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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR FISCAL YEAR ENDED MARCH 31, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-21294
ASECO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 04-2816806
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
500 DONALD LYNCH BOULEVARD, MARLBORO, MASSACHUSETTS 01752
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
508-481-8896
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
The aggregate market value of voting stock held by non-affiliates of the
registrant was $41,692,896 as of May 31, 1996
3,631,788
(NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AS OF MAY 31, 1996)
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates certain information by reference form the Registrant's
definitive proxy statement for the annual meeting of stockholders to be held
on August 8, 1996.
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PART I
ITEM 1. BUSINESS
OVERVIEW
Aseco designs, manufactures and markets test handlers used to automate the
testing of integrated circuits in surface mount packages. Surface mount
technology ("SMT") has been widely adopted as a package configuration for
integrated circuits used in a wide range of applications, including automotive
electronics, telecommunications equipment and personal computers, because it
permits the production of packaged integrated circuits ("IC devices") which
are smaller and/or more powerful than those using conventional packaging
technologies. Aseco provides high quality, versatile test handlers designed to
maximize the productivity of the significantly more costly testers with which
they operate. The Company's net sales have grown from fiscal 1986 through
fiscal 1996 at a compound annual growth rate of 35% and the Company has
operated profitably for each of the past thirty four consecutive quarters.
INDUSTRY BACKGROUND
IC devices are tested by semiconductor manufacturers for quality and
electrical performance at the end of the manufacturing process and before
shipment to end users. In addition, volume purchasers of IC devices often test
IC devices during incoming inspection. Test handlers facilitate the fast,
automated and cost-effective testing of IC devices. The automated test process
requires two major pieces of equipment: a tester and a test handler. Testers
are specialized, computer-controlled electronic systems that perform the
electrical test of IC devices, including memory, logic, linear, microprocessor
and Application Specific Integrated Circuit (ASIC) devices. Test handlers are
electro-mechanical systems which are connected to and communicate with the
tester. IC devices are loaded into the test handler and are then stabilized at
a specified temperature to simulate operating extremes for the IC device. The
test handler then transports the IC device to a contactor, which provides an
electrical connection between the IC device and the tester and allows an
interchange of electrical signals between the tester and device under test so
the tester can evaluate the performance of the IC. Finally, the handler
segregates the devices as determined by the tester.
Traditionally, IC devices were attached to one side of a printed circuit
board by means of pins, also referred to as leads, that were inserted into
pre-drilled holes and soldered to the electrical circuits on the board, a
technique known as "through-hole" mounting. SMT, an alternative technology,
involves soldering of IC devices directly to the surface of the board. This
technology has been increasingly adopted in response to the introduction of
more powerful IC devices with more leads and the demand for ever more
increasing miniaturization. SMT has several distinct advantages over through-
hole technology. First, because IC device leads are not inserted through the
board, IC device leads can be closer together allowing IC devices and the
boards they populate to be smaller. This reduction in IC device size also
enhances circuit processing speed and thus board and system performance.
Second, because IC device leads are not inserted through the board, boards can
be populated on both sides which further reduces overall required board size.
The demand for test handlers is driven primarily by IC device production
levels and technological changes relating to the packaging of integrated
circuits. Because only the test handler has physical contact with the IC
devices, changes in integrated circuit packaging have minimal effect on tester
requirements but generally have a major effect on test handler requirements
and the demand for the test handlers.
The test handler market is commonly segmented on the basis of the function
of the IC devices handled: test handlers which process memory IC devices, such
as Dynamic Random Access Memory devices (DRAM) and Static Random Access Memory
devices (SRAM), and test handlers which process non-memory IC devices, such as
digital, logic, linear, ASIC and microprocessor devices. Non-memory IC devices
generally have short test times, are often configured with leads on four
sides, come in a wide variety of package configurations and are produced in
relatively small lot sizes. Consequently, non-memory IC device test handlers
must be able to handle devices gently and transport them to and from the
contactor rapidly (the rate at which a test handler is able to
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do so is called the "index speed") and must be adaptable to accommodate many
different package types. Memory IC devices, by contrast, generally have longer
test times, have leads on just two sides, come in fewer package configurations
and are produced in larger lot sizes. The index speed of memory IC device test
handlers is less important because of the long test times of memory IC
devices, and gentle handling is often less important because memory IC devices
are generally less susceptible to lead damage.
Test handlers capable of facilitating the testing of multiple IC devices
simultaneously ("multi-site" test handlers) have been developed to improve
test handler throughput of memory IC devices. Traditionally, multi-site test
handlers have not been used in connection with the testing of non-memory IC
devices. Recently, however, as non-memory IC devices have become more complex
and their test times have correspondingly increased, multi-site test handlers
have been used in connection with the testing of non-memory IC devices as
well. In addition, certain SRAM IC devices possess characteristics typical of
non-memory IC devices, such as shorter test time, leads on four sides and
wider variety of package configurations, therefore creating the demand in the
SRAM market for a multi-site test handler with fast index speed and gentle
handling capabilities.
The majority of DRAM IC devices are manufactured in Japan and Korea while
the majority of non-memory IC devices are manufactured in the United States. A
significant number of SRAM IC devices are manufactured in the United States as
well as in Japan and Korea.
To date, the Company's products have primarily addressed the non-memory
surface mount IC device portion of the test handler market.
TEST HANDLERS
Test handlers are used to automate the electrical testing of IC devices. IC
devices are loaded into the handler from tubes, magazines or trays. They are
then transported to a temperature chamber within the test handler where they
are thermally conditioned at temperatures typically ranging from -55 to +155
Celsius to simulate operating extremes for the IC device. After the IC devices
are stabilized at a specified temperature, the test handler positions the IC
devices within a contactor, which provides an electrical connection between
the IC device and the tester and insulates the tester from the temperature
extremes inside the handler. Test routines can last from fractions of a second
to minutes depending on the type of IC device being tested and the purpose of
the test. After testing, the tester signals the test handler to sort the IC
devices into various categories for shipment, additional testing or disposal.
There are three basic types of test handlers: gravity-feed systems, pick and
place systems and air-bearing systems. The appropriate type of test handler is
generally determined by the size and lead configuration of the IC devices
being tested and by throughput requirements. The gravity-feed system, the
oldest of the three test handler types, is the predominant test handler for
through-hole IC devices. As the name indicates, gravity-feed systems rely on
gravity to move IC devices through the test handler. This type of test handler
has the advantage of being able to process IC devices quickly, but has a
greater tendency to damage IC devices with leads on four sides. Damaged leads
can cause soldering defects when the IC devices are mounted on boards, which
in turn increases re-work and warranty costs. Pick and place systems, in
contrast, transport IC devices by means of robotic arms, which prevent the IC
devices from coming into contact with one another and reduce the chance of
lead damage. While pick and place systems are suitable for fragile IC devices
that are susceptible to lead damage such as the Quad Flat Pack (QFP), they
typically process IC devices more slowly than other types of test handlers.
Air-bearing systems, which transport IC devices on a bed of air in the
temperature chamber, permit high-speed processing while minimizing the
potential for lead damage characteristic of gravity-feed systems.
KEY TEST HANDLER FEATURES
The primary function of the test handler is to automate the testing process
therefore increasing the productivity of the tester resulting in the accurate
testing of IC devices at the lowest per unit cost possible. Important test
handler features include:
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Gentle Handling. In order for the test handler user to maximize yield and
the quality of the IC devices it ships, it is imperative that the test handler
not damage the IC devices it processes. Due to their fragility, surface mount
IC device leads are especially susceptible to damage, and as IC devices with
higher lead counts and more fragile leads have become more prevalent, gentle
handling has become an increasingly important test handler feature. Aseco
offers test handlers with all three IC device transport mediums--gravity-feed,
air-bearing and pick and place, allowing customers to use the type of test
handler most suitable for the IC device being tested. In addition, Aseco test
handlers are equipped with vacuum stops, limited force contactors and other
features to further minimize lead damage.
Signal Integrity. Signal integrity is the ability of the test handler to
facilitate accurate transmission of electrical signals between the tester and
the IC device being tested. Poor transmission can lead to incorrect test
results. Aseco maximizes its performance in this area by equipping its test
handlers with Aseco's proprietary contactors which position the IC device
under test in close proximity to the tester which allows fast and accurate
signal transmission.
Cold Operation. The ability of the test handler to operate for extended
periods of time at cold temperatures (typically -55 Celsius) without
interruption for defrosting is an especially important factor in the overall
productivity of the test handler. Aseco has developed considerable expertise
in thermal engineering and insulation technology which is reflected by the
fact that its test handlers are capable of operating for long periods over
multiple work shifts without interruption.
Productivity. The productivity of a test handler is largely a function of
the rate at which it moves IC devices through the test handler ("throughput")
and the percentage of time the test handler is available for use ("uptime").
The throughput of Aseco's test handlers is enhanced by their use of forced air
to thermally condition IC devices. This produces an effect analogous to wind
chill and minimizes the time IC devices are required to stay in the
temperature chamber. The Company believes its handlers are able to achieve
high uptime because of their relatively simple design which reduces jam rates
and the frequency and duration of required maintenance. Maintenance time is
also reduced by the diagnostic software incorporated in each Aseco test
handler.
Versatility. With the increase in the number of different IC device lead
configurations, an important feature of a test handler is its ability to
accommodate IC devices with different lead configurations. Through the use of
easy to install conversion kits, Aseco's test handlers are currently capable
of processing many different IC device configurations.
ASECO PRODUCTS
Aseco offers a range of products to address the varying IC device test
handling requirements of its customers. The Company's test handlers share
certain common features including the ability to operate at cold, ambient and
hot temperatures and a menu-driven CRT user interface that displays test
handler performance and diagnostic information. All of the Company's current
products have been introduced since fiscal 1990, except for the S-130 which
was introduced in fiscal 1987. The Company's products are as follows:
Model S-130 Test Handler
The Company's principal product is currently its S-130 test handler, the
successor to the Company's original S-150 product. The S-130 is a versatile
air-bearing test handler, capable of handling a broad array of non-memory IC
device types. Through the use of conversion kits, the S-130 is currently able
to accommodate a wide variety of IC device configurations. The S-130 reaches
throughput rates of 2,400 devices per hour, and has the capability to operate
at temperatures between -55 and +150 Celsius. The versatility of the S-130 has
made it popular with suppliers of ASIC devices and others who need to test a
relatively small number of many different IC device package types.
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Model S-170 Test Handler
The S-170 is a high-speed gravity-feed test handler capable of a throughput
rate of 6,000 IC devices per hour. This test handler is equipped with high
performance contactors and provides test handling at temperatures ranging from
- -55 to +155 Celsius. Changing between different IC device package lead counts
is achieved by simple keypad entry on a menu-driven CRT display. The S-170 is
most appropriate for high volume testing of small surface mount IC devices
having short test times and leads on only two sides such as linear devices.
Model S-170C Test Handler
The S-170C is a modified version of the S-170 gravity feed test handler. It
offers all the features and capabilities of the S-170 plus the ability to
handle a broader spectrum of the popular SOIC package types and, accordingly,
has a target market that is approximately twice as large as the market for the
original S-170 model.
Model TL-50 Test Handler
The TL-50 is a pick and place test handler, particularly suitable for
handling fragile lead IC devices such as the popular QFP package. The TL-50
has a throughput capacity of 1,200 devices per hour and operates at
temperatures ranging from -55 to +155 Celsius. Key features of the TL-50
include its simple design, which enhances uptime, and the ease with which it
can be converted to handle different package types plus automatic tray loading
and unloading.
Model S-200 Test Handler
The S-200 is the successor to the TL-50. It has the same functionality and
form factor as the TL-50. Its key distinguishing feature is its ability,
through the addition of an optional machine vision system, to provide the
added capability of in-line lead inspection in addition to its normal
electrical test handling mode.
Model S-450 Test Handler
The S-450, the successor to the S-400, has all of the features of a S-400
plus additional automation. The S-450 is a versatile, high capacity, highly
automated test handler employing an air-bearing transport system. This product
incorporates the best features of Aseco's other test handlers, while
incorporating additional capabilities such as a touch screen user interface,
multi-site testing, high throughput and automated IC device loading and
unloading. The S-450 meets the demand for higher throughput at lower cost per
IC device tested and in addition to PLCC and SOIC(W) has the ability to
accommodate new, larger IC devices with high lead counts such as the Molded
Carrier Ring (MCR).
The multi-site test capability of the S-450 allows up to eight IC devices to
be tested simultaneously, thereby dramatically improving throughput. The
Company believes that this feature will enable the Company to strengthen its
position in its existing markets as test times of non-memory IC devices become
longer. In addition, this product is the Company's first offering to the SRAM
portion of the surface mount IC device test handler market. The Company
believes that the high throughput and gentle handling features of the S-450
make it particularly suitable for SRAM devices which have more leads and
shorter test times than many other memory IC devices. The S-450 can be
converted to handle numerous IC device package types and, like the Company's
other test handler models, allows testing at hot, cold and ambient
temperatures.
Remanufacturing Services
During fiscal 1996, the Company established a remanufacturing services group
which provides services such as machine upgrades, reconditioning and
reconfiguration for all of the Company's test handler models.
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CUSTOMERS
An integral part of Aseco's overall strategy is to maintain close
relationships with its customers and to broaden its customer base. In fiscal
1996, approximately 96% of the Company's net sales represented repeat
business. In addition, since 1988 the Company has succeeded in adding an
average of three to five new customers each quarter.
Customers for the Company's products are primarily semiconductor
manufacturers, but also include volume purchasers of IC devices and companies
engaged in the business of testing IC devices for others.
As of March 31, 1996, the Company had sold 992 test handler systems to
approximately 121 customers. In fiscal 1996, one customer accounted for 12% of
net sales. In fiscal 1995, no single customer accounted for 10% or more of the
Company's net sales. In fiscal 1994, two customers accounted for more than 10%
of net sales, one representing approximately 20% and a second representing
approximately 11% of the Company's net sales.
SALES AND MARKETING
The Company markets its products primarily through manufacturers'
representative organizations. As of March 31, 1996, the Company had nine
United States manufacturers' representatives and six international
manufacturers' representatives located in London, Munich, Seoul, Singapore,
Sweden and Taipei.
The Company's sales organization coordinates the activities of the Company's
manufacturers' representatives and actively participates with them in selling
efforts. Aseco provides sales and technical support to its manufacturers'
representatives through the Company's sales and service offices in Marlboro,
Massachusetts, Santa Clara, California and Kuala Lumpur, Malaysia and Malta.
The Company's marketing efforts include participation in industry trade shows
and production of product literature. These efforts are designed to generate
sales leads for the Company's manufacturers' representatives.
To date, the Company's international sales have been primarily to customers
located in the Asia Pacific region (excluding Japan) and Western Europe.
International sales accounted for approximately 42%, 42%, and 40% of the
Company's net sales in fiscal 1996, 1995 and 1994, respectively.
All of the Company's international sales are invoiced in U.S. dollars and,
accordingly, have not historically been subject to fluctuating currency
exchange rates. The Company's international sales are subject to certain risks
common to many export activities, such as governmental regulations, export
license requirements and the risk of imposition of tariffs and other trade
barriers.
BACKLOG
The Company's backlog which consists of customer purchase orders which the
Company expects to fill within the next twelve months, was approximately
$7,900,000 as of March 31, 1996. Because all purchase orders are subject to
cancellation or delay by customers with limited or no penalty, the Company's
backlog is not necessarily indicative of future revenues or earnings. The
Company typically ships its test handlers within eight to ten weeks of receipt
of purchase order and its conversion kits and spare parts within a shorter
period.
CUSTOMER SERVICE
The Company believes that strong customer service is important in achieving
its goal of high customer satisfaction. Aseco's customer service organization,
augmented by the Company's engineering personnel, provides product training,
telephone technical support, applications support, maintenance and operations
manuals and on-site service and repair. Such services are provided from the
Company's headquarters in Marlboro, Massachusetts and from one other domestic
and seven international field service centers, each strategically located near
customers to minimize response time to customer service requests. Six of the
eight international
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field service centers are maintained by the Company's manufacturers'
representative organizations and two directly by the Company.
The Company warranties its products against defects in material and
workmanship for a period of up to one year. To date, the Company's warranty
claims have not been material. The Company believes its accrual for product
warranties is adequate.
PRODUCT DEVELOPMENT
The Company believes that its future success will depend in large part on
its ability to enhance and broaden, with the input of its customers, its
existing product line to meet the evolving needs of the test handler market.
To date, the Company has relied on internal development and a product
acquisition (the TL-50) to extend its product offering. The Company is
continually engaged in improving its current products and expanding the types
of IC devices its test handlers can accommodate. In addition, the Company is
currently focused on the continued development of enhancements and features
for its current test handler systems. As the test handler market continues to
develop, the software component of the Company's products plays an
increasingly important role. The Company currently develops all software in-
house and plans to expand its expertise in this area by hiring additional
personnel as needed.
MANUFACTURING AND SUPPLY
The Company manufactures its products at its facility in Marlboro,
Massachusetts. The Company's manufacturing operations consist of procurement
and inspection of components and subassemblies, assembly and extensive testing
of finished products.
A significant portion of the components and subassemblies of the Company's
products, including circuit boards, vacuum pumps, optical sensors,
refrigeration units and contactor elements, are manufactured by third parties
on a subcontract basis. Currently all components, subassemblies and parts used
in Aseco's products are available from multiple sources, except for the S-200
lead inspection module which incorporates cameras and a central processing
unit. Although the Company maintains an inventory of lead inspection modules,
an extended disruption in the supply of these components could have a
significant impact on the S-200 product operations for some period of time.
Quality and reliability are emphasized in both the design and manufacture of
the Company's test handlers. All components and subassemblies are inspected
for mechanical and electrical defects. Fully assembled products are thoroughly
tested at all temperatures and with all the IC device packages to be
accommodated. They are also inspected for conformity to specifications of both
Aseco and the customer.
COMPETITION
The test handler market is highly competitive. Aseco competes with a large
number of companies ranging from very small businesses to large companies,
many of which have substantially greater financial, manufacturing, marketing
and product development resources than the Company. Certain of these companies
manufacture and sell both testers and test handlers. The Company's test
handlers are compatible with all major testers, including those manufactured
by companies which sell both testers and test handlers. The large companies in
the overall surface mount IC device test handler market with which the Company
competes include Advantest and Cohu. In general, the particular companies with
which the Company competes vary with the Company's different markets, with no
one company dominating the overall test handler market. The companies with
which the Company competes most directly in the surface mount non-memory IC
device test handler market are companies such as Multitest, JLSI, Aetrium and
Micro Component Technology, Inc.
The Company competes primarily on the basis of the speed, ease-of-use,
accuracy and other performance characteristics of its products, the breadth of
its product lines, the effectiveness of its sales and distribution channels
and its customer service.
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INTELLECTUAL PROPERTY RIGHTS
Aseco attempts to protect the proprietary aspects of its products with
patents, copyrights, trade secret laws and internal nondisclosure safeguards.
The Company has several patents covering certain features of the TL-50 and S-
200 and the contactor elements incorporated in certain of its other test
handlers. The source code for all software contained in the Company's products
is protected as a trade secret and as unpublished copyrighted work. In
addition, the Company has entered into nondisclosure and assignment of
invention agreements with each of its key employees. Despite these
restrictions, it may be possible for competitors or users to copy aspects of
the Company's products or to obtain information which the Company regards as a
trade secret.
Because of the rapid pace of technological changes in the test handler
industry, the Company believes that patent, trade secret and copyright
protection are less significant to its competitive position than factors such
as the knowledge, ability and experience of the Company's personnel, new
product development, frequent product enhancements, name recognition and
ongoing reliable product maintenance and support.
The Company believes that its products and trademarks and other proprietary
rights do not infringe the proprietary rights of third parties. There can be
no assurance, however, that third parties will not assert infringement claims
in the future.
EMPLOYEES
As of March 31, 1996, Aseco had 132 regular employees and 18 contract
employees including 64 in manufacturing, 46 in engineering and product
development, 17 in general administration and finance, nine in sales and
marketing and 15 in customer service. None of the Company's employees is
represented by a labor union or is subject to a collective bargaining
agreement. The Company has never experienced a work stoppage and believes that
its employee relations are excellent.
ITEM 2. PROPERTIES
The Company's administrative, manufacturing and product development, and its
principal sales, marketing and field service office is located in Marlboro,
Massachusetts where the Company occupies approximately 61,000 square feet
under a lease that expires in May 2000.
The Company also leases and occupies approximately 2,900 square feet of
space in Santa Clara, California under a lease that expires in fiscal 1997.
The Company uses this space for sales and field service support operations.
The Company believes its facilities are adequate for all its reasonable
foreseeable requirements.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders during
the last quarter of the fiscal year ended March 31, 1996.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the executive officers of the Company, their
ages, present position and principal occupations held for at least the past
five years.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Carl S. Archer, Jr. .... 59 President, Chief Executive Officer and Chairman of the Board
Sebastian J. Sicari..... 44 Vice President, Finance and Administration, Chief Financial Officer,
Treasurer and Director
C. Kenneth Gray......... 46 Vice President, Sales & Marketing
Peter S. Rood........... 41 Vice President, Manufacturing Operations
</TABLE>
Mr. Archer has been President, Chief Executive Officer and a director of the
Company since November 1987.
Mr. Sicari has been Vice President, Finance and Administration and Chief
Financial Officer of the Company since December 1985, has served as Treasurer
of the Company since July 1988 and has been a Director since 1993.
Mr. Gray has been Vice President, Sales and Marketing since January 1990.
From October 1983 to January 1990, Mr. Gray was Manager of Sales and
Marketing, Eastern U.S. and Europe, of Micro Component Technology, Inc., a
manufacturer of automatic test equipment, including test handlers.
Mr. Rood has been Vice President, Manufacturing Operations since January
1994. From 1990 to 1993, Mr. Rood was Vice President of Operations of LTX
Corporation, a manufacturer of test equipment.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Aseco Corporation's common stock is traded on the Nasdaq National Market
under the symbol "ASEC." The table below sets forth the high and low prices of
the common stock during the two most recent fiscal years:
<TABLE>
<CAPTION>
1996 1995
------------- ------------
PERIOD HIGH LOW HIGH LOW
------ ------ ------ ------ -----
<S> <C> <C> <C> <C>
First Quarter................................... $18.25 $ 9.38 $ 8.50 $5.25
Second Quarter.................................. 22.00 15.75 8.50 6.25
Third Quarter................................... 21.25 13.50 10.25 7.75
Fourth Quarter.................................. 16.63 10.00 12.25 7.75
</TABLE>
On May 31, 1996, the closing price of the Company's common stock was $12.00
per share. On such date there were 3,631,788 shares outstanding held of record
by 92 persons. This number does not include stockholders for whom shares are
held in a "nominee" or "street" name.
The Company has not paid cash dividends on its common stock and does not
intend to do so in the foreseeable future. The Company's bank line of credit
prohibits the payment of cash dividends without the bank's consent.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------
MARCH 31, APRIL APRIL MARCH 28, MARCH 29,
1996 2, 1995 3, 1994 1993 1992
--------- ------- ------- --------- ---------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA
Net sales....................... $41,569 $29,192 $20,264 $15,869 $13,315
Income from operations.......... 6,397 3,987 2,445 1,635 1,015
Net income...................... 4,406 3,088 1,980 1,060 501
Earnings per share.............. 1.17 .85 .55 .47 .23
BALANCE SHEET DATA
Total assets.................... $36,681 $29,267 $23,792 $21,166 $ 9,583
Long term capital lease
obligations.................... 42 53 -- 73 441
Redeemable convertible preferred
stock.......................... -- -- -- -- 7,237
Stockholders' equity (deficit).. 28,416 22,711 19,513 16,566 (1,825)
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS--FISCAL 1996 VERSUS FISCAL 1995
Net sales for fiscal 1996 increased 42% to $41.6 million from $29.2 million
in fiscal 1995. During fiscal 1996, net sales of the Company's earlier
designed models (S-130) grew slightly over fiscal 1995 net sales levels while
net sales of the Company's more recently introduced machines (S-170, S-200 and
S-450), which generally have higher average selling prices, increased 94% from
fiscal 1995.
International sales increased 42% during fiscal 1996 to $17.4 million from
$12.3 million in fiscal 1995, keeping pace with overall sales growth.
International sales represented approximately 42% of net sales in both fiscal
1996 and 1995. Sales in the Pacific Rim region were particularly strong with
74% of all export sales originating in the region.
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Gross profit for fiscal 1996 was $20.4 million, or 49% of net sales,
compared to $13.8 million, or 47% of net sales, in fiscal 1995. The increase
in gross profit as a percentage of net sales resulted from improved
manufacturing efficiencies generated by improved production flow and cost
savings generated by increased outsourcing and vendor management programs.
Research and development costs increased 41% to $4.7 million in fiscal 1996
from $3.4 million in fiscal 1995 primarily due to the hiring of additional
engineering personnel in each of the Company's critical technical disciplines.
As a percentage of net sales, research and development costs remained
relatively consistent at 11% of net sales in fiscal 1996 and fiscal 1995.
Research and development spending in fiscal 1996 focused primarily on the
development of new test handler system designs and the enhancement of existing
products through additional automation and product versatility through
additional conversion kits. During fiscal 1997 the Company intends to maintain
its approximate current level of investment in research and development
spending as a percentage of net sales to support new and ongoing development
programs.
Selling, general and administrative expenses for fiscal 1996 increased 43%
to $9.3 million from $6.5 million in fiscal 1995, but remained constant at 22%
of net sales in both fiscal 1996 and 1995. The increase in selling, general
and administrative expenses resulted primarily from increased headcount
related expenses and travel expenses incurred to address the sales and service
demands of an expanded customer and installed equipment base throughout the
world. Additionally, the Company incurred higher costs of information
technology and administration necessary to support the Company's substantial
growth and increased headcount during fiscal 1996.
As a result of the above, operating income for fiscal 1996 grew 60% to $6.4
million from $4.0 million in fiscal 1995. Other income, net of $549,000 in
fiscal 1996 and $414,000 in fiscal 1995 was derived primarily from interest
income earned on cash and cash equivalents.
The Company's effective tax rate for fiscal 1996 was 36.6% compared to 29.8%
in fiscal 1995. The fiscal 1995 tax rate was lower than the fiscal 1996 rate
principally because during the fourth quarter of fiscal 1995, the Company
completed an Internal Revenue Service audit of its fiscal 1993 tax year. As a
result, an increased amount of credits became available for the Company to
utilize in the fourth quarter causing the fourth quarter 1995 tax rate to be
17%.
Net income for fiscal 1996 increased 43% to $4.4 million, or $1.17 per share
with 3,776,000 shares outstanding, from $3.1 million, or $.85 per share with
3,616,000 shares outstanding, in fiscal 1995.
RESULTS OF OPERATIONS--FISCAL 1995 VERSUS FISCAL 1994
Net sales for fiscal 1995 increased 44% to $29.2 million from net sales of
$20.3 million in fiscal 1994. Such increase was due to a 62% increase in the
number of test handlers sold by the Company in fiscal 1995 over fiscal 1994,
including an increase in the number of shipments of the Company's newer models
which generally have higher average selling prices than more mature products.
During fiscal 1995 the Company also achieved increased sales growth in the
international market with 42% of net sales attributable to offshore shipments
compared to 40% in fiscal 1994. Approximately 70% of the Company's new
customers in fiscal 1995 were offshore companies, with the most significant
growth originating in Korea, the Philippines and France.
Gross profit for fiscal 1995 increased to $13.8 million from $9.8 million in
fiscal 1994. Gross profit as a percentage of net sales was 47% in fiscal 1995
versus 48% in fiscal 1994. The decline in gross margin as a percent of net
sales in fiscal 1995 was primarily the result of price discounts associated
with certain large quantity customer orders and manufacturing inefficiencies
and start-up production costs relating to products introduced in
10
<PAGE>
fiscal 1995. These factors were partially offset by favorable price and
spending variances resulting from increased levels of production outsourcing.
Research and development costs increased 44% to $3.4 million in fiscal 1995
from $2.3 million in fiscal 1994. As a percentage of net sales, research and
development expenses were 11% in both fiscal 1995 and 1994. During fiscal
1995, the Company's overall investment level in the S-400 test handler
declined as a majority of the design related to that product was completed.
The majority of the Company's research and development spending in fiscal 1995
related to new product development. The Company's research and development
efforts resulted in the introduction of four new products in July 1994.
Selling, general and administrative expenses were $6.5 million, or 22% of
net sales, in fiscal 1995 compared to $5.0 million, or 25% of net sales, in
fiscal 1994. The increase in such expenses in absolute dollars was primarily
attributable to increased selling commissions resulting from the increase in
total net sales and the increase in the proportion of international sales
which generally have higher commission rates. The increase was also due to
higher travel and other field service costs associated with the Company's
expanding customer base.
Other income, net of $414,000 in fiscal 1995 and $250,000 in fiscal 1994 was
derived primarily from interest income earned on invested funds.
The Company's effective tax rate for fiscal 1995 was 29.8% compared to 26.5%
in fiscal 1994. During the first three quarters of fiscal 1995, tax credits
available to the Company to offset fiscal 1995 tax liability remained
relatively comparable to those utilized in the prior year while taxable income
increased causing the effective tax rate to increase over the fiscal 1994
rates. However, as a result of the completion of an Internal Revenue Service
audit in the fourth quarter of fiscal 1995, an increased amount of credits
became available for the Company to utilize in the fourth quarter causing the
fourth quarter 1995 tax rate to be 17%.
As a result of the foregoing, net income for fiscal 1995 increased $1.1
million, or 56%, to $3.1 million, or $.85 per share, from $2.0 million, or
$.55 per share, in fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintained a strong liquidity position in fiscal 1996, closing
fiscal 1996 with a cash balance of $14.1 million. Additionally, the Company
had an unsecured line of credit with a bank in the amount of $5.0 million
against which there were no borrowings in fiscal 1996.
The Company generated approximately $5.0 million in cash from operating
activities during the 1996 fiscal year. The primary working capital factors
affecting cash from operations were inventory levels, accounts receivable and
accounts payable and accrued expenses. During fiscal 1996, inventory levels
decreased by approximately $626,000 to $7.1 million driving inventory turns up
35% to approximately 2.9 turns. Accounts receivable increased approximately
$3.4 million, or 38%, slightly less than the net sales growth rate for the
fiscal year as days sales outstanding also decreased slightly. Accounts
payable and accrued expenses increased concurrently with increased material
requirements to satisfy fourth quarter fiscal 1996 production levels,
increased sales commission levels in proportion to the increased net sales
during fiscal 1996, and increased amounts for accrued compensation and
benefits resulting from increased headcount.
The Company used approximately $728,000 in cash during fiscal 1996 to fund
the acquisition of capital equipment and $117,000 to fund internal software
development costs. The Company expects that its investment in capital
equipment will increase in fiscal 1997 because of several planned capital
acquisitions.
The Company generated cash from financing activities in fiscal 1996 of
approximately $624,000, primarily from employee stock purchases under the
Company's employee stock option and stock purchase plans.
The Company believes that funds generated from operations, existing cash
balances and available borrowing capacity will be sufficient to meet the
Company's cash requirements at least through the end of fiscal 1997.
11
<PAGE>
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of", which establishes criteria for the
recognition and measurement of impairment loss associated with long-lived
assets. The Company will be required to adopt this standard in the first
quarter of fiscal 1997. Based on the Company's initial evaluation, adoption is
not expected to have a material impact on the Company's financial position or
results of operations.
The impact of inflation on the Company's business during the past three
fiscal years has not been significant.
CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
The Company's future results are difficult to predict and may be affected by
a number of important risk factors including, but not limited to, the
following risk factors. The Company wishes to caution readers that the
following important factors and those important factors described elsewhere in
other Securities and Exchange Commission filings, in some cases, have
affected, and in the future could affect, the Company's actual consolidated
quarterly or annual operating results and could cause those actual
consolidated quarterly or annual operating results to differ materially from
those expressed in any forward looking statements made by, or on behalf of,
the Company.
Semiconductor Market Fluctuations--The semiconductor market has historically
been cyclical and subject to significant economic downturns at various times,
which often have a disproportionate effect on manufacturers of semiconductor
capital equipment. While the semiconductor industry in recent periods has
experienced increased demand and production capacity constraints, it is
uncertain how long these conditions will continue. As a result there can be no
assurance that the Company will not experience material fluctuations in future
quarterly or annual operating results as a result of such a market
fluctuation.
Variability in Quarterly Operating Results--During each quarter, the Company
customarily sells a limited number of systems, thus a change in the shipment
of a few systems in a quarter can have a significant impact on results of
operations for a particular quarter. To achieve sales objectives, the Company
must generally obtain orders for systems to be shipped in the same quarter in
which the order is obtained. Moreover, customers may cancel or reschedule
shipments with limited or no penalty, and production difficulties could delay
shipments. Accordingly, the Company's operating results are subject to
significant variability from quarter to quarter and could be adversely
affected for a particular quarter if shipments for that quarter were lower
than anticipated. Moreover, since the Company ships a significant quantity of
products at or near the end of each quarter, the magnitude of fluctuation is
not known until late in or at the end of any given quarter.
International Operations--In fiscal 1996, 42% of the Company's net sales
were derived from customers in international markets. The Company is therefore
subject to certain risks common to many export activities, such as
governmental regulations, export license requirements, air transportation
disruptions, freight rates and the risk of imposition of tariffs and other
trade barriers. All of the Company's international sales are invoiced in U.S.
dollars and, accordingly, have not historically been subject to fluctuating
currency exchange rates. In the future, the Company may decide to conduct its
international business denominated in foreign currency in which case there can
be no assurance that the Company would be able to protect its position by
hedging its exposure to currency exchange rate fluctuations.
New Product Introductions--The Company's success depends in part on its
continued ability to develop and market new products. There can be no
assurance that the Company will be able to develop and introduce new products
in a timely manner or that such products, if developed, will achieve market
acceptance. Additionally there can be no assurance that the Company will be
able to manufacture such products at profitable levels or in sufficient
quantities to meet customer requirements. The inability of the Company to do
any of the foregoing could have a material adverse effect on the Company's
operating results.
12
<PAGE>
Competition--The markets for the Company's products are highly competitive.
The Company's competitors include a number of established companies that have
significantly greater financial, technical, manufacturing and marketing
resources than the Company. The Company also competes with a number of smaller
companies. There can be no assurance that the Company will be able to compete
successfully against current and future sources of competition or that the
competitive pressures faced by the Company will not adversely effect its
profitability or financial performance.
Customer Concentrations--Although the Company has a growing customer base,
from time to time, an individual customer may account for 10% or more of the
Company's quarterly or annual net sales. During the year ended March 31, 1996,
one customer accounted for 12% of net sales. The Company expects that such
customer concentration of net sales will continue to occur from time to time
as customers place large quantity orders with the Company. As a result, the
loss of, or significant reduction in purchases by, any such customer could
have an adverse effect on the Company's annual or quarterly financial results.
Investments in Research & Development and Selling General & Administrative
Expenses--The Company is currently investing in specific time-sensitive
strategic programs related to both the research and development and selling,
general and administrative areas which the Company believes are critical to
its future ability to compete effectively in the market. As such the Company
plans to continue to invest in such programs at a planned rate and not to
reduce or limit the increase in such expenditures until such programs are
completed. As a result there can be no assurance that such expenditures will
not adversely affect the Company's quarterly or annual profitability or
financial performance.
Dependence on Single Source Suppliers--Currently all components,
subassemblies and parts used in Aseco's products are available from multiple
sources, except for the S-200 lead inspection module which incorporates
cameras and a central processing unit. Although the Company maintains an
inventory of lead inspection modules, an extended disruption in the supply of
these components could have a significant impact on the S-200 product
operations for some period of time.
Reliance on Third Party Distribution Channels--The Company markets and sells
its products primarily through third-party manufacturers' representative
organizations which are not under the direct control of the Company. The
Company has limited internal sales personnel. A reduction in the sales efforts
by the Company's current manufacturers' representatives or a termination of
their relationships with the Company could adversely affect the Company's
operations and financial performance. There can be no assurance that the
Company will be able to retain its current manufacturers' representatives or
its distribution channels by selling directly through its sales employees or
enter into arrangements with new manufacturers' representatives.
Dependence on Key Personnel--The Company's success depends to a significant
extent upon a number of senior management and technical personnel. These
persons are not bound by employment agreements. The loss of the services of a
number of these key persons could have a material adverse effect on the
Company. The Company's future success will depend in large part upon its
ability to attract and retain highly skilled technical, managerial and
marketing personnel. Competition for such personnel in the Company's industry
is intense. Although the Company has been successful to date in this endeavor,
there can be no assurance that the Company will continue to be successful in
attracting and retaining the personnel it requires to successfully develop new
and enhanced products and to continue to grow and operate profitably.
Dependence on Proprietary Technology--The Company's success is dependent
upon proprietary software and hardware which the Company protects primarily
through patents and restrictions on access to its trade secrets. There can be
no assurance that the steps taken by the Company to protect its proprietary
rights will be adequate to prevent misappropriation of its technology or
independent development by others of similar technology. Although the Company
believes that its products and technology do not infringe any existing
proprietary rights of others, the use of patents to protect software and
hardware has increased and there can be no assurance that third parties will
not assert infringement claims against the Company in the future.
13
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors........................................... 15
Consolidated Balance Sheets as of March 31, 1996 and April 2, 1995....... 16
Consolidated Statements of Income for the years ended March 31, 1996,
April 2, 1995 and April 3, 1994......................................... 17
Consolidated Statements of Changes in Stockholders' Equity for the years
ended March 31, 1996, April 2, 1995 and April 3, 1994................... 18
Consolidated Statements of Cash Flows for the years ended March 31, 1996,
April 2, 1995 and April 3, 1994......................................... 19
Notes to Consolidated Financial Statements............................... 20
Supplementary Quarterly Financial Data (unaudited)....................... 26
</TABLE>
14
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Aseco Corporation
We have audited the accompanying consolidated balance sheets of Aseco
Corporation as of March 31, 1996 and April 2, 1995, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the three years in the period ended March 31, 1996. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Aseco Corporation at March 31, 1996 and April 2, 1995 and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended March 31, 1996 in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.
Ernst & Young LLP
Boston, Massachusetts
May 10, 1996, except for
Note L, as to which the
date is June 14, 1996
15
<PAGE>
ASECO CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, APRIL
1996 2, 1995
--------- -------
<S> <C> <C>
Current assets
Cash and cash equivalents.................................. $14,083 $ 9,301
Accounts receivable, less allowance for doubtful accounts
of $397 in 1996 and $133 in 1995.......................... 12,346 8,975
Inventories, net........................................... 7,059 7,685
Prepaid expenses........................................... 212 248
Deferred taxes............................................. 598 547
Other current assets....................................... 54 225
------- -------
Total current assets..................................... 34,352 26,981
Plant and equipment, less accumulated depreciation and
amortization................................................ 2,011 1,841
Other assets................................................. 318 445
------- -------
$36,681 $29,267
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable........................................... $ 3,441 $ 3,267
Accrued expenses........................................... 3,923 2,289
Income taxes payable....................................... 476 595
Current portion of capital lease obligations............... 13 14
Deferred gain on sale-leasebacks........................... -- 23
------- -------
Total current liabilities................................ 7,853 6,188
Deferred taxes payable....................................... 370 315
Long-term capital lease obligations.......................... 42 53
Stockholders' equity
Preferred stock, $.01 par value, 1,000,000 shares
authorized, none issued and outstanding................... -- --
Common stock, $.01 par value: 15,000,000 shares authorized,
3,611,501 and 3,437,380 shares issued and outstanding in
1996 and 1995, respectively............................... 36 34
Additional paid in capital................................. 17,234 15,937
Retained earnings.......................................... 11,146 6,740
------- -------
Total stockholders' equity............................... 28,416 22,711
------- -------
$36,681 $29,267
======= =======
</TABLE>
See notes to consolidated financial statements.
16
<PAGE>
ASECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------
MARCH 31, APRIL 2, APRIL 3,
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Net sales.................................... $ 41,569 $ 29,192 $ 20,264
Cost of sales................................ 21,174 15,374 10,489
--------- --------- ---------
Gross profit............................. 20,395 13,818 9,775
Research and development costs............... 4,748 3,356 2,324
Selling, general and administrative
expenses.................................... 9,250 6,475 5,006
--------- --------- ---------
Income from operations................... 6,397 3,987 2,445
Other income (expense):
Interest income............................ 560 416 278
Interest expense........................... (14) (3) (19)
Other, net................................. 3 1 (9)
--------- --------- ---------
549 414 250
--------- --------- ---------
Income before income taxes................... 6,946 4,401 2,695
Income tax expense........................... 2,540 1,313 715
--------- --------- ---------
Net income................................... $ 4,406 $ 3,088 $ 1,980
========= ========= =========
Earnings per share........................... $ 1.17 $ .85 $ .55
========= ========= =========
Weighted average common and common equivalent
shares outstanding.......................... 3,776,000 3,616,000 3,589,000
========= ========= =========
</TABLE>
See notes to consolidated financial statements.
17
<PAGE>
ASECO CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK
--------------- ADDITIONAL
PAR PAID-IN RETAINED
SHARES VALUE CAPITAL EARNINGS TOTAL
--------- ----- ---------- -------- -------
<S> <C> <C> <C> <C> <C>
Balance at March 28, 1993.......... 3,220,988 $32 $14,862 $ 1,672 $16,566
Issuance of shares under stock
plans............................. 79,009 1 37 -- 38
Common stock issued through
exercise of over allotment option
related to the initial public
offering.......................... 112,500 1 928 -- 929
Net income......................... -- -- -- 1,980 1,980
--------- --- ------- ------- -------
Balance at April 3, 1994........... 3,412,497 34 15,827 3,652 19,513
Issuance of shares under stock
plans............................. 24,883 -- 110 -- 110
Net income......................... -- -- -- 3,088 3,088
--------- --- ------- ------- -------
Balance at April 2, 1995........... 3,437,380 34 15,937 6,740 22,711
Issuance of shares under stock
plans............................. 174,121 2 634 -- 636
Tax benefit from exercise of stock
options........................... -- -- 663 -- 663
Net income......................... -- -- -- 4,406 4,406
--------- --- ------- ------- -------
Balance at March 31, 1996.......... 3,611,501 $36 $17,234 $11,146 $28,416
========= === ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
18
<PAGE>
ASECO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------
MARCH 31, APRIL APRIL
1996 2, 1995 3, 1994
--------- ------- -------
<S> <C> <C> <C>
Operating activities
Net income....................................... $ 4,406 $ 3,088 $ 1,980
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization.................. 779 632 401
Deferred taxes................................. 4 (277) (110)
Changes in assets and liabilities:
Accounts receivable.............................. (3,371) (3,599) (1,365)
Inventories, net................................. 626 (935) (1,741)
Prepaid expenses................................. 36 (83) (90)
Accounts payable and accrued expenses............ 1,808 1,965 124
Income taxes payable............................. 544 438 (136)
Other current assets............................. 171 188 (344)
------- ------- -------
Total adjustments............................ 597 (1,671) (3,261)
------- ------- -------
Cash provided by (used in) operating
activities.................................. 5,003 1,417 (1,281)
Investing activities:
Acquisition of machinery and equipment........... (728) (918) (335)
Increase in software development costs and other
assets.......................................... (117) (211) (220)
------- ------- -------
Cash used in investing activities............ (845) (1,129) (555)
Financing activities:
Net proceeds from issuance of common stock....... 636 110 967
Increase (decrease) in notes payable and other
short-term borrowings........................... -- -- (199)
Reductions of capital lease obligations.......... (12) (83) (165)
------- ------- -------
Cash provided by financing activities........ 624 27 603
------- ------- -------
Net increase (decrease) in cash and cash
equivalents................................. 4,782 315 (1,233)
Cash and cash equivalents at the beginning of
period............................................ 9,301 8,986 10,219
------- ------- -------
Cash and cash equivalents at the end of period..... $14,083 $ 9,301 $ 8,986
======= ======= =======
Supplemental information:
Noncash investing and financing activities:
Capital lease obligations incurred............. -- $ 69 --
=======
</TABLE>
See notes to consolidated financial statements
19
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL TABULAR AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
NOTE A--NATURE OF BUSINESS
Aseco Corporation (the "Company") designs, manufactures and markets test
handlers used to automate the testing of surface mount integrated circuit
packages. The Company markets its products principally in North America, the
Asia Pacific region and Western Europe and sells its products principally to
integrated circuit manufacturers.
NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries. All
intercompany balances and transactions are eliminated.
Use of Estimates: The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts reported in the
consolidated financial statements. Actual results could differ from those
estimates.
Cash and Cash Equivalents: The Company considers all highly liquid
investments with maturities of three months or less at the time of purchase to
be cash equivalents.
The Company invests its excess cash in high quality commercial paper
($6,997,521 at March 31, 1996 and $6,275,000 at April 2, 1995) and money
market funds ($1,714,706 at March 31, 1996 and $715,000 at April 2, 1995), all
of which are cash equivalents as of March 31, 1996. Management determines the
appropriate classification of these investments at the time of purchase as
either held-to-maturity, available-for-sale or trading and re-evaluates such
designation at each balance sheet date. Given the short-term nature of the
Company's investments at March 31, 1996 and their availability for use in the
Company's current operations, these amounts are considered to be available-
for-sale. Available-for-sale securities are carried at fair market value and
unrealized gains or losses are reported as a separate component of
stockholders' equity. At March 31, 1996 and April 2, 1995, the cost of the
Company's investments in cash equivalents approximated their fair market
value.
Inventories: Inventories are stated at the lower of cost or market, using
the first-in, first-out method to determine cost.
Plant and Equipment: Plant and equipment are stated at cost. Depreciation is
provided using the straight line method over the estimated useful lives of the
applicable assets which is generally three to seven years. Leasehold
improvements and equipment under capital leases are being amortized over the
lives of the leases.
Warranty Costs: Estimated warranty costs are accrued upon shipment of
product.
Revenue Recognition: Revenue is recognized generally upon shipment of
product, and when special contractual criteria apply, upon acceptance.
Earnings Per Share: Earnings per share data are computed using the weighted
average number of shares of common stock and common stock equivalents during
each year. Common stock equivalents include options to purchase shares of
common stock and are computed using the treasury stock method. Fully diluted
earnings per share do not differ materially from primary earnings per share.
Stock Based Compensation: The Company has elected to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25) and related Interpretations in accounting for its stock-based
compensation plans, rather than the alternative fair value accounting provided
for under Financial Accounting Standards Board Statement No. 123, "Accounting
for Stock-Based Compensation." Under APB 25,
20
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
for those options granted in which the exercise price equals or exceeds the
market price of the underlying stock on the date of grant, no compensation
expense is recognized.
Recent Accounting Pronouncements: In March 1995, the Financial Accounting
Standards Board (FASB) issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
which establishes criteria for the recognition and measurement of impairment
loss associated with long-lived assets. The Company will be required to adopt
this standard in the first quarter of fiscal 1997. Based on the Company's
initial evaluation, adoption is not expected to have a material impact on the
Company's financial position or results of operations.
NOTE C--INVENTORIES, NET
Net inventories consisted of the following:
<TABLE>
<CAPTION>
APRIL
MARCH 31, 2,
1996 1995
--------- ------
<S> <C> <C>
Raw materials............................................. $3,491 $4,662
Work in process........................................... 2,218 2,145
Finished goods............................................ 1,350 878
------ ------
$7,059 $7,685
====== ======
</TABLE>
NOTE D--PLANT AND EQUIPMENT
Plant and equipment consisted of the following:
<TABLE>
<CAPTION>
APRIL
MARCH 31, 2,
1996 1995
--------- ------
<S> <C> <C>
Machinery and equipment.................................. $2,082 $1,725
Office furniture and equipment........................... 1,446 1,081
Property under capital lease............................. 578 578
Leasehold improvements................................... 81 75
------ ------
4,187 3,459
Less accumulated depreciation and amortization........... 2,176 1,618
------ ------
$2,011 $1,841
====== ======
</TABLE>
NOTE E--INDEBTEDNESS
The Company has a revolving credit facility with a bank which expires on
September 1, 1996. Under the facility, the Company may borrow up to $5,000,000
on an unsecured basis, conditioned upon meeting certain financial covenants,
including maintaining specified levels of quarterly and annual earnings,
tangible net worth and restrictions on dividend payments. Borrowings bear
interest at the bank's prime rate which was 8.25% at March 31, 1996. There
were no borrowings outstanding at March 31, 1996 and April 2, 1995.
Cash payments of interest were approximately $14,000, $3,000 and $21,000 for
the years ended March 31, 1996, April 2, 1995 and April 3, 1994, respectively.
NOTE F--LEASES
The Company leases a building in Marlboro, Massachusetts for its corporate
and manufacturing activities and a sales office in Santa Clara, California.
The operating lease for the Massachusetts facility expires in the
21
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE F--LEASES (CONTINUED)
year 2000, subject to the Company's option to extend the term for an
additional three year period. Rent expense for this lease is approximately
$350,000 per year. In addition, the lease is subject to escalation for
increases in operating expenses and real estate taxes. The Company also leases
equipment under capital and non-cancelable operating leases expiring through
the year 2001.
The following is a schedule of required minimum lease payments under capital
and operating leases at March 31, 1996:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
1997..................................................... $17 $ 364
1998..................................................... 17 387
1999..................................................... 17 405
2000..................................................... 13 412
2001..................................................... -- 34
--- ------
Total minimum lease payments............................. 64 $1,602
======
Less amounts representing interest....................... (9)
---
Present value of minimum lease payments.................. $55
===
</TABLE>
Total rent expense for the years ended March 31, 1996, April 2, 1995 and
April 3, 1994 was approximately $450,000, $459,000 and $412,000, respectively.
NOTE G--STOCKHOLDERS' EQUITY
The Board of Directors may, at its discretion, designate one or more series
of preferred stock and establish the voting, dividend, liquidation, and other
rights and preferences of the shares of each series, and provide for the
issuance of shares of any series. At March 31, 1996, no shares of preferred
stock were outstanding.
NOTE H--STOCK PLANS AND EMPLOYEE BENEFITS
1986 Incentive Stock Plan: The Company's 1986 Incentive Stock Option Plan
(the "1986 Plan") provides for the issuance of up to an aggregate of 416,666
shares of common stock upon the exercise of incentive stock options granted to
employees of the Company. The exercise price of options granted under the 1986
Plan must be at least equal to the fair market value of the underlying shares
of common stock at the time of grant. Options are exercisable either in full
immediately, or in installments, as the Board of Directors may determine.
Non-Employee Director Stock Option Plan: The Company's 1993 Non-Employee
Director Stock Option Plan (the "Director Plan") provides for the grant of
non-qualified stock options to non-employee directors of the Company for the
purchase of up to an aggregate of 65,000 shares of common stock. (See Note L)
Under the Director Plan, each non-employee director is entitled to receive,
when first elected to serve as a director, an option to purchase 15,000
shares. In addition, each non-employee director is entitled to receive on
April 30 of each year an option to purchase 2,500 shares. The exercise price
of the options is equal to the fair market value of the underlying common
stock on the date of grant. Options granted under the plan may only be
exercised with respect to vested shares. One-half of the shares subject to
such options vest on the first anniversary of the date of the grant and the
balance vest on the second anniversary of the grant.
Omnibus Stock Plan: The Company's 1993 Omnibus Stock Plan ( the "Omnibus
Plan") is administered by the Board of Directors and provides for the issuance
of up to 930,000 shares of common stock pursuant to the exercise of options or
in connection with awards or direct purchases of stock. (See Note L) Options
granted
22
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE H--STOCK PLANS AND EMPLOYEE BENEFITS (CONTINUED)
under the Omnibus Plan may be either incentive stock options or non-qualified
stock options. Incentive stock options may only be granted under the Omnibus
Plan to employees and officers of the Company. Non-qualified stock options may
be granted to, awards of stock may be made to, and direct purchases of stock
may be made by, employees, officers, consultants or directors of the Company.
The terms of the awards or grants, including the number of shares, the
duration and rate of exercise of each option, the option price per share, and
the determination of any restrictions to be placed on the grants or awards,
are determined by the Compensation Committee of the Board of Directors.
The following is a summary of activity with respect to the Company's stock
option plans:
<TABLE>
<CAPTION>
OPTIONS PRICE
-------- -------------
<S> <C> <C>
Outstanding at March 28, 1993..................... 187,100 $ .23-$ 9.50
Granted......................................... 328,900 5.38- 11.75
Exercised....................................... (79,000) .29- .48
Canceled........................................ (4,600) .23- 9.50
-------- -------------
Outstanding at April 3, 1994...................... 432,400 .29- 11.75
Granted......................................... 29,000 7.00- 7.63
Exercised....................................... (7,400) .29- 5.38
Canceled........................................ (11,100) .29- 11.75
-------- -------------
Outstanding at April 2, 1995...................... 442,900 .29- 9.63
Granted......................................... 477,000 12.19- 18.69
Exercised....................................... (157,400) .29- 13.00
Canceled........................................ (18,000) 5.38- 13.00
-------- -------------
Outstanding at March 31, 1996..................... 744,500 $ .29-$18.69
======== =============
</TABLE>
As of March 31, 1996, April 2, 1995 and April 3, 1994, there were
outstanding options exercisable for approximately 393,000, 224,000 and
124,000, respectively. As of March 31, 1996, shares available for future grant
were 36,000 shares in the 1986 Plan, 35,000 shares in the Director Plan and
161,000 shares in the Omnibus Plan.
Employee Stock Purchase Plan: The Company's Employee Stock Purchase Plan
(the "Purchase Plan") is administered by the Board of Directors or by its
designee (the "Administrator") and entitles employees of the Company to
purchase shares of the Company's common stock through payroll deductions over
offering periods specified by the Administrator. Shares may be purchased at a
price equal to the lesser of 85% of the fair market value of the common stock
on the first day of the offering period, or 85% of the fair value of the
common stock on the last day of the offering period. A total of 100,000 shares
have been reserved for issuance under the Purchase Plan. During 1996 and 1995,
a total of approximately 16,800 and 17,000 shares of common stock,
respectively, were issued under this plan. Shares available for future grant
were approximately 66,200 shares.
Savings Plan: Under the Company's Savings Plan (the "401(k) Plan") eligible
employees are permitted to make pre-tax contributions up to 20% of their
salary, subject to certain limitations imposed by Section 401(k) of the
Internal Revenue Code. In addition, employees may contribute up to 10% of
their salary to the 401(k) Plan on an after tax basis. The Company may, but is
not required to, contribute for the benefit of the employees of the Company an
amount determined each year by the Company. For the years ended March 31, 1996
and April 2, 1995, the Company contributed approximately $80,000 and $40,000,
respectively to the 401(k) Plan. No contribution was made to the 401(k) Plan
for the year ended April 3, 1994.
23
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE I--INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets as of March 31, 1996 and
April 2, 1995 are as follows:
<TABLE>
<CAPTION>
1996 TOTAL CURRENT NON-CURRENT
---- ----- ------- -----------
<S> <C> <C> <C>
Deferred tax liabilities:
Tax over book depreciation.................... $(247) $(247)
Capitalized software.......................... (123) (123)
Capital vs. operating lease................... (97) $ (97)
Other......................................... (33) (33)
----- ----- -----
Total deferred tax liabilities.................. (500) (130) (370)
Deferred tax assets:
Asset valuation allowances.................... 555 555
Product warranty.............................. 113 113
Other......................................... 60 60
----- -----
Total deferred tax assets....................... 728 728
----- ----- -----
Net deferred tax assets (liabilities)........... $ 228 $ 598 $(370)
===== ===== =====
1995
----
Deferred tax liabilities:
Tax over book depreciation.................... $(156) $(156)
Capitalized software.......................... (159) (159)
Capital vs. operating lease................... (133) $(133)
Other......................................... (32) (32)
----- ----- -----
Total deferred tax liabilities.................. (480) (165) (315)
Deferred tax assets:
Asset valuation allowances.................... 530 530
Product warranty.............................. 60 60
Tax credit carryforwards...................... 58 58
Other......................................... 64 64
----- -----
Total deferred tax assets....................... 712 712
----- ----- -----
Net deferred tax assets (liabilities)........... $ 232 $ 547 $(315)
===== ===== =====
</TABLE>
Significant components of the provision (benefit) for income taxes are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------
APRIL
MARCH 31, 2, APRIL 3,
1996 1995 1994
--------- ------ --------
<S> <C> <C> <C>
Current federal tax............................. $2,106 $1,416 $ 715
Current state tax............................... 438 174 110
Deferred federal tax............................ (3) (214) (106)
Deferred state tax.............................. (1) (63) (4)
------ ------ -----
$2,540 $1,313 $ 715
====== ====== =====
</TABLE>
24
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE I--INCOME TAXES (CONTINUED)
The reconciliation of income tax computed at the U.S. federal statutory rate
to income tax expense is as follows:
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------
MARCH 31, APRIL 2, APRIL 3,
1996 1995 1994
--------- -------- --------
<S> <C> <C> <C>
Tax at U.S. statutory rates................... 34.0% 34.0% 34.0%
State income taxes, net of federal benefit.... 4.6 4.4 4.9
Foreign sales corporation..................... (2.7) (2.4) (1.4)
Tax credits................................... (1.1) (6.3) (9.3)
Other, net.................................... 1.8 .1 (1.7)
---- ---- ----
36.6% 29.8% 26.5%
==== ==== ====
</TABLE>
During the year ended March 31, 1996 the Company recorded a tax benefit of
approximately $663,000 related to the exercise of incentive stock options and
subsequent sale of the related common stock and the exercise of non-qualified
stock options which amounts have been credited to additional paid-in capital.
Income taxes paid in the years ended March 31, 1996, April 2, 1995 and April
3, 1994 were $2,010,000, $1,152,000 and $877,000, respectively
NOTE J--ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
APRIL
MARCH 31, 2,
1996 1995
--------- ------
<S> <C> <C>
Accrued commissions...................................... $2,187 $1,183
Accrued compensation and benefits........................ 1,088 350
Other.................................................... 648 756
------ ------
$3,923 $2,289
====== ======
</TABLE>
NOTE K--SEGMENT, GEOGRAPHIC, CUSTOMER INFORMATION AND CONCENTRATION OF CREDIT
RISK
The Company operates in one industry segment. Export sales from the United
States were approximately as follows:
<TABLE>
<CAPTION>
YEAR ENDED
------------------------
APRIL
MARCH 31, APRIL 3,
1996 2, 1995 1994
--------- ------- ------
<S> <C> <C> <C>
Pacific Rim....................................... $12,845 $10,026 $5,427
Europe............................................ 3,567 1,983 2,369
Other............................................. 984 270 252
------- ------- ------
$17,396 $12,279 $8,048
======= ======= ======
</TABLE>
The Company sells its products principally to integrated circuit
manufacturers. The Company performs periodic credit evaluations of its
customers' financial condition, and historically, credit losses have been
small. The Company's accounts receivable included balances owed by one
customer which represented 18% of total trade accounts receivable as of March
31, 1996, and two customers which represented 16% and 12%, respectively, of
total trade accounts receivable as of April 2, 1995.
25
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
NOTE K--SEGMENT, GEOGRAPHIC, CUSTOMER INFORMATION AND CONCENTRATION OF CREDIT
RISK (CONTINUED)
One customer accounted for 12% of net sales for the year ended March 31,
1996. No single customer accounted for more than 10% of net sales in the year
ended April 2, 1995. In fiscal 1994, two customers accounted for more than 10%
of net sales, one representing approximately 20% and a second representing
approximately 11% of the Company's net sales.
NOTE L--SUBSEQUENT EVENT
On June 14, 1996, the Board of Directors voted to increase the number of
common shares available for grant under the 1993 Omnibus Stock Plan by 300,000
shares, and the Non-Employee Director Stock Option Plan by 100,000 shares,
subject to stockholder approval.
NOTE M--SUPPLEMENTARY QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of unaudited quarterly results for the fiscal
years ended March 31, 1996 and April 2, 1995.
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------
JULY 3 OCTOBER 2 JANUARY 1 APRIL 2
------ ------------ ----------- -------
<S> <C> <C> <C> <C>
FISCAL 1996
Net sales.......................... $9,136 $9,741 $10,998 $11,694
Gross profit....................... 4,532 4,731 5,565 5,567
Net income......................... 926 1,053 1,165 1,262
Earnings per share................. $ .25 $ .28 $ .31 $ .34
====== ====== ======= =======
<CAPTION>
QUARTER ENDED
---------------------------------------
JUNE
27 SEPTEMBER 26 DECEMBER 26 APRIL 3
------ ------------ ----------- -------
<S> <C> <C> <C> <C>
FISCAL 1995
Net sales.......................... $6,585 $7,002 $ 7,355 $ 8,250
Gross profit....................... 3,072 3,361 3,529 3,856
Net income(1)...................... 626 665 747 1,050
Earnings per share................. $ .18 $ .19 $ .21 $ .29
====== ====== ======= =======
</TABLE>
- --------
(1) As a result of the completion of an Internal Revenue Service audit in the
fourth quarter of fiscal 1995, an increased amount of tax credits became
available for the Company to utilize in the fourth quarter, causing the
fourth quarter fiscal 1995 tax rate to be 17%.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
26
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item with respect to directors of the
Company is incorporated herein by reference to "Election of Directors" on
pages 3 and 4 of the Company's Definitive Proxy Statement for its Annual
Meeting of Stockholders to be held on August 8, 1996.
The information required by this item with respect to executive officers of
the Company is set forth under the caption "Executive Officers of the
Registrant" in Part I of this Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item with respect to executive compensation
of the Company is incorporated herein by reference to "Executive Officer
Compensation" on pages 6, 7 and 8 of the Company's Definitive Proxy Statement
for its Annual Meeting of Stockholders to be held on August 8, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item with respect to security ownership of
management and certain beneficial owners of the Company is incorporated herein
by reference to "Stock Ownership of Directors, Executive Officers and
Principal Stockholders" on page 2 of the Company's Definitive Proxy Statement
for its Annual Meeting of the Stockholders to be held on August 8, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
None.
27
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS
The following consolidated financial statements are included in Item 8:
<TABLE>
<S> <C>
Consolidated Balance Sheets as of March 31, 1996 and April 2, 1995
Consolidated Statements of Income for the years ended March 31, 1996,
April 2, 1995 and April 3, 1994
Consolidated Statements of Changes in Stockholders' Equity for the
years ended March 31, 1996, April 2, 1995 and April 3, 1994
Consolidated Statements of Cash Flows for the years ended March 31,
1996, April 2, 1995 and April 3, 1994
</TABLE>
(A) 2. FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Schedule II--Valuation and Qualifying Accounts.......................... F-1
</TABLE>
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements or the notes thereto.
(A) 3. LISTING OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
*3.2 --Third Restated Certificate of Incorporation of the Company
*3.3 --Amended and Restated By-laws of the Company
*10.1 --1986 Incentive Stock Option Plan
10.2 --1993 Non-Employee Director Stock Option Plan, as amended and
restated as of June 14, 1996
*10.3 --1993 Employee Stock Purchase Plan
10.4 --1993 Omnibus Stock Plan, as amended and restated as of June 14,
1996
*10.5 --Lease dated April 13, 1993, between the Company and CIGNA
Investments, Inc.
*10.6 --Original Equipment Manufacturer Agreement dated January 30,
1991, between the Company and Applied Intelligent Systems, Inc.
*10.7 --Letter Agreement dated November 27, 1992, between the Company
and Fleet Bank of Massachusetts, N.A.
*10.8 --Amended and Restated Registration and First Refusal Rights
Agreement dated July 31, 1986, between the Company and certain
stockholders of the Company
10.9 --Amended Letter Agreement dated July 30, 1993, between the
Company and Fleet Bank of Massachusetts, N.A., filed as an
exhibit to the Company's Form 10-K for the fiscal year ended
April 3, 1994 and incorporated herein by reference.
+10.10 --Severance Agreement--Carl S. Archer, Jr., filed as an exhibit to
the Company's Form 10-K for the fiscal year ended April 3, 1994
and incorporated herein by reference
+10.11 --Severance Agreement--Sebastian J. Sicari, filed as an exhibit to
the Company's Form 10-K for the fiscal year ended April 3, 1994
and incorporated herein by reference
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
+10.12 --Form of Key Employee Stock Option Agreement, filed as an exhibit
to the Company's Form
10-K for the fiscal year ended April 3, 1994 and incorporated
herein by reference
10.13 --Amended Letter Agreement dated August 2, 1995, between the
Company and Fleet Bank of Massachusetts, N.A., filed herewith.
22.1 --Subsidiaries of the Registrant, filed as an exhibit to the
Company's Form 10-K for the fiscal year ended April 2, 1995 and
incorporated herein by reference
23.1 --Consent of Ernst & Young LLP
</TABLE>
- --------
* Incorporated by reference to the same exhibit number to the Registration
Statement on Form S-1 filed with the Securities and Exchange Commission on
January 29, 1993.
+ Management contract or compensation plan or arrangement required to be filed
as an exhibit pursuant to Item 14(c) of Form 10-K.
(B) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K with the Securities and Exchange
Commission during the fiscal quarter ended March 31, 1996.
29
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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.
Aseco Corporation
/s/ Carl S. Archer, Jr.
By: _________________________________
CARL S. ARCHER, JR.
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
JUNE 28, 1996
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE(S) DATE
/s/ Carl S. Archer, Jr. President, Chief Executive June 28,
_________________________________ Officer and Director 1996
CARL S. ARCHER, JR. (Principal Executive
Officer)
/s/ Sebastian J. Sicari Vice President, Finance and June 28,
_________________________________ Administration, Chief 1996
SEBASTIAN J. SICARI Financial Officer,
Treasurer and Director
(Principal Financial and
Accounting Officer)
/s/ Sheldon Buckler Director June 28,
_________________________________ 1996
SHELDON BUCKLER
/s/ Kenneth W. Tunnell Director June 28,
_________________________________ 1996
KENNETH W. TUNNELL
/s/ Sheldon Weinig Director June 28,
_________________________________ 1996
SHELDON WEINIG
/s/ Charles D. Yie Director June 28,
_________________________________ 1996
CHARLES D. YIE
30
<PAGE>
SCHEDULE II
ASECO CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT CHARGES TO BALANCE
BEGINNING COSTS AND AT END
CLASSIFICATION OF YEAR EXPENSES DEDUCTIONS OF YEAR
-------------- ------- -------- ---------- -------
YEAR ENDED MARCH 31, 1996
<S> <C> <C> <C> <C>
Allowance for doubtful
accounts $133,000 $264,000 --- $397,000
YEAR ENDED APRIL 2, 1995
Allowance for doubtful
accounts $ 78,000 $ 55,000 --- $133,000
YEAR ENDED APRIL 3, 1994
Allowance for doubtful
accounts $ 82,000 --- $4,000 $ 78,000
</TABLE>
F-1
<PAGE>
EXHIBIT 10.13
Fleet Bank
August 24, 1995
Mr. Sebastian J. Sicari
Chief Financial Officer
Aseco Corporation
500 Donald Lynch Boulevard
Marlboro, MA 01752
Dear Sebastian:
Reference is hereby made to the Letter Agreement (the "Agreement") executed by
and between Aseco Corporation and Fleet Bank of Massachusetts, N.A. as of
November 27, 1992 and amended as of July 30, 1993 and August 2, 1994. We are
pleased to inform you that we have approved an extension of the Expiration Date
from September 1, 1995 to September 1, 1996. Nothing herein shall be deemed to
constitute a waiver, release or amendment of any other terms of the agreement.
The Borrower represents and warrants that the execution of this amendment has
been duly authorized by the Borrower by all necessary corporate and other action
and that the execution will not conflict with, violate the provisions of, or
cause a default or constitute an event which, with the passage of time or giving
of notice or both, could cause a default on the part of the Borrower under its
charter documents or by-laws or under any contract, agreement, law, rule, order,
ordinance, franchise, instrument or other document, or result in the imposition
of any lien or encumbrance on any property or asset of the Borrower.
The Borrower further represents that this agreement and the attached Promissory
Note each represent legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective terms. In
addition, the statements, representations and warranties made in the Agreement
continue to be correct as of the date hereof and the Borrower is in compliance
with all terms of the Agreement. Except as expressly affected hereby, the
Agreement remains in full force and effect as heretofore.
Sebastian, we are pleased to extend the Agreement and look forward to continuing
our relationship with Aseco Corporation. Please sign below and execute the
attached note to evidence your acceptance of this amendment.
Sincerely,
Tom W. Davies
Vice President, High Technology Group
Agreed and Accepted: Sebastian J. Sicari 8/28/95
----------------------
Vice President and CFO
Fleet Bank of Massachusetts, N.A., A Member of Fleet Financial Group
<PAGE>
Time Note - Interest to Follow
$ 5,000,000 Boston, Massachusetts, August 24, 1995
--------- ---------- --
On September 1, 1996 after date.
---------------------
for value received, the undersigned, which term wherever used herein shall mean
all and each of the signers of this note jointly and severally, promises to pay
to FLEET BANK OF MASSACHUSETTS, NATIONAL ASSOCIATION, or order at said bank,
Five Million and 00/100 ($5,000,000)--------------------------- Dollars with
- ----------------------------------------------------------------
interest from the date hereof on the unpaid balance from time to time
outstanding a fluctuating rate per annum which shall at all times be equal to
Check appropriate box and complete item
[_] at the rate of _____per centum per annum,
[X] at the Large Business Prime Rate for commercial loans from time to time in
effect at said bank plus 0 per centum per annum,
---
[_] at the Small Business Base Rate for commercial loans from time to time in
effect at said bank plus ________ per centum per annum,
Such interest to be payable Monthly in arrears.
-------
At the option of the holder, this note shall become immediately due and
payable without notice or demand upon the occurrence at any time of any of the
following events of default: (1) default of any liability, obligation or
undertaking of the undersigned, hereunder or otherwise, including failure to pay
in full and when due any sum due hereunder, or of any indorser or guarantor of
any liability, obligation or undertaking, hereunder or otherwise, to the holder;
(2) if any statement, representation or warranty made in or in connection with
the application for the loan evidenced by this note, or in any supporting
financial statement of the undersigned or any indorser or guarantor hereof shall
be found to have been false in any material respect; (3) if the undersigned or
any indorser or guarantor hereof is a corporation, trust or partnership, the
liquidation, termination or dissolution of any such organization or its ceasing
to carry on actively its present business or the appointment of a receiver for
its property; (4) the death of the undersigned or of any indorser or guarantor
herof and, if any of the undersigned or any indorser or guarantor hereof is a
partnership, the death of any partner; (5) the institution by or against the
undersigned or any indorser or guarantor hereof of any proceedings under the
Bankruptcy Code or any other law in which the undersigned or any indorser or
guarantor hereof is alleged to be insolvent or unable to pay their respective
debts as they mature or the making by the undersigned or any indorser or
guarantor hereof of an assignment for the benefit of creditors; (6) the service
upon the holder hereof of a writ in which the holder is named as trustee of the
undersigned or of any indorser or guarantor hereof; or (7) if the holder hereof
should at any time deem itself insecure.
The undersigned agrees to pay upon default costs of collection including
reasonable fees for attorneys.
No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right of such
holder, nor shall any delay, omission or waiver on any one occasion be
<PAGE>
deemed a bar to or waiver of the same or any other right on any future occasion.
Every one of the undersigned and every indorser or guarantor of this note
regardless of the time, order or place of signing waives presentment, demand,
protest and notices of every kind and assents to any one or more extension or
postponements of the time of payment or any other indulgences, to any
substitutions, exchanges or releases of collateral if at any time there be
available to the holder collateral for this note, and to the additions or
release of any other parties or persons primarily or secondarily liable.
The proceeds of the loan represented by this note may be paid to any one or
more of the undersigned.
All rights and obligations hereunder shall be governed by the law of the
Commonwealth of Massachusetts and this note shall be deemed to be under seal.
This note shall be governed by the letter agreement between Aseco Corporation
and Fleet Bank of Massachusetts dated 11/27/92 and amended on 7/30/93, 8/2/94
and 8/24/95.
Aseco Corporation
- ---------------------------------
Borrower(s) - Print name or names
(by) Sebastian J. Sicari
-----------------------------
Signature
(by)
-----------------------------
Signature
<PAGE>
EXHIBIT 10.2
ASECO CORPORATION
1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(Amended and Restated Effective as of June 14, 1996)
1. Purpose. This Non-Qualified Stock Option Plan, to be known as the
-------
1993 Non-Employee Director Stock Option Plan (hereinafter, this "Plan") is
intended to promote the interests of Aseco Corporation (hereinafter, the
"Company") by providing an inducement to obtain and retain the services of
qualified persons who are not employees or officers of the Company to serve as
members of its Board of Directors (the "Board").
2. Available Shares. The total number of shares of Common Stock, par
----------------
value $.01 per share, of the Company (the "Common Stock"), for which options may
be granted under this Plan shall not exceed 165,000 shares, subject to
adjustment in accordance with paragraph 10 of this Plan. Shares subject to this
Plan are authorized but unissued shares or shares that were once issued and
subsequently reacquired by the Company. If any options granted under this Plan
are surrendered before exercise or lapse without exercise, in whole or in part,
the shares reserved therefor shall continue to be available under this Plan.
3. Administration. This Plan shall be administered by the Board or by a
--------------
committee appointed by the Board (the "Committee"). In the event the Board fails
to appoint or refrains from appointing a Committee, the Board shall have all
power and authority to administer this Plan. In such event, the word "Committee"
wherever used herein shall be deemed to mean the Board. The Committee shall,
subject to the provisions of the Plan, have the power to construe this Plan, to
determine all questions hereunder, and to adopt and amend such rules and
regulations for the administration of this Plan as it may deem desirable.
4. Granting of Options.
-------------------
(a) Initial Grant. On the effective date of a registration statement
-------------
on Form S-1 covering the initial public offering of the Company's Common Stock
(the "Effective Date"), each person who is then a member of the Board, and who
is not a current or former employee or officer of the Company, shall be
automatically granted, without further action by the Board, an option to
purchase 3,000 shares of the Common Stock.
(b) Initial Grant to New Directors. Subject to the availability of
------------------------------
shares under this Plan, each person who is first elected as a member of the
Board after May 15, 1995 and during the term of this Plan, and who is not on the
date of such election a current or former employee or officer of the Company,
shall be automatically granted an option to purchase 5,000 shares of the Common
Stock on the date of his or her first election as a member of the Board.
(c) Automatic Grants. On April 30 of each year commencing April 30,
----------------
1996 and during the term of this Plan, each person who is then serving on the
Board, and who is not a current or former employee or officer of the Company,
shall automatically be granted an
<PAGE>
option to purchase 2,500 shares of the Common Stock, subject to the availability
of shares under this Plan.
Except for the specific options referred to above, no other options shall
be granted under this Plan.
5. Option Price. The purchase price of the stock covered by an option
------------
granted pursuant to this Plan shall be 100% of the fair market value of such
shares on the day the option is granted. The option price will be subject to
adjustment in accordance with the provisions of paragraph 10 of this Plan. For
purposes of this Plan, if, at the time an option is granted under the Plan, the
Company's Common Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such option is granted and
shall mean (i) the average (on that date) of the high and low prices of the
Common Stock on the principal national securities exchange on which the Common
Stock is traded, if the Common Stock is then traded on a national securities
exchange; or (ii) the last reported sale price (on that date) of the Common
Stock on the Nasdaq National Market System, if the Common Stock is not then
traded on a national securities exchange; or (iii) the closing bid price (or
average of bid prices) last quoted (on that date) by an established quotation
service for over-the-counter National Market System. If, at the time an option
is granted under the Plan, the Company's stock is not publicly traded, "fair
market value" shall be the fair market value on the date the option is granted
as determined by the Board in good faith.
6. Period of Option. Unless sooner terminated in accordance with the
----------------
provisions of paragraph 8 of this Plan, an option granted hereunder shall expire
on the date which is ten (10) years after the date of grant of the option.
7. Vesting of Shares and Non-Transferability of Options.
----------------------------------------------------
(a) Vesting. Options granted under this Plan shall not be
-------
exercisable until they become vested. Options granted pursuant to Sections 4(b)
and 4(c) of this Plan shall vest in the optionee and thus become exercisable
immediately by the optionee in two annual installments of 50% each on the first
and second anniversary of the date of grant. Options granted pursuant to Section
4(a) of the Plan shall be 100% vested on the date of grant and thus be fully
exercisable at any time prior to their expiration.
(b) Legend on Certificates. The certificates representing such
----------------------
shares shall carry such appropriate legend, and such written instructions shall
be given to the Company's transfer agent, as may be deemed necessary or
advisable by counsel to the Company in order to comply with the requirements of
the Securities Act of 1933 or any state securities laws.
(c) Non-transferability. Any option granted pursuant to this Plan
-------------------
shall not be assignable or transferable other than by will or the laws of
descent and distribution or
2
<PAGE>
pursuant to a domestic relations order and shall be exercisable during the
optionee's life time only by him or her.
8. Termination of Option Rights.
----------------------------
(a) In the event an optionee ceases to be a member of the Board for
any reason other than death or permanent disability, any then unexercised
portion of options granted to such optionee shall, to the extent not then
vested, immediately terminate and become void; any portion of an option which is
then vested but has not been exercised at the time the optionee so ceases to be
a member of the Board may be exercised, to the extent it is then vested, by the
optionee within 180 days of the date the optionee ceased to be a member of the
Board; and all options shall terminate after such 180 days have expired.
(b) In the event that an optionee ceases to be a member of the Board
by reason of his or her death or permanent disability, any option granted to
such optionee shall be immediately, and automatically accelerated and become
fully vested and all unexercised options shall be exercisable by the optionee
(or by the optionee's personal representative, heir or legatee, in the event of
death) until the scheduled expiration date of the option.
9. Exercise of Option. Subject to the terms and conditions of this Plan
------------------
and the option agreements, an option granted hereunder shall, to the extent then
exercisable, be exercisable in whole or in part by giving written notice to the
Company by mail or in person addressed to Aseco Corporation, 261 Cedar Hill
Street, Marlboro, Massachusetts 01752, Attention: Chief Financial Officer,
stating the number of shares with respect to which the option is being
exercised, accompanied by payment in full for such shares. Payment may be (a) in
United States dollars in cash or by check, (b) in whole or in part in shares of
Common Stock of the Company already owned by the person or persons exercising
the option or shares subject to the option being exercised (subject to such
restrictions and guidelines as the Board may adopt from time to time), valued at
fair market value determined in accordance with the provisions of paragraph 5 or
(c) consistent with applicable law, through the delivery of an assignment to the
Company of a sufficient amount of the proceeds from the sale of the Common Stock
acquired upon exercise of the option and an authorization to the broker or
selling agent to pay that amount to the Company, which sale shall be at the
participant's direction at the time of exercise. There shall be no such exercise
at any one time as to fewer than one hundred (100) shares or all of the
remaining shares then purchasable by the person or persons exercising the
option, if fewer than one hundred (100) shares. The Company's transfer agent
shall, on behalf of the Company, prepare a certificate or certificates
representing such shares acquired pursuant to exercise of the option, shall
register the optionee as the owner of such shares on the books of the Company
and shall cause the fully executed certificates(s) representing such shares to
be delivered to the optionee as soon as practicable after payment of the option
price in full. The holder of an option shall not have any rights of a
stockholder with respect to the shares covered by the option, except to the
extent that one or more certificates for such shares shall be delivered to him
or her upon the due exercise of the option.
3
<PAGE>
10. Adjustments Upon Changes in Capitalization and Other Matters. Upon
------------------------------------------------------------
the occurrence of any of the following events, an optionee's rights with respect
to options granted to him or her hereunder shall be adjusted as hereinafter
provided:
(a) If, after January 18, 1993, the shares of Common Stock shall be
subdivided or combined into a greater smaller number of shares or if the Company
shall issue any shares of Common Stock as a stock dividend on its outstanding
Common Stock, the number of shares of Common Stock deliverable upon the exercise
of options shall be appropriately increased or decreased proportionately, and
appropriate adjustments shall be made in the purchase price per share to reflect
such subdivision, combination or stock dividend. No adjustment, however, shall
be made for the 1-for-2.4 reverse split of the Common Stock declared by the
Board on January 18, 1993.
(b) Merger; Consolidation; Liquidation; Sale of Assets. In the event
--------------------------------------------------
the Company is merged into or consolidated with another corporation under
circumstances where the Company is not the surviving corporation, or if the
Company is liquidated or sells or otherwise disposes of all or substantially all
of its assets to another corporation while unexercised options remain
outstanding under the Plan, (i) subject to the provisions of clauses (iii), (iv)
and (v) below, after the effective date of such merger, consolidation or sale,
as the case may be, each holder of an outstanding option shall be entitled, upon
exercise of such option, to receive in lieu of shares of Common Stock, shares of
such stock or other securities as the holders of shares of Common Stock received
pursuant to the terms of the merger, consolidation or sale; or (ii) the Board
may waive any discretionary limitations imposed with respect to the exercise of
the option so that all options from and after a date prior to the effective date
of such merger, consolidation, liquidation or sale, as the case may be,
specified by the Board, shall be exercisable in full; or (iii) all outstanding
options may be cancelled by the Board as of the effective date of any such
merger, consolidation, liquidation or sale, provided that notice of such
cancellation shall be given to each holder of an option, and each such holder
thereof shall have the right to exercise such option in full (without regard to
any discretionary limitations imposed with respect to the option) during a 30-
day period preceding the effective date of such merger, consolidation,
liquidation or sale; or (iv) all outstanding options may be cancelled by the
Board as of the date of any such merger, consolidation, liquidation or sale,
provided that notice of such cancellation shall be given to each holder of an
option and each such holder thereof shall have the right to exercise such option
but only to the extent exercisable in accordance with any discretionary
limitations imposed with respect to the option prior to the effective date of
such merger, consolidation, liquidation or sale; or (v) the Board may provide
for the cancellation of all outstanding options and for the payment to the
holders thereof of some part or all of the amount by which the value thereof
exceeds the payment, if any, which the holder would have been required to make
to exercise such option.
(c) Issuance of Securities. Except as expressly provided herein, no
----------------------
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to,
4
<PAGE>
the number or price of shares subject to options. No adjustments shall be made
for dividends paid in cash or in property other than securities of the Company.
(d) Adjustments. Upon the happening of any of the foregoing events,
-----------
the class and aggregate number of shares set forth in paragraph 2 of this Plan
that are subject to options which previously have been or subsequently may be
granted under this Plan shall also be appropriately adjusted to reflect such
events. The Board shall determine the specific adjustments to be made under this
paragraph 10 and its determination shall be conclusive.
11. Restrictions on Issuance of Shares. Notwithstanding the provisions of
----------------------------------
paragraphs 4 and 9 of this Plan, the Company shall have no obligation to deliver
any certificate or certificates upon exercise of an option until one of the
following conditions shall be satisfied:
(i) The shares with respect to which the option has been exercised
are at the time of the issue of such shares effectively registered under
applicable Federal and state securities laws as now in force or hereafter
amended; or
(ii) Counsel for the Company shall have given an opinion that such
shares are exempt from registration under Federal and state securities laws
as now in force or hereafter amended; and the Company has complied with all
applicable laws and regulations with respect thereto, including without
limitation all regulations required by any stock exchange upon which the
Company's outstanding Common Stock is then listed.
12. Representation of Optionee. If requested by the Company, the optionee
--------------------------
shall deliver to the Company written representations and warranties upon
exercise of the option that are necessary to show compliance with Federal and
state securities laws, including representations and warranties to the effect
that a purchase of shares under the option is made for investment and not with a
view to their distribution (as that term is used in Securities Act of 1933).
13. Option Agreement. Each option granted under the provisions of this
----------------
Plan shall be evidenced by an option agreement, which agreement shall be duly
executed and delivered on behalf for the Company and by the optionee to whom
such option is granted. The option agreement shall contain such terms,
provisions and conditions not inconsistent with this Plan as may be determined
by the officer executing it.
14. Termination and Amendment of Plan. Options may no longer be granted
---------------------------------
under this Plan after January 18, 2003, and this Plan shall terminate when all
options granted or to be granted hereunder are no longer outstanding. The Board
may at any time terminate this Plan or make such modification or amendment
thereof as it deems advisable; provided, however, that the Board may not,
-------- -------
without approval by the affirmative vote of the holders of a majority of the
shares of Common Stock present in person or by proxy and entitled to vote at the
meeting, (a) increase the maximum number of shares for which options may be
granted
5
<PAGE>
under this Plan (except by adjustment pursuant to Section 10), (b) materially
modify the requirements as to eligibility to participate in this Plan, (c)
materially increase benefits accruing to option holders under this Plan, or
(d) amend this Plan in any manner which would cause Rule 16b-3 to become
inapplicable to this Plan; and provided further that the provisions of this Plan
-------- -------
specified in Rule 16b-3(c)(2)(ii)(A) (or any successor or amended provision
thereof) under the Securities Exchange Act of 1934 (including without
limitation, provisions as to eligibility, amount, price and timing of awards)
may not be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules thereunder. Termination or any modification or amendment of
this Plan shall not, without consent of a participant, affect his or her rights
under an option previously granted to him or her.
15. Withholding of Income Taxes. Upon the exercise of an option, the
---------------------------
Company, in accordance with Section 3402(a) of the Internal Revenue Code, may
require the optionee to pay withholding taxes in respect of amounts considered
to be compensation includible in the optionee's gross income.
16. Compliance with Regulations. It is the Company's intent that the Plan
---------------------------
comply with all respects with Rule 16b-3 under the Securities Exchange Act of
1934 (or any successor or amended version thereof) and any applicable Securities
and Exchange Commission interpretations thereof. If any provision of this Plan
is deemed not to be in compliance with Rule 16b-3, the provision shall be null
and void.
17. Governing Law. The validity and construction of this Plan and the
-------------
instruments evidencing options shall be governed by the laws of The Commonwealth
of Massachusetts, without giving effect to the principles of conflicts of law
thereof.
Date Approved by Board of
Directors of the Company: January 18, 1993
Date Approved by Stockholders
of the Company: January 29, 1993
6
<PAGE>
EXHIBIT 10.4
ASECO CORPORATION
1993 OMNIBUS STOCK PLAN
(Amended and Restated Effective as of June 14, 1996)
1. Purpose. This 1993 Stock Plan (the "Plan") is intended to provide
-------
incentives (a) to the officers and other employees of Aseco Corporation (the
"Company"), its parent (if any) and any present or future subsidiaries of the
Company (collectively, "Related Corporations") by providing them with
opportunities to purchase stock in the Company pursuant to options which qualify
as "incentive stock options" under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), granted hereunder ("ISO" or "ISOs"); (b) to
directors, officers, employees and consultants of the Company and Related
Corporations by providing them with opportunities to purchase stock in the
Company pursuant to options granted hereunder which do not qualify as ISOs
("Non-Qualified Option" or "Non-Qualified Options"); (c) to directors, officers,
employees and consultants of the Company and Related Corporations by providing
them with awards of stock in the Company ("Awards"); and (d) to directors,
officers, employees and consultants of the Company and Related Corporations by
providing them with opportunities to make direct purchases of stock in the
Company ("Purchases"). Both ISOs and Non-Qualified Options are referred to
hereafter individually as an "Option" and collectively as "Options." As used
herein, the terms "parent" and "subsidiary" mean "parent corporation" and
"subsidiary corporation" as those terms are defined in Section 425 of the Code.
2. Administration of the Plan. (a) The Plan shall be administered by the
--------------------------
Board of Directors of the Company (the "Board"). The Board may appoint a
Compensation Committee (the "Committee") of two or more of its members to
administer this Plan. In the event the Company registers any class of any equity
security pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), each member of the Committee shall be a
"disinterested person" as defined in Rule 16b-3 under the Exchange Act and an
"outside director" as defined in Section 162(m) of the Code. Subject to
ratification of the grant of each Option or Award and of the authorization of
each Purchase by the Board (if so required by applicable state law), and subject
to the terms of the Plan, the Committee, if so appointed, shall have the
authority to (i) determine the employees of the Company and Related Corporations
(from among the class of employees eligible under paragraph 3 to receive ISOs)
to whom ISOs may be granted, and to determine (from among the class of
individuals and entities eligible under paragraph 3 to receive Non-Qualified
Options and Awards and to make Purchases) to whom Non-Qualified Options or
Awards may be granted and who may make Purchases; (ii) determine the time or
times at which Options or Awards may be granted or Purchases made; (iii)
determine the option price of shares subject to each Option, which price with
respect to ISOs shall not be less than the minimum specified in paragraph 6, and
the purchase price of shares subject to each Purchase; (iv) determine whether
each Option granted shall be an ISO or a Non-Qualified Option; (v) determine
(subject to paragraph 7) the time or times when each Option shall become
exercisable and the duration of the exercise period; (vi) determine whether
restrictions such as repurchase options are to be imposed on shares subject to
Options, Awards and Purchases, and the nature of such restrictions, if any, and
(vii) interpret the Plan and prescribe and rescind rules and regulations
relating to it. If the Committee determines to issue
<PAGE>
a Non-Qualified Option, it shall take whatever actions it deems necessary, under
Section 422 of the Code and the regulations promulgated thereunder, to ensure
that such Option is not treated as an ISO. The interpretation and construction
by the Committee of any provisions of the Plan or of any Option, Award or
authorization for any Purchase granted under it shall be final unless otherwise
determined by the Board. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem best. No member of the
Board or the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Option, Award or authorization for
Purchase granted under it.
(b) The Committee may select one of its members as its chairman, and shall
hold meetings at such time and places as it may determine. Acts by a majority of
the Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee. All
references in this Plan to the Committee shall mean the Board if there is no
Committee so appointed. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause), and appoint new members in substitution therefor, fill vacancies
however caused, or remove all members of the Committee and thereafter directly
administer the Plan.
3. Eligible Employees and Others. ISOs may be granted to any officer or
-----------------------------
other employee of the Company or any Related Corporation. Those directors of the
Company who are not employees may not be granted ISOs under the Plan. Non-
Qualified Options and Awards may be granted to, and Purchases may be made by,
any director (whether or not an employee), officer, employee or consultant of
the Company or any Related Corporation. The Committee may take into
consideration an optionee's individual circumstances in determining whether to
grant an ISO or a Non-Qualified Option or to authorize a Purchase. Granting of
any Option or Award to, or any Purchase by, any individual or entity shall
neither entitle that individual or entity to, nor disqualify him from,
participation in any other grant of Options or Awards, or in any other Purchase.
4. Stock. The stock subject to Options, Awards and Purchases shall be
-----
authorized but unissued shares of Common Stock of the Company, par value $.01
per share (the "Common Stock"), or shares of Common Stock re-acquired by the
Company in any manner. The aggregate number of shares which may be issued
pursuant to the Plan is 1,230,000, subject to adjustment as provided in
paragraph 13. Any such shares may be issued as ISOs, Non-Qualified Options or
Awards, or to persons or entities making Purchases, so long as the aggregate
number of shares so issued does not exceed such number, as adjusted. If any
Option granted under the Plan shall expire or terminate for any reason without
having been exercised in full or shall cease for any reason to be exercisable in
whole or in part, the unpurchased shares subject thereto shall again be
available for grants of Options or Awards and for Purchases under the Plan.
5. Granting of Options. Options may be granted under the Plan at any
-------------------
time on or after January 18, 1993 and prior to January 18, 2003. Any such grants
of ISOs shall be subject
2
<PAGE>
to the receipt, within 12 months of January 18, 1993, of the approval of
Stockholders as provided in paragraph 15. The date of grant of an Option under
the Plan will be the date specified by the Committee at the time it awards the
Option; provided, however, that such date shall not be prior to the date of
award. The Committee shall have the right, with the consent of the optionee, to
convert an ISO granted under the Plan to a Non-Qualified Option pursuant to
paragraph 16. Any other provision of the Plan notwithstanding, the number of
shares of Common Stock for which options may be granted in any fiscal year of
the Company to any participant shall not exceed 100,000.
6. Minimum Option Price: ISO Limitations.
--------------------------------------
A. The price per share specified in the agreement relating to each
ISO granted under the Plan shall not be less than the fair market value per
share of Common Stock on the date of such grant. In the case of an ISO to be
granted to an employee owning stock possessing more than ten percent of the
total combined voting power of all classes of stock of the Company or any
Related Corporation, the price per share specified in the agreement relating to
such ISO shall not be less than 110 percent of the fair market value of Common
Stock on the date of grant.
B. In no event shall the aggregate fair market value (determined at
the time the option is granted) of Common Stock for which ISOs granted to any
employee are exercisable for the first time by such employee during any calendar
year (under all stock option plans of the Company and any Related Corporation)
exceed $100,000.
C. If, at the time an Option is granted under the Plan, the
Company's Common Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such Option is granted and
shall mean (i) the average (on that date) of the high and low prices of the
Common Stock on the principal national securities exchange on which the Common
Stock is traded, if such stock is then traded on a national securities exchange;
or (ii) the last reported sale price (on that date) of the Common Stock on the
NASDAQ National Market System, if the Common Stock is not then traded on a
national securities exchange; or (iii) the closing bid price (or average of bid
prices) last quoted (on that date) by an established quotation service for over-
the-counter securities, if the Common Stock is not reported on the NASDAQ
National Market System or on a national securities exchange. However, if the
Common Stock is not publicly traded at the time an Option is granted under the
Plan, "fair market value" shall be deemed to be the fair value of the Common
Stock as determined by the Committee after taking into consideration all factors
which it deems appropriate, including, without limitation, recent sale and offer
prices of the Common Stock in private transactions negotiated at arm's length.
7. Option Duration. Subject to earlier termination as provided in
---------------
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than ten years from the date of grant and in the case of
ISOs granted to an employee owning stock
3
<PAGE>
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or any Related Corporation, not more than five
years from date of grant. Subject to earlier termination as provided in
paragraphs 9 and 10, the term of each ISO shall be the term set forth in the
original instrument granting such ISO, except with respect to any part of such
ISO that is converted into a Non-Qualified Option pursuant to paragraph 16.
8. Exercise of Option. Subject to the provisions of paragraphs 9 through
------------------
12, each Option granted under the Plan shall be exercisable as follows:
A. The Option shall either be fully exercisable on the date of grant
or shall become exercisable thereafter in such installments as the Committee may
specify.
B. Once an installment becomes exercisable it shall remain
exercisable until expiration or termination of the Option, unless otherwise
specified by the Committee.
C. Each Option or installment may be exercised at any time or from
time to time, in whole or in part, for up to the total number of shares with
respect to which it is then exercisable.
D. The Committee shall have the right to accelerate the date of
exercise of any installment; provided that the Committee shall not accelerate
the exercise date of any installment of any Option granted to any employee as an
ISO (and not previously converted into a Non-Qualified Option pursuant to
paragraph 16) if such acceleration would violate the annual vesting limitation
contained in Section 422(d) of the Code which provides generally that the
aggregate fair market value (determined at the time the option is granted) of
the stock with respect to which ISOs granted to any employee are exercisable for
the first time by such employee during any calendar year (under all plans of the
Company and any Related Corporation) shall not exceed $100,000.
9. Termination of Employment. If an ISO optionee ceases to be employed
-------------------------
by the Company or any Related Corporation other than by reason of death or
disability as provided in paragraph 10, no further installments of his ISOs
shall become exercisable, and his ISOs shall terminate after the passage of 60
days from the date of termination of his employment, but in no event later than
on their specified expiration dates except to the extent that such ISOs (or
unexercised installments thereof) have been converted into Non-Qualified Options
pursuant to paragraph 16. Leave of absence with the written approval of the
Committee shall not be considered an interruption of employment under the Plan,
provided that such written approval contractually obligates the Company or any
Related Corporation to continue the employment of the employee after the
approved period of absence. Employment shall also be considered as continuing
uninterrupted during any other bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service) provided
that the period of such leave does not exceed 90 days or, if longer, any period
during which such optionee's right to reemployment is guaranteed by statute.
Nothing in the Plan shall be deemed to give any grantee of any Option or Award,
or any person or entity entitled to make a Purchase, the
4
<PAGE>
right to be retained in employment or other service by the Company or any
Related Corporation for any period of time. ISOs granted under the Plan shall
not be affected by any change of employment within or among the Company and
Related Corporations, so long as the optionee continues to be an employee of the
Company or any Related Corporation. In granting any Non-Qualified Option, the
Committee may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other termination
or cancellation provisions as the Committee may determine.
10. Death; Disability; Dissolution. If an optionee ceases to be employed
------------------------------
by the Company and all Related Corporations by reason of his death, any Option
of his may be exercised, to the extent of the number of shares with respect to
which he could have exercised it on the date of his death, by his estate,
personal representative or beneficiary who has acquired the Option by will or by
the laws of descent and distribution, at any time prior to the earlier of the
Option's specified expiration date or 180 days from the date of the optionee's
death.
If an optionee ceases to be employed by the Company and all Related
Corporations by reason of his disability, he shall have the right to exercise
any Option held by him on the date of termination of employment, to the extent
of the number of shares with respect to which he could have exercised it on that
date, at any time prior to the earlier of the Option's specified expiration date
or 180 days from the date of the termination of the optionee's employment. For
the purposes of the Plan, the term "disability" shall have the meaning assigned
to it in Section 22(e)(3) of the Code or any successor statute.
In the case of a partnership, corporation or other entity holding a Non-
Qualified Option, if such entity is dissolved, liquidated, becomes insolvent or
enters into a merger or acquisition with respect to which such optionee is not
the surviving entity, such Option shall terminate immediately.
11. Assignability. No Option shall be assignable or transferable by the
-------------
optionee except by will or by the laws of descent and distribution, and during
the lifetime of the Optionee each Option shall be exercisable only by him.
12. Terms and Conditions of Options. Options shall be evidenced by
-------------------------------
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. The Committee may from time to time confer
authority and responsibility on one or more of its own members and/or one or
more officers of the Company to execute and deliver such instruments. The proper
officers of the Company are authorized and directed to take any and all action
necessary or advisable from time to time to carry out the terms of such
instruments.
5
<PAGE>
13. Adjustments. Upon the happening of any of the following described
-----------
events, an optionee's rights with respect to Options granted to him hereunder
shall be adjusted as hereinafter provided:
A. In the event shares of Common Stock shall be sub-divided or
combined into a greater or smaller number of shares (other than the 1-for-2.4
reverse split of the Common Stock approved by the Board on January 18, 1992) or
if, upon a merger, consolidation, reorganization, split-up, liquidation,
combination, recapitalization or the like of the Company, the shares of Common
Stock shall be exchanged for other securities of the Company or of another
corporation, each optionee shall be entitled, subject to the conditions herein
stated, to purchase such number of shares of common stock or amount of other
securities of the Company or such other corporation as were exchangeable for the
number of shares of Common Stock which such optionee would have been entitled to
purchase except for such action, and appropriate adjustments shall be made in
the purchase price per share to reflect such subdivision, combination, or
exchange.
B. In the event the Company shall issue any of its shares as a stock
dividend upon or with respect to the shares of stock of the class which shall at
the time be subject to option hereunder, each optionee upon exercising an Option
shall be entitled to receive (for the purchase price paid upon such exercise)
the shares as to which he is exercising his Option and, in addition thereto (at
no additional cost), such number of shares of the class or classes in which such
stock dividend or dividends were declared or paid, and such amount of cash in
lieu of fractional shares, as he would have received if he had been the holder
of the shares as to which he is exercising his Option at all times between the
date of grant of such Option and the date of its exercise.
C. Notwithstanding the foregoing, any adjustments made pursuant to
subparagraph A or B shall be made only after the Committee, after consulting
with counsel for the Company, determines whether such adjustments with respect
to ISOs will constitute a "modification" of such ISOs as that term is defined in
Section 425 of the Code, or cause any adverse tax consequences for the holders
of such ISOs. No adjustments shall be made for dividends paid in cash or in
property other than securities of the Company.
D. No fractional shares shall actually be issued under the Plan. Any
fractional shares which, but for this subparagraph D, would have been issued to
an optionee pursuant to an Option, shall be deemed to have been issued and
immediately sold to the Company for their fair market value, and the optionee
shall receive from the Company cash in lieu of such fractional shares.
E. Upon the happening of any of the foregoing events described in
subparagraphs A or B above, the class and aggregate number of shares set forth
in paragraph 4 hereof which are subject to Options which previously have been or
subsequently may be granted under the Plan shall also be appropriately adjusted
to reflect the events specified in
6
<PAGE>
such subparagraphs. The Committee shall determine the specific adjustments to be
made under this paragraph 13, and subject to paragraph 2, its determination
shall be conclusive.
14. Means of Exercising Options. An Option (or any part or installment
---------------------------
thereof) shall be exercised by giving written notice to the Company at its
principal office address. Such notice shall identify the Option being exercised
and specify the number of shares as to which such Option is being exercised,
accompanied by full payment of the purchase price therefor either (a) in United
States dollars in cash or by check, or (b) at the discretion of the Committee,
through delivery of shares of Common Stock having fair market value equal as of
the date of the exercise to the cash exercise price of the Option, or (c) at the
discretion of the Committee, by delivery of the optionee's personal recourse
note bearing interest payable not less than annually at no less than 100% of the
lowest applicable Federal rate, as defined in (S)1274(d) of the Code, or (d) at
the discretion of the Committee, by any combination of (a), (b) and (c) above.
If the Committee exercises its discretion to permit payment of the exercise
price of an ISO by means of the methods set forth in clauses (b) or (c) of the
preceding sentence, such discretion shall be exercised in writing at the time of
the grant of the ISO in question. The holder of an Option shall not have the
rights of a shareholder with respect to the shares covered by his Option until
the date of issuance of a stock certificate to him for such shares. Except as
expressly provided above in paragraph 13 with respect to change in
capitalization and stock dividends, no adjustment shall be made for dividends or
similar rights for which the record date is before the date such stock
certificates is issued.
15. Term and Amendment of Plan. This Plan was adopted by the Board on
--------------------------
January 18, 1993, and was approved by the holders of a majority of the
outstanding voting stock of the Company on January 29, 1994. The Plan was
subsequently amended and restated by the Board effective January 12, 1994,
subject to approval of the amendments thereto by the stockholders of the Company
on or before January 12, 1995. The Plan shall expire on January 18, 2003 (except
as to Options outstanding on that date). The Board may terminate or amend the
Plan in any respect at any time, except that, any amendment that (a) increases
the total number of shares that may be issued under the Plan (except by
adjustment pursuant to paragraph 13); (b) changes the class of persons eligible
to participate in the Plan, or (c) materially increases the benefits to
participants under the Plan, shall be subject to approval by Stockholders
obtained within 12 months before or after the Board adopts a resolution
authorizing any of the foregoing amendments, and shall be null and void if such
approval is not obtained. Except as provided in the fourth sentence of this
paragraph 15, in no event may action of the Board of Stockholders alter or
impair the rights of an optionee, purchaser or Award recipient without his
consent, under any Option, Purchase or Award previously granted to or made by
him.
16. Conversion of ISOs into Non-Qualified Options: Termination of ISOs.
-------------------------------------------------------------------
The Committee, at the written request of any optionee, may in its discretion
take such actions as may be necessary to convert such optionee's ISOs (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee
7
<PAGE>
is an employee of the Company or a Related Corporation at the time of such
conversion. Such actions may include, but not be limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
of such Options. At the time of such conversion, the Committee (with the consent
of the Optionee) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Committee in its discretion may determine, provided
that such conditions shall not be inconsistent with this Plan. Nothing in the
Plan shall be deemed to give any optionee the right to have such optionee's ISOs
converted into Non-Qualified Options, and no such conversion shall occur until
and unless the Board takes appropriate action. The Committee, with the consent
of the optionee, may also terminate any portion of any ISO that has not been
exercised at the time of such termination.
17. Application of Funds. The proceeds received by the Company from the
--------------------
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.
18. Governmental Regulation. The Company's obligation to sell and deliver
-----------------------
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
19. Withholding of Additional Income Taxes. The Company, in accordance
--------------------------------------
with Section 3402(a) of the Code, may, upon exercise of a Non-Qualified Option,
the grant of an Award, the making of a Purchase of Common Stock for less than
its fair market value, or the making of a Disqualifying Disposition (as defined
in paragraph 20) require the optionee exercising such Option, Award recipient or
purchaser to pay additional withholding taxes in respect of the amount that is
considered compensation includible in such person's gross income.
20. Notice to Company of Disqualifying Disposition. Each employee who
----------------------------------------------
receives ISOs shall agree to notify the Company in writing immediately after the
employee makes a disqualifying disposition of any Common Stock received pursuant
to the exercise of an ISO (a "Disqualifying disposition"). Disqualifying
Disposition means any disposition (including any sale) of such stock before the
later of (a) two years after the employee was granted the ISO under which he
acquired such stock, or (b) one year after the employee acquired such stock by
exercising such ISO. If the Employee has died before such stock is sold, these
holding period requirements do not apply and no Disqualifying Disposition will
thereafter occur.
21. Governing Laws; Construction. The validity and construction of the
----------------------------
Plan and the instruments evidencing Options, Awards and Purchases shall be
governed by the laws of The Commonwealth of Massachusetts. In construing this
Plan, the singular shall include the plural and the masculine gender shall
include the feminine and neuter, unless the context otherwise requires.
8
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Forms S-8 No. 33-66250, 33-80425, 33-89036) of Aseco Corporation of our report
dated May 10, 1996, except for Note L, as to which the date is June 14, 1996,
with respect to the consolidated financial statements and schedule of Aseco
Corporation included in the Annual Report (Form 10-K) for the year ended March
31, 1996.
ERNST & YOUNG LLP
Boston, Massachusetts
June 24, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ASECO
CORPORATION CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-03-1995
<PERIOD-END> MAR-31-1996
<CASH> 14,083
<SECURITIES> 0
<RECEIVABLES> 12,743
<ALLOWANCES> 397
<INVENTORY> 7,059
<CURRENT-ASSETS> 34,352
<PP&E> 4,187
<DEPRECIATION> 2,176
<TOTAL-ASSETS> 36,681
<CURRENT-LIABILITIES> 7,853
<BONDS> 0
0
0
<COMMON> 36
<OTHER-SE> 28,380
<TOTAL-LIABILITY-AND-EQUITY> 36,681
<SALES> 41,569
<TOTAL-REVENUES> 41,569
<CGS> 21,174
<TOTAL-COSTS> 21,174
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (14)
<INCOME-PRETAX> 6,946
<INCOME-TAX> 2,540
<INCOME-CONTINUING> 4,406
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,406
<EPS-PRIMARY> 1.17
<EPS-DILUTED> 1.17
</TABLE>
