Press Release
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Revenues for the third quarter increased 229% to $3.7 million from revenues of $1.1 million in the third quarter of 2001. On a sequential quarterly basis, third-quarter revenues were 70% higher than the $2.1 million reported for the second quarter of 2002. Revenues for the first nine months grew to $7.3 million compared to $3.0 million in the prior year nine-month period, a 141% increase.
The year-over-year revenue growth was attributable to the company's first production shipments of parts manufactured from bulk Liquidmetal(R) alloy, increased sales of Liquidmetal(R) alloy coatings, furnace equipment sales, research and development revenues largely derived from ongoing Department of Defense contracts, and revenues related to the prototyping of test products for current and prospective customers engaged in active product development programs with the company.
As expected, higher expenses stemming from the rapid build-up of the company's infrastructure in support of its growing operations resulted in losses for the third quarter and nine months. For the quarter, the company reported a loss from continuing operations of $5.2 million, or $.13 per share, compared to a loss of $1.2 million, or $.03 per share, in the third quarter of 2001. For the nine months, the loss from continuing operations was $14.0 million, or $.37 per share, compared with a loss of $2.3 million, or $.07 per share, from continuing operations for the prior year nine months. Including discontinued operations, the net loss for the quarter totaled $3.8 million, or $.09 per share, versus a net loss of $20.8 million, or $.61 per share, in the prior year quarter. For the nine months, the net loss including discontinued operations amounted to $12.0 million, or $.32 per share, compared with a net loss of $26.1 million, or $.80 per share, in the same period last year.
While gross profit for the third quarter more than doubled on the strength of higher revenues, the gross margin was 30.9% compared to 50.6% in the third quarter of 2001. For the nine months, the gross margin was 39.5% versus 49.4% a year earlier. The margin reduction during the current year periods was an anticipated outgrowth of the shift in the company's revenue mix toward a greater percentage of bulk alloy business, which carries a lower margin than the higher-margin coatings sales that dominated revenues in the prior year.
"On balance, we are very pleased with the company's third-quarter financial performance and the operational strides we are making as Liquidmetal Technologies transitions into a full-scale manufacturing company," said John Kang, President and Chief Executive Officer. "Our expanded manufacturing facilities in Pyongtaek, South Korea came onstream in September as planned, and capacity there is ramping up to meet demand for the current wave of new commercial products employing Liquidmetal(R) alloys. We look forward to the impending arrival of Tom Trotter, our new Senior Vice President of Manufacturing, as we continue building strength in this critical area of the company."
Kang noted that the company shipped its first production parts made of bulk Liquidmetal(R) alloy--an MP3/CD player casing component--to Growell Telecom, Inc. (formerly Jascom Co., Ltd.) in September. Planned September shipments of cellular phone casing components to Samsung Electronics, LG Electronics and Chinese wireless manufacturer TCL Mobile were delayed to accommodate customer-driven product design and launch-schedule changes. Shipments to Samsung began in October, while shipments to LG Electronics and TCL are expected to begin later in the fourth quarter, Kang said.
In late September, as previously reported, Samsung announced the planned launch of its first line of mobile phones--the SCH-X199--incorporating Liquidmetal(R) alloy, while also stating its commitment to the application of Liquidmetal technology in a range of consumer electronic products in the future.
"Samsung's recent and very visible endorsement of Liquidmetal(R) alloys is, in our view, indicative of the enormous potential for our technology across a broad spectrum of existing and new product applications," Kang said. "In addition to the products currently in production, our active product development programs with such world-class organizations as LVMH, Ping, Cleveland Golf, Head Sports, Rawlings, Johnson & Johnson, Surgical Specialties, General Dynamics and the U.S. Army underscore the exciting growth opportunities ahead for Liquidmetal Technologies."
In other news related to its product development initiatives, the company announced that U.S. President George W. Bush last week signed into effect the nation's 2003 Defense Appropriations bill which includes a $5.25 million allocation to Liquidmetal Technologies for ongoing Department of Defense research and testing of Liquidmetal(R) alloy in armor-piercing ammunition and other defense-related applications. Contract awards for specific projects under the allocation are expected in mid-2003.
The company will hold a third quarter web cast conference call hosted by John Kang, President and Chief Executive Officer, and Brian McDougall, Chief Financial Officer, at 8:30 a.m. EST on October 31. Interested parties may access the conference call live via the Internet from Liquidmetal Technologies' web site at http://ir.liquidmetal.com or at www.companyboardroom.com. The dial-in number for investors participating in the operator-assisted call is toll-free 1-800-915-4836 or toll 1-973-317-5319 for international callers. Institutional investors can also access the call via CCBN's password-protected event management site, www.streetevents.com.
About Liquidmetal Technologies
Liquidmetal Technologies (www.liquidmetal.com) is the leading developer, manufacturer, and marketer of products made from amorphous alloys. Amorphous alloys are unique materials that are characterized by a random atomic structure, in contrast to the crystalline atomic structure possessed by ordinary metals and alloys. Bulk Liquidmetal(R) alloys are two to three times stronger than commonly used titanium alloys, harder than tool steel, and relatively non-corrosive and wear resistant. Bulk Liquidmetal alloys can also be molded into precision net-shaped parts similar to plastics, resulting in intricate and sophisticated engineered designs. Liquidmetal Technologies is the first company to produce amorphous alloys in commercially viable bulk form, enabling significant improvements in products across a wide array of industries. The combination of a super alloy's performance coupled with unique processing advantages positions Liquidmetal alloys for what the company believes will be The Third Revolution(TM) in material science.
This press release may contain "forward-looking statements" that involve risks and uncertainties, including statements regarding our plans, future events, objectives, expectations, forecasts, or assumptions. Any statement in this press release that is not a statement of historical fact is a forward-looking statement, and in some cases, words such as "believe," "estimate," "project," "expect," "intend," "may," "anticipate," "plans," "seeks," and similar expressions identify forward-looking statements. These statements involve risks and uncertainties that could cause actual outcomes and results to differ materially from the anticipated outcomes or result, and undue reliance should not be placed on these statements. These risks and uncertainties may include: our limited operating history in developing and manufacturing products from bulk amorphous alloys; the adoption of our alloys by customers; the commercial success of our customer's products; our ability to identify, develop, and commercialize new applications for our alloys; competition with suppliers of incumbent materials; the development of new materials that render our alloys obsolete; the ability to manage our anticipated growth; our limited direct experience in manufacturing bulk alloy products; scaling-up our manufacturing facilities; protecting our intellectual property; problems associated with manufacturing and selling our alloys outside of the United States; and other risks and uncertainties discussed in filings made with the Securities and Exchange Commission (including risks described in subsequent reports on Form 10-Q, Form 10-K, Form 8-K, and other filings). Liquidmetal Technologies disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
(unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2002 2001 2002 2001
------- -------- -------- --------
REVENUE $ 3,655 $ 1,112 $ 7,262 $ 3,008
COST OF SALES 2,524 549 4,393 1,522
------- -------- -------- --------
Gross Profit 1,131 563 2,869 1,486
------- -------- -------- --------
OPERATING EXPENSES:
Selling, general
and administrative 3,912 1,084 9,041 2,133
Research and development 2,652 364 7,008 886
------- -------- -------- --------
Total expenses 6,564 1,448 16,049 3,019
------- -------- -------- --------
LOSS BEFORE INTEREST
EXPENSE AND INCOME,
MINORITY INTEREST AND
DISCONTINUED OPERATIONS (5,433) (885) (13,180) (1,533)
Interest expense (6) (294) (1,109) (781)
Interest income 297 -- 393 --
------- -------- -------- --------
LOSS BEFORE MINORITY
INTEREST AND
DISCONTINUED OPERATIONS (5,142) (1,179) (13,896) (2,314)
Minority interest in income
of consolidated subsidiary (76) -- (86) --
------- -------- -------- --------
LOSS FROM
CONTINUING OPERATIONS (5,218) (1,179) (13,982) (2,314)
DISCONTINUED OPERATIONS:
Loss from operations of
discontinued retail
golf segment, net -- (1,835) -- (5,973)
Gain (loss) from disposal
of discontinued
retail golf segment, net 1,466 (17,786) 1,974 (17,786)
-------- -------- -------- --------
NET LOSS (3,752) (20,800) (12,008) (26,073)
Foreign exchange
translation loss (371) -- (334) --
Unrealized gain
on marketable
securities held-for-sale 182 -- 182 (1)
-------- -------- -------- --------
COMPREHENSIVE LOSS $ (3,941) $(20,800) $(12,160) $(26,074)
======== ======== ======== ========
PER COMMON SHARE
BASIC AND DILUTED:
Loss from
continuing operations $ (0.13) $ (0.03) $ (0.37) $ (0.07)
======== ======== ======== ========
Income (loss) from
discontinued operations $ 0.04 $ (0.58) $ 0.05 $ (0.72)
======== ======== ======== ========
Net loss $ (0.09) $ (0.61) $ (0.32) $ (0.80)
======== ======== ======== ========
LIQUIDMETAL TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
September 30, December 31,
2002 2001
------------ -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 40,148 $ 2,230
Marketable securities held-for-sale 2,182 --
Trade receivables (net of allowance for doubtful
accounts of $100 in 2002 and $30 in 2001) 3,911 911
Inventories 2,331 503
Prepaid expenses and other current assets 1,574 967
-------- --------
Total current assets 50,146 4,611
PROPERTY, PLANT AND EQUIPMENT, NET 13,075 1,163
INTANGIBLE ASSETS, NET 933 723
OTHER ASSETS 310 183
-------- --------
Total assets $ 64,464 $ 6,680
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 6,452 $ 2,706
Net liabilities of discontinued operations 2,273 7,492
Deferred revenue 953 830
Other liabilities 185 167
Current portion of notes payable to shareholders -- 2,988
-------- --------
Total current liabilities 9,863 14,183
OTHER LONG-TERM LIABILITIES 79 --
-------- --------
Total liabilities 9,942 14,183
-------- --------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 226 --
-------- --------
SHAREHOLDERS' EQUITY (DEFICIENCY):
Preferred stock, no par value; 10,000,000
shares authorized and none outstanding at
September 30, 2002 and 456,857
outstanding at December 31, 2001 -- 5,577
Common stock, no par value;
200,000,000 shares authorized and
40,993,245 issued and outstanding at
September 30, 2002 and 35,023,515 issued
and outstanding at December 31, 2001 106,510 29,752
Paid in capital 19,445 22,401
Unamortized stock-based compensation (983) (6,717)
Accumulated deficit (70,596) (58,588)
Accumulated comprehensive (loss) income (80) 72
-------- --------
Total shareholders' equity (deficiency) 54,296 (7,503)
-------- --------
Total liabilities and
shareholders' equity (deficiency) $ 64,464 $ 6,680
======== ========
CONTACT:
Liquidmetal Technologies
Investors:
David Townsend, 813/314-0280 ext. 225
or
Media:
Otis Buchanan, 813/314-0280 ext. 109
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