AEIS Advanced Energy Industries Inc

FORT COLLINS, Colo., Feb. 16 /PRNewswire-FirstCall/ -- Advanced Energy Industries, Inc. (NASDAQ:AEIS) today reported financial results for the fourth quarter and year ended December 31, 2005. (Logo: http://www.newscom.com/cgi-bin/prnh/20030825/AEISLOGO) For the 2005 fourth quarter, sales were $80.4 million, up 2.1 percent compared to $78.8 million in the third quarter of 2005, and down 5.2 percent compared to $84.8 million in the fourth quarter of 2004. Gross profit was $30.2 million, or 37.6 percent of sales for the fourth quarter of 2005, compared to $28.9 million, or 36.7 percent of sales in the third quarter of 2005, and $13.3 million, or 15.7 percent of sales in the fourth quarter of 2004. Income from continuing operations was $5.0 million, or $0.11 per diluted share, in the fourth quarter of 2005, compared to a loss from continuing operations of $4.2 million, or $0.11 per share, in the third quarter of 2005, and a loss from continuing operations of $23.3 million, or $0.71 per share, in the fourth quarter of 2004. Fourth quarter 2005 income from continuing operations reflects a tax rate of 21 percent, which is lower than the Company's anticipated tax rate of 40 percent due to the mix of foreign and domestic income in the respective taxing jurisdictions, allowing the utilization of the net operating loss carryforwards. During the fourth quarter 2005, the Company sold its IKOR technology assets, resulting in income from discontinued operations of $5.0 million, or $0.11 per diluted share. Net income from discontinued operations in the third quarter of 2005 was $312,000, or $0.01 per diluted share, and $340,000, or $0.01 per diluted share in the fourth quarter of 2004. Fourth quarter 2005 net income was $10.0 million, or $0.22 per diluted share, compared to a net loss of $3.9 million, or $0.10 per share in the third quarter of 2005, and a net loss of $23.0 million, or $0.70 per share in the fourth quarter of 2004. The third quarter 2005 net loss included a $3.0 million litigation settlement, $2.1 million related to the early retirement of the convertible debt, and a non-cash charge of $1.1 million related to the write-off of deferred debt issuance costs. Included in the fourth quarter 2004 net loss were $19.8 million in pre-tax charges primarily attributable to increased excess and obsolete inventory reserves, a change in an accounting estimate related to demonstration equipment, employee severance and termination costs, and intangible asset impairments. Dr. Hans Betz, president and chief executive officer of Advanced Energy, said, "We continue to improve our gross margin even on relatively flat sequential sales volumes," said Dr. Betz. "Incremental operating margin above our $66 million break even level was approximately 44 percent, and we expect additional improvements throughout the year as we continue to benefit from the increasing capability of our worldwide manufacturing operations." Sales for the 2005 fiscal year were $325.5 million, a 14.5 percent decrease compared to net sales of $380.5 million in fiscal year 2004. Net income for the year was $12.8 million, or $0.34 per diluted share, compared to net loss of $12.7 million, or $0.39 per share in fiscal year 2004. Net income from continuing operations was $3.6 million, or $0.10 per diluted share, in fiscal year 2005, compared to a loss from continuing operations of $14.7 million, or $0.45 per share, in fiscal year 2004. "We are currently experiencing increased demand for our innovative portfolio of solutions that enable advanced processing," said Dr. Betz. "During the fourth quarter, we made progress in further penetrating emerging opportunities in the solar market with both our DC and RF power platforms, and in flat panel display with our RF technology for a new etch application. We are well-positioned to apply our technology leadership and worldwide manufacturing excellence to a diverse set of high-growth, high-profitability opportunities." Dr. Betz continued, "Based on improving order trends, we currently expect first quarter 2006 sales to be $88 million to $91 million. We anticipate earnings per share in the $0.17 to $0.19 range, including estimated stock-based compensation expense of $600,000, or $0.01 per diluted share after tax, due to our adoption of SFAS 123(R) in the first quarter of 2006." Fourth Quarter and Year-End 2005 Conference Call Management will host a conference call today, Thursday, February 16, 2006 at 5:00 pm Eastern time to discuss Advanced Energy's financial results. You may access this conference call by dialing 888-713-4717. International callers may access the call by dialing 706-679-7720. For a replay of this teleconference, please call 706-645-9291, and enter the pass code 4199312. The replay will be available through Thursday, February 23, 2006. There will also be a webcast available at http://www.advanced-energy.com/, and on the investor relations page at http://ir.advanced-energy.com/. About Advanced Energy Advanced Energy is a global leader in the development and support of technologies critical to high-technology, high-growth manufacturing processes used in the production of semiconductors, flat panel displays, data storage products, solar cells, architectural glass, and other advanced product applications. Leveraging a diverse product portfolio and technology leadership, Advanced Energy creates solutions that maximize process impact, improve productivity and lower the cost of ownership for its customers. This portfolio includes a comprehensive line of technology solutions in power, flow, thermal management, and plasma and ion beam sources for original equipment manufacturers (OEMs) and end-users around the world. Advanced Energy operates in regional centers in North America, Asia and Europe and offers global sales and support through direct offices, representatives and distributors. Founded in 1981, Advanced Energy is a publicly held company traded on the Nasdaq National Market under the symbol AEIS. For more information, please visit our corporate website: http://www.advanced-energy.com/. Safe Harbor Statement This press release contains certain forward-looking statements, including the company's expectations with respect to Advanced Energy's financial results for the first quarter of 2006. Forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to: the volatility and cyclicality of the semiconductor, semiconductor capital equipment and flat panel display industries, Advanced Energy's ongoing ability to develop new products in a highly competitive industry characterized by increasingly rapid technological changes, and other risks described in Advanced Energy's Form 10-K, Forms 10-Q and other reports and statements, as filed with the Securities and Exchange Commission. These reports and statements are available on the SEC's website at http://www.sec.gov/ . Copies may also be obtained from Advanced Energy's website at http://www.advanced-energy.com/ or by contacting Advanced Energy's investor relations at 970-221-4670. The company assumes no obligation to update the information in this press release. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share data) Three Months Ended Years Ended December 31, September 30, December 31, 2005 2004 2005 2005 2004 Sales $80,387 $84,811 $78,756 $325,482 $380,537 Cost of sales 50,196 71,536 49,834 208,401 265,911 Gross profit 30,191 13,275 28,922 117,081 114,626 Operating expenses: Research and development 9,635 11,987 9,610 39,720 49,004 Selling, general and administrative 13,671 12,305 13,421 53,631 54,174 Amortization of intangible assets 481 538 504 2,050 3,925 Restructuring charges 166 3,670 210 2,706 3,912 Litigation settlement -- -- 3,000 3,000 -- Demonstration equipment charge -- 3,752 -- -- 3,752 Impairment of intangible assets -- 3,326 -- -- 3,326 Total operating expenses 23,953 35,578 26,745 101,107 118,093 Income (loss) from operations 6,238 (22,303) 2,177 15,974 (3,467) Other income (expense), net 123 (1,690) (4,796) (7,479) (7,256) Income (loss) from continuing operations before income taxes 6,361 (23,993) (2,619) 8,495 (10,723) Provision (benefit) for income taxes (1,330) 648 (1,584) (4,873) (3,947) Income (loss) from continuing operations 5,031 (23,345) (4,203) 3,622 (14,670) Gain on sale of discontinued assets 5,210 -- -- 7,855 -- Results of discontinued operations (216) 340 312 1,340 1,923 Provision for income taxes -- -- -- -- -- Income from discontinued operations 4,994 340 312 9,195 1,923 Net income (loss) $10,025 $(23,005) $(3,891) $12,817 $(12,747) Net income (loss) per basic share Income (loss) from continuing operations $0.11 $(0.71) $(0.11) $0.10 $(0.45) Income from discontinued operations $0.11 $0.01 $0.01 $0.25 $0.06 Basic earnings (loss) per share $0.23 $(0.70) $(0.10) $0.35 $(0.39) Net income (loss) per diluted share Income (loss) from continuing operations $0.11 $(0.71) $(0.11) $0.10 $(0.45) Income from discontinued operations $0.11 $0.01 $0.01 $0.25 $0.06 Diluted earnings (loss) per share $0.22 $(0.70) $(0.10) $0.34 $(0.39) Basic weighted-average common shares outstanding 44,416 32,698 38,366 37,084 32,649 Diluted weighted-average common shares outstanding 44,902 32,698 38,366 37,434 32,649 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands) December 31, December 31, 2005 2004 ASSETS Current assets: Cash and cash equivalents $52,874 $38,404 Marketable securities 6,811 69,578 Accounts receivable, net 68,992 72,053 Inventories, net 56,199 73,224 Other current assets 6,773 6,140 Total current assets 191,649 259,399 Property and equipment, net 39,294 44,746 Deposits and other 3,808 6,468 Goodwill and intangibles, net 69,843 80,308 Customer service equipment, net 2,407 2,968 Deferred debt issuance costs, net -- 2,086 Deferred income tax assets, net 3,116 -- Total assets $310,117 $395,975 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $22,028 $17,683 Other accrued expenses 23,977 28,615 Current portion of capital leases and senior borrowings 1,216 3,726 Accrued interest payable on convertible subordinated notes -- 2,460 Total current liabilities 47,221 52,484 Long-term liabilities: Capital leases and senior borrowings 2,974 4,679 Deferred income tax liabilities, net -- 3,709 Convertible subordinated notes payable -- 187,718 Other long-term liabilities 2,492 2,407 Total long-term liabilities 5,466 198,513 Total liabilities 52,687 250,997 Stockholders' equity 257,430 144,978 Total liabilities and stockholders' equity $310,117 $395,975 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) Years Ended December 31, 2005 2004 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $36,051 $(11,378) NET CASH PROVIDED BY INVESTING ACTIVITIES 67,032 12,329 NET CASH USED IN FINANCING ACTIVITIES (85,972) (5,191) EFFECT OF CURRENCY TRANSLATION ON CASH (2,641) 1,122 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 14,470 (3,118) CASH AND EQUIVALENTS, beginning of period 38,404 41,522 CASH AND EQUIVALENTS, end of period $52,874 $38,404 http://www.newscom.com/cgi-bin/prnh/20030825/AEISLOGO http://photoarchive.ap.org/ DATASOURCE: Advanced Energy Industries, Inc. CONTACT: Cathy Kawakami, Director of Corporate and Investor Relations of Advanced Energy Industries, Inc., +1-970-407-6732, Web site: http://www.advanced-energy.com/ http://ir.advanced-energy.com/

Copyright