Filed with the SEC from July 24 to July 30:
Amtech Systems (ASYS)
Florida private investor Richard L. Scott reported owning 634,590 shares (7%) of the solar-cell component maker, having bought 287,013 from June 24 to July 28 at $8.95 to $9.50 each.
Amtech was incorporated in Arizona in October 1981, under the name Quartz Engineering & Materials, Inc. We changed to our present name in 1987. We conduct operations through four wholly-owned subsidiaries: Tempress Systems, Inc., a Texas corporation with all of its operations in The Netherlands, acquired in 1994, also referred to herein as Tempress Systems or Tempress; P.R. Hoffman Machine Products, Inc., an Arizona corporation based in Carlisle, Pennsylvania, acquired in July 1997, or PR Hoffman; and Bruce Technologies, Inc., a Massachusetts corporation based in Billerica, Massachusetts, acquired in July 2004, or Bruce Technologies; and R2D Ingenierie SAS, or R2D, a French corporation located near Montpellier, France, acquired in October 2007. See Exhibit 21 Subsidiaries for a complete list of our subsidiaries.
We are a leading supplier of horizontal diffusion furnace systems used for solar (photovoltaic) cell and semiconductor manufacturing, and are recognized in the markets we serve for our technology and our brands. We operate in two business segments: (i) semiconductor and solar equipment and (ii) polishing supplies. Our semiconductor and solar equipment is sold under the well-known and respected brand names of Tempress Systems and Bruce Technologies, which have customers in both the semiconductor industry and the solar industry. Within the semiconductor industry, we provide equipment to manufacturers of analog, power, automotive and microcontroller chips with geometries greater than 0.3 micron, denoted as Âµ, a strategy we believe minimizes direct competition with significantly larger suppliers of semiconductor equipment. Within the solar industry, we provide diffusion and automation equipment to solar cell manufacturers. Under the PR Hoffman brand, we believe we are also a leading supplier of insert carriers to manufacturers of silicon wafers, and we provide lapping and polishing consumable products as well as equipment used in various industries.
We have been providing manufacturing solutions to the semiconductor industry for over 30 years and are leveraging our semiconductor technology and industry presence in an effort to capitalize on growth opportunities in the solar industry. Our customers use our furnaces to manufacture semiconductors, solar cells, silicon wafers and microelectromechanical systems, or MEMS, which are used in end markets such as telecommunications, consumer electronics, computers, automotive, hand-held devices and solar industry products. To complement our research and development efforts, we also sell our furnaces to research institutes and universities.
For fiscal 2007, we recognized net revenue of $46.0 million, which included $12.5 million of solar revenue or approximately 27% of our total revenue. These results compare to $40.4 million of net revenue for fiscal 2006, which included $2.8 million of solar revenue or approximately 7% of our total revenue. Our order backlog as of September 30, 2007 and 2006 was $23.2 million and $13.6 million, respectively, a 71% increase. Our backlog as of September 30, 2007 included approximately $17.4 million of orders from our solar industry customers compared to $7.6 million of orders from our solar industry customers as of September 30, 2006. Because our orders are typically subject to cancellation or delay by the customer, our backlog at any particular point in time is not necessarily representative of actual sales in subsequent periods, nor is backlog any assurance that we will realize revenue or profit from completing these orders.
Orders from the solar industry, which consist of backlog and shipped orders, totaled $21.4 million during fiscal 2007, compared to $8.0 million and $3.8 million in fiscal 2006 and 2005, respectively.
We expect the solar industry to continue to grow as a result of greater interest in environmentally friendly energy alternatives, increased costs of fossil fuels and increased global demand for electricity, as well as the solar industryâ€™s efforts to reduce manufacturing costs and concern over the worldâ€™s dependence on oil. We plan to continue capitalizing on this trend by improving our existing products and expanding the number of process steps for which we provide manufacturing equipment to the solar industry. We intend to accomplish this by increasing our solar sales and marketing activities and by acquiring and developing additional products for this industry.
For information regarding net revenue, operating income or loss and identifiable assets attributable to each of our two business segments, see Note 10 of the Notes to Consolidated Financial Statements included herein and Item 7 of this Annual Report. For information of the products of each segment, see â€śSemiconductor and Solar Equipment Segment Productsâ€ť and â€śPolishing Supplies Segment Productsâ€ť within â€śItem 1. Businessâ€ť.
Acquisition of Solar Cell Automation Technology. On October 8, 2007, through our wholly-owned subsidiary, Tempress Holding B.V., we acquired R2D Ingenierie, or R2D, a solar cell and semiconductor automation equipment manufacturing company, located near Montpellier, France. R2D has provided solutions to the solar and semiconductor industries since 1989 and recognized net revenue of $4.9 million in 2006. The automation products sold by R2D are used in several steps of the semiconductor manufacturing processes and for the solar diffusion process. We believe R2Dâ€™s automation know-how provides a significant point of differentiation from our competitors and provides us the capability to expand the automation solutions we are able to provide to our current and future solar industry customers. We believe the acquisition of the technology and business of R2D enhances our growth strategy by allowing us to increase our sales by offering an integrated system under the Tempress brand to the solar industry.
Under the agreement, we acquired all of the outstanding shares of R2D for a total purchase price of approximately $6.1 million and made a working capital infusion of $1.0 million that was used to satisfy certain outstanding obligations. The purchase price includes significant contingent incentive provisions tied to R2Dâ€™s successful product improvements, production and technology delivery. Additionally, R2Dâ€™s key personnel have signed three-year employment agreements.
Partnering to Develop and Market an Antireflective Coating System for Solar Cells. In April 2007, we entered into a licensing and manufacturing agreement to develop and market an antireflective coating system for solar cells with PST Co., LTD., a South Korean producer of vertical thermal processing systems for high-end memory-chip semiconductor applications. This plasma enhanced chemical vapor deposition, or PECVD, system is used in high volume solar cell manufacturing, and is an important step in the solar cell manufacturing process, as is our diffusion process. The licensing agreement allows us to market PSTâ€™s existing and future PECVD systems to high-volume solar cell manufacturers throughout the term of the agreement, which we believe will enable us to develop new customer relationships. The royalty free, 10-year licensing agreement will enable us to sell this product to our solar customer base through our extensive global sales and marketing network on an exclusive basis, with the exception of sales in Korea and to one existing Japanese customer of PST, for which PST retains exclusive rights.
Expansion of Solar Manufacturing Plant Capacity. In March 2007, we acquired a 48,000 square foot manufacturing plant located in Vaassen, The Netherlands, near our existing plant where most of our solar cell and semiconductor equipment is currently manufactured. This facility, which will replace our current facility, significantly increases our European manufacturing capacity, and we believe it will improve the operating efficiencies of both our solar cell and semiconductor equipment manufacturing in fiscal 2008.
Penetration of the Asia-Pacific Market. We have continued to increase our sales into the Asia-Pacific market and we expect further growth in export opportunities to this region. In fiscal 2007, our sales into the Asia-Pacific market increased by 44% compared to fiscal 2006, driven primarily by sales to our solar industry customers. The Asia-Pacific region continues to be an important and expanding market for us because of the continued migration of solar cell and semiconductor manufacturing to countries in that market.
Partnering to Manufacture Advanced Vertical Microwave System. In May 2007, we entered into a manufacturing agreement with DSG Technologies, a California-based developer of low temperature, microwave heating and curing systems used in fabricating integrated circuits. Under this agreement we expect to manufacture a vertical microwave reactor system that utilizes both our small-batch vertical furnace platform and DSGâ€™s microwave heating technology. This new product is designed to be used for the curing processes on advanced sub-50nm semiconductor devices. This technology may open new markets for our small batch vertical furnace.
We believe that we are a leader in the markets we serve as a result of the following competitive strengths:
Leading Market Share and Recognized Brand Names. The Tempress, Bruce Technologies and PR Hoffman brands have long been recognized in our industry and identified with high-quality products, innovative solutions and dependable service. We believe that our brand recognition and experience will continue to allow us to capitalize on current and future market opportunities in the solar industry.
We have been providing horizontal diffusion furnaces and polishing supplies and equipment to our customers for over 30 years. We have sold and installed over 900 horizontal furnaces worldwide and benefit from what we believe to be the largest installed customer base in the semiconductor industry, which we believe offers an opportunity for replacement and expansion demand. Customers that have purchased our furnaces can leverage their investment in training, spare parts inventory and other costs by acquiring additional equipment from us. We also have an extensive retrofit, parts and service business, which typically generates higher margins than our equipment business.
Experienced Management Team. We are led by a highly experienced management team. Our CEO has over 34 years of industry experience, including 26 years with our company. Our four general managers have an average of over 19 years of semiconductor and solar industry experience and an average of 17 years with our company (including our predecessor companies).
Established, Diversified Customer Base. We have long-standing relationships with many of our top customers, which we believe remain strong. We maintain a broad base of customers, including leading solar cell manufacturing companies, as well as semiconductor and wafer manufacturing companies. During fiscal 2007, our largest customer accounted for approximately 13% of our net revenue and our top 10 customers collectively represented approximately 52% of our net revenue. In fiscal 2006, our largest customer accounted for approximately 17% of our net revenue, and our top 10 customers collectively represented approximately 58% of our net revenue. In fiscal 2005, no single customer accounted for more than 10% of our net revenue. Our largest customer has been different in each of the last three fiscal years.
Proven Acquisition Track Record. Over the last twelve years we have developed an acquisition program that has resulted in the acquisition of four significant businesses. In October 2007, we acquired R2D Ingenierie, a solar and semiconductor automation company located near Montpellier, France. We believe the acquisition of the technology and business of R2D enhances our growth strategy by allowing us to increase our sales by offering an integrated system under the Tempress brand to the solar industry. In July 2004, we acquired the Bruce Technologies line of semiconductor horizontal furnace operations, product lines and other assets from Kokusai, a wholly owned subsidiary of Hitachi, Japan and its affiliate, Kokusai Electric Europe, GmbH. We continue to market the horizontal furnace product line under the name Bruce Technologies. Bruce Technologies has a large installed base, including several large semiconductor manufacturers. In July 1997, we acquired substantially all of the assets of PR Hoffman. This acquisition enabled us to offer new consumable products, including lapping and polishing carriers, polishing templates, lapping and polishing machines and related consumable and spare parts to our existing customer base as well as to target new customers. In 1994, we acquired certain assets of Tempress and hired Tempressâ€™s engineers to develop our first models of the Tempress horizontal diffusion furnaces for production in The Netherlands.
Technical Expertise. We have highly trained and experienced mechanical, chemical, environmental, electronic, hardware and software engineers and support personnel. Our engineering group possesses core competencies in product applications and support systems, automation, sophisticated controls, chemical vapor deposition, diffusion and pyrogenic processes, robotics, vacuum systems, ultra clean applications and software driven control packages. We believe this expertise enables us to design, develop and deliver high-quality, technically-advanced integrated product solutions for solar cell and semiconductor manufacturing customers.
Leading Technology Solutions and New Product Development. We pursue a partnering-based approach, in which our engineering and development teams work closely with our customers to ensure our products are tailored to meet our customersâ€™ specific requirements. We believe this approach enables us to more closely align ourselves with our customers and provide them with superior systems. We believe our line of horizontal diffusion furnaces, which allow high wafer-per-hour throughput, is more technologically advanced and reliable than most of our competitorsâ€™ equipment. In addition, the processing and temperature control systems within the furnace provide diverse and proven process capabilities, which enable the application of high-quality films onto silicon wafers. We believe our recently acquired R2D solar automation technology will provide efficiencies in the manufacturing process that will allow our customers to be more competitive in their respective markets. We developed a small batch vertical furnace jointly with a major European customer and are currently developing five different thin film processes for use with this furnace. We retain full ownership of this technology. We shipped two of these systems in fiscal 2005 and one in 2006. In addition, in 2007, we shipped a small batch vertical furnace utilizing DSGâ€™s microwave technology to DSG. In 2007, we also began selling precision thickness wafer carriers. This is an internally developed product that we expect will increase our sales to the wafer carrier market.
We intend to leverage our competitive strengths through a combination of internal and external growth strategies.
Internal Growth. Our strategy for internal growth includes: capitalizing on growth opportunities in the solar industry and the Asia-Pacific market; accelerating new product and technology development; enhancing our sales and marketing capabilities; and leveraging our installed base.
Capitalizing on Growth Opportunities in the Solar Industry. We have had recent success in increasing our sales to the solar industry. Our fiscal 2007 solar orders, which consist of backlog and shipped orders, totaled $21.4 million, compared to $8.0 million and $3.8 million in fiscal 2006 and 2005, respectively. We believe the increase in orders from solar cell manufacturers is due to our focused product development and marketing efforts, as well as to growing overall demand from the solar industry. We believe that growth in the solar industry will be driven by rising energy demand, the increasing scarcity of traditional energy resources coupled with rising prices, the growing adoption of government incentives for solar energy due to increasing environmental awareness and concern about energy independence, the gradually decreasing cost of solar energy and the changing consumer preferences toward renewable energy sources.
Capitalizing on Growth Opportunities in the Asia-Pacific Market. With our extensive global knowledge and experience, particularly in Asia, we intend to further leverage our established sales channels in the Asia-Pacific market for current and future products. The Asia-Pacific region continues to be an important and expanding market for us, particularly because of the continuing migration of solar cell and semiconductor manufacturing to countries in that region. According to Solar Plaza , total solar cell production in China is expected to grow from 600 MWp in 2005 to 2,200 MWp in 2010 for a CAGR of 30%. For fiscal 2007, we have increased our sales into the Asia-Pacific market by 44% compared to fiscal 2006 This increase is primarily driven by solar equipment sales.
Accelerating New Product and Technology Development. We are focused on developing new products across our business in response to customer needs in various markets.
Small Batch Vertical Furnace. At $1.5 billion annually, the vertical furnace market is much larger than the horizontal furnace market that we have served historically. Our entry product into the vertical furnace market is a two-tube small batch vertical furnace for wafer sizes of up to 200mm, with each tube having a small flat zone capable of processing 25-50 wafers per run. We are targeting small batch niche applications in the vertical furnace market first, since the competition in the large batch vertical furnace market is intense and our competitors are much larger and have substantially greater financial resources, processing knowledge and advanced technology. We believe our large installed customer base increases the market to which we can sell our small batch vertical furnaces and other new products.
Precision Thickness Wafer Carrier. Wafer carriers are work holders into which silicon wafers or other materials are inserted for the purpose of holding them securely in place during the lapping and polishing processes. Many customers thin their wafer carriers to precise tolerances to meet their various applications. We internally developed and began selling precision thickness wafer carriers in 2007.
Enhancing our Sales and Marketing Capabilities. In order to increase sales and improve customer service globally, we intend to continue integrating our Bruce Technologies and Tempress sales and marketing teams and transitioning them from being product oriented to being regionally focused. We also intend to hire additional senior management to expand our existing solar sales and marketing efforts.
Leveraging our Installed Base. We intend to continue leveraging our relationships with our customers to maximize parts, system, service and retrofit revenue from the large installed base of Bruce Technologies and Tempress brand horizontal diffusion furnaces. We intend to accomplish this by meeting these customersâ€™ needs for replacement systems and additional capacity, including equipment and services in connection with any of our customersâ€™ relocation to, or expansion efforts in, Asia.
External Growth. We intend to selectively seek strategic growth opportunities through acquisitions, joint ventures, geographic expansion and the development of additional manufacturing capacity.
Pursuing Strategic Acquisitions that Complement our Strong Platform. Over the last twelve years, we have developed an acquisition program and have completed the acquisition of three significant businesses. Based on a disciplined acquisition strategy, we continue to evaluate potential technology, product and business acquisitions or joint ventures that are intended to increase our existing market share in the solar industry and expand the number of front-end semiconductor processes addressed by our products. In evaluating these opportunities, our objectives include: enhancing our earnings and cash flows, adding complementary product offerings, expanding our geographic footprint, improving our production efficiency and growing our customer base.
SOLAR AND SEMICONDUCTOR INDUSTRIES
We provide products and services primarily to two industries: the solar industry and the semiconductor industry.
Solar Industry. Solar power has emerged as one of the most rapidly growing renewable energy sources. To date, various technologies have been developed to harness solar energy. The most significant technology is the use of interconnected photovoltaic, or PV, cells to generate electricity directly from sunlight. Most PV cells are constructed using specially processed silicon, which, when exposed to sunlight, generates direct current electricity. Solar energy has many advantages over other existing renewable energy sources and traditional non-renewable energy sources in the areas of environmental impact, delivery risk, distributed nature of generation and matching of peak generation with demand. According to Photon International published by Solar Verlag GmbH, an independent solar energy research publication, the global PV market, as measured by total PV cell production, increased from 1.2 gigawatts, or GW, in 2004 to 2.6 GW in 2006, which represents a compound annual growth rate, or CAGR, of approximately 36%. During the same period, PV industry revenues grew from approximately $8.0 billion to approximately $20.0 billion.
Photon International projects that total PV cell production, including thin-film and non-conventional production which our products do not address, will increase from 4.0GW in 2007 to 20.5GW in 2011, representing a CAGR of approximately 50%. During the same period, PV industry revenues are projected to grow from approximately $30 billion to approximately $121 billion. Despite this rapid growth, solar energy currently accounts for only a small fraction of the worldâ€™s energy output. We believe that growth in the PV industry will be driven by rising energy demand, the increasing scarcity of traditional energy resources coupled with rising prices, the growing adoption of government incentives in a number of countries for solar energy due to increasing environmental awareness and concern about energy independence, the gradually decreasing cost of solar energy and the changing consumer preferences toward renewable energy sources. We believe the anticipated continued growth of the PV industry will result in increased investment in PV manufacturing equipment. Solar power systems are used for residential, commercial and industrial applications and for customers who either have access to or are remote from the electric utility grid. The market for â€śon-gridâ€ť applications, where solar power is used to supplement a customerâ€™s electricity purchased from the utility network, represents the largest and fastest growing segment of the market. â€śOff-gridâ€ť markets, where access to utility networks is not economical or physically feasible, and consumer markets both offer additional opportunities for solar technology. Off-grid industrial applications include road signs, highway call boxes and communications support along remote pipelines, as well as rural residential applications. Consumer applications include outdoor lighting and handheld devices such as calculators.
Semiconductor Industry. Semiconductors control and amplify electrical signals and are used in a broad range of electronic products, including: consumer electronic products, computers, wireless telecommunication devices, communications equipment, automotive electronic products, major home appliances, industrial automation and control systems, robotics, aircraft, space vehicles, automatic controls and high-speed switches for broadband fiber optic telecommunication networks. Semiconductors, or semiconductor â€śchips,â€ť solar cells and optical components are manufactured primarily on a silicon wafer and are part of the circuitry or electronic components of many of the products listed above.
The semiconductor industry has experienced significant growth since the early 1990s. This growth has been primarily attributable to an increase in demand for personal computers, the growth of the internet, the expansion of the telecommunications industry, especially wireless communications, and the emergence of new applications in consumer electronics. Further fueling this growth is the rapidly expanding end-user demand for smaller, less-expensive and better-performing electronic products as well as for traditional products with more â€śintelligence.â€ť This growing demand has led to an increased number of semiconductor devices in electronic and other consumer products, including automobiles.
Although the semiconductor market has experienced significant growth over the past fifteen years, it remains cyclical by nature. The market is characterized by short-term periods of under or over supply for most semiconductors, including microprocessors, memory, power management chips and other logic devices. When demand decreases, semiconductor manufacturers typically slow their purchasing of capital equipment. Conversely, when demand increases, so does capital spending. After the historical peak in 2000, the semiconductor industry experienced one of its most severe downturns in 2001 through the first half of 2003, resulting in a decline in revenue for most manufacturers of semiconductor chips and semiconductor equipment. During the latter part of 2003, the industry began to improve and has continued to improve through 2007.
The silicon wafer may be cycled ten to twenty-five times through these wafer-processing steps, starting each time at step (5) or (7) to form a number of chips on the wafer. The front-end process steps are followed by a number of back-end steps in which the wafers are sliced into individual chips that are then packaged to add connectors that are compatible with the end product in which the chip will be used.
Depending on the device, our polishing supplies segmentâ€™s products may be used in lapping and polishing (step 3) and our semiconductor and solar equipment segmentâ€™s products may be used in forming silicon dioxide films (step 5), doping (step 6), depositing insulating and conducting layers (step 7) and the annealing processes (step 13).
SEMICONDUCTOR AND SOLAR EQUIPMENT SEGMENT PRODUCTS
Our furnace and automation equipment is manufactured in our facilities in Massachusetts and The Netherlands. The following paragraphs describe the products that comprise our semiconductor and solar equipment segment:
Horizontal Diffusion Furnaces. Through our subsidiaries, Tempress and Bruce Technologies, we produce and sell horizontal diffusion furnaces. Our horizontal furnaces currently address several steps in the semiconductor manufacturing process, including diffusion (step 5 in the semiconductor manufacturing process previously described), phosphorus tetrachloride doping, or POCl 3 (step 6), low-pressure chemical vapor deposition, or LPCVD, (step 7), and annealing (step 13). Our horizontal furnaces also currently address diffusion and applying antireflective coating in the solar cell manufacturing process (steps 3 and 5).
Our horizontal furnaces generally consist of three large modules: the load station where the loading of the wafers occurs; the furnace section, which is comprised of one to four reactor chambers; and the gas distribution cabinet where the flow of gases into the reactor chambers is controlled, and often customized to meet the requirements of a customerâ€™s particular processes. The horizontal furnaces utilize existing industry technology and are sold primarily to customers who do not require the advanced automation of, or cannot justify the higher expense of, vertical furnaces for some or all of their diffusion processes. Our models are capable of processing all currently existing wafer sizes.
Small Batch Vertical Furnace. Our small batch, two-tube vertical furnace was developed internally with the active support from a large semiconductor manufacturer and long-term customer. The specifications for this furnace include a two-tube vertical furnace for wafer sizes of up to 200mm, with each tube having a small flat zone capable of processing 25-50 wafers per run. The market for vertical furnaces is much larger than the total of all the other markets we currently serve. We are initially targeting niche applications, including research and development, while we continue to develop additional processes, since the competition in the large batch vertical furnace market is intense and our competitors are much larger and have substantially greater financial resources, processing knowledge and advanced technology.
Conveyor Furnace. We produce conveyor furnaces used to manufacture thick films for the electronics industry. Conveyor furnaces provide for precision thermal processing of electronic parts for thick film applications, including annealing, sealing, soldering, silvering, curling, brazing, alloying, glass-metal sealing and component packaging.
Etch Systems. We manufacture and sell two models of etch systems. Our P2000 series is a fully automated single wafer plasma etch and deposition production system for front- and back-end processing of wafers up to 200mm. The system is used for semiconductor production applications. Etching of silicon, nitrides, oxides, polymers and metals is accomplished safely and reliably in this cost efficient, high performance system. Our PM2000 is a manually loaded small laboratory model that provides fast etch rates using solid state 600 watt generators and a unique chamber design. We acquired this product and process technology in 2004 for a nominal amount. We sold our first two etch systems in 2006.
Automation Products â€“ Semiconductor. Use of our automation products reduces human handling and, therefore, reduces exposure of wafers to particle sources during the loading and unloading of the process tubes and protects operators from heat and chemical fumes. Since the top reactor chamber of a horizontal furnace is as much as eight feet from the floor on which the operator stands when manually loading wafer boats, and typical boats of 150mm to 300mm wafers weigh three to six pounds, automating the wafer loading and unloading of a diffusion furnace improves employee safety and ergonomics in silicon wafer, solar cell and semiconductor manufacturing facilities.
E-300. Our most cost effective automation product is the E-300. This product is most suitable for the lower cost semiconductor devices, such as diodes and power management chips. The E-300 operates like an elevator and generally is used to raise wafer boats loaded with up to 300 wafers to one or both of the upper two reactor chambers of a diffusion furnace.
S-300. Our patented S-300 model provides a very efficient method of automatically transporting a full batch of up to 300 wafers to the designated tube level and automatically placing them directly onto the cantilever loader of a diffusion furnace at one time. This product is suitable for the production of nearly all semiconductors manufactured using a horizontal furnace. The S-300 can be used in conjunction with all current wafer sizes and is particularly well suited for manufacturers of 300mm wafers.
Automation Products â€“ Solar. Our automation technology products are used in several of the semiconductor manufacturing steps and the diffusion processing step in solar cell manufacturing. Our automation equipment includes mass wafer transfer systems, sorters, long-boat transfer systems, load station elevators, buffers and conveyers. We use a vacuum technology for our solar wafer transfer systems designed to ensure high throughput.
Atmoscan and Other Cantilevered Processing Systems . Our Atmoscan product is a controlled environment wafer processing system that includes a cantilever tube used to load silicon wafers into a horizontal diffusion furnace and through which a purging inert gas flows during the process of loading and unloading the reactor chamber. Among the major advantages afforded by the Atmoscan product is increased control of the environment surrounding the wafers during the gaseous and heating /cooling process, resulting in increased yields, decreased manufacturing costs and other economies in the manufacturing process.
Jong S. Whang has been our President, Chief Executive Officer and a Director since our inception in 1981, and was one of its founders. Mr. Whangâ€™s responsibilities include the sales effort for our semiconductor equipment business and the development of new products and business opportunities in that industry. He has 33 years of experience in the semiconductor industry, including time spent in both processing and manufacturing of equipment components and systems. From 1973 until 1979, he was employed by Siltronics, Inc., initially as a technician working with chemical vapor deposition, and later as manager of the quartz fabrication plant with responsibility of providing technical marketing support. From 1979 until 1981, he was employed by U.S. Quartz, Inc. as manufacturing manager. In 1981, he left U.S. Quartz to form Amtech.
Bradley C. Anderson joined us as Vice President-Finance, Chief Financial Officer, Treasurer and Secretary in April 2006. Prior to that, Mr. Anderson spent several years in a consulting role implementing the internal control requirements of the Sarbanes-Oxley Act for a broad range of publicly held companies. From 1996 to 2002, Mr. Anderson served as Vice President-Finance and then as Chief Financial Officer of Zila, Inc., an international provider of healthcare technology and products. Mr. Anderson began his career with Deloitte (formerly Deloitte & Touche) where he worked for over 11 years. He graduated from Brigham Young University with a Bachelor of Science in Accounting. Mr. Anderson is Certified Public Accountant.
Robert T. Hass has been our Chief Accounting Officer and Assistant Secretary since April 2006. Prior to that, he served as our Vice President - Finance, Chief Financial Officer, Treasurer and Secretary from June 1992 to April 2006, and as Director from February 1996 to March 2006. From 1991 until May, 1992, he operated a financial consulting practice. From 1985 to 1991, Mr. Hass was Director of Accounting Services and then Controller for Lifeshares Group, Inc., and from 1988 to 1991 was Controller and Chief Accounting Officer of some of Lifesharesâ€™ subsidiaries. From 1984 to 1985, he was Vice President - Finance and Treasurer of The Victorio Company. From 1977 to 1984, he served in various capacities including Vice President, Chief Financial Officer and Treasurer of Altamil Corporation, then a public diversified manufacturing company. From 1972 to 1977, he was an auditor with Ernst & Ernst, now known as Ernst & Young. Mr. Hass has a Bachelor of Science degree in accounting from Indiana University.
Michael Garnreiter has been a Director since February 19, 2007. He is currently a managing member of Rising Sun Restaurant Group LLC. Mr. Garnreiter serves on the boards of directors of Taser International, a manufacturer of non-lethal protection devices, and Knight Transportation Company, a nationwide truckload transportation company. From 2002 to 2006, Mr. Garnreiter was CFO of Main Street Restaurant Group, a publicly traded restaurant operating company, and from 1976 to 2002, he was a senior audit partner of Arthur Andersen LLP. He graduated from California State University Long Beach with a Bachelor of Science in Accounting and Business Administration. Mr. Garnreiter is a Certified Public Accountant.
Alfred W. Giese has been a Director since April 13, 2007. He was Interim President and General Manager of Sea Fare Foods Corp. from January 2007 to June 2007. Mr. Giese is Founder and Senior Partner of IBC, International Business Consultants, a firm in which he was active from 2001 to 2006 with an emphasis on sales and marketing for Aviza Technology Corporation, a semiconductor equipment manufacturer. He also assembled and managed a sales and marketing team for Epion Corporation, a high-technology equipment company which was acquired by TEL (Tokyo Electron Ltd.). From 1998 to 2001, he was the Vice President, Sales for Silicon Valley Group, or SVG, with responsibility for both Asia and Europe. From 1988 to 1998, Mr. Giese held positions of Vice President of Sales with Thermco Systems, Corp. and SVG, both semiconductor equipment companies. Prior to 1998, he held various sales positions for Thermco. For several years during that time, he served on the Board of Directors of Thermcoâ€™s joint venture company in Japan. Mr. Giese has a degree in international business from the Industriehochschule in Essen, Germany.
Brian L. Hoekstra has been a Director since February 19, 2007. He is Founder, President & CEO of Applied Photonics, Inc., a leading laser solutions provider for the flat panel display industry. Mr. Hoekstra has more than 25 years of professional experience including corporate management, strategic planning and business development, as well as extensive technical expertise that includes lasers, optics and electronic materials. He was previously Vice President of Technology at Accudyne Corporation and Project Scientist on the U.S. Display Consortium, or USDC, sponsored laser glass separation project. He was also Founder and deputy Director of a NASA Commercial Center focused on electronic and optical materials processing in space. Mr. Hoekstra is a graduate of the U.S. Air Force Academy and was a pilot with the 64 th Flying Training Wing. He qualified for the manned space flight program in 1988.
Robert F. King has been a Director since May 2003. Since 1989, Mr. King has been President of King Associates, which provides consulting services to equipment companies serving the semiconductor and flat panel display industries. He currently serves on the advisory board of a privately-held company, which provides equipment to the flat panel display industry. From 1968 to 1988, Mr. King was employed at Varian Associates, where he served in various marketing positions, including Vice President of Marketing for the Semiconductor Equipment Division. Mr. King also served on the Board of Directors of Varianâ€™s joint venture semiconductor equipment companies located in Korea and Japan.
MANAGEMENT DISCUSSION FROM LATEST 10K
Managementâ€™s Discussion and Analysis (â€śMD&Aâ€ť) is intended to facilitate an understanding of our business and results of operations. MD&A consists of the following sections:
Overview: a summary of our business.
Results of Operations: a discussion of operating results.
Liquidity and Capital Resources: an analysis of cash flows, sources and uses of cash and financial position.
Contractual Obligations and Commercial Commitments
Critical Accounting Policies: a discussion of critical accounting policies that require the exercise of judgments and estimates.
Impact of Recently Issued Accounting Pronouncements: a discussion of how we are affected by recent pronouncements.
We operate in two segments: semiconductor and solar equipment and polishing supplies. Our semiconductor and solar equipment segment is a leading supplier of thermal processing systems, including related automation, parts and services, to the semiconductor, solar/photovoltaic, silicon wafer and MEMS industries.
Our polishing supplies and equipment segment is a leading supplier of wafer carriers to manufacturers of silicon wafers. The polishing segment also manufacturers polishing templates, steel carriers and double-sided polishing and lapping machines to fabricators of optics, quartz, ceramics and metal parts, and to manufacturers of medical equipment components.
Our customers are primarily manufacturers of integrated circuits and solar cells. The semiconductor and solar cell industries are cyclical and historically have experienced significant fluctuations. Our revenue is impacted by these broad industry trends.
In June 2006, we adopted a plan to consolidate the manufacturing of our automation product line into facilities already used to manufacture diffusion furnaces. Our automation products are often sold in conjunction with new diffusion furnaces. As a result of this decision, we recorded approximately $0.2 million of restructuring charges in fiscal 2006.
In July 2004, we completed the acquisition of the Bruce Technologies horizontal diffusion furnace product line from Kokusai Semiconductor Equipment Corporation , which we believe makes us a leading manufacturer of horizontal diffusion furnaces.
Results of Operations
Fiscal 2007 compared to Fiscal 2006
Net revenue consists of revenue recognized upon shipment or installation of products using proven technology and upon acceptance of products using new technology. In addition, spare parts sales are recognized upon shipment. Service revenue is recognized upon completion of the service activity or ratably over the term of the service contract. The majority of our revenue is generated from large furnace systems sales which, depending on the timing of shipment and installation, can have a significant impact on our revenue and earnings in any given period. See Critical Accounting Policies â€“ Revenue Recognition.
Overall growth in net revenue in fiscal 2007 was driven primarily by our increased penetration into the solar market where revenue increased $9.7 million or more than 300% compared to fiscal 2006. Within the semiconductor and solar equipment segment, net revenue from the solar market was $12.5 million and $2.8 million in fiscal 2007 and 2006, respectively, while net revenue from the semiconductor market was $25.2 million in fiscal 2007 compared to $30.6 million in fiscal 2006. Net revenue within the semiconductor market in fiscal 2006 was positively impacted by the shipment of a $5.2 million multi-furnace order for which there was no corresponding order of similar magnitude in fiscal 2007. Revenue in the polishing supplies segment increased $1.2 million or 18% due to increased demand for our polishing machines and polishing templates Backlog
Our backlog as of September 30, 2007 and 2006 was $23.2 million and $13.6 million, respectively, a 71% increase. Our backlog as of September 30, 2007 included approximately $17.4 million of orders from our solar industry customers compared to $7.6 million of orders from solar industry customers as of September 30, 2006. The orders included in our backlog are generally credit approved customer purchase orders expected to ship within the next twelve months. Because our orders are typically subject to cancellation or delay by the customer, our backlog at any particular point in time is not necessarily representative of actual sales for succeeding periods, nor is backlog any assurance that we will realize revenue or profit from completing these orders. Our backlog also includes revenue deferred pursuant to our revenue recognition policy, derived from orders that have already been shipped, but which have not met the criteria for revenue recognition.
Gross profit is the difference between net revenue and cost of goods sold. Cost of goods sold consists of purchased material, labor and overhead to manufacture equipment or spare parts and the cost of service and support to customers for warranty, installation and paid service calls. Gross margin is gross profit as a percentage of net revenue.
Gross profit increased in fiscal 2007 by $2.2 million, or 21%, over fiscal 2006. The increase was driven by higher shipments during the year as well as improved margin percentage. Gross margin was 28% in fiscal 2007 compared to 26% in fiscal 2006. A major factor that contributed to the increase in margin percentage was improved capacity utilization in both segments. Additionally, in the semiconductor and solar equipment segment, margins were negatively impacted in fiscal 2006 by approximately $0.7 million of revenue and an equal amount of costs related to customer acceptance of one of our first small batch vertical furnace systems and lower margins on the multi-furnace order shipped during fiscal 2006.
The timing of revenue recognition can have a particularly significant effect on gross margin when the equipment revenue of an order is recognized in one period and the remainder of the revenue attributed to holdbacks is recognized in a later period. The portion of revenue attributed to the holdbacks generally comprises 10-20% of an order and has a significantly higher gross margin percentage.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist of the cost of employees, consultants and contractors, as well as facility costs, sales commissions, legal and accounting fees and promotional marketing expenses.
Total selling, general and administrative expenses increased $2.2 million or 26% in fiscal 2007 from fiscal 2006. Commissions on sales increased approximately $0.9 million due to increased revenue generated in geographic regions, primarily Asia, where third-party sales representatives are utilized. Other selling costs increased $0.2 million in fiscal 2007 due to increased marketing activities. General and administrative personnel and consulting costs increased in fiscal 2007 as a result of the need to (i) improve internal financial and operational reporting, (ii) identify potential improvements in operational efficiencies, (iii) assist in developing and executing our growth strategies and (iv) manage the increasing compliance obligations of a growing multi-national public company. Stock option expense increased $0.2 million in fiscal 2007.
In June 2006, we adopted a plan to consolidate the manufacturing of our automation product line into facilities already used to manufacture diffusion furnaces. Our automation products are often sold in conjunction with the sale of new diffusion furnaces. As a result of this decision, we recorded $0.2 million of restructuring charges in fiscal 2006. We incurred no comparable costs in fiscal 2007.
Research and Development
Research and development expenses consist of the cost of employees, consultants and contractors who design, engineer and develop new products and processes; materials used in those processes and producing prototypes.
Income Tax Provision
In fiscal 2004 we recorded a valuation allowance for the total of our deferred tax assets. The company, at that time, had incurred substantial book and tax losses and was in a cumulative loss position as defined under SFAS No. 109. During fiscal years 2004 through 2006, we recorded additional tax provisions or benefits as deferred tax assets increased or decreased so that the valuation allowance remained equal to total deferred tax assets. During fiscal 2006, our deferred tax assets declined by $0.2 million, resulting in a decline in our valuation allowance and an equal amount of tax benefit. This resulted in an effective tax rate for fiscal 2006 of 17.5%.
Based upon profitability in fiscal years 2006 and 2007, as well as our strong cash position and strong order backlog, we believe it is more likely than not that we will realize the future tax benefit of a significant portion of our deferred tax assets. Therefore, during fiscal 2007 we recorded reductions in the valuation allowance on deferred tax assets of $1.2 million. Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income, the level of expenses that are not deductible for tax purposes, changes in our deferred tax assets and the effectiveness of our tax planning strategies.
MANAGEMENT DISCUSSION FOR LATEST QUARTER
Net revenue consists of revenue recognized upon shipment or installation of products using proven technology and upon acceptance of products using new technology. In addition, spare parts sales are recognized upon shipment. Service revenue is recognized upon completion of the service activity or ratably over the term of the service contract. The majority of our revenue is generated from large furnace system sales. Timing of shipment, installation and customer acceptance can have a significant impact on our revenue and earnings in any given period. See Critical Accounting Policies â€“ Revenue Recognition.
Net revenue for the quarter ended March 31, 2008 increased by $7.1 million, or 67%, compared to the quarter ended March 31, 2007. Revenue from the Solar and Semiconductor Equipment Segment increased $7.4 million, or 90%, due to significantly higher shipments to the solar industry, partially offset by decreased shipments to the semiconductor industry. The growth in solar shipments was driven by the continuing increase in demand for solar products from our customers and the success of our increased marketing and sales efforts in penetrating the solar market. The decrease in net revenue from the semiconductor industry was due primarily to the overall cyclical downturn in the semiconductor industry. The decrease of $0.3 million, or 14%, in net revenue from the Polishing Supplies Segment was due primarily to lower insert carrier and polishing machines caused by higher competition in the insert carrier market and the current downturn in the semiconductor industry.
Net revenue for the six months ended March 31, 2008 increased by $9.3 million, or 47%, compared to the six months ended March 31, 2007. Revenue from the Solar and Semiconductor Equipment Segment increased $9.9 million, or 63%, due to higher solar product revenues, partially offset by decreased revenues to the semiconductor industry. The decrease of $0.5 million, or 12%, in net revenue from the Polishing Supplies Segment is due to the factors discussed above.
Our order backlog as of March 31, 2008 and 2007 was $64.2 million and $16.2 million, respectively, a 296% increase. Our backlog as of March 31, 2008 includes approximately $52.6 million of orders from our solar industry customers compared to $7.3 million of orders from our solar industry customers at March 31, 2007. The orders included in our backlog are generally credit approved customer purchase orders expected to ship within the next twelve months. Because our orders are typically subject to cancellation or delay by the customer, our backlog at any particular point in time is not necessarily representative of actual sales for succeeding periods, nor is backlog any assurance that we will realize profit from completing these orders. We believe the orders included in backlog are probable of being filled and not cancelled. Our backlog also includes revenue deferred pursuant to our revenue recognition policy, derived from orders that have already been shipped, but which have not met the criteria for revenue recognition.
Gross Profit and Gross Margin
Cost of goods sold consists of purchased material, labor and overhead to manufacture equipment and spare parts and the cost of service and factory and field support to customers for warranty, installation and paid service calls. In addition, the cost of outsourcing the assembly or manufacturing of certain systems and subsystems to third parties and supplemental contract field service is included in cost of goods sold.
Gross profit for the quarter ended March 31, 2008 increased $1.3 million or 44% from $2.9 million in the second quarter of fiscal 2007 to $4.1 million in the second quarter of fiscal 2008. Gross margin in the second quarter was 23% compared to 27% in the second quarter of fiscal 2007, reflecting the net impact of deferred revenue and deferred profit activity during the second quarter, which included the recognition of $1.1 million of deferred revenue with no gross profit because there was an equal amount of revenue and cost previously deferred. Lower capacity utilization at Bruce Technologies also negatively impacted margins during the second quarter along with a ramp up of production personnel at our Tempress and R2D facilities. Excluding the net impact of deferred revenue and profit activity, gross margin in the solar and semiconductor equipment segment improved in the second quarter compared to the same quarter in the prior year, primarily due to higher shipment volumes. Gross profit and margins in the polishing supplies segment decreased due to lower revenues and increased competition in the insert carrier market.
Gross profit for the six months ended March 31, 2008 increased $2.4 million or 46% from $5.3 million in the first half of fiscal 2007 to $7.7 million in the first half of fiscal 2008. Gross margin was 26% in both periods. As discussed above, in the second quarter of fiscal 2008 we recognized $1.1 million of previously deferred revenue with no gross profit. Excluding this negative effect, gross margins improved in the first half of fiscal 2008 when compared to the first half of fiscal 2007. This improvement resulted mainly from the efficiencies realized in the second quarter of fiscal 2008 as discussed above.
Selling, General and Administrative
Selling, general and administrative (SG&A) expenses for the quarter ended March 31, 2008 increased $1.5 million, or 64%, from $2.4 million to $4.0 million compared to the quarter ended March 31, 2007. The increase was due primarily to $0.6 million of increased selling expense for higher revenues generated in regions where third party sales agents are utilized. In addition, we incurred $0.3 million of expense at R2D for which there were no comparable expenses in the prior year quarter. SG&A expenses include $0.1 million of stock-based compensation expense in the quarters ended March 31, 2008 and 2007. The remainder of the increase in SG&A resulted from increased depreciation and operating costs for the new building in The Netherlands and increased personnel and consulting costs. The increased personnel and consulting costs include costs incurred to improve internal financial and operational reporting, to comply with the Sarbanes-Oxley Act, and to implement improvements in operational efficiencies.
For the six months ended March 31, 2008, SG&A increased $2.6 million or 57% compared to the six month period ended March 31, 2007. The increase reflects $0.6 million of costs incurred by R2D in fiscal 2008 for which there were no comparable expenses in the prior year period. Selling expenses increased $1.0 million due to increased commissions and increased sales and marketing activity. As previously discussed, personnel costs and professional fees, including costs related to moving our Netherlands operations into our new building, increased as we continued to execute our growth strategies and manage the increasing compliance obligations of a growing multi-national public company.
Research and Development
Research and development expenses consist of the cost of employees, consultants and contractors who design, engineer and develop new products and processes; materials and supplies used in those activities; and product prototyping. . Research and development costs for the three and six months ended March 31, 2008 increased $0.1 million and $0.2 million, respectively compared to the three and six-month periods ended March 31, 2007. The increase results from increased focus on the solar industry and reflects our partnering-based approach, in which our engineering and development teams work closely with our customers to ensure our products are tailored to meet our customersâ€™ specific requirements while at the same time minimizing research and development costs.
Hello, everyone and thank you for joining us this afternoon for Amtech Systemsâ€™ fourth quarter conference call. On the call today are J.S. Whang, Amtech's President and Chief Executive Officer; and Brad Anderson, Amtech's Chief Financial Officer.
After the close of market trading today, Amtech released its fiscal 2007 fourth quarter and year-end financial results. The release will be posted on their website at www.amtechsystems.com. In addition, a phone replay of todayâ€™s call will be available beginning approximately two hours after the callâ€™s conclusion and remaining in effect for one week. The call replay information is included in the earnings press release.
Before we begin, let me note that during todayâ€™s call, management will make forward-looking statements. All such forward-looking statements are based on information available to Amtech as of this date and they assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from current expectations.
Among the important factors which could cause actual results to differ materially from those in the forward-looking statements are changes in the technologies used by Amtech's customers, change and volatility in the demand for diffusion equipment, the effect of changing worldwide political and economic conditions on government funded solar initiatives, capital expenditures, production levels, including those in Europe and Asia, the effect of overall market conditions, market acceptance risks, risks associated with dependence on suppliers, the impact of competitive products and pricing, technological and product development risks, including the risks inherent in launching new products, such as Amtechâ€™s vertical furnace, and other risk factors detailed in the companyâ€™s Securities and Exchange Commission filings, including its Form 10-K and Forms 10-Q.
With that said, I will now turn the call over to J.S. Whang.
Jong S. Whang
Good afternoon, everyone and thank you for joining us today to discuss our fiscal 2007 Q4 and year-end financial results. Brad will review the financials in just a moment but first, I will review some highlights from the fiscal year and discuss recent developments and strategy going forward.
Fiscal year 2007 was a year of a transformation for Amtech, from being semiconductor dominant to becoming solar dominant. We are very pleased with our operating results during this year of our transition and our solar revenue grew 300% and this was 27% of the total revenue in fiscal 2007 compared to only 7% solar in fiscal year 2006.
With the contribution from our R2D automation, a wholly-owned [subsidiary] product, we generated strong growth in solar orders. For fiscal 2007, solar orders totaled more than $21 million compared to only $8 million in fiscal 2006 and, more importantly, the number of solar customers we serve nearly doubled from just eight customers in 2006.
For fiscal 2008 year-to-date, or for the past two-and-a-half months, we have already produced approximately $19 million in solar orders bookings, which is further evidence of increasing market acceptance of our product. We remain very focused on successful execution of our solar growth strategies and we continue to make a solid progress leveraging our technology, our strong brand mechanism, and our global presence to further penetrate the rapidly growing solar cell market.
To better support our growth and initiatives going forward, we recently completed a successful follow-on public offering, generating net proceeds to Amtech of approximately $33 million. In the near-term, we intend to use these proceeds for working capital to fulfill the orders that we continue to generate. In the longer term, they provide added resources of strength to pursue our solar growth strategy and further expand our product portfolio.
As a part of our strategy to expand our solar product portfolio, we have targeted specific additional steps in the solar cell manufacturing process that builds on our existing competencies and leverage our [proven] manufacturing experience.
We have added a second step in the manufacturing of solar cells with our exclusive licensing agreement to provide front-end manufacturing for the PECVD process. This is the application of anti-reflective coating on the solar wafers, which affects one of the most important steps in solar cell production.
Our PECVD product is currently scheduled to be launched for the end of March 2008. At that time, we expect our system to be ready for customers to bring their wafers and test the wafers through our PECVD machine. This process will take time as we validate the wafer production, receive orders, and ship the product.
As this ramp-up progresses, we expect PECVD to begin contributing to our order bookings in fiscal 2008. We are excited to produce and introduce this additional product and as it provides entry into a significant segment of the solar market that could double our total available market we currently serve.
As a part of our longer term strategy, we are actively seeking to add additional front-end [inaudible] steps to the solar product portfolio we provide, so that we can more fully participate in the rapidly growing solar markets. We continue to make progress on our stated plan and believe we are well-positioned to capitalize on the growth opportunities we have.
With the continued successful execution of our solar product strategy, we believe we can increase our total available solar market size significantly over the next three years.
I will now turn the call over to Brad to review our financial results and financial outlook going forward. Brad.
Bradley C. Anderson
Thank you, J.S. I would like to discuss with you some of the highlights of our successful year in 2007. For the fourth quarter, net revenue reached a record $13.4 million, reflecting continuing increase in demand for our solar products. This represents a 16% increase in net revenue over last yearâ€™s Q4.
Solar revenue during the fourth quarter was $4.4 million compared to $0.5 million in solar revenue for the fourth quarter of last year. For the full fiscal year 2007, solar revenue totaled $12.5 million, up more than 300% over fiscal 2006.
Total order backlog as of September 30, 2007, reached a very strong $23.2 million, or up 70% from a backlog of $13.6 million a year ago. This total includes approximately $17.4 million in orders from our solar industry customers, which represents a 128% increase over the prior year but does not include an additional $15 million solar order received shortly after our September 30 fiscal year-end.
Backlog includes deferred revenue and customer orders that are expected to ship within the next six to 12 months.
Fourth quarter gross margin was 31% compared to 24% in the fourth quarter of fiscal 2006. The most recent quarter benefited from a favorable product mix and capacity utilization, primarily at our Tempress facilities.
Through the fourth quarter, Tempress continued to operate at its older facilities and just recently in the first quarter of fiscal 2008 moved production and office personnel to the new expanded facility.
Operating margin for the quarter was 6% compared to 4.7% in the same quarter a year ago, reflecting improved gross margins and higher revenues. Net income for the fourth quarter was $1.1 million, or $0.17 per diluted share, compared to net income of $497,000, or $0.14 per diluted share for the fourth quarter of fiscal 2006. Net income was positively impacted in the quarter by the recording of a net tax benefit of approximately $300,000 resulting from a reduction in the valuation allowance on deferred tax assets of approximately $600,000, compared to zero tax expense in the same period a year ago.
For the full fiscal 2007 year, we generated record net revenue of $46.4 million, an increase of 14% from $40.4 million in fiscal 2006.
We continue to build on our broad and diverse base of customers, both within the solar industry and the leading semiconductor and wafer manufacturing companies. In fiscal 2007, only one customer accounted for more than 10% of our total revenue and that customer was approximately 13%.
Total revenue by geographic distribution was Asia at 52%, North America at 28%, and Europe at 20%, evidence in our continued success in pursuing and penetrating the Asian market.
Gross profit for the year of $12.8 million increased by $2.2 million, or 21% over fiscal 2006, driven by higher shipments during the year. Gross margin was 28% in fiscal 2007 compared to 26% in fiscal 2006, reflecting higher capacity utilization in both segments of our business, the semiconductor and solar equipment segment and the polishing supply segment.
Operating margin for fiscal 2007 was 3.8% compared to 4% in fiscal 2006. This reflects continued investment in financial and operational resources to support our future solar growth and compliance obligations.
Net income for the 2007 fiscal year was $2.4 million, or $0.44 per diluted share compared to net income of $1.3 million, or $0.38 per diluted share in fiscal 2006.
Turning to the balance sheet for a moment, as of September 30, 2007, we had a cash balance of $18.4 million, long-term debt of less than $1 million, and working capital of $30.5 million, compared to working capital of $11.9 million at the end of fiscal 2006.
Our September 30 balance sheet does not include the assets and liabilities of R2D, nor the use of cash to purchase R2D, which was acquired at the beginning of fiscal 2008.
As many of you know, to better support our strategic initiatives going forward, we recently closed a successful follow-on public offering, generating net proceeds to the company of approximately $33 million. We would like to welcome many new investors to Amtech and express appreciation for the support of our existing investors, many of whom participated in the financing.
The outlook for fiscal 2008, for the full year fiscal 2008, we anticipate revenue to be in the range of $65 million to $75 million, representing growth of approximately 40% to 60% over fiscal 2007. Total revenues are expected to be the primary growth driver, while semiconductor revenues relative to last fiscal year and consistent with overall street trends are expected to be flat or slightly down. Gross margins are expected to remain at their annual historical rate through the first half of fiscal 2008, with improvement occurring in the second half of fiscal 2008. Overall, for fiscal 2008, we expect gross margin to be in the range of 28% to 30%.
We expect selling, general, and administrative expenses, or SG&A in fiscal 2008 to continue at their historical rates or be slightly down as a percentage of revenues. The total dollar amount of SG&A will continue to increase as a result of increased activity in the Asia-Pacific region where we utilize third-party sales organizations, Sarbanes-Oxley compliance costs, and increased depreciation and amortization, primarily as a result of the R2D acquisition and the new manufacturing facility in The Netherlands.
Fiscal 2008 is the first year that Amtech will be required to comply with section 404 of the Sarbanes-Oxley Act, which requires managementâ€™s assessment of its internal controls over financial reporting and an additional assessment by the companyâ€™s external auditors.
Operating income for fiscal 2008 is expected to more than double compared to fiscal 2007 as a result of higher revenues and improved gross margin.
Turning to the first quarter of fiscal 2008, we anticipate revenues to be in the range of $11 million to $12 million, representing growth of approximately 16% to 27% over the first quarter of fiscal 2007.
Revenues are expected to be down sequentially due to the timing of shipments and acceptances of several systems moving into the second quarter of fiscal 2008.
Operating results for the first quarter of fiscal 2008 are expected to be break even to negative due to lower revenues, higher operating costs discussed above, and increased production personnel.
This concludes the prepared remarks section of our conference call. Operator, please open the call to questions.