CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
Three Months Ended
March 31, December 31,
2005 2004 2004
Sales $86,140 $104,487 $88,399
Cost of sales 57,065 66,073 73,836
Gross profit 29,075 38,414 14,563
Operating expenses:
Research and development 11,015 13,410 12,746
Selling, general and administrative 12,901 13,804 16,246
Amortization of intangible assets 547 1,170 538
Restructuring charges 1,262 220 3,670
Impairment of intangible assets -- -- 3,326
Total operating expenses 25,725 28,604 36,526
Income (loss) from operations 3,350 9,810 (21,963)
Other expense, net (2,087) (1,155) (1,690)
Income (loss) before income taxes 1,263 8,655 (23,653)
(Provision) benefit for income taxes (529) (1,731) 648
Net income (loss) $734 $6,924 $(23,005)
Basic earnings (loss) per share $0.02 $0.21 $(0.70)
Diluted earnings (loss) per share $0.02 $0.21 $(0.70)
Basic weighted-average
common shares outstanding 32,755 32,581 32,698
Diluted weighted-average
common shares outstanding 32,878 33,593 32,698
The following condensed consolidated statements of operations excluding
certain (charges) benefits are presented to aid in understanding the
operating results of Advanced Energy Industries, Inc. These condensed
consolidated statements of operations are not in accordance with
generally accepted accounting principals (GAAP) in the United States of
America and may be different from similar measures used by other
companies. The statement below presents adjusted net income that is GAAP
net income, adjusted to exclude certain charges and benefits, and
adjusted gross profit that is GAAP gross profit, adjusted to exclude
inventory write-downs for excess and obsolete inventory. Reconciliations
from these non-GAAP financial measures to the most directly comparable
measures reported under GAAP are included at the bottom of this
statement. The inclusion of the charges and benefits herein does not
necessarily indicate that such events will not recur in the future.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
EXCLUDING CERTAIN (CHARGES) BENEFITS
(in thousands, except per share data)
Three Months Ended
March 31, December 31,
2005 2004
Sales $86,140 $88,399
Cost of sales 57,065 64,797
Gross profit (Non-GAAP) 29,075 23,602
Operating expenses:
Research and development 11,015 12,746
Selling, general and administrative 12,901 12,494
Amortization of intangible assets 547 538
Restructuring charges -- --
Demonstration equipment charge -- --
Impairment of intangible assets -- --
Total operating expenses 24,463 25,778
Income (loss) from operations (Non-GAAP) 4,612 (2,176)
Other expense, net (2,087) (1,690)
Income (loss) before income taxes 2,525 (3,866)
Provision for income taxes (Non-GAAP) (1,057) (654)
Net income (loss) excluding certain
(charges) benefits (Non-GAAP) $1,468 $(4,520)
Basic earnings (loss) per share (Non-GAAP) $0.04 $(0.14)
Diluted earnings (loss) per share (Non-GAAP) $0.04 $(0.14)
A reconciliation of our gross profit and net income (loss) excluding
certain (charges) benefits to the most directly comparable measures under
generally accepted accounting principals in the United States of America
is presented below:
Gross profit excluding certain (charges)
benefits (Non-GAAP) $29,075 $23,602
Inventory write-down (1) -- (9,039)
Gross profit (GAAP) $29,075 $14,563
Net income (loss) excluding certain (charges)
benefits (Non-GAAP) $1,468 $(4,520)
Inventory write-down (1) -- (9,039)
Employee severance and termination costs (2) (1,262) (3,670)
Change in estimated life of demonstration
and evaluation equipment (3) -- (3,752)
Impairment of intangible assets (4) -- (3,326)
Total (charges) benefits (1,262) (19,787)
Adjustment to provision for income taxes 528 1,302
Net income (loss) (GAAP) $734 $(23,005)
Basic earnings (loss) per share (GAAP) $0.02 $(0.70)
Diluted earnings (loss) per share (GAAP) $0.02 $(0.70)
Basic weighted-average common shares outstanding 32,755 32,698
Diluted weighted-average common shares outstanding 32,878 32,698
(1) The inventory write-down in the fourth quarter of 2004 was primarily
due to the product lifecycle management program, discontinuance of
certain products in select markets, the product mix shift from 200mm
wafers to 300mm wafers, and the expected continued slowdown in the
semiconductor industry.
(2) The fourth quarter 2004 and first quarter 2005 employee severance and
termination costs consist primarily of costs associated with the
involuntary severance of approximately 225 employees at the Fort
Collins facility. The need to reduce headcount in Fort Collins
resulted primarily from the transfer of a substantial portion of
manufacturing operations to Shenzhen, China.
(3) During the fourth quarter of 2004, as a result of the continuing
process of obtaining and analyzing historical data and the Company's
fiscal year 2005 operating plan for use of current and future
demonstration equipment, the Company made a change in the estimated
useful life of the demonstration equipment from two years to zero
years. The Company's policy since this change is to record sales and
marketing expense for the demonstration equipment as it is placed
into service at our customers' or potential customers' location.
(4) The fourth quarter 2004 intangible asset impairment charge related to
assets acquired in conjunction with the acquisitions of Aera and
Dressler and were considered for impairment in conjunction with the
Company's restructuring activities and 2005 operating plan.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
March 31, December 31,
2005 2004
ASSETS
Current Assets:
Cash and cash equivalents $51,366 $38,404
Marketable securities, available for sale 70,016 69,578
Accounts receivable, net 69,852 72,053
Inventories, net 66,168 73,224
Other current assets 3,546 6,140
Total current assets 260,948 259,399
Property and equipment, net 43,802 44,746
Deposits and other 6,789 6,468
Goodwill and intangibles, net 76,209 80,308
Demonstration and customer service equipment,
net 3,359 2,968
Deferred debt issuance costs, net 1,811 2,086
Total assets $392,918 $395,975
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $24,368 $17,683
Other accrued expenses 24,754 28,615
Current portion of capital leases and
senior borrowings 3,067 3,726
Accrued interest payable on convertible
subordinated notes 1,810 2,460
Total current liabilities 53,999 52,484
Long-term Liabilities:
Capital leases and senior borrowings 3,960 4,679
Deferred income tax liabilities, net 1,656 3,709
Convertible subordinated notes payable 187,718 187,718
Other long-term liabilities 2,250 2,407
Total long-term liabilities 195,584 198,513
Total liabilities 249,583 250,997
Stockholders' equity 143,335 144,978
Total liabilities and stockholders' equity $392,918 $395,975
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Three Months Ended March 31,
2005 2004
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $18,140 $(4,344)
NET CASH (USED IN) PROVIDED
BY INVESTING ACTIVITIES (3,355) 8,003
NET CASH USED IN FINANCING ACTIVITIES (1,051) (1,588)
EFFECT OF CURRENCY TRANSLATION ON CASH (772) 403
INCREASE IN CASH AND CASH EQUIVALENTS 12,962 2,474
CASH AND EQUIVALENTS, beginning of period 38,404 41,522
CASH AND EQUIVALENTS, end of period $51,366 $43,996