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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE YEARLY PERIOD ENDED MARCH 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE PERIOD FROM APRIL 1, 1996 TO MARCH 31, 1997
COMMISSION FILE NUMBER 0-22114
ASYST TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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CALIFORNIA 94-2944251
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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48761 KATO ROAD, FREMONT, CALIFORNIA 94538
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(510) 661-5000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, no
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 report), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]
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 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 [X]
There were 5,334,816 shares of No Par Value Common Stock outstanding as of
June 10, 1997. The aggregate market value of voting stock held by
nonaffiliates of the registrant based upon the closing sales quotation of the
Common Stock on June 10, 1997 was approximately $191,386,500.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated
by reference in this report:
Definitive Proxy Statement in connection with
1997 Annual Meeting of Stockholders
(Part III of this Report)
The 1997 Proxy Statement shall be deemed to have been "filed" only to the
extent portions thereof are expressly incorporated by reference.
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PART I
ITEM 1 -- BUSINESS
Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially. Factors
that could cause or contribute to such differences include, but are not
limited to, those discussed in this section as well as those under the
caption, "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
INTRODUCTION
Asyst Technologies, Inc. ("Asyst" or the "Company") develops, manufactures
and markets systems utilizing isolation technology, material tracking
products, and factory automation solutions used primarily in cleanrooms for
semiconductor manufacturing. These systems are designed to reduce
contamination on in-process wafers by isolating processing equipment and
wafers in ultraclean (better than Class 1) minienvironments within a cleanroom
production facility. Controlling contamination in this manner enables
semiconductor manufacturers to increase yields and, in many cases, reduce
cleanroom construction and operating costs.
The Company's Asyst-SMIF(TM) System family of isolation technology products
is an integrated system consisting of sealed wafer cassette containers,
processing equipment enclosures (minienvironments) and related robotic
transfer equipment. The Company also offers the SMART-Traveler(TM) System,
which includes software and electronic display and communications devices and
enables semiconductor manufacturers to track wafers and reduce misprocessing
and misrouting during the production of integrated circuits. The Company's
subsidiary, Asyst Software, Inc. ("ASI"), founded in 1996, is dedicated to the
development of software products for equipment communications and automated
material handling, identification and tracking. Utilizing a combination of
open systems software and integration services, ASI is focused on providing
standards-based factory automation solutions, customer-focused software
products and formal systems integration processes. In November 1996, the
Company completed the acquisition of Radiance Systems, Inc. ("RSI") a small
software company which was integrated into ASI.
Advances in electronics technology in recent years have resulted in
increasingly sophisticated integrated circuits based on submicron geometries
and complex manufacturing processes. In order to produce these semiconductors
at acceptable yields, manufacturers must meet increasingly stringent
requirements for cleanliness and material control in the semiconductor
production facility. Semiconductor manufacturers generally have sought to meet
these requirements through the increasingly costly process of improving the
uniform level of cleanliness of the entire cleanroom. Asyst, however, believes
that its minienvironment approach, by focusing on control of the environment
in the immediate vicinity of the in-process wafers and the processing
equipment, provides semiconductor manufacturers with an efficient and cost-
effective way to achieve very high levels of cleanliness. A minienvironment-
based cleanroom, for example, requires less air handling equipment and
therefore can be constructed at a significantly lower cost than a conventional
cleanroom. In addition, semiconductor manufacturers are able to more
effectively respond to changing product and process requirements in a
minienvironment-based cleanroom, as equipment can be added or modified with
less disruption of ongoing production processing.
Most of the Company's minienvironment systems are based on the utilization
of SMIF ("Standard Mechanical InterFace"). SMIF is an industry standard mating
"port" that, when implemented, creates a common methodology for transferring
products between minienvironments and sealed containers. The SMIF standard was
originally proposed by Hewlett-Packard Company in 1984 and was initially
adopted as a semiconductor industry standard in 1990. Asyst, which was formed
in 1984, pioneered the early development of SMIF technology for the
semiconductor industry.
The Company markets its products worldwide to semiconductor manufacturers
who are either upgrading existing manufacturing facilities or who are
constructing new facilities. The Company's principal customers have
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included Applied Materials, Chartered Semiconductor Co. Pte. Ltd., Cypress
Semiconductor Corporation, Hyundai Electronics America, IBM Corporation,
Integrated Design Technology, Inc., LAM Research Corporation, KLA-Tencor,
Macronix International, Ltd., Philips Electronics N.V., Submicron Technology
Public Company, Symbios Logic, Inc., Taiwan Semiconductor Manufacturing Co.
Ltd., SVG/Thermco, VLSI Technology, Inc., Windbond and Zilog, Inc. The Company
sells its products directly to end users and OEMs in the United States and all
other parts of the world, except for Japan. In addition, ASI provides products
and services to assist original equipment manufacturers (OEMs) with the
integration of SMIF material handling and automated material identification
systems. The Company distributes its products in Japan through an agreement
with Tokyo Electron Limited ("TEL"). See " -- Customers" and " -- Sales and
Marketing."
Although the Company's products were designed to address the specific needs
of semiconductor manufacturers, the Company also sells limited quantities of
its products for use in the manufacture of high density magnetic discs and flat
panel displays and believes that, due to similar manufacturing process
requirements, its products and technology may be useful in the manufacture of
other high technology products in which contamination control is critical.
BACKGROUND
A decade ago, integrated circuits generally incorporated feature sizes of
three microns or more and were typically manufactured with processes involving
approximately 100 steps. Today, semiconductor companies manufacture much more
complex integrated circuits by incorporating feature sizes of less than half
micron and using more sophisticated processes with up to 500 or more steps. In
addition, recently developed integrated circuit design and verification
techniques have enabled semiconductor companies to rapidly design and
manufacture semi-custom and custom products addressing specific customer
requirements. Instead of producing high volumes of a small number of standard
products, many of today's facilities are typically required to produce varying
volumes of a large number of products and to adapt readily to changing customer
and market requirements.
As the costs and complexity of semiconductor production have increased,
certain aspects of the semiconductor manufacturing process have become
increasingly important. Some of these are as follows:
.Need for Higher Levels of Cleanliness and Contamination Control
Semiconductors must be manufactured in a clean environment in order to
prevent contamination by particles as wafers are processed into finished
product. Particles on the wafer surface can result in defective devices,
adversely affecting the manufacturer's overall yield, the percentage of the
original integrated circuits processed that are of sufficient quality to be
sold. As feature sizes shrink and as chip densities and the number of process
steps increase, the risks posed by particle contamination become much greater.
During the 1980s, semiconductor manufacturers could typically satisfy their
contamination level requirements with cleanrooms certified as Class 100 (i.e.,
no more than 100 particles of 0.5 micron diameter or larger per cubic foot of
air) or higher. The cleanrooms required to manufacture today's most advanced
integrated circuits generally must achieve Class 1 cleanliness levels (i.e., no
more than 1 particle of 0.1 micron diameter or larger per cubic foot of air),
as well as maintain stringent control of temperature and humidity. In addition,
certain advanced semiconductor manufacturing processes require not only control
of particulate contamination, but also control of contamination caused by water
vapor, oxygen and trace chemicals that are present in normal cleanroom air.
Semiconductor manufacturers have generally addressed the increased need for
cleanliness and contamination control through the construction of more advanced
cleanrooms, which improves the uniform level of cleanliness within the entire
cleanroom. Such advanced facilities typically require the isolation of
manufacturing personnel in expensive and highly constraining cleanroom garments
that reduce, but do not completely eliminate, the generation of particles and
other contamination from human activity. Some utilize varying degrees of
automation to further minimize operator activity and related contamination.
Despite advances in cleanroom technology, however, the presence of production
personnel and the conduct of activity within a
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facility continue to result in the introduction of contaminants during the
production process, typically in sudden events referred to as "particle
bursts." These particle bursts are often generated in the vicinity of in-
process wafers in connection with manual loading and unloading of wafer
cassettes into and out of processing equipment and can cause temporary
contamination levels of Class 1000 or greater at the wafer surface level.
Although high levels of cleanliness can in principle be obtained in a state-
of-the-art cleanroom, control of contamination at the wafer surface level
remains difficult due to such locally generated contamination. Minimizing the
adverse effects of these events and controlling the generation of contaminants
within the cleanroom present an increasing challenge for semiconductor
manufacturers.
.Need to Improve Facility Utilization
The rapid pace of advances in semiconductor technology has led to shorter
semiconductor product and production facility life cycles. Semiconductor
manufacturing facilities constructed in the mid-1980s to process a limited
number of standard products with three micron geometries must be substantially
refurbished in order to produce numerous, sub-micron products at acceptable
yields. Such refurbishment typically requires the entire manufacturing
facility to be shut down for weeks or months, thereby resulting in a loss of
revenue to the manufacturer. In addition, the introduction of new products and
processes to address new market conditions can require the manufacturer to
halt production temporarily while it adjusts its manufacturing flow and
processes frequently in response to shifting product mix and surges in
customer demand. Faced with the prospect of continuing advances in
semiconductor technology, most semiconductor manufacturers need the ability to
upgrade existing facilities and construct new facilities in a manner that
allows for better ongoing facility utilization.
.Need for Greater Manufacturing Control
As the manufacturing process has become more complicated and integrated
circuits have become more complex, the possibility and cost of human error has
increased. The VLSI fabrication process typically requires human operators to
move batches of silicon wafers carried in cassettes through over one hundred
pieces of processing equipment in which over 500 different processing steps
are performed during a four to twelve week period. In addition, semiconductor
manufacturers are increasingly producing multiple integrated circuits in the
same manufacturing facility, thereby requiring more sophisticated methods of
precise wafer control. Examples of human error range from misplacing a
cassette, thereby delaying processing, to incorrectly processing a cassette of
wafers, thereby ruining the wafers. The cost of misprocessing errors can be
significant, given that a typical cassette of 25 wafers being processed in a
state-of-the-art facility can contain finished product worth from $25,000 to
$500,000 or more.
.Need to Control Escalating Cleanroom Costs
The cost of construction of cleanrooms has increased dramatically from
approximately $500 per square foot in the early 1980s to over $2,000 per
square foot. This cost increase is due significantly to increased costs
associated with the infrastructure and equipment required for moving and
environmentally conditioning millions of cubic feet of air every minute.
Operating costs have also escalated in tandem with energy consumption and
cost. Operating and maintaining the air conditioning system for a Class 1
cleanroom is expensive. For example, a typical 40,000 square foot Class 1
cleanroom requires the circulation and filtration of over four million cubic
feet of air every minute. Total construction costs alone for such a cleanroom
are often in excess of $100 million, and operating costs for air handling
typically exceed $1 million per year.
ASYST'S PRODUCTS
Asyst addresses the requirements for increased levels of cleanliness,
facility utilization, control and cost-effectiveness in semiconductor
manufacturing through its Asyst-SMIF minienvironment system, its SMART-
Traveler material control system and its family of automation software
products and solutions.
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Asyst-SMIF System
The Asyst-SMIF System is designed to provide a continuous, ultraclean
environment for semiconductor products while they move through the
manufacturing facility. The Company believes that its Asyst-SMIF System, by
focusing on control of the environment in the immediate vicinity of the in-
process wafers and the processing equipment, provides semiconductor
manufacturers with an efficient and cost-effective way to achieve very high
levels of cleanliness. Through sealed containers that encapsulate wafer
cassettes (SMIF-Pods), enclosures with engineered airflows that surround
process equipment (SMIF-Enclosures) and robotic systems that transfer wafer
cassettes into and out of process equipment (SMIF-Arms), a minienvironment
system is created which maintains and controls cleanliness and which is
essentially independent of the external room environment. Asyst believes that
its minienvironment approach offers several advantages to semiconductor
manufacturers.
First, Asyst-SMIF Systems can significantly reduce contamination by using
minienvironments to protect the in-process wafers and processing equipment
from exposure to particle bursts caused by human handling of cassettes as well
as to contaminants that migrate from elsewhere in the cleanroom. Thus, rather
than attempt to achieve and maintain uniformly high levels of cleanliness and
contamination control throughout the entire facility, the Asyst-SMIF
minienvironment system provides ultraclean contamination control in the
immediate vicinity of the wafers and the process equipment.
Second, the Asyst-SMIF solution affords manufacturers the opportunity to
significantly reduce capital expenditures associated with the construction of
new cleanrooms or the upgrade of existing cleanrooms. A minienvironment-based
cleanroom requires less air handling equipment and therefore can be
constructed at a significantly lower cost than a conventional cleanroom. In
the case of an existing cleanroom, the Asyst solution makes it possible to
upgrade the cleanroom to state-of-the-art cleanliness with minimal disruption
of production compared to a traditional upgrade and at much lower expense than
would be required for a complete retrofit or the construction of a new
cleanroom.
Third, an Asyst-SMIF System can reduce the cost of operating the
semiconductor manufacturing facility both by reducing the amount of clean air
volume required to maintain acceptable contamination levels in the cleanroom
and by reducing costs associated with the gowning of operating personnel.
Last, the Asyst-SMIF System enhances facility flexibility. Semiconductor
manufacturers are able to more effectively respond to changing product and
process requirements as equipment can be added or modified with much less
disruption of ongoing production processing in other minienvironments within
the cleanroom. This mitigates the need to shut down the entire facility in
order to add or rearrange equipment.
The Company offers a range of products to address the varying requirements
of its customers for minienvironments and manufacturing control systems. The
Company's current Asyst-SMIF System, SMART-Traveler System and Asyst Software
products are as follows:
Asyst-SMIF System Products
The Asyst-SMIF System consists of three main components: (i) the SMIF-
Pod(TM), used for storage and transport of wafer cassettes; (ii) the SMIF-
Enclosure(TM), which provides an ultra clean minienvironment via a custom
chamber built around the processing equipment; and (iii) the SMIF-I/O(TM)
("input/output") products including Arms, Indexers, LPI/LPT and related
products, which transfer the cassette from the SMIF-Pod into the process tool
and/or SMIF-Enclosure. In addition to its standard SMIF-System products, the
Company also offers its advanced SMIF-E System, which provides the capability
to store, transport and transfer the product in an inert gas. The Company has
developed a library of Asyst-SMIF System configurations to cover nearly 500
different models of processing equipment. To date, the Company has installed
over 8,000 Asyst-SMIF I/O's and supplied over 90,000 SMIF-Pods to its
customers. A fully-equipped semiconductor manufacturing facility with an
output of 20,000 wafers per month would typically include approximately 2,000
SMIF-Pods, 300 SMIF-I/O and 200 SMIF-Enclosures, with an aggregate price to
the customer of between $5 million and $10 million.
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.SMIF-Pod
The Asyst SMIF-Pod(TM) is a sealed polycarbonate container for products,
typically cassettes of wafers, which provides contamination control (Class 1 or
better) during transport and storage. A WaferLock(TM) protects the wafers
against movement or vibration during transport. A replaceable InnerShield
protects the wafer by maintaining an ultra-pure environment around the product.
The SMIF-Pod components are constructed from materials chosen specifically for
their low particulate generation and low organic outgassing. The Company's
SMIF-Pod family currently includes SMIF-Pods for 125mm, 150mm, 200mm and 300mm
wafers, reticles (single and multiple), flat panel displays and rigid disks.
SMIF-Pods are typically priced between $200 and $400, depending upon the model.
.SMIF-Enclosure
The SMIF-Enclosure is a specially constructed chamber that surrounds a
particular piece of process equipment in the wafer fabrication facility.
Options include a dedicated fan filter unit for air handling as well as a
temperature and humidity control system. In new facilities, SMIF-Enclosures are
generally suspended from the cleanroom ceiling with clean air supplied through
the filters in the ceiling of the cleanroom. For older facilities, the SMIF-
Enclosures are typically floor supported and include dedicated air handling
units. SMIF-Enclosures are typically priced between $3,000 and $100,000,
depending on the level of complexity. The Company has also provided enclosures
for non-SMIF semiconductor and hard disk drive applications.
.SMIF-I/O
The SMIF-I/O is a fully automated robotic transfer system designed to remove
a cassette from a SMIF-Pod and load it into the processing equipment without
exposing the cassette to ambient facility air. The SMIF-I/O is available for
the processing of 100mm, 125mm, 150mm and 200mm wafers. In addition, the
Company offers an advanced version of the SMIF-I/O, the LPT/LPI, which extends
SMIF-based particle control and automation capabilities to loadlock production
equipment with recessed process chambers, such as chemical vapor deposition and
ion implant equipment. SMIF-I/O are typically priced between $22,000 and
$55,000, depending on the model.
Another part of the SMIF-I/O group of products is the SMIF-Indexer INX-
2200(TM), an OEM product which enables process equipment manufacturers to
integrate SMIF-Pod-based cassette loading and unloading into their
semiconductor processing equipment. The SMIF-Indexer integrates a SMIF port
with an indexer function; it enables process equipment with Z-axis picking
mechanisms to load and unload wafers with random access capability. With its
laser-based wafer detector features, improperly seated wafers within a cassette
are automatically reseated before cassettes are loaded into the SMIF-Pod. The
SMIF-Indexer also has built in SMART-Traveler and SMIF-E capability. The
Company also has developed a new Indexer for flat panel displays. The SMIF-
Indexer prices range between $8,000 and $19,000, depending on the model.
.SMIF-E(TM)
The Asyst SMIF-E System is an advanced inert gas encapsulation version of the
Asyst-SMIF System. The standard SMIF-Pod is inter-changeable in conventional
(clean-air) SMIF and SMIF-E applications. The SMIF-Arm and SMIF-Indexer family
of products are modified with a patented gas injection and control system
capability to enable SMIF-E functionality at specific locations as needed. The
SMIF-Enclosure may also be modified with inert gas recirculating, monitoring
and control capability to enable SMIF-E functionality within specific
processing equipment enclosures. SMIF-E capability can add between $15,000 to
$50,000 to SMIF-I/O and SMIF-Enclosure selling prices, depending on features.
SMART-Traveler(TM) System
In conventional cleanrooms, semiconductor manufacturers typically track
batches of wafers by attaching lot-cards, bar-code tags or paper travelers to a
wafer carrier, such as a SMIF-Pod or lot box. The Asyst SMART-Traveler System
is designed to provide automated manufacturing floor control of wafers by
replacing the paper travelers and bar code systems with an intelligent
electronic memory device called a SMART-Tag(TM).
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The Asyst SMART-Traveler System allows semiconductor manufacturers to reduce
manufacturing errors by significantly decreasing the opportunities for
operator-associated misprocessing during the production process. Conventional
paper traveler and bar-code based systems rely on operator interpretation and
input and thus are prone to human error. Reliance on operator control is
substantially reduced by the SMART-Traveler System, thereby improving factory
yields.
The SMART-Traveler System also improves manufacturing efficiency by
providing real-time information to the operator on the manufacturing floor
about the disposition and destination of the wafers inside each SMIF-Pod.
Unlike paper travelers or bar-code based systems, operators are not required
to manually enter or obtain process information from computer terminals prior
to loading the process equipment. Operator efficiency is improved because the
SMART-Traveler System automatically verifies that the SMIF-Pod is at the
correct processing location. Efficiency is improved in managing the wafers in
SMIF-Pods that are in SMART-Storage since the SMART-Traveler System
automatically keeps track of the location of each SMIF-Pod.
The Company's SMART-Traveler System consists of three main components: (i)
the SMART-Tag, used for storing, displaying and communicating wafer cassette
level information; (ii) MicroStation Controller (MSC), used for controlling
and communicating the disposition of the wafer cassette at processing
equipment stations; and (iii) SMART-Storage, used for managing wafers in SMIF-
Pods while in storage. In addition, the Company provides software to
communicate from the SMART-Traveler System to the factory-wide host system and
to individual pieces of processing equipment.
.SMART-Tag
SMART-Tag is an electronic device with an infra-red communications link that
attaches to a SMIF-Pod or other container. The SMART-Tag's memory file
structure accepts a variety of information such as wafer cassette
identification, process sequence and history, wafer identification maps and
other manufacturing data. SMART-Tags are priced at approximately $300 to $400
depending on quantity and features.
Attached directly to a SMIF-Pod or lot box, the SMART-Tag carries
information relevant to the wafers inside the carrier, including wafer
identification, lot identification, process specifications and next process
step information. The information included in the SMART-Tag's memory is
automatically verified to each specific process equipment to the factory host
computer system to ensure the lot is at the right process tool with the
correct recipe. After each process step the SMART-Tag is automatically updated
with the next process step.
The LCD display on the SMART-Tag provides operators with specific
instructions regarding process step and equipment destination for the
particular wafers inside that wafer carrier. Upon placement of the SMIF-Pod
wafer carrier onto a SMIF-I/O, the SMART-Tag communicates with the
MicroStation Controller (MSC) through an infra-red probe embedded in each
SMIF-I/O.
.MicroStation Controller
The MSC is an embedded single board computer and associated software that is
attached to a SMIF interface. Two specific products with different software
programs, MicroStation Controller ("MSC") and Link Manager, may be utilized
based on application requirements. MSC enables the SMART-Traveler System to
communicate with and control the SMIF-I/O as well as, in some instances, the
processing equipment. The Link Manager enables the SMART-Traveler System to
communicate with the host system network. Each provides communication and
control by validating the status of the SMIF-Pods arriving and leaving the
processing equipment. Depending on the configuration and the quantity, the MSC
is priced at approximately $3,500 to $5,000.
The MSC communicates with the factory host computer system to verify that
the wafers are at the correct process equipment. The combination of the SMIF-
I/O and the SMART-Tag provides a lock and key allowing the process step to
begin only if the wafers are at the correct processing location.
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.SMART-Storage(TM)
SMART-Storage is an interactive system built around a personal computer and a
network of controllers and communication probes that provides work-in-process
control and management of SMIF-Pods in storage racks or automated stockers. It
monitors the physical storage locations of production cassettes and obtains
information from SMART-Tags to create a real-time database. Each storage area
computer links up to 256 rack-mounted storage trays, which store work-in-
process between process steps and communicates via infra-red to the SMART-
Storage computer. SMART-Storage is priced at approximately $70,000 to $90,000
per system depending on quantity.
The management of SMIF-Pods in storage occurs through a system that involves
nesting areas called Storage-Trays. Storage-Trays have infra-red sensors and
are connected to a Storage-Controller and personal computer running software
that communicates with the host system and with the SMART-Tag's attached to
each SMIF-Pod.
The Company has interfaced the SMART-Traveler System to several host systems,
including systems marketed by PROMIS Systems Corporation, Consilium and IBM's
proprietary host Factory Control Systems. To date, the Company has sold over
22,000 SMART-Tags. A typical SMART-Traveler System for a 20,000 square foot
semiconductor manufacturing facility has an aggregate price ranging from $2
million to $3 million.
Asyst Software
ASI's equipment integration software provides material control throughout the
fab. In addition to automating the processing of each lot during the
manufacturing cycle, the customizable software links directly to the fab's host
system - thereby providing users with the ability to pre-schedule material
movement to specific process equipment. ASI's DataView(TM) software collects
data in real-time from semiconductor equipment and displays the collected data
on trend plots and Statistical Process Control (SPC) charts, based on user-
defined configurations. DataView stores the data in a relational database for
historical analysis.
CUSTOMERS
The Company's customers primarily are semiconductor manufacturers who are
either upgrading existing manufacturing facilities or constructing new
manufacturing facilities. The Company considers repeat business to be important
to its success and strives to maintain close relationships with its customers.
In addition to generating revenue for the Company through their repeat
purchases, these customers can serve as reference accounts for potential new
customers. For example, since completion of the first installation of the
Company's Asyst-SMIF Systems by IBM in 1989, the Company has installed Asyst-
SMIF Systems at three additional IBM semiconductor manufacturing facilities,
with two of these facilities also implementing SMART-Traveler Systems.
Similarly, the Company began the first installation of its Asyst-SMIF products
at a manufacturing facility owned by Symbios Logic, Inc. in 1989 and has
shipped products for a second installation manufacturing facility specifically
designed for minienvironment systems. The Company is presently shipping
products for a third installation at Symbios Logic. The Company has also
received follow-up orders from Taiwan Semiconductor Manufacturing Co. Ltd.,
Cypress, Philips and Chartered Semiconductor.
As major customer projects are completed, the Company's business from such
customers will decline substantially unless these customers undertake
additional projects incorporating the Company's products. For example, sales of
the Company's products to IBM, which accounted for approximately 48 percent and
44 percent of the Company's net sales during fiscal 1992 and 1993,
respectively, declined to approximately 3 percent, 5 percent, and 11 percent of
the Company's net sales during fiscal 1994, 1995 and 1996, respectively. During
fiscal year 1996 and 1997 the Company's sales to Taiwan Semiconductor
Manufacturing Co. Ltd., accounted for approximately 21 percent and 14 percent,
respectively, of the Company's net sales. If additional projects are not
initiated by existing customers, the performance of the Company will depend on
securing business from new
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customers. While the Company attempts to pursue new customers, there can be no
assurance that the Company will be successful in its sales and marketing
efforts, and any significant weakening in customer demand would have a material
adverse effect on the Company.
The Company's ten largest U.S. and international customers based on
cumulative sales during fiscal 1995, 1996 and 1997 were the following
companies:
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Chartered Semiconductor Co. Pte. Ltd. Taiwan Semiconductor Manufacturing Co. Ltd.
Cypress Semiconductor Corporation Lam Research Corporation
IBM Corporation Tokyo Electron Ltd.
Integrated Devices Technology, Inc. Thermco Systems
Submicron Technology Public Co. Winbond
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Although the companies listed above represent Asyst's largest customers
during the periods, and have all purchased products from the Company during the
past twelve months, there can be no assurance that such companies will make
significant purchases of the Company's products in the future. See "Risk
Factors Customer Concentration," "-- Acceptance of Minienvironment Technology
by Customers," and "-- Dependence on Semiconductor Industry" and Note 2 of
"Notes to Consolidated Financial Statements."
SALES AND MARKETING
The Company sells its products principally through its direct sales force to
end users in the United States and other parts of the world, except Japan. The
Company markets its products in Japan through its distributor relationship with
Tokyo Electron Ltd. The Company's sales organization is based in Fremont,
California, and domestic field sales personnel are stationed in Pennsylvania,
Arizona and Texas.
International sales, which consist principally of export sales from the U.S.,
have accounted for approximately 59 percent, 47 percent and 56 percent of total
sales for fiscal 1995, 1996 and 1997, respectively. The European market is
supported through an office in the vicinity of Paris, France. The Asia/Pacific
Region, with the exception of Japan, is supported through sales and service
offices in Hsin-Chu, Taiwan, Singapore, Bangkok, Thailand and Inchun, Korea.
(See Note 7 of "Notes to Consolidated Financial Statements" for a summary of
international revenue by geographic area.) 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, however, are subject to certain other risks common to many technology
export activities, such as the imposition of governmental controls, the need to
comply with a variety of foreign and U.S. export laws, political and economic
instability, trade restrictions, changes in tariffs and taxes, the greater
difficulty in administering business overseas and general economic conditions.
See "Risk Factors -- Risks of International Operations."
The sales cycle for a significant purchase of the Company's products is
typically six to twelve months or longer and generally follows a lengthy
evaluation, budgeting and approval process. An important element of the sales
cycle consists of persuading potential customers that Asyst's solutions are
superior, cost-effective and flexible approaches to their needs, and the
Company's marketing effort includes extensive participation by Asyst's senior
management. The sales cycle begins with generation of a sales lead, which is
followed by qualification of the lead, an analysis of the customer's needs, a
presentation to the customer, an equipment and airborne particulate
contamination audit, a detailed economic and return on investment analysis, a
further presentation to the customer, sign-off activities and contract
finalization. During the sales cycle, the Company offers a performance audit on
customer-selected pieces of processing equipment and limited installations of
SMIF products to demonstrate the benefits of Asyst's solution. The Company's
standard selling term is net 30-days. Sales under Letters of Credit are often
required for new international customers. Prepayments are sometimes required on
orders that involve significant engineering. Large system orders typically
provide for a portion of the contract price to be paid upon system acceptance.
The standard warranty period for the Company's products ranges between one and
five years, depending on product and time of shipment. Warranty costs and
product returns incurred over the last three fiscal years have not been
material.
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<PAGE>
An important part of the Company's marketing strategy has been the
participation by the Company in key industry organizations such as SEMI
SEMATECH and SEMI and attendance at events coordinated by SIA. The Company
believes that such participation serves to promote the acceptance of the
Company's SMIF minienvironment approach in the semiconductor industry. In
addition, the Company actively participates in industry trade shows and
conferences and has sponsored seminars with technology and business experts
from the semiconductor industry. Company officers speak and make presentations
at these and related events during the year.
SYSTEMS INTEGRATION
After a sales contract for the Company's system products is finalized,
Asyst's Systems Integration organization is responsible for the engineering,
procurement and manufacturing of SMIF-Enclosures and interfaces necessary to
integrate SMIF-Arms and SMIF-Pods with the processing equipment. The
organization provides system integration, installation, qualification of the
Asyst-SMIF System and other services associated with the facility-wide
integration of the minienvironment and Asyst-SMIF System.
The Systems Integration organization is focused on understanding the
customer's manufacturing methodology and actual production applications and
developing customer-specific solutions. For retrofitting and upgrading
existing facilities with the minienvironment and SMIF solution, the Systems
Integration organization works with the customer's facilities and
manufacturing personnel to develop programs, schedules and solutions to
minimize disruption during the installation of the Company's products into the
customer's facility. In the case of new facility design, the Systems
Integration organization works with the customer's facility planners and
operations personnel as well as with cleanroom designers, architects and
engineers.
In the case of OEM integration, the Systems Integration organization designs
and integrates the SMIF components directly into the processing equipment. The
OEM integration team works very closely with the OEM (equipment suppliers) to
understand the process equipment and the processing requirements and provides
an optimized solution including training, service, and post support.
RESEARCH AND DEVELOPMENT
The Company's research and development efforts are focused on enhancing its
existing products and developing and introducing new products in order to
maintain technological leadership and meet a wider range of customer needs.
The Company's research and development expenditures were approximately $3.5
million, $6.9 million and $8.6 million during fiscal 1995, 1996 and 1997,
respectively.
The Company's research and development employees are involved in mechanical
and electronic engineering, software development, microcontamination control
and product documentation and support. The Company's research and development
facilities include a prototyping lab and a cleanroom used for product
research, development and demonstration.
Recent development efforts by the Company have focused on the direct
integration of Asyst-SMIF System and SMART-Traveler System products with
semiconductor process equipment, the expansion of the Company's SMIF-Indexer
products to suit applications for multiple wafer diameters and self-contained
environmental control, the extension of the SMART-Traveler System to provide
direct equipment communication and control, various enhancements of the
Company's SMIF-E products and the development of a logistical wafer management
system. The Company has also developed a new line of Indexer and Pod products
for flat panel displays. At ASI, the Company's product development efforts are
focused on integrating peripheral devices on manufacturing equipment in a
Windows-NT(TM) format. Semiconductor equipment and processes are subject to
rapid technological change. The development of more complex integrated
circuits has driven the need for new facilities, equipment and processes to
produce such devices at acceptable cost and yield. The Company believes that
its future success will depend in part upon its ability to continue to enhance
its existing products to meet customer needs and to develop and introduce new
products which maintain technological leadership. There can
9
<PAGE>
be no assurance that the Company's product development efforts will be
successful or that the Company will be able to respond effectively to
technological change. See "Risk Factors -- Dependence on New Products and
Technologies."
MANUFACTURING
The Company's manufacturing activities consist of assembling and testing
components and sub-assemblies, which are then integrated into finished
products. Once completed, the Company performs a final test of all electronic
and electromechanical sub-assemblies and cycles the product before shipment.
Much of the cleaning, assembly and packaging of the Company's SMIF-Pods is
conducted in cleanroom environments where manufacturing personnel are clothed
in cleanroom gowns to reduce particulate contamination.
The Company currently maintains manufacturing facilities for its Asyst-SMIF
System and SMART-Traveler System products in Fremont, California and for its
software engineering services for ASI in San Jose, California. The Company
fabricates its custom SMIF-Enclosures at both the Fremont facility and, in the
case of large system orders, near customer sites, where the Company will lease
temporary space for the conduct of enclosure manufacturing by its personnel.
While the Company uses standard components whenever possible, most
mechanical parts, metal fabrications and castings are made to the Company's
specifications. The Company procures certain of the components and sub-
assemblies included in its products from a single supplier or a limited group
of suppliers in order to ensure overall quality and timeliness of delivery. To
date, the Company has been able to obtain adequate supplies of such components
in a timely manner. However, disruption or termination of certain of these
sources could have a temporary adverse effect on the Company's operations. The
Company believes that alternative sources could be obtained and qualified to
supply these products if necessary. Nevertheless, a prolonged inability to
obtain certain components could have an adverse effect on the Company's
operating results and could result in damage to customer relationships. See
"Risk Factors -- Dependence on Key Suppliers."
QUALITY IMPROVEMENT PROCESS
The Quality Service Organization ensures that the products and systems
developed and manufactured by Asyst Technologies meets and/or exceeds customer
satisfaction and established standards. This is accomplished through the
Quality Improvement Process (QIP), Reliability and Safety Engineering
activities, Quality Reporting, ISO 9001 Project, and process inspection
activities. The QIP fosters an atmosphere that promotes improvement activities
and empowers the employees of Asyst Technologies. Design validation is ensured
through the execution of Reliability and Safety Engineering activities.
Quality Engineering provides guidance to technical staff and management on key
opportunities which would benefit from continuous improvements. Statistical
data and reports are used to drive these activities. Through the ISO 9001
Project, audits against documented systems are conducted and fed back for
corrective actions. Inspection for incoming and outgoing quality is conducted
to ensure that quality requirements are met.
COMPETITION
The Company currently has direct competition in all of its businesses
(minienvironments, Asyst-SMIF systems, SMART-Traveler system products and
software engineering). Most competitors remain dedicated to one of these
businesses, enabling a focused engineering, manufacturing, and marketing
effort. To the Company's knowledge, its primary source of competition from
these competitors remains alternative approaches to solving the contamination
and manufacturing control problems of the semiconductor manufacturing
industry. The Company's ability to provide the total manufacturing automation
and wafer isolation solution provides a significant competitive advantage with
respect to these competitors, but there can be no assurance that the
competition's product offerings will not expand or that new competitors will
not enter the Company's market.
10
<PAGE>
Significant direct competition currently exists from Jenoptik-Infab, Inc.
("Infab"), a joint venture directed at total semiconductor fab automation and
wafer isolation. Jenoptik's product offerings include 150mm, 200mm and 300mm
SMIF systems, manufacturing control systems, and minienvironments. While
Jenoptik's automation solution has been adopted on a limited basis within the
Company's market, Jenoptik's marketing efforts continue to present a
significant challenge for the Company, primarily due to the extensive
engineering, manufacturing and marketing capabilities and potentially greater
financial resources than those available to the Company.
The Company believes that the principal competitive factors in its market
are the technical capabilities and characteristics of systems and products
offered, technological experience and "know-how," product breadth, proven
product performance, quality and reliability, ease of use, flexibility and the
effectiveness of marketing and sales. The Company currently believes that it
competes favorably with respect to the foregoing factors, although there can
be no assurance that it will be able to do so in the future. See "Risk
Factors -- Competition."
PROPRIETARY RIGHTS
The Company pursues primarily patent, trade secret and copyright protection
for its minienvironment and Asyst-SMIF system technology and its SMART-
Traveler products technology. The Company currently holds thirty-two patents
in the United States, has ten patent applications in process in the United
States and intends to file additional patent applications as appropriate.
There can be no assurance that patents will be issued from any of these
pending applications or that any claims allowed from existing or pending
patents will be sufficiently broad to protect the Company's technology.
While the Company intends to protect its intellectual property rights
vigorously, there can be no assurance that any patents held by the Company
will not be challenged, invalidated or circumvented, or that the rights
granted thereunder will provide competitive advantages to the Company. In
October 1996, the Company filed a lawsuit in the United States District Court
for the Northern District of California against Jenoptik A.G. ("Jenoptik"),
Infab, a joint venture comprised of Jenoptik, Emtrak, Inc. ("Emtrak") and
Empak, Inc. ("Empak"), Emtrak and Empak alleging infringement of two patents
related to the Company's SMART Traveler System. See "Item 3 -- Legal
Proceedings".
The Company also relies on trade secrets and proprietary technology that it
seeks to protect, in part, through confidentiality agreements with employees,
consultants and other parties. There can be no assurance that these agreements
will not be breached, that the Company will have adequate remedies for any
breach, or that the Company's trade secrets will not otherwise become known to
or independently developed by others. Also, the laws of some foreign countries
do not protect the Company's proprietary rights to the same extent as the laws
of the United States.
There has been substantial litigation regarding patent and other
intellectual property rights in semiconductor-related industries. Further
commercialization of the Company's products could provoke claims of
infringement from third parties. In the future, litigation may be necessary to
enforce patents issued to the Company, to protect trade secrets or know-how
owned by the Company or to defend the Company against claimed infringement of
the rights of others and to determine the scope and validity of the
proprietary rights of others. Any such litigation could result in substantial
cost and diversion of effort by the Company, which by itself could have a
material adverse effect on the Company's financial condition and operating
results. Further, adverse determinations in such litigation could result in
the Company's loss of proprietary rights, subject the Company to significant
liabilities to third parties, require the Company to seek licenses from third
parties or prevent the Company from manufacturing or selling its products, any
of which could have a material adverse effect on the Company's financial
condition and results of operations.
11
<PAGE>
BACKLOG
The Company's backlog at March 31, 1997 was approximately $43.9 million,
compared with approximately $68.6 million at March 31, 1996. During 1997, the
Company's orders moved to more of a turns business (orders placed to be
shipped during the next two to three months) as customers delayed orders until
they were ready to take delivery, apparently because of uncertainty in the
near term capacity situation of the semiconductor industry. By the end of the
year the backlog was pushing out beyond the current quarter which is more
consistent with its past experience. Fifty seven percent (57%) or $25 million
of the Company's backlog at March 31, 1997 was comprised of orders from five
customers, Chartered Semiconductor Co. Pte. Ltd., Macronix International,
Ltd., Holtek Microelectronics, Inc., Submicron Technology Public Co. and
Taiwan Semiconductor Manufacturing Company, Ltd. Asyst includes in its backlog
only orders for which a customer's purchase order has been received and a
delivery date within 12 months has been specified. Because purchase orders are
generally 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.
Additionally, the Company expects to receive follow-on orders from several
of its current customers as these customers increase the production capacity
of their fabs by purchasing additional wafer processing tools.
Although the Company believes that the backlog reflects continued acceptance
of minienvironment technology by its customers, there can be no assurance that
the Company will be successful in obtaining broader acceptance of its products
and technology. See "Risk Factors -- Acceptance of Minienvironment Technology
by Customers." In addition, the Company's higher level of orders places
substantial demands on the Company's management and manufacturing resources.
Failure to manage the Company's growth could have a material adverse effect on
the Company. See "Risk Factors -- Management of Growth."
EMPLOYEES
As of March 31, 1997, the Company employed 505 persons on a regular full-
time basis, including 48 in research and development, 203 in manufacturing
operations, 62 in system integration, 96 in sales and marketing, which
includes customer service, 49 in finance and administrative activities, and 47
in our international operations. Many of the Company's employees have
specialized skills of value to the Company and the Company's future success
will depend in large part upon its ability to attract and retain highly
skilled technical, managerial, financial and marketing personnel, who are in
great demand. The Company has never had a work stoppage or strike and no
employees are represented by a labor union or covered by a collective
bargaining agreement. Asyst considers its employee relations to be good. See
"Risk Factors -- Retention and Recruitment of Key Personnel."
RISK FACTORS
.Variability of Quarterly Operating Results
The Company's revenues and operating results can fluctuate substantially
from quarter to quarter depending on such factors as the timing of significant
customer orders, the timing of product shipments, variations in the mix of
products sold, new product introductions by the Company, changes in customer
buying patterns, fluctuations in the semiconductor equipment market,
availability of key components and general trends in the economy. The
procurement process of the Company's customers is typically six to twelve
months or longer from initial inquiry to order and may involve competing
capital budget considerations, thus making the timing of customer orders
uneven and difficult to predict. Any delay or failure to receive anticipated
orders could adversely affect the Company's financial performance. A
significant portion of the Company's net sales in any quarter is typically
derived from a small number of long-term, multimillion dollar customer
projects involving an upgrade of an existing facility, the construction of a
new facility or the shipping of a single or multiple automation solution(s) of
up to several million dollars in revenue recognition. The Company typically
cannot ship its products until the facility and/or the process tools housed in
the facility are ready, and thus faces uncertainty in the scheduling of
shipments due to many factors beyond its control. Customers generally may
cancel or reschedule shipments with limited or no penalty. In addition, due to
production cycles and customer requirements, the Company often ships
significant quantities of products in the last month of the quarter. This
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<PAGE>
factor increases the risk of unplanned fluctuations in net sales since
management has limited opportunity to take corrective actions should a
customer reschedule a shipment or otherwise delay an order during the last
month of the quarter. Moreover, a shortfall in planned net sales in a quarter
as a result of these factors could have a material adverse effect on the
Company's operating results for the quarter. Given these factors, the Company
expects that quarter to quarter performance will fluctuate for the foreseeable
future and consequently that quarter to quarter comparisons will not be
meaningful. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
.Acceptance of Minienvironment Technology by Customers
Since 1995, substantially all of the Company's revenues have been from sales
of minienvironment systems and related products to a small number of
semiconductor manufacturers, and the Company expects that sales of such
systems will continue to account for a majority of revenues for the
foreseeable future. Given that the use of minienvironment systems represents
an alternative to the conventional cleanroom approach utilized by
semiconductor manufacturers, the Company believes that its growth prospects
depend in large part upon its ability to gain acceptance by a broader group of
customers of the efficacy of the Company's minienvironment technology. Because
of the large capital commitment involved in the construction and operation of
a semiconductor manufacturing facility, the decision by a semiconductor
manufacturer to make a large-scale deployment of the Company's products
involves significant organizational, technological and financial commitments
by the semiconductor manufacturer to what is currently an unconventional
approach to providing for cleanliness. While the Company actively promotes the
acceptance of minienvironment technology and has as customers several
semiconductor manufacturers that can serve as influential reference accounts,
there can be no assurance that the Company will be successful in obtaining
broader acceptance of its products and technology. See "Business --
Customers."
.Customer Concentration
A significant portion of the Company's net sales is derived from a small
number of customers. Sales of the Company's products to Taiwan Semiconductor
Manufacturing Co., Ltd. ("TSMC") accounted for approximately 32 percent, 21
percent and 14 percent of the Company's net sales during fiscal 1995, 1996 and
1997, respectively. Fifty seven percent or $25 million of the Company's
backlog at March 31, 1997 was comprised of orders from five customers,
Chartered Semiconductor Co. Pte. Ltd., Macronix International, Ltd., Holtek
Microelectronics, Inc., Submicron Technology Public Co. and Taiwan
Semiconductor Manufacturing Co. Ltd. The Company's projects are typically
completed within a six to eighteen month period from when the customer's
purchase order is initially received. As these projects are completed,
business from these customers will decline substantially unless they undertake
additional projects incorporating the Company's products. For example, sales
of the Company's products to International Business Machines Corporation
("IBM"), which accounted for approximately 44 percent of the Company's net
sales during fiscal 1993, declined to approximately 3 percent of the Company's
net sales during fiscal 1994 and 5 percent of the Company's net sales during
fiscal 1995. Although the Company has received new orders from existing
customers, including TSMC, Chartered and many other existing customers during
the year ended March 31, 1997, if additional projects are not initiated by
existing customers, the performance of the Company will depend on securing
business from new customers. While the Company is pursuing a number of new
customer opportunities, there can be no assurance that the Company will be
successful in its sales and marketing efforts, and any significant weakening
in customer demand would have a material adverse effect on the Company. See
"Business --Customers" and "Business -- Backlog."
.Dependence on Semiconductor Industry
The Company's business depends upon the capital expenditures of
semiconductor manufacturers, which in turn depend on the current and
anticipated market demand for integrated circuits and products utilizing
integrated circuits. The semiconductor industry is cyclical and has
historically experienced periodic downturns. These downturns are difficult to
predict and have often had a severe adverse effect on the semiconductor
industry's demand for semiconductor processing equipment. The Company believes
that its future performance will be adversely affected from time to time by
such industry downturns. See "Business -- Customers."
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.Retention and Recruitment of Key Personnel
The Company's success depends to a significant extent upon a small number of
senior management and technical personnel. The loss of the services of one or
more 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
recruit and retain highly skilled technical, managerial, financial and
marketing personnel, who are in great demand. A failure to retain, acquire
and/or adequately train such persons could have a material adverse impact on
the Company. See "Business -- Employees."
.Management of Growth and Personnel Changes
The Company has recently experienced extremely rapid growth in the number of
its employees and the geographic area of its operations. The growth of the
Company's business and the expansion of the Company's customer base have
placed a significant strain on the Company's management, operations and
financial systems. The Company's future operating results will be dependent in
part on its ability to continue to implement and improve its operating and
financial controls and management information systems and to expand, train and
manage its management and employee base. Failure to manage the Company's
growth effectively could have a material adverse effect on the Company. See
"Management Discussion and Analysis and Results of Operations."
.Competition
The Company currently has direct competition with respect to its Asyst-SMIF
System and SMART-Traveler System products, with its principal competition
coming from conventional approaches to solving the contamination and
manufacturing control problems of the semiconductor manufacturing industry.
See "-- Acceptance of Minienvironment Technology by Customers." The
semiconductor equipment industry, however, is highly competitive in general,
and there can be no assurance that one or more potential competitors will not
enter the Company's market. During the past several years, several companies,
including Jenoptik have begun offering one or more products that compete with
the minienvironment products of the Company. Jenoptik also acquired Meissner &
Wurst, GmbH ("M&W"), a former shareholder of the Company. Jenoptik continues
to be an effective competitor. As a result of new competition in the
minienvironment systems marketplace, the Company may encounter competition
which could have a negative effect on the Company's operating results. The
Company faces potential competition from a number of companies, including
semiconductor equipment and cleanroom construction companies, some of which
may have greater name recognition, more extensive engineering, manufacturing
and marketing capabilities and substantially greater financial, technical and
personnel resources than those available to the Company. There can be no
assurance that the Company will be able to compete successfully in the future.
ASI has several competitors in the software integration business and is in a
business that does not present significant capital barriers to new entrants.
See "Business -- Competition."
.Dependence on New Products and Technologies
Semiconductor equipment and processes are subject to rapid technological
change. The development of more complex integrated circuits has driven the
need for new facilities, equipment and processes to produce such devices at
acceptable cost and yield. The Company believes that its future success will
depend in part upon its ability to continue to enhance its existing products
to meet customer needs and to develop and introduce new products which
maintain technological leadership. There can be no assurance that the
Company's product development efforts will be successful or that the Company
will be able to respond effectively to technological change. See "Business --
Background" and "Business -- Research and Development."
.Dependence on Key Suppliers
Certain of the components and subassemblies included in the Company's
products are obtained from a single supplier or a limited group of suppliers.
Although to date the Company has experienced only minimal delays in receiving
goods from its key suppliers, disruption or termination of these sources could
have a
14
<PAGE>
temporary adverse effect on the Company's operations. The Company believes that
in time alternative sources could ordinarily be obtained and qualified to
supply these products, but a prolonged inability to obtain certain components
could have an adverse effect on the Company's operating results and could
result in damage to customer relationships. See "Business -- Manufacturing."
.Patents and Proprietary Rights
The Company relies on a combination of patent, trade secret and copyright
protection to establish and protect its intellectual property. While the
Company intends to protect its patent rights vigorously, there can be no
assurance that any patents held by the Company will not be challenged,
invalidated or circumvented, or that the rights granted thereunder will provide
competitive advantages to the Company. The Company also relies on trade secrets
that it seeks to protect, in part, through confidentiality agreements with
employees, consultants and other parties. There can be no assurance that these
agreements will not be breached, that the Company will have adequate remedies
for any breach, or that the Company's trade secrets will not otherwise become
known to or independently developed by others.
There has been substantial litigation regarding patent and other intellectual
property rights in semiconductor related industries. Litigation may be
necessary to enforce patents issued to the Company, to protect trade secrets or
know-how owned by the Company or to defend the Company against claimed
infringement of the rights of others and to determine the scope and validity of
the proprietary rights of others. Any such litigation could result in
substantial cost and diversion of effort by the Company, which by itself could
have a material adverse effect on the Company's financial condition and
operating results. Further, adverse determinations in such litigation could
result in the Company's loss of proprietary rights, subject the Company to
significant liabilities to third parties, require the Company to seek licenses
from third parties or prevent the Company from manufacturing or selling its
products, any of which could have a material adverse effect on the Company's
financial condition and results of operations. The Company is engaged in
litigation in which it has alleged violation of patents relating to its SMART
traveler system. See "Business -- Proprietary Rights" and "Legal Proceeding."
.Risks of International Operations
Approximately 59 percent, 47 percent and 56 percent of the Company's net
sales for the years ended March 31, 1995, 1996 and 1997, respectively, were
attributable to sales outside the United States, primarily in Taiwan, Japan,
Europe and Singapore, and the Company expects that international sales will
continue to represent a significant portion of its total revenues. Sales to
customers outside the United States are subject to risks, including exposure to
currency fluctuations, the imposition of governmental controls, the need to
comply with a wide variety of foreign and U.S. export laws, political and
economic instability, trade restrictions, changes in tariffs and taxes, longer
payment cycles typically associated with foreign sales, the greater difficulty
of administering business overseas and general economic conditions. As of March
31, 1997 and 1996, approximately 71 percent and 41 percent of accounts
receivable were due from international customers located primarily in Taiwan,
Thailand, Singapore and Japan. Of the 71 percent, approximately 17 percent of
total accounts receivable as of March 31, 1997 was due from one customer in
Thailand which the Company does not anticipate will be collected until after
the first quarter of fiscal year 1998. Receivable collection and credit
evaluation in new geographies and countries challenge the Company's ability to
avert such risks. In addition, the laws of certain foreign countries may not
protect the Company's intellectual property to the same extent as do the laws
of the United States. Although to date the Company's results of operations have
not been adversely affected by currency exchange rate fluctuations because the
Company has invoiced substantially all of its international sales in United
States dollars, there can be no assurance that the Company's results of
operations will not be adversely affected by currency fluctuations in the
future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
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<PAGE>
ITEM 2 -- PROPERTIES
The Company's headquarters and principal manufacturing and research and
development activities are located in Fremont, California in two leased
facilities, one of approximately 91,275 square feet and the other
approximately 35,360 square feet. The Company also leases a sales office in
Arizona and maintains small regional manufacturing facilities in Colorado and
Vermont. Overseas, the Company has sales and service support offices in leased
facilities in the metropolitan area of Paris, France, Hsin-Chu, Taiwan and
Singapore. Asyst Automation, Inc., a subsidiary which is being liquidated,
leases 37,000 square feet in Wilmington, Massachusetts. This lease will
terminate in the third quarter of fiscal year 1998.
ITEM 3 -- LEGAL PROCEEDINGS
In October 1996, the Company filed a lawsuit in the United States District
Court for the Northern District of California against Jenoptik A.G.
("Jenoptik"), Jenoptik-Infab, Inc. ("Infab"), a joint venture comprised of
Jenoptik, Emtrak, Inc. ("Emtrak") and Empak, Inc. ("Empak"), Emtrak and Empak
alleging infringement of two patents related to the Company's SMART --
Traveler System. The Company has amended its Complaint to allege causes of
action for breach of fiduciary duty against Jenoptik and Meissner & Wurst,
GmbH and misappropriation of trade secrets and unfair business practices
against all defendants. The Company's Complaints seek damages and injunctive
relief against further infringement. All defendants have counter-sued, seeking
a judgment declaring the patents invalid, unenforceable and not infringed.
Jenoptik, Infab and Emtrak have also alleged that the Company has violated
federal antitrust laws. The Company has denied these allegations. While it is
not possible to predict accurately or to determine the eventual outcome of
these matters, the Company believes that the outcome of these legal
proceedings will not have a material adverse effect on the financial position
of the Company.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE FOR SECURITY HOLDERS
Not applicable.
16
<PAGE>
PART II
ITEM 5 -- MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
Since September 22, 1993, Asyst's Common Stock, no par value, has been
traded on the Nasdaq National Market ("Nasdaq") under the symbol ASYT. The
following table sets forth the range of high and low sales prices for Asyst
Common Stock on Nasdaq for the periods indicated.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
April 1 - June 30, 1995................................... $45.25 $28.75
July 1 - September 30, 1995............................... $53.50 $36.75
October 1 - December 31, 1995............................. $52.75 $33.00
January 1 - March 31, 1996................................ $35.75 $19.75
April 1 - June 30, 1996................................... $38.50 $15.00
July 1 - September 30, 1996............................... $22.50 $15.00
October 1 - December 31, 1996............................. $24.00 $15.00
January 1 - March 31, 1997................................ $30.50 $16.75
</TABLE>
There were approximately 224 record holders of the Company's Common Stock as
of March 31, 1997. Asyst has not paid any cash dividends since its inception
and does not anticipate paying cash dividends in the foreseeable future.
ITEM 6 -- SELECTED FINANCIAL DATA
The following table reflects selected summary financial data restated in
fiscal years 1995 and 1996 for the affects of the closure of Asyst Automation,
Inc.:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------------------
1993 1994 1995 1996 1997
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Consolidated Statements of
Operations Data:
Net sales.......................... $18,837 $22,498 $34,932 $97,549 $137,520
Gross margin....................... 11,076 12,977 17,322 40,903 56,788
In process research and development
of acquired business.............. -- -- -- -- 1,335
Operating income................... 1,598 2,753 4,691 11,310 17,910
Income from continuing operations.. 1,495 2,424 3,810 7,643 11,408
Net income (loss).................. 1,495 2,424 1,240 5,240 (3,257)
Net income per share from
continuing operations............. $ 0.60 $ 0.75 $ 0.94 $ 1.45 $ 2.17
Net income (loss) per share........ $ 0.60 $ 0.75 $ 0.31 $ 0.99 $ (0.62)
Weighted average common and
equivalent shares................. 2,502 3,215 4,039 5,268 5,256
Consolidated Balance Sheet Data:
Working capital.................... $ 7,334 $17,908 $50,845 $53,572 $ 52,189
Total assets....................... 12,586 24,588 71,965 90,502 94,079
Long-term obligations, net of
current portion................... 9 -- -- -- --
Redeemable convertible preferred
stock............................. 16,372 -- -- -- --
Shareholders' equity (deficit)..... $(7,363) $20,821 $57,226 $64,090 $ 65,004
</TABLE>
17
<PAGE>
ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company is the leading supplier of minienvironment systems and
automation systems utilized primarily in cleanrooms for semiconductor
manufacturing. The Company's sales are tied to capital expenditures at wafer
fabrication facilities. The majority of the Company's revenues in any single
quarter is typically derived from relatively few customers, and the Company's
revenues will therefore fluctuate based on a number of factors, including the
timing of significant customer orders, variations in the mix of products sold
and changes in customer buying patterns. In addition, due to production cycles
and customer requirements, the Company often ships significant quantities of
products in the last month of the quarter. This factor increases the risk of
unplanned fluctuations in net sales since management has limited opportunity
to take corrective actions should a customer reschedule a shipment or
otherwise delay an order during the last month of the quarter.
The following table sets forth the percentage of net sales represented by
certain consolidated statements of operations data for the periods indicated:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
MARCH 31,
-------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Net sales............................................. 100.0% 100.0% 100.0%
Cost of sales......................................... 50.4 58.1 58.7
----- ----- -----
Gross margin.......................................... 49.6 41.9 41.3
----- ----- -----
Operating expenses:
Research and development............................. 10.1 7.1 6.3
Selling, general and administrative.................. 26.0 23.3 21.0
In-process research and development of acquired
business............................................ -- -- 1.0
----- ----- -----
Total operating expenses.............................. 36.1 30.4 28.3
----- ----- -----
Operating income..................................... 13.4 11.6 13.0
Other income, net..................................... 0.7 0.8 0.5
----- ----- -----
Income before provision for income taxes.............. 14.1 12.4 13.5
Provision for income taxes............................ 3.2 4.6 5.2
----- ----- -----
Income from continuing operations..................... 10.9 7.8 8.3
----- ----- -----
Loss from operations of Asyst Automation, Inc., net of
applicable income taxes............................... (7.4) (2.4) (4.5)
Loss on closure of Asyst Automation, Inc., net of
applicable income taxes............................... -- -- (6.2)
----- ----- -----
Net income (loss)..................................... 3.5% 5.4% (2.4)%
----- ----- -----
</TABLE>
FISCAL YEARS ENDED MARCH 31, 1995, 1996 AND 1997
Net sales. Net sales grew 41.0 percent over the prior fiscal year to $137.5
million in fiscal 1997. The increase is comprised mostly of increased sales of
the Load Port Products (LPP) which were less than 10 percent of sales in the
prior year when this product family was introduced, and grew to over 20
percent of the Company's current year's net sales. Shipments of other
products, including the 200mm SMIF-Arm and Pod, wafer management systems,
indexers, new enclosure designs and sales to OEMs (original equipment
manufacturers) of semiconductor processing equipment increased in fiscal year
1997. Sales of Asyst-SMIF System products have accounted for the vast majority
of the Company's historical net sales to date, with sales of SMART-Traveler
System products and software integration services accounting for the balance
of net sales. A majority of net sales attributable to Asyst-SMIF System
products was derived from sales of SMIF standard products, comprised of SMIF-
Pods and SMIF-I/Os, with the balance derived from sales of systems management
products and services,
18
<PAGE>
which include SMIF-Enclosures and the related integration of standard products
into a minienvironment system. Net sales increased 179.3 percent to $97.5
million from fiscal 1995 to fiscal 1996. The growth was primarily attributable
to increased sales of 200mm SMIF-Arms and systems management products.
The Company's international sales were $20.6 million, $45.4 million and
$77.0 million during fiscal 1995, 1996 and 1997, respectively, representing 59
percent, 47 percent and 56 percent of net sales during these periods. The
increase in international sales in fiscal 1997 is due to significant sales in
the Asia/Pacific Region. The Company believes that the Asia/Pacific Region
will continue to be an important market for its products based on its position
in Taiwan, Singapore, Thailand and Korea, its licensing and distribution
partner in Japan, and increased levels of interest from potential customers in
other countries located in the Asia/Pacific region. See "Risk Factors -- Risk
of International Operations."
Gross Margin. The Company's gross margin as a percentage of net sales has
declined from 49.6 percent in fiscal 1995 to 41.9 percent in fiscal 1996 and
to 41.3 percent in fiscal 1997. Gross margins decreased in fiscal 1996 due to
manufacturing inefficiencies associated with the substantial increase in sales
year over year, and new product start up costs. The 0.6 percent gross margin
erosion in fiscal year 1997 was due primarily to the product mix shift to the
newer LPP product line which generates lower margins because it is still in
its early stages of manufacturing evolution. Efforts continue to lower the
manufacturing costs of this product line. The Company expects gross margins as
a percentage of net sales to fluctuate in the future due to changes in product
mix and the introduction and refinement in the manufacturing process of new
products. While it is the goal of the Company to improve gross margins as a
percentage of net sales in the future through reduction of manufacturing and
other inefficiencies in the Company's distribution system and product cost
reduction through redesign, there can be no assurance that such improved
margins can be realized through such efforts or that margins may not be
negatively affected by other factors such as pricing pressures from new or
existing competitors.
Research and development. Research and development expenses were $3.6
million, $6.9 million and $8.6 million during fiscal 1995, 1996 and 1997,
respectively, representing 10.1 percent, 7.1 percent and 6.3 percent of net
sales during these periods. The decrease as a percent of sales is both as a
result of the rapid rate of growth in sales and to a lesser extent efforts to
hold back on spending in research and development during a period of
uncertainty in our customers business climate. Research and development
expenses primarily consist of salaries, project materials and other expenses
related to the Company's ongoing product development efforts. The Company
capitalizes certain legal costs related to its patents. The Company, to date,
has not capitalized costs associated with software or other development
efforts because such costs incurred to date that are eligible for
capitalization have not been material. The Company expects that its research
and development activities and their related expenses, measured in both
absolute dollars and as a percent of sales, will increase in future periods in
support of the Company's commitment to enhancing current products and
developing new generations of products in anticipation of the changing
requirements of its customers.
Selling, general and administrative. Selling, general and administrative
expenses were $9.1 million, $22.7 million and $28.9 million, or 26.0 percent,
23.3 percent and 21.0 percent of net sales, during fiscal 1995, 1996 and 1997,
respectively. Of this amount, selling and marketing expenses were $6.7
million, $8.1 million, and $10.2 million or 19.2 percent, 8.3 percent and 7.4
percent of net sales, respectively. Selling and marketing expenses decreased
as a percent of sales due to growth in sales year over year. General and
administrative expenses were $2.4 million, $14.6 million and $18.7 million or
6.9 percent, 15.0 percent and 13.6 percent of net sales, in fiscal 1995, 1996
and 1997, respectively. Such increases were primarily as a result of increases
in personnel costs and professional fees offset by improved processes.
In process research and development of acquired business. In November 1996,
the Company completed the acquisition of Radiance Systems Inc. (RSI) which was
accounted for as a purchase in the third quarter ended December 28, 1996. In
connection with the purchase price allocation, the Company recorded a write-
off of $1.3 million of in process research and development in the quarter
ended December 28, 1996, as the acquired research and development in process
had not yet reached technological feasibility and had no alternative future
uses.
19
<PAGE>
Other income (expense), net. Other income (expense), net includes interest
income, interest expense, foreign exchange gain and loss, which have not been
material, and royalty income. The net balance in these accounts has in each of
the past three fiscal years been less than 1 percent of net sales and is
primarily the result of the interest income or interest expense related to the
Company's net cash position.
Provision for income taxes. In fiscal 1995, 1996 and 1997 the effective tax
rate was 23 percent, 37 percent and 39 percent respectively, as the Company
was able to recognize certain tax benefits such as the FSC benefit, tax
credits and tax exempt income.
Discontinued operations. In January 1997, the Company adopted a formal plan
to close Asyst Automation, Inc. ("Automation") by the end of September 1997,
which was accounted for in the third quarter ended December 28, 1996. The
decision was based upon the recent demonstration of the subsidiary's lack of
ability to profitably manufacture and sell the automation products that were
acquired as part of the purchase of Proconics. Accordingly, Automation is
reported as a discontinued operation. Net assets of Automation consist
primarily of trade receivables, inventory and property and equipment.
20
<PAGE>
SELECTED QUARTERLY FINANCIAL DATA
The following table presents certain unaudited consolidated quarterly
financial information for the eight quarters ended March 31, 1997. In the
opinion of the Company's management, this information has been prepared on the
same basis as the audited consolidated financial statements appearing
elsewhere in this Form 10-K and includes all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the unaudited
quarterly results of operations set forth herein. The Company's quarterly
results have in the past been subject to fluctuations and, thus, the operating
results for any quarter are not necessarily indicative of results for any
future period. The first three quarters of Asyst's fiscal year end on a
Saturday, and thus the actual date of the quarter-end is usually different
from the month-end dates used throughout this Form 10-K.
<TABLE>
<CAPTION>
FISCAL 1996 FISCAL 1997
-------------------------------- -----------------------------------
JUN. SEP. DEC. MAR. JUN. SEP. MAR.
30, 30, 31, 31, 30, 30, DEC. 31, 31,
1995 1995 1995 1996 1996 1996 1996 1997
------- ------- ------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $16,540 $21,717 $25,032 $34,260 $33,148 $33,085 $ 36,432 $34,855
Cost of sales........... 7,648 11,785 14,177 23,036 19,006 19,461 22,396 19,869
------- ------- ------- ------- ------- ------- -------- -------
Gross margin........... 8,892 9,932 10,855 11,224 14,142 13,624 14,036 14,986
Operating Expenses:
Research and
development........... 1,287 1,612 1,410 2,593 2,538 1,331 2,307 2,453
Selling, general and
administrative........ 4,495 4,366 5,399 8,431 6,144 7,291 7,215 8,264
In process research and
development of
acquired business..... -- -- -- -- -- -- 1,335 --
------- ------- ------- ------- ------- ------- -------- -------
Total operating
expenses............. 5,782 5,978 6,809 11,024 8,682 8,622 10,857 10,717
------- ------- ------- ------- ------- ------- -------- -------
Operating income...... 3,110 3,954 4,046 200 5,460 5,002 3,179 4,269
Other income (expense),
net.................... 414 226 250 (68) 139 172 194 166
------- ------- ------- ------- ------- ------- -------- -------
Income before provision
for income taxes....... 3,524 4,180 4,296 132 5,599 5,174 3,373 4,435
Provision for income
taxes.................. 1,411 1,672 1,335 71 2,103 1,790 1,680 1,600
------- ------- ------- ------- ------- ------- -------- -------
Income from continuing
operations............. 2,113 2,508 2,961 61 3,496 3,384 1,693 2,835
------- ------- ------- ------- ------- ------- -------- -------
Income (loss) from
discontinued operations (3) 145 202 (2,747) (358) (971) (4,763) --
Loss on closure of Asyst
Automation -- -- -- -- -- -- (8,573) --
------- ------- ------- ------- ------- ------- -------- -------
Net income (loss)....... $ 2,110 $ 2,653 $ 3,163 $(2,686) $ 3,138 $ 2,413 $(11,643) $ 2,835
======= ======= ======= ======= ======= ======= ======== =======
Net income per share
from continuing
operations............. $ 0.40 $ 0.47 $ 0.56 $ 0.01 $ 0.67 $ 0.66 $ 0.32 $ 0.52
======= ======= ======= ======= ======= ======= ======== =======
Net income (loss) per
share.................. $ 0.40 $ 0.50 $ 0.60 $ (0.54) $ 0.60 $ 0.47 $ (2.21) $ 0.52
------- ------- ------- ------- ------- ------- -------- -------
Weighted average common
and equivalent shares.. 5,267 5,294 5,300 5,002 5,196 5,166 5,260 5,403
------- ------- ------- ------- ------- ------- -------- -------
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has funded its operations primarily through
the private sale of equity securities, public stock offerings in fiscal year
1994 and 1995, customer pre-payments, bank borrowings and cash generated from
operations. The Company recorded net proceeds of $9.2 million in its initial
public offering in September 1993. In February 1995, the Company raised an
additional $34.4 million in net proceeds from another public offering. As of
March 31, 1997, the Company had approximately $12.0 million in cash, cash
investments, and short-term investments and working capital of approximately
$52.2 million. In addition, under a working capital line of credit with a
bank, which expires in October 1998, the Company can borrow up to $20.0
million conditioned upon meeting certain financial covenants, including
maintaining specific levels of annual earnings, working capital, tangible net
worth and liquidity. Interest is at the bank's prime rate. As of March 31,
1997, there were no borrowings outstanding under this credit facility.
21
<PAGE>
Although the Company cannot accurately anticipate the effect of inflation on
its operations, to date inflation has not had a material effect on the
Company's net sales or results of operations.
The Company believes that the existing sources of liquidity and anticipated
funds from operations will satisfy the Company's projected working capital and
other cash requirements through at least the end of fiscal 1998.
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's Financial Statements and notes thereto and Financial Statement
Schedules appear on pages 26-39 on this Form 10-K.
ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
22
<PAGE>
PART III
ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item concerning the Company's directors and
executive officers is incorporated by reference from the Company's Definitive
Proxy Statement filed not later than 120 days following the close of the
fiscal year ("1997 Proxy Statement").
ITEM 11 -- EXECUTIVE COMPENSATION
The information required under this item is hereby incorporated by reference
from the Company's 1997 Proxy Statement.
ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required under this item is hereby incorporated by reference
from the Company's 1997 Proxy Statement.
ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required under this item is hereby incorporated by reference
from the Company's 1997 Proxy Statement.
23
<PAGE>
PART IV
ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1)Index to Financial Statements
The Financial Statements required by this item are submitted in a
separate section beginning on page 26 of this report.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants 26
Consolidated Balance Sheets 27
Consolidated Statements of Operations 28
Consolidated Statements of Shareholders' Equity 29
Consolidated Statements of Cash Flows 30
Notes to Consolidated Financial Statements 31
</TABLE>
(2)Schedule II Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or
the required information is shown in the Financial Statements or the
notes thereto.
(3)Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- ---------------------------------------------------------------
<C> <S>
3.1* Amended and Restated Articles of Incorporation of the Company.
3.2* Bylaws of the Company
10.1* Form of Indemnity Agreement entered into between the Company
and its directors and officers
10.2*+ Company's 1986 Incentive Stock Option Plan and related form of
incentive stock option agreement
10.3*+ Company's 1986 Supplemental Stock Option Plan and related form
of supplemental stock option agreement
10.4**+ Company's 1993 Stock Option Plan and related form of stock
option agreement
10.5*+ Company's 1993 Employee Stock Purchase Plan and related
offering document
10.6*+ Company's 1993 Non-Employee Directors' Stock Option Plan and
related offering document
10.7*+ Company's Fiscal 1993 and Fiscal 1994 Executive Bonus Plans
10.8* Manufacturing License Agreement between the Company and Tokyo
Electron Limited, dated January 10, 1993
10.9* Distributor Agreement between the Company and Tokyo Electron
Limited, dated January 10, 1993
10.10* Operating Agreement between the Company and M&W, dated November
7, 1990
10.11* Hewlett-Packard SMIF License Agreement dated June 6, 1984
10.12*** Lease Agreement between the Company and the Kato Road Partners
dated February 16, 1995
10.13*** Sublease Agreement between the Company and the Kato Road
Partners dated February 16, 1995
10.14**+ Employment Agreement between the Company and Guy Gandenberger
dated September 6, 1994
</TABLE>
24
<PAGE>
<TABLE>
<C> <S>
21.1** Subsidiaries of the Company
23.1 Consent of Arthur Andersen LLP.
27 Financial Data Schedule (Exhibit 27 is submitted as an exhibit
only in the electronic format of this Annual Report on Form 10-K
submitted to the Securities and Exchange Commission.)
</TABLE>
- --------
* Incorporated by reference to the Company's Registration Statement on Form
S-1 (No. 33-66184), as amended.
** Incorporated by reference to the Company's Registration Statement on Form
S-1 (No. 33-88246).
*** Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 1995.
+ Management contract or compensation plan or arrangement.
(b) The Company filed no reports on Form 8-K during the year ended March 31,
1997.
(c) See Exhibits listed under Item 14 (a) (3)
(d) The financial Statement schedules required by this item are listed under
Item 14 (a) (2).
25
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Asyst Technologies, Inc.:
We have audited the accompanying consolidated balance sheets of Asyst
Technologies, Inc. (a California corporation) and subsidiaries as of March 31,
1997 and 1996, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended March 31, 1997. These financial statements and the schedule referred to
below 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 financial statements referred to above present fairly,
in all material respects, the financial position of Asyst Technologies, Inc.
and subsidiaries as of March 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period
ended March 31, 1997, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed under Item 14(a) is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in our audits
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
San Jose, California
May 16, 1997
26
<PAGE>
ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
MARCH 31,
------------------
1997 1996
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash investments................................. $ 11,021 $ 12,014
Short-term investments.................................... 1,000 2,005
Accounts receivable, less allowances of $1,845 in 1997 and
$4,363 in 1996........................................... 35,259 30,248
Inventories............................................... 18,609 18,535
Deferred tax asset........................................ 11,599 5,695
Prepaid expenses and other................................ 1,027 2,251
Net current assets of discontinued operations............. 2,749 9,236
-------- --------
Total current assets.................................... 81,264 79,984
-------- --------
PROPERTY AND EQUIPMENT:
Leasehold improvements.................................... 4,042 3,876
Machinery and equipment................................... 3,889 2,280
Office equipment, furniture and fixtures.................. 9,166 7,686
-------- --------
17,097 13,842
Less -- Accumulated depreciation and amortization......... (6,734) (4,435)
-------- --------
10,363 9,407
OTHER ASSETS, net.......................................... 2,452 1,111
-------- --------
$ 94,079 $ 90,502
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 13,392 $ 9,382
Accrued liabilities....................................... 10,205 4,897
Customer deposits......................................... 2,968 8,938
Income taxes payable...................................... 2,510 3,195
-------- --------
Total current liabilities............................... 29,075 26,412
-------- --------
</TABLE>
COMMITMENTS (Note 6)
SHAREHOLDERS' EQUITY:
<TABLE>
<S> <C> <C>
Preferred Stock, no par value
Authorized shares -- 4,000,000
Outstanding shares -- none............................... -- --
Common stock, no par value
Authorized shares -- 20,000,000
Outstanding shares -- 5,297,623 in 1997 and 5,011,173 in
1996..................................................... 66,945 62,774
Retained earnings (deficit)................................ (1,941) 1,316
-------- --------
Total shareholders' equity............................... 65,004 64,090
-------- --------
$ 94,079 $ 90,502
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
27
<PAGE>
ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
--------------------------
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
NET SALES.......................................... $137,520 $97,549 $34,932
COST OF SALES...................................... 80,732 56,646 17,610
-------- ------- -------
Gross margin...................................... 56,788 40,903 17,322
-------- ------- -------
OPERATING EXPENSES:
Research and development.......................... 8,629 6,902 3,538
Selling, general and administrative............... 28,914 22,691 9,093
In process research and development of acquired
business......................................... 1,335 -- --
-------- ------- -------
Total operating expenses........................ 38,878 29,593 12,631
-------- ------- -------
Operating income................................ 17,910 11,310 4,691
OTHER INCOME (EXPENSE):
Interest income................................... 810 864 321
Interest and other expense........................ (139) (42) (75)
-------- ------- -------
Income before provision for income taxes........ 18,581 12,132 4,937
PROVISION FOR INCOME TAXES......................... 7,173 4,489 1,127
-------- ------- -------
INCOME FROM CONTINUING OPERATIONS.................. 11,408 7,643 3,810
-------- ------- -------
DISCONTINUED OPERATIONS:
Loss from operations of Asyst Automation, Inc.,
net of applicable income taxes................... (6,092) (2,403) (2,570)
Loss on closure of Asyst Automation, Inc. includ-
ing a provision of $1,095 for the operating
losses during phase-out, net of applicable income
taxes............................................ (8,573) -- --
-------- ------- -------
NET INCOME (LOSS).................................. $ (3,257) $ 5,240 $ 1,240
======== ======= =======
NET INCOME PER SHARE FROM CONTINUING OPERATIONS.... $ 2.17 $ 1.45 $ 0.94
======== ======= =======
NET INCOME (LOSS) PER SHARE........................ $ (0.62) $ 0.99 $ 0.31
======== ======= =======
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
SHARES............................................. 5,256 5,268 4,039
-------- ------- -------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
28
<PAGE>
ASYST TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
COMMON STOCK RETAINED TOTAL
----------------- EARNINGS SHAREHOLDERS'
SHARES AMOUNT (DEFICIT) EQUITY
--------- ------- --------- -------------
<S> <C> <C> <C> <C>
BALANCE, MARCH 31, 1994............. 3,557,163 $25,985 $(5,164) $20,821
Issuance of common stock to employ-
ees for services and exercise of
stock options..................... 92,357 208 -- 208
Common stock issued upon secondary
public offering and exercise of
underwriters' over-allotment op-
tion, net of issuance costs....... 1,150,000 34,406 -- 34,406
Tax benefit realized from activity
in employee stock option plans.... -- 178 -- 178
Employee stock purchase plan....... 47,906 373 -- 373
Net income......................... -- -- 1,240 1,240
--------- ------- ------- -------
BALANCE, MARCH 31, 1995............. 4,847,426 61,150 (3,924) 57,226
Issuance of common stock to employ-
ees for services and exercise of
stock options..................... 142,491 673 -- 673
Additional issuance costs from sec-
ondary public offering............ -- (104) -- (104)
Tax benefit realized from activity
in employee stock option plans.... -- 550 -- 550
Employee stock purchase plan....... 21,256 505 -- 505
Net income......................... -- -- 5,240 5,240
--------- ------- ------- -------
BALANCE, MARCH 31, 1996............. 5,011,173 62,774 1,316 64,090
Issuance of common stock from exer-
cise of stock options............. 112,460 1,149 -- 1,149
Stock issued for acquisition....... 129,740 2,235 -- 2,235
Tax benefit realized from activity
in employee stock option plans.... -- 147 -- 147
Employee stock purchase plan....... 44,250 640 -- 640
Net loss........................... -- -- (3,257) (3,257)
--------- ------- ------- -------
BALANCE, MARCH 31, 1997............. 5,297,623 $66,945 $(1,941) $65,004
========= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
29
<PAGE>
ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................................. $(3,257) $ 5,240 $ 1,240
Adjustments to reconcile net income (loss) to net
cash used for operating activities --
Loss from discontinued operations................. 6,092 2,403 2,570
Loss on disposal of discontinued operations....... 8,573 -- --
Change in net assets of discontinued operations... (8,178) (9,554) (6,682)
Depreciation and amortization expense............. 2,641 1,987 817
Common stock issued for services rendered......... -- 139 104
Provision for doubtful accounts................... (300) 4,075 690
Write-off of in process research and development
of acquired business............................. 1,335 -- --
Changes in assets and liabilities --
Accounts receivable............................... (4,711) (19,393) (9,939)
Inventories, net.................................. (74) (9,332) (6,335)
Deferred tax asset................................ (5,904) (4,297) (1,398)
Prepaid expenses and other........................ 1,317 (1,145) (800)
Accounts payable.................................. 4,165 1,110 6,789
Accrued liabilities............................... 4,932 2,293 849
Customer deposits................................. (5,970) 5,853 2,976
Income taxes payable.............................. (685) 2,417 536
------- ------- -------
Net cash used for operating activities........... (24) (18,204) (8,583)
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of short-term investments................. (7,000) (5,022) (4,508)
Sale of short-term investments..................... 8,005 7,525 4,000
Purchase of property and equipment, net............ (3,217) (8,747) --
Decrease (increase) in other assets................ (546) 538 (173)
------- ------- -------
Net cash used for investing activities........... (2,758) (5,706) (681)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock, net...................... 1,789 1,485 34,883
------- ------- -------
INCREASE (DECREASE) IN CASH AND CASH INVESTMENTS.... (993) (22,425) 25,619
CASH AND CASH INVESTMENTS AT BEGINNING OF YEAR...... 12,014 34,439 8,820
------- ------- -------
CASH AND CASH INVESTMENTS AT END OF YEAR............ $11,201 $12,014 $34,439
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
30
<PAGE>
ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION OF THE COMPANY:
Asyst Technologies, Inc. (the "Company") was incorporated in California on
May 31, 1984, for the purpose of designing, developing, manufacturing and
marketing minienvironment systems utilized primarily in clean rooms for
semiconductor manufacturing. These systems are designed to reduce
contamination on in-process wafers by isolating processing equipment and
wafers in ultra clean minienvironments within a cleanroom production facility.
In October 1994, the Company, through its subsidiary Asyst Automation, Inc.
("Automation"), acquired the assets and liabilities of Proconics
International, Inc., which manufactures interbay automation products that
automate the transport, storage and handling of individual silicon wafers and
other wafer containers during the semiconductor manufacturing process. In
January 1997, the Company adopted a formal plan to discontinue the operations
of Automation by the end of September 1997. As a result of the plan to
discontinue the operations of Automation, the consolidated statements and the
related Notes to the Consolidated Financial Statements and supplemental data
have been adjusted and restated to reflect the results of operation and net
assets of Automation as a discontinued operation in the quarter ended December
28, 1996, in accordance with APB Opinion No. 30 (see Note 9).
Asyst Software, Inc. ("ASI") was incorporated in the state of Delaware in
January, 1996. The Company develops software integration solutions to tie
O.E.M. tools to the manufacturing facilities operating system and to automate
material control throughout a semiconductor fabrication facility. In November
1996, the Company through its subsidiary, ASI, acquired Radiance Systems
Incorporated. (see Note 10)
The accompanying consolidated financial statements include the accounts of
Asyst Technologies, Inc. and its wholly-owned subsidiaries. All material
intercompany accounts and transactions have been eliminated in consolidation.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results may differ from those estimates.
2. SIGNIFICANT ACCOUNTING POLICIES:
Cash, Cash Investments and Short-term Investments
The Company considers all highly liquid investments with an original
maturity of three months or less from the date of purchase to be cash
investments. As of March 31, 1997 and 1996, the Company's short-term
investments, which are classified as available-for-sale securities, consist
entirely of debt securities, which are recorded at cost, which approximates
fair value in the accompanying consolidated balance sheet. The securities
mature at various dates through the year 2026, but interest rates are reset
annually, at which time the Company may choose to sell the security. The
Company does not intend to hold the individual securities for greater than one
year.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market
and include materials, labor and manufacturing overhead costs. Inventories
consisted of (in thousands):
<TABLE>
<CAPTION>
MARCH 31,
----------------
1997 1996
-------- -------
<S> <C> <C>
Raw materials........................................... $ 16,302 $12,242
Work-in-process and finished goods...................... 2,307 6,293
-------- -------
$ 18,609 $18,535
======== =======
</TABLE>
31
<PAGE>
ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets (or
over the lease term if it is shorter for leasehold improvements) which range
from two to five years.
Software Development Costs
The Company capitalizes eligible software development costs upon the
establishment of technological feasibility, which the Company has defined as
completion of a working model. For fiscal 1997, 1996 and 1995, costs which
were eligible for capitalization, after consideration of factors such as
realizable value, were insignificant and, thus, the Company has charged all
software development costs to research and development expense in the
accompanying consolidated statements of operations.
Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 31,
--------------
1997 1996
------- ------
<S> <C> <C>
Accrued warranty costs.................................... $ 3,815 $1,151
Accrued payroll and payroll-related costs................. 4,002 2,555
Other accrued liabilities................................. 2,388 1,191
------- ------
$10,205 $4,897
======= ======
</TABLE>
Revenue Recognition
The Company recognizes revenues from standard products and custom enclosures
at the time of shipment to the customer assuming no significant obligations
remain. The Company records reserves for anticipated product returns,
installation costs and warranty costs at the time of shipment based on
historical and anticipated rates of return and cost, as appropriate. The Company
generally sells products on net 30 day terms. Prepayments are sometimes required
on orders that involve significant engineering. As of March 31, 1997 the Company
has received prepayments of approximately $3.0 million, which is reflected as
customer deposits in the accompanying consolidated balance sheet.
The Company sells to a small number of customers in the semiconductor
industry and, as such, is subject to the risks regarding concentration of
credit with respect to the semiconductor industry. Customers which accounted
for more than 10 percent of revenue in the respective period, as a percentage
of total revenues, are as follows (excluding information for periods in which
a customer accounted for less than 10 percent of total revenues):
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Taiwan Semiconductor
Manufacturing Co. Ltd... 14% 21% 32%
Chartered Semiconductor
Co. Pte. Ltd............ --% 13% 12%
International Business
Machine................. --% 11% --%
</TABLE>
32
<PAGE>
ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Concentration of Credit Risk
Financial instruments which potentially subject the Company to a
concentration of credit risk principally consist of accounts receivable. As of
March 31, 1997 and 1996, approximately 54 percent and 75 percent, of accounts
receivable, respectively, were concentrated with ten customers. In addition,
as of March 31, 1997 and 1996, approximately 71 percent and 41 percent of
accounts receivable, respectively were due from customers located in Taiwan,
Thailand, Singapore and Japan. Of the 71 percent, approximately 17 percent of
total accounts receivable as of March 31, 1997 was due from a single customer
in Thailand for which collection is not anticipated until after the first
quarter 1998. The Company performs ongoing credit evaluations of its
customers' financial condition and, generally, does not require collateral on
accounts receivable as the majority of the Company's customers are large, well
established companies. The allowance for non-collection of accounts receivable
is based upon the expected collectibility of all accounts receivable.
Expansion into new countries or geographies challenge the Company's ability to
gather the necessary economic and political data to avert new credit risks.
Patents
The Company capitalizes the direct costs associated with obtaining patents.
The costs, which are included in other assets in the accompanying consolidated
balance sheet, are being amortized using the straight-line method over the
expected useful lives of the patents of 10 years. Accumulated amortization was
approximately $0.6 million and $0.4 million as of March 31, 1997 and 1996,
respectively.
Foreign Currency Translation
The functional currency of the Company's foreign subsidiaries is the U.S.
dollar. Accordingly, foreign translation and foreign exchange gains and
losses, which have not been material, are reflected in the accompanying
consolidated statements of operations.
Net Income (Loss) Per Share
Net income (loss) per share for each period has been computed using the
weighted average number of common stock, and common stock equivalents
outstanding. Common stock equivalents consist of dilutive shares issuable upon
the assumed exercise of outstanding common stock options. In accordance with
APB Opinion No. 30, common stock equivalents are recognized for all periods
presented even though they have an anti-dilutive effect on the per share
amounts.
New Accounting Standard
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share" and SFAS No. 129, "Disclosure of Information about
Capital Structure." The requirements of both SFAS No. 128 and SFAS No. 129
will become effective for the Company's year ending March 31, 1998. If SFAS
No. 128 had been applied by the Company during 1997, 1996 and 1995, basic
income (loss) per share would have been $(0.63), $1.06 and $0.34,
respectively, and diluted income (loss) per share would have been $(0.62),
$0.99 and $0.31, respectively. SFAS No. 129 will not have a material impact on
the Company's financial statement disclosures.
3. SUPPLEMENTAL STATEMENTS OF CASH FLOWS DISCLOSURES:
Cash paid for interest and domestic and foreign taxes was as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Interest............................................. $ 42 $ 34 $ --
Income Taxes......................................... $3,153 $6,818 $1,428
</TABLE>
33
<PAGE>
ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. LINE OF CREDIT:
The Company maintains an unsecured line of credit with a bank which provides
financing of up to $20.0 million. This line of credit expires on October 1,
1998 and bears interest at the bank's prime rate. The Company must maintain
certain financial covenants under the line of credit, including maintaining
specific levels of quarterly and annual earnings, working capital, tangible
net worth and liquidity. In addition, the line of credit prohibits the Company
from paying cash dividends without the bank's prior approval. There were no
borrowings outstanding under this line of credit as of March 31, 1997 and
1996. As of March 31, 1997 the Company was in full compliance with the
covenants of the unsecured line of credit.
5. COMMON STOCK:
As of March 31, 1997, the following shares of common stock were reserved for
issuance:
<TABLE>
<S> <C>
Employee Stock Option Plans..................................... 947,638
Non-employee Director's Stock Option Plan....................... 47,187
Employee Stock Purchase Plan.................................... 126,814
---------
1,121,639
=========
</TABLE>
Stock Option Plans
Under the Company's stock option plans, options are granted for ten year
periods and become exercisable ratably over a vesting period of four years, or
as determined by the Board of Directors'. Under the 1986 Plan (the "1986
Plan"), which was terminated in 1994, there are no further options available
for issuance. Under the 1993 Plan (the "1993 Plan"), as amended, 1,050,000
shares of common stock are reserved for issuance thereunder. The 1993 Plan
provides for the grant of both incentive stock options and nonqualified stock
options to key employees and consultants of the Company. Under the 1993 Plan,
options may be granted at prices not less than the fair market value of the
Company's common stock at grant date (85% for nonqualified options). Under the
1993 Non-Employee Directors' Stock Plan ( the "Directors' Plan"), 50,000
shares of common stock are reserved for issuance thereunder.
The company accounts for these plans under APB Opinion No. 25, under which
no compensation cost has been recognized. Had compensation cost for these
plans been determined consistent with Statement of Financial Accounting
Standards No. 123 ("SFAS No. 123"), "Accounting for Stock-based Compensation,"
the Company's net income (loss) and per share information would have been
adjusted to the following pro forma amounts (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
1997 1996
-------- ------
<S> <C> <C> <C>
Net Income (loss) As reported $(3,257) $5,240
-------- ------
Pro forma $(4,600) $4,763
-------- ------
Net Income (loss) per
share As reported $ (0.62) $ 0.99
-------- ------
Pro forma $ (0.88) $ 0.90
-------- ------
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average
assumptions used for grants in 1997 and 1996; risk-free interest rate of 7
percent; expected dividend yields of 0.0 percent; expected lives of 4.3 years;
expected volatility 70 percent and 66 percent, respectively. Because the SFAS
No. 123 method of accounting has not been applied to options granted prior to
1996, the resulting pro forma compensation cost may not be representative of
that to be expected in future years.
34
<PAGE>
ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes the stock options outstanding as of March 31,
1997 (prices and contractual life are weighted averages):
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------- -------------------
ACTUAL RANGE OF NUMBER CONTRACTUAL EXERCISE AVERAGE NUMBER
EXERCISE PRICES OUTSTANDING LIFE PRICE PRICE EXERCISABLE
--------------- ----------- ----------- -------- ------- -----------
<S> <C> <C> <C> <C> <C>
$ 2.00 - $15.50 169,156 7.00 $12.31 112,726 $12.20
$16.75 - $20.25 202,059 6.21 $18.93 12,126 $19.49
$21.69 - $23.75 165,038 9.19 $21.92 15,208 $22.27
$24.25 - $41.50 282,857 8.33 $34.70 94,660 $35.40
$43.50 - $48.38 5,000 8.35 $44.72 1,651 $44.42
------- ---- ------ ------- ------
$ 2.00 - $48.38 824,110 7.71 $23.74 236,371 $22.07
======= ==== ====== ======= ======
</TABLE>
Activity in the Company's stock option plans is summarized as follows
(exercise prices are weighted average prices):
<TABLE>
<CAPTION>
1997 1996 1995
---------------- ---------------- ---------------
SHARES PRICE SHARES PRICE SHARES PRICE
-------- ------ -------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at
Beginning of year........ 716,997 $23.15 608,793 $11.47 279,721 $ 3.10
Granted.................. 395,076 20.74 353,200 36.21 426,250 14.85
Exercised................ (112,460) 10.18 (137,916) 3.39 (86,182) 1.45
Canceled................. (174,476) 23.55 (94,871) 24.06 (6,125) 8.14
Terminated............... (1,027) 23.55 (12,209) 24.06 (4,871) 8.14
-------- ------ -------- ------ ------- ------
Options outstanding at end
of year.................. 824,110 $23.74 716,997 $23.15 608,793 $11.47
Exercisable at end of
year..................... 236,371 145,069
Weighted average fair
value of options granted. $ 11.76 $ 19.62
</TABLE>
Employee Stock Purchase Plan
Under the 1993 Employee Stock Purchase Plan (the "ESP Plan"), as amended,
250,000 shares of common stock are reserved for issuance to eligible
employees. The ESP Plan permits employees to purchase common stock through
payroll deductions, which may not exceed 10 percent of an employee's
compensation, at a price not less than 85 percent of the market value of the
stock on specified dates. At March 31, 1997, 123,186 shares had been purchased
by employees under the ESP Plan.
Stock Bonus Plan
In fiscal 1996 and 1995, the Company granted bonuses of 4,575 and 6,175
shares, respectively, to certain employees based upon their period of
employment with the Company. The fair value of these shares was charged to
compensation expense as of the date the bonuses were granted. No such bonuses
were granted in fiscal year 1997.
35
<PAGE>
ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. LEASE COMMITMENTS:
The Company leases various facilities under non-cancelable operating leases.
At March 31, 1997, the future minimum commitments under these leases are as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING
MARCH 31,
-----------
<S> <C>
1998............................................................. $ 1,729
1999............................................................. 1,524
2000............................................................. 1,174
2001............................................................. 244
2002 and thereafter.............................................. 601
-------
$ 5,272
=======
</TABLE>
Rent expense under the Company's operating leases was approximately $1.9
million, $1.3 million and $0.3 million for fiscal years 1997, 1996 and 1995,
respectively.
7. INTERNATIONAL SALES:
International sales, which consist principally of export sales from the
U.S., are comprised of the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Europe........................................... $ 4,636 $ 5,277 $ 3,241
Japan............................................ 7,638 4,558 2,329
Taiwan........................................... 43,294 21,668 10,821
Asia-Pacific (excluding Japan and Taiwan)........ 21,400 13,900 4,200
------- ------- -------
Total international sales....................... $76,968 $45,403 $20,591
======= ======= =======
International sales as a percentage of total
sales........................................... 56% 47% 59%
======= ======= =======
</TABLE>
8. INCOME TAXES:
The provision for income taxes attributable to continuing operations is
based upon income before income taxes from continuing operations as follows
(in thousands):
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------
1997 1996 1995
-------- ------- ------
<S> <C> <C> <C>
Domestic........................................ $ 18,476 $12,158 $4,826
Foreign......................................... 105 (26) 111
-------- ------- ------
$ 18,581 $12,132 $4,937
======== ======= ======
</TABLE>
36
<PAGE>
ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The provision (benefit) for income taxes consisted of (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------
1997 1996 1995
------- ------ ------
<S> <C> <C> <C>
Current:
Federal......................................... $ 3,437 $5,770 $2,091
State........................................... 1,294 1,374 308
Foreign......................................... 97 231 35
------- ------ ------
Total current.................................. 4,828 7,375 2,434
------- ------ ------
Deferred:
Federal......................................... (4,616) (3,461) (1,398)
State........................................... (1,288) (836) --
------- ------ ------
Total deferred................................. (5,904) (4,297) (1,398)
------- ------ ------
$(1,076) $3,078 $1,036
======= ====== ======
</TABLE>
The provision (benefit) for income taxes included in the accompanying
statement of operations consisted of the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Continuing operations......................... $ 7,173 $ 4,489 $ 1,127
Discontinued operations....................... (8,249) (1,411) (91)
-------- ------- -------
Total........................................ $ (1,076) $ 3,078 $ 1,036
======== ======= =======
</TABLE>
The provision for income taxes attributable to continuing operations is
reconciled with the Federal statutory rate as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Provision computed at Federal statutory rate..... $6,503 $4,246 $1,728
State taxes, net of Federal benefit.............. 1,295 932 200
Foreign income and withholding taxes in excess of
statutory rate.................................. -- 177 --
In process research and development cost write-
off............................................. 467 -- --
Non-deductible expenses and other................ 276 153 (247)
Tax credits...................................... -- -- (256)
FSC benefit...................................... (705) (282) (144)
Change in valuation allowance.................... (578) (456) (76)
Tax exempt income................................ (85) (281) (78)
------ ------ ------
$7,173 $4,489 $1,127
====== ====== ======
Effective tax rate............................... 39% 37% 23%
====== ====== ======
</TABLE>
37
<PAGE>
ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of the net deferred tax asset are as follows (in thousands):
<TABLE>
<CAPTION>
MARCH 31,
---------------
1997 1996
------- ------
<S> <C> <C>
Provisions for discontinued operations................... $ 7,222 $ --
Accounts receivable reserves............................. 740 2,784
Inventory reserves....................................... 1,203 861
Accrued vacation......................................... 377 254
Accrued warranty......................................... 1,530 461
Depreciation............................................. (182) 20
Capitalized patent costs................................. (467) (202)
Acquired technology...................................... 687 741
Other temporary differences.............................. 489 1,354
------- ------
11,599 6,273
Valuation allowance...................................... -- (578)
------- ------
Net deferred tax asset................................... $11,599 $5,695
======= ======
</TABLE>
9. ACQUISITION AND CLOSURE OF ASYST AUTOMATION, INC.:
In October 1994, the Company acquired certain assets and liabilities of
Proconics International, Inc. ("Proconics") through its subsidiary, Asyst
Automation, Inc. in a transaction accounted for as a purchase. In exchange for
the cash purchase price of $1.2 million, the Company received tangible assets
of approximately $0.8 million and intangible assets of approximately $2.0
million. In addition, the Company assumed liabilities of Proconics of
approximately $1.6 million. In connection with the purchase price allocation,
the Company received an appraisal of the intangible assets which indicated
that substantially all of the acquired intangible assets consisted of research
and development in process. In the opinion of management and the appraiser,
the $2.0 million of acquired research and development in process had not yet
reached technological feasibility and had no alternative future uses and,
accordingly, had been charged to expense in the accompanying consolidated
statements of operations.
In January 1997, the Company adopted a formal plan to close Automation, by
the end of September 1997, which was accounted for in the third quarter ended
December 28, 1996. The decision was based upon the recent demonstration of the
lack of the subsidiary's ability to profitably manufacture and sell the
automation products that were acquired as part of the purchase of Proconics.
Accordingly, Automation is reported as a discontinued operation. Net assets of
Automation consist primarily of trade receivables, inventory and property and
equipment.
38
<PAGE>
ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
The loss on the closure of Automation reflects management's best estimate,
based on the information currently available, of costs to be incurred for
existing and probable events of the discontinued operations. The results of
Automation are as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Net sales.................................... $ 22,743 $22,806 $ 2,292
======== ======= =======
Loss from operations before income tax bene-
fit......................................... $ (9,519) $(3,814) $(2,598)
Income tax benefit........................... 3,427 1,411 91
-------- ------- -------
Loss from operations........................ (6,092) (2,403) (2,507)
-------- ------- -------
Loss on disposal before income tax benefit.. (13,395) -- --
Income tax benefit........................... 4,822 -- --
-------- ------- -------
Loss on disposal............................. (8,573) -- --
-------- ------- -------
Total loss on discontinued operations........ $(14,665) $(2,403) $(2,507)
======== ======= =======
</TABLE>
10. ACQUISITION OF RADIANCE SYSTEMS, INC.:
On November 15, 1996 the Company purchased Radiance Systems Incorporated
("RSI"), a developer and supplier of software products to be used in the
semiconductor manufacturing industry, by acquiring all of the outstanding
stock of RSI in exchange for 129,740 shares of common stock of the Company.
The total purchase price was approximately $2.4 million and was accounted for
as a purchase in the quarter ended December 28, 1996.
In connection with the acquisition, approximately $1.3 of the acquired
intangible assets consisted of in process research and development. Because
there can be no assurance that the Company will be able to successfully
complete the development of RSI products or that the acquired technology has
any alternative future use, the acquired in process research and development
was charged to expense. As a result of the purchase price allocation, $1.7
million (including $0.6 million of deferred tax liability) was assigned to
intangible assets related to existing product technology, the assembled
workforce and excess of the purchase price over net assets acquired. These
intangible assets are being amortized over a period up to three years.
Accumulated amortization was approximately $0.1 million as of March 31, 1997.
Management believes that the unamortized balance of these assets is
recoverable.
Comparative pro forma information reflecting the acquisition of RSI has not
been presented because the operations of RSI are not material to the Company's
consolidated financial statements.
11. LEGAL PROCEEDINGS
In October 1996, the Company filed a lawsuit in the United States District
Court for the Northern District of California against Jenoptik A.G.
("Jenoptik"), Jenoptik-Infab, Inc. ("Infab"), a joint venture comprised of
Jenoptik, Emtrak, Inc. ("Emtrak") and Empak, Inc. ("Empak"), Emtrak and Empak
alleging infringement of two patents related to the Company's SMART Traveler
System. The Company has amended its Complaint to allege causes of action for
breach of fiduciary duty against Jenoptik and Meissner & Wurst, GmbH and
misappropriation of trade secrets and unfair business practices against all
defendants. The Company's Complaints seek damages and injunctive relief
against further infringement. All defendants have counter-sued, seeking a
judgment declaring the patents invalid, unenforceable and not infringed.
Jenoptik, Infab and Emtrak have also alleged that the Company has violated
federal antitrust laws. The Company has denied these allegations. While it is
not possible to predict accurately or to determine the eventual outcome of
these matters, the Company believes that the outcome of these legal
proceedings will not have a material adverse effect on the financial position
or results of operations of the Company.
39
<PAGE>
SCHEDULE II
ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE CHARGED TO/ BALANCE
BEGINNING RECOVERY OF END OF
OF PERIOD EXPENSES DEDUCTIONS PERIOD
--------- ----------- ---------- -------
<S> <C> <C> <C> <C>
March 31, 1995
Allowance for doubtful accounts.... $ 104 $ 690 $ (74) $ 720
March 31, 1996
Allowance for doubtful accounts.... $ 720 $4,125 $ (482) $4,363
March 31, 1997
Allowance for doubtful accounts.... $4,363 $ (300) $ (2,218) $1,845
</TABLE>
40
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report on Form 10-K to
be signed on its behalf by the undersigned, thereunto duly authorized on the
20th day of June 1997.
ASYST TECHNOLOGIES, INC.
By /s/ Mihir Parikh
___________________________________
Mihir Parikh
Chairman and Chief Executive
Officer
(Principal executive officer)
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Mihir Parikh Chairman and Chief Executive June 20, 1997
____________________________________ Officer
Mihir Parikh
/s/ Douglas J. McCutcheon Chief Financial Officer June 20, 1997
____________________________________ (Principal Financial and
Douglas J. McCutcheon Accounting Officer)
/s/ Stanley J. Grubel Director June 20, 1997
____________________________________
Stanley J. Grubel
/s/ Tsuyoshi Kawanishi Director June 20, 1997
____________________________________
Tsuyoshi Kawanishi
/s/ Ashok K. Sinha Director June 20, 1997
____________________________________
Ashok K. Sinha
/s/ James E. Springgate Director June 20, 1997
____________________________________
James E. Springgate
/s/ Walter W. Wilson Director June 20, 1997
____________________________________
Walter W. Wilson
</TABLE>
41
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10-K, into the Company's previously filed
registration Statement Nos. 33-301438 and 33-70100 on Form S-8.
ARTHUR ANDERSEN LLP
San Jose, California
June 20, 1997
42
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from Twelve
Months ended March 31, 1997 and is qualified in its entirey by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 11,021
<SECURITIES> 1,000
<RECEIVABLES> 37,104
<ALLOWANCES> 1,845
<INVENTORY> 18,609
<CURRENT-ASSETS> 81,264
<PP&E> 17,097
<DEPRECIATION> 6,734
<TOTAL-ASSETS> 94,079
<CURRENT-LIABILITIES> 29,075
<BONDS> 0
0
0
<COMMON> 66,945
<OTHER-SE> (1,941)
<TOTAL-LIABILITY-AND-EQUITY> 94,079
<SALES> 137,520
<TOTAL-REVENUES> 137,520
<CGS> 80,732
<TOTAL-COSTS> 119,610
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (300)
<INTEREST-EXPENSE> 139
<INCOME-PRETAX> 18,581
<INCOME-TAX> 7,173
<INCOME-CONTINUING> 11,408
<DISCONTINUED> 14,665
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,257)
<EPS-PRIMARY> (0.62)
<EPS-DILUTED> (0.62)
</TABLE>
