Advanced Energy
Advanced Energy
A global leader in innovative power and control technologies that drive high-growth, plasma thin-film and nontech manufacturing processes.
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For more information, contact:

Richard Beck
Advanced Energy Industries, Inc.
970.407.6204
dick.beck@aei.com
Cathy Kawakami
Advanced Energy Industries, Inc.
970.407.6732
cathy.kawakami@aei.com


Advanced Energy Posts Record Quarterly Revenue and Earnings

Fort Collins, Colorado (July 17, 2000)—Advanced Energy (Nasdaq: AEIS) today reported record financial results for the second quarter and six-month period ended June 30, 2000. Advanced Energy is an industry-leading provider of critical technology solutions for the manufacture of semiconductors, data storage products, and flat panel displays.

For the second quarter, revenues were $80.6 million, up 86 percent from $43.3 million for the second quarter of 1999 and up 15 percent from $70.3 million for the first quarter of 2000. The company's prior quarter and 1999 results have been restated to reflect the second quarter acquisition of Noah Holdings, using the pooling of interests method of accounting.

"We are seeing continued strength in demand from the semiconductor capital equipment sector, which was a contributing factor in the achievement of our sixth consecutive quarter of increasing revenues and earnings," said Doug Schatz, Chairman and Chief Executive Officer. "The company is poised for continued growth as we further integrate our product offering to best address customer needs and capture new market share opportunities."

Net income for the 2000 second quarter grew to $12.0 million, or $0.40 per diluted share, after considering non-recurring charges of $2.3 million associated with the acquisition of Noah Holdings, completed on April 6, 2000. Pro forma net income for the second quarter of 2000, excluding the non-recurring charges associated with the Noah Holdings acquisition, was $14.4 million, or $0.47 per diluted share. This compares to net income of $2.8 million or $0.10 per diluted share for the second quarter of 1999. This also compares favorably with net income of $10.0 million, or $0.33 per diluted share, for the first quarter of 2000.

"Our gross margin for the quarter expanded to 48.8 percent, continuing our trend of cost containment and cost reduction," said Mr. Schatz.

For the first six months of 2000, revenues were $150.8 million compared with $77.2 million for the first six months of 1999. Gross profit for the 2000 six-month period was $73.0 million, or 48.4 percent, an improvement compared with $32.6 million or 42.3 percent for the 1999 period.

Net income for the 2000 six-month period was $22.1 million, or $0.73 per diluted share, compared with $3.3 million, or $0.12 per diluted share, for the six-month period ended June 30, 1999. Pro forma net income for the 2000 six-month period was $24.4 million, or $0.80 per diluted share, and does not include the non-recurring charge of $2.3 million associated with the second quarter acquisition.

The company announced on July 6, 2000 its intent to acquire Engineering Measurements Company (EMCO) in a stock transaction that is anticipated to close during the fourth quarter of 2000 after an EMCO shareholder meeting. EMCO provides flow measurement and control solutions, which are designed to improve yield and reliability in the manufacture of semiconductor devices.

"Our pending acquisition of EMCO, and important strategic partnerships with companies such as Berkeley Process Control and network-based software provider, Symphony Systems, are integral to our vision of providing complete sub-systems and electronic controls for our OEM customers," said Mr. Schatz. "We believe our customers endorse and support our integration strategy, as we work closely with them to deliver value through technical innovation and integration. We anticipate that these strong relationships and expanded product offering will lead to increased market share opportunities and solid execution of our long-term strategy for growth."

The company also announced today that it will be consolidating its Tower Electronics facility, located in Fridley, Minnesota, into the Company's existing facility in Voorhees, New Jersey. The company anticipates one-time charges of less than $1 million related to the consolidation in the third and fourth quarters, and expects the move to be completed during the fourth quarter of this year.

About Advanced Energy

Advanced Energy (AE) is a global leader in the development, marketing, and support of technology solutions that are critical in the manufacture of semiconductors, data storage products, and flat panel displays as well as in applications that involve surface modification and process power control. Original equipment manufacturers (OEMs) and end-users around the world depend on AE products when plasma-based technology plays a central role in their manufacturing process. AE offers a comprehensive line of technology solutions including power conversion and control systems, process monitoring and control tools, ion-beam sources, dynamic temperature control products, and plasma abatement systems. AE technology solutions are sold and supported globally by direct offices, representatives, and distributors. Founded in 1981, AE is a publicly held company traded on Nasdaq under the symbol AEIS. More information can be found on www.advanced-energy.com.

Safe Harbor Statement

Except for any historical information contained herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements, including risk relating to the acquisition and integration of other businesses and companies and the management of our rapid growth. These and other risks and cautionary statements are detailed in Advanced Energy's Securities and Exchange Commission reports, including the Company's Form 10-K and Forms 10-Q. The Company continues to be susceptible to fluctuations in quarterly and annual revenues and operating results and the volatility of the semiconductor and semiconductor capital equipment industries. The Company assumes no obligation to update the information in this release.

                          CONSOLIDATED INCOME STATEMENT
(in thousands except per share data)

Quarter Ended June 30, Six Months Ended June 30,
2000 1999 2000 1999
(unaudited) (unaudited) (unaudited) (unaudited)
Sales $80,586 $43,272 $150,837 $77,205
Cost of sales 41,247 24,326 77,797 44,583
Gross profit 39,339 18,946 73,040 32,622

Operating expenses:
Research and
development 8,100 6,831 15,906 12,696
Sales and marketing 5,049 4,062 10,679 7,430
General and
administrative 5,323 3,548 10,547 6,848
Merger costs 2,333 - 2,333 -

Income from operations 18,534 4,505 33,575 5,648

Other income (expense) 734 31 925 (42)

Net income before
income taxes and
minority interest 19,268 4,536 34,500 5,606

Provision for
income taxes 7,305 1,759 12,515 2,272
Minority interest
in net loss (67) - (84) -

Net income $12,030 $2,777 $22,069 $3,334

Basic earnings
per share $0.41 $0.10 $0.76 $0.12
Diluted earnings
per share $0.40 $0.10 $0.73 $0.12

Basic weighted-average
common shares
outstanding 29,214 27,275 29,114 27,222

Diluted weighted-average
common shares
outstanding 30,443 28,504 30,425 28,433


ADDITIONAL INFORMATION
- Pro forma without
merger costs:

Pro forma net income
without merger-related
costs $14,363 $2,777 $24,402 $3,334

Pro forma basic
earnings per share $0.49 $0.10 $0.84 $0.12
Pro forma fully diluted
earnings per share $0.47 $0.10 $0.80 $0.12

ADDITIONAL INFORMATION
- EBITDA including
merger costs:

Earnings before
interest, taxes,
depreciation and
amortization $21,150 $6,320 $38,251 $8,851

Pretax EBITDA
diluted EPS $0.69 $0.22 $1.26 $0.31
After tax EBITDA
diluted EPS $0.43 $0.15 $0.81 $0.21


CONSOLIDATED BALANCE SHEET
(in thousands)

June 30, December 31,
2000 1999
ASSETS (unaudited) (audited)

Current Assets:
Cash and cash equivalents $17,790 $20,303
Marketable securities - trading 201,221 186,440
Accounts receivable 53,528 44,759
Income tax receivable 149 1,353
Inventories 33,910 26,456
Income tax receivable - -
Other current assets 1,610 1,707
Deferred income tax assets, net 3,668 3,668
Total current assets 311,876 284,686

Property and equipment, net 18,938 17,295
Goodwill and intangibles, net 9,460 9,783
Deferred debt issuance costs 4,090 4,410
Other assets 3,115 2,887
Total assets $347,479 $319,061

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable, trade $15,826 $15,020
Other current liabilities 11,629 11,011
Accrued income taxes payable 1,843 1,266
Current portion of long-term debt 2,292 2,535
Accrued interest payable on
convertible subordinated notes 886 886
Total current liabilities 32,476 30,718

Long-term Liabilities:
Capital leases and notes payable 1,143 1,263
Convertible subordinated notes payable 135,000 135,000
Total long-term liabilities 136,143 136,263

Total liabilities 168,619 166,981

Minority interest 44 128

Stockholders' equity 178,816 151,952
Total liabilities and stockholders' equity $347,479 $319,061


CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)

Six Months Ended June 30,
2000 1999
(unaudited) (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $22,069 $3,334
Depreciation and amortization 4,885 3,625
Accounts receivable (8,769) (15,160)
Inventories (7,454) (2,198)
Accounts payable, trade 771 5,279
Income taxes 1,781 1,602
Other (2,938) 1,189
Net cash provided by (used in)
operating activities 10,345 (2,329)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment 150 -
Marketable securities (10,000) 1,928
Purchase of property and equipment, net (5,011) (3,093)
Net cash used in investing activities (14,861) (1,165)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change from notes payable and
capital lease obligations (363) 1,616
Proceeds from common stock transactions 3,032 1,812
Net cash provided by financing activities 2,669 3,428
EFFECT OF CURRENCY TRANSLATION ON CASH FLOW (666) (860)
DECREASE IN CASH AND CASH EQUIVALENTS (2,513) (926)
CASH AND EQUIVALENTS, beginning of period 20,303 12,324
CASH AND EQUIVALENTS, end of period $17,790 $11,398