UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from _______________ to ______________
Commission file number 0-25424
Semitool, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Montana 81-0384392
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
655 West Reserve Drive
Kalispell, Montana 59901
(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (406)752-2107
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 __
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practical date:
Title Outstanding as of May 7, 1998
Common Stock 13,789,473
Part I. Financial Information
Item 1. Financial Statements
SEMITOOL, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 1998 and September 30, 1997
(Amounts in Thousands, Except for Share Amounts)
March 31, September 30,
ASSETS 1998 1997
---------------- ---------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 4,172 $ 5,060
Trade receivables, less allowance for doubtful
accounts of $224 and $224 35,365 40,896
Inventories 41,661 41,124
Prepaid expenses and other current assets 2,324 1,771
Deferred income taxes 5,902 5,902
---------------- ---------------
Total current assets 89,424 94,753
Property, plant and equipment, net 37,310 33,685
Intangibles, less accumulated amortization of $1,812 and $1,460 2,946 2,142
Other assets, net 1,091 1,145
---------------- ---------------
Total assets $ 130,771 $ 131,725
================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Note payable to bank $ 5,000 $ 4,000
Accounts payable 12,943 16,735
Accrued commissions 1,085 1,850
Accrued warranty and installation 9,575 9,820
Accrued payroll and related benefits 5,456 6,164
Other accrued liabilities 818 1,029
Customer advances 2,138 1,722
Income taxes payable 1,570 2,986
Long-term debt, due within one year 479 393
Payable to shareholder 46 7
---------------- ---------------
Total current liabilities 39,110 44,706
Long-term debt, due after one year 4,184 3,364
Deferred income taxes 2,075 2,075
---------------- ---------------
Total liabilities 45,369 50,145
---------------- ---------------
Contingency (Note 5)
Shareholders' equity:
Preferred stock, no par value, 5,000,000 shares authorized,
no shares issued and outstanding -- --
Common stock, no par value, 30,000,000 shares authorized,
13,789,286 and 13,755,514 shares issued and outstanding 40,908 40,590
Retained earnings 44,968 40,949
Foreign currency translation adjustment (474) 41
---------------- ---------------
Total shareholders' equity 85,402 81,580
---------------- ---------------
Total liabilities and shareholders' equity $ 130,771 $ 131,725
================ ===============
The accompanying notes are an integral part of the consolidated financial statements.
SEMITOOL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
for the three and six months ended March 31, 1998 and 1997
(Amounts in Thousands, Except for Per Share Amounts)
Three Months Ended Six Months Ended
March 31, March 31,
--------------------------- ---------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
Net sales $ 45,241 $ 45,227 $ 92,243 $ 87,735
Cost of sales 21,399 24,320 44,497 47,745
----------- ----------- ----------- -----------
Gross profit 23,842 20,907 47,746 39,990
----------- ----------- ----------- -----------
Operating expenses:
Selling, general and administrative 14,496 11,341 28,200 21,822
Research and development 6,896 5,315 13,023 10,303
----------- ----------- ----------- -----------
Total operating expenses 21,392 16,656 41,223 32,125
----------- ----------- ----------- -----------
Income from operations 2,450 4,251 6,523 7,865
Other income (expense), net (204) (17) (143) (72)
----------- ----------- ----------- -----------
Income before income taxes 2,246 4,234 6,380 7,793
Provision for income taxes 831 1,608 2,361 2,961
----------- ----------- ----------- -----------
Net income $ 1,415 $ 2,626 $ 4,019 $ 4,832
=========== =========== =========== ===========
Earnings per share:
Basic $ 0.10 $ 0.19 $ 0.29 $ 0.35
=========== =========== =========== ===========
Diluted $ 0.10 $ 0.19 $ 0.29 $ 0.35
=========== =========== =========== ===========
Average common shares:
Basic 13,780 13,667 13,775 13,662
=========== =========== =========== ===========
Diluted 13,926 13,809 13,971 13,767
=========== =========== =========== ===========
The accompanying notes are an integral part of the consolidated financial statements.
SEMITOOL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
for the six months ended March 31, 1998 and 1997
(Amounts in Thousands)
Six Months Ended
March 31,
-----------------------------
1998 1997
----------- -----------
Operating activities:
Net income $ 4,019 $ 4,832
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 5,035 2,840
Other 37 19
Change in:
Trade receivables 4,709 3,054
Inventories (2,074) (9,776)
Prepaid expenses and other current assets (553) 469
Other assets (110) (207)
Accounts payable (3,375) 3,017
Accrued commissions (765) (918)
Accrued warranty and installation (245) 1,015
Accrued payroll and related benefits (708) 691
Other accrued liabilities (211) 66
Customer advances 416 (373)
Income taxes payable (1,416) (837)
Shareholder payable 39 (16)
----------- -----------
Net cash provided by operating activities 4,798 3,876
----------- -----------
Investing activities:
Purchases of property, plant and equipment (6,764) (2,156)
Increase in intangible assets (1,172) (351)
Proceeds from sale of equipment 52 17
----------- -----------
Net cash used in investing activities (7,884) (2,490)
----------- -----------
Financing activities:
Proceeds from exercise of stock options 318 115
Borrowings under line of credit 44,975 17,865
Repayments under line of credit (43,975) (17,865)
Proceeds from long-term debt 1,100 11
Repayments of long-term debt (194) (185)
----------- -----------
Net cash provided by (used in) financing activities 2,224 (59)
----------- -----------
Effect of exchange rate changes on cash and cash equivalents (26) --
----------- -----------
Net increase (decrease) in cash and cash equivalents (888) 1,327
Cash and cash equivalents at beginning of period 5,060 3,058
----------- -----------
Cash and cash equivalents at end of period $ 4,172 $ 4,385
=========== ===========
The accompanying notes are an integral part of the consolidated financial statements.
SEMITOOL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The consolidated financial statements included herein have been prepared by
Semitool, Inc., (the "Company") without audit, pursuant to the rules and
regulations of the United States Securities and Exchange Commission (the "SEC").
Certain information and footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting principles,
have been condensed or omitted as permitted by such rules and regulations. The
Company believes the disclosures included herein are adequate; however, these
consolidated statements should be read in conjunction with the consolidated
financial statements and the notes thereto for the year ended September 30, 1997
previously filed with the SEC on Form 10-K.
Financial information as of September 30, 1997 has been derived from the audited
financial statements of the Company. In the opinion of management, these
unaudited financial statements contain all of the adjustments (normal and
recurring in nature) necessary to present fairly the consolidated financial
position of the Company and subsidiaries and the consolidated results of their
operations and their cash flows. The results of operations for the periods
presented may not be indicative of those which may be expected for the full
year.
In June 1997, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) NO. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. Comprehensive income is defined as the change in equity of
a business enterprise during a period from transactions and other events and
circumstances from nonowner sources. The adoption of SFAS No. 130 is effective
for the Company in fiscal 1999.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 requires publicly-held
companies to report financial and other information about key revenue-producing
segments of the entity for which such information is available and is utilized
by the chief operation decision maker. Specific information to be reported for
individual segments includes profit or loss, certain revenue and expense items
and total assets. A reconciliation of segment financial information to amounts
reported in the financial statements is also to be provided. SFAS No. 131 is
effective for the Company in fiscal 1999 and the form of the presentation of the
Company's financial statements has not yet been determined.
Note 2. Principles of Consolidation
The consolidated financial statements include the accounts of Semitool, Inc. and
its wholly-owned subsidiaries. All significant intercompany and affiliated
accounts and transactions are eliminated in consolidation.
Note 3. Inventories
Inventories are summarized as follows (in thousands):
March 31, 1998 September 30, 1997
-------------- ------------------
Parts and raw materials $ 22,618 $ 22,028
Work-in-process 14,989 14,869
Finished goods 4,054 4,227
-------------- ------------------
$ 41,661 $ 41,124
============== ==================
During the six months ended March 31, 1998 and 1997, $1,486,000 and $1,128,000,
respectively, of finished goods inventory was transferred to property, plant and
equipment.
Note 4. Income Taxes
The components of the Company's income tax provision (benefit) are as follows,
(in thousands):
Three Months Ended Six Months Ended
March 31, March 31,
--------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
Federal $ 673 $ 1,381 $ 2,295 $ 2,452
State 83 196 278 288
Foreign 75 31 (212) 221
----------- ----------- ----------- -----------
Total $ 831 $ 1,608 $ 2,361 $ 2,961
=========== =========== =========== ===========
Note 5. Contingency
A class action lawsuit (Case No. DV-96-124A) was filed on February 26, 1996, in
the Montana Eleventh Judicial District Court, Flathead County, Kalispell,
Montana against the Company and certain of its officers and directors. The
complaint includes allegations that the Company issued misleading statements
concerning its business and prospects. The suit seeks injunctive relief,
damages, costs and other relief as the court may find appropriate. The Company
believes the lawsuit to be without merit and is contesting the action
vigorously. However, given the inherent uncertainty of litigation, insurance
issues, and the current stage of discovery, there can be no assurance that the
ultimate outcome will be in the Company's favor, or that if the ultimate outcome
is not in the Company's favor, that such an outcome, the diversion of
management's attention, and any costs associated with the lawsuit, will not have
a material adverse effect on the Company's financial condition or results of
operations.
Note 6. Earnings Per Common Share
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128 (SFAS 128), "Earnings per Share." The Company
adopted SFAS 128 during the first quarter of fiscal 1998. SFAS 128 replaced the
previously required primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants and convertible
securities. Diluted earnings per share is calculated in a manner that is similar
to the previously reported fully diluted earnings per share. All earnings per
share amounts for all periods have been presented to conform to the requirements
of SFAS 128.
The following table sets forth the computation of basic and diluted earnings per
share (in thousands):
Three Months Ended Six Months Ended
March 31, March 31,
-------------------------- --------------------------
1998 1997 1998 1997
----------- ---------- ----------- -----------
Numerator:
Net income for basic and diluted earnings
per share $ 1,415 $ 2,626 $ 4,019 $ 4,832
=========== ========== =========== ===========
Denominator:
Average common shares used for basic
earnings per share 13,780 13,667 13,775 13,662
Effect of diluted securities:
Stock options 146 142 196 105
----------- ---------- ----------- -----------
Denominator for diluted earnings per share 13,926 13,809 13,971 13,767
=========== ========== =========== ===========
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
CAUTION
Statements contained in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this report which are not
historical facts are forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. A forward-looking
statement may contain words such as "will continue to be," "will be," "continue
to," "expect to," "anticipates that," "to be" or "can impact." Forward looking
statements include: the Company's statement in Part I, Item 2 under the heading
"Liquidity and Capital Resources" regarding its belief that cash and cash
equivelents, funds generated from operations, and borrowings under the Company's
line of credit agreements will be sufficient to meet the Company's planned
requirements for the balance of the fiscal year. Management cautions that
forward-looking statements are subject to risks and uncertainties that could
cause the Company's actual results to differ materially from those projected in
such forward-looking statements. These risks and uncertainties include, but are
not limited to, the cyclical nature of the semiconductor industry in general,
lack of market acceptance for new products, decreasing demand for the Company's
existing products, impact of competitive products and pricing, product
development, commercialization and technological difficulties, capacity and
supply constraint difficulties and other risks detailed herein. The Company's
future results will depend on its ability to continue to enhance its existing
products and to develop and manufacture new products and to finance such
activities. There can be no assurance that the Company will be successful in the
introduction, marketing and cost-effective manufacture of any new products or
that the Company will be able to develop and introduce in a timely manner new
products or enhancements to its existing products and processes which satisfy
customer needs or achieve widespread market acceptance.
The Company undertakes no obligation to release revisions to forward-looking
statements to reflect subsequent events, changed circumstances, or the
occurrence of unanticipated events.
RESULTS OF OPERATIONS
SECOND QUARTER OF FISCAL YEAR 1998 COMPARED WITH SECOND QUARTER OF
FISCAL YEAR 1997
Net Sales. Net sales consist of revenues from sales of equipment, including
associated spare parts and service contracts, and software products. Net sales
were $45.2 million in the second quarter of fiscal year 1998 essentially even
with sales for the same period in fiscal year 1997. Sales of vertical thermal
processors, spare parts, single wafer processors, including electrochemical
deposition tools, and software were higher in the current quarter but that
increase was offset by lower shipments of batch wet processing tools.
Gross Profit. Gross profit margin was 52.7% of net sales in the second quarter
of fiscal year 1998 compared to 46.2% of net sales for the same period in fiscal
year 1997. Lower warranty and manufacturing costs were the primary factors in
this increase. The Company's gross profit margin has been, and will continue to
be, affected by a variety of factors, including the mix and average selling
price of products sold, and the cost to manufacture, service and support new and
enhanced products.
Selling, General and Administrative. Selling, general and administrative
expenses were $14.5 million or 32.0% of net sales in the second quarter of
fiscal year 1998 compared to $11.3 million or 25.1% of net sales for the same
period in fiscal year 1997. The increase in selling, general and administrative
expense is primarily attributable to the larger infrastructure put in place to
support the Asian and domestic markets, and the growing installed base of a
broader range of equipment. A substantial portion of the Company's selling,
general and administrative expenses are fixed in the short term and as such may
fluctuate as a percentage of net sales from period to period.
Research and Development. Research and development expenses consist of salaries,
project materials, laboratory costs, professional fees, and other costs
associated with the Company's research and development efforts. Research and
development expense was $6.9 million or 15.2% of net sales in the second quarter
of fiscal year 1998 compared to $5.3 million or 11.8% of net sales in the same
period in fiscal year 1997. The Company's development efforts associated with
its electrochemical deposition tool and software products for fab equipment data
collection, analysis and control accounted for most of the increase.
The Company is committed to technology leadership in the semiconductor equipment
industry and expects to continue to fund research and development with a
multiyear perspective. The Company's research and development expenses have
fluctuated from quarter to quarter in the past and this fluctuation is expected
to continue in the future, both in the absolute dollar amount and as a
percentage of net sales.
Other Income (Expense), Net. Other income (expense), net was a net expense of
$204,000 in the second quarter of fiscal year 1998 compared to a net expense of
$17,000 for the same period in fiscal year 1997. Interest expense is the largest
contributor to the increase and interest expense exceeded interest income in
both periods.
Provision for Income Taxes. Income tax provisions are made based on the blended
estimate of federal, state and foreign effective income tax rates.
Orders Backlog. The Company includes in its orders backlog those customer orders
for which it has received purchase orders or purchase order numbers and shipment
is scheduled within the next twelve months. Orders backlog was approximately
$63.2 million at March 31, 1998 compared to approximately $81.7 million at March
31, 1997 and $63.8 million at the beginning of the current fiscal year.
Orders are generally subject to cancellation or rescheduling by customers with
limited or no penalty. As the result of tools ordered and shipped in the same
quarter, changes in customer delivery schedules, cancellations of orders and
delays in product shipments, the Company's orders backlog at any particular date
is not necessarily indicative of actual sales for any succeeding period.
SIX MONTHS OF FISCAL YEAR 1998 COMPARED WITH SIX MONTHS OF FISCAL YEAR 1997
Net Sales. Net sales increased 5.1% to $92.2 million in the first half of fiscal
year 1998 from $87.7 million for the same period in fiscal year 1997. Increased
shipments of vertical thermal processors, spare parts, single wafer processors,
including electrochemical deposition tools, and software products were partially
offset by decreases in shipments of batch wet processing tools.
Gross Profit. Gross profit margin was 51.8% of net sales in the first half of
fiscal year 1998 compared to 45.6% of net sales for the same period in fiscal
year 1997. Reduced manufacturing costs, lower warranty costs in the second
quarter and performance based incentives earned in the first quarter were the
most significant factors in the increase in gross profit margin. The Company's
gross profit margin has been, and will continue to be, affected by a variety of
factors, including the mix and average selling price of products sold, and the
cost to manufacture, service and support new and enhanced products.
Selling, General and Administrative. Selling, general and administrative
expenses were $28.2 million or 30.6% of net sales in the first half of fiscal
year 1998 compared to $21.8 million or 24.9% of net sales for the same period in
fiscal year 1997. The 5.7% increase in selling, general and administrative
expenses relative to net sales consists primarily of a 4.7% increase in sales
and service expenses due to the larger infrastructure put in place to support
both the Asian and domestic markets, and the larger installed base of a broader
range of equipment.
Research and Development. Research and development expense was $13.0 million or
14.1% of net sales in the first half of fiscal year 1998 compared to $10.3
million or 11.7% of net sales for the same period in fiscal year 1997. The
increase in spending on research and development for the first six months of the
current fiscal year was primarily associated with the Company's electrochemical
deposition tool development and the development of software products by Semy
Engineering, Inc., a wholly-owned subsidiary of the Company.
Other Income (Expense), Net. Other income (expense), net was a net expense of
$143,000 in the first half of fiscal year 1998 compared to a net expense of
$72,000 for the same period in fiscal year 1997. Interest expense exceeded
interest income in the first half of fiscal year 1998 and accounted for the
majority of the change.
Provision for Income Taxes. Income tax provisions are made based on the blended
estimate of federal, state and foreign effective income tax rates. The effective
income tax rate for the first half of fiscal year 1998 was 37% compared to 38%
for the comparable period in fiscal year 1997.
Year 2000 Software System Status. The Company has conducted a preliminary review
of its software systems for year 2000 compliance. This includes software used by
the Company and the software developed by the Company that is incorporated in
the tools that it sells to customers. The tests completed to date show that most
of the Company's software is year 2000 compliant and will operate as is, or with
minor modifications. The Company will continue to test its software, but does
not anticipate major year 2000 compliance problems at this time. There can be no
assurance, however, that the Company will not experience unanticipated year 2000
compliance difficulties that could have a material negative impact on the
Company's operations.
Recently Issued Accounting Standards. Recently issued accounting standards
include Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings Per
Share," issued by the Financial Accounting Standards Board (FASB) in February
1997, SFAS No. 130 "Reporting Comprehensive Income" and SFAS No. 131
"Disclosures about Segments of an Enterprise and Related Information," issued by
the FASB in June 1997. SFAS No. 128 was first effective for the Company for its
interim period ended December 31, 1997. Basic and diluted earnings per share
pursuant to the requirements of SFAS No. 128 are presented on the face of the
income statement and in the notes to the financial statements. Descriptions of
SFAS No. 130 and SFAS No. 131 are included in the notes to the financial
statements.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations was $4.8 million during the first six months of
fiscal year 1998, compared to $3.9 million provided in the same period in fiscal
year 1997. Inventories rose slightly to $41.7 million during the first six
months of fiscal year 1998 from $41.1 million at September 30, 1997. During the
same period, trade receivables decreased $4.7 million, net of foreign currency
translation effects, mainly due to the timing of collections. The Company
expects future working capital components to fluctuate based on net sales and
the manufacturing cycle time of the specific equipment types being produced.
Investing activities consisted primarily of $6.8 million of property, plant and
equipment acquisitions, and $1.0 million for internally developed software
products included in intangible assets. The expenditures for property, plant and
equipment included the purchase of land to be used as a site for an office
building for Semy Engineering, Inc., a wholly-owned subsidiary, which markets
software products for semiconductor fab automation, and a manufacturing facility
for Rhetech, Inc., a wholly-owned subsidiary, which refurbishes and markets used
semiconductor equipment. New financing in the amount of $1.1 million was
obtained for the Rhetech facility purchase. The financing included a $540,000,
ten year loan with monthly pricipal and interest payments, a fixed interest rate
of 7.50% for seven years, and a variable interest rate of one percentage point
above the lender's then current prime rate for the remaining three years. A
$560,000 bridge loan was provided by the same lender with a maturity date of
September 3, 1998 and it is expected to be repaid from the proceeds of an
industrial development association loan. Financing activity under the Company's
revolving line of credit resulted in new net borrowings of $1.0 million, and
borrowings of $5.0 million were outstanding under this credit facility at March
31, 1998.
As of March 31, 1998, the Company's principal sources of liquidity consisted of
approximately $4.2 million of cash and cash equivalents, $5.0 million available
under the Company's $10.0 million revolving line of credit, and $15.0 million
under its long-term credit facility. The revolving line of credit facility
expires on March 31, 1999, when all principal amounts owing are due. The
long-term credit facility expires on December 31, 1999, with amounts outstanding
repayable in monthly principal and interest payments over a five-year period
ending December 2004.
The Company believes that cash and cash equivalents, funds generated from
operations, and borrowings under its line of credit agreements will be
sufficient to meet the Company's planned capital requirements for the balance of
the fiscal year. Total purchases of property, plant and equipment for fiscal
year 1998 are expected to be approximately $13.0 million excluding any major
facility expansion. The Company has plans to build an office building for its
software business but has not determined when, or if, that project will move
forward. Additionally, the Company has formulated preliminary expansion plans
for other areas of its business which can be triggered quickly. Any decision to
implement a major facility expansion, to add an additional facility, to invest
in or acquire complementary businesses, products, or technology, or any
significant increase in working capital to fund such growth could result in the
Company effecting additional equity or debt financing. The sale of additional
equity securities or the issuance of equity securities in a business combination
could result in dilution to the Company's shareholders.
LITIGATION
A class action lawsuit (Case No. DV-96-124A) was filed February 26, 1996, in the
Montana Eleventh Judicial District Court, Flathead County, Kalispell, Montana
against the Company and certain of its officers and directors. The complaint
includes allegations that the Company issued misleading statements concerning
its business and prospects. The suit seeks injunctive relief, damages, costs and
other relief as the court may find appropriate. The Company believes the lawsuit
to be without merit and is contesting the action vigorously. However, given the
inherent uncertainty of litigation, insurance issues, and the current stage of
discovery, there can be no assurance that the ultimate outcome will be in the
Company's favor, or that if the ultimate outcome is not in the Company's favor,
that such an outcome, the diversion of management's attention, and any costs
associated with the lawsuit, will not have a material adverse effect on the
Company's financial condition or results of operations.
SEMITOOL, INC.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
A class action lawsuit (Case No. DV-96-124A) was filed February 26, 1996, in the
Montana Eleventh Judicial District Court, Flathead County, Kalispell, Montana
against the Company and certain of its officers and directors. The complaint
includes allegations that the Company issued misleading statements concerning
its business and prospects. The suit seeks injunctive relief, damages, costs and
other relief as the court may find appropriate. The Company believes the lawsuit
to be without merit and is contesting the action vigorously. However, given the
inherent uncertainty of litigation, insurance issues, and the current stage of
discovery, there can be no assurance that the ultimate outcome will be in the
Company's favor, or that if the ultimate outcome is not in the Company's favor,
that such an outcome, the diversion of management's attention, and any costs
associated with the lawsuit, will not have a material adverse effect on the
Company's financial condition or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Shareholders held on February 9, 1998, the
following proposals were adopted:
1. To elect six directors of the Company to serve until the 1999 Annual
Meeting of Shareholders or until their successors are elected and
qualified. All director nominees received votes which exceeded the minimum
number of votes to be elected. The table below summarizes voting results:
Votes Votes
For Withheld
----------- --------
Raymon F. Thompson 8,480,438 42,677
Howard E. Bateman 8,479,988 43,127
Richard A. Dasen 8,479,988 43,127
Daniel J. Eigeman 8,479,988 42,627
John F. Osborne 8,480,588 42,527
Calvin S. Robinson 8,476,738 46,377
2. To ratify and approve an amendment to the Amended and Restated Semitool,
Inc. 1994 Stock Option Plan, as amended to increase the number of shares of
Common Stock available for issuance thereunder by 200,000 shares from
1,100,000 shares to 1,300,000 shares.
For Against Abstain
--------- ------- -------
8,355,508 146,429 21,178
3. To ratify the appointment of Coopers & Lybrand L.L.P. independent auditors
for the Company for the fiscal year ending September 30, 1998.
For Against Abstain
--------- ------- -------
8,494,468 15,244 13,403
Item 5. Other Information
Timothy C. Dodkin, Senior Vice President, was appointed to the Board of Direc-
tors of Semitool, Inc. in February 1998, to serve until the 1999 Annual Meeting
of Shareholders. Mr. Dodkin joined the Company in 1985 and served as the Com-
pany's European Sales Manager from 1985 to 1986. Since 1986, Mr. Dodkin has
served as Managing Director of Semitool Europe, Ltd. Prior to joining the Com-
pany, Mr. Dodkin worked at Cambridge Instruments, Ltd., a semiconductor
equipment manufacturer, for ten years in national and international sales.
William A. Freeman was appointed Vice President, Finance and Chief Financial
Officer on April 22, 1998. Prior to joining Semitool and since 1995, Mr. Freeman
was a management consultant providing finance and general management services to
private companies. Before that, he was President of Zurn Industries, Inc., a
diversified manufacturing, engineering, and construction company. In his
twenty-two years at Zurn, Mr. Freeman served in division management positions
before his appointment as Senior Vice President and Chief Financial Officer in
1986, and President in 1991. Mr. Freeman is a certified public accountant and
has a bachelor's degree from Pittsburg State University, Pittsburg, Kansas. He
also serves on the Board of NPC International, Inc., a Nasdaq-listed company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(3.5) Amended By-Laws of Semitool, Inc.
(10.21) Promissory Note, dated March 26, 1998 between Rhetech, Inc.
and CoreStates Bank, N.A.
(10.22) Mortgage, Assignment of Leases and Security Agreement, dated
March 26, 1998 between Rhetech Inc. and CoreStates Bank, N.A.
(10.23) Promissory Note, dated March 26, 1998 between Rhetech, Inc.
and CoreStates Bank, N.A.
(10.24) Mortgage, Assignment of Leases and Security Agreement, dated
March 26, 1998 between Rhetech, Inc.and CoreStates Bank, N.A.
(10.25) Employment Agreement between William A. Freeman and
Semitool, Inc. dated February 20, 1998.
(27.1) Financial Data Schedule for Form 10-Q dated March 31, 1998.
(27.2) Restated Financial Data Schedule.
(99.2) Amended and Restated Semitool, Inc. 1994 Stock Option Plan.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the three months ended
March 31, 1998.
SIGNATURES
Pursuant to the requirements 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.
SEMITOOL, INC.
(Registrant)
Date: May 13, 1998 By /s/Larry Viano
-------------------------------
Larry A. Viano
Controller, Treasurer and
Chief Accounting Officer
Date: May 13, 1998 By /s/W. A. Freeman
-------------------------------
William A. Freeman
Vice President, Finance
and Chief Financial Officer