August Technology Reports Increased Revenues and Orders in Second Quarter 2003 Financial Results.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--July 30, 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 announced results for its second quarter ended June June: see month. 30, 2003. Recent highlights: -- Second quarter revenues increased 18% sequentially to $7.76 million; the third consecutive quarter of top line growth. -- Second quarter 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 significantly above 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. for the fourth consecutive quarter. -- Key wins at one of the world's largest foundries and at a leading advanced packaging technology company. -- Cash and investments increased to $20.2 million as of June 30, 2003. -- Second quarter 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. reduced 39% from prior quarter. -- Acquired Semiconductor Technologies and Instruments (STI STI systolic time intervals. ) WAV business and Counterpoint counterpoint, in music, the art of combining melodies each of which is independent though forming part of a homogeneous texture. The term derives from the Latin for "point against point," meaning note against note in referring to the notation of plainsong. Solutions Inc. (CSI CSI Crime Scene Investigator CSI CompuServe, Inc. CSI Commodity Systems, Inc. CSI Commodity Systems Inc. (Boca Raton, FL) CSI Crime Scene Investigation (CBS TV show) CSI Christian Schools International ). -- Introduced two new and innovative inspection and 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. solutions - the EXi 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. edge inspection system and the UltraPort-5 flexible handler A software routine that performs a particular task. It often refers to a routine that "handles" an exception of some kind, such as an error, but it can refer to mainstream processes as well. The term is typically used in operating systems and other system software. . The Company reported revenues of $7.76 million during the quarter, an increase of 18% from the previous quarter and 11% from the second quarter of 2002. The increase includes 8% growth in the current quarter resulting from the acquisition of the STI WAV business. The Company's operating loss of $1.44 million decreased 39% from the prior quarter's operating loss as a result of the higher revenues and reduced operating costs operating costs npl → gastos mpl operacionales , primarily due to lower research and development expenses. The Company's net loss per share of $0.10 decreased significantly from first quarter's net loss per share of $0.17, and was $0.02 to $0.03 favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. as compared with analyst expectations. Gross margin of 54.3% for the quarter was within the range of the Company's previous guidance, and compared to 55.0% in the previous quarter and 57.5% in the second quarter of 2002. Revenues from the sale of WAV Series systems unfavorably impacted gross margin by 1.5 percentage points due to purchase accounting requirements. During the second quarter 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 increased $1.5 million to $20.2 million, primarily due to a $3.5 million increase in customer deposits. Inventory, net of payables Payables Related: Accounts payable , increased by $0.6 million due to an increase in the number of systems in the field undergoing demonstrations or at customer sites under purchase order (i.e. SAB SAB Spontaneous abortion. See Abortion. 101). This increase was partially offset by an overall reduction in raw material and work in process inventory. "We are very pleased with our second quarter results as we build top line momentum with both new orders and our recent acquisitions. This momentum is supported by new orders exceeding revenue for the fourth consecutive quarter, leading to a book to bill ratio significantly above parity," 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. . "This increase was driven by higher 3Di Series orders from both new and repeat customers, including a multiple system order from one of the world's largest foundries, and a first-time order from a leading advanced packaging technology company. Second quarter orders were also nicely supported by the newly acquired WAV inspection system business." O'Dell continued, "We now have a record order 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. and expect to achieve our goal of profitable operations on a quarterly basis by the end of the calendar year. We believe we can achieve this improvement in financial performance while maintaining our focused investments in R&D, marketing and sales channel development." "We are also pleased by the level of interest we've seen from customer visits, and at the recent Semicon West trade show, for our new front-end advanced macro defect defect - bug inspection system, the AXi Series. Interest in the new AXi Series is largely driven by its unique combination of significantly higher inspection resolution while achieving well over 100 wafers wafers compressed roughage in flat plates useful for feeding to animals in transit. per hour throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. . We are also seeing similar customer enthusiasm for our latest new product introductions of the EXi edge inspection system and the UltraPort-5, an ultra flexible handling solution," O'Dell explained. "The acquisitions we've completed in the last four months have extended the breadth of our inspection and metrology product offerings and add key resources to further drive and support our growth," continued O'Dell. "Our most recent acquisition of CSI directly enhances August Technology's ability to help our customers go beyond detecting defects to quickly understand and analyze their defects - ultimately helping them make decisions that will improve their process and increase yield. Device manufacturers are making it increasingly clear that advanced macro defects, typically 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. and larger, play a key part in impacting the overall yield. We are keenly focused on helping our customers quickly find and disposition these macro defects, directly driving yield improvements and significant cost savings for device manufacturers," O'Dell concluded. August Technology will provide a live conference call with senior management, today at 3:30 p.m. CT to discuss second quarter financial performance. If you would like to participate, please call 913-981-5507 prior to the 3:30 start time and use participant code 458477. 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 shortly following the call and continuing through August 13, 2003. 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 solutions provide critical product and process enhancing information, which enable microelectronic device manufacturers to drive down costs and time to market. 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]. , 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 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 fiscal year 2003 profitability and revenues, semiconductor and/or microelectronic market conditions and outlook for the remainder of 2003, potential customer and market interest in our tools, expectations that our product will drive down customer costs and time to market, and acceptance of both our new visual inspection solutions and recently acquired product line. 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, or customers delaying or canceling orders in backlog; (iii) loss of potential sales to competitors based on pricing, product features or other factors; (iv) lack of customer acceptance in the upcoming quarters of the Company's newer products including the AXi Series, EXi Series, 3Di Series, NSX-105, or new YieldPilot enhancements 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; and (vii) failure to effectively integrate the recently acquired businesses of STI and CSI and their product lines to enhance our product offering. 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 BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, December 31,
2003 2002
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,512 $ 1,895
Short-term marketable securities 18,694 15,438
Accounts receivable, net 5,199 7,054
Inventories 7,861 7,432
Inventories at customers under purchase
orders 3,395 1,012
Prepaid expenses and other current
assets 1,277 1,091
------------- ------------
Total current assets 37,938 33,922
Property and equipment, net 3,605 3,439
Purchased technology, net 330 -
Long-term marketable securities - 1,444
Other assets 658 705
------------- ------------
Total assets $ 42,531 $ 39,510
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,651 $ 2,273
Accrued compensation 710 554
Accrued liabilities 665 451
Customer deposits 5,263 1,268
------------- ------------
Total current liabilities 10,289 4,546
Other non-current liabilities 85 97
------------- ------------
Total liabilities 10,374 4,643
------------- ------------
Shareholders' equity:
Common stock, no par value 43,087 42,158
Undesignated capital stock, no par
value - -
Deferred compensation related to stock
options (75) (105)
Accumulated deficit (10,858) (7,229)
Accumulated other comprehensive income 3 43
------------- ------------
Total shareholders' equity 32,157 34,867
------------- ------------
Total liabilities and
shareholders' equity $ 42,531 $ 39,510
============= ============
Total cash and marketable securities $ 20,206 $ 18,777
AUGUST TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
----------------- -----------------
2003 2002 2003 2002
-------- -------- -------- --------
Net revenues $ 7,757 $ 6,980 $14,320 $12,490
Cost of revenues 3,548 2,965 6,503 5,329
-------- -------- -------- --------
Gross profit 4,209 4,015 7,817 7,161
Selling, general and
administrative expenses 3,213 2,832 6,166 5,658
Research and development expenses 2,434 2,729 5,202 4,864
Restructuring expenses (1) - 568 254 568
-------- -------- -------- --------
Operating loss (1,438) (2,114) (3,805) (3,929)
Interest income 78 174 176 382
-------- -------- -------- --------
Loss before provision for income
taxes (1,360) (1,940) (3,629) (3,547)
Provision for income taxes (2) - 1,491 - 687
-------- -------- -------- --------
Net loss $(1,360) $(3,431) $(3,629) $(4,234)
======== ======== ======== ========
Net loss per share:
Basic & Diluted $ (0.10) $ (0.26) $ (0.27) $ (0.33)
Weighted average shares
outstanding:
Basic & Diluted 13,565 13,033 13,447 12,939
(1) Restructuring expenses for the six months ended June 30, 2003
include $254 of employee severance costs. Restructuring expenses
for the three and six months ended June 30, 2002 include $184 of
employee severance costs and $384 of costs related to the
modification of a distributor agreement.
(2) The Company recorded a full valuation allowance against deferred
tax assets in the second quarter of 2002, resulting in a provision
for income taxes rather than recording a tax benefit on the
pre-tax loss during the period. 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.
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