Exhibit 20
To Our Shareholders:
We would like to share with you the financial results and operating
highlights from our third fiscal quarter ended February 28, 2003.
Net sales for the third quarter of fiscal 2003 were $4.0 million, an increase
of 18 percent from $3.4 million for the same quarter of the prior year. On a
sequential basis, net sales were up 38 percent over the second quarter of
this fiscal year. Pre-tax loss for the third quarter of $938,000 compared
favorably with a pre-tax loss of $1.0 million in the third quarter of fiscal
2002, and was less than half the pre-tax loss of $2.0 million in the second
quarter of fiscal 2003. Net loss for the quarter was $988,000, or $0.14 per
share, compared with a net loss of $737,000, or $0.10 per share, in the same
quarter last year.
For the nine months ended February 28, 2003, net sales were $10.5 million, a
16 percent increase from $9.0 million in the comparable period of fiscal
2002. Loss from operations for the nine months was $3.9 million compared
with $3.3 million for the same period of the prior fiscal year. Net loss
for the nine months was $3.9 million, or $0.54 per share, compared with a net
loss of $2.1 million, or $0.30 per share, in the comparable period of fiscal
2002. Net loss for the period last year included a tax benefit of $835,000,
or $0.12 per share.
As of February 28, 2003, our cash, short-term investments and long-term
investments totaled $9.5 million, book value per share was $3.63 and we had
no outstanding debt. Our long-term investments consist of interest bearing
securities with maturities of less than 18 months.
We are proud of our accomplishments this quarter and are very excited that
our FOX development program is progressing well and starting to bear fruit.
During the third quarter, we received an order for our next generation 300mm
FOX full wafer contact test and burn-in system from a major semiconductor
manufacturer. We believe there is a large market opportunity for this
product, as it offers the potential to reduce the high cost of test and burn-
in for ICs and could change the way ICs are processed in the back-end. We
continue to see interest in our FOX family of products, for use in a wide
range of applications, from several IC manufacturers.
We are also encouraged by the additional orders for our core MTX and MAX4
systems. During the quarter, we received multiple MTX orders, totaling over
$2 million, from two leading Taiwanese test and assembly subcontractors of
Nanya Technology, a major DRAM manufacturer. Finally, as a result of higher
net sales and continued cost control, we were able to significantly reduce
our pre-tax loss for the third quarter compared with that of the previous
quarter.
Our solid balance sheet continues to provide the resources to invest in our
product development efforts, particularly those for our FOX product family.
We are confident that these efforts will result in new, innovative products
that will fuel our growth over the long term.
On behalf of everyone at Aehr Test, we appreciate your continued support.
/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 Nine Months Ended
Feb 28, Feb 28, Feb 28, Feb 28,
2003 2002 2003 2002
---------- ---------- ---------- ----------
Net sales...................................... $ 4,028 $ 3,419 $10,464 $ 9,046
Cost of sales.................................. 2,512 1,801 6,369 4,612
---------- ---------- ---------- ----------
Gross profit................................... 1,516 1,618 4,095 4,434
---------- ---------- ---------- ----------
Operating expenses:
Selling, general and administrative.......... 1,497 1,683 4,660 4,814
Research and development..................... 1,100 966 3,295 2,931
---------- ---------- ---------- ----------
Total operating expenses................... 2,597 2,649 7,955 7,745
---------- ---------- ---------- ----------
Loss from operations........................... (1,081) (1,031) (3,860) (3,311)
Interest income................................ 44 110 185 423
Other income (expense), net.................... 99 (91) (160) (92)
---------- ---------- ---------- ----------
Loss before income taxes....................... (938) (1,012) (3,835) (2,980)
Income tax expense (benefit)................... 50 (275) 32 (835)
---------- ---------- ---------- ----------
Net Loss....................................... $ (988) $ (737) $(3,867) $(2,145)
========== ========== ========== ==========
Net loss per share (basic)..................... $ (0.14) $ (0.10) $ (0.54) $ (0.30)
Net loss per share (diluted)................... $ (0.14) $ (0.10) $ (0.54) $ (0.30)
Shares used in per share calculation (basic)... 7,137 7,169 7,162 7,140
Shares used in per share calculation (diluted). 7,137 7,169 7,162 7,140
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Feb 28, May 31,
2003 2002
(unaudited)
---------- ----------
Assets
Current assets:
Cash and cash equivalents .......................... $ 6,411 $ 7,485
Short-term investments ............................. 2,631 8,003
Accounts receivable................................. 5,568 3,132
Inventories ........................................ 9,467 8,633
Prepaid expenses and other ......................... 2,260 2,373
---------- ----------
Total current assets ........................... 26,337 29,626
Property and equipment, net .......................... 1,570 2,356
Long-term investments ................................ 420 --
Other assets, net .................................... 1,563 1,836
---------- ----------
Total assets ................................... $29,890 $33,818
========== ==========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable ................................... $ 1,179 $ 874
Accrued expenses ................................... 2,324 2,260
Deferred revenue ................................... 142 540
---------- ----------
Total current liabilities ...................... 3,645 3,674
Deferred revenue ..................................... 35 35
Deferred lease commitment ............................ 266 224
---------- ----------
Total liabilities .............................. 3,946 3,933
---------- ----------
Shareholders' equity:
Common stock........................................ 71 72
Additional paid-in capital ......................... 36,333 36,387
Accumulated deficit ................................ (11,935) (8,068)
Net unrealized gain on investments.................. 4 2
Cumulative translation adjustment................... 1,471 1,492
---------- ----------
Total shareholders' equity ..................... 25,944 29,885
---------- ----------
Total liabilities and shareholders' equity ..... $29,890 $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 calendar year 2003. See the Company's recent
10-K and 10-Q reports filed with the SEC for additional risks affecting the
Company.