Advanced Energy Announces Agreement to Sell Aera Mass Flow Controller and Related Product Lines to Hitachi Metals, Ltd.
July 21 2010 - 8:00PM
Business Wire
Advanced Energy Industries, Inc. (Nasdaq GM: AEIS) (the
“Company” or “Advanced Energy”) today announced that the Company
has entered into an agreement to sell its Aera® mass flow control
and related product lines and real property in Japan to Hitachi
Metals, Ltd., part of Hitachi Metals Group, for $44 million in
cash, subject to adjustment based on the inventory balance at
closing. Subject to the satisfaction of customary closing
conditions, the Company anticipates the closing of this transaction
within the third quarter of 2010.
"The sale of our Aera mass flow controller product line
represents a significant step in our strategy to focus our global
resources on power conversion,” said Dr. Hans Betz, Chief Executive
Officer of Advanced Energy. “Our core technology portfolio in power
conversion for the semiconductor, flat panel display, solar panel
and other thin film markets as well as grid-tied PV inverters is
the foundation of our long-term growth strategy. These markets
provide tremendous growth opportunities as we continue to develop
technologies and scale our business to address them.”
At closing, the Company will transfer substantially all of the
assets associated with the Aera product lines to Hitachi Metals,
Ltd., which will assume certain related liabilities as well as
global sales for the Aera product lines. During a transition
period, the Company has agreed to provide manufacturing support and
certain other services to enable Hitachi Metals, Ltd. to complete
the transition without interruption in business flow. Both
companies will work to maintain the highest quality service and
support throughout the transition for customers using the Aera flow
products. It is also contemplated that Hitachi Metals, Ltd. will
leverage the Company’s worldwide service infrastructure and have
the Company become an authorized service provider for Hitachi
Metals, Ltd. to service products in all countries other than
Japan.
“Hitachi Metals, Ltd. is a highly capable materials
manufacturer, and the Aera product lines are complementary to their
current business. We are working together to ensure a seamless
transition for our mass flow control customers worldwide,”
continued Dr. Betz.
“We are very pleased to add the high-quality Aera product line
to our product portfolio,” said Mr. Hiroyuki Fujii, Executive
President of Hitachi Metals, Ltd. “This acquisition increases our
industry presence in these strategic markets. Advanced Energy has
built a great reputation in the semiconductor, flat panel display
and solar panel market, and it is our honor to acquire these
products and carry forward the strong heritage of the Aera product
line.”
The Aera product lines had sales of $11.9 million in the first
quarter of 2010 and $15.1 million in the second quarter of 2010. As
a result of the sale, the Company's assets are classified as held
for sale on the balance sheet as of June 30, 2010, and results from
continuing operations will be reduced by the revenue and costs
associated with the mass flow controller business and will be
included in the discontinued operations line on the income
statement. Further financial detail regarding the amounts related
to the mass flow controller business are included in the financial
tables attached.
GCA Savvian served as the financial advisor and provided a
fairness opinion to Advanced Energy related to the transaction.
This press release should be read in conjunction with our
earnings release dated July 21, 2010. As previously announced,
management will host a conference call tomorrow, Thursday July 22,
2010, at 8:30 a.m. Eastern Daylight Time to discuss Advanced
Energy's financial results, including the transaction described
herein. Domestic callers may access this conference call by dialing
(888) 713-4717. International callers may access the call by
dialing (816) 650-2836. Participants will need to provide a
conference pass code 86106130. For a replay of this teleconference,
please call (800) 642-1687 or (706) 645-9291, and enter the pass
code 86106130. The replay will be available through 12:00 a.m.
Eastern Daylight Time, July 24, 2010. A webcast will also be
available on the Investor Relations web page at
http://ir.advanced-energy.com.
Forward-Looking Language
Statements in this press release concerning the proposed
transaction and future business, operating and financial condition
of the Company and Hitachi Metals, Ltd. including expectations
regarding revenues, gross margins, and operating expenses for
future periods are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. 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: satisfaction of the closing conditions
under the definitive agreement and the successful completion of
closing, the amount of the final purchase price, our ability to
transition the Aera product line post closing; Hitachi Metals,
Ltd.’s ability to successfully integrate the Aera product line post
closing and our expectations surrounding the benefits of the
transaction; as well as the effects of global macroeconomic
conditions upon demand for our products, the volatility and
cyclicality of the industries the Company serves, particularly the
semiconductor industry, and unanticipated changes to management's
reserves or allowances. These and other risks are described in
Advanced Energy's Form 10-K, Forms 10-Q and other reports and
statements filed with the Securities and Exchange Commission. These
reports and statements are available on the SEC's website at
www.sec.gov. Copies may also be obtained from Advanced Energy's
website at www.advanced-energy.com or by contacting Advanced
Energy's investor relations at 970-407-6555. Forward-looking
statements are made and based on information available to the
Company on the date of this press release. The Company assumes no
obligation to update the information in this press release.
About Advanced Energy
Advanced Energy is a global leader in innovative power and
control technologies for high-growth, thin-film manufacturing and
solar-power generation. Advanced Energy is headquartered in Fort
Collins, Colorado, with dedicated support and service locations
around the world. For more information, go to
www.advanced-energy.com.
About Hitachi Metals Group
The Hitachi Metals Group is an integral supplier of highly
functional component materials that draw on its competitive core
technologies. With products that are recognized as leading global
brands, the Group operates in the automobile, electronics and
industrial infrastructure-related markets, guided by the
overarching theme of "global environmental protection."
Please visit www.hitachi-metals.co.jp for more information.
FLOW BUSINESS BY QUARTER (in thousands)
Three Months Ended March 31, 2010 June 30,
2010 Total sales $ 11,865 $ 15,084 Cost of sales 7,964 9,754
Gross profit 3,901 5,330 OPERATING EXPENSES:
R&D 447 444 Selling, general and administrative 1,054 1,159
Intangible amortization 122 124 Total Operating Expenses 1,623
1,727
Operating Income 2,278 3,603
Other Income (Expense) - -
Pre-tax income 2,278
3,603 Provision for income taxes 911 1,442
Net Income $ 1,367 $ 2,161 Diluted
Earnings per Share $ 0.03 $ 0.05
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