August Technology Reports Increased Revenue in Second Quarter 2005 Results; Strong Order Rebound Drives Book to Bill Greater Than 1.00.MINNEAPOLIS Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. -- August Technology Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :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 and data analysis solutions for the microelectronic The miniaturization of electronic circuits. See chip. industries, today reported revenues of $19.7 million during the second quarter ended June June: see month. 30, 2005, an increase of 7% from the previous quarter and a decrease of 1% from the second quarter of 2004. Gross margin in the second quarter was 57.3% compared to 54.6% in the first quarter of 2005 and 54.4% in the second quarter of 2004. Second quarter selling, general and administrative expenses included $920,000 of severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs, primarily related to management departures resulting from organizational streamlining initiatives. There were no such costs incurred in the first quarter of 2005 or the second quarter of 2004. The Company reported a net loss of $11.0 million, or $0.61 per share, in the quarter. This compares to a net loss of $0.9 million, or $0.05 per share, in the first quarter of 2005, and net income of $2.2 million, or $0.12 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, in the second quarter of 2004. The net loss in the quarter resulted primarily from merger related expenses of $12.0 million, or $0.67 per share. These expenses included a $10.9 million termination fee termination fee The one-time charge for terminating or transferring an individual retirement account. If a financial institution charges a termination fee, the fee must be spelled out in the original agreement that is signed when the account is opened. related to the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of the proposed merger with Nanometrics, Inc. The first quarter of 2005 included $1.2 million, or $0.07 per share, in merger related expenses. Excluding merger related expenses, net income was $1.0 million, or $0.05 per diluted share, and $0.3 million, or $0.02 per diluted share, in the second and first quarters of 2005, respectively. Highlights: --Second quarter revenues increased 7% sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen --Orders 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 and increase 52% driven by increased demand from a broad array of Back End customers and new Front End penetration The successful unauthorized breach of a security perimeter. See penetration test. --Orders include first AXi All Surface Systems from two of the Top 20 Chip-Makers --During Semicon West in July July: see month. , major IDM (1) See identity management. (2) (Integrated Device Manufacturer) A company that performs every step of the chip-making process, including design, manufacture, test and packaging. Examples of IDMs are Intel, AMD, Motorola, IBM, TI and Lucent. advised that AXi All Surface system is the "tool of record" for their 300mm 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. production --Second quarter net earnings before merger costs increase to $1.0 million or $0.05 per share --Cash used in operating activities was $10.4 million for the second quarter. Excluding cash payments for merger expenses, cash generated from operating activities for the second quarter was $1.8 million "We are delighted with the financial performance and operating gains achieved during the June quarter," 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. . "Strong demand, especially from a broad base of Final Manufacturing customers, drove a significant growth in orders and an increase in our 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. ." O'Dell continued, "And the August Technology team continued penetration of the front end advanced macro inspection market while making significant progress moving forward with the strategic merger with Rudolph Rudolph: see Raoul, king of France. Rudolph his red nose lit the way for Santa and his sleigh. [Am. Pop. Music: “Rudolph the Red-Nosed Reindeer”] See : Nose Technologies. We believe that merger will allow us to accelerate our growth, especially in the front end market." O'Dell concluded, "As we look ahead, we anticipate third quarter revenues will range from flat to +10% as compared to second quarter. We continue to believe increased adoption of advanced macro inspection and our ability to bring to market innovative yield-enhancing solutions will allow us to grow revenues and outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. the industry in 2005." August Technology will provide a live conference call with senior management, today at 11:00a.m. ET/10:00a.m. CT to discuss second quarter financial performance. If you would like to participate, please call (913) 981-5509 prior to the start time and use participant Participant A party of a funding. It usually refers to the lowest rank or smallest level of funding. code 3479116. A webcast of the conference call will also 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 beginning on Thursday Thursday: see week. July 28, 2005. To listen to the call live, 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's automated inspection and data analysis solutions provide critical product and process enhancing information, which enables microelectronic device manufacturers to drive down costs and time to market. With the first all-surface advanced macro inspection solution, August Technology has incorporated frontside, backside BACKSIDE, estates. In England this term was formerly used in conveyances and even in pleadings, and is still, adhered to with reference to ancient descriptions in deeds, in continuing the transfer of the same. property. and wafer edge inspection in a single system. Following detection August Technology's decision tools correlate the defect defect - bug data across surfaces and provide the comprehensive information necessary for device manufacturers to make process-enhancing decisions. Headquartered 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]. , August Technology supports its customers with a worldwide sales and service organization. Additional information can be found on the company'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 our expectation to outperform the industry again in 2005 and our expectation for Q3 2005 sequential One after the other in some consecutive order such as by name or number. revenue change of flat to +10%. 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 continuing improvement, or a 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 and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. microelectronic industries; (ii) pre-order 1. (graph theory) pre-order - traversal. 2. (theory) pre-order - A relation R is a pre-order if it is reflexive (x R x) and transitive (x R y R z => x R z). If it is also antisymmetric (x R y R x => x = y) then it is a partial ordering. sales activities not resulting in orders, or customers delaying or canceling orders in backlog; (iii) loss of potential sales to competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. based on pricing, product features or other factors; (iv) lack of customer acceptance in the upcoming quarters of the Company's newer products including All-Surface inspection solutions and DMS (1) (Document Management System) See document management. (2) (Defense Messaging System) An X.500-compliant messaging system developed by the U.S. Dept. of Defense. Decision that were or are planned to be shipped to them; (v) failure of our recently completed and current product development efforts to meet customer needs and expectations including driving down their costs and time-to-market; (vi) unanticipated costs and expenses which increase operating costs operating costs npl → gastos mpl operacionales ; and (vii) delay in the merger transaction increasing costs. 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 SEC on March 16, 2005. August Technology does not assume any obligation to update the 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. information contained in this press release.
AUGUST TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Net revenues $19,688 $19,855 $38,105 $36,255
Cost of revenues 8,403 9,059 16,762 16,117
--------- --------- --------- ---------
Gross profit 11,285 10,796 21,343 20,138
Selling, general and
administrative expenses 7,237 5,390 13,526 10,579
Research and development
expenses 3,324 3,322 6,990 6,230
--------- --------- --------- ---------
Operating income 724 2,084 827 3,329
Merger expenses (11,991) - (13,225) -
Interest income 335 189 623 390
--------- --------- --------- ---------
Income (loss) before provision
for income taxes (10,932) 2,273 (11,775) 3,719
Provision for income taxes(1) 109 100 164 100
--------- --------- --------- ---------
Net income (loss) $(11,041) $2,173 $(11,939) $3,619
========= ========= ========= =========
GAAP net income (loss) per
share:
Basic $(0.61) $0.12 $(0.67) $0.20
Diluted $(0.61) $0.12 $(0.67) $0.20
Pro Forma Non-GAAP net income
and net income per share:(2)
Net income $950 $2,173 $1,286 $3,619
========= ========= ========= =========
Basic $0.05 $0.12 $0.07 $0.20
Diluted $0.05 $0.12 $0.07 $0.20
Weighted average shares
outstanding used to calculate
net income (loss) per share:
Basic - GAAP and Pro Forma
Non-GAAP 18,005 17,778 17,936 17,700
Diluted - GAAP 18,005 18,349 17,936 18,421
Diluted - Pro Forma Non-
GAAP 18,431 18,349 18,375 18,421
(1) Due to the level of historical operating losses, the Company began
to record a valuation allowance against deferred tax assets in the
second quarter of 2002, and continues to do so at June 30, 2005.
The Company has recorded a provision for incomes taxes primarily
related to foreign income taxes and alternative minimum tax.
(2) Reconciliation of pro forma Non-GAAP financial measure.
GAAP net income (loss) $(11,041) $2,173 $(11,939) $3,619
Add back:
Merger expenses 11,991 - 13,225 -
--------- --------- --------- ---------
Pro forma Non-GAAP net
income $950 $2,173 $1,286 $3,619
========= ========= ========= =========
The Company provides pro forma Non-GAAP net income and net income per
share in the press release as additional information regarding the
Company's operating results. These pro forma measures are not in
accordance with, or an alternative for, generally accepted accounting
principles in the United States and may be different from similar pro
forma Non-GAAP net income and net income per share measures used by
other companies. GAAP net income (loss) has been adjusted to exclude
the effects of the Company's merger expenses. The merger expenses
include a $10.9 million termination fee paid to Nanometrics for
terminating the Nanometrics Merger Agreement, legal and investment
banker fees incurred prior to terminating the proposed merger with
Nanometrics, and legal and investment banker fees incurred in
conjunction with the proposed merger with Rudolph Technologies, Inc.
The Company believes this presentation of pro forma Non-GAAP net
income and net income per share provides useful information to
investors regarding trends relating to the Company's results of
operations. There is no effect to this pro forma adjustment for income
taxes, due to the Company's recording of a valuation allowance as
described in note 1 above.
AUGUST TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, December 31,
2005 2004
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents(1) $10,313 $5,518
Short-term marketable debt securities(1) 22,583 28,615
Accounts receivable, net 12,035 8,603
Inventories 21,393 20,131
Inventories at customers under purchase
orders 3,646 3,993
Prepaid expenses and other current
assets 1,651 2,306
------------ ------------
Total current assets 71,621 69,166
Property and equipment, net 5,342 5,994
Long-term marketable debt securities(1) 9,034 16,289
Purchased technology, net 3,098 3,703
Goodwill 498 498
Other assets 162 150
------------ ------------
Total assets $89,755 $95,800
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $6,947 $3,366
Accrued compensation 2,952 1,691
Other accrued liabilities 2,353 2,306
Customer deposits and deferred revenues 6,769 6,841
------------ ------------
Total current liabilities 19,021 14,204
Other non-current liabilities 108 131
------------ ------------
Total liabilities 19,129 14,335
------------ ------------
Shareholders' equity:
Common stock, no par value 91,437 90,347
Undesignated capital stock, no par value - -
Accumulated deficit (20,715) (8,776)
Accumulated other comprehensive loss (96) (106)
------------ ------------
Total shareholders' equity 70,626 81,465
------------ ------------
Total liabilities and shareholders'
equity $89,755 $95,800
============ ============
(1) Total cash and marketable debt
securities $41,930 $50,422
AUGUST TECHNOLOGY CORPORATION
SELECTED CONSOLIDATED STATEMENT OF CASH FLOWS DATA
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Cash flows used in operating
activities $(10,424) $(3,939) $(8,462) $(10,718)
Cash flows provided by
investing activities 8,646 258 12,217 308
Cash flows provided by
financing activities 579 440 1,041 1,988
Effect of exchange rate
changes on cash and cash
equivalents (6) (10) (1) (13)
--------- --------- --------- ---------
Net increase (decrease) in
cash and cash equivalents $(1,205) $(3,251) $4,795 $(8,435)
========= ========= ========= =========
GAAP cash flows from operating
activities $(10,424) $(3,939) $(8,462) $(10,718)
Add back:
Cash paid for merger
expenses 12,188 - 12,342 -
--------- --------- --------- ---------
Pro forma Non-GAAP cash flows
from operating activities $1,764 $(3,939) $3,880 $(10,718)
========= ========= ========= =========
The Company provides pro forma Non-GAAP cash flows from operating
activities in the press release as additional information regarding
the Company's financial results. This pro forma measure is not in
accordance with, or an alternative for, generally accepted accounting
principles in the United States and may be different from similar pro
forma Non-GAAP cash flows from operating activities measures used by
other companies. GAAP cash flows from operating activities has been
adjusted to exclude the effects of the Company's merger expenses. The
Company believes this presentation of pro forma Non-GAAP cash flows
from operating activities provides useful information to investors
regarding trends relating to the Company's cash flows from operations.
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