SpeedFam-IPEC Announces First-Quarter Fiscal 2001 Results
Company Establishes Direct Presence in Far East
CHANDLER, Ariz.--(BUSINESS WIRE)--Sept. 26, 2000--SpeedFam-IPEC, Inc. (Nasdaq: SFAM - news), a leading global supplier of high-throughput chemical mechanical planarization (CMP) systems for the semiconductor industry, with the world's largest installed base, today announced its financial results for the first quarter of fiscal 2001, ended September 2, 2000. Total revenue in the first quarter was $74.7 million, up 48 percent from $50.3 million in the same quarter of the prior year. Before one-time charges, the net loss was $7.6 million, or $0.25 per share, for the first quarter of 2001, compared with a net loss of $11.0 million, or $0.37 per share, in the same quarter of the prior year. During the first quarter, the company recorded a one-time charge of $21.6 million, resulting from an agreement with Obara Corporation to transfer full ownership of the CMP sales and service operations of the Far East Joint Venture to SpeedFam-IPEC, Inc. The one-time charge relates primarily to the loss on the disposal of the investment in the Far East Joint Venture, and asset impairment charges and inventory write-downs associated with the company's exit from the manufacturing of wafer and disk polishing equipment, as required by the agreement with Obara Corporation. Also included in the $21.6-million one-time charge for the first quarter are charges to research and development of $2.4 million, primarily for CMP equipment that was designed by the Far East Joint Venture but will not be used in ongoing research and development programs. As a result, the net loss for the first quarter was $29.2 million, or $0.98 per share. The joint venture transaction and related one-time charges will have no material net effect on the company's cash balances. Consequently, despite the loss from operations during the quarter, the company increased its cash balances to $117.5 million at the end of the quarter, from $100.3 million at the end of the prior quarter, primarily through changes in working capital.
``We continue to gain confidence in the long-term competitive advantages of our new Momentum(TM) universal CMP system,'' said Richard J. Faubert, president and chief executive officer of SpeedFam-IPEC. ``Greater than anticipated demand for Momentum's advanced process capabilities had a significant impact on our reported results for the quarter, as two key customers requested time-intensive modifications to incorporate some of its features into another one of our CMP tools, the 776. These modifications resulted in a delay in delivery of a number of tools in the first quarter. Since its introduction at SEMICON West in July, Momentum has demonstrated an approximate two-fold improvement in total oxide uniformity as compared with current systems, as well as leading-edge copper capabilities, which minimize dishing, erosion and oxide thinning. Based on initial customer feedback, we firmly believe Momentum's technological advantages will provide substantial opportunities for market share gains in the future. We continue to see strong demand for CMP tools and expect to enjoy revenue growth of approximately 40 percent in fiscal year 2001 over the previous year, while growing market share on a year-over-year basis.''
``Along with strong demand for Momentum features, our agreement with Obara Corporation had a considerable effect on the quarter and represents an important step forward,'' said Faubert. ``We now will be able to exercise direct control over our CMP operations in the Far East with the goal of increasing market share in this vital region.'' The 30-year-old Far East Joint Venture between SpeedFam-IPEC and Obara Corporation was officially dissolved on August 30, 2000. Under terms of the agreement with Obara Corporation, ownership of the CMP operations of the Far East Joint Venture was transferred to SpeedFam-IPEC, and specific personnel involved in CMP efforts became SpeedFam-IPEC employees. The CMP markets served by the previous Far East Joint Venture represent a major portion of the CMP market and account for more than half of the company's CMP revenue. Obara Corporation will continue the non-CMP activities of the Joint Venture, which include the manufacturing of wafer and disk polishing products. The company will continue to act as a direct distributor in the United States and Europe for the wafer and disk polishing products manufactured by the former Joint Venture. Makoto Kouzuma, executive vice president of the Far East Joint Venture, has retired from his post after a distinguished tenure, and will continue to serve as vice-chairman of the company's board of directors.
About SpeedFam-IPEC, Inc.
SpeedFam-IPEC, Inc. is a leading global supplier of chemical mechanical planarization (CMP) systems used in the fabrication of next-generation semiconductor devices, with the world's largest installed base. The company is also a leading manufacturer of high-throughput precision surface processing systems for the general industrial applications markets. The company also markets and distributes parts and consumables (polishing liquids and pads) used in CMP and precision surface processing.
This news release contains forward-looking statements regarding our future revenues, customer interest in Momentum and the impact of our restructuring of the Far East Joint Venture. Actual results may vary. Recognition of revenues and related losses depend in part on the timing of shipping of CMP tools, which is uncertain. The CMP market may not grow. In particular, the growth of the CMP market in Asia is uncertain. We may not be able to maintain or increase our share of the CMP market due to many factors. We may encounter problems introducing Momentum, such as not having adequate manufacturing capacity, technological problems and lack of customer acceptance. We may not be able to achieve the high levels of customer satisfaction to obtain repeat business from existing customers. We may not be successful in our efforts to develop new accounts. The markets for metal and oxide applications requiring line widths of 0.18 micron and below, and for copper and 300mm process technologies, may not develop, or we may not be successful in developing these technologies, delivering to market products based on these technologies or generating revenue from these products. Restructuring of the Far East Joint Venture may not produce the desired results. See SpeedFam-IPEC's filings with the SEC, including the Annual Report on Form 10-K filed on August 10, 2000, for additional risks affecting the company.
SPEEDFAM-IPEC, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars and shares in thousands, except per share data)
First Quarter Ended
September 2, August 31,
2000 1999
---- ----
Net sales $ 74,707 $ 50,327
Cost of sales 54,988 35,160
Gross margin 19,719 15,167
Operating expenses:
Research and development 16,557 12,890
Selling, general and
administrative 16,453 12,260
Restructuring charges 5,123 --
Total operating expenses 38,133 25,150
Operating loss (18,414) (9,983)
Other income (expense), net (121) (88)
Loss from consolidated
companies before income taxes (18,535) (10,071)
Income taxes -- --
Loss from consolidated
companies (18,535) (10,071)
Loss on disposal of
investment in affiliate (10,763) --
Equity in net earnings
(loss) of affiliates 110 (892)
Net loss $(29,188) $(10,963)
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Net loss per share
- basic and diluted $ (0.98) $ (0.37)
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Weighted average number
of shares - basic and
diluted 29,818 29,404
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SPEEDFAM-IPEC, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 2, June 3,
2000 2000
---- ----
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $117,523 $100,296
Trade accounts receivable, net 106,053 129,102
Inventories 100,572 81,192
Other current assets 7,223 3,301
Total current assets 331,371 313,891
Investment in affiliate -- 19,810
Property, plant and equipment, net 84,862 87,913
Other assets 11,136 13,466
Total assets $427,369 $435,080
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,288 $ 1,077
Accounts payable and due to
affiliate 54,288 51,354
Other current liabilities 38,233 23,264
Total current liabilities 93,809 75,695
Long-term debt 115,449 115,162
Other liabilities 7,138 7,253
Total liabilities 216,396 198,110
Stockholders' equity 210,973 236,970
Total liabilities and
stockholders' equity $427,369 $435,080
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