EX-99.1 2 ex99-1.htm Q3 FY 2009 RESULTS PRESS RELEASE ex99-1.htm


 
ELECTROGLAS ANNOUNCES THIRD QUARTER
 
Fiscal 2009 Results
 
 

 
SAN JOSE, CALIF. —March 19, 2008— Electroglas, Inc. (Nasdaq:EGLS), a leading supplier of wafer probing and software solutions for the semiconductor industry, today reported its operating results for the third fiscal quarter ended February 28, 2009.
 
 
Revenue for the third quarter of fiscal 2009 was $2.2 million, a 65% decrease from the second quarter of fiscal 2009 and an 81% decrease from the third quarter of fiscal 2008. Net loss on a GAAP (Generally Accepted Accounting Principles) basis was $4.5 million, or a $0.17 per share loss on both a GAAP and non-GAAP basis. A reconciliation of non-GAAP operating results to GAAP results is included below.
 
 
 “Clearly we are disappointed in these quarterly results,” stated Warren Kocmond, Chief Executive Officer. “In spite of salary reductions of 15% and a 15% reduction in force this was not enough to compensate for the precipitous drop in revenue. Our customers stopped buying in early 2009 as their near term business outlook weakened and fear spread throughout the world economy. We are getting very little visibility from customers as to when business conditions will improve.
 
 
We are adjusting to these business realities and have additional plans in place to dramatically lower our break even point which should return us to positive gross margins this quarter. We are looking at every segment of our business and infrastructure to make additional cuts and preserve our cash resources. We will not be holding a conference call discussing the third quarter results and our fourth quarter outlook due to the unpredictability of the current market. In the next several days the Company will have further announcements detailing these steps.
 
 
As we had disclosed in a previous press release we are continuing our efforts with Needham and Company in exploring strategic options for the Company. Finally, our MCAT (Motion Control for Advanced Technology) platform continues to mature in several applications and we believe this represents a reasonable upside revenue opportunity for us when the global economy recovers.”
 
 
About Electroglas
Electroglas is a leading supplier of innovative wafer probers and software solutions for the semiconductor industry.  For more than 40 years, Electroglas has helped integrated device manufacturers (IDMs), wafer foundries and outsourced assembly and test (OSAT) suppliers improve the overall effectiveness of semiconductor manufacturers’ wafer testing. Headquartered in San Jose, California, the Company has shipped more than 16,500 systems worldwide. Electroglas’ stock trades on the NASDAQ Capital Market under the symbol “EGLS.” More information about the Company and its products is available at www.electroglas.com
 
Safe Harbor Statement
This news release contains forward-looking statements including statements relating to Electroglas’ business for the fourth fiscal quarter of 2009, gross margins, cash preservations, expense reductions, strategic options and our MCAT business.  These forward-looking statements involve risks and uncertainties including, but not limited to, the risk of continued adverse changes in global and domestic economic conditions, continued downturn in the semiconductor and electronics industries, a continued downturn or decrease in customer utilization rates, unforeseen technical difficulties related to the development and manufacture of Electroglas’ products, and a failure of its new products to achieve broad market acceptance as a result of competing technologies and an inability to successfully market our precision motion control technology to users outside the wafer probing market.  Electroglas assumes no obligation to update this information.  For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to Electroglas’ business in general, see the risk disclosures in Electroglas’ SEC filings, including its most recent annual report on Form 10-K for the year ended May 31, 2008, its quarterly reports on Form 10-Q and periodic reports on Form 8-K filed from time to time with the SEC.



- Condensed Financial Statements Attached -

 
 
 


ELECTROGLAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts)
(unaudited)


   
Three months ended
    
Nine months ended
  
   
February 28, 2009
    
March 1, 2008
    
February 28, 2009
    
March 1, 2008
  
Net sales
   $ 2,219     $ 11,553     $ 16,973     $ 33,425  
Cost of sales
     2,893       8,635       15,297       23,813  
Gross margin
     (674 )     2,918       1,676       9,612  
Operating expenses:
                                
  Engineering, research and  development
     1,675       2,355       5,445       6,814  
  Sales, general and administrative
     2,385       3,372       8,119       10,711  
  Restructuring and impairment charges
     70       149       590       608  
          Total operating expenses
     4,130       5,876       14,154       18,133  
Operating loss
     (4,804 )     (2,958 )     (12,478 )     (8,521 )
Interest expense, net
     (576 )     (461 )     (1,658 )     (808 )
Other expense, net
     (187 )     (205 )     (586 )     (502 )
Loss before provision (benefit)  for income taxes
     (5,567 )     (3,624 )     (14,722 )     (9,831 )
Provision (benefit) for income taxes
     (1,020 )     124       (995 )     548  
Net loss
   $ (4,547 )   $ (3,748 )   $ (13,727 )   $ (10,379 )
                                 
Net loss per share, basic and diluted
   $ (0.17 )   $ (0.14 )   $ (0.52 )   $ (0.39 )
Shares used in basic and diluted calculations
     26,627       26,385       26,589       26,353  



 
 
 

Reconciliation of GAAP to Non-GAAP Financial Information

In addition to disclosing results that are determined in accordance with Generally Accepted Accounting Principles (GAAP), Electroglas also discloses non-GAAP results of operations that exclude certain unusual charges, gains, or benefits.  Electroglas reports non-GAAP results to better assess and reflect operating performance.  These results are provided as a complement to results provided in accordance with GAAP.  Management believes the non-GAAP measures help indicate underlying trends in Electroglas’ business, and management uses non-GAAP measures to establish operational goals.  Non-GAAP information should not be considered superior to or as a substitute for GAAP measures or data prepared in accordance with GAAP.
 
The following is a reconciliation of GAAP net loss and gross margin to non-GAAP net loss and gross margin (in thousands, except per share amounts):
 

 
   
(unaudited)
    
(unaudited)
  
   
Three months ended
    
Nine months ended
  
   
February 28, 2009
    
March 1, 2008
    
February 28, 2009
    
March 1, 2008
  
GAAP net loss
   $ (4,547 )   $ (3,748 )   $ (13,727 )   $ (10,739 )
Non-GAAP adjustments:
                                
  Duplicate factory costs (1)
     -       818       -       1,572  
  Restructuring and impairment charges (2)
     70       149       590       608  
Non-GAAP net loss
   $ (4,477 )   $ (2,781 )   $ (13,137 )   $ (8,559 )
Non-GAAP net loss per share, basic and diluted
   $ (0.17 )   $ (0.11 )   $ (0.49 )   $ (0.32 )

 

 

   
(unaudited)
    
(unaudited)
  
   
Three months ended
    
Nine months ended
  
   
February 28, 2009
    
March 1, 2008
    
February 28, 2009
    
March 1, 2008
  
GAAP gross margin
   $ (674 )   $ 2,918     $ 1,676     $ 9,612  
Non-GAAP adjustments:
                                
  Duplicate factory costs (1)
     -       818       -       1,572  
Non-GAAP gross margin
     (674 )     3,736       1,676       11,184  
Net sales
   $ 2,219     $ 11,553     $ 16,973     $ 33,425  
GAAP gross margin
     -30 %     25 %     10 %     29 %
Non-GAAP gross margin
     -30 %     32 %     10 %     33 %

(1)  
Freight, travel and overhead costs associated with the Company’s move from internal manufacturing in Singapore to contract manufacturing with Flextronics in China.
(2)  
During Q2 and Q3 2009, the Company accrued restructuring costs for a reduction in work force in the United States and Asia.  During Q1 2009, the Company accrued restructuring costs for a reduction in work force in the United States. During Q1 2008, the Company accrued restructuring costs related to the retention of employees in its Singapore factory of $0.1 million.  The Company also recorded a liability for a reduction in work force in Europe of $0.2 million during Q1 2008.

 
 
 


ELECTROGLAS, INC.
  
CONDENSED CONSOLIDATED BALANCE SHEETS
  
(in thousands)
  
             
   
February 28, 2009
    
May 31, 2008
  
   
(unaudited)
      
(1)
  
ASSETS
              
Current assets:
              
   Cash and cash equivalents
   $ 4,956     $ 16,541  
   Accounts receivable, net
     2,809       9,419  
   Inventories
     7,032       5,533  
   Prepaid expenses and other current assets
     2,051       4,396  
         Total current assets
     16,848       35,889  
Property, plant and equipment, net
     1,829       2,724  
Goodwill
     1,942       1,942  
Other assets
     2,412       2,806  
    $ 23,031     $ 43,361  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
          
Current liabilities:
                
   Accounts payable
   $ 1,570     $ 6,848  
   Accrued liabilities
     3,649       5,717  
   Deferred revenue
     511       826  
   Line of credit borrowing
     500       -  
         Total current liabilities
     6,230       13,391  
  Convertible subordinated notes
     24,180       23,610  
  Other non-current liabilities
     1,629       2,442  
  Stockholders’ equity (deficit)
     (9,008 )     3,918  
    $ 23,031     $ 43,361  
                 
(1) Derived from the Company's audited consolidated financial statements as of May 31, 2008.
  



Investor and Shareholder Contact:
Electroglas, Inc.
Tom Brunton
CFO
(408) 528-3300
tbrunton@electroglas.com
 
 


###