Exhibit 20
To Our Shareholders:
We would like to share with you the financial results and some highlights
from our first fiscal quarter ended August 31, 2002.
Net sales for the first quarter of fiscal 2003 were $3.5 million, an increase
of 25 percent from net sales of $2.8 million in the first quarter of the
prior fiscal year. Net loss for the quarter was $887,000, or $0.12 per
share, compared with a net loss of $634,000, or $0.09 per share, in the same
quarter of the prior year. The operating loss for the first quarter of
fiscal 2003 showed an improvement of 7 percent compared with the operating
loss in the same quarter of the prior year. Net loss for the first quarter
of fiscal 2002 included a U.S. income tax benefit of $332,000, or $0.05 per
share, whereas in the first quarter of fiscal 2003 no U.S. income tax benefit
was recorded.
As of August 31, 2002, we had no outstanding debt. Our cash, short-term
investments and long-term investments totaled $13.6 million, working capital
was $24.5 million and book value per share was $4.03. Our long-term
investments consist of interest bearing securities with maturities of less
than 18 months.
Although the recovery of the semiconductor industry is slow, we continue to
remain confident about Aehr Test's long-term future. We were able to reduce
our operating loss somewhat in the quarter just ended compared with that of
the fourth quarter of fiscal 2002. However, given the sluggish economy and
the continued downturn in the semiconductor industry, we expect our net sales
in the second quarter of fiscal 2003 to be less than those in the quarter
just reported. We have a strong balance sheet, so we can continue to invest
in R&D and grow our FOX family of products, which we expect to add to our
core product revenues.
We received orders during the first quarter for multiple MAX4 burn-in and
test systems from a leading semiconductor manufacturer. The newly released
MAX4 system features low voltage down to 0.5 volts and high current up to 200
amps, as needed to meet the burn-in and test requirements for today's high
performance logic devices. We believe that this sale validates the market
need for higher power, lower voltage burn-in and test systems. Our new MAX4
system could lead to new business opportunities for us if a significant
percentage of our installed base needs to be replaced as the industry
migrates to higher power ICs. We continue to be encouraged as our new
products continue to generate interest from our large customer base.
On behalf of everyone at Aehr Test, we appreciate your continued support
during these difficult times.
/S/ RHEA J. POSEDEL /S/ C.J. MEURELL
Rhea J. Posedel C.J. Meurell
CEO and Chairman President and COO
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
Aug 31, Aug 31,
2002 2001
---------- ----------
Net sales............................................. $3,508 $2,805
Cost of sales......................................... 1,949 1,410
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Gross profit.......................................... 1,559 1,395
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Operating expenses:
Selling, general and administrative................. 1,711 1,631
Research and development............................ 961 966
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Total operating expenses........................ 2,672 2,597
---------- ----------
Loss from operations.................................. (1,113) (1,202)
Interest income....................................... 83 168
Other income, net..................................... 104 101
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Loss before income taxes.............................. (926) (933)
Income tax benefit.................................... (39) (299)
---------- ----------
Net loss.............................................. $ (887) $ (634)
---------- ----------
Net loss per share (basic)............................ $(0.12) $(0.09)
Net loss per share (diluted).......................... $(0.12) $(0.09)
Shares used in per share calculation (basic).......... 7,184 7,123
Shares used in per share calculation (diluted)........ 7,184 7,123
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Aug 31, May 31,
2002 2002
(unaudited)
---------- ----------
Assets
Current assets:
Cash and cash equivalents .......................... $ 8,020 $ 7,485
Short-term investments ............................. 4,856 8,003
Accounts receivable................................. 3,546 3,132
Inventories ........................................ 8,921 8,633
Prepaid expenses and other ......................... 2,327 2,373
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Total current assets ........................... 27,670 29,626
Property and equipment, net .......................... 2,205 2,356
Long-term investments ................................ 701 --
Other assets, net .................................... 1,859 1,836
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Total assets ................................... $32,435 $33,818
========== ==========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable ................................... $ 809 $ 874
Accrued expenses ................................... 1,995 2,260
Deferred revenue ................................... 399 540
---------- ----------
Total current liabilities ...................... 3,203 3,674
Deferred revenue ..................................... 35 35
Deferred lease commitment ............................ 240 224
---------- ----------
Total liabilities .............................. 3,478 3,933
---------- ----------
Shareholders' equity:
Common stock........................................ 72 72
Additional paid-in capital ......................... 36,384 36,387
Accumulated deficit ................................ (8,955) (8,068)
Net unrealized gain on investments.................. 3 2
Cumulative translation adjustment................... 1,453 1,492
---------- ----------
Total shareholders' equity ..................... 28,957 29,885
---------- ----------
Total liabilities and shareholders' equity ..... $32,435 $33,818
========== ==========
"Safe Harbor" Statement: This letter contains forward-looking statements
that involve risks and uncertainties relating to projections regarding
industry growth and customer demand for the Company's products. Actual
results may vary from projected results. These risks and uncertainties
include economic conditions in Asia and elsewhere, world events, acceptance
by customers of the FOX, MTX, MAX and DiePak technologies, the ability of the
Company to gain business in China, the Company's development and manufacture
of a commercially successful wafer-level burn-in system, and the potential
emergence of alternative technologies, which could adversely affect demand
for the Company's products in fiscal year 2003. See the Company's 10-K and
most recent 10-Q filed with the SEC for additional risks affecting the
Company.