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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One) FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
Commission file number 1-10938
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SEMX CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3584740
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
ONE LABRIOLA COURT, ARMONK, NEW YORK 10504
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (914) 273-5500
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Securities registered pursuant to Section 12(b) of the Exchange Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ----------------------------- ------------------------------------------
Common Stock, $.10 par value NASDAQ National Market
Securities registered pursuant to Section 12(g) of the Exchange Act: NONE
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 5-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 or any amendment to this Form 10-K: |X|
The Exhibit Index is located on page 18.
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On March 15, 2000 the aggregate market value of the voting stock of the
Registrant held by non-affiliates was approximately $62,807,779.
On March 15, 2000 the Registrant had 6,116,741 shares of Common Stock
outstanding, $.10 par value ("Common Stock"). In addition, at such date the
Registrant held 334,600 shares of Common Stock in treasury.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT PARTS INTO WHICH INCORPORATED
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Portions of the Definitive Proxy Part III, Items 10, 11, 12, 13
Statement prepared in connection with
the Company's 2000 Annual Meeting
of Stockholders which will be held on
May 16, 2000
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RESTATED FORM 10-K
Subsequent to the filing of the Registrant's Form 10-K for the year
ended December 31, 1999 and Proxy Statement dated April 17, 2000, the Registrant
discovered that a typographical error had been made in Part II, Item 7,
Management's Discussion and Analysis of Financial Conditions and Results of
Operations - Liquidity and Capital Resources - Summary of 1999 Activity, which
is amended by this Form 10-K/A.
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PART II
ITEM 7: Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following table sets forth, for the periods indicated, certain financial
data as a percentage of net sales:
<TABLE>
<CAPTION>
Fiscal Year Ended
December 31 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net Sales 100.0 100.0 100.0
Cost of Sales 66.6 80.6 71.3
Gross Profit 33.4 19.4 28.7
Selling, General and
Administrative Expenses 22.1 24.0 16.9
Operating Income (loss) 11.2 (21.6) 11.8
Interest Expense (Net) 3.1 5.3 3.7
Income (Loss)
before Income Taxes 21.4 (26.9) 8.1
Provision (Credit)
for Income Taxes 9.8 (8.3) 3.1
Net Income (Loss) 11.6 (18.1) 5.3
</TABLE>
RESULTS OF OPERATIONS (1999 COMPARED TO 1998)
Total revenue for the 1999 period of $63,524,000 decreased $2,379,000 or 3.6%
from the comparable 1998 period. On February 19, 1999, the Company sold its
connector business, ("Retconn") as described herein. Retconn had sales through
the February 1999 disposition date of $2,122,000 compared to sales of
$17,974,000 for the year 1998. Excluding Retconn sales from all periods
presented, the Company's total revenue for 1999 increased $13,473,000 or 28.1%.
The Materials Group includes the Company's SPM, Polese and Retconn business
units. Excluding Retconn, the Materials Groups 1999 sales of $44,544,000
increased $14,994,000 or 50.7% from 1998 levels. SPM's 1999 sales increased by
$191,000 or 1.5% as compared to the comparable 1998 periods. Polese Company's
1999 sales increased by $14,803,000 or 89.5% as compared to the prior year
periods. Polese sales have increased due to improved sales of thermal management
products, microprocessor lids, wireless technology products and the introduction
of new products.
The Company's Services Group 1999 revenues decreased $1,521,000 to $16,858,000
for 1999 as compared to the prior year. The Service Group includes the Company's
American Silicon Products ("ASP"), American Silicon Products B.V. ("ASP B.V.")
and International Semiconductor Products Pte. Ltd. ("ISP") business units. The
Services Group 1999 revenue decrease was the result of a slowdown in the demand
for reclaimed wafers and pricing pressures caused by a downturn in the
semiconductor industry. Further, in July of 1998, the Company closed its Texas
operations and consolidated all of ASP's domestic business into its Rhode Island
facility. The 1999 and 1998 periods included $0 and $1,537,000, respectively, in
revenue from the Texas operation. The Service Group's revenue from ASP's U.S.
and European operations for the year 1999 decreased a total of $2,515,000 or 16%
as compared to the comparable 1998 periods. Revenue from ISP of $2,930,000 for
1999 increased by $994,000 or 51% over the comparable 1998 periods.
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Direct sales of the Company's products into foreign markets as a percentage of
consolidated revenue during 1999 was 24% compared to 18% for 1998. The Company
currently maintains foreign manufacturing operations in the Netherlands ("ASP
B.V."), in Morocco, Semiconductor Materials S.A. R. L. ("S.A.R.L."), in
Malaysia, SPM ("MSDN.BHD") and in Singapore, ISP. In 1999, the Company derived
revenue from ASP B.V. of $3,260,000, from S.A.R.L. of $770,000, from MSDN.BHD of
$115,000 and from ISP of $2,930,000. Foreign sales made through the Company's
domestic operations are made through foreign manufacturer's representatives and
are priced and paid for in U.S. dollars. Sales for ASP B.V., S.A.R.L., MSDN.BHD
and ISP are conducted in the local currencies of Dutch Guilders, Dirhams,
Ringits, and Singapore Dollars, respectively, and account for 11% of
consolidated revenues in 1999 and are subject to currency fluctuations.
The Company's consolidated backlog as of December 31, 1999 was $17,184,000 and,
excluding the backlog from the Retconn business, was $15,161,000 at December 31,
1998. The Polese backlog which was $5,003,000 at the end of 1998, has improved
to $8,117,000 as of December 31, 1999. The backlog for SPM increased $219,000 to
$3,440,000 as of December 31, 1999. The backlog for ASP decreased $1,310,000 to
$5,627,000 since the end of 1998.
GROSS PROFIT
Gross profit of $21,206,000 for 1999 increased $8,428,000 or 66%, from the
comparable 1998 periods. Excluding Retconn from all periods presented, 1999
gross profit increased by $12,456,000 or 159%, from 1998 levels. Without Retconn
the Materials Group's 1999 gross profit of $16,427,000 increased $11,804,000 or
255% as compared to 1998. The Materials Group's gross profit increases primarily
reflected the increased sales at Polese Company. The Service Group's gross
profit of $3,888,000 increased $652,000 or 20% as compared to the comparable
periods in 1998 primarily due to the effects of cost reductions during 1999.
GROSS MARGINS
The Company's gross margins increased from 19% to 33% over the comparable 1998
period. Excluding Retconn, the Company's gross margin for 1999 increased from
28% to 35%. The Materials Group's 1999 gross margin increased from 16% to 37%
from the comparable 1998 period. The Service Group's 1999 gross margins
increased from 18% to 23% from the comparable 1998 periods, reflecting the
consolidation of domestic operations and improved performance at ISP.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative ("SG&A") expenses in 1999, decreased
$1,727,000 or 11% from the comparable 1998 periods. The decrease in SG&A in 1999
reflects savings realized by the closing of the Services Group Texas Plant
during the second quarter of 1998 as well as reductions in SG&A due to the sale
of Retconn. Excluding Retconn, 1999 SG&A increased by $1,638,000 or 14%. SG&A
expenses as a percentage of revenue decreased from 24% in 1998 to 22% in 1999 as
a result of the above.
SPECIAL CHARGES
In 1998, the Company recorded special charges of $11,217,000, primarily related
to adjustments of the carrying values of the Company's Service Group assets and
the closing of a Service Group plant. During 1998 the Company performed a
restructuring of the Service Group that included closing its Texas operation and
consolidating domestic business and equipment into the Group's Rhode Island
facility. As a result of a more severe than anticipated market decline, the
division continued operating at a loss in 1998 which triggered an impairment and
utilization review of the Services Group's long lived assets. The review
identified approximately $4,700,000 of excess Services Group equipment that was
written down to estimated fair value, less cost of disposal. In addition the
Company wrote down approximately $2,700,000 of Goodwill associated with certain
Texas facility customers and lines of business that were eliminated. Due
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to financial problems experienced during 1998, at the Service Groups 50.1% owned
Singapore operation, the Company recorded an asset impairment of $1,000,000 in
response to uncertainty regarding the ultimate recoverability of its investment.
The Company recorded no special charges during the year ended December 31, 1999.
GAIN ON SALE OF CONNECTOR BUSINESS
Income before income taxes and minority interest for 1999 includes a pretax gain
of $8,430,000 on the sale of Retconn to Litton Corporation on February 19, 1999
as described below in Liquidity and Capital Resources.
INTEREST EXPENSE (NET)
Net interest expense for 1999 decreased $1,515,000 from the comparable 1998
periods. The decrease in net interest expense is due to reduced debt levels from
February 19, 1999 forward due to the principal repayments from proceeds from the
sale of the Retconn business.
PROVISION (CREDIT) FOR INCOME TAXES
A provision of $6,201,000 for income taxes has been made for 1999 as compared to
a credit of $5,500,000 for the comparable 1998 periods. The provision in 1999
includes $4,527,000 associated with the gain on the sale of Retconn. The Company
has Federal net operating loss carryforwards available to offset a substantial
portion of the income tax return liability associated with the gain. The credit
for 1998 includes a $3,477,000 income tax credit associated with the special
charges recorded during that year.
MINORITY INTEREST
In 1999 and 1998 the Company has included income of $31,000 and loss of $244,000
respectively, associated with ISP in its income (loss) before minority interest
in (income) loss of consolidated subsidiary, net of tax. The Company has a 50.1%
interest in the joint venture and has accordingly, excluded 49.9% of such income
(loss) from its consolidated net income.
NET INCOME
As a result of the above, net income of $7,383,000 for 1999 increased by
$19,341,000 from the comparable 1998 period.
YEAR 2000
The year 2000 (Y2K) problem was a potential issue for the Company since many
computer programs and some pieces of computer hardware manipulate and store
dates as a two-digit field and were unable to recognize dates past December 31,
1999. In preparation for the year 2000 problem, the Company assessed the systems
and software at all of its operations, including external interfaces with
critical suppliers and customers. During 1999, the Company replaced
non-compliant hardware, installed new manufacturing enterprise computer software
systems at SPM and installed software upgrades that are year 2000 compliant at
its other locations. The Company completed the installation and testing of these
new systems and upgrades by the end of 1999. Outside suppliers, and customers
were contacted and requested to complete the Company's assessment questionnaire
to determine their readiness.
The Company has expended approximately $500,000 through the end of 1999 in
addressing the potential Y2K problem. The Company experienced no known problems
upon the changeover to the year 2000 with any of its internal systems or
external interfaces with suppliers and customers.
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RESULTS OF OPERATIONS (1998 COMPARED TO 1997)
Total revenue for 1998 decreased $5,173,000, or 7.3%, from the comparable 1997
period. Sales by the Company's Materials Group for the year ended December 31,
1998 decreased $505,000, or 1.1% from the 1997 period. The Materials Group
includes the Company's SPM, Polese and Retconn business units. The sales decline
was primarily due to a $2,003,000, or 10.8% decrease at Polese, offset by an
increase of $1,529,000, or 9.3% at Retconn. 1998 Retconn sales included a full
years revenue from S.T. Electronics, Inc., which was acquired on July 30, 1997.
Sales at SPM were slightly down from 1997 levels. In 1998, the sales decrease at
Polese was primarily due to a downturn in sales of heat dissipation products as
they relate to the communications and computer related marketplaces.
Service revenue from the Company's Service Group for the year ended December 31,
1998 decreased $4,668,000 or 20.3% from the 1997 period. The Service Group
includes the Company's ASP, ASP B.V., and ISP business units. The 1998 decrease
included a $5,860,000, or 26.3% decrease in revenue at ASP's U.S. and European
operations, which was partially offset by increased revenue of $1,192,000 from
ISP. The Services Group revenue decrease was the result of a slowdown in the
demand for reclaimed wafers and pricing pressures caused by a downturn in the
semiconductor industry.
Direct sales of the Company's products into foreign markets accounted for 18%
and 15% of consolidated revenue for the years ended December 31, 1998 and 1997,
respectively. The Company currently maintains foreign manufacturing operations
in the Netherlands ASP B.V., in Morocco, Semiconductor Materials S.A. R. L.
("S.A.R.L."), and in Singapore, ISP. In the year ended December 31, 1998 and
1997, the Company derived revenue from ASP B.V. of $3,230,000 and $3,168,000
respectively, revenue from S.A.R.L. of $192,000 and $0 respectively, and revenue
from ISP of $1,936,000 and $744,000, respectively. Foreign sales made through
the Company's domestic operations are made through foreign manufacturer's
representatives and are priced and paid for both in local currencies and in U.S.
dollars. Sales for ASP B.V., S.A.R.L. and ISP are conducted in the local
currencies of Dutch Guilders, Dirhams, and Singapore dollars, respectively.
These sales account for 8% and 6% of the consolidated revenue for the years
ended December 31, 1998 and 1997, respectively and are subject to fluctuations
in foreign currency exchange rates.
The Company's consolidated backlog as of December 31, 1998 was $18,699,000. This
compares to consolidated backlog of $20,643,000 at December 31, 1997. The
$1,944,000 decrease was primarily the result of $200,000, $2,334,000 and
$594,000 decreases at Polese, ASP and Retconn, respectively. These decreases
were partially offset by a $1,204,000 increase in the backlog of SPM. The
decrease at Polese was the result of a significant decrease in order levels by a
customer servicing the communication-related industry. In 1998, Polese
experienced a significant increase in its backlog from December 1997 levels
primarily from increased order inflow from its communications, computer and
recreational products customers and has recently seen an increase in order
levels from the customer which had decreased order levels in 1998. While ASP's
backlog has recently improved, it still remains at depressed levels due to the
continuing slowdown in the semiconductor industry.
Gross profit for 1998 decreased $7,599,000, or 37.3% from the comparable 1997
period. In the Materials Group, the decrease was primarily due to a $3,756,000,
or 78.6% decrease at Polese, a $452,000, or 8.4% decrease at Retconn and a
$1,156,000, or 24.3% decrease at SPM. During the fourth quarter of 1998 the
Company's Materials Group adjusted the carrying value of its inventories in
response to changing semiconductor and microelectronic market conditions and
realized charges of $1,267,000 to cost of sales to record provisions for excess
and obsolete inventory. Materials Group gross profit in 1998 reflected the
decreased sales levels as well as provisions for excess and obsolete inventory.
In the Services Group, ASP's gross profit decreased $2,711,000, or 46.5% during
1998 as a result of decreased sales and pricing pressures. Gross profit declines
during 1998 at ASP were partially offset by an increase in gross profit of
$414,000 at ISP. Gross margin in the Materials Group decreased to 20.1% in the
1998 period from 30.9% in the 1997 period. As a result of the foregoing,
consolidated gross margin for the Company decreased to 19.4% in 1998 from 28.7%
in the 1997 period.
Selling, general and administrative ("SG&A") expenses in 1998, excluding
$11,217,000 of special charges, increased $3,796,000, or 31.7% over the 1997
period. The increase was primarily due to increased legal fees, corporate staff,
and
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infrastructure additions at the operational level in sales and research and
development. SG&A expenses as a percentage of revenue, excluding special
charges, increased to 24% in the 1998 period from 17% in the 1997 period.
In 1998, the Company recorded special charges of $11,217,000, the majority of
which relate to a review of the carrying values of the Company's Service Group
assets and the closing of a Service Group plant. During the first quarter of
1998, the Company recorded a charge of $1,950,000 in conjunction with a
restructuring of the Service Group that included closing its Texas operation and
consolidating domestic business and equipment into the Group's Rhode Island
facility. As a result of the Services Group's inability to achieve the
improvements anticipated by the restructuring plan, primarily due to a more
severe than anticipated market decline, the division continued operating at a
loss in 1998. This triggered an impairment and utilization review of the
Services Group's long lived assets. The review identified approximately
$4,700,000 of excess Services Group equipment that was written down to estimated
fair value, less cost of disposal. In addition the Company wrote down
approximately $2,700,000 of Goodwill associated with certain Texas facility
customers and lines of business that have been eliminated. Due to continuing
financial problems of the Service Groups 51% owned Singapore operation, the
Company recorded an asset impairment of $1,000,000 in response to uncertainty
regarding the ultimate recoverability of its investment.
The Company's Material's Group recorded a special charge of $620,000 in the
fourth quarter consisting of a write down of $473,000 in goodwill associated
with a line of business that has been eliminated and the write down of $147,000
of surplus equipment.
Net interest expense for the 1998 period increased $874,000 from the 1997 period
primarily due to increased interest costs associated with debt incurred with the
SMS and ST acquisitions, the ISP startup and increased capital lease
obligations.
A credit of $5,500,000 for income taxes was recorded for the 1998 period as
compared to a $2,214,000 provision in the 1997 period. In the 1998 period, the
Company received a tax credit at an effective rate of 31% as compared to an
effective tax rate of 38% in the comparable 1997 period. The 1998 losses have
generated net operating loss ("NOL") carryforwards for income tax purposes,
which are available to offset future taxable income.
Excluding $1,000,000 in special charges, the Company has included a $740,000
loss before income taxes and minority interest, as compared to $677,000 in the
1997 period, associated with ISP in its income before minority interest in loss
of consolidated subsidiary. The Company has a 50.1% interest in the joint
venture and has accordingly excluded $244,000, net of tax, as compared to
$223,000 in 1997, or 49.9% of such loss from its consolidated net income.
As a result of the foregoing, the net losses for 1998 amounted to $11,958,000 as
opposed to net income of $3,793,000 in 1997. In 1998, as a result of the above
and special charges taken during the year, all of the Company's operations
sustained a loss except for Retconn.
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LIQUIDITY AND CAPITAL RESOURCES
General
To maintain its growth, the Company has historically made significant capital
expenditures to support its facilities and manufacturing processes as well as
working capital needs. The Company has financed its capital needs through cash
flow from operations, its line of credit facility, term loans from the Bank,
other bank financing including gold consignment supply agreements, and capital
leases. The Company had Bank short term debt maturities, standby letter of
credit maturities, gold consignment agreements and debt service requirements
which were deferred until October 31, 1999 under a limited forbearance agreement
with its banks. The Company completed the sale of its Retconn business on
February 19, 1999 and repaid $22,191,000 of its then existing Bank debt. On
November 1, 1999 the Company entered into a Revolving Credit, Term Loan and
Security Agreement with PNC Bank, National Association ("PNC Bank") as lender
and agent ("the Credit Facility"). The Credit Facility, replaced the existing
revolving credit and interim term loan facilities with First Union and Fleet.
Summary of 1999 Activity
At December 31, 1999, the Company had cash and cash equivalents of $0, due to
the agreement with PNC Bank, and an available balance on its revolving credit
facility of $2,688,000 as compared to $1,141,000 and $200,000 respectively at
December 31, 1998.
Net cash provided by operating activities during 1999 amounted to $5,466,000 as
compared to cash provided of $872,000 in the comparable 1998 period. Cash
provided by operations increased compared to 1998 principally as a result of
1999 income and working capital changes. The decrease in the deferred tax assets
is due to utilization of net operating loss carryforwards generated by the 1998
losses.
Cash provided by investing activities amounted to $19,561,000 during the year
ended December 31, 1999. On February 19, 1999 the Company completed the sale of
Retconn, and realized cash proceeds of $22,191,000. During the years ended
December 31, 1999 and 1998, the Company invested $2,719,000 and $3,063,000,
respectively, in property and equipment. This investment excludes $896,000 and
$3,078,000, respectively, in the 1999 and 1998 periods for equipment acquired
under capital leases.
Net cash used by financing activities amounted to $26,131,000 during 1999 as
compared to cash provided of $916,000 during 1998. During the year ended
December 31, 1999 the Company repaid $23,868,000 under a bank term loan
facilities and $6,173,000 under its Bank revolving line of credit. In addition,
the Company made payments of $2,487,000 under capital leases obligations.
Current Credit Facilities
On November 1, 1999 the Company entered into a Revolving Credit, Term Loan and
Security Agreement with PNC Bank. The Credit Facility replaced the existing
revolving credit and interim term loan facilities with First Union and Fleet.
The Credit Facility, which has a three year term, consists of a formula based
$8,500,000 revolving credit facility and a $6,234,000 term loan which are
secured by substantially all of the Company's domestic assets. Revolving credit
facility availability of up to S$5,000,000 Singapore dollars (approximately
$3,000,000 US) is reserved for issuance of a standby letter of credit in support
of the Company's continuing guarantee of ISP's debt. The interest rate on
revolving credit borrowings are, at the Company's option, based on either the
prime rate or a floating Eurodollar rate plus a margin of 2.75%. At the
Company's option, the term loan interest rate is based on either prime plus 0.5%
or a floating Eurodollar rate plus a margin of 3.0%. Principal payments under
the $6,234,000 term loan are due in equal monthly installments of $74,214 over
the three-year term.
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Upon the November 2, 1999 funding of the Credit Facility, the Company repaid its
$7,664,000 remaining indebtedness to First Union and Fleet, with a combination
of $6,234,000 borrowed under the PNC term loan and $1,430,000 of the Company's
cash. Upon closing, the Company had excess PNC Bank revolving credit borrowing
availability of over $2,000,000.
The Company has guaranteed S$5,000,000 Singapore dollars (approximately
$3,000,000 US) of the debt of its 50.1% owned Singapore operation ISP. The
guarantee was secured by a standby letter of credit of up to S$5,000,000
Singapore dollars issued by First Union and Fleet in favor of ISP's lenders. In
the event of default, as defined by ISP's lending agreements, ISP's bank could
draw down the S$5,000,000 standby letter of credit provided by the Company's
Bank. On November 1, 1999 in conjunction with the closing of the Credit
Facilities, PNC Bank issued a backup letter of credit in support of First Union
and Fleet's existing S$5,000,000 standby letter of credit. In January 2000 ISP's
lenders accepted PNC Bank's sponsored standby letter of credit in place of the
existing instrument.
In December 1996, the Company entered into a consignment agreement (the "Gold
Consignment Agreement") with Fleet Precious Metals ("FPM") which expired
December 23, 1998. As part of the limited Forbearance Agreement, as amended, FPM
and the Bank extended the maturity to October 31, 1999. Under the Gold
Consignment Agreement, the Company purchases gold used in its manufacturing of
materials. The Gold Consignment Agreement provides for gold on consignment not
to exceed the lesser of 5,000 troy ounces of gold or gold having a market value
of $1,870,000. The Gold Consignment Agreement requires the Company to pay a
consignment fee of 5.5% per annum based upon the value of all gold consigned to
the Company. On November 1, 1999, in conjunction with the closing of the Credit
Facility, FPM and the Bank granted a 90-day extension of the Gold Consignment
Agreement to permit the Company time to negotiate terms of a new agreement with
FPM. The final agreement with FPM extended the current gold agreement to June
30, 2000.
Former Credit Facilities - refinanced on November 1, 1999
In January 1997, the Company entered into a $21,000,000 five-year term loan
("Term Loan") with First Union Bank and Fleet National Bank (collectively the
"Bank"). Under a limited forbearance agreement, as amended, the Bank extended a
previous waiver of the Term Loan's financial ratio covenants, agreed to waive
principal payments of $350,000 per month from August 1, 1998 forward and set the
maturity of the Term Loan at June 30, 1999. Coincident with the sale of its
Retconn subsidiary, on February 19, 1999 the Company repaid the remaining
$15,050,000 principal balance outstanding under this term loan.
In January 1997, the Company entered into a $15,000,000 line of credit with the
Bank that originally expired in February 1999. As part of the limited
Forbearance Agreement, as amended, the Bank extended the maturity to October 31,
1999. This credit line included a standby letter of credit for ISP in the amount
of approximately $3,000,000. Coincident with the sale of its Retconn subsidiary,
on February 19, 1999 the Company repaid $7,141,000 of the outstanding borrowings
under this facility. The remaining principal amount was paid in full in
conjunction with the PNC Bank refinancing described above.
On June 19, 1998 the Company entered into a 90-day note for $1,000,000 ("Interim
Term Loan") with the Bank to supplement the Company's working capital
requirements. The Interim Term Loan note provided for the payment of interest
monthly and for the repayment of principal on October 1, 1998. As part of the
limited Forbearance Agreement, as amended, the Bank extended the maturity to
October 31, 1999. The remaining principal amount was paid in full in conjunction
with the PNC Bank refinancing described above.
Other
In conjunction with the Company's acquisition of Polese Company on May 27, 1993,
the Company acquired from Frank J. Polese, the former sole shareholder of Polese
Company, all of the rights, including a subsequently issued patent, for certain
powdered metal technology and its application to the electronics industry. For a
period of ten years from May
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1993, Mr. Polese has the right to receive 10% of (i) the pre-tax profit from the
copper tungsten product line, after allocating operating costs and (ii) the
proceeds of the sale, if any, by the Company of the powdered metal technology.
During 1999, the Company charged against operations a total of $500,000 under
this agreement.
On December 18, 1997, the Board of Directors authorized the Company to
repurchase up to $2,000,000 of SEMX common stock on the open market. Repurchased
shares will be held as treasury shares and may be reissued in the future or may
be reissued pursuant to the Company's stock option programs. During 1998 the
Company repurchased 34,600 shares at a cost of $212,000. The Company has
suspended the repurchase of any further stock at this time.
The Company continually seeks to broaden its product lines by various means,
including through acquisitions. The Company intends to pursue only those
acquisitions for which it will be able to arrange the necessary financing by
means of the issuance of additional equity, the use of its cash or, through bank
or other debt financing.
Forward Looking Statements
Portions of the narrative set forth in this document that are not historical in
nature are forward looking statements. These forward-looking statements speak
only as of the date of this document, and the Company expressly disclaims any
obligation or undertaking to publicly release any updates or revisions to any
forward-looking statements contained herein. The Company's actual performance
may differ materially from that contemplated by the forward looking statements
as a result of a variety of factors that include, but are not limited to, the
general economic or business climate, business conditions of the microelectronic
and semiconductor markets and the automotive and communications industry which
the Company serves and the economic volatility in geographic markets, such as
Asia.
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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 10-K/A Report to be
signed on its behalf by the undersigned, duly authorized.
Dated: May 10, 2000
SEMX CORPORATION
By: /s/ Mark A. Koch
-----------------------------
Mark A. Koch
Controller and Secretary
(Chief Accounting Officer)
