using the weighted average number of
shares of Common Stock outstanding. Common equivalent shares from stock options
and warrants (using the treasury stock method) have been included in the
computation when dilutive. The weighted average number of shares used in the
computation for the three and nine months ended September 30, 1997 excludes
common equivalent shares from options, preferred stock and warrants because they
would be antidilutive.
NOTE H - LINE OF CREDIT AND LONG-TERM DEBT
On November 15, 1996 the Company entered into a three-year senior secured credit
facility with certain domestic and U.K. lenders (the "Working Capital Facility")
that permitted the Company and its subsidiaries to borrow an aggregate of up to
$35.0 million, subject to borrowing base limitations, based upon eligible
accounts receivable. As of September 30, 1997, the Company had approximately
$14.6 million in outstanding borrowings under the Working Capital Facility. The
Working Capital Facility placed certain restrictions on the Company, which,
among other things, prohibited the Company from paying cash dividends, limited
the amount of capital expenditures and required the Company to comply with
certain financial ratios and covenants.
In connection with the acquisition of Trikon Limited, the Company issued
$86,250,000 of Convertible Subordinated Notes (the "Convertible Notes"). The
Convertible Notes bear interest at 7 1/8% which is payable in semi-annual
installments beginning on April 15, 1997. Since January 1997, the Convertible
Notes have borne an additional 0.5% interest per annum due to the Company's
noncompliance with certain registration rights of the Convertible Notes.
The Convertible Notes contain certain provisions which, upon the occurrence of
an "Event of Default" (as defined in the Convertible Notes) could cause the
Convertible Notes to become due and payable immediately. Such an Event of
Default would occur if, among other things, the Company were to default on the
Working Capital Facility or any other secured indebtedness, as defined in the
Convertible Notes, caused by the failure to pay principal and interest payments
when due or resulting from the acceleration of any such indebtedness prior to
its express maturity in excess of $10.0 million.
At December 31, 1996, March 31, 1997, June 30, 1997 and September 30, 1997, the
Company was out of compliance with certain financial ratios and covenants
established under the Working Capital Facility. The lenders had granted the
Company a waiver of such covenant violations as of December 31, 1996 and March
31, 1997 and for the year and quarter, respectively, then ended, which waivers
expired June 30, 1997. Concurrent with the June 30, 1997 first closing of the
Private Placement (as defined below), the Company entered into an amendment
agreement with its lending banks (the "Amendment") to amend its Working Capital
Facility. The Amendment, among other things, revised certain financial ratios
and covenants as to which the Company had previously been in default. In
connection with and as consideration for the Amendment, the Company issued to
the lending banks and their administrative agent, warrants to purchase an
aggregate of 178,182 shares of Common Stock at an exercise price of $6.75 per
share.
As a result of the substantial loss incurred during the June 30, 1997 and
September 30, 1997 quarters, the Company violated the financial ratio and
covenants requirements set forth in the Amendment. The Company received waivers
from its lending banks with regard to the June 30, 1997 covenant violations
which extended the Working Capital Facility through September 30, 1997. Under
the terms of one June 30, 1997 waiver, the lending banks suspended their
obligation to advance any further funds under the Working Capital Facility.
8
<PAGE>
Trikon Technologies, Inc.
NOTE H - LINE OF CREDIT AND LONG-TERM DEBT (CONTINUED)
As a result of the Company being in default under the Working Capital Facility,
the lenders issued on October 7, 1997 a payment blockage notice to the holders
of the Convertible Notes (the "Payment Blockage Notice"). The Payment Blockage
Notice would have prevented the payment of any principal or interest due and
payable under the Convertible Notes until the earlier of the curing of any event
of default under the Working Capital Agreement or 180 days.
On November 12, 1997, the Company entered into a pay-off agreement with its
domestic and U.K. lenders under the Working Capital Facility (the "Pay-off
Agreement"). Under the Pay-off Agreement, among other things, the Company made
payments in the aggregate of approximately $12.5 million (which includes all
outstanding principal and interest due at November 12, 1997) to its lenders
under the Working Capital Facility, the lenders under the Working Capital
Facility released all of their liens on the assets of the Company, the Working
Capital Facility was terminated, and the Payment Blockage Notice was cancelled.
In addition, in order to collateralize certain obligations of Trikon Limited
relating to bankers guarantees and a credit facility with the Company's U.K.
lender, the Company provided cash collateral of approximately $1.4 million to
the U.K. lender.
On November 12, 1997, the Company made an interest payment of approximately $3.1
to the holders of the Convertible Notes, which payment was originally due on
October 15, 1997. Having made this payment, the Company remains in compliance
with the terms of the Convertible Notes.
NOTE I - PREFERRED STOCK
During the quarter ended June 30, 1997, the Company commenced a private offering
(the "Private Placement") of shares of its newly-authorized Series G Preferred
Stock together with three-year warrants to purchase Common Stock at an exercise
price of $8.00 per share (the "Warrants"). The Company sold an aggregate of
2,962,032 shares of Series G Preferred Stock (together with Warrants to purchase
an aggregate of 733,332 shares of Common Stock) with net proceeds to the Company
of approximately $19,500,000. Investors in the Private Placement received
Warrants exercisable for a number of shares of Common Stock equal to 30% of the
number of shares of Series G Preferred Stock purchased, at a total price of
$6.75 per share of Series G Preferred Stock. The Series G Preferred Stock has a
liquidation preference of $6.75 per share which is generally applicable to any
liquidation or acquisition of the Company, such that the Series G Preferred
Stock receives the first $6.75 per share of available proceeds, the shares of
Common Stock then receive the next $6.75 per share, and thereafter the Series G
Preferred Stock and the Common Stock share any remaining proceeds pro rata (on
an as converted basis assuming conversion of all of the Series G Preferred Stock
into Common Stock). The Series G Preferred Stock is convertible at the option of
the holders on a share-for-share basis into Common Stock commencing September
30, 1997 (subject to antidilution adjustments), bears no dividend (except as may
be paid on the Common Stock into which it is convertible) and will be
automatically converted into Common Stock on June 30, 2000.
The Articles of Incorporation of the Company provide that, except for any
amendment, alteration or repeal of the preferences, privileges, special rights
or other powers of the Series G Preferred Stock or the authorization of any
other preferred stock (all of which require the approval of a majority of the
Series G Preferred Stock voting as a separate class), the Series G Preferred
Stock and the Common Stock vote together as a single class, with each share of
Series G Preferred Stock being entitled to that number of votes equal to the
number of shares of Common Stock into which it is then convertible (presently,
one vote per share). Additionally, the purchasers of the Series G Preferred
Stock have entered into a ten-year Voting Agreement with the Company pursuant to
which they have agreed that, if a separate class vote of the Series
9
<PAGE>
Trikon Technologies, Inc.
NOTE I - PREFERRED STOCK (CONTINUED)
G Preferred Stock is required by law (rather than by the Articles of
Incorporation of the Company), and if the proposal being presented to the
shareholders has been approved by the Board of Directors and approved by the
vote of the holders of the Common Stock and Series G Preferred Stock voting as a
single class as described above, they will vote their shares of Series G
Preferred Stock in favor of such proposal when voting the Series G Preferred
Stock as a separate class.
NOTE J - SUBSEQUENT EVENTS
In October 1997, the Company announced a 20% reduction in its workforce, which
was completed during the month. In November 1997, the Company announced plans to
reorganize the Company's U.S. etch operations during the fourth quarter. As a
result of the reduction in its workforce and the reorganization, the Company
expects to incur a substantial charge to earnings in the fourth quarter of 1997.
On November 12, 1997, the Company granted non-exclusive, worldwide, paid-up
licenses of its MORI etch and Forcefill PVD technologies to Applied Materials,
Inc. Under the terms of the license agreements and related technology transfer
agreements, Applied Materials, Inc. will pay the Company $30 million, $27
million of which has been paid and an additional $3 million of which will be
paid upon completion of the technology transfer.
On November 12, 1997, the Company also entered into the Pay-off Agreement with
its domestic and U.K. lenders. Under the terms of the Pay-off agreement, among
other things, the Company made payments in the aggregate of approximately $12.5
million to its lenders under the Working Capital Facility, the lenders under the
Working Capital Facility released all of their liens on the assets of the
Company and the Working Capital Facility was terminated. In addition, in order
to collateralize certain obligations of Trikon Limited related to bankers
guarantees and a credit facility with the Company's U.K. lender, the Company
provided cash collateral of approximately $1.4 million to the U.K. lender.
On November 12, 1997, the Company made the approximately $3.1 million interest
payment, originally due on October 15, 1997, to the holders of the Convertible
Notes.
10
<PAGE>
Trikon Technologies, Inc.
PART II - OTHER INFORMATION
---------------------------
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
10.27+# M0RI(TM) Source Technology License Agreement dated November 12,
1997 by and between the Company and Applied Materials, Inc., a
Delaware corporation ("Applied").
10.28+# FORCEFILL(TM) Technology License Agreement dated November 12, 1997
by and between Applied and Trikon Equipments Limited, a company
incorporated under the laws of England and Wales under registered
number 939289
10.29+# FORCEFILL(TM) Technology License Agreement dated November 12, 1997
by and between Applied and Trikon Technologies Limited, a company
incorporated under the laws of England and Wales under registered
number 1373344
11.1 Computation of Per Share Earnings
27.1 Financial Statement Data
</TABLE>
- -------------------------------
+ Certain portions of this exhibit have been omitted from the copies filed as
part of the Form 10-Q for the quarterly period ended September 30, 1997 and
are the subject of an order granting confidential treatment.
# Filed as an exhibit to Form 10-Q for the quarterly period ended September 30,
1997.
(b) Reports on Form 8-K:
None.
11
<PAGE>
Trikon Technologies, Inc.
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.
TRIKON TECHNOLOGIES, INC.
Date January 14, 1997 /s/ Christopher D. Dobson
----------------- -------------------------
Chistopher D. Dobson
Chief Executive Officer and
Chairman of the Board
Date January 14, 1997 /s/ Jeremy Linnert
----------------- -------------------------
Acting Chief Financial Officer
12
<PAGE>
Trikon Technologies, Inc.
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit Page
Number Description Number
- ------ ----------- ------
<S> <C> <C>
10.27+# M0RI(TM) Source Technology License Agreement...............................
10.28+# FORCEFILL(TM) Technology License Agreement.................................
10.29+# FORCEFILL(TM) Technology License Agreement.................................
11.1 Computation of Per Share Earnings..........................................
27.1 Financial Statement Data...................................................
</TABLE>
- ----------------
+ Certain portions of this exhibit have been omitted from the copies filed as a
part of the Form 10-Q and are subject of an order granting confidential
treatment.
# Filed as an exhibit to Form 10-Q for the quarterly period ended September 30,
1997.
13
<PAGE>
EXHIBIT 11.1 - STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three months ended Nine months ended
-------------------------------------------- --------------------------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
----------------------- ------------------ ----------------------- ------------------
<S> <C> <C> <C> <C>
Primary:
Average Common shares outstanding........ 15,114,764 8,691,862 14,617,416 8,681,339
Net effect of dilutive stock options-
based on the treasury stock method
using average fair market price...... --- 360,529 --- 386,275
Net effect of dilutive warrants - based
on the treasury stock method using
average fair market price............ --- 50,712 --- 53,095
------------ ---------- ------------ -----------
Total shares............................. 15,114,764 9,103,103 14,617,416 9,120,709
============ ========== ============ ==========
Net income (loss)........................ $(13,460,501) $ 501,171 $(36,040,618) $3,122,510
============ ========== ============ ==========
Per share amount......................... $ (0.89) $ 0.06 $ (2.47) $ 0.34
============ ========== ============ ==========
Fully diluted:
Average Common shares outstanding........ 15,114,764 8,691,862 14,617,416 8,681,339
Net effect of dilutive stock options-
based on the treasury stock method
using average fair market price at
the end of the period.................. --- 403,091 --- 407,745
Net effect of dilutive warrants - based
on the treasury stock method
using average fair market price at
the end of the period.................. --- 55,385 --- 55,385
------------ ---------- ------------ -----------
Total shares............................. 15,114,764 9,150,338 14,617,416 9,144,469
============ ========== ============ ==========
Net income (loss)........................ $(13,460,501) $ 501,171 $(36,040,618) $3,122,510
============ ========== ============ ==========
Per share amount......................... $ (0.89) $ 0.05 $ (2.47) $ 0.34
============ ========== ============ ==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 7,730
<SECURITIES> 6,353
<RECEIVABLES> 22,853
<ALLOWANCES> (3,643)
<INVENTORY> 45,041
<CURRENT-ASSETS> 81,887
<PP&E> 44,139
<DEPRECIATION> (11,467)
<TOTAL-ASSETS> 159,270
<CURRENT-LIABILITIES> 41,139
<BONDS> 86,250
0
19,548
<COMMON> 137,766
<OTHER-SE> (138,429)
<TOTAL-LIABILITY-AND-EQUITY> 159,270
<SALES> 43,720
<TOTAL-REVENUES> 43,720
<CGS> 31,626
<TOTAL-COSTS> 75,930
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,579
<INCOME-PRETAX> (39,788)
<INCOME-TAX> (3,748)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (36,041)
<EPS-PRIMARY> (2.47)
<EPS-DILUTED> (2.47)
</TABLE>
