Applied Films Corporation Reports Earnings for the Fourth Fiscal Quarter 2002
LONGMONT, Colo., July 25 /PRNewswire-FirstCall/ -- Applied Films Corporation (Nasdaq: AFCO - News), a leading supplier of coated glass and thin film deposition equipment to the flat panel display (FPD), architectural, automotive and solar glass, and the consumer products packaging and electronics industries, today reported its results for the fourth quarter of fiscal 2002, ended June 29, 2002.
Fourth Quarter Fiscal 2002 Results
Net revenues for the fourth quarter of fiscal 2002 were $31.0 million versus $40.5 million for the fourth quarter of fiscal 2001, representing a decrease of 23%. In the fourth quarter of fiscal 2002, 89% of our revenue was derived from thin film deposition equipment compared to 87% for the fourth quarter of fiscal 2001. Coated glass revenues were 30% lower in the fourth quarter of fiscal 2002 compared to the fourth quarter of fiscal 2001.
The net loss for the fourth quarter of fiscal 2002 was $1.1 million, or $(0.10) per fully diluted common share, compared to a net loss of $1.2 million or $(0.21) per fully diluted common share for the fourth quarter of fiscal 2001. The net loss for the fourth quarter of fiscal years 2001 and 2002 includes $839,000 (pre-tax) for the amortization of intangibles related to the Large Area Coatings Division of Unaxis (LAC) acquisition, and for the three months ended June 30, 2001, the net loss also includes $1.7 million for the amortization of goodwill. The Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets," on July 1, 2001 and upon adoption, discontinued the amortization of goodwill.
Equipment backlog for Applied Films as of June 29, 2002 was $41.1 million, compared to $99.0 million at the end of the fourth quarter of fiscal 2001 and $56.0 million at the end of the third quarter of fiscal 2002. During the last quarter we removed from backlog, an order for a display coater from a Taiwanese customer. We expect revenue from this backlog will be recognized over the next 6 to 12 months. We do not report a backlog figure for our coated glass business due to the just-in-time nature of the sales process.
"Revenue and earnings for the quarter came within our guidance, despite the bookings challenges caused primarily by the delay of an order for a large architectural glass coater," said Thomas Edman, Applied Films President and Chief Executive Officer. "We received this order in our first fiscal quarter of 2003 and expect to begin revenue recognition in our second fiscal quarter. I was also pleased to see continued strong performance in our web coater group during the quarter. Our other divisions faced greater challenges including our Longmont and joint venture coated glass operations which experienced continued demand weakness, particularly in the cellular phone display market, during the quarter."
"We have continued to respond to the present economic environment by implementing discretionary spending reductions globally and managing our cost structure while continuing to invest in new product development," said Edman.
Business Outlook
Demand remains strong and factory utilization rates in the Thin Film Transistor (TFT) flat panel display market are above 90%. The flat panel desktop monitor market continued to grow and several flat panel display manufacturers are beginning to discuss plans for production of Liquid Crystal Display (LCD) televisions. At this time the two major Korean TFT flat panel manufacturers have begun expanding their fifth generation TFT production facilities and are beginning to discuss plans for sixth generation fabrication investments. Five major Taiwanese TFT flat panel manufacturers have announced plans for fourth and fifth generation fabrication expansions, which will begin production in 2003 and 2004. We believe these indications continue to represent a positive trend for investment in capital equipment for this market. The outlook for coated glass shows signs of stability but we expect flat revenue performance in the next several quarters, as cellular phone demand remains weak.
Demand for web coaters used in packaging, capacitor and touch panel applications remains strong. We expect this trend to continue as new packaging requirements drive geographic expansion in that market. Growth in the Low-Emissivity architectural and automotive glass coating equipment business continues to be driven by automotive demand for better cabin efficiency. Automotive glass suppliers use Low-E glass to reduce air conditioning load thereby reducing emissions.
Our BESTPET(TM) process equipment for the coating of thin films on plastic bottles to extend shelf life is now running commercially in several bottling plants and is delivering acceptable barrier films for our customers as they roll out their plastic bottles in new 250ml plastic packages.
The following statements are based on our current expectations for the first quarter of fiscal 2003. These statements are forward-looking and subject to the qualifying safe harbor statement. Actual results may differ materially:
Fiscal 2003 - for the First Fiscal Quarter
-- Net Revenues: We expect net revenue for the first quarter of fiscal
2003 to be between $22-$25 million.
-- Earnings Per Share: We expect a loss per share range of approximately
$(0.08) - $(0.13) per fully diluted share for the first quarter of
fiscal 2003.
-- We expect fully diluted shares outstanding to be approximately
11.4 million for the quarter.
Fourth Fiscal Quarter 2002 Conference Call
Applied Films Corporation will conduct a conference call and webcast at 3:00 p.m. MDT (5:00 p.m. EDT) on Thursday, July 25, 2002 to review fourth quarter fiscal year 2002 financial results. During the conference call and webcast, Thomas Edman, President and Chief Executive Officer, and Lawrence Firestone, Chief Financial Officer, will present the operating results for the quarter.
The public is invited to participate in the conference call by dialing 800-233-2795 or 785-832-1077 (International) at least 5-10 minutes prior to the start time (Conference ID: FILM) or via webcast at www.appliedfilms.com , and click on the "Investor Relations" button and then "Meetings and Presentations". A replay of the recorded conference call will be available until August 8, 2002. To listen to the replay, dial 877-693-4280 or 402-220-1601 (International).
Upcoming Events
Applied Films Corporation will be presenting at the United States Display Consortium (USDC) Conference on August 5th in Boston, MA, and the Adams, Harkness & Hill conference on August 8th, also in Boston, MA. The company will also present at the AeA Classic Conference on November 5th in San Diego, CA.
About Applied Films Corporation
Applied Films Corporation is a leading provider of thin film deposition equipment to the flat panel display, the architectural, automotive and solar glass, and the consumer products packaging and electronics industries. We have also developed a barrier coating solution technology for the plastic beverage bottle industry. Our deposition systems are used to deposit thin films that enhance the characteristics of a base substrate, such as glass, plastic, paper or foil. These thin films provide conductive, electronic, reflective, filter, barrier, and other properties that are critical elements of our customers' products. We also produce coated glass both directly and through a joint venture. Founded in 1976, the Company currently has approximately 550 employees worldwide with its headquarters in Longmont, Colorado, and operations in Alzenau, Germany; Brussels, Belgium; Hong Kong and Shanghai, China; Seoul, Korea; Tokyo and Osaka, Japan; and Hsinchu, Taiwan. For more information, please visit Applied Films' web site at appliedfilms.com .
Safe Harbor Statement
This press release contains forward-looking statements that involve substantial risks and uncertainties. Typically, these statements contain words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will" and "would" or similar words. You should read statements that contain these words carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial position or state other "forward-looking" information. You are cautioned that forward-looking statements, including statements about our intent, belief or current expectations regarding recognition of backlog, cell phone and TFT investment cycles and market conditions, plasma television investment cycles and market penetration, demand for flat panel displays future revenues and earnings, are not guaranties of future performance. Actual results may differ materially from such expectations. There may be events in the future that we are not able to predict or control. Such risks and uncertainties include change in the demand for coating equipment and coated glass, the effect of changing worldwide political and economic conditions (including those related to the September 11, 2001, terrorist attacks and related events) on capital expenditures and production levels, including those in Europe and Asia, the effect of overall market conditions and market acceptance risks. Our future results may also be affected by our ability to successfully manage and integrate the acquired LAC business. Other risks include those associated with dependence on suppliers, the impact of competitive products and pricing, technological and product development risks and other risk factors. As a result, our operating results may fluctuate, especially when measured on a quarterly basis. The forward-looking statements included in this release are made only as of the date of this release and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances. For further information, refer to our Securities and Exchange Commission filings, including our Registration Statements, Forms 10-K and Forms 10-Q.
APPLIED FILMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Twelve Months Ended
June 29, June 30, June 29, June 30,
2002 2001 2002 2001
(unaudited)
Net revenues $31,038 $40,528 $143,718 $112,715
Cost of goods sold 25,840 30,518 111,524 90,021
Gross profit 5,198 10,010 32,194 22,694
Operating expenses:
Selling, general and
administrative 4,848 6,446 24,101 16,027
Research and development 3,001 2,955 9,401 6,484
Amortization of other
intangible assets(1) 839 2,568 3,356 16,536
Loss from operations (3,490) (1,959) (4,664) (16,353)
Other (expense) income:
Interest income (expense) 506 (78) 701 1,034
Other income, net 1,647 358 2,249 805
Equity earnings of joint
venture 52 448 465 4,421
Loss before income taxes (1,285) (1,231) (1,249) (10,093)
Income tax (expense) benefit 202 (2) 227 5,760
Net loss (1,083) (1,233) (1,022) (4,333)
Preferred stock dividends -- (196) (315) (367)
Net loss applicable to common
stockholders $(1,083) $(1,429) $(1,337) $(4,700)
Net loss per common share:
Basic $(0.10) $(0.21) $(0.14) $(0.73)
Diluted $(0.10) $(0.21) $(0.14) $(0.73)
Weighted average common shares
outstanding:
Basic 11,022 6,809 9,628 6,414
Diluted 11,022 6,809 9,628 6,414
(1) The twelve months ended June 30, 2001 includes an $11.5 million
non-recurring charge for the write off of research and development
costs. Prior year amounts also include amortization of goodwill of
$1.7 million and $3.4 million for the three and twelve months ended
June 30, 2001, respectively.Effective July 1, 2001, the Company
discontinued amortizing goodwill.
APPLIED FILMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
June 29, 2002 June 30, 2001
ASSETS
Current Assets:
Cash and cash equivalents $39,105 $26,236
Marketable securities 43,544 --
Accounts and trade notes receivable,
net of allowance of $997 and
$1,142, respectively 9,160 12,267
Revenue in excess of billings 27,246 29,717
Inventories, net of allowance of
$8,668 and $7,708 respectively 10,101 16,599
Prepaid expenses and other 1,845 836
Deferred tax asset, net -- 989
Total current assets 131,001 86,644
Property, plant and equipment, net of
accumulated depreciation of $11,009
and $9,998, respectively 7,640 7,746
Goodwill and intangible assets, net of
accumulated amortization of $8,392 and
$5,036, respectively 55,408 58,097
Investment in Joint Venture 10,004 9,852
Deferred tax asset, net 12,742 6,780
Other assets 373 307
Total Assets $217,168 $169,426
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $9,662 $13,063
Accrued expenses 27,112 39,841
Billings in excess of revenue 8,213 8,716
Current portion of deferred gross profit,
deferred gain and lease obligation 414 335
Deferred tax liability 5,758 2,129
Total current liabilities 51,159 64,084
Long-term portion of:
Debt -- 6,483
Deferred gross profit, deferred gain
and lease obligation 2,427 2,791
Accrued pension benefit obligation 9,012 6,876
Total Liabilities 62,598 80,234
STOCKHOLDERS' EQUITY:
Series A Convertible Preferred Stock;
no par value, 1,000,000 shares
authorized; 0 and 1,000 shares
outstanding at June 29, 2002 and
June 30, 2001, respectively -- 8,571
Common Stock, no par value, 40,000,000
shares authorized, 11,027,310 and
6,832,701 shares issued and outstanding
at June 29, 2002 and June 30, 2001,
respectively 159,610 83,207
Warrants and stock options 734 876
Other cumulative comprehensive loss (7,995) (7,020)
Retained earnings 2,221 3,558
Total Stockholders' Equity 154,570 89,192
Total Liabilities & Stockholders' Equity $217,168 $169,426
SOURCE: Applied Films Corporation |
