August Technology Reports Fourth Quarter and Year-End 2002 Results.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Feb. 12, 2003 August Technology Corporation (Nasdaq:AUGT), a leading provider of automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. inspection solutions for the microelectronic The miniaturization of electronic circuits. See chip. industries, today reported fourth quarter and year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. December December: see month. 31, 2002 results in line with guidance. Fiscal year 2002 highlights: -- Revenue of $25.1 million and strong gross margin near 56% -- Development and introduction of several new product models: NSX-105, 3Di-7500, 3Di-8500 -- Multiple repeat orders for our 3Di Series bump inspection solutions to top contract manufacturing customers in Asia -- Entered development agreement with leading semiconductor manufacturer for advanced macro defect inspection, expanding into the wafer fab The Company reported fourth quarter revenues of $6.3 million, flat from the third quarter of 2002 and an increase of 15% from the fourth quarter of 2001. Gross margin for the quarter was 53.6%, compared to 55.1% in the previous quarter and 57.0% in the fourth quarter of 2001. The gross margin decrease was due primarily to the recording of an additional provision for inventory obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. during the fourth quarter and lower manufacturing utilization levels. The net loss during the fourth quarter was $2.2 million, or $0.16 per share, compared to a net loss of $740,000, or $0.06 per share, in the fourth quarter of 2001. For comparative purposes, excluding non-recurring expenses of $147,000 and the recording of a benefit from income taxes of $689,000, the net loss during the fourth quarter of 2001 was $1.3 million, or $0.10 per share. The higher net loss in 2002 is primarily due to the Company's increased investment in the development of new products. Revenue in 2002 was $25.1 million, a decrease of 16% from 2001, as compared to an overall industry decrease of over 31%. Gross margin in 2002 was 55.8%, compared to 59.6% in 2001. The net loss in 2002 was $8.9 million, or $0.69 per share as compared to a net loss of $351,000, or $0.03 per share, in 2001. Excluding non-recurring charges of $1.2 million and the recording of a tax provision of $687,000, the net loss in 2002 was $7.0 million, or $0.54 per share, as compared to a net loss of $585,000, or $0.05 per share, in 2001, excluding non-recurring charges of $579,000 and the recording of a tax benefit of $813,000. The lower year-over-year results are primarily due to the decrease in capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. by microelectronics microelectronics, branch of electronic technology devoted to the design and development of extremely small electronic devices that consume very little electric power. manufacturers during the continued industry slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. and the Company's increased investment in the development of new products. The Company's financial position as of December 31, 2002 remains strong with cash, cash equivalents 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 totaling $18.8 million, working capital of $29.4 million and no debt. "Throughout 2002, we were able to improve our competitive position by advancing several new product development projects which resulted in the introduction of the NSX-105, 3Di-7500 and 3Di-8500," commented Jeff O'Dell, August Technology's chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "We also invested in our worldwide support infrastructure with added staff in our Taiwan Taiwan (tī`wän`), Portuguese Formosa, officially Republic of China, island nation (2005 est. pop. 22,894,000), 13,885 sq mi (35,961 sq km), in the Pacific Ocean, separated from the mainland of S China by the 100-mi-wide (161-km) Taiwan office and direct sales and service in Singapore Singapore (sĭng`gəpôr, sĭng`ə–, sĭng'gəpôr`), officially Republic of Singapore, republic (2005 est. pop. 4,426,000), 240 sq mi (625 sq km). to better support our customers in Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. ." "We are continuing to identify new inspection applications which leverage our core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
adj. 1. Of or relating to the initial phase of a project: a front-end investment. 2. Of or relating to the forward parts of a vehicle: a front-end alignment. 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 for affordable detection, review and classification of defects greater than 0.5 micron micron: see micrometer. One micrometer, which is one millionth of a meter or approximately 1/25,000 of an inch. The tiny elements that make up a transistor on a chip are measured in micrometers and nanometers. See process technology. ," O'Dell explained. "We recently announced a development agreement with one of the world's top ten semiconductor manufacturers targeting this opportunity. As a result of this agreement, we have shipped multiple systems in the first quarter of 2003 and anticipate revenue from these systems in the second half of the year." O'Dell concluded, "In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite this opportunity, our visibility remains extremely limited. Although we entered 2003 with a higher backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. than last year and a book-to-bill greater than parity parity or space parity, in physics, quantity that refers to the relationship between an object or process and the image that it can produce in a mirror. , we are projecting that first quarter revenue will be relatively flat from fourth quarter, and we expect to record a loss in first quarter." August Technology will provide a live webcast of its earnings conference call with senior management, today at 3:30 p.m. CT to discuss third quarter financial performance. The webcast will be available live via 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 on August Technology's web site at www.augusttech.com and archived for replay shortly following the conference call and continuing through February February: see month. 26, 2003. To listen to the call, visit the web site at least fifteen minutes beforehand to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. About the Company: August Technology Corporation, based in Bloomington, Minnesota Bloomington is a city in Hennepin County, Minnesota, and a southern suburb of Minneapolis. As of 2005, it had a population of 84,347, making it the largest Twin Cities suburb, and the fifth largest city in the state[1]. , is a leading supplier of automated visual defect defect - bug inspection equipment for the microelectronic industries and has established service and sales representation in all major microelectronic manufacturing markets worldwide. The inspection solutions designed, manufactured and marketed by August Technology provide microelectronic device manufacturers with cost-saving quality and process information. August Technology is a founding member of the Advanced Packaging and Interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. Alliance (APiA) and is an active member of the Die Products Consortium (DPC DPC Department of Premier and Cabinet (Victoria, Australia) DPC Dutch Power Cows DPC Deferred Procedure Calls (Microsoft Windows NT 4. ). Additional information can be found by visiting August Technology's web site at www.augusttech.com. 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. : This release contains forward-looking statements regarding projected first quarter 2003 revenues, semiconductor and/or microelectronic market conditions for 2003, potential customer outlooks, our ability to identify and generate revenues from new inspection applications, front-end opportunities, new development agreements, and acceptance of new visual inspection solutions. These forward-looking statements involve risks and uncertainties which may cause actual results to differ from those set forth in the forward-looking statements, including, but not limited to: (i) no improvement, or further or continued deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in general economic conditions and in the semiconductor and/or microelectronic industries; (ii) pre-order sales activities not resulting in orders; (iii) possible failure to meet the revenue projections for inspection products in the first quarter and fiscal year 2003; (iv) lack of customer acceptance in 2003 of the Company's newer products including the 3Di Series, NSX-105, or new YieldPilot enhancements that were or are planned to be shipped to them; (v) misguided mis·guid·ed adj. Based or acting on error; misled: well-intentioned but misguided efforts; misguided do-gooders. mis·guid market and customer focus on new applications, opportunities and development agreements; (vi) customer cancellations of backlog; and (vii) any domestic, regional or international conflicts, wars or attacks. Please refer to additional risk factors stated in August Technology's 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. filed with the Securities and Exchange Commission. August Technology does not assume any obligation to update the forward-looking information contained in this press release.
AUGUST TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
------------------------- -------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
Net revenues $ 6,295 $ 5,471 $25,058 $29,784
Cost of revenues 2,920 2,351 11,068 12,039
------------ ------------ ------------ ------------
Gross profit 3,375 3,120 13,990 17,745
Selling, general
and administrative
expenses 3,007 2,861 11,769 11,800
Research and
development expenses 2,636 1,791 9,847 7,940
Non-recurring
expenses (1) - 147 1,244 579
------------ ------------ ------------ ------------
Operating loss (2,268) (1,679) (8,870) (2,574)
Interest income 118 250 624 1,427
Other expense - - - (17)
------------ ------------ ------------ ------------
Loss before
provision for
(benefit from)
income taxes (2,150) (1,429) (8,246) (1,164)
Provision for
(benefit from)
income taxes (2) - (689) 687 (813)
------------ ------------ ------------ ------------
Net loss $(2,150) $ (740) $(8,933) $ (351)
============ ============ ============ ============
Net loss per share:
Basic & Diluted $ (0.16) $ (0.06) $ (0.69) $ (0.03)
Pro forma net loss
and per share
amounts: (3)
Net loss $(2,150) $(1,282) $(7,002) $ (585)
Per share amounts:
Basic & Diluted $ (0.16) $ (0.10) $ (0.54) $ (0.05)
Weighted average
shares outstanding:
Basic & Diluted 13,130 12,795 13,033 12,723
(1) Non-recurring expenses include the following items for the periods
indicated:
-- Three months ended December 31, 2001: $147 of employee
severance costs.
-- Year ended December 31, 2002: $459 for the write-off of
acquisition costs, $427 of distributor termination costs and
$358 of employee severance costs.
-- Year ended December 31, 2001: $348 of distributor termination
costs and $231 of employee severance costs.
(2) The Company recorded a full valuation allowance against deferred
tax assets in the second quarter of 2002. The Company has continued to
provide such allowance due to the continued uncertainty of the
industry downturn and its impact on current and projected results.
(3) The pro forma net loss and the related per share amounts are
presented for comparative purposes. The pro forma amounts exclude
non-recurring expenses and assume that a full valuation allowance
against the deferred tax assets had been established in 2001. The
reconciling items to GAAP for the periods indicated are as follows:
-- The three months ended December 31, 2001 excludes
non-recurring expenses of $147 and the benefit from income
taxes of $689.
-- The year ended December 31, 2002 excludes non-recurring
expenses of $1,244 and the valuation allowance recorded
against deferred tax assets of $687.
-- The year ended December 31, 2001 excludes non-recurring
expenses of $579 and the benefit from income taxes of $813.
AUGUST TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2002 2001
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,895 $ 1,523
Short-term investments 15,438 23,196
Accounts receivable, net 7,054 4,737
Inventories 8,444 9,384
Prepaid expenses and other current
assets 1,091 2,838
------------ -------
Total current assets 33,922 41,678
Property and equipment, net 3,439 3,541
Long-term investments 1,444 1,138
Other assets 705 798
------------ ------------
Total assets $39,510 $47,155
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,273 $ 1,641
Accrued compensation 554 615
Accrued liabilities 451 536
Customer deposits 1,268 1,715
------------ ------------
Total current liabilities 4,546 4,507
Other non-current liabilities 97 125
------------ ------------
Total liabilities 4,643 4,632
------------ ------------
Shareholders' equity:
Common stock, no par value 42,158 41,020
Undesignated capital stock, no par value - -
Deferred compensation related to stock
options (105) (192)
Retained earnings (accumulated deficit) (7,229) 1,704
Accumulated other comprehensive income
(loss) 43 (9)
------------ ------------
Total shareholders' equity 34,867 42,523
------------ ------------
Total liabilities and
shareholders' equity $39,510 $47,155
============ ============
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