MICRO COMPONENT TECHNOLOGY INC, 10-K/A, 1999-12-29

MICRO COMPONENT TECHNOLOGY INC
10-K/A, 1999-12-29
INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K/A
AMENDMENT NO. 2
---------------

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR FISCAL YEAR ENDED JUNE 26, 1999
-----------------------------------
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 NUMBER 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, MINNESOTA 55113
(Address of principal executive offices)
Registrant's telephone number, including area code (651) 697-4000

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
----------------------------
(Title of Class)

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, and (2) has been subject to such filing
requirements for the past 90 days. Yes __X__ No_____

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]

The aggregate market value of the common stock held by non-affiliates
of the Registrant on September 2, 1999 (based upon the closing price of those
shares on the NASDAQ National Market System) was approximately $20.4 million.

Number of shares outstanding of the Registrant's Common stock, as of
September 2, 1999, is 7,476,922.

<PAGE>

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Definitive Proxy Statement for the annual
meeting of stockholders (the "Proxy Statement"), and to be filed within 120 days
after the Registrant's fiscal year ended June 26, 1999, are incorporated by
reference into Part III.

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MICRO COMPONENT TECHNOLOGY, INC.

TABLE OF CONTENTS
PAGE
----
PART I

ITEM 1. Business......................................................... 4

ITEM 2. Properties....................................................... 11

ITEM 3. Legal Proceedings................................................ 11

ITEM 4. Submission of Matters to a Vote of Security Holders.............. 11

PART II

ITEM 5. Market for Registrant's Common Stock and Related Stockholder
Matters...................................................... 11

ITEM 6. Selected Financial Data.......................................... 13

ITEM 7. Management's Discussion and Analysis of Results of Operations
and Financial Condition...................................... 15

ITEM 8. Financial Statements and Supplementary Data...................... 20

ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure......................................... 20

PART III

ITEM 10. Directors and Executive Officers of the Registrant.............. 20

ITEM 11. Executive Compensation.......................................... 20

ITEM 12. Security Ownership of Certain Beneficial Owners and
Management................................................... 21

ITEM 13. Certain Relationships and Related Transactions.................. 21

PART IV

ITEM 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K..................................................... 21

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS.................................. F-1

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<PAGE>

PART I

This Form 10-K contains certain forward-looking statements. For this
purpose, any statements contained in this Form 10-K that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, words such as "may," "will," "expect," "believe," "anticipate,"
"estimate" or "continue" or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties, and actual results may differ materially depending on a
variety of factors, including those set forth in the section below entitled
"Risk Factors."

THE COMPANY

ITEM 1. BUSINESS

GENERAL

Unless the context otherwise requires, references in this Annual Report
on Form 10-K to "MCT", "Registrant" and the "Company" refer to Micro Component
Technology, Inc. and its consolidated subsidiaries. MCT was incorporated in
Minnesota on June 20, 1972, was reorganized as a Delaware corporation on June
28, 1983 and reorganized as a Minnesota corporation on November 6, 1996. MCT has
one wholly owned active subsidiary, Micro Component Technology Asia Pte. Ltd.
("MCT Asia"). The Company's principal executive offices are located at 2340 West
County Road C, St. Paul, Minnesota 55113 and its telephone number at that
location is (651) 697-4000.

The Company designs, manufactures, markets, services and distributes
automatic test equipment ("ATE") consisting of both handling and testing
equipment for integrated circuit ("IC") devices manufactured by the
semiconductor industry. Today, IC devices are found in a rapidly increasing
number of items as varied as clock radios, telecommunication products (i.e.,
phones and pagers), automotive electronics and computers.

BACKGROUND

On October 18, 1993 the Company completed an initial public offering of
2,200,000 shares of its Common stock resulting in net proceeds to the Company of
$21.7 million. Simultaneous with the closing, all series of Redeemable Preferred
Stock, Class B Non-voting Common stock, and the outstanding Subordinated
Debentures were exchanged or converted into shares of Common stock.

On November 22, 1994, the Company completed the sale of its 1149 tester
product line to Megatest Corporation. Concurrent with this sale, Megatest
purchased 315,789 shares of the Company's Non-Voting Series A Preferred Stock.
On November 24, 1997, the Company converted 315,789 shares of Class A preferred
stock to common stock on a one-for-one basis.

On September 25, 1995, the Company completed the sale of its European
subsidiary, Intertrade Scientific, Inc. ("ITS"). The Company continues to
distribute its products in Europe through another distributor.

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and is expected to close in December 1999. The agreement has been approved by
the Board of Directors of both companies and is subject to approval by the
shareholders of each company and regulatory agencies.

The Company's fiscal year ends on the last Saturday of June.

PRODUCTS

HANDLING EQUIPMENT
Handlers are electro-mechanical systems that are connected to a tester
in order to automate the IC testing process. The handlers thermally condition
the IC devices, provide electrical contact between the IC and the tester, and
then sort the IC's based upon the results of the testing. Handlers should
present IC devices to the tester efficiently to ensure maximum utilization of
the tester and should handle the IC devices without causing damage that would
render them unusable. Handlers are often operated 24 hours a day, seven days a
week. As handlers are comprised of many moving parts, high reliability and ease
of maintenance are essential. Although the most effective handler designs reduce
the amount of complex mechanisms, the industry is characterized by a wide
variety of handling techniques, many of which are extremely complex.

Handler architecture also needs to offer flexibility. While many
manufacturers currently dedicate handlers to a single IC device package over a
long production run, manufacturers want to be able to modify the handlers to
process different types of IC devices to preserve the value of their investment
in handling equipment.

Furthermore, handler designers must consider the contact set, which is
the critical mechanical and electrical interface between the tester and the IC
device under test. While not all handler manufacturers offer contact sets,
higher test performance can be anticipated from those handlers in which contact
sets are fully integrated into the handler design. Additionally, those
manufacturers not providing contact sets require that the customers bear the
burden of integrating testers, contact sets, and handlers.

TAPESTRY CHIP SCALE AND WAFER LEVEL HANDLER
The new MCT Tapestry Handling System Model PH-I is a versatile, high
throughput, and highly parallel test handling and thermal conditioning system,
for devices that are in panel or strip format. The system is capable of handling
fine pitch Chip Scale Packages (CSPs), (mu)BGA, Chip Array, Ball Grid Array
(BGA), and other over-molded devices on laminated panels or strips. The system
is also capable of handling leaded devices in strip format including TSOP,
TSSOP, SOIC, MSOP, SOTs and other packages in lead-frames. Using standard
industry interfaces, the system is designed to function as a stand-alone system,
or can be integrated into an in-line process with other equipment such as
lead/ball inspect, mark, mark inspect, singulation, and tape and reel. The
Company began delivering Tapestry Handling Systems to customers in the third
quarter of fiscal 1999.

The MCT Tapestry Handling System consists of a Multi-Cassette Input
Module, a Tri-Temp (-40(degree)C to +125(degree)C) Test Module, and a
Multi-Cassette Output Module. The system is controlled by a Pentium(R) PC system
running Windows(R) NT and C++. The system has been designed to meet safety and
ergonomic specifications for handling equipment including Semi S2-93A, S8-95,
and CE Mark, and is year 2000 compliant. The system has several available
options for factory automation and communication including GEM/SECS II
capability.

A wafer-handling version of the Tapestry Handling System, Model WH-I,
is available and targeted at handling Wafer Level Packages. New wafer level
packaging technology is emerging and may be the ultimate solution for package
miniaturization. The system is capable of handling larger profile package
formats including complete wafers and glass substrates. Like the Tapestry PH-I
system, the system is cassette based and can function as a stand-alone system or
be integrated with other in-process systems.

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MCT 5100 FINE PITCH SURFACE MOUNT DEVICE HANDLER
The MCT 5100 Handler is a high-speed handler for handling small outline
integrated circuits ("SOIC"). The new fine pitch SOIC packages are very light
and are difficult to handle in traditional gravity feed handlers. These devices
range from 0.110 inches wide to 0.300 inches wide and have lead pitch down to
0.012 inches. The MCT 5100 Handler uses a combination of gravity feed and pick
and place technology to reliably move parts through the handler. The MCT 5100
Handler is capable of testing one or two devices in parallel with throughput of
14,400 units per hour with an index time of only .500 seconds. This makes the
MCT 5100 Handler one of the fastest handlers available in the market today. The
system is controlled by a high speed computer that monitors all functions of the
handler and is capable of producing reports to operators and management
describing test efficiency, handler uptime, test yield, operator identification,
lot statistics and other customer defined data. The handler can be configured
with several different kits for varying customer requirements. The Company began
shipping this product in volume in the last half of fiscal 1997 and this product
continued to represent a significant portion of equipment sales in fiscal 1999.

MCT 5200 TRI-TEMPERATURE HANDLER
Extending the product family for fine pitch surface mount device
handling, MCT recently introduced its 5200 Tri-temperature handler. The MCT 5200
Handler provides all the high speed features and automation options of the MCT
5100 Handler and provides the ability to operate over the full temperature range
of -55(Degree)C to +125(Degree)C without the additional cost of liquid nitrogen
(LN2). The unique temperature control of the MCT 5200 Handler utilizes
conduction principles in place of the conventional convection temperature
systems. The innovative change in temperature technology provides significant
cost savings in the operation of tri-temperature device handling systems.

MCT 7632 FINE PITCH PICK AND PLACE HANDLER
The MCT 7632 Handler is a handler for high volume manufacturing of
memory and other semiconductor devices. The MCT 7632 Handler can accommodate a
large variety of package types including the traditional QFP, TQFP, PLCC, LCC
and PGA packages and the more difficult to handle SOIC, TSOP, TSSOP, and (mu)BGA
packages. The handler uses pick and place technology to pick up devices from
carriers, move them to the test site, and then move them to the appropriate bin
after test. The MCT 7632 Handler can test from 1 to 32 devices in parallel at
temperatures ranging from -60(Degree)C to +160(Degree)C. The handler has a
unique capability of being able to load and unload devices from carriers while
testing without interrupting system operation. This capability provides for very
high throughput and ease of use in a production environment. The MCT 7632
Handler is controlled by a high speed computer that monitors all functions of
the handler and is capable of producing reports to operators and management
describing test efficiency, handler uptime, test yield, operator identification,
lot statistics and other customer defined data.

MCT 4610 SURFACE MOUNT DEVICE HANDLERS
The MCT 4610 Handlers are designed for test handling of surface mount
devices that are transported in tubes. These handlers rely on gravity to move
untested IC devices from the top of the handler, where the temperature of the IC
device is modified, to the test site and out to the output bins. The MCT 4610
Handlers are convertible for use with new types of IC devices through the
purchase of package conversion kits which are available for approximately 20% of
the cost of a new handler. There are currently over 50 different package
conversion kits available. Although it can process certain surface mount IC
devices, the MCT 4610 Handler is not designed to accommodate surface mount IC
devices with package widths of 150/1000 inch or narrower, although such packages
constitute a significant portion of the surface mount IC device market.

High throughput is achieved on the MCT 4610 Handlers through short
intervals between tests, a lower device jam rate and, in the case of the 4610
DUAL Handler, the utilization of two test sites. Dual test sites allow devices
to be tested in parallel or in alternation, which maximizes tester usage, by
testing one IC device while another IC device is being moved to the test site.

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The comprehensive lead protection system in MCT 4610 Handlers minimizes
device-to-device impact without limiting the throughput of the handler. The
output tracks may be equipped with optional output adapters specific to the
customer's tubes being used to transport devices. This prevents the leads from
being damaged by incorrect tube placement.

OTHER HANDLER PRODUCTS
The Company also sells the MCT 3600 Handler and MCT 8000 Handler. These
handlers are dedicated to transporting a variety of dual in-line pin package
("DIP") devices.

TESTING EQUIPMENT
Testers are specialized, computer-controlled electronic systems that
are programmed by a user to perform electrical evaluation of IC devices
including proper functionality, voltage and current characteristics, and
critical timing parameters. During the design and engineering phase of the
development of an IC device, testers serve as precision engineering tools for
design verification, characterization (the process of determining the range and
nature of a device's operating variables) and failure analysis. During
manufacturing, IC devices are tested several times to segregate functional from
nonfunctional devices ("functional test") and to measure the variable parametric
or performance characteristics of the devices ("performance test").

During fiscal 1995, the Company sold its 1149 product line to Megatest
Corporation, allowing the Company to focus upon recapturing the market leader
position among U.S. based test handler companies. The Company did retain its
mature tester product line, the MCT 2000 series. The Company performs board
repair and maintenance contracts, refurbishes units and provides spare parts and
additional pincards as a means of supporting the large installed base of
equipment.

In addition to the ongoing support, the Company offers an upgraded
workstation for controlling these test systems. The MCT Workstation 2000 is a
Pentium PC based workstation that provides much greater throughput by reducing
test times up to 60% on certain device types. The Workstation 2000 can be
installed in the field on existing test systems, significantly increasing test
capacity of the installed test systems. Sales of the Workstation 2000 began in
fiscal year 1996.

See Management's Discussion and Analysis of Results of Operations and
Financial Condition for a discussion of certain risk factors related to the sale
of these new products.

MARKETING AND SALES

The Company's marketing and sales efforts are organized around three
regional divisions: North America, Asia, and Europe. The Company markets its
products primarily to IC device manufacturers through its own sales force and,
in selected geographical areas, through independent sales representatives and
distributors.

The Company augments its sales efforts with direct customer
support/service engineers based in the field. These engineers are specialists in
the Company's product portfolio and work with the customers to help determine
product requirements, install the Company's equipment, and train the customers'
operators and maintenance technicians on the proper use and care of the
Company's equipment. These engineers also help identify emerging markets for new
products and are supported by the Company's design center at St. Paul,
Minnesota.

MCT ASIA
As semiconductor manufacturers move responsibility for ATE purchasing
to the factory level, the Company's operations in the Pacific Rim region have
become increasingly important. With a presence established more than 20 years
ago, the Company operates MCT Asia Pte., Ltd., and its wholly owned subsidiary,
MCT Asia (Penang) Sdn. Bhd., with offices in Singapore and Penang, Malaysia
respectively. MCT Asia, the regional headquarters, also controls 85% of a
company, MCT Beijing, in a partnership with the Institute for Integrated

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Circuit Testing in Beijing, PROC. To supplement the region's sales and service
coverage, MCT Asia uses sales representative companies and distributors in the
Philippines, Korea, Taiwan and China.

The Company has stationed service engineer personnel in Singapore,
Malaysia, Thailand and the Philippines for rapid response to any customer
problem in the Far East. Additionally, a complete board-repair facility in
Penang, Malaysia provides the Company's Asian customers with local board service
and repair capabilities.

WORLDWIDE SUPPORT

Through its foreign subsidiary and sales representative companies and
distributors, the Company maintains customer support centers in 18 offices
worldwide, located in the U.S., the Far East, and Europe. The Company believes
that its direct sales, service and applications personnel add significant value
to its products, thereby enhancing their marketability and fostering long-term
customer loyalty. The sales staff encourages "partnering" relationships in which
the Company's sales and engineering personnel are assigned to work closely with
the Company's major customers to determine the most cost-effective solutions for
their ATE needs. As a result, the customer gains detailed insight into the
benefits of the Company's product offerings and the Company has an opportunity
to demonstrate its products as optimized for that customer.

The Company offers initial applications development and comprehensive
installation support at no additional charge, thereby eliminating a portion of
the customer's overhead associated with installing a piece of capital equipment.
Additionally, when the Company's engineers install equipment, they are able to
verify that the overall performance of the customer's system is optimized by (1)
mechanically adjusting all handler mechanisms to the positions enabling the
smoothest operation, and by (2) properly calibrating the handler temperature
systems to ensure accurate temperature control. The Company's engineers then run
a test of the customer's IC devices and analyze the results to verify that the
handler meets all performance specifications. The Company typically provides a
one-year warranty against defects for its handlers and related system
components.

As with pre-sale support, continuing maintenance and service enhance
customer satisfaction by ensuring maximum uptime, yield and tester utilization.
These support services also generate additional revenues for the Company.

SEASONALITY IN QUARTERLY OPERATING RESULTS

During each quarter, the Company customarily sells a relatively small
number of systems that carry a high average selling price. The majority of
shipments in a quarter are typically booked during the same quarter. Although
the Company believes its sales are not seasonal in nature, a small change in the
number of products ordered and/or shipped in a quarter can have a significant
impact on results of operations for that particular quarter. Moreover,
production difficulties could delay shipments. Accordingly, the Company's
operating results may vary significantly from quarter to quarter and could be
adversely affected for a particular quarter if shipments for that quarter were
lower than anticipated. The Company's quarterly operating results may also be
affected by, among other factors, the timing of new product introductions,
fluctuations in the semiconductor market and the actions of competitors.

CUSTOMERS

The Company expends substantial efforts to maintain its relationships
with its existing major customers through frequent visits to customers and
service support in order to increase the likelihood that these manufacturers
will continue to select the Company's testers and/or handlers for their future
generations of IC devices. However, it is difficult to obtain significant new
ATE customers since manufacturers tend to standardize their production

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processes through consistency in production equipment used, and are
reluctant to change equipment suppliers once they have made their initial
equipment selection.

During fiscal 1999, one customer, Amkor Technology, Inc. accounted for
27% of the Company's sales. In fiscal 1998 no single customer accounted for 10%
of the Company's sales and in fiscal 1997 ST Microelectronics, Inc. accounted
for approximately 17% of the Company's sales. The Company expects that Amkor
will continue to be a significant customer in fiscal 2000.

The loss of a major customer or any reduction in orders by such a
customer, including reductions due to market or competitive conditions in the
semiconductor industry, would have an adverse effect on the Company's results of
operations. In addition, the Company's ability to increase its net sales will
depend in part upon its ability to obtain orders from new customers. No
assurance can be given that the Company will be able to do so.

BACKLOG

At June 26, 1999, the Company's backlog of unfilled orders was $3.9
million, compared with $3.6 million as of June 27, 1998. A significant portion
of the backlog at June 26, 1999 is expected to be shipped in the first half of
fiscal year 2000. Since a large majority of the shipments made in a given
quarter are usually made during the latter part of the quarter, and since a
significant portion of shipments in a given quarter are booked during that same
quarter, backlog as of a date in the middle of the quarter will typically be
greater than backlog at quarter end. The Company includes in backlog only those
orders to which a purchase order number has been assigned by the customer and
for which a delivery schedule has been specified. All orders are subject to
cancellation by the customer with limited charges. The Company's backlog at a
particular date is not necessarily indicative of actual sales for any succeeding
period.

RESEARCH AND DEVELOPMENT

As an important element of its business strategy, the Company works
closely with its customers to develop new products and enhancements of existing
products to meet the evolving needs of the ATE market, particularly with respect
to emerging IC devices, while providing the lowest cost of test. The Company
relies primarily on its internal engineering capabilities to develop new
products and existing product enhancements. The Company may participate in
joint-development arrangements when it believes a higher quality, lower cost
product would result. An ongoing goal of the Company's research and development
activities is to reduce the time required to develop new products and bring them
to market. As handlers become increasingly complex, the development of improved
software for the Company's products becomes increasingly important. The Company
currently develops all software in-house and plans to expand its expertise in
this area subject to the availability of financial and personnel resources.

For fiscal years 1999, 1998 and 1997, the Company's expenses relating
to research and development were $2.8 million, $3.7 million, $3.9 million,
respectively.

PATENTS

The Company attempts to protect the proprietary aspects of its products
with patents and copyrights, and through trade secret laws and internal
nondisclosure safeguards. The source code for all software contained in the
Company's products is protected as a trade secret and as unpublished copyrighted
work. In addition, the Company has entered into nondisclosure and invention
assignment agreements with each of its key employees. Despite these
restrictions, it may be possible for competitors or customers to copy aspects of
the Company's products or to obtain information which the Company regards as a
trade secret. Moreover, because of the rapid pace of technological changes in
the ATE industry, the Company believes that patent, trade secret and copyright
protections are less significant to its competitive position than factors such
as the technical competence and creative skills of the

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Company's personnel, the rapid development of new products, frequent product
enhancements, the Company's name recognition and ongoing reliable product
maintenance and support.

The Company has a number of patents, none of which it considers
material to its business. The Company has not maintained patent protection
outside of the United States on all of its current patents. The Company has
filed a patent application concerning the temperature control aspects of certain
of its handlers for which the Company may pursue protection under the patent
laws of certain foreign countries.

Other companies and inventors may receive patents that contain claims
applicable to the Company's products. The sale of the Company's products covered
by such patents could require licenses that may not be available on acceptable
terms.

MANUFACTURING AND SUPPLY

The Company's principal manufacturing activities consist of assembly
and final test. The Company's components, selected subassemblies and machine
parts are manufactured by third parties in the United States. However, the
Company maintains its own machine shop, primarily for handling special materials
and product development.

COMPETITION

The IC device ATE industry is highly competitive. The Company faces
substantial competition throughout the world, primarily from ATE manufacturers
in the United States and Japan. The Company's primary competitors in the handler
market are Advantest, Aseco Corporation, Aetrium Incorporated (including its
Sym-Tek Systems, Inc. and FSA subsidiaries), Cohu, Inc., Kuwano, Multi-Test
GmbH, Rasco and Tesec. Many of these competitors are considerably larger and
have considerably greater financial resources than the Company.

From time to time, the Company's older generation handlers are sold as
used equipment at prices substantially below the prices of new handlers sold by
the Company. This may materially and adversely affect the Company's sales of new
handlers. Used equipment is sold by original owners of the equipment and by a
number of used equipment dealers. It is also sold as refurbished equipment with
a limited warranty by the Company's Singapore office, MCT Asia.

The principal elements of competition in the Company's markets include
versatility, price, product performance and throughput capability, quality and
reliability, customer service and support and the ability to deliver on
schedule. Although the Company believes that it competes favorably with respect
to each of these factors, new product introductions by the Company's competitors
could cause a decline in sales or loss of market acceptance of the Company's
existing products. In addition, increased competitive pressure could lead to
intensified price-based competition, resulting in lower prices and adversely
affecting the Company's operating results. In particular, at the end of a
product life cycle and as competitors introduce more technologically advanced
products, pricing pressure for that product typically becomes more intense.

EMPLOYEES

As of June 26, 1999, the Company had a total of 128 employees including
eleven contract people: 59 (or 46%) engaged in manufacturing, 33 (or 26%) in
engineering and research and development, 18 (or 14%) in sales, marketing and
service, and 18 (or 14%) in administration. Many of the Company's employees are
highly skilled, and the Company believes its future success will depend in large
part on its ability to attract and retain such employees. None of the Company's
employees is covered by a collective bargaining agreement, and the Company has
experienced no work stoppages. The Company considers its employee relations to
be good.

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FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

The Company operates in three geographic areas. Summarized data for the
Company's operations are included in Note 10 of Notes to Consolidated Financial
Statements, included elsewhere herein.

ITEM 2. PROPERTIES

The Company's principal executive and administrative offices as well as
its manufacturing operations utilize approximately 69,000 square feet in a
facility in St. Paul, Minnesota. This facility is leased through April 2007.

ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal, governmental, administrative or
other proceedings to which the Company is a party.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during
the quarter ended June 26, 1999.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

From October 18, 1993 until September 15, 1994, the Company's common
stock was traded on NASDAQ's National Market System. From September 15, 1994
until October 23, 1995 it was traded on the OTC Bulletin Board. From October 23,
1995 until June 19, 1996 the stock was traded on the NASDAQ Small Cap Market.
The stock resumed trading on the NASDAQ National Market System (Nasdaq: MCTI) on
June 19, 1996.

The following table sets forth the high and low prices for the
Company's common stock as reported by NASDAQ for the periods indicated:

Fiscal 1999 Fiscal 1998
------------------- -----------------
High Low High Low
---- --- ---- ---
First Quarter $1 1/16 $15/32 $5 5/8 $3 1/4
Second Quarter $2 $7/16 $5 3/8 $1 1/2
Third Quarter $2 7/8 $1 5/32 $2 1/2 $1 3/8
Fourth Quarter $2 3/4 $1 27/32 $2 $1

The above prices reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.
The approximate number of holders of record of the common stock as of September
2, 1999 was 244.

The Company has never declared or paid any cash dividends on its common
stock and does not anticipate paying any cash dividends in the foreseeable
future. The Company currently intends to retain future earnings to fund the
development and growth of its business. The Company's bank line of credit
prohibits the payment of cash dividends without the bank's consent.

During the past three fiscal years, the Company made the following
sales of unregistered securities:

On November 24, 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

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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. The Company paid no discounts or commissions to solicit
the conversion.

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ITEM 6. SELECTED FINANCIAL DATA

MICRO COMPONENT TECHNOLOGY, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)

<TABLE>
<CAPTION>
June 26, June 27, June 28, June 29, June 24,
1999 1998 (1) 1997 1996 (2) 1995 (2)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA - YEAR ENDED:
Net sales ................................... $ 15,171 $ 16,975 $ 16,129 $ 22,318 $ 23,635
Gross profit ................................ 7,632 7,380 9,219 12,999 10,739
Income (loss) from operations ............... (1,447) (4,202) (1,836) 2,330 1,923
Income (loss) from continuing operations .... (1,466) (3,879) (1,563) 2,568 1,566
Discontinued operations (3) ................. -- -- -- 652 (3,897)
Income (loss) before extraordinary item ..... (1,466) (3,879) (1,563) 3,220 (2,331)
Extraordinary item (4) ...................... -- -- -- -- 1,005
Net income (loss) ........................... (1,466) (3,879) (1,563) 3,220 (1,326)
Net income (loss) applicable to common
stock ....................................... $ (1,466) $ (3,879) $ (1,563) $ 3,220 $ (1,326)
Per Share Data - diluted:
Income (loss) from continuing operations .... $ (0.20) $ (0.54) $ (0.22) $ 0.35 $ 0.30
Discontinued operations ..................... -- -- -- 0.09 (0.74)
Extraordinary item (4) ...................... -- -- -- -- 0.19
Net income (loss) per share ................. $ (0.20) $ (0.54) $ (0.22) $ 0.44 $ (0.25)
Shares used to compute earnings (loss)
per share, diluted ........................ 7,396 7,248 7,030 7,246 5,240

Selected Balance Sheet Data:
Working capital ............................. $ 6,265 $ 7,385 $ 11,008 $ 12,638 $ 2,839
Net assets of discontinued operations (3) ... -- -- -- -- 977
Total assets ................................ 9,990 11,226 15,792 16,980 11,532
Current obligations under debt facilities and
financing obligations ....................... 51 50 300 352 363
Long-term debt and financing
obligations ................................. 33 83 133 183 41
Redeemable convertible preferred
stock .................................... -- -- 1,500 1,500 1,500
Total stockholders' equity (deficit) ........ $ 6,952 $ 8,400 $ 12,219 $ 13,709 $ 4,618
</TABLE>

(1) Includes charges totaling $2.3 million, comprised of a $2.0 million
provision for excess and obsolete inventory, and $0.3 million related
primarily to cost reduction actions and operational adjustments related to
the depressed semiconductor capital equipment market.

(2) Includes unusual and non-recurring items primarily comprised of: 1995 -
$5.2 million gain on the sale of the 1149 tester product line, $1.9 million
gain on the settlement with Sym-Tek Systems, $0.8 million charge for
severance costs for the Company's former Chief Executive Officer, and a
$0.2 million charge for closing a Japanese facility; 1996 - $1.5 million
gain on the resolution of the escrow fund created from the sale of the 1149
tester product line.

13
<PAGE>

(3) In fiscal year 1995, the Company initiated a formal plan to sell the
Company's European subsidiary, Intertrade Scientific, Inc. (ITS). A
provision for the loss on the sale of approximately $3.0 million was
recorded in the results of operations for the year ended June 24, 1995. The
net assets of ITS are reflected as "net assets of discontinued operations"
on the June 24, 1995 balance sheet and are primarily cash, accounts
receivable, inventory, property, plant and equipment, accounts payable, and
accrued liabilities. As a result of the final sales agreement, the Company
realized a net gain of $0.7 million on the disposal of ITS, which was
completed in fiscal 1996.

(4) In fiscal year 1995, the Company used $3.5 million of the proceeds from the
sale of the 1149 tester product line in settlement of approximately $4.5
million of outstanding trade payables, not including the payables assumed
by Megatest as part of the sale transaction. The difference between the
trade payables and the cash used resulted in an extraordinary gain of
approximately $1.0 million, net of $21,000 provision for taxes.

QUARTERLY RESULTS, FISCAL 1999 AND 1998

The following table presents selected unaudited quarterly operating
results for the Company for the eight fiscal quarters ended June 26, 1999.

<TABLE>
<CAPTION>
(in thousands, except per share data)
Three-Month Periods Ended
Fiscal 1999 Fiscal 1998
------------------------------------------- -------------------------------------------
Sept. 26, Dec. 26, Mar. 27, June 26, Sept. 27, Dec. 27, Mar. 28, June 27,
1998 1998 1999 1999 1997 1997 1998 1998
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales ............. $ 3,668 $ 3,020 $ 4,028 $ 4,455 $ 4,450 $ 4,522 $ 3,567 $ 4,436
Gross profit .......... 1,733 1,449 1,996 2,454 2,970 2,475 1,784 151
Income (loss) from
operations ....... (824) (578) (129) 84 (104) (599) (804) (2,695)
Net income (loss) ..... $ (819) $ (576) $ (125) $ 54 $ 16 $ (520) $ (773) $(2,602)
Per share data - basic
and diluted:
Net income (loss) $ (0.11) $ (0.08) $ (0.02) $ 0.01 $ 0.00 $ (0.07) $ (0.10) $ (0.35)
</TABLE>

14
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

RESULTS OF CONTINUING OPERATIONS

The following table sets forth, for the periods indicated, certain
items in the Company's statements of operations as a percentage of net sales:

Year Ended
------------------------------
June 26, June 27, June 28,
1999 1998 1997
----- ----- -----

Net sales ............................... 100.0% 100.0% 100.0%
Cost of sales ........................... 49.7 56.5 42.8
----- ----- -----
Gross margin ............................ 50.3 43.5 57.2
Operating expenses:
Selling, general and administrative 41.4 46.4 44.2
Research and development .......... 18.4 21.9 24.4
----- ----- -----
Total operating expenses .... 59.8 68.3 68.6
----- ----- -----
Loss from operations .................... (9.5) (24.8) (11.4)
Other income (expense), net ....... (0.2) 1.9 1.7
----- ----- -----
Loss before income taxes ................ (9.7) (22.9) (9.7)
Income tax provision .................... -- -- --
----- ----- -----
Net loss ................................ (9.7)% (22.9)% (9.7)%
===== ===== =====

GENERAL MARKET CONDITIONS

The Company operates exclusively in the semiconductor capital equipment
market, which went into a significant downturn beginning in early fiscal 1998,
and intensified throughout the remainder of fiscal year and throughout most of
fiscal year 1999. The downturn was provoked by the economic crisis in Southeast
Asia, where much of the Company's equipment is sold and used. These market and
economic conditions have adversely impacted the Company's net sales and
operating results for fiscal 1999 and 1998. Late in fiscal 1999, the market
began to stabilize and show signs of a gradual recovery, which management
believes will facilitate improved sales and operating results for the Company in
fiscal 2000.

FISCAL YEARS ENDED JUNE 26, 1999 AND JUNE 27, 1998

NET SALES. Net sales for fiscal year 1999 were $15.2 million, a decrease of
10.6% from $17.0 million in fiscal year 1998. Sales of the Company's newest
products, the 5100 handler, introduced in mid-fiscal 1997, and the 7632 and
Tapestry handlers, both of which first shipped to customers in fiscal 1999,
increased $3.2 million or 66% over the prior year. Sales of these new products
represent 53% of total net sales in the current year compared to 29% in the
prior year. The Company's older, more mature products declined by $5.0 million
or 42% compared to the prior year. The mature products are made up of the 4610
handler, Workstation 2000 and other handler and test products.

As detailed in Note 10 of Notes to Consolidated Financial Statements,
sales increased year over year in the Far East ($2.1 million), but decreased
comparatively in the United States ($2.7 million) and Europe ($1.2 million). The
increase in shipments to the Far East resulted primarily from increased business
with several key and new customers in that region. The decrease in sales in the
United States and Europe was primarily the result of the depressed market
conditions.

The Company expects sales to gradually improve with the anticipated
recovery of the semiconductor capital equipment market in fiscal year 2000;
however, no assurance can be made that a sales increase will occur. Continued
growth of the Company's newer products are expected to generate the majority of
the Company's sales

15
<PAGE>

increase as customers are anticipated to continue to migrate to smaller devices
and chip-scale packages, and transition testing processes to strip, panel and
wafer levels.

GROSS PROFIT. Gross profit in fiscal 1999 increased 3.4% or $0.2 million, to
$7.6 million from $7.4 million in fiscal 1998, and gross margin increased to
50.3% in fiscal 1999 from 43.5% in the previous year. In the prior year, the
Company recorded charges of approximately $2.0 million for increased reserves
for excess and obsolete inventory as a result of the depressed and changing
market conditions. Prior to these charges, gross profit was $9.5 million and
gross margin was 55.7%. The decrease in gross margin, prior to unusual charges,
resulted from the shift in product mix from certain older, higher margin
products and the decreased overhead absorption on lower production levels in the
current year. The Company expects gross margins in the near future to be
consistent with the average levels for fiscal 1999.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative
("SG&A") expense decreased by $1.6 million or 20.2%, to $6.3 million in fiscal
1999 from $7.9 million in the prior year. As a percentage of net sales, SG&A
expense decreased to 41.4% in the current year versus 46.4% in fiscal year 1998.
This decrease resulted from cost reduction activities initiated by the Company
beginning in fiscal 1998, in response to the downturn in the semiconductor
capital equipment market. The cost reduction initiatives primarily included a
planned decrease in the Company's headcount and a change in some customer sales
coverage areas from independent sales representatives to the Company's direct
sales employees, reducing sales commissions by approximately $0.6 million.

RESEARCH AND DEVELOPMENT EXPENSE. Research and development ("R&D") expense
decreased by $0.9 million, or 24.5%, to $2.8 million in the current year from
$3.7 million in fiscal year 1998. As a percentage of net sales, R&D expense
decreased to 18.4% from 21.9% for last year. During fiscal 1999 the majority of
the Company's R&D projects moved into the advanced stages of development,
requiring less material and labor. Compared to fiscal 1998, personnel related
costs decreased $0.6 million and material costs decreased $0.2 million. The
Company chose to maintain a high level of R&D spending throughout the downturn
in semiconductor capital equipment market to ensure that it could support the
launch of the newer products and continue to fund other product development
projects. These efforts are allowing the Company to enter markets and attract
customers not previously served by the Company.

NET INTEREST INCOME /(EXPENSE). Net interest income decreased during the current
year due to decreased holdings of interest bearing cash equivalents throughout
the year.

INCOME TAX PROVISION. During fiscal years 1999 and 1998, the Company incurred
minimal tax liabilities primarily related to foreign taxes. The Company has
recorded valuation allowances against all benefits associated with net operating
loss carryforwards due to uncertainty regarding their ultimate realization.

NET INCOME. Net loss for fiscal year 1999 was $1.5 million, or $0.20 per share.

FISCAL YEARS ENDED JUNE 27, 1998 AND JUNE 28, 1997

GENERAL COMMENTS. As a result of the market downturn that began in fiscal 1998,
the Company initiated cost reduction actions and adjusted its reserve
assumptions in fiscal 1998, recording inventory and other charges totaling $2.3
million. The cost reduction initiatives, implemented beginning in the fourth
quarter of fiscal 1998 and targeted to achieve approximately $0.5 million in
quarterly savings beginning in fiscal 1999, primarily included a reduction in
the Company's headcount, changes in some customer sales coverage areas from
independent sales representatives to the Company's direct sales employees -
resulting in reduced sales commissions, consolidation of service office
locations, and changes to travel and discretionary spending practices.

16
<PAGE>

Of the $2.3 charges, $2.0 million represented a provision for excess
and obsolete inventory, reflected in cost of sales, comprised of approximately
$1.5 million for excess 7632 product , $0.2 million for the 8000 and 3800
products, with the balance related to obsolete and excess kit inventory across
the remaining product lines. After applying these charges, the net carrying
value of the 7632 product line was approximately $0.6 million and the net
carrying value of the 8000 and 3800 products was $0. The Company initiated
marketing activities to identify alternative customer applications and markets
for the 7632 product, and conducts periodic reviews of excess and obsolete
inventory for disposal.

The remainder of the charges, primarily impacting operating expenses,
related mainly to cost reduction activities initiated by the Company, as
described above.

NET SALES. Net sales for fiscal year 1998 were $17.0 million, an increase of
5.2% over $16.1 million in fiscal year 1997. Sales of the 5100 and 4610 handlers
increased in fiscal 1998 while sales of older handler and tester products
decreased as compared to fiscal 1997. The product mix shift from older products
to newer products was precipitated by the downturn in the semiconductor capital
equipment market.

GROSS PROFIT. Gross profit in fiscal 1998 decreased 19.9% or $1.8 million to
$7.4 million from $9.2 million in fiscal 1997, and gross margin decreased to
43.5% in fiscal 1998 from 57.2% in the previous year, primarily as a result the
previously discussed inventory and other charges in fiscal 1998. Prior to these
charges, fiscal 1998 gross profit was $9.5 million and gross margin was 55.7%,
reflecting slightly higher sales, offset by product mix shift to lower margin
products.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. SG&A expense increased by $0.8
million or 10.5%, to $7.9 million in fiscal 1998 from $7.1 million in the prior
year. As a percentage of net sales, the SG&A expense increased to 46.4% in the
current year versus 44.2% in fiscal year 1997. The increase in fiscal 1998
expenses resulted from increased investments in sales and marketing initiated in
fiscal 1997.

RESEARCH AND DEVELOPMENT EXPENSE. R&D expense decreased by $0.2 million, or
5.7%, to $3.7 million in the current year from $3.9 million in fiscal year 1997.
As a percentage of net sales, R&D expense decreased to 21.9% from 24.4% for last
year. The Company chose to maintain a high level of R&D spending during the
downturn in semiconductor capital equipment market to ensure that it could
support the launch of the newer products and continue to fund other product
development projects.

NET INTEREST INCOME /(EXPENSE). Net interest income decreased during the current
year due to decreased holdings of interest bearing cash equivalents and
short-term investments throughout the year.

INCOME TAX PROVISION. During fiscal years 1998 and 1997, the Company incurred
minimal tax liabilities primarily related to foreign taxes. The Company has
recorded valuation allowances against all benefits associated with net operating
loss carryforwards due to uncertainty regarding their ultimate realization.

NET INCOME. Net loss for fiscal year 1998 was $3.9 million, or $0.54 per share.

LIQUIDITY AND CAPITAL RESOURCES

Cash used in operations was $0.5 million, $3.5 million, and $0.7
million in fiscal years 1999, 1998 and 1997, respectively. The net loss was the
primary use of cash in fiscal 1999, while the net loss and inventory purchases
were the primary uses of cash in fiscal 1998 and 1997.

Capital expenditures totaled $0.1, $0.3 million and $0.5 million in
fiscal years 1999, 1998 and 1997, respectively. Capital purchases have been
primarily for production and computer equipment and leasehold improvements.

17
<PAGE>

At June 26, 1999, the Company had cash and cash equivalents of $1.9
million, compared to $2.5 million at June 27, 1998. The current ratio was 3.1
and working capital was $6.3 million at June 26, 1999, compared to 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 June 26, 1999 and June 27, 1998. Borrowings bear interest at
1.5% over the bank's prime rate of 7.75% at June 26, 1999. The amount available
for borrowing is calculated as a percentage of eligible accounts receivable and
inventory, and amounted to approximately $2.8 million at June 26, 1999.

The Company's anticipated capital needs for fiscal 2000, prior to
acquisitions, are expected to be comparable to current year levels and
concentrated in development of additional handler products and upgrading its
management information systems. The Company expects to use funds for the
business acquisitions described in Item I. Management believes that cash and
cash equivalents on hand at June 26, 1999, and funds available through its bank
line of credit are sufficient to finance such acquisitions and sustain the
Company's continuing operations at the projected level for at least the next
twelve months. Beyond fiscal year 2000, management believes that these
resources, supplemented by anticipated cash flows from operations will continue
to sustain the Company's continuing operations through fiscal year 2002, the
period covered by the Company's current strategic plan, but that one or more
additional business acquisitions or unforseen changes in market conditions could
require the Company to seek additional financing. Management believes that it
will be able to raise additional capital and/or negotiate an increase to its
bank line of credit at terms acceptable to the Company if required, but no
assurance can be made that such financing will be available if needed. The
Company may acquire other companies, product lines or technologies that are
complementary to the Company's business and the Company's working capital needs
may change as a result of such acquisitions.

FEDERAL TAX MATTERS

The Company paid only nominal federal and state income taxes in fiscal
years 1999, 1998 and 1997. At June 26, 1999, the Company had federal net
operating loss carryforwards for tax reporting purposes of approximately $32.9
million, a portion of which is subject to annual limitation under Section 382 of
the Internal Revenue Code. See Note 6 of Notes to Consolidated Financial
Statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The vast majority of the Company's transactions are denominated in U.S.
dollars; as such, fluctuations in foreign currency exchange rates have
historically had little impact on the Company. Inflation has not been a
significant factor in the Company's operations over the last three fiscal years,
and it is not expected to affect operations in the future. The Company's bank
line of credit carries a variable interest rate. Though the line was unused at
June 26, 1999, an increase in the interest rate could expose the Company to
market risk in the event the Company is required to borrow under the line to
finance its operations in the future. At June 26, 1999, all of the Company's
outstanding long-term debt carries interest at a fixed rate. There is no
material market risk relating to the Company's long-term debt.

IMPACT OF ACCOUNTING STANDARDS

Effective fiscal 1999, the Company adopted Statement on Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income". SFAS
No. 130 requires that changes in the amounts of certain items, including foreign
currency translation adjustments, be presented in the Company's financial
statements.

18
<PAGE>

statement requires disclosure of certain financial and descriptive information
about operating segments as redefined by SFAS No. 131. The Company operates in
one business segment.

In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" was issued. SFAS No. 133 establishes a new model for
accounting for derivatives and hedging activities and supersedes and amends a
number of existing accounting standards. SFAS No. 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. Management has not yet completed an
assessment of the impact of adopting the provisions of SFAS No. 133 on the
Company's financial statements. The standard is effective for the Company in
fiscal 2001.

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 2000 compliant.

The Company completed a review of its internal information systems and
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 contracted with the software
vendor and related hardware supplier to bring these systems year 2000 compliant.
The upgrade was completed in the second quarter of fiscal 1999. All other
significant application software, hardware and internal information systems
which were identified as not year 2000 compliant have been upgraded or replaced.
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. The Company has upgraded
or replaced all significant non-IT systems that were identified as not year 2000
compliant. 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
parties 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. To date, the
Company is not aware of any such third parties with year 2000 issues that would
materially impact the Company's results of operations, liquidity or 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 Company completed an assessment and test of the software components
of its products for year 2000 compliance, and determined that no significant
modifications are required to products currently offered or actively marketed
within the past five years. The Company does not believe that its products
contain undetected errors or

19
<PAGE>

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.

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 MCT
Tapestry handlers, 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; and, (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. 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.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Consolidated Financial Statements included elsewhere in this Annual
Report on Form 10-K. The financial information by Quarter is included in Item 6
of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

This Item is not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item concerning the Company's
directors and executive officers is incorporated by reference from the Company's
Proxy Statement to be filed no later than 120 days following the close of the
fiscal year ended June 26, 1999.

ITEM 11. EXECUTIVE COMPENSATION

The information required under this item is hereby incorporated by
reference from the Company's Proxy Statement.

20
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required under this item is hereby incorporated by
reference from the Company's Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required under this item is hereby incorporated by
reference from the Company's Proxy Statement.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)1. CONSOLIDATED FINANCIAL STATEMENTS PAGE
----
Index to Consolidated Financial Statements................................. F-1
Independent Accountants' Report............................................ F-2
Consolidated Balance Sheets as of June 26, 1999, and June 27, 1998......... F-3
Consolidated Statements of Operations for the Years Ended June 26,
1999, June 27, 1998, and June 28, 1997.................................. F-4
Consolidated Statements of Changes in Stockholders' Equity
for the Years Ended June 26, 1999, June 27, 1998, and June 28,
1997.................................................................... F-5
Consolidated Statements of Cash Flows for the Years Ended June 26,
1999, June 27, 1998, and June 28, 19967................................. F-6
Notes to Consolidated Financial Statements................................. F-7

(a)3. EXHIBITS
3A. Bylaws of the Company. (11)
3B. Articles of Incorporation of the Company. (11)
4. Specimen Certificate of Common stock. (1)
10A. Agreements between the Company and Hambrecht & Quist Guaranty Finance.
10A.i. Warrant Purchase Agreement dated July 22, 1992. (1)
10A.ii. Second Common stock Warrant Purchase Agreement dated August
10, 1993. (1)
10A.iii. First Amendment to Restated Financing Agreement dated August
24, 1994, with attached Amendment to Warrant Purchase
Agreement and Warrants. (2)
10A.iv. Warrant Amendment Agreement dated October 31, 1995. (7)
10B. Incentive Stock Option Plan as amended through June 27, 1996. (9)
10C. Incentive Bonus Plan adopted by the Board of Directors of the Company
on May 26, 1993. (1)
10D. Form of Non-Competition Agreement between the Company and certain
senior executive officers. (1)
10E. Asset Purchase Agreement and Preferred Stock Purchase Agreement between
the Company and Megatest Corporation dated November 22, 1994. (3)
10F. Stock Purchase Agreement and Commission Agreement entered into between
the Company and Cardine & Levy, dated September 25, 1995. (6)
10G. Employment Agreement with Roger E. Gower dated March 28, 1995. (4)
10H. Stock Option Agreement between the Company and Bentley Hall & Company
dated April 19, 1994. (5)
10I. Employment Agreement with Dennis Nelson dated May 30, 1996. (9)
10J. Employee Stock Purchase Plan. (8)
10K. Stock Option Plan for Outside Directors as amended through April 29,
1999. (filed herewith)
10L. Lease for the Company's corporate headquarters dated October 16, 1996.
(10)
10M. Credit and Security Agreement, dated February 17, 1998 between Norwest
Business Credit, Inc. and Micro Component Technology, Inc. (12)

21
<PAGE>

10N. Credit and Security Agreement, dated February 17, 1998 between Norwest
Bank Minnesota, N.A. and Micro Component Technology, Inc. (12)
10O. First Amendment to Credit and Security Agreement, dated October 22,
1998 between Norwest Business Credit, Inc. and Micro Component
Technology, Inc. (13)
10P. First Amendment to Credit and Security Agreement, dated October 22,
1998 between Norwest Bank Minnesota, N.A. and Micro Component
Technology, Inc. (13)
10Q. Incentive Stock Option Plan as amended through April 29, 1999. (filed
herewith)
10R. Second Amendment to Credit and Security Agreement (Eximbank Guaranteed
Loan), dated February 16, 1999 between Norwest Bank Minnesota N.A and
Micro Component Technology, Inc. (15)
10S. Second Amendment to Credit and Security Agreement , dated May 6, 1999
between Wells Fargo Business Credit, Inc. and Micro Component
Technology, Inc. (15)
21. Revised Listing of Subsidiaries of the Company. (7)
23. Consent of Deloitte & Touche LLP. (filed herewith)
27. Financial Data Schedule (filed herewith)

- --------------------------------------------------------------------------------

(1) Incorporated by reference to the exhibits to the registration statement
on Form S-1 filed by the Company on August 24, 1993, as amended, SEC
File Number 33-67846.
(2) Incorporated by reference to the exhibits to the report on Form 10-K
filed by the Company for the fiscal year ended June 25, 1994, file
number 0-22384.
(3) Incorporated by reference to the report on Form 8-K filed by the
Company on December 8, 1994, file number 0-22384.
(4) Incorporated by reference to the report on Form 10-Q filed by the
Company for the quarter ended March 25, 1995, file number 0-22384.
(5) Incorporated by reference to the report on Form 10-K filed by the
Company for the fiscal year ended June 24, 1995, file number 0-22384.
(6) Incorporated by reference to the report on Form 10-Q filed by the
Company for the quarter ended September 30, 1995, file number 0-22384.
(7) Incorporated by reference to the exhibits to the Registration Statement
on Form S-1 filed by the Company on November 2, 1995, as amended, SEC
File Number 33-98940.
(8) Incorporated by reference to the exhibits to the Registration Statement
on Form S-8 filed by the Company on October 31, 1994, as amended, SEC
File Number 33-85766.
(9) Incorporated by reference to the exhibits to the report on Form 10-K
filed by the Company for the fiscal year ended June 29, 1996, file
number 0-22384.
(10) Incorporated by reference to the report on Form 10-Q filed by the
Company for the quarter ended September 28, 1996, file number 0-22384.
(11) Incorporated by reference to the exhibits to the post-effective
amendment #1 to the Registration Statement on Form S-1 filed by the
Company on November 18, 1996, file number 33-98940.
(12) Incorporated by reference to the report on Form 10-Q filed by the
Company for the quarter ended March 28, 1998, file number 0-22384.
(13) Incorporated by reference to the report on Form 10-Q filed by the
Company for the quarter ended September 26, 1998, file number 0-22384.
(14) Incorporated by reference to the report on Form 10-Q filed by the
Company for the quarter ended December 26, 1998, file number 0-22384.
(15) Incorporated by reference to the report on Form 10-Q filed by the
Company for the quarter ended March 27, 1999, file number 0-22384.

(b) REPORTS ON FORM 8-K

There was no Form 8-K filed during the fourth quarter of fiscal 1999.

22
<PAGE>

MICRO COMPONENT TECHNOLOGY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

a.) CONSOLIDATED FINANCIAL STATEMENTS PAGE
----

Independent Accountants' Report ........................................... F-2
Consolidated Balance Sheets as of June 26, 1999 and June 27, 1998.......... F-3
Consolidated Statements of Operations for the Years Ended June 26, 1999,
June 27, 1998, and June 28, 1997...................................... F-4
Consolidated Statements of Changes in Stockholders' Equity
for the Years Ended June 26, 1999, June 27, 1998, and June 28, 1997... F-5
Consolidated Statements of Cash Flows for the Years Ended June 26, 1999,
June 27, 1998, and June 28, 1997...................................... F-6
Notes to Consolidated Financial Statements................................. F-7

F-1
<PAGE>

INDEPENDENT ACCOUNTANTS' REPORT

To the Stockholders and Board of Directors of Micro Component Technology, Inc.

We have audited the accompanying consolidated balance sheets of Micro
Component Technology, Inc. and its subsidiaries (the Company) as of June 26,
1999, and June 27, 1998, and the related consolidated statements of operations,
changes in stockholders' equity and cash flows for each of the three years in
the period ended June 26, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of the Company at June 26,
1999, and June 27, 1998, and the results of their operations and their cash
flows for each of the three years in the period ended June 26, 1999, in
conformity with generally accepted accounting principles.

Minneapolis, Minnesota
August 17, 1999 (September 18, 1999 as to
the second paragraph of Note 11)

F-2
<PAGE>

MICRO COMPONENT TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
June 26, June 27,
1999 1998
-------- --------
<S> <C> <C>
ASSETS
- ------------------------------------------------------------------
Current assets:
Cash and cash equivalents .................................. $ 1,927 $ 2,532
Accounts receivable, less allowance for doubtful accounts in
1999 and 1998 of $146 and $250, respectively .............. 3,596 3,614
Inventories ................................................ 3,616 3,830
Other ...................................................... 131 152
-------- --------
Total current assets ........................... 9,270 10,128

Property, plant and equipment, less accumulated depreciation ..... 673 1,047

Other assets ..................................................... 47 51
-------- --------

Total assets ..................................................... $ 9,990 $ 11,226
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------
Current Liabilities:
Current portion of long-term debt .......................... $ 51 $ 50
Accounts payable ........................................... 1,548 1,227
Accrued compensation ....................................... 666 729
Accrued warranty ........................................... 271 244
Customer prepayments and unearned service revenue .......... 224 180
Other accrued liabilities .................................. 245 313
-------- --------
Total current liabilities ............................... 3,005 2,743

Long-term Debt ................................................... 33 83

Commitments and Contingencies (Note 6)

Stockholders' Equity:
Common, $.01 par value, 20,000,000 authorized, 7,416,922 and
7,394,300 issued, respectively .......................... 74 74
Additional paid-in capital ................................. 44,035 44,012
Cumulative other comprehensive income ...................... (69) (64)
Accumulated deficit ........................................ (37,088) (35,622)
-------- --------
Total stockholders' equity .............................. 6,952 8,400

Total Liabilities and Stockholders' Equity ....................... $ 9,990 $ 11,226
======== ========
</TABLE>

See Notes to Consolidated Financial Statements.

F-3
<PAGE>

MICRO COMPONENT TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

<TABLE>
<CAPTION>
Year Ended
----------------------------------
June 26, June 27, June 28,
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net sales ............................................. $ 15,171 $ 16,975 $ 16,129
Cost of sales ......................................... 7,539 9,595 6,910
-------- -------- --------
Gross profit .......................................... 7,632 7,380 9,219

Operating expenses:
Selling, general and administrative ............. 6,279 7,871 7,121
Research and development ........................ 2,800 3,711 3,934
-------- -------- --------
Total operating expenses .................. 9,079 11,582 11,055

Loss from operations .................................. (1,447) (4,202) (1,836)

Other income (expense):
Interest income (expense), net .................. 67 116 329
Other income (expense) .......................... (86) 207 (56)
-------- -------- --------

Loss before income taxes .............................. (1,466) (3,879) (1,563)

Income tax provision .................................. -- -- --
-------- -------- --------

Net loss .............................................. $ (1,466) $ (3,879) $ (1,563)
======== ======== ========

Net loss per share:
Basic ........................................ $ (0.20) $ (0.54) $ (0.22)
======== ======== ========
Diluted ...................................... $ (0.20) $ (0.54) $ (0.22)
======== ======== ========

Weighted average common and common
Equivalent shares outstanding:
Basic ........................................ 7,396 7,248 7,030
======== ======== ========
Diluted ...................................... 7,396 7,248 7,030
======== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements.

F-4
<PAGE>

MICRO COMPONENT TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands, except share data)

<TABLE>
<CAPTION>
Preferred Stock Common Stock Treasury Stock
--------------- --------------------------- --------------
Cumulative
Additional Compre- Other
Par Paid-In hensive Accum. Comprehensive Class A Common
Shares Value Shares Value Capital Income Deficit Income Shares Cost
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 29, 1996 315,789 $ 1,500 7,187,244 $ 72 $43,461 $(26,934) $ (82) 176,074 $(4,308)
Net loss $(1,563) (1,563)
Shares issued on exercise of
options 20,000 40
Shares issued through employee
stock purchase plan 15,932 33
-------
Comprehensive income $(1,563)
=======
Retirement of treasury shares (176,074) (2) (1,060) (3,246) (176,074) 4,308
---------------------------------------------- -----------------------------------------

Balance at June 28, 1997 315,789 1,500 7,047,102 70 42,474 (31,743) (82) -- --
Net loss $(3,879) (3,879)
Shares issued on exercise of
options 12,750 20
Shares issued through employee
stock purchase plan 18,659 22
Translation adjustment 18 18
-------
Comprehensive income $(3,861)
=======
Shares issued through
conversion of preferred
stock (315,789) (1,500) 315,789 4 1,496
---------------------------------------------- -----------------------------------------

Balance at June 27, 1998 -- -- 7,394,300 74 44,012 (35,622) (64) -- --
Net loss $(1,466) (1,466)
Shares issued through
employee stock purchase
plan 22,622 23
Translation adjustment (5) (5)
-------
Comprehensive income $(1,471)
=======
---------------------------------------------- -----------------------------------------

Balance at June 26, 1999 -- $ -- 7,416,922 $ 74 $44,035 $(37,088) $ (69) -- $ --
============================================== =========================================
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

F-5
<PAGE>

MICRO COMPONENT TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
Year Ended
----------------------------------
June 26, June 27, June 28,
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ........................................ $ (1,466) $ (3,879) $ (1,563)
Adjustments to reconcile net income (loss) to net cash
used by operating activities:
Depreciation and amortization .................. 465 492 469
Non-cash charge related to inventory ........... -- 2,038 --
Other, net ..................................... (1) -- (12)
Changes in assets and liabilities:
Accounts receivable ....................... 18 414 143
Inventories ............................... 214 (2,274) (581)
Other assets .............................. 21 194 428
Accounts payable .......................... 321 (336) 519
Other accrued liabilities ................. (54) (111) (115)
-------- -------- --------
Net cash used in operating activities ........................ (482) (3,462) (712)

Cash flows from investing activities:
Additions to property, plant and equipment ............... (92) (295) (523)
Purchase of short-term investments ....................... -- -- (1,169)
Maturity of short-term investments ....................... -- 1,169 --
-------- -------- --------
Net cash provided by (used in) investing activities .......... (92) 874 (1,692)

Cash flows from financing activities:
Payments of long-term debt ............................... (49) (300) (102)
Proceeds from issuance of stock .......................... 23 42 73
-------- -------- --------
Net cash used in financing activities ........................ (26) (258) (29)

Effects of exchange rate changes ............................... (5) 18 --
-------- -------- --------

Net increase (decrease) in cash and cash equivalents ......... (605) (2,828) (2,433)
Cash and cash equivalents at beginning of period ............... 2,532 5,360 7,793
-------- -------- --------
Cash and cash equivalents at end of period ..................... $ 1,927 $ 2,532 $ 5,360
======== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements.

F-6
<PAGE>

MICRO COMPONENT TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

The Company designs, manufactures, markets and services automatic test
equipment consisting of both handling and testing equipment for the
semiconductor industry. The Company's handlers are designed to handle most
integrated circuit ("IC") device packages currently in production. The Company's
testers are used to test logic, mixed signal, microprocessor, microperipheral
and application-specific IC devices. The Company operates in one business
segment.

A network of offices and representatives supports the Company's
customers across North America, Europe, and the Far East. The Company was formed
in 1972 and is headquartered in St. Paul, Minnesota.

CONSOLIDATION

The consolidated financial statements include the accounts of the
parent company and its subsidiary after elimination of all significant
intercompany balances and transactions. The significant subsidiary is 100%
owned.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported therein. Due to the inherent
uncertainty involved in making estimates, actual results reported in future
periods might differ from those estimates.

FISCAL YEAR

The Company's fiscal year is 52 or 53 weeks, ending on the last
Saturday in June.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with
original maturities of 90 days or less to be cash equivalents

INVENTORIES

Inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out ("FIFO") method. Provision for
obsolescence is made based on estimates of future sales and the related value of
component parts.

REVENUE RECOGNITION

Revenue for product sales is recognized upon shipment if all conditions
precedent to the sale have been met or are assured of being met. If significant
conditions regarding acceptance and right of return exist, revenue is not
recognized until such conditions are met. Service revenue is deferred and
amortized to earnings on a straight-line basis over the life of the service
contract.

STOCK-BASED COMPENSATION

In fiscal 1997, the Company adopted Statement on Financial Accounting
Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation." As
permitted by SFAS No. 123, the Company has elected to

F-7
<PAGE>

continue following the guidance of APB No. 25 for measurement and recognition of
stock-based transactions with employees and non-employee directors. Because
stock options have been granted at exercise prices at least equal to the fair
market value of the stock at the grant date, no compensation cost has been
recognized for stock options issued to employees under the stock option plans.
Stock-based transactions with non-employees are accounted for in accordance with
SFAS No. 123.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. Depreciation is
provided by the straight-line method over the estimated useful lives of the
assets for financial reporting and accelerated methods for tax purposes.
Estimated lives used in computing depreciation are as follows:

Leasehold improvements................. 3 to 10 years
Machinery and equipment................ 2 to 5
Furniture and fixtures................. 3 to 5

PRODUCT WARRANTY

Estimated costs of warranty obligations to customers are charged to
expense and a related accrual is established at the time the product is sold.

INCOME TAXES

The Company accounts for income taxes in accordance with the provisions
of SFAS No. 109, "Accounting for Income Taxes." Deferred income tax benefits and
deferred income taxes are recorded based on differences in the bases of assets
and liabilities between the financial statements and the tax returns as well as
from loss carryforwards. The valuation allowance for deferred income tax
benefits is determined by the Company based upon the expectation of whether the
benefits are more likely than not to be realized.

FOREIGN CURRENCY TRANSLATION

Assets and liabilities of the foreign subsidiary are translated to U.S.
dollars at year-end rates, and the statements of operations are translated at
average exchange rates during the year. Translation adjustments arising from the
translation of the foreign affiliates' net assets into U.S. dollars are recorded
in cumulative other comprehensive income.

NEW ACCOUNTING STANDARDS

Effective fiscal 1999, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income". SFAS No. 130 requires that changes in the amounts of
certain items, including foreign currency translation adjustments, be presented
in the Company's financial statements.

In June 1997, the Financial Accounting Standards Board issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information" which
was adopted by the Company in fiscal year 1999. The statement requires
disclosure of certain financial and descriptive information about operating
segments as redefined by SFAS No. 131. The Company operates in one business
segment.

F-8
<PAGE>

statement of operations or as a deferred item depending on the type of hedge
relationship that exists with respect to such derivative. Management has not yet
completed an assessment of the impact of adopting the provisions of SFAS No. 133
on the Company's financial statements. The standard is effective for the Company
in fiscal 2001.

RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses for new product development are
charged to expense as incurred.

NOTE 2 - EARNINGS (LOSS) 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
(loss) per share data for fiscal year 1997 have been restated to conform to the
provisions of SFAS No. 128. The following table reconciles the denominators used
in computing basic and diluted earnings (loss) per share for the periods
reported:

Fiscal year ended
June 26 June 27 June 28
(in thousands) 1999(1) 1998(1) 1997(1)
----------------------------
Weighted average common
shares outstanding 7,396 7,248 7,030
Effect of dilutive stock options
and warrants -- -- --
Effect of dilutive redeemable
preferred stock (2) -- -- --
----------------------------
7,396 7,248 7,030
============================

(1) The Company reported a loss for the period. No adjustment made
for the effect of stock options, warrants or redeemable preferred
stock, as effect is anti-dilutive.
(2) Preferred stock converted to common stock in November 1997.

NOTE 3 - BALANCE SHEET INFORMATION

Valuation reserves for notes and accounts receivable are as follows (in
thousands):

1999 1998 1997
---- ---- ----
Beginning Balance.................... $250 $238 $585
Additions............................ 20 12 (344)
Deductions........................... (124) -- (3)
---- ---- ----
Ending Balance....................... $146 $250 $238
==== ==== ====

Additions to the reserves are charged to selling, general and
administrative expense. Deductions represent uncollectible accounts written off.

Major components of inventories are as follows (in thousands):

1999 1998
-------- --------
Raw materials................... $ 1,129 $ 878
Work-in-process................. 1,485 1,562
Finished goods.................. 1,002 1,390
-------- --------
$ 3,616 $ 3,830
======== ========

F-9
<PAGE>

Inventory balances are shown net of inventory reserves of $4.0 million
and $4.4 million at fiscal year end 1999 and 1998, respectively.

Property, plant and equipment consisted of the following (in
thousands):

1999 1998
-------- --------
Leasehold improvements.......... $ 179 $ 185
Machinery and equipment......... 3,042 3,353
Furniture and fixtures.......... 877 889
-------- --------
4,098 4,427
Less accumulated depreciation... (3,425) (3,380)
-------- --------
$ 673 $ 1,047
======== ========

NOTE 4 - INDEBTEDNESS

In February 1998, the Company established a secured revolving credit
facility with a bank, which expires in February 2001. Under the facility, the
Company may borrow up to $5 million as determined by the borrowing base of
eligible trade accounts receivable and certain inventory, conditioned upon
meeting certain financial covenants, including maintaining certain levels of
monthly and quarterly earnings and and quarterly tangible net worth. The
agreement prohibits the Company from paying cash dividends without the bank's
consent.

Borrowings bear interest at 1.5% over the bank's prime rate, which was
7.75% at June 26, 1999. Though the Company had no borrowings on the line at June
26, 1999, $2.8 million was available for borrowing under the line.

NOTE 5 - LONG-TERM DEBT

Long-term debt and financing obligations consist of the following (in
thousands):

1999 1998
------ ------
Equipment lease agreements....................... $ 84 $ 131
Other ........................................... -- 2
------ ------
Total long-term debt and financing obligations 84 133
Less current obligations......................... (51) (50)
------ ------
Total long-term debt............................. $ 33 $ 83
====== ======

The Company has two equipment lease agreements, bearing interest at
approximately 7% for two Fadal Machining Centers used in the Company's
manufacturing process. Capitalized lease amounts included in Property, Plant and
Equipment at June 26, 1999 and June 27, 1998 were $234,000, and $234,000 and
accumulated depreciation was $154,000 and $102,000, respectively.

Cash paid for interest was $8,000, $23,000 and $33,000 for fiscal years
1999, 1998 and 1997, respectively.

Payments due under debt obligations at June 26, 1999 are as follows:
2000 - $51,000; and, 2001 - $33,000.

NOTE 6 - INCOME TAXES

The Company incurred losses in fiscal 1999, 1998 and 1997 and recorded
no provision for income taxes.

The reconciliation of income tax computed at the U.S. federal statutory
rate to income tax expense is as follows:

F-10
<PAGE>

Year Ended June
-----------------------
1999 1998 1997
---- ---- ----

Tax (benefit) at statutory rate (35.0)% (35.0)% (35.0)%
Effect of graduated tax rates 1.0 1.0 1.0
Foreign subsidiary losses with no tax benefit -- -- 11.3
Foreign loss carryforward benefit -- -- (0.6)
Adjustment to valuation allowance 34.0 34.0 23.3
State tax -- -- --
Other -- -- --
---- ---- ----
0.0% 0.0% 0.3%
==== ==== ====

As of June 26, 1999, the Company had federal and state NOLs totaling
approximately $32.9 million and tax credit carryforwards of approximately
$169,000 which can be used to reduce future taxable income. Tax loss
carryforwards of certain foreign operations in the aggregate of $1.3 million are
available for tax and financial reporting purposes. Such tax loss carryforwards
begin to expire in the year 2004.

The Company believes that its initial public offering, combined with
prior events, resulted in an "ownership change" of the Company as defined in
Section 382 of the Internal Revenue Code and the Regulations issued thereunder
(Section 382). Pursuant to Section 382, the Company's ability to use its NOLs
originating prior to the initial public offering, accounting for approximately
$9.6 million of the NOLs, is subject to certain restrictions including an annual
limitation of approximately $918,000. Losses incurred subsequent to the initial
public offering are available without annual limitation to offset future income.

The Company has recorded a total valuation reserve against
approximately $15.3 million and $14.8 million of deferred tax assets at June 26,
1999 and June 27, 1998, respectively, related primarily to operating loss
carryforwards, due to the uncertainty of their ultimate realization.

NOTE 7 - REDEEMABLE CONVERTIBLE PREFERRED STOCK

In November 1997, the Company converted 315,789 shares of Non-voting
Series 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.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

COMMITMENTS

The Company leases certain facilities and equipment under various
operating leases. Effective April 1997, the Company entered into an operating
lease agreement and relocated its headquarters to a new facility in St. Paul,
Minnesota, coinciding with the expiration of the operating lease at its previous
headquarters facility. Under the terms of the new agreement, which extends
through April 2007, the Company is responsible for base rent and all operating
expenses associated with the portion of the facility that it occupies. The
agreement provides the Company with a one-time option to cancel the lease after
seven years, at which time the Company would only be responsible for certain
unamortized build-out costs incurred by the landlord.

Total rent expense charged to operations, primarily for facilities and
equipment was $ 583,000, $767,000, and $1,149,000 in fiscal years 1999, 1998 and
1997, respectively.

F-11
<PAGE>

The future minimum rental payments at June 26, 1999, due under
noncancelable operating leases, are as follows: 2000 - $571,000; 2001 -
$545,000; 2002 - $450,000; 2003 - $463,000; 2004 - $463,000; thereafter -
$1,311,000.

The Company has an employment agreement with its Chief Executive
Officer that may be terminated upon 60 days written notice by either party. If
the Company terminates the agreement, the Company shall continue to pay the
officer's salary in effect at date of termination for 12 months thereafter. The
Company also has an agreement with one other officer that provides for severance
pay and other remuneration if employment is terminated without cause or if the
individual should resign following a change of control.

NOTE 9 - STOCK OPTION AND BONUS PLANS AND WARRANTS TO PURCHASE COMMON STOCK

In May 1995 and August 1995, the Board of Directors amended the April
1993 Incentive Stock Option Plan for key employees and reserved an additional
500,000 shares and 250,000 shares respectively for a total of 1,250,000 shares
of Common stock for issuance under the Plan at fair market value at the date of
grant. The shareholders have approved these amendments. The options expire five
to ten years from the date of grant and generally vest over a two-year or
four-year period. If an individual ceases employment, he/she has one month to
exercise vested options granted prior to June 8, 1994 or 90 days for options
granted on or after June 8, 1994. Options granted in excess of the $100,000
annual IRS limitations become non-qualified.

In fiscal 1996, the Board of Directors and the shareholders approved
the Stock Option Plan for Outside Directors and reserved 300,000 shares of
Common stock for issuance under the Plan. Each person who becomes an outside
director will automatically be granted an option to purchase 10,000 shares. In
addition, each outside director will also automatically be granted an option to
purchase 10,000 shares immediately upon each reelection as a director, or on the
anniversary of the prior year's grant in any year in which there is no meeting
of the stockholders at which directors are elected. The period within which an
option must be exercised will be the earlier of (1) ten years from the date of
the grant, or (2) the date which is one year after the director ceases to be a
director for any reason. The exercise price for each option will be the fair
market value of the stock on the date of grant, and each option will generally
vest over a two-year period at 50 percent per year.

During fiscal 1999, the Board of Directors voted to extend the life of
all outstanding options granted prior to 1997 from five to ten years.

The Company has also reserved 150,000 shares of Common stock for the
grant of non-qualified stock options for outside directors, consultants,
advisors and employees.

Shares subject to options under these plans during fiscal year 1997,
1998 and 1999 were as follows:

F-12
<PAGE>

WEIGHTED
AVERAGE
EXERCISE PRICE PER
OPTIONS SHARES PRICE RANGE SHARE
------- ------ ----------- -----
Outstanding June 29, 1996 850,500 $2.00 to $7.50 $3.00

Granted (fair value $0.98 per share) 232,000 $2.0625 to $3.3125 $2.48
Exercised (20,000) $2.00 $2.00
Expired (167,500) $2.00 to $4.25 $2.97
---------

Outstanding June 28, 1997 895,000 $2.00 to $7.50 $2.89

Granted (fair value $1.27 per share) 349,000 $1.563 to $4.813 $3.62
Exercised (1) (20,000) $2.00 to $3.625 $2.81
Expired (16,000) $2.625 to $3.00 $2.81
---------

Outstanding June 27, 1998 1,208,000 $1.563 to $7.50 $3.11

Granted (fair value $0.68 per share) 461,500 $1.00 to $1.938 $1.17
Expired (347,000) $2.375 to $7.00 $4.78
---------

Outstanding June 26, 1999 1,322,500 $1.00 to $7.50 $2.00

Exercisable at June 26, 1999 694,750 $1.00 to $7.50 $2.43

(1) Of the 20,000 shares exercised, 7,250 shares were surrendered
in a cashless exercise as provided for in the terms of the
option grant.

Options outstanding at June 26, 1999 had exercise prices ranging from
$1.00 to $7.50 per share as summarized in the following table:

NUMBER WEIGHTED WEIGHTED NUMBER
RANGE OF OUTSTANDING AVERAGE AVERAGE EXERCISABLE
EXERCISE AT JUNE 26, REMAINING EXERCISE AT JUNE 26,
PRICES 1999 LIFE PRICE PER SHARE 1999
------ ---- ---- --------------- ----
$1.00 to $1.563 543,500 4.5 years $1.22 50,500
$1.938 to $2.625 556,000 5.5 years $2.07 478,500
$3.25 to $3.75 213,000 7.0 years $3.53 155,750
$7.50 10,000 6.5 years $7.50 10,000
--------- ---------

$1.00 to $7.50 1,322,500 5.5 years $2.00 694,750
========= =========

In February 1996, the Board of Directors adopted the Employee Stock
Purchase Plan and reserved 300,000 shares of Common stock for issuance under the
Plan. Eligible employees can elect under the Plan to contribute between two
percent and ten percent of their base pay each plan year (June 1 May 31) to
purchase shares of Common stock at a price per share equal to 85 percent of
market value on the first day of the plan year or the last day of the plan year,
whichever is lower. Employee contributions are deducted from their regular
salary or wages. The maximum number of shares that can be purchased by an
employee in any plan year is 1,000 shares. During fiscal year 1999, 22,622
shares were issued under the plan at prices ranging from $0.45 to $1.0625, a
weighted average price of $1.04 per share. During fiscal year 1998, 18,658
shares were issued under the plan at the price of $1.17 per share. Approximately
242,900 shares remain reserved for future issuance.

F-13
<PAGE>

In May 1993, the Board of Directors approved an Incentive Bonus Plan
commencing in fiscal year 1994 which provides for payment of discretionary
annual bonuses to employees of up to 5% of the Company's pretax income. Eighty
percent of the bonus is to be paid in cash and twenty percent to the Company's
qualified 401(k) retirement plan. No bonus payments were made under the Plan in
fiscal years 1999, 1998 or 1997.

In fiscal 1997, the Company adopted SFAS No. 123, "Accounting for
Stock-Based Compensation." As permitted by SFAS No. 123, the Company has elected
to continue following the guidance of APB No. 25 for measurement and recognition
of stock-based transactions with employees. Because stock options have been
granted at exercise prices at least equal to the fair market value of the stock
at the grant date, no compensation cost has been recognized for stock options
issued to employees under the stock option plans. If compensation cost for the
Company's stock option and employee stock purchase plans had been determined
based on the fair value at the grant dates, consistent with the method provided
in SFAS No. 123, the Company's net income (loss) and earnings (loss) per share
would have been as follows:

1999 1998 1997
---- ---- ----
Net income (loss), in thousands
As reported $(1,466) $(3,879) $(1,563)
Pro forma $(1,652) $(4,077) $(1,752)

Earnings (loss) per share - basic
As reported $ (0.20) $ (0.54) $ (0.22)
Pro forma $ (0.22) $ (0.56) $ (0.25)

Earnings (loss) per share - diluted
As reported $ (0.20) $ (0.54) $ (0.22)
Pro forma $ (0.22) $ (0.56) $ (0.25)

The fair value of options granted under the stock option and employee
stock purchase plans during fiscal 1996 and 1997 was estimated on the date of
grant using the Black-Scholes option-pricing model with the following weighted
average assumptions and results:

1999 1998 1997
---- ---- ----
Dividend yield 0.00% 0.00% 0.00%
Expected volatility 88.48% 60.62% 46.25%
Risk-free interest rate 4.77% 6.0% 6.0%
Expected life of options 3.0 years 3.1 years 3.5 years

The following summarizes all warrants outstanding to purchase shares of
the Company's common stock at June 26, 1999:

Exercise
Shares Issue Date Price Expiration Date
------- -------------- -------- -----------------
169,807 July 22, 1992 $3.125 December 31, 1999
30,000 March 5, 1993 $4.00 December 31, 1999
18,500 June 1, 1993 $5.00 December 31, 1999
10,000 July 9, 1993 $5.00 December 31, 1999
10,000 August 1, 1993 $5.00 December 31, 1999
30,000 July 14, 1994 $5.00 December 31, 1999

F-14
<PAGE>

NOTE 10 - SEGMENT, GEOGRAPHIC, CUSTOMER INFORMATION AND CONCENTRATION OF
CREDIT RISK

The Company operates in one industry segment supplying integrated
circuit handlers and testers to the semiconductor industry. Net sales to
customers located in the three geographic regions in which the Company operates
are summarized as follows (in thousands):

1999 1998 1997
------- ------- -------
United States $ 5,379 $ 8,051 $ 6,842
Far East 9,205 7,091 8,528
Europe 587 1,833 759
------- ------- -------
$15,171 $16,975 $16,129
======= ======= =======

The Company does not hold a material amount of long-lived assets
outside of the United States.

During fiscal year 1999, one customer accounted for 27% of net sales.
During fiscal year 1998, no single customer accounted for more than 10% of net
sales. During fiscal year 1997, one customer accounted for approximately 17% and
another customer accounted for approximately 11% of net sales.

The Company's sales and accounts receivable balances are concentrated
in one industry, the integrated circuit manufacturers. The Company's historical
credit losses have not been significant.

NOTE 11 - SUBSEQUENT EVENT

On June 29, 1999, the Company acquired certain assets and assumed
certain liabilities of the Systems Integration unit of FICO America, Inc.,
forming the Infinity Systems Division of the Company to develop and implement
Manufacturing Execution Systems ("MES") and factory control systems to customers
in the semiconductor industry. The acquisition was accounted for as a purchase,
and accordingly, the net assets acquired were recorded at their estimated fair
market value at the effective date of the acquisition. The purchase price and
the pro forma impact on fiscal 1999 or 1998 were not material to the Company.

On September 18, 1999, the Company entered into a definitive merger
agreement to acquire Aseco Corporation, a Massachusetts based manufacturer of
handling equipment. The acquisition, currently valued at $16.3 million, subject
to adjustment under certain terms of the agreement, is structured as a stock for
stock purchase and is expected to close in December 1999. The agreement has been
approved by the Board of Directors of both companies and is subject to approval
by the shareholders of each company and regulatory agencies.

F-15
<PAGE>

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) 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, in the City of St.
Paul, State of Minnesota, on December 28, 1999.

MICRO COMPONENT TECHNOLOGY, INC.

By: /s/ Jeffrey S. Mathiesen
----------------------------------------
Jeffrey S. Mathiesen
Vice President of Finance/
Administration, Chief Financial Officer,
Treasurer

S-1
<PAGE>

INDEX TO EXHIBITS

3A. Bylaws of the Company. (11)
3B. Articles of Incorporation of the Company. (11)
4. Specimen Certificate of Common stock. (1)
10A. Agreements between the Company and Hambrecht & Quist Guaranty Finance.
10A.i. Warrant Purchase Agreement dated July 22, 1992. (1)
10A.ii. Second Common stock Warrant Purchase Agreement dated August
10, 1993. (1)
10A.iii. First Amendment to Restated Financing Agreement dated August
24, 1994, with attached Amendment to Warrant Purchase
Agreement and Warrants. (2)
10A.iv. Warrant Amendment Agreement dated October 31, 1995. (7)
10B. Incentive Stock Option Plan as amended through June 27, 1996. (9)
10C. Incentive Bonus Plan adopted by the Board of Directors of the Company
on May 26, 1993. (1)
10D. Form of Non-Competition Agreement between the Company and certain
senior executive officers. (1)
10E. Asset Purchase Agreement and Preferred Stock Purchase Agreement between
the Company and Megatest Corporation dated November 22, 1994. (3)
10F. Stock Purchase Agreement and Commission Agreement entered into between
the Company and Cardine & Levy, dated September 25, 1995. (6)
10G. Employment Agreement with Roger E. Gower dated March 28, 1995. (4)
10H. Stock Option Agreement between the Company and Bentley Hall & Company
dated April 19, 1994. (5)
10I. Employment Agreement with Dennis Nelson dated May 30, 1996. (9)
10J. Employee Stock Purchase Plan. (8)
10K. Stock Option Plan for Outside Directors, as amended through April 29,
1999. (filed with original Form 10-K)
10L. Lease for the Company's corporate headquarters dated October 16, 1996.
(10)
10M. Credit and Security Agreement, dated February 17, 1998 between Norwest
Business Credit, Inc. and Micro Component Technology, Inc. (12)
10N. Credit and Security Agreement, dated February 17, 1998 between Norwest
Bank Minnesota, N.A. and Micro Component Technology, Inc. (12)
10O. First Amendment to Credit and Security Agreement, dated October 22,
1998 between Norwest Business Credit, Inc. and Micro Component
Technology, Inc. (13)
10P. First Amendment to Credit and Security Agreement, dated October 22,
1998 between Norwest Bank Minnesota, N.A. and Micro Component
Technology, Inc. (13)
10Q. Incentive Stock Option Plan as amended through April 29, 1999. (filed
with original Form 10-K)
10R. Second Amendment to Credit and Security Agreement (Eximbank Guaranteed
Loan), dated February 16, 1999 between Norwest Bank Minnesota N.A and
Micro Component Technology, Inc. (15)
10S. Second Amendment to Credit and Security Agreement , dated May 6, 1999
between Wells Fargo Business Credit, Inc. and Micro Component
Technology, Inc. (15)
21. Revised Listing of Subsidiaries of the Company. (7)
23. Consent of Deloitte & Touche LLP. (filed herewith)
27. Financial Data Schedule (filed herewith)

- --------------------------------------------------------------------------------

(1) Incorporated by reference to the exhibits to the registration statement
on Form S-1 filed by the Company on August 24, 1993, as amended, SEC
File Number 33-67846.

S-2
<PAGE>

(2) Incorporated by reference to the exhibits to the report on Form 10-K
filed by the Company for the fiscal year ended June 25, 1994, file
number 0-22384.
(3) Incorporated by reference to the report on Form 8-K filed by the
Company on December 8, 1994, file number 0-22384.
(4) Incorporated by reference to the report on Form 10-Q filed by the
Company for the quarter ended March 25, 1995, file number 0-22384.
(5) Incorporated by reference to the report on Form 10-K filed by the
Company for the fiscal year ended June 24, 1995, file number 0-22384.
(6) Incorporated by reference to the report on Form 10-Q filed by the
Company for the quarter ended September 30, 1995, file number 0-22384.
(7) Incorporated by reference to the exhibits to the Registration Statement
on Form S-1 filed by the Company on November 2, 1995, as amended, SEC
File Number 33-98940.
(8) Incorporated by reference to the exhibits to the Registration Statement
on Form S-8 filed by the Company on October 31, 1994, as amended, SEC
File Number 33-85766.
(9) Incorporated by reference to the exhibits to the report on Form 10-K
filed by the Company for the fiscal year ended June 29, 1996, file
number 0-22384.
(10) Incorporated by reference to the report on Form 10-Q filed by the
Company for the quarter ended September 28, 1996, file number 0-22384.
(11) Incorporated by reference to the exhibits to the post-effective
amendment #1 to the Registration Statement on Form S-1 filed by the
Company on November 18, 1996, file number 33-98940.
(12) Incorporated by reference to the report on Form 10-Q filed by the
Company for the quarter ended March 28, 1998, file number 0-22384.
(13) Incorporated by reference to the report on Form 10-Q filed by the
Company for the quarter ended September 26, 1998, file number 0-22384.
(14) Incorporated by reference to the report on Form 10-Q filed by the
Company for the quarter ended December 26, 1998, file number 0-22384.
(15) Incorporated by reference to the report on Form 10-Q filed by the
Company for the quarter ended March 27, 1999, file number 0-22384.

S-3

EXHIBIT 23

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement No.'s
33-85766, 33-93100 and 33-37641 of Micro Component Technology, Inc. of our
report dated August 17, 1999 (September 18, 1999 as to the second paragraph of
Note 11), on the consolidated financial statements of Micro Component
Technology, Inc. appearing in this Annual Report on Form 10-K/A of Micro
Component Technology, Inc. for the year ended June 26, 1999.

December 28, 1999
Minneapolis, Minnesota

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