<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
TRANSITION PERIOD FROM __________ TO _________
Commission File Number 0-23840
MICRION CORPORATION
-------------------
(Exact name of Registrant as specified in its charter)
MASSACHUSETTS 04-2892070
- ------------- ----------
(State of other jurisdiction of (I.R.S Employer
Incorporation or organization) Identification No.)
ONE CORPORATION WAY, PEABODY, MASSACHUSETTS 01960-7990
- ------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(978) 538-6700
--------------
(Registrant's telephone number)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of May 1, 1999, the Company had 4,099,893 shares of Common Stock, no
par value, outstanding.
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MICRION CORPORATION
<TABLE>
<CAPTION>
Page #
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1998 and 3
March 31, 1999 (unaudited)
Consolidated Statements of Operations - Three months ended 4
March 31, 1998 and 1999 (unaudited) and Nine months ended
March 31, 1998 and 1999 (unaudited)
Consolidated Statements of Cash Flows - Nine months ended 5
March 31, 1998 and 1999 (unaudited)
Notes to Consolidated Financial Statements - March 31, 1999 6
Item 2. Management's Discussion and Analysis of Financial Condition and 7
Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities - None 13
Item 3. Defaults Upon Senior Securities - None 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information - None 13
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MICRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30 MARCH 31
1998 1999
-------- --------
(in thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,349 $ 2,308
Accounts receivable 18,303 16,511
Inventories (note 3) 21,690 23,593
Prepaid expenses and other current assets 635 568
Deferred income taxes 3,156 3,156
-------- --------
Total current assets 47,133 46,136
-------- --------
PROPERTY AND EQUIPMENT, net (note 4) 4,711 3,999
OTHER ASSETS, net 3 871
-------- --------
Total assets $ 51,847 $ 51,006
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable 3,605 5,815
Current portion of obligations under capital leases 668 668
Current portion of long term debt 4,000 2,667
Accounts payable 2,682 4,924
Accrued expenses 3,566 1,981
Accrued warranty expenses 1,499 1,482
Customer deposits and deferred income 1,214 1,697
-------- --------
Total current liabilities 17,234 19,234
-------- --------
OBLIGATIONS UNDER CAPITAL LEASES 688 182
LONG TERM DEBT 4,000 4,000
STOCKHOLDERS' EQUITY:
Preferred stock, no par value; authorized 5,000,000 shares -- --
Common stock, no par value; authorized 12,300,000 shares 31,825 32,038
Retained earnings (1,964) (4,518)
Other equity 64 70
-------- --------
Total stockholders' equity 29,925 27,590
-------- --------
Total liabilities and stockholders' equity $ 51,847 $ 51,006
======== ========
</TABLE>
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MICRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31, Nine months ended March 31,
---------------------------- ---------------------------
1998 1999 1998 1999
---------- ---------- ---------- ----------
( in thousands except for per share data)
<S> <C> <C> <C> <C>
REVENUES:
Product revenues $ 11,235 $ 10,867 $ 40,111 $ 30,410
Contract revenues 706 539 1,173 1,813
-------- -------- -------- --------
Total revenues 11,941 11,406 41,284 32,223
-------- -------- -------- --------
COST OF REVENUES:
Cost of product revenues 7,033 6,921 24,428 19,796
Cost of contract revenues 438 486 856 1,558
-------- -------- -------- --------
Total cost of revenues 7,471 7,407 25,284 21,354
-------- -------- -------- --------
Gross profit 4,470 3,999 16,000 10,869
OPERATING EXPENSES:
Selling, general and administrative expenses 3,340 3,074 9,279 9,120
Research and development expenses 1,801 1,168 4,903 3,840
Employee severance and other one-time charges 998 -- 998 --
Merger expenses -- 635 -- 635
-------- -------- -------- --------
Total operating expenses 6,139 4,877 15,180 13,595
-------- -------- -------- --------
(Loss) income from operations (1,669) (878) 820 (2,726)
OTHER EXPENSE:
Interest income 64 26 156 108
Interest expense (321) (313) (900) (919)
Other (4) 5 (45) 9
-------- -------- -------- --------
Total other expense (261) (282) (789) (802)
-------- -------- -------- --------
(Loss) income before provision
for income taxes (1,930) (1,160) 31 (3,528)
BENEFIT (PROVISION) FOR INCOME TAXES 675 206 (12) 1,035
-------- -------- -------- --------
Net (loss) income $ (1,255) $ (954) $ 19 $ (2,493)
======== ======== ======== ========
(LOSS) EARNINGS PER SHARE:
BASIC $ (.31) $ (.23) $ -- $ (.61)
======== ======== ======== ========
DILUTED $ (.31) $ (.23) $ -- $ (.61)
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER OF SHARES:
BASIC 4,061 4,088 4,055 4,079
======== ======== ======== ========
DILUTED 4,061 4,088 4,318 4,079
======== ======== ======== ========
</TABLE>
4
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MICRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED )
Nine months ended March 31,
1998 1999
---------- -----------
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 19 $(2,493)
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 1,425 1,363
Non-cash compensation 1 --
Changes in assets and liabilities:
Accounts receivable 5,358 1,793
Inventories (2,855) (1,854)
Prepaid expenses and other current assets (151) 54
Accounts payable (3,442) 2,242
Accrued expenses (770) (1,591)
Provision for warranty expenses 168 (26)
Customer deposits and deferred income 387 483
------- -------
Net cash provided by (used in) operating activities 140 (29)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,829) (862)
Disposition of property and equipment 1,118 214
Increase in other assets (81) (869)
------- -------
Net cash used in investing activities (792) (1,517)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of capital lease obligations (490) (506)
Net (repayments) borrowings on line of credit (6,855) 2,210
Net proceeds (repayments) of long-term debt 7,960 (1,333)
Issuance of common stock 275 212
------- -------
Net cash provided by financing activities 890 583
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (44) (78)
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 194 (1,041)
CASH AND CASH EQUIVALENTS, beginning of period 2,677 3,349
------- -------
CASH AND CASH EQUIVALENTS, end of period $ 2,871 $ 2,308
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 855 $ 919
======= =======
Income taxes $ 661 $ --
======= =======
</TABLE>
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MICRION CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(1) NATURE OF BUSINESS
Micrion Corporation and its subsidiaries (collectively "the Company") are
engaged in the development, production and marketing of capital equipment used
in the manufacturing and processing of semiconductor and other high technology
devices.
(2) BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-Q and Article 2 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for fair presentation have been included. The accompanying
financial statements should be read in conjunction with the consolidated
financial statements and footnotes thereto included in the Company's annual
report 10-K filing with the U.S. Securities and Exchange Commission for the year
ended June 30, 1998. The Company's first, second, and third fiscal quarters end
on the Saturday closest to September 30, December 31 and March 31, respectively.
For ease of reference, such quarter end dates are used herein.
(3) INVENTORIES
Inventories consist of:
(UNAUDITED)
JUNE 30, MARCH 31,
1998 1999
-------- --------
(in thousands)
Raw materials and manufactured parts, net $ 9,217 $10,977
Work in process 7,829 9,622
Finished goods 4,644 2,994
------- -------
Total inventories $21,690 $23,593
======= =======
(4) PROPERTY AND EQUIPMENT, NET
Property and equipment consists of:
(UNAUDITED)
JUNE 30, MARCH 31,
1998 1999
-------- --------
(in thousands)
Furniture and fixtures $ 821 $ 847
Computer, engineering and production equipment 6,318 6,562
Leasehold improvements 590 605
Property under capital lease 3,464 3,464
-------- --------
$ 11,193 $ 11,478
Accumulated depreciation and amortization (6,482) (7,479)
-------- --------
Net property and equipment $ 4,711 $ 3,999
======== ========
At June 30, 1998 and March 31, 1999, accumulated amortization for property under
capital lease was $2,173 and $2,682, respectively.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements in this management's discussion and analysis of financial
condition and results of operation include forward-looking information. Factors
that could cause actual results to differ include the continuation of the Asian
financial weakness, financial problems in other regions, continued declining
demand for semiconductor and data storage capital equipment, continuing or
increasing over capacity in the semiconductor and data storage industries, the
Company's ability to compete successfully under current market conditions,
issues relating to the proposed merger of the Company and FEI Company, and other
risks discussed in the Company's current report on Form 10-K, filed with the
Securities and Exchange Commission on September 28, 1998. The Company undertakes
no obligation to publicly release the result of any revisions to these
forward-looking statements that may be made to reflect the events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
REVENUES Total revenues, which consist primarily of product revenues,
decreased by 4.5% to $11.4 million for the three months ended March 31, 1999
from $11.9 million for the same period ended March 31, 1998.
Product revenues consist of revenues from the sale of focused ion beam (FIB)
systems, spare and replacement parts and service contracts provided with respect
to systems. Product revenues decreased 3.3% to $10.9 million for the three-month
period ended March 31, 1999 from $11.2 million for the same period ended March
31, 1998. The decrease was primarily due to the overall product mix of FIB
systems shipped during the three months ended March 31, 1999.
GROSS PROFIT Total gross profit decreased 10.5% to $4.0 million for the three
months ended March 31, 1999 from $4.5 million for the same period ended March
31, 1998. The decrease was primarily due to the overall product mix of FIB
systems shipped and a reduction in commercial contract revenue during the
quarter-ended March 31, 1999.
The Company's gross profit on product revenues decreased to 36.3% for the
three-month period ended March 31, 1999 from 37.4% for the same period ended
March 31, 1998. Gross profit on product revenues is affected by changes in the
type of product shipments and the mix of foreign and domestic shipments during
any given period. During the quarter ended March 31, 1999, the product mix of
systems resulted in lower margins on system sales due to competitive pressures
arising, in part, from reduced customer capital acquisition budgets.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and
administrative expenses decreased 8.0% to $3.1 million for the three-month
period ended March 31, 1999 from $3.3 million for the same period ended March
31, 1998. The decrease was primarily attributable to
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<PAGE> 8
a reduction of $235,000 in salaries related to a reduction in the Company's
workforce and a decrease of $140,000 in travel related costs offset against
increases in consulting fees of $85,000 during the quarter ended March 31, 1999
as compared to the same period ended March 31, 1998.
RESEARCH AND DEVELOPMENT EXPENSES The Company's research and development
expenses decreased 35.2% to $1.2 million for the three-month period ended March
31, 1999 from $1.8 million for the same period ended March 31, 1998. The
decrease was due to the Company receiving two government research and
development contracts during the 1999 period, which resulted in greater
absorption of research and development expenses to the cost of contract
revenues.
OTHER OPERATING CHARGES On December 3, 1998, the Company entered into a
merger agreement with FEI Company. The Company incurred $635,000 of merger costs
related to legal, accounting and other professional services during the quarter
ended March 31, 1999.
As a result of the slowdown in both the semiconductor and data storage
industries, the Company took steps to reduce its current expense levels and took
a one-time charge of $998,000 in the quarter ended March 31, 1998. Employee
severance of $398,000 included severance charges (approximately $120,000),
outplacement and job training fees (approximately $30,000), job retraining costs
(approximately $50,000) and COBRA health insurance (approximately $198,000) as a
result of a workforce reduction. Other one-time charges of $600,000 consisted of
specific engineering projects and related assets that management redirected to
meet the demands of customer needs, which caused assets under these projects to
become obsolete.
OTHER INCOME AND EXPENSE Other expense, net, primarily bank interest expense,
remained constant at $ .3 million for the three-month period ended March 31,
1999 as compared to the same period ended March 31, 1998.
BENEFIT (PROVISION) FOR INCOME TAXES The Company's effective tax benefit /
rate for the three-month periods ended March 31, 1999 and 1998 reflects a tax
benefit / rate of approximately 18% and 35%, respectively. The 18% tax benefit
for the quarter ended March 31, 1999 is due to the Company's recording
non-deductible merger expenses of $635,000.
NINE MONTHS ENDED MARCH 31, 1999 COMPARED TO NINE MONTHS ENDED MARCH 31, 1998
REVENUES Total revenues decreased by 21.9% to $32.2 million for the nine
months ended March 31, 1999 from $41.3 million for the same period ended March
31, 1998.
Product revenues consist of revenues from the sale of focused ion beam (FIB)
systems, spare and replacement parts and service contracts provided with respect
to systems. Product revenues decreased 24.2% to $30.4 million for the nine-month
period ended March 31, 1999 from $40.1 million for the same period ended March
31, 1998. The decrease was due to a
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<PAGE> 9
slowdown in the semiconductor and data storage industries, which resulted in
reduced customer capital spending for FIB systems.
GROSS PROFIT Total gross profit decreased by 32.1% to $10.9 million for the
nine months ended March 31, 1999 from $16.0 million for the same period ended
March 31, 1998. The decrease was primarily due to a reduced number of FIB
shipments during the nine months ended March 31, 1999 resulting from a softness
in demand for semiconductor capital equipment.
The Company's gross profit on product revenues decreased to 35.0% for the
nine-month period ended March 31, 1999 from 39.1% for the same period ended
March 31, 1998. Gross profit on product revenues is affected by changes in the
type of product shipments and the mix of foreign and domestic shipments during
any given period. During the nine months ended March 31, 1999, the mix of
systems resulted in lower margins on system sales due to competitive price
pressures arising, in part, from reduced customer capital acquisition budgets.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and
administrative expenses decreased 1.7% to $9.1 million for the nine-month period
ended March 31, 1999 from $9.3 million for the same period ended March 31, 1998.
The decrease was primarily attributable to increases of $270,000 for demo
equipment expense and $500,000 for customer support personnel in the UK, Taiwan
and Japan subsidiaries, offset by decreases of $630,000 in U.S. salaries due to
a Company work force reduction and $230,000 in travel related expenses.
RESEARCH AND DEVELOPMENT EXPENSES The Company's research and development
expenses decreased 21.7% to $3.8 million for the nine-month period ended March
31, 1999 from $4.9 million for the same period ended March 31, 1998. The
decrease was due to reductions in salaries related to a reduction in the
Company's workforce and travel-related costs related to research and
development. The decrease was also related to the Company receiving two
government research and development contracts, which resulted in greater
absorption of research and development expenses to the cost of contract
revenues.
OTHER OPERATING CHARGES On December 3, 1998, the Company entered into a merger
agreement with FEI Company. The Company incurred $635,000 of merger costs
related to legal, accounting and other professional services for the nine months
ended March 31, 1999.
As a result of the slowdown in both the semiconductor and data storage
industries, the Company took steps to reduce its current expense levels and took
a one-time charge of $998,000 in the quarter ended March 31, 1998. Employee
severance of $398,000 included severance charges (approximately $120,000),
outplacement and job training fees (approximately $30,000), job retraining costs
(approximately $50,000) and COBRA health insurance (approximately $198,000) as a
result of a workforce reduction. Other one-time charges of $600,000 consisted of
specific engineering projects and related assets that management redirected to
meet the demands of customer needs, which caused assets under these projects to
become obsolete.
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OTHER INCOME AND EXPENSE Other expense, net, primarily bank interest expense,
increased to $.8 million for the nine-month period ended March 31, 1999 as
compared to $.7 million for the same period ended March 31, 1998. The increase
is due a lower cash position for the nine-month period ended March 31, 1999,
which resulted in the Company borrowing more funds under its available line of
credit during the period.
BENEFIT (PROVISION) FOR INCOME TAXES The Company's effective tax benefit /
rate for the nine-month periods ended March 31, 1999 and 1998 reflects a tax
benefit / rate of approximately 29% and 35%, respectively. The 29% tax benefit
for the nine-month period ended March 31, 1999 is due to the Company's recording
non-deductible merger expenses of $635,000.
YEAR 2000 READINESS DISCLOSURE. Management is aware of the potential software
logic anomalies associated with the year 2000 and other date changes ("Year 2000
issues"). The Company has taken steps to review and analyze its information
technology along with its non-information technology systems in order to assess
the Year 2000 issues.
During fiscal 1998, the Company completed an inventory of its systems and
system components, which included sending questionnaires to its vendors and
suppliers regarding hardware and software logic. The Company has also analyzed
its internal manufacturing, accounting, and management information systems and
believes that its internal systems address all Year 2000 issues in all material
respects.
The Company has requested documentation in the form of questionnaires from
its vendors and suppliers to determine the adequacy of their preparedness with
respect to Year 2000 issues. Because the assessment will not be complete until
June 1999, the Company is unable to determine vendor and supplier compliance
with year 2000 readiness. To date, the Company has received back a majority of
the vendor questionnaires and has not received any notification as to any
material deficiency from any vendor or supplier. There can be no assurance that
the Company's suppliers or service providers will not suffer a Year 2000
business disruption which could have a material adverse impact on the Company's
business, financial condition and results of operations The Company, in the
ordinary course of business, seeks to expand its vendor base to lessen the
dependence on any one vendor and seeks additional sources of supply for its key
products and services where appropriate.
The Company has also assessed Year 2000 compliance regarding the products
it manufactures. A program is underway to test each of the products sold by the
Company following standards suggested by Sematech. Sematech is an industry
consortium, whose membership comprises a number of the world's largest
semiconductor manufacturers. This consortium provides guidance regarding
standards to be used by member companies and others selling equipment to the
semiconductor industry, which includes specific recommended tests to be
conducted on equipment to determine the adequacy of functionality and compliance
with Year 2000 issues. While testing will not be completed on all products until
the end of May 1999, the Company has not encountered any significant issues
based upon the preliminary data collected.
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Micrion has contacted in writing all customers that purchased focused ion
beam systems to inform them of the tests being conducted on various Micrion
products, advise them of any potential Year 2000 issues on the systems used by
them, and offer solutions. In addition, Micrion has established a section on its
website (www.micrion.com) to provide information and updates to customers and
other interested parties regarding the Company's Year 2000 activities.
The Company currently believes that its most reasonably likely worst case
Year 2000 scenario would relate to problems with systems of third parties that
would create the greatest risks with infrastructure, including water and sewer
services, electricity, transportation, telecommunications and supplies. Because
the Company's ability to eliminate these problems is limited, contingency plans
are limited to seeking to expand the vendor base and additional sources of
supply for key products and services, as described above, and to ensure that
adequate supplies are in stock at December 31, 1999.
For the fiscal years 1999 and 1998, incremental costs incurred and charged
to expense to identify, test and correct such Year 2000 problems were not
material to the consolidated financial statements. Future incremental
expenditures are also not expected to be material to the consolidated financial
statements. At this time, the Company expects that the cost of addressing all
Year 2000 issues will not have a material effect upon the Company's financial
position, results of operations, or cash flows in future periods.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999 the Company had working capital of $26.9 million as
compared to $29.9 million at June 30, 1998, reflecting a decrease in working
capital of $3.0 million. The decrease is primarily attributable to an increase
in inventory offset by a decrease in accounts receivable and increases in
accounts payable and borrowings against the Company's working line of credit.
Cash and cash equivalents were $2.3 million as of March 31, 1999 as compared to
$3.3 million as of June 30, 1998.
Net cash used in operating activities for the nine months ended March 31,
1999 was approximately $29,000 and consisted primarily of a decrease in accounts
receivable and accrued expenses offset by an increase in accounts payable and
inventories. Accounts payable and inventory increased due to the level of
inventory purchases relating to the new C3D FIB products being received towards
the end of the quarter.
Net cash used in investing activities for the nine months ended March 31,
1999 was approximately $1.5 million and consisted primarily of the sale of a
demonstration FIB system offset against an increase in engineering equipment
used to support research and development applications and FIB systems and the
addition of two leased FIB systems currently at customer sites for evaluation.
Net cash provided by financing activities for the nine months ended March
31, 1999 was $.6 million and consisted primarily of net borrowings of $2.2
million from the Company's
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available working capital line of credit offset against repayments by the
Company of $1.3 million and $.5 million, respectively, against outstanding
long-term debt and capital lease obligations.
The Company has a working capital line of credit with a bank, which
provides for borrowings up to $10.0 million. Amounts borrowed bear interest at
the bank's prime rate plus .5% (8.25% at March 31, 1999). The line of credit
expires on December 1, 1999 and is secured by the Company's assets and
intellectual property. As of March 31, 1999, $5.8 million was outstanding under
the line of credit. In July 1997, the Company entered into a secured long-term
debt loan agreement with a bank for $8.0 million. The loan is secured by the
Company's assets and intellectual property. The term loan bears interest at the
bank's prime rate plus 1.5% (9.25% at March 31, 1999). The agreement calls for
twelve quarterly payments of $666,667 commencing in the quarter ending September
30, 1998 through the quarter ending June 30, 2001. The outstanding balance as of
May 13, 1999 on the term loan was $6,000,000.
The Company believes that existing cash balances, together with its
available line of credit, will be sufficient to finance the Company's operations
and meet its foreseeable cash requirements at least through the next twelve
months.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Market risk represents the risk of loss that may affect the consolidated
financial statements of the Company due to adverse changes in financial market
prices and rates. The Company's market risk exposure is primarily the result of
fluctuations in foreign exchange rates. The price in dollars of products sold
outside the United States in foreign currencies will vary as the value of the
dollar fluctuates against such foreign currencies.
During its fiscal year ended June 30, 1998, the Company derived
approximately 61.6% of its total revenue from sales to customers outside of the
United States and approximately 2.2% of total revenue was from sales which were
denominated in foreign currencies. Although the Company's sales denominated in
foreign currencies in the fiscal year ended June 30, 1998 were not material,
there can be no assurance that such sales will not be material in the future and
that there will not be increases in the value of the dollar against such
currencies that will reduce the dollar return to the Company on the sale of its
products in such foreign countries.
Part II. Other Information
ITEM 1. LEGAL PROCEEDINGS.
Certain litigation filed against the Company purportedly by a class of
purchasers of the Company's common stock was described in the Company's Form
10-K filed on September 28, 1998 and updated on the Company's Form 10-Q filed
November 13, 1998. Subsequent to
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the filing of the Form 10-Q, no material developments have occurred with respect
to this litigation.
ITEM 2. CHANGES IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
The Exhibits filed as part of this report are listed below.
Exhibit
Number Description
------ -----------
11 Statement of Computation of Per Share Earnings
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended March 31, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MICRION CORPORATION
(Registrant)
Date: May 13, 1999 /s/ Nicholas P. Economou
------------------------
Nicholas P. Economou
President and Chief
Executive Officer
Date: May 13, 1999 /s/ David M. Hunter
-------------------
David M. Hunter
Vice President,
Finance and Administration
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Micrion Corporation
EXHIBIT INDEX
-------------
Exhibit
Number Description of Document Page
- ------- ----------------------- ----
11 Statement of Computation of
Per Share Earnings (Loss) 16
27 Financial Data Schedule 17
15
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MICRION CORPORATION AND SUBSIDIARIES Exhibit 11
Statement of Computation of Per Share Earnings (Loss)
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
For the three months For the nine months
ended March 31, ended March 31,
1998 1999 1998 1999
------- ------- ------- -------
(in thousands except per share data)
<S> <C> <C> <C> <C>
Net (loss) income .................................... $(1,255) $( 954) $ 19 $(2,493)
(a) Computation of Basic Earnings (Loss)
per Share:
Weighted average common shares outstanding:
Common stock ....................................... 4,061 4,088 4,055 4,079
------- ------- ------- -------
Basic Earnings (Loss) per Share ..................... $( 0.31) $( 0.23) $ 0.00 $( 0.61)
======= ======= ======= =======
(b) Computation of Diluted
Earnings (Loss) per Share:
Weighted average common equivalent shares outstanding:
Common stock ....................................... 4,061 4,088 4,055 4,079
Common stock equivalents:
Warrants(1) ...................................... -- -- 62 --
Options (2) ...................................... -- -- 201 --
------- ------- ------- -------
Weighted average common and
common equivalent shares
outstanding .......................................... 4,061 4,088 4,318 4,079
======= ======= ======= =======
Diluted Earnings (Loss) per Share ................... $( 0.31) $( 0.23) $ 0.00 $( 0.61)
======= ======= ======= =======
</TABLE>
(1) Warrants issued 5/94 for 100,000 shares, less shares reacquired under the
treasury stock method.
(2) Options granted 11/94 through 3/98, less shares reacquired under the
treasury stock method.
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 2,308
<SECURITIES> 0
<RECEIVABLES> 16,511
<ALLOWANCES> 0
<INVENTORY> 23,593
<CURRENT-ASSETS> 46,136
<PP&E> 11,478
<DEPRECIATION> 7,479
<TOTAL-ASSETS> 51,006
<CURRENT-LIABILITIES> 19,234
<BONDS> 0
0
0
<COMMON> 32,038
<OTHER-SE> 70
<TOTAL-LIABILITY-AND-EQUITY> 51,006
<SALES> 30,410
<TOTAL-REVENUES> 32,223
<CGS> 19,796
<TOTAL-COSTS> 21,354
<OTHER-EXPENSES> 9
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 919
<INCOME-PRETAX> 0
<INCOME-TAX> (1,035)
<INCOME-CONTINUING> (2,726)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,493)
<EPS-PRIMARY> (.61)
<EPS-DILUTED> (.61)
</TABLE>
