<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: July 31, 1998 Commission File Number 0-26714
------------- -------
ADE CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Massachusetts 04-2441829
------------- ----------
<S> <C>
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
80 Wilson Way, Westwood, Massachusetts
--------------------------------------
02090 (Address of principal executive offices, including area code)
(781) 467-3500
--------------
(Registrant's telephone number, including area code)
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 each of the issuer's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Common Stock, par value $.01 per share 13,156,912 shares
- ------------------------------------------------------ ------------------------------------------
<S> <C> <C>
Class Outstanding at September 4, 1998
</TABLE>
<PAGE>
ADE CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
Part I. - Financial Information
Item 1. Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Balance Sheet-
July 31, 1998 and April 30, 1998 3
Condensed Consolidated Statement of Operations-
Three Months Ended July 31, 1998 and 1997 4
Condensed Consolidated Statement of Cash Flows -
Three Months Ended July 31, 1998 and 1997 5
Notes to Unaudited Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Part II. - Other Information 13
Signatures 14
Exhibit Index 15
</TABLE>
2
<PAGE>
<PAGE>
ADE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
July 31, April 30,
1998 1998
---------- ---------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $68,599 $ 72,711
Accounts receivable, net 21,408 16,938
Inventories 31,149 28,792
Prepaid expenses and other current assets 1,995 6,573
Deferred income taxes 7,670 7,670
----- -----
Total current assets 130,821 132,684
Fixed assets, net 25,764 26,058
Deferred income taxes 1,905 1,905
Investments 4,127 3,892
Intangible assets, net 4,701 4,996
Restricted cash 3,683 3,808
Other assets 289 300
--- ---
$171,290 $173,643
-------- --------
-------- --------
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 437 $ 434
Accounts payable 4,436 5,694
Accrued expenses and other current liabilities 12,188 12,205
Deferred income on sales to affiliates 2,021 2,511
----- -----
Total current liabilities 19,082 20,844
------ ------
Long-term debt 8,503 8,613
----- -----
Stockholders' equity:
Common stock 131 131
Capital in excess of par value 99,360 99,045
Retained earnings 44,340 45,153
------ ------
143,831 144,329
Deferred compensation (126) (143)
---- ----
143,705 144,186
------- -------
$171,290 $173,643
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
3
<PAGE>
ADE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data, unaudited)
<TABLE>
<CAPTION>
Three months
ended July 31,
1998 1997
------------------
<S> <C> <C>
Revenue $24,028 $34,181
Cost of revenue 13,457 15,272
------ ------
Gross profit 10,571 18,909
------ ------
Operating expenses:
Research and development 6,652 5,708
Marketing and sales 3,122 3,812
General and administrative 2,878 2,963
----- -----
Total operating expenses 12,652 12,483
------ ------
Income (loss) from operations (2,081) 6,426
------ -----
Interest income, net 761 189
--- ---
Income (loss) before provision for (benefit from) income taxes and
equity in net income (loss) of affiliated companies (1,320) 6,615
Provision for (benefit from) income taxes (514) 2,342
---- -----
Income (loss) before equity in net income (loss) of
affiliated companies (806) 4,273
Equity in net income (loss) of affiliated companies (7) 34
-- --
Net income (loss) $(813) $4,307
----- ------
----- ------
Basic earnings per share $(0.06) $0.41
Diluted earnings per share $(0.06) $0.39
Weighted average shares outstanding - basic 12,923 10,417
Weighted average shares outstanding - diluted 12,923 11,124
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
4
<PAGE>
ADE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands, unaudited)
<TABLE>
<CAPTION>
Three months ended
July 31,
1998 1997
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(813) $4,307
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Depreciation and amortization 1,731 557
Equity in net (earnings) loss of affiiated companies,
net of dividends received 115 (34)
Changes in assets and liabilities:
Accounts receivable, net (4,470) (1,766)
Inventories (2,357) (3,655)
Prepaid expenses and other current assets 4,578 (259)
Accounts payable (1,258) 1,655
Accrued expenses and other current liabilities (17) (846)
Deferred income on sales to affiliate (490) (631)
---- ----
Net cash used in operating activities (2,981) (672)
------ ----
Cash flows from investing activities:
Purchases of fixed assets (1,125) (1,253)
Change in restricted cash 125 -
Advances to affiliated company (350) -
Decrease (increase) in other assets 11 (14)
-- ---
Net cash used in investing activities (1,339) (1,267)
------ ------
Cash flows from financing activities:
Repayment of long-term debt (107) (692)
Proceeds from issuance of common stock 310 195
Tax benefit related to the exercise of common stock options 5 74
- --
Net cash provided by (used in) financing activities 208 (423)
--- ----
Net decrease in cash and cash equivalents (4,112) (2,362)
Cash and cash equivalents, beginning of period 72,711 22,485
------ ------
Cash and cash equivalents, end of period $ 68,599 $ 20,123
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
5
<PAGE>
ADE CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. Basis of Preparation
The accompanying unaudited condensed consolidated financial statements of
ADE Corporation (the "Company") include, in the opinion of management, all
adjustments (consisting only of normal and recurring adjustments) necessary for
a fair statement of the Company's financial position, results of operations and
cash flows at the dates and for the periods indicated. Results of operations for
interim periods are not necessarily indicative of those to be achieved for full
fiscal years.
Pursuant to accounting requirements of the Securities and Exchange
Commission applicable to quarterly reports on Form 10-Q, the accompanying
unaudited condensed consolidated financial statements and these notes do not
include all disclosures required by generally accepted accounting principles for
complete financial statements. Accordingly, these statements should be read in
conjunction with the financial statements included in the Company's Annual
Report on Form 10-K for the fiscal year ended April 30, 1998.
2. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
(in thousands)
July 31, April 30,
1998 1998
----------- ---------
(unaudited)
<S> <C> <C>
Raw materials and purchased parts $17,649 $15,817
Work-in-process 11,464 11,053
Finished goods 2,036 1,922
----- -----
$31,149 $28,792
------- -------
------- -------
</TABLE>
3. Acquisition
On June 11, 1998, pursuant to an Agreement and Plan of Merger (the "PST
Agreement"), the Company, through a wholly owned subsidiary, merged with Phase
Shift Technology, Inc. ("PST"), an Arizona corporation. PST designs,
manufactures, markets and services high-performance, non-contact surface
metrology equipment using advanced optical interferometric technology that
provides enhanced yield management for computer hard disk, semiconductor and
optics manufacturers. Pursuant to the PST Agreement, each outstanding share of
PST common stock was exchanged for two shares of the Company's common stock. A
total of 2,000,000 shares of the Company's common stock were issued in this
transaction. This transaction has been accounted for as a pooling-of-interests.
Accordingly, all financial statements presented have been restated as if the
acquisition took place at the beginning of such periods. There were no material
transactions between the Company and PST prior to the PST Agreement.
4. Earnings Per Share
Basic earnings per share is computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share is computed using the weighted
average number of common shares outstanding and gives effect to all dilutive
potential common shares outstanding during the period. Potential common shares
outstanding include shares issuable upon the assumed exercise of dilutive stock
options reflected under the treasury stock method and shares issued in the PST
merger (Note 3) held in escrow.
6
<PAGE>
ADE CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
4. Earnings Per Share (continued)
The following is a reconciliation of the shares used in calculating basic
and diluted earnings per share:
<TABLE>
<CAPTION>
(in thousands)
Three months ended
July 31,
1998 1997
------- -------
<S> <C> <C>
Shares used in computation:
a. Weighted average common stock outstanding used
in computation of basic earnings per share 12,923 10,417
b. Dilutive effect of stock options outstanding -- 507
c. Dilutive effect of shares held in escrow -- 200
------- -------
d. Shares used in computation of diluted earnings per share 12,923 11,124
------- -------
------- -------
</TABLE>
5. Recently Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 130, " Reporting Comprehensive
Income" ("SFAS 130") and Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS
131"). The Company adopted SFAS 130 and 131 on May 1, 1998. SFAS 130 establishes
standards for reporting comprehensive income and its components in the
consolidated financial statements. There were no material differences between
net income and comprehensive income for the three month period ended July 31,
1998. SFAS 131 establishes standards for reporting information on operating
segments and will first be applicable to its April 30, 1999 year-end financial
statements.
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"). This statement establishes new standards for the recognition of gains and
losses on derivative instruments and provides guidance as to whether a
derivative may be accounted for as a hedging instrument. Gains or losses from
hedging transactions may be wholly or partially recorded in earnings or
comprehensive income as part of a cumulative translation adjustment, depending
upon the classification of the hedge transaction. Gain or loss on a derivative
instrument not classified as a hedging instrument is recognized in earnings in
the period of change. SFAS 133 will be effective for the Company beginning in
fiscal 2001. To date the Company has not utilized derivative instruments or
hedging activities and, therefore, the adoption of SFAS 133 is not expected to
have a material impact on its financial position or its results of operations.
7
<PAGE>
ADE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Introduction
ADE Corporation (the "Company") designs, manufactures, markets and
services highly precise, automated measurement, defect detection and handling
equipment with current applications in the production of semiconductor wafers,
semiconductor devices and computer disks.
On June 11, 1998, pursuant to an Agreement and Plan of Merger (the "PST
Agreement"), the Company, through a wholly owned subsidiary, merged with Phase
Shift Technology, Inc. ("PST"), an Arizona corporation. PST designs,
manufactures markets and services high-performance, non-contact surface
metrology equipment using advanced optical interferometric technology that
provides enhanced yield management for computer hard disk, semiconductor and
optics manufacturers. Pursuant to the PST Agreement, each outstanding share of
PST common stock was exchanged for two shares of the Company's common stock. A
total of 2,000,000 shares of the Company's common stock were issued in this
transaction. This transaction has been accounted for as a pooling-of-interests.
Accordingly, all financial statements presented have been restated as if the
acquisition took place at the beginning of such periods. There were no material
transactions between the Company and PST prior to the PST Agreement.
The following information should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto included in this
Quarterly Report and the audited consolidated financial statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's Annual Report on Form 10-K for the fiscal
year ended April 30, 1998.
Results of Operations
Three Months Ended July 31, 1998 compared to Three Months Ended July 31, 1997
Revenue. Revenue decreased 29.7% to $24.0 million in the first quarter of
fiscal 1999 from $34.2 million in the first quarter of 1998. Decreased sales of
the Company's products were primarily due to reduced demand for capital
equipment in the semiconductor wafer and device industries as well as the
computer hard disk industry. Reduced demand in the semiconductor market resulted
from excess manufacturing capacity for 200mm wafers, continued delays in
large-scale production of 300mm wafers and an overall uncertainty about
short-term chip demand. Similarly, the computer hard disk industry is in a
period of excess supply in many disk drive market segments which has resulted in
reduced production and capital equipment purchases.
The Company has been adversely affected by the general slowdown in capital
equipment spending in both the semiconductor and computer disk drive industries.
Additionally, the current financial uncertainty within the economies of certain
Asian countries has adversely affected, and may continue to adversely affect the
Company. These effects have included and could continue to include delay or
cancellation of orders, postponement of product delivery dates, price
concessions and extended payment terms on product sales. The Company remains
cautious about when growth in these industries will return.
Gross Margin. Gross margin decreased to 44.0% in the first quarter of
fiscal 1999 from 55.3% in the first quarter of 1998. This decrease resulted
primarily from reduced sales of products with higher gross profit contribution
margins, lower absorption of overhead expenses due to reduced manufacturing
activity, pricing pressure from customers and fixed costs associated with
maintaining the Company's expanded worldwide customer service organization.
Additionally, there was a decrease in sales made through external sales
representatives in certain foreign markets. These sales typically carry a higher
unit selling price than domestic sales or sales through distributors. This
decrease in selling price was partially offset by lower commissions paid to
sales representatives that resulted in reduced sales and marketing expense.
8
<PAGE>
Research and Development. Research and development expense increased 16.5%
to $6.7 million in the first quarter of fiscal 1999 from $5.7 million in the
first quarter of 1998 and increased as a percentage of revenue to 27.7% from
16.7% in the first quarter of 1998. Significantly increased expenditures on the
Company's 300mm surface inspection and wafer thickness products have resulted
from the continued delay in expected volume sales of 300mm equipment and the
Company's belief that a second generation of 300mm products will become
available by the time volume sales begin. Additionally, the Company has
increased development efforts to enhance its existing 200mm and advanced 200mm
wafer systems as its semiconductor industry customers seek to improve their
yields on 200mm wafers. The increase in research and development expense as a
percentage of revenue resulted from the increase in absolute dollar expense
discussed above as well as the significant decrease in revenue during the first
quarter of fiscal 1999 due to the semiconductor and computer hard disk industry
downturns. The Company is committed to continuing its investment in research and
development to maintain its position as a technological leader, however, the
Company also continues to evaluate the costs of current resources relative to
expected revenue and will continue to implement aggressive cost containment
measures.
Marketing and Sales. Marketing and sales expense decreased 18.1% to $3.1
million in the first quarter of fiscal 1999 from $3.8 million in the first
quarter of 1998 and increased as a percentage of revenue to 13.0% from 11.2% in
the first quarter of 1998. The reduced expense resulted primarily from lower
overall commissions expense related to lower sales volume and a lower proportion
of sales and related sales commissions made through external sales
representatives in certain foreign markets. The mix of sales channels through
which the Company's products are sold may have a significant impact on the
Company's marketing and sales expense and the results in any period may not be
indicative of marketing and sales expense for future periods. The increase in
marketing and sales expense as a percentage of revenue despite the decrease in
absolute dollar expense resulted from the significant decrease in revenue during
the first quarter of fiscal 1999. The Company continues to evaluate its cost
structure relative to expected revenue and will continue to implement aggressive
cost containment measures.
General and Administrative. General and administrative expenses decreased
2.9% to $2.9 million in the first quarter of fiscal 1999 from $3.0 million in
the first quarter of 1998 and increased as a percentage of revenue to 12.0% from
8.7% in the first quarter of 1998. Expenses decreased primarily as a result of
the Company's cost reduction strategy implemented during the fourth quarter of
fiscal 1998 which included strict controls over discretionary spending and a 12%
reduction in workforce. The increase in general and administrative expense as a
percentage of revenue despite the decrease in absolute dollar expense resulted
from the significant decrease in revenue during the first quarter of fiscal
1999. The Company continues to evaluate its cost structure relative to expected
revenue and will continue to implement aggressive cost containment measures.
Interest Income, Net. Net interest income was $761,000 in the first
quarter of fiscal 1999 compared to net interest income of $189,000 in the first
quarter of fiscal 1998. The increase in income resulted primarily from interest
earned on the proceeds of a public offering of the Company's common stock
completed in August 1997 that raised approximately $67.8 million in cash, and
was partially offset by interest expense related to separate $4 million and $5.5
million Industrial Development Bonds ("IDB") issued in December 1997 and June
1996, respectively, through the Massachusetts Industrial Finance Agency.
Income Taxes. The benefit from income taxes was $514,000 in the first
quarter of fiscal 1999 compared to the provision for income taxes of $2.3
million in the first quarter of fiscal 1998 and resulted from the Company's loss
before taxes in the current quarter compared to the Company's income before
taxes in the year earlier period. The increase in the Company's estimated
effective tax rate to 39.0% for the three months ended July 31, 1998 compared to
the estimated rate of 35.4% for the year earlier period primarily reflects
changes in the Company's estimated federal and state research and development
credits and estimated investment tax credits from capital spending for the
current fiscal year.
9
<PAGE>
Liquidity and Capital Resources
At July 31, 1998, the Company had $68.6 million in cash and cash
equivalents and $111.7 million in working capital. In addition, the Company had
$3.7 million in restricted cash used as security for a tax-exempt Industrial
Development Bond issued through the Massachusetts Industrial Finance Agency in
December 1997. Under the terms of the bond agreement, the Company may substitute
a letter of credit in an amount equal to approximately 105% of the outstanding
principal balance as collateral for the Company's obligations under the IDB,
allowing the restricted cash balance to be used for general corporate purposes.
The Company also has an unsecured revolving line of credit facility (the "Credit
Facility") with a bank, with a maximum borrowing amount of $8 million. The
Credit Facility provides the Company the option of borrowing at either the
bank's prime rate or the bank's LIBOR rate plus 2%. The Credit Facility expires
and all outstanding amounts thereunder are due December 21, 1999. There were no
borrowings outstanding under the Credit Facility at July 31, 1998. At July 31,
1998, the Company was in violation of certain financial covenants related to the
Credit Facility, which provides the bank with the right to withhold future
advances under the Credit Facility, to require cash deposits as security for any
future advances or to offset any and all of the Company's cash deposits with the
bank against any outstanding borrowings under the Credit Facility. The Company
expects to seek a waiver of the covenant violation from the bank in the event
that it seeks to obtain funds under the Credit Facility.
Net cash used in operating activities for the three months ended July 31,
1998 was $3.0 million. This amount resulted from a net loss of $813,000,
adjusted for non-cash charges and changes in working capital. Non-cash items
consisted primarily of $1.7 million of depreciation and amortization for the
period. The net increase in working capital totaled $4.0 million and was
primarily comprised of increased accounts receivable and inventory of $4.5
million and $2.4 million, respectively, decreased accounts payable and deferred
income on sales to Japan ADE Ltd., the Company's 50% owned Japanese distributor,
of $1.3 million and $490,000, respectively, offset in part by a reduction of
prepaid expenses and other current assets of $4.6 million. The increase in
accounts receivable resulted primarily from a larger volume of product shipments
during the latter portion of the most recent quarter compared to prior periods.
The increase in inventory resulted primarily from purchases of materials related
to the Company's 300mm and advanced 200mm products. The decrease in accounts
payable resulted primarily from the timing of purchases and the related
payments. The reduction in prepaid expenses and other current assets resulted
from an income tax refund received during the period.
Cash used in investing activities was $1.3 million, and consisted of $1.1
million for purchases of fixed assets and $350,000 in advances to affiliated
companies, partially offset by aggregate reductions of $136,000 in restricted
cash and other assets. During fiscal 1999, the Company anticipates investing
between $5 million and $6 million in a new facility for PST in Tucson, Arizona
to provide additional manufacturing capacity as PST's products and technology
are integrated with those of the Company.
Cash provided by financing activities was $208,000, which consisted of
$315,000 of aggregate proceeds from the issuance of common stock and tax
benefits from the exercise of stock options, partially offset by $107,000 in
repayments of long-term debt.
The Company expects to meet its near-term working capital needs and
capital expenditures primarily through cash generated from operations, its
available cash and cash equivalents and the above-referenced Credit Facility.
10
<PAGE>
Year 2000
The Company has formed a task force to assess the nature, extent and cost
of remediation of any Year 2000 compliance issues confronting the Company and
its suppliers. The project encompasses reviewing the Company's internal systems
and products as well as the Year 2000 readiness of companies with which the
Company has a material relationship. This assessment has begun at each of its
operating units and the Company has identified certain requisite corrective
actions.
Corrective actions for software included in the Company's products have
included formulating software patches that provide proper system operation while
reporting the Year 2000 as "1910" or a combination of software patches and
upgrades that provide proper system operation and the reporting of the year 2000
as either "0" or "2000". Some of the Company's software products are Year 2000
compliant, however, their ability to function as a Year 2000 ready product is
dependent upon the Year 2000 compliance of the user's operating system. The
Company anticipates all testing and corrective actions related to Year 2000
issues in its products will be completed in calendar 1998.
The Company has substantially completed its review of its internal software
applications and has determined that all network systems and server architect
are Year 2000-ready. Some software at the individual user level remains to be
tested and the Company anticipates this testing will be completed in calendar
1998.
The Company is aware of potential non-IT system risk associated with the
Year 2000 issue and is currently evaluating its potential exposure at each of
its facilities. The Company anticipates the renovation of any Year 2000 related
risks of its non-IT systems as well the renovation and validation of any repairs
will be substantially completed in calendar 1998. Aggregate costs incurred and
anticipated costs related to addressing the Year 2000 issue for the Company's
products and internal systems have not and are not anticipated to have an
adverse material financial impact on the Company. While the Company does not
believe the Year 2000 issue related to its internal systems and products will
have a material impact on the Company, there can be no assurance that
unanticipated problems will not arise that will have a material adverse effect
on the Company's business and operations.
Additionally, the Company's suppliers and vendors have been sent letters
requesting information regarding their own Year 2000 compliance efforts, as well
as requesting confirmation that the components and services provided by these
suppliers are Year 2000 compliant. The Company has not received complete
responses from each of its suppliers and vendors but anticipates completion of
these request efforts in calendar 1998. To date, there have been no inquiry
responses that are anticipated to have an adverse material effect on the
Company. However, there can be no assurance that the systems of other companies
upon which the Company's systems and business rely will be timely converted or
that any such failure to convert by another company would not have a material
adverse effect on the Company's business or results of operations
The Company is currently uncertain of the impact a reasonable, worst case
Year 2000 scenario would have on its business and operations. The Company's Year
2000 task force has begun this assessment and anticipates to complete a
contingency plan to address the most reasonably likely worst case scenario by
the end of calendar 1998. There can be no assurance, however, that unanticipated
problems not considered in determining a reasonable worse case Year 2000
scenario will not arise that will have a material adverse effect on the
Company's business and operations.
Other Risk Factors
Capital expenditures by semiconductor wafer and device manufacturers
historically have been cyclical as they in turn depend upon the current and
anticipated demand for integrated circuits. Currently, there is industry-wide
uncertainty about short-term chip demand, which has resulted in lower capital
equipment expenditures by silicon wafer and semiconductor device manufacturers.
The current period of oversupply within the semiconductor industry has and could
continue to adversely affect the performance of the Company. The computer disk
drive
11
<PAGE>
industry is also in a period of oversupply and excess manufacturing capacity and
this has also had an adverse impact on the Company. Additionally, the Company
anticipates that its revenue for the current fiscal year will be adversely
affected by the economic conditions in the Asian region, which has historically
accounted for a significant portion of the Company's revenue base. At July 31,
1998, the Company's backlog was $22.3 million, which represents a 41.2%
reduction from fiscal year end 1998.
Furthermore, the Company's success is dependent upon supplying
technologically superior products to the marketplace at appropriate times to
satisfy customer needs. Product development requires substantial investment and
is subject to technological risks. Delays or difficulties in product development
could adversely affect the future performance of the Company.
12
<PAGE>
PART II.
OTHER INFORMATION
<TABLE>
<CAPTION>
<S> <C>
Item 1. Legal Proceedings:
None
Item 2. Changes in Securities:
None
Item 3. Defaults Upon Senior Securities:
None
Item 4. Submission of Matters to a Vote of Security Holders:
None
Item 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8-K:
a. See Exhibit Index, Page 14
b. Reports on Form 8-K
</TABLE>
The Company filed a Current Report on Form 8-K with the
Securities and Exchange Commission on June 26, 1998. The Form
8-K reported that on June 11, 1998, pursuant to an Agreement
and Plan of Merger (the "PST Agreement"), the Company, through
its wholly-owned subsidiary Theta Acquisition Corporation,
merged with Phase Shift Technology, Inc., an Arizona
corporation. Pursuant to the PST Agreement, each outstanding
share of PST common stock was exchanged for two shares of the
Company's common stock. A total of 2,000,000 shares of the
Company's common stock were issued in this transaction.
13
<PAGE>
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.
ADE CORPORATION
Date: September 14, 1998 /s/ Mark D. Shooman
-----------------------------
Mark D. Shooman
Vice President and Chief Financial Officer
Date: September 14, 1998 /s/ Robert C. Abbe
----------------------------
Robert C. Abbe
President and Chief Executive Officer
14
<PAGE>
ADE CORPORATION
EXHIBIT INDEX
Exhibit
- -------
27 Financial Data Schedule
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF ADE CORPORATION FOR THE THREE
MONTHS ENDED JULY 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> JUL-31-1998
<CASH> 68,599
<SECURITIES> 0
<RECEIVABLES> 21,408
<ALLOWANCES> 0
<INVENTORY> 31,149
<CURRENT-ASSETS> 130,821
<PP&E> 25,764
<DEPRECIATION> 0
<TOTAL-ASSETS> 171,290
<CURRENT-LIABILITIES> 19,082
<BONDS> 8,940
0
0
<COMMON> 131
<OTHER-SE> 143,574
<TOTAL-LIABILITY-AND-EQUITY> 171,290
<SALES> 24,028
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</TABLE>
