SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 27, 2003
Axcelis Technologies, Inc.
(Exact name of registrant as specified in charter)
| Delaware |
000-30941 |
34-1818596 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 55 Cherry Hill Drive, Beverly, Massachusetts |
01915 | |
| (Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (978) 787-4000
(Former name or former address, if changed since last report)
Item 12. Disclosure of Results of Operations and Financial Condition.
On October 27, 2003, Axcelis Technologies, Inc. (the "Company") issued a press release regarding its
financial results for the quarter ended September 30, 2003. The Company's press release is attached
as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.
The information in this Current Report on Form 8-K and the Exhibit attached hereto shall not be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise
subject to the liabilities of that section, nor shall it be deemed incorporated by refernce in any filing
under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in
such filing.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
Date: October 27, 2003 |
Axcelis Technologies, Inc. | |||||||
| By: |
/S/ STEPHEN G. BASSETT | |||||||
| Stephen G. Bassett Chief Financial Officer | ||||||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 |
Press release dated October 27, 2003 |
| Company Contact: | Investor Contact: | Agency Contact: |
| Maureen Hart | Mark Namaroff | Stacy Grisinger |
| Axcelis Technologies, Inc. | Axcelis Technologies, Inc. | Axcelis Technologies, Inc. |
| Tel: (978) 787-4266 | Tel: (978) 787-4000 | Tel:(617) 638-0022 |
| Fax: (978) 787-4275 | Fax: (978) 787-4212 | Fax: (617) 638-0033 |
| maureen.hart@axcelis.com | investor.relations@axcelis.com | grisingers@loomisgroup.com |
RESULTS FOR THE THIRD QUARTER 2003
BEVERLY, Mass.--(BUSINESS WIRE)--October 27, 2003--Axcelis Technologies, Inc. (NASDAQ: ACLS) today announced financial results for its third quarter ended September 30, 2003 with emphasis on the following:
1. Bookings during the third quarter were up 29%, with projected strong fourth quarter order activity signaling growth for Axcelis into 2004.
2. The company achieved its business objectives during the quarter including major design wins and a significant reduction in annual operating costs.
3. The company revised its revenue recognition policy to comply with recently issued EITF 00-21 which became effective for the company on July 1, 2003.
Mary Puma, president and Chief Executive Officer stated, "We believe that the continued improvement in our worldwide shipments in the third quarter is an indicator of strengthening industry dynamics. This, combined with the 29% increase in orders we experienced this quarter, gives us reason to be optimistic that 2004 will be a year of growth for Axcelis. Worldwide orders in the third quarter are the highest we have experienced since becoming a public company in 2000. In past cycles, the ion implantation market has always outperformed the overall equipment market in the upturns, leading us to be very positive about the opportunities that lie ahead."
Puma continued, "We believe we have turned the corner from a business perspective as well. We continued to take action during the third quarter to lower our break-even level and we believe that the business is now correctly sized for profitability through the cycle. We expect to break-even and be cash flow positive in the fourth quarter based on our revenue outlook and existing cost structure. We also look forward to the significant financial leverage we will realize as our business continues to improve."
In the third quarter, Axcelis modified its Staff Accounting Bulletin (SAB) 101 compliant revenue recognition policy (as described in the Company's Form 10-K) to comply with recently issued Emerging Issues Task Force Issue No. 00-21, which became effective for revenue transactions occurring after June 30, 2003. EITF 00-21 requires Axcelis to defer revenue for certain deliverables in system sales transactions beginning in this quarter.
Under the company's revised revenue recognition policy, worldwide revenues for the third quarter, including revenues of the Company's 50% owned joint venture in Japan, Sumitomo Eaton Nova Corporation ("SEN"), were $78.6 million and GAAP net revenue (excluding SEN revenues) for the third quarter was $59.0 million. Net loss for the quarter, including the effect of the change in revenue recognition policy of $10.3 million ($0.10 per share), was $31.9 million ($0.32 per share). Results of operations for the third quarter of 2003 also include restructuring costs of $4.7 million ($0.05 per share) for severance and other benefits associated with the Company's reduction in force actions taken during the quarter.
In light of the change in the Company's revenue recognition policy taking effect in the third quarter of 2003, Axcelis' management believes that it is useful to provide investors with its revenues and results of operations for the third quarter of 2003 as determined on a non-GAAP pro-forma basis upon shipment, without giving effect to revenue deferral prescribed by EITF 00-21 to provide a comparison to amounts reported in prior periods.
Axcelis believes that the information regarding the aggregate quarterly shipments of SEN, a 50% owned unconsolidated subsidiary of Axcelis, combined with Axcelis' own sales for the quarter, is useful to investors. SEN's ion implant products are covered by a license from Axcelis and therefore the combined revenue of the two companies indicates the full market penetration of Axcelis' technology.
| Q3 2003 | Q2 2003 | Q3 2002 | ||||||||||||||
| Revised Policy | Prior Policy | As Reported | As Reported | |||||||||||||
|
Worldwide Revenue (including SEN)
|
$ | 78.6 M | $ | 125.2 M | $ | 123.3 M | $ | 135.6 M | ||||||||
|
Net Revenue (not including SEN)
|
$ | 59.0 M | $ | 63.2 M | $ | 87.4 M | $ | 93.1 M | ||||||||
Pro-forma net loss (excluding the effect of the change in accounting) for the third quarter was $21.6 million ($0.22 per share) compared to a net loss of $78.9 million ($0.80 per share) for the preceding quarter and net income of $0.2 million for the third quarter of 2002. Results of operations for the second quarter of 2003 include the effect of a non-cash charge to income tax expense of $69.7 million ($0.70 per share) to reduce the carrying value of deferred tax assets to zero.
Fourth Quarter 2003 Outlook
Determined under the Company's revised revenue recognition method, worldwide revenue (including SEN) is expected to be $150 million to $160 million on shipments of $155 to $165 million. Net revenue (excluding SEN) is expected to be in the range of $88 to $93 million on shipments of $95 to $100 million. Gross margins are expected in the mid 30% range. Contribution from SEN is expected to approximate $6.5 to $7.0 million. The Company expects break-even results from operations and positive cash flow.
Third Quarter Detail
Shipments
Customer activity continued to show evidence of broadening beyond memory manufacturers as logic customers (Integrated Device Manufacturers IDMs and foundries) represented 44% of system shipments during the quarter. Memory customers (IDMs and foundries) represented 56% of system shipments in the quarter. Service revenue (service contracts, spare parts and consumables) was $30.7 million for the quarter, flat sequentially from the prior quarter. Geographically, systems shipments (excluding SEN) were as follows: Asia 56%, North America 26%, and Europe 18%. Including SEN, 83% of worldwide systems shipments were to Asia indicating that strength in the Japanese market is currently a key driver during the quarter.
The ion implantation business accounted for 79% of total shipments in the third quarter while the complementary products (RTP, Dry Strip and Photostabilization) accounted for 21%. This is compared to the second quarter where the ratio was 70% implant / 30% complementary products. The ratio of implant revenue to complementary product revenue on a quarterly basis is not necessarily indicative of a long-term trend.
Orders and Backlog
Net orders (systems and service), excluding SEN, received for the third quarter totaled $ 93.5 million, up 29% from the second quarter of 2003. Worldwide orders, including SEN, totaled $161.9 million, up 15% compared with the second quarter as Japan continues to show strong order activity driven by consumer electronics demand. Geographically, system orders were split as follows: Asia 86%, Europe 12% and North America 2%. Memory (IDMs and foundries) made up the bulk of the order activity with 83% of orders while logic (IDMs and foundries) made up 17% of orders. Book to bill ratio for the quarter was 2.0, far exceeding the recently announced industry book to bill ratio for front-end equipment of 0.95.
Backlog plus deferred revenue for the quarter ended at $80.6 million, an increase of 77% since the end of the second quarter of 2003. Reported backlog consists of systems only (e.g. excluding service contracts) that are generally scheduled to ship within 6 months.
Gross Margin
Gross margin for the quarter at 23.6% was lower than expected. The change in revenue recognition policy and an adjustment to warranty costs reduced gross margins by 9.1%.Operating Expenses
Total operating expenses for the third quarter (excluding restructuring costs and amortization of intangible assets) were $39.0 million, up 7% sequentially from the second quarter primarily due to operating expenses and integration costs attributed to the company's acquisition of Matrix Integrated Systems in July. SG&A expense increased 11% to $22.8 million and R&D expense increased 2% to $16.3 million. During the quarter, Axcelis took further action through a reduction in force to lower operating costs by approximately $18.5 million annually, the benefits of which will begin to be realized in the fourth quarter. The Company recognized a $4.7 million restructuring charge during the quarter for severance and related benefits associated with the reduction in force.
SEN Contribution
Contribution from SEN (royalties and Axcelis' 50% share of net income) for the quarter at $0.2 million (on $62.0 million of shipments) was impacted negatively by approximately $7.8 million due to the change in accounting method for revenue recognition. The impact in the fourth quarter from the revised revenue recognition policy is expected to be minimal, as revenue deferred from fourth quarter shipments will be offset by revenue recognized from amounts deferred in the third quarter.
Balance Sheet
Axcelis ended the third quarter with $115.2 million in cash, cash equivalents and short-term investments compared with $153.5 million in cash and equivalents at the end of the second quarter. Cash outflow of $38.3 million was due to the loss from operations, the acquisition and integration expenses of Matrix, and higher inventory levels in anticipation of increased fourth quarter shipments.
Third Quarter Earnings Conference Call
Please join us for our third quarter conference call on October 27, 2003 at 5:00 pm EST. The call will be available to interested listeners via an audio webcast that can be accessed through Axcelis's home page at www.axcelis.com, or by dialing 1-800-915-4836 (1-973-317-5319 outside North America). Participants calling into the conference call will be requested to provide the company name: Axcelis Technologies, the conference leader: Mark Namaroff, and pass code: Axcelis 3Q. A telephone replay will be available from 7:00 pm EST on Oct. 27, 2003 until 11:59 pm EST on Nov. 3, 2003. Dial 1-800-428-6051 (1-973-709-2089 outside North America), and enter conference ID code #298980. A webcast replay will be available from 8:00 pm EST on Oct. 27, 2003 until 5:00 pm EST Nov. 27, 2003.
Safe Harbor Statement
This document contains forward-looking statements under the SEC safe harbor provisions. These statements are based on management's current expectations and should be viewed with caution. They are subject to various risks and uncertainties, many of which are outside the control of the Company, including the conversion of orders to revenue in any particular quarter, or at all, our ability to implement successfully our profit plans, the continuing demand for semiconductor equipment, relative market growth, continuity of business relationships with and purchases by major customers, competitive pressure on sales and pricing, increases in material and other production costs that cannot be recouped in product pricing and global economic, political and financial conditions. These risks and other risk factors relating to Axcelis are described more fully in the most recent Form 10-K filed by Axcelis and in other documents filed from time to time with the Securities and Exchange Commission.
About Axcelis Technologies, Inc.
Axcelis Technologies, Inc., headquartered in Beverly, Massachusetts, provides innovative, high-productivity solutions for the semiconductor industry. Axcelis is dedicated to developing enabling process applications through the design, manufacture and complete life cycle support of ion implantation, rapid thermal processing, and cleaning and curing systems. Axcelis Technologies has key technology centers in Beverly, Massachusetts, and Rockville, Maryland as well as in Toyo, Japan through its joint venture, SEN. The company's Internet address is: www.axcelis.com.
Consolidated Statements of Operations
(In thousands, except per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
|
Net sales
|
$ | 59,007 | $ | 93,117 | $ | 226,083 | $ | 244,190 | ||||||||
|
Cost of products sold
|
45,108 | 56,672 | 157,493 | 159,120 | ||||||||||||
|
Gross profit
|
13,899 | 36,445 | 68,590 | 85,070 | ||||||||||||
|
Operating expenses:
|
||||||||||||||||
|
Research and development
|
16,273 | 18,096 | 48,376 | 54,380 | ||||||||||||
|
Selling
|
11,983 | 10,912 | 35,590 | 33,892 | ||||||||||||
|
General and adminstrative
|
10,841 | 10,799 | 30,383 | 34,419 | ||||||||||||
|
Amortization of intangible assets
|
563 | 365 | 1,293 | 1,095 | ||||||||||||
|
Restructuring
|
4,745 | — | 4,745 | — | ||||||||||||
|
Loss from operations
|
(30,056 | ) | (3,727 | ) | (51,797 | ) | (38,716 | ) | ||||||||
|
Other income (expense):
|
||||||||||||||||
|
Royalty income of Sumitomo Eaton Nova Corporation
|
195 | 3,451 | 3,193 | 7,362 | ||||||||||||
|
Royalty income - other
|
70 | 32 | 95 | 42 | ||||||||||||
|
Equity income of Sumitomo Eaton Nova Corporation
|
41 | 2,235 | 4,534 | 3,595 | ||||||||||||
|
Interest income
|
431 | 874 | 1,485 | 2,850 | ||||||||||||
|
Interest expense
|
(1,876 | ) | (1,535 | ) | (4,663 | ) | (4,429 | ) | ||||||||
|
Other-net
|
57 | (828 | ) | (945 | ) | (2,472 | ) | |||||||||
|
Income (loss) before taxes
|
(31,588 | ) | 502 | (48,098 | ) | (31,768 | ) | |||||||||
|
Income taxes (credit)
|
354 | 311 | 69,048 | (12,451 | ) | |||||||||||
|
Net income (loss)
|
$ | (31,942 | ) | $ | 191 | $ | (117,146 | ) | $ | (19,317 | ) | |||||
|
Basic net income (loss) per share
|
$ | (0.32 | ) | $ | 0.00 | $ | (1.19 | ) | $ | (0.20 | ) | |||||
|
Diluted net income (loss) per share
|
$ | (0.32 | ) | $ | 0.00 | $ | (1.19 | ) | $ | (0.20 | ) | |||||
|
Shares used in computing:
|
||||||||||||||||
|
Basic net income (loss) per share
|
98,697 | 98,090 | 98,423 | 97,849 | ||||||||||||
|
Diluted net income (loss) per share
|
98,697 | 98,213 | 98,423 | 97,849 | ||||||||||||
Consolidated Balance Sheets
(In thousands)
| September 30, | December 31, | ||||||||
| 2003 | 2002 | ||||||||
| ASSETS | |||||||||
|
Current assets:
|
|||||||||
|
Cash & cash equivalents
|
$ | 91,293 | $ | 150,651 | |||||
|
Short-term investments
|
23,916 | 34,992 | |||||||
|
Accounts receivable, net
|
74,164 | 60,311 | |||||||
|
Inventories
|
120,729 | 115,290 | |||||||
|
Deferred income taxes & other current assets
|
2,159 | 18,329 | |||||||
|
Total current assets
|
312,261 | 379,573 | |||||||
|
Property, plant & equipment, net
|
88,378 | 93,597 | |||||||
|
Investment in Sumitomo Eaton Nova Corporation
|
66,220 | 57,868 | |||||||
|
Goodwill
|
47,948 | 40,682 | |||||||
|
Intangible assets
|
19,799 | 13,141 | |||||||
|
Deferred income taxes
|
— | 57,136 | |||||||
|
Other assets
|
32,067 | 27,454 | |||||||
|
Total assets
|
$ | 566,673 | $ | 669,451 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
|
Current liabilities:
|
|||||||||
|
Accounts payable
|
$ | 33,032 | $ | 32,594 | |||||
|
Accrued compensation
|
13,471 | 6,745 | |||||||
|
Warranty reserve
|
17,326 | 16,625 | |||||||
|
Income taxes payable
|
7,420 | 12,823 | |||||||
|
Other current liabilities
|
21,719 | 18,400 | |||||||
|
Total current liabilities
|
92,968 | 87,187 | |||||||
|
Convertible debt
|
125,000 | 125,000 | |||||||
|
Other long-term liabilities
|
3,270 | 4,756 | |||||||
|
Stockholders’ equity:
|
|||||||||
|
Common stock
|
99 | 98 | |||||||
|
Additional paid-in capital
|
450,803 | 447,533 | |||||||
|
Deferred compensation
|
(891 | ) | (782 | ) | |||||
|
Treasury stock - at cost
|
(1,218 | ) | (1,218 | ) | |||||
|
Retained earnings
|
(104,777 | ) | 12,369 | ||||||
|
Accumulated other comprehensive loss
|
1,419 | (5,492 | ) | ||||||
|
Total stockholders’ equity
|
345,435 | 452,508 | |||||||
|
Total liabilities and stockholders’ equity
|
$ | 566,673 | $ | 669,451 | |||||