SpeedFam-IPEC Revises Third Fiscal Quarter 2001 Outlook
Company Announces Cost-Cutting Plan and Impact of Early Adoption of SAB 101
CHANDLER, Ariz.--(BUSINESS WIRE)--March 1, 2001--SpeedFam-IPEC, Inc. (Nasdaq:SFAM - news) today announced that it is transitioning from the company's historical accounting method to the method required by the Securities and Exchange Commission Staff Accounting Bulletin (SAB) 101. Under the company's historical accounting method, now called pro-forma, the company expects revenue of approximately $55 million for the third fiscal quarter of 2001, ending March 3, 2001. Based upon this revised pro-forma revenue estimate, the company anticipates reporting a net loss of approximately $14 to $16 million, or $0.47 to $0.53 per share, excluding one-time charges and the impact of the early adoption of SAB 101. Net orders for the quarter are expected to total approximately $20 million. Dramatic changes in the capital spending plans of semiconductor manufacturers led to the postponement or cancellation of a number of existing orders, resulting in lower than anticipated pro-forma revenue. The company believes current order revisions are reflective of the general condition of the semiconductor sector.
SpeedFam-IPEC expects to record one-time charges of approximately $35 to $45 million. These charges will include severance costs associated with an 18-percent reduction in workforce during the quarter as part of an aggressive cost-cutting program. These one-time charges will also include the write-down of certain assets, primarily inventory, resulting from cancelled and postponed orders for the company's existing 200-mm products. The company anticipates expending approximately $8 to $12 million of cash over the next two quarters as a result of the reduction in force and asset write-down. The estimated pro-forma net loss for the third fiscal quarter of 2001, excluding the impact of the early adoption of SAB 101 and including the one-time charges, will be approximately $49 to $61 million, or a loss of $1.63 to $2.03 per share.
``Responding to the industry-wide downturn, we took swift and significant actions to substantially reduce operating expenses, while continuing to fund efforts in the areas necessary to leverage our strengths for the next industry upturn,'' commented Richard Faubert, president and chief executive officer of SpeedFam-IPEC. ``Aggressive cost-cutting measures include an 18-percent reduction in our workforce, a 10-percent salary cutback for executives, the deferment of management raises until business conditions improve, and a decrease in overall discretionary spending. At the same time, we continue to invest in the strategic placement of our revolutionary chemical mechanical planarization (CMP) system Momentum(TM), which is showing superior process results in areas that we believe will drive the next industry upturn, such as copper, 300-mm, and geometries of 0.13-micron and below.''
The company also announced that it has elected early adoption of SAB 101 which sets forth guidelines for the timing of revenue recognition. Under SAB 101, revenue for the quarter is expected to be in the range of $57 to $59 million, and the net loss is projected to be between $11 and $13 million, or $0.37 to $0.43 per share, exclusive of the one-time charges discussed above. Revenue under SAB 101 for the nine months ended March 3, 2001, is anticipated to range from $210 to $212 million, resulting in a net loss of $26 to $28 million, or $0.87 to $0.94 per share, excluding the one-time charges and the cumulative effect of the change in accounting principle. This change in accounting principle results in a cumulative effect of approximately $36 million at June 4, 2000, representing the gross margin on equipment shipments that could not yet be recognized as revenue under SAB 101.
The net loss for the third fiscal quarter, including the one-time charges and the impact of SAB 101, is estimated to be in the range of $46 to $58 million, or $1.53 to $1.93 per share. The net loss for the nine months ending March 3, 2001, including the one-time charges, the cumulative effect adjustment, and the impact of SAB 101, is estimated to be in the range of $119 to $131 million, or $3.97 to $4.37 per share.
Based upon the current business outlook, SAB 101 revenue is expected to be in the range of $47 to $52 million in the fourth fiscal quarter of 2001, with a net loss of approximately $15 to $18 million, or $0.50 to $0.60 per share. Without the impact of SAB 101, revenue is projected to be between $48 and $53 million for the fourth fiscal quarter of 2001, with a net loss of approximately $16 to $19 million, or $0.53 to $0.63 per share.
SAB 101 revenue for fiscal 2001 is anticipated to be in the range of $257 to $264 million, resulting in a net loss of $41 to $46 million, or $1.37 to $1.54 per share, excluding the one-time charges and the cumulative effect adjustment. The net loss for the fiscal year, including the effect of SAB 101 and the one-time charges, but excluding the cumulative effect adjustment, is expected to be in the range of $98 to $113 million, or $3.27 to $3.77 per share. Without the impact of SAB 101, fiscal 2001 revenue is estimated to range from $261 to $266 million, resulting in a net loss of $41 to $46 million, or $1.37 to $1.54 per share, excluding the one-time charges and the cumulative effect adjustment. Cash and short-term investments are estimated to be between $70 and $75 million at the end of the third fiscal quarter, and will not be impacted by SAB 101.
SpeedFam-IPEC, Inc.
SpeedFam-IPEC, Inc. is a pioneer and innovator in the manufacture of chemical mechanical planarization (CMP) systems used in the fabrication of next-generation semiconductor devices, with the world's largest installed base. The company also markets and distributes parts used in CMP and precision surface processing. With headquarters in Chandler, Ariz., and offices throughout the world, SpeedFam-IPEC is publicly traded on Nasdaq under the symbol SFAM. The company's web site is www.sfamipec.com.
This news release contains forward-looking statements concerning our financial results and Momentum that are subject to known and unknown risks and uncertainties. Actual results could differ. Customers may cancel or delay orders without significant penalty. Savings from our cost-cutting measures may be less than anticipated. We may incur unexpected additional costs as a result of our cost-cutting measures. We may suffer additional impairment of assets due to the continuing economic downturn. Although initial customer reaction to Momentum has been positive, this response may not translate into sales of Momentum on the scale or time frame we anticipate. For instance, market conditions in the semiconductor industry may cause potential purchasers of Momentum to delay investment in new equipment, which could reduce demand for Momentum. In addition, the rollout of Momentum may be slowed due to manufacturing problems, unforeseen technical problems with the Momentum product itself or changes in the CMP marketplace that differ from our expectations. See SpeedFam-IPEC's filings with the SEC, including the Annual Report on Form 10-K filed on August 10, 2000, and the Quarterly Report on Form 10-Q filed on January 3, 2001, for additional risks affecting the company. |
