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
- Press Release
- Source: Entegris, Inc.
- On 7:00 am EST, Thursday February 12, 2009
CHASKA, Minn., Feb. 12, 2009 (GLOBE NEWSWIRE) -- Entegris, Inc. (NasdaqGS:ENTG - News) today reported its financial results for the fiscal fourth quarter and year ended December 31, 2008.
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| ENTG | 4.38 | +0.07 |
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 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 http://www.entegris.com.
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 at http://www.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 http://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.
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended Twelve months ended
-------------------------------- ---------------------
Dec. 31, Sept. 27, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2007 2008 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
GAAP to Non-GAAP Reconciliation of Statement of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended
December 31, 2008
---------------------------------
U.S. Non-
GAAP Adjustments GAAP
---------------------------------
Net sales $ 112,736 $-- $112,736
Cost of sales(a) 80,291 (7,801) 72,490
Restructuring charges 203 -- 203
---------------------------------
Gross profit 32,242 7,801 40,043
Selling, general and
administrative expenses (b) 31,731 (596) 31,135
Engineering, research and
development
expenses 8,939 -- 8,939
Amortization of intangible assets 5,088 -- 5,088
Impairment of goodwill (c) 93,989 (93,989) --
Restructuring charges 7,091 -- 7,091
---------------------------------
Operating (loss) income (114,596) 102,386 (12,210)
Interest expense, net 336 -- 336
Other expense, net (d) 13,663 (10,000) 3,663
---------------------------------
(Loss) income before income
taxes (128,595) 112,386 (16,209)
Income tax (benefit) expense (e) 3,473 (3,970) (497)
Equity in net loss of affiliates 234 -- 234
---------------------------------
(Loss) income from continuing (132,302) 116,356 (15,946)
operations
Income (loss) from discontinued
operations, net of taxes 504 -- 504
---------------------------------
Net (loss) income ($131,798) $ 116,356 ($15,442)
=================================
Basic (loss) income per common
share:
Continuing operations ($1.18) $1.04 ($0.14)
Discontinued operations $0.00 -- $0.00
Net (loss) income per common
share ($1.18) $1.04 ($0.14)
Diluted (loss) income per common
share:
Continuing operations ($1.18) $1.04 ($0.14)
Discontinued operations $0.00 -- $0.00
Net (loss) income per common
share ($1.18) $1.04 ($0.14)
Weighted average shares outstanding:
Basic 111,787 111,787 111,787
Diluted 111,787 111,787 111,787
Twelve months ended
December 31, 2008
---------------------------------
U.S. Non-
GAAP Adjustments GAAP
---------------------------------
Net sales $ 554,699 $ -- $554,699
Cost of sales (a) 342,981 (13,519) 329,462
Restructuring charges 203 -- 203
---------------------------------
Gross profit 211,515 13,519 225,034
Selling, general and
administrative expenses (b) 147,531 (596) 146,935
Engineering, research and
development expenses 40,086 -- 40,086
Amortization of intangible assets 19,585 -- 19,585
Impairment of goodwill (c) 473,799 (473,799) --
Restructuring charges 10,423 -- 10,423
---------------------------------
Operating (loss) income (479,909) 487,914 8,005
Interest expense, net 1,018 -- 1,018
Other expense, net (d) 15,486 (11,102) 4,384
---------------------------------
(Loss) income before income
taxes (496,413) 499,016 2,603
Income tax (benefit) expense (e) 19,785 (15,830) 3,955
Equity in net loss of affiliates 283 -- 283
---------------------------------
(Loss) income from
continuing operations (516,481) 514,846 (1,635)
Income (loss) from discontinued
operations, net of taxes (521) -- (521)
---------------------------------
Net (loss) income $(517,002) $ 514,846 $ (2,156)
=================================
Basic (loss) income per common
share:
Continuing operations ($4.58) $4.57 ($0.01)
Discontinued operations ($0.00) -- ($0.00)
Net (loss) income per common
share ($4.59) $4.57 ($0.02)
Diluted (loss) income per common
share:
Continuing operations ($4.58) $4.57 ($0.01)
Discontinued operations ($0.00) -- ($0.00)
Net (loss) income per common
share ($4.59) $4.57 ($0.02)
Weighted average shares
outstanding:
Basic 112,653 112,653 112,653
Diluted 112,653 112,653 112,653
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.
Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
Dec. 31, Dec. 31,
2008 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
======== ==========
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
=====================================================================
Contact:
Entegris, Inc.
Steve Cantor, VP of Corporate Relations
978-436-6750
irelations@entegris.com
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