-----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, KtnfmoI4ndXlv9AkmcLR5K7L5HRxSudJMqmpVwLBkpoRBIL6+hvC8VAdh/D3Ig1j HeIqr26v8qhOO8CT7j+h4w== 0000950147-97-000812.txt : 19971117 0000950147-97-000812.hdr.sgml : 19971117 ACCESSION NUMBER: 0000950147-97-000812 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CERPROBE CORP CENTRAL INDEX KEY: 0000725259 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 860312814 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-11370 FILM NUMBER: 97721984 BUSINESS ADDRESS: STREET 1: 1150 NORTH FIESTA BLVD CITY: GILBERT STATE: AZ ZIP: 85233-2237 BUSINESS PHONE: 6029677885 MAIL ADDRESS: STREET 1: 600 S ROCKFORD DR CITY: TEMPE STATE: AZ ZIP: 85281 10-Q 1 QUARTERLY REPORT 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 Quarter Ended September 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 0-11370 --------- CERPROBE CORPORATION (Exact name of registrant as specified in its charter) Delaware 86-0312814 ------------------------------ ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1150 North Fiesta Boulevard, Gilbert, Arizona 85233 ---------------------------------------------- ---------------------- (Address of principal executive offices) (Zip Code) (602) 333-1500 ---------------------------------------------------- (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 and 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 ------- ------- As of October 31, 1997, there were 8,070,313 shares of the Registrant's common stock outstanding. CERPROBE CORPORATION QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1997 TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page ---- Item 1. Financial Statements: Condensed Consolidated Balance Sheets - September 30, 1997 and December 31, 1996..............................3 Condensed Consolidated Statements of Operations - Three and Nine Months Ended September 30, 1997 and 1996...............4 Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 1997 and 1996.........................6 Notes to Condensed Consolidated Financial Statements..................7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..................................13 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K.....................................19 Signatures ............................................................21 2 CERPROBE CORPORATION Condensed Consolidated Balance Sheets
September 30, December 31, ASSETS 1997 1996 ------------ ------------ (unaudited) Current assets: Cash and cash equivalents $ 24,443,687 $ 5,564,557 Accounts receivable, net of allowance of $312,278 in 1997 and $223,000 in 1996 11,452,878 5,564,203 Inventories, net 6,990,722 3,862,753 Note receivable -- 250,000 Prepaid expenses 391,602 377,003 Income taxes receivable -- 214,097 Deferred tax asset 506,129 202,476 ------------ ------------ Total current assets 43,785,018 16,035,089 Property, plant and equipment, net 14,588,884 11,446,291 Intangibles, net 2,491,340 2,602,812 Other assets 1,491,382 1,326,592 ------------ ------------ Total assets $ 62,356,624 $ 31,410,784 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,335,407 $ 2,739,064 Accrued expenses 4,317,611 1,600,120 Demand note payable 988,911 1,030,000 Current portion of notes payable 132,786 128,180 Current portion of capital leases 581,608 634,755 ------------ ------------ Total current liabilities 10,356,323 6,132,119 Notes payable, less current portion 185,031 278,645 Capital leases, less current portion 1,010,346 1,462,799 Other liabilities 490,992 394,011 ------------ ------------ Total liabilities 12,042,692 8,267,574 ------------ ------------ Minority interest -- 12,851 ------------ ------------ Commitments and contingencies Stockholders' equity: Preferred stock, $.05 par value; authorized 10,000,000 shares; issued and outstanding 330 shares of Series A Convertible Preferred Stock, liquidation preference of $10,164 per share at December 31,1996 -- 16 Common stock, $.05 par value; authorized, 10,000,000 shares; issued and outstanding 7,765,113 shares at September 30, 1997 and 6,027,714 at December 31, 1996 388,255 301,386 Additional paid-in capital 48,231,185 20,652,290 Retained earnings 1,762,462 2,105,674 Foreign currency translation adjustment (67,970) 70,993 ------------ ------------ Total stockholders' equity 50,313,932 23,130,359 ------------ ------------ Total liabilities and stockholders' equity $ 62,356,624 $ 31,410,784 ============ ============
See accompanying notes to condensed consolidated financial statements. 3 CERPROBE CORPORATION Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended September 30, Nine Months Ended September 30, -------------------------------- ------------------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Net sales $ 19,886,447 $ 8,799,247 $ 54,469,368 $ 28,159,069 Costs of goods sold 11,698,566 4,937,571 32,101,895 15,285,366 ------------ ------------ ------------ ------------ Gross profit 8,187,881 3,861,676 22,367,473 12,873,703 ------------ ------------ ------------ ------------ Expenses: Selling, general and administrative 4,746,863 2,595,559 13,874,174 7,870,390 Engineering and product development 412,905 345,963 1,030,679 724,230 Acquisition related costs (recovery) (1,167,689) -- 4,996,467 -- ------------ ------------ ------------ ------------ Total expenses 3,992,079 2,941,522 19,901,320 8,594,620 ------------ ------------ ------------ ------------ Operating income 4,195,802 920,154 2,466,153 4,279,083 ------------ ------------ ------------ ------------ Other income (expense): Interest income 10,609 177,113 78,274 345,356 Interest expense (170,050) (50,737) (466,905) (167,194) Other income, net 107,153 64,348 221,999 151,830 ------------ ------------ ------------ ------------ Total other income (expense) (52,288) 190,724 (166,632) 329,992 ------------ ------------ ------------ ------------ Income before income taxes and minority interest 4,143,514 1,110,878 2,299,521 4,609,075 Minority interest share of loss 67,394 21,521 96,379 83,809 ------------ ------------ ------------ ------------ Income before income taxes 4,210,908 1,132,399 2,395,900 4,692,884 Provision for income taxes (1,248,812) (469,000) (2,739,112) (2,162,000) ------------ ------------ ------------ ------------ Net income (loss) $ 2,962,096 $ 663,399 $ (343,212) $ 2,530,884 ============ ============ ============ ============ Net income (loss) per common and common equivalent share: Primary $ 0.44 $ 0.13 $ (0.05) $ 0.49 ============ ============ ============ ============ Weighted average number of common and common equivalent shares outstanding 6,706,347 5,297,528 6,318,243 5,125,943 ============ ============ ============ ============ Fully diluted $ 0.44 $ 0.11 $ (0.05) $ 0.45 ============ ============ ============ ============ Weighted average number of common and common equivalent shares outstanding 6,786,973 5,782,576 6,318,243 5,647,789 ============ ============ ============ ============
See accompanying notes to condensed consolidated financial statements. 4 CERPROBE CORPORATION Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, -------------------------------- 1997 1996 -------------------------------- Cash flows from operating activities: Net income (loss) $ (343,211) $ 2,530,884 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 2,627,529 1,339,227 Purchased research and development 4,496,467 -- Loss on sale of fixed assets 508 -- Tax benefit from stock options excercised 28,000 407,000 Deferred income taxes (303,553) (65,999) Provision for losses on accounts receivable, net 79,395 5,000 Provision for obsolete inventory, net 624,132 46,000 Compensation expense 888 49,383 Income (loss) applicable to minority interest in consolidated subsidiaries 96,379 (83,809) Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable (5,143,871) (797,178) Inventories (393,353) (1,055,273) Prepaid expenses and other assets (204,855) (461,780) Income taxes receivable 214,097 (200,652) Accounts payable and accrued expenses 2,310,621 869,365 Other liabilities 20,140 292,358 ------------ ------------ Net cash provided by operating activities 4,109,313 2,874,526 ------------ ------------ Cash flows from investing activities: Purchase of property, plant and equipment (5,011,726) (2,896,861) Purchase of marketable securities -- (2,260,063) Investment in CRPB Investors, L.L.C (607) (600,000) Investment in Upsys-Cerprobe, L.L.C 19,333 -- Supplemental acquisition costs for CompuRoute (80,102) -- Purchase of SVTR, net of cash acquired (2,590,697) -- Proceeds from sale of equipment 71,183 -- Payment of notes receivable 250,000 -- ------------ ------------ Net cash used in investing activities (7,342,616) (5,756,924) ------------ ------------ Cash flows from financing activities: Principal payments on notes payable and capital leases (3,715,538) (261,000) Net proceeds from issuance of convertible preferred stock -- 9,400,000 Redemption of convertible preferred stock (5,250,000) -- Net proceeds from issuance of common stock 30,710,000 564,980 Net proceeds from stock options exercised 506,936 -- Capital contribution by minority interest partner -- 113,020 ------------ ------------ Net cash provided by financing activities 22,251,398 9,817,000 ------------ ------------ Effect of exchange rates on cash and cash equivalents (138,965) 34,712 ------------ ------------ Net increase in cash and cash equivalents 18,879,130 6,969,314 Cash and cash equivalents, beginning of period 5,564,557 263,681 ------------ ------------ Cash and cash equivalents, end of period $ 24,443,687 $ 7,232,995 ============ ============
See accompanying notes to condensed consolidated financial statements. 5 CERPROBE CORPORATION Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, -------------------------------- 1997 1996 -------------------------------- Supplemental schedule of noncash investing and financing activities: Conversion of subordinated debentures to common stock $ -- $ 110,000 ------------ -------------- Equipment acquired under capital leases and issuances of notes payable $ 4,144 $ 253,378 ------------ -------------- Supplemental disclosures of cash flow information: Interest paid $ 466,903 $ 118,685 ------------ -------------- Income taxes paid $ 1,917,596 $ 1,812,000 ------------ -------------- Supplemental disclosures of noncash investing activities: The Company made an acquisition for $4.5 million. The purchase price was allocated to the assets acquired and liabilities assumed based on their fair values as indicated in Note 4 to the condensed consolidated financial statements. A summary of the acquisition after adjustment is as follows: Purchase price $ 4,546,825 Less cash acquired (285,316) Common stock issued (1,670,812) ----------- Cash invested $ 2,590,697 ===========
See accompanying notes to condensed consolidated financial statements. 6 CERPROBE CORPORATION Notes to Condensed Consolidated Financial Statements (Unaudited) (1) Basis of Preparation The accompanying condensed consolidated financial statements as of September 30, 1997 and for the three months and nine months ended September 30, 1997 and September 30, 1996 are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of financial position and operating results for the interim periods. The condensed consolidated balance sheet as of December 31, 1996 was derived from the audited consolidated financial statements at such date. Pursuant to accounting requirements of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, the accompanying condensed consolidated financial statements and notes do not include all disclosures required by generally accepted accounting principles for complete financial statements. Accordingly, these statements should be read in conjunction with Cerprobe Corporation's (the "Company") annual financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1996. Results of operations for interim periods are not necessarily indicative of those to be achieved for full fiscal years. Principles of Consolidation The consolidated financial statements include the accounts of Cerprobe and its wholly-owned subsidiaries: Cerprobe Europe Limited, Cerprobe Asia Holdings PTE LTD, CompuRoute, Inc., Silicon Valley Test & Repair, Inc. and Cobra Venture Management, Inc. Cerprobe Asia Holdings PTE LTD, together with Asian investors, formed Cerprobe Asia PTE LTD in 1995. Cerprobe Asia Holdings PTE LTD is a 70% owner of Cerpobe Asia PTE LTD. Cerprobe Asia PTE LTD created wholly owned subsidiaries, Cerprobe Singapore PTE LTD ("Cerprobe Singapore") and Cerprobe Taiwan Co. LTD ("Cerprobe Taiwan"), to operate full service sales and manufacturing plants. Cerprobe-Singapore became operational in April 1996 and Cerprobe-Taiwan in January 1997. All significant intercompany transactions have been eliminated in consolidation. The consolidated balance sheet at December 31, 1996 also includes the assets and liabilities of CompuRoute, Inc. ("CompuRoute"), a wholly-owned subsidiary, acquired on December 27, 1996. As a result of the date of acquisition, the condensed consolidated financial statements do not include the 1996 operations of CompuRoute. On January 15, 1997, the Company acquired all of the outstanding stock of Silicon Valley Test & Repair, Inc. ("SVTR"), a company that refurbishes, reconfigures, and services wafer probing equipment. Accordingly, the condensed consolidated financial statements 7 as of September 30, 1997 and for the three months and nine months ended September 30, 1997 include SVTR's activities since the date of acquisition. On May 30, 1997, the Company entered into a joint venture with Upsys Reseau Eurisys ("Upsys"), a French company owned by IBM and GAME, a French test and engineering company. The joint venture, called Upsys-Cerprobe, L.L.C., assembles and repairs the Cobra Probe in Arizona for distribution by Cerprobe throughout the United States and Asia. Cerprobe owns 55% of the joint venture and Upsys owns 45%. The Company manages the joint venture and established a wholly owned subsidiary called Cobra Venture Management, Inc. to function as manager of Upsys-Cerprobe, L.L.C. Accordingly, the condensed consolidated financial statements as of September 30, 1997 and for the three months and nine months ended September 30, 1997 include the activities of both organizations since the formation of the venture. On August 18, 1997, Cerprobe Asia Holdings PTE LTD sold 10% of its ownership in Cerprobe Asia PTE LTD to a Taiwanese Investor. Accordingly, the condensed consolidated financial statements as of September 30, 1997 and for the three months and nine months ended September 30, 1997 show a 60% ownership in Cerprobe Asia PTE LTD since the transaction date. (2) Commitments and Contingencies Lease Line of Credit In February 1997, the Company entered into a $10,000,000 unsecured revolving line of credit, which matures August 15, 1998, with its primary lender, Wells Fargo Bank. Advances under the revolving line may be made as prime rate advances, which accrue interest payable monthly, at the Bank's prime lending rate, or as LIBOR rate advances, which bear interest at 175 basis points in excess of the LIBOR base rate. As of September 30, 1997, no amounts were outstanding under the line. In May 1997, the Company entered into a $3,000,000 lease line of credit, which matures February 28, 1998, with Banc One Leasing Corporation. The maximum term for each lease schedule will not exceed 60 months. Pricing will be indexed to like term treasuries plus 170 basis points. The advances will be collateralized by the underlying leased manufacturing equipment, furniture, fixtures, software, and/or hardware. As of September 30, 1997, no advances had been made under the agreement. Convertible Preferred Stock On August 25, 1997, the Company reached an agreement, which included mutual releases, with the holders of the remaining 330 shares of convertible preferred stock to redeem their shares for $5,250,000 in cash. The redemption was funded through an advance on the Company's line of credit which was paid off in September 1997, with the proceeds from the Secondary Offering. See Note 3. 8 (3) Common Stock In September 1997, the Company completed a Secondary Public Offering (the "Secondary Offering") of 2,000,000 shares of the Company's Common Stock at a price of $22 per share. Of the shares, 1,500,000 were sold by the Company and the remaining 500,000 shares were sold by selling stockholders. The Company did not receive proceeds from shares sold by selling stockholders. The Company received approximately $30,710,000 in net proceeds from the offering. In addition, on October 6, 1997 the managing underwriters of the offering, Adams, Harkness & Hill, Inc. and Dain Bosworth Incorporated exercised their over-allotment options to purchase an additional 300,000 shares of the Company's Common Stock at a price of $22 per share. The Company received $6,222,000 in net proceeds from the exercise of the over-allotment. (4) Acquisitions SVTR, Inc. On January 15, 1997, the Company acquired all of the outstanding stock of SVTR. The purchase price paid by the Company consisted of $2,753,217 in cash and 300,000 shares of common stock. The acquisition has been accounted for using the purchase method of accounting. Accordingly, the purchase price has been allocated to assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. The purchase price of $5,617,467 plus acquisition costs of $97,796 was allocated as follows. Purchase price: Cash $ 2,753,217 Common stock 2,864,250 Costs of acquisition 97,796 ------------ $ 5,715,263 ============ Assets acquired and liabilities assumed: Current assets $ 4,979,145 Property, plant, and equipment 651,781 Other assets 185,007 Purchased research and development 5,664,156 Current liabilities (4,795,473) Noncurrent liabilities (969,353) ------------ $ 5,715,263 ============ 9 At acquisition, the state of the research and development products was not yet at a technologically or commercially viable stage. The Company does not believe that the research and development products have any future alternative use because if these products are not finished and brought to ultimate product completion, they have no other value. Therefore, consistent with generally accepted accounting principles, the Company recorded a one-time charge of $5,664,156 on January 15, 1997 for the full value of the purchased research and development. In addition, at the date of acquisition the Company recorded a $500,000 accrual for the estimated costs to move SVTR's manufacturing operations from California to Arizona during 1997. Under the original terms of the acquisition, the Company agreed to pay up to an additional $500,000 in cash and up to 50,000 additional shares of common stock if certain sales and operating profit targets for calendar year 1997 were achieved by SVTR. On August 18, 1997, a letter of understanding detailing the settlement of certain open terms related to the purchase of SVTR by the Company on January 15, 1997 was signed by the former owners of SVTR. In general, the letter of understanding required the former owners to return 125,000 shares of the Company's common stock then held in escrow to the Company. In addition, the former owners were required to release any claims or interests they may have to receive any payments or shares of common stock of the Company with respect to an earnout provision detailed in the January 15, 1997 agreement of merger between the two entities. On September 26, 1997, a formal agreement was signed consummating the details in the letter of understanding. As a result, the Company has recorded a $1,167,689 reduction in previously recorded acquisition related expenses. The re-negotiated purchase price of $4,546,825 plus acquisition costs of $122,795 was allocated as follows. Purchase price: Cash $ 2,753,217 Common stock 1,670,813 Costs of acquisition 122,795 ----------- $ 4,546,825 =========== Assets acquired and liabilities assumed: Current assets $ 4,918,904 Property, plant and equipment 517,413 Other assets 146,867 Purchased research and development 4,496,467 Current liabilities (4,795,473) Noncurrent liabilities (737,353) ----------- $ 4,546,825 =========== 10 Pro forma Results The following summary, prepared on a pro forma basis, excluding the charges for purchased research and development, presents the results of operations as if the acquisitions of CompuRoute and SVTR had occurred January 1, 1996: Nine Months Ended September 30, ------------------------------ 1997 1996 ------------------------------ (unaudited) Net sales $ 54,522,748 $ 48,041,518 Net income $ 4,325,282 $ 2,778,633 Primary net income per share $ .65 $ .48 Fully diluted net income per share $ .64 $ .44 The pro forma results are not necessarily indicative of what the actual consolidated results of operations might have been if the acquisitions had been effective at the beginning of 1996 and are not a projection of future results. (5) Recent Accounting Pronouncements In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" (Statement 128). This Statement establishes standards for computing and presenting earnings per share ("EPS"), and supersedes APB Opinion No. 15. The Statement replaces primary EPS with basic EPS and requires dual presentation of basic and diluted EPS. The Statement is effective for both interim and annual periods ending after December 15, 1997. Earlier application is not permitted. After adoption, all prior-period EPS data shall be restated to conform to Statement 128. Basic and diluted EPS, as calculated under Statement No. 128 would have been $.47 and $.44 for the fiscal three months ended September 30, 1997 and $(.05) and $(.05) for the nine months ended September 30, 1997. 11 CERPROBE CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations Introduction and General Development of Business Cerprobe offers comprehensive solutions for semiconductor test integration and is a leading manufacturer of probe cards, ATE interface assemblies, and ATE test boards. The Company's products and services enable semiconductor manufacturers to test integrated circuits ("ICs") in wafer form and as packaged ICs. The Company has grown substantially over the last five years as the Company has increased its market share and has benefited from the substantial growth in the worldwide demand for ICs. Net sales have increased from $8.1 million for 1992 to $37.3 million for 1996, representing an average annualized growth rate of 46.5%. Similarly, the Company's net income has increased from $.8 million for 1992 to $3.2 million for 1996 (before a one-time charge for purchased research and development of $4.6 million, resulting in a net loss of $1.4 million). Until 1995, substantially all of the Company's growth was from the existing probe card product line. Beginning with the April 1995 acquisition of Fresh Test Technology Corporation ("Fresh Test"), acquisitions have contributed to the Company's growth. Fresh Test, which expanded the Company's product line to include ATE interface assemblies, contributed approximately $4 million to 1995 net sales and approximately $7 million to 1996 net sales. The Company acquired CompuRoute in December 1996, which enabled the Company to offer ATE test boards. CompuRoute's net sales and net income for its fiscal year ended December 31, 1996 were $10.4 million and $.5 million, respectively. The Company acquired SVTR in January 1997, which added wafer prober refurbishing and upgrading services. SVTR's net sales and net loss for its fiscal year ended December 31, 1996 were $14.6 million and $.4 million, respectively. Together, these acquisitions contributed approximately $19.5 million to net sales for the first nine months of 1997. In May 1997, the Company entered into a joint venture with Upsys Reseau Eurisys ("Upsys"), a French company owned by IBM and GAME, a French test and engineering company. The joint venture, called Upsys-Cerprobe, L.L.C., will assemble and repair the Cobra probe card for distribution by the Company in the United States and Asia. The Company believes the Cobra probe is well-suited for multiple-IC and memory IC testing. The Company believes that it is positioned to continue its growth as a result of its strength in designing, producing, and delivering, on a timely and cost-efficient basis, a broad range of custom or customized, high quality test products and services for semiconductor manufacturers in the United States, Europe, and Asia. There can be no assurance that the Company can continue its growth. The Company maintains regional full service facilities in Arizona, California, and Texas as well as sales offices in Colorado, Florida, Massachusetts, and Oregon to service the U.S. market for its products and services. The Company continues to expand into international markets, including Europe and Asia. The Company maintains a full service facility in Scotland to serve the European market and full service facilities in Singapore and Taiwan to serve the Southeast Asia market. Each of the Company's facilities is located in proximity to semiconductor manufacturing centers. 12 Results of Operations Three Months Ended September 30, 1997 Compared to Three Months Ended September 30, 1996. Net Sales. Net sales for the three months ended September 30, 1997 were $19,886,447, an increase of 126.0% over net sales of $8,799,247 for the three months ended September 30, 1996. This increase in net sales is a result of Cerprobe's two recent acquisitions, higher order rates for Cerprobe's probe card and interface products and increased sales from Cerprobe's international operations. Gross Profit. Gross profit for the three months ended September 30, 1997, was $8,187,881, an increase of 112.0% over the gross profit of $3,861,676 for the same period in 1996. Gross profit as a percentage of sales decreased from 43.9% for the three months ended September 30, 1996 to 41.2% for the same period in 1997. The decrease in gross profit was primarily a result of a change in product mix due to the recent acquisitions. Approximately 27.8% of net sales within the period were attributed to ATE test boards from the Company's CompuRoute subsidiary and wafer prober products and services from the Company's SVTR subsidiary. Both product lines currently have lower gross profit than the Company's core products of probe cards and ATE interfaces. Selling, General and Administrative. Selling, general and administrative expenses were $4,746,863, or 23.9% of net sales, for the three months ended September 30, 1997 as compared to $2,595,559, or 29.5% of net sales, for the same period in 1996, an increase of 82.9%. The increase in selling, general and administrative expenses resulted primarily from the two recent acquisitions, the start up of the joint venture with Upsys, and the continued domestic and international expansion. Of the increase, $1,428,743, or 66%, was attributable to Cerprobe's two recent acquisitions and the joint venture with Upsys. Engineering and Product Development. Engineering and product development expenses were $412,905 for the three months ended September 30, 1997, an increase of 19.3% over $345,963 for the same period in 1996. This increase resulted from Cerprobe's recent acquisitions and Cerprobe's continued emphasis on engineering and product development in an effort to anticipate and address technological advances in semiconductor testing. Acquisition Related Recovery. Acquisition related recovery was $1,167,689 of the original $5,664,156 purchased research and development expenses associated with the acquisition of SVTR on January 15, 1997. The recovery is a result of a formal agreement signed September 26, 1997 by the former owners of SVTR which settled certain open terms relating to Cerprobe's purchase of SVTR. The agreement required the former owners to return to the Company 125,000 shares of the Company's common stock currently held in escrow. In addition, the former owners were required to release any claim or interest they may have to receive any payments or shares of common stock of the company with respect to an earnout provision detailed in the January 15, 1997 agreement of merger between the two entities. Interest Income. Interest income was $10,609 for the three months ended September 30, 1997 as compared to $177,113 for the same period in 1996. The decrease was a result of utilizing the net 13 proceeds of the Series A Convertible Preferred Stock offering for the CompuRoute and SVTR acquisitions in the fourth quarter of 1996 and in the first quarter of 1997, respectively. Interest income is expected to increase significantly in the quarter ending December 31,1997 due to the investment of the net proceeds of the Company's recent Secondary Offering. Interest Expense. Interest expense was $170,050 for the three months ended September 30, 1997 as compared to $50,737 for the same period in 1996, an increase of 235.2%. The majority of the 1997 increase in interest expense was due to the debt acquired in the acquisition of CompuRoute and SVTR. This debt was liquidated at September 30, 1997, with a portion of the net proceeds from the Company's recent Secondary Offering. Accordingly, interest expense is expected to be substantially lower in the quarter ending December 31, 1997. Minority Interest Share of loss. The minority interest share of loss from operations of $67,394 for the three months ended September 30, 1997 represents the Company's joint venture partners' share (40.0%, prior to August 18, 1997, 30.0% thereafter) of the income from Cerprobe Asia PTE LTD of $47,704 and the Company's joint venture partner's share (45.0%) of the loss from Upsys-Cerprobe, L.L.C. of $115,098. Provision for Income Taxes. The provision for income taxes was $1,248,812 which represents an effective tax rate of 41.0%, excluding the recovery of acquisition costs of $1,167,689 for the three months ended September 30, 1997 versus the provision for income taxes for the three months ended September 30, 1996 of $469,000 which represents an effective tax rate of 41.4%. Net Income. Net income for the three months ended September 30, 1997 was $2,962,096, an increase of $2,298,697, or 346.5%, from the net income of $663,399 for the same period in 1996. Excluding the $1,167,689 recovery of purchased research and development expenses, net income would have been $1,794,407 or 9.0% of sales compared to 7.5% of sales for the same period in 1996. Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30, 1996. Net Sales. Net sales for the nine months ended September 30, 1997 were $54,469,368, an increase of 93.4% over net sales of $28,159,069 for the nine months ended September 30, 1996. This increase in net sales is a result of Cerprobe's two recent acquisitions, higher order rates for Cerprobe's probe card and interface products and increased sales from Cerprobe's international operations. Gross Profit. Gross profit for the nine months ended September 30, 1997, was $22,367,473, an increase of 73.7% over the gross profit of $12,873,703 for the same period in 1996. Gross profit as a percentage of sales decreased from 45.7% for the nine months ended September 30, 1996 to 41.1% for the same period in 1997. The decrease in gross profit, as a percentage of sales, is primarily a result of a change in product mix due to the recent acquisitions. Approximately 25.9% of net sales within the period were attributed to ATE test boards from the Company's CompuRoute subsidiary and wafer prober products and services from the Company's SVTR subsidiary. Both product lines currently have lower gross profit than the Company's core products of probe cards and ATE interfaces. 14 Selling, General and Administrative. Selling, general and administrative expenses were $13,874,174, or 25.5% of net sales, for the nine months ended September 30, 1997 as compared to $7,870,390, or 27.9% of net sales, for the same period in 1996. The increase of $6,003,784, or 76.3%, resulted primarily from the two recent acquisitions, the start up of the joint venture with Upsys, and the continued domestic and international facilities expansion. Of the increase, $3,745,466, or 62.4%, was attributable to CompuRoute, SVTR, and the joint venture with Upsys. Engineering and Product Development. Engineering and product development expenses were $1,030,679 for the nine months ended September 30, 1997, an increase of 42.3% over $724,230 for the same period in 1996. This increase resulted from Cerprobe's recent acquisitions and from Cerprobe's continued emphasis on engineering and product development in an effort to anticipate and address technological advances in semiconductor testing. Acquisition Related Expenses. Acquisition related costs totaled $4,996,467, including a recovery of $1,167,689, and are related to the acquisition of SVTR on January 15, 1997. The acquisition was accounted for using the purchase method of accounting. Accordingly, the purchase price was allocated to the assets acquired and the liabilities assumed based upon their estimated fair values. The value of the purchased research and development in connection with the acquisition was $4,496,467. The current state of the research and development products/processes was not yet at a technologically feasible or commercially viable stage. Cerprobe does not believe that the research and development products/processes have any future alternative use because if they are not finished and brought to ultimate product or process completion they have no value. Therefore, consistent with generally accepted accounting principles, Cerprobe took a one-time charge for the full value of the purchased research and development. The remaining $500,000 of acquisition related costs represent the estimated cost to move SVTR's manufacturing operations to Arizona during 1997. Interest Income. Interest income was $78,274 for the nine months ended September 30, 1997 as compared to $345,356 for the same period on 1996. The decrease was a result of utilizing the net proceeds of the Series A Convertible Preferred Stock offering in the CompuRoute and SVTR acquisitions in the fourth quarter of 1996 and in the first quarter of 1997, respectively. Interest Expense. Interest expense was $466,905 for the nine months ended September 30, 1997 as compared to $167,194 for the same period in 1996, an increase of 179.3%. The majority of the 1997 increase in interest expense was due to the debt acquired in the acquisition of CompuRoute and SVTR. Minority Interest Share of Income. The minority interest share of loss from operations of $96,379 for the nine months ended September 30, 1997, represents the Company's joint venture partners' share (40.0%, prior to August 18, 1997, 30.0% thereafter) of the income from Cerprobe Asia PTE LTD of $68,447 and the Company's joint venture partner's share (45.0%) of the loss from Upsys-Cerprobe, L.L.C. of $164,826. Provision for Income Taxes. The provision for income taxes was $2,739,112, which represents an effective tax rate of 39.8%, excluding the acquisition costs of $4,996,467, for the nine months ended September 30, 1997, versus $2,162,000, which represents an effective rate of 46.0%, for 1996. The decreased effective tax rate, as adjusted for the nine months ended September 30, 15 1997, is due to the utilization of CompuRoute's net operating loss carryforward of $140,000 and partial use of previous nondeductible losses from foreign subsidiaries. Net Loss. Net loss for the nine months ended September 30, 1997 was $(343,212), a decrease of $2,874,096, or 113.6%, from the net income of $2,530,884 for the same period in 1996. This decrease is primarily due to the recording of approximately $500,000 of costs associated with the relocation of SVTR's manufacturing operations and the write-off of the purchased research and development of $4,496,467 from the SVTR acquisition. Excluding the acquisition related expenses, net income for the nine months ended September 30, 1997 would have been $4,453,255, or 8.1% of net sales, as compared to 9.0% of net sales for the nine months ended September 30, 1996. Liquidity and Capital Resources Cerprobe has financed its operations and capital requirements primarily through cash flow from operations, equipment lease financing arrangements and sales of equity securities. In January 1996, Cerprobe completed a private placement of Series A Convertible Preferred Stock, which raised net proceeds of $9,400,000. The net proceeds have been used in domestic and international expansion and acquisition of companies and/or technologies. In September 1997, the Company completed the Secondary Offering which raised net proceeds of approximately $30,710,000. The proceeds have been used to redeem the remaining outstanding shares of Series A Convertible Preferred Stock and repay existing Company debt. The remainder will be used for general corporate purposes, including working capital and for possible future acquisitions. In addition, on October 6, 1997, the managing underwriters of the offering, Adams, Harkness & Hill, Inc. and Dain Bosworth Incorporated exercised their over-allotment option to purchase an additional 300,000 shares of the Company's Common Stock at a purchase price of $22 per share. Approximately $6,222,000 in net proceeds was received by the Company from the exercise of the over-allotment. At September 30, 1997, cash and cash equivalents were $24,443,687, compared to $5,564,557 at December 31, 1996. Cerprobe generated $4,109,313 in cash flow from operating activities for the nine months ended September 30, 1997. Accounts receivable increased by $5,888,675, or 105.8%, to $11,452,878 at September 30, 1997. Of this increase, $884,440 resulted from the acquisition of SVTR with the balance a result of increased sales. Inventories increased $3,127,969, or 81.0%, over December 31, 1996 to $6,990,722 at September 30, 1997. The increase resulted primarily from the acquisition of SVTR. Accounts payable and accrued expenses increased $4,313,834, or 99.4%, to $8,653,018 at June 30, 1997. The increase resulted from the acquisition of SVTR and Cerprobe's continued expansion activities. The current portions of notes payable and capital leases increased to $1,703,305 at September 30, 1997 from $762,935 at December 31, 1996, primarily as a result of Cerprobe's recent acquisition of SVTR. Cerprobe borrowed approximately $2,000,000 from its revolving line of credit during the second quarter to payoff notes payable and capital lease obligations of CompuRoute and SVTR whose obligation interest rates were higher than Cerprobe's borrowing rate. The 16 $2,000,000 borrowed from the revolving line has been paid off with proceeds from the Secondary Offering. Working capital increased $23,525,725, or 237.6%, to $33,428,695 at September 30, 1997 from December 31, 1996, primarily as a result of the Secondary Offering which netted proceeds of approximately $30,710,000. The current ratio increased from 2.6 at December 31, 1996 to 4.2 at September 30, 1997. This increase was due to the net proceeds from the Secondary Offering. Cerprobe increased its investment in property, plant, and equipment during the nine months ended September 30, 1997 by $3,142,593, or 27.5%, to $14,588,884. This increase was attributable to the acquisition of SVTR and the Company's efforts to expand capacity to meet customer demand for its products. These capital expenditures were funded from cash flow from operations, and proceeds from the private placement of the Series A Convertible Preferred Stock. In February 1997, Cerprobe entered into a $10,000,000 unsecured revolving line of credit, which matures August 15, 1998, with its primary lender, Wells Fargo Bank. Advances under the revolving line may be made as prime rate advances, which accrue interest payable monthly, at the Bank's prime lending rate, or as LIBOR rate advances, which bear interest at 175 basis points in excess of the LIBOR base rate. At September 30, 1997, there were no amounts outstanding under the unsecured revolving line of credit. In May 1997, Cerprobe entered into a $3,000,000 lease line of credit, which matures February 28, 1998, with Banc One Leasing Corporation. The maximum term for each lease schedule will not exceed 60 months. Pricing will be indexed to like term treasuries plus 170 basis points. The advances will be collateralized by the underlying leased manufacturing equipment, furniture, fixtures, software and/or hardware. At September 30, 1997, no advances had been made under the agreement. In September 1997, the Company completed a Secondary Offering of 2,000,000 shares of the Company's common stock at a price of $22.00 per share. Of the shares, 1,500,000 were sold by the Company and the remaining 500,000 shares were sold by selling stockholders. The Company did not receive proceeds from shares sold by selling stockholders. Accordingly, $30,710,000 was received in net proceeds from the transaction. In addition, on October 6, 1997, the managing underwriters of the offering, Adams, Harkness & Hill, Inc. and Dain Bosworth Incorporated exercised their over-allotment option to purchase an additional 300,000 shares of the Company's Common Stock at a price of $22.00 per share. Approximately $6,222,000 was received by the Company from the exercise of the over-allotment. The Company used a portion of the proceeds from the Secondary Offering to redeem the remaining shares of Series A Convertible Preferred Stock for $5,250,000 and to repay certain existing Company debt of approximately $3,000,000. The remainder will be used for general corporate purposes, including working capital and possible future acquisitions. Cerprobe believes that its working capital, together with the loan commitments described above and anticipated cash flow from operations, will provide adequate sources to fund operations for at least the next 12 months. Cerprobe anticipates that any additional cash requirements for operations or capital expenditures will be financed through cash flow from operations, by 17 borrowing from Cerprobe's primary lender, by lease financing arrangements, or by sales of equity securities. There can be no assurance that any such financing will be available on acceptable terms and that any additional equity financing, of available, would not result in additional dilution to existing investors. "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995 Statements in this section regarding the Company's prospects for continued growth and the adequacy of sources of capital are forward-looking statements. Words such as "intends," "adequate," "believes," and "anticipates," also identify forward-looking statements. Actual results, however, could differ materially from those anticipated for a number of reasons, including product demand and development, technological advancements, impact of competitive products and pricing, growth in targeted markets, and other factors identified under "Special Considerations" of the Company's 1996 Form 10-KSB and under "Risk Factors" of the Company's Secondary Offering prospectus dated September 24, 1997, both of which have been filed with the Securities and Exchange Commission. Additional risk factors are identified from time to time in the Company's 1997 press releases. 18 PART II - OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K a. Exhibits 10(fff) Agreement dated September 26, 1997, by and among the Company, EMI Acquisition, Inc., Silicon Valley Test & Repair, Inc. and William and Carol Mayer. (11) Statement regarding computation of net earnings (loss) per share. (27) Financial Data Schedule. b. No reports on Form 8-K were filed by the Company during the quarter ended September 30, 1997 19 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigning thereunto duly authorized. CERPROBE CORPORATION /s/Randal L. Buness --------------------------------------- Randal L. Buness Vice President - Chief Financial Officer November 11, 1997 20 EX-10.FFF 2 AGREEMENT DATED 9/26/97 AGREEMENT THIS AGREEMENT is made and entered into as of September 26, 1997, by and among SVTR, INC., a Delaware corporation, formerly known as Silicon Valley Test & Repair, Inc. and formerly known as EMI Acquisition, Inc. ("SVTR"), CERPROBE CORPORATION, a Delaware corporation ("Cerprobe"), and WILLIAM E. MAYER and CAROL MAYER (individually and together, "Mayer"). RECITALS A. On January 15, 1997, EMI Acquisition, Inc., a Delaware corporation ("Acquisition") and a wholly-owned subsidiary of Cerprobe, and Cerprobe entered into an Agreement of Merger and Plan of Reorganization ("Agreement of Merger") with Silicon Valley Test & Repair, Inc., a California corporation ("SVTR California") and Mayer, pursuant to which SVTR California merged into Acquisition and Acquisition changed its name to Silicon Valley Test & Repair, Inc. (the "Merger"). Later, Silicon Valley Test & Repair, Inc. changed its name again to SVTR, Inc. B. Certain matters of dispute have arisen regarding: (a) the financial condition of SVTR California prior to the Merger; (b) the accuracy of certain forecasts, representations and other statements by Mayer, whether or not contained in the Agreement of Merger; (c) the ability of SVTR California and later of SVTR to make certain products and meet specifications; and (d) the relationship of SVTR California and SVTR with customers, vendors and employees. C. Mayer seeks to assure his future by having Cerprobe and SVTR release Mayer of any liability to Cerprobe and SVTR arising out of: (a) any of the items in Recital B above; (b) the Merger; or (c) actions or statements by Mayer before or after the Merger relating to SVTR California. D. SVTR, Cerprobe and Mayer have agreed to resolve all disputes between them as hereinafter provided. AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants set forth in this Agreement, the parties hereto agree as follows: 1. Mayer Payment. Upon the execution of this Agreement, Mayer shall pay to Cerprobe the sum of $230,000 representing repayment of a portion of the cash payment paid to Mayer pursuant to Section 3.2(c) of the Agreement of Merger. 2. Escrow Stock. The 125,000 shares of common stock of Cerprobe issued to Mayer in connection with the Merger currently held in escrow pursuant to that certain Escrow and Security Agreement, by and among Cerprobe, Mayer and Arizona Escrow & Financial Corporation, dated January 28, 1997, shall, effective August 18, 1997, be redelivered to Cerprobe and Mayer does hereby forever release and relinquish any and all claims or interest with respect thereto. Contemporaneously with the execution and delivery of this Agreement, Cerprobe and Mayer shall execute and deliver a letter to Arizona Escrow & Financial Corporation in form and content as set forth in Exhibit A attached hereto. 3. Earn Out. Effective August 18, 1997, Mayer hereby releases any and all rights, claims or interests that either of them may have to receive any payment or shares of the common stock of Cerprobe with respect to the earn-out provisions set forth in Article IV of the Agreement of Merger. 4. Resignation. By executing the form of resignation attached hereto as Exhibit B, Mayer hereby resigns as an officer and employee of SVTR (formerly Acquisition) effective on October 31, 1997. The Employment Agreement, by and between Acquisition and William E. Mayer, dated as of January 15, 1997, is terminated effective October 31, 1997. 5. Promissory Note. Upon the execution of this Agreement, SVTR shall pay to Mayer the sum of $242,000 representing the pre-payment of the entire principal owing on the indebtedness owing to Mayer under that certain Note Payment Agreement, by and between SVTR California and Mayer, dated as of January 15, 1997 (the "Note Payment Agreement"), and that certain Promissory Note executed by SVTR California, dated July 31, 1994, in the original principal amount of $407,949.55, payable to William E. Mayer (the "SVTR Note"). Upon receipt of the $242,000, Mayer shall deliver to SVTR the original SVTR Note marked "paid in full." Mayer hereby releases and forever discharges SVTR of all indebtedness owed under the Note Payment Agreement and SVTR Note. 6. COBRA. Upon the execution of this Agreement, Mayer shall pay to SVTR the amount of $10,000 which amount shall be utilized for the insurance premiums for COBRA coverage (both medical and dental) for a period of 18 months beginning November 1, 1997. SVTR hereby agrees to pay, for a period of 18 months beginning November 1, 1997, unless sooner terminated by Mayer, the insurance premium payments for COBRA coverage for William E. Mayer, Carol Mayer and any minor children residing with them. At the end of the 18 month COBRA period, or earlier termination by William E. Mayer, if any amount of the $10,000 is remaining, that remaining amount shall belong to SVTR. If the premiums for COBRA coverage exceed $10,000, Mayer shall pay any excess. 7. Net Effect. The net financial effect of the payments provided for in Sections 1, 5 and 6 hereof is that Cerprobe and SVTR shall pay $2,000 to Mayer. Payment shall be made within 10 days of the execution of this Agreement. Nothing herein or in any other Release or Agreement shall be deemed to waive, release or discharge this net payment. 8. Release. SVTR and Cerprobe shall deliver to Mayer a Release in form and content as set forth in Exhibit C attached hereto, and Mayer shall deliver to SVTR and Cerprobe a Release in form and content as set forth in Exhibit D attached hereto. 9. Labor Code. Nothing in this Agreement nor in any contemporaneous agreement among the parties hereto shall waive, release or diminish the rights of Mayer or SVTR pursuant to California Labor Code section 2802, as applicable, which provides: 2 "An employer shall indemnify his employee for all that the employee necessarily expends or loses in direct consequence of the discharge of his duties as such, or of his obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying such directions, believed them to be unlawful." 10. Miscellaneous. (a) Effective Date of Transactions. The parties agree that, unless otherwise provided in this Agreement, the transactions referenced herein shall be effective as of September 26, 1997. (b) Entire Agreement. This Agreement and the agreements referred to herein constitutes the entire agreement among the parties and shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns. Except as set forth herein, the provisions of this Agreement supersede any and all other agreements or understandings, whether oral or written, among the parties hereto with respect to their dispute. Any amendments, or alternative or supplementary provisions to this Agreement must be made in writing and duly executed by an authorized representative or agent of each of the parties hereto. (c) Construction. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments thereto. (d) Governing Law. This Agreement shall be governed by the laws of the State of California. (e) Further Assurances. Each party hereto agrees to do all acts and things and to make, execute, and deliver such written instruments and documents as shall from time to time be reasonably required to carry out the terms and provisions of this Agreement. (f) Attorneys' Fees. In the event of any claim, controversy or dispute arising out of or relating to this Agreement, or the breach thereof, each party shall pay his, her or its own attorneys' fees. (g) Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original, and all such counterparts shall constitute but one instrument. 3 IN WITNESS WHEREOF, the parties have executed this Agreement, or caused this Agreement to be executed, as of the date first written above. SVTR, INC. By: ------------------------------------- Randal L. Buness, Chief Financial Officer CERPROBE CORPORATION By: ------------------------------------- Randal L. Buness, Vice President ---------------------------------------- William E. Mayer ---------------------------------------- Carol Mayer 4 EX-11 3 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS Cerprobe Corporation Computation of Net earnings (Loss) Per Share Exhibit 11 (Unaudited)
Three Months Ended Nine Months ended September 30, 1997 September 30, 1997 ------------------------------------ ------------------------------------ 1997 1996 1997 1996 ---------------- ----------------- ----------------- ----------------- Net income (loss) $ 2,962,096 $ 663,399 $ (343,212) $ 2,530,884 ================ ================= ================= ================= Weighted average common shares outstanding 6,315,506 4,529,389 6,318,243 4,304,633 Common equivalent shares: Shares issuable upon exercise of stock options (1) 390,841 249,009 - 199,331 Convertible preferred stock - 519,130 - 621,979 ---------------- ----------------- ----------------- ----------------- Total weighted average shares-primary 6,706,347 5,297,528 6,318,243 5,125,943 ---------------- ----------------- ----------------- ----------------- Fully diluted incremental shares: Stock options (calculated using the higher of end of period or average market value) 80,626 48 - 4,846 Convertible subordinated debentures - 485,000 - 517,000 ---------------- ----------------- ----------------- ----------------- Total weighted average shares-fully diluted 6,786,973 5,782,576 6,318,243 5,647,789 ---------------- ----------------- ----------------- ----------------- Primary net income per common and common equivalent share $ 0.44 $ 0.13 $ (0.05) $ 0.49 ---------------- ----------------- ----------------- ----------------- Fully diluted net income per common and common equivalent share $ 0.44 $ 0.11 $ (0.05) $ 0.45 ---------------- ----------------- ----------------- ----------------- (1) Amount calculated under the treasury stock method and fair market values for stock
EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1997 AND THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 U.S. Dollars 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 1 24,443,687 0 11,765,156 312,278 6,990,722 43,785,018 20,906,624 6,317,740 62,356,624 10,356,323 1,195,377 0 0 388,255 49,925,677 62,356,624 54,469,368 54,469,368 32,101,895 52,003,215 466,905 0 466,905 2,299,521 2,739,112 (343,212) 0 0 0 (343,212) (0.05) (0.05)
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