ST. PETERS, Mo., April 25, 2000 (PRIMEZONE) -- MEMC Electronic Materials, Inc. (NYSE:WFR) today released financial results for the quarter ended March 31, 2000. MEMC reported net sales increased 21% to $193.1 million for the 2000 first quarter, compared to net sales of $159.8 million in the year-ago period. Net sales also increased on a sequential basis, up approximately 6%.
The Company reported a net loss of $27.3 million, or $0.39 per share on approximately 69.6 million weighted average shares outstanding, compared to a net loss of $50.3 million, or $1.19 per share on approximately 42.2 million weighted average shares outstanding for the quarter ended March 31, 1999. The 2000 first quarter weighted average shares reflect the issuance of 15.4 million shares of common stock to VEBA Zweite Verwaltungsgesellschaft mbH in a private placement in March 1999 and 13.6 million shares of common stock in connection with the Company's rights offering in April 1999.
Product volumes increased 22% in the 2000 first quarter as compared to the first quarter of 1999, and modestly as compared to the prior quarter. Advanced large diameter and epitaxial products as a percent of total volume increased by a low single-digit percentage compared to the 1999 fourth quarter. Average selling prices increased modestly as compared to the 1999 fourth quarter.
In the first quarter of 2000, gross margin was 7.3%, compared to a negative 8.6% in the prior year period and 0.3% in the 1999 fourth quarter. The improvement in the gross margin in comparison with the year-ago period is primarily a result of substantially higher product volumes, coupled with significant cost reductions. The improved gross margin as compared to the prior quarter is a result of modest increases in average selling prices and product volumes, as well as continued benefits realized from the Company's cost reduction programs. The Company expects continued, but gradual, improvements in its cost structure in the next few quarters.
"As anticipated, our average selling prices increased this quarter. We expect that our average selling prices will continue to show a modest improvement in the next quarter through product mix improvements and selective pure price increases as market demand continues to increase towards wafer industry capacity levels," commented Klaus von Hörde, MEMC's Chief Executive Officer. "We also expect our product volumes to increase moderately in the next quarter as a result of the continued growth in the semiconductor industry."
"Our better operating results have enabled us to significantly decrease our rate of borrowing this quarter," Mr. von Hörde continued. "Looking forward, we expect to see continued improvement in our cash flow situation as the silicon wafer industry continues to strengthen."
Marketing and administration expenses decreased $1.3 million to $15.6 million in the 2000 first quarter compared to $16.9 in the 1999 first quarter. The Company anticipates that second quarter 2000 marketing and administration expenses will be similar to the first quarter levels.
Research and development expenses in the 2000 first quarter totaled $19.4 million, compared to $20.9 million in the year-ago period, and $23.7 million the 1999 fourth quarter. As anticipated, research and development expenses in the 2000 first quarter returned to levels consistent with the first three quarters of 1999.
The effective tax rate was 27% for the 2000 first quarter, as compared to 31% for the year ended December 31, 1999. The reduced rate of income tax benefit is primarily a result of changes in the composition of the Company's worldwide taxable income. The Company expects an effective tax rate for the year 2000 consistent with the first quarter.
Equity in loss of joint ventures was $1.1 million in the first quarter of 2000, compared to a loss of $4.6 million in the year-ago period and income of $1.5 million in the 1999 fourth quarter. The losses in the 2000 first quarter were principally the result of foreign currency losses. Compared to the 1999 first quarter, both joint ventures experienced double-digit increases in product volumes. In addition, both achieved positive cash flow for the second sequential quarter and positive operating profit for the third sequential quarter. In the 1999 fourth quarter, equity in income of joint ventures included a $1.8 million positive adjustment, representing the Company's share of the reduction of reserves related to certain tax net operating loss carryforwards that were adjusted in light of improving results.
MEMC is a leading worldwide producer of silicon wafers for the semiconductor industry. Silicon wafers are the fundamental building block from which almost all semiconductor devices are manufactured, such as computers, mobile electronic devices, automobiles, and other consumer and industrial products. Headquartered in St. Peters, MO, MEMC operates manufacturing facilities directly or through joint ventures in every major semiconductor-manufacturing region throughout the world, including Europe, Japan, South Korea, Taiwan, and the United States.
The matters discussed in this news release regarding continued cost improvements, future pricing, future product mix improvements, expected increase in market demand, future product volumes, expected growth in the semiconductor industry, improving cash flows, strengthening silicon wafer market, future levels of marketing and administration expenses, and expected effective income tax rate are forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include such factors as market demand for silicon wafers, utilization of manufacturing capacity, demand for semiconductors generally, changes in pricing environment, general economic conditions, competitors' actions, changes in currency exchange rates, changes in the components of worldwide taxable income, technological changes, changes in product specifications and manufacturing processes and other risks described in the Company's filings with the Securities and Exchange Commission, including the Company's 1999 Form 10-K. These forward-looking statements represent the Company's judgment as of the date of this release. The Company disclaims, however, any intent or obligation to update these forward-looking statements.
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; Dollars in thousands, except share data)
Three Months Ended
March 31,
2000 1999
----- ----
Net sales $ 193,089 $ 159,800
Costs of goods sold 179,085 173,616
------- ----------
Gross margin 14,004 (13,816)
Operating expenses:
Marketing and administration 15,594 16,879
Research and development 19,388 20,857
----------- ----------
Operating loss (20,978) (51,552)
Nonoperating (income) expense:
Interest expense 17,481 17,459
Interest income (376) (442)
Royalty income (2,080) (1,225)
Other, net 801 557
----------- ----------
Total nonoperating expense 15,826 16,349
Loss before income taxes,
equity in loss of joint
ventures and minority interests (36,804) (67,901)
Income taxes (9,937) (21,049)
----------- ----------
Loss before equity in
loss of joint ventures
and minority interests (26,867) (46,852)
Equity in loss of joint ventures (1,073) (4,589)
Minority interests 601 1,187
----------- ----------
Net loss $ (27,339) $ (50,254)
========== ==========
Basic loss per share $ (.39) $ (1.19)
========== =======
Diluted loss per share $ (.39) $ (1.19)
========== =======
Weighted average shares
used in computing
basic loss per share 69,551,754 42,196,538
========== ==========
Weighted average shares
used in computing
diluted loss per share 69,551,754 42,196,538
========== ==========
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(Unaudited)
March 31, December 31,
2000 1999
---- ----
ASSETS
Current Assets:
Cash and cash equivalents $ 23,231 $ 28,571
Accounts receivable, less
allowance for doubtful
accounts $2,333 and $2,409
in 2000 and 1999, respectively 121,867 111,559
Income taxes receivable 3,635 9,237
Inventories 96,877 98,419
Deferred tax assets, net 12,444 12,905
Prepaid and other current assets 17,267 15,229
------------ ------------
Total current assets 275,321 275,920
Property, plant and equipment, net of
accumulated depreciation of
$728,277 and $703,252 in 2000
and 1999, respectively 1,048,295 1,090,358
Investments in joint ventures 96,181 97,254
Excess of cost over net assets
acquired, net of accumulated
amortization of $6,797 and $6,466
in 2000 and 1999, respectively 46,727 47,058
Deferred tax asset, net 200,027 183,902
Other assets 28,127 30,089
------------ ------------
Total assets $ 1,694,678 $ 1,724,581
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and
current portion of long-term debt $ 40,848 $ 22,163
Accounts payable 84,814 85,704
Accrued liabilities 26,723 29,795
Customer deposits 19,058 16,556
Provision for restructuring costs 11,648 12,839
Accrued wages and salaries 23,685 22,557
----------- ------------
Total current liabilities 206,776 189,614
Long-term debt, less current portion 863,050 869,759
Pension and similar liabilities 97,352 95,731
Customer deposits 41,428 48,456
Other liabilities 44,071 44,893
----------- ------------
Total liabilities 1,252,677 1,248,453
--------- ----------
Minority interests 42,736 43,337
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value,
50,000,000 shares authorized,
none issued or outstanding at
2000 or 1999 - -
Common stock, $.01 par value,
200,000,000 shares authorized,
70,540,105 and 70,463,505
issued in 2000 and 1999,
respectively 705 705
Additional paid-in capital 771,411 770,476
Accumulated deficit (326,656) (299,317)
Accumulated other
comprehensive loss (29,175) (22,053)
Treasury stock, at cost:
929,205 in 2000 and 1999 (17,020) (17,020)
----------- -------------
Total stockholders' equity 399,265 432,791
----------- -----------
Total liabilities and
stockholders' equity $ 1,694,678 $ 1,724,581
============ ===========
CONTACT: Janine Orf
Director, Investor Relations
(636) 474-5443
Michele Katz/Michael Polyviou/ Elric Martinez
Morgen-Walke Associates
Press: Rob Ingram
212-850-5600