SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-22384
MICRO COMPONENT TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0985960
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2340 West County Road C, St. Paul, MN 55113-2528
(Address of principal executive offices)
(612) 697-4000
(Registrant's telephone number)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days
Yes ___X___ No _______
The number of shares outstanding of the Registrant's Common Stock, as of October
31, 1997 was 7,059,852.
Page 1 of 13 pages
Exhibit index on page 12
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS 3
CONSOLIDATED STATEMENTS OF OPERATIONS 4
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION 7
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
SIGNATURES 11
EXHIBIT INDEX 12
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
ITEM 1. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
<TABLE>
<CAPTION>
Sept. 27, June 28,
ASSETS 1997 1997
------ -------- --------
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,745 $ 5,360
Short-term investments 874 1,169
Accounts receivable, less allowance for doubtful accounts
of $132 (Sept. 1997) and $109 (June 1997) 5,119 4,028
Inventories
Raw materials 2,399 1,110
Work in process 2,174 1,420
Finished goods 1,677 1,064
Other 320 297
-------- --------
Total current assets 15,308 14,448
-------- --------
Property, plant and equipment 4,113 4,347
Less accumulated depreciation 2,829 3,103
-------- --------
Property, plant and equipment, net 1,284 1,244
Other assets 79 100
-------- --------
Total assets $ 16,671 $ 15,792
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current obligations under debt facilities and financing
obligations $ 287 $ 300
Accounts payable 2,312 1,563
Other accrued liabilities 1,696 1,577
-------- --------
Total current liabilities 4,295 3,440
Long-term debt and financing obligations 121 133
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 20,000,000 authorized, 7,059,852 and
7,047,102 issued, respectively 71 70
Redeemable convertible preferred stock, $.01 par value, 1,000,000
authorized, 315,789 issued (liquidation value $4.75 per share) 1,500 1,500
Additional paid-in capital 42,493 42,474
Cumulative translation adjustment (82) (82)
Accumulated deficit (31,727) (31,743)
-------- --------
Total stockholders' equity
12,255 12,219
-------- --------
Total liabilities and stockholders' equity $ 16,671 $ 15,792
======== ========
</TABLE>
See notes to consolidated financial statements
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
------------------
Sept. 27, Sept. 28,
1997 1996
------- -------
Net sales $ 4,450 $ 2,631
Cost of sales 1,480 1,220
------- -------
Gross profit 2,970 1,411
Operating expenses
Selling, general and administrative 2,151 1,774
Research and development 923 844
------- -------
Total operating expenses 3,074 2,618
------- -------
Loss from operations (104) (1,207)
Interest income, net 50 79
Other 70 --
------- -------
Total interest and other 120 79
------- -------
Net income (loss) $ 16 $(1,128)
======= =======
Net income (loss) per share $ .00 $ (.15)
======= =======
Weighted average common and common
equivalent shares outstanding 7,721 7,336
======= =======
See notes to consolidated financial statements
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
-------------------
Sept. 27, Sept 28,
1997 1996
------- -------
Cash flows from operating activities:
Net income (loss) $ 16 $(1,128)
Adjustments to reconcile net income (loss) to
net cash used by operating activities
Depreciation and amortization 115 113
Other 21 (40)
Changes in assets and liabilities:
Accounts receivable (1,091) 1,011
Inventories (2,656) (41)
Other assets (23) 150
Accounts payable 749 (154)
Other accrued liabilities 119 335
------- -------
Net cash provided by (used in) operating activities (2,750) 246
Cash flows from investing activities:
Maturity of short-term investments 295 --
Additions to property, plant and equipment (155) (20)
------- -------
Net cash provided by (used in) investing activities 140 (20)
Cash flows from financing activities:
Payments of long-term debt (25) (24)
Proceeds from issuance of stock 20 40
------- -------
Net cash provided by (used in) financing activities (5) 16
------- -------
Net increase (decrease) in cash and cash equivalents (2,615) 242
Cash and cash equivalents at beginning of period 5,360 7,793
------- -------
Cash and cash equivalents at end of period $ 2,745 $ 8,035
======= =======
See notes to consolidated financial statements
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited, condensed, consolidated financial
statements for the three month period ended September 27, 1997 have
been prepared in accordance with the instructions for SEC Form 10-Q
and, accordingly, do not include all disclosures required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments, consisting of normal
recurring accruals considered necessary for a fair presentation, have
been included.
Interim unaudited financial results should be read in conjunction with
the audited financial statements included in the SEC Annual Report,
Form 10-K, for the fiscal year ended June 28, 1997.
The results of operations for the three months ended September 27, 1997
are not necessarily indicative of the operating results to be expected
for the full year.
2. CONTINGENCIES
The Securities and Exchange Commission is conducting an investigation
with respect to certain financial reporting discrepancies announced by
the Company in April 1994 dating back to fiscal 1993 and the first two
quarters of fiscal 1994. The Company has submitted documents to the
Commission pursuant to requests from the Commission, and certain former
officers and certain current and former employees of the Company have
been interviewed by the Commission as part of the investigation.
Management is currently not able to predict the financial impact, if
any, that may result from the outcome of the investigation.
3. NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, Statement of Financial Accounting Standards ("SFAS")
No. 130, "Reporting Comprehensive Income" was issued which is required
to be adopted for the fiscal year beginning June 28, 1998. The adoption
of this standard is not expected to have a material impact on the
Company's financial position or results of operations.
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 27, 1997
Net sales for the first quarter ended September 27, 1997, were $4.5 million, an
increase of $1.8 million or 69.1% from $2.6 million in the prior year. Increased
shipments of both the Company's 5100 handler product line and its previously
existing product lines contributed to the increase in net sales.
Gross profit for the first quarter of fiscal 1998 increased by $1.6 million, or
110.5%, to $3.0 million from $1.4 million in the prior year. Gross margin was
66.7%, compared to 53.6% for the same period last year. The improvement in gross
margin is attributable to changes in product mix and to increased absorbed
overhead expenses due to higher production levels. The Company expects gross
margins to decline to levels consistent with the last half of fiscal 1997, and
to decrease further as the 7632 handler product line sales commence.
Selling, general and administrative expense in the first quarter of fiscal 1998
was $2.2 million compared to $1.8 million in the prior year. As a percentage of
net sales, SG&A decreased to 48.3% for the first quarter from 67.4% for the same
period last year. The increase in SG&A is due to the higher selling costs
associated with the higher net sales.
Research and development expense for the first quarter of fiscal 1998 was $0.9
million compared to $0.8 million for the same period one year ago. As a
percentage of net sales, R&D expenses decreased to 20.7% from 32.1% in the prior
year. The percentage decrease is primarily due to the higher net sales level.
The Company will continue to make significant investment in Research and
Development consistent with its continued focus on new product offerings.
The Company generated net interest income during the quarter of $50,000 as
compared to $79,000 for the same period one year ago. The decrease resulted from
lower levels of interest bearing cash equivalents and short-term investments in
the current year.
Net income for the first quarter of fiscal 1998 was $16,000 or 0.4% of net sales
as compared to a net loss of $1.1 million for the first quarter of fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
In August of 1995 the Company completed a private placement offering of
1,500,000 shares of common stock resulting in net proceeds of $4.6 million from
several accredited investors. In December of 1995, the Company received $1.5
million in settlement of the escrow agreement established with Megatest
Corporation in connection with the sale of the 1149 tester product line which
occurred in November of 1994. In February of 1996, the Company received $500,000
<PAGE>
from Hambrecht & Quist Guaranty Finance L.P. (H&Q) pursuant to its exercise of
stock purchase warrants for 160,000 shares of the Company's common stock. H&Q
had earned these warrants under a previous financing agreement it had entered
into with the Company. The proceeds from these transactions are being used to
fund operations and for working capital. The unused portion is currently held in
interest bearing cash equivalents and short-term investments.
The Company used $2.8 million of cash in its operating activities during the
three months ended September 27, 1997 as compared to $0.2 million of cash
generated by operations in the same period of the prior year. Increases in
accounts receivable due to higher sales levels and increases in inventories
primarily related to new product offerings were the primary users of cash.
Capital expenditures for the first three months were $155,000, compared to
$20,000 for the same period of the previous year. The Company expects fiscal
1998 capital investments to be comparable to fiscal 1997 levels.
At September 27, 1997, the Company had cash and cash equivalents of $2.7 million
and short-term investments of $0.9 million, compared to $5.4 million and $1.2
million, respectively, at June 28, 1997.
Current assets at September 27, 1997 were $15.3 million, an increase of $0.9
million from $14.4 million at June 28, 1997. Increases in accounts receivable
and inventories were partially offset by the decrease in cash and cash
equivalents. The current ratio was 3.6 and working capital was $11.0 million at
September 27, 1997, compared to 4.2 and $11.0 million, respectively, at June 28,
1997.
Management believes that cash, cash equivalents and short-term investments at
September 27, 1997 and funds available through establishing a bank line of
credit will sustain the Company's continuing operations at their current levels.
IMPACT OF ACCOUNTING STANDARDS
In June 1997, SFAS No. 130, "Reporting Comprehensive Income" was issued which is
required to be adopted for the fiscal year beginning June 28, 1998. The adoption
of this standard is not expected to have a material impact on the Company's
financial position or results of operations.
RISK FACTORS
Except for the historical information contained herein, certain of the matters
discussed in this report are "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995. These "forward-looking
statements" involve certain risks and uncertainties, including, but not limited
to, the following: (1) fluctuations and periodic downturns in the semiconductor
market which often have had a disproportionately negative effect on
manufacturers of semiconductor capital equipment; (2) rapid changes in
technology and in tester and handler products, which the Company must respond to
successfully in order for its products to avoid becoming noncompetitive or
obsolete; (3) customer acceptance of the Company's new products, including the
MCT 5100 and MCT 7632 handlers, in which the Company has invested significant
levels of inventory; (4) possible loss of any of the Company's key customers,
who account for a
<PAGE>
substantial percentage of the Company's business; (5) the possible adverse
impact of competition in markets which are highly competitive; and (6) the
possible adverse impact of economic or political changes in markets the Company
serves. All forecasts and projections in this report are "forward-looking
statements," and are based on management's current expectations of the Company's
near-term results, based on current information available pertaining to the
Company, including risk factors discussed above. Actual results could differ
materially.
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Securities and Exchange Commission is conducting an investigation with
respect to certain financial reporting discrepancies announced by the Company in
April 1994 dating back to fiscal 1993 and the first two quarters of fiscal 1994.
The Company has submitted documents to the Commission pursuant to requests from
the Commission, and certain former officers and certain current and former
employees of the Company have been interviewed by the Commission as part of the
investigation. Management is currently not able to predict the financial impact,
if any, that may result from the outcome of the investigation.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11. Computation of Earnings Per Common and Common Equivalent
Shares
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Micro Component Technology, Inc.
Registrant
Dated: November 10, 1997 By: /s/ Roger E. Gower
Roger E. Gower
President and Chief Executive Officer
and
Dated: November 10, 1997 By: /s/ Jeffrey S. Mathiesen
Jeffrey S. Mathiesen
Chief Financial Officer
Chief Accounting Officer
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
EXHIBIT INDEX
Exhibit
Number Page
11 Computation of Earnings per Common and
Common Equivalent Shares 13
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
COMPUTATION OF EARNINGS PER COMMON SHARE AND
COMMON EQUIVALENT SHARE
(In thousands, except per share data)
THREE MONTHS ENDED
-------------------
SEPT. 27, SEPT. 28,
PRIMARY 1997 1996
- ------- ------- -------
Net income (loss) $ 16 $(1,128)
======= =======
Weighted average number of common shares outstanding
during the period 7,054 7,020
Shares issuable on exercise of stock options and warrants
less shares repurchaseable from the proceeds 351 --
Shares issuable on conversion of redeemable preferred
stock 316 316
------- -------
Common and common equivalent shares - primary 7,721 7,336
======= =======
Net income (loss) per share - primary $ .00 $ (.15)
======= =======
FULLY DILUTED
Net income (loss) $ 16 $(1,128)
======= =======
Common and common equivalent shares - primary 7,721 7,336
Shares issuable on exercise of stock options and
warrants less shares repurchaseable from
the proceeds -- --
------- -------
Common and common equivalent shares - fully diluted 7.721 7,336
======= =======
Net income (loss) per share - fully diluted $ .00 $ (.15)
======= =======
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-27-1998
<PERIOD-END> SEP-27-1997
<CASH> 2,745
<SECURITIES> 874
<RECEIVABLES> 5,251
<ALLOWANCES> (132)
<INVENTORY> 6,250
<CURRENT-ASSETS> 15,308
<PP&E> 4,113
<DEPRECIATION> 2,829
<TOTAL-ASSETS> 16,671
<CURRENT-LIABILITIES> 4,295
<BONDS> 0
71
0
<COMMON> 1,500
<OTHER-SE> 10,684
<TOTAL-LIABILITY-AND-EQUITY> 16,671
<SALES> 4,450
<TOTAL-REVENUES> 4,450
<CGS> 1,480
<TOTAL-COSTS> 1,480
<OTHER-EXPENSES> 3,004
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (50)
<INCOME-PRETAX> 16
<INCOME-TAX> 0
<INCOME-CONTINUING> 16
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
