Applied Films Corporation Reports Earnings for the Third Fiscal Quarter 2002
LONGMONT, Colo., April 18 /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 third quarter of fiscal 2002, ended March 30, 2002. In addition to generally accepted accounting principles (GAAP) earnings and GAAP earnings per share, Applied Films has also included earnings before intangible amortization (EBIA) and earnings before intangible amortization (EBIA) per share, which are earnings excluding the effect of amortization of intangible assets related to the acquisition of the Large Area Coatings division of Unaxis (LAC). GAAP earnings include the effect of amortization of intangible assets.
Third Quarter Fiscal 2002 Results
Net revenues for the third quarter of fiscal 2002 were $32.2 million versus $45.0 million for the third quarter of fiscal 2001, representing a decrease of 28%. In the third quarter of fiscal 2002, 93% of our revenue was derived from thin film deposition equipment compared to 88% for the third quarter of fiscal 2001. Coated glass revenues were 60% lower in the third quarter of fiscal 2002 compared to the third quarter of fiscal 2001 due to weakness in the cellular phone market.
The net loss before intangible amortization (EBIA) were within our revised guidance for the third quarter of fiscal 2002 at $(614,000) or $(0.06) per fully diluted common share, compared to earnings before Intangible Amortization (EBIA) of $1.5 million or $0.22 per fully diluted common share for third quarter of fiscal 2001.
The net loss on a GAAP basis for the third quarter of fiscal 2002 was $(1.2) million, or $(0.11) per fully diluted common share, compared to a net loss of $(6.8) million or $(1.03) per fully diluted common share, for the third quarter of fiscal 2001. The net income reported under GAAP, for the third quarter of fiscal years 2001 and 2002, includes $839,000 (pre-tax) related to the amortization of intangibles related to the LAC acquisition. Due to the LAC acquisition, net income for the three and nine months ended March 31, 2001 also includes an $11.5 million non-recurring pre-tax charge for the write off of research and development costs and $1.6 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 March 30, 2002 was $56.0 million, compared to $93.7 million at the end of the third quarter of fiscal 2001 and $75.2 million at the end of the second quarter of fiscal 2002. We expect 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.
Thomas Edman, President and Chief Executive Officer said, ``This was a challenging quarter for us as we saw an order delay reduce revenue recognized from new bookings for our architectural glass equipment. This order is expected to move forward in our fourth fiscal quarter. In addition, an existing order for display equipment was pushed out because of contractual progress payment funding issues from one of our Taiwanese customers. We continue to be optimistic about the prospects for next generation investments in the flat panel display industry going forward.''
Business Outlook
Factory utilization rates in the TFT flat panel display market hovered at over 90% in most factories during the quarter as the desktop monitor market continued to grow for flat panel displays. At this time the two major Korean TFT flat panel manufacturers have begun expanding their fifth generation TFT production facilities and five major Taiwanese TFT flat panel manufacturers have announced expansions which will begin production in 2003. We believe these indications represent a positive trend for investment in capital equipment for this market. Demand for large screen plasma display televisions has also continued to grow into its existing capacity. We expect the next investment cycle in the plasma display market to begin in late 2002 or early 2003. Our coated glass business continued to show very weak revenue performance in the quarter though cellular phone demand began to show some signs of rebounding late in the quarter.
Our web coater business for packaging, capacitor and touch panel markets registered strong performance during the quarter and we expect that trend to continue as geographic expansion drives that market. The Low-E architectural and automotive glass coating equipment business performed well on a revenue basis, but showed bookings weakness. We continue to emphasize development of an improved coating process for our BestPET equipment which is targeted at significantly enhancing the barrier properties of filled plastic (PET) soda packaging, and anticipate that this process will be commercially proven at production rates during the fourth fiscal quarter of 2003.
The following statements are based on our current expectations for the next quarter of fiscal 2002. These statements are forward-looking and subject to the qualifying safe harbor statement. Actual results may differ materially:
Fiscal 2002 - For The Fourth Quarter - Revised Guidance
-- Net Revenues: We expect net revenue for the fourth quarter of fiscal
2002 to be between $30-$33 million, with approximately 95% of our
revenues recognized from the equipment segment of the business.
-- GAAP Earnings: We expect a GAAP loss per share range of approximately
$(0.07) - $(0.12) per fully diluted share for the fourth quarter of
fiscal 2002.
-- Loss Before Intangible Amortization (EBIA): We expect a cash loss per
share range of approximately $(0.02) - $(0.06) per fully diluted share
for the fourth quarter of fiscal 2002.
Third Fiscal Quarter 2002 Conference Call
Applied Films Corporation will conduct a conference call and webcast at 9:00 a.m. MDT (11:00 a.m. EDT) on Thursday, April 18, 2002 to review third 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 financial results for the quarter.
The public is invited to participate in the conference call by dialing 800-544-8465 or 785-832-0301 (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 May 2, 2002. To listen to the replay, dial 800-283-8217 or 402-220-0868 (International).
About Applied Films Corporation
Applied Films Corporation 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 570 employees world wide 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)
(unaudited)
Three Months Ended Nine Months Ended
March 30, March 31, March 30, March 31,
2002 2001 2002 2001
Net Revenues $32,166 $44,981 $112,680 $72,187
Cost of Goods Sold 25,275 35,293 85,684 59,503
Gross Profit 6,891 9,688 26,996 12,684
Operating Expenses:
Selling, General and
Administrative 5,942 6,354 19,253 9,580
Research and Development 2,343 2,632 6,400 3,529
Amortization of Other
Intangible Assets(1) 839 13,969(1) 2,517 13,969(1)
Loss from Operations (2,233) (13,267) (1,174) (14,394)
Other (Expense) Income:
Interest Income (Expense) 212 (90) 195 1,111
Other Income, Net 7 108 602 447
Equity Earnings of Joint
Venture 150 1,041 413 3,973
Income (Loss) Before Income
Taxes (1,864) (12,208) 36 (8,863)
Income Tax Benefit 618 5,399 25 5,705
Net Income (Loss) (1,246) (6,809) 61 (3,158)
Preferred Stock Dividends -- 171 315 171
Net Loss Applicable to
Common Stockholders $(1,246) $(6,980) $(254) $(3,329)
Net Loss Per Share:
Basic $(0.11) $(1.03) $(0.03) $(0.53)
Diluted $(0.11) $(1.03) $(0.03) $(0.53)
Weighted Average Common
Shares Outstanding:
Basic 10,998 6,752 9,163 6,282
Diluted 10,998 6,752 9,163 6,282
Earnings (Loss) Before
Intangible Amortization:
Loss from Operations $(2,233) $(13,267) $(1,174) $(14,394)
Amortization of Other
Intangible Assets(1) 839 13,969(1) 2,517 13,969(1)
Interest Income (Expense) 212 (90) 195 1,111
Other Income, Net 7 108 602 447
Equity Earnings of Joint
Venture 150 1,041 413 3,973
Earnings (Loss) Before
Intangible Amortization
and Taxes (1,025) 1,761 2,553 5,106
Tax Benefit (Provision) 411 (252) (749) (393)
Earnings (Loss) Before
Intangible Amortization $(614) $1,509 $1,804 $4,713
Earnings (Loss) Before
Intangible Amortization
Per Common Share
Basic $(0.06) $0.22 $0.20 $0.75
Diluted $(0.06) $0.22 $0.20 $0.75
Weighted Average Common
Shares Outstanding:
Basic 10,998 6,752 9,163 6,282
Diluted 10,998 6,752 9,163 6,282
(1) The prior year amounts also include an $11.5 million non-recurring
charge for the write off of research and development costs and
$1.6 million for the amortization of goodwill. Effective July 1,
2001, the Company discontinued amortizing goodwill.
APPLIED FILMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
(unaudited)
March 30, June 30,
2002 2001
ASSETS
Current Assets:
Cash and cash equivalents $72,315 $26,236
Accounts and trade notes receivable, net of
allowance of $921 and $1,142, respectively 10,013 12,267
Revenue in excess of billings 37,807 29,717
Inventories, net of allowance of $801 and
$613, respectively 14,610 16,599
Prepaid expenses and other 1,280 836
Deferred tax asset, net 989 989
Total current assets 137,014 86,644
Property, plant and equipment, net of
accumulated depreciation of $9,854 and
$9,998, respectively 7,511 7,746
Goodwill and other intangible assets, net of
accumulated amortization of $7,554 and
$5,036, respectively 61,417 58,097
Investment in Joint Venture 10,029 9,852
Deferred tax asset, net 6,780 6,780
Other assets 321 307
Total Assets $223,072 $169,426
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $14,184 $13,063
Accrued expenses 26,727 39,841
Accrued pension benefit obligation 7,783 6,876
Billings in excess of revenue 8,709 8,716
Current portion of:
Deferred revenue 279 279
Deferred gain 56 56
Deferred tax liability 2,128 2,129
Total current liabilities 59,866 70,960
Long-term debt -- 6,483
Deferred revenue, net of current portion 1,973 2,202
Deferred gain, net of current portion 547 589
Total Liabilities 62,386 80,234
STOCKHOLDERS' EQUITY:
Series A Convertible Preferred Stock;
no par value, 1,000,000 shares authorized;
0 and 1,000 shares outstanding at March 30,
2002 and June 30, 2001, respectively -- 8,571
Common Stock, no par value, 40,000,000
shares authorized, 11,018,586 and
6,832,701 shares issued and outstanding
at March 30, 2002 and June 30, 2001,
respectively 159,504 83,207
Warrants and stock options 734 876
Other cumulative comprehensive loss (2,856) (7,020)
Retained earnings 3,304 3,558
Total Stockholders' Equity 160,686 89,192
Total Liabilities & Stockholders' Equity $223,072 $169,426
SOURCE: Applied Films Corporation |
