UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Form 10-Q
(Mark One)
| þ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2002
OR
| [ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to ________
Commission File number 000-22430
ASYST TECHNOLOGIES, INC.
| California | 94-2942251 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer identification No.) |
48761 Kato Road, Fremont, California 94538
(Address of principal executive offices)
(510) 661-5000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| Yes þ | No [ ] |
The number of shares of the registrant’s Common Stock, no par value, outstanding as of January 31, 2003 was 38,561,611.
ASYST TECHNOLOGIES, INC.
INDEX
| Page No. | ||||||
Part I. Financial Information |
||||||
Item 1. Financial Statements |
||||||
Condensed Consolidated Balance Sheets — December 31, 2002 and March 31, 2002 |
3 | |||||
Condensed Consolidated Statements of Operations — Three Months and Nine Months Ended |
||||||
December 31, 2002 and 2001 |
4 | |||||
Condensed Consolidated Statements of Cash Flows — Nine Months Ended December 31, 2002 and
2001 |
5 | |||||
Notes to Condensed Consolidated Financial Statements |
6 | |||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 | |||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
48 | |||||
Item 4. Controls and Procedures |
48 | |||||
Part II. Other Information |
||||||
Item 1. Legal Proceedings |
49 | |||||
Item 6. Exhibits and Reports on Form 8-K |
50 | |||||
Signatures |
50 | |||||
2
Part I — FINANCIAL INFORMATION
Item 1 — Financial Statements
ASYST TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands)
| December 31, | March 31, | |||||||||
| 2002 | 2002 | |||||||||
ASSETS |
||||||||||
Current assets: |
||||||||||
Cash and cash equivalents |
$ | 60,133 | $ | 74,577 | ||||||
Restricted cash and cash equivalents |
2,836 | 5,052 | ||||||||
Short-term investments |
14,000 | 5,000 | ||||||||
Accounts receivable, net |
93,696 | 28,307 | ||||||||
Inventories |
16,269 | 39,296 | ||||||||
Deferred tax asset |
— | 33,906 | ||||||||
Prepaid expenses and other |
11,232 | 14,618 | ||||||||
Total current assets |
198,166 | 200,756 | ||||||||
Property and equipment, net |
33,255 | 34,399 | ||||||||
Deferred tax asset |
— | 30,294 | ||||||||
Goodwill |
37,106 | — | ||||||||
Intangible
assets, net |
84,992 | 29,901 | ||||||||
Other assets |
21,678 | 32,180 | ||||||||
Assets of discontinued operations |
8,985 | 16,885 | ||||||||
Total assets |
$ | 384,182 | $ | 344,415 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||
Current liabilities: |
||||||||||
Short-term loans and notes payable |
$ | 20,557 | $ | 16,707 | ||||||
Current portion of long-term debt and finance leases |
1,199 | 1,076 | ||||||||
Accounts payable |
44,029 | 9,193 | ||||||||
Accrued liabilities and other |
54,820 | 46,819 | ||||||||
Deferred revenue |
4,430 | 4,367 | ||||||||
Total current liabilities |
125,035 | 78,162 | ||||||||
Long-term debt and finance leases, net of current portion |
115,297 | 90,331 | ||||||||
Other long-term liabilities |
11,434 | 6,795 | ||||||||
Liabilities of discontinued operations |
2,990 | 4,190 | ||||||||
Total liabilities |
254,756 | 179,478 | ||||||||
Minority shareholders’ interest |
63,175 | — | ||||||||
Shareholders’ equity: |
||||||||||
Common stock |
325,857 | 294,351 | ||||||||
Accumulated other comprehensive income |
2,207 | (35 | ) | |||||||
Accumulated deficit |
(261,813 | ) | (129,379 | ) | ||||||
Total shareholders’ equity |
66,251 | 164,937 | ||||||||
Total liabilities and shareholders’ equity |
$ | 384,182 | $ | 344,415 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
ASYST TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| December 31, | December 31, | |||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||||||||
Net sales |
$ | 75,624 | $ | 35,631 | $ | 199,807 | $ | 147,461 | ||||||||||
Cost of sales |
56,495 | 39,411 | 135,955 | 119,762 | ||||||||||||||
Gross profit |
19,129 | (3,780 | ) | 63,852 | 27,699 | |||||||||||||
Operating expenses: |
||||||||||||||||||
Research and development |
11,160 | 9,224 | 31,510 | 30,276 | ||||||||||||||
Selling, general and administrative |
20,462 | 18,020 | 54,346 | 59,996 | ||||||||||||||
Amortization of acquired intangible assets |
5,707 | 2,329 | 9,273 | 5,980 | ||||||||||||||
Restructuring charges |
2,519 | 5,920 | 7,019 | 8,075 | ||||||||||||||
Asset impairment charges |
8,398 | 22,574 | 15,519 | 40,499 | ||||||||||||||
In-process research and development costs of acquired businesses |
5,750 | — | 7,834 | 2,000 | ||||||||||||||
Total operating expenses |
53,996 | 58,067 | 125,501 | 146,826 | ||||||||||||||
Operating loss |
(34,867 | ) | (61,847 | ) | (61,649 | ) | (119,127 | ) | ||||||||||
Other income (expense), net |
(2,578 | ) | (1,081 | ) | (5,228 | ) | (1,644 | ) | ||||||||||
Loss
from continuing operations before income taxes and minority interest |
(37,445 | ) | (62,928 | ) | (66,877 | ) | (120,771 | ) | ||||||||||
Provision (benefit) for income taxes |
— | (14,459 | ) | 58,628 | (33,490 | ) | ||||||||||||
Loss
from continuing operations before minority interest |
(37,445 | ) | (48,469 | ) | (125,505 | ) | (87,281 | ) | ||||||||||
Minority interest |
(4,824 | ) | — | (4,824 | ) | — | ||||||||||||
Loss from continuing operations |
(32,621 | ) | (48,469 | ) | (120,681 | ) | (87,281 | ) | ||||||||||
Loss from discontinued operations, net |
(8,300 | ) | (41,379 | ) | (11,753 | ) | (48,462 | ) | ||||||||||
Net loss |
$ | (40,921 | ) | $ | (89,848 | ) | $ | (132,434 | ) | $ | (135,743 | ) | ||||||
Basic and diluted loss per common share: |
||||||||||||||||||
Continuing operations |
$ | (0.86 | ) | $ | (1.37 | ) | $ | (3.23 | ) | $ | (2.48 | ) | ||||||
Discontinued operations |
(0.22 | ) | (1.17 | ) | (0.32 | ) | (1.37 | ) | ||||||||||
Net loss |
$ | (1.08 | ) | $ | (2.54 | ) | $ | (3.55 | ) | $ | (3.85 | ) | ||||||
Weighted average number of common shares outstanding — basic
and diluted |
37,932 | 35,419 | 37,316 | 35,237 | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
ASYST TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
| Nine Months Ended | ||||||||||||
| December 31, | ||||||||||||
| 2002 | 2001 | |||||||||||
Cash flows from operating activities: |
||||||||||||
Net loss |
$ | (132,434 | ) | $ | (135,743 | ) | ||||||
Less: Loss from discontinued operations |
11,753 | 48,462 | ||||||||||
Net loss from continuing operations |
(120,681 | ) | (87,281 | ) | ||||||||
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities: |
||||||||||||
Depreciation and amortization |
19,928 | 13,438 | ||||||||||
Impairment
of goodwill and other intangible assets |
8,398 | 22,541 | ||||||||||
Employee and non-employee stock compensation |
2,243 | 371 | ||||||||||
Provision for doubtful accounts |
(400 | ) | 690 | |||||||||
Non-cash charges for restructuring and write-down of land |
10,317 | 15,000 | ||||||||||
Provision for excess inventories |
— | 12,810 | ||||||||||
In-process research and development costs |
7,834 | 2,000 | ||||||||||
Deferred tax asset, net |
59,432 | (40,496 | ) | |||||||||
Changes in assets and liabilities, net of acquisitions: |
||||||||||||
Accounts receivable |
(17,473 | ) | 41,045 | |||||||||
Inventories |
30,598 | 14,440 | ||||||||||
Prepaid expenses and other assets |
362 | 7,967 | ||||||||||
Accounts payable, accrued liabilities and deferred revenue |
23,210 | (10,992 | ) | |||||||||
Net cash provided by (used in) operating activities |
23,768 | (8,467 | ) | |||||||||
Cash flows from investing activities: |
||||||||||||
Purchase of short-term investments |
(9,000 | ) | (23,077 | ) | ||||||||
Sale or maturity of short-term investments |
— | 18,441 | ||||||||||
Purchase of restricted cash equivalents and short-term investments |
(22,500 | ) | (55,842 | ) | ||||||||
Sale or maturity of restricted cash equivalents and short-term investments |
24,716 | 105,100 | ||||||||||
Purchase of property and equipment, net |
(7,271 | ) | (8,839 | ) | ||||||||
Net cash used in acquisitions |
(52,296 | ) | (3,772 | ) | ||||||||
Net cash provided by (used in) investing activities |
(66,351 | ) | 32,011 | |||||||||
Cash flows from financing activities: |
||||||||||||
Net proceeds from line of credit |
25,000 | — | ||||||||||
Net proceeds (payments) on short-term loans |
2,995 | (47,903 | ) | |||||||||
Net proceeds from the issuance of long-term debt and finance
leases |
— | 85,146 | ||||||||||
Net payments on long-term debt and finance leases |
(620 | ) | (262 | ) | ||||||||
Issuance of shares of common stock |
1,922 | 4,410 | ||||||||||
Net cash provided by (used in) financing activities |
29,297 | 41,391 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents |
3,880 | — | ||||||||||
Net cash provided by (used in) continuing operations |
(9,406 | ) | 64,935 | |||||||||
Net cash provided by (used in) discontinued operations |
(5,038 | ) | (3,719 | ) | ||||||||
Increase (decrease) in cash and cash equivalents |
(14,444 | ) | 61,216 | |||||||||
Cash and cash equivalents, beginning of period |
74,577 | 33,226 | ||||||||||
Cash and cash equivalents, end of period |
$ | 60,133 | $ | 94,442 | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
ASYST TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| 1. | ORGANIZATION OF THE COMPANY: |
The accompanying condensed consolidated financial statements include the accounts of Asyst Technologies, Inc. (“Asyst” or the “Company”), which was incorporated in California on May 31, 1984, its subsidiaries and its majority owned joint venture. The Company designs, develops, manufactures and markets isolation systems, work-in-process materials management, substrate-handling robotics, automated transport and loading systems, and connectivity automation software utilized primarily in clean rooms for semiconductor manufacturing.
In October 2002, the Company purchased a 51% interest in Asyst Shinko, Inc. (“ASI”), a Japanese corporation.
In May 2002, Asyst Connectivity Technologies, Inc., a subsidiary of the Company (“ACT”), purchased substantially all of the assets of domainLogix Corporation, (“DLC”), a Delaware corporation.
In May 2001, the Company acquired 100 percent of the common stock of GW Associates, Inc. (“GW”), a California corporation.
The above transactions, which were unrelated, were accounted for using the purchase method of accounting. Accordingly, the Company’s Consolidated Statements of Operations and of Cash Flows for the period ended December 31, 2002 include the results of these acquired entities for the periods subsequent to their respective acquisitions. The Company consolidates fully the financial position and results of operations of ASI and accounts for the minority interest in the consolidated financial statements.
| 2. | SIGNIFICANT ACCOUNTING POLICIES: |
Basis of Preparation
While the financial information furnished is unaudited, the condensed consolidated financial statements included in this report reflect all adjustments (consisting of normal recurring accruals) which the Company considers necessary for the fair presentation of the results of operations for the interim periods covered and of the financial condition of the Company at the date of the interim balance sheet. All significant intercompany accounts and transactions have been eliminated. Minority shareholder’s interest represents the minority shareholders proportionate share of the net assets and results of operations of the Company’s majority-owned subsidiary, Asyst Shinko, Inc. Certain prior year amounts in the condensed consolidated financial statements and the notes thereto have been reclassified where necessary to conform to the quarter ended December 31, 2002. The Company closes its books on the last Saturday of each quarter and thus the actual date of the quarter-end is usually different from the month-end dates used
6
throughout this Form 10-Q report. The results for interim periods are not necessarily indicative of the results for the entire year. The condensed consolidated financial statements should be read in connection with the Asyst Technologies, Inc. consolidated financial statements for the year ended March 31, 2002 included in its Annual Report on Form 10-K. The Advanced Machine Programming, Inc. (AMP) and SemiFab, Inc. (SemiFab) businesses are accounted for as discontinued operations and therefore, the results of operations and cash flows have been removed from the Company’s results of continuing operations for all periods presented.
New Accounting Standards
In June 2002, the Financial Accounting Standards Board issued SFAS No. 146, “Accounting for Exit or Disposal Activities,” or SFAS 146. SFAS 146 addresses significant issues regarding the recognition, measurement, and reporting of costs that are associated with exit and disposal activities, including restructuring activities that are currently accounted for under EITF No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” The scope of SFAS 146 also includes costs related to terminating a contract that is not a capital lease and termination benefits that employees who are involuntarily terminated receive under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. SFAS 146 will be effective for exit or disposal activities that are initiated after December 31, 2002 and early application is encouraged. The Company will adopt SFAS 146 during the quarter ending March 31, 2003. The provisions of EITF No. 94-3 shall continue to apply for an exit activity initiated under an exit plan that met the criteria of EITF No. 94-3 prior to the adoption of SFAS 146. The effect on adoption of SFAS 146 will change on a prospective basis the timing of when restructuring charges are recorded from a commitment date approach to when the liability is incurred.
In November 2002, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN 45 requires that a liability be recorded in the guarantor’s balance sheet upon issuance of a guarantee. In addition, FIN 45 requires disclosures about the guarantees that an entity has issued, including a reconciliation of changes in the entity’s product warranty liabilities. The initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor’s fiscal year-end. The disclosure requirements of FIN 45 are effective for financial statements of interim or annual periods ending after December 15, 2002. The Company is currently assessing the impact of this standard on its consolidated financial statements.
In November 2002, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables.” EITF Issue No. 00-21 provides guidance on how to account for arrangements that involve the delivery or performance of multiple products, services and/or rights to use assets. The provisions of EITF Issue No. 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The Company is currently assessing the impact of this standard on the on its consolidated financial statements.
7
In December 2002, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure — an amendment of SFAS 123.” SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS No. 148 also requires that disclosures of the pro forma effect of using the fair value method of accounting for stock-based employee compensation be displayed more prominently and in a tabular format. Additionally, SFAS No. 148 requires disclosure of the pro forma effect in interim financial statements. The transition and annual disclosure requirements of SFAS No. 148 are effective for fiscal years ended after December 15, 2002. The interim disclosure requirements are effective for interim periods beginning after December 15, 2002. The Company believes that the adoption of this standard will have no material impact on its consolidated financial statements.
In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.” FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective immediately for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. The Company believes that the adoption of this standard will have no material impact on its consolidated financial statements.
Restricted Cash and Cash Equivalents
Restricted cash and cash equivalents represent amounts that are restricted as to their use in accordance with Japanese debt agreements.
Restricted cash and cash equivalents by security type are as follows (dollars in thousands):
| December 31, | March 31, | |||||||||
| 2002 | 2002 | |||||||||
| (Unaudited) | ||||||||||
Cash |
$ | 2,836 | $ | 4,552 | ||||||
Cash equivalents: |
||||||||||
Institutional money market funds debt
securities |
$ | — | $ | 500 | ||||||
Total |
$ | 2,836 | $ | 5,052 | ||||||
8
Inventories
Inventories consist of the following (dollars in thousands):