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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 30, 1997
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 $46,818,217 as of May 30, 1997
3,672,017
(Number of shares of common stock outstanding as of May 30, 1997)
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates by reference certain information from the Registrant's
proxy statement for the annual meeting of stockholders to be held on August 6,
1997
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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 1997 at a compound annual growth rate of 30% and the Company has
operated profitably for each of the past thirty-eight 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 ("index time") and must be adaptable to
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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 time of
memory IC device test handlers is less important because of the long test
times of memory IC devices.
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 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 four basic types of test handlers: gravity-feed systems, pick and
place systems, belt-conveyance 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. The gravity-feed system, the
oldest of the four 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. Belt-
conveyance systems move large quantities of devices quickly into and out of
the system on belts without damaging fragile leads.
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
currently offers test handlers with three IC device transport mediums--
gravity-feed, air-bearing and pick and place and in the fourth quarter of
fiscal 1997, shipped a beta test version of its newest belt-conveyance test
handler (see "Product Development"). The four transport mediums allow
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. If so desired by customers, other contactors can also be
used with Aseco equipment.
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 that 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-133 TEST HANDLER
The S-133 is a modified version of the S-130 test handler. It offers all the
features and capabilities of the S-130 plus the ability to position the device
for electrical testing of accelerometers while under physical shock. An
accelerometer is a device that activates when a large amount of force is
placed upon it and is used in such applications as car airbags.
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 AND S-170D TEST HANDLERS
The S-170C and S-170D are modified versions of the S-170 gravity feed test
handler. Each 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. In addition, the S-170D offers plunge to
board capability that allows an electrical connection between the IC device
and a device under test ("dut") board eliminating the need for a contactor and
facilitating testing of IC devices with very short lead lengths.
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 in-line
lead inspection in addition to its normal electrical test handling capability.
MODEL S-450 TEST HANDLER
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. 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 that 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.
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Remanufacturing Services
The Remanufacturing Services Group provides services such as machine
upgrades, reconditioning and reconfiguration for all of the Company's test
handler models.
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
1997, approximately 90% of the Company's net sales represented repeat
business. In addition, since 1988 the Company has succeeded in adding new
names to its customer list each and every 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 30, 1997, the Company had sold 1,145 test handler systems to
approximately 130 customers in more than 160 worldwide locations. In fiscal
1997, one customer, Analog Devices, Inc., accounted for 17% of net sales.
SALES AND MARKETING
The Company markets its products primarily through manufacturers'
representative organizations. As of March 30, 1997, the Company had ten 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.
In the first quarter of fiscal 1998, the Company also established a sales and
service office in Singapore. 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 52%, 42%, and 42% of the
Company's net sales in fiscal 1997, 1996 and 1995, 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. As a result of the Company's acquisition of WED on May 23, 1997, in
England, a portion of the Company's international sales will be subject to
fluctuating currency exchange rates. (See "Fiscal 1997 Developments" at the
end of Part I)
BACKLOG
The Company's backlog which consists of customer purchase orders which the
Company expects to fill within the next twelve months, was approximately
$2,995,000 as of March 30, 1997. 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,
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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 eight international field
service centers, each strategically located near customers to minimize
response time to customer service requests. Six of the eight international
field service centers are maintained by the Company's manufacturers'
representative organizations and two directly by the Company. In addition, in
the first quarter of fiscal 1998, the Company established a subsidiary in
Singapore to provide service and technical support directly to its customers.
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 at March 30, 1997 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.
During the fourth quarter of fiscal 1997, the Company initiated beta testing
of its newest test handler that employs a belt-conveyance transport medium
addressing a wide range of IC applications with limited need for conversion
kits. Assuming the successful completion of beta testing, the Company plans to
begin shipments of this model in the second half of fiscal 1998.
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.
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.
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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.
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 30, 1997, Aseco had 129 regular employees and 15 contract
employees including 49 in manufacturing, 49 in engineering and product
development, 16 in general administration and finance, 27 in sales and
marketing and 3 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.
FISCAL 1997 DEVELOPMENTS
In the fourth quarter of fiscal 1997, the Company initiated beta testing of
its newest test handler that employs a belt conveyance transport medium and
addresses a wide range of IC applications with limited need for conversion
kits. Assuming the successful completion of beta testing, the Company plans to
begin shipments of this model in the second half of fiscal 1998.
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In the first quarter of fiscal 1998, the Company established a new
subsidiary in Singapore to provide service and technical support to its
customer base in Southeast Asia. Personnel at this site will provide on-site
service and repair, product training and technical support services.
On May 23, 1997 the Company acquired Western Equipment Developments
(Holdings) Ltd. ("WED"), based in Plymouth, England for approximately
$6,000,000 in cash. WED designs, manufactures and markets integrated circuit
wafer handling robot systems. These systems are used to load, sort and
transport wafers during both manual and automatic inspection as well as other
wafer processing steps in the semiconductor manufacturing process. WED will
allow Aseco to broaden its presence in the semiconductor automated handling
and processing equipment market while taking advantage of synergies such as
similar customer bases and distribution channels. WED has approximately 40
employees and generated net sales of approximately $5.0 million for its fiscal
year ended April 30, 1997. (See Footnote M to Consolidated Financial
Statements)
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 1998.
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 30, 1997.
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........ 45 Vice President, Finance and Administration,
Chief Financial Officer, Treasurer and Director
C. Kenneth Gray............ 48 Vice President, Sales & Marketing
Dennis A. Legal............ 57 Vice President, Engineering
Theodore A. Aronis......... 59 Vice President, Manufacturing Operations
R. Bruce O'Connor.......... 58 Vice President, Device Process Equipment
Marketing
</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.
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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. Legal has been Vice President, Engineering since August 1996. From May
1986 to August 1996, Mr. Legal was the Division Engineering Manager of
Teradyne Automatic Test Equipment, a manufacturer of automatic test equipment,
including test handlers.
Mr. Aronis has been Vice President, Manufacturing Operations since April
1997. From 1985 to 1997, Mr. Aronis was Vice President, Operations of
Xylogics, a manufacturer of communications equipment.
Mr. O'Connor has been Vice President, Device Process Equipment Marketing
since April 1997. From 1994 to 1997, Mr. O'Connor led the Company's
development program for its newest test handler model. Prior to joining Aseco,
Mr. O'Connor was Executive Vice President at Symtek Systems, Inc. a
manufacturer of automatic test handlers.
Executive officers of the Company are elected by the Board of Directors and
serve until their successors have been duly elected and qualified. There are
no family relationships among any of the executive officers or directors of
the Company.
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 sale
prices of the common stock during the two most recent fiscal years:
<TABLE>
<CAPTION>
1997
-------------
PERIOD HIGH LOW
------ ------ ------
<S> <C> <C>
First Quarter................................................ $14.63 $ 9.50
Second Quarter............................................... 11.50 8.25
Third Quarter................................................ 10.38 7.00
Fourth Quarter............................................... 11.88 9.50
<CAPTION>
1996
-------------
<S> <C> <C>
First Quarter................................................ $18.25 $ 9.38
Second Quarter............................................... 22.00 15.75
Third Quarter................................................ 21.25 13.50
Fourth Quarter............................................... 16.63 10.00
</TABLE>
On May 30, 1997, the closing price of the Company's common stock was $12.75
per share. On such date there were 3,672,017 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.
9
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------
MARCH 30, MARCH 31, APRIL 2, APRIL 3, MARCH 28,
1997 1996 1995 1994 1993
--------- --------- -------- -------- ---------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA
Net sales..................... $34,320 $41,569 $29,192 $20,264 $15,869
Income from operations........ 2,623 6,397 3,987 2,445 1,635
Net income.................... 2,288 4,406 3,088 1,980 1,060
Earnings per share............ .62 1.17 .85 .55 .47
BALANCE SHEET DATA
Total assets.................. $36,640 $36,681 $29,267 $23,792 $21,166
Long term capital lease obli-
gations...................... 29 42 53 -- 73
Stockholders' equity.......... 31,113 28,416 22,711 19,513 16,566
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations--Fiscal 1997 versus Fiscal 1996
Net sales for fiscal 1997 decreased 17% to $34.3 million from $41.6 million
in fiscal 1996. The decrease resulted primarily from a reduction in unit
shipments due to an industry wide slowdown in the semiconductor market during
fiscal 1997.
International sales, which increased 2.5% during fiscal 1997 to $17.8
million from $17.4 million in fiscal 1996, represented approximately 52% of
net sales in fiscal 1997 versus 42% in fiscal 1996. Sales in the Pacific Rim
region were particularly strong, representing 83% of all international sales.
Gross profit for fiscal 1997 was $16.2 million, or 47% of net sales,
compared to $20.4 million, or 49% of net sales, in fiscal 1996. The decrease
in gross profit as a percentage of net sales resulted from a reduction in
manufacturing overhead spending which was disproportionate with the reduction
in units produced during fiscal 1997. Although cost control measures,
including a reduction in workforce and discretionary spending constraints,
were made early in fiscal 1997, the savings realized were partially offset by
spending on operation infrastructure enhancements incurred to enable the
Company to respond effectively to production demands in the future.
Research and development costs increased 10% to $5.2 million in fiscal 1997
from $4.7 million in fiscal 1996. As a percentage of net sales, research and
development costs were 15% and 11% in fiscal 1997 and fiscal 1996,
respectively. Research and development spending in fiscal 1997 focused
primarily on the development of a new test handler system design and the
enhancement of existing products through additional automation and product
versatility through additional conversion kits.
Selling, general and administrative expenses for fiscal 1997 decreased
approximately 10% to $8.4 million from $9.3 million in fiscal 1996. As a
percentage of net sales, selling, general and administrative costs were 24%
and 22% during fiscal 1997 and 1996, respectively. The decrease in selling,
general and administrative expenses resulted primarily from a decrease in
sales commissions earned during the year. The decrease in commission expense
resulted from both the decrease in net sales and a decrease in commission
rates resulting from the Company's efforts to transition more customers to a
direct sales relationship. The decrease in selling, general and administrative
costs were partially offset by spending incurred to support the installation
of the Company's new business information system.
As a result of the above, operating income for fiscal 1997 declined 59% to
$2.6 million from $6.4 million in fiscal 1996.
10
<PAGE>
Other income, net of $668,000 in fiscal 1997 and $549,000 in fiscal 1996 was
derived primarily from interest income earned on cash and cash equivalents.
The Company's effective tax rate for fiscal 1997 was 30.5% compared to 36.6%
in fiscal 1996. The fiscal 1997 tax rate was lower than the fiscal 1996 rate
principally because of a higher percentage of net sales coming from
international markets and a greater R&D tax credit which resulted as the
Company accelerated its spending on certain qualified development expenses.
Net income for fiscal 1997 decreased 48% to $2.3 million, or $.62 per share
with 3,717,000 weighted average shares outstanding, from $4.4 million, or
$1.17 per share with 3,776,000 weighted average shares outstanding, in fiscal
1996.
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.
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.
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
successfully completed an Internal Revenue Service audit of its fiscal 1993
tax year. As a result, an
11
<PAGE>
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 weighted average shares outstanding, from $3.1 million, or $.85
per share with 3,616,000 weighted average shares outstanding, in fiscal 1995.
Liquidity and Capital Resources
The Company maintained a strong liquidity position in fiscal 1997, closing
fiscal 1997 with a cash balance of $14.1 million (See "Subsequent Events"
below). 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
1997.
The Company generated approximately $1 million in cash from operating
activities during fiscal 1997. The primary working capital factors affecting
cash from operations were inventory levels, accounts receivable, and accounts
payable and accrued expenses. During fiscal 1997, inventory levels increased
by approximately $2.2 million to $9.2 million as the Company purchased
inventory during the first quarter of the year to fulfill build plans which
were subsequently revised downward as market conditions softened. Accounts
receivable decreased approximately $3.2 million, or 26%, because of the
decline in net sales for the fiscal year. Accounts payable and accrued
expenses decreased as a result of a decrease in material receipts in the
second half of fiscal 1997 compared to fiscal 1996, a decrease in sales
commissions earned and a decrease in amounts accrued for compensation benefits
and other performance based compensation.
The Company used approximately $992,000 in cash during fiscal 1997 to fund
the acquisition of capital equipment and $243,000 to fund internal software
development costs.
The Company generated cash from financing activities in fiscal 1997 of
approximately $192,000 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 1998.
Subsequent Events
On May 23, 1997, the Company acquired 100% of the outstanding stock of
Western Equipment Developments (Holdings) Ltd. ("WED") in Plymouth, England
for approximately $6,000,000 in cash. WED designs, manufactures and markets
integrated circuit wafer handling robot systems used to load, sort and
transport wafers during inspection in the semiconductor manufacturing process.
The acquisition will be accounted for as a purchase and, accordingly, the
results of operations of the acquired business will be included in the
Company's consolidated financial statements commencing May 23, 1997. In
connection with the acquisition, the Company expects to allocate a portion of
the purchase price to in-process research and development resulting in a one-
time charge to operations of approximately $3.5-$4.3 million in the first
quarter of fiscal 1998 (see Note M to Consolidated Financial Statements--
Subsequent Events).
Impact of Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement No. 128 "Earnings per Share" which is required to be adopted for the
quarter ending December 28, 1997. At that time, the Company will be required
to change the method currently used to compute earnings per share and to
restate all prior periods. Under the new requirements for calculating primary
earnings per share, the dilutive effect of stock options will be excluded. The
impact is expected to result in an increase in primary earnings per share for
the first quarter ended June 29, 1997 and June 30, 1996 of approximately $.01
per share for each of these quarters. The impact of Statement 128 on the
calculation of fully diluted earnings per share for these quarters is not
expected to be material.
12
<PAGE>
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 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. 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. The semiconductor
industry in recent periods has experienced decreased demand, and it is
uncertain how long these conditions will continue.
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.
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
including, in particular, its newest belt-conveyance test handler, 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.
International Operations--In fiscal 1997, 52% 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.
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
13
<PAGE>
year ended March 30, 1997, one customer accounted for 17% 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.
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.
14
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements included in Item 8:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors............................................ 16
Consolidated Balance Sheets as of March 30, 1997 and March 31, 1996....... 17
Consolidated Statements of Income for the years ended March 30, 1997,
March 31, 1996, and April 2, 1995........................................ 18
Consolidated Statements of Changes in Stockholders' Equity for the years
ended March 30, 1997, March 31, 1996 and April 2, 1995................... 19
Consolidated Statements of Cash Flows for the years ended March 30, 1997,
March 31, 1996 and April 2, 1995......................................... 20
Notes to Consolidated Financial Statements................................ 21
Supplementary Quarterly Financial Data (unaudited)........................ 30
</TABLE>
15
<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 30, 1997 and March 31, 1996, 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 30, 1997. 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 30, 1997 and March 31, 1996 and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended March 30, 1997 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.
LOGO
Boston, Massachusetts
May 9, 1997, except for Note M as
to which the date is May 23, 1997
16
<PAGE>
ASECO CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 30, MARCH 31,
1997 1996
--------- ---------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents................................ $14,082 $14,083
Accounts receivable, less allowance for doubtful accounts
of $407 in 1997 and $397 in 1996........................ 9,153 12,346
Inventories, net......................................... 9,238 7,059
Prepaid expenses......................................... 273 212
Deferred taxes........................................... 1,003 598
Other current assets..................................... 138 54
------- -------
Total current assets................................... 33,887 34,352
Plant and equipment, less accumulated depreciation and
amortization.............................................. 2,227 2,011
Other assets............................................... 526 318
------- -------
$36,640 $36,681
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable......................................... $ 2,091 $ 3,441
Accrued expenses......................................... 2,608 3,923
Income taxes payable..................................... 321 476
Current portion of capital lease obligations............. 13 13
------- -------
Total current liabilities.............................. 5,033 7,853
Deferred taxes payable..................................... 465 370
Long-term capital lease obligations........................ 29 42
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,
3,664,519 and 3,611,501 shares issued and outstanding in
1997 and 1996, respectively............................... 37 36
Additional paid in capital................................. 17,642 17,234
Retained earnings.......................................... 13,434 11,146
------- -------
Total stockholders' equity............................. 31,113 28,416
------- -------
$36,640 $36,681
======= =======
</TABLE>
See notes to consolidated financial statements.
17
<PAGE>
ASECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------
MARCH 30, MARCH 31, APRIL 2,
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Net sales.................................. $ 34,320 $ 41,569 $ 29,192
Cost of sales.............................. 18,113 21,174 15,374
---------- ---------- ----------
Gross profit............................. 16,207 20,395 13,818
Research and development costs........... 5,227 4,748 3,356
Selling, general and administrative
expenses................................ 8,357 9,250 6,475
---------- ---------- ----------
Income from operations................... 2,623 6,397 3,987
Other income (expense):
Interest income.......................... 664 560 416
Interest expense......................... (7) (14) (3)
Other, net............................... 11 3 1
---------- ---------- ----------
668 549 414
---------- ---------- ----------
Income before income taxes................. 3,291 6,946 4,401
Income tax expense......................... 1,003 2,540 1,313
---------- ---------- ----------
Net income................................. $ 2,288 $ 4,406 $ 3,088
========== ========== ==========
Earnings per share......................... $ .62 $ 1.17 $ .85
========== ========== ==========
Weighted average common and common
equivalent shares outstanding........... 3,717,000 3,776,000 3,616,000
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
18
<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 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
Issuance of shares under stock
plans........................... 53,018 1 344 -- 345
Tax benefit from exercise of
stock options................... -- -- 64 -- 64
Net income....................... -- -- -- 2,288 2,288
--------- --- ------- ------- -------
Balance at March 30, 1997.......... 3,664,519 $37 $17,642 $13,434 $31,113
========= === ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
19
<PAGE>
ASECO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------
MARCH 30, MARCH 31, APRIL 2,
1997 1996 1995
--------- --------- --------
<S> <C> <C> <C>
Operating activities:
Net income..................................... $ 2,288 $ 4,406 $ 3,088
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation................................... 776 558 378
Amortization................................... 166 221 254
Deferred taxes................................. (310) 4 (277)
Changes in assets and liabilities:
Accounts receivable............................ 3,193 (3,371) (3,599)
Inventories, net............................... (2,179) 626 (935)
Prepaid expenses............................... (61) 36 (83)
Accounts payable and accrued expenses.......... (2,665) 1,808 1,965
Income taxes payable........................... (91) 544 438
Other current assets........................... (84) 171 188
Other assets................................... 9 -- --
------- ------- -------
Total adjustments............................ (1,246) 597 (1,671)
------- ------- -------
Cash provided by operating activities........ 1,042 5,003 1,417
Investing activities:
Acquisition of machinery and equipment......... (992) (728) (918)
Increase in software development costs and
other assets.................................. (243) (117) (211)
------- ------- -------
Cash used in investing activities............ (1,235) (845) (1,129)
Financing activities:
Loan to officer................................ (140) -- --
Net proceeds from issuance of common stock..... 345 636 110
Reductions of capital lease obligations........ (13) (12) (83)
------- ------- -------
Cash provided by financing activities........ 192 624 27
------- ------- -------
Net increase (decrease) in cash and cash
equivalents................................. (1) 4,782 315
Cash and cash equivalents at the beginning of the
year............................................ 14,083 9,301 8,986
------- ------- -------
Cash and cash equivalents at the end of the
year............................................ $14,082 $14,083 $ 9,301
======= ======= -------
Supplemental information:
Noncash investing and financing activities:
Capital lease obligations incurred........... -- -- $ 69
=======
</TABLE>
See notes to consolidated financial statements
20
<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. (See Note M--Subsequent Events)
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 and accompanying notes. 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
($7,212,883 at March 30, 1997 and $6,997,521 at March 31, 1996) and money
market funds ($1,943,278 at March 30, 1997 and $1,714,706 at March 31, 1996),
all of which are cash equivalents as of March 30, 1997. 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 30, 1997 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 30, 1997 and March 31, 1996, 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.
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" effective as of the beginning of fiscal 1997. This adoption
had no material affect on the Company's financial statements.
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
21
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
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.
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement No. 128 "Earnings Per Share" which is required to be adopted for the
quarter ending December 28, 1997. At that time, the Company will be required
to change the method currently used to compute earnings per share and to
restate all prior periods. Under the new requirements for calculating primary
earnings per share, the dilutive effect of stock options will be excluded. The
impact is expected to result in an increase in primary earnings per share for
the first quarter ended June 29, 1997 and June 30, 1996 of approximately $.01
per share for each quarter. The impact of Statement 128 on the calculation of
fully diluted earnings per share for these quarters is not expected to be
material.
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 ABP 25, 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.
NOTE C--INVENTORIES, NET
Net inventories consisted of the following:
<TABLE>
<CAPTION>
MARCH 30, MARCH 31,
1997 1996
--------- ---------
<S> <C> <C>
Raw materials.......................................... $4,996 $3,491
Work in process........................................ 1,612 2,218
Finished goods......................................... 2,630 1,350
------ ------
$9,238 $7,059
====== ======
</TABLE>
NOTE D--PLANT AND EQUIPMENT
Plant and equipment consisted of the following:
<TABLE>
<CAPTION>
MARCH 30, MARCH 31,
1997 1996
--------- ---------
<S> <C> <C>
Machinery and equipment................................ $2,289 $2,082
Office furniture and equipment......................... 2,203 1,446
Property under capital lease........................... 578 578
Leasehold improvements................................. 109 81
------ ------
5,179 4,187
Less accumulated depreciation and amortization ........ 2,952 2,176
------ ------
$2,227 $2,011
====== ======
</TABLE>
NOTE E--INDEBTEDNESS
The Company has a revolving credit facility with a bank which expires on
September 1, 1997. 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
22
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
and restrictions on dividend payments. Borrowings bear interest at the bank's
prime rate which was 8.5% at March 30, 1997. There were no borrowings
outstanding at March 30, 1997 and March 31, 1996.
Cash payments of interest were approximately $7,000, $14,000, and $ 3,000
for the years ended March 30, 1997, March 31, 1996, April 2, 1995,
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 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 30, 1997:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
1998..................................................... 17 387
1999..................................................... 17 405
2000..................................................... 13 412
2001..................................................... -- 34
---- ------
Total minimum lease payments............................. 47 $1,238
======
Less amounts representing interest....................... (5)
----
Present value of minimum lease payments.................. $ 42
====
</TABLE>
Total rent expense for the years ended March 30, 1997, March 31, 1996, and
April 2, 1995 was approximately $372,000, $450,000, and $459,000,
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 30, 1997, 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. No
additional options may be granted under this Plan.
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
23
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
the Company for the purchase of up to an aggregate of 165,000 shares of common
stock. 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 Compensation Committee of the Board of Directors
and provides for the issuance of up to 1,230,000 shares of common stock
pursuant to the exercise of options or in connection with awards or direct
purchases of stock. Options granted 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>
WEIGHTED
AVERAGE
OPTIONS EXERCISE
-------- --------
<S> <C> <C>
Outstanding at April 3, 1994.............................. 432,400 $ 4.45
Granted................................................. 29,000 7.17
Exercised............................................... (7,400) 1.46
Canceled................................................ (11,100) 6.92
-------- ------
Outstanding at April 2, 1995.............................. 442,900 4.59
Granted................................................. 477,000 17.76
Exercised............................................... (157,400) 3.04
Canceled................................................ (18,000) 7.17
-------- ------
Outstanding at March 31, 1996............................. 744,500 13.30
Granted................................................. 458,000 10.37
Exercised............................................... (33,400) 5.67
Canceled................................................ (449,000) 17.72
-------- ------
Outstanding at March 30, 1997............................. 720,100 $ 8.91
======== ======
</TABLE>
As of March 30, 1997, March 31, 1996 and April 2, 1995, there were
outstanding options exercisable for approximately 430,000, 393,000, and
224,000, respectively. As of March 30, 1997, shares available for future grant
were 90,000 shares in the Director Plan and 497,000 shares in the Omnibus
Plan. No additional shares were available for grant in the 1986 Plan.
The range of exercises prices for options outstanding at March 30, 1997 was
$.29-$18.69. The range of exercise prices is wide due to the inclusion of
options granted at a lower fair market value in years preceding the Company's
initial public offering in March 1993.
In fiscal 1997, 391,000 options outstanding under the Company's 1993 Omnibus
Stock Plan having an exercise price of $18.69 per share were cancelled and
290,250 new shares were issued at a price of $10.38 per
24
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
share representing the fair value on the date of issuance. All other terms of
these options, including the vesting period associated with each option
remained the same.
The following table summarizes information about options outstanding at
March 30, 1997:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
RANGE OF OPTIONS AVERAGE OPTIONS AVERAGE WEIGHTED AVERAGE
EXERCISE PRICES OUTSTANDING PRICE EXERCISABLE PRICE CONTRACTUAL LIFE
--------------- ----------- -------- ----------- -------- ----------------
<S> <C> <C> <C> <C> <C>
$ .29-$ .48 8,300 $ .46 8,300 $ .46 4 years
$ 5.38-$ 9.88 309,600 $ 6.76 229,400 $ 5.75 8 years
$10.38-$18.69 402,200 $10.97 192,300 $11.02 9 years
------- -------
720,100 430,000
======= =======
</TABLE>
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 fiscal 1997
and 1996, a total of approximately 19,600 and 16,800 shares of common stock,
respectively, were issued under this plan. Shares available for future grant
were approximately 46,600 shares.
Disclosure of pro forma information regarding net income and earnings per
share is required by FASB Statement No. 123 "Accounting for Stock-Based
Compensation", and has been determined as if the Company had accounted for its
employee stock plans under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using a Black-
Scholes option pricing model with the following weighted-average assumptions
for fiscal years 1997 and 1996, respectively: risk-free interest rates of
4.73% and 5.97%; dividend yields of 0% in both years; volatility factors of
the expected market price of the Company's common stock of .485 and .520; and
a weighted-average expected life of the options of 3 and 5 years.
The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options.
The weighted average grant date fair value of options granted during fiscal
1997 and 1996 was $4.12 and $9.21, respectively. The weighted average grant
date fair value of options associated with the Company's Employee Stock
Purchase Plan for fiscal 1997 and 1996 was $1.47 and $2.42, respectively.
25
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The
Company's pro forma information follows:
<TABLE>
<CAPTION>
MARCH 30, MARCH 31,
1997 1996
--------- ---------
<S> <C> <C>
Pro forma net income................................... $1,633 $3,741
Pro forma earnings per share........................... $ .44 $ .99
</TABLE>
Savings Plan: Under the Company's Savings Plan (the "401(k) Plan"), eligible
employees are permitted to make pre-tax contributions up to 15% 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 30,
1997, March 31, 1996, and April 2, 1995 the Company contributed approximately
$110,000, $80,000 and $40,000, respectively to the 401(k) Plan.
Stockholder Rights Plan: On August 15, 1996, the Board of Directors adopted
a Stockholder Rights Plan. Pursuant to the Stockholder Rights Plan, each share
of common stock has an associated right. Under certain circumstances, each
right entitles the holder to purchase from the Company one one-thousandth of a
share of junior preferred stock at an exercise price of $55.00 per one one-
thousandth of a share, subject to adjustment.
The rights are not exercisable and cannot be transferred separately from the
common stock until ten days after a person acquires or obtains the right to
acquire 15% or more or makes a tender offer for 30% or more of the Company's
common stock. Upon exercise, each right will entitle the holder to purchase in
lieu of preferred stock, at the right exercise price, common stock having a
value of two times the exercise price of the right. In addition, if the
Company is either (i) acquired in a merger or other business combination in
which the Company is not the surviving entity, or (ii) sells or transfers 50%
or more of its assets or earning power to another party, each right will
entitle its holder to purchase, upon exercise, common stock of the acquiring
Company having a value equal to two times the exercise price of the right.
The rights have certain anti-takeover effects, in that they would cause
substantial dilution to a person or group that attempts to acquire a
significant interest in the Company on terms not approved by the Board of
Directors. The rights expire on August 15, 2006 but may be redeemed by the
Company for $.01 per right at any time prior to the tenth day following a
person's acquisition of 15% or more of the Company's common stock. So long as
the rights are not separately transferable, the Company will issue one right
with each new share of common stock issued.
26
<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 30, 1997 and
March 31, 1996 are as follows:
<TABLE>
<CAPTION>
1997 TOTAL CURRENT NON-CURRENT
---- ------ ------- -----------
<S> <C> <C> <C>
Deferred tax liabilities:
Tax over book depreciation.................... $ (308) $(308)
Capitalized software.......................... (157) (157)
Capital vs. operating lease................... (98) (98)
Other......................................... (35) (35)
------ ------ -----
Total deferred tax liabilities.................. (598) (133) (465)
Deferred tax assets:
Asset valuation allowances.................... 1,013 1,013
Product warranty.............................. 62 62
Other......................................... 61 61
------ ------
Total deferred tax assets....................... 1,136 1,136
------ ------ -----
Net deferred tax assets (liabilities)........... $ 538 $1,003 $(465)
====== ====== =====
<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)
====== ====== =====
</TABLE>
27
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Significant components of the provision (benefit) for income taxes are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------
MARCH 30, MARCH 31, APRIL 2,
1997 1996 1995
--------- --------- --------
<S> <C> <C> <C>
Current federal tax............................. $1,211 $2,106 $1,416
Current state tax............................... 102 438 174
Deferred federal tax............................ (258) (3) (214)
Deferred state tax ............................. (52) (1) (63)
------ ------ ------
$1,003 $2,540 $1,313
====== ====== ======
</TABLE>
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 30, MARCH 31, APRIL 2,
1997 1996 1995
--------- --------- --------
<S> <C> <C> <C>
Tax at U.S. statutory rates.................... 34.0% 34.0% 34.0%
State income taxes, net of federal benefit..... 3.1 4.6 4.4
Foreign sales corporation...................... (3.7) (2.7) (2.4)
Tax credits.................................... (4.9) (1.1) (6.3)
Other, net..................................... 2.0 1.8 .1
---- ---- ----
30.5% 36.6% 29.8%
==== ==== ====
</TABLE>
During the year ended March 30, 1997 the Company recorded a tax benefit of
approximately $64,000 related to 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 30, 1997, March 31, 1996, and
April 2, 1995 were $1,404,000, $2,010,000, and $1,152,000, respectively.
NOTE J--ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
MARCH 30, MARCH 31,
1997 1996
--------- ---------
<S> <C> <C>
Accrued commissions...................................... $1,467 $2,187
Accrued compensation and benefits........................ 595 1,088
Other.................................................... 546 648
------ ------
$2,608 $3,923
====== ======
</TABLE>
28
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
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
----------------------------
MARCH 30, MARCH 31, APRIL 2,
1997 1996 1995
--------- --------- --------
<S> <C> <C> <C>
Pacific Rim..................................... $14,785 $12,845 $10,026
Europe.......................................... 2,512 3,567 1,983
Other........................................... 528 984 270
------- ------- -------
$17,825 $17,396 $12,279
======= ======= =======
</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 two
customers which represented 11% and 18% of total trade accounts receivable as
of March 30, 1997, and one customer which represented 18% of total trade
accounts receivable as of March 31, 1996.
One customer accounted for 17% of net sales for the year ended March 30,
1997. 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.
NOTE L--RELATED PARTY TRANSACTIONS
On April 15, 1996, the Company loaned $140,000 to an executive officer who
is also a director of the Company. The loan bears interest at the rate of
5.33% per annum, compounded annually, and is due and payable in full on the
earlier of the termination of the executive officer's employment with the
Company or April 15, 1999. The loan is secured by shares of the Company's
common stock owned by the executive officer.
NOTE M--SUBSEQUENT EVENTS
On May 23, 1997, the Company acquired 100% of the outstanding stock of
Western Equipment Developments (Holdings) Ltd. ("WED") in Plymouth, England
for approximately $6,000,000 in cash. WED designs, manufactures and markets
integrated circuit wafer handling robot systems used to load, sort and
transport wafers during inspection in the semiconductor manufacturing process.
The acquisition will be accounted for as a purchase and, accordingly, the
results of operations of the acquired business will be included in the
Company's consolidated financial statements commencing May 23, 1997. In
connection with the acquisition, the Company expects to allocate a portion of
the purchase price to in-process research and development resulting in a one-
time charge to operations of approximately $3.5-$4.3 million in the first
quarter of fiscal 1998. The following table summarizes the unaudited pro-forma
consolidated results of operations as if the acquisition had been made at the
beginning of each of the periods presented:
<TABLE>
<CAPTION>
YEAR ENDED
-------------------
MARCH 30, MARCH 31,
1997 1996
--------- ---------
<S> <C> <C>
Net sales.............................................. $39,303 $48,013
Net income............................................. (3,078) 196
Earnings per share..................................... $ (.83) $ .05
</TABLE>
29
<PAGE>
ASECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE N--SUPPLEMENTARY QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of unaudited quarterly results for the fiscal
years ended March 30, 1997 and March 31, 1996.
<TABLE>
<CAPTION>
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
FISCAL 1997
Net sales............... $11,001 $8,989 $ 6,722 $ 7,608
Gross profit............ 5,387 4,184 3,127 3,509
Net income.............. 1,275 538 234 241
Earnings per share...... $ .34 $ .15 $ .06 $ .06
<CAPTION>
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
------------- -------------- ------------- --------------
<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
</TABLE>
30
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is included in the Company's Proxy
Statement to be filed in connection with the Company's 1997 Annual Meeting of
Stockholders to be held on August 6, 1997, under the section captioned
"Election of Directors" and is incorporated herein by reference thereto.
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 is included in the Company's Proxy
Statement to be filed in connection with the Company's 1997 Annual Meeting of
Stockholders to be held on August 6, 1997, under the section captioned
"Executive Officer Compensation" and is incorporated herein by reference
thereto.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is included in the Company's Proxy
Statement to be filed in connection with the Company's 1997 Annual Meeting of
Stockholders to be held on August 6, 1997, under the section captioned "Stock
Ownership of Directors, Nominees, Executive Officers and Principal
Stockholders" and is incorporated herein by reference thereto.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On April 15, 1996, the Company loaned $140,000 to Sebastian J. Sicari, a
director and executive officer of the Company. The loan bears interest at the
rate of 5.33% per annum, compounded annually, and is due and payable in full
on the earlier of the termination of Mr. Sicari's employment with the Company
or April 15, 1999. At March 30, 1997, principal and accrued interest on the
loan totaled $147,384. The loan is secured by shares of the Company's common
stock owned by Mr. Sicari.
31
<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:
Consolidated Balance Sheets as of March 30, 1997 and March 31, 1996
Consolidated Statements of Income for the years ended March 30, 1997,
March 31, 1996, and April 2, 1995
Consolidated Statements of Changes in Stockholders' Equity for the
years ended March 30, 1997, March 31, 1996, and April 2, 1995
Consolidated Statements of Cash Flows for the years ended March 30,
1997, March 31, 1996, and April 2, 1995
(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, filed as Exhibit 4.2
to the Registration Statement on Form S-8 (SEC File No. 333-18337)
filed with the Commission on December 19, 1996 and incorporated
herein by reference.
4.2 Rights Agreement dated August 15, 1996 between the Company and
State Street Bank & Trust Company as Rights Agent (including the
exhibits thereto), incorporated by reference from the Company's
Registration Statement on Form 8-A filed with the Commission on
August 26, 1996.
4.3 Amendment Number One to the Rights Agreement dated January 2, 1997
between the Company and American Stock Transfer & Trust Company,
filed as Exhibit 4.2 to the Company's Form 10-Q for the quarter
ended December 29, 1996 and incorporated herein by reference.
*10.1 1986 Incentive Stock Option Plan.
10.2 1993 Non-Employee Director Stock Option Plan, as amended and
restated as of October 18, 1996, filed herewith.
*10.3 1993 Employee Stock Purchase Plan.
10.4 1993 Omnibus Stock Plan, as amended and restated as of June 14,
1996, filed as Exhibit 10.1 to the Registration Statement on Form
S-8 (SEC File No. 333-18337) filed with the Commission on December
19, 1996 and incorporated herein by reference.
*10.5 Lease dated April 13, 1993, between the Company and CIGNA
Investments, Inc.
*10.7 Letter Agreement dated November 27, 1992, between the Company and
Fleet Bank of Massachusetts, N.A.
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, dated December 30, 1996, between the Company
and Carl S. Archer, Jr., filed herewith.
**10.11 Severance agreement, dated December 30, 1996, between the Company
and Sebastian J. Sicari, filed herewith.
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
**10.12 Form of Key Employee Stock Option Agreement, filed as Exhibit
10.12 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 30, 1996, between the
Company and Fleet Bank of Massachusetts, N.A., filed as Exhibit
10.13 to the Company's Form 10-Q for the quarter ended September
29, 1996 and incorporated herein by reference.
10.14 Promissory Note between the Company and Sebastian J. Sicari dated
April 15, 1996 and filed as Exhibit 10.14 to the Company's Form
10-Q for the quarter ended December 29, 1996 and incorporated
herein by reference.
10.15 Pledge Agreement between the Company and Sebastian J. Sicari dated
April 15, 1996, filed as Exhibit 10.15 to the Company's Form 10-Q
for the quarter ended December 29, 1996 and incorporated herein by
reference.
**10.16 Severance agreement, dated March 18, 1997, between C. Kenneth Gray
and the Company, filed herewith.
**10.17 Severance agreement, dated December 30, 1996, between Dennis A.
Legal and the Company, filed herewith.
21 Subsidiaries of the Company, filed herewith.
23.1 Consent of Ernst & Young LLP, filed herewith.
27 Financial Data Schedule, filed herewith.
</TABLE>
- --------
* Incorporated by reference to the same exhibit number to the Registration
Statement on Form S-1 (SEC File No. 33-57644) 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 30, 1997.
33
<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 27, 1997
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 June 27, 1997
- ------------------------------------- Executive Officer
CARL S. ARCHER, JR. and Director
(Principal
Executive Officer)
/s/ Sebastian J. Sicari Vice President, June 27, 1997
- ------------------------------------- Finance and
SEBASTIAN J. SICARI Administration,
Chief Financial
Officer, Treasurer
and Director
(Principal
Financial and
Accounting Officer)
/s/ Dr. Sheldon Buckler Director June 27, 1997
- -------------------------------------
DR. SHELDON BUCKLER
/s/ Dr. Gerald Wilson Director June 27, 1997
- -------------------------------------
DR. GERALD WILSON
/s/ Dr. Sheldon Weinig Director June 27, 1997
- -------------------------------------
DR. SHELDON WEINIG
34
<PAGE>
SCHEDULE II
ASECO CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT CHARGES TO
BEGINNING OF COSTS AND BALANCE AT
CLASSIFICATION YEAR EXPENSES DEDUCTIONS END OF YEAR
-------------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
YEAR ENDED MARCH 30, 1997
Allowance for doubtful
accounts...................... $397,000 $100,000 $90,000 $407,000
YEAR ENDED MARCH 31, 1996
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
</TABLE>
35
<PAGE>
EXHIBIT 10.2
ASECO CORPORATION
1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(Amended and Restated Effective as of October 18, 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, 1996 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 15,000 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 option
<PAGE>
to purchase 2,500 shares of the Common Stock, subject to the availability of
shares under this Plan.
(d) Initial Option Adjuster. On May 15, 1996, each person who is
-----------------------
serving on the Board as of such date, who is not a current or former employee or
officer of the Company and who is to serve on the Board following the 1996
Annual Meeting of Stockholders of the Company shall automatically be granted an
option to purchase an additional 10,000 shares of Common Stock.
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), 4(c) and 4(d) 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
2
<PAGE>
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 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 two years of the date the optionee ceased to be a member of the
Board; and all options shall terminate after such two year period has 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 agreement, 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, 500 Donald Lynch
Boulevard, 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
3
<PAGE>
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.
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.
4
<PAGE>
(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, 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
5
<PAGE>
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 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 provison 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 law thereof.
6
<PAGE>
EXHIBIT 10.10
SEVERANCE AGREEMENT
-------------------
This Severance Agreement is entered into as of this 30th day of
December, 1996 by and between Aseco Corporation, a Delaware corporation (the
"Company"), and Carl S. Archer, Jr. (the "Employee").
Recitals:
--------
WHEREAS, the Employee is an executive officer of the Company; and
WHEREAS, the Company and the Employee wish to provide for the payment
of certain severance compensation by the Company to the Employee in the event
the Employee's employment by the Company is terminated.
NOW, THEREFORE, in consideration of the Employee's continued service
to the Company and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions.
-----------
"Benefit Period" shall mean the twelve (12)-month period following the
Termination Date, in the context of Section 2, and the twenty-four (24)-month
period following the Termination Date, in the context of Section 3.
"Cause" shall be deemed to exist if the Board of Directors of the
Company in good faith determines, after giving the Employee notice and an
opportunity to be heard, that the Employee has committed an act constituting
fraud, embezzlement, larceny or theft.
"Change in Control" shall mean (i) the sale, lease, transfer or other
disposition by the Company of all or substantially all of its assets in a single
transaction or a series of related transactions; (ii) the merger or
consolidation of the Company with another entity in which the stockholders of
the Company immediately prior to such merger or consolidation hold less than 50%
of the outstanding voting stock of the surviving or resulting corporation
immediately following such transaction; or (iii) the sale or exchange (to or
with any person or entity other than the Company) by the stockholders of the
Company of more than 50% of the outstanding voting stock of the Company in a
single transaction or series of related transactions.
<PAGE>
"Ineligibility Period" shall mean that portion of the applicable
Benefit Period when the Employee is ineligible for coverage under the Company's
group life or group health insurance policies.
"Termination Date" shall mean the effective date of the termination of
the Employee's employment with the Company.
2. Severance Other Than Following a Change in Control.
--------------------------------------------------
In the event the Employee's employment by the Company is terminated
for any reason other than (i) for Cause by the Company, (ii) voluntary
resignation by the Employee or (iii) the Employee's death, and Section 3 is
inapplicable, the Company shall (i) pay the Employee within five (5) days after
the Termination Date a lump sum amount equal to the sum of (A) twelve (12) times
the Employee's monthly base salary in effect at the time of such termination
plus (B) the average of the annual bonus amounts paid to the Employee in respect
of the Company's two fiscal years immediately preceding the Termination Date
(less applicable withholding taxes and FICA with respect to (A) and (B)) and
(ii) continue to provide during the Benefit Period life and health insurance
coverage to the Employee, with benefits substantially comparable to those
provided to executive officers of the Company generally immediately prior to
such termination. Notwithstanding the foregoing, the Company shall have the
right, in lieu of providing such coverage during any Ineligibility Period, to
pay the Employee an amount equal to 200% of the amount it would have cost the
Company to provide such coverage during such Ineligibility Period, assuming the
Employee were eligible for coverage under the Company's group insurance policies
and assuming further no increase in premium costs under such policies after the
commencement of such Ineligibility Period.
3. Severance Following a Change in Control.
---------------------------------------
Except as provided in the last sentence of this Section 3, in the
event the Employee's employment by the Company is terminated for any reason
whatsoever, including voluntary resignation by the Employee, within twenty-four
months following a Change in Control, the Company shall (i) pay the Employee
within five days after the Termination Date a lump sum amount equal to the sum
of (A) twenty-four (24) times the Employee's monthly base salary in effect at
the time of such termination plus (B) two times the average of the annual bonus
amounts paid
2
<PAGE>
to the Employee in respect of the Company's two fiscal years
immediately preceding the Termination Date (less applicable withholding taxes
and FICA with respect to (A) and (B)) and (ii) continue to provide during the
Benefit Period life and health insurance coverage to the Employee, with benefits
substantially comparable to those provided to executive officers of the Company
generally immediately prior to such termination. Notwithstanding the foregoing,
the Company shall have the right, in lieu of providing such coverage during any
Ineligibility Period, to pay the Employee an amount equal to 200% of the amount
it would have cost the Company to provide such coverage during any Ineligibility
Period, assuming the Employee were eligible for coverage under the Company's
group insurance policies and assuming further no increase in premium costs under
such policies after the commencement of the Ineligibility Period.
Notwithstanding anything to the contrary contained in this Agreement, the
Employee shall not be entitled to any severance benefits pursuant to Section 2
or this Section 3 if the Employee's employment by the Company is terminated by
the Company for Cause.
4. Vesting of Stock. Upon a Change in Control, the vesting of all
----------------
stock options held by the Employee and exercisable to purchase common stock of
the Company shall be accelerated so that all such options shall be immediately
exercisable in full.
5. Miscellaneous.
-------------
5.1 This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings, whether written
or oral, relating to the subject matter of this Agreement, including without
limitation that certain letter agreement dated October 23, 1990.
5.2 This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
5.3 This Agreement shall be construed, interpreted and enforced
in accordance with the laws of The Commonwealth of Massachusetts.
5.4 This Agreement shall be binding upon and inure to the
benefit of both parties and their respective successors and assigns, including
any corporation with which or into which the Company may be merged or which may
succeed to its assets or business.
3
<PAGE>
5.5 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
5.6 In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth above.
ASECO CORPORATION
By:___________________________
Title:________________________
EMPLOYEE
______________________________
Carl S. Archer, Jr.
4
<PAGE>
EXHIBIT 10.11
SEVERANCE AGREEMENT
-------------------
This Severance Agreement is entered into as of this 30th day of
December, 1996 by and between Aseco Corporation, a Delaware corporation (the
"Company"), and Sebastian J. Sicari (the "Employee").
Recitals:
--------
WHEREAS, the Employee is an executive officer of the Company; and
WHEREAS, the Company and the Employee wish to provide for the payment
of certain severance compensation by the Company to the Employee in the event
the Employee's employment by the Company is terminated.
NOW, THEREFORE, in consideration of the Employee's continued service
to the Company and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions.
-----------
"Benefit Period" shall mean the twelve (12)-month period following the
Termination Date, in the context of Section 2, and the twenty-four (24)-month
period following the Termination Date, in the context of Section 3.
"Cause" shall be deemed to exist if the Board of Directors of the
Company in good faith determines, after giving the Employee notice and an
opportunity to be heard, that the Employee has committed an act constituting
fraud, embezzlement, larceny or theft.
"Change in Control" shall mean (i) the sale, lease, transfer or other
disposition by the Company of all or substantially all of its assets in a single
transaction or a series of related transactions; (ii) the merger or
consolidation of the Company with another entity in which the stockholders of
the Company immediately prior to such merger or consolidation hold less than 50%
of the outstanding voting stock of the surviving or resulting corporation
immediately following such transaction; or (iii) the sale or exchange (to or
with any person or entity other than the Company) by the stockholders of the
Company of more than 50% of the outstanding voting stock of the Company in a
single transaction or series of related transactions.
<PAGE>
"Ineligibility Period" shall mean that portion of the applicable
Benefit Period when the Employee is ineligible for coverage under the Company's
group life or group health insurance policies.
"Termination Date" shall mean the effective date of the termination of
the Employee's employment with the Company.
2. Severance Other Than Following a Change in Control.
--------------------------------------------------
In the event the Employee's employment by the Company is terminated
for any reason other than (i) for Cause by the Company, (ii) voluntary
resignation by the Employee or (iii) the Employee's death, and Section 3 is
inapplicable, the Company shall (i) pay the Employee within five (5) days after
the Termination Date a lump sum amount equal to the sum of (A) twelve (12) times
the Employee's monthly base salary in effect at the time of such termination
plus (B) the average of the annual bonus amounts paid to the Employee in respect
of the Company's two fiscal years immediately preceding the Termination Date
(less applicable withholding taxes and FICA with respect to (A) and (B)) and
(ii) continue to provide during the Benefit Period life and health insurance
coverage to the Employee, with benefits substantially comparable to those
provided to executive officers of the Company generally immediately prior to
such termination. Notwithstanding the foregoing, the Company shall have the
right, in lieu of providing such coverage during any Ineligibility Period, to
pay the Employee an amount equal to 200% of the amount it would have cost the
Company to provide such coverage during such Ineligibility Period, assuming the
Employee were eligible for coverage under the Company's group insurance policies
and assuming further no increase in premium costs under such policies after the
commencement of such Ineligibility Period.
3. Severance Following a Change in Control.
---------------------------------------
Except as provided in the last sentence of this Section 3, in the
event the Employee's employment by the Company is terminated for any reason
whatsoever, including voluntary resignation by the Employee, within twenty-four
months following a Change in Control, the Company shall (i) pay the Employee
within five days after the Termination Date a lump sum amount equal to the sum
of (A) twenty-four (24) times the Employee's monthly base salary in effect at
the time of such termination plus (B) two times the average of the annual bonus
amounts paid
2
<PAGE>
to the Employee in respect of the Company's two fiscal years
immediately preceding the Termination Date (less applicable withholding taxes
and FICA with respect to (A) and (B)) and (ii) continue to provide during the
Benefit Period life and health insurance coverage to the Employee, with benefits
substantially comparable to those provided to executive officers of the Company
generally immediately prior to such termination. Notwithstanding the foregoing,
the Company shall have the right, in lieu of providing such coverage during any
Ineligibility Period, to pay the Employee an amount equal to 200% of the amount
it would have cost the Company to provide such coverage during any Ineligibility
Period, assuming the Employee were eligible for coverage under the Company's
group insurance policies and assuming further no increase in premium costs under
such policies after the commencement of the Ineligibility Period.
Notwithstanding anything to the contrary contained in this Agreement, the
Employee shall not be entitled to any severance benefits pursuant to Section 2
or this Section 3 if the Employee's employment by the Company is terminated by
the Company for Cause.
4. Vesting of Stock. Upon a Change in Control, the vesting of all
----------------
stock options held by the Employee and exercisable to purchase common stock of
the Company shall be accelerated so that all such options shall be immediately
exercisable in full.
5. Miscellaneous.
-------------
5.1 This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings, whether written
or oral, relating to the subject matter of this Agreement, including without
limitation that certain letter agreement dated October 23, 1990.
5.2 This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
5.3 This Agreement shall be construed, interpreted and enforced
in accordance with the laws of The Commonwealth of Massachusetts.
5.4 This Agreement shall be binding upon and inure to the
benefit of both parties and their respective successors and assigns, including
any corporation with which or into which the Company may be merged or which may
succeed to its assets or business.
3
<PAGE>
5.5 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
5.6 In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth above.
ASECO CORPORATION
By:___________________________
Title:________________________
EMPLOYEE
______________________________
Sebastian J. Sicari
4
<PAGE>
EXHIBIT 10.16
SEVERANCE AGREEMENT
-------------------
This Severance Agreement is entered into as of this ___ day of March,
1997 by and between Aseco Corporation, a Delaware corporation (the "Company"),
and Kenneth Gray (the "Employee").
Recitals:
--------
WHEREAS, the Employee is an executive officer of the Company; and
WHEREAS, the Company and the Employee wish to provide for the payment
of certain severance compensation by the Company to the Employee in the event
the Employee's employment by the Company is terminated.
NOW, THEREFORE, in consideration of the Employee's continued service
to the Company and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions.
-----------
"Benefit Period" shall mean the six (6)-month period following the
Termination Date.
"Cause" shall be deemed to exist if the Board of Directors of the
Company or its successor in good faith determines, after giving the Employee
notice and an opportunity to be heard, that the Employee has committed an act
constituting fraud, embezzlement, larceny or theft.
"Change in Control" shall mean (i) the sale, lease, transfer or other
disposition by the Company of all or substantially all of its assets in a single
transaction or a series of related transactions; (ii) the merger or
consolidation of the Company with another entity in which the stockholders of
the Company immediately prior to such merger or consolidation hold less than 50%
of the outstanding voting stock of the surviving or resulting corporation
immediately following such transaction; or (iii) the sale or exchange (to or
with any person or entity other than the Company) by the stockholders of the
Company of more than 50% of the outstanding voting stock of the Company in a
single transaction or series of related transactions.
<PAGE>
"Ineligibility Period" shall mean that portion of the Benefit Period
when the Employee is ineligible for coverage under the Company's group life or
group health insurance policies.
"Termination Date" shall mean the effective date of the termination of
the Employee's employment with the Company.
2. Severance.
---------
In the event the Employee's employment by the Company is terminated
without Cause by the Company or any successor within twelve (12) months
following a Change in Control, the Company or such successor shall (i) pay the
Employee within five days after the Termination Date a lump sum amount equal to
six (6) times the Employee's monthly base salary in effect at the time of such
termination (less applicable withholding taxes and FICA) and (ii) continue to
provide during the Benefit Period life and health insurance coverage to the
Employee, with benefits substantially comparable to those provided to executive
officers of the Company generally immediately prior to such termination.
Notwithstanding the foregoing, the Company shall have the right, in lieu of
providing such coverage during any Ineligibility Period, to pay the Employee an
amount equal to 200% of the amount it would have cost the Company to provide
such coverage during any Ineligibility Period, assuming the Employee were
eligible for coverage under the Company's group insurance policies and assuming
further no increase in premium costs under such policies after the commencement
of the Ineligibility Period.
3. Miscellaneous.
-------------
3.1 This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings, whether written
or oral, relating to the subject matter of this Agreement.
3.2 This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
3.3 This Agreement shall be construed, interpreted and enforced
in accordance with the laws of The Commonwealth of Massachusetts.
3.4 This Agreement shall be binding upon and inure to the
benefit of both parties and their respective successors and assigns, including
any corporation with which or into which the
-2-
<PAGE>
Company may be merged or which may succeed to its assets or business.
3.5 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
3.6 In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, ity and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth above.
ASECO CORPORATION
By:___________________________
Title:________________________
EMPLOYEE
______________________________
Kenneth Gray
-3-
<PAGE>
EXHIBIT 10.17
SEVERANCE AGREEMENT
-------------------
This Severance Agreement is entered into as of this 30th day of
December, 1996 by and between Aseco Corporation, a Delaware corporation (the
"Company"), and Dennis A. Legal (the "Employee").
Recitals:
--------
WHEREAS, the Employee is an executive officer of the Company; and
WHEREAS, the Company and the Employee wish to provide for the payment
of certain severance compensation by the Company to the Employee in the event
the Employee's employment by the Company is terminated.
NOW, THEREFORE, in consideration of the Employee's continued service
to the Company and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions.
-----------
"Benefit Period" shall mean the six (6)-month period following the
Termination Date.
"Cause" shall be deemed to exist if the Board of Directors of the
Company or its successor in good faith determines, after giving the Employee
notice and an opportunity to be heard, that the Employee has committed an act
constituting fraud, embezzlement, larceny or theft.
"Change in Control" shall mean (i) the sale, lease, transfer or other
disposition by the Company of all or substantially all of its assets in a single
transaction or a series of related transactions; (ii) the merger or
consolidation of the Company with another entity in which the stockholders of
the Company immediately prior to such merger or consolidation hold less than 50%
of the outstanding voting stock of the surviving or resulting corporation
immediately following such transaction; or (iii) the sale or exchange (to or
with any person or entity other than the Company) by the stockholders of the
Company of more than 50% of the outstanding voting stock of the Company in a
single transaction or series of related transactions.
<PAGE>
"Ineligibility Period" shall mean that portion of the Benefit Period
when the Employee is ineligible for coverage under the Company's group life or
group health insurance policies.
"Termination Date" shall mean the effective date of the termination of
the Employee's employment with the Company.
2. Severance.
---------
In the event the Employee's employment by the Company is terminated
without Cause by the Company or any successor within twelve (12) months
following a Change in Control, the Company or such successor shall (i) pay the
Employee within five days after the Termination Date a lump sum amount equal to
six (6) times the Employee's monthly base salary in effect at the time of such
termination (less applicable withholding taxes and FICA) and (ii) continue to
provide during the Benefit Period life and health insurance coverage to the
Employee, with benefits substantially comparable to those provided to executive
officers of the Company generally immediately prior to such termination.
Notwithstanding the foregoing, the Company shall have the right, in lieu of
providing such coverage during any Ineligibility Period, to pay the Employee an
amount equal to 200% of the amount it would have cost the Company to provide
such coverage during any Ineligibility Period, assuming the Employee were
eligible for coverage under the Company's group insurance policies and assuming
further no increase in premium costs under such policies after the commencement
of the Ineligibility Period.
3. Miscellaneous.
-------------
3.1 This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings, whether written
or oral, relating to the subject matter of this Agreement.
3.2 This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
3.3 This Agreement shall be construed, interpreted and enforced
in accordance with the laws of The Commonwealth of Massachusetts.
3.4 This Agreement shall be binding upon and inure to the
benefit of both parties and their respective successors and assigns, including
any corporation with which or into which the
-2-
<PAGE>
Company may be merged or which may succeed to its assets or business.
3.5 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
3.6 In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth above.
ASECO CORPORATION
By:___________________________
Title:________________________
EMPLOYEE
______________________________
Dennis A. Legal
-3-
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING
SECURITIES OWNED BY
ORGANIZED UNDER REGISTRANT AS OF
LAW OF MARCH 30, 1997
--------------- --------------------
<S> <C> <C>
Aseco Investment Corporation.............. Massachusetts 100%
Aseco International Sales Corporation..... Barbados 100%
Aseco International Inc................... Delaware 100%
Aseco Malaysia Sdn. Bhd................... Malaysia 100%
</TABLE>
<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, 333-18337) of Aseco Corporation of
our report dated May 9, 1997, except for Note M as to which the date is May 23,
1997, 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 30, 1997.
ERNST & YOUNG LLP
Boston, Massachusetts
June 23, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS IN FORM 10K FOR THE YEAR ENDED MARCH 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANICAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-30-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-30-1997
<CASH> 14,082
<SECURITIES> 0
<RECEIVABLES> 9,560
<ALLOWANCES> 407
<INVENTORY> 9,238
<CURRENT-ASSETS> 33,887
<PP&E> 5,179
<DEPRECIATION> 2,952
<TOTAL-ASSETS> 36,640
<CURRENT-LIABILITIES> 5,033
<BONDS> 0
0
0
<COMMON> 37
<OTHER-SE> 31,076
<TOTAL-LIABILITY-AND-EQUITY> 36,640
<SALES> 34,320
<TOTAL-REVENUES> 34,320
<CGS> 18,113
<TOTAL-COSTS> 18,113
<OTHER-EXPENSES> 13,584
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7
<INCOME-PRETAX> 3,291
<INCOME-TAX> 1,003
<INCOME-CONTINUING> 2,288
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,288
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
</TABLE>
