Adept Technology Reports Fourth Quarter Fiscal 2003 Results

LIVERMORE, Calif.--(BUSINESS WIRE)--Aug. 6, 2003--Adept Technology, Inc. (OTCBB: ADTK.OB), a leading manufacturer of flexible automation for the semiconductor, life sciences, electronics and automotive industries, today reported financial results for its fourth quarter ended June 30, 2003. Net revenues for the quarter ended June 30, 2003 were $11.3 million, a decrease of 22.7% from net revenues of $14.6 million for the quarter ended June 30, 2002. Gross margin for the quarter was 20.0% versus 31.0% for the same quarter a year ago. The decrease in gross margin is primarily the result of inventory write downs related to our Nanostage product line and obsolete semiconductor components. Operating expenses for the quarter were $8.6 million, a decrease of 50.0% compared to $17.1 million for the quarter ended June 30, 2002. R&D and SG&A expenses for the quarter ended June 30, 2003 were $6.2 million, a decrease of 48.1% compared to $11.9 million for the same period a year ago. Adept reported a net loss of $6.4 million, or $0.42 per share, for the quarter ended June 30, 2003, versus a net loss of $11.9 million, or $0.85 per share, for the quarter ended June 30, 2002. The figures above include amortization and restructuring charges of $2.4 million for the quarter ended June 30, 2003 and $6.8 million for the quarter ended June 30, 2002.

Brian R. Carlisle, Chairman and Chief Executive Officer of Adept noted, "During the fourth quarter, we made very substantial progress in turning around our financial performance. We have now completed most of the write downs and restructuring necessary to get our expenses in line with revenues. We have reduced our operating expense run rate to approximately $5 million of cash operating expense per quarter. We have improved our gross margins, and expect our first quarter gross margin to be in the range of 34% to 38%. Revenue has stabilized and appears to be slowly improving as some of our historical markets in electronics and data storage are finally beginning to add capacity again. We were able to increase our cash balance through careful asset management from $1.7 million at the end of the March quarter to $3.2 million at the end of the June quarter. We effectively managed non-cash working capital assets during the quarter enabling us to reduce cash utilized in operations. As an example, we controlled receipts and leveraged sales of existing inventory resulting in an ending inventory balance of $7.1 million at the end of the June quarter compared to a balance of $11.2 million for the same period a year ago. This represents a 36.6% reduction in inventory levels. In terms of product offerings, we introduced and began shipping the next generation versions of our controls architecture and Adept Cobra robots, which are expected to further improve gross margins during the course of fiscal 2004. Although our reported gross margin for the fourth quarter was 20.0%, it included several non-cash charges consisting of inventory write downs and rent which negatively impacted gross margin by fourteen points. We do not anticipate incurring these charges over the next several quarters. We were successful in completing lease amendment negotiations with our landlord in Livermore, the result of which involves the settlement of rent for unused space for a convertible note in the first quarter of fiscal 2004 and a reduction in our quarterly rent expenses by 78.0%. We have not been successful in reaching agreement with the landlord of our former San Jose facility, and are currently litigating amounts owed under that lease. As we have vacated this facility, and have established appropriate reserves for any liabilities associated with this lease, we anticipate no future income statement impacts related to this lease. As a result of all these activities, we expect substantially improved financial performance in fiscal 2004."

For the year ended June 30, 2003, Adept reported net revenues of $44.8 million compared to net revenues of $57.0 million for the year ended June 30, 2002, a decrease of 21.4%. Gross margin for the year ended June 30, 2003 was 24.0% versus 33.6% for the same period a year ago. Operating expenses for year ended June 30, 2003 were $39.8 million compared to $72.8 million in operating expenses for the same period a year ago, a decrease of 45.4%. For the year ended June 30, 2003, Adept had a net loss of $29.0 million, as compared to a net loss of $59.8 million for the year ended June 30, 2002. The operating expense figures above include amortization and restructuring charges of $6.1 million for the year ended June 30, 2003 and $18.4 million for the same period one year ago. The net loss figure for the year ended June 30, 2002 also includes a goodwill impairment charge of $6.6 million and the cumulative effect of change in accounting principle of $10.0 million.

The company managed to increase its cash balance to $3.2 million in the quarter ended June 30, 2003 from $1.7 million in the quarter ended March 29, 2003, despite a fourth quarter operating loss of $6.3 million. Of this loss, approximately $3.0 million is attributable to non-cash lease expenses and inventory write-downs. Additionally, the company generated $3.8 million from reducing inventory and accounts receivable balances, resulting in a net increase of $1.5 million in cash. Although Adept continues to manage its cash very closely, it remains committed to pursuing a modest level of additional outside sources of financing to address future operating requirements.

Financial Liquidity Highlights

-- Cash and cash equivalents were $3.2 million at June 30, 2003 compared with $1.7 million at March 29, 2003.
-- Amounts owed to vendors beyond normal terms decreased to $1.1 million at June 30, 2003 from $1.5 million at March 29, 2003.
-- Outstanding Accounts Receivable Purchase Agreement liabilities with Silicon Valley Bank decreased to $97,000 at June 30, 2003 from $340,000 at March 29, 2003.

Business Highlights

-- Adept announced New Film Frame Handling Platform for Back-End

Metrology and Advanced Packaging Process Equipment. =410&layout=9&item_id=425202

-- Adept announced that its Adept Cobra Smart600(TM) robot won

Robotics World magazine's Innovative Products Award at the

2003 International Robot and Vision Show =410&layout=9&item_id=422224

-- Adept introduced the Adept FireBlox(TM), a miniature dual-axis

servo amplifier and controller. The Adept FireBlox is based

upon the Adept SmartServo(TM) architecture and is designed to

power and control multi-axis servo devices. Based on the Adept

SmartServo architecture, the new product is designed to reduce

wiring, lower costs and improve reliability for motion control

applications. =410&layout=9&item_id=416499

-- Adept announced the release of the Adept SmartMotion(TM)

system. Based on the Adept SmartServo(TM) architecture, the

Adept SmartMotion system controls industrial robots and other

high performance multi-axis servo devices, and is designed to

reduce the costs of motion control. =410&layout=9&item_id=416149

-- Adept announced the introduction of four new models in their

Adept Cobra product line. The new Adept Cobra Smart600(TM) and

Adept Cobra Smart800(TM) robots contain an embedded controller

in the arm and have no external electronics. The new Adept

Cobra s600(TM) and Adept Cobra s800(TM) robots are offered

with the Adept SmartController(TM) and provide advanced

functionality such as vision guidance, conveyor tracking and

multiple robot control. All four new robots contain power

amplifiers and a servo controller inside the robot, and

utilize the Adept SmartServo architecture, which replaces

hundreds of wires and connections with a single cable, using

the FireWire(R) (IEEE-1394) based high-speed control bus,

reducing costs, increasing reliability and simplifying

installation. =410&layout=9&item_id=400707

(Due to the length of the above URLs, it may be necessary to copy and paste them into your Internet browser's URL address field.)

Adept's Outlook

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not reflect the potential impact of any mergers, acquisitions or other business combinations that may be completed after the date of this release.

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