-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D5jjEFj/CobWaDAZuAIV1EnpqvMmBYEaezGPQb9p4xraSRI6LyRi1lri1ih4VUX7 Xb2LXy3G9eTN8mn0asXYuQ== 0000912057-97-018044.txt : 19970520 0000912057-97-018044.hdr.sgml : 19970520 ACCESSION NUMBER: 0000912057-97-018044 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970330 FILED AS OF DATE: 19970515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MATTSON TECHNOLOGY INC CENTRAL INDEX KEY: 0000928421 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 770208119 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24838 FILM NUMBER: 97608471 BUSINESS ADDRESS: STREET 1: 3550 WEST WARREN AVE CITY: FREMONT STATE: CA ZIP: 94538 BUSINESS PHONE: 5106575900 10-Q 1 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 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to _____________________ Commission file number 0-21970 MATTSON TECHNOLOGY, INC. (Exact name of registrant as specified in its charter) CALIFORNIA 77-0208119 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 3550 WEST WARREN AVENUE FREMONT, CALIFORNIA 94538 (Address of principal executive offices) (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 such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- -------- Number of shares of common stock outstanding as of May 13, 1997 : 14,034,555 1 PART I -- FINANCIAL INFORMATION 1. FINANCIAL STATEMENTS MATTSON TECHNOLOGY, INC. CONDENSED CONSOLIDATED BALANCE SHEET (in thousands) (unaudited) ASSETS
MARCH 30, DEC. 31, 1997 1996 ---- ---- Current assets: Cash and cash equivalents $ 13,146 $ 21,547 Short-term investments 20,656 16,620 Accounts receivable, net 15,328 15,954 Inventories 15,209 12,954 Deferred taxes 4,197 4,197 Prepaid expenses and other current assets 749 882 ---------- ---------- Total current assets 69,285 72,154 Property and equipment, net 8,902 9,373 Other assets 43 2,962 ---------- ---------- $ 78,230 $ 84,489 ---------- ---------- ---------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,945 $ 1,240 Accrued liabilities 9,729 14,134 ---------- ---------- Total current liabilities 11,674 15,374 ---------- ---------- Shareholders' equity: Common stock 56,206 57,580 Retained earnings 10,477 11,625 Other (127) (90) ---------- ---------- Total shareholders' equity 66,556 69,115 ---------- ---------- $ 78,230 $ 84,489 ---------- ---------- ---------- ----------
See accompanying notes to condensed consolidated financial statements. 2 MATTSON TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except per share amounts) (unaudited)
THREE MONTHS ENDED ------------------ MARCH 30, MARCH 31, 1997 1996 ---- ---- Net sales $ 13,023 $ 22,002 Cost of sales 6,458 9,181 --------- --------- Gross profit 6,565 12,821 --------- --------- Operating expenses: Research, development and engineering 2,944 2,648 Selling, general and administrative 4,908 5,266 --------- --------- Total operating expenses 7,852 7,914 --------- --------- Income (loss) from operations (1,287) 4,907 Interest and other income (expense), net 437 610 --------- --------- Income (loss) before income taxes (850) 5,517 Provision for (benefit from) income taxes (282) 1,979 --------- --------- Net income (loss) $ (568) $ 3,538 --------- --------- --------- --------- Net income (loss) per share $ (.04) $ 0.23 --------- --------- --------- --------- Shares used in computing net income (loss) per share 14,180 15,276 --------- --------- --------- ---------
See accompanying notes to condensed consolidated financial statements. 3 MATTSON TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) (unaudited)
THREE MONTHS ENDED ------------------ MARCH 30, MARCH 31, 1997 1996 ---- ---- Cash flows from operating activities: Net income (loss) $ (568) $ 3,538 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 698 296 Changes in assets and liabilities: Accounts receivable (280) (5,138) Inventories (2,255) (2,643) Prepaid expenses and other assets 90 (756) Accounts payable 705 607 Accrued liabilities (537) 3,241 -------- -------- Net cash used in operating activities (2,147) (855) -------- -------- Cash flows from investing activities: Acquisition of property and equipment (227) (1,577) Purchases of short-term investments (7,956) (5,961) Sales and maturities of short-term investments 3,912 19,791 -------- -------- Net cash provided by (used in) investing activities (4,271) 12,253 -------- -------- Cash flows from financing activities: Proceeds from the issuance of Common Stock, net 19 53 Purchase of Common Stock (1,973) - -------- -------- Net cash provided by (used in) financing activities (1,954) 53 -------- -------- Effect of exchange rate changes on cash and cash equivalents (29) (10) -------- -------- Net increase (decrease) in cash and cash equivalents (8,401) 11,441 Cash and cash equivalents, beginning of period 21,547 14,310 -------- -------- Cash and cash equivalents, end of period $ 13,146 $ 25,751 -------- -------- -------- -------- Supplemental disclosure of non-cash operating activities: Inventory totaling $1 million was capitalized and transferred to property and equipment during the first three months of 1996.
See accompanying notes to condensed consolidated financial statements. 4 MATTSON TECHNOLOGY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The financial statements should be read in conjunction with the audited financial statements included in the Company's Annual Report for the year ended December 31, 1996. The results of operations for the three month period ended March 30, 1997 are not necessarily indicative of results that may be expected for the entire year ending December 31, 1997. NOTE 2 BALANCE SHEET DETAIL (IN THOUSANDS): MARCH 30, DEC. 31, 1997 1996 ---- ---- Inventories: Purchased parts and raw materials $ 6,790 $ 6,763 Work-in-process 5,974 4,634 Finished goods 1,201 734 Evaluation systems 1,244 823 -------- -------- $ 15,209 $ 12,954 -------- -------- Accrued liabilities: Warranty reserve $ 3,549 $ 3,378 Accrued compensation and benefits 1,354 1,252 Income taxes 1,304 2,082 Commissions 380 1,082 Deferred income 1,685 4,966 Other 1,457 1,374 -------- -------- $ 9,729 $ 14,134 -------- -------- -------- -------- 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW Mattson Technology, Inc. ("Mattson" or the "Company") designs, manufactures and markets advanced fabrication equipment to semiconductor manufacturers worldwide. The Company's product line is based on the Company's modular "Aspen" platform which accommodates two process chambers supporting increased throughput. The Company currently offers Aspen Strip, CVD, RTP and LiteEtch products. The Company has derived substantially all of its sales from Aspen Strip and CVD systems. The Company has sold two LiteEtch systems and one RTP system. The Company's LiteEtch and RTP products are each in an early marketing phase. In addition, the Company derives sales from spare parts and maintenance services. Until the quarter ended September 29, 1996, the Company experienced rapid growth. There can be no assurance that the Company will be able to regain sales growth or profitability. Future results will depend on a variety of factors, particularly overall market conditions and also timing of significant orders, the ability of the Company to bring new systems to market, the timing of new product releases by the Company's competitors, patterns of capital spending by the Company's customers, market acceptance of new and/or enhanced versions of Company systems, changes in pricing by the Company, its competitors, customers, or suppliers and the mix of products sold. In order to support long term growth in its business the Company has not decreased its expense levels compared with the decrease in the rate of sales growth. As a result, the Company is dependent upon increases in sales in order to regain profitability. If the Company's sales do not increase, the current levels of operating expenses could materially and adversely affect the financial results of the Company. As a result of the well publicized slowdown in the semiconductor market, particularly for DRAMs, many semiconductor manufacturers have been delaying or canceling previously planned new equipment purchases. The cyclicality and uncertainties regarding overall market conditions continue to present significant challenges to the Company and have a significant adverse impact on the Company's ability to forecast near term revenue expectations. The ability of the Company to modify its operations in response to short term changes in market conditions is limited. The extent and duration of the slowdown and the short term and ultimate impact on the Company and its results of operations and financial condition cannot be precisely predicted. The Company generally recognizes a sale upon shipment of a system. However, from time to time, the Company allows customers to evaluate systems. The Company does not recognize the associated sale until and unless an evaluation system is accepted by the customer. 6 FORWARD LOOKING STATEMENTS This report on Form 10-Q contains forward looking statements regarding, among other matters, the Company's future strategy, product development plans, and productivity gains and growth. The forward looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward looking statements address matters which are subject to a number of risks and uncertainties. In addition to the general risks associated with the development of complex technology, future results of the Company will depend on a variety of factors as described herein and other filings with the Securities and Exchange Commission. RESULTS OF OPERATIONS The following table sets forth the statement of operations data of the Company expressed as a percentage of net sales for the period indicated: THREE MONTHS ENDED ------------------ MARCH 30, MARCH 31, 1997 1996 ---- ---- Net sales 100% 100% Cost of sales 50% 42% ---- ---- Gross margin 50% 58% ---- ---- Operating expenses: Research, development and engineering 23% 12% Selling, general and administrative 38% 24% Total operating expenses 60% 36% Income (loss) from operations (10%) 22% Income (loss) before income taxes (7%) 25% Net income (loss) (4%) 16% NET SALES Net sales for the first quarter of 1997 decreased 41% to $13.0 million from $22.0 million for the first quarter of 1996. Net sales decreased as a result of overall industry conditions and reflected a 32% decrease in unit shipments and an 11% decrease in average selling prices (ASP's). Sales in the first quarter consist principally of single and dual chamber Aspen Strip systems. Lower ASP's resulted primarily from a quarter-to-quarter proportionate decrease in sales of the Company's dual chamber Aspen Strip compared to sales of single chamber Aspen Strip systems. International sales, which are predominantly to customers based in Japan and the Pacific Rim (which includes Taiwan, Singapore and Korea), accounted for 50% and 87% of net sales for the first quarter of 1997 and 1996, respectively. All sales are denominated in U.S. dollars. The Company's operating results could be materially and adversely affected by any loss of business from, the cancellation of orders by, or decreases in prices of systems sold through Marubeni, the Company's distributor in Japan. The Company anticipates that international sales will continue to account for a significant portion of 1997 total net sales due primarily to orders from customers in Japan and the Pacific Rim. 7 GROSS MARGIN The Company's gross margin for the first quarter of 1997 decreased to 50% from 58% for the first quarter of 1996. The quarter-to-quarter decrease was principally due to the allocation of relatively fixed overhead costs over lower sales volume and higher warranty reserves associated with the Company's newer products. The Company's gross margin will continue to be affected by a variety of factors. In particular, until and unless the Company's sales volume increases, lower economies of scale will adversely affect gross margin. The Company's gross margin on international sales, other than sales through Marubeni, is substantially the same as domestic sales. Sales to Marubeni typically carry a lower gross margin as Marubeni is still primarily responsible for sales and support costs in Japan. In addition, the Company has incurred additional research, development and engineering and marketing expenses primarily through the Company's Japanese subsidiary, Mattson Technology Center K.K. ("MTC"). Although the Company has not offered substantial discounts on its systems to date, particularly in light of the overall industry slowdown, the Company may face discounting pressures in the future which could adversely affect gross margins. The Company's reliance on outside vendors generally, and a sole or a limited group of suppliers in particular, involves several risks, including a potential inability to obtain an adequate supply of required components and reduced control over pricing and timely delivery of components. Any inability to obtain adequate deliveries or any other circumstance that would require the Company to seek alternative sources of supply or to manufacture such components internally could delay the Company's ability to ship its systems and could have a material adverse effect on the Company, including an increase in the Company's cost of sales and therefore an adverse impact on gross margin. In addition, new system introductions and enhancements may also have an adverse effect on gross margin due to the inefficiencies associated with manufacturing of new product lines. RESEARCH, DEVELOPMENT AND ENGINEERING Research, development and engineering expenses for the first quarter of 1997 were $2.9 million, or 23% of net sales, as compared to $2.6 million, or 12%, for the first quarter of 1996. The increase in expenses was primarily due to depreciation expense which increased to $0.3 million from $0.1 million for the first quarter of 1996. The increase in depreciation expense was due to additions of capital equipment for ongoing product development. The increase in expense as a percentage of net sales was due to lower sales volume in the first quarter of 1997. The Company believes that continued investment in research and development is critical to maintaining a strong technological position in the industry and therefore expects research and development expenses to continue to increase in the foreseeable future. SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expenses for the first quarter of 1997 were $4.9 million, or 38% of net sales, as compared to $5.3 million, or 24%, for the first quarter of 1996. The decrease in expenses was primarily due to commission expense which decreased to $0.4 million from $1.5 million in the first quarter of 1996, which was partially offset by salaries and payroll taxes which increased to $2.7 million from $1.9 million, principally as a result of additional personnel. The increase in expense as a percentage of net sales was due to lower sales volume in the first quarter of 1997. PROVISION FOR INCOME TAXES The Company's expected annual tax rate was 33% and 36% in the first quarter of 1997 and 1996, respectively. In the third quarter of 1996, the Company revised its expected annual tax rate from 36% to 33% which was principally a result of Congress's reinstatement of the Research and Development credit, effective July 1, 1996. In addition, the expected annual tax rate of 33% in 1997 and 1996 also reflects benefit derived from the Company's Foreign Sales Corporation. 8 LIQUIDITY AND CAPITAL RESOURCES Net cash used in operations during the first three months of 1997 was $2.1 million, compared to $0.9 million of net cash used in operations during the first three months of 1996. Net cash used by operations during the first three months of 1997 was primarily attributable to the net loss of $0.6 million and an increase in inventories of $2.3 million. Net cash used in investing activities during the first three months of 1997 was $4.3 million, compared to $12.3 million net cash provided by investing activities during the first three months of 1996. Investing activities during the first three months of 1997 consisted primarily of purchases and maturities of short-term investments and acquisition of fixed assets. Net cash used in financing activities during the first three months of 1997 was $2.0 million, compared to $0.1 million net cash provided by financing activities in the first three months of 1996. Cash used in financing activities during the first three months of 1997 was primarily due to the Company's repurchase of 200,000 shares of Common Stock in the first quarter of 1997. The Board of Directors has authorized the Company to repurchase up to 500,000 shares of the Company's common stock of which 400,000 shares have been repurchased to date. In September 1996, the Company entered into a four year lease agreement with a major customer for the customer's lease of certain products. The total sales value of products covered under the lease was approximately $3.9 million. The Company deferred income recognition on the lease. In the first quarter of 1997, the customer exercised its right to prepay the lease and purchase the equipment. The $3.9 million was recognized as a sale and the corresponding receivable was recorded in the first quarter of 1997. Subsequent to the first quarter of 1997, the Company collected the $3.9 million receivable from the customer. The Company believes that existing cash and short-term investment balances will be sufficient to meet the Company's cash requirements during the next twelve months. However, depending upon its rate of growth and profitability, the Company may require additional equity or debt financing to meet its working capital requirements or capital equipment needs. There can be no assurance that additional financing will be available when required or, if available, will be on terms satisfactory to the Company 9 PART II -- OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits Exhibit 27 (Electronic filing only) (b) Reports on Form 8-K None. 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MATTSON TECHNOLOGY, INC. Date: May 14, 1997 /s/ Richard S. Mora ----------------------------------- Richard S. Mora Vice President of Finance and Chief Financial Officer (as principal financial officer) and on behalf of Registrant) 11 EX-27 2 EXHIBIT 27 (FDS)
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOUND ON PAGES 2 AND 3 OF THE COMPANY'S FORM 10-Q FOR THE YEAR TO DATE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-30-1997 13,146 20,656 15,328 0 15,209 69,285 8,902 0 78,230 11,674 0 0 0 56,206 10,350 78,230 13,023 13,023 6,458 6,458 7,852 0 0 (850) (282) (568) 0 0 0 (568) (.04) (.04)
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