EXHIBIT 13.1
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
----------- --------- ---------
Net sales..................................................................... $ 100,350 $ 63,616 $ 44,236
Net income (loss)............................................................. 19,282 4,177 (6,883)
Net income (loss) per share................................................... 1.20 0.32 (0.57)
Working capital............................................................... 50,061 23,201 22,162
Shareholders' equity.......................................................... 75,361 36,986 31,751
To Our Shareholders
Genus achieved considerable success during 1995 due to a substantial
increase in the shipments of our high energy (MeV) ion implantation and chemical
vapor deposition (CVD) systems. Our sales grew 58% over 1994 to $100.4 million.
In addition, our entire product line has been strengthened with the first
production shipments of our CVD cluster tool platform and the introduction of
our third-generation MeV ion implanter.
Throughout 1995, the semiconductor industry continued to expand at a
substantial pace. A sizable portion of this gain is a result of increased
integrated circuit (IC) sales that were fueled primarily by strong personal
computer and telecommunications demand. As a supplier of capital equipment
specifically designed to provide low-cost production solutions for both thin
films and ion implantation, Genus is well positioned to take advantage of this
market expansion.
From late 1994 through 1995, we enhanced our product line and now offer
stronger and more competitive systems than ever before. These new products --
the Genus 7000 and the Tandetron-TM- 1520 -- build upon our technology
leadership and provide highly competitive process results, high throughput and
low cost-of-ownership.
The initial shipments of our Genus 7000, a single-wafer CVD cluster tool,
were installed directly into production at one of the world's leading DRAM
manufacturers. The rapid migration of these systems into production, rare in the
semiconductor industry, attests to the cost savings and reliability demonstrated
by the 7000 system.
High energy ion implantation continues to be an area of great growth
potential for Genus. MeV ion implantation demand is driven by the technology's
ability to reduce manufacturing costs for memory and logic devices. Using Genus'
buried implanted layer for lateral isolation (BILLI)* structure and our
Tandetron 1520 implanter, manufacturers can save up to 20% on total wafer
fabrication costs.
In January of 1996, we strengthened our technology organization with the
addition of Thomas Seidel, formerly SEMATECH's director of strategic technology.
Dr. Seidel joins us as chief technical officer. During the last year, we further
broadened our management team with the addition of James Burns as executive vice
president and general manager of our Thin Film Division and Kent Robertson as
executive vice president and chief financial officer, and with the promotion of
John Ogawa Borland to the post of vice president of strategic technology.
In 1995, the strengthening of our customer support program resulted in an
award for exemplary service from Samsung. We are building on this solid
foundation by establishing locally based service centers such as our wholly
owned Korean subsidiary, which opened in January of 1996. In addition, we are
supporting our existing customer base with ongoing product enhancements that add
value to their installed systems.
I would like to thank all Genus employees for their continuing dedication.
Their hard work has made it possible for us to make the important changes
necessary to position the Company for future growth. We are confident that the
significant additions to our product line and the expansion of our customer
support capabilities will enable us to maintain a competitive edge. We are
continuing to leverage our technology leadership to adapt to the ever-changing
landscape of our dynamic market.
William W. R. Elder
Chairman and Chief Executive Officer
2
A CHANGING MARKET
The explosive growth of the semiconductor industry is nothing short of
phenomenal. Even conservative industry forecasts have been revised upward with
many analysts now anticipating a market of $350 billion by the year 2000.
Leading this tremendous growth is the proliferation of computer technology and
the expanding range of other electronic products now incorporating integrated
circuits.
The continued decrease in IC cost-per-function is the engine driving the
growth of the semiconductor industry. With higher cost-effectiveness and more
capability on each chip, the electronics industry has created enormous and very
challenging market opportunities. For semiconductor manufacturers, this shift
has made cost reduction a vital objective.
REDUCED PRODUCTION COSTS As a leader in innovative technologies that
significantly reduce the cost of fabricating semiconductors, Genus continues to
capitalize on this heightened emphasis on cost reduction. Genus MeV ion
implantation and CVD products break new ground by enabling chip makers to
simplify their IC production processes and lower their cost-of-ownership.
TECHNOLOGY LEADERSHIP
In 1995, Genus demonstrated ongoing technical leadership in its served
markets and strengthened its product offering with the introduction of two new
systems. The Company shipped its first integrated cluster tool for tungsten
silicide thin-film deposition, the Genus 7000, directly into production. Later
in 1995, Genus took an important evolutionary step in MeV ion implantation with
the introduction of the Tandetron 1520 MeV ion implantation system.
HIGH ENERGY ION IMPLANTATION
MeV ion implantation, used in the fabrication of both memory and logic
devices, implants electrically charged dopant ions into a silicon substrate.
Driven by the technology's ability to simplify processing and reduce
manufacturing costs by up to 20%, the MeV ion implantation market tripled in
1995 and is projected to grow another 50% in 1996. Analysts predict that MeV ion
implantation will continue to be one of the fastest-growing segments of the
front-end capital equipment market.
Genus' Tandetron 1520 MeV ion implantation system was introduced in the
fourth quarter of 1995. Designed to be a "production workhorse," it provides
significant cost savings for both memory and logic IC production. In logic
devices using Genus' BILLI structure, the Tandetron 1520 replaces the need for
expensive silicon epitaxy. Eliminating this step can save manufacturers as much
as $229 per 8-inch wafer according to VLSI Research, Inc. In addition, the
process reduces cycle time and boosts capacity by up to 16%. A "super fab"
manufacturer producing 40,000 wafer starts per month can gain savings of more
than $100 million per year.* The wide energy range of the Tandetron also enables
it to perform medium current implants that further reduce manufacturing costs by
increasing product utilization.
THIN-FILM DEPOSITION Tungsten silicide CVD technology is commonly used to
produce faster memory devices. For more than 12 years, Genus has been a leading
supplier in this market, a position the Company strengthened with the first
production shipments of the Genus 7000. This modular, single-wafer system
provides significantly higher throughput, improved reliability and lower
cost-of-ownership. The benefits of the 7000 were validated when Samsung, the
world's leading DRAM manufacturer, moved its first system shipments directly
into 16-Mb DRAM production at 0.35 micron m. The system's dichlorosilane (DCS)
chemistry provides the higher throughput, step coverage, lower fluorine content
and predictable device speed essential for advanced ICs.
To support both its MeV ion implantation and CVD advanced technologies,
Genus established a local service presence and greatly expanded its support
organizations in Korea and Japan. These efforts, and other strategies currently
under development, are designed to strengthen the Company's customer
satisfaction programs and capabilities throughout the world.
3
Genus' current product offerings represent the leading edge of industry
technology. Both MeV ion implantation and CVD products provide the capabilities
essential for the most advanced devices as well as the cost-saving potential
vital to success in today's rapidly growing semiconductor market.
LOOKING TOWARD THE FUTURE
Genus' current product line provides a solid foundation for future growth.
Through continued innovation and improvement combined with strategic
partnerships, Genus will be able to provide more robust solutions for a wider
range of semiconductor processing steps as technology advances into the future.
NEW FILMS With the multimodule cluster tool design of the Genus 7000, the
Company will offer a wider range of thin films in 1996. New innovative CVD films
are currently under development in joint programs with leading semiconductor
manufacturers. In addition, Genus' DCS chemistry is also expected to gain wider
industry acceptance as its improved productivity and film properties make it
more attractive for submicron manufacturing.
PIONEERING FUNDAMENTAL CHANGE During 1995, Genus introduced new advanced
MeV ion implantation techniques that promise to change the way many CMOS
semiconductors will be built. One of these techniques, Genus' BILLI structure,
is expected to gain in usage as more manufacturers realize significant cost
savings as a result of the process' ability to eliminate 20 - 40 steps in CMOS
memory and logic device production. To create added momentum for wider
acceptance in the logic market, Genus initiated joint development programs to
use the BILLI structure for epi replacement with several key customers in 1995.
A key milestone was achieved in January of 1996 when a major U.S. logic device
manufacturer announced the fabrication of the world's first logic IC using the
BILLI structure and a Genus MeV ion implanter to replace the epi layer.
As the industry moves toward larger wafer sizes with 300-mm wafer production
as early as 1997, the process step reduction made possible by the BILLI
structure's epi replacement capabilities will gain in importance. Genus'
Tandetron 1520 MeV ion implanter is ideally suited to take advantage of the
economic opportunities created with this new technology.
Through continuously pursuing technical leadership and anticipating industry
technology changes, Genus is positioned for growth in tomorrow's dynamic
semiconductor market.
4
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND EMPLOYEE DATA)
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- --------- ---------- ---------
Net sales........................................... $ 100,350 $ 63,616 $ 44,236 $ 40,079 $ 51,528
Gross profit........................................ 39,239 24,967 13,900 9,661 18,646
Gross profit as a percentage of sales............... 39% 39% 31% 24% 36%
Income (loss) from operations....................... $ 7,976 $ 3,729 $ (6,974) $ (17,382) $ (5,130)
Net income (loss)................................... 19,282 4,177 (6,883) (17,095) (3,980)
Net income (loss) per share......................... $ 1.20 $ 0.32 $ (0.57) $ (1.45) $ (0.35)
Cash and cash equivalents........................... $ 12,630 $ 10,188 $ 10,423 $ 9,684 $ 22,169
Total assets........................................ 95,247 54,997 45,205 49,258 60,957
Long-term obligations, less current portion......... 1,034 523 1,042 2,342 168
Working capital..................................... 50,061 23,201 22,162 29,455 42,817
Shareholders' equity................................ 75,361 36,986 31,751 37,771 54,390
Backlog............................................. 44,996 44,011 18,945 7,783 15,656
Number of employees................................. 319 264 212 246 259
5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
1995 COMPARED TO 1994
Genus' net sales in 1995 increased 58 percent over net sales in 1994 to
$100.4 million. The increase in net sales was primarily due to the introduction
of the Genus 7000 tungsten chemical vapor deposition (CVD) system with higher
average selling prices (ASP) and, secondarily, to greater unit sales of the
Company's high energy (MeV) ion implantation system. In addition, the increase
was driven by continued strong demand for capital equipment by semiconductor
manufacturers, particularly in Korea. The increase in net sales was made despite
the continued competitiveness in the markets the Company serves. Foreign sales
accounted for 88 percent of the Company's net sales in 1995, compared to 89
percent in 1994. Net sales from the Company's customer support group increased
five percent when compared to the same period in 1994.
Gross profit for the years ended 1995 and 1994 was 39 percent of net sales.
While there was no change in the Company's consolidated gross profit percentage
between 1995 and 1994, gross margins on products sold by the Company's Thin Film
Division (TFD) and Ion Technology Division (ITD) in 1995 were significantly
different. During 1995, gross margins at TFD improved three percentage points
and eroded five percentage points at ITD. The improvement in gross margin at TFD
was as a result of higher ASP on Genus 7000 system sales, improved production
cycle times and manufacturing efficiencies due to increased volumes. The erosion
in gross margins at ITD was due principally to increased service and warranty
costs, higher product transition costs associated with the introduction of the
division's new Tandetron 1520 MeV ion implantation system, manufacturing
inefficiencies related to volume and product transition and lower ASP due to
competitive pressures.
In 1995, research and development (R&D) expenses were $12.3 million compared
to $9.0 million in 1994, a 36 percent increase. The $3.3 million increase in R&D
was due to continued investments made by the Company in additional headcount,
higher new product development material costs and greater depreciation expenses
associated with equipment purchased for new product development. As a percentage
of net sales, R&D expenses in 1995 and 1994 were 12 percent and 14 percent,
respectively. The decrease in R&D expenses as a percentage of sales was due
principally to the increased net sales volume. The Company's R&D expenses in
1995 and 1994 are net of the capitalization of software costs of $0.9 million
and $0.8 million, respectively. The Company serves markets that are highly
competitive and rapidly changing. For these reasons, the Company believes that
it must continue to maintain its investment in R&D to develop competitive,
market driven products. In addition, the Company continually evaluates its R&D
investment in view of evolving competitive and market conditions.
Selling, general and administrative (S,G&A) expenses as a percentage of
sales were 19 percent for both years ended December 31, 1995 and 1994. On an
absolute dollar basis, S,G&A expenses for the year ended December 31, 1995
increased $6.8 million when compared to the same period in 1994. The absolute
dollar increase was primarily due to headcount additions and related payroll
costs to support the Company's growth rate, higher sales commissions and
incentives and increased depreciation expense.
During the year ended December 31, 1995, the Company had $0.3 million in
other income, compared to $0.7 million in other income for the same period in
1994. The decrease in other income was due to the write-off of leasehold
improvements in connection with the relocation of the Company's ITD facility
scheduled for mid-1996 and the gain on the sale of property and equipment in
1994, but not in 1995; offset by higher interest income earned on higher cash
balances outstanding during 1995 when compared to the same period in 1994.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The effective tax rate for the year ended December 31, 1995 was (132)
percent compared to an effective tax rate of 5 percent for the same period in
1994. The significant change in the effective tax rate was due primarily to the
one-time recognition of deferred tax assets in accordance with Financial
Accounting Standard No. 109, "Accounting for Income Taxes." As a result of this
one-time recognition in 1995, the Company anticipates that the effective tax
rate in 1996 will approximate the statutory rate.
The Company has continued to experience positive order and financial
performance in recent quarters. These results have been primarily due to strong
market conditions for the Company's products in Korea, and one Korean customer
in particular, as a result of increased investments in semiconductor
manufacturing facilities in this region. However, due to the inconsistency in
the Company's order rate during the second half of 1995, the Company's reliance
on one customer for a significant portion of its orders, the continued
competitive market environment for the Company's products and the historically
cyclical nature of the semiconductor equipment market, the Company remains
cautious about the short-term prospects for its business. The Company continues
to make strategic investments in new product development and manufacturing
improvements with a view to improving future performance by enhancing product
offerings; however, such investment may adversely affect short-term operating
performance. The Company is also continuing its efforts to implement
productivity improvements for future operating performance. The Company believes
that the future economic environment could continue to lengthen the order and
sales cycles for its products, causing it to continue to simultaneously book and
ship some orders during the same quarter.
1994 COMPARED TO 1993
Genus' net sales in 1994 were $63.6 million, an increase of 44 percent over
net sales in 1993 of $44.2 million. This increase in net sales was primarily due
to increased system sales of the Company's MeV ion implantation system as a
result of increased market acceptance of MeV ion implantation in the
semiconductor manufacturing process and, secondarily, to changes in the
Company's CVD product mix with higher ASP. In addition, the increase was driven
by continued strong demand for capital equipment from semiconductor
manufacturers, particularly in Korea where significant investments were made in
dynamic random-access memory (DRAM) manufacturing facilities. Foreign sales
accounted for 89 percent of the Company's net sales in 1994 compared to 84
percent in 1993. Net sales from the Company's customer support group were $15.6
million in 1994 compared to $13.5 million in 1993, a 16 percent increase.
Gross margin in 1994 was 39 percent compared to 31 percent in 1993. The
improvement in gross margin was due to increased unit sales volumes with higher
ASP, improved manufacturing efficiencies due to increased sales volumes and
other gross margin improvement programs implemented by the Company. In 1994, the
Company included all service expenses in cost of goods sold. Prior to 1994, the
Company included a portion of service costs in S,G&A expenses. As a result of
this reclassification, the financial statements for prior periods have been
reclassified to conform with the presentation in 1994. Previously reported
results were not affected by this reclassification.
In 1994, R&D expenses were $9.0 million compared to $7.8 million in 1993, a
16 percent increase. The $1.2 million increase in R&D expenses was due to
increased investments made by the Company in new product development in both of
its divisions. As a percentage of net sales, R&D expenses in 1994 and 1993 were
14 percent and 18 percent, respectively. The decrease in R&D expenses as a
percentage of sales was primarily due to the increased net sales volume. The
Company's R&D expenses in 1994 are net of software capitalization costs of $0.8
million.
As a percentage of net sales, S,G&A expenses in 1994 and 1993 were 19
percent and 28 percent, respectively. This significant change was primarily due
to increased net sales volumes. On an absolute dollar basis, S,G&A expenses in
1994 were marginally lower than 1993 levels.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
During 1994, the Company earned $0.7 million in other income compared to
$0.1 million in other income in 1993. This increase was primarily a result of
the gain on the sale of property and equipment of approximately $0.5 million
during the second quarter of 1994. During 1993, the Company incurred a special
charge of $0.6 million related to the severance packages and other
payroll-related costs associated with a reduction in work force during 1993.
Effective January 1, 1993, the Company changed its method of accounting for
income taxes by adopting Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes." The effective tax rate of 1994 was 5 percent and
related primarily to alternative minimum tax. The low effective tax rate was due
to the Company's utilization of net operating loss carryforwards to offset
regular taxable income.
LIQUIDITY AND CAPITAL RESOURCES
During the 12 months ended December 31, 1995, the Company's cash and cash
equivalents increased $2.4 million due principally to issuance of common stock
of $18.3 million, offset by cash used by operations of $4.1 million, the
repayment of short-term bank borrowings of $3.8 million, repayments of long-term
debt of $1.4 million, the purchase of property and equipment of $5.6 million and
the capitalization of software development cost of $0.9 million.
The $4.1 million decrease in cash from operating activities resulted
primarily from an increase of $11.6 million in accounts receivable due to the
inability to collect the receivables from shipments made late in the fourth
quarter, an increase in inventories of $9.8 million as a result of inventory
purchases received late in the fourth quarter to support shipments in the first
quarter of 1996, an increase in other assets of $0.7 million related to higher
long-term deposits and an increase in deferred tax assets of $11.6 million. The
decrease in cash from operations was primarily offset by an increase in accounts
payable of $1.3 million as a result of inventory purchases made late in the
quarter for fourth-quarter shipments and the cash management practices of the
Company, and an increase of $4.4 million in accrued expenses due to increased
retrofit costs, increased warranty and commission accruals as a result of higher
sales volumes, and increased accruals for profit sharing and incentives. In
addition, the decrease in cash from operating activities was offset by
depreciation and amortization of $4.2 million and net income of $19.3 million.
At December 31, 1995, the Company's primary source of funds consisted of
$12.6 million in cash and cash equivalents and funds available under a $10.0
million revolving line of credit. The line of credit is secured by substantially
all of the assets of the Company and expires in May 1996. At December 31, 1995,
the Company had no borrowings outstanding under the line of credit.
Capital expenditures during 1995 were $5.6 million and related primarily to
acquisition of machinery and equipment for the Company's R&D and Applications
Laboratories. In September 1995, the Company entered into an agreement to lease
a new facility in Newburyport, Massachusetts for its Ion Technology Division.
The Company estimates that it will expend approximately $3.0 million for
leasehold improvements and equipment associated with the new facility. The
Company intends to finance these expenditures through new or existing lease
lines. Furthermore, the Company anticipates that it will continue to make
additional capital expenditures during 1996 that will be funded through existing
working capital or lease financing.
On February 17, 1995, the Company sold 2,539,018 shares of common stock
through a private placement offering, which generated net proceeds of
approximately $16.2 million.
The Company believes that existing cash and cash equivalents, cash generated
from operations, if any, and existing credit facilities will be sufficient to
satisfy its cash needs in the near term and for the foreseeable future.
8
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
AS OF DECEMBER 31,
----------------------
1995 1994
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents.............................................................. $ 12,630 $ 10,188
Accounts receivable (net of allowance for doubtful accounts of $250 in 1995 and
1994)................................................................................. 26,796 15,169
Inventories............................................................................ 24,437 14,677
Other current assets................................................................... 623 655
Current deferred taxes................................................................. 4,427
---------- ----------
Total current assets................................................................. 68,913 40,689
Property and equipment, net.............................................................. 14,627 11,492
Other assets, net...................................................................... 3,824 2,816
Noncurrent deferred taxes................................................................ 7,883
---------- ----------
$ 95,247 $ 54,997
---------- ----------
LIABILITIES
Current Liabilities:
Short-term bank borrowings............................................................. 3,800
Accounts payable....................................................................... 7,129 5,858
Accrued expenses....................................................................... 11,042 6,625
Current portion of long-term debt and capital lease obligations........................ 681 1,205
---------- ----------
Total current liabilities............................................................ 18,852 17,488
---------- ----------
Long-term debt and capital lease obligations, less current portion....................... 1,034 523
---------- ----------
Commitments (Note 8)
SHAREHOLDERS' EQUITY
Preferred stock, no par value:
Authorized, 2,000,000 shares;
Issued and outstanding, none
Common stock, no par value:
Authorized, 20,000,000 shares;
Issued and outstanding, 16,163,539 shares (1995) and 12,813,028 shares (1994)........ 95,683 76,590
Accumulated deficit.................................................................... (20,322) (39,604)
---------- ----------
Total shareholders' equity............................................................. 75,361 36,986
---------- ----------
$ 95,247 $ 54,997
---------- ----------
The accompanying notes are an integral part of the financial statements.
9
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
----------- --------- ---------
Net sales..................................................................... $ 100,350 $ 63,616 $ 44,236
Costs and expenses:
Cost of goods sold.......................................................... 61,111 38,649 30,336
Research and development.................................................... 12,259 8,999 7,788
Selling, general and administrative......................................... 19,004 12,239 12,466
Special charge................................................................ 620
----------- --------- ---------
Income (loss) from operations............................................. 7,976 3,729 (6,974)
Other income, net............................................................. 327 661 91
----------- --------- ---------
Income (loss) before provision for (benefit from) income taxes............ 8,303 4,390 (6,883)
Provision for (benefit from) income taxes..................................... (10,979) 213
----------- --------- ---------
Net income (loss)......................................................... $ 19,282 $ 4,177 $ (6,883)
----------- --------- ---------
Net income (loss) per share................................................... $ 1.20 $ 0.32 $ (0.57)
----------- --------- ---------
Shares used in per share calculations......................................... 16,063 13,106 12,170
----------- --------- ---------
The accompanying notes are an integral part of the financial statements.
10
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
FOR THE THREE YEARS ENDED
DECEMBER 31, 1995
----------------------------------
COMMON ACCUMULATED
STOCK DEFICIT TOTAL
--------- ------------ ---------
Balances, January 1, 1993.................................................... $ 74,669 $ (36,898) $ 37,771
Issuance of 213,922 shares of common stock under stock option plan......... 344 344
Issuance of 254,998 shares of common stock under employee stock purchase
plan...................................................................... 519 519
Net loss................................................................... (6,883) (6,883)
--------- ------------ ---------
Balances, December 31, 1993.................................................. 75,532 (43,781) 31,751
Issuance of 214,024 shares of common stock under stock option plan......... 573 573
Issuance of 195,274 shares of common stock under employee stock purchase
plan...................................................................... 485 485
Net income................................................................. 4,177 4,177
--------- ------------ ---------
Balances, December 31, 1994.................................................. 76,590 (39,604) 36,986
Issuance of 2,539,018 shares of common stock under private placement
offering.................................................................. 16,222 16,222
Issuance of 542,450 shares of common stock under stock option plan......... 1,161 1,161
Tax benefit on exercise of stock options................................... 750 750
Issuance of 269,043 shares of common stock under employee stock purchase
plan...................................................................... 960 960
Net income................................................................. 19,282 19,282
--------- ------------ ---------
Balances, December 31, 1995.................................................. $ 95,683 $ (20,322) $ 75,361
--------- ------------ ---------
The accompanying notes are an integral part of the financial statements.
11
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
--------- ------------ ---------
Cash flows from operating activities:
Net income (loss).......................................................... $ 19,282 $ 4,177 $ (6,883)
Adjustments to reconcile to net cash from operating activities:
Special charge........................................................... 84
(Gain) loss on disposal of property and equipment............................ 261 (461)
Depreciation and amortization............................................ 4,244 2,622 3,261
Deferred taxes........................................................... (11,560)
Changes in assets and liabilities:
Accounts receivable.................................................... (11,627) (2,442) 2,027
Inventories............................................................ (9,760) (3,945) 2,447
Other current assets................................................... 32 37 291
Accounts payable....................................................... 1,271 3,632 (1,260)
Accrued expenses....................................................... 4,417 (558) 2,466
Other, net............................................................. (701) (68) 131
--------- ------------ ---------
Net cash provided by (used in) operating activities.................. (4,141) 2,994 2,564
--------- ------------ ---------
Cash flows from investing activities:
Acquisition of property and equipment...................................... (5,594) (4,671) (3,543)
Proceeds from disposition of property and equipment........................ 595
Sales of marketable securities............................................. 2,844
Capitalization of software development costs............................... (937) (831)
--------- ------------ ---------
Net cash used in investing activities................................ (6,531) (4,907) (699)
--------- ------------ ---------
Cash flows from financing activities:
Proceeds from issuance of common stock..................................... 18,343 1,058 863
Proceeds from short-term bank borrowings................................... 6,600 11,500
Payments of short-term bank borrowings..................................... (3,800) (4,900) (9,400)
Payments of long-term debt................................................. (1,429) (1,080) (1,245)
--------- ------------ ---------
Net cash provided by financing activities............................ 13,114 1,678 1,718
--------- ------------ ---------
Increase (decrease) in cash.................................................. 2,442 (235) 3,583
Decrease in marketable securities............................................ (2,844)
Cash and cash equivalents, beginning of year................................. 10,188 10,423 9,684
--------- ------------ ---------
Cash and cash equivalents, end of year....................................... $ 12,630 $ 10,188 $ 10,423
--------- ------------ ---------
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
Interest................................................................... $ 172 $ 180 $ 283
Income taxes............................................................... 209 154 69
Noncash investing and financing activities:
Purchase of property and equipment under long-term debt obligations........ 1,416 842
Tax benefit on exercise of stock options................................... 750
The accompanying notes are an integral part of the financial statements.
12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, UNLESS OTHERWISE NOTED)
NOTE 1. -- NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Genus develops, manufactures, markets and services advanced thin-film
deposition and high energy (MeV) ion implantation equipment used in the
fabrication of advanced semiconductor integrated circuits. The Company's
products are marketed worldwide either directly to end users or through
exclusive sales representative arrangements. The Company's customers include
semiconductor manufacturers located throughout the United States, Europe and in
the Pacific Rim including Japan, Korea and Taiwan. Genus conducts its business
within one industry segment. The following is a summary of Genus' significant
accounting policies.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Genus, Inc.
and its wholly owned subsidiaries after elimination of intercompany accounts and
transactions.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents and classifies such amounts
as cash.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents approximates estimated
fair value because of the short maturity of those financial instruments. Based
on rates currently available to the Company for debt with similar terms and
remaining maturities, the carrying value of long-term debt approximates
estimated fair value.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of cash and trade receivables. The Company
places its cash investments with three high credit quality financial
institutions located in the United States. The Company performs ongoing credit
evaluations of its customers. The Company does not require collateral from its
customers and maintains an allowance for credit losses, which historically have
not been material.
INVENTORIES
Inventories are stated at the lower of cost or market, using standard costs
that approximate actual costs, under the first-in, first-out method.
DEPRECIATION AND AMORTIZATION
Property and equipment are stated at cost and depreciated using the
straight-line method over their estimated useful lives, which range from 3 to 10
years. Leasehold improvements are amortized using the straight-line method over
their estimated useful lives or the remaining lease term, whichever is less.
OTHER ASSETS
Other assets include goodwill and software development costs and are stated
at cost. Goodwill represents the cost in excess of an acquired business and is
amortized on a straight-line basis over 15 years. Software development costs
represent costs incurred subsequent to establishing the technological
feasibility of software products and are amortized over the expected life of the
products, estimated to be three years.
13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, UNLESS OTHERWISE NOTED)
NOTE 1. -- NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
REVENUE RECOGNITION
Revenue related to systems is recognized upon shipment or, prior to
shipment, upon completion of customer source inspection and factory acceptance
of the system where risk of loss and title to the system passes to the customer.
A provision for the estimated future cost of system installation, warranty and
commissions is recorded when revenue is recognized.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INCOME TAXES
The Company accounts for income taxes using a method that requires deferred
tax assets to be computed annually on an asset and liability method and adjusted
when new tax laws or rates are enacted. Valuation allowances are established
when necessary to reduce deferred tax assets to the amounts expected to be
realized. Income tax expense (benefit) is the tax payable (refundable) for the
period plus or minus the change in deferred tax assets and liabilities during
the period.
NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of common and common equivalent (when dilutive)
shares of common stock outstanding during each year.
RECENT ACCOUNTING PRONOUNCEMENTS
During March 1995, the Financial Accounting Standards Board issued Statement
No. 121 (SFAS No. 121), "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of," which requires the Company to review
for impairment long-lived assets, certain identifiable intangibles and goodwill
related to those assets whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The Company does
not expect SFAS No. 121 to have a material impact on the Company's financial
condition or results of operations.
During October 1995, the Financial Accounting Standards Board issued
Statement No. 123 (SFAS No. 123), "Accounting for Stock-Based Compensation,"
which establishes a fair value-based method of accounting for stock-based
compensation plans. The Company is currently following the requirements of APB
Opinion No. 25, "Accounting for Stock Issued to Employees." The Company plans to
adopt SFAS No. 123 during 1996, utilizing the disclosure alternative.
RECLASSIFICATION
Certain amounts in prior years' financial statements have been reclassified
to conform to the current year's presentation. These reclassifications did not
change previously reported results.
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, UNLESS OTHERWISE NOTED)
NOTE 2. -- INVENTORIES
Inventories comprise the following:
DECEMBER 31,
--------------------
1995 1994
--------- ---------
Raw materials and parts.................................................................... $ 12,922 $ 8,156
Work in process............................................................................ 10,048 6,118
Finished goods............................................................................. 1,467 403
--------- ---------
$ 24,437 $ 14,677
--------- ---------
--------- ---------
NOTE 3. -- PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and comprise the following:
DECEMBER 31,
--------------------
1995 1994
--------- ---------
Equipment.................................................................................. $ 12,512 $ 8,460
Demonstration equipment.................................................................... 12,877 11,909
Furniture and fixtures................................................................... 1,960 1,952
Leasehold improvements..................................................................... 6,366 5,901
--------- ---------
33,715 28,222
Less accumulated depreciation and amortization............................................. (19,944) (18,262)
--------- ---------
13,771 9,960
Construction in process.................................................................... 856 1,532
--------- ---------
$ 14,627 $ 11,492
Equipment includes $2,258 and $842 of assets under capital leases at
December 31, 1995 and 1994, respectively. Accumulated amortization on these
assets is $713 and $144 at December 31, 1995 and 1994, respectively.
NOTE 4. -- OTHER ASSETS
Other assets comprise the following:
DECEMBER 31,
--------------------
1995 1994
--------- ---------
Goodwill..................................................................................... $ 3,802 $ 3,802
Software development costs................................................................... 1,768 831
--------- ---------
5,570 4,633
Accumulated amortization--goodwill........................................................... (2,167) (1,913)
Accumulated amortization--software development costs......................................... (458) (82)
--------- ---------
2,945 2,638
Other........................................................................................ 879 178
--------- ---------
$ 3,824 $ 2,816
--------- ---------
Amortization expense for software development costs was $376 and $82 in 1995
and 1994, respectively. There was no amortization expense for software
development costs in 1993.
NOTE 5. -- SHORT-TERM BORROWINGS
The Company has a working capital line of credit agreement with a bank that
provides for maximum borrowings of $10.0 million, which expires in May 1996.
Borrowings under the line of credit
15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, UNLESS OTHERWISE NOTED)
NOTE 5. -- SHORT-TERM BORROWINGS (CONTINUED)
are collateralized by substantially all the assets of the Company and bear
interest at the bank's prime rate (8 1/2 percent at December 31, 1995). At
December 31, 1995, the Company had no borrowings outstanding under the line of
credit. In addition, the Company has a Term Loan Agreement with the same bank
that provides $3.0 million to fund leasehold improvements for one of its
facilities (see Note 7). At December 31, 1995, $11 thousand was outstanding
under the Term Loan Agreement. Both agreements require the Company to comply
with certain financial covenants and restrict the payment of dividends.
NOTE 6. -- ACCRUED EXPENSES
Accrued expenses comprise the following:
DECEMBER 31,
--------------------
1995 1994
--------- ---------
System installation and warranty........................................................... $ 4,318 $ 2,394
Accrued commissions and incentives......................................................... 3,227 1,527
Accrued payroll and related items.......................................................... 1,104 966
Other...................................................................................... 2,393 1,738
--------- ---------
$ 11,042 $ 6,625
--------- ---------
NOTE 7. -- LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt comprises the following:
DECEMBER 31,
--------------------
1995 1994
--------- ---------
Term loan payable in monthly installments through January 1996 at 10 percent interest per
annum and collateralized by substantially all assets
of the Company.............................................................................. $ 11 $ 910
Capitalized lease obligations with interest rates of 4.2-11.2 percent........................ 1,581 678
Mortgage loan payable in monthly installments through October 2000 at 9 1/4 percent interest
per annum and collateralized by a building.................................................. 123 140
--------- ---------
1,715 1,728
--------- ---------
Less amounts due within one year............................................................. (681) (1,205)
--------- ---------
$ 1,034 $ 523
--------- ---------
The future aggregate principal payments of long-term debt and capital lease
obligations are as follows:
1996............................................................................... $ 797
1997............................................................................... 612......
1998............................................................................... 276
1999............................................................................... 91
2000............................................................................... 151
---------
$ 1,927
Less amounts representing interest on long-term debt and capital lease
obligations....................................................................... (212)
---------
Principal payments and present value of minimum capital lease obligations.......... $ 1,715
---------
16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, UNLESS OTHERWISE NOTED)
NOTE 7. -- LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
Certain of the capital lease agreements require the Company to comply with
specific financial covenants and to pay stipulated amounts upon default or
termination prior to the expiration of the basic lease terms.
NOTE 8. -- LEASE COMMITMENTS
The Company leases certain of its facilities and various office equipment
under operating leases expiring through the year 2017. The Company is
responsible for property taxes, insurance and maintenance under the facility
leases. Certain of these leases contain renewal options.
At December 31, 1995, minimum lease payments required under these operating
leases are as follows:
1996........... $ 1,652
1997........... 1,748
1998........... 1,482
1999........... 1,517
2000........... 1,517
Thereafter..... 12,942
---------
$ 20,858
---------
Rent expense for 1995, 1994 and 1993 was $1,251, $1,304 and $1,260,
respectively.
NOTE 9. -- CAPITAL STOCK
PRIVATE PLACEMENT OFFERING
On February 17, 1995, the Company sold 2,539,018 shares of common stock for
$16.2 million through a private placement offering.
STOCK OPTION PLAN
The Company has a 1991 Stock Option Plan (the "Plan") under which the Board
of Directors may issue incentive and nonstatutory stock options. The Plan
expires ten years after adoption and the Board of Directors has the authority to
determine to whom options will be granted, the number of shares, the term and
the exercise price. The options are exercisable at times and in increments as
specified by the Board of Directors, and expire five to ten years from the date
of grant. These options generally vest over a three-year period. At December 31,
1995, the Company had reserved 2,053,006 shares of common stock for issuance
under the Plan; 35,161 shares of common stock remain available for future
grants; and options to purchase 351,866 shares of common stock were exercisable.
17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, UNLESS OTHERWISE NOTED)
NOTE 9. -- CAPITAL STOCK (CONTINUED)
Activity under the Plan is set forth in the table below:
(in thousands, except per share data)
OUTSTANDING OPTIONS
----------------------------------------
SHARES PRICE PER SHARE TOTAL
--------- ------------------ ---------
Balance, January 1, 1993................................................. 1,219 $ 1.25 to $ 5.13 $ 2,754
Granted.................................................................. 320 1.88 to 4.00 811
Exercised................................................................ (214) 1.25 to 2.88 (344)
Terminated............................................................... (113) 1.25 to 5.13 (294)
--------- ------------------ ---------
Balance, December 31, 1993............................................... 1,212 1.25 to 4.38 2,927
Granted.................................................................. 383 3.63 to 6.88 1,631
Exercised................................................................ (214) 1.25 to 4.38 (573)
Terminated............................................................... (102) 1.25 to 4.38 (303)
--------- ------------------ ---------
Balance, December 31, 1994............................................... 1,279 1.25 to 6.88 3,682
Granted.................................................................. 938 7.75 to 15.63 9,161
Exercised................................................................ (542) 1.25 to 6.88 (1,161)
Terminated............................................................... (89) 1.25 to 13.13 (395)
--------- ------------------ ---------
Balance, December 31, 1995............................................... 1,586 $ 1.75 to $15.63 $ 11,287
--------- ------------------ ---------
EMPLOYEE STOCK PURCHASE PLAN
The Company has reserved a total of 1,300,000 shares of common stock for
issuance under a qualified stock purchase plan, which provides substantially all
Company employees with the right to acquire shares of the Company's common stock
through payroll deductions. Under the plan, the Company's employees, subject to
certain restrictions, may purchase shares of common stock at the lesser of 85
percent of fair market value at either the beginning of each two-year offering
period or the end of each six-month purchase period within the two-year offering
period. At December 31, 1995, 1,102,667 shares have been issued under the plan.
COMMON STOCK PURCHASE RIGHTS
In July 1990, the Company distributed a dividend to shareholders comprised
of a right to purchase one share of common stock ("Right") for each outstanding
share of common stock of the Company they hold. These rights do not become
exercisable or transferrable apart from the common stock until the Distribution
Date, which is either the tenth day after a person or group (a) acquires
beneficial ownership of 20 percent or more of the Company's common stock or (b)
announces a tender or exchange offer, the consummation of which would result in
ownership by a person or group of 30 percent or more of the Company's common
stock. After the Distribution Date, each Right will entitle the holder to
purchase from the Company one share of common stock at a price of $28.00 per
share.
If the Company is acquired in a merger or other business combination
transaction, or if 50 percent or more of its consolidated assets or earnings
power is sold, each Right will entitle the holder to purchase at the exercise
price that number of shares of the acquiring company having a then-current
market value of two times the exercise price of the Right. In the event that the
Company is the surviving corporation in a merger and the Company's common stock
remains outstanding, or in the event that an acquiring party engages in certain
self-dealing transactions, each Right not owned by the acquiring party will
entitle the holder to purchase at the exercise price that number of shares of
the Company's common stock having a then-current market value of two times the
exercise price of the Right.
18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, UNLESS OTHERWISE NOTED)
NOTE 9. -- CAPITAL STOCK (CONTINUED)
The Rights are redeemable at the Company's option for $.01 per Right prior
to becoming exercisable, may be amended at the Company's option on or prior to
the Distribution Date and expire on July 3, 2000.
NOTE 10. -- EMPLOYEE BENEFIT PLAN
During 1988, the Company adopted the Genus, Inc. 401(k) Plan (the "401(k)
Plan") to provide retirement and incidental benefits for eligible employees. The
401(k) Plan provides for Company contributions as determined by the Board of
Directors that may not exceed 6 percent of the annual aggregate salaries of
those employees eligible for participation. In 1995 and 1994, the Company
contributed $61 thousand and $34 thousand, respectively, to the 401(k) Plan. No
Company contributions were made in 1993.
NOTE 11. -- SPECIAL CHARGE
During 1993, the Company incurred special charges of $0.6 million relating
primarily to the severance packages and other payroll-related costs associated
with a reduction in workforce at its Thin Film Division.
NOTE 12. -- OTHER INCOME, NET
Other income, net, comprises the following:
YEARS ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
Interest income....................................................................... $ 790 $ 221 $ 163
Interest expense...................................................................... (172) (180) (283)
Disposal of leasehold improvements.................................................... (261)
Gain on sale of property and equipment................................................ 461
Other, net............................................................................ (30) 159 211
--------- --------- ---------
$ 327 $ 661 $ 91
--------- --------- ---------
NOTE 13. -- INCOME TAXES
For the year ended December 31, 1993, there was no provision for income
taxes. Income tax expense (benefit) for the years ended December 31, 1995 and
1994 consists of the following:
1995 1994
---------- ---------
Federal:
Current.................................................................................. $ 431 $ 165
Deferred................................................................................. (11,036)
---------- ---------
(10,605) 165
---------- ---------
State:
Current.................................................................................. 150 48
Deferred................................................................................. (524)
---------- ---------
(374) 48
---------- ---------
$ (10,979) $ 213
---------- ---------
Actual deferred taxes are greater than reflected above for 1995 by $750
thousand for the stock option deduction benefit recorded as an increase to
shareholders' equity.
19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, UNLESS OTHERWISE NOTED)
NOTE 13. -- INCOME TAXES (CONTINUED)
The Company's effective tax rate for the years ended December 31, 1995 and
1994 differs from the U.S. federal statutory income tax rate as follows:
1995 1994
--------- ---------
Federal income tax at statutory rate............................................................... 34% 34%
Benefit of net operating loss...................................................................... (34%) (34%)
Change in valuation allowance...................................................................... (134%)
Other.............................................................................................. 2% 5%
--- ---
(132%) 5%
--- ---
The components of the net deferred tax asset comprise the following:
1995 1994
--------- ---------
Deferred tax assets:
Net operating loss carryforwards....................................................... $ 7,027 $ 10,600
Tax credit carryforward................................................................ 1,288 1,200
Accounts receivable reserves........................................................... 97 100
Inventory reserves..................................................................... 1,274 1,100
Nondeductible accrued expenses......................................................... 2,395 2,800
Other reserves......................................................................... 483
--------- ---------
12,564 15,800
Deferred tax liabilities:
Depreciation and amortization.......................................................... (254) (630)
12,310 15,170
Valuation reserve.......................................................................... (15,170)
--------- ---------
$ 12,310 $ 0
--------- ---------
Temporary differences represent the cumulative taxable or deductible amounts
recorded in the financial statements in different years than recognized in the
tax returns.
At December 31, 1995, the Company had the following income tax carryforwards
available:
TAX EXPIRATION
REPORTING DATES
--------- ------------
U.S. regular tax operating losses....................................................... $ 25,000 2002-2008
U.S. business tax credits............................................................... 1,285 2002-2008
State net operating losses.............................................................. 8,030 1997-1998
NOTE 14. -- SEGMENT INFORMATION
The Company is engaged in the design, manufacture, marketing and servicing
of advanced thin-film deposition systems and high energy ion implantation
systems used primarily in the semiconductor manufacturing industry. The
Company's sales are primarily generated from two products, CVD tungsten silicide
and MeV ion implantation systems. The Company's CVD system is designed for the
deposition of tungsten silicide to create multiple interconnect layers on
integrated circuits. The MeV ion implantation system drives electrically charged
ions into the surface of a silicon wafer to convert the electrical
characteristics of the wafer. Both products are primarily used in the
manufacturing of DRAMs. Its business serves the semiconductor manufacturing
industry only. Net sales, identifiable assets and the results of operations of
subsidiaries in foreign countries are not material.
20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, UNLESS OTHERWISE NOTED)
NOTE 14. -- SEGMENT INFORMATION (CONTINUED)
INTERNATIONAL SALES
International sales (principally from sales to customers in Asia and Europe)
for 1995, 1994 and 1993 represented 88 percent, 89 percent and 84 percent of net
sales, respectively.
MAJOR CUSTOMERS
One customer accounted for 63 percent of net sales in 1995. Three customers
accounted for 33 percent, 19 percent and 14 percent of net sales in 1994. In
1993, three customers accounted for 26 percent, 23 percent and 14 percent of net
sales.
NOTE 15. -- INTERIM FINANCIAL INFORMATION (UNAUDITED)
1995 QUARTER ENDED
------------------------------------------------
(in thousands, except per share data)
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
--------- --------- ------------ ------------
Net sales..................................................... $ 22,526 $ 25,057 $ 27,241 $ 25,526
Gross profit.................................................. 9,220 10,168 10,498 9,353
Net income.................................................... 1,938 2,340 2,361 12,643
Net income per share.......................................... 0.13 0.14 0.14 0.77
1995 QUARTER ENDED
------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
--------- --------- ------------ ------------
Net sales..................................................... $ 13,773 $ 14,966 $ 18,246 $ 16,631
Gross profit.................................................. 5,317 6,017 6,970 6,663
Net income.................................................... 652 1,051 1,132 1,342
Net income per share.......................................... 0.05 0.08 0.09 0.10
21
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
GENUS, INC.
We have audited the accompanying consolidated balance sheets of Genus, Inc.
and subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Genus, Inc. and
subsidiaries as of December 31, 1995 and 1994 and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ Coopers & Lybrand LLP
San Jose, California
January 26, 1996
22
COMMON STOCK INFORMATION
The common stock of Genus, Inc., is traded on the Nasdaq National Market
under the symbol GGNS. The high and low last sales prices for 1995 and 1994, set
forth below are as reported by the Nasdaq National Market. At March 12, 1996,
the Company has 503 shareholders.
HIGH LOW HIGH LOW
--------- --------- --------- ---------
First Quarter.............................................................. $ 11 1/4 $ 7 1/2 $ 5 3/4 $ 2 7/8
Second Quarter............................................................. 14 1/8 9 1/2 4 7/8 3 1/4
Third Quarter.............................................................. 16 3/4 11 15/16 5 5/8 3 5/16
Fourth Quarter............................................................. 15 1/2 6 49/64 8 3/8 5 1/2
The Company has not paid cash dividends on its common stock since inception,
and its Board of Directors presently intends to reinvest the Company's earnings,
if any, in its business. Accordingly, it is anticipated that no cash dividends
will be paid to holders of common stock in the foreseeable future.
ANNUAL SHAREHOLDERS' MEETING
The 1996 annual meeting of shareholders will be held on April 30, 1996 at
2:00 p.m. at The Westin Hotel, 5101 Great America Parkway, Santa Clara,
California 95054.
FORM 10-K
A copy of the Company's Annual Report on Form 10-K as filed with the
Securities and Exchange Commission may be obtained from the Company without
charge by writing to Investor Relations, Genus, Inc., 1139 Karlstad Drive,
Sunnyvale, CA 94089.
23
GENUS CORPORATE OFFICERS WORLDWIDE LOCATIONS
William W. R. Elder Corporate Headquarters
Chairman, Chief Executive Officer Genus, Inc.
Kent L. Robertson 1139 Karlstad Drive
Executive Vice President, Sunnyvale, CA 94089
Chief Financial Officer, (408) 747-7120
Secretary Ion Technology Division
James M. Burns Genus, Inc.
Executive Vice President 4 Mulliken Way
Thin Film Division Newburyport, MA 01950
John E. Aldeborgh (508) 463-1500
Vice President Genus Europa SARL
Ion Technology Division Zac du Clos aux Pois
William D. Cole CE 4817, Lisses
Vice President, Sales 91048 Evry Cedex
Kevin C. Conlon France
Vice President, Marketing 011-331-69-89-79-20
Thomas E. Seidel, Ph. D. Genus Korea, Ltd.
Vice President, 3F, KEC Building
Chief Technical Officer #275-7, Yangjae-Dong
Ernest P. Quinones Seocho-Ku, Seoul, South Korea
Corporate Controller, 011-822-589-4800
Chief Accounting Officer, Genus KK
Treasurer Shin Yokohama West Building
Mario M. Rosati, Assistant Secretary 2-3-3 Shin Yokohama, Kouhoku-ku
Partner Yokohama, Japan 222
Wilson, Sonsini, Goodrich & Rosati 011-81-45-476-0581
BOARD OF DIRECTORS SALES AND
William W. R. Elder SERVICE OFFICES
Chairman, Chief Executive Officer United States
Genus, Inc. Sunnyvale, California
Todd S. Myhre Newburyport, Massachusetts
Former Chief Operating Officer Rockville Center, New York
Genus, Inc. Europe
Mario M. Rosati * + Melbourn, England
Partner Evry, France
Wilson, Sonsini, Goodrich & Rosati Asia/Pacific
Stephen F. Fisher * + Hsin-chu City, Taiwan, R.O.C.
Managing Director Hong Kong
Bachow & Associates, Inc. Seoul, South Korea
G. Frederick Forsyth Yokohama, Japan
Senior Vice President
Worldwide Operations
Apple Computer, Inc.
* Member of Audit Committee
+ Member of Compensation Committee