Exhibit 99.1
TEGAL CORPORATION REPORTS
FOURTH QUARTER AND FISCAL YEAR 2003 FINANACIAL RESULTS - ANNOUNCES
CONVERTIBLE DEBT FINANCING
PETALUMA, CALIF., JULY 1, 2003 -- Tegal Corporation (Nasdaq:TGAL), a leading
designer and manufacturer of plasma etch and deposition systems used in the
production of integrated circuits, today announced financial results for the
Fourth Quarter and Fiscal Year 2003, which ended March 31, 2003.
Revenues for the fiscal Fourth Quarter were $4 million, a decrease of 43% from
$7 million for the fiscal Fourth quarter of 2002, and an increase of 8% from
$3.7 million in the fiscal third quarter of 2003. Tegal reported a net loss of
$1.7 million, or $0.09 per share, for the quarter, compared to a net loss of
$1.2 million, or $0.09 per share in the comparable quarter one year ago.
Sequentially, Tegal's reported loss declined from $3.3 million, or $0.20 per
share, in the fiscal third quarter of 2003.
For Fiscal 2003, revenues were $14.1 million, a decrease of 35% from $21.6
million for Fiscal 2002. Tegal reported a net loss of $12.6 million, or $0.82
per share, for the Fiscal Year, compared to a net loss of $8.7 million, or $0.67
per share in the previous fiscal year.
In recent months, Tegal has achieved a number of revenue-generating business
wins, and completed a $20-million cost-reduction program. These milestones have
significantly advanced the company's initiative to extend its leadership to
adjacent markets that are integral to etch and deposition processes related to
new materials. Industry analysts forecast substantial growth in these markets,
which are driven by increased demand for wireless and hand-held products, PDAs,
cell phones, smart cards, and RFIDs (radio frequency identification devices).
Also of note, as stated in Tegal's recently filed Form 10K for Fiscal 2003, the
company's backlog stood at $6.0 million, compared with $2.0 million a year ago.
In an update as of June 30, Tegal said that its backlog stood at approximately
$4.3 million.
Tegal also announced today the signing of definitive agreements with investors
to raise up to $7.2 million in a private placement of convertible debt financing
to be completed in two steps. The first step, completed yesterday, involved the
infusion of approximately $1 million into the Company. The second step, which
will make available the balance of the financing, will be completed following
shareholder approval. This matter will be brought to the shareholders in Tegal's
Annual Meeting, currently scheduled for August 26, 2003. Shareholders of record
as of July 10, 2003 will be allowed to vote at the meeting. The proceeds of this
financing will be used to fund Tegal's general working capital requirements.
Under the terms of the proposed financing, Tegal will issue convertible
debentures with a conversion price of $0.35 per share plus warrants to purchase
up to an additional 4.1 million shares of the company at $0.50.
"Several recent business wins are positive signs that the markets in which we
specialize are improving", said Tegal Chairman and Chief Executive Officer
Michael Parodi. "Our cost-reduction program, which has provided a cumulative
savings going forward of more than $20 million annually compared to two years
ago, combined with the financing announced today, will significantly improve the
financial health of the Company," Mr. Parodi said.
"We are extremely pleased that we were able to secure financing in a very
difficult capital market for semiconductor equipment manufacturers and micro-cap
companies in general " said Mr. Parodi. "We will be calling on our shareholders
to back our recommendation for the issuance of additional shares to these
investors, confident that we have explored many other alternatives. We believe
that this is the best alternative for our stockholders to achieve the highest
value for their shareholding."
Performance highlights in recent months include:
|_| The sale to a leading semiconductor manufacturer of an EndeavorEUV(TM)
PVD cluster tool for use in producing state-of- the-art photomasks using
extreme ultraviolet (EUV) radiation. This sale was the second major
publicly announced order this year by Tegal's Sputtered Films subsidiary.
Earlier in the year, the Company announced a repeat order for an Endeavor
PVD cluster tool from another leading worldwide supplier of
semiconductors. Tegal expects to sell additional systems to that customer
over the next 18 months.
|_| The sale of a 903e plasma etch system to a leading sensor and power
device manufacturer in the United Kingdom. The tool will join other 903
systems already installed at this location and be used in the manufacture
of a variety of high power RF sensors, automotive devices and imaging
components. Tegal's 900 Series systems are widely recognized for their
low cost of ownership and high throughput. More than 1,300 of the 900
Series systems have been installed worldwide and are supported by Tegal's
extensive worldwide field process and service organization.
|_| A repeat order from a leading Japanese charge-coupled device (CCD)
manufacturer for a model 6510 HRe-(TM) advanced etch system. The system
is needed to meet rapidly expanding production requirements for CCD
arrays. CCDs are critical components used in many high resolution digital
imaging applications including digital cameras, video recorders, and the
new picture-taking cellular phones.
|_| An order from a leading Japanese semiconductor manufacturer for an
extensive system upgrade of one of its advanced etch systems. The upgrade
is needed to meet rapidly expanding production requirements for advanced
non-volatile memory devices known as Ferroelectric Random Access Memory
(FeRAM). The upgrade includes extensive productivity enhancements to the
existing system, as well as the addition of a second production chamber.
The upgraded tool is to be transferred into mainstream manufacturing
alongside other Tegal advanced etch systems already being used in FeRAM
production.
|_| Tegal was granted two patents in the Fourth Quarter for producing sub
0.15 micron devices via a unique apparatus and solid source method. One
of the patents' focus is on the production of controlled vertical
profiles. The second patent enables manufacturers to produce advanced
devices using solid source technology thereby extending the capabilities
of standard etchers that rely on source gases to define the features for
advanced devices. The vertical profiles from both patents can be used for
the production of next generation MPU's, MRAM, DRAM, FeRAM, Thin Film
Head, Compound Semiconductors, and system-on-a-chip products.
Additionally, in an action designed to ensure an orderly trading environment for
its stock, Tegal announced in May the transfer of the listing of its common
stock to the Nasdaq SmallCap Market. The Company's continued listing on the
Nasdaq SmallCap Market is contingent upon the successful completion of an
application and review process. Tegal also announced that its stockholders have
given its Board of Directors the authority to effect, should it elect to do so,
a reverse split of the company's common stock within a range of two-for-one to
fifteen-for-one.
The timing and ratio of a reverse split, if any, is at the sole discretion of
the Tegal Board of Directors. The action was approved on April 28, 2003, at a
special meeting of Tegal stockholders.
Tegal is the incumbent provider of integrated etch and deposition solutions to
more than 20 major IC manufacturers now actively engaged in the development and
production of advanced semiconductor devices incorporating new materials. More
than half of Tegal's 80+ patents are essential in the development and production
of these devices. Tegal has established a leading position in the Non-volatile
Memory market, which includes such devices as FeRAM - now moving into production
in the form of 4 Meg devices for newest generation cell phones and wireless
devices. Non-volatile Memory also includes MRAM devices, a market driven by the
need for faster, lower power, longer lasting replacement for Flash, Eprom, and
other memory devices. While still in the development stage, Tegal is actively
engaged with nearly all of the major IC manufactures around the world with
programs in this area, and it has produced results that are unmatched by any of
its competitors.
In addition to the Non-Volatile Memory market, Tegal's etch and deposition
systems are targeted at several other niche markets, including compound
semiconductors, MEMS, device-level packaging and EUV photomask production.
INVESTOR CONFERENCE CALL
Tegal will host an investor conference call today, July 1, 2003, at 4:00 p.m.
(EST), which is open to all interested investors. The call-in numbers are (800)
299-7098 or (617) 801-9715. For either dial-in number, investors should
reference Tegal or reservation number: 49431371. A digital recording will be
made available one hour after the completion of the conference call, and it will
be accessible through Friday, July 4, 2003. To access, investors should dial
(888) 286-8010 or (617) 801-6888 and enter reservation number: 20715072.
The conference call also will be available online via the Investor Section of
the Company's website at: www.tegal.com. An online replay of the teleconference,
along with a copy of the Company's earnings release, will be available on the
Company's website, as well.
SPECIAL NOTE
The securities sold in the private placement have not been registered under the
Securities Act, and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration requirements. This
press release shall not constitute an offer to sell or the solicitation of an
offer to buy any of these securities.
SAFE HARBOR STATEMENT
Except for historical information, matters discussed in this news release
contain forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. Forward-looking statements,
which are based on assumptions and describe our future plans, strategies and
expectations, are generally identifiable by the use of the words "anticipate,"
"believe," "estimate," "expect," "intend," "project" or similar expressions.
These forward-looking statements are subject to risks, uncertainties and
assumptions about the company including, but not limited to industry conditions,
economic conditions, acceptance of new technologies and market acceptance of the
company's products and services. All forward-looking statements attributable to
us or persons acting on our behalf are expressly qualified in their entirety by
the cautionary statements in this paragraph. For a further discussion of these
risks and uncertainties, please refer to the company's periodic filings with the
Securities and Exchange Commission.
ABOUT TEGAL
Tegal Corporation, headquartered in Petaluma, California, is a leading designer
and manufacturer of plasma etch and deposition systems used in the production of
smart cards, opto-telecom devices, integrated circuits (ICs), and other related
microelectronics devices. Both etching and deposition are key process steps and
must be repeated multiple times in the production of these devices. Tegal
markets and services its systems in all major IC-producing regions of the world.
More information is available on the Internet at: www.tegal.com.
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CONTACT:
Tegal Corporation
Thomas Mika (EVP and CFO), 707/763-5600
or
Nagle & Ferri Investor Relations
Frank Nagle or Bob Ferri, 415/575-1999
(Financial Exhibits Follow)
TEGAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
--THREE MONTHS ENDED-- --TWELVE MONTHS ENDED--
MARCH 31, MARCH 31,
2003 2002 2003 2002
-------- -------- -------- --------
Revenue $ 4,002 $ 6,969 $ 14,100 $ 21,606
Cost of sales 2,727 5,025 14,166 14,930
-------- -------- -------- --------
Gross profit (loss) 1,275 1,944 (66) 6,676
Operating expenses:
Research and development 1,418 1,233 4,815 5,928
Sales and marketing 662 820 2,922 3,996
General and administrative 1,038 1,114 4,814 4,987
-------- -------- -------- --------
Total operating expenses 3,118 3,170 12,551 14,911
-------- -------- -------- --------
Operating income (loss) (1,843) (1,223) (12,617) (8,235)
Other income (expense), net 148 (2) (8) (495)
-------- -------- -------- --------
Net Income (Loss) Before Taxes (1,695) (1,225) (12,625) (8,730)
Income Tax Expense 0 0 0 0
Net income (loss) After Tax $ (1,695) $ (1,225) $(12,625) $ (8,730)
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Net income (loss) per common share:
Basic $ (0.09) $ (0.09) $ (0.82) $ (0.67)
Diluted $ (0.09) $ (0.09) $ (0.82) $ (0.67)
Shares used in per share computation
Basic 16,064 14,311 15,311 13,030
Diluted 16,064 14,311 15,311 13,030
TEGAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
MARCH 31, MARCH 31,
2003 2002
------- -------
ASSETS
Current assets:
Cash $ 912 $ 8,100
Net receivables 2,681 2,579
Net inventory 7,032 15,577
Other current assets 465 1,492
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Total current assets 11,090 27,748
Intangible assets, net 959 0
Property and equipment, net 4,916 1,382
Other assets, net 244 97
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Total assets $17,209 $29,227
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 6,049 $ 6,932
Long-term liabilities 37 9
Stockholders' equity 11,123 22,286
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Total liabilities and stockholders' equity $17,209 $29,227
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