Axcelis Announces Financial Results for the Second Quarter 2004; Company Achieves Near Record Financial Performance.BEVERLY Beverly, city (1990 pop. 38,195), Essex co., NE Mass., on Massachusetts Bay; inc. as a city 1894. Its chief manufactures are electronic and scientific equipment, consumer goods, and chemicals. , Mass. -- Axcelis Technologies Axcelis Technologies, Inc. NASDAQ: ACLS engages in the design, manufacture, and servicing of capital equipment for the semiconductor manufacturing industry worldwide. , Inc. (Nasdaq: ACLS ACLS abbr. advanced cardiac life support ) today announced financial results for its second quarter ended June June: see month. 30, 2004. Highlights for the period include: 1. The Company reported net revenues of $151.3 million, a 13% increase over the first quarter of 2004, and net income of $34.5 million ($0.33 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 with $13.6 million ($0.13 per diluted share) for the first quarter of 2004. Net income for the quarter includes a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. income tax adjustment of $4.0 million or $0.04 per diluted share. 2. Gross margins during the second quarter were above expectations at 45.2% due to a favorable product mix and improved manufacturing efficiencies. 3. Positive cash flow of $37.0 million during the second quarter highlights the company's continued focus on working capital management. 4. Systems bookings increased 12%, compared to the first quarter of 2004, to $122.1 million as demand continues for both 200mm and 300mm process equipment at the 130 nanometer One billionth of a meter. Nanometers are used to measure the wavelengths of light. See angstrom and metric system. and 90 nanometer technology nodes See technology generation. . Mary Puma, president and Chief Executive Officer stated, "Our performance in the second quarter exceeded expectations, with profitability and positive cash flow achieving near record levels. Our pre-tax margins of 22% are approaching 2000 quarterly peak levels, demonstrating that Axcelis can deliver a high rate of profitability on a lower revenue base. This performance level is a testament to the improvements we have incorporated into our business model that create sustainable operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. ." Puma continued, "Our business remains strong. Systems bookings increased another 12% for the quarter, marking the fourth consecutive quarter of double-digit growth. Customers' fab projects are still moving forward, with tool shipments planned for later this year and into the beginning of 2005." Worldwide revenues for the second quarter, including revenues of the Company's 50% owned joint venture in Japan, Sumitomo Eaton Nova Corporation ("SEN SEN. This is said to be an ancient word which signified justice. Co. Litt. 61 a. "), were $226.7 million, an increase of 9% compared to the first quarter of 2004, and net revenues (excluding SEN revenues) for the first quarter were $151.3 million, an increase of 13% compared with the first quarter of 2004. Net income for the quarter was $34.5 million ($0.33 per diluted share) compared with net income of $13.6 million ($0.13 per diluted share) in the first quarter of 2004. Net income for the quarter was positively affected by the reversal of prior years' income tax accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. ($4.0 million or $0.04 per diluted share) related to income tax matters that were resolved during the second quarter of 2004. Axcelis believes that the information regarding the aggregate quarterly revenues of SEN, a 50% owned unconsolidated subsidiary of Axcelis, combined with Axcelis' own revenues for the quarter, is useful to investors. SEN's ion implant implant /im·plant/ (im-plant´) to insert or to graft (tissue, or inert or radioactive material) into intact tissues or a body cavity. products are covered by a license from Axcelis and therefore the combined revenue of the two companies indicates the full market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" of Axcelis' technology. Third Quarter 2004 Outlook Worldwide revenues (including SEN) are expected to increase to $250 million to $260 million. Net revenues (excluding SEN) are anticipated to increase to $155 million to $165 million. Gross margins will be approximately 45%. Net income is expected to be $31 to $35 million ($0.30 to $0.34 per diluted share). The Company also expects to generate $10 million to $15 million of cash during the third quarter. Second Quarter Detail Shipments Shipments for the second quarter on a worldwide basis, including SEN, totaled $241.4 million with net shipments, excluding SEN, totaling $155.8 million. Worldwide shipments were up 10% from the first quarter of 2004 and net shipments were up 8%. Service revenue (service labor, spare parts Spare parts, also referred to as Service Parts is a term used to indicate extra parts available and in proximity to the mechanical item, such as a automobile, boat, engine, for which they might be used. Spare parts are also called “spares. and consumables) was $41.2 million for the quarter, up 5% from the first quarter of 2004, driven by continuing high utilization rates in our customers' factories. Geographically, systems shipments (excluding SEN) were to: Asia 78%, Europe 8% and North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. 14%. Including SEN, 86% of worldwide systems shipments were to Asia, with 39% of shipments to Japan. The ion implantation Ion implantation A process that utilizes accelerated ions to penetrate a solid surface. The implanted ions can be used to modify the surface composition, structure, or property of the solid material. business (excluding SEN) accounted for 80% of total revenues in the second quarter while the complementary products (RTP (1) (Rapid Transport Protocol) The protocol used in IBM's High Performance Routing (HPR) system. (2) (Realtime Transport Protocol) An IP protocol that supports real time transmission of voice and video. , Dry Strip and Curing) accounted for 20%. Growth of ion implantation market continues to outpace out·pace tr.v. out·paced, out·pac·ing, out·pac·es To surpass or outdo (another), as in speed, growth, or performance. outpace Verb [-pacing, that of dry strip, RTP and curing products due to large capacity oriented o·ri·ent n. 1. Orient The countries of Asia, especially of eastern Asia. 2. a. The luster characteristic of a pearl of high quality. b. A pearl having exceptional luster. 3. shipments. The ratio of implanter sales to complementary product sales does fluctuate quarter to quarter and is not indicative of a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. trend. Orders and 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. Net orders (systems and service), excluding SEN, received for the second quarter totaled $163.3 million, up 11% from the first quarter of 2004. System bookings amounted to $122.1 million, up 12% from first quarter of 2004. Worldwide orders, including SEN, were $252.5 million, up 13% compared with the first quarter of 2004, driven by continuing strength in demand for new equipment worldwide. Geographically, net system orders were split as follows: Asia 66%, Europe 8% and North America 26%. Logic manufacturers (Integrated Device Manufacturers See IDM. and Foundries) comprised 32% of systems orders while memory manufacturers made up 68%. Book to bill ratio for the quarter was 1.07. Backlog plus deferred systems revenue for the quarter ended at $145.2 million, an increase of 11% since the end of the first quarter of 2004. Reported backlog consists of systems only (e.g. excluding service contracts) that are generally scheduled to ship within six months. Gross Margin Gross margin for the quarter was above expectations at 45.2%. The increase in gross margin during the quarter was due to a favorable mix of products (200mm vs. 300mm) and improved manufacturing efficiencies and costs. Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. Total operating expenses for the second quarter (excluding restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs and amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ) were $40.4 million, up 6% sequentially from the first quarter of 2004 primarily due to increased variable compensation costs. Compared to the first quarter of 2004, SG&A expense increased 8% to $24.4 million and R&D expense increased 3% to $15.9 million. SEN Contribution Contribution from SEN (royalties and Axcelis' 50% share of net income) for the second quarter was $10.7 million. The Japanese market continues to remain strong with SEN's revenues remaining at high levels, above $70 million, for the second consecutive quarter. Balance Sheet Axcelis ended the second quarter with $163.7 million in cash, cash equivalents and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments compared with $126.7 million at the end of the first quarter of 2004. The Company generated $37.0 million in cash during the quarter due to increased profitability, effective working capital management, and increased customer collections. Positive cash flow for the third quarter is expected to be lower due to timing of scheduled shipments. Second Quarter 2004 Conference Call Please join us for our second quarter conference call on July 28, 2004 at 5:00 pm EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . The call will be available to interested listeners via an audio webcast that can be accessed through Axcelis' home page at www.axcelis.com, or by dialing 1-800-262-1292 (1-719-457-2680 outside North America). Participants calling into the conference call will be requested to provide the company name: Axcelis Technologies, the conference leader: Mark Namaroff, and pass code: Axcelis Q2. A telephone replay will be available from 8:00 pm EDT on July 28, 2004 until 11.59 pm EDT on August 4, 2004. Dial 1-888-203-1112 (1-719-457-0820 outside North America), and enter conference ID code #397404. A webcast replay will be available from 8:00 pm EDT on July 28, 2004 until 5:00 pm EDT August 27, 2004. 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 This document contains 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. under the SEC safe harbor provisions. These statements are based on management's current expectations and should be viewed with caution. They are subject to various risks and uncertainties, many of which are outside the control of the Company, including the conversion of orders to revenue in any particular quarter, or at all, our ability to implement successfully our profit plans, the continuing demand for semiconductor equipment, relative market growth, continuity of business relationships with and purchases by major customers, competitive pressure on sales and pricing, increases in material and other production costs that cannot be recouped in product pricing and global economic, political and financial conditions. These risks and other risk factors relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Axcelis are described more fully in the most recent 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 by Axcelis and in other documents filed from time to time with the Securities and Exchange Commission. About Axcelis Technologies, Inc. Axcelis Technologies, Inc., headquartered in Beverly, Massachusetts Beverly is a city in Essex County, Massachusetts, United States. The population was 39,862 at the 2000 census. A resort, residential and manufacturing community, Beverly includes Beverly Farms and Prides Crossing. , provides innovative, high-productivity solutions for the semiconductor industry. Axcelis is dedicated to developing enabling process applications through the design, manufacture and complete life cycle support of ion implantation, rapid thermal processing Rapid Thermal Processing (or RTP) refers to a semiconductor manufacturing process which heats silicon wafers to high temperatures (up to 1200 C or greater) on a timescale of several seconds or less. , and cleaning and curing systems. Axcelis Technologies has key technology centers in Beverly, Massachusetts, and Rockville, Maryland Rockville is the county seat of Montgomery County, Maryland, United States. According to the 2006 census update, the city had a total population of 59,114, making it the second largest city in Maryland. as well as in Toyo, Japan through its joint venture, SEN. The company's Internet address There are two kinds of addresses that are widely used on the Internet. One is a person's e-mail address, and the other is the address of a Web site, which is known as a URL. Following is an explanation of Internet e-mail addresses only. For more on URLs, see URL and Internet domain name. is: www.axcelis.com.
Axcelis Technologies, Inc.
Consolidated Balance Sheets
In thousands
(Unaudited)
June 30, December 31,
2004 2003
-------- ---------
Assets
Current assets
Cash and cash equivalents $139,095 $ 93,249
Restricted cash 3,370 3,800
Short-term investments 18,616 14,972
Accounts receivable, net 106,756 73,751
Inventories 122,259 123,985
Other Current Assets 16,356 20,102
-------- ---------
Total current assets 406,452 329,859
Property, plant & equipment, net 77,604 80,927
Investment in Sumitomo Eaton Nova Corporation 85,455 73,327
Goodwill 46,773 46,774
Intangible assets 18,895 20,119
Restricted cash, long-term portion 2,616 2,616
Other assets 27,783 31,973
-------- ---------
Total assets $665,578 $ 585,595
======== =========
Liabilities and stockholders' equity
Current liabilities
Accounts payable $ 40,731 $ 36,335
Accrued compensation 19,224 15,061
Warranty 15,762 17,000
Income taxes 5,694 7,109
Deferred revenue 30,923 14,441
Other current liabilities 14,218 11,925
-------- ---------
Total current liabilities 126,552 101,871
Long-term debt 125,000 125,000
Other long-term liabilities 10,683 5,474
Stockholders' equity
Common stock 100 99
Additional paid-in capital 454,550 451,389
Deferred compensation (590) (811)
Treasury stock - at cost (1,218) (1,218)
Retained earnings deficit (53,455) (101,507)
Accumulated other comprehensive income 3,956 5,298
-------- ---------
403,343 353,250
-----------------
Total liabilities and stockholders' equity $665,578 $ 585,595
======== =========
Axcelis Technologies, Inc.
Consolidated Statements of Operations
In thousands, except per share amounts
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------------
2004 2003 2004 2003
-------- -------- -------- --------
Revenue
Systems $106,834 $ 53,910 $198,590 $106,477
Services 41,178 30,761 80,270 60,599
Royalties, primarily Sumitomo
Eaton Nova Corporation 3,336 1,258 6,713 3,023
-------- -------- -------- --------
151,348 85,929 285,573 170,099
Cost of Revenue 82,948 57,655 166,997 112,385
-------- -------- -------- --------
Gross profit 68,400 28,274 118,576 57,714
Operating expenses
Research & development 15,927 15,927 31,364 32,103
Selling 12,836 11,509 24,435 23,607
General and administrative 11,607 9,099 22,702 19,542
Amortization of intangible
assets 612 365 1,224 730
-------- -------- -------- --------
40,982 36,900 79,725 75,982
Income (loss) from operations 27,418 (8,626) 38,851 (18,268)
Other income (expense)
Equity income of Sumitomo
Eaton Nova Corporation 7,578 1,298 13,147 4,493
Interest income 338 523 634 1,054
Interest expense (1,702) (1,571) (3,374) (3,111)
Other-net (55) (557) (646) (678)
-------- -------- -------- --------
6,159 (307) 9,761 1,758
Income (loss) before income
taxes 33,577 (8,933) 48,612 (16,510)
Income taxes (credit) (894) 69,945 560 68,694
-------- -------- -------- --------
Net income (loss) $ 34,471 $(78,878) $ 48,052 $(85,204)
======== ======== ======== ========
Basic net income (loss) per
share $ 0.35 $ (0.80) $ 0.48 $ (0.87)
Diluted net income (loss) per
share $ 0.33 $ (0.80) $ 0.47 $ (0.87)
Shares used in computing:
Basic net income (loss) per
share 99,286 98,289 99,247 98,284
Diluted net income (loss) per
share 107,763 98,289 107,724 98,284
Note: Income taxes for the three and six months ended June 30, 2003
include a non-cash charge of $69.7 million ($0.70 per diluted
share) to reduce the carrying value of
deferred tax assets to zero.
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