Advanced Power Technology Reports Third Quarter 2001 Revenue and Earnings.Business Editors/High Tech Writers BEND, Ore.--(BUSINESS WIRE)--Oct. 25, 2001 Conference Call at 2:00 p.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT , October October: see month. 25, 2001 Advanced Power Technology (Nasdaq:APTI APTI Association for Preservation Technology International APTI Air Pollution Training Institute ) will conduct a conference call at 2:00 p.m. PDT, Thursday Thursday: see week. , October 25, 2001, webcast simultaneously for interested investors via the company's corporate web site at www.advancedpower.com. The content of the call will remain available for replay on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the through midnight, November November: see month. 25, 2001, or by phone through 7:00 p.m., November 25, 2001 at 800/428-6051, pass code 211947. Selected Third Quarter Information -- Revenues decreased 43.3 percent to $6.8 million from $12.1 million in last year's third quarter. -- Net income decreased to a loss of $417,000 from a profit of $1.3 million in last year's third quarter. -- Earnings per share as reported decreased to a loss of $0.05 per diluted share from net income of $0.16 per diluted share in last year's third quarter. Advanced Power Technology, Inc. (Nasdaq:APTI), a leading supplier of high performance power semiconductors used in the conditioning and control of electrical power, today reported financial results for the third quarter ended September September: see month. 30, 2001. Revenues for the third quarter of 2001 were $6.8 million, down 43.3 percent compared to $12.1 million in the third quarter of 2000 and down 40.7 percent sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen from the $11.5 million recorded in the second quarter of 2001. Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2.0 million of the sequential One after the other in some consecutive order such as by name or number. decline in revenue was due to lower shipments to distributors as the company took proactive steps to align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. distributors' inventories with reduced demand. Revenues to distribution declined 66.1 percent sequentially while revenues to OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and customers declined 31.5 percent sequentially. Net loss for the third quarter of 2001 was $417,000, or $0.05 per 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. share, compared to a net profit of $1.3 million, or $0.16 per diluted share, earned in the comparable period last year. Gross margin for the third quarter of 2001 was 19.1 percent compared to 40.0 percent for the third quarter of 2000 and 36.9 percent for the second quarter of 2001. The decrease in gross margin was primarily due to significantly lower fixed cost absorption in the company's internal manufacturing facilities, decreased utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of lower-cost outside manufacturing subcontractors, non-quality related product returns from customers and increased inventory reserves. Third quarter research and development expenses totaled $359,000 or 5.3 percent of revenues, compared to $280,000, or 2.3 percent of revenue in last year's third quarter. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. , research and development expenses increased 54.2% to $1.18 million from $762,000 in the year ago period. In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the difficult market environment the Company has been accelerating its research and development programs leading to the introduction of a strong flow of new products. Selling, general and administrative expenses (S,G&A) totaled $1.97 million in the third quarter, or 28.8 percent of revenues, a 28.7 percent decrease compared to $2.76 million in last year's comparable period and 26.2 percent below $2.67 million in the second quarter. As announced on June June: see month. 18, 2001 and September 7, 2001, the Company has instituted a number of expense and cost-reduction programs, including a reduction of employment, a wage freeze Noun 1. wage freeze - a freeze of wages at a given level freeze - fixing (of prices or wages etc) at a particular level; "a freeze on hiring" wage freeze n → congelación f de salarios and graduated pay reductions for domestic salaried and hourly workers, and planned company-wide shutdowns. Cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has totaled $36.1 million, virtually unchanged from $36.7 million at the end of last year's third quarter and $36.1 million at the end of the second quarter of this year. The Company is aggressively focusing on cash management as well as expense reduction and has implemented planned production shutdowns in order to reduce production levels in line with reduced demand and to control inventory levels. Patrick Sireta, Chief Executive Officer commented, "Our third quarter revenues are on track with the revised business outlook we provided late September. As we indicated in our September 28, 2001 press release we observed a marked slow down toward the end of the quarter. However we have no specific and identified reason to believe that our financial results for the third quarter were materially impacted by the September 11th tragedy." "While the company saw across the board weakness in the third quarter as revenues sequentially declined from $11.5 million to $6.8 million, we believe that the fundamental dynamics continue to be weakness in the communications and the semiconductor capital equipment markets and relative strength in the industrial, medical and military and aerospace markets. Based on identified customer demand for the fourth quarter 2001 we expect our sales to the communications and the semiconductor capital equipment markets to decline year over year by 14 percent and 38 percent respectively while our sales to the combined industrial, medical and military and aerospace markets are expected to grow by 8 percent." "We've we've Contraction of we have. we've have continued to significantly enhance our product lines with recent new product and technology introductions, including Super Rugged RF Power MOSFETs A Power MOSFET is a specific type of Metal Oxide Semiconductor Field-Effect Transistor (MOSFET) designed to handle large powers. Compared to the other power semiconductor devices (IGBT, Thyristor... , Schottky Diodes The Schottky diode (named after German physicist Walter H. Schottky; also known as hot carrier diode) is a semiconductor diode with a low forward voltage drop and a very fast switching action. and a new line of IGBT IGBT Insulated Gate Bipolar Transistor IGBT Integrated Gate Bipolar Transistor products based on our Power MOS (1) (Metal Oxide Semiconductor) See MOSFET. (2) (Mean Opinion Score) The quality of a digitized voice line. It is a subjective measurement that is derived entirely by people listening to the calls and scoring the results from 7(TM) technology. In addition, although the current environment is one of very low visibility, we experienced another strong quarter of design wins, attesting to the real benefits of our unique technologies and giving us confidence as we focus on the longer term. With 91 design wins in the last twelve months compared to 52 design wins in the previous twelve months we believe that we have strong momentum in the market place and are well 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>. the upturn. Many of the design wins came from our Power MOS 7(TM) products, which provide for extremely efficient and reliable power conversion -- benefits that we believe will always remain paramount to our customers in designing their advanced power electronics systems. "APT's strong balance sheet, with over $36.1 million in cash and marketable securities, $54.3 million in stockholders equity and only $148,000 of total debt, positions us well to withstand this downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. and continue to make those investments which are key to fueling future growth," concluded Mr. Sireta. Business Outlook The following statements are based on current expectations. These statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. , subject to risks and uncertainties, and actual results may differ materially. These statements do not include the potential impact of any investments outside the ordinary course of business, or mergers or acquisitions that may be completed after September 30, 2001. Readers are cautioned not to place undue reliance on these 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. , which speak only as of the date of this press release. The inclusion of any statement in this release does not constitute a suggestion by the company or any other person that the events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or described in such statements are material. The company does not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied in this release will not be realized. Based upon the company's most recent demand forecasts and in an environment where ordering patterns from many customers continue to be extremely fluid and unpredictable, revenues for the fourth quarter ending December December: see month. 31, 2001 are expected to be in the range of $5.1 million to $5.8 million. At these revenue levels, the company expects gross margins to continue to be significantly below prior year levels, due to the negative leverage associated with increased under-utilization of the company's in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. manufacturing capacity. In addition, until orders increase significantly, the company will be unable to fully realize the benefits of its lower-cost third-party manufacturing partnerships. In the current uncertain environment the Company is taking aggressive actions to adjust production levels to reduced demand levels and to simultaneously reduce inventories even though this creates strong pressure on gross margin. Current fourth quarter projections are for the Company's wafer fabrication Wafer Fabrication is a procedure composed of many repeated sequential processes to produce complete electrical or photonic circuits. Examples include production of radio frequency (RF) amplifiers, LEDs, optical computer components, and CPUs for computers. operations to operate at 24 percent of capacity and for purchases from 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. foundries to be down 68 percent from their peak level. The combination of these two factors is expected to cause gross margin in the fourth quarter to be in the mid teen range. Capitalizing on its strong financial position, the company intends to continue increasing its investment in R&D programs to sustain and advance its technology leadership, while simultaneously maintaining strict controls on discretionary expenses. About Advanced Power Technology Advanced Power Technology is a leading supplier of high performance power semiconductors used in the conditioning and control of electrical power. The Company's products are used in communications and Internet infrastructure equipment, semiconductor capital equipment, as well as medical, industrial, and military and aerospace systems. Important information about Advanced Power Technology, Inc., including press releases and SEC filings, are available at no charge through the Company's Web site at www.advancedpower.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Except for historical information contained herein, the matters discussed in this news release are forward-looking statements made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. APT (Automatic Programmed Tools) A high-level programming language used to generate instructions for numerical control machines. 1. (language) APT - Automatically Programmed Tools. 2. (company) APT - Audio Processing Technology. cautions that such statements are subject to a number of uncertainties, and actual results may differ materially. Factors that could affect the company's actual results include the ability of subcontractors to meet their delivery commitments; unfavorable changes in industry and competitive conditions; the Company's mix of product shipments; the accuracy of customers forecasts; the effectiveness of the Company's efforts to control and reduce costs; and other uncertainties disclosed in the Company's S-1 filing with the Securities and Exchange Commission dated August 7, 2000, Annual Report on Form 10K filed on March 21, 2001 and other periodic filings made by the Company. The Company assumes no obligation to update the information in this release.
ADVANCED POWER TECHNOLOGY, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
2001 2000 2001 2000
---------- --------- ---------- ----------
(unaudited) (unaudited)
Revenues, net $ 6,838 $ 12,058 $ 31,522 $ 31,699
Cost of goods sold 5,529 7,233 20,747 19,746
-------- -------- -------- --------
Gross profit 1,309 4,825 10,775 11,953
-------- -------- -------- --------
Operating expenses:
Research and
development 359 280 1,175 762
Selling, general
and administrative 1,970 2,764 7,364 7,363
-------- -------- -------- --------
Total operating
expenses 2,329 3,044 8,539 8,125
-------- -------- -------- --------
Income (loss) from operations (1,020) 1,781 2,236 3,828
Other income (expense), net:
Interest, net 325 (80) 1,322 (867)
Other, net (88) (2) 25 (2)
-------- -------- -------- --------
Income (loss) before
income taxes (783) 1,699 3,583 2,959
Benefit (Provision) for
income taxes 366 (380) (1,075) (1,146)
-------- -------- -------- --------
Net income (loss) $ (417) $ 1,319 $ 2,508 $ 1,813
======== ======== ======== ========
Net income (loss) per share:
Basic ($ 0.05) $ 0.19 $ 0.29 $ 0.32
Diluted ($ 0.05) $ 0.16 $ 0.27 $ 0.26
Weighted average
number of shares
used in the computation
of net income (loss)
per share:
Basic 8,709 6,869 8,596 5,621
Diluted 8,709 8,155 9,277 6,925
Net income (loss) adjusted
for non cash interest,
goodwill amortization and
other non cash pushdown
accounting charges $ (417) $ 1,671 $ 2,508 $ 2,844
======== ======== ======== ========
Net income (loss)
adjusted per share:
Basic ($ 0.05) $ 0.24 $ 0.29 $ 0.51
Diluted ($ 0.05) $ 0.20 $ 0.27 $ 0.41
Weighted average number
of shares used in the
computation of net
income (loss)
adjusted per share:
Basic 8,709 6,869 8,596 5,621
Diluted 8,709 8,155 9,277 6,925
ADVANCED POWER TECHNOLOGY, INC
CONSOLIDATED BALANCE SHEETS
(In thousands)
Sept. 30, 2001 Dec. 31, 2000
--------------- ---------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 17,436 $ 25,326
Short term investments 15,185 8,118
Accounts receivable, net 5,236 6,776
Inventories, net 9,185 6,814
Prepaid and other current assets 1,895 1,799
-------- --------
Total current assets 48,937 48,833
Property and equipment, net 5,260 4,367
Long term investments 3,441 3,022
Other assets 1,164 1,091
-------- --------
Total assets $ 58,802 $ 57,313
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,614 $ 4,385
Accrued expenses 1,540 1,402
Current portion of long term debt -- 21
Current portion of capital
lease obligations 71 80
-------- --------
Total current liabilities 4,225 5,888
Capital lease obligations,
less current portion 77 130
Deferred gain on sale leaseback 164 177
-------- --------
Total liabilities 4,466 6,195
Stockholders' equity:
Common stock 88 85
Additional paid in capital 67,323 66,826
Treasury stock (1,700) (1,700)
Deferred stock compensation (207) (330)
Accumulated other
comprehensive income 151 64
Accumulated deficit (11,319) (13,827)
-------- --------
Total stockholder's equity 54,336 51,118
-------- --------
Total liabilities and
stockholder's equity $ 58,802 $ 57,313
======== ========
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