Advanced Power Technology Reports Third Quarter 2002 Results.Business Editors BEND, Ore.--(BUSINESS WIRE)--Oct. 24, 2002 Advanced Power Technology, Inc. (Nasdaq:APTI APTI Association for Preservation Technology International APTI Air Pollution Training Institute ): 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. 24, 2002 -- Advanced Power Technology will conduct a conference call at 2:00 p.m. PDT, Thursday Thursday: see week. , October 24, 2002, webcast simultaneously for interested investors via the Company's corporate web site at www.advancedpower.com. The call can be accessed live by dialing 1-800-388-8975. International callers please dial 1-973-694-2225. 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 for 30 days. In addition, a telephone replay of the conference call will be available for 30 days and can be accessed at 1-800-428-6051 and from international locations at 1-973-709-2089; passcode 264771. 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 third quarter 2002 revenues of $13.1 million, toward the high end of the previously announced Company guidance of $12.6 to $13.2 million, an increase of 91 percent over the year-ago quarter and of 22 percent over the prior quarter. Excluding the business of Microsemi RF Products, Inc., acquired on May 24, 2002, the sequential One after the other in some consecutive order such as by name or number. revenue growth in the third quarter 2002 was 9 percent. The net income for the third quarter of 2002 in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) was $64,000 or $0.01 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 GAAP net loss of $417,000 or $(0.05) per share in the year-ago quarter and a net loss of $545,000 or $(0.05) per share in the prior quarter. Excluding non-cash purchase accounting charges related to the January January: see month. 25, 2002 acquisition of GHz Technology, Inc. (GHz) and the May 24, 2002 acquisition of the business of Microsemi RF Products, Inc., pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income for the third quarter ended September September: see month. 30, 2002 was $547,000 or $0.05 per diluted share, compared to a GAAP net loss of $417,000 or $(0.05) per share in the year-ago quarter, which had no pro forma adjustments, and a pro forma net loss of $26,000 or $(0.00) per share in the prior quarter. Excluding non-cash purchase accounting charges associated with the two acquisitions, gross margin for the third quarter 2002 was 34.2 percent of revenue compared to 19.1 percent in the year-ago quarter and 33.9 percent in the prior quarter. Patrick Sireta, Chief Executive Officer, commented, "Given the difficult market environment in which we continue to operate, I am pleased with our third quarter results. They are consistent with our expectation that 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. is currently structured to break-even operationally at a quarterly sales level of approximately $12.5 to $13.0 million, excluding non-cash purchase accounting charges. The process of integrating our two recent acquisitions continued successfully through the third quarter. Both subsidiaries performed solidly, contributing to the pro forma profitability we reported for the third quarter 2002 and providing increased diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. to APT's revenue base." "We experienced sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen weaker order activity in the third quarter of 2002 with a book-to-bill ratio Book-to-Bill Ratio The technology industry's demand-to-supply ratio for orders on a "firm's book" to number of orders filled. Notes: This ratio tells whether the company has more orders than it can deliver (if greater than 1), has the same amount of orders that it can of approximately 0.82 compared to a book-to-bill ratio of approximately 1.12 for the second quarter of 2002. This was due primarily to an abrupt weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. of orders
from the semiconductor capital equipment market, coupled with continued
softness in the commercial avionics avionics (ā'vēŏn`ĭks), electronic instruments used in air or space flight; also the design and production of such instruments. Early planes had few instruments, but as aviation and aircraft became more complex, so did instrumentation. and the communications and data
processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a markets. We had another solid quarter of design wins with 16
design wins in the third quarter of 2002."APT's strong balance sheet, with $18.0 million in 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 , $71.4 million in stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. and only $92,000 of total debt, gives us the ability to continue to make the necessary investments in our future, including other strategic acquisition opportunities as they may arise." "Looking beyond the next few quarters which will continue to be difficult, we are confident that APT has in place and is implementing an effective combination of cost reduction actions and growth strategies that have the potential to deliver sustained profitable growth. The RF product portion of our sales in the third quarter 2002 was approximately 49 percent and we have a strong flow of new products being introduced by our Power and RF products businesses" 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 October 24, 2002. 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. Revenues for the fourth quarter ending December December: see month. 31, 2002 are expected to be in the range of $10.4 million to $11.0 million. At the anticipated revenue levels indicated above, gross margin for the fourth quarter 2002 (exclusive of non-cash purchase accounting charges associated with the GHz and Microsemi RF Products acquisitions) is expected to be in the 25.5 percent to 27.5 percent range. The Company has initiated several actions to further reduce costs and control inventory levels. These include salary reduction programs, planned intermittent intermittent /in·ter·mit·tent/ (-mit´ent) marked by alternating periods of activity and inactivity. in·ter·mit·tent adj. 1. Stopping and starting at intervals. 2. shutdowns during the fourth quarter 2002 and strict control of discretionary spending. In addition, the Company will continue the implementation of identified cost reductions and consolidation actions to fully realize the synergies between its two recent acquisitions and to further increase their contribution to earnings per share. These actions, which will further reduce the Company's operational 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. , include consolidation of internal 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, greater utilization of low cost offshore assembly subcontractors associated with corresponding downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing of internal assembly operations and centralization cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. of support organizations. R&D expenses in the fourth quarter 2002 are expected to be 7.5 percent to 8.5 percent of revenues and SG&A expenses 28 percent to 30 percent of revenues. These R&D and SG&A expense estimates are exclusive of non-cash purchase accounting charges associated with the acquisition of GHz and the Microsemi RF Products, Inc. business. Interest income in the fourth quarter 2002 is expected to be approximately $100,000. On a before tax basis the non-cash purchase accounting charges associated with the GHz and Microsemi RF Products business for the fourth quarter 2002 are expected to be $463,000 in cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold , $11,000 in R&D expenses and $28,000 in SG&A expenses. The tax effect of these charges is expected to be $168,000. 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 data processing, semiconductor capital equipment, industrial/medical, and military/aerospace markets. 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 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 cost and liability associated with patent infringement patent infringement n. the manufacture and/or use of an invention or improvement for which someone else owns a patent issued by the government, without obtaining permission of the owner of the patent by contract, license or waiver. litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; 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 29, 2002 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,
2002 2001 2002 2001
----------- -------- ----------- --------
(unaudited) (unaudited)
Revenues, net $13,052 $6,838 $31,985 $31,522
Cost of goods sold 8,589 5,529 21,275 20,747
Amortization of technology
rights & other 555 - 1,512 -
----------- -------- ----------- --------
Total cost of goods sold 9,144 5,529 22,787 20,747
----------- -------- ----------- --------
Gross profit 3,908 1,309 9,198 10,775
----------- -------- ----------- --------
Operating expenses:
Research and development 1,019 359 3,000 1,175
Selling, general and
administrative 3,335 1,970 8,868 7,364
In-process research &
development charge - - 2,108 -
----------- -------- ----------- --------
Total operating expenses 4,354 2,329 13,976 8,539
----------- -------- ----------- --------
Income (loss) from operations (446) (1,020) (4,778) 2,236
Other income (expense), net:
Interest, net 98 325 479 1,322
Other, net 31 (88) 22 25
----------- -------- ----------- --------
Income (loss) before income
taxes (317) (783) (4,277) 3,583
Provision (benefit) for
income taxes (381) (366) (1,231) 1,075
----------- -------- ----------- --------
Net income (loss) $64 $(417) $(3,046) $2,508
=========== ======== =========== ========
Net income (loss) per share:
Basic $0.01 ($0.05) ($0.30) $0.29
Diluted $0.01 ($0.05) ($0.30) $0.27
Weighted average number of
shares used in the computation
of net income (loss) per share:
Basic 10,381 8,709 10,199 8,596
Diluted 10,935 8,709 10,199 9,277
ADVANCED POWER TECHNOLOGY, INC.
RECONCILIATION OF PRO FORMA NET INCOME (LOSS)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
2002 2001 2002 2001
----------- -------- ----------- --------
(unaudited) (unaudited)
Reported GAAP net income
(loss) $64 $(417) $(3,046) $2,508
Purchase accounting adjustments
related to acquisitions
Cost of sales
Intangible asset amortization 270 - 609 -
Inventory fair value adjustment 252 - 786 -
Deferred compensation amortization 33 - 117 -
Research & development expense
Deferred compensation amortization 12 - 48 -
Selling, general and administrative
Deferred compensation amortization 36 - 130 -
In-process research & development
charge - - 2,108 -
Tax effect of pro forma
adjustments (120) - (618) -
----------- -------- ----------- --------
Pro forma net income (loss) $547 $(417) $134 $2,508
=========== ======== =========== ========
Pro forma net income (loss)
per share:
Basic $0.05 ($0.05) $0.01 $0.29
Diluted $0.05 ($0.05) $0.01 $0.27
Weighted average number of shares
used in the computation of
pro forma net income (loss)
per share:
Basic 10,381 8,709 10,199 8,596
Diluted 10,935 8,709 10,825 9,277
ADVANCED POWER TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
Sept. 30, 2002 Dec. 31, 2001
-------------- -------------
unaudited
Assets
Current assets:
Cash and cash equivalents $5,747 $16,102
Short term investments 10,293 17,093
Accounts receivable, net 8,937 3,493
Inventories, net 12,371 9,307
Prepaid and other current assets 3,378 3,422
----------- --------
Total current assets 40,726 49,417
Property and equipment, net 10,996 5,546
Long term investments 2,000 2,473
Other assets 661 639
Intangible assets, net 10,155 -
Goodwill 15,385 -
----------- --------
Total assets $79,923 $58,075
=========== ========
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable $4,049 $2,805
Accrued expenses 2,113 1,031
Current portion of capital
lease obligations 77 73
----------- --------
Total current liabilities 6,239 3,909
Deferred tax liability 2,095 -
Capital lease obligations,
less current portion 15 58
Deferred gain on sale leaseback 147 160
----------- --------
Total liabilities 8,496 4,127
Stockholders' equity:
Common stock 105 88
Additional paid in capital 88,308 67,640
Treasury stock (1,700) (1,700)
Deferred stock compensation (323) (166)
Accumulated other comprehensive
income 114 117
Accumulated deficit (15,077) (12,031)
----------- --------
Total stockholders' equity 71,427 53,948
----------- --------
Total liabilities and
stockholders' equity $79,923 $58,075
=========== ========
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