AMTECH SYSTEMS INC — Regulatory Filings 2009

May 18, 2009

CORRESP 1 filename1.htm

May 18, 2009

Brian Cascio, Branch Chief Division of Corporation Finance United States Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549

Re:
Form
10-K for the fiscal year ended September 30, 2008
Filed
December 10, 2008
File
No. 000-11412

Dear Mr. Cascio:

This letter sets forth the responses of Amtech Systems, Inc. (the "Company") to your comment letter, dated March 31, 2009, relating to (i) the Form 10-K for the fiscal year ended September 30, 2008 of the Company filed with the Securities and Exchange Commission (the "Commission") on December 10, 2008; (ii) the Form 10-Q for the quarter ended December 31, 2008, filed with the commission on February 9, 2009; and (iii) the current report on Form 8-K/A filed with the Commission on November 2, 2007.

The Company is filing, via EDGAR, this letter setting forth the Company's responses to comments of the Staff of the Commission (the "Staff"). Enclosed as well are two hard copies of the Company's response letter. We have included your original questions in addition to providing our responses.

Form 10-K for the fiscal year ended September 30, 2008

Item 1. Business, page 3

| 1. |
| --- |
| Additionally, we note your
disclosure on page 14 that in “fiscal 2008, 2007 and 2006, one customer
accounted for approximately 20%, 13% and 17% of [y]our net revenue,
respectively.” Please tell us, and in future filings disclose, the name of
the customer, which we note “has been different [each year],” and any
relationship with that customer, pursuant to the requirements of
Regulation S-K Item 101(c)(vii). Please also tell us which customers
accounted for the 22% and 20% of total accounts receivable at September
30, 2008. |

131 South Clark Dr. Tempe, AZ 85281 Tel: (480) 967-5146 Fax: (480) 968-3763

Brian Cascio, Branch Chief Division of Corporation Finance United States Securities and Exchange Commission May 18, 2009 Page 2 of 12

| R: |
| --- |
| The registrant had no other
relationship with the referenced customers. |
| Though, for the reasons mentioned
above we do not believe disclosure of customer names is material or
required, in order to ensure compliance with your request number 1, we are
providing that information here. The customers that accounted for
approximately 20%, 13%, and 17% of net revenue in fiscal 2008, 2007, and
2006 were Yingli Green Energy Holding Company Ltd. (NYSE: YGE), E-ton
Solar Tech. Co., Ltd, and Infineon AG. The customers that accounted for
the 22% and 20% of total accounts receivable at September 30, 2008 were
Tianwei New Energy Holdings Co. Ltd. and Yingli Green Energy Holding
Company Ltd. (NYSE: YGE), respectively. |

Brian Cascio, Branch Chief Division of Corporation Finance United States Securities and Exchange Commission May 18, 2009 Page 3 of 12

Item 11. Executive Compensation

To facilitate your review, we have included text from our proxy, or references to our proxy, in our responses to questions relating to Item 11 of the 10-K for the fiscal year ended September 30, 2008.

Determining Executive Compensation, page 7

| 2. | We note your disclosure that your
compensation committee considers “compensation of executives of comparable
companies within similar industries” when making salary recommendations
for your named executive officers. Since you appear to benchmark
compensation, please discuss how each element of compensation relates to
the data you analyzed from peer companies and include an analysis of where
actual payments actually fell within the targeted parameters. If any of
your named executive officers are compensated at levels that are
materially different from the targeted levels of compensation, please also
provide discussion and analysis as to why. In addition, in your applicable
future filings, please identify the peer companies that you use. See
Regulations S-K Item 402(b)(2)(xiv). |
| --- | --- |
| R: | As noted on page 7 of our Proxy
Statement, “our Compensation Committee reviews information regarding
salaries, including the compensation of comparable companies within
similar industries and to make recommendations regarding the salary of our
chief executive office and chief financial officer.” As it relates
specifically to base or salary compensation, page 8 of our Proxy Statement
states the following: “During fiscal 2008, our chief financial officer, at
the request of our Compensation Committee, summarized the base pay for
chief executive officers and chief financial officers as reported in the
American Electronics Association Salary Survey. Using parameters that best
fit our company (for example, revenues, public companies, similarities in
numbers of employees, and geographic region), our chief financial officer
presented a statistical summary of such information and made
recommendations to our Compensation Committee that were in line with the
average and median salaries of similarly situated
companies.” |
| | The reference to “comparable
companies” found on page 7 was in the context of an overall review of
compensation and the specific data from the survey discussed on page 8 was
the primary data used by the Compensation Committee in determining base
compensation for the chief executive officer and chief financial officer.
Based on the survey analysis reviewed by the compensation committee, the
average of the median base salary for the positions of CEO and
CFO was $280,000 and $202,000, respectively. The salary approved by the
compensation committee for the CEO and CFO was $275,000 and $198,000,
respectively. |

Brian Cascio, Branch Chief Division of Corporation Finance United States Securities and Exchange Commission May 18, 2009 Page 4 of 12

| 3. | We also note your disclosure here and on
page 8 that you rely upon “published and proprietary survey data” when
implementing your compensation programs. Please identify the surveys you
used and their components; include component companies, the elements of
compensation that are benchmarked and how you determine such
benchmarks. |
| --- | --- |
| R: | Page 8 of our Proxy Statement states the
following (emphasis added): “During fiscal 2008, our chief financial officer, at the
request of our Compensation Committee, summarized the base pay for chief
executive officers and chief financial officers as reported in the American Electronics Association Salary Survey . That
survey benchmarks base salary, bonus and other unspecified
compensation. Since cash incentive compensation for our named
executives is calculated under our bonus program based upon quantifiable
measures of performance, we limited our use of the survey to base salary.
Using parameters that best fit our company (for example, revenues , public companies , similarities in numbers of employees , and geographic region ), our chief financial
officer presented a statistical summary of such information and made
recommendations to our Compensation Committee that were in line with the average of the median salaries of similarly situated
companies.” |
| | The survey data did not provide a separate
listing of the individual companies included within the data, but was
based upon companies that are in or serve the electronics industries,
which includes manufacturers of equipment used by semiconductor and solar
cell manufacturers. The survey does not include specific data for
equity based compensation. |

Elements of Our Executive Compensation Program, page 8

| 4. | You state that the compensation committee
considers “the roles and responsibilities” and “the individual experience
and skills of [y]our executives” when making compensation decisions.
Please provide additional disclosure to discuss and analyze how individual
performance contributes to actual compensation for named executive
officers. For example, disclose the elements of individual performance,
both quantitative and qualitative, and specific contributions by named
executive officers that the compensation committee considers in its
evaluation. If applicable, please also discuss how these elements are
weighted and factored into specific compensating decisions. See
Regulations S-K 402(b)(2)(vii). |
| --- | --- |
| R: | The compensation committee primarily
considers the roles, responsibilities, skills and experience of the named
executives in establishing base salary. Our chief executive
officer is also one of the founders of the company and has over 30 years
of experience in the markets in which we serve. In addition to his CEO
role, he effectively serves as our chief sales and marketing officer, and
chief strategy officer, although we do not have those specific executive
positions. In these roles, our CEO provides leadership in developing the
Company’s sales and marketing plans and product acquisition and
development strategies. Our chief financial officer is heavily involved in
the operations of the company, in addition to his roles in finance,
investor relations, SEC reporting, tax planning and compliance, budgeting
and forecasting, and serves as a quasi chief operating officer, although
we do not have that specific executive position. All three of our
executives have experience in equity financings. These qualitative factors
are some of the major items considered by the compensation committee in
its evaluation. Quantitative contributions are used
primarily in establishing the levels of cash incentive compensation for
our names executives. As reflected in our compensation discussion and
analysis on page 9 of our Proxy Statement, our bonus program is
quantitatively based upon performance objectives established in each of
the following categories: (i) bookings; (ii) revenue; (iii) gross margin;
and (iv) operating profit. |

Brian Cascio, Branch Chief Division of Corporation Finance United States Securities and Exchange Commission May 18, 2009 Page 5 of 12

Annual Cash Compensation, page 8
5.	We note that you increased base
salary compensation for your CEO and CFO by approximately 10% and for your
chief accounting officer by approximately 15% during fiscal year 2008.
Tell us, and expand your disclosure in future filings to explain, what
factors you considered in the decision to make these material increases in
compensation. See Regulations S-K Item 402(b)(ix).
R:	Based on our analysis of the AEA survey, our
compensation committee determined that the aforementioned raises were
necessary in order to bring our executive compensation in line with that
of the industry and ensure we retain our executive talent. Please also see
our response to question 4 which further describes the factors considered
in the decision to make these material increases in compensation. In
future filings we will expand our disclosure with respect to this
matter.
Equity Incentive Compensation, page 9
6.	We believe that investors will
benefit from an expanded analysis of how you arrived at and why you paid
each particular level of compensation for 2008. For example, we note
minimal discussion and analysis of how you determined specific stock
option awards, as disclosed on pages 9 and 10. We would expect to see a
more focused discussion that provides substantive analysis and insight
into how the Committee made actual payout determinations for the fiscal
year for which compensation is being reported. Refer to paragraphs
(b)(1)(iii) and (v) of Regulation S-K Item 402. In your response and in
future filings, please also clarify the reasons for differences in the
relative size of the grants among the officers.
	Please understand that discussion
of the various items of corporate and individual performance that were
considered by you must be accompanied by a complete qualitative and
quantitative discussion of how you determined to award each specific form
and level of compensation. You should provide complete discussions of
specific factors considered by the Committee in ultimately approving this
and other forms of compensation, including the reasons why the Committee
believed that the amounts paid to each named executive officer are
appropriate in light of the various items it considered in making specific
compensation decisions.

Brian Cascio, Branch Chief Division of Corporation Finance United States Securities and Exchange Commission May 18, 2009 Page 6 of 12

R: Please note that the value of stock option awards in fiscal 2008 represent between 7% and 17% of total compensation for our named executives, significantly less than the percent of total compensation represented by base salary or cash incentive compensation. See the Summary Compensation Table on page 11. As disclosed on pages 9 and 10, the committee did not apply a rigid formula in allocating equity incentive compensation to our executives as a group or to any particular executive. Instead, the committee exercised its judgment and discretion and considered qualitatively a number of factors as outlined on page 10. There were no quantitative calculations or measurements performed on the qualitative factors. The primary reason for the differences in the relative size of the grants among the officers is the role and responsibility of the executive and his contribution to the overall success of the company. As described in response to question number 4, we are staffed very leanly at the executive officer level and, as such, our executive officers often have roles that expand well beyond the duties commonly associated with their titles. In future filings we will clarify the reasons for differences in the relative size of the grants among the officers and provide more insight in the determination of the size of equity grants to our executive officers.

Item 13. Certain Relationships and Related Transactions

| 7. | Please provide the disclosure required by
Regulation S-K Item 404(b). |
| --- | --- |
| R: | During the Fiscal 2008 year, we
had no transactions that were required to be reported pursuant to
Regulation S-K Item 404(a). Regulation S-K Item 404(b) asks for
information concerning the review of any transactions required to be
reported pursuant to Regulation S-K 404(a). Thus, we believe nothing is
required in response to S-K Item 404(b) for Fiscal 2008. Nonetheless, to
ensure compliance with your request number 7, below is our policy with
respect to related party transactions. |
| | Policy Regarding Related
Person Transactions |
| | The policy of the Board is for
it, or one of its committees, to review each related person transaction
(as defined below) and determine whether it will approve or ratify that
transaction. Any Board member who has any interest (actual or perceived)
will not be involved in the consideration. |
| | For purposes of the policy, a
“related person transaction” is any transaction, arrangement or
relationship in which we are a participant, the related person (defined
below) had, has or will have a direct or indirect material interest and
the aggregate amount involved is expected to exceed $120,000 in any
calendar year. “Related person” includes (a) any person who is or was (at
any time during the last fiscal year) an officer, director or nominee for
election as a director; (b) any person or group who is a beneficial owner
of more than 5% of our voting securities; (c) any immediate family member
of a person described in provisions (a) or (b) of this sentence; or (d)
any entity in which any of the foregoing persons is employed, is a partner
or has a greater than 5% beneficial ownership
interest. |

Brian Cascio, Branch Chief Division of Corporation Finance United States Securities and Exchange Commission May 18, 2009 Page 7 of 12

| | In determining whether a related person
transaction will be approved or ratified, the Board, or committee, will
consider a multitude of factors including (a) the extent of the related
person’s interest in the transaction; (b) the availability of other
sources of comparable products or services; (c) whether the terms are
competitive with terms generally available in similar transactions with
persons that are not related persons; (d) the benefit to us; and (e) the
aggregate value of the transaction. |
| --- | --- |
| Compliance with Section 16(a)
of the Securities Exchange Act of 1934, page 20 | |
| 8. | We note your disclosure in the second
paragraph under this heading. It appears that you have not disclosed the
number of late reports or the number of transactions that were not
reported on a timely basis by Messrs. Austin Marxe and David Greenhouse.
Please tell us, and in future filings include, the number of late reports,
the number of transactions that were not reported on a timely basis, and
any known failure to file a required form for all Section 16 reporting
persons. See Regulations S-K Item 405(a)(2). |
| R: | One of the sentences of our
disclosure was inadvertently cut off. Our report should have read as
follows: |
| | Based solely on our review of
such forms received by us during the fiscal year ended September 30, 2008,
or written representations from certain reporting persons, we believe that
between October 1, 2006 and September 30, 2008, all Section 16(a) filing
requirements applicable to its officers, directors and 10% shareholders
were complied with, except that: (i) Messrs. Austin Marxe and David
Greenhouse appear to have failed to timely file with respect to three (3)
transactions; (ii) Mr. Michael Garnreiter failed to timely file with
respect to one (1) transaction; (iii) Mr. Alfred Giese failed to timely
file with respect to one (1) transaction; (iv) Mr. Brian L. Hoekstra
failed to timely file with respect to one (1) transaction; and (v) Mr.
Robert F. King failed to timely file with respect to two (2)
transactions. |

Brian Cascio, Branch Chief Division of Corporation Finance United States Securities and Exchange Commission May 18, 2009 Page 8 of 12

Financial Statements

Note 13. Acquisitions, page 63

| 9. | We refer to the disclosure in Note 13 on
page 63 that “the valuation of acquired assets was determined with the
assistance of an independent third-party consultant." Please tell us the
nature and extent of your reliance on the third party for the asset
valuations. |
| --- | --- |
| R: | The independent third-party
consultant assisted management in determining the fair value of certain of
the intangible assets acquired in the purchase of R2D and in the
allocation of the purchase price of that acquisition. The Company’s management acknowledges its responsibility for
the preparation of purchase price allocations and fair value associated
with intangible assets associated with business combinations and asset
acquisitions. |

Note 10. Business Segments Disclosure, page 57

| 10. | Please tell us how you concluded
that the solar and semiconductor equipment products meet the requirements
of SFAS 131 to be reported as one segment. In addition, tell us your
consideration of providing the product line disclosures outlined in
paragraph 37 of SFAS 131. |
| --- | --- |
| R: | Pursuant to paragraph 10 of SFAS
131, an operating segment is a component of an enterprise……for which
discrete financial information is available…and whose operating results
are regularly reviewed by the enterprise's chief operating decision
maker…. Except for revenue, discrete financial information is not
available for our solar or semiconductor equipment products. The only
discrete financial information that is separately accumulated and
summarized for both solar and semiconductor is revenue. For that reason
and a variety of other factors, including the following, we have concluded
that solar and semiconductor equipment meets the requirements of SFAS 131
to be reported as one segment: |
| | Our subsidiaries, Tempress, located in the
Netherlands, and R2D, located in France, produce and sell both solar
equipment products and semiconductor equipment products. Neither
Tempress nor R2D prepare discrete financial information for solar
equipment products or semiconductor products, other than revenue, which
is reviewed by the Company’s chief operating decision maker and certain
limited product cost information that is not summarized nor reviewed by
that person. |

Brian Cascio, Branch Chief Division of Corporation Finance United States Securities and Exchange Commission May 18, 2009 Page 9 of 12

| | The Company’s solar equipment products and
semiconductor equipment products are manufactured, sold and serviced by
the same personnel; are comprised of many of the same components; and
are based upon the same technologies. The only
significant distinction between these products is that they are sold
into different markets, solar cell fabricators and semiconductor
fabricators. As stated above, the only discrete financial information
that is available for those markets is revenue. |
| --- | --- |
| | Paragraph 37 of SFAS 131 states that an
enterprise shall report the revenues from external customers for each
product and service or each group of similar products and services unless
it is impracticable to do so. The Company has two groups of similar
products and services: (1) solar and semiconductor equipment; and (2)
polishing supplies, which are also the Company’s two segments. Revenue for
those groups of products are disclosed in Note 10, Business Segment
Information on page 57 of the Company’s annual report on Form 10-K. As
stated above, the only significant distinction between the Company’s solar
and semiconductor products is the markets they serve. In recent years,
sales into the solar market have increased. Therefore, on page 3 in Part I
of the Company’s annual report on Form 10-K, we disclose solar revenue of
$50.1 million or approximately 62% of total revenue. However, as stated,
the solar revenue is that derived from a specific market, not from
different products. Therefore, we believe that we have properly identified
and disclosed the revenues of the Company’s similar groups of products. |
| Exhibits 31.1 and
31.2 | |
| 11. | We note that you omitted a portion of the
introductory language in paragraph 4 of Item 601(b)(31)(i) of Regulation
S-K, which refers to internal control over financial reporting. We also
note that the certification in Exhibit 31.2 includes two paragraphs 4(c).
Finally, we note that the word “condition” was omitted from paragraph 3 of
Exhibit 31.1 and was change to “position” in paragraph 3 of Exhibit 31.2.
Please file an amendment to the Form 10-K to include corrected
certifications. You may file abbreviated amendments to these documents
that include a cover page, explanatory note, signature page and paragraphs
1, 2, 4 and 5 of the certification. |
| R: | We will file an abbreviated
amendment to our Form 10-K for fiscal year 2008, which will include a
cover page, explanatory note, signature page and corrected certifications,
as Exhibits 31.1 and 31.2, dated as of the dates of the original filing.
In Future filings, including any amendments, we will ensure that the
wording of the certifications submitted as exhibits 31.1 and 31.2 are
exactly the same as that provided at Item 601(b)(31)(i) of Regulation
S-K. |

Brian Cascio, Branch Chief Division of Corporation Finance United States Securities and Exchange Commission May 18, 2009 Page 10 of 12

Form 10-Q for the period ended December 31, 2008

Exhibits 31.1 and 31.2

| 12. | In Future filings, including any amendments,
please ensure that the wording of the certification is exactly the same as
that provided at Item 601(b)(31)(i) of Regulation S-K. For example, we
note that you omitted the parenthetical phrase in paragraph 4(d) and
changed the word “condition” to “position” in paragraph 3. In future
filings please revise to ensure that the certifications are consistent
with the required wording. |
| --- | --- |
| R: | In future filings, including any amendments,
we will ensure that the wording of the certifications submitted as
exhibits 31.1 and 31.2 are exactly the same as that provided at Item
601(b)(31)(i) of Regulation S-K. |

Form 8-K/A dated November 2, 2007

| 13. | We note the reference in second paragraph of
the audit report on page 1 that the audit was conducted in accordance with
international auditing standards. Please have your
auditors revise their reports to indicate that the audit was conducted in
accordance with generally accepted audited standards as required by
Article 2 of Regulation S-X. |
| --- | --- |
| R: | We have been in contact with the
independent public accountants that audited the financial statements
included in the Form 8-K/A dated November 2, 2007. We have requested them
to revise their report to indicate the audit was conducted in accordance
with generally accepted auditing standards as required by Article 2 of
Regulation S-X. Once we have received their revised report, we will file
an abbreviated amendment to our Form 8-K/A, which will include a cover
page, explanatory note, signature page and the audited financial
statements as Exhibit 99.3, which will include the revised report of the
independent public accountants. |
| 14. | In the revised audit report,
please present the city and country where signed as required by Rule 2-02
of Regulation S-X. |

Brian Cascio, Branch Chief Division of Corporation Finance United States Securities and Exchange Commission May 18, 2009 Page 11 of 12

| R: | We have also requested the auditor to
present the city and country where signed as required by Rule 2-02 of
Regulation S-X when submitting the revised report requested pursuant to
question 13, above. As stated in response to question 13, once we have
received their revised report, we will file an abbreviated amendment to
our Form 8-K/A. |
| --- | --- |
| 15. | We note that the form 8-K/A dated November
2, 2007 includes only audited financial statements of R2D. We also note
that references in footnote (2) on pages 3 and 4 of Exhibit 99.4 to the
financial statements of R2D as of June 30, 2007 “included elsewhere in
this Form 8-K/A.” Please tell us where you have included the interim
financial statements as of June 30, 2007 required by Item 3-05 of
Regulation S-X in your 8-K/A filing. |
| R: | The form 8-K/A dated November 2, 2007
includes audited financial statements of R2D, incorporated by reference to
Exhibit 99.3 and pro forma financial information incorporated by reference
to Exhibit 99.4. The interim financial statements as of June 30, 2007
required by Item 3-05 of Regulation S-X are included on pages 3 and 4 of
Exhibit 99.4 to our 8-K/A filing, in the column labeled R2D Ingenierie
SAS. Footnote (2) on pages 3 and 4 of Exhibit 99.4 incorrectly refers to
both the historical financial statements of R2D Ingenierie SAS as of June
30, 2007 and the audited financial statements of R2D included elsewhere in
this Form 8-K/A. Footnote (2) on page 3 should have read, “Represents the
historical balance sheet of R2D Ingenierie SAS as of June 30, 2007.”
Footnote (2) on page 4 should have read, “Represents the
unaudited historical statement of operations of R2D Ingenierie SAS for the
nine months ended June 30, 2007.” |

The Company acknowledges that it is responsible for the adequacy of the disclosure in the filings, that staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings; and the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

We trust that the foregoing is responsive to your comments. If you have any questions or comments, please contact the undersigned.

Brian Cascio, Branch Chief Division of Corporation Finance United States Securities and Exchange Commission May 18, 2009 Page 12 of 12

Best regards, Amtech Systems, Inc. /s/ Robert T. Hass Robert T. Hass, CPA Chief Accounting Officer

CC:
Robert F. King, Chairman of the
Compensation and Stock Option Committee of the
Board of
Directors
Christopher Johnson, Squire,
Sanders & Dempsey L.L.P.