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 December 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
February 07, 1998 was 7,375,642.
Page 1 of 14 pages
Exhibit index on page 13
<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 8
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 12
EXHIBIT INDEX 13
<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>
ASSETS Dec. 27, 1997 June 28, 1997
------ -------- --------
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,668 $ 5,360
Short-term investments -- 1,169
Accounts receivable, less allowance for doubtful accounts
of $132 (Dec. 1997) and $109 (June 1997) 4,905 4,028
Inventories
Raw materials 2,609 1,110
Work in process 1,445 1,420
Finished goods 2,133 1,064
Other 241 297
-------- --------
Total current assets 14,001 14,448
-------- --------
Property, plant and equipment 4,142 4,347
Less accumulated depreciation 2,950 3,103
-------- --------
Property, plant and equipment, net 1,192 1,244
Other assets 72 100
-------- --------
Total assets $ 15,265 $ 15,792
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current obligations under debt facilities and financing
obligations $ 275 $ 300
Accounts payable 1,095 1,563
Other accrued liabilities 2,052 1,577
-------- --------
Total current liabilities 3,422 3,440
Long-term debt and financing obligations 108 133
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 20,000,000 authorized, 7,375,642 and
7,047,102 issued, respectively 74 70
Redeemable convertible preferred stock, $.01 par value, 1,000,000
authorized, 315,789 issued (liquidation value $4.75 per share) -- 1,500
Additional paid-in capital 43,990 42,474
Cumulative translation adjustment (82) (82)
Accumulated deficit (32,247) (31,743)
-------- --------
Total stockholders' equity
11,735 12,219
-------- --------
Total liabilities and stockholders' equity $ 15,265 $ 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)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- -------------------
Dec. 27, Dec. 28, Dec. 27, Dec. 28,
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales $ 4,522 $ 3,972 $ 8,972 $ 6,603
Cost of sales 2,047 1,894 3,527 3,114
------- ------- ------- -------
Gross profit 2,475 2,078 5,445 3,489
------- ------- ------- -------
Operating expenses:
Selling, general and administrative 2,017 1,764 4,168 3,538
Research and development 1,057 1,080 1,980 1,924
------- ------- ------- -------
Total operating expenses 3,074 2,844 6,148 5,462
------- ------- ------- -------
Loss from operations (599) (766) (703) (1,973)
Interest income, net 22 87 72 166
Other 57 -- 127 --
------- ------- ------- -------
79 87 199 87
------- ------- ------- -------
Income (loss) before income taxes (520) (679) (504) (1,807)
Income tax provision -- -- -- --
------- ------- ------- -------
Net income (loss) $ (520) $ (679) $ (504) $(1,807)
======= ======= ======= =======
Net Income (loss) per share - basic $ (.07) $ (.10) $ (.07) $ (.26)
======= ======= ======= =======
Weighted average common shares outstanding 7,181 7,031 7,118 7,026
======= ======= ======= =======
Net Income (loss) per share - diluted $ (.07) $ (.10) $ (.07) $ (.26)
======= ======= ======= =======
Weighted average common and common
equivalent shares outstanding 7,181 7,031 7,118 7,026
======= ======= ======= =======
</TABLE>
See notes to consolidated financial statement
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
-------------------
Dec. 27, Dec. 28,
1997 1996
------- -------
Cash flows from operating activities:
Net income (loss) $ (504) $(1,807)
Adjustments to reconcile net income (loss) to
net cash used by operating activities
Depreciation and amortization 241 225
Changes in assets and liabilities:
Accounts receivable (877) 2,049
Inventories (2,593) (225)
Other assets 84 231
Accounts payable (468) 92
Other accrued liabilities 475 (18)
------- -------
Net cash provided by (used in) operating activities (3,642) 547
Cash flows from investing activities:
Maturity of short-term investments 1,169 --
Additions to property, plant and equipment (189) (39)
------- -------
Net cash provided by (used in) investing activities 980 (39)
Cash flows from financing activities:
Payments of long-term debt (50) (49)
Proceeds from issuance of stock 20 40
------- -------
Net cash provided by (used in) financing activities (30) (9)
------- -------
Net increase (decrease) in cash and cash equivalents (2,692) 499
Cash and cash equivalents at beginning of period 5,360 7,793
------- -------
Cash and cash equivalents at end of period $ 2,668 $ 8,292
======= =======
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 and six month periods ended December 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 and six months ended December 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 February 1997, Statement of Financial Accounting Standards (SFAS) No.
128, "Earnings per Share" was issued which is required to be adopted in
this quarter. The Company has changed the method it uses to compute
earnings per share and has, accordingly, restated the prior periods. The
impact of the adoption of SFAS No. 128 was not material. The number of
shares outstanding used to compute both basic earnings per share ("EPS")
and diluted EPS were identical, as a result of the net loss position for
all periods reported.
<PAGE>
4. PREFERRED STOCK
In November 1997, the Company converted 315,789 shares of Class A
preferred stock to common stock on a one-for-one basis. There were no
dividends accrued or paid on the preferred stock. The Company no longer
has shares of preferred stock outstanding. The issuance of the shares of
common stock was exempt from registration pursuant to section 3(a)(9) of
the Securities Act of 1933. No commission or other remuneration was paid
to solicit the conversion.
<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 DECEMBER 27, 1997
Net sales for the second quarter of fiscal 1998, ended December 27, 1997, were
$4.5 million, an increase of $0.5 million or 13.8% from $4.0 million for the
same period 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 second quarter of fiscal 1998 increased by $0.4 million, to
$2.5 million from $2.1 million in the prior year. Gross margin was 54.7%,
compared to 52.3% for the same period last year. The improvement in gross margin
is primarily attributed to changes in product mix. Gross margins in the current
quarter are consistent with the Company's expectations going forward, barring
product mix swings or unforeseen events.
Selling, general and administrative expense in the second quarter of fiscal 1998
was $2.0 million compared to $1.8 million in the prior year. As a percentage of
net sales, SG&A remained relatively consistent year to year.
Research and development expense for the second quarters of fiscal 1998 and
fiscal 1997 was $1.1 million. As a percentage of net sales, R&D expenses
decreased to 23.4% from 27.2% in the prior year. Although the Company expects to
continue to make significant investments in new product development, it expects
quarterly R&D expenses to decrease from current quarter levels for the remainder
of the current fiscal year, based upon the projected needs of current and
anticipated development projects.
The Company generated net interest income during the quarter of $22,000 as
compared to $87,000 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 loss for the second quarter of fiscal 1998 was $520,000, or $0.07 per share
as compared to a net loss of $679,000, or $0.10 per share for the second quarter
of fiscal 1997.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 27, 1997
Net sales for the six months ended December 27, 1997 were $9.0 million, an
increase of $2.4 million or 35.9% from sales of $6.6 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.
<PAGE>
Gross profit for the six months ended December 27, 1997 was $5.4 million, an
increase of $1.9 million or 56.1% from $3.5 million last year. Gross margin was
60.7%, compared to 52.8% for the same six month period a year ago. The
improvement in gross margin resulted from product mix differences and increased
overhead absorption, primarily in the first quarter.
Selling, general and administrative expense for the six months ended December
27, 1997, was $4.2 million compared to $3.5 million in the prior year, but
decreased as a percentage of sales from the prior year. The increase in spending
resulted from direct selling expenses associated with increased sales and from
increased investments in sales and marketing.
Research and development expense for the six months ended December 27, 1997 was
$2.0 million, compared to $1.9 million in the prior year. As a percentage of net
sales, R&D expenses decreased to 22.1% from 29.1%, respectively.
The Company generated net interest income of $72,000 during the first six months
of fiscal 1998 as compared to $166,000 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 loss for the six months ended December 27, 1997 was $504,000, or $0.07 per
share, compared to a net loss of $1.8 million, or $0.26 per share for the first
six months of fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
At December 27, 1997, the Company had cash and cash equivalents of $2.7 million,
compared to $5.4 million of cash and cash equivalents and short-term investments
of $1.2 million at June 28, 1997.
The Company used $3.6 million of cash in its operating activities during the six
months ended December 27, 1997 as compared to $0.5 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.
Current assets at December 27, 1997 were $14.0 million, a decrease of $0.4
million from $14.4 million at June 28, 1997. Increases in accounts receivable
and inventories were offset by the decrease in cash and cash equivalents. The
current ratio was 4.1 and working capital was $10.6 million at December 27,
1997, compared to 4.2 and $11.0 million, respectively, at June 28, 1997.
Capital expenditures for the first six months were $189,000, compared to $39,000
for the same period of the previous year. The Company expects fiscal 1998
capital investments to be comparable to fiscal 1997 levels.
Management believes that cash and cash equivalents at December 27, 1997 and
funds available through establishing a bank line of credit will sustain the
Company's continuing operations at their current levels, for the foreseeable
future.
<PAGE>
IMPACT OF ACCOUNTING STANDARDS
In February 1997, Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings per Share" was issued which is required to be adopted in this quarter.
The Company has changed the method it uses to compute earnings per share and
has, accordingly, restated the prior periods. The impact of the adoption of SFAS
No. 128 was not material.
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 substantial percentage of the Company's business; (5) the
possible adverse impact of competition in markets which are highly competitive;
(6) the possible adverse impact of economic or political changes in markets the
Company serves, including the uncertain economic situation currently facing
Southeast Asia; and, (7) other factors detailed from time to time in the
Company's SEC reports, including but not limited to the discussion in the
Management's Discussion & Analysis included in the Annual Report on Form 10-K
for the year ended June 28, 1997. 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 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In November 1997, the Company converted 315,789 shares of Class A preferred
stock to common stock on a one-for-one basis. There were no dividends accrued or
paid on the preferred stock. The Company no longer has shares of preferred stock
outstanding. The issuance of the shares of common stock was exempt from
registration pursuant to section 3(a)(9) of the Securities Act of 1933. No
commission or other remuneration was paid to solicit the conversion.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on November 5, 1997. The
following matter was submitted to a vote of the shareholders at the Annual
Meeting:
Election of Directors. The following persons were elected to serve as
directors, for a term of one year:
Roger E. Gower D. James Guzy Donald J. Kramer
David M. Sugishita Donald R. VanLuvanee Patrick Verderico
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11. Computation of Earnings Per Common and Common Equivalent
Shares
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter.
<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: February 10, 1998 By: /s/ Roger E. Gower
-------------------
Roger E. Gower
President and Chief Executive Officer
and
Dated: February 10, 1998 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)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- -------------------
DEC. 27, DEC. 28, DEC. 27, DEC. 28,
BASIC 1997 1996 1997 1996
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C>
Net income (loss) $ (520) $ (679) $ (504) $(1,807)
======== ======== ======== =======
Weighted average number of common shares outstanding
during the period 7,181 7,031 7,118 7,026
======== ======== ======== =======
Net income (loss) per share - basic $ (.07) $ (.10) $ (.07) $ (.26)
======== ======== ======== =======
DILUTED
-----------
Net income (loss) $ (520) $ (679) $ (504) $(1,807)
======== ======== ======== =======
Weighted average number of common shares outstanding
during the period 7,181 7,031 7,118 7,026
Shares issuable on exercise of stock options and warrants
less shares repurchaseable from the proceeds -- -- -- --
-------- -------- -------- -------
Common and common equivalent shares - diluted 7,181 7,031 7,118 7,026
======== ======== ======== =======
Net income (loss) per share - diluted $ (.07) $ (.10) $ (.07) $ (.26)
======== ======== ======== =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-27-1998
<PERIOD-END> DEC-27-1997
<CASH> 2,668
<SECURITIES> 0
<RECEIVABLES> 5,037
<ALLOWANCES> (132)
<INVENTORY> 6,187
<CURRENT-ASSETS> 14,001
<PP&E> 4,142
<DEPRECIATION> 2,950
<TOTAL-ASSETS> 15,265
<CURRENT-LIABILITIES> 3,422
<BONDS> 0
0
0
<COMMON> 74
<OTHER-SE> 11,661
<TOTAL-LIABILITY-AND-EQUITY> 15,265
<SALES> 8,972
<TOTAL-REVENUES> 8,972
<CGS> 3,527
<TOTAL-COSTS> 3,527
<OTHER-EXPENSES> 6,021
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (72)
<INCOME-PRETAX> (504)
<INCOME-TAX> 0
<INCOME-CONTINUING> (504)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (504)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
