Earnings: (Or lack of them)
MEMC REPORTS 5% SEQUENTIAL QUARTERLY INCREASE IN NET SALES
Continued Improvement in Product Volumes
For more information, call:
Janine Orf
Director, Investor Relations
(314) 279-5443
E-mail address: invest@memc.com
St. Peters, MO, July 29, 1999 – MEMC Electronic Materials, Inc. (NYSE: WFR) today released financial results for the second quarter ended June 30, 1999. MEMC reported that net sales increased 5% sequentially to $168.0 million for the 1999 second quarter. In the 1999 first quarter, net sales totaled $159.8 million.
For the 1999 second quarter, the Company reported a net loss of $39.3 million, or $0.58 per share on approximately 67.3 million weighted average shares outstanding. This compares to a net loss in the 1999 first quarter of $50.3 million, or $1.19 per share on approximately 42.2 million weighted average shares outstanding. Second quarter 1999 weighted average shares reflect the issuance of 15.4 million shares of common stock to VEBA Zweite Verwaltungsgesellschaft mbH in a private placement on March 22, 1999 and 13.6 million shares of common stock on April 16, 1999 in connection with the Company's rights offering.
MEMC experienced a double-digit percentage increase in product volume from the 1999 first quarter. In particular, 150mm and 200mm volumes increased significantly during the second quarter. Advanced large diameter and epitaxial products as a percent of total volume remained relatively flat compared to the 1999 first quarter. While volumes increased in the current quarter, the Company experienced continuing downward pressure on prices, although the rate of price decline decreased as compared to the 1999 first quarter.
In the second quarter of 1999, gross margin was a negative 1.2%, compared to negative 8.6% in the 1999 first quarter. The improved gross margin is primarily attributable to significantly higher product volumes, as well as the cost reduction strategies initiated in 1998.
"As anticipated, MEMC's product volumes continued to improve in the second quarter of 1999 compared to the 1999 first quarter, led by significantly higher product volumes in Asia Pacific, Japan, and the U.S. In Europe, product volumes remained flat sequentially," commented Klaus von Hörde, MEMC Chief Executive Officer. "MEMC continues to realize benefits from the cost reduction and other strategies begun last year.
"Looking forward, we remain cautiously optimistic that product volumes will continue to grow. We believe that our operating results will show continued improvement as a result of the higher volumes and the benefits of the cost reduction programs in place, and, assuming some price stabilization, we expect to achieve a positive gross margin during the third quarter of 1999."
Interest expense decreased $1.8 million in the 1999 second quarter as compared to the 1999 first quarter, reflecting the application of the proceeds from the private placement in March and the rights offering in April to reduce outstanding borrowings.
The Company's effective tax rate was 31% for the 1999 second quarter.
Equity in loss of joint ventures was $3.9 million in the second quarter of 1999, compared to a loss of $4.6 million in the 1999 first quarter. The improvement in results of the joint ventures is due to higher product volumes, partially offset by a $1.4 million decrease in currency gains in the 1999 second quarter versus the 1999 first quarter. At their current volumes, both joint ventures are producing positive gross margins.
MEMC is a leading global producer of silicon wafers. The silicon wafer is the fundamental building block of semiconductors, which, in turn, are found in virtually all electronics applications, including computers, telecommunications equipment, automobiles, consumer electronics products, industrial automation and control systems, and analytical and defense systems. Headquartered in St. Peters, MO, MEMC operates manufacturing facilities directly or through joint ventures in Italy, Japan, Malaysia, South Korea, Taiwan, and the United States.
The matters discussed in this news release regarding future product volumes and operating results are forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include such factors as demand for the Company's silicon wafers, demand for semiconductors generally, the ability of the Company to realize continuing benefits from the cost reduction programs, the market prices of silicon wafers, general economic conditions in the Asia Pacific region, Japan, and Europe, competitors' actions, and other risks described in the Company's filings with the Securities and Exchange Commission, including the Company's 1998 Form 10-K. These forward-looking statements represent the Company's judgment as of the date of this release. The Company disclaims, however, any intent or obligation to update these forward-looking statements.
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