Exhibit 99.1
Entegris Reports Fourth Quarter and Fiscal Year 2008 Results
Credit Agreement Amended in Light of Sharp Economic and Industry Slowdown;
Cost Reductions Lower Quarterly Breakeven Further
CHASKA (Minneapolis), Minn., February 12, 2009 –Entegris, Inc. (Nasdaq: ENTG) today reported its financial results for the fiscal fourth quarter and year ended December 31, 2008.
The Company recorded fourth-quarter sales of $112.7 million and a net loss of $131.8 million, or $1.18 per share. The fourth-quarter results included a goodwill impairment charge of $94.0 million, additional cost of sales of $7.8 million related to inventory acquired in the acquisition of Poco Graphite, investment impairment charges of $10.6 million, and a deferred tax valuation adjustment of $12.5 million. On a non-GAAP basis, the loss from continuing operations was $15.9 million, or $0.14 per share, which included restructuring charges of $7.3 million.
Fiscal 2008 sales were $554.7 million. The GAAP net loss was $517.0 million, or $4.59 per diluted share. The fiscal 2008 results included goodwill impairment charges of $473.8 million, non-cash purchase accounting charges of $13.5 million, investment impairment charges of $11.7 million, and deferred tax valuation adjustments of $39.4 million. The fiscal 2008 net loss from continuing operations on a non-GAAP basis was $1.6 million, or $0.01 per diluted share, which included restructuring charges of $10.6 million.
Gideon Argov, president and chief executive officer, said: “The steep fourth-quarter decline in spending and production activity across the semiconductor industry was evident across our product lines. Even our unit-driven products, which are historically more stable during industry downturns, were adversely impacted by low fab utilization and output.”
Argov continued: “To contend with this difficult environment, we have taken actions to reduce our targeted quarterly breakeven to less than $100 million on an EBITDA basis by the second half of 2009. To do this we have restructured the business to reduce our fixed costs by $28 million annually, supplemented by temporary cost reduction measures such as scheduled plant shutdowns and global salary reductions. We are confident these steps will enable us to effectively manage through a very challenging market environment, while ensuring our ability to sustain our investments in critical engineering and development projects.”
Greg Graves, chief financial officer, said: “In anticipation of the impact on our business of what may be a deep and extended downturn, we initiated a discussion with our bank group that resulted in a commitment letter to amend the terms of our revolving credit facility. Under the amended agreement, the primary loan covenant is a monthly cumulative EBITDA test that allows for losses over the next 12 months. In exchange for the flexibility this affords, we have reduced the size of the facility, shortened the maturity to November 2011, agreed to increase the interest rate on the borrowed funds, and granted a security interest in certain assets. We believe these amended terms, together with our year-end cash balance of $115 million, will provide the Company with ample liquidity to fund operations and necessary investments until our markets recover.”
Fourth-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the fourth quarter on Thursday, February 12, 2009, at 10:00 a.m. Eastern Time. Participants should dial 1-877-502-9276 (for domestic callers) or 1-913-905-1086 (for callers outside the U.S.). A replay of the call can be accessed at 1-719-457-0820 using passcode 6725476. A webcast of the call can also be accessed from the investor relations section of Entegris’ website at www.entegris.com.
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NON-GAAP INFORMATION
In addition to reporting results that are determined in accordance with generally accepted accounting principles in the U.S. (GAAP), the Company also reports non-GAAP results of operations that exclude certain expenses and charges. These non-GAAP results are provided as a complement to results provided in accordance with GAAP in order to provide investors with relevant and useful information about the Company’s ongoing operations. As such, non-GAAP information primarily excludes expenses and charges resulting from goodwill impairment under FASB Statement No. 142, a valuation allowance for deferred tax assets under FASB Statement No. 109, and purchase accounting adjustments related to inventory associated with the Company’s August, 2008 acquisition of Poco Graphite, Inc. A reconciliation of GAAP to non-GAAP financial information discussed in this release is contained in the attached exhibits and on the Company’s website atwww.entegris.com.
ABOUT ENTEGRIS
Entegris is a leading provider of a wide range of products for purifying, protecting and transporting critical materials used in processing and manufacturing in the semiconductor and other high-tech industries. Entegris is ISO 9001 certified and has manufacturing, customer service and/or research facilities in the United States, China, France, Germany, India, Israel, Japan, Malaysia, Singapore, South Korea and Taiwan. Additional information can be found at www.entegris.com.
Forward-Looking Statements
Certain information contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current management expectations only as of the date of this press release, and involve substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Statements that include such words as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “may,” “will,” “should” or the negative thereof and similar expressions as they relate to Entegris or our management are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These risks include, but are not limited to, fluctuations in the market price of Entegris’ stock, Entegris’ future operating results, other acquisition and investment opportunities available to Entegris, general business and market conditions and other factors. Additional information concerning these and other risk factors may be found in previous financial press releases issued by Entegris and Entegris’ periodic public filings with the Securities and Exchange Commission, including discussions appearing under the headings “Risks Relating to our Business and Industry,” “Manufacturing Risks,” “International Risks,” and “Risks Related to Securities Markets and Ownership of Our Securities” in Item 1A of our Annual Report on Form 10–K for the fiscal year ended December 31, 2007, as well as other matters and important factors disclosed previously and from time to time in the filings of Entegris with the U.S. Securities and Exchange Commission. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we undertake no obligation to update publicly any forward-looking statements contained herein.
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Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended | Twelve months ended | |||||||||||||||||||
Dec. 31, 2008 | Sept. 27, 2008 | Dec. 31, 2007 | Dec. 31, 2008 | Dec. 31, 2007 | ||||||||||||||||
Net sales | $ | 112,736 | $ | 145,789 | $ | 161,348 | $ | 554,699 | $ | 626,238 | ||||||||||
Cost of sales | 80,291 | 90,391 | 94,623 | 342,981 | 360,001 | |||||||||||||||
Restructuring charges | 203 | — | — | 203 | — | |||||||||||||||
Gross profit | 32,242 | 55,398 | 66,725 | 211,515 | 266,237 | |||||||||||||||
Selling, general and administrative expenses | 31,731 | 35,373 | 43,376 | 147,531 | 163,918 | |||||||||||||||
Engineering, research and development expenses | 8,939 | 10,284 | 10,105 | 40,086 | 39,727 | |||||||||||||||
Amortization of intangible assets | 5,088 | 4,858 | 5,172 | 19,585 | 18,874 | |||||||||||||||
Impairment of goodwill | 93,989 | 379,810 | — | 473,799 | — | |||||||||||||||
Restructuring charges | 7,091 | 3,332 | — | 10,423 | — | |||||||||||||||
Operating (loss) income | (114,596 | ) | (378,259 | ) | 8,072 | (479,909 | ) | 43,718 | ||||||||||||
Interest expense (income), net | 336 | 614 | 271 | 1,018 | (5,245 | ) | ||||||||||||||
Other expense (income), net | 13,663 | 947 | (1,659 | ) | 15,486 | (7,656 | ) | |||||||||||||
(Loss) income before income taxes | (128,595 | ) | (379,820 | ) | 9,460 | (496,413 | ) | 56,619 | ||||||||||||
Income tax expense | 3,473 | 12,897 | (1,614 | ) | 19,785 | 10,356 | ||||||||||||||
Equity in net loss (earnings) of affiliates | 234 | 195 | (85 | ) | 283 | (93 | ) | |||||||||||||
(Loss) income from continuing operations | (132,302 | ) | (392,912 | ) | 11,159 | (516,481 | ) | 46,356 | ||||||||||||
Income (loss) from discontinued operations, net of taxes | 504 | (90 | ) | (377 | ) | (521 | ) | (1,997 | ) | |||||||||||
Net (loss) income | ($ | 131,798 | ) | ($ | 393,002 | ) | $ | 10,782 | ($ | 517,002 | ) | $ | 44,359 | |||||||
Basic (loss) income per common share: | ||||||||||||||||||||
Continuing operations | $ | (1.18 | ) | $ | (3.51 | ) | $ | 0.10 | $ | (4.58 | ) | $ | 0.38 | |||||||
Discontinued operations | $ | 0.00 | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.02 | ) | ||||||
Net (loss) income per common share | $ | (1.18 | ) | $ | (3.52 | ) | $ | 0.09 | $ | (4.59 | ) | $ | 0.36 | |||||||
Diluted (loss) income per common share: | ||||||||||||||||||||
Continuing operations | $ | (1.18 | ) | $ | (3.51 | ) | $ | 0.10 | $ | (4.58 | ) | $ | 0.37 | |||||||
Discontinued operations | $ | 0.00 | $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | $ | (0.02 | ) | |||||||
Net (loss) income per common share | $ | (1.18 | ) | $ | (3.52 | ) | $ | 0.09 | $ | (4.59 | ) | $ | 0.36 | |||||||
Weighted average shares outstanding: | ||||||||||||||||||||
Basic | 111,787 | 111,796 | 114,475 | 112,653 | 122,557 | |||||||||||||||
Diluted | 111,787 | 111,796 | 115,819 | 112,653 | 124,940 |
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Entegris, Inc. and Subsidiaries
GAAP to Non-GAAP Reconciliation of Statement of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended December 31, 2008 | Twelve months ended December 31, 2008 | |||||||||||||||||||||||
U.S. GAAP | Adjustments | Non- GAAP | U.S. GAAP | Adjustments | Non- GAAP | |||||||||||||||||||
Net sales | $ | 112,736 | $ | — | $ | 112,736 | $ | 554,699 | $ | — | $ | 554,699 | ||||||||||||
Cost of sales(a) | 80,291 | (7,801 | ) | 72,490 | 342,981 | (13,519 | ) | 329,462 | ||||||||||||||||
Restructuring charges | 203 | — | 203 | 203 | — | 203 | ||||||||||||||||||
Gross profit | 32,242 | 7,801 | 40,043 | 211,515 | 13,519 | 225,034 | ||||||||||||||||||
Selling, general and administrative expenses (b) | 31,731 | (596 | ) | 31,135 | 147,531 | (596 | ) | 146,935 | ||||||||||||||||
Engineering, research and development expenses | 8,939 | — | 8,939 | 40,086 | — | 40,086 | ||||||||||||||||||
Amortization of intangible assets | 5,088 | — | 5,088 | 19,585 | — | 19,585 | ||||||||||||||||||
Impairment of goodwill (c) | 93,989 | (93,989 | ) | — | 473,799 | (473,799 | ) | — | ||||||||||||||||
Restructuring charges | 7,091 | — | 7,091 | 10,423 | — | 10,423 | ||||||||||||||||||
Operating (loss) income | (114,596 | ) | 102,386 | (12,210 | ) | (479,909 | ) | 487,914 | 8,005 | |||||||||||||||
Interest expense, net | 336 | — | 336 | 1,018 | — | 1,018 | ||||||||||||||||||
Other expense, net (d) | 13,663 | (10,000 | ) | 3,663 | 15,486 | (11,102 | ) | 4,384 | ||||||||||||||||
(Loss) income before income taxes | (128,595 | ) | 112,386 | (16,209 | ) | (496,413 | ) | 499,016 | 2,603 | |||||||||||||||
Income tax (benefit) expense (e) | 3,473 | (3,970 | ) | (497 | ) | 19,785 | (15,830 | ) | 3,955 | |||||||||||||||
Equity in net loss of affiliates | 234 | — | 234 | 283 | — | 283 | ||||||||||||||||||
(Loss) income from continuing operations | (132,302 | ) | 116,356 | (15,946 | ) | (516,481 | ) | 514,846 | (1,635 | ) | ||||||||||||||
Income (loss) from discontinued operations, net of taxes | 504 | — | 504 | (521 | ) | — | (521 | ) | ||||||||||||||||
Net (loss) income | ($ | 131,798 | ) | $ | 116,356 | ($ | 15,442 | ) | $ | (517,002 | ) | $ | 514,846 | $ | (2,156 | ) | ||||||||
Basic (loss) income per common share: | ||||||||||||||||||||||||
Continuing operations | $ | (1.18 | ) | $ | 1.04 | $ | (0.14 | ) | $ | (4.58 | ) | $ | 4.57 | $ | (0.01 | ) | ||||||||
Discontinued operations | $ | 0.00 | — | $ | 0.00 | $ | (0.00 | ) | — | $ | (0.00 | ) | ||||||||||||
Net (loss) income per common share | $ | (1.18 | ) | $ | 1.04 | $ | (0.14 | ) | $ | (4.59 | ) | $ | 4.57 | $ | (0.02 | ) | ||||||||
Diluted (loss) income per common share: | ||||||||||||||||||||||||
Continuing operations | $ | (1.18 | ) | $ | 1.04 | $ | (0.14 | ) | $ | (4.58 | ) | $ | 4.57 | $ | (0.01 | ) | ||||||||
Discontinued operations | $ | 0.00 | — | $ | 0.00 | $ | (0.00 | ) | — | $ | (0.00 | ) | ||||||||||||
Net (loss) income per common share | $ | (1.18 | ) | $ | 1.04 | $ | (0.14 | ) | $ | (4.59 | ) | $ | 4.57 | $ | (0.02 | ) | ||||||||
Weighted average shares outstanding: | ||||||||||||||||||||||||
Basic | 111,787 | 111,787 | 111,787 | 112,653 | 112,653 | 112,653 | ||||||||||||||||||
Diluted | 111,787 | 111,787 | 111,787 | 112,653 | 112,653 | 112,653 |
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a) | Cost of sales for the three months ended and year ended December 31, 2008 is adjusted for $7.8 million and $13.5 million, respectively, for the fair value mark-up of acquired inventory sold related to the POCO Graphite, Inc. acquisition. |
b) | Selling, general, and administrative expense for both the three months ended and year ended December 31, 2008 is adjusted for $0.6 million, related to the write-off of a loan. |
c) | Impairment of goodwill for the three months ended and year ended December 31, 2008 is adjusted for $94.0 million and $473.8 million of impairment charges, respectively, related to goodwill. |
d) | Other expense, net for the three months ended and year ended December 31, 2008 is adjusted for $10.0 million and $11.1 million, respectively, for write-offs of equity investments. |
e) | Income tax expense for the three months ended and year ended December 31, 2008 is adjusted for $12.5 million and $39.4, respectively, related to the increase in the deferred tax asset valuation allowance related to U.S. tax credit carryforwards, offset by adjustments of $8.5 million and $23.6 million, respectively, for the tax benefit associated with the impairment charges and write-offs noted in b), c) and d) above. |
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Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
Dec. 31, 2008 | Dec. 31, 2007 | |||||
ASSETS | ||||||
Cash, cash equivalents and short-term investments | $ | 115,033 | $ | 160,655 | ||
Accounts receivable | 70,535 | 112,053 | ||||
Inventories | 102,189 | 73,120 | ||||
Deferred tax assets, deferred tax charges and refundable income taxes | 13,337 | 23,238 | ||||
Other current assets and assets held for sale | 10,710 | 13,555 | ||||
Total current assets | 311,804 | 382,621 | ||||
Property, plant and equipment, net | 159,738 | 121,157 | ||||
Intangible assets and goodwill | 93,139 | 478,495 | ||||
Deferred tax asset – non-current | 30,349 | 35,323 | ||||
Other assets | 18,504 | 17,645 | ||||
Total assets | $ | 613,534 | $ | 1,035,241 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current maturities of long-term debt | $ | 13,166 | $ | 9,310 | ||
Short-term borrowings | — | 17,802 | ||||
Accounts payable | 21,782 | 24,260 | ||||
Accrued liabilities | 42,456 | 61,884 | ||||
Income tax payable | 1,605 | 12,493 | ||||
Total current liabilities | 79,009 | 125,749 | ||||
Long-term debt, less current maturities | 150,516 | 20,373 | ||||
Other liabilities | 47,839 | 36,810 | ||||
Shareholders’ equity | 336,170 | 852,309 | ||||
Total liabilities and shareholders’ equity | $ | 613,534 | $ | 1,035,241 | ||
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Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Quarter ended Dec. 31 | Year ended Dec. 31 | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Operating activities: | ||||||||||||||||
Net (loss) income | $ | (131,798 | ) | $ | 10,782 | $ | (517,002 | ) | $ | 44,359 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
(Income) loss from discontinued operations | (504 | ) | 377 | 521 | 1,997 | |||||||||||
Depreciation | 7,982 | 6,010 | 26,758 | 24,902 | ||||||||||||
Amortization | 5,088 | 5,172 | 19,585 | 18,874 | ||||||||||||
Stock-based compensation expense | 1,466 | 1,891 | 7,024 | 10,344 | ||||||||||||
Impairment of goodwill | 93,989 | 235 | 473,799 | 235 | ||||||||||||
Impairment of equity investments | 10,596 | — | 11,698 | — | ||||||||||||
Deferred tax valuation allowance | 12,501 | — | 39,425 | — | ||||||||||||
Provision for deferred taxes | (8,824 | ) | (21,661 | ) | (23,595 | ) | (20,434 | ) | ||||||||
Charge for fair value mark-up of acquired inventory | 7,801 | 100 | 13,519 | 836 | ||||||||||||
Other | 2,149 | 5,840 | 2,305 | (2,808 | ) | |||||||||||
Changes in operating assets and liabilities, excluding effects of acquisitions: | ||||||||||||||||
Trade accounts receivable and notes receivable | 39,186 | (5,988 | ) | 53,355 | 20,054 | |||||||||||
Inventories | (1,310 | ) | 8,992 | 1,922 | 24,061 | |||||||||||
Accounts payable and accrued liabilities | (20,117 | ) | 7,235 | (29,840 | ) | (2,935 | ) | |||||||||
Income taxes payable and refundable income taxes | (2,827 | ) | 15,930 | (25,057 | ) | 14,682 | ||||||||||
Other | 8,054 | (2,087 | ) | 10,741 | 2,150 | |||||||||||
Net cash provided by operating activities | 23,432 | 32,828 | 65,158 | 132,017 | ||||||||||||
Investing activities: | ||||||||||||||||
Acquisition of property and equipment | (7,793 | ) | (5,484 | ) | (26,987 | ) | (26,919 | ) | ||||||||
Acquisition of businesses, net of cash acquired | (879 | ) | (3,067 | ) | (162,852 | ) | (44,911 | ) | ||||||||
Purchases of equity investments | — | — | (10,982 | ) | (6,126 | ) | ||||||||||
Maturities of short-term investments, net of purchases | — | — | — | 121,093 | ||||||||||||
Other | (129 | ) | 4,004 | 900 | 7,663 | |||||||||||
Net cash (used in) provided by investing activities | (8,801 | ) | (4,547 | ) | (199,921 | ) | 50,800 | |||||||||
Financing activities: | ||||||||||||||||
Payments on short-term borrowings and long-term debt | (16,301 | ) | (60,800 | ) | (64,707 | ) | (88,115 | ) | ||||||||
Proceeds from short-term and long-term borrowings | 40,811 | 69,063 | 173,811 | 131,063 | ||||||||||||
Repurchase and retirement of common stock | — | (4,100 | ) | (28,895 | ) | (256,109 | ) | |||||||||
Issuance of common stock | 9 | 1,140 | 3,097 | 29,856 | ||||||||||||
Other | (3 | ) | (2,401 | ) | (625 | ) | 244 | |||||||||
Net cash provided by (used in) financing activities | 24,516 | 2,902 | 82,681 | (183,061 | ) | |||||||||||
Net cash (used in) provided by discontinued operations | (433 | ) | 2,313 | (41 | ) | 1,237 | ||||||||||
Effect of exchange rate changes on cash | 2,358 | 1,286 | 6,501 | 4,856 | ||||||||||||
Increase (decrease) in cash and cash equivalents | 41,072 | 34,782 | (45,622 | ) | 5,849 | |||||||||||
Cash and cash equivalents at beginning of period | 73,961 | 125,873 | 160,655 | 154,806 | ||||||||||||
Cash and cash equivalents at end of period | $ | 115,033 | $ | 160,655 | $ | 115,033 | $ | 160,655 | ||||||||
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