Tegal Corporation (Nasdaq:TGAL), a leading designer and
manufacturer of plasma etch and deposition systems used in the
production of integrated circuits and nanotechnology devices, today
announced financial results for the Second Quarter Fiscal Year
2006, which ended September 30, 2005. Senior management will
conduct an investor conference call to discuss these results and
the company's financial outlook in more detail today at 2pm Pacific
Time, Thursday, November 10, 2005. More information about the
conference call is provided below. Second Quarter Highlights --
Revenues increased substantially during the second quarter of
fiscal 2006 to $6.4 million, an increase of 28% from $5.0 million
reported in the second quarter of fiscal 2005, and an increase of
110% from the $3.1 million recorded for the first quarter of fiscal
2006. -- Tegal recorded a net loss for the second quarter of $2.7
million or ($0.04) per share, compared to a net loss of $2.5
million or ($0.05) per share for the same quarter one year ago, and
a net loss of $2.5 million or ($0.05) per share in the first
quarter of Fiscal 2006. -- On a non-GAAP, proforma basis, Tegal was
at cash break-even at an operating level, backing out from the
operating loss of $2.9 million an equal amount of both
non-recurring and non-cash charges for the quarter. -- As a result
of a positive stockholder vote held in September, the Company
completed the second step of its private equity financing, raising
a total of $18.2 million (net of fees and expenses). -- Quarterly
shipments included two re-certified advanced etch systems for the
production of de-coupling capacitors for cell phones and wireless
devices, a re-certified Endeavor PVD system for backside
metallization and a number of both new and recertified 9xx plasma
etch systems for various applications. -- Subsequent to the end of
the quarter, Tegal won an order to provide four new 6540 plasma
etch systems to the Asia-Pacific production facility of a Tier 1
European manufacturer for the full-scale production of de-coupling
capacitors for a new active-passive integrated device component for
cell phones and wireless products. "We are making substantial
progress on our plan to turn this company around by increasing
sales in existing products and markets, by managing our resources
better, and by investing more intelligently in a select number of
growth opportunities for the future," said Thomas Mika, President
& Chief Executive Officer of Tegal Corporation. "With an
increasing backlog, I believe that we can look forward to a more
stable revenue outlook that allows us to preserve our cash while
still making investments in our new products." Financial Results
Revenues for the second quarter of fiscal 2006 were $6.4 million,
an increase of 28% from the $5.0 million reported for the second
quarter of fiscal 2005, and an increase of 110% from the $3.1
million recorded for the first quarter of fiscal 2006. Tegal
reported a net loss for the second quarter of $2.7 million or
($0.04) per share compared to a net loss of $2.5 million or ($0.05)
per share for the same quarter one year ago. Sequentially, the
Company's net loss increased from the prior quarter loss of $2.5
million or ($0.05) per share. Gross profits for the second quarter
of fiscal 2006 were 38% -- the same as reported for the second
quarter one year ago, but improved from the first quarter of fiscal
2006 of 22%. Operating expenses for the second quarter of fiscal
2006 were $5.4 million, an increase from the $4.4 million reported
one year ago and the $3.0 million reported last quarter. This
resulted in operating losses of $2.9 million during the current
quarter. However, the operating expenses for the second quarter
included non-recurring expenses included in G&A expense related
to lease termination and the recently completed financing ($0.8
million), substantial non-cash expenses related to warrants and
stock grants that vested during the quarter ($1.7 million), and
normal non-cash depreciation and amortization expense ($0.4
million). On a non-GAAP, proforma basis, the Company's operating
loss of $41 thousand represents a substantial reduction compared to
the same quarter last year as well as the first quarter of fiscal
2006. "We are reporting non-GAAP proforma results to show investors
that we have made substantial progress toward achieving cash
break-even at an operating level during this quarter -- a stated
goal for this fiscal year," said Christine Hergenrother, Vice
President and Chief Financial Officer of Tegal. "We would like to
achieve break-even at lower revenue levels, but to do so may
require some additional strategic one-time expenses." Cash and
equivalents at the end of the second quarter of fiscal 2006 were
$18.2 million compared to $3.2 million in the first quarter.
Accounts receivable increased by $2.6 million to $5.3 million,
while inventories remained flat. Borrowings were negligible at $46
thousand, down from $83 thousand in the prior quarter. Accounts
payable declined by $0.5 million to $3.1 million. Total shares
outstanding as of November 10, 2005 are 83,951,613. Investor
Conference Call Tegal Corporation will discuss these results and
further details of its second quarter of fiscal 2006 during a
conference call today, November 10, 2005, at 5:00 p.m. EST / 2:00
p.m. PST. The call is open to all interested investors. The call-in
numbers are (866) 203-3206 or (617) 213-8848. For either dial-in
number, investors should reference Tegal or reservation number:
10481480. A digital recording will be made available one hour after
the completion of the conference call, and it will be accessible
through midnight on Thursday, November 17, 2005. To access,
investors should call (888) 286-8010 or (617) 801-6888 and enter
passcode: 67110221. The conference call also will be available
online via the Investor Section of the Company's website at:
www.tegal.com. An online replay of the teleconference, along with a
copy of the Company's earnings release, will also be available on
the Company's website. Safe Harbor Statement Except for historical
information, matters discussed in this news release contain
forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. Forward-looking
statements, which are based on assumptions and describe our future
plans, strategies and expectations, are generally identifiable by
the use of the words "anticipate," "believe," "estimate," "expect,"
"intend," "project" or similar expressions. These forward-looking
statements are subject to risks, uncertainties and assumptions
about the Company including, but not limited to industry
conditions, economic conditions, acceptance of new technologies and
market acceptance of the Company's products and services. All
forward-looking statements attributable to us or persons acting on
our behalf are expressly qualified in their entirety by the
cautionary statements in this paragraph. For a further discussion
of these risks and uncertainties, please refer to the Company's
periodic filings with the Securities and Exchange Commission. About
Tegal Tegal provides process and equipment solutions to leading
edge suppliers of advanced semiconductor and nanotechnology
devices. Incorporating unique, patented etch and deposition
technologies, Tegal's system solutions are backed by over 35 years
of advanced development and over 100 patents. Some examples of
devices enabled by Tegal technology are energy efficient memories
found in portable computers, cellphones, PDAs and RFID
applications; megapixel imaging chips used in digital and cellphone
cameras; power amplifiers for portable handsets and wireless
networking gear; and MEMS devices like accelerometers for
automotive airbags, microfluidic control devices for ink jet
printers; and laboratory-on-a-chip medical test kits. More
information is available on the Internet at: www.tegal.com. -0- *T
TEGAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited) (In thousands) September March 30, 31, 2005 2005
--------- -------- ASSETS Current assets: Cash and cash equivalents
$18,201 $7,093 Accounts receivable, net of allowances for sales
returns and doubtful accounts of $92 and $533 at September 30, and
March 31, 2005 respectively 5,332 1,897 Inventories 6,050 5,140
Prepaid expenses and other current assets 1,099 641 ---------
-------- Total current assets 30,682 14,771 Property and equipment,
net 2,965 3,342 Intangible assets, net 1,633 1,796 Other assets 166
183 --------- -------- Total assets $35,446 $20,092 =========
======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Notes payable and bank lines of credit $46 $159 Accounts payable
3,107 3,607 Accrued product warranty 315 252 Deferred revenue 434
122 Accrued expenses and other current liabilities 2,867 2,575
--------- -------- Total current liabilities 6,769 6,715 Long-term
portion of capital lease obligations 7 13 Other long term
obligations 38 64 --------- -------- Total long term liabilities 45
77 --------- -------- Total liabilities 6,814 6,792 Commitments and
contingencies (Note 6) 6,295 -- --------- -------- Total
liabilities and contingent liabilities 13,109 6,792 Stockholders'
equity: Preferred stock; $0.01 par value; 5,000,000 shares
authorized; none issued and outstanding -- -- Common stock; $0.01
par value; 200,000,000 shares authorized; 83,951,613 and 52,843,520
shares issued and outstanding at September 30, 2005 and March 31,
2005 respectively 840 528 Restricted Stock Units 1,280 Deferred
Compensation (276) Additional paid-in capital 111,671 99,156
Accumulated other comprehensive income (loss) 284 (110) Accumulated
deficit (91,462) (86,274) --------- -------- Total stockholders'
equity 22,337 13,300 --------- -------- Total liabilities and
stockholders' equity $35,446 $20,092 ========= ======== TEGAL
CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) (In thousands, except per share data) Three
Months Six Months Ended Ended September 30, September 30,
----------------- ----------------- 2005 2004 2005 2004 --------
-------- -------- -------- Revenue $6,406 $4,988 $9,458 $8,429 Cost
of sales 3,963 3,087 6,340 5,728 -------- -------- --------
-------- Gross profit (loss) 2,443 1,901 3,118 2,701 --------
-------- -------- -------- Operating expenses: Research and
development 1,211 1,539 2,387 2,665 Sales and marketing 757 876
1,401 1,526 General and administrative 3,398 1,992 4,638 3,593 In
Process Research and Development - - - 1,653 -------- --------
-------- -------- Total operating expenses 5,366 4,407 8,426 9,437
-------- -------- -------- -------- Operating loss (2,923) (2,506)
(5,308) (6,736) Other income (expense), net 242 5 120 (2,090)
-------- -------- -------- -------- Net loss $(2,681) $(2,501)
$(5,188) $(8,826) ======== ======== ======== ======== Net loss per
share, basic and diluted $(0.04) $(0.05) $(0.09) $(0.20) ========
======== ======== ======== Shares used in per share computations:
Basic 62,729 45,804 55,297 43,808 Diluted 62,729 45,804 55,297
43,808 Reconciliation from GAAP to non-GAAP Measures of Performance
Three Months Six Months Ended Ended September 30, September 30,
--------------- --------------- 2005 2004 2005 2004 ------- -------
------- ------- Reported operating loss (2,923) (2,506) (5,308)
(6,736) Expenses related to lease termination and financing
(reported in G&A expense) 777 - 777 - Non-cash warrants and
restricted stock units 1,712 135 1,796 174 Non-cash depreciation
and amortization 393 374 678 711 ------- ------- ------- -------
Non-GAAP Operating Loss (41) (1,997) (2,057) (5,851) =======
======= ======= ======= *T
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