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 26, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. 0-22384
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)
(651) 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 January
22, 1999 was 7,394,300.
Page 1 of 23 pages
Exhibit index on page 14
<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 UNAUDITED CONDENSED 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 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12
ITEM 5. OTHER INFORMATION 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 13
EXHIBITS AND REPORTS 14
2
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
December 26, June 27,
ASSETS 1998 1998
- -------------------------------------------------------------- -------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,260 $ 2,532
Accounts receivable, less allowance for doubtful accounts
of $204 and $250, respectively 2,573 3,614
Inventories:
Raw materials 853 878
Work in process 1,095 1,562
Finished goods 1,316 1,390
Other 142 152
-------- --------
Total current assets 8,239 10,128
Property, plant and equipment 3,952 4,037
Less accumulated depreciation (3,137) (2,990)
-------- --------
Property, plant and equipment, net 815 1,047
Other assets 49 51
-------- --------
Total assets $ 9,103 $ 11,226
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------------------------
Current liabilities:
Current portion of long term debt $ 50 $ 50
Accounts payable 799 1,227
Other accrued liabilities 1,191 1,466
-------- --------
Total current liabilities 2,040 2,743
Long-term debt and financing obligations 58 83
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 20,000,000 authorized,
7,394,300 and 7,394,300 issued, respectively 74 74
Additional paid-in capital 44,012 44,012
Cumulative translation adjustment (64) (64)
Accumulated deficit (37,017) (35,622)
-------- --------
Total stockholders' equity 7,005 8,400
-------- --------
Total liabilities and stockholders' equity $ 9,103 $ 11,226
======== ========
</TABLE>
See notes to unaudited condensed consolidated financial statements
3
<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. 26, Dec. 27, Dec. 26, Dec. 27,
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales $ 3,020 $ 4,522 $ 6,688 $ 8,972
Cost of sales 1,571 2,047 3,506 3,527
------- ------- ------- -------
Gross profit 1,449 2,475 3,182 5,445
Operating expenses:
Selling, general and administrative 1,431 2,017 3,152 4,168
Research and development 596 1,057 1,432 1,980
------- ------- ------- -------
Total operating expenses 2,027 3,074 4,584 6,148
------- ------- ------- -------
Loss from operations (578) (599) (1,402) (703)
Interest income, net 26 57 43 72
Other (24) 22 (36) 127
------- ------- ------- -------
Total Interest and other 2 79 7 199
------- ------- ------- -------
Net Income (loss) $ (576) $ (520) $(1,395) $ (504)
======= ======= ======= =======
Net income (loss) per share:
Basic $ (0.08) $ (0.07) $ (0.19) $ (0.07)
======= ======= ======= =======
Diluted $ (0.08) $ (0.07) $ (0.19) $ (0.07)
======= ======= ======= =======
Weighted average common and common
equivalent shares outstanding:
Basic 7,394 7,181 7,394 7,118
======= ======= ======= =======
Diluted 7,394 7,181 7,394 7,118
======= ======= ======= =======
</TABLE>
See notes to consolidated financial statement
4
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
---------------------
December 26, December 27,
1998 1997
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(1,395) $ (504)
Adjustments to reconcile net income (loss) to net cash
Used by operating activities:
Depreciation and amortization 251 241
Changes in assets and liabilities:
Accounts Receivable 1,041 (877)
Inventories 566 (2,594)
Other assets 12 84
Accounts payable (428) (468)
Other accrued liabilities (275) 476
------- -------
Net cash used in operating activities (228) (3,642)
Cash flows from investing activities:
Maturity of short-term investments -- 1,169
Additions to property, plant and equipment (19) (189)
------- -------
Net cash provided by (used in) investing activities (19) 980
Cash flows from financing activities:
Payments of long-term debt (25) (50)
Proceeds from issuance of stock -- 20
------- -------
Net cash used in financing activities (25) (30)
------- -------
Net decrease in cash and cash equivalents (272) (2,692)
Cash and cash equivalents at beginning of period 2,532 5,360
------- -------
Cash and cash equivalents at end of period $ 2,260 $ 2,668
======= =======
</TABLE>
See notes to unaudited condensed consolidated financial statements
5
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited, condensed, consolidated financial
statements for the three and six month periods ended December 26, 1998
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 27, 1998.
The results of operations for the three and six months ended December
26, 1998 are not necessarily indicative of the operating results to be
expected for the full year.
2. EARNINGS PER SHARE
Earnings per share are computed in accordance with Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share."
Basic earnings per share are computed using the weighted average number
of common shares outstanding during each period. Diluted earnings per
share include the dilutive effect of common shares potentially issuable
upon the exercise of stock options and warrants outstanding, and the
dilutive effect of the assumed conversion of outstanding Class A
preferred stock to common stock. Earnings per share data for the three
and six month periods ended December 26, 1998 and December 27, 1997
have been stated and restated, respectively, to conform to the
provisions of SFAS No. 128. The following table reconciles the
denominators used in computing basic and diluted earnings per share:
<TABLE>
<CAPTION>
Three months ended Six months ended
--------------------------------------------------
December 26, December 27, December 26 December 27
(in thousands) 1998 1997 1998 1997
--------------------------------------------------
<S> <C> <C> <C> <C>
Weighted average common
shares outstanding 7,394 7,181 7,394 7,118
Effect of dilutive stock
options and warrants (1) -- -- -- --
--------------------------------------------------
7,394 7,181 7,394 7,118
===================================================
</TABLE>
(1) The Company reported a loss for all periods presented. No
adjustment made for the effect of stock options or warrants as
effect is anti-dilutive.
6
<PAGE>
3. REPORTING OF COMPREHENSIVE NET INCOME OR (LOSS)
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS), No. 130 "Reporting Comprehensive
Income" which establishes standards for the reporting and display of
comprehensive income (loss) and its components in a full set of
general-purpose financial statements. Under this standard, certain
revenues, expenses, gains, and losses recognized during the period are
included in comprehensive income (loss), regardless of whether they are
considered to be results of operations of the period. During the three
and six month periods ended December 26, 1998 and December 27, 1997,
total comprehensive loss equaled net loss as reported on the
Consolidated Statements of Operations.
4. 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 the Commission
as part of the investigation has interviewed certain former officers
and certain current and former employees of the Company. In September
1998, the Company reached a preliminary resolution of this matter with
the staff, which is subject to approval by the Securities and Exchange
Commission. The terms of the preliminary resolution do not have a
financial impact on the Company.
5. 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.
7
<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 26, 1998
Net sales for the second quarter of fiscal 1999, ended December 26, 1998,
decreased $1.5 million or 33.2% to $3.0 million compared to $4.5 million for the
same period the previous year. The weakness in the semiconductor capital
equipment market continued during the second quarter of the current year,
adversely impacting sales. Although sales of the 5100 product, which handles the
newer and smaller devices, increased from the prior year, sales of older
products were below prior year levels. Net sales are expected to continue to be
adversely affected for the foreseeable future while the semiconductor market
remains soft.
Gross profit for the second quarter of fiscal 1999 decreased by $1.0 million to
$1.4 million, or 48.0% of sales, from $2.5 million, or 54.7% of sales, for the
second quarter of fiscal 1998. The decrease in gross margin is primarily
attributed to changes in product mix, shifting from older, higher margin
products to products with lower margins. In addition, unabsorbed overhead costs
related to lower production volumes further decreased gross margins in the
current year. Gross margins are expected to improve to approximately 50% in
future periods.
Selling, general and administrative expense in the second quarter of fiscal 1999
was $1.4 million compared to $2.0 million for the same quarter in 1998. The
decrease in expenses is the result of continued cost reduction activities by the
Company during the quarter as well as the result of lower direct sales expenses
associated with lower sales revenue.
Research and development expense for the second quarter of fiscal 1999 was $0.6
million, or 19.7% of sales, compared to $1.1 million, or 23.4% of sales in the
previous year. The decrease in spending in the current year resulted from
reduced spending requirements related to R&D projects in process during this
period. However, the Company expects to continue to make significant investments
in new product development, and expects third quarter fiscal 1999 R&D expenses
to increase from current quarter levels, based upon the projected needs of
current and anticipated development projects.
The Company generated net interest income during the quarter of $26,000 as
compared to $57,000 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 1999 was $576,000, or $0.08 per share
as compared to a net loss of $520,000, and $0.07 per share for the second
quarter of fiscal 1998.
8
<PAGE>
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 26, 1998
Net sales for the first six months of fiscal 1999 decreased $2.3 million, or
25.5% to $6.7 million compared to $9.0 million for the same period the previous
year. The weakness in the semiconductor capital equipment market during the
current year adversely impacted sales, most notably in older products.
Gross margin for the first six months of fiscal 1999 decreased to 47.6% from
60.7% for the same period the prior year. The decrease is primarily attributed
to changes in product mix, shifting from older, higher margin products to
products with lower margins. In addition, unabsorbed overhead costs related to
lower production volumes further decreased gross margins in the current year.
Selling, general and administrative expense decreased by $1.0 million, or 24.4%,
to $3.2 million in the first six months of the current fiscal year, compared to
$4.2 million for the same period in fiscal 1998. The decrease in expenses is the
result of continued cost reduction activities by the Company during the quarter
as well as the result of lower direct sales expenses associated with lower sales
revenue.
Research and development expense decreased to $1.4 million in fiscal 1999, as
compared to $2.0 million in the previous year. The decrease in spending in the
current year resulted from reduced spending requirements related to R&D projects
in process during this period.
The Company generated net interest income during the current year of $43,000 as
compared to $72,000 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 first six months of fiscal 1999 was $1.4 million, or $0.19 per
share as compared to a net loss of $0.5 million, and $0.07 per share for the
same period of fiscal 1998.
LIQUIDITY AND CAPITAL RESOURCES
As of December 26, 1998, the Company had cash and cash equivalents of $2.3
million compared to $2.5 million at June 27, 1998. Cash used in operations was
$0.2 million during the current year, versus $3.6 million used in the previous
year. Cash provided by reduced receivables and inventory partially offset the
net loss in the current year. During fiscal 1998, increases in inventory and
receivables to support new product launches combined with the net loss as the
primary uses of cash.
Current assets at December 26, 1998 were $8.2 million, the current ratio was 4.0
and working capital was $6.2 million, versus $10.1 million, 3.7 and $7.4
million, respectively, at June 27, 1998.
The Company maintains a $5 million secured line of credit with a bank, which was
unused at December 26, 1998. Management believes that cash and cash equivalents
at December 26, 1998 and funds available through its bank line of credit will
sustain the Company's continuing operations at their current levels, for the
foreseeable future.
9
<PAGE>
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field. When year 2000 begins,
these computers may interpret "00" as the year 1900 and could either stop
processing date related computations or could process them incorrectly.
Beginning in the year 2000, these date code fields will need to accept
four-digit entries to distinguish 21st century dates from 20th century dates to
be year compliant.
The Company has completed an initial assessment of its internal information
systems and has determined that most of the application software and internal
information systems, other than the Company's primary manufacturing and
accounting system: (1) are year 2000 compliant; (2) can be upgraded to be year
2000 compliant without significant cost or effort; or (3) do not pose a
significant issue to the Company if left uncorrected. With regard to the
Company's primary manufacturing and accounting system, the Company has
contracted with the software vendor and related hardware supplier to bring these
systems year 2000 compliant. The upgrade process was completed in the 2nd
quarter of fiscal 1999. Total costs to upgrade the Company's internal
information systems, most of which have been paid, are not material to the
operations of the Company, and are expected to be less than $100,000.
The Company has completed an assessment of non-IT systems within the Company to
determine if they are year 2000 compliant. Non-year 2000 compliant systems have
been identified and are scheduled to be upgraded or replaced by the end of
fiscal 1999. Although the Company is not aware of any material operational
issues or costs associated with preparing its internal systems for the year
2000, there can be no assurance that the Company will not experience serious
unanticipated negative consequences and/or material costs caused by undetected
errors or defects in the technology used in its internal operating systems,
which are composed predominately of third party software and hardware
technology.
The Company is in the process of determining the impact that third-party
suppliers and vendors that are not year 2000 compliant may have on the
operations of the Company. Non-compliance by any of the Company's major
distributors, suppliers, customers, vendors, or financial organizations could
result in business disruptions that could have a material adverse affect on the
Company's results of operations, liquidity and financial condition. The Company
plans on developing a contingency plan once it has completed its assessment of
significant party compliance. The contingency plan will be developed to minimize
the Company's exposure to work slowdowns or business disruptions and any adverse
affects on the Company's results of operations. The contingency plan should be
completed by the end of fiscal 1999.
The Company is currently in the process of assessing and testing the software
components of its products for year 2000 compliance. The Company does not
believe that its products contain undetected errors or defects associated with
year 2000 date functions that may result in material costs to the Company,
including repair costs and costs incurred in litigation due to any such defects;
however, there can be no assurance that such errors or defects do not exist.
Many commentators have stated that a significant amount of litigation will arise
out of year 2000 compliance issues. Because of the unprecedented nature of such
litigation, there can be no assurance that the Company will not be materially
adversely affected by claims related to year 2000 compliance.
10
<PAGE>
IMPACT OF ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of
an Enterprise and Related Information" which is required to be adopted for the
fiscal year beginning June 28, 1998. At that time, the Company will be required
to disclose certain financial and descriptive information about its operating
segments as redefined by SFAS No. 131. The Company is in the process of
assessing the impact of SFAS No. 131 on its footnote disclosures.
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" was issued. SFAS 133 establishes a new model for accounting for
derivatives and hedging activities and supercedes and amends a number of
existing accounting standards. SFAS 133 requires that all derivatives be
recognized in the balance sheet at their fair market value, and the
corresponding derivative gains or losses be either reported in the statement of
operations or as a deferred item depending on the type of hedge relationship
that exists with respect to such derivative. Adopting the provisions of SFAS 133
are not expected to have a material effect on the Company's financial
statements. The standard is effective for the Company in fiscal 2000.
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, as currently being experienced, 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, MCT 5200, MCT 7632 and Tapestry
handling systems, in which the Company has invested significant amounts 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, including
increased pressure on pricing and payment terms which may adversely affect net
sales and gross margins and increase the Company's exposure to credit risk; (6)
the possible adverse impact of economic or political changes in markets the
Company serves, including the uncertain economic situation currently facing
Southeast Asia; (7) the possible adverse impact on the Company's operations or
material costs which may be incurred by the Company due to undetected errors or
defects in preparing its internal operating systems for the year 2000; (8) the
possible adverse impact on the Company's operations or material costs which may
be incurred by the Company arising from year 2000 related repair costs or
litigation due to undetected errors or defects in its products which use
software; and, (9) 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 27, 1998. 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.
11
<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. In September 1998, the Company reached a preliminary resolution
of this matter with the staff, which is subject to approval by the Securities
and Exchange Commission. The terms of the preliminary resolution do not have a
financial impact on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on November 4, 1998. 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 5. OTHER INFORMATION
On November 9, 1998 the Company's Board of Directors approved a stock repurchase
program for the purchase of up to 500,000 shares of the Company's common stock.
The repurchase program is effective for a period of 90 days, unless earlier
terminated by the Board of Directors. The Company elected not to repurchase any
shares under this program, and the program expired on February 7, 1999.
In September and October 1998, the Company was notified by The Nasdaq Stock
Market that its Common stock did not comply with Nasdaq's $1.00 minimum bid
price and $5 million market float requirements, respectively. The Company was
provided 90 days from the date of each notification to demonstrate compliance
with these requirements. On November 17, 1998 The Nasdaq Stock Market notified
the Company that it had determined that the Company had resumed compliance with
both requirements and, accordingly, closed the matter.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.Q Incentive Stock Option Plan as amended through November 4, 1998.
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter.
12
<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
By: /s/ Roger E. Gower
Dated: February 8, 1999 -------------------------------------
Roger E. Gower
President and Chief Executive Officer
And
Dated: February 8, 1999 By: /s/ Jeffrey S. Mathiesen
-------------------------------------
Jeffrey S. Mathiesen
Chief Financial Officer
Chief Accounting Officer
13
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
EXHIBIT INDEX
Exhibit
Number Page
10Q Incentive Stock Option Plan as amended through November 4, 1998. 15
27 Financial Data Schedule 23
14
<PAGE>
MICRO COMPONENT TECHNOLOGY, INC.
INCENTIVE STOCK OPTION PLAN
(as amended through November 4, 1998)
ARTICLE I.
PURPOSE
The purpose of this Plan is to provide a means whereby Micro Component
Technology, Inc. (the "Company") may be able, by granting options to purchase
stock in the Company, to attract and retain persons of ability as key employees
of the Company or of any parent or subsidiary corporation of the Company (the
"Related Corporations"), and to motivate such employees through an increased
personal interest in the Company and the Related Corporations to exert their
best efforts on behalf of the Company and the Related Corporation, and thus to
advance the interest of such corporations and benefit their stockholders. Both
options which qualify for favorable tax treatment under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and options which do not
so qualify, may be granted under the Plan.
ARTICLE II.
RESERVATION OF SHARES
A total of 1,250,000 shares of the authorized but unissued Common Stock
of the Company is reserved for issue upon the exercise of options granted under
this Plan. If any option expires or terminates for any reason without having
been exercised in full, the unpurchased shares covered thereby shall become
available for additional options which may be issued to persons eligible under
the Plan so long as it remains in effect. Shares reserved for issue as provided
herein shall cease to be reserved upon termination of the Plan.
15
<PAGE>
ARTICLE III.
ADMINISTRATION
(a) The Plan shall be administered by the Compensation Committee of the
Board of Directors of the Company (the "Committee") which shall be appointed by
the directors and which shall consist of two or more disinterested directors. A
disinterested director is one who is ineligible to receive options under the
Plan, and who has been ineligible to receive options under the Plan during the
preceding 12 months. Vacancies in the Committee shall be filled by the Board.
(b) The Committee shall have full power to construe and interpret the
plan and to establish and amend rules and regulations for its administration,
subject to the express provisions of the Plan.
(c) The Committee shall determine which employees of the Company or of
any Related Corporations shall be granted options hereunder, the number of
shares for which each option shall be granted, and any limitations on the
exercise of the option in addition to those imposed by this Plan. In determining
the employees to whom options shall be granted and the number of shares to be
covered by each option, the Committee shall apply such criteria as it determines
appropriate from time to time. The maximum number of shares for which any
employee may be granted options under the Plan in any calendar year shall be
limited to 300,000 shares.
16
<PAGE>
ARTICLE IV.
ELIGIBILITY
An option may be granted to any officer or other key employee provided
that any person to whom an option is granted shall be an employee of the Company
or of a Related Corporation at the time an option is granted to him or her.
ARTICLE V.
PRICE
The option price per share of stock, to be determined from time to time
by the Committee, shall not be less than the fair market value of the stock on
the date an option to purchase the same is granted. The fair market value of the
stock as of any date in any month shall be the closing market price for the
stock on the 15th day of such month, or on the trading day closest to the 15th
if the stock does not trade on the 15th. If there is no closing market price for
the stock, the Committee shall use such other information deemed appropriate by
the Committee. No options shall be granted to any employee who at the time
directly or indirectly owns more than ten percent of the combined voting power
of all classes of stock of the Company or of a Related Corporation, unless the
exercise price is not less than 110 percent of the fair market value of such
stock on the date of grant, and unless the option is not exercisable more than
five years after the date of grant.
ARTICLE VI.
CHANGES IN PRESENT STOCK
In the event of a recapitalization, merger, consolidation,
reorganization, stock dividend, stock split or other change in capitalization
affecting the Company's present capital stock, appropriate adjustment may be
made by the Committee in the number and kind of shares and the
17
<PAGE>
option price of shares which are or may become subject to options granted or to
be granted hereunder.
ARTICLE VII.
EXERCISE OF OPTIONS
An optionee shall exercise an option by delivery of a signed, written
notice to the Company, specifying the number of shares to be purchased, together
with payment of the full purchase price for the shares. The Company may accept
payment from a broker on behalf of the optionee and may, upon receipt of signed,
written instructions from the optionee, deliver the shares directly to the
broker. The date of receipt by the Company of the final item required under this
paragraph shall be the date of exercise of the option.
ARTICLE VIII.
OPTION PROVISIONS
Each option granted under the Plan shall be evidenced by a Stock Option
Agreement executed by the Company and the optionee, and shall be subject to the
following terms and conditions, and such other terms and conditions as may be
prescribed by the Committee:
(a) Dollar Limitation. Each option grant shall constitute an
incentive stock option eligible for favorable tax treatment under Section 422 of
the Code, provided that no more than $100,000 of such options (based upon the
fair market value of the underlying shares as of the date of grant) can first
become exercisable for any employee in any calendar year. To the extent any
option grant exceeds the $100,000 dollar limitation, it shall constitute a
nonqualified stock option. Each stock option agreement shall specify the extent
to which it is an incentive and/or a
18
<PAGE>
nonqualified stock option. For purposes of applying the $100,000 limitation,
options granted under this Plan and under all other plans of the Company and the
Related Corporations which are qualified under Section 422 of the Code shall be
included.
(b) Payment. The full purchase price of the shares acquired
upon exercise of any option shall be paid in cash, by certified or cashier's
check, or in the form of shares of the Company's Common Stock with a fair market
value equal to the full purchase price and free and clear of all liens and
encumbrances.
(c) Exercise Period. The period within which an option must be
exercised shall be five years from the date of grant thereof. An option may not
be exercised during the first year after the date of grant. The option shall
become exercisable to the extent of 50 percent of the shares on the first
anniversary of the date of grant and 100 percent of the shares on the second
anniversary of the date of grant. To the extent exercisable, an option may be
exercised in whole or in part. The Committee may impose different or additional
conditions with respect to length of service which must be satisfied prior to
exercise of all or any part of an option. For options granted on or after
November 4, 1998, the Committee, in its discretion, may accelerate the vesting
of any of such options while they remain outstanding.
Outstanding options shall become immediately exercisable in
full in the event that the Company is acquired by merger, purchase of all or
substantially all of the Company's assets, or purchase of a majority of the
outstanding stock by a single party or a group acting in concert.
(d) Rights of Optionee Before Exercise. The holder of an
option shall not have the rights of a stockholder with respect to the shares
covered by his or her option until such shares have been issued to him or her
upon exercise of an option.
19
<PAGE>
(e) No Right to Continued Employment. Nothing herein shall be
construed to confer upon any optionee any right to continue in the employ of the
Company or of any Related Corporation or to interfere in any way with the right
of the Company or of any Related Corporation as employer to terminate his or her
employment at any time, nor to derogate from the terms of any written employment
agreement between such corporation and the optionee.
(f) Termination of Employment. If the optionee's employment is
terminated other than by death or for conduct which is contrary to the best
interests of the Company, the optionee may, within one month of such
termination, or within 90 days of such termination for options granted on or
after June 8, 1994, exercise any unexercised portion of his or her option to the
extent he or she was entitled to do so at the time of such termination.
If termination of employment is effected by death of the optionee, the
option, or any portion thereof, may be exercised to the extent the optionee was
entitled to do so at the time of his or her death, by his or her executor or
administrator or other person entitled by law to the optionee's rights under the
option, at any time within six months subsequent to the date of death.
If an optionee's employment is terminated by the Company for conduct
which is contrary to the best interests of the Company, as determined by the
Company in its sole discretion, the unexercised portion of the optionee's option
shall expire automatically on the date of termination of his or her employment.
Notwithstanding the foregoing, no option shall be exercisable
subsequent to the date of expiration of the option term and no option shall be
exercisable subsequent to the termination of the optionee's employment except as
specifically provided in this paragraph (f).
(g) Special Rule for California. Notwithstanding paragraph
(f), if a California optionee's employment is terminated, the optionee may,
within six months of such termination for
20
<PAGE>
death or disability, or within 90 days for any other termination, exercise any
unexercised portion of his or her option to the extent he or she was entitled to
do so at the time of such termination. This provision shall apply only to
options granted when the Common Stock is not exempt from registration in
California pursuant to a NASDAQ/NMS exemption or otherwise.
(h) Non-transferability of Option. No option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution, and each option shall be exercisable during the optionee's
lifetime only by optionee.
(i) Date of Grant. The date on which the Committee approves
the granting of an option shall be considered the date on which such option is
granted.
ARTICLE IX.
RESTRICTIONS ON TRANSFER
During any period in which the offering of the shares under the Plan is
not registered under federal and state securities laws, the optionees shall
agree in the Stock Option Agreement that they are acquiring shares under the
Plan for investment purposes, and not for resale, and that the shares cannot be
resold or otherwise transferred except pursuant to registration or unless, in
the opinion of counsel for the Company, registration is not required.
Any restriction upon shares acquired upon exercise of an option
pursuant to the Plan and the Stock Option Agreement shall be binding upon the
optionee and his or her heirs, executors, and administrators. Any stock
certificate issued under the Plan which is subject to restrictions shall be
endorsed so as to refer to the restrictions on transfer imposed by the Plan and
by applicable securities laws.
21
<PAGE>
ARTICLE X.
EFFECTIVE DATE OF PLAN
The effective date of the Plan shall be April 28, 1993, the date of its
original adoption by the Board of Directors of the Company.
ARTICLE XI.
TERMINATION OF THE PLAN
The Plan shall terminate April 27, 2003, which is ten years after the
date of its approval by the Board of Directors, unless sooner terminated by
issuance of all shares reserved for issuance hereunder. No option shall be
granted under the Plan after such termination date.
ARTICLE XII.
AMENDMENT OF THE PLAN
The Board of Directors of the Company may at any time terminate the
Plan, or make such modifications of the Plan as it shall deem advisable. No
termination or amendment of the Plan may, without the consent of the optionees
to whom any options shall theretofore have been granted, adversely affect the
rights of such optionees under such options.
22
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