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To: StanX Long who wrote (13319)	2/12/2004 10:09:05 PM
From: StanX Long	Read Replies (1) \| Respond to of 95743

Tegal Revs Drop, Scores Capital Expansion Deal Online Staff -- Electronic News, 2/12/2004 Tegal Corp. reported today that an unexpected delay in revenue recognition from one of its European customers had an impact on its December quarter earnings results. But the company still had good news to report: it has secured a $25 million structured secondary stock offering facility for capital expansion. The Petaluma, Calif.-based provider of plasma etch and deposition tools posted revenues for the quarter, its fiscal Q3 2004, of $3.3 million, a decrease of 11 percent year over year and down slightly from the prior quarter's $3.2 million. Tegal subsequently posted a net loss of $6.7 million, or 29 cents per share, compared to a net loss of $3.3 million, or 20 cents per share, in the year-ago period. Tegal's loss this quarter included non-cash charges for: an accelerated interest expense of $2 million related to convertible debt financing; a $2.2 million one-time expensing of in-process research and development related to its recent acquisition of the assets of Simplus Systems; and a $1 million increase of excess inventory reserves. Excluding these non-cash charges, Tegal's pro-forma, non-GAAP loss was $1.4 million, which was about the same as its pro-forma earnings for the first two quarters of this fiscal year, the company said. Tegal's cash at the end of its fiscal Q3 stood at $5.1 million, a substantial improvement from $900,000 at the end of March, 2003, because of convertible debt financings completed in June and September of 2003, the company reported. "Except for an unexpected delay in revenue recognition for systems shipped to one of our key European accounts, our quarter went exactly as planned," Michael Parodi, chairman, president and CEO, said in a statement. "The signing of our $25 million secondary facility and our recent acquisition of Simplus Systems Corporation's nanotechnology-related assets, provide important building blocks for future growth." The company also announced today the signing of a new $25 million structured secondary offering facility with Kingsbridge Capital designed to provide growth capital for expansion in semiconductor capital equipment, nanotechnology and related markets, Tegal said. That growth will come primarily through acquisitions, according to the company. Kingsbridge Capital specializes in the financing of small to medium sized technology-based companies. "We are excited by Tegal's position in the emerging new markets for semiconductor and nanotechnology applications," Adam Gurney, Kingsbridge managing director, said in a statement. The arrangement will allow Tegal to sell equity at its sole discretion over a 24-month period on a when-and-if-needed basis, and Kingsbridge is required under the terms of the arrangement to purchase Tegal's stock, subject to certain conditions contained in the agreement. "The financing agreement with Kingsbridge represents an important source of financial strength for Tegal as we execute our business plan over the next 12 to 24 months," Thomas Mika, Tegal VP and CFO, said in a statement. "The facility is a cost-effective way to access additional capital while retaining control over the timing and price of the common stock issued. We will now be able to seriously consider expansion opportunities that were not previously available to us." The 24-month agreement enables Tegal to obtain up to $25 million by issuing shares of its common stock to Kingsbridge via a series of periodic drawdowns of funds following the effectiveness of the registration statement. The price of the common shares issued under the agreement will be based on a discount to the volume-weighted average market price during a specified drawdown period, Tegal said. Kingsbridge is prohibited under the agreement from holding a short position in Tegal's common stock. The company has no obligation to draw down all or any portion of the commitment. In connection with the agreement, Tegal issued warrants to Kingsbridge to purchase 300,000 shares of the company's common stock at an exercise price of $4.11 per share.