Notes to Consolidated Financial Statements
For the Years Ended
September 30, 2017
,
2016
and
2015
1. Summary of Operations and Significant Accounting Policies
Description of Business
– Amtech Systems, Inc. (the “Company,” “Amtech,” “we,” “our” or “us”) is a global manufacturer of capital equipment, including thermal processing, silicon wafer handling automation, and related consumables used in fabricating solar cells, LED and semiconductor devices. We sell these products to solar cell and semiconductor manufacturers worldwide, particularly in Asia, United States and Europe.
We serve niche markets in industries that are experiencing rapid technological advances and which historically have been very cyclical. Therefore, future profitability and growth depend on our ability to develop or acquire and market profitable new products and on our ability to adapt to cyclical trends.
Our fiscal year is from October 1 to September 30. Unless otherwise stated, references to the years
2017
,
2016
and
2015
relate to the fiscal years ended
September 30, 2017
,
2016
and
2015
, respectively.
Acquisitions and Divestitures
– In December 2014, we expanded our participation in the solar market by acquiring a
51%
controlling interest in SoLayTec B.V. (“SoLayTec”), based in Eindhoven, the Netherlands, which provides ALD systems used in high efficiency solar cells. The acquisition of the controlling interest in SoLayTec supports our business model of growth through strategic acquisition. In July 2017, we purchased the non-controlling interest in SoLayTec, pursuant to which SoLayTec became a wholly-owned subsidiary of Amtech.
In January 2015, we completed our acquisition of BTU International, Inc. (“BTU”), a Delaware corporation, pursuant to which BTU became a wholly-owned subsidiary of Amtech. Amtech acquired all of the outstanding stock of BTU in an all-stock transaction. BTU stockholders received
0.3291
shares of Amtech common stock for every share of BTU stock. The combination with BTU further positioned Amtech as a leading, global supplier of solar and semiconductor production and automation systems.
In September 2015, we sold a portion of our interest in Kingstone Technology Hong Kong Limited (“Kingstone Hong Kong”) that is the parent company of Shanghai Kingstone (collectively with Kingstone Hong Kong, “Kingstone”), a Shanghai-based technology company specializing in ion implant solutions for the solar and semiconductor industries (in which we acquired a
55%
ownership in February 2011), to a China-based venture capital firm. Proceeds from the sale of shares were paid to Amtech and used to support our core strategic initiatives. We now own
15%
of the holding company, Kingstone Hong Kong, following consummation of the transaction, which effectively represents an
8%
beneficial ownership interest in the Shanghai operating entity, Shanghai Kingstone.
See Note 12 for a discussion of our acquisitions and Note 13 for a discussion of our divestitures.
Principles of Consolidation
– The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries and subsidiaries in which we have a controlling interest. We report non-controlling interests in consolidated entities as a component of equity separate from our equity. The equity method of accounting is used for i
nvestments over which we have a significant influence but not a controlling financial interest.
All material intercompany accounts and transactions have been eliminated in consolidation. Effective July 1, 2017, we purchased the non-controlling interest in SoLayTec, pursuant to which SoLayTec became a wholly-owned subsidiary of Amtech. Beginning July 1, 2017, the non-controlling interest will no longer be reported. Prior amounts have not been restated.
Use of Estimates
– The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Reclassifications
– Certain reclassifications have been made to prior year financial statements to conform to the current year presentation. These reclassifications had no effect on the previously reported Consolidated Financial Statements for any period.
Cash and Cash Equivalents
– We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Our cash and cash equivalents consist of amounts invested in U.S. money market funds and various U.S. and foreign bank operating and time deposit accounts.
Restricted Cash
– Restricted cash includes collateral for bank guarantees required by certain customers from whom deposits have been received in advance of shipment.
Accounts Receivable and Allowance for Doubtful Accounts
– Accounts receivable are recorded at the sales price of products sold to customers on trade credit terms. Accounts receivable are considered past due when payment has not been received from the customer within the normal credit terms extended to that customer. A valuation allowance is established for accounts when collection is no longer probable. Accounts are written off against the allowance when the probability of collection is remote.
Accounts Receivable
–
Unbilled and Other
– Unbilled and other accounts receivable consist mainly of the contingent portion of the sales price that is not collectible until successful installation of the product. These amounts are generally billed upon final customer acceptance.
Inventory
– We value our inventory at the lower of cost or net realizable value. Costs for approximately
55%
and
50%
of inventory as of
September 30, 2017
and
2016
, respectively, are determined on an average cost basis with the remainder determined on a first-in, first-out (FIFO) basis.
Property, Plant and Equipment
– Property plant, and equipment are recorded at cost. Maintenance and repairs are charged to expense as incurred. The cost of property retired or sold and the related accumulated depreciation and amortization are removed from the applicable accounts when disposition occurs and any gain or loss is recognized. Depreciation and amortization is computed using the straight-line method over the estimated useful life of the asset. Useful lives for equipment, machinery and leasehold improvements range from
three
to
seven
years; for furniture and fixtures from
five
to
ten
years; and for buildings from
20
to
30
years.
Reviews are regularly performed to determine whether facts and circumstances exist which indicate that the useful life is shorter than originally estimated or the carrying amount of assets may not be recoverable. When an indication exists that the carrying amount of long-lived assets may not be recoverable, we assess the recoverability of our assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Such impairment test is based on the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Impairment, if any, is based on the excess of the carrying amount over the estimated fair value of those assets.
Intangible Assets
– Intangible assets are capitalized and amortized on a straight-line basis over their estimated useful life, if the life is determinable. If the life is not determinable, amortization is not recorded. We regularly perform reviews to determine if facts and circumstances exist which indicate that the useful lives of our intangible assets are shorter than originally estimated or the carrying amount of these assets may not be recoverable. When an indication exists that the carrying amount of intangible assets may not be recoverable, we assess the recoverability of our assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Such impairment test is based on the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Impairment, if any, is based on the excess of the carrying amount over the estimated fair value of those assets.
Goodwill
- Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of net identified tangible and intangible assets acquired. Goodwill and intangible assets with indefinite lives are not subject to amortization, but are tested for impairment when it is determined that it is more likely than not that the fair value of a reporting unit or the indefinite-lived intangible asset is less than its carrying amount, typically at the end of the fiscal year, or more frequently if circumstances dictate. If it is concluded that there is a potential impairment, we would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value (although the loss would not exceed the total amount of goodwill allocated to the reporting unit). Impairment tests include the use of estimates and assumptions that are inherently uncertain. Changes in these estimates and assumptions could materially affect the determination of fair value or goodwill impairment, or both.
Revenue Recognition
– We review product and service sales contracts with multiple deliverables to determine if separate units of accounting are present. Where separate units of accounting exist, revenue allocated to delivered items
is the lower of the relative selling price of the delivered items in the sales arrangement or the portion of the selling price that is not contingent upon performance of the service.
We recognize revenue when persuasive evidence of an arrangement exists; the product has been delivered and title has transferred, or services have been rendered; and the seller’s price to the buyer is fixed or determinable and collectability is reasonably assured. For us, this policy generally results in revenue recognition at the following points:
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1.
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For our equipment business, transactions where legal title passes to the customer upon shipment, we recognize revenue upon shipment for those products where the customer’s defined specifications have been met with at least
two
similarly configured systems and processes for a comparably situated customer. Our selling prices may include both equipment and services, i.e., installation and start-up services performed by our service technicians. The equipment and services are multiple deliverables. Certain equipment that has a positive track record of successful installation and customer acceptance are considered to be routine systems. Our recognition of revenue upon delivery of such equipment that has been routinely installed and accepted is equal to the total selling price minus the relative selling price of the undelivered services.
|
Where the installation and acceptance of more than
two
similarly configured items of equipment have not become routine, recognition of revenue upon delivery of equipment is limited to the lesser of (i) the total selling price minus the relative selling price of the undelivered services or (ii) the non-contingent amount. Since we defer only those costs directly related to installation, or other unit of accounting not yet delivered, and the portion of the contract price is often considerably greater than the relative selling price of those items, our policy at times will result in deferral of profit that is disproportionate in relation to the deferred revenue. When this is the case, the gross margin recognized in
one
period will be lower and the gross margin reported in a subsequent period will improve.
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2.
|
For products where the customer’s defined specifications have not been met with at least
two
similarly configured systems and processes, the revenue and directly related costs are deferred at the time of shipment and later recognized at the time of customer acceptance or when this criterion has been met. We have, on occasion, experienced longer than expected delays in receiving cash from certain customers pending final installation or system acceptance. If some of our customers refuse to pay the final payment, or otherwise delay final acceptance or installation, the deferred revenue would not be recognized, adversely affecting our future cash flows and operating results.
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3.
|
Sales of certain equipment, spare parts and consumables are recognized upon shipment, as there are no post shipment obligations other than standard warranties.
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4.
|
Service revenue is recognized upon performance of the services requested by the customer. Revenue related to service contracts is recognized ratably over the period of the contract or in accordance with the terms of the contract, which generally coincides with the performance of the services requested by the customer.
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Deferred Profit –
Revenue deferred pursuant to our revenue policy, net of the related deferred costs, if any, is recorded as deferred profit in current liabilities. The components of deferred profit are as follows:
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|
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|
|
|
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|
September 30,
|
|
2017
|
|
2016
|
|
(dollars in thousands)
|
Deferred revenue
|
$
|
6,822
|
|
|
$
|
7,029
|
|
Deferred costs
|
2,741
|
|
|
2,320
|
|
Deferred profit
|
$
|
4,081
|
|
|
$
|
4,709
|
|
Warranty –
A limited warranty is provided free of charge, generally for periods of
12
to
24
months to all purchasers of our new products and systems. Accruals are recorded for estimated warranty costs at the time revenue is recognized, generally upon shipment or acceptance, as determined under the revenue recognition policy above. 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 we believe that the amounts accrued for warranty expenditures are sufficient for all systems sold
through
September 30, 2017
, we cannot guarantee that we will continue to experience a similar level of predictability with regard to warranty costs. 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 result in an increase in our warranty expense.
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Years Ended September 30,
|
|
2017
|
|
2016
|
|
(dollars in thousands)
|
Beginning balance
|
$
|
795
|
|
|
$
|
793
|
|
Additions for warranties issued during the period
|
1,723
|
|
|
1,074
|
|
Reductions in the liability for payments made under the warranty
|
(414
|
)
|
|
(832
|
)
|
Changes related to pre-existing warranties
|
(872
|
)
|
|
(250
|
)
|
Currency translation adjustment
|
22
|
|
|
10
|
|
Ending balance
|
$
|
1,254
|
|
|
$
|
795
|
|
Shipping Expense
– Shipping expenses of
$1.9 million
,
$2.3 million
and
$2.5 million
for
2017
,
2016
and
2015
are included in selling, general and administrative expenses.
Advertising Expense
– Advertising costs are expensed as incurred. Advertising expense of
$0.4 million
,
$0.6 million
and
$0.5 million
for
2017
,
2016
and
2015
are included in selling, general and administrative expenses.
Stock-Based Compensation
– We measure compensation costs relating to share-based payment transactions based upon the grant-date fair value of the award. Those costs are recognized as expense over the requisite service period, which is generally the vesting period, less an estimate of expected forfeitures. Forfeitures were estimated based upon historical experience. Beginning in 2018, we will begin recognizing forfeitures as they occur. The benefits or deficiencies of tax deductions in excess of or less than recognized compensation cost are reported as cash flow from financing activities rather than as cash flow from operating activities.
We estimate the fair value of stock option awards on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes model requires us to apply highly subjective assumptions, including expected stock price volatility, expected life of the option and the risk-free interest rate. A change in one or more of the assumptions used in the model may result in a material change to the estimated fair value of the stock-based compensation.
Research, Development and Engineering Expenses
– Research, development and engineering expenses consist of the cost of employees, consultants and contractors who design, engineer and develop new products and processes as well as materials, supplies and facilities used in producing prototypes. Payments received for research and development grants prior to the meeting of milestones are recorded as unearned research and development grant liabilities and included in other accrued liabilities on the balance sheet. When certain contract requirements are met, governmental research and development grants are netted against research, development and engineering expenses.
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Years Ended September 30,
|
|
2017
|
|
2016
|
|
2015
|
|
(dollars in thousands)
|
Research, development and engineering
|
$
|
7,001
|
|
|
$
|
9,535
|
|
|
$
|
13,214
|
|
Grants earned
|
(629
|
)
|
|
(1,531
|
)
|
|
(6,296
|
)
|
Net research, development and engineering
|
$
|
6,372
|
|
|
$
|
8,004
|
|
|
$
|
6,918
|
|
Foreign Currency Transactions and Translation
– We use the U.S. dollar as our reporting currency. Our operations in Europe, China and other countries are primarily conducted in their functional currencies, the Euro, Renminbi, or the local country currency, respectively. Accordingly, assets and liabilities of the subsidiaries are translated into U.S. dollars at the exchange rate in effect at the balance sheet dates. Income and expense items are translated at the average exchange rate for each month within the year. The resulting translation adjustments are recorded directly in accumulated other comprehensive income (loss), net of tax - foreign currency translation adjustments as a separate component of
stockholders’ equity. Net foreign currency transaction gains/losses, including transaction gains/losses on intercompany balances that are not of a long-term investment nature and non-functional currency cash balances, are reported as a separate component of non-operating (income) expense in our consolidated statements of operations.
Income Taxes
– We file consolidated federal income tax returns in the United States for all subsidiaries except those in the Netherlands, France, Hong Kong and China, where separate returns are filed. We compute deferred income tax assets and liabilities based upon cumulative temporary differences between financial reporting and taxable income, carryforwards available and enacted tax laws. We also accrue a liability for uncertain tax positions when it is more likely than not that such tax will be incurred.
Deferred tax assets reflect the tax effects of temporary differences between the carrying value of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management and based on the weight of available evidence, it is more likely than not that a portion or all of the deferred tax asset will not be realized. Each quarter, the valuation allowance is re-evaluated. In 2017, we reversed a portion of the valuation allowance related to net operating loss carryforwards which we have determined will be utilized against net operating income in the current year.
Concentrations of Credit Risk
– Our customers consist of solar cell and semiconductor manufacturers worldwide, as well as the lapping and polishing marketplace. Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and trade accounts receivable. Credit risk is managed by performing ongoing credit evaluations of the customers’ financial condition, by requiring significant deposits where appropriate, and by actively monitoring collections. Letters of credit are required of certain customers depending on the size of the order, type of customer or its creditworthiness, and country of domicile.
As of
September 30, 2017
, two customers individually represented
24%
and
11%
of accounts receivable. As of
September 30, 2016
, one customer individually represented
11%
of accounts receivable.
We maintain our cash, cash equivalents and restricted cash in multiple financial institutions. Balances in the United States (approximately
45%
and
70%
of total cash balances as of
September 30, 2017
and
2016
, respectively) are primarily invested in US Treasuries or are in financial institutions insured by the Federal Deposit Insurance Corporation (FDIC). The remainder of our cash is maintained with financial institutions with reputable credit in The Netherlands, France, China, the United Kingdom, Singapore and Malaysia.
Refer to Note 19, “Geographic Regions,” for information regarding revenue and assets in other countries subject to fluctuation in foreign currency exchange rates.
Fair Value of Financial Instruments
–
In accordance with the requirements of the Fair Value Measurements and Disclosures Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), we group our financial assets and liabilities measured at fair value on a recurring basis in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:
Level 1 – Valuation is based upon quoted market price for identical instruments traded in active markets.
Level 2 – Valuation is based on quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 3 – Valuation is generated from model-based techniques that use significant assumptions not observable in the market. Valuation techniques include use of discounted cash flow models and similar techniques.
In accordance with the requirements of the Fair Value Measurements and Disclosures Topic of the FASB ASC, it is our policy to use observable inputs whenever reasonably practicable in order to minimize the use of unobservable inputs when developing fair value measurements. When available, we use quoted market prices to measure fair value. If market prices are not available, the fair value measurement is based on models that use primarily market based parameters including interest rate yield curves, option volatilities and currency rates. In certain cases, where market rate assumptions are not available, we are required to make judgments about assumptions market participants would use to estimate the
fair value of a financial instrument. Changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future values.
Cash, Cash Equivalents and Restricted Cash
– Included in Cash and Cash Equivalents and Restricted Cash in the Consolidated Balance Sheets are money market funds invested in treasury bills, notes and other direct obligations of the U.S. Treasury and foreign bank operating and time deposit accounts. The fair value of this cash equivalent is based on Level 1 inputs in the fair value hierarchy.
Receivables and Payables
– The recorded amounts of these financial instruments, including accounts receivable and accounts payable, approximate their fair value because of the short maturities of these instruments. If measured at fair value in the financial statements, these financial instruments would be classified as Level 2 in the fair value hierarchy.
Debt
–
The recorded amounts of these financial instruments, including long-term debt and current maturities of long-term debt, approximate fair value and are considered Level 2 in the fair value hierarchy.
Recently Issued Accounting Pronouncements
In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The guidance is intended to simplify the subsequent accounting for goodwill acquired in a business combination. Prior guidance required utilizing a two-step process to review goodwill for impairment. A second step was required if there was an indication that an impairment may exist, and the second step required calculating the potential impairment by comparing the implied fair value of the reporting unit’s goodwill (as if purchase accounting were performed on the testing date) with the carrying amount of the goodwill. The new guidance eliminates the second step from the goodwill impairment test. Under the new guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value (although the loss should not exceed the total amount of goodwill allocated to the reporting unit). The guidance requires prospective adoption and will be effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption of this guidance is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We early adopted this guidance in the fourth quarter of fiscal 2017 with no impact on our consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows: Restricted Cash.” The amendments address diversity in practice that exists in the classification and presentation of changes in restricted cash and require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. This ASU is effective retrospectively for fiscal years and interim periods within those years beginning after December 15, 2017. We plan to adopt this standard effective October 1, 2018, the first quarter of our fiscal year 2019. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. The new standard applies to financial assets measured at amortized cost basis, including receivables that result from revenue transactions and held-to-maturity debt securities. The new guidance will be effective for us starting in the first quarter of fiscal 2021. Early adoption is permitted starting in the first quarter of fiscal 2020. We are in the process of determining the effects the adoption will have on our consolidated financial statements as well as whether to adopt the new guidance early.
In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718).” ASU 2016-09 identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The amendments in this ASU are effective for annual periods beginning after December 15, 2016 and for the interim periods therein. This new standard increases volatility in the statement of operations by requiring all excess tax benefits and deficiencies to be recognized as discrete income tax benefits or expenses in the statement of operations in the period in which they occur. We adopted the new standard as of October 1, 2017, and prospectively applied the provisions in this guidance requiring recognition of excess tax benefits and deficits in the
statement of operations. Also, as a result of the adoption of the new standard, we made an accounting policy election to recognize forfeitures as they occur and no longer estimate expected forfeitures. The provisions in this guidance requiring the use of a modified retrospective transition method would have required us to record a cumulative-effect adjustment in retained earnings as of October 1, 2017. We elected not to adjust retained earnings and to record such cumulative-effect adjustment as stock-based compensation in the first quarter of 2018 on the basis of immateriality. Lastly, we applied the provisions of this guidance relating to classification on the statement of cash flows retrospectively.
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use-assets. ASU 2016-02 also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. This ASU is effective for fiscal years beginning after December 15, 2018 and early adoption is permitted. We will adopt the standard as of October 1, 2019, the start of our fiscal 2020. We are currently in the process of evaluating the impact of this standard on our consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes.” This ASU requires entities to classify deferred tax liabilities and assets as noncurrent in a classified statement of financial position. This ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for all entities as of the beginning of an interim or annual reporting period. We will adopt this standard effective October 1, 2017, the first quarter of our fiscal 2018. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which amends the existing accounting standards for revenue recognition. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB voted to amend ASU 2014-09 by approving a one-year deferral of the mandatory effective date as well as providing the option to early adopt the standard on the original effective date. An entity may choose to adopt the new standard either retrospectively or through a cumulative effect adjustment as of the start of the first period for which it applies the new standard. We are in the process of determining the effect that the adoption will have on our consolidated financial statements. Based on our analysis to date, we have reached the following tentative conclusions regarding the new standard and how we expect it to affect our consolidated financial statements and related disclosures:
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We expect to adopt the standard as of October 1, 2018, the start of our first quarter of fiscal 2019.
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•
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We expect to use the cumulative effect transition method. Such method provides that upon applying the new standard, the cumulative effect from prior periods is recognized in our consolidated balance sheet as of the date of adoption, including an adjustment to retained earnings. Prior periods will not be retrospectively adjusted.
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•
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We believe that since substantially all of our revenue is contractual, substantially all of our revenue falls within the scope of ASU 2014-09, as amended.
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•
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As discussed above, our equipment revenue is generally recognized upon shipment, except for non-routine technology equipment, which is subject to a deferral until acceptance. We are continuing to evaluate how the new standard will affect the allocation of the contract prices between equipment and service deliverables and the timing of the recognition of such revenue, as well as how this will apply to our non-routine technology equipment. Additionally, we are reviewing the effect of customer acceptance clauses on the timing of revenue recognition and related deferrals, for both routine and non-routine technology equipment, under the new standard.
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•
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We believe that the only significant incremental costs incurred to obtain contracts with our clients within the scope of ASU 2014-09, as amended, are sales commissions. Under current accounting standards, we recognize sales commissions as the revenue is earned and record such amounts within selling and administrative expenses in our statements of operations. The majority of our contracts are completed within a one-year performance period. Under the new standard, we expect to record sales commissions on contracts with performance periods that exceed one year as an asset and amortize the asset to expense over the related contract performance period in proportion to the revenue recognized.
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•
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We expect that our disclosures in our notes to our consolidated financial statements related to revenue recognition will be significantly expanded under the new standard.
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Our analysis and evaluation of the new standard will continue through its effective date in the first quarter of fiscal 2019. A substantial amount of work remains to be completed due to the complexity of the new standard, the application of judgment and the requirement for the use of estimates in applying the new standard, as well as the volume of our client portfolio and the related terms and conditions of our contracts that must be reviewed. The quantification of the effects of the new standard, including the items discussed above, is a significant undertaking. Further, we will be required to implement necessary changes in our processes, accounting systems and internal controls in conjunction with applying the new standard.
2. Earnings Per Share & Diluted Earnings Per Share
Basic earnings per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed similarly to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares had been issued, and the numerator is based on net income. In the case of a net loss, diluted earnings per share is calculated in the same manner as basic earnings per share. Options and restricted stock of approximately
1,364,000
,
1,840,000
and
1,640,000
weighted average shares are excluded from the
2017
,
2016
and
2015
earnings per share calculations as they are anti-dilutive. These shares could be dilutive in the future.
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Years ended September 30,
|
|
2017
|
|
2016
|
|
2015
|
|
(dollars in thousands, except per share amounts)
|
Basic Earnings Per Share Computation
|
|
|
Net income (loss) attributable to Amtech Systems, Inc.
|
$
|
9,131
|
|
|
$
|
(7,008
|
)
|
|
$
|
(7,771
|
)
|
Weighted Average Shares Outstanding:
|
|
|
|
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|
Common stock
|
13,378
|
|
|
13,168
|
|
|
12,022
|
|
Basic income (loss) per share attributable to Amtech shareholders
|
$
|
0.68
|
|
|
$
|
(0.53
|
)
|
|
$
|
(0.65
|
)
|
Diluted Earnings Per Share Computation
|
|
|
|
|
|
Net income (loss) attributable to Amtech Systems, Inc.
|
$
|
9,131
|
|
|
$
|
(7,008
|
)
|
|
$
|
(7,771
|
)
|
Weighted Average Shares Outstanding:
|
|
|
|
|
|
Common stock
|
13,378
|
|
|
13,168
|
|
|
12,022
|
|
Common stock equivalents
(1)
|
123
|
|
|
—
|
|
|
—
|
|
Diluted shares
|
13,501
|
|
|
13,168
|
|
|
12,022
|
|
Diluted income (loss) per share attributable to Amtech shareholders
|
$
|
0.68
|
|
|
$
|
(0.53
|
)
|
|
$
|
(0.65
|
)
|
(1) The number of common stock equivalents is calculated using the treasury stock method and the average market price during the period.
3. Inventory
The components of inventory are as follows:
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
September 30, 2016
|
|
(dollars in thousands)
|
Purchased parts and raw materials
|
$
|
14,789
|
|
|
$
|
12,435
|
|
Work-in-process
|
11,078
|
|
|
7,044
|
|
Finished goods
|
4,343
|
|
|
3,744
|
|
|
$
|
30,210
|
|
|
$
|
23,223
|
|
4. Property, Plant and Equipment
The following is a summary of property, plant and equipment:
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
September 30, 2016
|
|
(dollars in thousands)
|
Land
|
$
|
4,990
|
|
|
$
|
4,891
|
|
Building and leasehold improvements
|
14,408
|
|
|
13,364
|
|
Equipment and machinery
|
8,934
|
|
|
9,056
|
|
Furniture and fixtures
|
5,243
|
|
|
5,426
|
|
|
33,575
|
|
|
32,737
|
|
Accumulated depreciation and amortization
|
(17,783
|
)
|
|
(16,777
|
)
|
|
$
|
15,792
|
|
|
$
|
15,960
|
|
Depreciation and capital lease amortization expense was
$1.6 million
,
$2.1 million
and
$2.2 million
in
2017
,
2016
and
2015
, respectively.
5. Intangible Assets
The following is a summary of intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
|
|
2017
|
|
2016
|
|
Useful Life
|
|
Gross Carrying Amount
|
Accumulated Amortization
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
Accumulated Amortization
|
Net Carrying Amount
|
|
|
|
(dollars in thousands)
|
Customer lists
|
6-10 years
|
|
$
|
2,471
|
|
$
|
(1,521
|
)
|
$
|
950
|
|
|
$
|
2,432
|
|
$
|
(1,164
|
)
|
$
|
1,268
|
|
Technology
|
5-10 years
|
|
3,386
|
|
(2,024
|
)
|
1,362
|
|
|
3,214
|
|
(1,678
|
)
|
1,536
|
|
Trade names
|
10-15 Years
|
|
1,468
|
|
(285
|
)
|
1,183
|
|
|
1,455
|
|
(219
|
)
|
1,236
|
|
Other
|
2-10 years
|
|
78
|
|
(78
|
)
|
—
|
|
|
277
|
|
(217
|
)
|
60
|
|
|
|
|
$
|
7,403
|
|
$
|
(3,908
|
)
|
$
|
3,495
|
|
|
$
|
7,378
|
|
$
|
(3,278
|
)
|
$
|
4,100
|
|
Amortization expense related to intangible assets was
$0.8 million
,
$0.8 million
and
$1.2 million
in
2017
,
2016
and
2015
, respectively. The aggregate amortization expense for the intangible assets for each of the five succeeding fiscal years is estimated to be $
0.6 million
,
$0.6 million
,
$0.6 million
,
$0.4 million
,
$0.3 million
and
$1.2 million
in
2018
,
2019
,
2020
,
2021
,
2022
and thereafter, respectively.
On December 24, 2014, we acquired a
51%
controlling interest in SoLayTec. The intangible assets of SoLayTec total
$2.1 million
, of which
$1.9 million
is included in “Technology” and
$0.2 million
is included in “Trade names” in the table above. On January 30, 2015, we completed the merger with BTU. The intangible assets of BTU total
$2.9 million
, of which
$1.2 million
is included in “Trade names” and
$1.7 million
is included in “Customer lists” in the table above. See Note 12, “Acquisitions,” for more information regarding the acquisition of SoLayTec and the merger with BTU.
As a result of the sale of our partial ownership in Kingstone in 2015, we derecognized
$3.2 million
of intangible assets and
$1.9 million
of accumulated amortization. See Note 13, “Deconsolidation,” for additional details.
6. Goodwill
The changes in the carrying amount of goodwill for the year ended
September 30, 2017
are as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solar
|
|
Semiconductor
|
|
Polishing
|
|
Total
|
|
(dollars in thousands)
|
Goodwill
|
$
|
6,597
|
|
|
$
|
5,063
|
|
|
$
|
728
|
|
|
$
|
12,388
|
|
Accumulated impairment losses
|
(1,269
|
)
|
|
—
|
|
|
—
|
|
|
(1,269
|
)
|
Carrying value at September 30, 2016
|
5,328
|
|
|
5,063
|
|
|
728
|
|
|
11,119
|
|
Net exchange differences
|
286
|
|
|
—
|
|
|
—
|
|
|
286
|
|
Carrying value at September 30, 2017
|
$
|
5,614
|
|
|
$
|
5,063
|
|
|
$
|
728
|
|
|
$
|
11,405
|
|
|
|
|
|
|
|
|
|
Goodwill
|
$
|
6,962
|
|
|
$
|
5,063
|
|
|
$
|
728
|
|
|
$
|
12,753
|
|
Accumulated impairment losses
|
(1,348
|
)
|
|
—
|
|
|
—
|
|
|
(1,348
|
)
|
Carrying value at September 30, 2017
|
$
|
5,614
|
|
|
$
|
5,063
|
|
|
$
|
728
|
|
|
$
|
11,405
|
|
During
2017
, we periodically assessed whether any indicators of impairment existed which would require us to perform an interim impairment review. As of each interim period end during the year, we concluded that a triggering event had not occurred that would more likely than not reduce the fair value of our reporting units below their carrying values. We performed our annual test of goodwill for impairment during the fourth quarter of
2017
. The results of the first step of the goodwill impairment test indicated that the fair values of our reporting units were in excess of their respective carrying values, and thus we did not require an impairment charge.
7. Long-Term Debt
In January 2015, we acquired
$7.2 million
of long-term debt as part of the BTU acquisition. The debt acquired is a mortgage note secured by BTU’s real property in Billerica, Massachusetts, and has a remaining balance of $
6.2 million
as of
September 30, 2017
. The debt was refinanced in September 2016 with an interest rate of
4.11%
through September 26, 2021, at which time the interest rate will be adjusted to a per annum fixed rate equal to the aggregate of the Federal Home Loan Board Five Year Classic Advance Rate plus
two hundred forty
basis points. The maturity date of the debt is September 26, 2023.
In December 2014, we acquired long-term debt as part of the SoLayTec acquisition. During the year ended
September 30, 2017
, SoLayTec borrowed an additional
$0.3 million
. Effective with the Exit Agreement between Amtech and SoLayTec’s minority owners in July 2017 (see Note 12), approximately
$2.4 million
of long-term debt was forgiven by SoLayTec’s minority owners. This debt forgiveness was recorded as a capital contribution, with no effect on the Consolidated Statement of Operations. As of
September 30, 2017
, SoLayTec’s remaining debt balance is
$1.9
million. This loan has an interest rate of
7.00%
and was modified in 2017 to allow SoLayTec to defer repayment indefinitely, contingent on SoLayTec’s results of operations. We expect to begin making repayments in fiscal 2020 through 2023.
In 2017, Tempress borrowed approximately
$0.4 million
as part of the construction of a large, bi-facial solar PV park at its headquarters in the Netherlands. The debt is secured by Tempress’ real property in Vaassen, the Netherlands, and carries an interest rate equal to the
10
-year interest rate swap rate plus a
2.4%
premium, reduced by a
1%
discount, which at
September 30, 2017
was
2.23%
. The debt has a
15
-year term.
Annual maturities relating to our long-term debt as of
September 30, 2017
are as follows:
|
|
|
|
|
|
Annual Maturities
|
|
(in thousands)
|
2018
|
$
|
361
|
|
2019
|
375
|
|
2020
|
602
|
|
2021
|
831
|
|
2022
|
848
|
|
Thereafter
|
5,478
|
|
Total
|
$
|
8,495
|
|
8. Equity and Stock-Based Compensation
2017 Equity Offering
On August 18, 2017, we entered into an Underwriting Agreement with Roth Capital Partners, LLC, as underwriter (the “Underwriter”), relating to a firm commitment underwritten offering (the “Offering”) of
1,055,000
shares of our common stock, par value
$0.01
per share, at a price of
$9.50
per share, and granted the Underwriter an option to purchase up to
158,250
additional shares (the “Over-Allotment Option”) of our common stock to cover over-allotments, if any. On August 23, 2017, we and the Underwriter closed the Offering and the Underwriter exercised its Over-Allotment Option at the closing. As a result, we issued a total of
1,213,250
shares of our common stock at a price of
$9.50
per share. We received net proceeds of approximately
$10.6 million
from the Offering. We plan to use the net proceeds of the Offering for general corporate purposes, which may include working capital, capital expenditures and potential acquisitions.
Stock-Based Compensation Expense
Stock-based compensation expense of
$1.3 million
,
$1.4 million
and
$1.2 million
for
2017
,
2016
and
2015
, respectively, are included in selling, general and administrative expenses. As of
September 30, 2017
, total compensation cost related to non-vested stock options not yet recognized is
$0.9 million
, which is expected to be recognized over the next
1.13
years on a weighted-average basis.
Amtech Equity Plans
The 2007 Employee Stock Incentive Plan (the “2007 Plan), under which
500,000
shares could be granted, was adopted by our Board of Directors (the “Board”) in April 2007, and approved by the shareholders in May 2007. The 2007 Plan was amended in 2009, 2014 and 2015 to add
2,500,000
shares. The Non-Employee Directors Stock Option Plan was approved by the shareholders in 1996 for issuance of up to
100,000
shares of Common Stock to directors. The Non-Employee Directors Stock Option Plan was amended in 2005, 2009 and 2014 to add
400,000
shares.
Stock-based compensation plans as of
September 30, 2017
are summarized in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Plan
|
|
Shares Authorized
|
|
Shares Available
|
|
Options Outstanding
|
|
Plan Expiration
|
2007 Employee Stock Incentive Plan
|
|
3,000,000
|
|
|
686,032
|
|
|
1,342,391
|
|
|
Mar. 2020
|
1998 Employee Stock Option Plan
|
|
500,000
|
|
|
—
|
|
|
—
|
|
|
Jan. 2008
|
Non-Employee Directors Stock Option Plan
|
|
500,000
|
|
|
107,600
|
|
|
218,050
|
|
|
Mar. 2020
|
|
|
|
|
|
793,632
|
|
|
1,560,441
|
|
|
|
Stock Options
Stock options issued under the terms of the plans have, or will have, an exercise price equal to or greater than the fair market value of the Common Stock at the date of the option grant and expire no later than
10
years from the date of grant, with the most recent grant expiring in 2026. Options issued under the plans vest over
6 months
to
4
years. We estimate the fair value of stock option awards on the date of grant using the Black-Scholes option pricing model using the following assumptions:
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
2017
|
|
2016
|
|
2015
|
Risk free interest rate
|
2%
|
|
2%
|
|
2%
|
Expected life
|
6 years
|
|
6 years
|
|
6 years
|
Dividend rate
|
0%
|
|
0%
|
|
0%
|
Volatility
|
63%
|
|
63%
|
|
67%
|
Stock option transactions and the options outstanding are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
2017
|
|
2016
|
|
2015
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
Outstanding at beginning of period
|
1,841,567
|
|
|
$
|
8.15
|
|
|
1,627,477
|
|
|
$
|
9.11
|
|
|
1,063,324
|
|
|
$
|
7.37
|
|
Granted
|
145,000
|
|
|
5.23
|
|
|
360,075
|
|
|
5.25
|
|
|
327,500
|
|
|
9.74
|
|
Assumed - merger
|
—
|
|
|
|
|
|
—
|
|
|
—
|
|
|
367,229
|
|
|
14.19
|
|
Exercised
|
(317,986
|
)
|
|
6.30
|
|
|
(15,346
|
)
|
|
3.28
|
|
|
(94,701
|
)
|
|
5.52
|
|
Forfeited/canceled
|
(108,140
|
)
|
|
12.71
|
|
|
(130,639
|
)
|
|
12.86
|
|
|
(35,875
|
)
|
|
24.71
|
|
Outstanding at end of period
|
1,560,441
|
|
|
$
|
7.95
|
|
|
1,841,567
|
|
|
$
|
8.15
|
|
|
1,627,477
|
|
|
$
|
9.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of period
|
1,055,865
|
|
|
$
|
8.58
|
|
|
1,127,611
|
|
|
$
|
8.92
|
|
|
1,002,421
|
|
|
$
|
9.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average grant-date fair value of options granted during the period
|
$
|
3.04
|
|
|
|
|
$
|
3.03
|
|
|
|
|
$
|
5.91
|
|
|
|
The following tables summarize information for stock options outstanding and exercisable as of
September 30, 2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
Range of Exercise
Prices
|
|
Number
Outstanding
|
|
Remaining
Contractual
Life
|
|
Average
Exercise
Price
|
|
Aggregate
Intrinsic
Value
|
|
|
|
|
(in years)
|
|
|
|
(in thousands)
|
2.95-4.87
|
|
169,459
|
|
|
5.36
|
|
$
|
3.54
|
|
|
|
5.07-5.20
|
|
70,990
|
|
|
9.03
|
|
5.07
|
|
|
|
5.25-5.25
|
|
263,936
|
|
|
8.13
|
|
5.25
|
|
|
|
5.40-6.15
|
|
105,520
|
|
|
5.59
|
|
5.93
|
|
|
|
7.01-7.01
|
|
183,176
|
|
|
6.20
|
|
7.01
|
|
|
|
7.15-7.87
|
|
35,234
|
|
|
3.65
|
|
7.61
|
|
|
|
7.98-7.98
|
|
195,273
|
|
|
4.21
|
|
7.98
|
|
|
|
8.20-9.94
|
|
70,707
|
|
|
5.09
|
|
8.89
|
|
|
|
9.98-9.98
|
|
267,950
|
|
|
7.14
|
|
9.98
|
|
|
|
10.50-27.47
|
|
198,196
|
|
|
2.34
|
|
15.23
|
|
|
|
|
|
1,560,441
|
|
|
5.84
|
|
$
|
7.95
|
|
|
$
|
7,060
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest as of September 30, 2017
|
|
1,559,021
|
|
|
5.84
|
|
$
|
7.95
|
|
|
$
|
7,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Exercisable
|
Range of Exercise
Prices
|
|
Number
Exercisable
|
|
Weighted
Average
Exercise
Price
|
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
|
(in thousands)
|
2.95-4.87
|
|
132,793
|
|
|
$
|
3.18
|
|
|
|
5.07-5.20
|
|
990
|
|
|
5.20
|
|
|
|
5.25-5.25
|
|
74,604
|
|
|
5.25
|
|
|
|
5.40-6.15
|
|
90,520
|
|
|
5.96
|
|
|
|
7.01-7.01
|
|
131,950
|
|
|
7.01
|
|
|
|
7.15-7.87
|
|
25,132
|
|
|
7.51
|
|
|
|
7.98-7.98
|
|
195,273
|
|
|
7.98
|
|
|
|
8.20-9.94
|
|
53,207
|
|
|
9.12
|
|
|
|
9.98-9.98
|
|
155,200
|
|
|
9.98
|
|
|
|
10.50-27.47
|
|
196,196
|
|
|
15.28
|
|
|
|
|
|
1,055,865
|
|
|
8.58
|
|
|
$
|
4,356
|
|
The aggregate intrinsic value in the tables above represents the total pretax intrinsic value, based on our closing stock price of
$11.98
per share as of September 29, 2017, the last business day of our fiscal year, which would have been received by the option holders had all option holders exercised their options as of that date. The total intrinsic value of stock options exercised during the fiscal years ended
September 30, 2017
,
2016
and
2015
was
$1.1 million
, less than
$0.1 million
and $
0.6 million
, respectively.
Restricted Stock Awards
We award restricted shares under the existing share-based compensation plans. Our restricted share awards vest in equal annual installments over 6 months to four years. The total value of these awards is expensed on a ratable basis over the service period of the employees receiving the grants. The “service period” is the time during which the employees receiving grants must remain employed for the shares granted to fully vest. There were no restricted stock awards outstanding at the end of
2017
or
2016
.
9. Benefit Plans
We have retirement plans covering substantially all employees. The principal plans are the multi-employer defined benefit pension plans of our operations in the Netherlands and France, the multi-employer plan for hourly union employees in Pennsylvania and our defined contribution plan that covers substantially all of our employees in the United States. The multi-employer plans in the United States and France as well as the defined contribution plan are insignificant.
Pensions
– Our employees in The Netherlands,
123
at
September 30, 2017
, participate in a multi-employer pension plan Pensioenfonds Metaal en Techniek (“PMT”), determined in accordance with the collective bargaining agreements effective for the industry in the Netherlands. The collective bargaining agreement has no expiration date. This multi-employer pension plan covers approximately
33,000
companies and
1.2 million
participants. Amtech’s contribution to the multi-employer pension plan is less than
5.0%
of the total contributions to the plan. The plan monitors its risks on a global basis, not by company or employee, and is subject to regulation by Dutch governmental authorities. By law (the Dutch Pension Act), a multi-employer pension plan must be monitored against specific criteria, including the coverage ratio of the plan assets to its obligations. This coverage ratio must exceed
105%
for the total plan. Every company participating in a Dutch multi-employer union plan contributes a premium calculated as a percentage of its total pensionable salaries, with each company subject to the same percentage contribution rate. The premium can fluctuate yearly based on the coverage ratio of the multi-employer union plan. The pension rights of each employee are based upon the employee’s average salary during employment, the years of service, and the participant’s age at the time of retirement.
Our net periodic pension cost for this multi-employer pension plan for any period is the amount of the required contribution for that period. A contingent liability may arise from, for example, possible actuarial losses relating to other participating entities because each entity that participates in a multi-employer union plan shares in the actuarial risks of every other participating entity or any responsibility under the terms of a plan to finance any shortfall in the plan if other entities cease to participate
The coverage ratio of the Dutch multi-employer union plan is
102.2%
as of
September 30, 2017
. In 2013, PMT prepared and executed a “Recovery Plan” which was approved by De Nederlandsche Bank, the Dutch central bank, which is the supervisor of all pension companies in the Netherlands. As a result of the Recovery Plan, the pension rights decreased
6.3%
in April 2013 and the employer’s premium percentage increased to
16.6%
of pensionable wages. The coverage ratio is calculated by dividing the plan assets by the total sum of pension liabilities and is based on actual market interest. The coverage ratio of PMT fluctuates during a year due to the changes in the value of the assets and the present value of the liabilities. During the fiscal year
2017
, the coverage ratio was as high as
102.2%
in the fourth quarter and as low as
93.6%
in the first quarter. The fluctuations are due to the reduction in the ultimate forward rate (which increases the present value of the liabilities) and a decrease in the value of global equities. As of
September 30, 2017
, PMT’s total plan assets were
$80.7 billion
and the actuarial present value of accumulated plan benefits was
$78.9 billion
.
Below is a table of our contributions to multi-employer pension plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
2017
|
|
2016
|
|
2015
|
|
(dollars in thousands)
|
Pensioenfonds Metaal en Techniek (PMT)
|
$
|
805
|
|
|
$
|
796
|
|
|
$
|
805
|
|
Other plans
|
188
|
|
|
187
|
|
|
158
|
|
Total
|
$
|
993
|
|
|
$
|
983
|
|
|
$
|
963
|
|
Defined Contribution Plans
– We match employee contributions to our defined contribution plans on a discretionary basis. The match was
$0.3 million
,
$0.2 million
and
$0.2 million
in
2017
,
2016
and
2015
, respectively.
10. Income Taxes
The components of income (loss) before provision for income taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
2017
|
|
2016
|
|
2015
|
|
(dollars in thousands)
|
Domestic
|
$
|
1,900
|
|
|
$
|
2,100
|
|
|
$
|
94
|
|
Foreign
|
7,930
|
|
|
(7,550
|
)
|
|
(4,901
|
)
|
|
$
|
9,830
|
|
|
$
|
(5,450
|
)
|
|
$
|
(4,807
|
)
|
The components of the provision (benefit) for income taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
2017
|
|
2016
|
|
2015
|
|
(dollars in thousands)
|
Current:
|
|
|
|
|
|
Domestic federal
|
$
|
54
|
|
|
$
|
530
|
|
|
$
|
(320
|
)
|
Foreign
|
1,330
|
|
|
500
|
|
|
500
|
|
Foreign withholding taxes
|
240
|
|
|
280
|
|
|
1,240
|
|
Domestic state
|
120
|
|
|
110
|
|
|
—
|
|
Total current
|
1,744
|
|
|
1,420
|
|
|
1,420
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
Domestic federal
|
—
|
|
|
1,680
|
|
|
720
|
|
Foreign
|
—
|
|
|
—
|
|
|
(210
|
)
|
Domestic state
|
—
|
|
|
—
|
|
|
(20
|
)
|
Total deferred
|
—
|
|
|
1,680
|
|
|
490
|
|
Total provision
|
$
|
1,744
|
|
|
$
|
3,100
|
|
|
$
|
1,910
|
|
A reconciliation of actual income taxes to income taxes at the expected United States federal corporate income tax rate of
thirty-four percent
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
2017
|
|
2016
|
|
2015
|
|
(dollars in thousands)
|
Tax expense (benefit) at the U.S. rate (34%)
|
$
|
3,340
|
|
|
$
|
(1,890
|
)
|
|
$
|
(1,630
|
)
|
Effect of permanent book-tax differences
|
340
|
|
|
1,120
|
|
|
(1,570
|
)
|
State tax provision
|
100
|
|
|
110
|
|
|
(40
|
)
|
Valuation allowance for net deferred tax assets
|
(1,610
|
)
|
|
2,690
|
|
|
2,490
|
|
Uncertain tax items
|
350
|
|
|
350
|
|
|
330
|
|
Foreign tax rate differential
|
(776
|
)
|
|
1,050
|
|
|
1,890
|
|
Other items
|
—
|
|
|
(330
|
)
|
|
440
|
|
|
$
|
1,744
|
|
|
$
|
3,100
|
|
|
$
|
1,910
|
|
Deferred income taxes reflect the tax effects of temporary differences between the carrying value of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of temporary book-tax differences that give rise to significant portions of the deferred tax assets and deferred tax liability are as follows:
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
2017
|
|
2016
|
|
(dollars in thousands)
|
Deferred tax assets - current:
|
|
|
|
Capitalized inventory costs
|
$
|
210
|
|
|
$
|
270
|
|
Inventory write-downs
|
1,945
|
|
|
2,460
|
|
Accrued warranty
|
260
|
|
|
160
|
|
Deferred profits
|
1,190
|
|
|
1,180
|
|
Accruals and reserves not currently deductible
|
1,945
|
|
|
1,720
|
|
Deferred tax assets - current
|
$
|
5,550
|
|
|
$
|
5,790
|
|
Valuation allowance
|
(5,550
|
)
|
|
(5,790
|
)
|
Deferred tax assets - current, net of valuation allowance
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Deferred tax assets (liabilities) - non-current:
|
|
|
|
Stock option expense
|
$
|
1,080
|
|
|
$
|
890
|
|
Book vs. tax basis of acquired assets
|
(1,290
|
)
|
|
(1,340
|
)
|
Federal net operating loss carryforwards
|
4,820
|
|
|
3,370
|
|
Foreign and state net operating losses
|
14,800
|
|
|
13,200
|
|
Book vs. tax depreciation and amortization
|
(2,250
|
)
|
|
(2,200
|
)
|
Foreign tax credits
|
420
|
|
|
4,230
|
|
Other deferred tax assets
|
—
|
|
|
570
|
|
Total deferred tax assets - non-current
|
17,580
|
|
|
18,720
|
|
Valuation allowance
|
(17,380
|
)
|
|
(18,520
|
)
|
Deferred tax assets (liabilities) - non-current, net of valuation allowance
|
$
|
200
|
|
|
$
|
200
|
|
Changes in the deferred tax valuation allowance are as follows:
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
2017
|
|
2016
|
|
(dollars in thousands)
|
Balance at the beginning of the year
|
$
|
24,310
|
|
|
$
|
23,810
|
|
(Reductions) additions to valuation allowance
|
(1,380
|
)
|
|
500
|
|
Balance at the end of the year
|
$
|
22,930
|
|
|
$
|
24,310
|
|
The deferred tax valuation allowance decreased by
$1.4
million and increased
$0.5
million for the years ended
September 30, 2017
and
2016
, respectively. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future income and tax planning strategies in making this assessment. We have established valuation allowances on substantially all net deferred tax assets, after considering all of the available objective evidence, both positive and negative, historical and prospective, with greater weight given to historical evidence, and determined it is not more likely than not that these assets will be realized. As of September 30, 2017, we reversed a portion of the valuation allowance related to net operating loss carryforwards which we have determined will be utilized against net operating income in the current year. Additionally, as of September 30, 2017, we wrote off acquired foreign tax credits and the related valuation allowance due to our inability to use them prior to expiration.
As of
September 30, 2017
, we have federal net operating loss carryforwards of approximately
$14.5
million that expire at various times between 2028 and 2035. The utilization of those federal net operating losses are limited to approximately
$0.8
million per year. We have foreign net operating loss carryforwards of approximately
$56.4
million which expire at various times through 2025. We have approximately
$7.2
million of state net operating loss carryforwards.
Our historical and continuing policy is that our undistributed foreign earnings are indefinitely reinvested and, accordingly, no related provision for U.S. federal and state income taxes has been provided on the undistributed foreign earnings at
September 30, 2017
. The amount of taxes attributable to these undistributed earnings is immaterial.
We apply the accounting guidance for uncertainty in income taxes using the provisions of FASB ASC 740. In this regard, an uncertain tax position represents our expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. Approximately
$1.7
million of this total represents the amount that, if recognized, would favorably affect our effective income tax rate in future periods.
A reconciliation of the beginning and ending amount of our unrecognized tax benefits is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
2017
|
|
2016
|
|
2015
|
|
(dollars in thousands)
|
Balance at beginning of the year
|
$
|
3,860
|
|
|
$
|
3,510
|
|
|
$
|
3,180
|
|
Additions related to tax positions taken in prior years
|
350
|
|
|
350
|
|
|
330
|
|
Reductions due to lapse of statute of limitations
|
—
|
|
|
—
|
|
|
—
|
|
Balance at the end of the year
|
$
|
4,210
|
|
|
$
|
3,860
|
|
|
$
|
3,510
|
|
We have classified all of our liabilities for uncertain tax positions as income taxes payable long-term. Income taxes long-term also includes other items, primarily withholding taxes that are not due until the related intercompany service fees are paid.
We report accrued interest and penalties related to unrecognized tax benefits in income tax expense. We recognized a net expense for interest and penalties of
$0.4 million
,
$0.4 million
and
$0.3
million for
2017
,
2016
and
2015
, respectively. Income taxes payable long-term on the Consolidated Balance Sheets includes a cumulative accrual for potential interest and penalties of
$2.6
million as of both
September 30, 2017
and
2016
.
We do not expect that the amount of our tax reserves for uncertain tax positions will materially change in the next 12 months other than the continued accrual of interest and penalties.
Amtech and one or more of our subsidiaries file income tax returns in The Netherlands, Germany, France, China and other foreign jurisdictions, as well as the U.S. and various states in the U.S. We have not signed any agreements with the Internal Revenue Service, any state or foreign jurisdiction to extend the statute of limitations for any fiscal year. As such, the number of open years is the number of years dictated by statute in each of the respective taxing jurisdictions, but generally is from
3
to
5
years.
These open years contain certain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, timing, or inclusion of revenues and expenses, or the sustainability of income tax positions of Amtech and our subsidiaries.
11. Commitments and Contingencies
Purchase Obligations
– As of
September 30, 2017
, we had unrecorded purchase obligations in the amount of
$34.4 million
. These purchase obligations consist of outstanding purchase orders for goods and services. While the amount represents purchase agreements, the actual amounts to be paid may be less in the event that any agreements are renegotiated, canceled or terminated.
Development Projects
– In fiscal 2014, Tempress Systems, Inc. (“Tempress”) entered into an agreement with the Energy Research Centre of the Netherlands (“ECN”), a Netherlands government sponsored research institute, for a joint research and development project. Under the terms of the agreement, Tempress sold an ion implanter (“Equipment”) to ECN for
$1.4 million
. Both Tempress and ECN are performing research and development projects utilizing the Equipment at the ECN facilities. Each party to the agreement has
100%
rights to the results of the projects
developed separately by the individual parties. Any results co-developed will be jointly owned. Tempress met its requirement to contribute
$1.4 million
to the project in the form of installation of the equipment, acceptance testing, project meeting attendance, training, parts, and service, including keeping the equipment in good condition and repair for the first two years of the agreement, prior to fiscal 2017.
EPA Accrual
- As a result of the BTU acquisition, we assumed BTU’s proportional responsibility for clean-up costs at a Superfund site. As an equipment manufacturer, BTU generated and disposed of small quantities of solid waste that were considered hazardous under Environment Protection Agency (“EPA”) regulations. Because BTU historically used a waste disposal firm that disposed of the solid waste at a site that the EPA designated as a Superfund site, BTU was named by the EPA as one of the entities responsible for a portion of the expected clean-up costs. Based on our proportional responsibility, as negotiated with and agreed to by the EPA, our liability related to this matter is less than
$0.1
million, which is included in Other Accrued Liabilities on the Consolidated Balance Sheet as of
September 30, 2017
and
2016
. In accordance with the agreement, we established a letter of credit for
$0.2
million to the benefit of the EPA for potential cash payments as settlements for our proportional liability, which is included in Restricted Cash in the Consolidated Balance Sheets.
Legal Proceedings –
We are defendants from time to time in actions for matters arising out of our business operations. We regularly evaluate the status of the legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss, or an additional loss, may have been incurred and determine if accruals are appropriate. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of possible loss or range of possible loss can be made for disclosure. Although litigation is inherently unpredictable, we believe that we have adequate provisions for any probable and estimable losses. It is possible, nevertheless, that our consolidated financial position, results of operations or liquidity could be materially and adversely affected in any particular period by the resolution of a legal proceeding. Legal expenses related to defense, negotiations, settlements, rulings and advice of outside legal counsel are expensed as incurred.
As previously disclosed in our filings with the SEC, in April 2016 we paid
$325,000
pursuant to a settlement agreement entered into in connection with litigation filed against us related to the BTU Merger.
Operating Leases –
We lease buildings, vehicles and equipment under operating leases. Rental expense under such operating leases was
$1.2 million
,
$1.4 million
, and
$1.2 million
in
2017
,
2016
and
2015
, respectively. As of
September 30, 2017
, future minimum rental commitments under non-cancelable operating leases with initial or remaining terms of
one
year or more totaled $
2.3 million
, of which
$0.9 million
,
$0.8 million
,
$0.4 million
,
$0.2 million
and less than
$0.1 million
is payable in
2018
,
2019
,
2020
,
2021
and
2022
, respectively, and none thereafter.
Employment Contracts –
We have employment contracts with, and severance plans covering, certain officers and management employees under which severance payments would become payable in the event of specified terminations without cause or terminations under certain circumstances after a change in control. If severance payments under the current employment agreements or plan payments were to become payable, the severance payments would generally range from twelve to thirty-six months of salary.
12. Acquisitions
Acquisition of BTU International, Inc.
On
January 30, 2015
, we completed our acquisition of BTU (the “Merger”). In connection with the Merger, each share of BTU common stock outstanding immediately prior to the effective time of the Merger, including BTU restricted stock units that vested immediately prior to the effective time of the Merger, was converted to
0.3291
shares of common stock of Amtech. We issued
3,185,852
shares our common stock on the Merger date. Pursuant to the terms of the Merger Agreement, options to purchase BTU common stock held by BTU employees were assumed by us and converted into options to purchase shares of our common stock on substantially the same terms and conditions as were applicable to such BTU stock options, with appropriate adjustments based upon the exchange ratio of
0.3291
to the exercise price and the number of shares of our common stock subject to such stock option. As a result of the Merger, we own
100%
of the outstanding stock of BTU.
The following unaudited pro forma data has been prepared as if the acquisition of BTU occurred on October 1, 2013 and includes adjustments for depreciation expense, amortization of intangibles, and the effect of other purchase accounting adjustments. In addition, the unaudited pro forma consolidated results do not purport to project the future
results of operations of the combined company nor do they reflect the expected realization of any cost savings associated with the acquisition.
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended (unaudited)
|
|
|
September 30, 2015
|
|
September 30, 2014
|
|
|
(dollars in thousands, except per share data)
|
Revenue, net
|
|
$
|
121,186
|
|
|
$
|
111,531
|
|
Net loss
|
|
$
|
(9,223
|
)
|
|
$
|
(15,586
|
)
|
Earnings per share available to Amtech stockholders:
|
|
|
|
|
Basic
|
|
$
|
(0.70
|
)
|
|
$
|
(1.21
|
)
|
Diluted
|
|
$
|
(0.70
|
)
|
|
$
|
(1.21
|
)
|
The Merger was an all-stock transaction. The following table summarizes the consideration transferred:
|
|
|
|
|
(In thousands, except per share amounts)
|
|
BTU common shares and restricted stock units exchanged
|
9,681
|
|
Exchange ratio
|
0.3291
|
|
Amtech common stock issued for consideration
|
3,186
|
|
Amtech common stock per share price on January 30, 2015
|
$
|
8.20
|
|
Consideration for BTU common shares and restricted stock units
|
$
|
26,125
|
|
Vested BTU stock options exchanged for Amtech stock options
|
$
|
500
|
|
Total fair value of consideration transferred
|
$
|
26,625
|
|
The following table summarizes the allocation of the consideration for the assets acquired and liabilities assumed on
January 30, 2015
, including the effects of measurement period adjustments recorded in fiscal 2016:
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
Initial Estimate
|
Adjustments
|
Final Allocation
|
Fair value of net tangible assets acquired
|
$
|
19,232
|
|
$
|
(600
|
)
|
$
|
18,632
|
|
Goodwill
|
4,463
|
|
600
|
|
5,063
|
|
Identifiable intangible assets
|
2,930
|
|
—
|
|
2,930
|
|
Total consideration allocated
|
$
|
26,625
|
|
$
|
—
|
|
$
|
26,625
|
|
Refer to Note 1 “Summary of Significant Accounting Policies,” Note 5 “Intangible Assets,” and Note 6 “Goodwill” for additional information on Goodwill and Intangible Assets.
Transaction-related expenses of
$4.0
million and
$1.3
million for fiscal 2015 and 2014, respectively, are included in the Selling, General and Administrative line in the Consolidated Statements of Operations. We recorded a net charge of
$0.6 million
for the year ended September 30, 2015, which is reported in restructuring and other charges in the Consolidated Statement of Operations, for employee related costs, including costs for severance related to the BTU acquisition.
Acquisition of SoLayTec B.V.
On December 24, 2014, we expanded our participation in the solar market by acquiring a
51%
controlling interest in SoLayTec, which provides ALD systems used in high efficiency solar cells, for a total purchase price consideration of
$1.9 million
. We consolidated the results of operations for SoLayTec beginning on December 24, 2014, the effective date of the acquisition, which were not material to our Consolidated Statement of Operations for fiscal 2015.
On July 31, 2017, Tempress entered into an Exit Agreement (the “Agreement”) with the two minority owners of SoLayTec (“Minority Owners”) to acquire their shares of SoLayTec, resulting in Tempress becoming the sole owner
of SoLayTec. The terms of the Agreement, which was effective as of July 1, 2017, state that the Minority Owners will sell all of their SoLayTec shares to Tempress for a nominal fee and waive all right to future repayment of principal and interest on loans payable to the Minority Owners. As a result of the effectiveness of the Agreement, SoLayTec will have no further liability under the loans. The amount of principal and interest forgiven was approximately
$2.4 million
, which was recorded as a capital contribution, with no impact on the Consolidated Statement of Operations. The carrying value of the non-controlling interest at the date of the Agreement was
$2.7 million
. Under the terms of the Agreement, if we sell SoLayTec within two years from the effective date, the Minority Owners are entitled to a pro-rated payment of the sale proceeds.
13. Deconsolidation
In fiscal 2015, we deconsolidated Kingstone, eliminating the assets, liabilities and non-controlling interests recorded for Kingstone from our Consolidated Balance Sheet, thereby reducing our ownership to
15%
of the Hong Kong holding company. In fiscal 2015, we recorded a gain of
$8.8 million
as a result of the deconsolidation. The gain was computed as follows: the fair value of consideration received, plus the fair values of the retained non-controlling interest and the sales and service rights, less the carrying value of Kingstone’s net assets. Based on the terms of the transaction agreements, in fiscal 2016, we received a payment of
$4.9 million
from Kingstone for its exclusive sale and service rights in the solar ion implant equipment. We recognized a gain on the sale of
$2.6 million
for the year ended September 30, 2016, which is included in our Consolidated Statement of Operations in Gain on sale of other assets.
Our remaining investment in Kingstone is accounted for using the equity method for periods subsequent to the deconsolidation due to our ability to exert significant influence over the financial and operating policies of Kingstone, primarily through our representation on the board of directors. See Note 14 “Investment” for additional details.
14. Investment
As discussed in Note 13 “Deconsolidation”, on September 16, 2015, we deconsolidated Kingstone, reducing our ownership to
15%
of the Hong Kong holding company. Our investment in Kingstone is accounted for using the equity method for periods subsequent to the deconsolidation due to our ability to exert significant influence over the financial and operating policies of Kingstone, primarily through our representation on the board of directors. We recognize our portion of net income or losses on a one-quarter lag. The resulting equity method investment was initially recorded at fair value at
$2.7 million
using the value the third party purchaser placed on their investment in Kingstone Shanghai, a Level 2 input in the fair value hierarchy. The carrying value of the equity method investment in Kingstone was
$2.6 million
and
$3.0 million
as of
September 30, 2017
and
2016
, respectively.
As of September 30, 2016, our carrying value of Kingstone exceeded its share of the underlying equity in the net assets by approximately
$2.7 million
. In accordance with ASC Topic 323,
Investments
-
Equity Method,
the difference
(the “basis difference”) between the initial fair value of our investment and the proportional interest in the underlying net assets of Kingstone was accounted for using the acquisition method of accounting, which requires that the basis difference be allocated to the identifiable assets and liabilities of Kingstone at fair value and based upon our proportionate ownership. Determining the fair value of assets and liabilities is judgmental in nature and involves the use of significant estimates and assumptions. During the fourth quarter of 2016, we completed our valuation of the identifiable assets to which the basis is attributable and recorded amortization based on this valuation for the year ended September 30, 2016.
15. Shareholder Rights Plan
On December 15, 2008, Amtech and Computershare Trust Company, N.A., as Rights Agent (the “Rights Agent”), entered into an Amended and Restated Rights Agreement (the “Restated Rights Agreement”) which amended and restated the terms governing the previously authorized shareholder rights (each a “Right”) to purchase fractional shares of our Series A Participating Preferred Stock (“Series A Preferred”) currently attached to each of our outstanding Common Shares, par value
$0.01
per share (“Common Shares”). As amended, each Right entitles the registered holder to purchase from us
one one-thousandth
of a share of Series A Preferred at an exercise price of
$51.60
(the “Exercise Price”), subject to adjustment. The rights will expire
10
years after issuance and will be exercisable if (a) a person or group becomes the beneficial owner of
15%
or more of our common stock or (b) a person or group commences a tender or exchange offer that would result in the offeror beneficially owning
15%
or more of our common stock. The Final Expiration Date (as defined in the Restated Rights Agreement) is December 14, 2018.
On October 1, 2015, we entered into a Second Amended and Restated Rights Agreement (the “Second Restated Rights Agreement”) with Computershare Trust Company, N.A., which expands the definition of Exempted Person to include any person that the Board, in its sole and absolute discretion, exempts from becoming an Acquiring Person under the Second Restated Rights Agreement. A person deemed an Exempted Person under the Second Restated Rights Agreement cannot trigger any of the Rights provided therein so long as such Exempted Person complies with the terms and conditions by which the Board approved such exemption from the Restated Rights Agreement.
As previously disclosed, on October 8, 2015, we entered into a Letter Agreement (the “Agreement”) by and between Amtech and certain shareholders of Amtech who jointly file (the “Joint Filers”) under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Agreement permits the Joint Filers, pursuant to the Restated Rights Agreement, to individually acquire shares of common stock of Amtech that would, in the aggregate, bring the Joint Filers’ collective ownership to no more than
19.9%
of our issued and outstanding common stock at any time. In the event the Joint Filers’ collective ownership at any time exceeds
19.9%
of our issued and outstanding shares of common stock, we are entitled to specific performance and all other remedies entitled to us at law or equity, among others. The Board approved the Agreement and transactions contemplated thereunder, and has the sole authority to terminate the Agreement at any time.
16. Related Party Transactions
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence, such as a family member or relative, stockholder, or a related corporation.
In the fourth quarter of 2015, we deconsolidated Kingstone, reducing our ownership to
15%
of Kingstone Hong Kong, the Hong Kong holding company. Upon the deconsolidation, Kingstone became a related party of Amtech. Based on the terms of the transaction agreements in the second quarter of 2016, we received a payment of
$4.9 million
from Kingstone for its exclusive sale and service rights in the solar ion implant equipment. We recognized a gain on the sale of
$2.6 million
for the year ended September 30, 2016, which is included in our Consolidated Statement of Operations in Gain on sale of other assets.
As of June 30, 2017, SoLayTec had borrowed approximately
$2.4 million
, including accrued interest, from its minority shareholders. These loans were forgiven as part of the Exit Agreement entered into in July 2017. See Note 12 “Acquisitions” for additional information.
17. Business Segments
Following our acquisition of BTU, an evaluation was conducted of our organizational structure. Beginning with the second quarter of fiscal 2015, we made changes to our reportable segments. Prior period amounts have been revised to conform to the current period segment reporting structure. Our
three
reportable segments are as follows:
Solar
- We are a leading supplier of thermal processing systems, including related automation, parts and services, to the solar/photovoltaic industry and also offer PECVD (plasma-enhanced chemical vapor deposition) equipment to the global solar market.
Semiconductor
- We design, manufacture, sell and service thermal processing equipment and related controls for use by leading semiconductor manufacturers, and in electronics, automotive and other industries.
Polishing
- We produce consumables and machinery for lapping (fine abrading) and polishing of materials, such as sapphire substrates, optical components, silicon wafers, numerous types of crystal materials, ceramics and metal components.
Beginning in the second quarter of 2015, SoLayTec’s business is included in the results for the Solar segment, and BTU’s business is included in the results for the Semiconductor segment. See Note 12 “Acquisitions” for additional information with respect to our recent acquisitions.
Information concerning our business segments is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
2017
|
|
2016
|
|
2015
|
|
(dollars in thousands)
|
Net revenue:
|
|
|
|
|
|
Solar*
|
$
|
87,031
|
|
|
$
|
60,946
|
|
|
$
|
56,689
|
|
Semiconductor
|
67,237
|
|
|
50,637
|
|
|
37,250
|
|
Polishing
|
10,248
|
|
|
8,725
|
|
|
10,944
|
|
|
$
|
164,516
|
|
|
$
|
120,308
|
|
|
$
|
104,883
|
|
Operating income (loss):
|
|
|
|
|
|
Solar*
|
$
|
6,060
|
|
|
$
|
(6,696
|
)
|
|
$
|
(5,056
|
)
|
Semiconductor
|
9,538
|
|
|
3,904
|
|
|
(1,268
|
)
|
Polishing
|
2,617
|
|
|
1,588
|
|
|
2,250
|
|
Non-segment related
|
(7,790
|
)
|
|
(6,704
|
)
|
|
(9,447
|
)
|
|
$
|
10,425
|
|
|
$
|
(7,908
|
)
|
|
$
|
(13,521
|
)
|
* The financial statement of business units included in the Solar segment include some sales of equipment and parts to the semiconductor, silicon wafer and MEMS industries, comprising less than
25%
of the Solar segment revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
2017
|
|
2016
|
|
2015
|
|
(dollars in thousands)
|
Capital expenditures:
|
|
|
|
|
|
Solar
|
$
|
1,008
|
|
|
$
|
235
|
|
|
$
|
411
|
|
Semiconductor
|
236
|
|
|
692
|
|
|
136
|
|
Polishing
|
12
|
|
|
51
|
|
|
63
|
|
|
$
|
1,256
|
|
|
$
|
978
|
|
|
$
|
610
|
|
Depreciation and amortization expense:
|
|
|
|
|
|
Solar
|
$
|
1,544
|
|
|
$
|
2,014
|
|
|
$
|
2,940
|
|
Semiconductor
|
876
|
|
|
870
|
|
|
318
|
|
Polishing
|
73
|
|
|
90
|
|
|
99
|
|
|
$
|
2,493
|
|
|
$
|
2,974
|
|
|
$
|
3,357
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
September 30,
2016
|
|
(dollars in thousands)
|
Identifiable assets:
|
|
|
|
Solar
|
$
|
97,999
|
|
|
$
|
42,962
|
|
Semiconductor
|
57,177
|
|
|
51,985
|
|
Polishing
|
5,078
|
|
|
4,819
|
|
Non-segment related
|
31,369
|
|
|
18,664
|
|
|
$
|
191,623
|
|
|
$
|
118,430
|
|
18. Major Customers and Foreign Sales
In 2017,
one
customer accounted for
25%
of net revenues. In 2016,
one
customer accounted for
11%
of net revenues. In 2015,
two
customers individually accounted for
15%
and
11%
of net revenues.
Our net revenues for
2017
,
2016
and
2015
were to customers in the following geographic regions:
|
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
2017
|
|
2016
|
|
2015
|
United States
|
11
|
%
|
|
17
|
%
|
|
24
|
%
|
Other
|
1
|
%
|
|
3
|
%
|
|
2
|
%
|
Total Americas
|
12
|
%
|
|
20
|
%
|
|
26
|
%
|
Taiwan
|
12
|
%
|
|
15
|
%
|
|
13
|
%
|
Malaysia
|
9
|
%
|
|
18
|
%
|
|
13
|
%
|
China
|
47
|
%
|
|
28
|
%
|
|
26
|
%
|
Other
|
7
|
%
|
|
7
|
%
|
|
8
|
%
|
Total Asia
|
75
|
%
|
|
68
|
%
|
|
60
|
%
|
Germany
|
5
|
%
|
|
3
|
%
|
|
5
|
%
|
Other
|
8
|
%
|
|
9
|
%
|
|
9
|
%
|
Total Europe
|
13
|
%
|
|
12
|
%
|
|
14
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
19. Geographic Regions
We have operations in The Netherlands, United States, France and China. Revenues, operating income (loss) and identifiable assets by geographic region are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
2017
|
|
2016
|
|
2015
|
|
(dollars in thousands)
|
Net revenue:
|
|
The Netherlands
|
$
|
81,443
|
|
|
$
|
52,189
|
|
|
$
|
46,982
|
|
United States
|
60,952
|
|
|
44,299
|
|
|
37,483
|
|
France
|
5,588
|
|
|
8,758
|
|
|
8,387
|
|
China
|
12,673
|
|
|
11,799
|
|
|
9,725
|
|
Other
|
3,860
|
|
|
3,263
|
|
|
2,306
|
|
|
$
|
164,516
|
|
|
$
|
120,308
|
|
|
$
|
104,883
|
|
|
|
|
|
|
|
Operating income (loss):
|
|
|
|
|
|
The Netherlands
|
$
|
5,206
|
|
|
$
|
(7,773
|
)
|
|
$
|
(9,069
|
)
|
United States
|
1,527
|
|
|
(1,396
|
)
|
|
(5,541
|
)
|
France
|
(1,000
|
)
|
|
(783
|
)
|
|
(330
|
)
|
China
|
3,647
|
|
|
1,530
|
|
|
986
|
|
Other
|
1,045
|
|
|
514
|
|
|
433
|
|
|
$
|
10,425
|
|
|
$
|
(7,908
|
)
|
|
$
|
(13,521
|
)
|
|
|
|
|
|
|
|
|
|
As of September 30,
|
|
|
|
2017
|
|
2016
|
Net property, plant and equipment:
|
|
|
|
|
|
The Netherlands
|
|
|
$
|
5,190
|
|
|
$
|
4,996
|
|
United States
|
|
|
9,924
|
|
|
10,171
|
|
France
|
|
|
289
|
|
|
241
|
|
China
|
|
|
389
|
|
|
552
|
|
|
|
|
$
|
15,792
|
|
|
$
|
15,960
|
|
20. Supplementary Financial Information
The following is a summary of the activity in our allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended September 30,
|
|
2017
|
|
2016
|
|
2015
|
|
(dollars in thousands)
|
Balance at beginning of year
|
$
|
3,730
|
|
|
$
|
5,009
|
|
|
$
|
2,846
|
|
Provision / (Reversal)
|
(720
|
)
|
|
1,698
|
|
|
(194
|
)
|
Write offs
|
(1,249
|
)
|
|
(1,942
|
)
|
|
(130
|
)
|
Acquired through business acquisitions
|
—
|
|
|
—
|
|
|
1,397
|
|
Adjustment
(1) (2)
|
(895
|
)
|
|
(1,035
|
)
|
|
1,090
|
|
Balance at end of year
|
$
|
866
|
|
|
$
|
3,730
|
|
|
$
|
5,009
|
|
(1) 2015 amount primarily relates to cancellation fees that were legally owed to us but for which collectability was not assured. A portion of these fees were collected in 2016, and the remainder were written off.
(2) Includes foreign currency translation adjustments.
21. Selected Quarterly Data (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
Fiscal Year 2017:
|
(in thousands, except per share amounts)
|
Revenue
|
$
|
29,135
|
|
|
$
|
32,944
|
|
|
$
|
47,760
|
|
|
$
|
54,677
|
|
Gross profit
|
$
|
8,443
|
|
|
$
|
8,395
|
|
|
$
|
15,502
|
|
|
$
|
19,592
|
|
Provision for income taxes
|
$
|
90
|
|
|
$
|
194
|
|
|
$
|
986
|
|
|
$
|
474
|
|
Net income (loss) attributable to Amtech Systems, Inc.
|
$
|
(53
|
)
|
|
$
|
(1,420
|
)
|
|
$
|
3,287
|
|
|
$
|
7,317
|
|
Net income (loss) per share attributable to Amtech Systems, Inc.:
|
|
|
|
|
|
|
|
Basic earnings per share
|
$
|
0.00
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.25
|
|
|
$
|
0.53
|
|
Shares used in calculation
|
13,179
|
|
|
13,188
|
|
|
13,242
|
|
|
13,895
|
|
Diluted earnings per share
|
$
|
0.00
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.25
|
|
|
$
|
0.51
|
|
Shares used in calculation
|
13,179
|
|
|
13,188
|
|
|
13,398
|
|
|
14,294
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2016:
|
|
Revenue
|
$
|
22,074
|
|
|
$
|
22,483
|
|
|
$
|
33,342
|
|
|
$
|
42,409
|
|
Gross profit
|
$
|
5,955
|
|
|
$
|
6,001
|
|
|
$
|
9,631
|
|
|
$
|
12,476
|
|
Provision for income taxes
|
$
|
300
|
|
|
$
|
1,670
|
|
|
$
|
70
|
|
|
$
|
1,060
|
|
Net loss attributable to Amtech Systems, Inc.
|
$
|
(4,015
|
)
|
|
$
|
(1,499
|
)
|
|
$
|
(1,209
|
)
|
|
$
|
(285
|
)
|
Net loss per share attributable to Amtech Systems, Inc.:
|
|
|
|
|
|
|
|
Basic loss per share
|
$
|
(0.31
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.02
|
)
|
Shares used in calculation
|
13,152
|
|
|
13,169
|
|
|
13,173
|
|
|
13,177
|
|
Diluted loss per share
|
$
|
(0.31
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.02
|
)
|
Shares used in calculation
|
13,152
|
|
|
13,169
|
|
|
13,173
|
|
|
13,177
|
|
|
|
|
|
|
|
|
|