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 March 29, 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
(formerly 3850 North Victoria Street, St. Paul, Minnesota 55126)
(Address of principal executive offices)
(612) 697-4000
(formerly 612 482-5100)
(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 April
30, 1997 was 7,031,170.
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 8
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 13
EXHIBIT INDEX 14
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
ITEM 1. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
<TABLE>
<CAPTION>
ASSETS Mar. 29, 1997 June 29, 1996
------ -------- --------
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,454 $ 7,793
Accounts receivable, less allowance
for doubtful accounts of $174 (Mar. 1997) and
$585 (June 1996) 3,150 4,171
Inventories
Raw materials 969 1,215
Work in process 1,149 484
Finished goods 936 1,314
Other 463 749
-------- --------
Total current assets 14,121 15,726
-------- --------
Property, plant and equipment 4,266 4,663
Less accumulated depreciation 3,316 3,485
-------- --------
Property, plant and equipment, net 950 1,178
Other assets 139 76
-------- --------
Total assets $ 15,210 $ 16,980
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current obligations under debt facilities and financing
obligations $ 312 $ 352
Accounts payable 1,329 1,044
Other accrued liabilities 1,388 1,692
-------- --------
Total current liabilities 3,029 3,088
Long-term debt and financing obligations 146 183
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 20,000,000 authorized, 7,031,170 and
7,187,244 issued, respectively 70 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 42,439 43,463
Cumulative translation adjustment (82) (82)
Accumulated deficit (31,892) (26,934)
Treasury stock 176,074 shares of common stock at cost (June 1996) -- (4,308)
-------- --------
Total stockholders' equity 12,035 13,709
-------- --------
Total liabilities and stockholders' equity $ 15,210 $ 16,980
======== ========
</TABLE>
See notes to consolidated financial statements
MICRO COMPONENT TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------- --------------------
Mar. 29, Mar. 30, Mar. 29, Mar. 30,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 4,706 $ 5,756 $ 11,309 $ 18,130
Cost of sales 1,951 2,389 5,065 7,532
-------- -------- -------- --------
Gross profit 2,755 3,367 6,244 10,598
-------- -------- -------- --------
Operating expenses
Selling, general and administrative 1,664 1,893 5,202 5,872
Research and development 1,021 1,441 2,945 3,206
Unusual and non-recurring items -- -- -- (1,524)
-------- -------- -------- --------
Total operating expenses 2,685 3,334 8,147 7,554
-------- -------- -------- --------
Income (loss) from operations 70 33 (1,903) 3,044
Interest income, net 85 80 251 144
Other (63) -- (63) --
-------- -------- -------- --------
Total interest and other 22 80 188 144
Income (loss) before income taxes 92 113 (1,715) 3,188
Income tax provision -- 4 -- 76
-------- -------- -------- --------
Income (loss) from continuing operations 92 109 (1,715) 3,112
Discontinued operations -- -- -- 474
Net income (loss) $ 92 $ 109 $ (1,715) $ 3,586
======== ======== ======== ========
Income (loss) per share from continuing
operations $ .01 $ .01 $ (.24) $ .44
Income per share from discontinued
operations
-- -- -- .06
-------- -------- -------- --------
Net income (loss) per share $ .01 .01 $ (.24) $ .50
======== ======== ======== ========
Weighted average common and common
equivalent shares outstanding 7,516 7,663 7,028 7,127
======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements
MICRO COMPONENT TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
-----------------
Mar. 29, Mar. 30,
1997 1996
------- -------
Cash flows from operating activities:
Net income (loss) $(1,715) $ 3,586
Adjustments to reconcile net income (loss) to
net cash used by operating activities
Depreciation and amortization 339 310
Gain on sale of property, plant & equipment (23) (12)
Unusual and non-recurring items -- (1,524)
Changes in assets and liabilities:
Accounts receivable 1,021 (1,871)
Inventories (41) (77)
Other assets 223 925
Accounts payable 285 (570)
Other accrued liabilities (304) (1,369)
Discontinued operations -- 977
------- -------
Net cash provided by (used in) operating activities (215) 375
Cash flows from investing activities:
Net proceeds from sale of property, plant and equipment 24 19
Additions to property, plant and equipment (112) (509)
Proceeds from sale of subsidiary -- 150
Net proceeds from sale of product line -- 1,524
------- -------
Net cash provided by (used in) investing activities (88) 1,184
Cash flows from financing activities:
Proceeds from issuance of long-term debt -- 98
Payments of long-term debt (77) (77)
Proceeds from issuance of stock 41 5,107
------- -------
Net cash provided by (used in) financing activities (36) 5,128
------- -------
Effects of exchange rate changes -- (361)
------- -------
Net increase (decrease) in cash and cash equivalents (339) 6,326
Cash and cash equivalents at beginning of period 7,793 1,156
------- -------
Cash and cash equivalents at end of period $ 7,454 $ 7,482
======= =======
See notes to consolidated financial statements
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 and nine month periods ended March 29, 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 29, 1996.
The results of operations for the three and nine months ended March 29,
1997 are not necessarily indicative of the operating results to be
expected for the full year.
2. CONTINGENCIES
The Securities and Exchange Commission has informed the Company that it
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 as part of the investigation. The Commission is in
the process of interviewing potential witnesses as part of the
investigation.
On December 28, 1995, University/Joseph Associates, the former landlord
of Sym-Tek Systems, Inc., filed a lawsuit against the Company in Superior
Court in San Diego, California, seeking payment by the Company of
$500,000. The landlord alleges in the lawsuit that the Company agreed to
pay Sym-Tek's rent during the period in 1994 in which the Company and
Sym-Tek were negotiating a possible merger. The merger was not concluded,
and the Company has denied any liability to the landlord and intends to
vigorously defend the lawsuit.
On September 25, 1995 the Company sold all of the outstanding stock of
the Company's European subsidiary, Intertrade Scientific, Inc. (ITS) to
Cardine & Levy, a company based in France. In July 1996 Cardine & Levy
initiated an arbitration proceeding in Geneva, Switzerland under the
rules of the International Chamber of Commerce claiming damages from the
Company related to the discontinuation of a distribution relationship
between ITS and one of its significant equipment suppliers. The Company
has responded to the request for arbitration and denied any liability.
The Company intends to vigorously defend its position in the arbitration
proceeding and is seeking to recover their additional amounts due
pursuant to the original sales agreement from Cardine & Levy.
3. NEW ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." The Company adopted the
disclosure provisions of SFAS 123 in the first quarter of fiscal 1997,
the effect of which was not material for all periods presented.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Standards No. 128 "Earnings per Share". This
Statement specifies the computation, presentation, and disclosure
requirements for earnings per share. This Statement is effective for
financial statements issued for periods after December 15, 1997,
including interim periods. Adoption by the Company in 1998 is not
expected to have a material impact on the earnings per share computation.
4. RECLASSIFICATION
Certain reclassifications have been made to the 1996 consolidated
financial statements to conform to the 1997 classification. These
reclassifications had no impact on net income or stockholders' equity as
previously reported.
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 MARCH 29, 1997
Net sales for the third quarter ended March 29, 1997, were $4.7 million, a
decrease of $1.1 million or 18.2% from $5.8 million in the prior year. Softness
in the semiconductor capital equipment market continued to negatively impact
sales in the current year. As compared to the prior quarter ended December 28,
1996, net sales increased by $0.7 million. This increase was lead by sales of
the MCT 5100 product during the quarter.
Gross profit for the third quarter of fiscal 1997 decreased by $0.6 million, or
18.2%, to $2.8 million from $3.4 million in the prior year. The decrease
resulted from lower sales. Gross margin was 58.5% for both the current year and
prior year quarters.
Selling, general and administrative expense in the third quarter of fiscal 1997
was $1.7 million compared to $1.9 million in the prior year. As a percentage of
net sales, SG&A increased to 35.4% for the third quarter from 32.9% for the same
period last year, as a result of the lower comparative sales.
Research and development expense for the third quarter of fiscal 1997 was $1.0
million compared to $1.4 million for the same period one year ago. As a
percentage of net sales, R&D expenses decreased to 21.7% from 25.0% in the prior
year. 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 $85,000 as
compared to $80,000 for the same period one year ago. Increased rates earned on
investments and reduced debt levels in the third quarter of fiscal 1997 versus
fiscal 1996 resulted in the difference.
Net income for the third quarter of fiscal 1997 was $92,000 or 2.0% of net sales
as compared to net income of $109,000 for the third quarter of fiscal 1996.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 29, 1997
Net sales for the nine months ended March 29, 1997 were $11.3 million, a
decrease of $6.8 million from the same period a year ago. The continued slowdown
in the semiconductor capital equipment market has severely impacted fiscal 1997
net sales.
Gross profit for the nine months ended March 29, 1997 was $6.2 million, a
decrease of $4.4 million or 41.1%, from $10.6 million last year. Gross margin
was 55.2%, compared to 58.5% for the same nine month period a year ago. The
reduction in gross margin is attributable to changes in product mix and to
increased unabsorbed overhead expenses due to lower production levels in early
fiscal 1997.
Selling, general and administrative expense for the nine months ended March 29,
1997, was $5.2 million compared to $5.9 million in the prior year. As a
percentage of net sales, SG&A increased to 46.0% for the first nine months of
fiscal 1997 from 32.4% for the same period last year. The percentage increase is
due to the lower net sales level.
Research and development expense for the nine months ended March 29, 1997, was
$2.9 million, a $0.3 million decrease from $3.2 million of a year ago. As a
percentage of net sales, R&D expenses increased to 26.0% from 17.7% in the prior
year. The percentage increase is due to the lower net sales level and continued
emphasis on new product development.
The Company generated net interest income of $251,000 during the first nine
months of fiscal 1997 as compared to $144,000 for the same period one year ago.
The increase in net interest income is due to the Company's strengthened cash
position and reduced debt level in the first nine months of fiscal 1997 versus
fiscal 1996.
Net loss for the nine months ended March 29, 1997 was $1.7 million as compared
to net income of $3.6 million, inclusive of an unusual and non-recurring gain of
$1.5 million and income from discontinued operations of $0.5 million, for the
first nine months of fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
In February 1996, the Company received $0.5 million from Hambrecht & Quist
Guaranty Finance L.P. ( "H&Q") pursuant to its exercise of stock warrants for
160,000 shares of the Company's common stock. In December 1995, the Company
received $1.5 million in settlement of the escrow agreement established with
Megatest Corporation in connection with the November 1994 sale of the 1149
tester product line. In August 1995, the Company completed a private placement
offering of 1,500,000 shares of the Company's common stock, receiving net
proceeds of $4.6 million. These funds are being used for operations and the
unused portion is currently held in interest-bearing cash equivalents.
The Company used $0.2 million of cash in its operating activities during the
nine months ended March 29, 1997 as compared to $0.4 million of cash generated
by operations in the same period of the prior year. Cash flows from collection
of accounts receivable offset most of the loss in the current year.
Capital expenditures for the first nine months were $112,000, compared to
$509,000 for the same period of the previous year. The Company expects fiscal
1997 capital investments to be below prior year levels.
At March 29, 1997, the Company had cash and cash equivalents of $7.5 million, as
compared to $7.8 million at June 29, 1996.
Current assets at March 29, 1997 were $14.1 million, or $1.6 million lower than
the amount of current assets of $15.7 million at June 29, 1996. The decrease is
primarily attributable to the reductions in accounts receivable.
Current liabilities at March 29, 1997 were $3.0 million, slightly lower than
$3.1 as at June 29, 1996.
Management believes that cash and cash equivalents on-hand, and anticipated cash
flows from operations are sufficient to sustain the Company's present operations
in the current semiconductor capital equipment market environment through the
foreseeable future.
IMPACT OF ACCOUNTING STANDARDS
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation." The Company adopted the disclosure
provisions of SFAS 123 in the first quarter of fiscal 1997, the effect of which
was not material for all periods presented.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Standards No. 128 "Earnings per Share". This Statement specifies the
computation, presentation, and disclosure requirements for earnings per share.
This Statement is effective for financial statements issued for periods after
December 15, 1997, including interim periods. Adoption by the Company in 1998 is
not expected to have a material impact on the earnings per share computation.
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; (4) possible loss of any of the Company's key
customers, who account for a substantial percentage of the Company's business;
and (5) the possible adverse impact of competition in markets which are highly
competitive. 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.
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Securities and Exchange Commission has informed the Company that it 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 as part of the
investigation. The Commission is in the process of interviewing potential
witnesses as part of the investigation.
On December 28, 1995, University/Joseph Associates, the former landlord of
Sym-Tek Systems, Inc., filed a lawsuit against the Company in Superior Court in
San Diego, California, seeking payment by the Company of $500,000. The landlord
alleges in the lawsuit that the Company agreed to pay Sym-Tek's rent during the
period in 1994 in which the Company and Sym-Tek were negotiating a possible
merger. The merger was not concluded, and the Company has denied any liability
to the landlord and intends to vigorously defend the lawsuit.
On September 25, 1995 the Company sold all of the outstanding stock of the
Company's European subsidiary, Intertrade Scientific, Inc. (ITS) to Cardine &
Levy, a company based in France. In July 1996 Cardine & Levy initiated an
arbitration proceeding in Geneva, Switzerland under the rules of the
International Chamber of Commerce claiming damages from the Company related to
the discontinuation of a distribution relationship between ITS and one of its
significant equipment suppliers. The Company has responded to the request for
arbitration and denied any liability. The Company intends to vigorously defend
its position in the arbitration proceeding and is seeking to recover the
additional amounts due pursuant to the original sales agreement from Cardine &
Levy.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11. Computation of Earnings Per Common and Common
Equivalent Shares
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: May 2, 1997 By: /s/ Roger E. Gower
-------------------
Roger E. Gower
President and Chief Executive Officer
and
Dated: May 2, 1997 By: /s/ Jeffrey S. Mathiesen
-------------------------
Jeffrey S. Mathiesen
Chief Financial Officer
Chief Accounting Officer
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
EXHIBIT INDEX
Exhibit
Number Page
11 Computation of Earnings per Common and
Common Equivalent Shares 15
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
COMPUTATION OF EARNINGS PER COMMON SHARE AND
COMMON EQUIVALENT SHARE
(In thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
----------------- ------------------
PRIMARY MAR. 29, MAR. 30, MAR. 29, MAR. 30,
- ------- 1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Income (loss) from continuing operations $ 92 $ 109 $(1,715) $ 3,112
Income from discontinued operations -- -- -- 474
------- ------- ------- -------
Net income (loss) $ 92 $ 109 $(1,715) $ 3,586
======= ======= ======= =======
Weighted average number of common shares outstanding
during the period 7,031 6,928 7,028 6,355
Shares issuable on exercise of stock options and warrants
less shares repurchaseable from the proceeds 169 424 -- 456
Shares issuable on conversion of redeemable preferred
stock 316 316 -- 316
------- ------- ------- -------
Common and common equivalent shares - primary 7,516 7,663 7,028 7,127
======= ======= ======= =======
Income (loss) per share from continuing operations $ .01 $ .01 $ (.24) $ .44
Income per share from discontinued operations -- -- -- .06
------- ------- ------- -------
Net income (loss) per share - primary $ .01 $ .01 $ (24) $ .50
======= ======= ======= =======
FULLY DILUTED
- -------------
Income (loss) from continuing operations $ 92 $ 109 $(1,715) $ 3,112
Income from discontinued operations -- -- -- 474
------- ------- ------- -------
Net income (loss) $ 92 $ 109 $(1,715) $ 3,586
======= ======= ======= =======
Common and common equivalent shares - primary and
fully diluted 7,516 7,663 7,028 7,127
======= ======= ======= =======
Income (loss) per share from continuing operations $ .01 $ .01 $ (.24) $ .44
Income per share from discontinued operations -- -- -- .06
------- ------- ------- -------
Net income (loss) per share - fully diluted $ .01 $ .01 $ (24) $ .50
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-END> MAR-29-1997
<CASH> 7,454
<SECURITIES> 0
<RECEIVABLES> 3,324
<ALLOWANCES> 174
<INVENTORY> 3,054
<CURRENT-ASSETS> 14,121
<PP&E> 4,266
<DEPRECIATION> 3,316
<TOTAL-ASSETS> 15,210
<CURRENT-LIABILITIES> 3,029
<BONDS> 0
0
1,500
<COMMON> 70
<OTHER-SE> 10,465
<TOTAL-LIABILITY-AND-EQUITY> 15,210
<SALES> 11,309
<TOTAL-REVENUES> 11,309
<CGS> 5,065
<TOTAL-COSTS> 5,065
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (251)
<INCOME-PRETAX> (1,715)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,715)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,715)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
