-----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, O2kTsZkoB+f6knEsNJbeon8CeKFCO5LrF7qBPh5hQoDXRkNsoLvnT1GCeIGaKYee ZCptJekLzLNQswitI1iaMQ== 0000927016-97-001817.txt : 19970630 0000927016-97-001817.hdr.sgml : 19970630 ACCESSION NUMBER: 0000927016-97-001817 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19970330 FILED AS OF DATE: 19970627 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASECO CORP CENTRAL INDEX KEY: 0000896645 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] 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: 97632003 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, DC 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 30, 1997 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 $46,818,217 as of May 30, 1997 3,672,017 (Number of shares of common stock outstanding as of May 30, 1997) DOCUMENTS INCORPORATED BY REFERENCE Part III incorporates by reference certain information from the Registrant's proxy statement for the annual meeting of stockholders to be held on August 6, 1997 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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 1997 at a compound annual growth rate of 30% and the Company has operated profitably for each of the past thirty-eight 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 ("index time") and must be adaptable to 1 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 time of memory IC device test handlers is less important because of the long test times of memory IC devices. 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 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 four basic types of test handlers: gravity-feed systems, pick and place systems, belt-conveyance 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. The gravity-feed system, the oldest of the four 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. Belt- conveyance systems move large quantities of devices quickly into and out of the system on belts without damaging fragile leads. 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 currently offers test handlers with three IC device transport mediums-- gravity-feed, air-bearing and pick and place and in the fourth quarter of fiscal 1997, shipped a beta test version of its newest belt-conveyance test handler (see "Product Development"). The four transport mediums allow 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. If so desired by customers, other contactors can also be used with Aseco equipment. 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 that 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-133 TEST HANDLER The S-133 is a modified version of the S-130 test handler. It offers all the features and capabilities of the S-130 plus the ability to position the device for electrical testing of accelerometers while under physical shock. An accelerometer is a device that activates when a large amount of force is placed upon it and is used in such applications as car airbags. 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 AND S-170D TEST HANDLERS The S-170C and S-170D are modified versions of the S-170 gravity feed test handler. Each 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. In addition, the S-170D offers plunge to board capability that allows an electrical connection between the IC device and a device under test ("dut") board eliminating the need for a contactor and facilitating testing of IC devices with very short lead lengths. 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 in-line lead inspection in addition to its normal electrical test handling capability. MODEL S-450 TEST HANDLER 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. 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 that 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. 4 Remanufacturing Services The Remanufacturing Services Group provides services such as machine upgrades, reconditioning and reconfiguration for all of the Company's test handler models. 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 1997, approximately 90% of the Company's net sales represented repeat business. In addition, since 1988 the Company has succeeded in adding new names to its customer list each and every 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 30, 1997, the Company had sold 1,145 test handler systems to approximately 130 customers in more than 160 worldwide locations. In fiscal 1997, one customer, Analog Devices, Inc., accounted for 17% of net sales. SALES AND MARKETING The Company markets its products primarily through manufacturers' representative organizations. As of March 30, 1997, the Company had ten 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. In the first quarter of fiscal 1998, the Company also established a sales and service office in Singapore. 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 52%, 42%, and 42% of the Company's net sales in fiscal 1997, 1996 and 1995, 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. As a result of the Company's acquisition of WED on May 23, 1997, in England, a portion of the Company's international sales will be subject to fluctuating currency exchange rates. (See "Fiscal 1997 Developments" at the end of Part I) BACKLOG The Company's backlog which consists of customer purchase orders which the Company expects to fill within the next twelve months, was approximately $2,995,000 as of March 30, 1997. 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, 5 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 eight international field service centers, each strategically located near customers to minimize response time to customer service requests. Six of the eight international field service centers are maintained by the Company's manufacturers' representative organizations and two directly by the Company. In addition, in the first quarter of fiscal 1998, the Company established a subsidiary in Singapore to provide service and technical support directly to its customers. 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 at March 30, 1997 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. During the fourth quarter of fiscal 1997, the Company initiated beta testing of its newest test handler that employs a belt-conveyance transport medium addressing a wide range of IC applications with limited need for conversion kits. Assuming the successful completion of beta testing, the Company plans to begin shipments of this model in the second half of fiscal 1998. 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. 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. 6 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. 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 30, 1997, Aseco had 129 regular employees and 15 contract employees including 49 in manufacturing, 49 in engineering and product development, 16 in general administration and finance, 27 in sales and marketing and 3 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. FISCAL 1997 DEVELOPMENTS In the fourth quarter of fiscal 1997, the Company initiated beta testing of its newest test handler that employs a belt conveyance transport medium and addresses a wide range of IC applications with limited need for conversion kits. Assuming the successful completion of beta testing, the Company plans to begin shipments of this model in the second half of fiscal 1998. 7 In the first quarter of fiscal 1998, the Company established a new subsidiary in Singapore to provide service and technical support to its customer base in Southeast Asia. Personnel at this site will provide on-site service and repair, product training and technical support services. On May 23, 1997 the Company acquired Western Equipment Developments (Holdings) Ltd. ("WED"), based in Plymouth, England for approximately $6,000,000 in cash. WED designs, manufactures and markets integrated circuit wafer handling robot systems. These systems are used to load, sort and transport wafers during both manual and automatic inspection as well as other wafer processing steps in the semiconductor manufacturing process. WED will allow Aseco to broaden its presence in the semiconductor automated handling and processing equipment market while taking advantage of synergies such as similar customer bases and distribution channels. WED has approximately 40 employees and generated net sales of approximately $5.0 million for its fiscal year ended April 30, 1997. (See Footnote M to Consolidated Financial Statements) 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 1998. 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 30, 1997. 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........ 45 Vice President, Finance and Administration, Chief Financial Officer, Treasurer and Director C. Kenneth Gray............ 48 Vice President, Sales & Marketing Dennis A. Legal............ 57 Vice President, Engineering Theodore A. Aronis......... 59 Vice President, Manufacturing Operations R. Bruce O'Connor.......... 58 Vice President, Device Process Equipment Marketing
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. 8 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. Legal has been Vice President, Engineering since August 1996. From May 1986 to August 1996, Mr. Legal was the Division Engineering Manager of Teradyne Automatic Test Equipment, a manufacturer of automatic test equipment, including test handlers. Mr. Aronis has been Vice President, Manufacturing Operations since April 1997. From 1985 to 1997, Mr. Aronis was Vice President, Operations of Xylogics, a manufacturer of communications equipment. Mr. O'Connor has been Vice President, Device Process Equipment Marketing since April 1997. From 1994 to 1997, Mr. O'Connor led the Company's development program for its newest test handler model. Prior to joining Aseco, Mr. O'Connor was Executive Vice President at Symtek Systems, Inc. a manufacturer of automatic test handlers. Executive officers of the Company are elected by the Board of Directors and serve until their successors have been duly elected and qualified. There are no family relationships among any of the executive officers or directors of the Company. 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 sale prices of the common stock during the two most recent fiscal years:
1997 ------------- PERIOD HIGH LOW ------ ------ ------ First Quarter................................................ $14.63 $ 9.50 Second Quarter............................................... 11.50 8.25 Third Quarter................................................ 10.38 7.00 Fourth Quarter............................................... 11.88 9.50 1996 ------------- First Quarter................................................ $18.25 $ 9.38 Second Quarter............................................... 22.00 15.75 Third Quarter................................................ 21.25 13.50 Fourth Quarter............................................... 16.63 10.00
On May 30, 1997, the closing price of the Company's common stock was $12.75 per share. On such date there were 3,672,017 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. 9 ITEM 6. SELECTED FINANCIAL DATA
YEAR ENDED ----------------------------------------------- MARCH 30, MARCH 31, APRIL 2, APRIL 3, MARCH 28, 1997 1996 1995 1994 1993 --------- --------- -------- -------- --------- (IN THOUSANDS EXCEPT PER SHARE DATA) STATEMENT OF INCOME DATA Net sales..................... $34,320 $41,569 $29,192 $20,264 $15,869 Income from operations........ 2,623 6,397 3,987 2,445 1,635 Net income.................... 2,288 4,406 3,088 1,980 1,060 Earnings per share............ .62 1.17 .85 .55 .47 BALANCE SHEET DATA Total assets.................. $36,640 $36,681 $29,267 $23,792 $21,166 Long term capital lease obli- gations...................... 29 42 53 -- 73 Stockholders' equity.......... 31,113 28,416 22,711 19,513 16,566
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations--Fiscal 1997 versus Fiscal 1996 Net sales for fiscal 1997 decreased 17% to $34.3 million from $41.6 million in fiscal 1996. The decrease resulted primarily from a reduction in unit shipments due to an industry wide slowdown in the semiconductor market during fiscal 1997. International sales, which increased 2.5% during fiscal 1997 to $17.8 million from $17.4 million in fiscal 1996, represented approximately 52% of net sales in fiscal 1997 versus 42% in fiscal 1996. Sales in the Pacific Rim region were particularly strong, representing 83% of all international sales. Gross profit for fiscal 1997 was $16.2 million, or 47% of net sales, compared to $20.4 million, or 49% of net sales, in fiscal 1996. The decrease in gross profit as a percentage of net sales resulted from a reduction in manufacturing overhead spending which was disproportionate with the reduction in units produced during fiscal 1997. Although cost control measures, including a reduction in workforce and discretionary spending constraints, were made early in fiscal 1997, the savings realized were partially offset by spending on operation infrastructure enhancements incurred to enable the Company to respond effectively to production demands in the future. Research and development costs increased 10% to $5.2 million in fiscal 1997 from $4.7 million in fiscal 1996. As a percentage of net sales, research and development costs were 15% and 11% in fiscal 1997 and fiscal 1996, respectively. Research and development spending in fiscal 1997 focused primarily on the development of a new test handler system design and the enhancement of existing products through additional automation and product versatility through additional conversion kits. Selling, general and administrative expenses for fiscal 1997 decreased approximately 10% to $8.4 million from $9.3 million in fiscal 1996. As a percentage of net sales, selling, general and administrative costs were 24% and 22% during fiscal 1997 and 1996, respectively. The decrease in selling, general and administrative expenses resulted primarily from a decrease in sales commissions earned during the year. The decrease in commission expense resulted from both the decrease in net sales and a decrease in commission rates resulting from the Company's efforts to transition more customers to a direct sales relationship. The decrease in selling, general and administrative costs were partially offset by spending incurred to support the installation of the Company's new business information system. As a result of the above, operating income for fiscal 1997 declined 59% to $2.6 million from $6.4 million in fiscal 1996. 10 Other income, net of $668,000 in fiscal 1997 and $549,000 in fiscal 1996 was derived primarily from interest income earned on cash and cash equivalents. The Company's effective tax rate for fiscal 1997 was 30.5% compared to 36.6% in fiscal 1996. The fiscal 1997 tax rate was lower than the fiscal 1996 rate principally because of a higher percentage of net sales coming from international markets and a greater R&D tax credit which resulted as the Company accelerated its spending on certain qualified development expenses. Net income for fiscal 1997 decreased 48% to $2.3 million, or $.62 per share with 3,717,000 weighted average shares outstanding, from $4.4 million, or $1.17 per share with 3,776,000 weighted average shares outstanding, in fiscal 1996. 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. 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. 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 successfully completed an Internal Revenue Service audit of its fiscal 1993 tax year. As a result, an 11 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 weighted average shares outstanding, from $3.1 million, or $.85 per share with 3,616,000 weighted average shares outstanding, in fiscal 1995. Liquidity and Capital Resources The Company maintained a strong liquidity position in fiscal 1997, closing fiscal 1997 with a cash balance of $14.1 million (See "Subsequent Events" below). 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 1997. The Company generated approximately $1 million in cash from operating activities during fiscal 1997. The primary working capital factors affecting cash from operations were inventory levels, accounts receivable, and accounts payable and accrued expenses. During fiscal 1997, inventory levels increased by approximately $2.2 million to $9.2 million as the Company purchased inventory during the first quarter of the year to fulfill build plans which were subsequently revised downward as market conditions softened. Accounts receivable decreased approximately $3.2 million, or 26%, because of the decline in net sales for the fiscal year. Accounts payable and accrued expenses decreased as a result of a decrease in material receipts in the second half of fiscal 1997 compared to fiscal 1996, a decrease in sales commissions earned and a decrease in amounts accrued for compensation benefits and other performance based compensation. The Company used approximately $992,000 in cash during fiscal 1997 to fund the acquisition of capital equipment and $243,000 to fund internal software development costs. The Company generated cash from financing activities in fiscal 1997 of approximately $192,000 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 1998. Subsequent Events On May 23, 1997, the Company acquired 100% of the outstanding stock of Western Equipment Developments (Holdings) Ltd. ("WED") in Plymouth, England for approximately $6,000,000 in cash. WED designs, manufactures and markets integrated circuit wafer handling robot systems used to load, sort and transport wafers during inspection in the semiconductor manufacturing process. The acquisition will be accounted for as a purchase and, accordingly, the results of operations of the acquired business will be included in the Company's consolidated financial statements commencing May 23, 1997. In connection with the acquisition, the Company expects to allocate a portion of the purchase price to in-process research and development resulting in a one- time charge to operations of approximately $3.5-$4.3 million in the first quarter of fiscal 1998 (see Note M to Consolidated Financial Statements-- Subsequent Events). Impact of Recently Issued Accounting Standards In February 1997, the Financial Accounting Standards Board (FASB) issued Statement No. 128 "Earnings per Share" which is required to be adopted for the quarter ending December 28, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The impact is expected to result in an increase in primary earnings per share for the first quarter ended June 29, 1997 and June 30, 1996 of approximately $.01 per share for each of these quarters. The impact of Statement 128 on the calculation of fully diluted earnings per share for these quarters is not expected to be material. 12 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 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. 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. The semiconductor industry in recent periods has experienced decreased demand, and it is uncertain how long these conditions will continue. 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. 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 including, in particular, its newest belt-conveyance test handler, 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. International Operations--In fiscal 1997, 52% 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. 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 13 year ended March 30, 1997, one customer accounted for 17% 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. 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. 14 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Statements included in Item 8:
PAGE ---- Report of Independent Auditors............................................ 16 Consolidated Balance Sheets as of March 30, 1997 and March 31, 1996....... 17 Consolidated Statements of Income for the years ended March 30, 1997, March 31, 1996, and April 2, 1995........................................ 18 Consolidated Statements of Changes in Stockholders' Equity for the years ended March 30, 1997, March 31, 1996 and April 2, 1995................... 19 Consolidated Statements of Cash Flows for the years ended March 30, 1997, March 31, 1996 and April 2, 1995......................................... 20 Notes to Consolidated Financial Statements................................ 21 Supplementary Quarterly Financial Data (unaudited)........................ 30
15 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 30, 1997 and March 31, 1996, 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 30, 1997. 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 30, 1997 and March 31, 1996 and the consolidated results of its operations and its cash flows for each of the three years in the period ended March 30, 1997 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. LOGO Boston, Massachusetts May 9, 1997, except for Note M as to which the date is May 23, 1997 16 ASECO CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
MARCH 30, MARCH 31, 1997 1996 --------- --------- ASSETS Current Assets Cash and cash equivalents................................ $14,082 $14,083 Accounts receivable, less allowance for doubtful accounts of $407 in 1997 and $397 in 1996........................ 9,153 12,346 Inventories, net......................................... 9,238 7,059 Prepaid expenses......................................... 273 212 Deferred taxes........................................... 1,003 598 Other current assets..................................... 138 54 ------- ------- Total current assets................................... 33,887 34,352 Plant and equipment, less accumulated depreciation and amortization.............................................. 2,227 2,011 Other assets............................................... 526 318 ------- ------- $36,640 $36,681 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable......................................... $ 2,091 $ 3,441 Accrued expenses......................................... 2,608 3,923 Income taxes payable..................................... 321 476 Current portion of capital lease obligations............. 13 13 ------- ------- Total current liabilities.............................. 5,033 7,853 Deferred taxes payable..................................... 465 370 Long-term capital lease obligations........................ 29 42 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, 3,664,519 and 3,611,501 shares issued and outstanding in 1997 and 1996, respectively............................... 37 36 Additional paid in capital................................. 17,642 17,234 Retained earnings.......................................... 13,434 11,146 ------- ------- Total stockholders' equity............................. 31,113 28,416 ------- ------- $36,640 $36,681 ======= =======
See notes to consolidated financial statements. 17 ASECO CORPORATION CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
YEAR ENDED ---------------------------------- MARCH 30, MARCH 31, APRIL 2, 1997 1996 1995 ---------- ---------- ---------- Net sales.................................. $ 34,320 $ 41,569 $ 29,192 Cost of sales.............................. 18,113 21,174 15,374 ---------- ---------- ---------- Gross profit............................. 16,207 20,395 13,818 Research and development costs........... 5,227 4,748 3,356 Selling, general and administrative expenses................................ 8,357 9,250 6,475 ---------- ---------- ---------- Income from operations................... 2,623 6,397 3,987 Other income (expense): Interest income.......................... 664 560 416 Interest expense......................... (7) (14) (3) Other, net............................... 11 3 1 ---------- ---------- ---------- 668 549 414 ---------- ---------- ---------- Income before income taxes................. 3,291 6,946 4,401 Income tax expense......................... 1,003 2,540 1,313 ---------- ---------- ---------- Net income................................. $ 2,288 $ 4,406 $ 3,088 ========== ========== ========== Earnings per share......................... $ .62 $ 1.17 $ .85 ========== ========== ========== Weighted average common and common equivalent shares outstanding........... 3,717,000 3,776,000 3,616,000 ========== ========== ==========
See notes to consolidated financial statements. 18 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 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 Issuance of shares under stock plans........................... 53,018 1 344 -- 345 Tax benefit from exercise of stock options................... -- -- 64 -- 64 Net income....................... -- -- -- 2,288 2,288 --------- --- ------- ------- ------- Balance at March 30, 1997.......... 3,664,519 $37 $17,642 $13,434 $31,113 ========= === ======= ======= =======
See notes to consolidated financial statements. 19 ASECO CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEAR ENDED ---------------------------- MARCH 30, MARCH 31, APRIL 2, 1997 1996 1995 --------- --------- -------- Operating activities: Net income..................................... $ 2,288 $ 4,406 $ 3,088 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation................................... 776 558 378 Amortization................................... 166 221 254 Deferred taxes................................. (310) 4 (277) Changes in assets and liabilities: Accounts receivable............................ 3,193 (3,371) (3,599) Inventories, net............................... (2,179) 626 (935) Prepaid expenses............................... (61) 36 (83) Accounts payable and accrued expenses.......... (2,665) 1,808 1,965 Income taxes payable........................... (91) 544 438 Other current assets........................... (84) 171 188 Other assets................................... 9 -- -- ------- ------- ------- Total adjustments............................ (1,246) 597 (1,671) ------- ------- ------- Cash provided by operating activities........ 1,042 5,003 1,417 Investing activities: Acquisition of machinery and equipment......... (992) (728) (918) Increase in software development costs and other assets.................................. (243) (117) (211) ------- ------- ------- Cash used in investing activities............ (1,235) (845) (1,129) Financing activities: Loan to officer................................ (140) -- -- Net proceeds from issuance of common stock..... 345 636 110 Reductions of capital lease obligations........ (13) (12) (83) ------- ------- ------- Cash provided by financing activities........ 192 624 27 ------- ------- ------- Net increase (decrease) in cash and cash equivalents................................. (1) 4,782 315 Cash and cash equivalents at the beginning of the year............................................ 14,083 9,301 8,986 ------- ------- ------- Cash and cash equivalents at the end of the year............................................ $14,082 $14,083 $ 9,301 ======= ======= ------- Supplemental information: Noncash investing and financing activities: Capital lease obligations incurred........... -- -- $ 69 =======
See notes to consolidated financial statements 20 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. (See Note M--Subsequent Events) 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 and accompanying notes. 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 ($7,212,883 at March 30, 1997 and $6,997,521 at March 31, 1996) and money market funds ($1,943,278 at March 30, 1997 and $1,714,706 at March 31, 1996), all of which are cash equivalents as of March 30, 1997. 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 30, 1997 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 30, 1997 and March 31, 1996, 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. The Company adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" effective as of the beginning of fiscal 1997. This adoption had no material affect on the Company's financial statements. 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 21 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 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. In February 1997, the Financial Accounting Standards Board (FASB) issued Statement No. 128 "Earnings Per Share" which is required to be adopted for the quarter ending December 28, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The impact is expected to result in an increase in primary earnings per share for the first quarter ended June 29, 1997 and June 30, 1996 of approximately $.01 per share for each quarter. The impact of Statement 128 on the calculation of fully diluted earnings per share for these quarters is not expected to be material. 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 ABP 25, 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. NOTE C--INVENTORIES, NET Net inventories consisted of the following:
MARCH 30, MARCH 31, 1997 1996 --------- --------- Raw materials.......................................... $4,996 $3,491 Work in process........................................ 1,612 2,218 Finished goods......................................... 2,630 1,350 ------ ------ $9,238 $7,059 ====== ======
NOTE D--PLANT AND EQUIPMENT Plant and equipment consisted of the following:
MARCH 30, MARCH 31, 1997 1996 --------- --------- Machinery and equipment................................ $2,289 $2,082 Office furniture and equipment......................... 2,203 1,446 Property under capital lease........................... 578 578 Leasehold improvements................................. 109 81 ------ ------ 5,179 4,187 Less accumulated depreciation and amortization ........ 2,952 2,176 ------ ------ $2,227 $2,011 ====== ======
NOTE E--INDEBTEDNESS The Company has a revolving credit facility with a bank which expires on September 1, 1997. 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 22 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) and restrictions on dividend payments. Borrowings bear interest at the bank's prime rate which was 8.5% at March 30, 1997. There were no borrowings outstanding at March 30, 1997 and March 31, 1996. Cash payments of interest were approximately $7,000, $14,000, and $ 3,000 for the years ended March 30, 1997, March 31, 1996, April 2, 1995, 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 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 30, 1997:
CAPITAL OPERATING LEASES LEASES ------- --------- 1998..................................................... 17 387 1999..................................................... 17 405 2000..................................................... 13 412 2001..................................................... -- 34 ---- ------ Total minimum lease payments............................. 47 $1,238 ====== Less amounts representing interest....................... (5) ---- Present value of minimum lease payments.................. $ 42 ====
Total rent expense for the years ended March 30, 1997, March 31, 1996, and April 2, 1995 was approximately $372,000, $450,000, and $459,000, 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 30, 1997, 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. No additional options may be granted under this Plan. 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 23 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) the Company for the purchase of up to an aggregate of 165,000 shares of common stock. 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 Compensation Committee of the Board of Directors and provides for the issuance of up to 1,230,000 shares of common stock pursuant to the exercise of options or in connection with awards or direct purchases of stock. Options granted 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:
WEIGHTED AVERAGE OPTIONS EXERCISE -------- -------- Outstanding at April 3, 1994.............................. 432,400 $ 4.45 Granted................................................. 29,000 7.17 Exercised............................................... (7,400) 1.46 Canceled................................................ (11,100) 6.92 -------- ------ Outstanding at April 2, 1995.............................. 442,900 4.59 Granted................................................. 477,000 17.76 Exercised............................................... (157,400) 3.04 Canceled................................................ (18,000) 7.17 -------- ------ Outstanding at March 31, 1996............................. 744,500 13.30 Granted................................................. 458,000 10.37 Exercised............................................... (33,400) 5.67 Canceled................................................ (449,000) 17.72 -------- ------ Outstanding at March 30, 1997............................. 720,100 $ 8.91 ======== ======
As of March 30, 1997, March 31, 1996 and April 2, 1995, there were outstanding options exercisable for approximately 430,000, 393,000, and 224,000, respectively. As of March 30, 1997, shares available for future grant were 90,000 shares in the Director Plan and 497,000 shares in the Omnibus Plan. No additional shares were available for grant in the 1986 Plan. The range of exercises prices for options outstanding at March 30, 1997 was $.29-$18.69. The range of exercise prices is wide due to the inclusion of options granted at a lower fair market value in years preceding the Company's initial public offering in March 1993. In fiscal 1997, 391,000 options outstanding under the Company's 1993 Omnibus Stock Plan having an exercise price of $18.69 per share were cancelled and 290,250 new shares were issued at a price of $10.38 per 24 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) share representing the fair value on the date of issuance. All other terms of these options, including the vesting period associated with each option remained the same. The following table summarizes information about options outstanding at March 30, 1997:
WEIGHTED WEIGHTED RANGE OF OPTIONS AVERAGE OPTIONS AVERAGE WEIGHTED AVERAGE EXERCISE PRICES OUTSTANDING PRICE EXERCISABLE PRICE CONTRACTUAL LIFE --------------- ----------- -------- ----------- -------- ---------------- $ .29-$ .48 8,300 $ .46 8,300 $ .46 4 years $ 5.38-$ 9.88 309,600 $ 6.76 229,400 $ 5.75 8 years $10.38-$18.69 402,200 $10.97 192,300 $11.02 9 years ------- ------- 720,100 430,000 ======= =======
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 fiscal 1997 and 1996, a total of approximately 19,600 and 16,800 shares of common stock, respectively, were issued under this plan. Shares available for future grant were approximately 46,600 shares. Disclosure of pro forma information regarding net income and earnings per share is required by FASB Statement No. 123 "Accounting for Stock-Based Compensation", and has been determined as if the Company had accounted for its employee stock plans under the fair value method of that Statement. The fair value for these options was estimated at the date of grant using a Black- Scholes option pricing model with the following weighted-average assumptions for fiscal years 1997 and 1996, respectively: risk-free interest rates of 4.73% and 5.97%; dividend yields of 0% in both years; volatility factors of the expected market price of the Company's common stock of .485 and .520; and a weighted-average expected life of the options of 3 and 5 years. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. The weighted average grant date fair value of options granted during fiscal 1997 and 1996 was $4.12 and $9.21, respectively. The weighted average grant date fair value of options associated with the Company's Employee Stock Purchase Plan for fiscal 1997 and 1996 was $1.47 and $2.42, respectively. 25 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro forma information follows:
MARCH 30, MARCH 31, 1997 1996 --------- --------- Pro forma net income................................... $1,633 $3,741 Pro forma earnings per share........................... $ .44 $ .99
Savings Plan: Under the Company's Savings Plan (the "401(k) Plan"), eligible employees are permitted to make pre-tax contributions up to 15% 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 30, 1997, March 31, 1996, and April 2, 1995 the Company contributed approximately $110,000, $80,000 and $40,000, respectively to the 401(k) Plan. Stockholder Rights Plan: On August 15, 1996, the Board of Directors adopted a Stockholder Rights Plan. Pursuant to the Stockholder Rights Plan, each share of common stock has an associated right. Under certain circumstances, each right entitles the holder to purchase from the Company one one-thousandth of a share of junior preferred stock at an exercise price of $55.00 per one one- thousandth of a share, subject to adjustment. The rights are not exercisable and cannot be transferred separately from the common stock until ten days after a person acquires or obtains the right to acquire 15% or more or makes a tender offer for 30% or more of the Company's common stock. Upon exercise, each right will entitle the holder to purchase in lieu of preferred stock, at the right exercise price, common stock having a value of two times the exercise price of the right. In addition, if the Company is either (i) acquired in a merger or other business combination in which the Company is not the surviving entity, or (ii) sells or transfers 50% or more of its assets or earning power to another party, each right will entitle its holder to purchase, upon exercise, common stock of the acquiring Company having a value equal to two times the exercise price of the right. The rights have certain anti-takeover effects, in that they would cause substantial dilution to a person or group that attempts to acquire a significant interest in the Company on terms not approved by the Board of Directors. The rights expire on August 15, 2006 but may be redeemed by the Company for $.01 per right at any time prior to the tenth day following a person's acquisition of 15% or more of the Company's common stock. So long as the rights are not separately transferable, the Company will issue one right with each new share of common stock issued. 26 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 30, 1997 and March 31, 1996 are as follows:
1997 TOTAL CURRENT NON-CURRENT ---- ------ ------- ----------- Deferred tax liabilities: Tax over book depreciation.................... $ (308) $(308) Capitalized software.......................... (157) (157) Capital vs. operating lease................... (98) (98) Other......................................... (35) (35) ------ ------ ----- Total deferred tax liabilities.................. (598) (133) (465) Deferred tax assets: Asset valuation allowances.................... 1,013 1,013 Product warranty.............................. 62 62 Other......................................... 61 61 ------ ------ Total deferred tax assets....................... 1,136 1,136 ------ ------ ----- Net deferred tax assets (liabilities)........... $ 538 $1,003 $(465) ====== ====== ===== 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) ====== ====== =====
27 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Significant components of the provision (benefit) for income taxes are as follows:
YEAR ENDED ---------------------------- MARCH 30, MARCH 31, APRIL 2, 1997 1996 1995 --------- --------- -------- Current federal tax............................. $1,211 $2,106 $1,416 Current state tax............................... 102 438 174 Deferred federal tax............................ (258) (3) (214) Deferred state tax ............................. (52) (1) (63) ------ ------ ------ $1,003 $2,540 $1,313 ====== ====== ======
The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense is as follows:
YEAR ENDED ---------------------------- MARCH 30, MARCH 31, APRIL 2, 1997 1996 1995 --------- --------- -------- Tax at U.S. statutory rates.................... 34.0% 34.0% 34.0% State income taxes, net of federal benefit..... 3.1 4.6 4.4 Foreign sales corporation...................... (3.7) (2.7) (2.4) Tax credits.................................... (4.9) (1.1) (6.3) Other, net..................................... 2.0 1.8 .1 ---- ---- ---- 30.5% 36.6% 29.8% ==== ==== ====
During the year ended March 30, 1997 the Company recorded a tax benefit of approximately $64,000 related to 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 30, 1997, March 31, 1996, and April 2, 1995 were $1,404,000, $2,010,000, and $1,152,000, respectively. NOTE J--ACCRUED EXPENSES Accrued expenses consist of the following:
MARCH 30, MARCH 31, 1997 1996 --------- --------- Accrued commissions...................................... $1,467 $2,187 Accrued compensation and benefits........................ 595 1,088 Other.................................................... 546 648 ------ ------ $2,608 $3,923 ====== ======
28 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 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 ---------------------------- MARCH 30, MARCH 31, APRIL 2, 1997 1996 1995 --------- --------- -------- Pacific Rim..................................... $14,785 $12,845 $10,026 Europe.......................................... 2,512 3,567 1,983 Other........................................... 528 984 270 ------- ------- ------- $17,825 $17,396 $12,279 ======= ======= =======
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 two customers which represented 11% and 18% of total trade accounts receivable as of March 30, 1997, and one customer which represented 18% of total trade accounts receivable as of March 31, 1996. One customer accounted for 17% of net sales for the year ended March 30, 1997. 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. NOTE L--RELATED PARTY TRANSACTIONS On April 15, 1996, the Company loaned $140,000 to an executive officer who is also a director of the Company. The loan bears interest at the rate of 5.33% per annum, compounded annually, and is due and payable in full on the earlier of the termination of the executive officer's employment with the Company or April 15, 1999. The loan is secured by shares of the Company's common stock owned by the executive officer. NOTE M--SUBSEQUENT EVENTS On May 23, 1997, the Company acquired 100% of the outstanding stock of Western Equipment Developments (Holdings) Ltd. ("WED") in Plymouth, England for approximately $6,000,000 in cash. WED designs, manufactures and markets integrated circuit wafer handling robot systems used to load, sort and transport wafers during inspection in the semiconductor manufacturing process. The acquisition will be accounted for as a purchase and, accordingly, the results of operations of the acquired business will be included in the Company's consolidated financial statements commencing May 23, 1997. In connection with the acquisition, the Company expects to allocate a portion of the purchase price to in-process research and development resulting in a one- time charge to operations of approximately $3.5-$4.3 million in the first quarter of fiscal 1998. The following table summarizes the unaudited pro-forma consolidated results of operations as if the acquisition had been made at the beginning of each of the periods presented:
YEAR ENDED ------------------- MARCH 30, MARCH 31, 1997 1996 --------- --------- Net sales.............................................. $39,303 $48,013 Net income............................................. (3,078) 196 Earnings per share..................................... $ (.83) $ .05
29 ASECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE N--SUPPLEMENTARY QUARTERLY FINANCIAL DATA (UNAUDITED) The following is a summary of unaudited quarterly results for the fiscal years ended March 30, 1997 and March 31, 1996.
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER ------------- -------------- ------------- -------------- FISCAL 1997 Net sales............... $11,001 $8,989 $ 6,722 $ 7,608 Gross profit............ 5,387 4,184 3,127 3,509 Net income.............. 1,275 538 234 241 Earnings per share...... $ .34 $ .15 $ .06 $ .06 FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER ------------- -------------- ------------- -------------- 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
30 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this item is included in the Company's Proxy Statement to be filed in connection with the Company's 1997 Annual Meeting of Stockholders to be held on August 6, 1997, under the section captioned "Election of Directors" and is incorporated herein by reference thereto. 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 is included in the Company's Proxy Statement to be filed in connection with the Company's 1997 Annual Meeting of Stockholders to be held on August 6, 1997, under the section captioned "Executive Officer Compensation" and is incorporated herein by reference thereto. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is included in the Company's Proxy Statement to be filed in connection with the Company's 1997 Annual Meeting of Stockholders to be held on August 6, 1997, under the section captioned "Stock Ownership of Directors, Nominees, Executive Officers and Principal Stockholders" and is incorporated herein by reference thereto. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS On April 15, 1996, the Company loaned $140,000 to Sebastian J. Sicari, a director and executive officer of the Company. The loan bears interest at the rate of 5.33% per annum, compounded annually, and is due and payable in full on the earlier of the termination of Mr. Sicari's employment with the Company or April 15, 1999. At March 30, 1997, principal and accrued interest on the loan totaled $147,384. The loan is secured by shares of the Company's common stock owned by Mr. Sicari. 31 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 30, 1997 and March 31, 1996 Consolidated Statements of Income for the years ended March 30, 1997, March 31, 1996, and April 2, 1995 Consolidated Statements of Changes in Stockholders' Equity for the years ended March 30, 1997, March 31, 1996, and April 2, 1995 Consolidated Statements of Cash Flows for the years ended March 30, 1997, March 31, 1996, and April 2, 1995 (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, filed as Exhibit 4.2 to the Registration Statement on Form S-8 (SEC File No. 333-18337) filed with the Commission on December 19, 1996 and incorporated herein by reference. 4.2 Rights Agreement dated August 15, 1996 between the Company and State Street Bank & Trust Company as Rights Agent (including the exhibits thereto), incorporated by reference from the Company's Registration Statement on Form 8-A filed with the Commission on August 26, 1996. 4.3 Amendment Number One to the Rights Agreement dated January 2, 1997 between the Company and American Stock Transfer & Trust Company, filed as Exhibit 4.2 to the Company's Form 10-Q for the quarter ended December 29, 1996 and incorporated herein by reference. *10.1 1986 Incentive Stock Option Plan. 10.2 1993 Non-Employee Director Stock Option Plan, as amended and restated as of October 18, 1996, filed herewith. *10.3 1993 Employee Stock Purchase Plan. 10.4 1993 Omnibus Stock Plan, as amended and restated as of June 14, 1996, filed as Exhibit 10.1 to the Registration Statement on Form S-8 (SEC File No. 333-18337) filed with the Commission on December 19, 1996 and incorporated herein by reference. *10.5 Lease dated April 13, 1993, between the Company and CIGNA Investments, Inc. *10.7 Letter Agreement dated November 27, 1992, between the Company and Fleet Bank of Massachusetts, N.A. 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, dated December 30, 1996, between the Company and Carl S. Archer, Jr., filed herewith. **10.11 Severance agreement, dated December 30, 1996, between the Company and Sebastian J. Sicari, filed herewith.
32
EXHIBIT NO. DESCRIPTION ----------- ----------- **10.12 Form of Key Employee Stock Option Agreement, filed as Exhibit 10.12 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 30, 1996, between the Company and Fleet Bank of Massachusetts, N.A., filed as Exhibit 10.13 to the Company's Form 10-Q for the quarter ended September 29, 1996 and incorporated herein by reference. 10.14 Promissory Note between the Company and Sebastian J. Sicari dated April 15, 1996 and filed as Exhibit 10.14 to the Company's Form 10-Q for the quarter ended December 29, 1996 and incorporated herein by reference. 10.15 Pledge Agreement between the Company and Sebastian J. Sicari dated April 15, 1996, filed as Exhibit 10.15 to the Company's Form 10-Q for the quarter ended December 29, 1996 and incorporated herein by reference. **10.16 Severance agreement, dated March 18, 1997, between C. Kenneth Gray and the Company, filed herewith. **10.17 Severance agreement, dated December 30, 1996, between Dennis A. Legal and the Company, filed herewith. 21 Subsidiaries of the Company, filed herewith. 23.1 Consent of Ernst & Young LLP, filed herewith. 27 Financial Data Schedule, filed herewith.
- -------- * Incorporated by reference to the same exhibit number to the Registration Statement on Form S-1 (SEC File No. 33-57644) 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 30, 1997. 33 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 27, 1997 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 June 27, 1997 - ------------------------------------- Executive Officer CARL S. ARCHER, JR. and Director (Principal Executive Officer) /s/ Sebastian J. Sicari Vice President, June 27, 1997 - ------------------------------------- Finance and SEBASTIAN J. SICARI Administration, Chief Financial Officer, Treasurer and Director (Principal Financial and Accounting Officer) /s/ Dr. Sheldon Buckler Director June 27, 1997 - ------------------------------------- DR. SHELDON BUCKLER /s/ Dr. Gerald Wilson Director June 27, 1997 - ------------------------------------- DR. GERALD WILSON /s/ Dr. Sheldon Weinig Director June 27, 1997 - ------------------------------------- DR. SHELDON WEINIG 34 SCHEDULE II ASECO CORPORATION VALUATION AND QUALIFYING ACCOUNTS
BALANCE AT CHARGES TO BEGINNING OF COSTS AND BALANCE AT CLASSIFICATION YEAR EXPENSES DEDUCTIONS END OF YEAR -------------- ------------ ---------- ---------- ----------- YEAR ENDED MARCH 30, 1997 Allowance for doubtful accounts...................... $397,000 $100,000 $90,000 $407,000 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
35 EX-10.2 2 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 October 18, 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, 1996 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 15,000 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. (d) Initial Option Adjuster. On May 15, 1996, each person who is ----------------------- serving on the Board as of such date, who is not a current or former employee or officer of the Company and who is to serve on the Board following the 1996 Annual Meeting of Stockholders of the Company shall automatically be granted an option to purchase an additional 10,000 shares of Common Stock. 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), 4(c) and 4(d) 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 2 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 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 two years of the date the optionee ceased to be a member of the Board; and all options shall terminate after such two year period has 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 agreement, 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, 500 Donald Lynch Boulevard, 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 3 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. 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. 4 (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, 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 5 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 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 provison 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 law thereof. 6 EX-10.10 3 SEVERANCE AGREEMENT BETWEEN COMPANY AND C. ARCHER JR. EXHIBIT 10.10 SEVERANCE AGREEMENT ------------------- This Severance Agreement is entered into as of this 30th day of December, 1996 by and between Aseco Corporation, a Delaware corporation (the "Company"), and Carl S. Archer, Jr. (the "Employee"). Recitals: -------- WHEREAS, the Employee is an executive officer of the Company; and WHEREAS, the Company and the Employee wish to provide for the payment of certain severance compensation by the Company to the Employee in the event the Employee's employment by the Company is terminated. NOW, THEREFORE, in consideration of the Employee's continued service to the Company and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Definitions. ----------- "Benefit Period" shall mean the twelve (12)-month period following the Termination Date, in the context of Section 2, and the twenty-four (24)-month period following the Termination Date, in the context of Section 3. "Cause" shall be deemed to exist if the Board of Directors of the Company in good faith determines, after giving the Employee notice and an opportunity to be heard, that the Employee has committed an act constituting fraud, embezzlement, larceny or theft. "Change in Control" shall mean (i) the sale, lease, transfer or other disposition by the Company of all or substantially all of its assets in a single transaction or a series of related transactions; (ii) the merger or consolidation of the Company with another entity in which the stockholders of the Company immediately prior to such merger or consolidation hold less than 50% of the outstanding voting stock of the surviving or resulting corporation immediately following such transaction; or (iii) the sale or exchange (to or with any person or entity other than the Company) by the stockholders of the Company of more than 50% of the outstanding voting stock of the Company in a single transaction or series of related transactions. "Ineligibility Period" shall mean that portion of the applicable Benefit Period when the Employee is ineligible for coverage under the Company's group life or group health insurance policies. "Termination Date" shall mean the effective date of the termination of the Employee's employment with the Company. 2. Severance Other Than Following a Change in Control. -------------------------------------------------- In the event the Employee's employment by the Company is terminated for any reason other than (i) for Cause by the Company, (ii) voluntary resignation by the Employee or (iii) the Employee's death, and Section 3 is inapplicable, the Company shall (i) pay the Employee within five (5) days after the Termination Date a lump sum amount equal to the sum of (A) twelve (12) times the Employee's monthly base salary in effect at the time of such termination plus (B) the average of the annual bonus amounts paid to the Employee in respect of the Company's two fiscal years immediately preceding the Termination Date (less applicable withholding taxes and FICA with respect to (A) and (B)) and (ii) continue to provide during the Benefit Period life and health insurance coverage to the Employee, with benefits substantially comparable to those provided to executive officers of the Company generally immediately prior to such termination. Notwithstanding the foregoing, the Company shall have the right, in lieu of providing such coverage during any Ineligibility Period, to pay the Employee an amount equal to 200% of the amount it would have cost the Company to provide such coverage during such Ineligibility Period, assuming the Employee were eligible for coverage under the Company's group insurance policies and assuming further no increase in premium costs under such policies after the commencement of such Ineligibility Period. 3. Severance Following a Change in Control. --------------------------------------- Except as provided in the last sentence of this Section 3, in the event the Employee's employment by the Company is terminated for any reason whatsoever, including voluntary resignation by the Employee, within twenty-four months following a Change in Control, the Company shall (i) pay the Employee within five days after the Termination Date a lump sum amount equal to the sum of (A) twenty-four (24) times the Employee's monthly base salary in effect at the time of such termination plus (B) two times the average of the annual bonus amounts paid 2 to the Employee in respect of the Company's two fiscal years immediately preceding the Termination Date (less applicable withholding taxes and FICA with respect to (A) and (B)) and (ii) continue to provide during the Benefit Period life and health insurance coverage to the Employee, with benefits substantially comparable to those provided to executive officers of the Company generally immediately prior to such termination. Notwithstanding the foregoing, the Company shall have the right, in lieu of providing such coverage during any Ineligibility Period, to pay the Employee an amount equal to 200% of the amount it would have cost the Company to provide such coverage during any Ineligibility Period, assuming the Employee were eligible for coverage under the Company's group insurance policies and assuming further no increase in premium costs under such policies after the commencement of the Ineligibility Period. Notwithstanding anything to the contrary contained in this Agreement, the Employee shall not be entitled to any severance benefits pursuant to Section 2 or this Section 3 if the Employee's employment by the Company is terminated by the Company for Cause. 4. Vesting of Stock. Upon a Change in Control, the vesting of all ---------------- stock options held by the Employee and exercisable to purchase common stock of the Company shall be accelerated so that all such options shall be immediately exercisable in full. 5. Miscellaneous. ------------- 5.1 This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement, including without limitation that certain letter agreement dated October 23, 1990. 5.2 This Agreement may be amended or modified only by a written instrument executed by both the Company and the Employee. 5.3 This Agreement shall be construed, interpreted and enforced in accordance with the laws of The Commonwealth of Massachusetts. 5.4 This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business. 3 5.5 The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. 5.6 In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above. ASECO CORPORATION By:___________________________ Title:________________________ EMPLOYEE ______________________________ Carl S. Archer, Jr. 4 EX-10.11 4 SEVERANCE AGREEMENT BETWEEN COMPANY AND S. SICARI EXHIBIT 10.11 SEVERANCE AGREEMENT ------------------- This Severance Agreement is entered into as of this 30th day of December, 1996 by and between Aseco Corporation, a Delaware corporation (the "Company"), and Sebastian J. Sicari (the "Employee"). Recitals: -------- WHEREAS, the Employee is an executive officer of the Company; and WHEREAS, the Company and the Employee wish to provide for the payment of certain severance compensation by the Company to the Employee in the event the Employee's employment by the Company is terminated. NOW, THEREFORE, in consideration of the Employee's continued service to the Company and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Definitions. ----------- "Benefit Period" shall mean the twelve (12)-month period following the Termination Date, in the context of Section 2, and the twenty-four (24)-month period following the Termination Date, in the context of Section 3. "Cause" shall be deemed to exist if the Board of Directors of the Company in good faith determines, after giving the Employee notice and an opportunity to be heard, that the Employee has committed an act constituting fraud, embezzlement, larceny or theft. "Change in Control" shall mean (i) the sale, lease, transfer or other disposition by the Company of all or substantially all of its assets in a single transaction or a series of related transactions; (ii) the merger or consolidation of the Company with another entity in which the stockholders of the Company immediately prior to such merger or consolidation hold less than 50% of the outstanding voting stock of the surviving or resulting corporation immediately following such transaction; or (iii) the sale or exchange (to or with any person or entity other than the Company) by the stockholders of the Company of more than 50% of the outstanding voting stock of the Company in a single transaction or series of related transactions. "Ineligibility Period" shall mean that portion of the applicable Benefit Period when the Employee is ineligible for coverage under the Company's group life or group health insurance policies. "Termination Date" shall mean the effective date of the termination of the Employee's employment with the Company. 2. Severance Other Than Following a Change in Control. -------------------------------------------------- In the event the Employee's employment by the Company is terminated for any reason other than (i) for Cause by the Company, (ii) voluntary resignation by the Employee or (iii) the Employee's death, and Section 3 is inapplicable, the Company shall (i) pay the Employee within five (5) days after the Termination Date a lump sum amount equal to the sum of (A) twelve (12) times the Employee's monthly base salary in effect at the time of such termination plus (B) the average of the annual bonus amounts paid to the Employee in respect of the Company's two fiscal years immediately preceding the Termination Date (less applicable withholding taxes and FICA with respect to (A) and (B)) and (ii) continue to provide during the Benefit Period life and health insurance coverage to the Employee, with benefits substantially comparable to those provided to executive officers of the Company generally immediately prior to such termination. Notwithstanding the foregoing, the Company shall have the right, in lieu of providing such coverage during any Ineligibility Period, to pay the Employee an amount equal to 200% of the amount it would have cost the Company to provide such coverage during such Ineligibility Period, assuming the Employee were eligible for coverage under the Company's group insurance policies and assuming further no increase in premium costs under such policies after the commencement of such Ineligibility Period. 3. Severance Following a Change in Control. --------------------------------------- Except as provided in the last sentence of this Section 3, in the event the Employee's employment by the Company is terminated for any reason whatsoever, including voluntary resignation by the Employee, within twenty-four months following a Change in Control, the Company shall (i) pay the Employee within five days after the Termination Date a lump sum amount equal to the sum of (A) twenty-four (24) times the Employee's monthly base salary in effect at the time of such termination plus (B) two times the average of the annual bonus amounts paid 2 to the Employee in respect of the Company's two fiscal years immediately preceding the Termination Date (less applicable withholding taxes and FICA with respect to (A) and (B)) and (ii) continue to provide during the Benefit Period life and health insurance coverage to the Employee, with benefits substantially comparable to those provided to executive officers of the Company generally immediately prior to such termination. Notwithstanding the foregoing, the Company shall have the right, in lieu of providing such coverage during any Ineligibility Period, to pay the Employee an amount equal to 200% of the amount it would have cost the Company to provide such coverage during any Ineligibility Period, assuming the Employee were eligible for coverage under the Company's group insurance policies and assuming further no increase in premium costs under such policies after the commencement of the Ineligibility Period. Notwithstanding anything to the contrary contained in this Agreement, the Employee shall not be entitled to any severance benefits pursuant to Section 2 or this Section 3 if the Employee's employment by the Company is terminated by the Company for Cause. 4. Vesting of Stock. Upon a Change in Control, the vesting of all ---------------- stock options held by the Employee and exercisable to purchase common stock of the Company shall be accelerated so that all such options shall be immediately exercisable in full. 5. Miscellaneous. ------------- 5.1 This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement, including without limitation that certain letter agreement dated October 23, 1990. 5.2 This Agreement may be amended or modified only by a written instrument executed by both the Company and the Employee. 5.3 This Agreement shall be construed, interpreted and enforced in accordance with the laws of The Commonwealth of Massachusetts. 5.4 This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business. 3 5.5 The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. 5.6 In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above. ASECO CORPORATION By:___________________________ Title:________________________ EMPLOYEE ______________________________ Sebastian J. Sicari 4 EX-10.16 5 SEVERANCE AGREEMENT, DATED 18-MAR-1997 EXHIBIT 10.16 SEVERANCE AGREEMENT ------------------- This Severance Agreement is entered into as of this ___ day of March, 1997 by and between Aseco Corporation, a Delaware corporation (the "Company"), and Kenneth Gray (the "Employee"). Recitals: -------- WHEREAS, the Employee is an executive officer of the Company; and WHEREAS, the Company and the Employee wish to provide for the payment of certain severance compensation by the Company to the Employee in the event the Employee's employment by the Company is terminated. NOW, THEREFORE, in consideration of the Employee's continued service to the Company and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Definitions. ----------- "Benefit Period" shall mean the six (6)-month period following the Termination Date. "Cause" shall be deemed to exist if the Board of Directors of the Company or its successor in good faith determines, after giving the Employee notice and an opportunity to be heard, that the Employee has committed an act constituting fraud, embezzlement, larceny or theft. "Change in Control" shall mean (i) the sale, lease, transfer or other disposition by the Company of all or substantially all of its assets in a single transaction or a series of related transactions; (ii) the merger or consolidation of the Company with another entity in which the stockholders of the Company immediately prior to such merger or consolidation hold less than 50% of the outstanding voting stock of the surviving or resulting corporation immediately following such transaction; or (iii) the sale or exchange (to or with any person or entity other than the Company) by the stockholders of the Company of more than 50% of the outstanding voting stock of the Company in a single transaction or series of related transactions. "Ineligibility Period" shall mean that portion of the Benefit Period when the Employee is ineligible for coverage under the Company's group life or group health insurance policies. "Termination Date" shall mean the effective date of the termination of the Employee's employment with the Company. 2. Severance. --------- In the event the Employee's employment by the Company is terminated without Cause by the Company or any successor within twelve (12) months following a Change in Control, the Company or such successor shall (i) pay the Employee within five days after the Termination Date a lump sum amount equal to six (6) times the Employee's monthly base salary in effect at the time of such termination (less applicable withholding taxes and FICA) and (ii) continue to provide during the Benefit Period life and health insurance coverage to the Employee, with benefits substantially comparable to those provided to executive officers of the Company generally immediately prior to such termination. Notwithstanding the foregoing, the Company shall have the right, in lieu of providing such coverage during any Ineligibility Period, to pay the Employee an amount equal to 200% of the amount it would have cost the Company to provide such coverage during any Ineligibility Period, assuming the Employee were eligible for coverage under the Company's group insurance policies and assuming further no increase in premium costs under such policies after the commencement of the Ineligibility Period. 3. Miscellaneous. ------------- 3.1 This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement. 3.2 This Agreement may be amended or modified only by a written instrument executed by both the Company and the Employee. 3.3 This Agreement shall be construed, interpreted and enforced in accordance with the laws of The Commonwealth of Massachusetts. 3.4 This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the -2- Company may be merged or which may succeed to its assets or business. 3.5 The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. 3.6 In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, ity and enforceability of the remaining provisions shall in no way be affected or impaired thereby. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above. ASECO CORPORATION By:___________________________ Title:________________________ EMPLOYEE ______________________________ Kenneth Gray -3- EX-10.17 6 SEVERANCE AGREEMENT DATED 30-DEC-1997 EXHIBIT 10.17 SEVERANCE AGREEMENT ------------------- This Severance Agreement is entered into as of this 30th day of December, 1996 by and between Aseco Corporation, a Delaware corporation (the "Company"), and Dennis A. Legal (the "Employee"). Recitals: -------- WHEREAS, the Employee is an executive officer of the Company; and WHEREAS, the Company and the Employee wish to provide for the payment of certain severance compensation by the Company to the Employee in the event the Employee's employment by the Company is terminated. NOW, THEREFORE, in consideration of the Employee's continued service to the Company and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Definitions. ----------- "Benefit Period" shall mean the six (6)-month period following the Termination Date. "Cause" shall be deemed to exist if the Board of Directors of the Company or its successor in good faith determines, after giving the Employee notice and an opportunity to be heard, that the Employee has committed an act constituting fraud, embezzlement, larceny or theft. "Change in Control" shall mean (i) the sale, lease, transfer or other disposition by the Company of all or substantially all of its assets in a single transaction or a series of related transactions; (ii) the merger or consolidation of the Company with another entity in which the stockholders of the Company immediately prior to such merger or consolidation hold less than 50% of the outstanding voting stock of the surviving or resulting corporation immediately following such transaction; or (iii) the sale or exchange (to or with any person or entity other than the Company) by the stockholders of the Company of more than 50% of the outstanding voting stock of the Company in a single transaction or series of related transactions. "Ineligibility Period" shall mean that portion of the Benefit Period when the Employee is ineligible for coverage under the Company's group life or group health insurance policies. "Termination Date" shall mean the effective date of the termination of the Employee's employment with the Company. 2. Severance. --------- In the event the Employee's employment by the Company is terminated without Cause by the Company or any successor within twelve (12) months following a Change in Control, the Company or such successor shall (i) pay the Employee within five days after the Termination Date a lump sum amount equal to six (6) times the Employee's monthly base salary in effect at the time of such termination (less applicable withholding taxes and FICA) and (ii) continue to provide during the Benefit Period life and health insurance coverage to the Employee, with benefits substantially comparable to those provided to executive officers of the Company generally immediately prior to such termination. Notwithstanding the foregoing, the Company shall have the right, in lieu of providing such coverage during any Ineligibility Period, to pay the Employee an amount equal to 200% of the amount it would have cost the Company to provide such coverage during any Ineligibility Period, assuming the Employee were eligible for coverage under the Company's group insurance policies and assuming further no increase in premium costs under such policies after the commencement of the Ineligibility Period. 3. Miscellaneous. ------------- 3.1 This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement. 3.2 This Agreement may be amended or modified only by a written instrument executed by both the Company and the Employee. 3.3 This Agreement shall be construed, interpreted and enforced in accordance with the laws of The Commonwealth of Massachusetts. 3.4 This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the -2- Company may be merged or which may succeed to its assets or business. 3.5 The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. 3.6 In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above. ASECO CORPORATION By:___________________________ Title:________________________ EMPLOYEE ______________________________ Dennis A. Legal -3- EX-21 7 SUBSIDIARIES OF THE COMPANY EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT
PERCENTAGE OF VOTING SECURITIES OWNED BY ORGANIZED UNDER REGISTRANT AS OF LAW OF MARCH 30, 1997 --------------- -------------------- Aseco Investment Corporation.............. Massachusetts 100% Aseco International Sales Corporation..... Barbados 100% Aseco International Inc................... Delaware 100% Aseco Malaysia Sdn. Bhd................... Malaysia 100%
EX-23.1 8 CONSENT OF ERNST & YOUNG LLP 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, 333-18337) of Aseco Corporation of our report dated May 9, 1997, except for Note M as to which the date is May 23, 1997, 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 30, 1997. ERNST & YOUNG LLP Boston, Massachusetts June 23, 1997 EX-27 9 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS IN FORM 10K FOR THE YEAR ENDED MARCH 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANICAL STATEMENTS. 1,000 YEAR MAR-30-1997 APR-01-1996 MAR-30-1997 14,082 0 9,560 407 9,238 33,887 5,179 2,952 36,640 5,033 0 0 0 37 31,076 36,640 34,320 34,320 18,113 18,113 13,584 0 7 3,291 1,003 2,288 0 0 0 2,288 .62 .62
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