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Pushed To Edge Of Survival Losses force MRS to cut staff 80%; seek financing, cling to Nasdaq Listing chelmsford, mass. -- MRS Technology, Inc. finds itself on the ropes. The sole U.S. flat panel display (FPD) equipment supplier, cum advanced packaging company, has turned 80 percent of its staff loose, leaving "the essential staff required to manage its business and support customers of its installed base of 26 systems in the U.S., Europe and Asia," the company stated. The drastic measures were followed by MRS Technology's recent reporting of first-quarter results. For the quarter ended June 30, MRS notched revenues of $390,000 and a net loss of $1,800,000, compared with revenues of $418,000 and a net loss of $1,130,000 for the prior year's first quarter. "As a result of the net loss for the fiscal year ended March 31, 1998, and the additional loss for this first quarter," Carl Herrmann, president/CEO, said the company filed a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code on July 1. By paring down to its essential staff, MRS Technology hopes to conserve cash while continuing to seek financing and strategic partners to pursue the market for HDI manufacturing applications. According to Mr. Herrmann, the company has four systems in its inventory. The company hopes to sell these systems soon and has "several prospects" in its target high-density interconnect (HDI) manufacturing sector. "If successful, such sales could provide the best opportunity for exiting Chapter 11," said Mr. Hermann. However, he added, "By itself, this is not enough to get us back on a fast track for the HDI market opportunity, so we will continue to seek partners and funding." Such funding could come from a possible acquirer; however, MRS Technology would prefer to entertain offers after it logs some sales and gets out of Chapter 11, according to Jack Steele, co-founder/VP. MRS Technology is making the painful transition from a technology company to a marketing company, according to Mr. Steele. In terms of marketing practices, the company "had ignored these principles, which are somewhat critical to having a business these days," said Mr. Steele. For several years, MRS Technology was not only a fledgling FPD equipment supplier, but the sole U.S. FPD stepper maker, in a market dominated by Nikon and Canon. The company hit a sales high in 1995 of $22.4 million. However, sales started to decline precipitously in 1996, dropping to $10.6 million. In 1997, the company made $7.141 million in sales while taking a $3.131 million net loss. Last year, MRS logged $7.148 million in sales; its net loss, however, increased to $5.143 million. The tide changed at MRS in February. Griff Resor, co-founder and president of the company, resigned at the board's insistence (EN, Feb. 23) after 12 years at the helm. The company elected Mr. Herrmann to replace Mr. Resor and assume the duties of president/CEO and chairman. Closely following this changing of the guard, MRS "deployed" technology developed for flat panel displays to enter the market for HDI with high-density single and multichip packaging (EN, March 6). The strategy called for the introduction of a new product optimized for HDI market requirements, using much of the company's existing technology. Mr. Steele notes that HDI systems require less resolution than FPD steppers. MRS Technology scaled back its resolution development and concentrated on increasing throughput, a key to improving the price/performance of its machine. For the first quarter, MRS Technology was saddled with added R&D expenses related to consulting and materials for a new HDI product. Sales, general and administrative (SG&A) expenses increased in the first quarter, compared with the prior year's first quarter, as a result of some unusual expenses and some costs related to the workforce reduction. One-time charges were approximately $125,000. R&D and SG&A expenses are expected to be significantly lower for the second quarter. On Wednesday, Aug. 19, MRS Technology was trading at 25 cents on the Nasdaq National Market. Nasdaq notified MRS Technology on Aug. 5 that its common stock had failed to maintain a minimum closing bid price of $1.00 for 30 consecutive trade dates, and on Aug. 12 about the related continued listing requirement $5 million public float. In those cases, Nasdaq recognized that the MRS may be in a temporary situation and provided an additional 90 calendar days for the company to regain compliance for continued listing. Separately, and as a result of the company's filing under Chapter 11 of the federal Bankruptcy Code, Nasdaq conducted a review of MRS Technology's eligibility for continued listing for which the company submitted information on the actions it was taking to regain compliance with the minimum listing requirements. Its request for continued listing was denied and Nasdaq scheduled its securities to be delisted on July 30, but provided information on procedural remedies to stay this action. MRS Technology subsequently requested a hearing to review this decision. No action will be taken until the hearing has been held. The company has not yet been notified of the date of the hearing, but understands that it could be scheduled for mid- to late September. "As long as we believe that we have a realistic chance of coming out of Chapter 11, we will use all available procedural remedies to remain listed," said Mr. Steele. |