EX-99.1 2 a05-16943_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

4900 West 78th Street
Bloomington, MN 55435

 

Tel: 952-820-0080
Fax: 952-820-0060

 

www.AugustTech.com
info@augusttech.com

 

Contact:

Stan Piekos, CFO
(952) 259-1672
Stan.Piekos@AugustTech.com

 

For Release September 28, 2005

 

August Technology Announces Plans to Restate Timing of Revenue Recognized in Prior Periods

 

Minneapolis, September 28, 2005 – August Technology Corporation (NASDAQ: AUGT), a leading provider of automated inspection and data analysis solutions for the microelectronic industries, today announced that the audit committee of the Company’s board of directors has determined to restate the timing of revenue recognized from a series of transactions with one customer.

 

In 2004 and the first half of 2005, the Company sold AXi 930 systems to a customer for an aggregate amount of approximately $12.2 million and recognized the revenue for these sales.  During the same time periods, the Company accepted orders from the same customer for enhancement packages to the AXi 930 system but has not yet delivered these enhancement packages.  In connection with preparing to report its results for the quarter ended September 30, 2005, the Company determined that recognition of the $12.2 million of revenue from the AXi 930 systems should have been deferred until the delivery of the enhancement packages, according to Emerging Issues Task Force Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables.”  The Company therefore will restate its financial statements for the annual and quarterly periods in the fiscal year ended December 31, 2004, and the quarters ended March 31, 2005 and June 30, 2005 to reduce the net revenues in those periods by an aggregate of approximately $12.2 million.  Accordingly, the financial statements for those periods should no longer be relied upon.

 

The customer cancelled its orders for the enhancement packages on September 27, 2005, which will allow the Company to recognize the entire $12.2 million of restated revenue in the quarter ended September 30, 2005.

 

On September 23, 2005, management and the audit committee discussed these issues regarding the Company’s recognition of revenue with the Company’s independent registered public accounting firm and concluded that revenue was improperly recognized.  Accordingly, management and the audit committee concluded that the Company will

 


 

restate its financial statements by filing with the Securities and Exchange Commission such amended Annual and Quarterly reports as management determines are appropriate.

 

Based on its review to date of the transactions with the customer described above, management’s preliminary estimates of the approximate effect of revenue recognition timing differences are set forth in the table below.  If the restatement process results in the deferral of revenues from other customers or other accounting changes, the preliminary estimates set forth in the table below may change.  As set forth in the table, the restatement adjustments are expected to decrease revenues for the year ended December 31, 2004 by approximately $6.7 million and for the six months ended June 30, 2005 by approximately $5.5 million, resulting in an aggregate reduction in revenue of approximately $12.2 million.  Because the Company expects to recognize this $12.2 million of restated revenue in the quarter ended September 30, 2005, the restatement essentially represents a change in the timing of revenue recognition.

 

Estimated
Adjustments to Net

 

Year
Ended

 

Three Months
Ended

 

Six Months
Ended

 

Revenues

 

12/31/04

 

3/31/05

 

6/30/05

 

6/30/05

 

($ in thousands)

 

 

 

 

 

 

 

 

 

Previously reported net revenues

 

$

68,443

 

$

18,417

 

$

19,688

 

$

38,105

 

 

 

 

 

 

 

 

 

 

 

Estimated adjustments

 

(6,704

)

(3,050

)

(2,401

)

(5,451

)

 

 

 

 

 

 

 

 

 

 

Net revenues, as restated

 

$

61,739

 

$

15,367

 

$

17,287

 

$

32,654

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated
Adjustments to Net

 

Year
Ended

 

Three Months
Ended

 

Six Months
Ended

 

Income (Loss)

 

12/31/04

 

3/31/05

 

6/30/05

 

6/30/05

 

($ in thousands)

 

 

 

 

 

 

 

 

 

Previously reported net income (loss)

 

$

802

 

$

(898

)

$

(11,041

)

$

(11,939

)

 

 

 

 

 

 

 

 

 

 

Estimated adjustments

 

(3,993

)

(1,563

)

(1,144

)

(2,707

)

 

 

 

 

 

 

 

 

 

 

Net income (loss), as restated

 

$

(3,191

)

$

(2,461

)

$

(12,185

)

$

(14,646

)

 


 

A schedule showing management’s preliminary estimates of the quarterly impact of this revenue recognition restatement on the Consolidated Statements of Operations for 2004 and the first two quarters of 2005 is provided below.  The restatement estimated herein is confined to revenue and the related cost of revenues and no significant income tax provision change is currently anticipated.  A schedule is also included below which shows the primary impact of the restatement of the June 30, 2005 and December 31, 2004 Consolidated Balance Sheets to be confined to accounts receivable, inventory at customers under purchase orders and deferred revenues.  The restatement will have no impact on cash balances or cash flows from operating activities.  The discussion of the Company’s revised financial results contained in this press release has been prepared by management and represents management’s preliminary estimate of the revised results. These results are subject to change as management and the Company’s independent registered public accounting firm complete their review.

 

“We believe the proposed adjustments to the timing of revenue recognized from ongoing transactions with a valued customer reflect our commitment to the highest standards of applicable accounting treatment,” commented Roger Gower, Chairman of August Technology’s Audit Committee.  “This restatement resulted from a technical application of accounting principles and we have no reason to believe there has been any misconduct or wrongdoing by any August Technology personnel,” Gower concluded.

 

Revised Guidance for the September Quarter

 

Stan Piekos, August Technology’s Chief Financial Officer, stated, “As we look ahead, we now anticipate that third quarter revenues will range from +5% to +10% as compared to previously reported second quarter revenues, before giving effect to the restatement, in the upper half of the range of our previous guidance of flat to +10%.  We continue to believe our participation in advanced macro inspection will allow us to outperform the industry in 2005.”

 

As indicated earlier, on a restated basis in addition to the forecasted results described above, the Company expects to recognize the $12.2 million of restated revenue in the quarter ended September 30, 2005.

 

The Company currently estimates that the restatement of financial statements will delay the process of completing the Securities and Exchange Commission’s review of the Form S-4 Registration Statement filed by Rudolph Technologies, Inc. in connection with the Company’s proposed merger with Rudolph.  Although the Company plans to proceed as quickly as possible with the restatement, the time required will depend upon factors outside its control, including the extent of the review required by the Company’s independent auditors.  The restatement process may also delay the Company’s announcement of its third quarter results and the filing of the Quarterly Report on Form 10-Q for the third quarter, currently planned for November 9, 2005.

 

About the Company: August Technology’s automated inspection and data analysis solutions provide critical product and process enhancing information, which enables

 


 

microelectronic device manufacturers to drive down costs and time to market.  With the first all-surface advanced macro inspection solution, August Technology has incorporated frontside, backside and wafer edge inspection in a single system.  Following detection, August Technology’s decision tools correlate the defect data across surfaces and provide the comprehensive information necessary for device manufacturers to make process-enhancing decisions.  Headquartered in Bloomington, Minnesota, August Technology supports its customers with a worldwide sales and service organization.  Additional information can be found on the company’s web site at www.augusttech.com.

 

Forward-Looking Statements: This release contains forward-looking statements including those regarding (i) the nature, scope and timing of the Company’s restatement of its financial statements and the impact of the restatement on the Form S-4 Registration Statement of Rudolph Technologies, Inc. and the Company’s Form 10-Q for the quarter ended September 30, 2005, (ii) the Company’s expectation of recognizing the $12.2 million of restated revenue in the third quarter of 2005 and (iii) the Company’s expectation to outperform the industry again in 2005 and achieve Q3 2005 sequential revenue change of +5 to +10% on a pre-restatement basis. These forward-looking statements involve risks and uncertainties which may cause actual results or timing to differ from those set forth in the forward-looking statements, including, but not limited to: (i) additional issues may arise in connection with the ongoing review of the Company’s financial statements and accounting records by management, the audit committee and the Company’s independent registered public accounting firm that may cause additional deferral of revenue or additional accounting changes; (ii) the Company’s expectations for the third quarter of 2005 may change if additional issues arise in the course of the review associated with the restatement or in the course of closing its books for the third quarter; (iii) actions resulting from discussions with or required by the Securities and Exchange Commission may affect the results of the restatement and the Company’s filings with the Securities and Exchange Commission;  (iv) if the restatement causes the Company to delay the filing of its Form 10-Q for the quarter ended September 30, 2005, the Company will not be in compliance with the rules of the Securities and Exchange Commission and Nasdaq and may be the subject of sanctions including potential delisting of the Company’s securities from Nasdaq;  (v) the restatement may delay or otherwise adversely affect the Company’s proposed merger with Rudolph Technologies, Inc. increasing costs for the Company; (vi) no continuing improvement, or a deterioration in general economic conditions and in the semiconductor and/or microelectronic industries; (vii) pre-order sales activities not resulting in orders, or customers delaying or canceling orders in backlog; (viii) loss of potential sales to competitors based on pricing, product features or other factors; (ix) lack of customer acceptance in the upcoming quarters of the Company’s newer products including All-Surface inspection solutions and DMS Decision that were or are planned to be shipped to them; (x) failure of the Company’s recently completed and current product development efforts to meet customer needs and expectations including driving down their costs and time-to-market; (xi) unanticipated costs and expenses which increase operating costs. Please refer to additional risk factors stated in August Technology’s Form 10-K filed with the SEC on March 16, 2005.  August Technology does not assume any obligation to update the forward-looking information contained in this press release.

 


 

AUGUST TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

Three Months Ended

 

Six Months

 

 

 

Mar. 31,

 

June 30,

 

Sept. 30,

 

Dec. 31,

 

Dec. 31,

 

Mar. 31,

 

June 30,

 

Ended

 

 

 

2004

 

2004

 

2004

 

2004

 

2004

 

2005

 

2005

 

June 30, 2005

 

As Previously Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

16,400

 

$

19,855

 

$

15,516

 

$

16,672

 

$

68,443

 

$

18,417

 

$

19,688

 

$

38,105

 

Cost of revenues

 

7,058

 

9,059

 

8,187

 

7,621

 

31,925

 

8,359

 

8,403

 

16,762

 

Gross profit

 

9,342

 

10,796

 

7,329

 

9,051

 

36,518

 

10,058

 

11,285

 

21,343

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

5,189

 

5,390

 

6,202

 

6,017

 

22,798

 

6,290

 

7,236

 

13,526

 

Research and development expenses

 

2,908

 

3,322

 

3,822

 

3,509

 

13,561

 

3,666

 

3,324

 

6,990

 

Operating income

 

1,245

 

2,084

 

(2,695

)

(475

)

159

 

102

 

725

 

827

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger expenses

 

—

 

—

 

—

 

—

 

—

 

(1,234

)

(11,991

)

(13,225

)

Interest income

 

201

 

189

 

204

 

253

 

847

 

289

 

334

 

623

 

Other income

 

—

 

—

 

46

 

27

 

73

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before provision for income taxes

 

1,446

 

2,273

 

(2,445

)

(195

)

1,079

 

(843

)

(10,932

)

(11,775

)

Provision for income taxes

 

—

 

100

 

—

 

177

 

277

 

55

 

109

 

164

 

Net income (loss)

 

$

1,446

 

$

2,173

 

$

(2,445

)

$

(372

)

$

802

 

$

(898

)

$

(11,041

)

$

(11,939

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.08

 

$

0.12

 

$

(0.14

)

$

(0.02

)

$

0.05

 

$

(0.05

)

$

(0.61

)

$

(0.67

)

Diluted

 

$

0.08

 

$

0.12

 

$

(0.14

)

$

(0.02

)

$

0.04

 

$

(0.05

)

$

(0.61

)

$

(0.67

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Recognition Restatement Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

—

 

(2,210

)

(4,387

)

(107

)

(6,704

)

(3,050

)

(2,401

)

(5,451

)

Cost of revenues

 

—

 

(900

)

(1,811

)

—

 

(2,711

)

(1,487

)

(1,257

)

(2,744

)

Gross profit

 

—

 

(1,310

)

(2,576

)

(107

)

(3,993

)

(1,563

)

(1,144

)

(2,707

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As Restated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

16,400

 

$

17,645

 

$

11,129

 

$

16,565

 

$

61,739

 

$

15,367

 

$

17,287

 

$

32,654

 

Cost of revenues

 

7,058

 

8,159

 

6,376

 

7,621

 

29,214

 

6,872

 

7,146

 

14,018

 

Gross profit

 

9,342

 

9,486

 

4,753

 

8,944

 

32,525

 

8,495

 

10,141

 

18,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

5,189

 

5,390

 

6,202

 

6,017

 

22,798

 

6,290

 

7,236

 

13,526

 

Research and development expenses

 

2,908

 

3,322

 

3,822

 

3,509

 

13,561

 

3,666

 

3,324

 

6,990

 

Operating income

 

1,245

 

774

 

(5,271

)

(582

)

(3,834

)

(1,461

)

(419

)

(1,880

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger expenses

 

—

 

—

 

—

 

—

 

—

 

(1,234

)

(11,991

)

(13,225

)

Interest income

 

201

 

189

 

204

 

253

 

847

 

289

 

334

 

623

 

Other income

 

—

 

—

 

46

 

27

 

73

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before provision for income taxes

 

1,446

 

963

 

(5,021

)

(302

)

(2,914

)

(2,406

)

(12,076

)

(14,482

)

Provision for income taxes

 

—

 

100

 

—

 

177

 

277

 

55

 

109

 

164

 

Net income (loss)

 

$

1,446

 

$

863

 

$

(5,021

)

$

(479

)

$

(3,191

)

$

(2,461

)

$

(12,185

)

$

(14,646

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.08

 

$

0.05

 

$

(0.28

)

$

(0.03

)

$

(0.18

)

$

(0.14

)

$

(0.68

)

$

(0.82

)

Diluted

 

$

0.08

 

$

0.05

 

$

(0.28

)

$

(0.03

)

$

(0.18

)

$

(0.14

)

$

(0.68

)

$

(0.82

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding used to calculate net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic - As Previously Reported and As Restated

 

17,622

 

17,778

 

17,803

 

17,815

 

17,755

 

17,867

 

18,005

 

17,936

 

Diluted - As Previously Reported

 

18,486

 

18,349

 

17,803

 

17,815

 

18,211

 

17,867

 

18,005

 

17,936

 

Diluted - As Restated

 

18,486

 

18,349

 

17,803

 

17,815

 

17,755

 

17,867

 

18,005

 

17,936

 

 


 

AUGUST TECHNOLOGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

 

June 30, 2005

 

December 31, 2004

 

 

 

As Previously

 

As

 

As Previously

 

As

 

 

 

Reported

 

Restated

 

Reported

 

Restated

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

10,313

 

$

10,313

 

$

5,518

 

$

5,518

 

Short-term marketable debt securities

 

22,583

 

22,583

 

28,615

 

28,615

 

Accounts receivable, net

 

12,035

 

10,389

 

8,603

 

8,328

 

Inventories

 

21,393

 

21,393

 

20,131

 

20,131

 

Inventories at customers under purchase orders

 

3,646

 

9,101

 

3,993

 

6,704

 

Prepaid expenses and other current assets

 

1,651

 

1,951

 

2,306

 

2,531

 

Total current assets

 

71,621

 

75,730

 

69,166

 

71,827

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

5,342

 

5,342

 

5,994

 

5,994

 

Long-term marketable debt securities

 

9,034

 

9,034

 

16,289

 

16,289

 

Purchased technology, net

 

3,098

 

3,098

 

3,703

 

3,703

 

Goodwill

 

498

 

498

 

498

 

498

 

Other assets

 

162

 

162

 

150

 

150

 

Total assets

 

$

89,755

 

$

93,864

 

$

95,800

 

$

98,461

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

6,947

 

$

6,747

 

$

3,366

 

$

3,291

 

Accrued compensation

 

2,952

 

2,952

 

1,691

 

1,691

 

Other accrued liabilities

 

2,353

 

2,353

 

2,306

 

2,306

 

Customer deposits and deferred revenues

 

6,769

 

17,778

 

6,841

 

13,570

 

Total current liabilities

 

19,021

 

29,830

 

14,204

 

20,858

 

 

 

 

 

 

 

 

 

 

 

Other non-current liabilities

 

108

 

108

 

131

 

131

 

Total liabilities

 

19,129

 

29,938

 

14,335

 

20,989

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

Common stock, no par value

 

91,437

 

91,437

 

90,347

 

90,347

 

Undesignated capital stock, no par value

 

—

 

—

 

—

 

—

 

Accumulated deficit

 

(20,715

)

(27,415

)

(8,776

)

(12,769

)

Accumulated other comprehensive loss

 

(96

)

(96

)

(106

)

(106

)

Total shareholders’ equity

 

70,626

 

63,926

 

81,465

 

77,472

 

Total liabilities and shareholders’ equity

 

$

89,755

 

$

93,864

 

$

95,800

 

$

98,461