Tegal Corporation Reports Second Quarter Fiscal 2010 Financial Results

PETALUMA, Calif.--(BUSINESS WIRE)--Tegal Corporation (NASDAQ: TGAL), an innovator of specialized production solutions for the fabrication of advanced MEMS, power ICs and optoelectronic devices, today announced financial results for the second quarter and fiscal year 2010, which ended September 30, 2009.

Second Quarter Highlights

• During the quarter, the Company launched ProNova™, a third-generation high-density Inductively Coupled Plasma (ICP) reactor for Tegal DRIE Series Wafer Processing Products. Targeted for fast-growing MEMS and 3D IC applications, delivery of the ProNova has already begun, with the first order going to a new Tegal customer in Europe.

• Shipments during the quarter included a Tegal DRIE 3200 multi-module cluster tool for a high volume manufacturer of MEMS sensors and a Tegal SMT PVD system for high quality reactive sputtering of piezoelectric aluminum nitride (AlN) films for electro acoustic devices such as BAW and FBAR filters (RF MEMS) and for other piezoelectric sensor and actuator applications.

Financial Results

Revenues for the second quarter of fiscal 2010 were $3.1 million, an increase of 55% from $2.0 million in the same period last year. Tegal reported a net loss of ($1.7) million, or ($0.20) per share, for the quarter, compared to net loss of ($2.5) million, or ($0.34) per share in the same period last year, and a net loss of ($2.6) million, or ($0.31) per share in the prior quarter.

Gross profits for the second quarter of fiscal 2010 were 27.2% compared to 50.8% in the same period last year, and up from 8.6% in the prior quarter.

Operating loss for the second quarter was ($1.8) million, including approximately $0.4 million of non-cash charges. Operating loss in the same period last year was ($2.4) million. That period’s operating expenses included $0.5 million of non-cash charges. The operating loss for Q1 of this fiscal year was ($3.0) million, which included $0.5 million of non-cash charges.

Backlog at the end of the quarter was $3.6 million.

Cash at the end of the fiscal second quarter of 2010 was $8.6 million, a $1.8 million decrease from the end of the June quarter. Over the same three month period, inventories decreased by $0.5 million to $14.5 million, accounts payable decreased by $0.3 million to $1.5 million, and accounts receivable increased by $0.7 million to $2.5 million.

As of September 30, 2009, the Company’s total shares outstanding were 8,415,676.

“While our industry remains under pressure, we were pleased to report sequential increasing revenues, an improved backlog and a reduction in both our operating loss and cash burn,” said Thomas Mika, President and CEO of Tegal Corporation. “More importantly, we believe our tools are the best in the industry and we are pleased to receive new orders from customers in Europe and Japan. This has been a challenging market for any company to win new customers and we believe that these orders are testament to our technology, value proposition and customer service.”

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 is an innovator of specialized production solutions for the fabrication of advanced MEMS, power ICs and optoelectronic devices found in products like smart phones, networking gear, solid-state lighting, and digital imaging. The Company’s plasma etch and deposition tools enable sophisticated manufacturing techniques, such as 3D interconnect structures formed by intricate silicon etch, also known as Deep Reactive Ion Etching (DRIE). Tegal combines proven expertise with practical system strategies to deliver application-specific solutions that are robust and reliable, and deliver exceptional process quality and high yields at a lower overall cost of ownership. Headquartered in Petaluma, California, the company has more than 35 years of expertise and innovation in specialized technologies, over 100 patents, and an installed base of more than 1900 systems worldwide. Please visit us on the web at www.Tegal.com.

TEGAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share data)
		September 30,			March 31,
		2009			2009
ASSETS
Current assets:
Cash and cash equivalents		$	8,616		$	12,491
Accounts receivable, net of allowances for sales returns and doubtful accounts of $159 and $207 at September 30, 2009 and March 31, 2009, respectively			2,469			2,775
Inventories, net			14,484			14,480
Prepaid expenses and other current assets			372			372
Total current assets			25,941			30,118
Property and equipment, net			1,176			1,154
Intangible assets, net			2,673			2,998
Other assets			62			67
Total assets		$	29,852		$	34,337
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable			1,545			1,487
Accrued product warranty			444			702
Common stock warrant liability			444			-
Deferred revenue			198			113
Accrued expenses and other current liabilities			1,803			2,004
Total current liabilities			4,434			4,306
Total liabilities			4,434			4,306
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock; $0.01 par value; 5,000,000 shares authorized; none issued and outstanding			—			—
Common stock; $0.01 par value; 50,000,000 shares authorized; 8,415,676 and 8,412,676 shares issued and outstanding at September 30, 2009 and March 31, 2009, respectively			84			84
Additional paid-in capital			127,952			128,484
Accumulated other comprehensive income (loss)			(504)			(372)
Accumulated deficit			(102,114)			(98,165)
Total stockholders’ equity			25,418			30,031
Total liabilities and stockholders’ equity		$	29,852		$	34,337

TEGAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data)
		Three Months Ended September 30,								Six Months Ended September 30,
		2009				2008				2009				2008
Revenue		$	3,117			$	2,010			$	4,200			$	6,739
Cost of sales			2,269				989				3,259				3,391
Gross profit			848				1,021				941				3,348
Operating expenses:
Research and development expenses			1,170				1,145				2,411				2,280
Sales and marketing expenses			670				839				1,374				1,682
General and administrative expenses			810				1,471				1,973				2,801
Total operating expenses			2,650				3,455				5,758				6,763
Operating income (loss)			(1,802	)			(2,434	)			(4,817	)			(3,415	)
Other income (expense), net			113				(65	)			521				125
Net income (loss)		$	(1,689	)		$	(2,499	)		$	(4,296	)		$	(3,290	)
Net income (loss) per share:
Basic		$	(0.20	)		$	(0.34	)		$	(0.51	)		$	(0.45	)
Diluted		$	(0.20	)		$	(0.34	)		$	(0.51	)		$	(0.45	)
Shares used in per share computation:
Basic			8,415				7,339				8,415				7,338
Diluted			8,415				7,339				8,415				7,338

Note: Shares used in per share computation for Basic and Diluted reflect a 12 to 1 reverse stock split effected by the Company on July 25, 2006