ADE Corporation Reports Financial Results for the Second Quarter of Fiscal 2002; Company Exceeds Guidance; Opens Office in People's Republic of China.Business/Technology Editors WESTWOOD, Mass.--(BUSINESS WIRE)--Nov. 27, 2001 ADE Corporation (Nasdaq: ADEX ADEX Athens Derivatives Exchange (Athens, Greece) ADEX Air Defense Exercise ADEX Advertisement Expenditure ADEX Asociaciã³n de Exportadores (Peru) ) today reported its financial results for the second fiscal quarter ended October 31, 2001. Revenues were $21.9 million, compared with $23.7 million for the same quarter a year ago. Pro-forma net loss was $4.0 million, or $0.29 per share, with 13.6 million weighted average basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. shares outstanding. This compares with net income of $0.2 million, or $0.01 per share, with 13.8 million weighted average diluted shares outstanding for the second quarter of fiscal 2001. Pro-forma net loss for the second quarter of fiscal 2002 excludes a non-operating, non-cash income tax valuation allowance of approximately $10.6 million that was established based on accounting guidance for deferred taxes provided in Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Net loss for the second quarter of fiscal 2002, including this allowance, was $14.6 million, or $1.07 per share. Cash and cash equivalents continued to increase sequentially from the first quarter to $31.2 million. Receivables and inventories decreased to $53.8 million from $55.0 million during the same period. For the first six months of fiscal 2002, ADE reported revenue of $47.3 million, compared with revenues of $45.1 million in the first six months of fiscal 2001. For the first six months of fiscal 2002, the Company reported a pro-forma net loss of $5.2 million, or $0.38 loss per share, with 13.6 million weighted average basic and diluted shares outstanding. This compares with a net loss of $3.3 million, or $0.25 per share, with 13.5 million weighted average basic and diluted shares outstanding, in the corresponding period of the previous year. "During ADE's second fiscal quarter, wafer (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. fab utilization continued to be well below capacity and pricing for 200mm wafers wafers compressed roughage in flat plates useful for feeding to animals in transit. remained soft," said ADE President and Chief Executive Officer Robert Abbe Robert Abbe (1851 - 1928), was an American surgeon and pioneer radiologist in New York City. He was born April 13, 1851, at New York City and educated at the College of the City of New York (S.B., 1871) and Columbia University (M.D., 1874). . "However, ADE continued to receive production orders for its newest 300mm equipment. ADE shipped production-qualified 300mm products to several key customers during the second quarter. In addition, technology-driven customer evaluations of ADE's latest equipment continues at a high rate as customers respond to an increased pace in device feature size reductions to maximize the number of devices that can be fabricated fab·ri·cate tr.v. fab·ri·cat·ed, fab·ri·cat·ing, fab·ri·cates 1. To make; create. 2. To construct by combining or assembling diverse, typically standardized parts: on each 200mm wafer. These trends clearly show that ADE is positioned to benefit when additional capital investment in wafer production begins to accelerate." "The Company's long-standing leadership in the 200mm market remains an important asset and potential growth driver as the installed capacity to consume 200mm wafers exceeds the capacity to produce them. The 200mm market continues to consume the most wafers, with countercyclical coun·ter·cy·cli·cal adj. Intended to compensate for immoderate developments in a business cycle: a countercyclical federal aid program. growth in the People's Republic People's Republic n. A political organization founded and controlled by a national Communist party. of China where some of the world's leading manufacturers such as Motorola are making large-scale investments," Abbe said. "In recent months, ADE established a beachhead beach·head n. 1. A position on an enemy shoreline captured by troops in advance of an invading force. 2. A first achievement that opens the way for further developments; a foothold: in this promising region by opening an office in Shanghai in order to provide locally based service and applications support, both of which are prerequisites for long-term success in China." "ADE intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: its commitment to cost reduction by completing several operational streamlining and process efficiency initiatives during the second quarter which should flow through to benefit our cost structure starting in the third fiscal quarter," stated ADE Chief Financial Officer Brian James Not to be confused with Brion James. Brian James can be
"We are aggressively addressing our inherent need to be flexible and nimble nim·ble adj. nim·bler, nim·blest 1. Quick, light, or agile in movement or action; deft: nimble fingers. See Synonyms at dexterous. 2. as an organization," said James. "The Company's second-quarter cost-reduction initiatives included the elimination of a layer of management across the ADE organization, as well as further workforce reductions and significant manufacturing process improvements. The Company also implemented a series of benefit plan revisions and renegotiated key supplier arrangements to facilitate outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. of certain subassembly sub·as·sem·bly n. pl. sub·as·sem·blies An assembled unit forming a component to be incorporated into a larger assembly. manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. . Management depth was also addressed through the appointment of two senior managers who are leading our Massachusetts-based product engineering and manufacturing operations. Each of these individuals joined ADE with a record of successfully managing for results in large, technically complex manufacturing organizations." "Reflecting the continued weakness in worldwide semiconductor capital equipment spending, ADE reported a lower ending backlog for the second fiscal quarter amounting to $33.3 million," said James. "Revenues and pro-forma earnings Pro-Forma Earnings Projected earnings based on a set of assumptions and often used to present a business plan (in Latin pro forma means "for the sake of form"). It also refers to earnings which exclude non-recurring items. Pro-forma earnings are not derived by standard GAAP methods. exceeded our guidance, while margins of 37% reached the higher side of guidance for the period. ADE's cost-reduction initiatives, although as yet incomplete, allowed the Company to maintain positive cash flow and substantially reduce its break-even point break-even point - In the process of implementing a new computer language, the point at which the language is sufficiently effective that one can implement the language in itself. from its year-end level. As a result, the Company's cash position remains strong, and ADE is positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. market opportunities going forward." BUSINESS OUTLOOK Continued James, "As we predicted last quarter, the persistence of the downturn in semiconductor wafer demand suggests that the second half of fiscal 2002 will be more difficult than the first. Although several industry experts believe that demand on the device side already may have reached bottom, we do not anticipate a rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective in wafer capital equipment spending to materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. in the near term. Consequently, we expect revenues in the third quarter of fiscal 2002 to be in the range of $19 to $21 million, with soft demand persisting through the fourth fiscal quarter. In line with this revenue outlook, ADE anticipates that third-quarter gross margins will be in the range of 35 to 37 percent with anticipated research and development expenditures in the range of 26 to 28 percent of revenues in the third fiscal quarter as ADE continues to invest aggressively in products aimed at new markets, as well as the development of common hardware and software platforms designed to further reduce product costs and working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. while adding increased flexibility. Given these assumptions, ADE expects to report an improved bottom-line performance, with its operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. ranging from $0.22 to $0.27 per share for the third quarter of fiscal 2002." Said Abbe, "ADE has risen to the challenges of the current down cycle by improving its product positioning while reducing its cost structure and break-even point. The industry's transition to 300mm production, while slower than originally anticipated, has contributed significant demand for ADE's new products. ADE also has taken steps to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. its product line. The Company is now enjoying multiple orders for its new X9 Magnetic Properties Analysis System, an automated measurement system capable of fully characterizing thin film magnetic head materials without operator involvement. The Company also is making excellent progress in various semiconductor industry market segments, and we plan to announce these new market opportunities in more detail during the upcoming Semicon Japan conference in December." About ADE Corporation ADE Corporation is a leading supplier of metrology metrology Science of measurement. Measuring a quantity means establishing its ratio to another fixed quantity of the same kind, known as the unit of that kind of quantity. and inspection systems for the silicon wafer and data storage industries. The Company's systems analyze and report product quality at critical manufacturing process steps and provide quality certification data that is relied upon by semiconductor and data storage manufacturers. The Company's systems also are used in the fabrication fabrication (fab´rikā´sh  n),n the construction or making of a restoration. of integrated circuits Integrated circuits Miniature electronic circuits produced within and upon a single semiconductor crystal, usually silicon. Integrated circuits range in complexity from simple logic circuits and amplifiers, about 1/20 in. (1. . To learn more about ADE, visit the Company's Web site at www.ade.com. This news release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Those statements that make reference to the Company's expectations, predictions and anticipations should be considered forward-looking statements. These statements include, but are not limited to, those associated with the recovery of the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. semiconductor and data storage industries, wafer pricing and wafer demand, the anticipated ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale of 300mm capacity, the success of ADE's product development efforts and cost-cutting initiatives, and financial projections for the third quarter of fiscal 2002. These statements involve risks and uncertainties including those associated with the strength of the semiconductor and hard disk markets, wafer pricing and wafer demand, the results of its product development efforts, the success of ADE's product offerings to meet customer needs within the timeframes required by customers in these markets, further increases in backlog, the Company's ability to increase gross margins, its visibility, and its predictions of future financial outcomes. Further information on potential factors that could affect ADE Corporation's business is described in the Company's reports on file with the Securities and Exchange Commission, including its Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended April 30, 2001.
ADE CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
Three months ended Six months ended
October 31, October 31,
2001 2000 2001 2000
Revenue $ 21,910 $ 23,671 $ 47,281 $ 45,058
Cost of revenue 13,729 11,966 28,649 23,076
Gross profit 8,181 11,705 18,632 21,982
Operating expenses:
Research and
development 5,961 5,176 12,076 10,331
Marketing and sales 3,551 4,284 7,138 8,545
General and
administrative 2,796 2,624 5,108 4,851
Total operating
expenses 12,308 12,084 24,322 23,727
Loss from operations (4,127) (379) (5,690) (1,745)
Interest and other
income, net 48 326 360 665
Loss before provision for
income taxes, equity in net
earnings (loss) of
affiliated companies
and cumulative effect
of change in accounting
principle (4,079) (53) (5,330) (1,080)
Provision for income taxes 10,598 64 10,605 64
Loss before equity in net
earnings (loss) of
affiliated companies and
cumulative effect of change
in accounting principle (14,677) (117) (15,935) (1,144)
Equity in net earnings
(loss) of affiliated companies 109 304 177 (418)
Income (loss) before
cumulative effect of change
in accounting principle (14,568) 187 (15,758) (1,562)
Cumulative effect of
change in accounting
principle, net of tax -- -- -- (1,785)
Net income (loss) $(14,568) $ 187 $(15,758) $ (3,347)
Net earnings (loss) per share:
Basic
Earnings (loss) before
cumulative effect of
change in accounting principle$ (1.07) $ 0.01 $ (1.16) $ (0.12)
Cumulative effect of change
in accounting principle $ -- $ -- $ -- $ (0.13)
Basic earnings (loss) per share$ (1.07) $ 0.01 $ (1.16) $ (0.25)
Diluted
Earnings (loss) before
cumulative effect of
change in accounting
principle $ (1.07) $ 0.01 $ (1.16) $ (0.12)
Cumulative effect of change
in accounting principle $ -- $ -- $ -- $ (0.13)
Diluted earnings (loss)
per share $ (1.07) $ 0.01 $ (1.16) $ (0.25)
Weighted average shares
outstanding
Basic 13,607 13,497 13,587 13,490
Diluted 13,607 13,781 13,587 13,490
Adjusted net income (loss)
excluding deferred income
tax valuation allowance $ (3,978) $ 187 $ (5,168) $ (3,347)
Adjusted basic earnings
(loss) per share $ (0.29) $ 0.01 $ (0.38) $ (0.25)
Adjusted diluted earnings
(loss) per share $ (0.29) $ 0.01 $ (0.38) $ (0.25)
ADE CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
October 31, April 30,
2001 2001
Assets
Cash and cash equivalents $ 31,227 $ 29,220
Marketable securities 1,638 1,913
Accounts receivable, net 19,242 24,424
Inventories 34,559 39,025
Other current assets 1,576 8,080
Total current assets 88,242 102,662
Fixed assets, net 29,173 29,569
Investments 3,289 3,221
Restricted cash 3,425 3,525
Other assets 3,130 7,730
Total assets $127,259 $146,707
Liabilities and Stockholders'
Equity
Total current liabilities $ 26,979 $ 30,704
Long-term debt 11,028 11,339
Total stockholders' equity 89,252 104,664
Total liabilities and
stockholders' equity $127,259 $146,707
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