**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

| **ý** |   | **QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                       |
|------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |   |                                                                                                                                                                                                                                               |
|       |   | **For  the quarterly period ended March 29, 2003**                                                                                                                                                                                                 |
|       |   |                                                                                                                                                                                                                                               |
|       |   | **OR**                                                                                                                                                                                                                                             |
|       |   |                                                                                                                                                                                                                                               |
| **o**      |   | **TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                      |
|       |   |                                                                                                                                                                                                                                               |
|       |   | **For  the transition period  from                 to                 ** |
|       |   |                                                                                                                                                                                                                                               |
|       |   | **Commission  File No. 0-22384**                                                                                                                                                                                                                   |

 

**MICRO COMPONENT TECHNOLOGY, INC.**

(Exact name of registrantas specified in its charter)

 

| **Minnesota**                                                    |   | **41-0985960**                        |
|------------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of  incorporation or organization) |   | (I.R.S. Employer  Identification No.) |
|                                                             |   |                                  |
| **2340  West County Road C, St. Paul, MN 55113-2528**            |
| (Address of principal  executive offices)                        |
|                                                             |
| **(651)  697-4000**                                              |
| (Registrant’s telephone  number)                            |

 

Indicate by check markwhether the Registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the Registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days

 

| Yes ý |   | No o |
|------------|--------|------|

 

Indicate by check markwhether the Registrant is an accelerated filer (as defined in Rule 12b-2 of theExchange Act).

 

| Yes o |   | No ý |
|-------|--------|-----------|

 

The number of sharesoutstanding of the Registrant’s Common Stock, as of May 2, 2003 was 17,319,389.

** **

 

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**MICRO COMPONENT TECHNOLOGY, INC**.

 

FORM 10-Q

 

TABLE OF CONTENTS

 
| **PART I - FINANCIAL  INFORMATION**  |
|--------------------------------------|
|                                 |   |   |
|                                 | ITEM 1. | FINANCIAL STATEMENTS |
|                                 |   |   |
|                                 |   | CONSOLIDATED BALANCE SHEETS |
|                                 |   |   |
|                                 |   | CONSOLIDATED  STATEMENTS OF OPERATIONS |
|                                 |   |   |
|                                 |   | CONSOLIDATED  STATEMENTS OF CASH FLOWS |
|                                 |   |   |
|                                 |   | NOTES  TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
|                                 |   |   |
|                                 | ITEM  2. | MANAGEMENT’S  DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION |
|                                 |   |   |
|                                 | ITEM 3. | QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|                                 |   |   |
|                                 | ITEM  4. | EVALUATION  OF DISCLOSURE CONTROLS AND PROCEDURES |
|                                 |   |   |
| **PART II.  OTHER INFORMATION** |
|                                 |   |   |
|                                 | ITEM  2. | CHANGES  IN SECURITIES AND USE OF PROCEEDS |
|                                 |   |   |
|                                 | ITEM 5. | OTHER INFORMATION |
|                                 |   |   |
|                                 | ITEM 6. | EXHIBITS AND  REPORTS ON FORM 8-K |
|                                 |   |   |
|                                 | SIGNATURES |
|                                 |   |   |
|                                 | CERTIFICATIONS |

 

2

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**MICRO COMPONENT TECHNOLOGY, INC.**

FORM 10-Q

# PART I.  FINANCIAL INFORMATION

## ITEM 1.  FINANCIAL STATEMENTS

## CONSOLIDATEDBALANCE SHEETS

(In thousands, exceptshare and per share data)

(Unaudited)

 
|                                                                                                  |   | **March 29,  2003** |   | **December  31,  2002** |   |
|-------------------------------------------------------------------------------------------------------|--------|---------------------|--------|-------------------------|--------|
| **Assets**                                                                                            |   |                |   |                    |   |
| Current assets                                                                                        |   |                |   |                    |   |
| Cash and cash  equivalents                                                                            |   | $                   | 363    |                    | $      | 1,560 |   |
| Accounts  receivable, less allowance for doubtful accounts of $324 and $319,  respectively            |   | 2,211               |   | 786                     |   |
| Inventories                                                                                           |   | 3,813               |   | 3,850                   |   |
| Other                                                                                                 |   | 261                 |   | 212                     |   |
| Total current  assets                                                                                 |   | 6,648               |   | 6,408                   |   |
|                                                                                                  |   |                |   |                    |   |
| Property, plant  and equipment, net                                                                   |   | 491                 |   | 605                     |   |
| Debt issuance  costs, net                                                                             |   | 624                 |   | 665                     |   |
| Other assets                                                                                          |   | 67                  |   | 75                      |   |
|                                                                                                  |   |                |   |                    |   |
| Total assets                                                                                          |   | $                   | 7,830  |                    | $      | 7,753 |   |
|                                                                                                  |   |                |   |                    |   |
| **Liabilities and Stockholders’  Deficit**                                                       |   |                |   |                    |   |
| Current  liabilities:                                                                                 |   |                |   |                    |   |
| Current portion  of long-term debt                                                                    |   | $                   | 18     |                    | $      | 29 |   |
| Accrued  restructuring costs                                                                          |   | 99                  |   | 194                     |   |
| Accounts payable                                                                                      |   | 1,655               |   | 1,010                   |   |
| Accrued  compensation                                                                                 |   | 446                 |   | 419                     |   |
| Accrued interest                                                                                      |   | 250                 |   | 500                     |   |
| Accrued warranty                                                                                      |   | 247                 |   | 200                     |   |
| Customer  prepayments and unearned service revenue                                                    |   | 399                 |   | 300                     |   |
| Deferred revenue  in excess of costs incurred                                                         |   | 214                 |   | 48                      |   |
| Other accrued  liabilities                                                                            |   | 643                 |   | 847                     |   |
| Total current  liabilities                                                                            |   | 3,971               |   | 3,547                   |   |
|                                                                                                  |   |                |   |                    |   |
| 10% senior  subordinated convertible debt                                                             |   | 10,000              |   | 10,000                  |   |
|                                                                                                  |   |                |   |                    |   |
| Stockholders’  deficit:                                                                          |   |                |   |                    |   |
| Preferred stock,  $.01 par value, 1,000,000 authorized, none issued and outstanding                   |   | —              |   | —                  |   |
| Common stock,  $.01 par value, 40,000,000 authorized, 17,319,389 and 14,152,520 issued,  respectively |   | 173                 |   | 142                     |   |
| Additional  paid-in capital                                                                           |   | 89,415              |   | 88,302                  |   |
| Cumulative other  comprehensive loss                                                                  |   | (69                 | )      | (69                     | )      |
| Accumulated  deficit                                                                                  |   | (95,660             | )      | (94,169                 | )      |
| Total  stockholders’ deficit                                                                     |   | (6,141              | )      | (5,794                  | )      |
| Total  liabilities and stockholders’ deficit                                                     |   | $                   | 7,830  |                    | $      | 7,753 |   |

 

See notes to unauditedcondensed consolidated financial statements

 

3

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**MICRO COMPONENT TECHNOLOGY, INC.**

## CONSOLIDATEDSTATEMENTS OF OPERATIONS

(In thousands, except pershare data)

(Unaudited)

 
|                                                        |   | **Three  Months Ended** |   |
|-------------------------------------------------------------|--------|-------------------------|--------|
|                                                        |   | **March 29,  2003**     |   | **March 30,  2002** |   |
| Net sales                                                   |   | $                       | 2,200  |   | $ | 3,463 |   |
| Cost of sales                                               |   | 1,476                   |   | 2,187 |   |
|                                                        |   |                    |   |   |   |
| Gross profit                                                |   | 724                     |   | 1,276 |   |
|                                                        |   |                    |   |   |   |
| Operating  expenses:                                        |   |                    |   |   |   |
| Selling, general  and administrative                        |   | 1,333                   |   | 2,266 |   |
| Research and  development                                   |   | 734                     |   | 1,306 |   |
| Restructuring  charge                                       |   | 19                      |   | 323 |   |
|                                                        |   |                    |   |   |   |
| Total operating  expenses                                   |   | 2,086                   |   | 3,895 |   |
|                                                        |   |                    |   |   |   |
| Loss from  operations                                       |   | (1,362                  | )      | (2,619 | ) |
|                                                        |   |                    |   |   |   |
| Interest income                                             |   | 1                       |   | 45 |   |
| Gain (loss) on  sale of assets                              |   | 153                     |   | (4 | ) |
| Interest expense  and other                                 |   | (283                    | )      | (289 | ) |
|                                                        |   |                    |   |   |   |
| Total interest  and other                                   |   | (129                    | )      | (248 | ) |
|                                                        |   |                    |   |   |   |
| Net loss                                                    |   | $                       | (1,491 | ) | $ | (2,867 | ) |
|                                                        |   |                    |   |   |   |
| Net loss per  share, basic and diluted:                     |   |                    |   |   |   |
|                                                        |   |                    |   |   |   |
| Net loss                                                    |   | $                       | (0.10  | ) | $ | (0.20 | ) |
|                                                        |   |                    |   |   |   |
| Weighted average  common and equivalent shares outstanding: |   |                    |   |   |   |
| Basic and  diluted                                          |   | 14,871                  |   | 14,077 |   |

 

See notes to unauditedcondensed consolidated financial statements

 

4

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**MICRO COMPONENT TECHNOLOGY, INC.**

## CONSOLIDATEDSTATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
|                                                             |   | **Three  Months Ended** |   |
|------------------------------------------------------------------|--------|-------------------------|--------|
|                                                             |   | **March 29,  2003**     |   | **March 30,  2002** |   |
|                                                             |   |                    |   |   |   |
| Cash flows from  operating activities:                           |   |                    |   |   |   |
| Net loss                                                         |   | $                       | (1,491 | ) | $ | (2,867 | ) |
| Adjustments to  reconcile net loss to net cash used in operating |   |                    |   |   |   |
| Activities:                                                      |   |                    |   |   |   |
| Depreciation and  amortization                                   |   | 135                     |   | 162 |   |
| Other, net                                                       |   | —                  |   | (11 | ) |
| (Gain) loss on  disposal of property                             |   | (153                    | )      | 4 |   |
| Changes in  assets and liabilities:                              |   |                    |   |   |   |
| Accounts  receivable                                             |   | (1,425                  | )      | 967 |   |
| Inventories                                                      |   | 37                      |   | (66 | ) |
| Other current  assets                                            |   | (41                     | )      | (29 | ) |
| Accounts payable                                                 |   | 656                     |   | 57 |   |
| Accrued restructuring  costs                                     |   | (95                     | )      | (116 | ) |
| Other accrued  liabilities                                       |   | (126                    | )      | (707 | ) |
|                                                             |   |                    |   |   |   |
| Net cash used in  operating activities                           |   | (2,503                  | )      | (2,606 | ) |
|                                                             |   |                    |   |   |   |
| Cash flow from  investing activities:                            |   |                    |   |   |   |
| Purchases of  property, plant and equipment                      |   | —                  |   | (28 | ) |
| Proceeds from  disposition of property                           |   | 173                     |   | 37 |   |
|                                                             |   |                    |   |   |   |
| Net cash  provided by investing activities                       |   | 173                     |   | 9 |   |
|                                                             |   |                    |   |   |   |
| Cash flows from  financing activities:                           |   |                    |   |   |   |
| Payments of  long-term debt                                      |   | (11                     | )      | (10 | ) |
| Proceeds from  issuance of stock                                 |   | 1,362                   |   | 8 |   |
| Stock issuance  costs                                            |   | (218                    | )      | — |   |
|                                                             |   |                    |   |   |   |
| Net cash  provided by (used in) financing activities             |   | 1,133                   |   | (2 | ) |
|                                                             |   |                    |   |   |   |
| Net decrease in  cash and cash equivalents                       |   | (1,197                  | )      | (2,599 | ) |
|                                                             |   |                    |   |   |   |
| Cash and cash  equivalents at beginning of period                |   | 1,560                   |   | 11,086 |   |
|                                                             |   |                    |   |   |   |
| Cash and cash  equivalents at end of period                      |   | $                       | 363    |   | $ | 8,487 |   |

 

See notes to unauditedcondensed consolidated financial statements

 

5

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**MICRO COMPONENT TECHNOLOGY, INC.**

FORM 10-Q

## NOTES TO UNAUDITEDCONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

**1.****                          INTERIMFINANCIAL STATEMENTS**

 

*Basis of Presentation*

 

The consolidatedfinancial statements include the accounts of the parent company and oursubsidiaries after elimination of all significant intercompany balances andtransactions.  All significantsubsidiaries are 100% owned.

 

The unauditedconsolidated financial statements included herein have been prepared inaccordance with accounting principles generally accepted in the United States(generally accepted accounting principles) for interim financial informationand with the instructions for Form 10-Q and Article 10 of Regulation S-X.  Certain information and footnote disclosuresnormally included in financial statements prepared in accordance with generallyaccepted accounting principles have been condensed or omitted pursuant to suchrules and regulations.  In the opinionof management all adjustments, including normal recurring adjustments,necessary for a fair presentation of the interim periods presented have beenincluded.  The interim results are notnecessarily indicative of the operating results expected for the full fiscalyear ending on December 31, 2003.

 

Our consolidatedfinancial statements have been prepared on the assumption that we will continueas a going concern, which contemplates the realization of assets andliquidation of liabilities in the normal course of business. The independentauditors’ report on the financial statements of the Company as of and for thefiscal year ended December 31, 2002 included in Form 10-K contained anexplanatory paragraph that expresses substantial doubt about our ability tocontinue as a going concern.   Thefinancial statements do not include any adjustments to reflect the possiblefuture effects on the recoverability and classification of assets or theamounts and classification of liabilities that may result from the outcome ofthis uncertainty.

 

As of March 29, 2003, theCompany had an accumulated deficit of $95.7 million and incurred a net loss of$1.5 million for the three-month period ended March 29, 2003.  As of March 29, 2003,  the Company had cash and cash equivalents of$363,000, working capital of $2.7 million, a current ratio of 1.67, totalassets of $7.8 million and total liabilities of $14.0 million. We expect toexpend cash and incur operating losses at these net sales levels at leastthough the first half of 2003 and our ability to generate cash and operatingincome is dependent on the realization of our restructuring efforts, thesuccessful transfer of our core manufacturing to Penang, Malaysia and ourresponsiveness to further negative impacts due to the downturn in thesemiconductor capital equipment market. We have completed the sub-letting of our St. Paul, Minnesota operationsand will be exiting leases in several other of our facilities pursuant to thoselease terms to further lower our operating costs.

 

6

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As discussed in Note 5,in March 2003, we completed a private equity placement of our common stock,which resulted in net proceeds to us of $1.1 million.  We estimate that we will need to raise additional capital throughdebt or equity offerings, selling assets or accelerating available cash throughthe factoring of our receivables. Additionally, we are also seeking torestructure our senior debt and accounts payable. We are actively pursing theseactivities; however, there is no assurance that additional financing will beavailable on terms and conditions acceptable or favorable to us, if atall.  If we are unsuccessful inobtaining sufficient financing and / or restructuring our senior debt andaccounts payable our operations will be materially negatively impacted and wewill be required to take actions that will harm our business, including potentiallyceasing certain or all of our operations.

 

Interim unauditedfinancial results should be read in conjunction with the audited financialstatements included in the SEC Report on Form 10-K, for the period endedDecember 31, 2002.

 

**2.****                          EARNINGSPER SHARE**

 

Basic earnings per shareare computed using the weighted average number of common shares outstandingduring each period.  Diluted earningsper share include the dilutive effect of common shares potentially issuable uponthe exercise of stock options outstanding. The following table reconciles the denominators used in computing basicand diluted earnings per share:

 
|                                           |   | **Three  Months Ended** |   |
|------------------------------------------------|--------|-------------------------|--------|
| **(in  thousands)**                            |   | **March 29,  2003 (1)** |   | **March 30,  2002 (1)** |   |
| Weighted average  common shares outstanding    |   | 14,871                  |   | 14,077 |   |
| Effect of  dilutive stock options and warrants |   | —                  |   | — |   |
|                                           |   |                    |   |   |   |
|                                           |   | 14,871                  |   | 14,077 |   |

 

----

(1)                                           Wereported a loss for the periods indicated. No adjustments were made for the effect of stock options, which totaled2,459,251 shares at March 29, 2003 and 2,450,566 shares at March 30, 2002, asthe effect is antidilutive.

 

7

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**3.****                          REPORTINGOF COMPREHENSIVE NET LOSS**

 

In 1997, the FinancialAccounting Standards Board issued Statement of Financial Accounting Standards(SFAS), No. 130 *Reporting Comprehensive Income* which establishes standardsfor the reporting and display of comprehensive income (loss) and its componentsin a full set of general-purpose financial statements.  Under this standard, certain revenues,expenses, gains, and losses recognized during the period are included incomprehensive loss, regardless of whether they are considered to be results ofoperations of the period.  During thethree-month periods ended March 29, 2003 and March 30, 2002, totalcomprehensive loss equaled net loss as reported on the Consolidated Statementsof Operations.

 

**4.****                          BALANCESHEET INFORMATION**

 

Major components ofinventories were as follows (in thousands):

 
|            |   | **March 29,  2003** |   | **December  31,  2002** |   |
|-----------------|--------|---------------------|--------|-------------------------|--------|
|            |   |                |   |                    |   |
| Raw materials   |   | $                   | 2,516  |                    | $      | 2,541 |   |
| Work-in-process |   | 792                 |   | 778                     |   |
| Finished goods  |   | 505                 |   | 531                     |   |
|            |   | $                   | 3,813  |                    | $      | 3,850 |   |

 

We provide a standardthirteen month warranty program for our equipment products. We recordprovisions for warranty claims for these products based upon historical claimperformance.  The following tableprovides the expense recorded and charges against our reserves for the qaurterended March 29, 2003 (in thousands):

 
| Accrued warranty  balance at December 31, 2002 |   | $      | 200    |   |
|------------------------------------------------|--------|--------|--------|--------|
|                                           |   |   |   |
| Provision                                      |   | 58     |   |
|                                           |   |   |   |
| Warranty claims                                |   | (11    | )      |
|                                           |   |   |   |
| Accrued warranty  balance at March 29, 2003    |   | $      | 247    |   |

 

**5.**                          **FINANCING TRANSACTIONS**

 

On March 7, 2003 andMarch 26, 2003, pursuant to a private equity placement with a group of accreditedinvestors, we issued a total of 3,166,869 shares of common stock, whichresulted in net proceeds to us of approximately $1.1 million.  Stock issuance costs associated with thisoffering totaled approximately $218,000. As part of this offering, we also issued warrants to

 

8

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purchase 253,350 sharesof common stock that have a term of five years with an exercise price of $0.43per share.

 

**6.**                          **RESTRUCTURING CHARGES**

 

**2003Restructuring Charges**

 

During the first quarter,in response to the continued and prolonged downturn in the semiconductorcapital equipment industry, we reduced our workforce across all functionalareas by approximately 24%, resulting in a restructuring charge of$19,000.  This charge reflectedseverance and other benefits costs associated with this reduction.  This workforce reduction affected a total of26 employees across all functional areas.

 

**2002Restructuring Charges**

 

In 2002, in response tothe continued and prolonged downturn in the semiconductor capital equipment industry,we took the following actions:

 

During the first quarter,we reduced our workforce across all functional areas by approximately 25% atthe time, resulting in a restructuring charge of $323,000.  This charge reflected severance and otherbenefits costs associated with this reduction. This workforce reduction affected 44 employees, principally in the areasof manufacturing, sales and marketing and engineering.

 

During the secondquarter, we further reduced our workforce by an additional 7% at the time,resulting in a restructuring charge of $199,000.  This charge reflected severance and other benefit costsassociated with the reduction, which affected 9 employees across all functionalareas.  We also completed a lease settlementagreement related to our Marlborough, Massachusetts’ facility.  This agreement required us to pay $450,000or approximately 35% of the outstanding lease obligation, which was to runthrough April 2003.  As of December 31,2002, the full amount of this settlement was paid. The settlement of this leaseresulted in a $674,000 recovery.

 

During the third quarter,as a result of the on going transfer of our core manufacturing operations toour Penang, Malaysia facility, we incurred a restructuring charge of $345,000,representing severance and other benefit costs associated with furtherreductions to our workforce.  Thisreduction was implemented in the third and fourth quarters of 2002 and affecteda total of 38 employees or 30% of our workforce at the time, across all functionalareas.

 

During the fourthquarter, we further reduced our workforce, resulting in a restructuring chargeof $14,000.  This charge reflectedseverance and other benefit costs associated with the reduction, which affected9 employees or 8% of our workforce at the time, principally in the area ofsales and marketing.

 

The following tablesummarizes these charges related to workforce and manufacturing cost reductions(in thousands):

 

9

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|                                                                  |   | **Employee  Separation  Costs** |   | **Idle Facility  Costs** |   | **Total** |   |
|-----------------------------------------------------------------------|--------|---------------------------------|--------|--------------------------|--------|-----------|--------|
|                                                                  |   |                            |   |                     |   |      |   |
| Accrued  restructuring costs at  December 31, 2001                    |   | $                               | 66     |                     | $      | 890       |   | $ | 956 |   |
|                                                                  |   |                            |   |                     |   |      |   |
| Restructuring  charge for the  quarter ended March 30, 2002           |   | 323                             |   | —                   |   | 323       |   |
|                                                                  |   |                            |   |                     |   |      |   |
| Utilization for  the quarter ended  March 30, 2002                    |   | (272                            | )      | (167                     | )      | (439      | )      |
|                                                                  |   |                            |   |                     |   |      |   |
| Restructuring  charge (recovery) for  the quarter ended June 29, 2002 |   | 199                             |   | (674                     | )      | (475      | )      |
|                                                                  |   |                            |   |                     |   |      |   |
| Utilization for  the quarter ended  June 29, 2002                     |   | (126                            | )      | (49                      | )      | (175      | )      |
|                                                                  |   |                            |   |                     |   |      |   |
| Restructuring  charge for the  quarter ended September 28, 2002       |   | 345                             |   | —                   |   | 345       |   |
|                                                                  |   |                            |   |                     |   |      |   |
| Utilization for  the quarter ended  September 28, 2002                |   | (119                            | )      | —                   |   | (119      | )      |
|                                                                  |   |                            |   |                     |   |      |   |
| Restructuring  charge for the  quarter ended December 31, 2002        |   | 14                              |   | —                   |   | 14        |   |
|                                                                  |   |                            |   |                     |   |      |   |
| Utilization for  the quarter ended  December 31, 2002                 |   | (236                            | )      | —                   |   | (236      | )      |
|                                                                  |   |                            |   |                     |   |      |   |
| Restructuring  charge for the  quarter ended March 29, 2003           |   | 19                              |   | —                   |   | 19        |   |
|                                                                  |   |                            |   |                     |   |      |   |
| Utilization for  the quarter ended  March 29, 2003                    |   | (114                            | )      | —                   |   | (114      | )      |
|                                                                  |   |                            |   |                     |   |      |   |
| Accrued  restructuring costs at  March 29, 2003                       |   | $                               | 99     |                     | $      | —    |   | $ | 99 |   |

 

**7.**                          **STOCK BASED COMPENSATION**

 

In October 2002, the FASBissued Statement No. 148 “Accounting for Stock-Based Compensation-Transitionand Disclosure”, (SFAS No. 148), providing alternative methods of transitionfor a voluntary change to the fair value based method of accounting forstock-based employee compensation.  SFASNo. 148 also amends the disclosure requirement of SFAS No. 123, “Accounting forStock-Based Compensation” to include prominent disclosures in annual and interimfinancial statements about the method of accounting for stock-basedcompensation and the effect of the method used on reported results.  The Company adopted the disclosureprovisions of SFAS No. 148 on December 31, 2002.

 

Had the Companydetermined stock-based compensation costs based on the estimated fair value atthe grant date for its stock options, the Company’s net loss per share for thethree months ended March 29, 2003 and March 30, 2002 would have been as follows(in thousands, except per share data):

 

10

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|                                          |   | **Quarters  Ended** |   |
|-----------------------------------------------|--------|---------------------|--------|
|                                          |   | **March 29,  2003** |   | **March 30,  2002** |   |
| Net loss:                                     |   |                |   |   |   |
| As reported                                   |   | $                   | (1,491 | ) | $ | (2,867 | ) |
| Fair value  compensation expense              |   | (241                | )      | (287 | ) |
| Pro forma                                     |   | $                   | (1,732 | ) | $ | (3,154 | ) |
|                                          |   |                |   |   |   |
| Net loss per  share – basic and diluted: |   |                |   |   |   |
| As reported                                   |   | $                   | (0.10  | ) | $ | (0.20 | ) |
| Fair value  compensation expense              |   | (0.02               | )      | (0.02 | ) |
| Pro forma                                     |   | $                   | (0.12  | ) | $ | (0.22 | ) |

 

The fair value of optionsgranted under the stock options for the quarters ended March 29, 2003 and March30, 2002 was estimated on the date of grant using the Black-Scholes optionpricing model with the following weighted average assumptions for the threemonths ended March 29, 2003 and March 30, 2002.  No options were issued for the first quarter ended March 29,2003.

 
|                                     |   | **Quarters  ended** |        |
|------------------------------------------|--------|---------------------|-------------|
|                                     |   | **March 29,  2003** |        | **March 30,  2002** |   |
|                                     |   |                |        |   |   |
| Dividend yield                           |   | 0.00                | %           | 0.00 | % |
| Expected  volatility                     |   | 88.17               | %           | 102.51 | % |
| Risk-free  interest rate                 |   | 3.87                | %           | 4.62 | % |
| Expected life of  options                |   | 3.5                 |  years | 3.5 |  years |
| Fair value per  share of options granted |   | $                   | 1.28        |   | $ | 1.94 |   |
|                                          |        |                     |             |  |  |  |  |

 

**8.**                          **RECENT ACCOUNTING PRONOUNCEMENTS**

 

***SFAS No. 143 – Accounting for AssetRetirement Obligations*.** In June 2001, the FASB issued SFAS No. 143, *Accounting for Asset RetirementObligations*.  SFAS No. 143addresses financial accounting and reporting for obligations associated withthe retirement of tangible long-lived assets and the associated assetretirement costs.  SFAS No. 143 appliesto legal obligations associated with the retirement of long-lived assets thatresult from the acquisition, construction, development and/or the normaloperation of a long-lived asset, except for certain obligations oflessees.   SFAS No. 143 was effectivefor us on January 1, 2003 and did not have a material effect on our financialposition or results of operations.

 

***SFAS No. 146 –Accounting for Costs Associated with Exit or Disposal Activities****.* In June 2002, the FASB issued SFAS No. 146, *Accounting for Costs Associated with Exit or Disposal Activities*.SFAS No. 146 addresses financial accounting and reporting for costs associatedwith exit or disposal activities and nullifies Emerging Issues Task Force(EITF) Issue No. 94-3, *Liability Recognitionfor Certain Employee Termination Benefits and Other Costs to Exit an Activity(Including**Certain Costs Incurredin a Restructuring).* SFAS No. 146 requires that a liability for acost associated with an exit or disposal activity be recognized when theliability is incurred. Under EITF 94-3, a liability for an exit cost was recognizedat the date of an entity’s commitment to an exit plan. SFAS No. 146 becameeffective for us for exit or disposal activities that have been  initiated by us after December 31, 2002.  The adoption SFAS No. 146 has not had amaterial effect on our financial position or results of operations.

 

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***FASB Interpretation No. 45 – Guarantor’s Accounting and DisclosureRequirements for Guarantees, Including Indirect Guarantees of Indebtedness ofOthers.***  In November 2002, the FASBissued FASB Interpretation No. 45, *Guarantor’s Accounting andDisclosure Requirements for Guarantees, Including Indirect Guarantees ofIndebtedness of Others* (FIN 45). FIN 45 clarifies the requirements for a guarantor’s accounting for anddisclosure of certain issued and outstanding guarantees.  The initial recognition and initialmeasurement provisions of FIN 45 are applicable to guarantees issued ormodified after December 31, 2002.  Thedisclosure requirements of FIN 45 are effective for financial statements ofinterim or annual periods ending after December 15, 2002.  The adoption of FIN 45 did not have amaterial impact on our financial position or results of operations.

*** ***

***EITF Issue No. 00-21 – Revenue Arrangements with MultipleDeliverables.***  InNovember 2002, the EITF reached a consensus on Issue No. 00-21, *Revenue Arrangements with Multiple Deliverables*, which providesguidance on how to account for arrangements that involve the delivery orperformance of multiple products, services and/or right to use assets.  The provisions of EITF Issue No. 00-21 willapply to revenue arrangements entered into in fiscal periods beginning afterJune 15, 2003.  We are currentlyevaluating the impact, if any, that the adoption of EITF Issue No. 00-21 willhave on our results of operations and financial condition.

 

***SFAS No. 148 – Accounting for Stock-Based Compensation –Transition and Disclosure-an Amendment of FASB Statement No. 123***.  In December 2002, the FASB issued SFAS No.148, *Accounting for Stock-Based Compensation-Transition andDisclosure – an amendment of FASB Statement No. 123.* SFAS No. 148,which amends SFAS No. 123, *Accounting for Stock-BasedCompensation*, provides alternative methods of transition for a voluntary change tothe fair value based method of accounting for stock-based employeecompensation. In addition, SFAS No. 148 amends the disclosure requirement ofSFAS No. 123 to require more prominent and more frequent disclosures infinancial statements of the effects of stock-based compensation. The transitionguidance and annual disclosure provisions of SFAS 148 are effective for fiscalyears ending after December 15, 2002. The interim disclosure provisions areeffective for financial reports containing condensed financial statements for interimperiods beginning after December 15, 2002. We have adopted the disclosure provisions of this standard as of December31, 2002.  The adoption of SFAS 148 didnot have a material impact on our financial position or results of operations.

 

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**MICRO COMPONENT TECHNOLOGY, INC.**

FORM 10-Q

## ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

*Thefollowing discussion of our results of operations and financial conditionshould be read together with the other financial information and condensedconsolidated financial statements included in this document.  This discussion contains forward-lookingstatements that involve risks and uncertainties.  Our actual results could differ materially from those anticipatedin the forward-looking statements as a result of a variety of factors,including those discussed in “Risk Factors” and elsewhere in this document.*

 

*Overview*

 

We supply automation solutions for the global semiconductortest and assembly manufacturing market. Our solutions include automated test handlers, factory automationsoftware and our new integrated Smart Solutions product line.  We believe that our products cansignificantly improve the productivity, yield and throughput of the back-end,or to the post-wafer manufacturing process, including assembling, packaging,testing and singulating semiconductor devices.

 

The demand for our products and services is dependentupon growth in the semiconductor industry and the increasing automation needsof semiconductor manufacturers and independent test and assembly facilities.  In the fourth quarter of 2000, thesemiconductor industry went into a sharp downturn, which intensified and continuedthrough the first quarter of 2003, resulting in significant adverse impacts onour business including inventory revaluations charges, write downs of impairedintangible assets and significant reductions in our employee base.  Although worldwide semiconductor bookingsare showing signs of stabilization, the return to market growth cannot be predictedin the short term.  As disclosed in ourForm 10-K for the year ended December 31, 2002 a continued or intensifiedmarket downturn might result in significant losses, charges for inventoryrevaluation, asset impairment or restructuring charges.  Consequently, as a result of this downturn,in addition to the actions taken in 2002, we further reduced our workforce inthe first quarter of 2003 by 24%, affecting a total of 26 employees across allfunctional areas.

 

**CriticalAccounting Policies**

 

*RevenueRecognition*

 

Under Staff Accounting Bulletin 101 (“SAB 101”), werecognize revenue upon shipment, as our terms are FOB shipping point, for establishedequipment products that have previously satisfied existing customer performancespecifications and that provide for full payment tied to shipment.  Revenue for products that have notpreviously satisfied customer performance specifications or from sales whereall or a portion of customer payment is based upon acceptance are onlyrecognized upon customer acceptance.  Assuch, in periods of increasing shipments, revenues will be deferred if theshipments are for new customers, new products or the payment terms are tied toacceptance criteria.  Consequently, ifthese conditions exist, we may report revenue levels that are not reflective ofactual shipment growth rates. Conversely, in periods of decreasing shipments, we potentially couldrecognize

 

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revenues related to shipments made in prior periods.  Consequently, if these conditions exist, wemay report revenue levels that are greater than actual shipments.

 

*Allowancefor Doubtful Accounts*

 

We record a provision for doubtful accounts based onspecific identification of our accounts receivable. This involves a degree ofjudgment based on discussion with our internal sales and marketing groups, ourcustomer base and the examination of the financial stability of our customers.  There can be no assurance that our estimateswill match actual amounts ultimately written off.  During periods of downturn in the market for semiconductorcapital equipment  or economicrecession, a greater degree of risk exists concerning the ultimatecollectability of our accounts receivable due to the impact that theseconditions might have on our customer base.

 

*Valuationof Inventories*

 

Our inventories are stated at the lower of cost ormarket.  Cost is determined by thefirst-in, first-out (“FIFO”) method.  Wemaintain a standard costing system for our inventories.  Assumptions with respect to direct laborutilization, standard direct and indirect cost rates, vendor pricing andutilization of factory capacities are formulated in the development of ourstandard costing system.  Sudden orcontinuing changes in the semiconductor capital equipment market affecting ourshipments can result in significant production variances from our standardrates. These variances directly impact our gross profit performance and maycause variability in gross profits results from reporting period-to-reportingperiod.  Our labor and overhead ratesare set for production rates that match typical market conditions.  Production variances are charged to cost ofsales each quarter as incurred. Material standards are based upon normalpurchase volumes.  Purchase pricevariances are charged to costs of sales each quarter as incurred.

 

Provisions to reduce inventories to the lower of costor market are made based on a review of excess and obsolete inventories throughan examination of historical component consumption, current market demands andshifting product technology. Significant assumptions with respect to market trends and customerproduct acceptance are utilized to formulate our provision methods.  Sudden or continuing downward changes in thesemiconductor capital equipment market may cause us to record additionalinventory revaluation charges in future periods

 

*AccruedWarranty*

 

We provide a standard thirteen-month warranty programfor our equipment products. We record provisions for warranty claims for theseproducts based upon historical claim performance.  This approach has been applied since the inception of thewarranty program and involves a degree of subjectivity in that historicalperformance is used to estimate future warranty claims.  There can be no assurance that our estimateswill match the actual amount of future warranty claims.

 

###### **Results ofOperations for the Three Months Ended March 29, 2003 and March 30, 2002**

###### ** **

Net sales for the three months ended March 29, 2003,decreased $1.3 million or 36.5% to $2.2 million compared to $3.5 million forthe three months ended March 30, 2002. Product acceptance

 

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requirements related to product and customer mix resulted in a netdecrease to revenues of $0.6 million over shipments for the quarter ended March29, 2003, while these same factors caused a net increase to revenues of $2.1million for the first quarter of 2002. Current quarter product sales continue to be severely impacted by thecontinued downturn in the semiconductor capital equipment market.  We expect net sales to continue to beadversely impacted by the market downturn.

 

Gross profit for the first quarter of 2003 decreasedby $0.6 million to $0.7 million, or 32.9% of net sales, from $1.3 million, or36.8% of net sales, for the comparable period in the prior year.  The decrease in gross margin in the currentyear period primarily resulted from unabsorbed excess production costsassociated with the industry downturn, and, in particular, excess productioncosts related to our singulated products. We expect gross margins to continue to be adversely impacted by themarket downturn, partially offset by the benefits of the restructuring steps weinitiated throughout all of 2002 and continuing into the first quarter of 2003.

 

Selling, general and administrative expense in thefirst quarter of 2003 was $1.3 million, or 60.6% of net sales, compared to $2.3million, or 65.4% of net sales for the first quarter of 2002. The decrease inexpense for the current year period is a result of the cost reduction measuresinitiated in 2002 and a decrease in direct selling costs related to thedecrease in sales.

 

Research and development expense for the first quarterof 2003 was $0.7 million, or 33.4% of net sales compared to $1.3 million, or37.7% of net sales in the first quarter of 2002.  The decrease in expense for the current year period is a resultof the cost reduction measures initiated in 2002.

 

The restructuring charge totaled $19,000 or 0.9% ofnet sales for the current year period. This charge resulted from reductions of our workforce across allfunctional areas in the first quarter of 2003. This charge reflects severance and other benefits costs associated withthis reduction in excess of the amounts included in our restructuring accrualsat December 31, 2002.  This workforcereduction affected 26 employees, across all functional areas.  The restructuring charge for the quarterended March 30, 2002, totaled $323,000 or 9.3% of net sales.  This charge resulted from reductions of ourworkforce across all functional areas. This charge reflects severance and other benefits costs associated withthis reduction.  This workforcereduction affected 44 employees, principally in the areas of manufacturing,sales and marketing and engineering.

 

Interest income for the first quarter of 2003 was$1,000 compared to $45,000 in the first quarter of 2002.  This decrease resulted from the decrease ininvestment in interest-bearing cash and cash equivalents. In connection withthe transfer of our manufacturing operations to Penang, we sold certain fixedand other assets from our St. Paul, Minnesota facility resulting in a gain onsale of $153,000 or 7.0% of net revenue for the first quarter of 2003.  Interest expense and other totaled $283,000or 12.9% of net revenue in the current year’s quarter, compared to $289,000 or8.3% of net revenue for the comparable period in the prior year.  The interest expense resulted from our 10%Senior Subordinated Notes, which were issued in December of 2001, and theamortization of debt issuance costs associated with the note offering.

 

Net loss for the quarter ended March 29, 2003 was $1.5million or $0.10 per share, as compared to a net loss of $2.9 million, or $0.20per share in the prior year period.

 

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**Liquidityand Capital Resources**

 

The Company’s consolidated financial statements areprepared and presented on a going concern basis.  As of March 29, 2003, the Company had an accumulated deficit of$95.7 million and incurred a net loss of $1.5 million for the three-monthperiod ended March 29, 2003.  As ofMarch 29, 2003,  the Company had cashand cash equivalents of $363,000, working capital of $2.7 million, a currentratio of 1.67. total assets of $7.8 million and total liablities of $14.0million. At December 31, 2002, we had cash and cash equivalents of $1.6million, a current ratio of 1.81 and working capital of $2.9 million.

 

The net loss and increase in accounts receivable werethe primary uses of cash in the first quarter of 2003.  The net loss and decrease in other accruedliabilites were the primary uses of cash in the first quarter of the prioryear.  Cash used in operations was $2.5million in the first quarter of 2003 and $2.6 million in the first quarter2002.

 

Capital expenditures were $28,000 for the firstquarter of 2002 compared to zero in the first quarter of 2003. The reduction incapital spending is in direct response to the downturn in the semiconductorcapital equipment market.

 

On March 7, 2003 and March 26, 2003, pursuant to aprivate equity placement with a group of accredited investors, we issued atotal of 3,166,869 shares of common stock, which resulted in net proceeds to usof approximately $1.1 million.  Stockissuance costs associated with this offering totaled approximately$218,000.  As part of this offering, wealso issued warrants to purchase 253,350 shares of common stock that have aterm of five years with an exercise price of $0.43 per share.

 

We estimate that we will need to raise additionalcapital through debt or equity offerings, or by selling assets of theCompany.  We believe that our ability tofund our operations and capital requirements for 2003 and our ability to obtainfinancing, is dependent on the success of our strip product technology in thecurrently depressed semiconductor capital equipment market and the realizationof the cost benefits associated with our restructuring efforts, coupled withthe transfer of our core manufacturing to Penang, Malaysia.  There is no assurance that additionalfinancing, if needed, will be available on terms and conditions acceptable orfavorable to us, if at all. Additionally, we are also seeking to restructure oursenior debt and accounts payable.   Ifwe are not successful in the realization of additional funding, the benefits ofour restructuring efforts, the transfer of our core manufacturing to Penang,Malaysia, the restructuring of our senior debt and accounts payables and/orexperience further impacts to our net sales as a result of market conditions,our operations will be materially negatively impacted and we will be requiredto take actions that will harm our business, including potentially ceasingcertain or all of our operations.

 

**QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

 

The vast majority of our transactions are denominatedin U.S. dollars; as such, fluctuations in foreign currency exchange rates havehistorically had little impact on us. Inflation has not been a significant factor in our operations in any ofthe periods presented, and it is not expected to affect operations in thefuture.  At March 29, 2003, all of ouroutstanding long-term debt carries interest at a fixed rate. There is nomaterial market risk relating to our long-term debt.

 

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**IMPACTOF ACCOUNTING STANDARDS**

 

In June 2001, the FASB issued SFAS No. 143, *Accountingfor Asset Retirement Obligations*. SFAS No. 143 addresses financial accounting and reporting forobligations associated with the retirement of tangible long-lived assets andthe associated asset retirement costs. SFAS No. 143 applies to legal obligations associated with the retirementof long-lived assets that result from the acquisition, construction,development and/or the normal operation of a long-lived asset, except for certainobligations of lessees.   SFAS No. 143was effective for us on January 1, 2003 and did not have a material effect onour financial position or results of operations.

 

In June 2002, the FASB issued SFAS No. 146, *Accounting for Costs Associated with Exit or DisposalActivities*. SFAS No. 146 addresses financial accounting andreporting for costs associated with exit or disposal activities and nullifiesEmerging Issues Task Force (EITF) Issue No. 94-3, *Liability Recognition for Certain Employee Termination Benefits andOther Costs to Exit an Activity (Including**Certain Costs Incurred in a Restructuring).*SFAS No. 146 requires that a liability for a cost associated with an exit ordisposal activity be recognized when the liability is incurred. Under EITF94-3, a liability for an exit cost was recognized at the date of an entity’scommitment to an exit plan. SFAS No. 146 became effective for us for exit ordisposal activities that have been initiated by us after December 31, 2002.  The adoption SFAS No. 146 has not had a material effect on ourfinancial position or results of operations.

 

InNovember 2002, the FASB issued FASB Interpretation No. 45, *Guarantor’s Accounting and Disclosure Requirements forGuarantees, Including Indirect Guarantees of Indebtedness of Others* (FIN 45).  FIN 45 clarifies the requirements for a guarantor’saccounting for and disclosure of certain issued and outstandingguarantees.  The initial recognition andinitial measurement provisions of FIN 45 are applicable to guarantees issued ormodified after December 31, 2002.  Thedisclosure requirements of FIN 45 are effective for financial statements ofinterim or annual periods ending after December 15, 2002.  The adoption of FIN 45 did not have amaterial impact on our financial position or results of operations.

 

In November 2002, the EITF reached a consensus onIssue No. 00-21, *Revenue Arrangements with Multiple Deliverables*, whichprovides guidance on how to account for arrangements that involve the deliveryor performance of multiple products, services and/or right to use assets.  The provisions of EITF Issue No. 00-21 willapply to revenue arrangements entered into in fiscal periods beginning afterJune 15, 2003.  We are currentlyevaluating the impact, if any, that the adoption of EITF Issue No. 00-21 willhave on our results of operations and financial condition.

 

InDecember 2002, the FASB issued SFAS No. 148, *Accountingfor Stock-Based Compensation-Transition and Disclosure – an amendment of FASBStatement No. 123.* SFAS No. 148, which amends SFAS No. 123, *Accountingfor Stock-Based Compensation*, provides alternative methods of transition for avoluntary change to the fair value based method of accounting for stock-basedemployee compensation. In addition, SFAS No. 148 amends the disclosurerequirement of SFAS No. 123 to require more prominent and more frequentdisclosures in financial statements of the effects of stock-based compensation.The transition guidance and annual disclosure provisions of SFAS 148 areeffective for fiscal years ending after December 15, 2002. The interimdisclosure provisions are effective for financial reports containing condensedfinancial statements for interim periods beginning after December 15, 2002. Wehave adopted the disclosure provisions of this standard as of December

 

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31, 2002.  The adoption of SFAS148 did not have a material impact on financial position or results ofoperations.

 

**RISKFACTORS**

 

Except for the historical information containedherein, certain of the matters discussed in this report are “forward-lookingstatements” as defined in the Private Securities Litigation Reform Act of1995.  These “forward-lookingstatements” involve certain risks and uncertainties, including, but not limitedto, the following: (1) the prolonged or intensified downturn in thesemiconductor market which often has a disproportionately negative impact onmanufacturers of semiconductor capital equipment, and which could cause us tocontinue to incur significant cash losses decreasing our cash and expose us topotential further charges for restructuring, excess and obsolete inventoryand/or impairment of assets; (2) the market for our products is highlycompetitive throughout the world, primarily from manufacturers in the UnitedStates, Europe and Asia, and many of our competitors are considerably largerand have considerably greater financial resources than we do which may allowthem to develop superior or lower priced products; (3) rapid changes intechnology and in tester and handler products, which we must respond tosuccessfully in order for our products to avoid becoming noncompetitive or obsolete;(4) customer acceptance of our new products, including the strip-based Tapestryhandling systems and Smart Solutions products, and other singulated devicehandler products in which we have invested significant amounts of inventory;(5) possible loss of any of our key customers, who account for a substantialpercentage of our business; (6) the possible adverse impact of competition inmarkets which are highly competitive; (7) the possible adverse impact ofeconomic or political changes in markets we serve;  and (8) other factors detailed from time to time in our SECreports, including but not limited to the discussion in the Management’sDiscussion & Analysis included in Form 10-K for the year ended December 31,2002.  Further, our consolidated financialstatements have been prepared on the assumption that we will continue as a goingconcern, which contemplates the realization of assets and liquidation ofliabilities in the normal course of business. The independent auditors’ report on the financial statements of theCompany as of and for the year ended December 31, 2002 included in Form 10-Kcontained an explanatory paragraph that expresses substantial doubt about ourability to continue as a going concern.

 

We expect losses and negative cash flows to continueat least through the first half of 2003, which will require us to obtainadditional capital or pursue other strategic alternatives including therestructuring of our senior debt and accounts payable.  It is uncertain whether we will be able toobtain a sufficient amount of additional capital, if needed, on acceptableterms, or at all.  Further, if future financingrequirements are satisfied through the issuance of equity or debt instruments,shareholders may experience additional dilution in terms of their percentage ofownership of our securities.  In theevent that the we are unable to obtain additional capital and/or restructureour senior debt and our accounts payable, our operations will be materially negativelyimpacted and we will be required to take actions that will harm our business,including potentially ceasing certain or all of our operations.

 

All forecasts and projections in this report are“forward-looking statements,” and are based on our current expectations of ournear-term results, based on current information available pertaining to us,including risk factors discussed above. Actual results could differ materially.

 

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**ITEM4.  EVALUATION OF DISCLOSURE CONTROLSAND PROCEDURES**

 

(a)           Evaluation ofdisclosure controls and procedures.

 

Under the supervision and with the participation ofour management, including the Company’s Chief Executive Officer and ChiefFinancial Officer, we evaluated the effectiveness of the design and operationof our disclosure controls and procedures (as defined in Rule 13a-14(c)under the Exchange Act) as of a date (the “Evaluation Date”) within90 days prior to the filing date of this report. Based upon thatevaluation, the Chief Executive Officer and Chief Financial Officer concludedthat, as of the Evaluation Date, our disclosure controls and procedures areeffective in timely alerting them to the material information relating to us(or our consolidated subsidiaries) required to be included in our periodic SECfilings.

 

(b)          Changes in internalcontrols.

 

There were no significant changes made in our internalcontrols or, to our knowledge, in other factors that could significantly affectthese controls, subsequent to the date of their evaluation.

 

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**MICRO COMPONENT TECHNOLOGY, INC.**

## FORM 10-Q

# PART II.  OTHER INFORMATION

### ** **

### **Item 2. Changes in Securities and Use of Proceeds**

 

On March 7, 2003 andMarch 26, 2003, pursuant to a private equity placement with a group of accreditedinvestors, we issued a total of 3,166,869 shares of common stock, whichresulted in net proceeds to us of approximately $1.1 million.  Stock issuance costs associated with thisoffering totaled approximately $218,000. As part of this offering, we also issued warrants to purchase 253,350shares of common stock that have a term of five years with an exercise price of$0.43 per share.  The offering wasexempt from registration under Rule 506 under the Securities Act of 1933,because all of the purchasers were accredited, there was no generalsolicitation, and the shares are subject to restrictions on transfer.

 

### **Item 5.  OtherInformation**

 

***Restructuring Charge.***  During the first quarter of 2003, inresponse to the continued and prolonged downturn in the semiconductor capitalequipment industry, we further reduced our workforce across all functionalareas by approximately 25%, resulting in a restructuring charge of$19,000.  This charge reflects severanceand other benefits costs associated with this reduction.  This workforce reduction affected anadditional 26 employees across all functional areas.

 

### **Item 6. Exhibits and Reports on Form 8-K**

 

(a) Reports on Form 8-K

 

No reports on Form8-K were filed during the quarter ended March 29, 2003

 

(b) Exhibit Index

 

99.1                           Certificationof Chief Executive Officer. (filed herewith)

 

99.2                           Certificationof Chief Financial Officer. (filed herewith)

 

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**MICRO COMPONENT TECHNOLOGY, INC.**

FORM 10-Q

## SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934,the registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.

 

 
|                          | Micro Component Technology, Inc.      |               |
|-------------------------------|---------------------------------------|--------------------|
|                          | Registrant                            |
|                          |                                  |
|                          |                                  |
| Dated:  May 2, 2003 | By:                                   | /s/ Roger E. Gower |
|                          | Roger E. Gower                        |
|                          | President and Chief Executive Officer |
|                          |                                  |
|                          |                                  |
|                          | And                                   |
|                          |                                  |
|                          |                                  |
| Dated:  May 2, 2003 | By:                                   | /s/ Thomas P. Maun |
|                          | Thomas P. Maun                        |
|                          | Chief Financial Officer               |
|                          | Chief Accounting Officer              |
|                               |                                       |                    |  |

#  

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## **CERTIFICATION**

##  

## I, Roger E. Gower,certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of MicroComponent Technology, Inc.:

 

2. Based on my knowledge, this quarterly report does not contain anyuntrue statement of a material fact or omit to state a material fact necessaryto make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered by thisquarterly report;

 

3. Based on my knowledge, the financial statements, and other financialinformation included in this quarterly report, fairly present in all materialrespects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this quarterly report;

 

4. The registrant’s other certifying officers and I are responsible forestablishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

 

a) designed such disclosure controls and procedures toensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this quarterly report is beingprepared;

 

b) evaluated the effectiveness of the registrant’sdisclosure controls and procedures as of a date within 90 days prior to thefiling date of this quarterly report (the “Evaluation Date”); and

 

c) presented in this quarterly report our conclusionsabout the effectiveness of the disclosure controls and procedures based on ourevaluation as of the Evaluation Date;

 

5. The registrant’s other certifying officers and I have disclosed,based on our most recent evaluation, to the registrant’s auditors and the auditcommittee of registrant’s board of directors (or persons performing theequivalent function):

 

a) all significant deficiencies in the design oroperation of internal controls which could adversely affect the registrant’sability to record, process, summarize and report financial data and haveidentified for the registrant’s auditors any material weaknesses in internalcontrols; and

 

b) any fraud, whether or not material, that involvesmanagement or other employees who have a significant role in the registrant’sinternal controls; and

 

6. The registrant’s other certifying officers and I have indicated inthis quarterly report whether or not there were significant changes in internalcontrols or in other factors that could significantly affect internal controlssubsequent to the date of our most recent evaluation, including any correctiveactions with regard to significant deficiencies and material weaknesses.

 
| Dated:  May 2, 2003 | By:                                   | /s/ Roger E. Gower |   |
|-------------------------------|---------------------------------------|--------------------|--------|
|                          | Roger E. Gower                        |
|                          | President and Chief Executive Officer |

 

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**CERTIFICATION**

I, Thomas P. Maun, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of MicroComponent Technology, Inc.:

 

2. Based on my knowledge, this quarterly report does not contain anyuntrue statement of a material fact or omit to state a material fact necessaryto make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered by thisquarterly report;

 

3. Based on my knowledge, the financial statements, and other financialinformation included in this quarterly report, fairly present in all materialrespects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this quarterly report;

 

4. The registrant’s other certifying officer’s and I are responsiblefor establishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

 

a) designed such disclosure controls and procedures toensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this quarterly report is beingprepared;

 

b) evaluated the effectiveness of the registrant’sdisclosure controls and procedures as of a date within 90 days prior to thefiling date of this quarterly report (the “Evaluation Date”); and

 

c) presented in this quarterly report our conclusionsabout the effectiveness of the disclosure controls and procedures based on ourevaluation as of the Evaluation Date;

 

5. The registrant’s other certifying officers and I have disclosed,based on our most recent evaluation, to the registrant’s auditors and the auditcommittee of registrant’s board of directors (or persons performing theequivalent function):

 

a) all significant deficiencies in the design oroperation of internal controls which could adversely affect the registrant’sability to record, process, summarize and report financial data and haveidentified for the registrant’s auditors any material weaknesses in internalcontrols; and

 

b) any fraud, whether or not material, that involvesmanagement or other employees who have a significant role in the registrant’sinternal controls; and

 

6. The registrant’s other certifying officers and I have indicated inthis quarterly report whether or not there were significant changes in internalcontrols or in other factors that could significantly affect internal controlssubsequent to the date of our most recent evaluation, including any correctiveactions with regard to significant deficiencies and material weaknesses.

 
| Dated:  May 2, 2003 | By:                      | /s/ Thomas P. Maun |
|-------------------------------|--------------------------|--------------------|
|                          | Thomas P. Maun           |
|                          | Chief Financial Officer  |
|                          | Chief Accounting Officer |

 

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