<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2 TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 24, 1998
MATTSON TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
- --------------------------------------------------------------------------------
Delaware 0-21970 77-0208119
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
- --------------------------------------------------------------------------------
3550 West Warren Avenue
Fremont, California 94538
(Address of principal executive offices) (Zip Code)
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code (510) 657-5900
(Former name or former address, if changed since last report)
<PAGE>
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K filed
August 6, 1998 as set forth in the pages attached hereto.
Item 7. Financial Statements and Exhibits
(a) Concept Systems Design, Inc. financial statements for the
years ended June 30, 1997 and 1998.
2
<PAGE>
CONCEPT SYSTEMS DESIGN, INC.
BALANCE SHEET
JUNE 30, 1998 AND 1997
(in thousands, except share data)
ASSETS
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 156 $ 1,140
Restricted cash 100 1,434
Accounts receivable, net of allowance for doubtful
accounts of $46 and $46 1,218 1,409
Income tax receivable 551 1,775
Inventories 2,191 2,828
Prepaid expenses and other current assets 116 272
-------- --------
Total current assets 4,332 8,858
-------- --------
Property, plant and equipment, at cost:
Machinery and equipment 1,972 2,495
Leasehold improvements 1,899 1,457
Furniture and fixtures 173 162
-------- --------
4,044 4,114
Less: Accumulated depreciation and amortization (1,412) (743)
-------- --------
2,632 3,371
Deposits and other assets 352 535
-------- --------
$ 7,316 $ 12,764
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Note payable $ 683 $ --
Borrowing under lines of credit -- 675
Accounts payable 4,448 1,374
Accrued liabilities 548 929
Deferred revenue and customer deposits 1,600 699
Debenture payable 4,000 --
-------- --------
Total current liabilities 11,279 3,677
-------- --------
Long-term portion of borrowing under lines of credit -- 700
-------- --------
Commitments (Note 5)
Shareholders' equity
Series A Convertible Preferred stock, no par value:
Authorized, issued and outstanding 400,000 6,000 6,000
Common stock, no par value
Authorized - 10,000,000
Issued and outstanding - 2,257,441 and 2,253,541 296 292
Retained earnings (deficit) (10,259) 2,095
-------- --------
Total shareholders' equity (deficit) (3,963) 8,387
-------- --------
$ 7,316 $ 12,764
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
CONCEPT SYSTEMS DESIGN, INC.
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
(in thousands)
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Sales $ 8,725 $ 12,809
Cost of sales 7,396 7,867
---------- ----------
Gross profit 1,329 4,942
---------- ----------
Operating expenses:
Selling, general and administrative 3,417 3,832
Research and development 10,356 5,976
---------- ----------
Total operating expenses 13,773 9,808
---------- ----------
Loss from operations (12,444) (4,866)
---------- ----------
Interest expense and other income, net (374) (4)
---------- ----------
Loss before provision for income taxes (12,818) (4,870)
Benefit from income taxes 464 1,821
---------- ----------
Net loss $ (12,354) $ (3,049)
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
CONCEPT SYSTEMS DESIGN, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SERIES A CONVERTIBLE RETAINED
PREFERRED STOCK COMMON STOCK EARNINGS
-------------------- --------------------- -------
SHARES AMOUNT SHARES AMOUNT (DEFICIT) TOTAL
-------------------- --------------------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance June 30, 1996 - $ - 2,230,000 $ 238 $ 5,144 $ 5,382
Issuance of common stock - - 23,541 54 - 54
Issuance of preferred stock 400,000 6,000 - - - 6,000
Net loss - - - - (3,049) (3,049)
------- -------- --------- --------- -------- --------
Balance June 30, 1997 400,000 6,000 2,253,541 292 2,095 8,387
Issuance of common stock - - 3,900 4 - 4
Net loss - - - - (12,354) (12,354)
------- -------- --------- --------- -------- --------
Balance June 30, 1998 400,000 $ 6,000 2,257,441 $ 296 $(10,259) $ (3,963)
------- -------- --------- --------- -------- --------
------- -------- --------- --------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CONCEPT SYSTEMS DESIGN, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (12,354) $ (3,049)
Adjustments to reconcile net loss to net cash used for operating
activities:
Depreciation 986 529
Loss on disposition of fixed assets 1,738 -
Changes in operating assets and liabilities:
Restricted cash 1,334 (1,284)
Accounts receivable 191 1,423
Income tax receivable 1,224 (1,774)
Inventories 637 1,445
Prepaid expenses and other current assets 156 111
Deposits and other assets 183 47
Accounts payable 3,074 (1,888)
Accrued liabilities (381) 6
Deferred revenue and customer deposits 901 90
---------- ---------
Net cash used for operating activities (2,311) (4,344)
---------- ---------
Cash flows from investing activities:
Purchase of property and equipment (1,985) (3,053)
---------- ---------
Cash flows from investing activities:
Proceeds from borrowings 4,683 875
Repayment of lines of credit (1,375) (2,000)
Issuance of common stock 4 54
Issuance of preferred stock - 6,000
---------- ---------
Net cash provided by financing activities 3,312 4,929
---------- ---------
Net decrease in cash and cash equivalents (984) (2,468)
Cash and cash equivalents at beginning of year 1,140 3,608
---------- ---------
Cash and cash equivalents at the end of the year $ 156 $ 1,140
---------- ---------
---------- ---------
Supplemental disclosure of cash flow information:
Cash paid for interest $ 238 $ 141
Cash paid for income taxes $ 304 $ 290
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
CONCEPT SYSTEMS DESIGN, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
NOTE 1: ORGANIZATION
Concept Systems Design, Inc. was incorporated in California on July 1, 1989, to
develop, manufacture and sell semiconductor capital equipment. In addition, the
Company also provides field service support and sells spare parts for its
products. The principal markets for the Company's semiconductor capital
equipment are domestic, European and Pacific Rim semiconductor manufacturers.
All of the Company's manufacturing operations are carried out in a single
facility, located in Fremont, California. The Company is subject to a number of
risks including concentrations of customers in the semiconductor industry, the
need to obtain adequate financing, competition from firms with greater financial
resources than the Company, and dependence on key personnel.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. The carrying amounts of these
instruments approximate fair value due to their short maturities.
RESTRICTED CASH
The cash received in connection with the sale of Series A Convertible Stock is
restricted for use only in the development of the Company's next generation
product, the Single Wafer System. In addition, the Company is required to
maintain cash balances that are restricted by provisions of its building lease
agreement. Restricted cash is invested in accounts earning market rates;
therefore, its carrying value approximates fair value. Such cash is excluded
from cash and cash equivalents for the purposes of the statement of cash flows.
STOCK BASED COMPENSATION
In October, 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123). As allowed by the provisions of SFAS No. 123, the
Company has continued to apply APB Opinion No. 25 in accounting for its stock
option plans and, accordingly, does not recognize compensation cost because the
exercise price equals the market price of the underlying stock at the date of
grant. The Company has adopted the disclosure only provisions of SFAS No. 123
and Note 9 to the financial statements contains a summary of the pro forma
effects to reported net income (loss) for fiscal 1998 and 1997 for compensation
cost based on the fair value of the options granted at the grant date as
prescribed by SFAS No.123.
INVENTORIES
Inventories are stated at the lower of cost or market and include material,
labor and manufacturing costs. Inventories are valued at currently adjusted
standards, which approximate actual costs, on a first-in, first-out basis.
The Company provides inventory reserves for excess, obsolete, damaged or lost
inventory. The process of estimating required inventory reserves is judgmental
and is based on a number of factors, which require input and discussion among
various members of management. Such factors include changes in customer demand
and technology, as well as other economic factors. Therefore, it is reasonably
possible that these estimates could change in the near term.
7
<PAGE>
Inventories consisted of the following:
<TABLE>
<CAPTION>
JUNE 30,
AMOUNTS IN THOUSANDS: 1998 1997
-------- -------
<S> <C> <C>
Purchased parts and raw materials $ 919 $ 2,258
Work-in-process 613 570
Finished goods 659 -
-------- -------
$ 2,191 $ 2,828
-------- -------
-------- -------
</TABLE>
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and are generally depreciated over the
estimated useful lives of the assets (five years) using the straight-line
method. Leasehold improvements are amortized on a straight-line basis over the
shorter of the useful lives of the assets or the remaining lease term.
REVENUE RECOGNITION AND PRODUCT WARRANTY
Sales are generally recognized upon shipment. The Company provides a reserve for
the estimated costs of installation and warranty at the time of sale.
Maintenance and service revenues are recognized as the related work is
performed. Deferred revenues consist primarily of customer deposits.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash investments and trade receivables. The
Company has cash investment policies that limit cash investments to short-term,
low risk investments. Additionally, the Company grants credit to customers who
are concentrated in the semiconductor industry. The Company performs ongoing
credit evaluations of its customers' financial condition, and establishes an
allowance for doubtful accounts based upon factors surrounding the credit risks
of specific customers, historical trends, and other information. At June 30,
1998, two customers accounted for 88% of total accounts receivable. At June 30,
1997, two customers accounted for 77% of total accounts receivable.
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income".
SFAS 130 establishes standards for reporting and display of comprehensive income
and its components in a financial statement that is displayed with the same
prominence as other financial statements for periods beginning after December
15, 1997. Comprehensive income, as defined, includes all changes in equity (net
assets) during a period from non-owner sources including unrealized gains and
losses on available for sale securities. Reclassification of financial
statements for earlier periods for comparative purposes is required. The Company
does not expect that adoption of this standard will have a material effect on
the Company's financial position or results of operations.
In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information". This statement establishes standards for
the way companies report information about operating segments in annual and
interim financial statements for periods beginning after December 15, 1997. It
also establishes standards for related disclosures about products and services,
geographical areas and major customers. It is not expected that adoption of SFAS
No. 131 will have any impact on the Company's financial statements.
8
<PAGE>
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", SFAS No. 133 establishes new standards of
accounting and reporting for derivative instruments and hedging activities for
periods beginning after June 15, 1999. SFAS No. 133 requires that all
derivatives be recognized at fair value in the statements of financial position,
and that the corresponding gains or losses be reported either in the statement
of operations or as a component of comprehensive income, depending on the type
of hedging relationship that exists. The Company is currently assessing the
disclosure effects of adopting SFAS No. 133.
NOTE 3: MAJOR CUSTOMERS AND EXPORT SALES
For the years ended June 30, 1998 and 1997, the Company had the following
customers who accounted for greater that 10% of sales:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Customer A 46% 15%
Customer B 27% 28%
Customer C 10% -
Customer D - 19%
</TABLE>
For the years ended June 30, 1998 and 1997, international sales, consisting of
export sales from the U.S., were as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Europe 7% 10%
Asia/Pacific 2% 30%
</TABLE>
NOTE 4: BORROWINGS
During fiscal year 1996, the Company entered into a $1,300,000 revolving line of
credit with a bank to finance $650,000 of domestic accounts receivable and
$650,000 of foreign accounts receivable. In addition, the Company entered into a
$1,000,000 term line of credit to finance capital equipment. The accounts
receivable lines and the capital equipment line were to expire on January 2,
1998 and December 3, 2001, respectively. As of June 30, 1997, $475,000 was
outstanding on the domestic line of credit and $900,000 was outstanding under
the capital equipment term line. These amounts are included in current and
long-term borrowings under lines of credit on the accompanying balance sheet at
June 30, 1997. The credit lines were terminated in April 1998, and amounts
outstanding thereunder were repaid in full. During fiscal year 1998, the Company
entered into a factoring arrangement which allowed the Company to borrow up to
80% of eligible accounts receivable balances. Borrowings under the arrangement
are full recourse, subject to a 1/2% administrative fee of the amount borrowed,
accrue interest at 2% per month of the average daily account balance and are
secured by receivables, inventory and equipment. At June 30, 1998, $683,000 was
outstanding under the factoring arrangement.
NOTE 5: COMMITMENTS AND CONTINGENCIES
The Company leases its primary operating facility in Fremont, California under
an operating lease. Under the terms of the operating lease, monthly rent
payments are scheduled to escalate over the period of the lease. The Company
records rent expense on a straight-line basis over the lease period. The minimum
future lease payments at June 30, 1998 required under the Company's operating
lease is as follows (in thousands):
9
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR OPERATING
ENDING JUNE 30, LEASE
-------------- ---------
<S> <C>
1999 $ 628
2000 647
2001 667
2002 687
2003 585
----------
Total Minimum payments $ 3,214
----------
----------
</TABLE>
Rent expense was approximately $615,000 and $620,000 for fiscal 1998 and 1997,
respectively.
NOTE 6: INCOME TAXES
Deferred tax assets of $213,000 at June 30, 1997, consisting primarily of the
tax effects of temporary differences between the carrying value of certain
accrued expenses and reserves for financial reporting purposes and the amounts
reported for income tax purposes and were included in prepaid expenses and other
current assets. Deferred tax assets of approximately $4,000,000 at June 30,
1998, consisting primarily of the tax effects of net operating loss
carryforwards, are fully reserved due to the uncertainty of their realization
based upon the weight of currently available information.
The income tax benefit consists of the following for the years ended June 30 (in
thousands):
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Current $ 677 $ 2,095
Deferred (213) (274)
------- -------
$ 464 $ 1,821
------- -------
------- -------
</TABLE>
The difference between the statutory tax rate and the Company's effective tax
rate is primarily due to changes in the valuation allowance related to certain
net operating losses and to the payment of state income taxes, net of the
federal tax impact. As of June 30, 1998, the Company had net operating loss
carryforwards of approximately $10,000,000, which expire primarily in fiscal
2018.
NOTE 7: CONVERTIBLE PREFERRED STOCK
As of June 30, 1998, the Company had issued 400,000 shares of Series A
Convertible Preferred Stock (Series "A"). In connection with the issuance of
Series A, the holder was given an option to purchase the outstanding shares of
the Company for an amount based on a valuation formula wherein the total
valuation of the Company would not be less than $45,000,000. This option expired
on July 15, 1998. Other rights, restrictions and preferences of the Series A are
as follows:
- - Each share of Series A is convertible, at the right and option of the
shareholder, into one share of common stock.
- - Each shareholder of Series A is entitled to the number of votes equal to
the number of shares of common stock into which the preferred stock can be
converted.
- - Each share of Series A will automatically convert into common stock in the
event of the closing of an underwritten public offering of the Company's
common stock from which the Company receives proceeds in excess of
$10,000,000 and for which the offering price is not less than $10.00 per
share of common stock or immediately upon the closing of the acquisition of
a majority of the then outstanding shares of the Company's
10
<PAGE>
common stock by holders of the majority of the then outstanding shares of
the series A Convertible Preferred Stock.
- - Each shareholder of Series A is entitled to receive annual dividends at the
rate of $1.50 per share, when and if declared by the Board of Directors,
prior to payment of dividends on common stock. Dividends are
non-cumulative, and no dividends have been declared to date.
- - In the event of any liquidation, dissolution, or winding-up of the Company,
either voluntary or involuntary, each shareholder of Series A will be
entitled to receive, prior and in preference to any distribution of any
assets or surplus funds to the holders of common stock, an amount equal to
$15.00 per share. If the full amount is not available for distribution,
amounts will be paid out in pro-ration to the aggregate preferential
amounts owed.
Subsequent to June 30, 1998, in conjunction with the acquisition of the Company
by Mattson Technology, Inc. ("Mattson") as further described in Note 12, the
Series A was converted to Company common stock and then exchanged for Mattson
Common Stock in a ratio of one share of Mattson Common Stock for each three
shares of Company common stock outstanding.
NOTE 8: COMMON STOCK
As of June 30, 1998, the Company had reserved shares of common stock for future
issuance as follows (in thousands):
<TABLE>
<S> <C>
Conversion of Series A Convertible Preferred Stock 400
Exercise of stock options 397
---
797
---
---
</TABLE>
NOTE 9: STOCK INCENTIVE PLAN
In 1994, the Board of Directors approved the 1994 Stock Incentive Plan (the
"Plan"). Under the Plan, incentive and non-qualified stock options to purchase
up to 400,000 shares may be granted to employees and outside directors of the
Company. The exercise price per share will not be less than the fair value as
determined by the Board of Directors at the date of grant. Options become
exercisable as determined by the Board of directors, which is generally ratably
over four years from the date of grant, and expire ten years after the date of
grant.
Option activity under the Plan for the year ended June 30, 1998 and 1997 is as
follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
----------------------------------------
SHARES AVAILABLE WEIGHTED AVERAGE
FOR GRANT NUMBER OF SHARES EXERCISE PRICE
---------------- ---------------- ----------------
<S> <C> <C> <C>
Balance at June 30, 1996 140,500 259,500 $1.64
Exercised - (3,541) $1.20
Canceled 7,209 (7,209) $1.43
Granted (60,500) 60,500 $2.50
---------------- ----------------
Balance at June 30, 1997 87,209 309,250 $1.78
Canceled 80,073 (80,073) $2.41
Granted (106,500) 106,500 $2.50
---------------- ----------------
Balance at June 30, 1998 60,782 335,677 $1.82
---------------- ----------------
---------------- ----------------
</TABLE>
11
<PAGE>
The following table summarizes information about stock options outstanding at
June 30, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ---------------------------------------------------------------- -----------------------------------
NUMBER NUMBER WEIGHTED
RANGE OF EXERCISE OUTSTANDING AS OF WEIGHTED AVERAGE EXERCISABLE AS OF AVERAGE
PRICES JUNE 30, 1998 EXERCISE PRICE JUNE 30, 1998 EXERCISE PRICE
- ------------------- ----------------- ---------------- ----------------- --------------
<S> <C> <C> <C> <C>
$0.35 - $1.32 143,646 $0.90 125,206 $0.86
$2.50 192,031 $2.50 85,231 $2.50
- ------------------- ----------------- ---------------- ----------------- --------------
$0.35 - $2.50 335,677 $1.82 210,437 $1.52
- ------------------- ----------------- ---------------- ----------------- --------------
- ------------------- ----------------- ---------------- ----------------- --------------
</TABLE>
In July 1998, the Company terminated the stock option plan. As part of the
termination agreement and the acquisition agreement with Mattson, the Company
offered employees $1.00 cash for each option outstanding or the right to convert
three options of the Company to one option of Mattson. The Company paid
approximately $271,000 to employees in exchange for the outstanding options and
the balance of approximately 65,000 options were exchanged for approximately
22,000 Mattson options with an exercise price which was one third the existing
exercise price.
In October 1995, the Financial Accounting Standards Board issued Statement No.
123 ("SFAS No. 123") "Accounting for Stock-Based Compensation," which
establishes a fair value-based method of accounting for stock-based compensation
plans and requires additional disclosures for those companies who elect not to
adopt the new method of accounting. The Company adopted SFAS No. 123 in fiscal
1997, and in accordance with the provisions of SFAS No. 123, the Company has
elected to continue to apply APB Opinion 25 in accounting for its stock option
plan. Had compensation cost for this plan been determined consistent with SFAS
No. 123, the Company's net loss in 1998 would have increased to $12,496,000 and
the net loss in 1997 would have increased to $3,090,000.
The weighted average fair values of options granted during fiscal year 1998 and
1997 were $0.41 and $0.44, respectively. The options outstanding at June 30,
1998 have a weighted average contractual remaining life of 7.3 years.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions used for
grants in 1998 and 1997; risk-free interest rates of 6% to 6.4%; expected
dividends of 0%; expected lives of 3 years beyond grant date; and expected
volatility of 0.01%.
NOTE 10: EMPLOYEE BENEFIT PLAN
Effective January 1, 1994, the Company adopted an employee benefit plan that
covers substantially all employees. The Company may make discretionary
contributions to this employee benefit plan and contributions vest immediately.
The Company contributed $0 and $105,000 to the Employee Benefit Plan during the
years ended June 30, 1998 and 1997, respectively.
NOTE 11: SUBORDINATED CONVERTIBLE DEBENTURE
In October 1997, the Company issued 3% subordinated convertible debentures in
the principal amount of $4,000,000 to the Series A shareholder. The agreement
required the principal amount to be repaid in five equal annual amounts
beginning in December 1998, with interest payments due quarterly. In conjunction
with the acquisition of the Company by Mattson, as described in Note 12, the
debenture and all accrued interest payments were paid in full in August 1998. As
a result, this debenture has been reflected as a current liability in the
accompanying balance sheet at June 30, 1998.
12
<PAGE>
NOTE 12: SUBSEQUENT EVENT
On July 24, 1998, Mattson acquired the Company. Under the terms of the
agreement, each share of Concept common stock issued and outstanding and held by
the former shareholders of the Company was converted into the right to receive
one-third of a share of Mattson Common Stock. Of the 795,136 shares of Mattson
Common Stock issued in connection with the merger (the "Mattson Shares"), 89,514
shares, will be held in escrow for one year as security against breaches by the
Company of the representations, warranties and covenants made under the
agreement. Notwithstanding the foregoing, an aggregate of 100,000 shares from
the Mattson Shares otherwise issuable to the shareholders of the Company as a
result of the merger shall not be issued initially and shall only be issued if
the Company achieves net revenues of $16,667,000 during the first twenty-four
(24) full calendar months following the closing date. In addition, up to 447,569
additional shares of Mattson Common Stock may be issued to the Company
shareholders at the end of the twenty-four month period if the Company meets the
revenue milestones stated above and Mattson's closing share price for its Common
Stock does not reach at least $12 per share for any consecutive ten (10) day
trading period during the twenty-four month period following the closing date.
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholder of
Concept Systems Design, Inc.
In our opinion, the accompanying balance sheet and the related statements of
operations, of shareholders' equity and of cash flows present fairly, in all
material respects, the financial position of Concept Systems Design, Inc. at
June 30, 1998, and the results of its operations and its cash flows for the year
then ended in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
San Jose, California
April 15, 1999
14
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors of
Concept Systems Design, Inc.
We have audited the accompanying balance sheet of Concept Systems Design, Inc.
(a California corporation) as of June 30, 1997 and the related statements of
operations, shareholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Concept Systems Design, Inc. as
of June 30, 1997, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Arthur Andersen LLP
San Jose, California
September 4, 1997
15
<PAGE>
(b) Unaudited pro-forma condensed combined statement of operations for
the Year ended December 31, 1998.
The following unaudited pro forma condensed combined statement of operations
gives effect to the merger of Mattson Technology, Inc. (Mattson) and Concept
Systems Design, Inc. (Concept) using the purchase method of accounting in
accordance with generally accepted accounting principles. Mattson is considered
the accounting acquirer. The unaudited pro forma condensed combined statement of
operations is based upon the historical financial statements of the respective
companies. The unaudited pro forma condensed combined statement of operations
for the twelve months ended December 31, 1998 assumes the merger took place as
of January 1, 1998 and combines Mattson's consolidated statement of operations
for the twelve months ended December 31, 1998 (which includes Concept operations
from the date of acquisition of July 24, 1998 to December 31, 1998) with
Concept's unaudited statement of operations for the period January 1, 1998 to
July 23, 1998. The unaudited pro forma condensed combined statement of
operations is based on the estimates and assumptions set forth in the notes to
such statement. The pro forma adjustments are based on a valuation of Concept,
made in connection with the development of the pro forma information to comply
with the disclosure requirements of the Securities and Exchange Commission. The
unaudited pro forma condensed combined statement of operations does not purport
to be indicative of the results of operations for future periods or the combined
results that would have been realized had the companies been a single entity
during this period. The unaudited pro forma condensed combined statement of
operations should be read in conjunction with the historical financial
statements and related notes thereto of Concept, which are included elsewhere
herein and the historical consolidated financial statements of Mattson included
in Mattson's December 31, 1998 Annual Report on Form 10-K previously filed with
the Securities and Exchange Commission.
16
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
MATTSON TECHNOLOGY, CONCEPT SYSTEMS PRO FORMA
------------------- --------------- ---------
INC. DESIGN, INC.
---- ------------
PERIOD
------
FOR THE YEAR ENDED JANUARY 1, 1998
------------------ ---------------
DECEMBER 31, 1998 TO JULY 23, 1998
----------------- ----------------
ADJUSTMENTS COMBINED
----------- --------
<S> <C> <C> <C> <C>
Net sales $ 59,186 $ 5,938 $ - $ 65,124
Cost of sales 37,595 4,891 455 (a) 42,941
--------------- ---------- -=-------- ----------
Gross profit 21,591 1,047 (455) 22,183
--------------- ---------- ---------- ----------
Operating expenses:
58 (c)
101 (a)
----------
Research, development and engineering 16,670 5,316 159 22,145
Acquired in-process research and ----------
development 4,220 (4,220) (d)
192 (b)
39 (a)
----------
Selling, general and administrative 24,542 2,223 231 26,996
--------------- ---------- ---------- ----------
Total operating expenses 45,432 7,539 (3,830) 49,141
--------------- ---------- ---------- ----------
Income (loss) from operations (23,841) (6,492) 3,375 (26,958)
Interest and other income (expense), net 1,811 (370) - 1,441
--------------- ---------- ---------- ----------
Income (loss) before income taxes (22,030) (6,862) 3,375 (25,517)
Provision for (benefit from) income taxes 337 (220) - 117
--------------- ---------- ---------- ----------
Net income (loss) $ (22,367) $ (6,641) $ 3,375 $ (25,634)
--------------- ---------- ---------- ----------
--------------- ---------- ---------- ----------
Net loss per share:
Basic $ (1.52) $ (1.68)
--------------- ----------
--------------- ----------
Diluted $ (1.52) $ (1.68)
--------------- ----------
--------------- ----------
Weighted average shares outstanding:
Basic 14,720 15,235 (e)
--------------- ----------
--------------- ----------
Diluted 14,720 15,235
--------------- ----------
--------------- ----------
</TABLE>
See accompanying notes to unaudited pro forma condensed combined
financial information
17
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. The Acquisition
The pro forma condensed combined financial information reflects the
acquisition of Concept on July 24, 1998 for 795,136 shares of Mattson
Common Stock. The purchase price of the acquisition of $4,689,000, which
includes $650,000 of estimated acquisition related costs, was used to
acquire the net assets of Concept. The purchase price for pro forma
purposes was allocated to assets acquired and liabilities assumed based
on the book value of Concept's current assets and liabilities, which
management believes approximates their fair value, the estimated fair
value of property and equipment, based on management's estimates of fair
value, and an independent appraisal for all other identifiable assets.
The excess of the purchase price over the net tangible and intangible
assets acquired and liabilities assumed has been allocated to goodwill.
The allocation of the purchase price is as follows (in thousands):
<TABLE>
<S> <C>
Property and equipment $ 3,055
Current and other assets 4,041
Liabilities assumed (13,570)
Goodwill 1,643
Acquired in-process research and development 4,220
Acquired developed technology and workforce 5,300
---------
$ 4,689
---------
---------
</TABLE>
The amounts summarized above were recorded by Mattson in the third
quarter of 1998. In the first quarter of 1999, a preacquisition
contingency was resolved which reduced the liabilities assumed from
Concept by approximately $2.2 million. Under the provisions of
Statement of Financial Accounting Standards No. 38, this has been
recorded by Mattson in the first quarter of 1999 on a prospective basis
as an elimination of previously recorded goodwill and a pro-rata
reduction of the balance to the acquired developed technology, workforce
and property and equipment.
In addition to the purchase price shown above, the agreement for the
acquisition of Concept also includes the contingent distribution of
shares of Common Stock of Mattson of 100,000 shares that will be issued
to the Concept shareholders if Concept achieves net revenues of at least
$16,667,000 during the first twenty-four full calendar months following
the acquisition date. Up to an additional 447,569 shares of Mattson
Common Stock will be issued to the Concept shareholders if the net
revenue milestone is achieved and the stock price of Mattson Common Stock
does not reach at least $12 per share for any consecutive ten day trading
period during the twenty-four full calendar months following the
acquisition. Additional shares issued, if any, will be valued at the fair
value of the shares at the date of issue and will result in goodwill.
2. Unaudited Pro forma Condensed Combined Statement of Operations
The following adjustments were applied to the historical statements of
operations for Mattson (including Concept operations from July 24, 1998)
for the year ended December 31, 1998 and Concept for the period January
1, 1998 to July 23, 1998 to arrive at the unaudited pro forma condensed
combined statement of operations for the year ended December 31, 1998 as
though the acquisition took place on January 1, 1998:
(a) To reflect amortization of the fair values of the
developed technology and work force over periods ranging from 3 to 7 years.
(b) Adjustment to recognize amortization of goodwill arising
from the merger over 5 years.
(c) To reflect the net change in depreciation related to the
change in fair value of property and equipment over 5 years.
18
<PAGE>
(d) The one time charge to expense for the fair value of
in-process research and development has been excluded from the unaudited pro
forma condensed combined statement of operations since it is a non-recurring
charge.
(e) Shares used in the per share calculation reflect 795,136
shares issued to shareholders as if they were outstanding from the beginning of
the period presented. Basic and diluted weighted average shares outstanding are
the same in each period because of the pro forma combined net loss.
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.2 Consent of Arthur Andersen LLP, independent public accountants.
</TABLE>
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this Amendment No. 2 to Current Report
to be signed on its behalf by the undersigned hereunto duly authorized.
MATTSON TECHNOLOGY, INC.
Date: May 6, 1999 By: /s/ Brian McDonald
---------------------
Brian McDonald
Vice President of Finance and Chief Financial
Officer
20
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.2 Consent of Arthur Andersen LLP, independent public accountants.
</TABLE>
21
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 333-39129, No. 333-59859, No. 33-85272 and No.
33-94972) of Mattson Technology, Inc. of our report dated April 15, 1999
relating to the financial statements of Concept Systems Design, Inc., which
appears in this Current Report on Form 8-K/A of Mattson Technology, Inc. filed
May 6, 1999.
/s/ PricewaterhouseCoopers LLP
- -----------------------------------------
PricewaterhouseCoopers LLP
San Jose, California
May 3, 1999
22
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 333-39129, No. 333-59859, No. 33-85272 and No.
33-94972) of Mattson Technology, Inc. of our report dated September 4, 1997
relating to the financial statements of Concept Systems Design, Inc., which
appears in the Current Report on Form 8-K/A of Mattson Technology, Inc. dated
May 6, 1999.
/s/ Arthur Andersen LLP
- ---------------------------------------
Arthur Andersen LLP
May 3, 1999
San Jose, California
23
