10-Q 1 mtsn201632710-q.htm 10-Q 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________________
FORM 10-Q
____________________________________________________________________________

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 27, 2016
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 000-24838
MATTSON TECHNOLOGY, INC.
(Exact name of Registrant as Specified in its Charter)
Delaware
77-0208119
(State or Other Jurisdiction of Incorporation or Organization) 
(I.R.S. Employer Identification Number)

47131 Bayside Parkway
Fremont, California 94538
(Address of Principal Executive Offices including Zip Code)
(510) 657-5900
(Registrant's Telephone Number, Including Area Code)
____________________________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. YES    x     NO    o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     YES    x     NO    o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
¨
Accelerated filer  
x
Non-accelerated filer
¨
Smaller reporting company
¨
 
 
 
 
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES    ¨    NO    x
At April 29, 2016 there were 75,656,763 shares of common stock outstanding.






MATTSON TECHNOLOGY, INC.
______________________________
TABLE OF CONTENTS
 
 
 
 
 
Page
 
 
 
 
 
Item 1.
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
 
 
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 
 
 

1



PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements (unaudited)

MATTSON TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)

 
Three Months Ended
 
March 27,
2016
 
March 29,
2015
Net revenue
$
28,689

 
$
58,254

Cost of goods sold
20,400

 
36,860

     Gross margin
8,289

 
21,394

Operating expenses:
 

 
 
Research, development and engineering
4,496

 
5,250

Selling, general and administrative
6,735

 
8,841

Restructuring and other charges
1,108

 

     Total operating expenses
12,339

 
14,091

Income (loss) from operations
(4,050
)
 
7,303

Interest income (expense), net
(30
)
 
(34
)
Other income (expense), net
88

 
(443
)
Income (loss) before income taxes
(3,992
)
 
6,826

Provision for income taxes
9

 
521

Net income (loss)
$
(4,001
)
 
$
6,305

Net income (loss) per share:
 

 
 

Basic
$
(0.05
)
 
$
0.08

Diluted
$
(0.05
)
 
$
0.08

Shares used in computing net income (loss) per share:
 

 
 

Basic
75,523

 
74,700

Diluted
75,523

 
77,265

The accompanying notes are an integral part of these condensed consolidated financial statements.

2



MATTSON TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, in thousands)

 
Three Months Ended
 
March 27,
2016
 
March 29,
2015
Net income (loss)
$
(4,001
)
 
$
6,305

Other comprehensive income (loss)
 

 
 

Changes in foreign currency translation adjustments
264

 
(1,534
)
Other comprehensive income (loss)
264

 
(1,534
)
Comprehensive income (loss)
$
(3,737
)
 
$
4,771


 The accompanying notes are an integral part of these condensed consolidated financial statements.

3



MATTSON TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except par value)
 
March 27,
2016
 
December 31,
2015
ASSETS
 
 
 
Current assets:
 

 
 

Cash and cash equivalents
$
21,006

 
$
33,427

Accounts receivable, net of allowance for doubtful accounts of $672 as of March 27, 2016 and $672 as of December 31, 2015
26,476

 
21,685

Advance billings
2,111

 
1,639

Inventories
48,275

 
50,020

Prepaid expenses and other current assets
5,327

 
6,057

     Total current assets
103,195

 
112,828

Property and equipment, net
9,002

 
8,236

Restricted cash
1,811

 
1,811

Other assets
405

 
438

Total assets
$
114,413

 
$
123,313

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 

 
 

Accounts payable
$
14,040

 
$
16,912

Accrued compensation and benefits
2,917

 
4,707

Deferred revenues, current
5,649

 
5,144

Other current liabilities
4,692

 
6,195

     Total current liabilities
27,298

 
32,958

Deferred revenues, non-current
250

 
375

Other liabilities
2,638

 
2,456

     Total liabilities
30,186

 
35,789

Commitments and contingencies (Note 6)


 


Stockholders' equity:
 

 
 

Preferred stock, 2,000 shares authorized; none issued and outstanding

 

Common stock, par value $0.001, 120,000 shares authorized; 80,120 shares issued and 75,647 shares outstanding as of March 27, 2016; 79,853 shares issued and 75,443 shares outstanding as of December 31, 2015
80

 
80

Additional paid-in capital
693,068

 
692,407

Accumulated other comprehensive income
16,553

 
16,289

Treasury stock, 4,473 shares as of March 27, 2016 and 4,410 shares as of December 31, 2015
(38,861
)
 
(38,640
)
Accumulated deficit
(586,613
)
 
(582,612
)
     Total stockholders' equity
84,227

 
87,524

          Total liabilities and stockholders' equity
$
114,413

 
$
123,313

The accompanying notes are an integral part of these condensed consolidated financial statements.

4



MATTSON TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
Three Months Ended
 
March 27,
2016
 
March 29,
2015
Cash flows from operating activities:
 
Net income (loss)
$
(4,001
)
 
$
6,305

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 

 
 

     Depreciation and amortization
784

 
610

     Stock-based compensation
519

 
516

     Other non-cash items
(22
)
 
253

     Changes in assets and liabilities:
 
 
 

          Accounts receivable
(4,803
)
 
(4,820
)
          Advance billings
(472
)
 
265

          Inventories
929

 
(757
)
          Prepaid expenses and other assets
802

 
57

          Accounts payable
(2,909
)
 
(340
)
          Accrued compensation and benefits and other current liabilities
(3,304
)
 
823

          Deferred revenues
381

 
(100
)
          Other liabilities
169

 
138

Net cash provided by (used in) operating activities
(11,927
)
 
2,950

Cash flows from investing activities:
 

 
 

Purchases of property and equipment
(454
)
 
(458
)
Other
3

 

Net cash used in investing activities
(451
)
 
(458
)
Cash flows from financing activities:
 

 
 

Proceeds from issuance of common stock, net of RSU settlements
(79
)
 
1,225

Net cash provided by (used in) financing activities
(79
)
 
1,225

Effect of exchange rate changes on cash and cash equivalents
36

 
(31
)
Net increase (decrease) in cash and cash equivalents
(12,421
)
 
3,686

Cash and cash equivalents, beginning of period
33,427

 
22,760

Cash and cash equivalents, end of period
$
21,006

 
$
26,446

 
 
 
 
Supplemental disclosure of non-cash transactions:
 
 
 
Transfer of inventories into property and equipment
$
932

 
$
1,988

The accompanying notes are an integral part of these condensed consolidated financial statements.

5



MATTSON TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Mattson Technology, Inc. (referred to in this Quarterly Report on Form 10-Q as "Mattson," "we," "us," or "our") was incorporated in California in 1988 and reincorporated in Delaware in 1997. We design, manufacture, market and globally support semiconductor wafer processing equipment used in the fabrication of integrated circuits.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by such accounting principles for complete financial statements. In the opinion of management, all adjustments (which include normal recurring adjustments) considered necessary to present fairly each of the statement of financial position as of March 27, 2016, the statements of operations for the three months ended March 27, 2016 and March 29, 2015, statements of comprehensive income for the three months ended March 27, 2016 and March 29, 2015, and the statements of cash flows for the three months ended March 27, 2016 and March 29, 2015, as applicable, have been made. The condensed consolidated balance sheet as of December 31, 2015 has been derived from our audited financial statements as of such date, but does not include all disclosures required by U.S. GAAP. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2015, which are included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 11, 2016.

The condensed consolidated financial statements include the accounts of Mattson Technology, Inc. and our wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated.

The results of operations for the three months ended March 27, 2016 are not necessarily indicative of results that may be expected for the entire year ending December 31, 2016.

Fiscal Year

Our fiscal year ends on December 31. Our first fiscal quarter of 2016 closed on Sunday, March 27, 2016. Our second and third fiscal quarters are each 13 weeks long and our fourth quarter closes on December 31.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. We evaluate our estimates on an ongoing basis, including those related to the useful lives and fair value of long-lived assets, estimates used to determine facility lease loss liabilities, measurement of warranty obligations, valuation allowances for deferred tax assets, the fair value of stock-based compensation, estimates for allowance for doubtful accounts, and valuation of excess and obsolete inventories. Our estimates and assumptions can be subjective and complex and, consequently, actual results could differ materially from those estimates.

Reclassifications

For presentation purposes, certain prior period amounts have been reclassified to conform to the reporting in the current period financial statements. These reclassifications do not affect our net income, cash flows or stockholders' equity.

6




Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, Compensation: Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards, and classification on the statement of cash flows. This guidance will be effective for us in the first quarter of fiscal 2017, with early adoption permitted. We are currently evaluating the impact that the implementation of this standard will have on our financial statements and footnote disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This guidance will be effective for us in the first quarter of fiscal 2019, with early adoption permitted. We are currently evaluating the impact that the implementation of this standard will have on our financial statements and footnote disclosures.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes. This amendment eliminates the requirement to bifurcate deferred taxes between current and non-current on the balance sheet and requires that deferred tax liabilities and assets be classified as non-current on the balance sheet. This guidance will be effective for us in the first quarter of fiscal 2018, with early adoption permitted. We are currently evaluating the impact that the implementation of this standard will have on our financial statements and footnote disclosures.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. Debt issuance costs are specified incremental costs, other than those paid to the lender, that are directly attributable to issuing a debt instrument (i.e., third party costs). Prior to the adoption of this standard, debt issuance costs were required to be presented in the balance sheet as a deferred charge (i.e., an asset). This presentation differed from the presentation for a debt discount, which is a direct adjustment to the carrying value of the debt (i.e., a contra liability). This new standard requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. This guidance will be effective for us in the first quarter of fiscal 2016, with early adoption permitted. We do not expect the adoption of this accounting standard to have a material impact on our financial statements and footnote disclosures. In August 2015, the FASB issued ASU No. 2015-15, Interest – Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. ASU 2015-15 provides additional guidance to ASU 2015-03, which did not address presentation or subsequent measurement of debt issuance costs related to line of credit arrangements. ASU 2015-15 noted that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line of credit arrangement, regardless of whether there are any outstanding borrowings on the line of credit arrangement. As of December 31, 2015, we continue to record our unamortized debt issuance costs in connection with our revolving credit facility as an asset.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. The FASB issued ASU 2014-09 to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, deferring the effective date of ASU 2014-09 by one year. This guidance will be effective for us in the first quarter of fiscal 2018, with early adoption permitted for annual periods beginning after December 15, 2016. We are currently evaluating the impact that the implementation of this standard will have on our financial statements and footnote disclosures.

In July 2015, the FASB issued ASU No. 2015-11, Inventory: Simplifying the Measurement of Inventory. Under ASU 2015-11, we are required to measure inventory at the lower of cost and net realizable value. The new guidance clarifies that net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This guidance is effective for us in the first quarter of fiscal 2017, with early adoption permitted. We are currently evaluating the impact that the implementation of this standard will have on our financial statements and footnote disclosures.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern. The update provides U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. This guidance is effective for us beginning with

7



our annual financial statements for fiscal 2017. We are currently evaluating the impact that the implementation of this standard will have on our financial statements and footnote disclosures.

There were no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 27, 2016 compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 that are of significance or potential significance to us.

2.
BALANCE SHEET DETAILS

We had restricted cash of $1.8 million and $1.8 million at March 27, 2016 and December 31, 2015, respectively, which is primarily related to secured standby letters of credit for our long-term leases. Accordingly, such amounts are classified as long term in the accompanying condensed consolidated balance sheets. See Note 6. Commitments and Contingencies.

Components of inventories are shown below (in thousands):
 
March 27,
2016
 
December 31,
2015
Inventories:
 
Purchased parts and raw materials
$
32,751

 
$
33,624

Work-in-process
12,533

 
12,793

Finished goods
2,991

 
3,603

 
$
48,275

 
$
50,020


Components of prepaid expenses and other current assets are shown below (in thousands):
 
March 27,
2016
 
December 31,
2015
Prepaid expenses and other current assets:
 
Value-added tax
$
2,749

 
$
3,194

Other current assets
2,578

 
2,863

 
$
5,327

 
$
6,057


Components of property and equipment are shown below (in thousands):
 
March 27,
2016
 
December 31,
2015
Property and equipment, net:
 
Machinery and equipment
$
41,913

 
$
41,463

Furniture and fixtures
8,635

 
8,531

Leasehold improvements
16,855

 
16,396

 
67,403

 
66,390

Less: accumulated depreciation                         
(58,401
)
 
(58,154
)
 
$
9,002

 
$
8,236


Components of other current liabilities are shown below (in thousands):
 
March 27,
2016
 
December 31,
2015
Other current liabilities:
 
Warranty
$
2,545

 
$
3,040

Value-added tax
387

 
1,250

Accrued restructuring charge, current
8

 
8

Other
1,752

 
1,897

 
$
4,692

 
$
6,195



8



3.
FAIR VALUE MEASUREMENT

We measure certain assets and liabilities at fair value, which is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The authoritative guidance on fair value measurements establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2. Include other inputs that are directly or indirectly observable in the marketplace.

Level 3. Unobservable inputs that are supported by little or no market activities.

Our money market funds are classified within Level 1 of the fair value hierarchy, as these instruments are valued using quoted market prices. Specifically, we value our investments in money market securities on quoted market prices in active markets. As of March 27, 2016 and December 31, 2015, we had no assets or liabilities classified within Level 2 or Level 3 and there were no transfers of instruments between Level 1, Level 2 and Level 3 regarding fair value measurement.

Cash and cash equivalents and restricted cash are carried at fair value. Accounts receivable and accounts payable are valued at their carrying amounts, which approximate fair value due to their short-term nature.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are shown in the table below by their corresponding balance sheet caption and consisted of the following types of instruments (in thousands):
 
March 27, 2016
 
December 31, 2015
 
Fair Value Measurements at
Reporting Date Using
 
Fair Value Measurements at
Reporting Date Using
 
(Level 1)
 
Total
 
(Level 1)
 
Total
Assets measured at fair value:
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
     Money market funds
$
10,019

 
$
10,019

 
$
15,011

 
$
15,011

Restricted cash:
 
 
 
 
 
 
 
     Money market funds
1,808

 
1,808

 
1,808

 
1,808

Total assets measured at fair value
$
11,827

 
$
11,827

 
$
16,819

 
$
16,819


4.
BUSINESS COMBINATION

Agreement and Plan of Merger

On December 1, 2015, Mattson entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Beijing E-town Dragon Semiconductor Industry Investment Center (Limited Partnership), a People's Republic of China ("PRC") limited partnership (“Parent”), providing for the merger of Dragon Acquisition Sub, Inc., an indirect subsidiary of Parent (“Merger Sub”), with and into Mattson (the “Merger”), with Mattson surviving the Merger as a subsidiary of Parent (the “Surviving Corporation”). The Merger Agreement was unanimously approved by Mattson’s Board of Directors (the “Board”). On March 23, 2016, Mattson stockholders approved the adoption of the Merger Agreement by the affirmative vote of holders of a majority of the outstanding shares of the Company's Common Stock (the “Company Stockholder Approval”).

Pursuant to the terms and subject to the conditions of the Merger Agreement, at the Effective Time (as defined in the Merger Agreement) of the Merger, each share of Mattson’s common stock, par value $0.001 per share (the “Company Common Stock”), outstanding immediately prior to the Effective Time will be cancelled and automatically converted into the right to receive $3.80 in cash, without interest (the “Merger Consideration”), excluding any shares owned by Mattson or any of its subsidiaries, or by Parent or Merger Sub or any of their respective wholly-owned subsidiaries (which will be cancelled) and any shares with respect to which appraisal rights have been properly exercised under Delaware law. Beijing E-Town International Investment & Development Co., Ltd., the parent company to Parent, has irrevocably and unconditionally guaranteed to the Company the due and punctual payment and performance of Parent’s and Merger Sub’s obligations under the Merger Agreement.

9




At the Effective Time, each option to purchase shares of Company Common Stock (a “Company Option”) that is outstanding and either (i) vested as of the Effective Time or (ii) held by a non-employee member of the Board will be converted into the right to receive an amount in cash, without interest, equal to the product obtained by multiplying (a) the aggregate number of shares of Company Common Stock subject to such Company Option immediately prior to the Effective Time, by (b) the Merger Consideration, less the per share exercise price of such Company Option.

At the Effective Time, each Company Option that is outstanding, unvested and held by an employee who continues employment with Parent or any of its subsidiaries (including the Surviving Corporation) after the Merger will either (i) conditioned upon receipt of an executed Award Surrender Agreement by the Company at least one business day prior to the Effective Time, be converted into the right to receive an amount in cash determined by multiplying (a) the aggregate number of shares of Company Common Stock represented by such Company Option immediately prior to the Effective Time by (b) the Merger Consideration, less the per share exercise price of such Company Option (the “Unvested Option Consideration”), or (ii) be assumed by the Surviving Corporation, on the same terms, conditions and vesting schedule applicable to such Company Option immediately prior to the Effective Time (an “Assumed Option”), except that (x) the number of shares of the Surviving Corporation’s common stock for which such Assumed Option will be exercisable will equal the product (rounded down to the next whole number, with no cash paid for any fractional share eliminated by such rounding) of the number of shares of Company Common Stock that were issuable upon exercise of such Company Option immediately prior to the Effective Time and the Exchange Ratio (as defined in the Merger Agreement) and (y) the per share exercise price for the shares of the Surviving Corporation’s common stock issuable upon exercise of such Assumed Option will equal the quotient (rounded up to the next whole cent) obtained by dividing the exercise price per share of such Company Option immediately prior to the Effective Time by the Exchange Ratio. The Unvested Option Consideration will be subject to the same vesting restrictions and continued service requirements applicable to such Company Option as are in effect immediately prior to the Effective Time, except that any portion of the Unvested Option Consideration remaining outstanding as of December 31, 2016 will accelerate in full and be paid as of such date.

At the Effective Time, each Company restricted stock unit (a “Company RSU”) that is outstanding and either (i) vested as of the Effective Time or (ii) held by a non-employee member of the Board will be converted into the right to receive an amount in cash, without interest, equal to the product obtained by multiplying (a) the aggregate number of shares of Company Common Stock subject to such Company RSU immediately prior to the Effective Time by (b) the Merger Consideration. At the Effective Time, all other outstanding Company RSUs not described in the immediately preceding sentence will be converted into the right to receive an amount in cash, without interest, equal to the product obtained by multiplying (x) the aggregate number of shares of Company Common Stock subject to such Company RSU immediately prior to the Effective Time by (y) the Merger Consideration (the “Unvested RSU Consideration”). The Unvested RSU Consideration will be subject to the same vesting restrictions and continued service requirements applicable to such Company RSU immediately prior to the Effective Time.

The obligations of the parties to consummate the Merger are subject to the satisfaction (or waiver, if applicable) of various customary conditions, including (i) filings and approvals with or by certain governmental authorities, including governmental authorities in the PRC and Taiwan, (ii) the absence of certain governmental orders prohibiting the Merger, (iii) the accuracy of the representations and warranties of each party contained in the Merger Agreement (subject to certain materiality qualifications) and (iv) each party’s compliance with or performance of the covenants and agreements in the Merger Agreement in all material respects.

The Company has made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants (i) to conduct its business in all material respects in the ordinary course consistent with past practices during the period between the execution of the Merger Agreement and the closing of the Merger, and (ii) not to engage in specified types of transactions or take certain actions during the interim period unless consented to in writing by Parent. The Company is also subject to customary restrictions on its ability to solicit alternative acquisition proposals from third parties and to provide non-public information to, and participate in discussions and engage in negotiations with, third parties regarding alternative acquisition proposals, with customary exceptions for alternative acquisition proposals that the Board determines either constitute or could reasonably be expected to lead to a Superior Proposal (as defined in the Merger Agreement).

Parent also has agreed to various covenants in the Merger Agreement, including, among others, covenants to take actions that may be necessary in order to obtain approval of the Merger with certain governmental authorities, subject to certain exceptions.

The Merger Agreement contains certain termination rights for the Company and Parent. Upon termination of the Merger Agreement under specified circumstances, including in connection with the Company’s entry into a definitive agreement providing for the consummation of a Superior Proposal as permitted under the Merger Agreement, the Company will be required to pay Parent a termination fee of approximately $8.6 million.


10



The Merger Agreement also provides that, upon termination of the Merger Agreement under specified circumstances, Parent will be required to pay the Company a termination fee of approximately $17.2 million (the “Parent Termination Fee”). The Parent Termination Fee will become payable from Parent to the Company if, subject to certain requirements and exceptions, the Merger Agreement is terminated by the Company in the event that (i) Parent and/or Merger Sub have breached or failed to perform any of its respective representations, warranties, covenants or other agreements set forth in the Merger Agreement such that the applicable closing conditions would not be satisfied or (ii) all of Parent’s conditions to closing are satisfied or waived and Parent has failed to consummate the Merger.

During the three months ended March 27, 2016, we incurred $1.1 million in costs associated with the Merger Agreement, which was recorded as restructuring and other charges in our condensed consolidated statement of operations.

Voting Agreement

Concurrent with the execution of the Merger Agreement, the directors and certain executive officers of Mattson, in their capacities as holders of Company Common Stock or other equity interests of the Company, entered into a Voting Agreement with Parent (the “Voting Agreement”) pursuant to which each agreed, among other things, to (i) vote their Company Common Stock for the approval of the Merger Agreement and against any alternative proposal, and (ii) comply with certain restrictions on the disposition of their Company Common Stock, subject to the terms and conditions contained in the Voting Agreement. Each stockholder party to the Voting Agreement has granted an irrevocable proxy in favor of Parent to vote his or her shares or other equity interests as required by the terms of the Voting Agreement. The Voting Agreement will terminate upon the earlier of (a) the Effective Time, (b) the termination of the Voting Agreement by Parent, (c) the termination of the Merger Agreement in accordance with its terms or (d) a material modification, waiver or amendment of the Merger Agreement that (x) reduces the amount or changes the form of consideration to be paid to such stockholder or (y) creates any additional conditions to the consummation of the Merger (unless such stockholder consents to such modification, waiver or amendment).

5.
REVOLVING CREDIT FACILITY

On April 12, 2013, we entered into a three-year $25.0 million senior secured revolving credit facility with Silicon Valley Bank. On October 21, 2014, we entered into Amendment Agreement No. 4 with Silicon Valley Bank, which (i) extended the term of our credit facility to October 12, 2017, (ii) amended and/or waived compliance with certain financial covenants, and (iii) granted us the ability to make a one-time request to increase the existing credit facility up to an additional $25.0 million. As of March 27, 2016 and December 31, 2015, we had no outstanding borrowings under the credit facility.

For a further discussion of our credit facility, see Note 5. Revolving Credit Facility in the notes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2015.

6.
COMMITMENTS AND CONTINGENCIES

Warranty

The warranty offered by us on our system sales is generally twelve months, and excludes certain consumable maintenance items. A provision for the estimated cost of warranty, based on historical costs, is recorded as cost of goods sold when the revenue is recognized. Our warranty obligations require us to repair or replace defective products or parts during the warranty period at no cost to the customer. The actual system performance and/or field warranty expense profiles may differ from historical experience, and in those cases, we adjust our warranty accruals accordingly.


11



The following table summarizes changes in our product warranty accrual for the periods indicated (in thousands):
 
Three Months Ended
 
March 27,
2016
 
March 29,
2015
Beginning balance
$
3,040

 
$
2,803

Warranties issued in the period
262

 
872

Costs to service warranties
(1,029
)
 
(982
)
Warranty accrual adjustments
272

 
650

Ending balance
$
2,545

 
$
3,343


Guarantees

Standby Letters of Credit

In the ordinary course of business, our bank provides standby letters of credit or other guarantee instruments on our behalf to certain parties as required. The standby letters of credit are secured by bank accounts and money market funds, which are classified as restricted cash in the accompanying condensed consolidated balance sheets. We have never recorded any liability in connection with these guarantee arrangements beyond what is required to appropriately account for the underlying transaction being guaranteed. We do not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid under such guarantee arrangements. As of March 27, 2016, the maximum potential amount that we could be required to pay was $1.7 million, the total amount of outstanding standby letters of credit, which were secured by $1.8 million in bank accounts and money market collateral accounts. This amount was recorded as restricted cash as of March 27, 2016.

Canadian Minister of Industries

In connection with our acquisition of Vortek Industries, Ltd. ("Vortek") in 2004, we became party to an agreement between Vortek and the Canadian Minister of Industries (the "Minister") relating to an investment in Vortek by Technology Partnerships Canada. Under the agreement, as amended, we, or Vortek (renamed Mattson Technology, Canada, Inc. ("MTC")) agreed to various terms, including (i) payment by us of a royalty to the Minister of 1.4 percent of net sales from certain Flash RTP products, up to a total of C$14.3 million (approximately $10.8 million based on the applicable exchange rate as of March 27, 2016), (ii) MTC maintaining a specified average workforce of employees in Canada, making certain investments and complying with certain manufacturing requirements, each, through October 27, 2009, and (iii) certain other covenants concerning protection of intellectual property rights. Under the provisions of this agreement, if MTC is dissolved, files for bankruptcy or we, or MTC, do not materially satisfy the obligations pursuant to any material terms or conditions, the Minister could demand payment of liquidated damages in the amount of C$14.3 million less any royalties paid to the Minister. As of October 27, 2009, we were no longer subject to covenant (ii), as discussed above but are still subject to the remaining terms and conditions until the earlier of payment of royalty of C$14.3 million less any royalties paid to date, or through December 31, 2020. We have recorded approximately C$0.6 million in cumulative royalty charges to date. The movement of our Canadian operations to Germany did not result in the dissolution of MTC.

Indemnification Agreements

We are a party to a variety of agreements, pursuant to which we may be obligated to indemnify other parties with respect to certain matters. Typically, these obligations arise in the context of contracts under which we may agree to hold other parties harmless against losses arising from a breach of representations or with respect to certain intellectual property, operations or tax-related matters. Our obligations under these agreements may be limited in terms of time and/or amount, and in some instances, we may have defenses to asserted claims and/or recourse against third parties for payments made. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement. Historically, our payments under these agreements have not had a material effect on our financial position, results of operations or cash flows. We believe if we were to incur a loss in any of these matters, such loss would not have a material effect on our financial position, results of operations or cash flows.

We indemnify our directors and certain employees as permitted by law, and have entered into indemnification agreements with our directors and certain senior officers. We have not recorded a liability associated with these indemnification agreements, as we historically have not incurred any material costs associated with such indemnification agreements. Costs associated with such indemnification agreements may be mitigated, in whole or only in part, by insurance coverage that we maintain.

12




Litigation

Overview

In the ordinary course of business, we are subject to claims and litigation, including claims that we infringe third party patents, trademarks and other intellectual property rights. Although we believe that it is unlikely that any current claims or actions will have a material adverse impact on our operating results or our financial position, given the uncertainty of litigation, we cannot be certain of this. The defense of claims or actions against us, even if without merit, could result in the expenditure of significant financial and managerial resources.

We record a legal liability when we believe it is both probable that a liability has been incurred, and the amount can be reasonably estimated. We monitor developments in our legal matters that could affect the estimate we have previously accrued. Significant judgment is required to determine both probability and the estimated amount.

Class Action Merger Litigation

On December 14, 2015, a putative shareholder class action complaint was filed in the Court of Chancery of the State of Delaware against Mattson, Mattson’s Board of Directors, Beijing E-town Dragon Semiconductor Industry Investment Center (“Parent”), and Dragon Acquisition Sub, Inc. (“Merger Sub”), captioned Sally Mogle v. Mattson Technology, Case No. 11807 (Del. Ch.). On December 22, 2015, a second putative shareholder class action complaint was filed in the Court of Chancery of the State of Delaware against Mattson’s Board of Directors, Parent, and Merger Sub, captioned Philip Durgin v. Kannappan, Case No. 11837 (Del. Ch.). The complaints allege, among other things, that the Company’s directors breached their fiduciary duties by approving the Definitive Merger Agreement, dated December 1, 2015, by and among Mattson, Parent, and Merger Sub (“Merger Agreement”), and that Parent, and Merger Sub aided and abetted the alleged breaches of fiduciary duty. The complaints seek, among other things, either to enjoin the proposed transaction or to rescind it should it be consummated, as well as unspecified damages, including attorneys’ and experts’ fees.

On January 12, 2016, a putative shareholder class action complaint was filed in the Superior Court of the State of California, Alameda County against Mattson, Mattson’s Board of Directors, Parent, and Merger Sub, captioned Mary Salinas v. Mattson Technology, Case No. RG16799807. The complaint alleges, among other things, that the Company’s directors breached their fiduciary duties by approving the Definitive Merger Agreement, and that Mattson, Parent, and Merger Sub aided and abetted the alleged breaches of fiduciary duty. The complaint seeks, among other things, to enjoin the stockholder vote on the proposed transaction and unspecified damages, including attorneys’ and experts’ fees. On February 11, 2016, Plaintiff filed an Amended Class Action Complaint alleging, among other things, that Mattson’s directors breached their fiduciary duties by approving the Merger Agreement and issuing an incomplete and misleading Preliminary Proxy Statement, and that Mattson, Parent and Merger Sub aided and abetted the alleged breaches of fiduciary duty. The complaint seeks, among other things, either to enjoin the proposed transaction or to rescind it should it be consummated, as well as unspecified damages, including attorneys’ and experts’ fees. On February 22, 2016, a second putative shareholder class action complaint was filed in the Superior Court of the State of California, Alameda County against Mattson, Mattson’s Board of Directors, Parent, and Merger Sub, captioned Darrell Brown v. Mattson Technology, Case No. RG16804802.  The complaint alleges, among other things, that Mattson’s directors breached their fiduciary duties by approving the Merger Agreement and issuing an incomplete and misleading Preliminary Proxy Statement, and that Mattson, Parent, and Merger Sub aided and abetted the alleged breaches of fiduciary duty. The complaint seeks, among other things, either to enjoin the proposed transaction or to rescind it should it be consummated, as well as unspecified damages, including attorneys’ and experts’ fees.

On February 18, 2016, a putative shareholder class action complaint was filed in the United States District Court for the Northern District of California against the Board, captioned Talbert v. Mattson Technology, No. 8:16-cv-00811-LHK. The complaint alleges, among other things, that Mattson and Mattson’s Board of Directors violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 by making materially incomplete and misleading statements and/or omitting material information from the Proxy Statement filed with the SEC on February 17, 2016.  The complaint seeks to enjoin the stockholder vote on the proposed transaction, unspecified damages, certain other equitable relief, and attorneys’ fees and costs.

On March 14, 2016, Mattson, Mattson’s Board of Directors and Merger Sub entered into a Memorandum of Understanding (the “MOU”) with the plaintiffs in the actions, which sets forth the parties’ agreement in principle to a settlement of these actions. As explained in the MOU, the Company, the members of the Company’s Board of Directors and Merger Sub have agreed to the settlement solely to avoid the expense, disruption, and distraction of further litigation and without admitting any liability or wrongdoing. The MOU contemplates that the parties will seek to enter into a stipulation of settlement providing for the certification of a mandatory non-opt-out class, for settlement purposes only, that includes any and all record and beneficial owners of the

13



Company’s common stock (excluding defendants, their subsidiary companies, affiliates, assigns, and members of their immediate families) during the period beginning on September 15, 2015, through the effective date of the consummation of the merger, including any and all of their respective successors in interest, predecessors, representatives, trustees, executors, administrators, heirs, assigns or transferees, immediate and remote, and any person or entity acting for or on behalf of, or claiming under, any of them, and each of them and a release of certain claims relating to the merger as set forth in the MOU. The claims will not be released until such stipulation of settlement is approved by the California Superior Court in the County of Alameda. There can be no assurance that the parties will ultimately enter into a stipulation of settlement or that the court will approve such settlement even if the parties were to enter into such stipulation

7.    EMPLOYEE STOCK PLANS

As of March 27, 2016, we had approximately 4.2 million shares available for future grants under our 2012 Equity Incentive Plan (the "2012 Plan").

On May 28, 2015, the stockholders approved an amendment to our 2012 Plan, (i) increasing the number of shares reserved for issuance under the 2012 Plan by an additional 2.5 million shares bringing the total number of shares reserved thereunder, to 19,475,000 shares; and (ii) removing the 1.75 share accounting ratio applicable to stock awards and restricted stock units.

Stock Options

Options to purchase common stock granted under the 2012 Plan generally have terms not exceeding seven years. Options to purchase stock under our equity incentive plans are generally granted at exercise prices that are at least 100 percent of the fair market value of our common stock on the date of grant. Generally, options granted to new employees typically vest over a period of four years at a rate of 25 percent after the first year and 1/48th of the initial amount granted each month thereafter, and beginning in 2014, options granted to established employees with more than 1-year of service, typically vest over a period of four years at a rate of 1/48th each month.

The following table summarizes the stock option activity under all of our equity incentive plans for the three months ended March 27, 2016:
 
Number of Shares
 
Weighted-
Average
Exercise
Price
 
Weighted- Average Remaining Term
 
Aggregate Intrinsic Value
 
(thousands)
 
(per share)
 
(years)
 
(thousands)
Outstanding as of December 31, 2015
4,172

 
$
2.04

 
 
 
 
Exercised
(89
)
 
$
1.59

 
 
 
 
Forfeited or expired
(18
)
 
$
1.12

 
 
 
 
Outstanding as of March 27, 2016
4,065

 
$
2.05

 
3.9
 
$
6,512

Exercisable as of March 27, 2016
2,857

 
$
1.85

 
3.4
 
$
5,160

 
 
 
 
 
 
 
 

The aggregate intrinsic value represents the pre-tax differences between the exercise price of stock options and the quoted market price of our stock on March 27, 2016 for all in-the-money options.

The following table provides supplemental information pertaining to our stock options for the periods indicated (in thousands, except weighted-average fair values):
 
Three Months Ended
 
March 27,
2016
 
March 29,
2015
Weighted-average fair value of options granted, per share
$

 
$
1.67

Intrinsic value of options exercised
$
177

 
$
1,940

Cash received from options exercised
$
142

 
$
1,526



14



Restricted Stock Units

The 2012 Plan provides for grants of time-based and performance-based restricted stock units ("RSUs"). As of March 27, 2016, we only had time-based RSUs outstanding.

Time-Based Restricted Stock Units

Historically, 25 percent of the time-based RSUs vest on each anniversary of the vesting commencement date or date of grant. In December 2013, our Board of Directors approved a quarterly vesting schedule for RSUs. On occasion, we grant time-based RSUs for varying purposes with different vesting schedules. Time-based RSUs granted prior to May 28, 2015 under the 2012 Plan are counted against the total number of shares of common stock available for grant under the 2012 Plan at 1.75 shares of common stock for every one share of common stock subject thereto.

The associated stock-based compensation expense on time-based RSUs is determined based on the fair value of our common stock on the date of grant of the RSU and recognized over the vesting period.

The following table summarizes RSU activity under all of our equity incentive plans for the three months ended March 27, 2016:
 
Number of Shares
 
Weighted Average Grant Date Fair Value
 
(thousands)
 
(per share)
Outstanding as of December 31, 2015
1,289

 
$
2.78

Released
(178
)
 
$
2.13

Forfeited
(7
)
 
$
2.95

Outstanding as of March 27, 2016
1,104

 
$
2.88


Employee Stock Purchase Plan

Our 1994 Employee Stock Purchase Plan ("1994 Plan") is a non-compensatory employee stock purchase plan ("ESPP"), which allows each eligible employee to withhold up to 15 percent of gross compensation over semi-annual six month ESPP periods to purchase shares of our common stock, limited to 4,000 shares per ESPP period in 2016. Under the ESPP, employees purchase stock at a price equal to 90 percent of the fair market value (generally the closing price of our common stock) on the last trading day prior to the end of the six month ESPP offering period.

We reserved 6.2 million shares of common stock for issuance under the ESPP, of which 2.4 million shares were available for issuance as of March 27, 2016.

8.
STOCK-BASED COMPENSATION

We account for stock-based compensation in accordance with the applicable authoritative guidance, which requires the measurement of stock-based compensation on the date of grant based on the fair value of the award, and the recognition of the expense over the requisite service period for the employee. Compensation related to RSUs is the intrinsic value on the date of grant, which is the closing price of our common stock less the employee exercise price, if any. Compensation related to stock options is determined using a stock option valuation model.


15



Valuation Assumptions

We use the Black-Scholes valuation model to determine the fair value of stock options. The Black-Scholes model requires the input of highly subjective assumptions, which are summarized in the table below for the three months ended March 27, 2016 and March 29, 2015 (assumptions are not applicable for the three months ended March 27, 2016 as there were no stock options granted during that period):
 
Three Months Ended
 
March 27,
2016
 
March 29,
2015
Expected dividend yield
N/A
 
Expected stock price volatility
N/A
 
66%
Risk-free interest rate
N/A
 
1.1%
Expected life of options in years
N/A
 
4.0

We estimate the expected life of options based on an analysis of our historical experience of employee exercise and post-vesting termination behavior considered in relation to the contractual life of the option. Expected volatility is based on the historical volatility of our common stock; and the risk-free interest rate is the rate on a U.S. Treasury Bill, with a maturity approximating the expected life of the option. We do not currently pay cash dividends on our common stock and do not anticipate doing so in the foreseeable future. Accordingly, the expected dividend yield is zero.

Our stock-based compensation for the periods indicated was as follows (in thousands):
 
Three Months Ended
 
March 27,
2016
 
March 29,
2015
Stock-based compensation by type of award:
 
Stock options
$
199

 
$
245

Restricted stock units
313

 
266

Employee stock purchase plan
7

 
5

 
$
519

 
$
516

Stock-based compensation by category of expense:
 
Cost of goods sold
$
46

 
$
34

Research, development and engineering
42

 
63

Selling, general and administrative
431

 
419

 
$
519

 
$
516


We did not capitalize any stock-based compensation into inventory for the three months ended March 27, 2016 and March 29, 2015, as such amounts were immaterial. As of March 27, 2016, we had $1.1 million in unrecognized stock-based compensation expense, net of estimated forfeitures, related to stock options which will be recognized over a weighted-average period of 2.1 years. As of March 27, 2016, we had $2.4 million in unrecognized stock-based compensation expense, net of estimated forfeitures, related to unvested RSUs which will be recognized over a weighted-average period of 2.4 years.

9.
GEOGRAPHIC AND CUSTOMER CONCENTRATION INFORMATION

The authoritative guidance on segment reporting and disclosure defines an operating segment as a component of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. For the purposes of evaluating our reportable segments, our Chief Executive Officer is the chief operating decision maker.

We have one operating segment in which we design, manufacture and market advanced fabrication equipment for the semiconductor manufacturing industry. As our business is completely focused on one industry segment, the design, manufacture and marketing of advanced fabrication equipment to the semiconductor manufacturing industry, management believes that we have one reportable segment. Our net revenue and profits are generated from the sales of systems and services in this one segment.


16



The following table summarizes net revenue by geographic areas based on the installation locations of the systems and the location of services rendered (in thousands, except percentages):
 
Three Months Ended
 
March 27, 2016
 
March 29, 2015
 
Amount
 
Percent
 
Amount
 
Percent
Net revenue:
 
 
 
 
 
 
 
United States
$
3,247

 
11
 
$
8,568

 
15
China
11,395

 
40
 
3,599

 
6
South Korea
6,430

 
22
 
33,998

 
58
Taiwan
2,509

 
9
 
5,520

 
10
Other Asia
4,137

 
15
 
5,365

 
9
Europe and others
971

 
3
 
1,204

 
2
 
$
28,689

 
100
 
$
58,254

 
100

For the three months ended March 27, 2016, three customers accounted for 10 percent or more of our total net revenue, representing approximately 24 percent, 22 percent and 14 percent of our total net revenue, respectively. For the three months ended March 29, 2015, two customers accounted for 10 percent or more of our total net revenue, representing approximately 63 percent and 13 percent of our total net revenue, respectively.

As of March 27, 2016, five customers accounted for 10 percent or more of our total net accounts receivable, representing approximately 23 percent, 17 percent, 17 percent, 10 percent and 10 percent of our total net accounts receivable, respectively. As of December 31, 2015, two customers accounted for 10 percent or more of our net accounts receivable, representing approximately 53 percent and 13 percent of our total net accounts receivable, respectively.

Geographical information relating to our property and equipment, net, as of March 27, 2016 and December 31, 2015 was as follows (in thousands):
 
March 27,
2016
 
December 31,
2015
Property and equipment, net:
 
United States
$
3,120

 
$
3,350

Germany
5,720

 
4,712

Others
162

 
174

 
$
9,002

 
$
8,236


10.     INCOME TAXES

On a quarterly basis, we record our income tax expense or benefit based on our year-to-date results and expected results for the remainder of the year.

For the three months ended March 27, 2016, we recorded a minimal income tax provision. For the three months ended March 29, 2015, we recorded an income tax provision of $0.5 million. The net tax provision for all periods was the result of the mix of profits earned by us in tax jurisdictions with a broad range of income tax rates.

11.
NET INCOME (LOSS) PER SHARE

We present both basic and diluted net income (loss) per share on the face of our condensed consolidated statements of operations in accordance with the authoritative guidance on earnings per share. Basic net income (loss) per common share is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period. Diluted net income (loss) per share of common stock is computed using the weighted average number of shares of common stock outstanding plus the effect of common stock equivalents, unless the common stock equivalents are anti-dilutive. The potential dilutive shares of our common stock are determined using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost yet to be recognized for future service, and the amount of tax benefits that is to be recorded when the award becomes deductible are assumed to be used to repurchase shares.

17




The following table presents the computation of net income (loss) per share of common stock (in thousands, except per share data):
 
Three Months Ended
 
March 27,
2016
 
March 29,
2015
Numerator:
 
     Net income (loss)
$
(4,001
)
 
$
6,305

Denominator:
 
 
 
Weighted-average shares outstanding - basic
75,523

 
74,700

Effect of dilutive stock options and restricted stock units

 
2,565

Weighted-average shares outstanding - diluted
75,523

 
77,265

Net income (loss) per share of common stock:
 
 
 
Basic
$
(0.05
)
 
$
0.08

Diluted
$
(0.05
)
 
$
0.08


For the three months ended March 27, 2016, options and RSUs totaling 2.6 million shares were excluded from diluted net income per share because their inclusion would have been anti-dilutive. For the three months ended March 29, 2015, options and RSUs totaling 0.7 million shares were excluded from diluted net income per share because their inclusion would have been anti-dilutive effect.


18



ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains forward‑looking statements, which are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. These forward‑looking statements are based on management's current expectations and beliefs, including estimates and projections about our industry. Forward-looking statements typically are identified by use of terms such as "anticipates," "expects," "intends," "plans," "seeks," "estimates," "believes" and similar expressions, although some forward-looking statements are expressed differently. Our forward-looking statements may include statements that relate to: our proposed merger with Beijing E-town Dragon Semiconductor Industry Investment Center; our future net revenue, earnings, cash flow and cash position; growth of the industry and the size of our served available market; market demand for our products; the timing of significant customer orders for our products; our ability to attract new customers, customer acceptance of delivered products and our ability to collect amounts due upon shipment and upon acceptance; end-user demand for semiconductors, including the growing mobile device industry; customer demand for semiconductor manufacturing equipment; our ability to timely manufacture, deliver and support ordered products; our ability to bring new products to market, to gain market share with such products and the overall mix of our products; our ability to generate significant net revenue; customer rate of adoption of new technologies; risks inherent in the development of complex technology; the timing and competitiveness of new product releases by our competitors; margins; product development plans and levels of research, development and engineering activity; our ability to align our cost structure with market conditions, including operating expenses, and our quarterly break-even point; tax expenses; excess inventory reserves, including the level of our vendor commitments compared to our requirements; economic conditions in general and in our industry; our dependence on international sales and our expectation of growth in international markets; the impact of any litigation or investigation on our operating results or financial position; any offering and sale of securities pursuant to our shelf registration statement or otherwise; volatility in our stock price; the sufficiency of our financial resources, including availability under our revolving credit agreement, to support future operations and capital expenditures and the availability of all financing resources; compliance with financial covenants related to our revolving credit facility and our control environment including our disclosure control and procedures, internal control over our financial reporting, and any related remediation efforts. These statements are not guarantees of future performance and are subject to numerous risks, uncertainties and assumptions that are difficult to predict. Such risks and uncertainties include those set forth in Part II, Item 1A under "Risk Factors" and this Part I, Item 2 under "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our actual results could differ materially from those anticipated by these forward-looking statements. The forward-looking statements in this report speak only as of the time they are made and do not necessarily reflect our outlook at any other point in time. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future event, or for any other reason. This discussion should be read in conjunction with the condensed consolidated financial statements and notes presented in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes in our last filed Annual Report on Form 10-K for the year ended December 31, 2015.

Overview

We are a supplier of semiconductor wafer processing equipment used in the fabrication of integrated circuits ("ICs"). Our manufacturing equipment is primarily used for semiconductor manufacturing, utilizing innovative technology to deliver advanced processing capabilities and high productivity for the fabrication of current and next-generation ICs. We were incorporated in California in 1988 and reincorporated in Delaware in 1997.

Our business depends upon capital expenditures by the manufacturers of semiconductor devices. The level of capital expenditures by these manufacturers depends upon the current and anticipated market demand for such devices which is dependent upon the consumer product industry. Since the demand for semiconductor devices is highly cyclical, the demand for wafer processing equipment also is highly cyclical. The semiconductor equipment industry is typically characterized by wide swings in operating results as the industry rotates between cycles.

A summary of our major products is as follows:

Our etch products, specifically our paradigmE XP systems, continue to run high volume production in advanced DRAM, NAND and 3D-NAND wafer fabs. The combination of the paradigmE XP’s technical capabilities and high productivity have established an etch market position in the memory segment.

Our conventional RTP product, the Helios XP, has established industry leading technical performance in 20 nanometer foundry/logic and memory volume production sites with its dual side wafer heating and differential thermal energy control.


19



Our millisecond anneal system, the Millios, is running advanced foundry/logic volume production at multiple manufacturing sites. The Millios, with our proprietary arc lamp technology, achieves leading device performance as well as higher production throughput and system availability.

Our dry strip products continue to make a steady contribution to our business.

The future success of our business will depend on numerous factors, including, but not limited to, the market demand for semiconductors and semiconductor wafer processing equipment. Such factors also will include our ability to (a) enhance our competitiveness and profitability; (b) develop and bring to market new products that address our customers' needs; (c) grow customer loyalty through collaboration with and support of our customers; (d) maintain a cost structure that will enable us to operate effectively and profitably throughout changing industry cycles; and (e) generate the gross margin necessary to enable us to make the necessary investments in our business.

Recent Developments

On December 1, 2015, Mattson entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Beijing E-town Dragon Semiconductor Industry Investment Center (Limited Partnership), a People's Republic of China ("PRC") limited partnership (“Parent”), providing for the merger of Dragon Acquisition Sub, Inc., an indirect subsidiary of Parent (“Merger Sub”), with and into Mattson (the “Merger”), with Mattson surviving the Merger as a subsidiary of Parent (the “Surviving Corporation”). The Merger Agreement was unanimously approved by Mattson’s Board of Directors (the “Board”). On March 23, 2016, Mattson stockholders approved the adoption of the Merger Agreement by the affirmative vote of holders of a majority of the outstanding shares of the Company's Common Stock (the “Company Stockholder Approval”).

Pursuant to the terms and subject to the conditions of the Merger Agreement, at the Effective Time (as defined in the Merger Agreement) of the Merger, each share of Mattson’s common stock, par value $0.001 per share (the “Company Common Stock”), outstanding immediately prior to the Effective Time will be cancelled and automatically converted into the right to receive $3.80 in cash, without interest (the “Merger Consideration”), excluding any shares owned by Mattson or any of its subsidiaries, or by Parent or Merger Sub or any of their respective wholly-owned subsidiaries (which will be cancelled) and any shares with respect to which appraisal rights have been properly exercised under Delaware law. Beijing E-Town International Investment & Development Co., Ltd., the parent company to Parent, has irrevocably and unconditionally guaranteed to the Company the due and punctual payment and performance of Parent’s and Merger Sub’s obligations under the Merger Agreement.

The obligations of the parties to consummate the Merger are subject to the satisfaction (or waiver, if applicable) of various customary conditions, including (i) filings and approvals with or by certain governmental authorities, including governmental authorities in the PRC and Taiwan, (ii) the absence of certain governmental orders prohibiting the Merger, (iii) the accuracy of the representations and warranties of each party contained in the Merger Agreement (subject to certain materiality qualifications) and (iv) each party’s compliance with or performance of the covenants and agreements in the Merger Agreement in all material respects.

See Note 4. Business Combination for additional details related to the pending Merger.

Critical Accounting Policies and Use of Estimates
Management's discussion and analysis of financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses during the reporting periods.
On an on-going basis, we evaluate our estimates and judgments, including those related to reserves for excess and obsolete inventory, warranty, bad debts, intangible assets, income taxes, restructuring costs, stock-based compensation, contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. These form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
There were no significant changes to our critical accounting policies during the three months ended March 27, 2016. For information about critical accounting policies, see Note 1. Basis of Presentation and Summary of Significant Accounting Policies of notes to consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2015.

20



Results of Operations
A summary of our results of operations for the three months ended March 27, 2016 and March 29, 2015 are as follows (in thousands, except for percentages):
 
Three Months Ended
 
 
  
 
March 27, 2016
 
March 29, 2015
 
Increase (Decrease)
  
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
 
Net revenue
$
28,689

 
100.0

 
$
58,254

 
100.0

 
$
(29,565
)
 
(50.8
)
  
Cost of goods sold
20,400

 
71.1

 
36,860

 
63.3

 
(16,460
)
 
(44.7
)
  
Gross margin
8,289

 
28.9

 
21,394

 
36.7

 
(13,105
)
 
(61.3
)
  
Operating expenses:
 

 
 

 
 
 
 

 
 
 
 

  
Research, development and engineering
4,496

 
15.6

 
5,250

 
9.0

 
(754
)
 
(14.4
)
  
Selling, general and administrative
6,735

 
23.5

 
8,841

 
15.2

 
(2,106
)
 
(23.8
)
  
Restructuring and other charges
1,108

 
3.9

 

 

 
1,108

 
n/m

(1) 
     Total operating expenses
12,339

 
43.0

 
14,091

 
24.2

 
(1,752
)
 
(12.4
)
 
Income (loss) from operations
(4,050
)
 
(14.1
)
 
7,303

 
12.5

 
(11,353
)
 
n/m

(1) 
Interest income (expense), net
(30
)
 
(0.1
)
 
(34
)
 

 
4

 
(11.8
)
 
Other income (expense), net
88

 
0.3

 
(443
)
 
(0.8
)
 
531

 
n/m

(1) 
Income (loss) before income taxes
(3,992
)
 
(13.9
)
 
6,826

 
11.7

 
(10,818
)
 
n/m

(1) 
Provision for income taxes
9

 

 
521

 
0.9

 
(512
)
 
(98.3
)
 
Net income (loss)
$
(4,001
)
 
(13.9
)
 
$
6,305

 
10.8

 
$
(10,306
)
 
n/m

(1) 
(1) Not meaningful.

Net Revenue

A summary of our net revenue for the three months ended March 27, 2016 and March 29, 2015 is as follows (in thousands, except for percentages):
 
Three Months Ended
 
March 27, 2016
 
March 29, 2015
 
Increase (Decrease)
 
 
 
Amount
 
Percent
Net revenue:
 
 
 
 
 

 
 
United States
$
3,247

 
$
8,568

 
$
(5,321
)
 
(62
)
International:
 

 
 

 
 

 
 

South Korea
6,430

 
33,998

 
(27,568
)
 
(81
)
China
11,395

 
3,599

 
7,796

 
217

Taiwan
2,509

 
5,520

 
(3,011
)
 
(55
)
Other Asia
4,137

 
5,365

 
(1,228
)
 
(23
)
Europe and others
971

 
1,204

 
(233
)
 
(19
)
 
25,442

 
49,686

 
(24,244
)
 
(49
)
Total net revenue
$
28,689

 
$
58,254

 
$
(29,565
)
 
(51
)

The decrease of $29.6 million in net revenue during the three months ended March 27, 2016, as compared to the three months ended March 29, 2015, was primarily attributable to lower overall net revenue from our etch and thermal systems.

During the three months ended March 27, 2016, net revenue from customers in Asia continued to account for a significant portion of our total net revenue. For the three months ended March 27, 2016 and March 29, 2015, international sales comprised approximately 89 percent and 85 percent, respectively, of our total net revenue.


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For the three months ended March 27, 2016, three customers accounted for 10 percent or more of our total net revenue, representing approximately 24 percent, 22 percent and 14 percent of our total net revenue, respectively. For the three months ended March 29, 2015, two customers accounted for 10 percent or more of our total net revenue, representing approximately 63 percent and 13 percent of our total net revenue, respectively.

Cost of Goods Sold and Gross Margin

Our cost of goods sold consists of the costs associated with manufacturing our products, and includes the purchase of raw materials and related overhead, labor, warranty costs and charges for excess and obsolete inventory.

Our gross margin percentage decreased approximately 8 percentage points, from 37 percent during the three months ended March 29, 2015 to 29 percent during the three months ended March 27, 2016. The decrease is primarily attributable to a less favorable product mix, and lower absorption of fixed costs from a decline in quarterly production.

Our gross margin has varied over the years and will continue to be affected by many factors, including competitive pressures, product mix, inventory reserves, economies of scale, material and other costs, overhead absorption levels and the timing of revenue recognition.

Research, Development and Engineering

Research, development and engineering expenses consist primarily of salaries and related costs of employees engaged in research, development and engineering activities, costs of product development and depreciation on equipment used in the course of research, development and engineering activities.

Research, development and engineering expenses decreased by $0.8 million, or 14 percent, during the three months ended March 27, 2016 as compared with the three months ended March 29, 2015. This decrease was primarily attributable to a decrease in spending on outside services and a decrease in employee-related costs.

Selling, General and Administrative

Selling, general and administrative expenses consist primarily of employee-related expenses, as well as legal and professional fees, insurance costs, amortization of evaluation systems and certain facilities and information technology costs.

Selling, general and administrative expenses decreased by $2.1 million, or 24 percent, during the three months ended March 27, 2016 as compared with the three months ended March 29, 2015. This decrease was primarily attributable to a decrease in sales-related expenses associated with supporting lower revenue levels in the first quarter of 2016.

Restructuring and Other Charges

During the three months ended March 27, 2016, we recorded restructuring and other charges of $1.1 million in professional fees and deal-related costs associated with the Merger Agreement with Parent.

Interest Income (Expense), net

Interest expense was minimal during the three months ended March 27, 2016 and during the three months ended March 29, 2015. Interest expense relates primarily to fees associated with our unused borrowings under our credit facility.

Other Income (Expense), net

Other income (expense), net was $0.1 million in income and $0.4 million in expense during the three months ended March 27, 2016 and March 29, 2015, respectively. The other income (expense), net for all periods presented primarily consisted of foreign exchange gains and losses from the re-measurement of foreign currency denominated inter-company balances.

Provision for Income Taxes

On a quarterly basis, we record our income tax expense or benefit based on our year-to-date results and expected results for the remainder of the year. The income tax provision for all periods presented was the result of the mix of profits earned by us in tax jurisdictions with a broad range of income tax rates.


22




Liquidity and Capital Resources

Our cash and cash equivalents as of March 27, 2016 and December 31, 2015 were $21.0 million and $33.4 million, respectively. Working capital as of March 27, 2016 was $75.9 million, compared to $79.9 million as of December 31, 2015. Stockholders' equity as of March 27, 2016 was $84.2 million, compared to $87.5 million as of December 31, 2015. The aforementioned decreases in working capital and stockholders' equity are primarily related to $15.9 million of cash used through our operating activities and $0.5 million in capital expenditures during the period.
 
Three Months Ended
 
March 27, 2016
 
March 29, 2015
Net cash provided by (used in) operating activities
$
(15,928
)
 
$
9,255

Net cash used in investing activities
(451
)
 
(458
)
Net cash provided by (used in) financing activities
(79
)
 
1,225

Effect of exchange rate changes on cash and cash equivalents
36

 
(31
)
Net increase (decrease) in cash and cash equivalents
$
(16,422
)
 
$
9,991


Liquidity and Capital Resources Outlook

As of March 27, 2016, our primary sources of liquidity were $21.0 million of cash and cash equivalents, as well as up to $25.0 million available to us under our credit facility, along with the ability to make a one-time request to increase the existing credit facility up to an additional $25.0 million. As of March 27, 2016, we had no outstanding borrowing under the credit facility.

We believe our available financial resources are sufficient to fund our working capital and other capital requirements over the course of the next twelve months. Our operations require careful management of our cash and working capital balances. Our liquidity is affected by many factors including, among others, fluctuations in our net revenue, gross margin and operating expenses, as well as changes in our operating assets and liabilities. The cyclical nature of the semiconductor industry makes it difficult to predict our future liquidity needs with certainty. Any upturn in the semiconductor industry would result in short-term uses of cash to fund inventory purchases. In addition, any ineffectiveness in our cost containment efforts may cause us to incur additional losses in the future and lower our cash balances. We may need additional funds to support our working capital requirements and operating expenses, or for other requirements.

Improvements in our results of operations and resulting cash position are largely dependent upon an improvement in the semiconductor equipment industry. We periodically review our liquidity position and may decide to raise additional funds on an opportunistic basis from sources such as an asset-backed financing agreement or the issuance of equity or debt securities through public or private financings. We currently have an effective omnibus shelf registration statement on file with the SEC that registers up to $25.5 million in securities that we may offer. These financing options may not be available on a timely basis, or on terms acceptable to us, and could be dilutive to our stockholders. If adequate funds are not available on acceptable terms, our ability to achieve our intended long-term business objectives could be limited.

On December 1, 2015, we entered into a Merger Agreement with Parent and Merger Sub, providing for the merger of Merger Sub into Mattson, with Mattson surviving as a subsidiary of Parent. If the Merger Agreement is terminated under certain circumstances, Mattson would have to pay a termination fee of approximately $8.6 million.

Operating Activities

Net cash used in operations was $15.9 million for the three months ended March 27, 2016, comprised primarily of $4.0 million in net loss and $9.2 million of cash decreases reflected in the net change in assets and liabilities, partially offset by $1.3 million in non-cash charges. Cash flow decreases resulting from the net change in assets and liabilities consisted primarily of a $5.3 million increase in accounts receivable and advance billings attributable to the timing of shipments and collections; a $3.3 million decrease in accrued compensation and benefits and other current liabilities, which primarily consists of a decrease in accrued compensation and benefits related to the February 2016 payout of bonuses earned in 2015 and a $0.5 million decrease in warranty reserves related to the lower revenue levels during the three months ended March 27, 2016; a $2.9 million decrease in accounts payable largely attributable to the timing of purchases and payments to vendors and service providers; partially offset by a $0.9 million decrease in inventory related to the consumption of on-hand inventory and an overall decrease in inventory purchases as a result of lower revenue levels during the first quarter of 2016; a $0.8 million decrease in prepaid expenses and other assets; a $0.4 million increase in deferred revenue; and a $0.2 million increase in other liabilities. Non-cash charges consisted

23



primarily of $0.8 million of depreciation and amortization and $0.5 million of stock-based compensation.

Net cash provided by operations was $3.0 million for the three months ended March 29, 2015, comprised primarily of $6.3 million in net income and $1.4 million in non-cash charges, partially offset by $4.7 million of cash decreases reflected in the net change in assets and liabilities. Non-cash charges consisted primarily of $0.6 million of depreciation and amortization and $0.5 million of stock-based compensation. Cash flow decreases resulting from the net change in assets and liabilities consisted primarily of a $4.6 million increase in accounts receivable and advance billings attributable to shipments late in the first quarter for which collections are anticipated during the second quarter of 2015; a $0.8 million increase in inventory resulting from the receipt of inventory intended for sale in future quarters; a $0.3 million decrease in accounts payable largely attributable to the timing of purchases and payments to vendors and service providers; and a $0.1 million decrease in deferred revenue; partially offset by a $0.8 million increase in accrued compensation and benefits and other current liabilities, which primarily consists of an increase in warranty reserves related to the higher revenue levels in the current quarter and an increase in accrued income taxes payable; a $0.1 million increase in other liabilities; and a $0.1 million decrease in prepaid expenses and other assets.

Cash provided by or used in operations may fluctuate in future periods as a result of a number of factors, including fluctuations in our net revenue and operating results, amount of revenue deferred, inventory purchases, collection of accounts receivable and timing of payments.

Investing Activities

Net cash used in investing activities was $0.5 million and $0.5 million during the three months ended March 27, 2016 and March 29, 2015, respectively, which primarily consisted of our capital spending in each period.

Financing Activities

Net cash used in financing activities was $0.1 million for the three months ended March 27, 2016, which consisted of $0.2 million in payments for withholding taxes related to the net share settlement of restricted stock units, partially offset by $0.1 million in proceeds from the issuance of common stock through stock option exercises.

Net cash provided by financing activities was $1.2 million for the three months ended March 29, 2015, which consisted of $1.5 million in proceeds from the issuance of common stock through stock option exercises, partially offset by $0.3 million in payments for withholding taxes related to the net share settlement of restricted stock units.

Off-Balance Sheet Arrangements

As of March 27, 2016, we did not have any significant "off-balance sheet" arrangements, as defined in Item 303 (a)(4)(ii) of Regulation S-K.

Contractual Obligations

Under U.S. GAAP, certain obligations and commitments are not required to be included in our condensed consolidated balance sheets. These obligations and commitments, while entered into in the normal course of business, may have a material impact on our liquidity. For further discussion of our contractual obligations, see our 2015 Annual Report on Form 10-K.

Recent Accounting Pronouncements

Information with respect to recent accounting pronouncements may be found in Note 1. Basis of Presentation and Significant Accounting Policies in the notes to condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

24



ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

We are exposed to various market risks related to fluctuations in foreign currency exchange rates and interest rates. We may use derivative financial instruments to mitigate certain risks related foreign exchange rates. We do not use derivatives or other financial instruments for trading or speculative purposes.

Interest Rate Risk

We are exposed to interest rate risk related to our borrowings. On April 12, 2013, we entered into a three-year $25.0 million senior secured revolving credit facility with Silicon Valley Bank. On October 21, 2014, we entered into Amendment Agreement No. 4 with Silicon Valley Bank, (i) extending the term of our credit facility to October 12, 2017, (ii) amending and/or waiving compliance with certain financial covenants, and (iii) allowing us to make a one-time request to increase the existing credit facility up to an additional $25.0 million.

At our option, the borrowings under this credit facility can bear interest at an Alternate Base Rate (“ABR”) or Eurodollar Rate. ABR loans bear interest at a per annum rate equal to the greater of the Federal Funds Effective Rate plus 0.50 percent or the prime rate. Eurodollar loans bear interest at a margin over British Bankers' Association LIBOR Rate divided by 1 minus Eurocurrency Reserve Requirements. As of March 27, 2016, we had no borrowings outstanding under the credit facility. An increase in the interest rate on the credit facility by 1.0 percent would increase the annual interest expense by $0.3 million, assuming we had borrowed $25.0 million for the entire year.

Since we generally invest most of our cash in non-interest bearing bank accounts or low yield money market funds, an immediate increase or decrease in interest rates of 100 basis points would not have a material adverse effect on the fair value of our investment portfolio.

Foreign Currency Risk

The functional currency of our foreign subsidiaries is their local currencies. Accordingly, all assets and liabilities of these foreign operations are translated using exchange rates in effect at the end of the period, and net sales and costs are translated using average exchange rates for the period. Gains or losses from translation of foreign operations are included as a component of accumulated other comprehensive income in the accompanying condensed consolidated balance sheets. Foreign currency transaction gains and losses are recognized in the accompanying condensed consolidated statements of operations as they are incurred. Because much of our net revenues and capital spending are transacted in U.S. dollars, we are subject to fluctuations in foreign currency exchange rates that could have a material adverse effect on our overall financial position, results of operations or cash flows, depending on the strength of the U.S. dollar relative to the currencies of other countries in which we operate. Exchange rate fluctuations of greater than ten percent, primarily for the U.S. dollar relative to the Euro, South Korean won, New Taiwan dollar and Singapore dollar, could have a material impact on our financial statements. Additionally, foreign currency transaction gains and losses fluctuate depending upon the mix of foreign currency denominated assets and liabilities and whether the local currency of an entity strengthens or weakens during a period. As of March 27, 2016, our U.S. operations had approximately $3.3 million, net, in foreign denominated operating inter-company payables. It is estimated that a ten percent fluctuation in the U.S. dollar relative to these foreign currencies would lead to a $0.3 million profit (U.S. dollar strengthening), or a $0.3 million loss (U.S. dollar weakening) on the re-measurement of these inter-company payables, which would be recorded as other income (expense), net in our condensed consolidated statement of operations.

We recorded a $0.1 million foreign currency exchange gain during the three months ended March 27, 2016 and a $0.4 million foreign currency exchange loss during the three months ended March 29, 2015 in other income (expense), net in the accompanying condensed consolidated statements of operations.


25



ITEM 4.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Quarterly Report on Form 10-Q, to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of March 27, 2016.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended March 27, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

26




PART II. OTHER INFORMATION

ITEM 1.
LEGAL PROCEEDINGS

Overview

In the ordinary course of business, we are subject to claims and litigation, including claims that we infringe third party patents, trademarks and other intellectual property rights. Although we believe that it is unlikely that any current claims or actions will have a material adverse impact on our operating results or our financial position, given the uncertainty of litigation, we cannot be certain of this. The defense of claims or actions against us, even if without merit, could result in the expenditure of significant financial and managerial resources.

We record a legal liability when we believe it is both probable that a liability has been incurred, and the amount can be reasonably estimated. We monitor developments in our legal matters that could affect the estimate we have previously accrued. Significant judgment is required to determine both probability and the estimated amount.

Class Action Merger Litigation

On December 14, 2015, a putative shareholder class action complaint was filed in the Court of Chancery of the State of Delaware against Mattson, Mattson’s Board of Directors, Beijing E-town Dragon Semiconductor Industry Investment Center (“Parent”), and Dragon Acquisition Sub, Inc. (“Merger Sub”), captioned Sally Mogle v. Mattson Technology, Case No. 11807 (Del. Ch.). On December 22, 2015, a second putative shareholder class action complaint was filed in the Court of Chancery of the State of Delaware against Mattson’s Board of Directors, Parent, and Merger Sub, captioned Philip Durgin v. Kannappan, Case No. 11837 (Del. Ch.). The complaints allege, among other things, that the Company’s directors breached their fiduciary duties by approving the Definitive Merger Agreement, dated December 1, 2015, by and among Mattson, Parent, and Merger Sub (“Merger Agreement”), and that Parent, and Merger Sub aided and abetted the alleged breaches of fiduciary duty. The complaints seek, among other things, either to enjoin the proposed transaction or to rescind it should it be consummated, as well as unspecified damages, including attorneys’ and experts’ fees.

On January 12, 2016, a putative shareholder class action complaint was filed in the Superior Court of the State of California, Alameda County against Mattson, Mattson’s Board of Directors, Parent, and Merger Sub, captioned Mary Salinas v. Mattson Technology, Case No. RG16799807. The complaint alleges, among other things, that the Company’s directors breached their fiduciary duties by approving the Definitive Merger Agreement, and that Mattson, Parent, and Merger Sub aided and abetted the alleged breaches of fiduciary duty. The complaint seeks, among other things, to enjoin the stockholder vote on the proposed transaction and unspecified damages, including attorneys’ and experts’ fees. On February 11, 2016, Plaintiff filed an Amended Class Action Complaint alleging, among other things, that Mattson’s directors breached their fiduciary duties by approving the Merger Agreement and issuing an incomplete and misleading Preliminary Proxy Statement, and that Mattson, Parent and Merger Sub aided and abetted the alleged breaches of fiduciary duty. The complaint seeks, among other things, either to enjoin the proposed transaction or to rescind it should it be consummated, as well as unspecified damages, including attorneys’ and experts’ fees. On February 22, 2016, a second putative shareholder class action complaint was filed in the Superior Court of the State of California, Alameda County against Mattson, Mattson’s Board of Directors, Parent, and Merger Sub, captioned Darrell Brown v. Mattson Technology, Case No. RG16804802.  The complaint alleges, among other things, that Mattson’s directors breached their fiduciary duties by approving the Merger Agreement and issuing an incomplete and misleading Preliminary Proxy Statement, and that Mattson, Parent, and Merger Sub aided and abetted the alleged breaches of fiduciary duty. The complaint seeks, among other things, either to enjoin the proposed transaction or to rescind it should it be consummated, as well as unspecified damages, including attorneys’ and experts’ fees.

On February 18, 2016, a putative shareholder class action complaint was filed in the United States District Court for the Northern District of California against the Board, captioned Talbert v. Mattson Technology, No. 8:16-cv-00811-LHK. The complaint alleges, among other things, that Mattson and Mattson’s Board of Directors violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 by making materially incomplete and misleading statements and/or omitting material information from the Proxy Statement filed with the SEC on February 17, 2016.  The complaint seeks to enjoin the stockholder vote on the proposed transaction, unspecified damages, certain other equitable relief, and attorneys’ fees and costs.

On March 14, 2016, Mattson, Mattson’s Board of Directors and Merger Sub entered into a Memorandum of Understanding (the “MOU”) with the plaintiffs in the actions, which sets forth the parties’ agreement in principle to a settlement of these actions.

27



As explained in the MOU, the Company, the members of the Company’s Board of Directors and Merger Sub have agreed to the settlement solely to avoid the expense, disruption, and distraction of further litigation and without admitting any liability or wrongdoing. The MOU contemplates that the parties will seek to enter into a stipulation of settlement providing for the certification of a mandatory non-opt-out class, for settlement purposes only, that includes any and all record and beneficial owners of the Company’s common stock (excluding defendants, their subsidiary companies, affiliates, assigns, and members of their immediate families) during the period beginning on September 15, 2015, through the effective date of the consummation of the merger, including any and all of their respective successors in interest, predecessors, representatives, trustees, executors, administrators, heirs, assigns or transferees, immediate and remote, and any person or entity acting for or on behalf of, or claiming under, any of them, and each of them and a release of certain claims relating to the merger as set forth in the MOU. The claims will not be released until such stipulation of settlement is approved by the California Superior Court in the County of Alameda. There can be no assurance that the parties will ultimately enter into a stipulation of settlement or that the court will approve such settlement even if the parties were to enter into such stipulation.

ITEM 1A. RISK FACTORS
Because of the following factors, as well as other variables affecting our operating results, cash flows and financial condition, past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. Other events that we do not currently anticipate or that we currently deem immaterial also may affect our results of operations, cash flows and financial condition.
We are dependent on a highly concentrated customer base, and any delays, reduction or cancellation of purchases by these customers could harm our business. Additionally, we may not achieve anticipated revenue levels if we are not selected as “vendor of choice” for new or expanded customer fabrication facilities.
 
We derive most of our net revenue from the sale of systems to a relatively small number of customers, which makes our relationship with each customer critical to our business. For example, for the three months ended March 27, 2016, three customers accounted for 10 percent or more of our total net revenues, representing approximately 24 percent, 22 percent and 14 percent of our total net revenue, respectively. For each of the years ended December 31, 2015, 2014 and 2013, our three largest customers accounted for approximately 74 percent, 76 percent and 73 percent of our net revenue, respectively. We currently depend on a few customers for a significant portion of our net revenue, and the delay, significant reduction in, or loss of, orders from these customers would significantly reduce our revenue and adversely impact our operating results. See Item 1. Business - Customers in our Annual Report on Form 10-K for the year ended December 31, 2015 for a detailed description of our customer concentration.

Because semiconductor manufacturers must make a substantial investment to install and integrate capital equipment into a semiconductor fabrication facility, these manufacturers will tend to choose semiconductor equipment manufacturers based on product compatibility and proven performance. Changes in forecasts or the timing of orders from customers could expose us to the risks of inventory shortages or excess inventory. In addition, changes in customer demand and order cancellations, could result in the loss of anticipated sales without allowing us sufficient time to reduce our inventory and operating expenses. Any such changes, delays and cancellations in orders in turn could cause our operating results to fluctuate. If customer relationships are disrupted due to an inability to deliver sufficient products or for any other reason, it could have a significant negative impact on our business.

Although we maintain a backlog of customer orders with expected shipment dates within the next 12 months, customers may request delivery delays or cancellations, as they have been doing more regularly in our business. More recently, we have seen delays in our customers' spending in DRAM and across sub-20 nanometer foundry and logic businesses during 2015. Customers in some regions place orders a few weeks before the shipment. As a result, our backlog may not be a reliable indication of future net revenue. If shipments of orders in backlog are canceled or delayed, net revenue could fall below our expectations and the expectations of market analysts and investors.

Once a semiconductor manufacturer selects a particular vendor’s capital equipment, the manufacturer generally relies upon equipment from this vendor of choice (“VOC”) for the specific production line application. In addition, the semiconductor manufacturer frequently will attempt to consolidate other capital equipment requirements with the same vendors. Accordingly, we may face narrow windows of opportunity to be selected as the VOC by new customers with significant needs. It may be difficult for us to sell to a particular customer for a significant period of time once that customer selects a competitor’s product. If we are unable to achieve broader market acceptance of our systems and technology, we may be unable to maintain and grow our business and our operating results and financial condition will be adversely affected.


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The cyclical nature of the semiconductor industry has caused us to experience losses and reduced liquidity, and it may continue to negatively impact our financial performance.

The semiconductor equipment industry is highly cyclical and periodically has severe and prolonged downturns, which causes our operating results to fluctuate significantly. We are exposed to the risks associated with industry overcapacity, including decreased demand for our products and increased price competition.

The semiconductor industry historically has experienced periodic downturns due to sudden changes in customers’ requirements for new manufacturing capacity and advanced technology, which depend in part on customers’ capacity utilization, production volumes, access to affordable capital, end-user demand, consumer buying patterns, and inventory levels relative to demand, as well as the rate of technology transitions, and general economic conditions. Our business depends, in significant part, upon capital expenditures by manufacturers of semiconductor devices, including manufacturers that open new or expand existing facilities. Periods of overcapacity and reductions in capital expenditures by our customers cause decreases in demand for our products. This could result in significant under-utilization in our factories. If existing customer fabrication facilities are not expanded and new facilities are not built, we may be unable to generate significant new orders and sales for our systems. During periods of declining demand for semiconductor manufacturing equipment, our customers typically reduce purchases, delay delivery of ordered products and/or cancel orders, resulting in reduced net sales and backlog, delays in revenue recognition and excess inventory for us. Increased price competition may also result as we compete for the smaller demand in the market, causing pressure on our gross margin and net income.

We are dependent on our revenue and the success of our cost reduction measures to ensure adequate liquidity and capital resources during the next twelve months.

We incurred annual operating losses from 2008 through 2013 and have generated negative cash flows from operating activities from 2008 through 2014, and during the three months ended March 27, 2016. As of March 27, 2016, we had cash and cash equivalents of $21.0 million and working capital of $75.9 million. Our operations require careful management of our cash and working capital balances. Our liquidity is affected by many factors including, among others, fluctuations in our revenue, gross margin and operating expenses, as well as changes in our operating assets and liabilities, and availability of financing sources, including under our revolving credit facility. The cyclicality of the semiconductor industry makes it difficult for us to predict our future liquidity needs with certainty. Any upturn in the semiconductor industry would result in short-term uses of our cash to fund inventory purchases. In addition, the ineffectiveness of our cost reduction efforts may cause us to incur additional losses in the future and lower our cash balances.

We may need additional funds to support our working capital requirements and operating expenses, or for other requirements. Historically, we have relied on a combination of fundraising from the sale of equity securities and cash generated from product, service and royalty revenues to provide funding for our operations. On April 12, 2013, we entered into a three-year $25.0 million senior secured revolving credit facility with Silicon Valley Bank, and amended it on October 21, 2014, extending the term of credit facility to October 12, 2017. As of March 27, 2016, we had no outstanding borrowing under the credit facility. If we do not comply with the affirmative and negative covenants contained in the credit facility, we may be in default under the credit facility, which may have a negative impact on our liquidity position through our inability to utilize any availability under the credit facility or an acceleration of any future amounts outstanding under the credit facility.

We will continue to review our expected cash requirements and take appropriate cost reduction measures to ensure that we have sufficient liquidity. Although we will pursue cost reduction measures if circumstances require, we are largely dependent upon improvement in the semiconductor equipment industry specifically, and general continued improvement in the economy as a whole, to increase our sales in order to improve our profitability and cash position. We periodically review our liquidity position and, in addition to the net proceeds from our February 2014 registered common stock offering of approximately $31.7 million, we may opportunistically seek to raise additional funds from a combination of sources including the issuance of equity or debt securities through public or private financings. In the event additional needs for cash arise, we also may seek to raise these funds externally through other means. The availability of additional financing will depend on a variety of factors, including among others, market conditions, the general availability of credit, our credit ratings, and our ability to maintain our listing on NASDAQ. As a consequence, these financing options may not be available to us on a timely basis, or on terms acceptable to us, and could be dilutive to our stockholders.

Our current liquidity position may result in risks and uncertainties affecting our operations and financial position, including the following:

we may be required to reduce planned expenditures or investments;


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we may be unable to compete in our newer or developing markets;

suppliers may require standby letters of credit before delivering goods and services, which will result in additional demands on our cash;

we may not be able to obtain and maintain normal terms with suppliers;

customers may delay or discontinue entering into contracts with us; and

our ability to retain management and other key individuals may be negatively affected.

Failure to generate sufficient cash flows from operations, raise additional capital or reduce spending could have a material adverse effect on our ability to achieve our intended long-term business objectives.

We face stiff competition in the semiconductor equipment industry.

The semiconductor equipment industry is both highly competitive and subject to rapid technological change. Significant competitive factors include the following:

system performance;

cost of ownership;

size of the installed base;

breadth of product line;

delivery speed; and

customer support.

Competitive pressure has been increasing in several areas. In addition to increased price competition, customers are waiting to make purchase commitments based on their end-user demand, which are then placed with requests for rapid delivery dates and increased product support. Most of our major competitors are larger than we are, have greater capital resources and may have a competitive advantage over us by virtue of having:

broader product lines;

greater experience with handling manufacturing cycles;

substantially larger customer bases; and

substantially greater customer support, financial, technical and marketing resources.

Our competitors include Applied Materials, Inc., Dainippon Screen Manufacturing Company, Lam Research Corporation, PSK, Inc., Tokyo Electron Limited and Ultratech Inc. As we derive a substantial percentage of our revenues from a limited number of products, our business, operating results, financial condition, and cash flows could be adversely affected by a decline in demand for even a limited number of our products and a failure to achieve continued market acceptance of our key products.

Growth in the semiconductor equipment industry is increasingly concentrated in the largest companies, continuing the trend in increasing industry consolidation, which has accelerated over the last year, such as the pending merger of Lam Research and KLA-Tencor Corp., announced in October 2015, and the previously completed merger of Lam Research and Novellus Systems in 2012. Semiconductor companies are consolidating their vendor base and prefer to purchase from vendors with a strong, worldwide support infrastructure.

To expand our sales we must often displace the systems of our competitors or sell new systems to customers of our competitors. Our competitors may develop new or enhanced competitive products that offer price or performance features that are superior to our systems. Our competitors also may be able to respond more quickly to new or emerging technologies and changes in customer

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requirements or to devote greater resources to the development, promotion, sale and on-site customer support of their product lines. We may not be able to maintain or expand our sales if competition increases and we are unable to respond effectively.

Our proposed Merger with Beijing E-Town Dragon Semiconductor Industry Investment Center (Limited Partnership (“E-Town Dragon” or "Parent") may not be completed within the expected time-frame, or at all, and the failure to complete the merger could adversely affect our business and the market price of our common stock.

On December 1, 2015, we entered into the Merger Agreement with Parent, as joined by Merger Sub, pursuant to which, and on the terms and conditions contained in the Merger Agreement, Merger Sub will merge with and into Mattson with Mattson surviving the Merger as a subsidiary of Parent. On March 23, 2016, the Mattson stockholders approved the adoption of the Merger Agreement by the affirmative vote of holders of a majority of the outstanding shares of our common stock. The obligations of the parties to consummate the Merger are subject to the satisfaction (or waiver, if applicable) of various customary conditions, including (i) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) filings and approvals with or by certain governmental authorities, including governmental authorities in the PRC and Taiwan, (iii) the absence of certain governmental orders prohibiting the Merger, (iv) the accuracy of the representations and warranties of each party contained in the Merger Agreement (subject to certain materiality qualifications) and (v) each party’s compliance with or performance of the covenants and agreements in the Merger Agreement in all material respects. In addition, the Merger Agreement may be terminated under specified circumstances. Failure to complete the Merger could adversely affect our business and the market price of our common stock in a number of ways, including:

if the Merger is not completed, and no other party is willing and able to acquire us at a price of $3.80 per share or higher, on terms acceptable to us, the share price of our common stock is likely to decline;

we have incurred, and continue to incur, significant transaction costs in connection with the proposed Merger, for which we will have received little or no benefit if the Merger is not completed. Many of these costs will be payable even if the Merger is not completed and may relate to activities that we would not have undertaken other than to complete the Merger;

a failed Merger may result in negative publicity and/or give a negative impression of us in the investment community or business community generally, and could have an adverse effect on our on-going operations including, but not limited to, retaining and attracting employees, and reduced ability to attract evaluation engagements and to sell our products; and

if the Merger Agreement is terminated under specified circumstances, we may be required to pay Parent a termination fee.

The announcement and pendency of our proposed merger with Parent could adversely affect our business, financial condition, and results of operations.

The announcement and pendency of the proposed Merger could disrupt our business and create uncertainty about it, which could have an adverse effect on our business, results of operations and financial condition, regardless of whether the Merger is completed. These risks to our business, all of which could be exacerbated by a delay in the completion of the Merger, include:

diversion of significant management time and resources towards the completion of the Merger;

impairment of our ability to attract and retain key personnel;

difficulties maintaining relationships with employees, customers and other business partners;

restriction on the conduct of our business prior to the completion of the Merger, which prevent us from taking specified actions without the prior consent of Parent, which we might otherwise take in the absence of the Merger Agreement; and

litigation relating to the Merger, of which several suits have been filed to date, and the related costs of such litigation.


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If the Merger Agreement is terminated, we may, under certain circumstances, be obligated to pay a termination fee to Parent. These costs could require us to use available cash that would have otherwise been available for other uses.

If the Merger is not completed, in certain circumstances, we could be required to pay a termination fee of approximately $8.6 million to Parent. If the Merger Agreement is terminated, the termination fee we may be required to pay, if any, under the Merger Agreement may require us to use available cash that would have otherwise been available for general corporate purposes or other uses. For these and other reasons, termination of the Merger Agreement could materially and adversely affect our business, results of operations or financial condition, which in turn would materially and adversely affect the price per share of our common stock. Further, an adverse ruling may prevent the Merger from being completed.

We are involved in litigation relating to the Merger Agreement that could divert management's attention and adversely affect our business.

We, including the individual members of our Board of Directors, have been named as defendants in litigation related to the Merger Agreement and the transactions contemplated thereby. The plaintiffs, purported stockholders of the Company, generally allege that the members of our Board of Directors breached their fiduciary duties to our stockholders by approving the Merger Agreement. They further allege that we aided and abetted these alleged breaches of fiduciary duty. Although we believe that these suits are without merit, the defense of these suits may be expensive and may divert management's attention and resources, which could adversely affect our business.

We must continually anticipate technology trends, improve our existing products and develop new products in order to be competitive. The development of new or enhanced products involves significant risks, additional costs and delays in revenue recognition. Technical and manufacturing difficulties experienced in the introduction of new products could be costly and could adversely affect our customer relationships.

The markets in which our customers and we compete are characterized by rapidly changing technology, evolving industry standards and continuous improvements in products and services. Consequently, our success depends upon our ability to anticipate future technology trends and customer needs, to develop new systems and processes that meet industry standards and customer requirements and that compete effectively on the basis of price and performance.

Our development of new products involves significant risk, since the products are very complex and the development cycle is long and expensive. The success of any new system we develop and introduce is dependent on a number of factors, including our ability to correctly predict customer requirements for new processes, to assess and select the potential technologies for research and development and to timely complete new system designs that are acceptable to the market. We may make substantial investments in new technologies before we can know whether they are technically or commercially feasible or advantageous, and without any assurance that revenue from future products or product enhancements will be sufficient to recover the associated development costs. Not all development activities result in commercially viable products. We may not be able to improve our existing systems or develop new technologies or systems in a timely manner. We may exceed the budgeted cost of reaching our research, development and engineering objectives, and planned product development schedules may require extension. Any delays or additional development costs could have a material adverse effect on our business and results of operations.

Our products are complex, and we may experience technical or manufacturing inefficiencies, delays or difficulties in the prototype introduction of new systems and enhancements, or in achieving volume production of new systems or enhancements that meet customer requirements. Our inability, or the inability of our supply chain partners, to overcome such difficulties, to meet the technical specifications of any new systems or enhancements or to manufacture and ship these systems or enhancements in the required volume and in a timely manner would materially adversely affect our business and results of operations, as well as our customer relationships.

Our revenue recognition policies require that during the initial evaluation phase of a new product, customer acceptance needs to be obtained before we can recognize revenue on the product. Customer acceptance may not be completed in a timely manner for a variety of reasons, whether or not related to the quality and performance of our products. Any delays in customer acceptance may result in revenue recognition delays and have an adverse impact on our results of operations.

We may from time to time incur unanticipated costs to ensure the functionality and reliability of our products early in their life cycles, and such costs can be substantial. If we encounter reliability or quality problems with our new products or enhancements, we could face a number of difficulties, including reduced orders, higher manufacturing costs, delays in collection of accounts receivable and additional service and warranty expenses, all of which could materially adversely affect our business and results of operations. The costs associated with our warranties may be significant, and in the event our projections and estimates of these

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costs are inaccurate, our financial performance could be seriously harmed. In addition, if we experience product failures at an unexpectedly high level, our reputation in the marketplace could be damaged, and our business would suffer.

We are highly dependent on international sales, and face significant international business risks.

International sales accounted for 89 percent of our net revenue for the three months ended March 27, 2016, and 85 percent and 86 percent of our net revenue for the years ended December 31, 2015 and 2014, respectively. We anticipate international sales will continue to account for the vast majority of our future net sales. Asia has been a particularly important region for our business, and we anticipate that it will continue to be important going forward. Our sales to customers located in Asia accounted for 85 percent of our net revenue for the three months ended March 27, 2016, and 81 percent and 81 percent of our net revenue for the years ended December 31, 2015 and 2014, respectively. Because of our continuing dependence upon international sales, we are subject to a number of risks associated with international business activities, including:

burdensome governmental controls, laws, regulations, tariffs, duties, taxes, restrictions, embargoes or export license requirements;

unexpected changes in laws or regulations prompted by economic stress, such as protectionism, and other attempts to rectify real or perceived international trade imbalances;

exchange rate volatility;

the need to comply with a wide variety of foreign and U.S. customs, export and other laws;

political and economic instability;

government-sponsored competition;

differing labor regulations;

reduced protection for, and increased misappropriation of, intellectual property;

difficulties in accounts receivable collections;

increased costs for product shipments and potential difficulties from shipment delays;

difficulties in managing distributors, representatives, contract manufacturers and suppliers;

difficulties in staffing and managing foreign subsidiary operations; and

natural disasters, acts of war, terrorism, widespread illness or other catastrophes affecting foreign countries.

Our sales to date have been denominated primarily in U.S. dollars; however future sales to Asian customers may be denominated in the customer's local currency. Our sales in foreign currencies are subject to risks of currency fluctuation. For U.S. dollar sales in foreign countries, our products may become less price competitive when the local currency is declining in value compared to the dollar. This could cause us to lose sales or force us to lower our prices, which would reduce our gross margins.

Significant fluctuations in our operating results are difficult to predict due to our lengthy sales cycle, and our results may fall short of anticipated levels, which could cause our stock price to decline.

Our systems revenues depend upon the decision of a prospective customer to increase or replace manufacturing capacity, typically involving a significant capital commitment. Accordingly, the decision to purchase our systems requires time-consuming internal procedures associated with the evaluation, testing, implementation and introduction of new technologies into our customers' manufacturing facilities. Even after the customer determines that our systems meet their qualification criteria, we may experience delays finalizing system sales while the customer obtains approval for the purchase, constructs new facilities or expands its existing facilities. Consequently, the time between our first contact with a customer regarding a specific potential purchase and the customer's placing its first order may last from one to two years or longer. We may incur significant sales and marketing expenses during this evaluation period, in addition to tying up substantial inventory in customer product evaluations. The length of this period makes it difficult to accurately forecast future sales. Also, any unexpected delays in orders could impact our revenue and operating results.

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If sales forecast for a specific customer are not realized, we may experience an unplanned shortfall in net revenue, and our quarterly and annual revenue and operating results may fluctuate significantly from period to period.

Our quarterly and annual revenue and operating results have varied significantly in the past and are likely to vary significantly in the future, which makes it very difficult for us to predict our future operating results. We incurred significant net losses between 2001 and 2003, yet were profitable for each of the years 2004 to 2007. We again incurred net losses from 2008 through the third quarter of 2013, due to our fluctuating revenues and/or declining demand as a result of the weakness in the semiconductor equipment market and the global economy. We may not achieve profitability in future quarters and years. We will need to generate significant sales to achieve profitability, and we may not be able to do so. A substantial percentage of our operating expenses are fixed in the short term and we may continue to be unable to adjust spending to compensate for shortfalls in net revenue. As a result, we may incur losses in the future, which could cause the price of our common stock to decline further or remain at a low level for an extended period of time.

Any weakness in the global economy may negatively impact our financial performance.

Any recessionary conditions in the global economy and slowdown in the semiconductor industry impacted customer demand for our products and correspondingly, negatively impacted our financial performance. There remains high unemployment in developed countries, concerns regarding the availability of credit, uncertainty about a sustained economic recovery in the U.S. and fears of further economic deterioration in Europe, China, and the developing world, which in turn, may lead to a global downturn. Any of these factors could have a negative impact on our business or our financial condition.

Demand for semiconductor equipment depends on consumer spending. Future economic uncertainty may lead to a decrease in consumer spending and may cause certain of our customers to cancel or delay orders. In addition, if our customers have difficulties obtaining capital or financing, this could result in lower sales. Customers with liquidity issues could lead to charges to our bad debt expense, if we are unable to collect accounts receivables. These conditions could also affect our key suppliers, which could affect their ability to supply parts to us, and result in delays of the completion of our systems and the shipment of these systems to our customers.

If as a result of any economic downturn and the uncertainty of any future decline in demand for our products due to slowdowns in the semiconductor industry, we may have to take additional, actions to reduce costs. These actions could further reduce our ability to invest in research and development at levels we believe are desirable. If we are unable to effectively align our cost structure with prevailing market conditions, we will experience additional losses and additional reductions in our cash and cash equivalents. If we are not able to suitably adapt to these economic conditions in a timely manner or at all, our performance, cash flows, results of operations and ability to access capital could be materially and adversely impacted.

Because of competition for qualified personnel, we may not be able to recruit or retain necessary personnel, which could impede development or sales of our products.

Our growth will depend on our ability to attract and retain qualified, experienced employees. Our ability to attract employees may be harmed by our recent financial losses, which have impacted our available cash and our ability to provide performance-based annual cash incentives. Also, part of our total compensation program includes share-based compensation. Share-based compensation is an important tool in attracting and retaining employees in our industry. If the market price of our common shares declines or remains low, it may adversely affect our ability to attract or retain employees.

During periods of growth in the semiconductor industry, there is substantial competition for experienced engineering, technical, financial, sales and marketing personnel in our industry. In particular, we must attract and retain highly skilled design and process engineers. If we are unable to retain existing key personnel, or attract and retain additional qualified personnel, we may from time to time experience inadequate levels of staffing to develop and market our products and perform services for our customers. As a result, our growth could be limited, we could fail to meet our delivery commitments or we could experience deterioration in service levels or decreases in customer satisfaction.


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The price of our common stock has fluctuated in the past and may continue to fluctuate significantly in the future, which may lead to losses by investors, delisting, securities litigation or hostile or otherwise unfavorable takeover offers.

The market price of our common stock has been highly volatile in the past, and our stock price may decline in the future. For example, for the year ended December 31, 2015, the closing price range for our common stock was between $2.20 and $5.02 per share. Our stock may be subject to eventual delisting from NASDAQ if we do not maintain a minimum $1.00 per share trading price. Any future decline below $1.00 per share may trigger a possible delisting by NASDAQ, and any delisting from NASDAQ would likely lead to less liquidity for our shareholders and increased volatility in our stock price.

The relatively low stock price makes us attractive to hedge funds and other short-term investors. This could result in substantial stock price volatility and cause fluctuations in trading volumes for our stock. Fluctuations in the trading price or liquidity of our common stock may harm the value of your investment in our common stock.

In addition, in recent years the stock market in general, and the market for shares of high technology stocks in particular, has experienced extreme price fluctuations. These fluctuations have frequently been unrelated to the operating performance of the affected companies. In the past, securities class action litigation often has been instituted against a company following periods of volatility in its stock price. This type of litigation, if filed against us, could result in substantial costs and divert our management's attention and resources.

Other factors that may have a significant impact on the market price and marketability of our securities include changes in securities analysts' recommendations, short selling, and halting or suspension of trading in our common stock by NASDAQ.

We may outsource select manufacturing activities to third-party service providers, which decreases our control over the performance of these functions and quality of our products.

From time to time, we may outsource product manufacturing to third-party service providers. Outsourcing has a number of risks and reduces our control over the performance of the outsourced functions. Significant performance problems by these third-party service providers could result in cost overruns, delayed deliveries, shortages, quality issues or other problems that could result in significant customer dissatisfaction and could materially and adversely affect our business, financial condition and results of operations. If for any reason one or more of these third-party service providers becomes unable or unwilling to continue to provide services of acceptable quality, at acceptable costs and in a timely manner, our ability to deliver our products to our customers could be severely impaired.

We depend upon a limited number of suppliers for some components and sub-assemblies, and supply shortages or the loss of these suppliers could result in increased cost or delays in the manufacture and sale of our products.

We rely, to a substantial extent, on outside vendors to provide many of the components and sub-assemblies of our systems. We obtain some of these components and sub-assemblies from a sole source or a limited group of suppliers. We generally acquire these components on a purchase order basis and not under long-term supply contracts. Because of our reliance on these vendors and suppliers, we may be unable to obtain an adequate supply of required components. When demand for semiconductor equipment is strong, our suppliers may have difficulty providing components on a timely basis.

In addition, during periods of shortages of components, we may have reduced control over pricing and timely delivery of components. We often quote prices to our customers and accept customer orders for our products prior to purchasing components and sub-assemblies from our suppliers. If our suppliers increase the cost of components or sub-assemblies, we may not have alternative sources of supply and may no longer be able to increase the price of the system being evaluated by our customers to cover all or part of the increased cost of components.

The manufacture of some of these components is an extremely complex process and requires long lead times. If we are unable to obtain adequate and timely deliveries of our required components, we may have to seek alternative sources of supply or manufacture such components internally. This could delay our ability to manufacture or ship our systems in a timely manner, causing us to lose sales, incur additional costs, delay new product introductions and harm our reputation. Historically, we have not experienced any significant delays in manufacturing due to an inability to obtain components, and we are not currently aware of any specific problems regarding the availability of components that might significantly delay the manufacturing of our systems in the future. Any inability to obtain adequate deliveries, or any other circumstance that would require us to seek alternative sources of supply or to manufacture such components internally, could delay our ability to ship our systems and could have a material adverse effect on us.


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Our gross margins may be impacted if we do not effectively manage our inventory and costs.

We need to manage our inventory of component parts, work-in-process and finished goods (principally comprised of products undergoing customer evaluations) effectively to meet customer delivery demands at an acceptable risk and cost. For both the inventories that support manufacture of our products and our spare parts inventories, if the anticipated customer demand does not materialize in a timely manner, we will incur increased carrying costs and some inventory could become excess or obsolete, resulting in write-offs, which would adversely affect our cash position and results of operations. The sale of this inventory during periods of increasing revenue could temporarily impact our gross margins favorably due to the adjusted carrying value of this inventory, and could result in future unpredictability in our gross margin estimates. In addition, we may be subject to higher production costs due to increasing freight, labor and other operating expenses in connection with the shipment of our products due to market factors, particularly heightened when we experience accelerated shipment schedules.

Our gross margins for sales of products that we manufacture in Germany may fluctuate due to changes in the value of the Euro.

We develop and manufacture our Millios product in Germany, where our costs for labor and materials are primarily denominated in Euros. Future increases in the value of the Euro, if any, could increase our development costs, our costs to manufacture systems, and our costs to purchase spare parts for products from our suppliers, which would make it more difficult for us to compete and could adversely affect our results of operations.

We primarily manufacture our products at one manufacturing facility and are thus subject to risk of disruption.

Although, from time to time, we outsource select core product manufacturing to third parties, we continue to produce our latest generation products at our principal manufacturing plant in Fremont, California and produce our Millios product at our research and manufacturing facility in Dornstadt, Germany. We have limited ability to interchangeably produce our products at either facility, and in the event of a disruption of operations at one facility, our other facility may not be able to make up the capacity loss. Our operations could be subject to disruption for a variety of reasons, including, but not limited to, natural disasters, including earthquakes in California, work stoppages, operational facility constraints and terrorism. Such disruption could cause delays in shipments of products to our customers, result in cancellation of orders or loss of customers and seriously harm our business.

We self-insure certain risks including earthquake risk. If one or more of the uninsured events occurs, we could suffer major financial losses.

We purchase insurance to help mitigate the economic impact of certain insurable risks; however, certain other risks are uninsurable or are insurable only at significant cost or cannot be mitigated with insurance. An earthquake could significantly disrupt our principal manufacturing operations in Fremont, California, an area highly susceptible to earthquakes. It could also significantly delay our research and development efforts on new products, a significant portion of which is conducted in California. We self-insure earthquake risks because we believe this is a prudent financial decision based on the high cost and limited coverage available in the earthquake insurance market. If a major earthquake were to occur, we could suffer a major financial loss and face significant disruption in our business.

If we are unable to protect our intellectual property, we may lose valuable assets and experience reduced market share. Efforts to protect our intellectual property may be costly to resolve, require costly litigation and could divert management attention. We also agree to indemnify customers for certain claims, and such obligations are more likely to increase during downturns.

We rely on a combination of patents, copyrights, trademark and trade secret laws, non-disclosure agreements, and other intellectual property protection methods to protect our proprietary technology. Despite our efforts to protect our intellectual property, we may from time to time be subject to claims of infringement of other parties' patents or other proprietary rights. If this occurs, we may not be able to prevent their use of such technology. Our means of protecting our proprietary rights may not be adequate and our patents may not be sufficiently broad to protect our technology. Any patents owned by us could be challenged, invalidated or circumvented and any rights granted under any patent may not provide adequate protection to us.

Furthermore, we may not have sufficient resources to protect our rights. When we outsource portions of our manufacturing, we are less able to protect our intellectual property, and rely more on our service providers to do so. Our service providers may not always be able to assure that their employees or former employees do not use our intellectual property for their own account to compete with us. Our competitors may independently develop similar technology, or design around patents that may be issued to us. In addition, the laws of some foreign countries may not protect our proprietary rights to as great an extent as do the laws of the United States and it may be more difficult to monitor the use of our intellectual property in such foreign countries. As a result of these threats to our proprietary technology, we may have to resort to costly litigation to enforce our intellectual property rights.

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Customers may request that we indemnify them or otherwise compensate them because of claims of intellectual property infringement made against them by third parties. Our involvement in any patent dispute or other intellectual property dispute or action to protect trade secrets, even if the claims are without merit, could be very expensive to defend and could divert the attention of our management. Adverse determinations in any litigation could subject us to significant liabilities to third parties, require us to seek costly licenses from third parties and prevent us from manufacturing and selling our products. Royalty or license agreements, if required, may not be available on terms acceptable to us, or at all. Any of these situations could have a material adverse effect on our business and operating results in one or more countries where we do business.

In the normal course of business, we indemnify customers with respect to certain matters, for example if our tool infringes the intellectual property rights of any third party or if we breach any promise in our contract with the customer. During downturns in general or adverse industry specific economic conditions, our customers may feel they have greater leverage in negotiating with us and may require that the extent and scope of our obligation to indemnify them be expanded. In the future, our financial performance could be materially adversely affected if we expend significant amounts in defending or settling any claims raised under customer indemnification provisions in our contract.

Data breaches and cyber-attacks could compromise our operations, or the operations of our third party service providers whom we rely upon, and cause significant damage to our business and reputation.
 
Over the past year, cyber-attacks have become more prevalent and much harder to detect and defend against. We believe that companies have been increasingly subject to a wide variety of security incidents, cyber-attacks and other attempts to gain unauthorized access. These threats can come from a variety of sources, all ranging in sophistication from an individual hacker to a state-sponsored attack. Cyber threats may be generic, or they may be custom-crafted against our information systems.

In the ordinary course of our business, we maintain sensitive data on our networks, including our intellectual property and proprietary or confidential business information relating to our business and that of our customers and business partners. The secure maintenance of this information is critical to our business and reputation. Our network and storage applications may be subject to unauthorized access by hackers or breached due to operator error, malfeasance or other system disruptions. It is often difficult to anticipate or immediately detect such incidents and the damage caused by such incidents. These data breaches and any unauthorized access or disclosure of our information or intellectual property could compromise our intellectual property and expose sensitive business information. A data security breach could also lead to public exposure of personal information of our employees, customers and others. Cyber-attacks could cause us to incur significant remediation costs, result in product development delays, disrupt key business operations and divert attention of management and key information technology resources. These incidents could also subject us to liability, expose us to significant expense and cause significant harm to our reputation and business.

We also rely on third party service providers to maintain some of our networks and information technology infrastructure. All of these third party service providers face risks relating to cyber-security similar to ours, which could disrupt their businesses and therefore materially impact ours.

We are exposed to various risks relating to compliance with the regulatory environment, including export control laws material contracts provisions and conflict-mineral reporting, and non-compliance or non-performance with any of these items could result in adverse consequences and monetary fines or damages.

We are subject to various risks related to (1) disagreements and disputes between national and regional regulatory agencies related to international trade; (2) new, inconsistent and conflicting rules by regulatory agencies in the countries in which we operate; and (3) interpretation and application of different laws and regulations. If we are found by a court or regulatory agency to not be in compliance with the applicable laws and regulations, our business, financial condition and results of operations could be adversely affected.

As an exporter, we must comply with various laws and regulations relating to the export of products and technology from the U.S. and other countries having jurisdiction over our operations. In the U.S. these laws include the International Traffic in Arms Regulations (“ITAR”) administered by the State Department's Directorate of Defense Trade Controls, the Export Administration Regulations (“EAR”) administered by the Bureau of Industry and Security (“BIS”), and trade sanctions against embargoed countries and destinations administered by the U.S. Department of Treasury, Office of Foreign Assets Control (“OFAC”). The EAR governs products, parts, technology and software which present military or weapons proliferation concerns, so-called “dual use” items, and ITAR governs military items listed on the United States Munitions List. Prior to shipping certain items, we must obtain an export license or verify that license exemptions are available. In addition, we must comply with certain requirements related to documentation, record keeping, plant visits and hiring of foreign nationals. Any failures to comply with

37



these laws and regulations could result in fines, adverse publicity and restrictions on our ability to export our products, and repeat failures could carry more significant penalties.

We are a party to a governmental contract with the Canadian Minister of Industries ("Minister") that provides for liquidated damages in the event that we fail to comply with their covenants or requirements. Under the provisions of this agreement, if Mattson Technology, Canada, Inc. ("MTC") is dissolved, files for bankruptcy or we, or MTC, do not materially satisfy the obligations pursuant to any material terms or conditions, the Minister could demand payment of liquidated damages in the amount of C$14.3 million less any royalties paid to the Minister. These liquidated damage payments could be significant and may adversely impact our financial condition or results of operations.

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC established new disclosure and reporting requirements for those companies who use "conflict" minerals mined from the Democratic Republic of Congo and adjoining countries in their products, whether or not these products are manufactured by third parties. These new requirements could affect the sourcing and availability of minerals used in the manufacture of our products. We have to date incurred costs and expect to incur additional costs associated with complying with the disclosure requirements, including for example, due diligence in regard to the sources of any conflict minerals used in our products and the initial filing that reported our results, in addition to the cost of remediation and other changes to products, processes, or sources of supply as a consequence of such verification activities. Additionally, we may face reputational challenges with our customers and other stakeholders because we have, to date, been unable to sufficiently verify the origins of all minerals used in our products through the due diligence procedures that we implement. We may also face challenges with government regulators and our customers and suppliers if we are unable to sufficiently verify that the metals used in our products are conflict free. We expect to continue to incur significant costs associated with complying with the disclosure requirements, such as costs related to determining the source of certain minerals used in our products.

Our failure to comply with environmental or safety regulations could result in substantial liability.

We are subject to a variety of federal, state, local and foreign laws, rules, and regulations relating to environmental protection and workplace safety. These laws, rules and regulations govern the use, storage, discharge and disposal of hazardous chemicals during manufacturing, research and development and sales demonstrations, as well as governmental standards for workplace safety. If we fail to comply with present or future regulations, especially in our manufacturing facilities in the U.S. and Germany, we could be subject to substantial liability for cleanup efforts, personal injury, fines or suspension or cessation of our operations. We may be subject to liability if we have past violations. Restrictions on our ability to expand or continue to operate at our present locations could be imposed upon us as a result of such laws, rules and regulations, and we could be required to acquire costly remediation equipment or incur other significant expenses.

To the extent we are leveraged financially, it could adversely affect our ability to adjust our business to respond to competitive pressures and to obtain sufficient funds to satisfy our future research and development needs, to protect and enforce our intellectual property and other needs.

In April 2013, we entered into a three-year $25.0 million senior secured revolving credit facility with Silicon Valley Bank. In October 2014, we entered into an amendment to the credit facility, extending the term of the loan, among other things. As of March 27, 2016, we had no outstanding borrowing under the credit facility and had availability to borrow an additional $25.0 million under the credit facility. The degree to which we are leveraged could have important consequences, including, but not limited to, the following:
  
our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, litigation, general corporate or other purposes may be limited;
  
a substantial portion of our cash flows from operations in the future will be dedicated to the repayment of the credit facility; and
   
we may be more vulnerable to economic downturns, less able to withstand competitive pressures and less flexible in responding to changing business and economic conditions.

In 2014, we entered into several amendments and waivers of our credit facility with Silicon Valley Bank that amended certain financial covenants and waived compliance with certain financial covenants. We may not be able to obtain waivers of covenants in the future, and a failure to comply with the covenants and other provisions of the credit facility could result a lack of availability for borrowing under the credit facility or events of default, which could permit acceleration of repayment of all amounts due under the credit facility. Any required repayment of our credit facility as a result of a fundamental change or other acceleration would lower our current cash on hand such that we would not have those funds available for use in our business.

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If we are at any time unable to generate sufficient cash flows from operations to service our indebtedness when payment is due, we may be required to attempt to renegotiate the terms of the instruments relating to the indebtedness, seek to refinance all or a portion of the indebtedness or obtain additional financing. There can be no assurance that we will be able to successfully renegotiate such terms, that any such refinancing would be possible or that any additional financing could be obtained on terms that are favorable or acceptable to us.

Our failure to establish and maintain effective internal control over financial reporting could result in our failure to meet our reporting obligations and cause investors to lose confidence in our reported financial information, which in turn could cause the trading price of our common stock to decline.

In connection with our assessment of the effectiveness of internal control over financial reporting and the preparation of our financial statements for the year ended December 31, 2013, we identified three significant deficiencies in our internal control over financial reporting with respect to inventory that, when aggregated, constituted a material weakness in our internal control over financial reporting as of December 31, 2013. While none of these significant deficiencies was individually considered a material weakness, our management determined that, in the aggregate, these control deficiencies constituted a material weakness, because they could result in a material misstatement of the consolidated financial statements that would not be prevented or detected. Because of this material weakness, which arose from our failure to maintain effective controls over the accounting for the existence, valuation and presentation of inventory, management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2013.

During the year ended December 31, 2014, we implemented enhancements to our internal controls over financial reporting, including new processes and procedures to ensure inventory is valued timely and accurately. Our remediation efforts, including the testing of these controls continued throughout 2014. Once these controls were shown to be operational for a sufficient period of time to allow management to conclude that these controls were operating effectively, the material weakness related to the accounting for the existence, valuation and presentation of inventory was considered remediated in the fourth quarter of 2014.

We cannot assure you that similar material weaknesses will not recur. Any failure to maintain or implement new or improved internal controls, or any difficulties that we may encounter in their maintenance or implementation, could result in additional significant deficiencies or material weaknesses, result in material misstatements in our financial statements and cause us to fail to meet our reporting obligations, which in turn could cause the trading price of our common stock to decline. In addition, any such failure could, in the future, adversely affect the results of our periodic management evaluations and annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002.

Changes in tax rates or tax liabilities could affect results.

We are subject to taxation in the U.S. and various other countries. Significant judgment is required to determine and estimate worldwide tax liabilities. Our future annual and quarterly tax rates could be affected by numerous factors, including changes in the applicable tax laws, composition of earnings in countries with differing tax rates or our valuation and utilization of deferred tax assets and liabilities. In addition, we are subject to regular examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. Although we believe our tax estimates are reasonable, there can be no assurance that any final determination will not be materially different from the treatment reflected in our historical income tax provisions and accruals, which could materially and adversely affect our results of operations.

Our restated certificate of incorporation and restated bylaws and Delaware law contain provisions that could discourage transactions resulting in a change in control, which may negatively affect the market price of our common stock.

Our restated certificate of incorporation, our restated bylaws and Delaware law contain provisions that might enable our management to discourage, delay or prevent a change in control. In addition, these provisions could limit the price that investors would be willing to pay in the future for shares of our common stock. Pursuant to such provisions:

our board of directors is authorized, without prior stockholder approval, to create and issue preferred stock, commonly referred to as “blank check” preferred stock, with rights senior to those of common stock;

our board of directors is staggered into three classes, only one of which is elected at each annual meeting;

stockholder action by written consent is prohibited;

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nominations for election to our board of directors and the submission of matters to be acted upon by stockholders at a meeting are subject to advance notice requirements;

certain provisions in our bylaws and certificate of incorporation such as notice to stockholders, the ability to call a stockholder meeting, advance notice requirements and action of stockholders by written consent may only be amended with the approval of stockholders holding 66 2/3 percent of our outstanding voting stock;

the ability of our stockholders to call special meetings of stockholders is prohibited; and

subject to certain exceptions requiring stockholder approval, our board of directors is expressly authorized to make, alter or repeal our bylaws.

We are subject to Section 203 of the Delaware General Corporation Law, which provides, subject to enumerated exceptions, that if a person acquires 15 percent or more of our outstanding voting stock, the person is an “interested stockholder” and may not engage in any “business combination” with us for a period of three years from the time the person acquired 15 percent or more of our outstanding voting stock.


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ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.
OTHER INFORMATION
None.
ITEM 6.
EXHIBITS
 
 
 
 
 
 
 
 
 
 
Exhibit
 
 
Incorporated By Reference
 
Filed
Number
 
Description
Form
 
Date
 
Number
 
Within
3.1
 
Amended and Restated Certificate of Incorporation of Mattson Technology, Inc.
8-K/A
 
1/30/2001
 
3(i)
 
 
3.2
 
Amended and Restated Bylaws of Mattson Technology, Inc.
8-K
 
12/22/2010
 
3.1
 
 
31.1
 
Certification of Chief Executive Officer Pursuant to Sarbanes‑Oxley Act Section 302(a)
 
 
 
 
 
 
X
31.2
 
Certification of Chief Financial Officer Pursuant to Sarbanes‑Oxley Act Section 302(a)
 
 
 
 
 
 
X
32.1
 
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
 
 
 
 
 
 
X
101.INS
 
XBRL Instance Document.
 
 
 
 
 
 
X
101.SCH
 
XBRL Taxonomy Extension Schema Document.
 
 
 
 
 
 
X
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document.
 
 
 
 
 
 
X
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document.
 
 
 
 
 
 
X
101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document.
 
 
 
 
 
 
X
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document.
 
 
 
 
 
 
X




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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 hereunto duly authorized.
 
MATTSON TECHNOLOGY, INC.
 
(Registrant)

May 6, 2016
 
By: /s/ FUSEN E. CHEN
 
Fusen E. Chen
President and Chief Executive Officer
(Principal Executive Officer)

May 6, 2016
 
By: /s/ J. MICHAEL DODSON
 
J. Michael Dodson
Chief Operating Officer, Chief Financial Officer, Executive Vice President and Secretary
(Principal Financial Officer)

May 6, 2016
 
By: /s/ TYLER PURVIS
 
Tyler Purvis
Senior Vice President, Chief Accounting Officer and Corporate Controller
(Principal Accounting Officer)

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