Plasma-Therm, Inc., together with its subsidiary, produce semiconductor and flat panel display manufacturing equipment.

The Company sells this equipment directly to manufacturers in the semiconductor, compound semiconductor, thin film head, photomask, micro electromechanical systems and flat panel display industries.

The Company's thin film etching systems provide a combination of Reactive Ion Etching (RIE), Electron Cyclotron Resonance (ECR), and Inductively Coupled Plasma (ICP) capability, which permits advanced process applications for Gallium Arsenide, Indium Phosphide, Chrome, Quartz, Silicon Dioxide, Amorphous Silicon, Silicon, Indium Tin Oxide, Molybdenum, Aluminum, Aluminum Oxide and various other materials.

The Company also offers Plasma Enhanced Chemical Vapor Deposition (PECVD) systems for depositing Amorphous Silicon, Silicon Nitride, Silicon Dioxide, diamond-like carbon and other materials.

The Company's plasma systems are divided into two groups. The batch group consists of three product lines: (1) 790 Series; (2) Shuttlelock® Series, and (3) the 7000 Series. The second or auto-mated group of products consists of the Versalock™ 700 and Cluster-lock® 7000 Series.

1. 790 Series - The 790 Series primarily used for advanced research and development and pilot production of compound semiconductor devices.

2. The Shuttlelock® Series RIE, PECVD, ECR, and ICP plasma systems are the company's most successful products. The Series is used for pilot production and production of compound semiconductor devices, opto-electronics, photomasks, microclectro-mechanical (MEMS) systems and thin film head manufacturing.

3. The 7000 Series RIE and PECVD systems were originally introduced in 1987. This series of manually loaded plasma systems is unique, featuring 24 inch diameter electrode areas. During 1995 the 7000 Series was re-engineered and updated to bring the product up to levels of performance and cost comparable with the Company's newer products.

4. The Versalock™ 700 Series RIE, PECVD and ICP plasma systems are among the Company's newest products and are a natural extension of the Shuttlelock® Series. The Versalock™ 700 is available with manual or cassette-to-cassette capability allowing it to meet advanced research and development and or volume production requirements of the compound semiconductor, thin film head, photomask, microclectromechanical (MEMS) systems, and flat panel display markets.

5. The Clusterlock® Series 7000 flat panel display plasma processing systems was introduced in late 1993. The CLR-7000 is used by manufacturers of flat panel displays during the microstructure formation process. This formation process is essential in the production of flat panel displays for notebook computers, PCs, workstations, avionics and marine navigation equipment.

The Company's wholly-owned subsidiary, Magnetran, Inc., is in the business of manufacturing transformers, reactors, power centers and related components. These products are used by manufacturers of induction melting furnaces, RF power supplies and AM/FM broadcast transmitters.


Fiscal Year: November 30

Total Authorized: 25,000,000

Outstanding Shares as of March 14, 1996: 10,296,561

Free trading: 7,500,000

Management control: 25%

Current Price: $3.06

Current Book Value as of March 14, 1996: $1.91

Cash & Cash Equivalents - $4.28 million as of Feb 29, 1996

Current Market Caps: $31,518,000

PE estimate fiscal 96: 11.1

PE estimate fiscal 97: 8

Estimated P/CF for 1996: 9.27

Estimated P/CF for 1997: 7.1

Dividend: None

Long-term debt: 2.4 million

Employees: 148

Shareholders: as of January 1996 - 747

Legal Proceeding: None

NASDAQ listing - symbol - PTIS - small caps

Auditor: Grant Thornton, Tampa, Florida

Transfer Agent: American Stock Transfer Company, New York, N.Y.

Corporate Headquarters










Recent Developments

January 24, 1996 - PTIS announces fiscal 95 year end results (See Chart A) - Management anticipates 1996 revenues to grow between 25% to 30% over 1995 results. Management believes that the recent introduction of the Versalock™ 700 to be a large contributor to the overall revenue growth projected during 1996.

August 15, 1995 - Plasma-Therm and USDC announced $4.9 million joint development contract targeted at advancing a reactive ion etching (RIE) capability for the flat panel display (FPD) industry.

Plasma-Therm also announced that it officially began the building of a new $5.3 million manufacturing center designed to upgrade and increase the Company's overall clean room assembly/test areas and applications/demonstration laboratory.

June 21, 1995 - Plasma-Therm announces over $3 million in Versalock™ 700 bookings.

Fundamental Analysis

From Chart A investors should be able to conclude that PTIS is a solidly growing technology company that in the past has shown consistent revenue and earnings growth. If we examine the future revenue and earnings estimations, obviously it indicates an acceleration in those variables from fiscal year end 95 to fiscal year end 98. During the next three years PTIS is anticipated to double its revenue, while increasing its earnings/share by 380% during the same period. Upon review of PTIS's PE, P/CF and PSR it is evident fundamentally that the current share price does not include any premium for future revenue and earnings growth. Since PTIS is growing by 25% annually and earnings growth equals around 30%, (note earnings growth during fiscal 96 is not a sustainable value, we will substitute a value of 30% for our calculations) we believe that a PE ratio of 20 would be a much fairer value for which PTIS should trade at. At 20x PTIS would trade at $5.50, $7.60 and $9.60, respectively, when compared to 1996E, 1997E and 1998E.

In our opinion, P/CF as well as PSR for PTIS also indicates an undervalued situation with very little downside risk, while appearing very attractive for the long term based upon estimated values. PTIS at present only trades at 40% premium over 1996 est. year end book value or 60% over the first quarter of fiscal 1996 valued book. It is not unusual for tech stocks to trade 2x - 10x their stated book. Again, PTIS trades substantially below its peers, indicating little risk.

From Chart AA we see an interesting comparison of semiconductor capital equipment companies; that is, based upon fiscal 96E and fiscal 97E this whole group is relatively inexpensive. On average the group trades at only 9.38x 1996 earnings estimates and 7.38x 1997 earnings estimates - actually indicating little downside risk, unless, of course, all the estimated earnings for the group are pie-in-the-sky guesses.

PTIS, when compared to the group, appears fairly valued for fiscal 96 and fiscal 97. Please keep in mind that the whole technology segment has been slaughtered during the past fiscal quarter to levels not seen in years, thereby in our opinion offers investors tremendous opportunity to purchase quality tech stocks at severely depressed prices. The tech stocks as a whole got way overvalued and now appear dramatically undervalued and under-owned. PTIS is one such company.

Chart A -


Share Price $3.06 Year ended Nov 31

First Fiscal Quarter

1993A 1994A1995A 1995A1996A 1996E1997E 1998E
Net sales16.4 mil 23.3 mil29.6 mil 5 mil8.3 mil 38.5 mil46.5 mil 58 mil
Net Income (loss)233K 1.9 mil1.08 mil 8,433646K 2.83 mil3.94 mil 4.94 mil
Net Income/Sh (loss) .03.18 .10 .06.275 .38.48
Shares outstanding fully dilutive 8.8 mil9.09 mil 10.57 mil10.28 mil 10.3 mil10.3 mil 10.3 mil10.3 mil
Book Value$1.02 $1.22$1.79 $1.35$1.91 $2.18$2.56 $3.04
Revenue Growth 30%21% 25%
Earnings Growth 175%38% 26%
PE est 11.1x 8x6.37x
P/CF 9.5x7.1x 5.7X
PSR .81.67 .54

PE = Price to Earnings ratio; P/CF = Price to cash flow; PSR = Price to sales ratio

Chart AA - Fundamental Comparison of Semiconductors related Capital Equipment Companies; i.e., flat panel display, thin film, deposition & etch processes, chip handling, wafer testing, photo lithographing

Company SymbolCurrent Price Earnings/Share Est. fiscal yr end & PE Est Earnings/sh Est. next year & PE Est.
Plasma Therm PTIS$3.05 .275 (Nov 30) .38 (Nov 30)
11.1x 8x
1. Lam ResearchLRCX 354.68 (June 30) 5.52 (June 30)
7.5x 6.3x
2. Ultratech Stepper UTEK17.25 1.79 (Dec 31)2.23 (Dec 31)
9.6x 7.7x
3. Aetrium Inc.ATRM 15.251.41 (Dec 31) 1.71 (Dec 31)
10.8x 8.9x
4. TegalTGAL 7.875.59 (March 31) .88 (March 31)
13.3x 8.9x
5. Electroglas, Inc. EGLS14.75 2.59 (Dec 31)2.88 (Dec 31)
5.7x 5.1x
PE Est average 1-5 9.38x 7.38x

1. Lam Research designs, manufactures, markets and services semiconductor processing equipment used in the fabrication of integrated circuits. The company's products are used to deposit special films on a silicon wafer and selectively etch away portions of various films and create and integrated circuit. The company currently sells a broad range of plasma etch products.

2. Ultratech Stepper designs, manufactures and markets photolithography steppers used worldwide in the fabrication of semiconductor and thin film heads for disk drives.

3. Aetrium designs, manufactures and markets electromechanical handling equipment used in testing and other manufacturing processes for packaged integrated circuit semiconductor devices.

4. Tegal produces semiconductor wafer processing equipment used to etch the polysilicon and metal films that make up the layers of a semiconductor device.

  1. Electroglas Inc. develops, manufactures, markets and services automatic wafer probing equipment for the use in the semiconductor industry.

Price to Cash Flow Comparions

Company Symbol Cash Flow/sh est Share Price P/CF
PTIS .333.06 9.27
1.LRCX 5.6035 6.25
2.UTEK 2.1117.25 8.17
3.TGAL .657.875 12.1
4.EGLS 2.6614.75 5.6
Price to Cash Flow average est. 1-4 8.03

From chart B investors again can see that the whole group that we use to compare PTIS are all relatively cheap with respect to P/CF. Since PTIS is our low priced group member, it should be obvious that when this group turns, PTIS has the potential for the greatest percentage appreciation.

Plasma-Therm's participation in various markets bodes well for much higher stock prices.

A. Flat Panel Display - the Clusterlock 7000 Series is used for the production of computer screens; namely, PCs and note books. Note From Charts 1 and 2 it is quite obvious that tremendous growth exists in the domestic as well as international computer sales. If you buy a computer, you obviously need a screen - huge opportunity for PTIS to grab a share of overall generated revenues from Clusterlock® 7000 Series being purchased by screen manufacturers.

B. Thin film etching and deposition manufacturing equipment can be used for the manufacturing of recording heads for disk drives. From Charts 3 and 4 PTIS sees tremendous opportunity within the domestic as well as international markets to grow. From Chart 4A one can see the worldwide growth of Thin Film Heads - again bodes well for PTIS.

C. Plasma-Therm has been involved in the development of dry etching for photomask production and is well positioned both in available products and technology to take part in the inevitable growth of this market that is directly driven by the growth of silicon semiconductors. Plasma-Therm products are used to etch the master images into the mask. From Chart 5 investors should be able to conclude that this market segment again offers PTIS sizeable growth potential. From Chart 6 the investor should realize that semiconductor sales are still exploding worldwide - again, offering PTIS opportunity in numerous segments of the silicon semiconductor industry.

  1. Plasma-Therm is considered part of a huge group of stocks that is considered part of the capital spending category. Domestically, companies are estimated to spend $751 billion on new equipment and plants this year, a 4.8% increase from $716 billion spent in 1995. This is still a healthy number when one considers that the GDP is expected to grow at only 2%. Equally impressive, Chart 7 shows the steady domestic as well as international semiconductor capital investment during the next two years. Once again, these kinds of numbers offer additional proof of PTIS's opportunity for solid growth near term.


Why Plasma Therm, Inc. (PTIS-NASDAQ) should be considered for purchase at current levels for the mini-microcap portfolio?

1. The Technology sector is highly out of favor and extremely undervalued and looks extremely attractive long-term.

2. PTIS's past performance as well as anticipated growth in revenues and earnings indicated solid growth potential.

3. PTIS's product mix is quite diverse and allows participation in huge technology sectors.

4. Highly ex-perienced management team, over $4.8 million in cash, only $2.4 million in LTD, a record backlog ($16 million) and a new manufacturing facility coming on-line during 1996 all bodes well for PTIS's future.

5. The worldwide thin film head industry will reach over 400 million heads in 1995 and is expected to reach nearly 700 million heads in 1997. This industry is expanding as computer manufacturers seeks to keep pace with increased memory requirements. Plasma-Therm participates in this segment.

6. The overall semiconductor industry is projected to more than double in the next five years to nearly $350 billion. PTIS is a player in this industry at numerous stages.

7. The outlook for semiconductor capital spending over the next several years remains bright and of course bodes well for Plasma Therm, Inc. The ongoing transition to increasingly sophisticated technology also enhances the longer-term outlook. Every new generation of product requires new production, assembly, and testing machinery.

8. Upon review of charts 1, 2, 3, 4A, 5, 6 and 7, investors should obviously see why we are excited about PTIS as a quality low priced tech stock that belongs in all diverse micro-minicaps portfolios looking for huge upside with very limited downside risk.

9. If all projections are met during fiscal 96, in our opinion PTIS should and would double in price from current prices.



We first recommended PTIS 9-11-92 @ .59. We proceeded to sell half our position @ $3.06 on or about 2-14-94. On or about 12-14-94 we proceeded to sell 50% of our remaining position at $7.18/share. On or about 12-14-95 (see Jan-Feb Newsletter 96) we initiated a New Buy Recommendation on PTIS @ $2.25/share. At that time we intended to monitor 5,000 newly purchased shares in our model portfolio for percentage gain performance. At present we are monitoring 6,875 PTIS shares.

Investment Strategy for

Specific Accounts

1. Very aggressive accounts - Plasma Therm PTIS.

2. Aggressive accounts - 50% Plasma Therm, Inc. PTIS @ $3.06 and 50% UTEK @ $17 5/8.

  1. Mildly aggressive accounts: 1/3 PTIS; 1/3 EGLS and 1/3 UTEK

S.A. Advisory, an advisory firm, acts as a consultant to PTIS. We receive compensation for production of this anecdotal research report. The Buy recommendation was placed on PTIS on or about 12-14-95. We were hired to produce this report on or about March 20, 1996. We may buy &/or sell shares in this issue at our own discretion.

Hotline 1-900-990-0909, EXT 192 ($2.00/min.)