UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
---------------------------------------------
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended March 31, 1998
or
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the transition period from ____ to ____
Commission File No. 0-21820
--------------------------------------------
KEY TECHNOLOGY, INC.
(Exact name of Registrant as specified in its charter)
Oregon 93-0822509
(State of Incorporation) (I.R.S. Employer Identification No.)
150 Avery Street, Walla Walla, Washington 99362
(Address of principal executive offices) (Zip Code)
(509) 529-2161
(Registrant's telephone number, including area code)
---------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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
The number of shares outstanding of the Registrant's common stock, no
par value, on April 30, 1998 was 4,692,528 shares.
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1998
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
Item 1. Financial statements
Condensed consolidated balance sheets, March 31, 1998
(unaudited) and September 30, 1997.............................3
Condensed unaudited consolidated statements of operations for the
three months ended March 31, 1998 and 1997 ...................4
Condensed unaudited consolidated statements of operations for the
six months ended March 31, 1998 and 1997 .....................5
Condensed unaudited consolidated statements of cash flows for
the six months ended March 31, 1998 and 1997..................6
Notes to condensed unaudited consolidated financial statements....7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.....................................10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders...............14
Item 6. Exhibits and Reports on Form 8-K..................................14
SIGNATURES....................................................................15
EXHIBIT INDEX.................................................................16
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 (UNAUDITED) AND SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
March 31, September 30,
1998 1997
---------------------- ----------------------
(in thousands)
<S> <C> <C>
Assets
- ---------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 5,548 $ 2,896
Trade accounts receivables, net 9,206 8,716
Inventories:
Raw materials 5,046 5,393
Work-in-process and sub-assemblies 5,199 5,357
Finished goods 2,316 3,096
------- -------
Total inventories 12,561 13,846
Other current assets 1,872 1,851
------- -------
Total current assets 29,187 27,309
Property, plant and equipment, net 8,802 9,380
Other assets 2,609 2,752
------- -------
Total $40,598 $39,441
======= =======
Liabilities and Shareholders' Equity
- ---------------------------------------------------------------
Current liabilities:
Accounts payable $ 1,756 $ 2,496
Accrued payroll liabilities and commissions 2,276 2,332
Income tax payable 177 738
Other accrued liabilities 2,566 2,239
Customers' deposits 3,142 1,344
Short-term borrowings and debt 570 852
------- -------
Total current liabilities 10,487 10,001
Long-term debt 1,372 1,293
Other long-term liabilities 157 116
Total shareholders' equity 28,582 28,031
------- -------
Total $40,598 $39,441
======= =======
</TABLE>
See notes to condensed unaudited consolidated financial statements
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
----------------- ----------------
(in thousands, except per share data)
<S> <C> <C>
Net sales $13,187 $15,286
Cost of sales 8,147 10,174
------- -------
Gross profit 5,040 5,112
Operating expenses:
Selling 1,996 1,849
Research and development 1,348 1,015
General and administrative 1,207 1,312
------- -------
Total operating expenses 4,551 4,176
------- -------
Income from operations 489 936
Other income 43 115
------- -------
Earnings before income taxes 532 1,051
Income tax expense 186 362
------- -------
Net earnings $ 346 $ 689
======= =======
Net earnings per common share - basic $ .07 $ .15
======= =======
Net earnings per common share - diluted $ .07 $ .15
======= =======
</TABLE>
See notes to condensed unaudited consolidated financial statements
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1998 AND 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
----------------- ----------------
(in thousands, except per share data)
<S> <C> <C>
Net sales $25,946 $28,703
Cost of sales 16,350 20,053
------- -------
Gross profit 9,596 8,650
Operating expenses:
Selling 3,942 4,100
Research and development 2,503 2,171
General and administrative 2,415 2,654
------- -------
Total operating expenses 8,860 8,925
------- -------
Income (loss) from operations 736 (275)
Other income 65 135
------- -------
Earnings (loss) before income taxes 801 (140)
Income tax benefit (expense) (281) 47
------- -------
Net earnings (loss) $ 520 $ (93)
======= =======
Net earnings (loss) per common share - basic $ .11 $ (.02)
======= =======
Net earnings (loss) per common share - diluted $ .11 $ (.02)
======= =======
</TABLE>
See notes to condensed unaudited consolidated financial statements
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1998 AND 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
--------------- --------------
(in thousands)
<S> <C> <C>
Net cash provided by (used in) operating activities $ 3,207 ($5,168)
Cash flows from investing activities:
Proceeds from short-term investments - 3,075
Additions to property, plant and equipment, net (499) (1,982)
------- -------
Net cash provided by (used in) investing activities (499) 1,093
------- -------
Cash flows from financing activities:
Proceeds from short-term borrowings - 937
Proceeds from issuance of long-term debt 408 1,500
Repayments of long-term debt (535) (1,076)
Proceeds from issuance of common stock 71 152
------- -------
Net cash provided by (used in) financing activities (56) 1,513
------- -------
Net increase (decrease) in cash and cash equivalents 2,652 (2,562)
Cash and cash equivalents, beginning of the year 2,896 3,458
------- -------
Cash and cash equivalents, end of period $ 5,548 $ 896
======= =======
Supplemental information:
Cash paid during the period for interest $ 257 $ 110
Cash paid during the period for income taxes $ 661 $ 1,300
</TABLE>
See notes to condensed unaudited consolidated financial statements
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Condensed unaudited consolidated financial statements
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted from these condensed unaudited consolidated
financial statements. These condensed unaudited consolidated financial
statements should be read in conjunction with the financial statements and
notes thereto included in the Company's Form 10-K for the fiscal year ended
September 30, 1997. The results of operations for the three- and six-month
periods ended March 31, 1998 are not necessarily indicative of the
operating results for the full year.
In the opinion of management, all adjustments, consisting only of normal
recurring accruals, have been made to present fairly the Company's
financial position at March 31, 1998 and the results of its operations for
the three- and six-month periods ended March 31, 1998 and 1997 and its cash
flows for the six-month periods ended March 31, 1998 and 1997.
The balance sheet at September 30, 1997 has been condensed from the audited
balance sheet as of that date.
2. Income taxes
The provision for income taxes is based on the estimated effective income
tax rate for the year.
3. Earnings per share
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings per
Share, requires all companies whose capital structures include convertible
securities to make a dual presentation of basic and diluted earnings per
share ("EPS"). This accounting standard became effective for the Company's
fiscal quarter ended December 31, 1997. Basic earnings per share are
computed on the basis of the weighted average number of common shares
outstanding during the period. Diluted earnings per share are calculated
after adjusting the weighted average number of common shares outstanding
for any dilutive effect of outstanding stock options using the treasury
stock method. During periods of net loss, the effect of outstanding stock
options is anti-dilutive and excluded from the calculation of loss per
share.
Tables reconciling basic earnings per share and diluted earnings per share
follow:
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Reconciliation of Basic EPS to Diluted EPS (in thousands,except per share data):
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
-------------------------------------------------------------------------------
1998 1997
-------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per-Share Per-Share
Income Shares Amount Income Shares Amount
Basic EPS:
Income available to common
shareholders $ 346 4,690 $ .07 $ 689 4,673 $ .15
===== =====
Effect of Dilutive Securities:
Stock Options - 34 - 87
---------- ---------- ---------- ----------
Diluted EPS:
Income available to common
shareholders plus assumed stock
options $ 346 4,724 $ .07 $ 689 4,760 $ .15
====== ===== ===== ====== ===== =====
</TABLE>
<TABLE>
<CAPTION>
For the Six Months Ended March 31,
-------------------------------------------------------------------------------
1998 1997
-------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per-Share Per-Share
Income Shares Amount Loss Shares Amount
Basic EPS:
Income (loss) available to common
shareholders $ 520 4,688 $ .11 ($ 93) 4,667 ($ .02)
===== =======
Effect of Dilutive Securities:
Stock Options - 43 - N.A.
Anti-
dilutive
---------- ---------- ---------- ----------
Diluted EPS:
Income (loss) available to common
shareholders plus assumed stock
options $ 520 4,731 $ .11 ($ 93) 4,667 ($ .02)
====== ===== ===== ======= ===== =======
</TABLE>
Options to purchase 316,550 shares at prices ranging from $16.25 to $23.25
per share were outstanding as of March 31, 1998, but were not included in
the computation of diluted EPS for the three-month period ended March 31,
1998 because the options' exercise prices were greater than the average
market price of the common stock. For the six-month period ended March 31,
1998, options for 345,400 shares of common stock at prices ranging from
$11.50 to $23.25 per share were not included in the computation of diluted
EPS because the options' exercise prices were greater than the average
market price of the common stock. These options expire on dates beginning
February 6, 2006 through March 25, 2008.
<PAGE>
4. Year 2000 Conversion
The Company has initiated an enterprise-wide program to prepare its
computer systems, applications and products for the year 2000 date
conversion. The Company expects to incur internal staff costs as well as
consulting and other remediation expenditures related to enhancements
necessary to achieve a year 2000 date conversion with no effect on
customers or disruption to business operations. The total cost of
compliance and its effect on the Company's future results of operations is
being determined as a part of the detailed compliance-planning program.
However, management believes that a reasonable proportion of these costs
are not likely to be incremental costs to the Company, but rather will
represent the redeployment of existing resources.
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Comments included in this document may include "forward-looking statements"
within the meaning of federal securities laws, including statements as to
anticipated future results that are based on current expectations and subject to
a number of risks and uncertainties. The following factors, among others, could
cause actual results or outcomes to differ materially from current expectations:
the ability of the Tegra product line to rebound and sustain an improved level
of customer acceptance; achievement of product performance specifications and
related product upgrade or warranty expenses; the ability of new products to
compete successfully in either existing or new markets; product development
activities; future costs of materials and other operating expenses; competitive
factors; the risks involved in expanding international operations and sales; the
costs associated with remediating potential Year 2000 issues; the performance
and needs of industries served by the Company and the financial capacity of
customers in these industries to purchase capital equipment.
Results of Operations
For the three-month period ended March 31, 1998, net earnings were $346,000 or
$.07 per share on net sales of $13.2 million compared to net earnings of
$689,000 or $.15 per share on net sales of $15.3 million for the comparable
period in fiscal 1997. Net earnings were 2.6% and 4.5% of net sales in the two
periods, respectively. For the six months ended March 31, 1998, the Company's
operating activities resulted in net income of $520,000 or $.11 per share on net
sales of $25.9 million compared to a net loss of $93,000 or $.02 per share on
net sales of $28.7 million for the corresponding period in fiscal 1997.
Three Months. Net sales decreased approximately $2.1 million or 14% in the
three-month period ended March 31, 1998 compared to the corresponding period in
fiscal 1997. The decrease in net sales between the two periods resulted
principally from decreased sales in the processing equipment and specialized
conveying system product groups, partially offset by increased sales of
automated inspection systems. The decrease in sales in the second quarter of
fiscal 1998 of the Company's processing equipment and specialized conveying
systems from the prior corresponding period resulted principally from a reduced
level of orders for these products during the first quarter of fiscal 1998
compared to the first quarter of the 1997 fiscal year, which had been seasonally
atypical. The increased level of sales for these products in fiscal 1997 was
partially related to the construction of new processing facilities by several
vegetable industry customers, which did not reoccur in fiscal 1998. Sales of
automated inspection systems resulted principally from shipments of the
Company's Tegra(TM) sorting systems. Sales to European customers increased by
60% in the second quarter of fiscal 1998 over the same period last year. Sales
of specialized conveying systems to European customers by the Company's Dutch
subsidiary, Superior B.V., was a significant factor contributing to this
increase.
Backlog at the end of the most recent quarter was approximately $10.2 million
compared to the respective backlogs of $7.6 million at the beginning of the
period and $14.5 million at March 31, 1997. Backlog increased by $2.6 million
within the second quarter of fiscal 1998 compared to a decrease of $1.5 million
<PAGE>
in backlog within the corresponding period in fiscal 1997, principally as a
result of increased orders for Tegra systems in the more recent period.
Gross profit improved to 38% of sales for the three months ended March 31, 1998
from 33% of sales in the corresponding period last year as a result of the
improved gross margins in all product groups, and specialized conveying systems
in particular. The improved margin percentage resulted from decreased
manufacturing labor and overhead as percentages of sales due to cost reduction
programs and improved manufacturing efficiencies. A shift in product mix to
higher margined products, primarily automated inspection systems, was also a
contributing factor to this increase in gross profit percentage. However, gross
profit contribution decreased slightly to $5.0 million in the fiscal 1998
quarter compared to $5.1 million for the corresponding period in fiscal 1997.
Overall gross profit contribution decreased principally as a result of decreased
sales in the more recent quarterly period.
Operating expenses were $4.6 million in the three-month period ended March 31,
1998 compared to $4.2 million for the three-month period ended March 31, 1997.
Research and development expenses increased by 33% to $1.3 million reflecting
increased spending for new product development related to expanding the
Company's presence in new markets and product applications. Management expects
that expenditures for research and development activities will decrease
moderately over the next several quarters. Selling expenses increased by 8% to
$2.0 million in the more recent period due principally to increased advertising
and product promotion expenses. General and administrative expenses decreased by
8% to $1.2 million in the more recent quarter as a result of a variety of
factors, including deceased expense levels for payroll and personnel costs,
legal fees, business promotion and maintenance expenses. For the fiscal quarter
ended March 31, 1998, other income was $43,000 compared to $115,000 for the
corresponding period in fiscal 1997.
During the three-month period ended March 31, 1998, the Company began the
consolidation of its two European subsidiaries, Key Technology B.V. and Superior
B.V. During the period, the Company incurred approximately $50,000 in expenses
related to the consolidation. The consolidation is expected to be completed in
early June.
Six Months. Net sales for the six-month period ended March 31, 1998 decreased
10% to $25.9 million from $28.7 million in the comparable period last year. The
decrease in net sales resulted from decreased sales of products in all three
primary product groups, principally in the processing equipment product group
followed by decreases in sales of specialized conveying systems and automated
inspection systems. The decreased sales in these product groups were generally
spread across the various geographic markets to which the Company sells, except
for Europe and, to a lesser extent, Latin America, both of which experienced
increased sales. In the more recent six-month period, decreased sales to
customers in international geographic markets other than Europe and Latin
America resulted principally from decreased sales of automated inspection
systems and specialized conveying systems to these customers during the first
quarter of fiscal 1998 compared to the same period last year. Historically, the
<PAGE>
Company's typical terms of sale for such systems sold to international customers
have been denominated in U.S. dollars. The Company believes the relative
strengthening of the dollar against other foreign currencies since the
comparable period a year ago has placed the Company's automated inspection
systems at a competitive pricing disadvantage. Accordingly, the Company
continues to review its sales strategies for such systems.
For the six months ended March 31, 1998, gross profit increased by $946,000 or
11% to $9.6 million, or 37% of sales, compared to $8.7 million, or 30% of sales,
in the six months ended March 31, 1997. Gross profit contribution during the
six-month period ended March 31, 1998 increased over the corresponding period in
1997 due principally to a shift in product mix to higher margined systems and
improved margins on these systems, and decreased manufacturing overhead and
labor as percentages of sales. Total operating expenses decreased by $65,000 to
$8.86 million in the six-month period ended March 31, 1998 from $8.93 million in
the comparable period in the previous fiscal year, principally as a result of
decreased general and administrative expenses followed by decreased selling
costs, both of which were partially offset by increased research and development
expenditures, as discussed above. For the six-month period ended March 31, 1998,
other income was $65,000 compared to other income of $135,000 for the
corresponding period in fiscal 1997. In the corresponding quarter in fiscal
1997, other income had benefited from moderately improved royalty and other
miscellaneous income compared to the more recent quarterly period
The results of operations for the six months ended March 31, 1997 were net
income of $520,000 compared to a net loss of $93,000 for the corresponding
period in fiscal 1997. The results of operations were 2.0% and (0.3%) of net
sales in the two periods, respectively.
Liquidity and Capital Resources
- -------------------------------
For the six-month period ended March 31, 1998, net cash provided by operating
activities totaled $3.2 million compared to net cash used in operating
activities totaling $5.2 million in the corresponding period in fiscal 1997. Two
principal sources of cash during the six months ended March 31, 1998 were
provided by an increase of $1.8 million in customers' deposits and a decrease in
inventories of $1.3 million. In the corresponding period last year, the Company
used $3.6 million in cash to decrease trade accounts payable balances and pay
accrued income taxes and certain accrued payroll liabilities, including profit
sharing and incentive compensation expenses, which had been accrued in the
previous fiscal year. Additionally, operating activities during the fiscal 1997
period had resulted in the use of $1.3 million to fund an increase in
inventories.
Cash flows from investing activities for the six-month period ended March 31,
1998 included the use of net cash resources totaling $499,000 to fund the
acquisition of capital equipment. In the corresponding period in fiscal 1997,
proceeds from short-term investments, upon their maturity, in a net amount of
$3.1 million were utilized to partially fund operating activities and $2.0
million in purchases of capital equipment. At March 31, 1998, the Company had
approved capital expenditures totaling approximately $1.3 million for equipment
and leasehold improvements related to expanding its operations in Europe through
the leasing of a new larger facility in Beusichem, The Netherlands.
<PAGE>
The Company's cash flows from financing activities for the six months ended
March 31, 1998 were principally affected by repayments of $535,000 in long-term
debt. These repayments, offset by the receipt during the first quarter of fiscal
1998 of $408,000 from a third-party leasing company, the result of an assignment
of the future proceeds of a customer's operating lease of the Company's
products, resulted in an a net decrease of $127,000 in total consolidated
long-term debt for the six months ended March 31, 1998. Proceeds from the
issuance of common stock during the period under the Company's employee stock
option and stock purchase plans totaled $71,000.
During the six-month period ended March 31, 1998, working capital increased by
$1.4 million to $18.7 million. Trade accounts receivable increased by the net
amount of $490,000 and inventories decreased by $1.3 million principally as a
result of a high level of shipments at the end of the period. Deposits from
customers increased by $1.8 million as a result of the increased backlog at the
close of the second fiscal quarter. Trade accounts payable decreased by
$740,000, principally as the result of the decrease in inventories. Income taxes
payable, payroll and other accrued liabilities also decreased by the net amount
of $290,000, including the payment of $661,000 for income taxes.
The Company's facility with a domestic commercial bank provides for an operating
line of credit up to $4.0 million. At March 31,1998, the Company had no
borrowings under this credit facility. The line of credit is subject to an
annual renewal and was renewed in January 1998. The line of credit under the
most recent renewal remains unsecured with terms at one-quarter percent below
the bank's prime rate of interest.
The Company also maintains a credit facility with a Dutch bank which provides
for operating lines of credit totaling 1.5 million guilders, or approximately
$750,000, to the Company's subsidiaries in the Netherlands. At March 31,1998,
the Company had no borrowings under this credit facility.
The Company's operating, investing and financing activities resulted in a $2.7
million increase in cash and cash equivalents. At the end of the period, the
balance of cash and cash equivalents totaled $5.5 million. The Company believes
that its cash and cash equivalents, cash generated from operations and available
borrowings under its operating lines of credit will be sufficient to provide for
its working capital needs and to fund future growth.
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
- --------------------------------------------------------------------------------
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its Annual Meeting of Shareholders on February 4,
1998. Voting common shareholders took the following actions at the
meeting:
1. The shareholders voted to elect the following nominees to the
Company's Board of Directors:
Votes Votes
For Abstaining
----------------- -------------------
John E. Pelo 4,342,099 13,845
Peter H. Van Oppen 4,341,129 14,815
Other directors whose term of office as a director continued
after the meeting are as follows:
Harold R. Frank
Edfred L. Shannon Jr.
Thomas C. Madsen
Gordon Wicher
2. The shareholders voted to ratify management's selection of
independent auditors for the 1998 fiscal year by the
affirmative vote of 4,328,151 shares, with 15,077 shares
voting against the proposal and 12,716 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(27.1) Financial Data Schedule for the six-month period
ended March 31, 1998.
(27.2) Restated Financial Data Schedules for the nine-month and
one-year periods ended June 30 and September 30,1996,
respectively.
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed during the three
months ended March 31, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KEY TECHNOLOGY, INC.
(Registrant)
Date: May 14, 1998 By /s/ Thomas C. Madsen
---------------------------
Thomas C. Madsen,
President and Chief Executive Officer
Date: May 14, 1998 By /s/ Steven D. Evans
----------------------------
Steven D. Evans,
Vice President of Finance and Administration
and Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXHIBIT INDEX
<S> <C>
Exhibit Page
- ------- ----
27.1 Financial Data Schedule for the six-month period ended March 31, 1998.....................17
27.2 Restated Financial Data Schedules for the nine-month and one-year periods ended June 30 and
September 30, 1996, respectively..........................................................18
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM KEY
TECHNOLOGY, INC.'S CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN ITS QUARTERLY
REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 5,548
<SECURITIES> 0
<RECEIVABLES> 9,704
<ALLOWANCES> (498)
<INVENTORY> 12,561
<CURRENT-ASSETS> 29,187
<PP&E> 18,060
<DEPRECIATION> (9,258)
<TOTAL-ASSETS> 40,598
<CURRENT-LIABILITIES> 10,487
<BONDS> 1,372
0
0
<COMMON> 9,040
<OTHER-SE> 19,542
<TOTAL-LIABILITY-AND-EQUITY> 40,598
<SALES> 25,946
<TOTAL-REVENUES> 26,119
<CGS> 16,350
<TOTAL-COSTS> 16,350
<OTHER-EXPENSES> 8,797
<LOSS-PROVISION> 63
<INTEREST-EXPENSE> 108
<INCOME-PRETAX> 801
<INCOME-TAX> 281
<INCOME-CONTINUING> 520
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 520
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
KEY TECHNOLOGY, INC.'S RESPECTIVE CONSOLIDATED BALANCE SHEETS AS OF SEP-30-1996
AND JUN-30-1996 AND THE RELATED STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE
RESPECTIVE PERIODS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS US DOLLARS
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> SEP-30-1996 SEP-30-1996
<PERIOD-START> OCT-01-1995 OCT-01-1995
<PERIOD-END> SEP-30-1996 JUN-30-1996
<EXCHANGE-RATE> 1 1
<CASH> 3,458 6,609
<SECURITIES> 6,070 5,667
<RECEIVABLES> 9,097 7,254
<ALLOWANCES> (273) (214)
<INVENTORY> 13,486 12,740
<CURRENT-ASSETS> 33,470 33,272
<PP&E> 15,524 11,707
<DEPRECIATION> (6,821) (6,620)
<TOTAL-ASSETS> 45,252 9,527
<CURRENT-LIABILITIES> 15,734 3,352
<BONDS> 1,467 541
0 0
0 0
<COMMON> 8,730 8,694
<OTHER-SE> 18,853 6,497
<TOTAL-LIABILITY-AND-EQUITY> 45,252 9,527
<SALES> 54,341 4,498
<TOTAL-REVENUES> 55,592 5,125
<CGS> 33,050 0,842
<TOTAL-COSTS> 33,050 0,842
<OTHER-EXPENSES> 15,226 0,803
<LOSS-PROVISION> 120 45
<INTEREST-EXPENSE> 70 36
<INCOME-PRETAX> 7,126 3,399
<INCOME-TAX> 2,252 912
<INCOME-CONTINUING> 4,874 2,487
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 4,874 2,487
<EPS-PRIMARY> 1.05 0.54
<EPS-DILUTED> 1.02<F1> 0.52<F1>
<FN>
<F1> REFLECTS THE ADOPTION IN THE FIRST QUARTER OF FISCAL YEAR 1998 OF FAS
128, A NEW STANDARD OF COMPUTING AND PRESENTING BOTH BASIC AND DILUTED NET
EARNINGS PER SHARE. PERIODS PRESENTED ARE THE ONLY PERIODS WHERE THE NEW
STANDARD CHANGED EARNINGS PER SHARE.
</FN>
</TABLE>
