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: December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number: 0-11412
AMTECH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Arizona 86-0411215
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
131 South Clark Drive, Tempe, Arizona 85281
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 480-967-5146
Indicate by a 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. [X] Yes [ ] No
Shares of Common Stock outstanding as of January 31, 2002: 2,689,571
AMTECH SYSTEMS, INC.
AND SUBSIDIARIES
TABLE OF CONTENTS
Page
----
PART I. FINANCIAL INFORMATION.
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets -
December 31, 2002 and September 30, 2002....................... 3
Condensed Consolidated Statements of Operations -
Three Months Ended December 31, 2002 and 2001.................. 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended December 31, 2002 and 2001.................. 5
Notes to Condensed Consolidated Financial Statements............. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Caution Regarding Forward-Looking Statements..................... 11
Documents to Review In Connection with Management's
Analysis of Financial Condition and Results of Operations...... 11
Results of Operations............................................ 11
Liquidity and Capital Resources.................................. 15
Critical Accounting Policies..................................... 16
New Accounting Pronouncements ................................... 19
Item 3. Quantitative and Qualitative Disclosures about Market Risk........ 20
Item 4. Controls and Procedures........................................... 20
PART II. OTHER INFORMATION.
Item 1. Legal Proceedings ............................................... 21
Item 4. Submission of Matters to a Vote of Security Holders.............. 21
Item 6. Exhibits and Reports on Form 8-K................................. 21
SIGNATURE................................................................... 21
SARBABES-OXLEY ACT SECTION 302(A) CERTIFICATIONS............................ 22
EXHIBIT INDEX .............................................................. 24
EXHIBIT 99.1 - Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes -
Oxley Act of 2002 ........................................... 25
EXHIBIT 99.2 - Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes -
Oxley Act of 2002 ........................................... 26
2
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, SEPTEMBER 30,
2002 2002
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 6,081,898 $ 8,045,663
Accounts receivable - net 3,927,529 2,695,323
Inventories 3,602,118 3,020,890
Deferred income taxes 1,084,000 1,044,000
Prepaid expenses 132,046 82,291
Income taxes refundable 495,000 --
------------ ------------
Total current assets 15,322,591 14,888,167
PROPERTY, PLANT AND EQUIPMENT - net 1,613,737 1,642,084
DEFERRED INCOME TAXES 88,000 88,000
GOODWILL AND OTHER ASSETS - net 771,700 774,849
------------ ------------
TOTAL ASSETS $ 17,796,028 $ 17,393,100
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 909,571 $ 891,640
Accrued compensation and related taxes 662,303 653,045
Accrued warranty expense 276,199 262,573
Deferred profit 667,770 479,964
Customer deposits 445,649 91,417
Income taxes payable -- 37,000
Other accrued liabilities 247,064 306,601
------------ ------------
Total current liabilities 3,208,556 2,722,240
------------ ------------
DEFERRED PROFIT - LONG TERM 65,396 199,966
LONG-TERM OBLIGATIONS 268,398 259,217
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock; no specified terms;
100,000,000 shares authorized; none issued -- --
Common stock; $0.01 par value; 100,000,000 shares authorized;
2,689,571 and 2,688,571 shares issued and outstanding
as of December 31 and September 30, respectively 26,896 26,886
Additional paid-in capital 12,860,831 12,859,715
Accumulated other comprehensive loss -
Cumulative foreign currency translation adjustment (22,196) (179,639)
Retained earnings 1,388,147 1,504,715
------------ ------------
Total stockholders' equity 14,253,678 14,211,677
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 17,796,028 $ 17,393,100
============ ============
3
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 2002 and 2001
(Unaudited)
Three Months Ended December 31,
-------------------------------
2002 2001
----------- -----------
Net revenues $ 4,329,197 $ 5,456,916
Cost of sales 3,437,295 4,137,433
----------- -----------
Gross margin 891,902 1,319,483
Selling, general and administrative 1,027,696 1,016,503
Research and development 57,734 89,931
----------- -----------
Operating income (loss) (193,528) 213,049
Interest income - net 13,960 34,813
----------- -----------
Income (loss) before income taxes (179,568) 247,862
Income tax provision (benefit) (63,000) 81,000
----------- -----------
NET INCOME (LOSS) $ (116,568) $ 166,862
=========== ===========
EARNINGS (LOSS) PER SHARE:
Basic earnings (loss) per share $ (.04) $ .06
Weighted average shares outstanding 2,689,006 2,680,891
Diluted earnings (loss) per share $ (.04) $ .06
Weighted average shares outstanding 2,689,006 2,798,330
4
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2002 AND 2001
(Unaudited)
2002 2001
----------- -----------
OPERATING ACTIVITIES:
Net income (loss) $ (116,568) $ 166,862
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 118,947 103,407
Provision for write-off of receivables 9,810 9,072
Deferred income taxes (40,000) 5,000
Decrease (increase) in:
Accounts receivable (1,101,414) (155,469)
Inventories (472,638) 813,122
Prepaid expenses and other assets (49,549) (41,307)
Increase (decrease) in:
Accounts payable (17,950) (148,601)
Accrued liabilities and customer deposits 266,159 340,544
Deferred Profit 32,559 (175,998)
Income taxes payable (523,970) (54,186)
----------- -----------
Net Cash Provided By (Used In) Operating Activities (1,894,614) 862,446
----------- -----------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (46,823) (109,023)
----------- -----------
Net Cash Used In Investing Activities (46,823) (109,023)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from warrant and stock option exercises 1,126 2,409
Net Cash Provided By Financing Activities 1,126 2,409
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (23,454) 12,066
----------- -----------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) (1,963,765) 767,898
Beginning of period 8,045,663 5,998,120
----------- -----------
END OF PERIOD CASH AND CASH EQUIVALENTS $ 6,081,898 $ 6,766,018
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 7,547 $ 3,409
Income taxes paid 514,000 137,000
5
AMTECH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED DECEMBER 31, 2002
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
include the accounts of Amtech Systems, Inc. and its wholly-owned
subsidiaries, Tempress Systems, Inc., based in Heerde, The Netherlands, and
P. R. Hoffman Machine Products, Inc. (collectively, the "Company"). All
significant intercompany balances and transactions have been eliminated in
consolidation.
The accompanying condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States, pursuant to the rules and regulations of the Securities and
Exchange Commission (the "SEC"), and are unaudited. In the opinion of
management, all adjustments necessary to present fairly the financial
position, results of operations, and cash flows for the periods presented
have been made.
Certain information and footnote disclosures normally included in financial
statements have been condensed or omitted pursuant to the rules and
regulations of the SEC. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 2002.
The consolidated results of operations for the three months ended December
31, 2002, are not necessarily indicative of the results expected for the
full year.
2. CRITICAL ACCOUNTING POLICIES
See Management's Discussion and Analysis for a summary and discussion of
critical accounting policies.
3. DEFERRED PROFIT
During the three months ended December 31, 2001, the Company recognized
revenue of $499,707 and related gross profit of $122,640 that were included
in the cumulative effect adjustment as of October 1, 2000.
6
The components of deferred profit are as follows:
December 31, 2002 September 30, 2002
------------------------------------ ------------------------------------
Deferred Deferred Deferred Deferred Deferred Deferred
Revenue Costs Profit Revenue Costs Profit
---------- ---------- ---------- ---------- ---------- ----------
Systems awaiting
installation $ 767,620 $ 552,026 $ 15,594 $ 992,600 $ 62,285 $ 30,315
Systems awaiting
final acceptance 517,572 -- 517,572 449,615 -- 449,615
---------- ---------- ---------- ---------- ---------- ----------
Total $1,285,192 $ 552,026 $ 733,166 $1,442,215 $ 762,285 $ 679,930
========== ========== ========== ========== ========== ==========
4. INVENTORIES
The components of inventories are as follows:
December 31, September 30,
2002 2002
---------- ----------
Purchased parts and raw materials $1,996,658 $1,720,728
Work-in-process 780,426 534,057
Finished goods 825,034 766,105
---------- ----------
Totals $3,602,118 $3,020,890
========== ==========
5. COMPREHENSIVE INCOME
Three Months Ended
December 31,
-----------------------
2002 2001
--------- ---------
Net income (loss) $(116,568) $ 166,862
Foreign currency translation adjustment 157,443 (72,144)
--------- ---------
Comprehensive income 40,875 94,718
========= =========
7
6. EARNINGS PER SHARE
Three Months Ended December 31,
-------------------------------
2002 2001
----------- -----------
Net income (loss) $ (116,568) $ 166,862
Weighted average shares outstanding:
Common shares 2,689,006 2,680,891
Common equivalents -- 117,439
----------- -----------
2,689,006 2,798,330
=========== ===========
Earnings (Loss) Per Share:
Basic $ (.04) $ .06
Diluted $ (.04) $ .06
As of December 31, 2002, 97,132 options had exercise prices that were lower
than the market value of the stock on that date. These options are not
classified as common equivalents in the above table since the net loss for
the period causes them to be antidulutive.
7. BUSINESS SEGMENT INFORMATION
The Company classifies its products into two core business segments,
semiconductor equipment and polishing supplies. The semiconductor equipment
segment designs, manufactures and markets semiconductor wafer processing
and handling equipment used in the fabrication of integrated circuits. Also
aggregated in the semiconductor equipment segment are the manufacturing
support service business and any difference between the planned corporate
expenses, which are allocated to the segments based upon their revenue and
the Company's investment in each, and actual corporate expenses. The
polishing supplies segment designs, manufactures and markets carriers,
templates and equipment used in the lapping and polishing of wafer thin
materials, including silicon wafers used in the production of
semiconductors. Information concerning the Company's business segments is
as follows:
Three Months Ended December 31,
-------------------------------
2002 2001
----------- -----------
Revenues
Semiconductor equipment $ 3,116,803 $ 4,385,413
Polishing supplies 1,212,394 1,071,503
----------- -----------
$ 4,329,197 $ 5,456,916
=========== ===========
Operating profit (loss)
Semiconductor equipment $ (94,213) $ 316,887
Polishing supplies (99,315) (103,838)
----------- -----------
Total operating profit (loss) (193,528) 213,049
Interest income - net 13,960 34,813
----------- -----------
Income (loss) before income taxes $ (179,568) $ 247,862
=========== ===========
8
8. LEGAL PROCEEDINGS
On or about August 31, 2000, a "P.R. Hoffman Machine Products" was one of
eleven companies named in a legal action brought by North Middleton
Township in Carlisle, Pennsylvania, the owner of a landfill allegedly found
to be contaminated. No detailed allegations have been filed as part of this
legal action, which appears to have been filed to preserve the right to
file claims for contribution to the clean-up of the landfill at a later
date. The Company acquired the assets of P.R. Hoffman Machine Products,
Inc. in an asset transaction consummated on July 1, 1997. The landfill was
closed and has not been used by P.R. Hoffman since sometime prior to
completion of the Company's asset acquisition. Therefore, the Company
believes that the named company is the prior owner of the acquired assets.
Under the terms of the Asset Purchase Agreement governing the acquisition,
the prior owner, P.R. Hoffman Machine Products Corporation, is obligated to
indemnify the Company for any breaches of its representations and
warranties in the Asset Purchase Agreement, including representations
relating to environmental matters. In accordance with the terms of the
Asset Purchase Agreement, the Company has provided notice to the prior
owner of P.R. Hoffman Machine Products Corporation of the Company's intent
to seek indemnification from such owner for any liabilities resulting from
this legal action. Based on information available to the Company as of the
date of this report, management believes the costs, if any, to resolve this
matter will not be material to the Company's business, results of
operations or financial position.
9. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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 year. Actual results could differ from those estimates.
10. NEW ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board Statement of Financial Accounting
Standards (SFAS) No. 142 "Goodwill and Other Intangible Assets" requires
the discontinuation of the amortization of goodwill and intangible assets
with indefinite lives and at least an annual assessment of whether there
has been an impairment of such assets that needs to be recognized as an
impairment charge. Effective as of October 1, 2002, Amtech adopted SFAS No.
142. Amtech has not completed its transition analysis, but does not expect
to incur an impairment charge related to the $728,000 of goodwill included
in its assets as of December 31, 2002.
9
For comparative purposes, pro forma net income assuming SFAS No. 142 had
been adopted in fiscal 2002 is as follows:
Three Months Ended
December 31,
------------------------
2002 2001
--------- ---------
Net income, as reported $(116,568) $ 166,862
Amortization expense, net tax effect -- 11,433
--------- ---------
Net income, pro forma $(116,568) $ 178,295
========= =========
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" supersedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and
portions of APB Opinion No. 30, "Reporting the Results of Operations." SFAS
No. 144 provides a single accounting model for long-lived assets to be
disposed of and significantly changes the criteria that must be met to
classify an asset as "held for sale." SFAS No. 144 also requires expected
future operating losses from discontinued operations to be recorded in the
period(s) in which the losses are incurred, rather than as of the
measurement date as presently required. Effective as of October 1, 2002,
Amtech adopted SFAS No. 144. The adoption of SFAS 144 did not have an
effect on Amtech's financial position or operating results.
SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment
of FASB Statement No. 13, and Technical Corrections" rescinds the
requirement to report gains and losses from extinguishment of debt as an
extraordinary item. Additionally, this statement amends Statement 13 to
require sale-leaseback accounting for certain lease modifications that have
economic effects similar to sale-leaseback transactions. Effective October
1, 2002, Amtech adopted SFAS No. 145. The adoption of SFAS No. 145 did not
have an effect on Amtech's financial statements.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". SFAS 146 nullifies Emerging
Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity. For
purposes of this Statement, an exit activity includes, but is not limited
to a restructuring as that term is defined in IAS 37, "Provisions,
Contingent Liabilities, and Contingent Assets". The Statement is effective
for exit or disposal activities initiated after December 31, 2002.
Effective October 1, 2002, Amtech adopted SFAS No. 146. The adoption of
SFAS No. 146 did not have an effect on Amtech's financial statements.
SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure" amends SFAS No. 123, "Accounting for Stock - Based
Compensation" and provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock -
based employee compensation. SFAS No. 148 also amends the disclosure
requirements of SFAS No. 123 to require more prominent and frequent
disclosures in financial statements about the effects of stock - based
compensation. Amtech will adopt SFAS No. 148 as of January 1, 2003.
In November 2002, the EITF reached a consensus on issue 00-21, "Multiple -
Deliverable Revenue Arrangements" (EITF 00-21). EITF 00-21 addresses how to
account for arrangements that may involve the delivery or performance of
multiple products, services and/or rights to use assets. The consensus
mandates how to identify whether goods or services or both which are to be
delivered separately in a bundled sales arrangement should be accounted for
separately because they are "separate units of accounting." The guidance
can affect the timing of revenue recognition for such arrangements, even
though it does not change rules governing the timing or patterns of revenue
recognition of individual items accounted for separately. The final
consensus will be applicable to agreements entered into in fiscal years
beginning after June 15, 2003 with early adoption permitted. Additionally,
companies will be permitted to apply the consensus guidance to all existing
arrangements as the cumulative effect of a change in accounting principle
in accordance with APB Opinion No. 20, "Accounting Changes." Amtech is
assessing, but at this point does not believe the adoption of EITF 00-21
will have a material impact on its financial position or results of
operations.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained or incorporated by reference in this
Quarterly Report on Form 10 Q is forward-looking in nature. All statements
included or incorporated by reference in this Quarterly Report on Form 10 Q or
made by management of Amtech Systems, Inc. and its subsidiaries ("Amtech"),
other than statements of historical fact, are hereby identified as
"forward-looking statements" (as such term is defined in the Private Securities
Litigation Reform Act of 1995). Examples of forward-looking statements include
statements regarding Amtech's future financial results, operating results,
business strategies, projected costs, products under development, competitive
positions and plans and objectives of management for future operations. In some
cases, forward-looking statements can be identified by terminology such as
"may," "might," "will," "should," "would," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," "possible," "continue," or the
negative of these terms or other comparable terminology. Any expectations based
on these forward-looking statements are subject to risks and uncertainties and
other important factors, including those discussed in the section entitled "Item
7: Management's Discussion and Analysis - Trends, Risks and Uncertainties" in
Amtech's Annual Report on Form 10-K for the fiscal year ended September 30,
2002, which is incorporated herein by reference. These and many other factors
could affect Amtech's future operating results and financial condition, and
could cause actual results to differ materially from expectations based on
forward-looking statements made in this document or elsewhere by Amtech or on
its behalf. All references to "we," "our," "us," or "Amtech" refer to Amtech
Systems, Inc. and its subsidiaries.
DOCUMENTS TO REVIEW IN CONNECTION WITH MANAGEMENT'S ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with the Condensed
Consolidated Financial Statements and Notes presented in this Form 10-Q and the
financial statements and notes and the section entitled "Item 7: Management's
Discussion and Analysis - Trends, Risks and Uncertainties" in our last filed
Annual Report on Form 10- K for a full understanding of our financial position
and results of operations for the three month period ended December 31, 2002.
RESULTS OF OPERATIONS
Amtech develops, manufactures, markets and services a range of
semiconductor wafer manufacturing and semiconductor fabrication equipment and
related parts, supplies and services on a worldwide basis. The products offered
are grouped into two segments: the semiconductor equipment segment, which offers
horizontal diffusion furnaces, processing/robotic equipment for diffusion
furnaces and services to semiconductor manufacturers, and the polishing supplies
segment, which offers supplies, including carriers and templates, and equipment
for lapping and polishing, which are some of the last steps in the manufacture
of silicon wafers. Demand for Amtech's products can change significantly from
period to period as a result of numerous factors, including, but not limited to,
changes in: 1) global and regional economic conditions; 2) supply and demand for
semiconductors or, more specifically, capacity utilization and production volume
11
of manufacturers of semiconductors, silicon wafers, solar cells and
microelectrical mechanical systems (MEMS), including optical components; and 3)
the profitability and capital resources of potential customers in these
industries. For this and other reasons, Amtech's results of operations for past
periods may not necessarily be indicative of future operating results.
Amtech's orders tend to be more volatile than its revenue as any change in
demand is reflected immediately in the orders booked, which are net of order
cancellations, while revenues tend to be recognized over multiple quarters as a
result of procurement and production lead times and the deferral of certain
revenue under the Company's accounting policy for revenue recognition.
During the third quarter of fiscal 2000 Amtech's orders reached a
historical high. Beginning in the first fiscal quarter of 2001, slowing
worldwide demand for semiconductors resulted in a rapid decline in net demand
for manufacturing equipment. Inventory buildups in telecommunications products,
slower than expected personal computer sales and slow global economic growth for
electronic products caused many semiconductor manufacturers to reevaluate their
capital spending plans and reduce the placement of new orders, while
rescheduling or canceling existing orders. This decline in demand continued
throughout fiscal 2001 and the first half of fiscal 2002, due to continued
weakness in the macro-economic climate and consumption of electronic goods.
Amtech believes its order backlog and revenue reached the lowest point of the
cycle during the fiscal quarter ended March 31, 2002.
During the third and fourth quarters of fiscal 2002, the semiconductor
industry recovered modestly and semiconductor wafer manufacturers continued
spending on equipment for producing 300mm wafers, resulting in increased orders,
shipments and backlog, as compared to the second quarter of fiscal 2002. New
orders, shipments, revenue and backlog were volatile during this period and are
shown in the table below:
Fiscal Quarter
----------------------------------------- Fiscal
First Second Third Fourth Year
----- ------ ----- ------ ----
2003:
New orders $ 2,322 -- -- -- --
Shipments 4,165 -- -- -- --
Revenue 4,329 -- -- -- --
Ending backlog 5,711 -- -- -- --
2002:
New orders 2,213 519 6,132 5,626 14,490
Shipments 4,373 3,983 4,189 4,925 17,470
Revenue 5,457 5,577 4,447 5,052 20,533
Ending backlog $ 10,711 $ 5,653 $ 7,338 $ 7,912 --
12
2001
New orders 4,361 7,783 2,750 3,788 14,490
Shipments 6,882 7,025 6,053 3,742 23,702
Revenue 3,603 6,803 8,023 4,423 22,852
Ending backlog 18,883 19,863 14,590 13,955 --
2000:
New orders 4,254 4,843 14,400 6,270 29,767
Shipments 3,863 4,549 4,693 5,922 19,027
Revenue 3,863 4,549 4,693 5,922 19,027
Ending backlog $ 4,150 $ 4,444 $ 14,151 $ 14,499 --
(1) Backlogs in 2001 and 2002 include a positive adjustment to reinstate
backlog for revenue that will be recognized in future periods due to the
implementation of Staff Accounting Bulletin No. 101 (SAB 101), "Revenue
Recognition in Financial Statements." Amounts prior to fiscal 2001 have not
been restated. The deferred revenue included in the cumulative effect of
the change in the revenue recognition accounting policy as of October 1,
2000 was $3.6 million, which accounts for the difference between the
backlog as of the end of 2000 and the beginning of 2001. The backlogs as of
September 30, 2001 and 2002 and December 31, 2002 include deferred revenue
of $4.5 million, $1.4 million and $1.3 million, respectively.
(2) New orders are net of cancellations.
During the first quarter of fiscal 2003, demand for capital equipment again
weakened due to ongoing economic weakness and geopolitical uncertainties,
resulting in orders declining essentially to the same level of the first quarter
of fiscal 2002 and causing the backlog to decline to the same level as at the
end of the second quarter of fiscal 2002. Strong interest for the Company's
products has been evident from quotation activity and the number of
specification meetings with customers and is expected to result in an increase
in orders and backlog during the second quarter of fiscal 2003. However, as a
result of the ongoing economic weakness and geopolitical uncertainties there can
be no assurance that this will actually occur.
The following table sets forth certain operational data as a percentage of
net revenue for the periods indicated:
Three Months Ended
December 31,
-------------------
2002 2001
---- ----
Net revenue 100% 100%
Cost of product sales (79) (76)
---- ----
Gross margin 21 24
Selling, general and
administrative expenses (24) (18)
Research and development (1) (2)
---- ----
Operating profit (loss) (3)% 4%
==== ====
REVENUES. Amtech's total revenue for the three months ended December 31,
2002 was $4.3 million, compared to $5.5 million for the same period in fiscal
2001, representing a decrease of 22%. Revenues for the first quarter of fiscal
2003 were $723,000, or 14%, lower than in the fourth quarter of 2002, primarily
13
as a result of the weakness in the order flow of the Company's automation
products, which customers often view as discretionary expenditures, and are the
first to be cut from their capital budgets. A 13% increase in the revenue of the
polishing supplies segment during the first quarter of fiscal 2003 as compared
to the same quarter of the prior fiscal year was more than offset by a 29%
decrease in the revenue of the semiconductor equipment segment.
GROSS MARGINS. Consolidated gross margin for the three months ended
December 31, 2002 was $.9 million, compared to $1.3 million for the same period
ended December 31, 2001, representing a decrease of $.4 million, or 31%. The
decline in gross margins is primarily a result of the decline in revenue and the
fact that manufacturing overhead costs remained relatively fixed. In the first
quarter of fiscal 2003, the gross margin of the semiconductor equipment segment
decreased to 22% of sales from 27% of sales in the first quarter of 2002. The
primary cause of this decrease is the pricing pressure caused by the worldwide
downturn in the semiconductor market and the under absorption of overheads. The
gross margin of the polishing supplies segment remained fairly consistent at
approximately 13% of revenue in the first quarter of both 2002 and 2003.
Amtech's gross margins and their percentage of revenue have significantly
fluctuated in the past and will continue to fluctuate based on several factors
including the severity and duration of the current industry downturn, the timing
of revenue recognition under the Company's revenue recognition policy, product
mix and overhead absorption levels.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Consolidated selling, general
and administrative expenses were $1.0 million in the first quarter of fiscal
2003, consistent with $1.0 million in the first quarter of fiscal 2002. Selling,
general and administrative expenses as a percentage of revenue represented 24%
and 18% for the first quarter of fiscal 2003 and 2002, respectively, as a result
of the decline in revenue.
RESEARCH AND DEVELOPMENT EXPENSES. During the three months ended December
31, 2002 and 2001, research and development expenses were consistent at $.1
million. During the past few fiscal years, the most significant project included
in research and development expenses has been the development of a new
technology asher pursuant to a joint product development agreement with PSK
Tech. The results of the feasibility work on the new technology asher with PSK
Tech are encouraging. The next step will be to develop a prototype of a 300mm
asher, using Amtech's damage free technology, and a similar machine for a Beta
site at one of Amtech's customers. Amtech and PSK Tech have agreed to time the
procurement, assembly and testing of both machines in order to match a
customer's advanced technology schedule, which Amtech understands calls for
testing to begin in approximately November 2004. The combined cost of those two
machines is estimated to be approximately $1.5 million, but the relative
contributions of Amtech and PSK Tech to that stage of the project have not been
established. However, Amtech's contribution to the project could cause its
research and development expenses to increase significantly starting as early as
November 2003.
OPERATING PROFIT (LOSS). Operating profit for the first quarter of fiscal
2002 was $.2 million, or 4% of revenue, compared to a loss of $.2 million, or 4%
of revenue, in the first quarter of fiscal 2003. Operating profit declined in
2003 due primarily to the decline in revenues and related gross margin in the
semiconductor segment. Operating income as a percent of revenue declined in the
first quarter of fiscal 2003 primarily as a result of the decline in gross
revenue and competitive pricing pressures discussed above. In both periods the
polishing supplies segment had a loss of $.1 million, as revenue remained
14
slightly below the breakeven point. Additional cost reductions have been made in
the polishing supplies segment since the end of the first quarter of fiscal 2003
as a result of the Company's objective to at least breakeven on a cash flow
basis during the industry slowdown. If anticipated new orders in the
semiconductor equipment segment are not received over the next few weeks,
additional cost reductions will be implemented there as well.
INTEREST INCOME-NET. Net interest income was less than $.1 million in the
first three months of fiscal 2003 and 2002.
INCOME TAX PROVISION. During the first quarter of fiscal 2003 and 2002,
Amtech recorded income tax (benefits) provisions of $(.1) million and $.1
million, respectively. The effective rate stated as a percentage of income
before income taxes was 35% and 33% in the first quarters of fiscal years 2003
and 2002, respectively. Amtech's future effective income tax rate depends on
various factors, such as tax legislation, the geographic composition of pre-tax
income, non-tax deductible expenses and the effectiveness of its tax planning
strategies.
NET INCOME. Net income (loss) for the first quarter of fiscal 2003 and
2002, respectively, was $(.1) million and $.2 million. Net income (loss) per
diluted share was $(.04) and $.06 in fiscal 2003 and 2002, respectively.
BACKLOG. At December 31, 2002, the order backlog was $5.7 million, a
decrease of $2.2 million, or 28%, from the $7.9 million backlog at September 30,
2002. As of December 31, 2002, the backlog was again at the lowest level since
March 31, 2002. See the table that begins on page 12. The orders included in
Amtech's backlog are generally credit approved customer purchase orders usually
scheduled to ship in the next twelve months. The backlog also includes revenue
deferred pursuant to Amtech's revenue recognition policy. Amtech schedules
production of its systems based on order backlog and customer commitments.
However, customers may delay delivery of products or cancel orders suddenly and
without sufficient notice, subject to possible cancellation penalties. Due to
possible customer changes in delivery schedules and cancellations of orders,
Amtech's backlog at any particular date is not necessarily indicative of actual
revenue for any succeeding period. Delays in delivery schedules and/or a
reduction of backlog during any particular reporting period could have a
material adverse effect on Amtech's business and results of operations. In
addition, a backlog does not provide any assurance that Amtech will realize a
profit from those orders or indicate in which period revenue will be recognized.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2002, the Company had $6.1 million of readily available
liquidity in the form of cash and cash equivalents, compared to cash and
equivalents of $8.0 million at September 30, 2002, a decrease of approximately
$1.9 million. The Company continues to believe that there is sufficient
available liquidity and capital resources for its existing operations and
expansion plans.
CASH FLOW. The $1.9 million net decrease in cash during the three months
ended December 31, 2002 approximates the $2.0 million cash flow used in
operations. The $1.9 million cash flow used in operations primarily resulted
from the $.1 million net loss, increases in accounts receivable and inventories
of $1.1 million and $.4 million, respectively, and a $.5 million decrease in
15
income taxes payable, which were only partially offset by an increase in accrued
liabilities and customer deposits of $.3 million. Investing activities consisted
of capital expenditures of less than $.1 million in the aggregate. There were no
significant financing activities during the period.
At December 31, 2002, Amtech's principal source of liquidity consisted of
$6.1 million of cash and cash equivalents. Since the only lien on the Company's
assets is a $.2 million mortgage loan, management believes that significant
amounts of additional liquidity is available from various financing sources.
Amtech believes that it has sufficient liquidity for current operations and for
at least certain elements of its growth strategy. One element of that strategy
is the development of new products such as the proposed new technology asher,
the costs of which have yet to be determined. Another is the acquisition of
product lines or businesses that complement the company's existing business.
Amtech's currently available cash and short-term investments are expected to be
sufficient for existing operations, planned research and development and
possibly an acquisition, depending on size. However, significant unplanned
development of new products, or larger acquisitions may require additional
capital resources that are expected to be obtained from one or more sources of
financing, such as a private placement, a public offering, working capital loans
or term loans from banks or other financial institutions, equipment leasing,
mortgage financing and internally generated cash flow from operations. There can
be no assurance of the availability or sufficiency of these or any other source
of funding for those purposes.
CRITICAL ACCOUNTING POLICIES
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" discusses our consolidated financial statements that have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
us to make estimates and assumptions that affect the reported amount of assets
and liabilities at the date of the financial statements, the 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.
On an on-going basis, we evaluate our estimates and judgments, including
those related to revenue recognition, valuation allowances for inventory and
accounts receivable, warranty and impairment of long-lived assets. We base our
estimates and judgments on historical experience and on various other factors
that are believed to be reasonable under the circumstances. The result of these
estimates and judgments form the basis for making conclusions about the carrying
value of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different
assumptions or conditions.
The SEC suggests that all registrants list their most "critical accounting
policies" in Management's Discussion and Analysis. A critical accounting policy
is one which is both important to the portrayal of the Company's financial
condition and results and requires management's most difficult, subjective or
complex judgments, often as a result of the need to make estimates about the
effect of matters that are inherently uncertain. Management believes the
critical accounting policies discussed below affect its more significant
judgments and estimates in the preparation of its consolidated financial
statements.
16
REVENUE RECOGNITION
The Company recognizes revenue when persuasive evidence of an arrangement
exists; title transfers; the seller's price is fixed or determinable and
collectibility is reasonably assured. Certain of the Company's product sales are
accounted for as multiple- element arrangements. For the semiconductor equipment
segment, if the Company has met defined customer specifications with similarly
situated customers, equipment and processes, the Company recognizes equipment
revenue upon shipment and transfer of title, and the holdback portion of the
revenue that is contingent upon installation and acceptance, generally 10% - 20%
of a system's selling price, is deferred until those activities are completed.
Revenues and related costs for products that are shipped but do not meet this
criteria are deferred and recognized when the equipment and processes are
proven, generally upon customer acceptance or upon obtaining customer acceptance
on at least two similar systems. Collection of the holdback portion of a system
sale is often based on system acceptance or final installation. We have, on
occasion, experienced longer than expected delays in receiving cash from certain
customers pending system acceptance or final installation. If some of our
customers were to refuse to pay the remaining holdback, or otherwise delay final
acceptance or installation, the deferred revenue would not be recognized,
adversely affecting future operating results.
Equipment sold by the polishing supplies segment does not include process
guarantees or acceptance criteria, so the related revenue is recorded upon
shipment. For all segments, sales of spare parts and consumables are recognized
upon shipment, as there are no post shipment obligations other than standard
warranties. Service revenues are recognized upon performance of the services
requested by the customer. Revenue related to service contracts is recognized as
the services requested by the customer are performed.
INVENTORY VALUATION
We value our inventory at the lower of cost or the current estimated market
value. We regularly review inventory quantities on hand and record a write-down
for excess and obsolete inventory. The provision is primarily based on our
estimated forecast of product demand and production requirements. However, our
industry is characterized by customers in highly cyclical industries, rapid
technological changes, frequent new product developments and rapid product
obsolescence. During 2002 and 2001, there has been a significant decrease in the
worldwide demand for semiconductor capital equipment. Demand for our products
has fluctuated significantly and may do so in the future, which could result in
17
an increase in the cost of inventory or an increase in excess inventory
quantities on hand. The Company's ratio of inventories to operating levels is
above, and is expected to remain above, the historic norms due to order
cancellations and the deferral of orders by customers. There can be no assurance
that future developments will not necessitate further write-downs.
VALUATION ALLOWANCE FOR ACCOUNTS RECEIVABLE
We maintain allowances for doubtful accounts for estimated losses resulting
from the inability of our customers to make required payments. These allowances
are based on historical experience, credit evaluations and specific customer
collection issues we have identified. Since our accounts receivable are often
concentrated in a relatively few number of customers, a significant change in
the liquidity or financial position of any one of these customers could have a
material adverse impact on the collectibility of our accounts receivable and our
future operating results.
WARRANTY
The Company provides a limited warranty, generally twelve to twenty-four
months, to all purchasers of its new products and systems. A provision for the
estimated cost of warranty is recorded upon shipment of all systems. On
occasion, we have been required and may be required in the future to provide
additional warranty coverage to ensure that the systems are ultimately accepted
or to maintain customer goodwill. While our warranty costs have historically
been within our expectations and management believes that the amounts accrued
for warranty expenditures are sufficient for all systems sold through December
31, 2002, there can be no assurance that we will continue to experience a
similar level of predictability in regard to warranty costs we have in the past.
In addition, technological changes or previously unknown defects in raw
materials or components may result in more extensive and frequent warranty
service than anticipated, which could have a material adverse impact on our
operating results for the periods in which such additional costs materialize.
IMPAIRMENT OF LONG-LIVED ASSETS
We evaluate whether events and circumstances have occurred that indicate
the estimated useful lives of long-lived assets or intangible assets may warrant
revision or that the remaining balance may not be recoverable. When factors
indicate that an asset should be evaluated for possible impairment, we use an
estimate of the related undiscounted net cash flows generated by the asset over
the remaining estimated life of the asset in measuring whether the asset is
recoverable. We make judgments and estimates used in establishing the carrying
value of long-lived or intangible assets. Those judgments and estimates could be
modified if adverse changes were to occur in the future resulting in an
inability to recover the carrying value of these assets. We have not experienced
any impairments to long-lived assets during fiscal 2002 or the first three
months of fiscal 2003. Future adverse changes could be caused by, among other
factors, a continued downturn in the semiconductor industry, a general economic
slowdown, reduced demand for our products in the market place, poor operating
results, inability to protect intellectual property or changing technologies and
product obsolescence.
18
NEW ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board Statement of Financial Accounting
Standards (SFAS) No. 142 "Goodwill and Other Intangible Assets" requires the
discontinuation of the amortization of goodwill and intangible assets with
indefinite lives and at least an annual assessment of whether there has been an
impairment of such assets that needs to be recognized as an impairment charge.
Effective as of October 1, 2002, Amtech adopted SFAS No. 142. Amtech has not
completed its transition analysis, but does not expect to incur an impairment
charge related to the $728,000 of goodwill included in its assets as of December
31, 2002.
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," and portions of APB Opinion
No. 30, "Reporting the Results of Operations." SFAS No. 144 provides a single
accounting model for long-lived assets to be disposed of and significantly
changes the criteria that must be met to classify an asset as "held for sale."
SFAS No. 144 also requires expected future operating losses from discontinued
operations to be recorded in the period(s) in which the losses are incurred,
rather than as of the measurement date as presently required. Effective as of
October 1, 2002, Amtech adopted SFAS No. 144. The adoption of SFAS 144 did not
have an effect on Amtech's financial position or operating results.
SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment
of FASB Statement No. 13, and Technical Corrections" rescinds the requirement to
report gains and losses from extinguishment of debt as an extraordinary item.
Additionally, this statement amends Statement 13 to require sale-leaseback
accounting for certain lease modifications that have economic effects similar to
sale-leaseback transactions. Effective October 1, 2002, Amtech adopted SFAS No.
145. The adoption of SFAS No. 145 did not have an effect on Amtech's financial
statements.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". SFAS 146 nullifies Emerging Issues
Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity. For purposes of this
Statement, an exit activity includes, but is not limited to a restructuring as
that term is defined in IAS 37, "Provisions, Contingent Liabilities, and
Contingent Assets". The Statement is effective for exit or disposal activities
initiated after December 31, 2002. Effective October 1, 2002, Amtech adopted
SFAS No. 146. The adoption of SFAS No. 146 did not have an effect on Amtech's
financial statements.
SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure" amends SFAS No. 123, "Accounting for Stock - Based Compensation" and
provides alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock - based employee compensation. SFAS
No. 148 also amends the disclosure requirements of SFAS No. 123 to require more
prominent and frequent disclosures in financial statements about the effects of
stock - based compensation. Amtech will adopt SFAS No. 148 effective January 1,
2003.
In November 2002, the EITF reached a consensus on issue 00-21, "Multiple -
Deliverable Revenue Arrangements" (EITF 00-21). EITF 00-21 addresses how to
account for arrangements that may involve the delivery or performance of
multiple products, services and/or rights to use assets. The consensus mandates
how to identify whether goods or services or both which are to be delivered
19
separately in a bundled sales arrangement should be accounted for separately
because they are "separate units of accounting." The guidance can affect the
timing of revenue recognition for such arrangements, even though it does not
change rules governing the timing or patters of revenue recognition of
individual items accounted for separately. The final consensus will be
applicable to agreements entered into in fiscal years beginning after June 15,
2003 with early adoption permitted. Additionally, companies will be permitted to
apply the consensus guidance to all existing arrangements as the cumulative
effect of a change in accounting principle in accordance with APB Opinion No.
20, "Accounting Changes." Amtech is assessing, but at this point does not
believe the adoption of EITF 00-21 will have a material impact on its financial
position or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For financial market risks related to changes in interest rates and foreign
currency exchange rates, refer to Part II, Item 7A, Quantitative and Qualitative
Disclosures About Market Risk, in the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 2002. The Company did not participate in any
derivative (hedging or speculative) activities in fiscal 2002 or 2003. There are
no material changes in reported market risk from September 30, 2002.
ITEM 4. CONTROLS AND PROCEDURES
Based on their evaluation as of a date within 90 days of the filing date of
this report, Amtech's principal executive officer and principal financial
officer have concluded that Amtech's disclosure controls and procedures as
defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of
1934 (the Exchange Act) are effective to ensure that information required to be
disclosed by Amtech in reports that it files or submits under the Exchange Act
is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms.
There were no significant changes in Amtech's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation and up to the filing date of this report. There were no
significant deficiencies or material weaknesses, and therefore there were no
corrective actions taken.
It should be noted that any system of controls, however well designed and
operated, can provide only reasonable, and not absolute, assurance that the
objectives of the system are met. In addition, the design of any control system
is based in part upon certain assumptions about the likelihood of future events.
Because of these and other inherent limitations of control systems, there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions, regardless of how remote.
20
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
On or about August 31, 2000, a "P.R. Hoffman Machine Products" was one of
11 companies named in a legal action brought by North Middleton Township in
Carlisle, Pennsylvania, the owner of a landfill allegedly found to be
contaminated. No detailed allegations have been filed as part of this legal
action, which appears to have been filed to preserve the right to file claims
for contribution to the clean-up of the landfill at a later date. The Company
acquired the assets of P.R. Hoffman Machine Products, Inc. in an asset
transaction consummated on July 1, 1997. The landfill was closed and has not
been used by P.R. Hoffman since sometime prior to completion of the Company's
acquisition. Therefore, the Company believes that the named company is the prior
owner of the acquired assets. Under the terms of the Asset Purchase Agreement
governing the acquisition, the prior owner, P.R. Hoffman Machine Products
Corporation, is obligated to indemnify the Company for any breaches of its
representations and warranties in the Asset Purchase Agreement, including
representations relating to environmental matters. In accordance with the terms
of the Asset Purchase Agreement, the Company has provided notice to the prior
owner of P.R. Hoffman Machine Products Corporation of the Company's intent to
seek indemnification from such owner for any liabilities resulting from this
legal action. Based on information available to the Company as of the date of
this report, management believes the costs, if any, to resolve this matter will
not be material to the Company's business, results of operations or financial
position.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit 99.1 - Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes -
Oxley Act of 2002
Exhibit 99.2 - Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes - Oxley
Act of 2002
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed by the Company during the
quarterly period ended December 31, 2002.
SIGNATURE
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.
AMTECH SYSTEMS, INC.
By /s/ Robert T. Hass Dated: February 14, 2003
------------------------------------------ -----------------
Robert T. Hass, Vice-President-Finance and
(Chief Financial and Accounting Officer)
21
SARBANES-OXLEY ACT SECTION 302(a) CERTIFICATIONS
I, Jong S. Whang, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Amtech Systems,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: February 14, 2003
By: /s/ Jong S. Whang
-------------------------------
Jong S. Whang, President
22
I, Robert T. Hass, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Amtech Systems,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: February 14, 2003
By: /s/ Robert T. Hass
------------------------------------
Robert T. Hass, Vice President -
Finance and Chief Financial Officer
23
EXHIBIT INDEX
EXHIBIT PAGE OR
NUMBER DESCRIPTION METHOD OF FILING
- ------ ----------- ----------------
99.1 Certification of Principal Executive Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 *
99.2 Certification of Principal Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 *
* Filed herewith.
24