-----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, KOt7c/hyjUBBw+fjsAxsgKlslz/ksgEQwZASrI1sUUZPKMCHy5DiZlsBk3SsUUEp qzOwV6cYhdx6ZtIAKsjQbA== 0000927016-96-000481.txt : 19960701 0000927016-96-000481.hdr.sgml : 19960701 ACCESSION NUMBER: 0000927016-96-000481 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960628 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASECO CORP CENTRAL INDEX KEY: 0000896645 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 042816806 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-21294 FILM NUMBER: 96587780 BUSINESS ADDRESS: STREET 1: 500 DONALD LYNCH BLVD CITY: MARLBORO STATE: MA ZIP: 01752 BUSINESS PHONE: 5084818896 MAIL ADDRESS: STREET 1: 500 DONALD LYNCH BOULEVARD CITY: MARLBORO STATE: MA ZIP: 01752 10-K 1 FORM 10-K - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR FISCAL YEAR ENDED MARCH 31, 1996 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 0-21294 ASECO CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 04-2816806 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 500 DONALD LYNCH BOULEVARD, MARLBORO, MASSACHUSETTS 01752 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 508-481-8896 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, $.01 PAR VALUE 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 [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] The aggregate market value of voting stock held by non-affiliates of the registrant was $41,692,896 as of May 31, 1996 3,631,788 (NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AS OF MAY 31, 1996) DOCUMENTS INCORPORATED BY REFERENCE Part III incorporates certain information by reference form the Registrant's definitive proxy statement for the annual meeting of stockholders to be held on August 8, 1996. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS OVERVIEW Aseco designs, manufactures and markets test handlers used to automate the testing of integrated circuits in surface mount packages. Surface mount technology ("SMT") has been widely adopted as a package configuration for integrated circuits used in a wide range of applications, including automotive electronics, telecommunications equipment and personal computers, because it permits the production of packaged integrated circuits ("IC devices") which are smaller and/or more powerful than those using conventional packaging technologies. Aseco provides high quality, versatile test handlers designed to maximize the productivity of the significantly more costly testers with which they operate. The Company's net sales have grown from fiscal 1986 through fiscal 1996 at a compound annual growth rate of 35% and the Company has operated profitably for each of the past thirty four consecutive quarters. INDUSTRY BACKGROUND IC devices are tested by semiconductor manufacturers for quality and electrical performance at the end of the manufacturing process and before shipment to end users. In addition, volume purchasers of IC devices often test IC devices during incoming inspection. Test handlers facilitate the fast, automated and cost-effective testing of IC devices. The automated test process requires two major pieces of equipment: a tester and a test handler. Testers are specialized, computer-controlled electronic systems that perform the electrical test of IC devices, including memory, logic, linear, microprocessor and Application Specific Integrated Circuit (ASIC) devices. Test handlers are electro-mechanical systems which are connected to and communicate with the tester. IC devices are loaded into the test handler and are then stabilized at a specified temperature to simulate operating extremes for the IC device. The test handler then transports the IC device to a contactor, which provides an electrical connection between the IC device and the tester and allows an interchange of electrical signals between the tester and device under test so the tester can evaluate the performance of the IC. Finally, the handler segregates the devices as determined by the tester. Traditionally, IC devices were attached to one side of a printed circuit board by means of pins, also referred to as leads, that were inserted into pre-drilled holes and soldered to the electrical circuits on the board, a technique known as "through-hole" mounting. SMT, an alternative technology, involves soldering of IC devices directly to the surface of the board. This technology has been increasingly adopted in response to the introduction of more powerful IC devices with more leads and the demand for ever more increasing miniaturization. SMT has several distinct advantages over through- hole technology. First, because IC device leads are not inserted through the board, IC device leads can be closer together allowing IC devices and the boards they populate to be smaller. This reduction in IC device size also enhances circuit processing speed and thus board and system performance. Second, because IC device leads are not inserted through the board, boards can be populated on both sides which further reduces overall required board size. The demand for test handlers is driven primarily by IC device production levels and technological changes relating to the packaging of integrated circuits. Because only the test handler has physical contact with the IC devices, changes in integrated circuit packaging have minimal effect on tester requirements but generally have a major effect on test handler requirements and the demand for the test handlers. The test handler market is commonly segmented on the basis of the function of the IC devices handled: test handlers which process memory IC devices, such as Dynamic Random Access Memory devices (DRAM) and Static Random Access Memory devices (SRAM), and test handlers which process non-memory IC devices, such as digital, logic, linear, ASIC and microprocessor devices. Non-memory IC devices generally have short test times, are often configured with leads on four sides, come in a wide variety of package configurations and are produced in relatively small lot sizes. Consequently, non-memory IC device test handlers must be able to handle devices gently and transport them to and from the contactor rapidly (the rate at which a test handler is able to 1 do so is called the "index speed") and must be adaptable to accommodate many different package types. Memory IC devices, by contrast, generally have longer test times, have leads on just two sides, come in fewer package configurations and are produced in larger lot sizes. The index speed of memory IC device test handlers is less important because of the long test times of memory IC devices, and gentle handling is often less important because memory IC devices are generally less susceptible to lead damage. Test handlers capable of facilitating the testing of multiple IC devices simultaneously ("multi-site" test handlers) have been developed to improve test handler throughput of memory IC devices. Traditionally, multi-site test handlers have not been used in connection with the testing of non-memory IC devices. Recently, however, as non-memory IC devices have become more complex and their test times have correspondingly increased, multi-site test handlers have been used in connection with the testing of non-memory IC devices as well. In addition, certain SRAM IC devices possess characteristics typical of non-memory IC devices, such as shorter test time, leads on four sides and wider variety of package configurations, therefore creating the demand in the SRAM market for a multi-site test handler with fast index speed and gentle handling capabilities. The majority of DRAM IC devices are manufactured in Japan and Korea while the majority of non-memory IC devices are manufactured in the United States. A significant number of SRAM IC devices are manufactured in the United States as well as in Japan and Korea. To date, the Company's products have primarily addressed the non-memory surface mount IC device portion of the test handler market. TEST HANDLERS Test handlers are used to automate the electrical testing of IC devices. IC devices are loaded into the handler from tubes, magazines or trays. They are then transported to a temperature chamber within the test handler where they are thermally conditioned at temperatures typically ranging from -55 to +155 Celsius to simulate operating extremes for the IC device. After the IC devices are stabilized at a specified temperature, the test handler positions the IC devices within a contactor, which provides an electrical connection between the IC device and the tester and insulates the tester from the temperature extremes inside the handler. Test routines can last from fractions of a second to minutes depending on the type of IC device being tested and the purpose of the test. After testing, the tester signals the test handler to sort the IC devices into various categories for shipment, additional testing or disposal. There are three basic types of test handlers: gravity-feed systems, pick and place systems and air-bearing systems. The appropriate type of test handler is generally determined by the size and lead configuration of the IC devices being tested and by throughput requirements. The gravity-feed system, the oldest of the three test handler types, is the predominant test handler for through-hole IC devices. As the name indicates, gravity-feed systems rely on gravity to move IC devices through the test handler. This type of test handler has the advantage of being able to process IC devices quickly, but has a greater tendency to damage IC devices with leads on four sides. Damaged leads can cause soldering defects when the IC devices are mounted on boards, which in turn increases re-work and warranty costs. Pick and place systems, in contrast, transport IC devices by means of robotic arms, which prevent the IC devices from coming into contact with one another and reduce the chance of lead damage. While pick and place systems are suitable for fragile IC devices that are susceptible to lead damage such as the Quad Flat Pack (QFP), they typically process IC devices more slowly than other types of test handlers. Air-bearing systems, which transport IC devices on a bed of air in the temperature chamber, permit high-speed processing while minimizing the potential for lead damage characteristic of gravity-feed systems. KEY TEST HANDLER FEATURES The primary function of the test handler is to automate the testing process therefore increasing the productivity of the tester resulting in the accurate testing of IC devices at the lowest per unit cost possible. Important test handler features include: 2 Gentle Handling. In order for the test handler user to maximize yield and the quality of the IC devices it ships, it is imperative that the test handler not damage the IC devices it processes. Due to their fragility, surface mount IC device leads are especially susceptible to damage, and as IC devices with higher lead counts and more fragile leads have become more prevalent, gentle handling has become an increasingly important test handler feature. Aseco offers test handlers with all three IC device transport mediums--gravity-feed, air-bearing and pick and place, allowing customers to use the type of test handler most suitable for the IC device being tested. In addition, Aseco test handlers are equipped with vacuum stops, limited force contactors and other features to further minimize lead damage. Signal Integrity. Signal integrity is the ability of the test handler to facilitate accurate transmission of electrical signals between the tester and the IC device being tested. Poor transmission can lead to incorrect test results. Aseco maximizes its performance in this area by equipping its test handlers with Aseco's proprietary contactors which position the IC device under test in close proximity to the tester which allows fast and accurate signal transmission. Cold Operation. The ability of the test handler to operate for extended periods of time at cold temperatures (typically -55 Celsius) without interruption for defrosting is an especially important factor in the overall productivity of the test handler. Aseco has developed considerable expertise in thermal engineering and insulation technology which is reflected by the fact that its test handlers are capable of operating for long periods over multiple work shifts without interruption. Productivity. The productivity of a test handler is largely a function of the rate at which it moves IC devices through the test handler ("throughput") and the percentage of time the test handler is available for use ("uptime"). The throughput of Aseco's test handlers is enhanced by their use of forced air to thermally condition IC devices. This produces an effect analogous to wind chill and minimizes the time IC devices are required to stay in the temperature chamber. The Company believes its handlers are able to achieve high uptime because of their relatively simple design which reduces jam rates and the frequency and duration of required maintenance. Maintenance time is also reduced by the diagnostic software incorporated in each Aseco test handler. Versatility. With the increase in the number of different IC device lead configurations, an important feature of a test handler is its ability to accommodate IC devices with different lead configurations. Through the use of easy to install conversion kits, Aseco's test handlers are currently capable of processing many different IC device configurations. ASECO PRODUCTS Aseco offers a range of products to address the varying IC device test handling requirements of its customers. The Company's test handlers share certain common features including the ability to operate at cold, ambient and hot temperatures and a menu-driven CRT user interface that displays test handler performance and diagnostic information. All of the Company's current products have been introduced since fiscal 1990, except for the S-130 which was introduced in fiscal 1987. The Company's products are as follows: Model S-130 Test Handler The Company's principal product is currently its S-130 test handler, the successor to the Company's original S-150 product. The S-130 is a versatile air-bearing test handler, capable of handling a broad array of non-memory IC device types. Through the use of conversion kits, the S-130 is currently able to accommodate a wide variety of IC device configurations. The S-130 reaches throughput rates of 2,400 devices per hour, and has the capability to operate at temperatures between -55 and +150 Celsius. The versatility of the S-130 has made it popular with suppliers of ASIC devices and others who need to test a relatively small number of many different IC device package types. 3 Model S-170 Test Handler The S-170 is a high-speed gravity-feed test handler capable of a throughput rate of 6,000 IC devices per hour. This test handler is equipped with high performance contactors and provides test handling at temperatures ranging from - -55 to +155 Celsius. Changing between different IC device package lead counts is achieved by simple keypad entry on a menu-driven CRT display. The S-170 is most appropriate for high volume testing of small surface mount IC devices having short test times and leads on only two sides such as linear devices. Model S-170C Test Handler The S-170C is a modified version of the S-170 gravity feed test handler. It offers all the features and capabilities of the S-170 plus the ability to handle a broader spectrum of the popular SOIC package types and, accordingly, has a target market that is approximately twice as large as the market for the original S-170 model. Model TL-50 Test Handler The TL-50 is a pick and place test handler, particularly suitable for handling fragile lead IC devices such as the popular QFP package. The TL-50 has a throughput capacity of 1,200 devices per hour and operates at temperatures ranging from -55 to +155 Celsius. Key features of the TL-50 include its simple design, which enhances uptime, and the ease with which it can be converted to handle different package types plus automatic tray loading and unloading. Model S-200 Test Handler The S-200 is the successor to the TL-50. It has the same functionality and form factor as the TL-50. Its key distinguishing feature is its ability, through the addition of an optional machine vision system, to provide the added capability of in-line lead inspection in addition to its normal electrical test handling mode. Model S-450 Test Handler The S-450, the successor to the S-400, has all of the features of a S-400 plus additional automation. The S-450 is a versatile, high capacity, highly automated test handler employing an air-bearing transport system. This product incorporates the best features of Aseco's other test handlers, while incorporating additional capabilities such as a touch screen user interface, multi-site testing, high throughput and automated IC device loading and unloading. The S-450 meets the demand for higher throughput at lower cost per IC device tested and in addition to PLCC and SOIC(W) has the ability to accommodate new, larger IC devices with high lead counts such as the Molded Carrier Ring (MCR). The multi-site test capability of the S-450 allows up to eight IC devices to be tested simultaneously, thereby dramatically improving throughput. The Company believes that this feature will enable the Company to strengthen its position in its existing markets as test times of non-memory IC devices become longer. In addition, this product is the Company's first offering to the SRAM portion of the surface mount IC device test handler market. The Company believes that the high throughput and gentle handling features of the S-450 make it particularly suitable for SRAM devices which have more leads and shorter test times than many other memory IC devices. The S-450 can be converted to handle numerous IC device package types and, like the Company's other test handler models, allows testing at hot, cold and ambient temperatures. Remanufacturing Services During fiscal 1996, the Company established a remanufacturing services group which provides services such as machine upgrades, reconditioning and reconfiguration for all of the Company's test handler models. 4 CUSTOMERS An integral part of Aseco's overall strategy is to maintain close relationships with its customers and to broaden its customer base. In fiscal 1996, approximately 96% of the Company's net sales represented repeat business. In addition, since 1988 the Company has succeeded in adding an average of three to five new customers each quarter. Customers for the Company's products are primarily semiconductor manufacturers, but also include volume purchasers of IC devices and companies engaged in the business of testing IC devices for others. As of March 31, 1996, the Company had sold 992 test handler systems to approximately 121 customers. In fiscal 1996, one customer accounted for 12% of net sales. In fiscal 1995, no single customer accounted for 10% or more of the Company's net sales. In fiscal 1994, two customers accounted for more than 10% of net sales, one representing approximately 20% and a second representing approximately 11% of the Company's net sales. SALES AND MARKETING The Company markets its products primarily through manufacturers' representative organizations. As of March 31, 1996, the Company had nine United States manufacturers' representatives and six international manufacturers' representatives located in London, Munich, Seoul, Singapore, Sweden and Taipei. The Company's sales organization coordinates the activities of the Company's manufacturers' representatives and actively participates with them in selling efforts. Aseco provides sales and technical support to its manufacturers' representatives through the Company's sales and service offices in Marlboro, Massachusetts, Santa Clara, California and Kuala Lumpur, Malaysia and Malta. The Company's marketing efforts include participation in industry trade shows and production of product literature. These efforts are designed to generate sales leads for the Company's manufacturers' representatives. To date, the Company's international sales have been primarily to customers located in the Asia Pacific region (excluding Japan) and Western Europe. International sales accounted for approximately 42%, 42%, and 40% of the Company's net sales in fiscal 1996, 1995 and 1994, respectively. All of the Company's international sales are invoiced in U.S. dollars and, accordingly, have not historically been subject to fluctuating currency exchange rates. The Company's international sales are subject to certain risks common to many export activities, such as governmental regulations, export license requirements and the risk of imposition of tariffs and other trade barriers. BACKLOG The Company's backlog which consists of customer purchase orders which the Company expects to fill within the next twelve months, was approximately $7,900,000 as of March 31, 1996. Because all purchase orders are subject to cancellation or delay by customers with limited or no penalty, the Company's backlog is not necessarily indicative of future revenues or earnings. The Company typically ships its test handlers within eight to ten weeks of receipt of purchase order and its conversion kits and spare parts within a shorter period. CUSTOMER SERVICE The Company believes that strong customer service is important in achieving its goal of high customer satisfaction. Aseco's customer service organization, augmented by the Company's engineering personnel, provides product training, telephone technical support, applications support, maintenance and operations manuals and on-site service and repair. Such services are provided from the Company's headquarters in Marlboro, Massachusetts and from one other domestic and seven international field service centers, each strategically located near customers to minimize response time to customer service requests. Six of the eight international 5 field service centers are maintained by the Company's manufacturers' representative organizations and two directly by the Company. The Company warranties its products against defects in material and workmanship for a period of up to one year. To date, the Company's warranty claims have not been material. The Company believes its accrual for product warranties is adequate. PRODUCT DEVELOPMENT The Company believes that its future success will depend in large part on its ability to enhance and broaden, with the input of its customers, its existing product line to meet the evolving needs of the test handler market. To date, the Company has relied on internal development and a product acquisition (the TL-50) to extend its product offering. The Company is continually engaged in improving its current products and expanding the types of IC devices its test handlers can accommodate. In addition, the Company is currently focused on the continued development of enhancements and features for its current test handler systems. As the test handler market continues to develop, the software component of the Company's products plays an increasingly important role. The Company currently develops all software in- house and plans to expand its expertise in this area by hiring additional personnel as needed. MANUFACTURING AND SUPPLY The Company manufactures its products at its facility in Marlboro, Massachusetts. The Company's manufacturing operations consist of procurement and inspection of components and subassemblies, assembly and extensive testing of finished products. A significant portion of the components and subassemblies of the Company's products, including circuit boards, vacuum pumps, optical sensors, refrigeration units and contactor elements, are manufactured by third parties on a subcontract basis. Currently all components, subassemblies and parts used in Aseco's products are available from multiple sources, except for the S-200 lead inspection module which incorporates cameras and a central processing unit. Although the Company maintains an inventory of lead inspection modules, an extended disruption in the supply of these components could have a significant impact on the S-200 product operations for some period of time. Quality and reliability are emphasized in both the design and manufacture of the Company's test handlers. All components and subassemblies are inspected for mechanical and electrical defects. Fully assembled products are thoroughly tested at all temperatures and with all the IC device packages to be accommodated. They are also inspected for conformity to specifications of both Aseco and the customer. COMPETITION The test handler market is highly competitive. Aseco competes with a large number of companies ranging from very small businesses to large companies, many of which have substantially greater financial, manufacturing, marketing and product development resources than the Company. Certain of these companies manufacture and sell both testers and test handlers. The Company's test handlers are compatible with all major testers, including those manufactured by companies which sell both testers and test handlers. The large companies in the overall surface mount IC device test handler market with which the Company competes include Advantest and Cohu. In general, the particular companies with which the Company competes vary with the Company's different markets, with no one company dominating the overall test handler market. The companies with which the Company competes most directly in the surface mount non-memory IC device test handler market are companies such as Multitest, JLSI, Aetrium and Micro Component Technology, Inc. The Company competes primarily on the basis of the speed, ease-of-use, accuracy and other performance characteristics of its products, the breadth of its product lines, the effectiveness of its sales and distribution channels and its customer service. 6 INTELLECTUAL PROPERTY RIGHTS Aseco attempts to protect the proprietary aspects of its products with patents, copyrights, trade secret laws and internal nondisclosure safeguards. The Company has several patents covering certain features of the TL-50 and S- 200 and the contactor elements incorporated in certain of its other test handlers. The source code for all software contained in the Company's products is protected as a trade secret and as unpublished copyrighted work. In addition, the Company has entered into nondisclosure and assignment of invention agreements with each of its key employees. Despite these restrictions, it may be possible for competitors or users to copy aspects of the Company's products or to obtain information which the Company regards as a trade secret. Because of the rapid pace of technological changes in the test handler industry, the Company believes that patent, trade secret and copyright protection are less significant to its competitive position than factors such as the knowledge, ability and experience of the Company's personnel, new product development, frequent product enhancements, name recognition and ongoing reliable product maintenance and support. The Company believes that its products and trademarks and other proprietary rights do not infringe the proprietary rights of third parties. There can be no assurance, however, that third parties will not assert infringement claims in the future. EMPLOYEES As of March 31, 1996, Aseco had 132 regular employees and 18 contract employees including 64 in manufacturing, 46 in engineering and product development, 17 in general administration and finance, nine in sales and marketing and 15 in customer service. None of the Company's employees is represented by a labor union or is subject to a collective bargaining agreement. The Company has never experienced a work stoppage and believes that its employee relations are excellent. ITEM 2. PROPERTIES The Company's administrative, manufacturing and product development, and its principal sales, marketing and field service office is located in Marlboro, Massachusetts where the Company occupies approximately 61,000 square feet under a lease that expires in May 2000. The Company also leases and occupies approximately 2,900 square feet of space in Santa Clara, California under a lease that expires in fiscal 1997. The Company uses this space for sales and field service support operations. The Company believes its facilities are adequate for all its reasonable foreseeable requirements. ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of the Company's security holders during the last quarter of the fiscal year ended March 31, 1996. 7 EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth the executive officers of the Company, their ages, present position and principal occupations held for at least the past five years.
NAME AGE POSITION ---- --- -------- Carl S. Archer, Jr. .... 59 President, Chief Executive Officer and Chairman of the Board Sebastian J. Sicari..... 44 Vice President, Finance and Administration, Chief Financial Officer, Treasurer and Director C. Kenneth Gray......... 46 Vice President, Sales & Marketing Peter S. Rood........... 41 Vice President, Manufacturing Operations
Mr. Archer has been President, Chief Executive Officer and a director of the Company since November 1987. Mr. Sicari has been Vice President, Finance and Administration and Chief Financial Officer of the Company since December 1985, has served as Treasurer of the Company since July 1988 and has been a Director since 1993. Mr. Gray has been Vice President, Sales and Marketing since January 1990. From October 1983 to January 1990, Mr. Gray was Manager of Sales and Marketing, Eastern U.S. and Europe, of Micro Component Technology, Inc., a manufacturer of automatic test equipment, including test handlers. Mr. Rood has been Vice President, Manufacturing Operations since January 1994. From 1990 to 1993, Mr. Rood was Vice President of Operations of LTX Corporation, a manufacturer of test equipment. 8 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS Aseco Corporation's common stock is traded on the Nasdaq National Market under the symbol "ASEC." The table below sets forth the high and low prices of the common stock during the two most recent fiscal years:
1996 1995 ------------- ------------ PERIOD HIGH LOW HIGH LOW ------ ------ ------ ------ ----- First Quarter................................... $18.25 $ 9.38 $ 8.50 $5.25 Second Quarter.................................. 22.00 15.75 8.50 6.25 Third Quarter................................... 21.25 13.50 10.25 7.75 Fourth Quarter.................................. 16.63 10.00 12.25 7.75
On May 31, 1996, the closing price of the Company's common stock was $12.00 per share. On such date there were 3,631,788 shares outstanding held of record by 92 persons. This number does not include stockholders for whom shares are held in a "nominee" or "street" name. The Company has not paid cash dividends on its common stock and does not intend to do so in the foreseeable future. The Company's bank line of credit prohibits the payment of cash dividends without the bank's consent. ITEM 6. SELECTED FINANCIAL DATA
YEAR ENDED --------------------------------------------- MARCH 31, APRIL APRIL MARCH 28, MARCH 29, 1996 2, 1995 3, 1994 1993 1992 --------- ------- ------- --------- --------- (IN THOUSANDS EXCEPT PER SHARE DATA) STATEMENT OF INCOME DATA Net sales....................... $41,569 $29,192 $20,264 $15,869 $13,315 Income from operations.......... 6,397 3,987 2,445 1,635 1,015 Net income...................... 4,406 3,088 1,980 1,060 501 Earnings per share.............. 1.17 .85 .55 .47 .23 BALANCE SHEET DATA Total assets.................... $36,681 $29,267 $23,792 $21,166 $ 9,583 Long term capital lease obligations.................... 42 53 -- 73 441 Redeemable convertible preferred stock.......................... -- -- -- -- 7,237 Stockholders' equity (deficit).. 28,416 22,711 19,513 16,566 (1,825)
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS--FISCAL 1996 VERSUS FISCAL 1995 Net sales for fiscal 1996 increased 42% to $41.6 million from $29.2 million in fiscal 1995. During fiscal 1996, net sales of the Company's earlier designed models (S-130) grew slightly over fiscal 1995 net sales levels while net sales of the Company's more recently introduced machines (S-170, S-200 and S-450), which generally have higher average selling prices, increased 94% from fiscal 1995. International sales increased 42% during fiscal 1996 to $17.4 million from $12.3 million in fiscal 1995, keeping pace with overall sales growth. International sales represented approximately 42% of net sales in both fiscal 1996 and 1995. Sales in the Pacific Rim region were particularly strong with 74% of all export sales originating in the region. 9 Gross profit for fiscal 1996 was $20.4 million, or 49% of net sales, compared to $13.8 million, or 47% of net sales, in fiscal 1995. The increase in gross profit as a percentage of net sales resulted from improved manufacturing efficiencies generated by improved production flow and cost savings generated by increased outsourcing and vendor management programs. Research and development costs increased 41% to $4.7 million in fiscal 1996 from $3.4 million in fiscal 1995 primarily due to the hiring of additional engineering personnel in each of the Company's critical technical disciplines. As a percentage of net sales, research and development costs remained relatively consistent at 11% of net sales in fiscal 1996 and fiscal 1995. Research and development spending in fiscal 1996 focused primarily on the development of new test handler system designs and the enhancement of existing products through additional automation and product versatility through additional conversion kits. During fiscal 1997 the Company intends to maintain its approximate current level of investment in research and development spending as a percentage of net sales to support new and ongoing development programs. Selling, general and administrative expenses for fiscal 1996 increased 43% to $9.3 million from $6.5 million in fiscal 1995, but remained constant at 22% of net sales in both fiscal 1996 and 1995. The increase in selling, general and administrative expenses resulted primarily from increased headcount related expenses and travel expenses incurred to address the sales and service demands of an expanded customer and installed equipment base throughout the world. Additionally, the Company incurred higher costs of information technology and administration necessary to support the Company's substantial growth and increased headcount during fiscal 1996. As a result of the above, operating income for fiscal 1996 grew 60% to $6.4 million from $4.0 million in fiscal 1995. Other income, net of $549,000 in fiscal 1996 and $414,000 in fiscal 1995 was derived primarily from interest income earned on cash and cash equivalents. The Company's effective tax rate for fiscal 1996 was 36.6% compared to 29.8% in fiscal 1995. The fiscal 1995 tax rate was lower than the fiscal 1996 rate principally because during the fourth quarter of fiscal 1995, the Company completed an Internal Revenue Service audit of its fiscal 1993 tax year. As a result, an increased amount of credits became available for the Company to utilize in the fourth quarter causing the fourth quarter 1995 tax rate to be 17%. Net income for fiscal 1996 increased 43% to $4.4 million, or $1.17 per share with 3,776,000 shares outstanding, from $3.1 million, or $.85 per share with 3,616,000 shares outstanding, in fiscal 1995. RESULTS OF OPERATIONS--FISCAL 1995 VERSUS FISCAL 1994 Net sales for fiscal 1995 increased 44% to $29.2 million from net sales of $20.3 million in fiscal 1994. Such increase was due to a 62% increase in the number of test handlers sold by the Company in fiscal 1995 over fiscal 1994, including an increase in the number of shipments of the Company's newer models which generally have higher average selling prices than more mature products. During fiscal 1995 the Company also achieved increased sales growth in the international market with 42% of net sales attributable to offshore shipments compared to 40% in fiscal 1994. Approximately 70% of the Company's new customers in fiscal 1995 were offshore companies, with the most significant growth originating in Korea, the Philippines and France. Gross profit for fiscal 1995 increased to $13.8 million from $9.8 million in fiscal 1994. Gross profit as a percentage of net sales was 47% in fiscal 1995 versus 48% in fiscal 1994. The decline in gross margin as a percent of net sales in fiscal 1995 was primarily the result of price discounts associated with certain large quantity customer orders and manufacturing inefficiencies and start-up production costs relating to products introduced in 10 fiscal 1995. These factors were partially offset by favorable price and spending variances resulting from increased levels of production outsourcing. Research and development costs increased 44% to $3.4 million in fiscal 1995 from $2.3 million in fiscal 1994. As a percentage of net sales, research and development expenses were 11% in both fiscal 1995 and 1994. During fiscal 1995, the Company's overall investment level in the S-400 test handler declined as a majority of the design related to that product was completed. The majority of the Company's research and development spending in fiscal 1995 related to new product development. The Company's research and development efforts resulted in the introduction of four new products in July 1994. Selling, general and administrative expenses were $6.5 million, or 22% of net sales, in fiscal 1995 compared to $5.0 million, or 25% of net sales, in fiscal 1994. The increase in such expenses in absolute dollars was primarily attributable to increased selling commissions resulting from the increase in total net sales and the increase in the proportion of international sales which generally have higher commission rates. The increase was also due to higher travel and other field service costs associated with the Company's expanding customer base. Other income, net of $414,000 in fiscal 1995 and $250,000 in fiscal 1994 was derived primarily from interest income earned on invested funds. The Company's effective tax rate for fiscal 1995 was 29.8% compared to 26.5% in fiscal 1994. During the first three quarters of fiscal 1995, tax credits available to the Company to offset fiscal 1995 tax liability remained relatively comparable to those utilized in the prior year while taxable income increased causing the effective tax rate to increase over the fiscal 1994 rates. However, as a result of the completion of an Internal Revenue Service audit in the fourth quarter of fiscal 1995, an increased amount of credits became available for the Company to utilize in the fourth quarter causing the fourth quarter 1995 tax rate to be 17%. As a result of the foregoing, net income for fiscal 1995 increased $1.1 million, or 56%, to $3.1 million, or $.85 per share, from $2.0 million, or $.55 per share, in fiscal 1994. LIQUIDITY AND CAPITAL RESOURCES The Company maintained a strong liquidity position in fiscal 1996, closing fiscal 1996 with a cash balance of $14.1 million. Additionally, the Company had an unsecured line of credit with a bank in the amount of $5.0 million against which there were no borrowings in fiscal 1996. The Company generated approximately $5.0 million in cash from operating activities during the 1996 fiscal year. The primary working capital factors affecting cash from operations were inventory levels, accounts receivable and accounts payable and accrued expenses. During fiscal 1996, inventory levels decreased by approximately $626,000 to $7.1 million driving inventory turns up 35% to approximately 2.9 turns. Accounts receivable increased approximately $3.4 million, or 38%, slightly less than the net sales growth rate for the fiscal year as days sales outstanding also decreased slightly. Accounts payable and accrued expenses increased concurrently with increased material requirements to satisfy fourth quarter fiscal 1996 production levels, increased sales commission levels in proportion to the increased net sales during fiscal 1996, and increased amounts for accrued compensation and benefits resulting from increased headcount. The Company used approximately $728,000 in cash during fiscal 1996 to fund the acquisition of capital equipment and $117,000 to fund internal software development costs. The Company expects that its investment in capital equipment will increase in fiscal 1997 because of several planned capital acquisitions. The Company generated cash from financing activities in fiscal 1996 of approximately $624,000, primarily from employee stock purchases under the Company's employee stock option and stock purchase plans. The Company believes that funds generated from operations, existing cash balances and available borrowing capacity will be sufficient to meet the Company's cash requirements at least through the end of fiscal 1997. 11 IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS In March 1995, the Financial Accounting Standards Board (FASB) issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", which establishes criteria for the recognition and measurement of impairment loss associated with long-lived assets. The Company will be required to adopt this standard in the first quarter of fiscal 1997. Based on the Company's initial evaluation, adoption is not expected to have a material impact on the Company's financial position or results of operations. The impact of inflation on the Company's business during the past three fiscal years has not been significant. CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The Company's future results are difficult to predict and may be affected by a number of important risk factors including, but not limited to, the following risk factors. The Company wishes to caution readers that the following important factors and those important factors described elsewhere in other Securities and Exchange Commission filings, in some cases, have affected, and in the future could affect, the Company's actual consolidated quarterly or annual operating results and could cause those actual consolidated quarterly or annual operating results to differ materially from those expressed in any forward looking statements made by, or on behalf of, the Company. Semiconductor Market Fluctuations--The semiconductor market has historically been cyclical and subject to significant economic downturns at various times, which often have a disproportionate effect on manufacturers of semiconductor capital equipment. While the semiconductor industry in recent periods has experienced increased demand and production capacity constraints, it is uncertain how long these conditions will continue. As a result there can be no assurance that the Company will not experience material fluctuations in future quarterly or annual operating results as a result of such a market fluctuation. Variability in Quarterly Operating Results--During each quarter, the Company customarily sells a limited number of systems, thus a change in the shipment of a few systems in a quarter can have a significant impact on results of operations for a particular quarter. To achieve sales objectives, the Company must generally obtain orders for systems to be shipped in the same quarter in which the order is obtained. Moreover, customers may cancel or reschedule shipments with limited or no penalty, and production difficulties could delay shipments. Accordingly, the Company's operating results are subject to significant variability from quarter to quarter and could be adversely affected for a particular quarter if shipments for that quarter were lower than anticipated. Moreover, since the Company ships a significant quantity of products at or near the end of each quarter, the magnitude of fluctuation is not known until late in or at the end of any given quarter. International Operations--In fiscal 1996, 42% of the Company's net sales were derived from customers in international markets. The Company is therefore subject to certain risks common to many export activities, such as governmental regulations, export license requirements, air transportation disruptions, freight rates and the risk of imposition of tariffs and other trade barriers. All of the Company's international sales are invoiced in U.S. dollars and, accordingly, have not historically been subject to fluctuating currency exchange rates. In the future, the Company may decide to conduct its international business denominated in foreign currency in which case there can be no assurance that the Company would be able to protect its position by hedging its exposure to currency exchange rate fluctuations. New Product Introductions--The Company's success depends in part on its continued ability to develop and market new products. There can be no assurance that the Company will be able to develop and introduce new products in a timely manner or that such products, if developed, will achieve market acceptance. Additionally there can be no assurance that the Company will be able to manufacture such products at profitable levels or in sufficient quantities to meet customer requirements. The inability of the Company to do any of the foregoing could have a material adverse effect on the Company's operating results. 12 Competition--The markets for the Company's products are highly competitive. The Company's competitors include a number of established companies that have significantly greater financial, technical, manufacturing and marketing resources than the Company. The Company also competes with a number of smaller companies. There can be no assurance that the Company will be able to compete successfully against current and future sources of competition or that the competitive pressures faced by the Company will not adversely effect its profitability or financial performance. Customer Concentrations--Although the Company has a growing customer base, from time to time, an individual customer may account for 10% or more of the Company's quarterly or annual net sales. During the year ended March 31, 1996, one customer accounted for 12% of net sales. The Company expects that such customer concentration of net sales will continue to occur from time to time as customers place large quantity orders with the Company. As a result, the loss of, or significant reduction in purchases by, any such customer could have an adverse effect on the Company's annual or quarterly financial results. Investments in Research & Development and Selling General & Administrative Expenses--The Company is currently investing in specific time-sensitive strategic programs related to both the research and development and selling, general and administrative areas which the Company believes are critical to its future ability to compete effectively in the market. As such the Company plans to continue to invest in such programs at a planned rate and not to reduce or limit the increase in such expenditures until such programs are completed. As a result there can be no assurance that such expenditures will not adversely affect the Company's quarterly or annual profitability or financial performance. Dependence on Single Source Suppliers--Currently all components, subassemblies and parts used in Aseco's products are available from multiple sources, except for the S-200 lead inspection module which incorporates cameras and a central processing unit. Although the Company maintains an inventory of lead inspection modules, an extended disruption in the supply of these components could have a significant impact on the S-200 product operations for some period of time. Reliance on Third Party Distribution Channels--The Company markets and sells its products primarily through third-party manufacturers' representative organizations which are not under the direct control of the Company. The Company has limited internal sales personnel. A reduction in the sales efforts by the Company's current manufacturers' representatives or a termination of their relationships with the Company could adversely affect the Company's operations and financial performance. There can be no assurance that the Company will be able to retain its current manufacturers' representatives or its distribution channels by selling directly through its sales employees or enter into arrangements with new manufacturers' representatives. Dependence on Key Personnel--The Company's success depends to a significant extent upon a number of senior management and technical personnel. These persons are not bound by employment agreements. The loss of the services of a number of these key persons could have a material adverse effect on the Company. The Company's future success will depend in large part upon its ability to attract and retain highly skilled technical, managerial and marketing personnel. Competition for such personnel in the Company's industry is intense. Although the Company has been successful to date in this endeavor, there can be no assurance that the Company will continue to be successful in attracting and retaining the personnel it requires to successfully develop new and enhanced products and to continue to grow and operate profitably. Dependence on Proprietary Technology--The Company's success is dependent upon proprietary software and hardware which the Company protects primarily through patents and restrictions on access to its trade secrets. There can be no assurance that the steps taken by the Company to protect its proprietary rights will be adequate to prevent misappropriation of its technology or independent development by others of similar technology. Although the Company believes that its products and technology do not infringe any existing proprietary rights of others, the use of patents to protect software and hardware has increased and there can be no assurance that third parties will not assert infringement claims against the Company in the future. 13 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE ---- Report of Independent Auditors........................................... 15 Consolidated Balance Sheets as of March 31, 1996 and April 2, 1995....... 16 Consolidated Statements of Income for the years ended March 31, 1996, April 2, 1995 and April 3, 1994......................................... 17 Consolidated Statements of Changes in Stockholders' Equity for the years ended March 31, 1996, April 2, 1995 and April 3, 1994................... 18 Consolidated Statements of Cash Flows for the years ended March 31, 1996, April 2, 1995 and April 3, 1994......................................... 19 Notes to Consolidated Financial Statements............................... 20 Supplementary Quarterly Financial Data (unaudited)....................... 26
14 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Aseco Corporation We have audited the accompanying consolidated balance sheets of Aseco Corporation as of March 31, 1996 and April 2, 1995, and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the three years in the period ended March 31, 1996. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Aseco Corporation at March 31, 1996 and April 2, 1995 and the consolidated results of its operations and its cash flows for each of the three years in the period ended March 31, 1996 in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. Ernst & Young LLP Boston, Massachusetts May 10, 1996, except for Note L, as to which the date is June 14, 1996 15 ASECO CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) ASSETS
MARCH 31, APRIL 1996 2, 1995 --------- ------- Current assets Cash and cash equivalents.................................. $14,083 $ 9,301 Accounts receivable, less allowance for doubtful accounts of $397 in 1996 and $133 in 1995.......................... 12,346 8,975 Inventories, net........................................... 7,059 7,685 Prepaid expenses........................................... 212 248 Deferred taxes............................................. 598 547 Other current assets....................................... 54 225 ------- ------- Total current assets..................................... 34,352 26,981 Plant and equipment, less accumulated depreciation and amortization................................................ 2,011 1,841 Other assets................................................. 318 445 ------- ------- $36,681 $29,267 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable........................................... $ 3,441 $ 3,267 Accrued expenses........................................... 3,923 2,289 Income taxes payable....................................... 476 595 Current portion of capital lease obligations............... 13 14 Deferred gain on sale-leasebacks........................... -- 23 ------- ------- Total current liabilities................................ 7,853 6,188 Deferred taxes payable....................................... 370 315 Long-term capital lease obligations.......................... 42 53 Stockholders' equity Preferred stock, $.01 par value, 1,000,000 shares authorized, none issued and outstanding................... -- -- Common stock, $.01 par value: 15,000,000 shares authorized, 3,611,501 and 3,437,380 shares issued and outstanding in 1996 and 1995, respectively............................... 36 34 Additional paid in capital................................. 17,234 15,937 Retained earnings.......................................... 11,146 6,740 ------- ------- Total stockholders' equity............................... 28,416 22,711 ------- ------- $36,681 $29,267 ======= =======
See notes to consolidated financial statements. 16 ASECO CORPORATION CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
YEAR ENDED ------------------------------- MARCH 31, APRIL 2, APRIL 3, 1996 1995 1994 --------- --------- --------- Net sales.................................... $ 41,569 $ 29,192 $ 20,264 Cost of sales................................ 21,174 15,374 10,489 --------- --------- --------- Gross profit............................. 20,395 13,818 9,775 Research and development costs............... 4,748 3,356 2,324 Selling, general and administrative expenses.................................... 9,250 6,475 5,006 --------- --------- --------- Income from operations................... 6,397 3,987 2,445 Other income (expense): Interest income............................ 560 416 278 Interest expense........................... (14) (3) (19) Other, net................................. 3 1 (9) --------- --------- --------- 549 414 250 --------- --------- --------- Income before income taxes................... 6,946 4,401 2,695 Income tax expense........................... 2,540 1,313 715 --------- --------- --------- Net income................................... $ 4,406 $ 3,088 $ 1,980 ========= ========= ========= Earnings per share........................... $ 1.17 $ .85 $ .55 ========= ========= ========= Weighted average common and common equivalent shares outstanding.......................... 3,776,000 3,616,000 3,589,000 ========= ========= =========
See notes to consolidated financial statements. 17 ASECO CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (IN THOUSANDS, EXCEPT SHARE DATA)
COMMON STOCK --------------- ADDITIONAL PAR PAID-IN RETAINED SHARES VALUE CAPITAL EARNINGS TOTAL --------- ----- ---------- -------- ------- Balance at March 28, 1993.......... 3,220,988 $32 $14,862 $ 1,672 $16,566 Issuance of shares under stock plans............................. 79,009 1 37 -- 38 Common stock issued through exercise of over allotment option related to the initial public offering.......................... 112,500 1 928 -- 929 Net income......................... -- -- -- 1,980 1,980 --------- --- ------- ------- ------- Balance at April 3, 1994........... 3,412,497 34 15,827 3,652 19,513 Issuance of shares under stock plans............................. 24,883 -- 110 -- 110 Net income......................... -- -- -- 3,088 3,088 --------- --- ------- ------- ------- Balance at April 2, 1995........... 3,437,380 34 15,937 6,740 22,711 Issuance of shares under stock plans............................. 174,121 2 634 -- 636 Tax benefit from exercise of stock options........................... -- -- 663 -- 663 Net income......................... -- -- -- 4,406 4,406 --------- --- ------- ------- ------- Balance at March 31, 1996.......... 3,611,501 $36 $17,234 $11,146 $28,416 ========= === ======= ======= =======
See notes to consolidated financial statements. 18 ASECO CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEAR ENDED -------------------------- MARCH 31, APRIL APRIL 1996 2, 1995 3, 1994 --------- ------- ------- Operating activities Net income....................................... $ 4,406 $ 3,088 $ 1,980 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization.................. 779 632 401 Deferred taxes................................. 4 (277) (110) Changes in assets and liabilities: Accounts receivable.............................. (3,371) (3,599) (1,365) Inventories, net................................. 626 (935) (1,741) Prepaid expenses................................. 36 (83) (90) Accounts payable and accrued expenses............ 1,808 1,965 124 Income taxes payable............................. 544 438 (136) Other current assets............................. 171 188 (344) ------- ------- ------- Total adjustments............................ 597 (1,671) (3,261) ------- ------- ------- Cash provided by (used in) operating activities.................................. 5,003 1,417 (1,281) Investing activities: Acquisition of machinery and equipment........... (728) (918) (335) Increase in software development costs and other assets.......................................... (117) (211) (220) ------- ------- ------- Cash used in investing activities............ (845) (1,129) (555) Financing activities: Net proceeds from issuance of common stock....... 636 110 967 Increase (decrease) in notes payable and other short-term borrowings........................... -- -- (199) Reductions of capital lease obligations.......... (12) (83) (165) ------- ------- ------- Cash provided by financing activities........ 624 27 603 ------- ------- ------- Net increase (decrease) in cash and cash equivalents................................. 4,782 315 (1,233) Cash and cash equivalents at the beginning of period............................................ 9,301 8,986 10,219 ------- ------- ------- Cash and cash equivalents at the end of period..... $14,083 $ 9,301 $ 8,986 ======= ======= ======= Supplemental information: Noncash investing and financing activities: Capital lease obligations incurred............. -- $ 69 -- =======
See notes to consolidated financial statements 19 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (ALL TABULAR AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS) NOTE A--NATURE OF BUSINESS Aseco Corporation (the "Company") designs, manufactures and markets test handlers used to automate the testing of surface mount integrated circuit packages. The Company markets its products principally in North America, the Asia Pacific region and Western Europe and sells its products principally to integrated circuit manufacturers. NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions are eliminated. Use of Estimates: The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Actual results could differ from those estimates. Cash and Cash Equivalents: The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. The Company invests its excess cash in high quality commercial paper ($6,997,521 at March 31, 1996 and $6,275,000 at April 2, 1995) and money market funds ($1,714,706 at March 31, 1996 and $715,000 at April 2, 1995), all of which are cash equivalents as of March 31, 1996. Management determines the appropriate classification of these investments at the time of purchase as either held-to-maturity, available-for-sale or trading and re-evaluates such designation at each balance sheet date. Given the short-term nature of the Company's investments at March 31, 1996 and their availability for use in the Company's current operations, these amounts are considered to be available- for-sale. Available-for-sale securities are carried at fair market value and unrealized gains or losses are reported as a separate component of stockholders' equity. At March 31, 1996 and April 2, 1995, the cost of the Company's investments in cash equivalents approximated their fair market value. Inventories: Inventories are stated at the lower of cost or market, using the first-in, first-out method to determine cost. Plant and Equipment: Plant and equipment are stated at cost. Depreciation is provided using the straight line method over the estimated useful lives of the applicable assets which is generally three to seven years. Leasehold improvements and equipment under capital leases are being amortized over the lives of the leases. Warranty Costs: Estimated warranty costs are accrued upon shipment of product. Revenue Recognition: Revenue is recognized generally upon shipment of product, and when special contractual criteria apply, upon acceptance. Earnings Per Share: Earnings per share data are computed using the weighted average number of shares of common stock and common stock equivalents during each year. Common stock equivalents include options to purchase shares of common stock and are computed using the treasury stock method. Fully diluted earnings per share do not differ materially from primary earnings per share. Stock Based Compensation: The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related Interpretations in accounting for its stock-based compensation plans, rather than the alternative fair value accounting provided for under Financial Accounting Standards Board Statement No. 123, "Accounting for Stock-Based Compensation." Under APB 25, 20 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) for those options granted in which the exercise price equals or exceeds the market price of the underlying stock on the date of grant, no compensation expense is recognized. Recent Accounting Pronouncements: In March 1995, the Financial Accounting Standards Board (FASB) issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", which establishes criteria for the recognition and measurement of impairment loss associated with long-lived assets. The Company will be required to adopt this standard in the first quarter of fiscal 1997. Based on the Company's initial evaluation, adoption is not expected to have a material impact on the Company's financial position or results of operations. NOTE C--INVENTORIES, NET Net inventories consisted of the following:
APRIL MARCH 31, 2, 1996 1995 --------- ------ Raw materials............................................. $3,491 $4,662 Work in process........................................... 2,218 2,145 Finished goods............................................ 1,350 878 ------ ------ $7,059 $7,685 ====== ======
NOTE D--PLANT AND EQUIPMENT Plant and equipment consisted of the following:
APRIL MARCH 31, 2, 1996 1995 --------- ------ Machinery and equipment.................................. $2,082 $1,725 Office furniture and equipment........................... 1,446 1,081 Property under capital lease............................. 578 578 Leasehold improvements................................... 81 75 ------ ------ 4,187 3,459 Less accumulated depreciation and amortization........... 2,176 1,618 ------ ------ $2,011 $1,841 ====== ======
NOTE E--INDEBTEDNESS The Company has a revolving credit facility with a bank which expires on September 1, 1996. Under the facility, the Company may borrow up to $5,000,000 on an unsecured basis, conditioned upon meeting certain financial covenants, including maintaining specified levels of quarterly and annual earnings, tangible net worth and restrictions on dividend payments. Borrowings bear interest at the bank's prime rate which was 8.25% at March 31, 1996. There were no borrowings outstanding at March 31, 1996 and April 2, 1995. Cash payments of interest were approximately $14,000, $3,000 and $21,000 for the years ended March 31, 1996, April 2, 1995 and April 3, 1994, respectively. NOTE F--LEASES The Company leases a building in Marlboro, Massachusetts for its corporate and manufacturing activities and a sales office in Santa Clara, California. The operating lease for the Massachusetts facility expires in the 21 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE F--LEASES (CONTINUED) year 2000, subject to the Company's option to extend the term for an additional three year period. Rent expense for this lease is approximately $350,000 per year. In addition, the lease is subject to escalation for increases in operating expenses and real estate taxes. The Company also leases equipment under capital and non-cancelable operating leases expiring through the year 2001. The following is a schedule of required minimum lease payments under capital and operating leases at March 31, 1996:
CAPITAL OPERATING LEASES LEASES ------- --------- 1997..................................................... $17 $ 364 1998..................................................... 17 387 1999..................................................... 17 405 2000..................................................... 13 412 2001..................................................... -- 34 --- ------ Total minimum lease payments............................. 64 $1,602 ====== Less amounts representing interest....................... (9) --- Present value of minimum lease payments.................. $55 ===
Total rent expense for the years ended March 31, 1996, April 2, 1995 and April 3, 1994 was approximately $450,000, $459,000 and $412,000, respectively. NOTE G--STOCKHOLDERS' EQUITY The Board of Directors may, at its discretion, designate one or more series of preferred stock and establish the voting, dividend, liquidation, and other rights and preferences of the shares of each series, and provide for the issuance of shares of any series. At March 31, 1996, no shares of preferred stock were outstanding. NOTE H--STOCK PLANS AND EMPLOYEE BENEFITS 1986 Incentive Stock Plan: The Company's 1986 Incentive Stock Option Plan (the "1986 Plan") provides for the issuance of up to an aggregate of 416,666 shares of common stock upon the exercise of incentive stock options granted to employees of the Company. The exercise price of options granted under the 1986 Plan must be at least equal to the fair market value of the underlying shares of common stock at the time of grant. Options are exercisable either in full immediately, or in installments, as the Board of Directors may determine. Non-Employee Director Stock Option Plan: The Company's 1993 Non-Employee Director Stock Option Plan (the "Director Plan") provides for the grant of non-qualified stock options to non-employee directors of the Company for the purchase of up to an aggregate of 65,000 shares of common stock. (See Note L) Under the Director Plan, each non-employee director is entitled to receive, when first elected to serve as a director, an option to purchase 15,000 shares. In addition, each non-employee director is entitled to receive on April 30 of each year an option to purchase 2,500 shares. The exercise price of the options is equal to the fair market value of the underlying common stock on the date of grant. Options granted under the plan may only be exercised with respect to vested shares. One-half of the shares subject to such options vest on the first anniversary of the date of the grant and the balance vest on the second anniversary of the grant. Omnibus Stock Plan: The Company's 1993 Omnibus Stock Plan ( the "Omnibus Plan") is administered by the Board of Directors and provides for the issuance of up to 930,000 shares of common stock pursuant to the exercise of options or in connection with awards or direct purchases of stock. (See Note L) Options granted 22 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE H--STOCK PLANS AND EMPLOYEE BENEFITS (CONTINUED) under the Omnibus Plan may be either incentive stock options or non-qualified stock options. Incentive stock options may only be granted under the Omnibus Plan to employees and officers of the Company. Non-qualified stock options may be granted to, awards of stock may be made to, and direct purchases of stock may be made by, employees, officers, consultants or directors of the Company. The terms of the awards or grants, including the number of shares, the duration and rate of exercise of each option, the option price per share, and the determination of any restrictions to be placed on the grants or awards, are determined by the Compensation Committee of the Board of Directors. The following is a summary of activity with respect to the Company's stock option plans:
OPTIONS PRICE -------- ------------- Outstanding at March 28, 1993..................... 187,100 $ .23-$ 9.50 Granted......................................... 328,900 5.38- 11.75 Exercised....................................... (79,000) .29- .48 Canceled........................................ (4,600) .23- 9.50 -------- ------------- Outstanding at April 3, 1994...................... 432,400 .29- 11.75 Granted......................................... 29,000 7.00- 7.63 Exercised....................................... (7,400) .29- 5.38 Canceled........................................ (11,100) .29- 11.75 -------- ------------- Outstanding at April 2, 1995...................... 442,900 .29- 9.63 Granted......................................... 477,000 12.19- 18.69 Exercised....................................... (157,400) .29- 13.00 Canceled........................................ (18,000) 5.38- 13.00 -------- ------------- Outstanding at March 31, 1996..................... 744,500 $ .29-$18.69 ======== =============
As of March 31, 1996, April 2, 1995 and April 3, 1994, there were outstanding options exercisable for approximately 393,000, 224,000 and 124,000, respectively. As of March 31, 1996, shares available for future grant were 36,000 shares in the 1986 Plan, 35,000 shares in the Director Plan and 161,000 shares in the Omnibus Plan. Employee Stock Purchase Plan: The Company's Employee Stock Purchase Plan (the "Purchase Plan") is administered by the Board of Directors or by its designee (the "Administrator") and entitles employees of the Company to purchase shares of the Company's common stock through payroll deductions over offering periods specified by the Administrator. Shares may be purchased at a price equal to the lesser of 85% of the fair market value of the common stock on the first day of the offering period, or 85% of the fair value of the common stock on the last day of the offering period. A total of 100,000 shares have been reserved for issuance under the Purchase Plan. During 1996 and 1995, a total of approximately 16,800 and 17,000 shares of common stock, respectively, were issued under this plan. Shares available for future grant were approximately 66,200 shares. Savings Plan: Under the Company's Savings Plan (the "401(k) Plan") eligible employees are permitted to make pre-tax contributions up to 20% of their salary, subject to certain limitations imposed by Section 401(k) of the Internal Revenue Code. In addition, employees may contribute up to 10% of their salary to the 401(k) Plan on an after tax basis. The Company may, but is not required to, contribute for the benefit of the employees of the Company an amount determined each year by the Company. For the years ended March 31, 1996 and April 2, 1995, the Company contributed approximately $80,000 and $40,000, respectively to the 401(k) Plan. No contribution was made to the 401(k) Plan for the year ended April 3, 1994. 23 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE I--INCOME TAXES Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets as of March 31, 1996 and April 2, 1995 are as follows:
1996 TOTAL CURRENT NON-CURRENT ---- ----- ------- ----------- Deferred tax liabilities: Tax over book depreciation.................... $(247) $(247) Capitalized software.......................... (123) (123) Capital vs. operating lease................... (97) $ (97) Other......................................... (33) (33) ----- ----- ----- Total deferred tax liabilities.................. (500) (130) (370) Deferred tax assets: Asset valuation allowances.................... 555 555 Product warranty.............................. 113 113 Other......................................... 60 60 ----- ----- Total deferred tax assets....................... 728 728 ----- ----- ----- Net deferred tax assets (liabilities)........... $ 228 $ 598 $(370) ===== ===== ===== 1995 ---- Deferred tax liabilities: Tax over book depreciation.................... $(156) $(156) Capitalized software.......................... (159) (159) Capital vs. operating lease................... (133) $(133) Other......................................... (32) (32) ----- ----- ----- Total deferred tax liabilities.................. (480) (165) (315) Deferred tax assets: Asset valuation allowances.................... 530 530 Product warranty.............................. 60 60 Tax credit carryforwards...................... 58 58 Other......................................... 64 64 ----- ----- Total deferred tax assets....................... 712 712 ----- ----- ----- Net deferred tax assets (liabilities)........... $ 232 $ 547 $(315) ===== ===== =====
Significant components of the provision (benefit) for income taxes are as follows:
YEAR ENDED -------------------------- APRIL MARCH 31, 2, APRIL 3, 1996 1995 1994 --------- ------ -------- Current federal tax............................. $2,106 $1,416 $ 715 Current state tax............................... 438 174 110 Deferred federal tax............................ (3) (214) (106) Deferred state tax.............................. (1) (63) (4) ------ ------ ----- $2,540 $1,313 $ 715 ====== ====== =====
24 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE I--INCOME TAXES (CONTINUED) The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense is as follows:
YEAR ENDED --------------------------- MARCH 31, APRIL 2, APRIL 3, 1996 1995 1994 --------- -------- -------- Tax at U.S. statutory rates................... 34.0% 34.0% 34.0% State income taxes, net of federal benefit.... 4.6 4.4 4.9 Foreign sales corporation..................... (2.7) (2.4) (1.4) Tax credits................................... (1.1) (6.3) (9.3) Other, net.................................... 1.8 .1 (1.7) ---- ---- ---- 36.6% 29.8% 26.5% ==== ==== ====
During the year ended March 31, 1996 the Company recorded a tax benefit of approximately $663,000 related to the exercise of incentive stock options and subsequent sale of the related common stock and the exercise of non-qualified stock options which amounts have been credited to additional paid-in capital. Income taxes paid in the years ended March 31, 1996, April 2, 1995 and April 3, 1994 were $2,010,000, $1,152,000 and $877,000, respectively NOTE J--ACCRUED EXPENSES Accrued expenses consist of the following:
APRIL MARCH 31, 2, 1996 1995 --------- ------ Accrued commissions...................................... $2,187 $1,183 Accrued compensation and benefits........................ 1,088 350 Other.................................................... 648 756 ------ ------ $3,923 $2,289 ====== ======
NOTE K--SEGMENT, GEOGRAPHIC, CUSTOMER INFORMATION AND CONCENTRATION OF CREDIT RISK The Company operates in one industry segment. Export sales from the United States were approximately as follows:
YEAR ENDED ------------------------ APRIL MARCH 31, APRIL 3, 1996 2, 1995 1994 --------- ------- ------ Pacific Rim....................................... $12,845 $10,026 $5,427 Europe............................................ 3,567 1,983 2,369 Other............................................. 984 270 252 ------- ------- ------ $17,396 $12,279 $8,048 ======= ======= ======
The Company sells its products principally to integrated circuit manufacturers. The Company performs periodic credit evaluations of its customers' financial condition, and historically, credit losses have been small. The Company's accounts receivable included balances owed by one customer which represented 18% of total trade accounts receivable as of March 31, 1996, and two customers which represented 16% and 12%, respectively, of total trade accounts receivable as of April 2, 1995. 25 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED) NOTE K--SEGMENT, GEOGRAPHIC, CUSTOMER INFORMATION AND CONCENTRATION OF CREDIT RISK (CONTINUED) One customer accounted for 12% of net sales for the year ended March 31, 1996. No single customer accounted for more than 10% of net sales in the year ended April 2, 1995. In fiscal 1994, two customers accounted for more than 10% of net sales, one representing approximately 20% and a second representing approximately 11% of the Company's net sales. NOTE L--SUBSEQUENT EVENT On June 14, 1996, the Board of Directors voted to increase the number of common shares available for grant under the 1993 Omnibus Stock Plan by 300,000 shares, and the Non-Employee Director Stock Option Plan by 100,000 shares, subject to stockholder approval. NOTE M--SUPPLEMENTARY QUARTERLY FINANCIAL DATA (UNAUDITED) The following is a summary of unaudited quarterly results for the fiscal years ended March 31, 1996 and April 2, 1995.
QUARTER ENDED --------------------------------------- JULY 3 OCTOBER 2 JANUARY 1 APRIL 2 ------ ------------ ----------- ------- FISCAL 1996 Net sales.......................... $9,136 $9,741 $10,998 $11,694 Gross profit....................... 4,532 4,731 5,565 5,567 Net income......................... 926 1,053 1,165 1,262 Earnings per share................. $ .25 $ .28 $ .31 $ .34 ====== ====== ======= ======= QUARTER ENDED --------------------------------------- JUNE 27 SEPTEMBER 26 DECEMBER 26 APRIL 3 ------ ------------ ----------- ------- FISCAL 1995 Net sales.......................... $6,585 $7,002 $ 7,355 $ 8,250 Gross profit....................... 3,072 3,361 3,529 3,856 Net income(1)...................... 626 665 747 1,050 Earnings per share................. $ .18 $ .19 $ .21 $ .29 ====== ====== ======= =======
- -------- (1) As a result of the completion of an Internal Revenue Service audit in the fourth quarter of fiscal 1995, an increased amount of tax credits became available for the Company to utilize in the fourth quarter, causing the fourth quarter fiscal 1995 tax rate to be 17%. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 26 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this item with respect to directors of the Company is incorporated herein by reference to "Election of Directors" on pages 3 and 4 of the Company's Definitive Proxy Statement for its Annual Meeting of Stockholders to be held on August 8, 1996. The information required by this item with respect to executive officers of the Company is set forth under the caption "Executive Officers of the Registrant" in Part I of this Report on Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information required by this item with respect to executive compensation of the Company is incorporated herein by reference to "Executive Officer Compensation" on pages 6, 7 and 8 of the Company's Definitive Proxy Statement for its Annual Meeting of Stockholders to be held on August 8, 1996. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item with respect to security ownership of management and certain beneficial owners of the Company is incorporated herein by reference to "Stock Ownership of Directors, Executive Officers and Principal Stockholders" on page 2 of the Company's Definitive Proxy Statement for its Annual Meeting of the Stockholders to be held on August 8, 1996. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS None. 27 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (A) 1. FINANCIAL STATEMENTS The following consolidated financial statements are included in Item 8: Consolidated Balance Sheets as of March 31, 1996 and April 2, 1995 Consolidated Statements of Income for the years ended March 31, 1996, April 2, 1995 and April 3, 1994 Consolidated Statements of Changes in Stockholders' Equity for the years ended March 31, 1996, April 2, 1995 and April 3, 1994 Consolidated Statements of Cash Flows for the years ended March 31, 1996, April 2, 1995 and April 3, 1994
(A) 2. FINANCIAL STATEMENT SCHEDULES
PAGE ---- Schedule II--Valuation and Qualifying Accounts.......................... F-1
All other schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or the notes thereto. (A) 3. LISTING OF EXHIBITS
EXHIBIT NO. DESCRIPTION ----------- ----------- *3.2 --Third Restated Certificate of Incorporation of the Company *3.3 --Amended and Restated By-laws of the Company *10.1 --1986 Incentive Stock Option Plan 10.2 --1993 Non-Employee Director Stock Option Plan, as amended and restated as of June 14, 1996 *10.3 --1993 Employee Stock Purchase Plan 10.4 --1993 Omnibus Stock Plan, as amended and restated as of June 14, 1996 *10.5 --Lease dated April 13, 1993, between the Company and CIGNA Investments, Inc. *10.6 --Original Equipment Manufacturer Agreement dated January 30, 1991, between the Company and Applied Intelligent Systems, Inc. *10.7 --Letter Agreement dated November 27, 1992, between the Company and Fleet Bank of Massachusetts, N.A. *10.8 --Amended and Restated Registration and First Refusal Rights Agreement dated July 31, 1986, between the Company and certain stockholders of the Company 10.9 --Amended Letter Agreement dated July 30, 1993, between the Company and Fleet Bank of Massachusetts, N.A., filed as an exhibit to the Company's Form 10-K for the fiscal year ended April 3, 1994 and incorporated herein by reference. +10.10 --Severance Agreement--Carl S. Archer, Jr., filed as an exhibit to the Company's Form 10-K for the fiscal year ended April 3, 1994 and incorporated herein by reference +10.11 --Severance Agreement--Sebastian J. Sicari, filed as an exhibit to the Company's Form 10-K for the fiscal year ended April 3, 1994 and incorporated herein by reference
28
EXHIBIT NO. DESCRIPTION ----------- ----------- +10.12 --Form of Key Employee Stock Option Agreement, filed as an exhibit to the Company's Form 10-K for the fiscal year ended April 3, 1994 and incorporated herein by reference 10.13 --Amended Letter Agreement dated August 2, 1995, between the Company and Fleet Bank of Massachusetts, N.A., filed herewith. 22.1 --Subsidiaries of the Registrant, filed as an exhibit to the Company's Form 10-K for the fiscal year ended April 2, 1995 and incorporated herein by reference 23.1 --Consent of Ernst & Young LLP
- -------- * Incorporated by reference to the same exhibit number to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 29, 1993. + Management contract or compensation plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K. (B) REPORTS ON FORM 8-K The Company filed no reports on Form 8-K with the Securities and Exchange Commission during the fiscal quarter ended March 31, 1996. 29 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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. Aseco Corporation /s/ Carl S. Archer, Jr. By: _________________________________ CARL S. ARCHER, JR. PRESIDENT AND CHIEF EXECUTIVE OFFICER JUNE 28, 1996 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. SIGNATURE TITLE(S) DATE /s/ Carl S. Archer, Jr. President, Chief Executive June 28, _________________________________ Officer and Director 1996 CARL S. ARCHER, JR. (Principal Executive Officer) /s/ Sebastian J. Sicari Vice President, Finance and June 28, _________________________________ Administration, Chief 1996 SEBASTIAN J. SICARI Financial Officer, Treasurer and Director (Principal Financial and Accounting Officer) /s/ Sheldon Buckler Director June 28, _________________________________ 1996 SHELDON BUCKLER /s/ Kenneth W. Tunnell Director June 28, _________________________________ 1996 KENNETH W. TUNNELL /s/ Sheldon Weinig Director June 28, _________________________________ 1996 SHELDON WEINIG /s/ Charles D. Yie Director June 28, _________________________________ 1996 CHARLES D. YIE 30 SCHEDULE II ASECO CORPORATION VALUATION AND QUALIFYING ACCOUNTS
BALANCE AT CHARGES TO BALANCE BEGINNING COSTS AND AT END CLASSIFICATION OF YEAR EXPENSES DEDUCTIONS OF YEAR -------------- ------- -------- ---------- ------- YEAR ENDED MARCH 31, 1996 Allowance for doubtful accounts $133,000 $264,000 --- $397,000 YEAR ENDED APRIL 2, 1995 Allowance for doubtful accounts $ 78,000 $ 55,000 --- $133,000 YEAR ENDED APRIL 3, 1994 Allowance for doubtful accounts $ 82,000 --- $4,000 $ 78,000
F-1 EX-10.13 2 FLEET BANK LETTER OF AGREEMENT EXHIBIT 10.13 Fleet Bank August 24, 1995 Mr. Sebastian J. Sicari Chief Financial Officer Aseco Corporation 500 Donald Lynch Boulevard Marlboro, MA 01752 Dear Sebastian: Reference is hereby made to the Letter Agreement (the "Agreement") executed by and between Aseco Corporation and Fleet Bank of Massachusetts, N.A. as of November 27, 1992 and amended as of July 30, 1993 and August 2, 1994. We are pleased to inform you that we have approved an extension of the Expiration Date from September 1, 1995 to September 1, 1996. Nothing herein shall be deemed to constitute a waiver, release or amendment of any other terms of the agreement. The Borrower represents and warrants that the execution of this amendment has been duly authorized by the Borrower by all necessary corporate and other action and that the execution will not conflict with, violate the provisions of, or cause a default or constitute an event which, with the passage of time or giving of notice or both, could cause a default on the part of the Borrower under its charter documents or by-laws or under any contract, agreement, law, rule, order, ordinance, franchise, instrument or other document, or result in the imposition of any lien or encumbrance on any property or asset of the Borrower. The Borrower further represents that this agreement and the attached Promissory Note each represent legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms. In addition, the statements, representations and warranties made in the Agreement continue to be correct as of the date hereof and the Borrower is in compliance with all terms of the Agreement. Except as expressly affected hereby, the Agreement remains in full force and effect as heretofore. Sebastian, we are pleased to extend the Agreement and look forward to continuing our relationship with Aseco Corporation. Please sign below and execute the attached note to evidence your acceptance of this amendment. Sincerely, Tom W. Davies Vice President, High Technology Group Agreed and Accepted: Sebastian J. Sicari 8/28/95 ---------------------- Vice President and CFO Fleet Bank of Massachusetts, N.A., A Member of Fleet Financial Group Time Note - Interest to Follow $ 5,000,000 Boston, Massachusetts, August 24, 1995 --------- ---------- -- On September 1, 1996 after date. --------------------- for value received, the undersigned, which term wherever used herein shall mean all and each of the signers of this note jointly and severally, promises to pay to FLEET BANK OF MASSACHUSETTS, NATIONAL ASSOCIATION, or order at said bank, Five Million and 00/100 ($5,000,000)--------------------------- Dollars with - ---------------------------------------------------------------- interest from the date hereof on the unpaid balance from time to time outstanding a fluctuating rate per annum which shall at all times be equal to Check appropriate box and complete item [_] at the rate of _____per centum per annum, [X] at the Large Business Prime Rate for commercial loans from time to time in effect at said bank plus 0 per centum per annum, --- [_] at the Small Business Base Rate for commercial loans from time to time in effect at said bank plus ________ per centum per annum, Such interest to be payable Monthly in arrears. ------- At the option of the holder, this note shall become immediately due and payable without notice or demand upon the occurrence at any time of any of the following events of default: (1) default of any liability, obligation or undertaking of the undersigned, hereunder or otherwise, including failure to pay in full and when due any sum due hereunder, or of any indorser or guarantor of any liability, obligation or undertaking, hereunder or otherwise, to the holder; (2) if any statement, representation or warranty made in or in connection with the application for the loan evidenced by this note, or in any supporting financial statement of the undersigned or any indorser or guarantor hereof shall be found to have been false in any material respect; (3) if the undersigned or any indorser or guarantor hereof is a corporation, trust or partnership, the liquidation, termination or dissolution of any such organization or its ceasing to carry on actively its present business or the appointment of a receiver for its property; (4) the death of the undersigned or of any indorser or guarantor herof and, if any of the undersigned or any indorser or guarantor hereof is a partnership, the death of any partner; (5) the institution by or against the undersigned or any indorser or guarantor hereof of any proceedings under the Bankruptcy Code or any other law in which the undersigned or any indorser or guarantor hereof is alleged to be insolvent or unable to pay their respective debts as they mature or the making by the undersigned or any indorser or guarantor hereof of an assignment for the benefit of creditors; (6) the service upon the holder hereof of a writ in which the holder is named as trustee of the undersigned or of any indorser or guarantor hereof; or (7) if the holder hereof should at any time deem itself insecure. The undersigned agrees to pay upon default costs of collection including reasonable fees for attorneys. No delay or omission on the part of the holder in exercising any right hereunder shall operate as a waiver of such right or of any other right of such holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion. Every one of the undersigned and every indorser or guarantor of this note regardless of the time, order or place of signing waives presentment, demand, protest and notices of every kind and assents to any one or more extension or postponements of the time of payment or any other indulgences, to any substitutions, exchanges or releases of collateral if at any time there be available to the holder collateral for this note, and to the additions or release of any other parties or persons primarily or secondarily liable. The proceeds of the loan represented by this note may be paid to any one or more of the undersigned. All rights and obligations hereunder shall be governed by the law of the Commonwealth of Massachusetts and this note shall be deemed to be under seal. This note shall be governed by the letter agreement between Aseco Corporation and Fleet Bank of Massachusetts dated 11/27/92 and amended on 7/30/93, 8/2/94 and 8/24/95. Aseco Corporation - --------------------------------- Borrower(s) - Print name or names (by) Sebastian J. Sicari ----------------------------- Signature (by) ----------------------------- Signature EX-10.2 3 1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN EXHIBIT 10.2 ASECO CORPORATION 1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN (Amended and Restated Effective as of June 14, 1996) 1. Purpose. This Non-Qualified Stock Option Plan, to be known as the ------- 1993 Non-Employee Director Stock Option Plan (hereinafter, this "Plan") is intended to promote the interests of Aseco Corporation (hereinafter, the "Company") by providing an inducement to obtain and retain the services of qualified persons who are not employees or officers of the Company to serve as members of its Board of Directors (the "Board"). 2. Available Shares. The total number of shares of Common Stock, par ---------------- value $.01 per share, of the Company (the "Common Stock"), for which options may be granted under this Plan shall not exceed 165,000 shares, subject to adjustment in accordance with paragraph 10 of this Plan. Shares subject to this Plan are authorized but unissued shares or shares that were once issued and subsequently reacquired by the Company. If any options granted under this Plan are surrendered before exercise or lapse without exercise, in whole or in part, the shares reserved therefor shall continue to be available under this Plan. 3. Administration. This Plan shall be administered by the Board or by a -------------- committee appointed by the Board (the "Committee"). In the event the Board fails to appoint or refrains from appointing a Committee, the Board shall have all power and authority to administer this Plan. In such event, the word "Committee" wherever used herein shall be deemed to mean the Board. The Committee shall, subject to the provisions of the Plan, have the power to construe this Plan, to determine all questions hereunder, and to adopt and amend such rules and regulations for the administration of this Plan as it may deem desirable. 4. Granting of Options. ------------------- (a) Initial Grant. On the effective date of a registration statement ------------- on Form S-1 covering the initial public offering of the Company's Common Stock (the "Effective Date"), each person who is then a member of the Board, and who is not a current or former employee or officer of the Company, shall be automatically granted, without further action by the Board, an option to purchase 3,000 shares of the Common Stock. (b) Initial Grant to New Directors. Subject to the availability of ------------------------------ shares under this Plan, each person who is first elected as a member of the Board after May 15, 1995 and during the term of this Plan, and who is not on the date of such election a current or former employee or officer of the Company, shall be automatically granted an option to purchase 5,000 shares of the Common Stock on the date of his or her first election as a member of the Board. (c) Automatic Grants. On April 30 of each year commencing April 30, ---------------- 1996 and during the term of this Plan, each person who is then serving on the Board, and who is not a current or former employee or officer of the Company, shall automatically be granted an option to purchase 2,500 shares of the Common Stock, subject to the availability of shares under this Plan. Except for the specific options referred to above, no other options shall be granted under this Plan. 5. Option Price. The purchase price of the stock covered by an option ------------ granted pursuant to this Plan shall be 100% of the fair market value of such shares on the day the option is granted. The option price will be subject to adjustment in accordance with the provisions of paragraph 10 of this Plan. For purposes of this Plan, if, at the time an option is granted under the Plan, the Company's Common Stock is publicly traded, "fair market value" shall be determined as of the last business day for which the prices or quotes discussed in this sentence are available prior to the date such option is granted and shall mean (i) the average (on that date) of the high and low prices of the Common Stock on the principal national securities exchange on which the Common Stock is traded, if the Common Stock is then traded on a national securities exchange; or (ii) the last reported sale price (on that date) of the Common Stock on the Nasdaq National Market System, if the Common Stock is not then traded on a national securities exchange; or (iii) the closing bid price (or average of bid prices) last quoted (on that date) by an established quotation service for over-the-counter National Market System. If, at the time an option is granted under the Plan, the Company's stock is not publicly traded, "fair market value" shall be the fair market value on the date the option is granted as determined by the Board in good faith. 6. Period of Option. Unless sooner terminated in accordance with the ---------------- provisions of paragraph 8 of this Plan, an option granted hereunder shall expire on the date which is ten (10) years after the date of grant of the option. 7. Vesting of Shares and Non-Transferability of Options. ---------------------------------------------------- (a) Vesting. Options granted under this Plan shall not be ------- exercisable until they become vested. Options granted pursuant to Sections 4(b) and 4(c) of this Plan shall vest in the optionee and thus become exercisable immediately by the optionee in two annual installments of 50% each on the first and second anniversary of the date of grant. Options granted pursuant to Section 4(a) of the Plan shall be 100% vested on the date of grant and thus be fully exercisable at any time prior to their expiration. (b) Legend on Certificates. The certificates representing such ---------------------- shares shall carry such appropriate legend, and such written instructions shall be given to the Company's transfer agent, as may be deemed necessary or advisable by counsel to the Company in order to comply with the requirements of the Securities Act of 1933 or any state securities laws. (c) Non-transferability. Any option granted pursuant to this Plan ------------------- shall not be assignable or transferable other than by will or the laws of descent and distribution or 2 pursuant to a domestic relations order and shall be exercisable during the optionee's life time only by him or her. 8. Termination of Option Rights. ---------------------------- (a) In the event an optionee ceases to be a member of the Board for any reason other than death or permanent disability, any then unexercised portion of options granted to such optionee shall, to the extent not then vested, immediately terminate and become void; any portion of an option which is then vested but has not been exercised at the time the optionee so ceases to be a member of the Board may be exercised, to the extent it is then vested, by the optionee within 180 days of the date the optionee ceased to be a member of the Board; and all options shall terminate after such 180 days have expired. (b) In the event that an optionee ceases to be a member of the Board by reason of his or her death or permanent disability, any option granted to such optionee shall be immediately, and automatically accelerated and become fully vested and all unexercised options shall be exercisable by the optionee (or by the optionee's personal representative, heir or legatee, in the event of death) until the scheduled expiration date of the option. 9. Exercise of Option. Subject to the terms and conditions of this Plan ------------------ and the option agreements, an option granted hereunder shall, to the extent then exercisable, be exercisable in whole or in part by giving written notice to the Company by mail or in person addressed to Aseco Corporation, 261 Cedar Hill Street, Marlboro, Massachusetts 01752, Attention: Chief Financial Officer, stating the number of shares with respect to which the option is being exercised, accompanied by payment in full for such shares. Payment may be (a) in United States dollars in cash or by check, (b) in whole or in part in shares of Common Stock of the Company already owned by the person or persons exercising the option or shares subject to the option being exercised (subject to such restrictions and guidelines as the Board may adopt from time to time), valued at fair market value determined in accordance with the provisions of paragraph 5 or (c) consistent with applicable law, through the delivery of an assignment to the Company of a sufficient amount of the proceeds from the sale of the Common Stock acquired upon exercise of the option and an authorization to the broker or selling agent to pay that amount to the Company, which sale shall be at the participant's direction at the time of exercise. There shall be no such exercise at any one time as to fewer than one hundred (100) shares or all of the remaining shares then purchasable by the person or persons exercising the option, if fewer than one hundred (100) shares. The Company's transfer agent shall, on behalf of the Company, prepare a certificate or certificates representing such shares acquired pursuant to exercise of the option, shall register the optionee as the owner of such shares on the books of the Company and shall cause the fully executed certificates(s) representing such shares to be delivered to the optionee as soon as practicable after payment of the option price in full. The holder of an option shall not have any rights of a stockholder with respect to the shares covered by the option, except to the extent that one or more certificates for such shares shall be delivered to him or her upon the due exercise of the option. 3 10. Adjustments Upon Changes in Capitalization and Other Matters. Upon ------------------------------------------------------------ the occurrence of any of the following events, an optionee's rights with respect to options granted to him or her hereunder shall be adjusted as hereinafter provided: (a) If, after January 18, 1993, the shares of Common Stock shall be subdivided or combined into a greater smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, the number of shares of Common Stock deliverable upon the exercise of options shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination or stock dividend. No adjustment, however, shall be made for the 1-for-2.4 reverse split of the Common Stock declared by the Board on January 18, 1993. (b) Merger; Consolidation; Liquidation; Sale of Assets. In the event -------------------------------------------------- the Company is merged into or consolidated with another corporation under circumstances where the Company is not the surviving corporation, or if the Company is liquidated or sells or otherwise disposes of all or substantially all of its assets to another corporation while unexercised options remain outstanding under the Plan, (i) subject to the provisions of clauses (iii), (iv) and (v) below, after the effective date of such merger, consolidation or sale, as the case may be, each holder of an outstanding option shall be entitled, upon exercise of such option, to receive in lieu of shares of Common Stock, shares of such stock or other securities as the holders of shares of Common Stock received pursuant to the terms of the merger, consolidation or sale; or (ii) the Board may waive any discretionary limitations imposed with respect to the exercise of the option so that all options from and after a date prior to the effective date of such merger, consolidation, liquidation or sale, as the case may be, specified by the Board, shall be exercisable in full; or (iii) all outstanding options may be cancelled by the Board as of the effective date of any such merger, consolidation, liquidation or sale, provided that notice of such cancellation shall be given to each holder of an option, and each such holder thereof shall have the right to exercise such option in full (without regard to any discretionary limitations imposed with respect to the option) during a 30- day period preceding the effective date of such merger, consolidation, liquidation or sale; or (iv) all outstanding options may be cancelled by the Board as of the date of any such merger, consolidation, liquidation or sale, provided that notice of such cancellation shall be given to each holder of an option and each such holder thereof shall have the right to exercise such option but only to the extent exercisable in accordance with any discretionary limitations imposed with respect to the option prior to the effective date of such merger, consolidation, liquidation or sale; or (v) the Board may provide for the cancellation of all outstanding options and for the payment to the holders thereof of some part or all of the amount by which the value thereof exceeds the payment, if any, which the holder would have been required to make to exercise such option. (c) Issuance of Securities. Except as expressly provided herein, no ---------------------- issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, 4 the number or price of shares subject to options. No adjustments shall be made for dividends paid in cash or in property other than securities of the Company. (d) Adjustments. Upon the happening of any of the foregoing events, ----------- the class and aggregate number of shares set forth in paragraph 2 of this Plan that are subject to options which previously have been or subsequently may be granted under this Plan shall also be appropriately adjusted to reflect such events. The Board shall determine the specific adjustments to be made under this paragraph 10 and its determination shall be conclusive. 11. Restrictions on Issuance of Shares. Notwithstanding the provisions of ---------------------------------- paragraphs 4 and 9 of this Plan, the Company shall have no obligation to deliver any certificate or certificates upon exercise of an option until one of the following conditions shall be satisfied: (i) The shares with respect to which the option has been exercised are at the time of the issue of such shares effectively registered under applicable Federal and state securities laws as now in force or hereafter amended; or (ii) Counsel for the Company shall have given an opinion that such shares are exempt from registration under Federal and state securities laws as now in force or hereafter amended; and the Company has complied with all applicable laws and regulations with respect thereto, including without limitation all regulations required by any stock exchange upon which the Company's outstanding Common Stock is then listed. 12. Representation of Optionee. If requested by the Company, the optionee -------------------------- shall deliver to the Company written representations and warranties upon exercise of the option that are necessary to show compliance with Federal and state securities laws, including representations and warranties to the effect that a purchase of shares under the option is made for investment and not with a view to their distribution (as that term is used in Securities Act of 1933). 13. Option Agreement. Each option granted under the provisions of this ---------------- Plan shall be evidenced by an option agreement, which agreement shall be duly executed and delivered on behalf for the Company and by the optionee to whom such option is granted. The option agreement shall contain such terms, provisions and conditions not inconsistent with this Plan as may be determined by the officer executing it. 14. Termination and Amendment of Plan. Options may no longer be granted --------------------------------- under this Plan after January 18, 2003, and this Plan shall terminate when all options granted or to be granted hereunder are no longer outstanding. The Board may at any time terminate this Plan or make such modification or amendment thereof as it deems advisable; provided, however, that the Board may not, -------- ------- without approval by the affirmative vote of the holders of a majority of the shares of Common Stock present in person or by proxy and entitled to vote at the meeting, (a) increase the maximum number of shares for which options may be granted 5 under this Plan (except by adjustment pursuant to Section 10), (b) materially modify the requirements as to eligibility to participate in this Plan, (c) materially increase benefits accruing to option holders under this Plan, or (d) amend this Plan in any manner which would cause Rule 16b-3 to become inapplicable to this Plan; and provided further that the provisions of this Plan -------- ------- specified in Rule 16b-3(c)(2)(ii)(A) (or any successor or amended provision thereof) under the Securities Exchange Act of 1934 (including without limitation, provisions as to eligibility, amount, price and timing of awards) may not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder. Termination or any modification or amendment of this Plan shall not, without consent of a participant, affect his or her rights under an option previously granted to him or her. 15. Withholding of Income Taxes. Upon the exercise of an option, the --------------------------- Company, in accordance with Section 3402(a) of the Internal Revenue Code, may require the optionee to pay withholding taxes in respect of amounts considered to be compensation includible in the optionee's gross income. 16. Compliance with Regulations. It is the Company's intent that the Plan --------------------------- comply with all respects with Rule 16b-3 under the Securities Exchange Act of 1934 (or any successor or amended version thereof) and any applicable Securities and Exchange Commission interpretations thereof. If any provision of this Plan is deemed not to be in compliance with Rule 16b-3, the provision shall be null and void. 17. Governing Law. The validity and construction of this Plan and the ------------- instruments evidencing options shall be governed by the laws of The Commonwealth of Massachusetts, without giving effect to the principles of conflicts of law thereof. Date Approved by Board of Directors of the Company: January 18, 1993 Date Approved by Stockholders of the Company: January 29, 1993 6 EX-10.4 4 1993 OMNIBUS STOCK PLAN EXHIBIT 10.4 ASECO CORPORATION 1993 OMNIBUS STOCK PLAN (Amended and Restated Effective as of June 14, 1996) 1. Purpose. This 1993 Stock Plan (the "Plan") is intended to provide ------- incentives (a) to the officers and other employees of Aseco Corporation (the "Company"), its parent (if any) and any present or future subsidiaries of the Company (collectively, "Related Corporations") by providing them with opportunities to purchase stock in the Company pursuant to options which qualify as "incentive stock options" under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), granted hereunder ("ISO" or "ISOs"); (b) to directors, officers, employees and consultants of the Company and Related Corporations by providing them with opportunities to purchase stock in the Company pursuant to options granted hereunder which do not qualify as ISOs ("Non-Qualified Option" or "Non-Qualified Options"); (c) to directors, officers, employees and consultants of the Company and Related Corporations by providing them with awards of stock in the Company ("Awards"); and (d) to directors, officers, employees and consultants of the Company and Related Corporations by providing them with opportunities to make direct purchases of stock in the Company ("Purchases"). Both ISOs and Non-Qualified Options are referred to hereafter individually as an "Option" and collectively as "Options." As used herein, the terms "parent" and "subsidiary" mean "parent corporation" and "subsidiary corporation" as those terms are defined in Section 425 of the Code. 2. Administration of the Plan. (a) The Plan shall be administered by the -------------------------- Board of Directors of the Company (the "Board"). The Board may appoint a Compensation Committee (the "Committee") of two or more of its members to administer this Plan. In the event the Company registers any class of any equity security pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), each member of the Committee shall be a "disinterested person" as defined in Rule 16b-3 under the Exchange Act and an "outside director" as defined in Section 162(m) of the Code. Subject to ratification of the grant of each Option or Award and of the authorization of each Purchase by the Board (if so required by applicable state law), and subject to the terms of the Plan, the Committee, if so appointed, shall have the authority to (i) determine the employees of the Company and Related Corporations (from among the class of employees eligible under paragraph 3 to receive ISOs) to whom ISOs may be granted, and to determine (from among the class of individuals and entities eligible under paragraph 3 to receive Non-Qualified Options and Awards and to make Purchases) to whom Non-Qualified Options or Awards may be granted and who may make Purchases; (ii) determine the time or times at which Options or Awards may be granted or Purchases made; (iii) determine the option price of shares subject to each Option, which price with respect to ISOs shall not be less than the minimum specified in paragraph 6, and the purchase price of shares subject to each Purchase; (iv) determine whether each Option granted shall be an ISO or a Non-Qualified Option; (v) determine (subject to paragraph 7) the time or times when each Option shall become exercisable and the duration of the exercise period; (vi) determine whether restrictions such as repurchase options are to be imposed on shares subject to Options, Awards and Purchases, and the nature of such restrictions, if any, and (vii) interpret the Plan and prescribe and rescind rules and regulations relating to it. If the Committee determines to issue a Non-Qualified Option, it shall take whatever actions it deems necessary, under Section 422 of the Code and the regulations promulgated thereunder, to ensure that such Option is not treated as an ISO. The interpretation and construction by the Committee of any provisions of the Plan or of any Option, Award or authorization for any Purchase granted under it shall be final unless otherwise determined by the Board. The Committee may from time to time adopt such rules and regulations for carrying out the Plan as it may deem best. No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option, Award or authorization for Purchase granted under it. (b) The Committee may select one of its members as its chairman, and shall hold meetings at such time and places as it may determine. Acts by a majority of the Committee, or acts reduced to or approved in writing by a majority of the members of the Committee, shall be the valid acts of the Committee. All references in this Plan to the Committee shall mean the Board if there is no Committee so appointed. From time to time the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause), and appoint new members in substitution therefor, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan. 3. Eligible Employees and Others. ISOs may be granted to any officer or ----------------------------- other employee of the Company or any Related Corporation. Those directors of the Company who are not employees may not be granted ISOs under the Plan. Non- Qualified Options and Awards may be granted to, and Purchases may be made by, any director (whether or not an employee), officer, employee or consultant of the Company or any Related Corporation. The Committee may take into consideration an optionee's individual circumstances in determining whether to grant an ISO or a Non-Qualified Option or to authorize a Purchase. Granting of any Option or Award to, or any Purchase by, any individual or entity shall neither entitle that individual or entity to, nor disqualify him from, participation in any other grant of Options or Awards, or in any other Purchase. 4. Stock. The stock subject to Options, Awards and Purchases shall be ----- authorized but unissued shares of Common Stock of the Company, par value $.01 per share (the "Common Stock"), or shares of Common Stock re-acquired by the Company in any manner. The aggregate number of shares which may be issued pursuant to the Plan is 1,230,000, subject to adjustment as provided in paragraph 13. Any such shares may be issued as ISOs, Non-Qualified Options or Awards, or to persons or entities making Purchases, so long as the aggregate number of shares so issued does not exceed such number, as adjusted. If any Option granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part, the unpurchased shares subject thereto shall again be available for grants of Options or Awards and for Purchases under the Plan. 5. Granting of Options. Options may be granted under the Plan at any ------------------- time on or after January 18, 1993 and prior to January 18, 2003. Any such grants of ISOs shall be subject 2 to the receipt, within 12 months of January 18, 1993, of the approval of Stockholders as provided in paragraph 15. The date of grant of an Option under the Plan will be the date specified by the Committee at the time it awards the Option; provided, however, that such date shall not be prior to the date of award. The Committee shall have the right, with the consent of the optionee, to convert an ISO granted under the Plan to a Non-Qualified Option pursuant to paragraph 16. Any other provision of the Plan notwithstanding, the number of shares of Common Stock for which options may be granted in any fiscal year of the Company to any participant shall not exceed 100,000. 6. Minimum Option Price: ISO Limitations. -------------------------------------- A. The price per share specified in the agreement relating to each ISO granted under the Plan shall not be less than the fair market value per share of Common Stock on the date of such grant. In the case of an ISO to be granted to an employee owning stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any Related Corporation, the price per share specified in the agreement relating to such ISO shall not be less than 110 percent of the fair market value of Common Stock on the date of grant. B. In no event shall the aggregate fair market value (determined at the time the option is granted) of Common Stock for which ISOs granted to any employee are exercisable for the first time by such employee during any calendar year (under all stock option plans of the Company and any Related Corporation) exceed $100,000. C. If, at the time an Option is granted under the Plan, the Company's Common Stock is publicly traded, "fair market value" shall be determined as of the last business day for which the prices or quotes discussed in this sentence are available prior to the date such Option is granted and shall mean (i) the average (on that date) of the high and low prices of the Common Stock on the principal national securities exchange on which the Common Stock is traded, if such stock is then traded on a national securities exchange; or (ii) the last reported sale price (on that date) of the Common Stock on the NASDAQ National Market System, if the Common Stock is not then traded on a national securities exchange; or (iii) the closing bid price (or average of bid prices) last quoted (on that date) by an established quotation service for over- the-counter securities, if the Common Stock is not reported on the NASDAQ National Market System or on a national securities exchange. However, if the Common Stock is not publicly traded at the time an Option is granted under the Plan, "fair market value" shall be deemed to be the fair value of the Common Stock as determined by the Committee after taking into consideration all factors which it deems appropriate, including, without limitation, recent sale and offer prices of the Common Stock in private transactions negotiated at arm's length. 7. Option Duration. Subject to earlier termination as provided in --------------- paragraphs 9 and 10, each Option shall expire on the date specified by the Committee, but not more than ten years from the date of grant and in the case of ISOs granted to an employee owning stock 3 possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any Related Corporation, not more than five years from date of grant. Subject to earlier termination as provided in paragraphs 9 and 10, the term of each ISO shall be the term set forth in the original instrument granting such ISO, except with respect to any part of such ISO that is converted into a Non-Qualified Option pursuant to paragraph 16. 8. Exercise of Option. Subject to the provisions of paragraphs 9 through ------------------ 12, each Option granted under the Plan shall be exercisable as follows: A. The Option shall either be fully exercisable on the date of grant or shall become exercisable thereafter in such installments as the Committee may specify. B. Once an installment becomes exercisable it shall remain exercisable until expiration or termination of the Option, unless otherwise specified by the Committee. C. Each Option or installment may be exercised at any time or from time to time, in whole or in part, for up to the total number of shares with respect to which it is then exercisable. D. The Committee shall have the right to accelerate the date of exercise of any installment; provided that the Committee shall not accelerate the exercise date of any installment of any Option granted to any employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to paragraph 16) if such acceleration would violate the annual vesting limitation contained in Section 422(d) of the Code which provides generally that the aggregate fair market value (determined at the time the option is granted) of the stock with respect to which ISOs granted to any employee are exercisable for the first time by such employee during any calendar year (under all plans of the Company and any Related Corporation) shall not exceed $100,000. 9. Termination of Employment. If an ISO optionee ceases to be employed ------------------------- by the Company or any Related Corporation other than by reason of death or disability as provided in paragraph 10, no further installments of his ISOs shall become exercisable, and his ISOs shall terminate after the passage of 60 days from the date of termination of his employment, but in no event later than on their specified expiration dates except to the extent that such ISOs (or unexercised installments thereof) have been converted into Non-Qualified Options pursuant to paragraph 16. Leave of absence with the written approval of the Committee shall not be considered an interruption of employment under the Plan, provided that such written approval contractually obligates the Company or any Related Corporation to continue the employment of the employee after the approved period of absence. Employment shall also be considered as continuing uninterrupted during any other bona fide leave of absence (such as those attributable to illness, military obligations or governmental service) provided that the period of such leave does not exceed 90 days or, if longer, any period during which such optionee's right to reemployment is guaranteed by statute. Nothing in the Plan shall be deemed to give any grantee of any Option or Award, or any person or entity entitled to make a Purchase, the 4 right to be retained in employment or other service by the Company or any Related Corporation for any period of time. ISOs granted under the Plan shall not be affected by any change of employment within or among the Company and Related Corporations, so long as the optionee continues to be an employee of the Company or any Related Corporation. In granting any Non-Qualified Option, the Committee may specify that such Non-Qualified Option shall be subject to the restrictions set forth herein with respect to ISOs, or to such other termination or cancellation provisions as the Committee may determine. 10. Death; Disability; Dissolution. If an optionee ceases to be employed ------------------------------ by the Company and all Related Corporations by reason of his death, any Option of his may be exercised, to the extent of the number of shares with respect to which he could have exercised it on the date of his death, by his estate, personal representative or beneficiary who has acquired the Option by will or by the laws of descent and distribution, at any time prior to the earlier of the Option's specified expiration date or 180 days from the date of the optionee's death. If an optionee ceases to be employed by the Company and all Related Corporations by reason of his disability, he shall have the right to exercise any Option held by him on the date of termination of employment, to the extent of the number of shares with respect to which he could have exercised it on that date, at any time prior to the earlier of the Option's specified expiration date or 180 days from the date of the termination of the optionee's employment. For the purposes of the Plan, the term "disability" shall have the meaning assigned to it in Section 22(e)(3) of the Code or any successor statute. In the case of a partnership, corporation or other entity holding a Non- Qualified Option, if such entity is dissolved, liquidated, becomes insolvent or enters into a merger or acquisition with respect to which such optionee is not the surviving entity, such Option shall terminate immediately. 11. Assignability. No Option shall be assignable or transferable by the ------------- optionee except by will or by the laws of descent and distribution, and during the lifetime of the Optionee each Option shall be exercisable only by him. 12. Terms and Conditions of Options. Options shall be evidenced by ------------------------------- instruments (which need not be identical) in such forms as the Committee may from time to time approve. Such instruments shall conform to the terms and conditions set forth in paragraphs 6 through 11 hereof and may contain such other provisions as the Committee deems advisable which are not inconsistent with the Plan, including restrictions applicable to shares of Common Stock issuable upon exercise of Options. The Committee may from time to time confer authority and responsibility on one or more of its own members and/or one or more officers of the Company to execute and deliver such instruments. The proper officers of the Company are authorized and directed to take any and all action necessary or advisable from time to time to carry out the terms of such instruments. 5 13. Adjustments. Upon the happening of any of the following described ----------- events, an optionee's rights with respect to Options granted to him hereunder shall be adjusted as hereinafter provided: A. In the event shares of Common Stock shall be sub-divided or combined into a greater or smaller number of shares (other than the 1-for-2.4 reverse split of the Common Stock approved by the Board on January 18, 1992) or if, upon a merger, consolidation, reorganization, split-up, liquidation, combination, recapitalization or the like of the Company, the shares of Common Stock shall be exchanged for other securities of the Company or of another corporation, each optionee shall be entitled, subject to the conditions herein stated, to purchase such number of shares of common stock or amount of other securities of the Company or such other corporation as were exchangeable for the number of shares of Common Stock which such optionee would have been entitled to purchase except for such action, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination, or exchange. B. In the event the Company shall issue any of its shares as a stock dividend upon or with respect to the shares of stock of the class which shall at the time be subject to option hereunder, each optionee upon exercising an Option shall be entitled to receive (for the purchase price paid upon such exercise) the shares as to which he is exercising his Option and, in addition thereto (at no additional cost), such number of shares of the class or classes in which such stock dividend or dividends were declared or paid, and such amount of cash in lieu of fractional shares, as he would have received if he had been the holder of the shares as to which he is exercising his Option at all times between the date of grant of such Option and the date of its exercise. C. Notwithstanding the foregoing, any adjustments made pursuant to subparagraph A or B shall be made only after the Committee, after consulting with counsel for the Company, determines whether such adjustments with respect to ISOs will constitute a "modification" of such ISOs as that term is defined in Section 425 of the Code, or cause any adverse tax consequences for the holders of such ISOs. No adjustments shall be made for dividends paid in cash or in property other than securities of the Company. D. No fractional shares shall actually be issued under the Plan. Any fractional shares which, but for this subparagraph D, would have been issued to an optionee pursuant to an Option, shall be deemed to have been issued and immediately sold to the Company for their fair market value, and the optionee shall receive from the Company cash in lieu of such fractional shares. E. Upon the happening of any of the foregoing events described in subparagraphs A or B above, the class and aggregate number of shares set forth in paragraph 4 hereof which are subject to Options which previously have been or subsequently may be granted under the Plan shall also be appropriately adjusted to reflect the events specified in 6 such subparagraphs. The Committee shall determine the specific adjustments to be made under this paragraph 13, and subject to paragraph 2, its determination shall be conclusive. 14. Means of Exercising Options. An Option (or any part or installment --------------------------- thereof) shall be exercised by giving written notice to the Company at its principal office address. Such notice shall identify the Option being exercised and specify the number of shares as to which such Option is being exercised, accompanied by full payment of the purchase price therefor either (a) in United States dollars in cash or by check, or (b) at the discretion of the Committee, through delivery of shares of Common Stock having fair market value equal as of the date of the exercise to the cash exercise price of the Option, or (c) at the discretion of the Committee, by delivery of the optionee's personal recourse note bearing interest payable not less than annually at no less than 100% of the lowest applicable Federal rate, as defined in (S)1274(d) of the Code, or (d) at the discretion of the Committee, by any combination of (a), (b) and (c) above. If the Committee exercises its discretion to permit payment of the exercise price of an ISO by means of the methods set forth in clauses (b) or (c) of the preceding sentence, such discretion shall be exercised in writing at the time of the grant of the ISO in question. The holder of an Option shall not have the rights of a shareholder with respect to the shares covered by his Option until the date of issuance of a stock certificate to him for such shares. Except as expressly provided above in paragraph 13 with respect to change in capitalization and stock dividends, no adjustment shall be made for dividends or similar rights for which the record date is before the date such stock certificates is issued. 15. Term and Amendment of Plan. This Plan was adopted by the Board on -------------------------- January 18, 1993, and was approved by the holders of a majority of the outstanding voting stock of the Company on January 29, 1994. The Plan was subsequently amended and restated by the Board effective January 12, 1994, subject to approval of the amendments thereto by the stockholders of the Company on or before January 12, 1995. The Plan shall expire on January 18, 2003 (except as to Options outstanding on that date). The Board may terminate or amend the Plan in any respect at any time, except that, any amendment that (a) increases the total number of shares that may be issued under the Plan (except by adjustment pursuant to paragraph 13); (b) changes the class of persons eligible to participate in the Plan, or (c) materially increases the benefits to participants under the Plan, shall be subject to approval by Stockholders obtained within 12 months before or after the Board adopts a resolution authorizing any of the foregoing amendments, and shall be null and void if such approval is not obtained. Except as provided in the fourth sentence of this paragraph 15, in no event may action of the Board of Stockholders alter or impair the rights of an optionee, purchaser or Award recipient without his consent, under any Option, Purchase or Award previously granted to or made by him. 16. Conversion of ISOs into Non-Qualified Options: Termination of ISOs. ------------------------------------------------------------------- The Committee, at the written request of any optionee, may in its discretion take such actions as may be necessary to convert such optionee's ISOs (or any installments or portions of installments thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the optionee 7 is an employee of the Company or a Related Corporation at the time of such conversion. Such actions may include, but not be limited to, extending the exercise period or reducing the exercise price of the appropriate installments of such Options. At the time of such conversion, the Committee (with the consent of the Optionee) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Committee in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give any optionee the right to have such optionee's ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Board takes appropriate action. The Committee, with the consent of the optionee, may also terminate any portion of any ISO that has not been exercised at the time of such termination. 17. Application of Funds. The proceeds received by the Company from the -------------------- sale of shares pursuant to Options granted and Purchases authorized under the Plan shall be used for general corporate purposes. 18. Governmental Regulation. The Company's obligation to sell and deliver ----------------------- shares of the Common Stock under this Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance or sale of such shares. 19. Withholding of Additional Income Taxes. The Company, in accordance -------------------------------------- with Section 3402(a) of the Code, may, upon exercise of a Non-Qualified Option, the grant of an Award, the making of a Purchase of Common Stock for less than its fair market value, or the making of a Disqualifying Disposition (as defined in paragraph 20) require the optionee exercising such Option, Award recipient or purchaser to pay additional withholding taxes in respect of the amount that is considered compensation includible in such person's gross income. 20. Notice to Company of Disqualifying Disposition. Each employee who ---------------------------------------------- receives ISOs shall agree to notify the Company in writing immediately after the employee makes a disqualifying disposition of any Common Stock received pursuant to the exercise of an ISO (a "Disqualifying disposition"). Disqualifying Disposition means any disposition (including any sale) of such stock before the later of (a) two years after the employee was granted the ISO under which he acquired such stock, or (b) one year after the employee acquired such stock by exercising such ISO. If the Employee has died before such stock is sold, these holding period requirements do not apply and no Disqualifying Disposition will thereafter occur. 21. Governing Laws; Construction. The validity and construction of the ---------------------------- Plan and the instruments evidencing Options, Awards and Purchases shall be governed by the laws of The Commonwealth of Massachusetts. In construing this Plan, the singular shall include the plural and the masculine gender shall include the feminine and neuter, unless the context otherwise requires. 8 EX-23.1 5 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23.1 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statements (Forms S-8 No. 33-66250, 33-80425, 33-89036) of Aseco Corporation of our report dated May 10, 1996, except for Note L, as to which the date is June 14, 1996, with respect to the consolidated financial statements and schedule of Aseco Corporation included in the Annual Report (Form 10-K) for the year ended March 31, 1996. ERNST & YOUNG LLP Boston, Massachusetts June 24, 1996 EX-27 6 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ASECO CORPORATION CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR MAR-31-1996 APR-03-1995 MAR-31-1996 14,083 0 12,743 397 7,059 34,352 4,187 2,176 36,681 7,853 0 0 0 36 28,380 36,681 41,569 41,569 21,174 21,174 0 0 (14) 6,946 2,540 4,406 0 0 0 4,406 1.17 1.17
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