Applied Films Corporation Reports Third Fiscal Quarter 2001 Results

Apr 26, 2001, 01:00 ET from Applied Films Corporation

    LONGMONT, Colo., April 26 /PRNewswire/ -- Applied Films Corporation
 (Nasdaq:   AFCO), a leading supplier of coated glass for the flat panel display
 (FPD) industry and thin film deposition equipment for the FPD, architectural,
 automotive glass, web packaging and the carbonated beverage industries, today
 reported its results for the third fiscal quarter 2001 and nine month period
 ended March 31, 2001.
     This report represents the first quarter of combined operations of Applied
 Films and the former Large Area Coatings (LAC) division of Unaxis Corporation
 of Switzerland, now called Applied Films Germany with manufacturing operations
 in Alzenau, Germany. The transaction was completed on December 31, 2000 and
 the acquisition was accounted for as a purchase. In this, and future quarterly
 earnings releases, Applied Films intends to supplementally report cash
 earnings and cash earnings per share, which are earnings excluding the effect
 of amortization of goodwill and other intangible assets. Management believes
 this cash earnings reporting will assist investors in analyzing the company's
 operating results.
     For the third fiscal quarter 2001, net revenues were $45.0 million versus
 $11.8 million for the third fiscal quarter 2000 ended April 1, 2000,
 representing an increase of 281%. In the third fiscal quarter, 88% of our
 revenue was derived from revenue of thin film coating equipment compared to
 13% for the third fiscal quarter of last year.  The increase in revenue
 resulted from the acquisition of the Applied Films Germany that closed on
 December 31, 2000.
     Cash earnings for the third fiscal quarter of 2001 were $1.5 million or
 $0.22 per fully diluted share compared to $807,000 or $0.18 per fully diluted
 share for the comparable period in the last fiscal year.
     The net (loss) on a GAAP basis for the third fiscal quarter 2001 was
 $(6.8) million, or $(1.03) per common share, compared to a net income of
 $807,000 or $0.18 per diluted share, for the third fiscal quarter 2000. Net
 income was negatively impacted by an $11.5 million non-recurring pre-tax
 charge for the write off of acquired in-process research and development, one
 time acquisition costs, and $2.5 million in amortization of goodwill and other
 intangible assets, all associated with the acquisition, and from lower
 earnings by our coated glass business.
     For the nine months ended March 31, 2001, net revenues were $72.2 million
 compared to $27.5 million for the nine months ended April 1, 2000. This
 62% increase in revenue was the result of the acquisition of Applied Films
 Germany. Equipment revenues were 69% for the nine months ended March 31, 2001,
 compared to 7% for the comparable period last fiscal year.
     Cash earnings for the nine months ended March 31, 2001 increased to
 $4.7 million or $0.74 per fully diluted share compared to $1.6 million or
 $0.40 per fully diluted share for the same period last year.
     The net (loss) on a GAAP basis for the nine months ended March 31, 2001,
 was $(3.2) million, or $(0.53) per common share, compared to net income of
 $1.6 million, or $0.40 per diluted share, for the comparable period in fiscal
 2000. This decrease in earnings was attributed to the $11.5 million
 non-recurring pre-tax charge for the write off of acquired in-process research
 and development, one time acquisition costs, and $2.5 million in amortization
 of goodwill and other intangible assets from the acquisition. Our STEC Joint
 Venture reported strong growth for the nine month period ended March 31, 2001,
 resulting in an increase in our equity in earnings of 162% to $3.9 million
 compared to $1.5 million for the comparable period last year.
     The equipment backlog for Applied Films as of March 31, 2001 was
 $93.7 million compared to $9.2 million for the third quarter of fiscal 2000.
 We do not report a backlog figure for our coated glass business due to the
 just in time nature of the sales process.
     Tom Edman, President and Chief Executive Officer said, "We are pleased
 with the combined operating results of Applied Films and Applied Films
 Germany. The expansion of our equipment product lines and the growth in
 revenue and cash earnings from Applied Films Germany (formerly LAC) is helping
 us diversify our markets. Our financial performance exceeded expectations
 based on guidance on a revenue and a cash earnings basis and the integration
 of the two teams is coming along quite well."
     "With the acquisition, we add significant strength in web coatings for
 decorative packaging, large area coaters for heat control coatings and solar
 cell applications and the BestPET(TM) product line which is a new effort
 targeted at barrier coating equipment to prolong the shelf-life of products
 packaged in PET bottles."
     "Demand for Flat Panel Display related equipment remained strong during
 the quarter as reflected in the significant number of new orders which we
 announced in January. However, we do anticipate lower capital expenditures in
 this area for the next several quarters as the industry focuses on bringing
 new plants into production. Longer term, continued replacement of CRT desktop
 monitors with flat panel technology and the colorization of cellular phone
 displays present a bright future for this important element of our business."
 
     Business Outlook
     The following statements are based on the Company's current expectations
 of the post-acquisition Applied Films for the balance of Fiscal 2001, and the
 first two quarters of Fiscal 2002. These statements are forward-looking and
 subject to the qualifying safe harbor statement. Actual results may differ
 materially:
     Fiscal 2001 -- Fourth Quarter -- Revised
     -- We expect revenue for the fourth fiscal quarter of 2001 to be between
        $36-$39 million, with over 80% of our revenues recognized from the
        equipment segment of the business.
     -- Gross Profit for the fourth fiscal quarter is expected to be between
        23-25% of revenue.
     -- GAAP Earnings. We expect a loss of approximately $(0.13)-$(0.09) per
        fully diluted share for the fourth quarter 2001 on a GAAP basis.
     -- Cash Earnings.  We expect Cash Earnings of approximately $0.12-$0.15
        per fully diluted share for the fourth quarter 2001.
 
     Fiscal 2002 -- First Quarter -- Initial Guidance
     -- The Company expects revenue for the first fiscal quarter of 2002 to be
        between $37-$40 million, with approximately 85% of our revenues
        recognized from the equipment segment of the business.
     -- Gross Profit for the first fiscal quarter of 2002 are expected to be
        between 23-25% of revenue.
     -- GAAP Earnings:  We expect a GAAP loss of approximately $(0.11)-$(0.07)
        per fully diluted share for the first quarter 2002.
     -- Cash Earnings:  We expect Cash Earnings of approximately $0.13-$0.16
        per fully diluted share for the first quarter of 2002.
 
     Fiscal 2002 -- Second Quarter -- Initial Guidance
     -- The Company expects revenue for the second fiscal quarter of 2002 to be
        between $38-$41 million with approximately 85% of our revenues
        recognized from the equipment segment of the business
     -- Gross Profit for the second fiscal quarter of 2002 are expected to be
        between 23-25% of revenue.
     -- GAAP Earnings:  we expect a GAAP loss of approximately $(0.10)-$(0.06)
        per fully diluted share for the second quarter 2002.
     -- Cash Earnings:  we expect Cash Earnings of approximately $0.14-$0.17
        per fully diluted share for the second quarter of fiscal 2002.
 
     Third Fiscal Quarter 2001 Conference Call
     Applied Films Corporation will conduct a conference call and webcast at
 9:00 a.m. (MDT) on Thursday, April 26, 2001 to review third quarter fiscal
 year 2001 financial results. During the conference call and webcast, Thomas
 Edman, President and Chief Executive Officer, and Lawrence Firestone, Chief
 Financial Officer, will present the financial results for the quarter.
 
     The public is invited to participate in the conference call by dialing
 888-467-1742 or 703-871-3722 (International) at least 5-10 minutes prior to
 the start time, or via webcast at http://www.streetevents.com . A replay of
 the recorded conference call will be available until May 3, 2001. To listen to
 the replay, dial 888-266-2086 or 703-925-2435, code number 5171662.
 
     About Applied Films Corporation
     Applied Films Corporation is a leading supplier of thin film coated glass
 and physical vapor deposition (PVD) equipment to the information technology
 industry, particularly the flat panel display (FPD) industry, roll coaters for
 use in the deposition of capacitor and barrier films and large glass coaters
 for the production of thin films used in the architectural and automotive
 industries. Flat panel displays are found in a wide variety of consumer and
 industrial products, including cellular telephones, calculators, pagers, video
 games, office products, and laptop computers. FPDs have also been identified
 as a potential replacement for the CRT in televisions and computer monitors.
 Founded in 1976, the Company currently has approximately 550 employees at its
 headquarters in Longmont, Colorado, and operations in Alzenau and Hanau
 Germany; Brussels, Belgium; Hong Kong and Shanghai, China; Seoul, Korea; Tokyo
 and Osaka, Japan; and Taipei, Taiwan. For more information, please visit
 Applied Films' web site at http://www.appliedfilms.com .
 
     Safe Harbor Statement
     This press release contains forward-looking statements that involve
 substantial risks and uncertainties. Typically, these statements contain words
 such as "anticipate," "believe," "could," "estimate," "expect," "intend,"
 "may," "should," "will" and "would" or similar words. You should read
 statements that contain these words carefully because they discuss our future
 expectations, contain projections of our future results of operations or of
 our financial position or state other "forward-looking" information. You are
 cautioned that forward-looking statements, including statements regarding
 intent, belief or current expectations of the Company or its management
 regarding expansion into the color STN market and regarding acquisition of the
 LAC Division are not guaranties of future performance. Actual results may
 differ materially from such expectations. There may be events in the future
 that we are not able to predict or control. Such risks and uncertainties
 include change in the demand for coating equipment and colored STN glass, the
 effect of changing worldwide economic conditions on capital expenditures and
 production levels, including those in Asia, the effect of overall market
 conditions and market acceptance risks. Our future results may also affected
 by our ability to successfully manage and integrate the recently acquired LAC
 business. Other risks include those associated with dependencies on suppliers,
 the impact of competitive products and pricing, technological and product
 development risks and other risk factors. As a result, the Company's operating
 results may fluctuate, especially when measured on a quarterly basis. For
 further information, refer to the Company's Securities and Exchange Commission
 filings, including the Company's Registration Statement on Form S-1, Form 10-K
 and Forms 10-Q.
 
 
                   APPLIED FILMS CORPORATION AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (unaudited)
 
                             Three months ended          Nine Months Ended
                            March 31,     April 1,      March 31,    April 1,
                               2001         2000          2001         2000
 
     Net Revenues           $44,981       $11,759      $72,187       $27,455
 
     Cost of Goods Sold      35,293        10,301       59,503        23,818
     Gross Profit             9,688         1,458       12,684         3,637
 
 
     Operating Expenses:
       Selling, General and
         Administrative       6,354         1,084        9,580         2,821
       Research and
         Development          2,632           360        3,529         1,024
       Goodwill amortization
         and associated
           acquisition costs 13,969             -       13,969
     Income (Loss)
       from Operations      (13,267)           14      (14,394)         (208)
 
     Other (Expense) Income:
       Interest Income
         (Expense)              (90)           32        1,111          (200)
       Other Income             108           125          447           312
       Equity Earnings
         in Affiliate         1,041           697        3,973         1,515
     Income before
       income taxes and
       cumulative effect
       of change in
       accounting principle (12,208)          868       (8,863)        1,419
 
     Income Tax Benefit
       (provision)            5,399          (61)        5,705           224
     Income before cumulative
       effect of
       change in
       accounting principle  (6,809)          807       (3,158)        1,643
 
     Cumulative effect of
       change in accounting
         principle,
       net of taxes               -             -            -           (50)
 
     Net Income (Loss)      $(6,809)         $807      $(3,158)       $1,593
 
     Income (Loss) per
         common share before
         cumulative effect
         of change in
         accounting
         principle:
       Basic                 $(1.03)        $0.20       $(0.53)        $0.44
       Diluted               $(1.03)        $0.18       $(0.53)        $0.41
 
     Cumulative effect of
       change in accounting
       principle
       net of taxes..            $-            $-           $-        $(0.01)
 
     Net Income (Loss)
       per common share:
       Basic                 $(1.03)        $0.20       $(0.53)        $0.43
       Diluted               $(1.03)        $0.18       $(0.53)        $0.40
 
     Weighted Average Common
       Shares Outstanding:
         Basic                6,752         4,005        6,282         3,662
         Diluted              6,752         4,382        6,282         3,967
 
     Cash EPS:
       Operating Income
         before goodwill        702            14         (504)         (208)
       Interest Income
         (Expense)              (90)           32        1,111          (200)
       Other Income             108           125          447           312
       Equity Earnings        1,041           697        3,973         1,515
       Cash Earnings
         Before Taxes         1,761           868        5,027         1,419
 
     Tax Benefit
       (Provision)              252           (61)         369           224
 
     Cash earnings            1,509           807        4,658         1,593
     Cash Net Income
       Per Share:
       Basic                  $0.22         $0.20        $0.74         $0.43
       Diluted                $0.22         $0.18        $0.74         $0.40
 
 
                   APPLIED FILMS CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS EXCEPT SHARE DATA)
                                  (unaudited)
 
                                               March 31, 2001   July 1, 2000
     ASSETS
     CURRENT ASSETS:
       Cash and cash equivalents                      $17,040        $32,058
       Marketable securities                            9,043         20,167
       Accounts and trade notes
         receivable, net of allowance
         of $1,724 and $188                            19,080          6,273
       Costs and profit in excess of billings          58,232          4,571
       Due from Joint Venture                               -            219
       Inventories, net of allowance
         of $647 and $261                              16,287         10,006
       Assets held for sale                                 -          2,251
       Prepaid expenses and other                       1,410            187
       Deferred tax asset, net                          1,192            480
         Total current assets                         122,284         76,212
 
       Property, plant and equipment,
         net of accumulated depreciation
           of $9,299 and $8,479, respectively           8,272          5,320
       Goodwill and other intangible assets,
         net of accumulated amortization
           of $2,469 and $0, respectively              62,650              -
 
       Investment in Joint Venture                      9,637          5,746
       Deferred tax asset, net                          5,081            136
       Other assets                                       564             64
     Total assets                                    $208,488        $87,478
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     CURRENT LIABILITIES:
       Trade accounts payable                          11,848          9,971
       Accrued expenses                                42,304          2,138
       Income taxes payable                                 -             98
       Billings in excess of revenue                   45,500              -
       Current portion of:
         Deferred revenue                                 302            164
         Deferred gain                                     56             56
       Total current liabilities                      100,010         12,427
 
       Long-term debt                                   8,983              -
       Deferred revenue, net of current portion         2,196          1,210
       Deferred gain, net of current portion              603            644
         Total liabilities                            111,792         14,281
 
     STOCKHOLDERS' EQUITY:
       Series A Convertible Preferred Stock,
         no par value, 1,000,000 shares authorized;
         1,000 and 0 shares outstanding at
         March 31, 2001 and July 1,
         2000, respectively                             8,619              -
 
       Common Stock, no par value,
         10,000,000 shares authorized,
         6,752,215 and 6,040,856 shares issued
         and outstanding at March 31, 2001
         and July 1, 2000, respectively                82,411         64,959
       Warrants and stock options                         876              -
       Other cumulative comprehensive loss               (139)           (20)
       Retained earnings                                4,929          8,258
         Total stockholders' equity                    96,696         73,197
 
     Total liabilities & stockholders' equity        $208,488        $87,478
 
 

SOURCE Applied Films Corporation
    LONGMONT, Colo., April 26 /PRNewswire/ -- Applied Films Corporation
 (Nasdaq:   AFCO), a leading supplier of coated glass for the flat panel display
 (FPD) industry and thin film deposition equipment for the FPD, architectural,
 automotive glass, web packaging and the carbonated beverage industries, today
 reported its results for the third fiscal quarter 2001 and nine month period
 ended March 31, 2001.
     This report represents the first quarter of combined operations of Applied
 Films and the former Large Area Coatings (LAC) division of Unaxis Corporation
 of Switzerland, now called Applied Films Germany with manufacturing operations
 in Alzenau, Germany. The transaction was completed on December 31, 2000 and
 the acquisition was accounted for as a purchase. In this, and future quarterly
 earnings releases, Applied Films intends to supplementally report cash
 earnings and cash earnings per share, which are earnings excluding the effect
 of amortization of goodwill and other intangible assets. Management believes
 this cash earnings reporting will assist investors in analyzing the company's
 operating results.
     For the third fiscal quarter 2001, net revenues were $45.0 million versus
 $11.8 million for the third fiscal quarter 2000 ended April 1, 2000,
 representing an increase of 281%. In the third fiscal quarter, 88% of our
 revenue was derived from revenue of thin film coating equipment compared to
 13% for the third fiscal quarter of last year.  The increase in revenue
 resulted from the acquisition of the Applied Films Germany that closed on
 December 31, 2000.
     Cash earnings for the third fiscal quarter of 2001 were $1.5 million or
 $0.22 per fully diluted share compared to $807,000 or $0.18 per fully diluted
 share for the comparable period in the last fiscal year.
     The net (loss) on a GAAP basis for the third fiscal quarter 2001 was
 $(6.8) million, or $(1.03) per common share, compared to a net income of
 $807,000 or $0.18 per diluted share, for the third fiscal quarter 2000. Net
 income was negatively impacted by an $11.5 million non-recurring pre-tax
 charge for the write off of acquired in-process research and development, one
 time acquisition costs, and $2.5 million in amortization of goodwill and other
 intangible assets, all associated with the acquisition, and from lower
 earnings by our coated glass business.
     For the nine months ended March 31, 2001, net revenues were $72.2 million
 compared to $27.5 million for the nine months ended April 1, 2000. This
 62% increase in revenue was the result of the acquisition of Applied Films
 Germany. Equipment revenues were 69% for the nine months ended March 31, 2001,
 compared to 7% for the comparable period last fiscal year.
     Cash earnings for the nine months ended March 31, 2001 increased to
 $4.7 million or $0.74 per fully diluted share compared to $1.6 million or
 $0.40 per fully diluted share for the same period last year.
     The net (loss) on a GAAP basis for the nine months ended March 31, 2001,
 was $(3.2) million, or $(0.53) per common share, compared to net income of
 $1.6 million, or $0.40 per diluted share, for the comparable period in fiscal
 2000. This decrease in earnings was attributed to the $11.5 million
 non-recurring pre-tax charge for the write off of acquired in-process research
 and development, one time acquisition costs, and $2.5 million in amortization
 of goodwill and other intangible assets from the acquisition. Our STEC Joint
 Venture reported strong growth for the nine month period ended March 31, 2001,
 resulting in an increase in our equity in earnings of 162% to $3.9 million
 compared to $1.5 million for the comparable period last year.
     The equipment backlog for Applied Films as of March 31, 2001 was
 $93.7 million compared to $9.2 million for the third quarter of fiscal 2000.
 We do not report a backlog figure for our coated glass business due to the
 just in time nature of the sales process.
     Tom Edman, President and Chief Executive Officer said, "We are pleased
 with the combined operating results of Applied Films and Applied Films
 Germany. The expansion of our equipment product lines and the growth in
 revenue and cash earnings from Applied Films Germany (formerly LAC) is helping
 us diversify our markets. Our financial performance exceeded expectations
 based on guidance on a revenue and a cash earnings basis and the integration
 of the two teams is coming along quite well."
     "With the acquisition, we add significant strength in web coatings for
 decorative packaging, large area coaters for heat control coatings and solar
 cell applications and the BestPET(TM) product line which is a new effort
 targeted at barrier coating equipment to prolong the shelf-life of products
 packaged in PET bottles."
     "Demand for Flat Panel Display related equipment remained strong during
 the quarter as reflected in the significant number of new orders which we
 announced in January. However, we do anticipate lower capital expenditures in
 this area for the next several quarters as the industry focuses on bringing
 new plants into production. Longer term, continued replacement of CRT desktop
 monitors with flat panel technology and the colorization of cellular phone
 displays present a bright future for this important element of our business."
 
     Business Outlook
     The following statements are based on the Company's current expectations
 of the post-acquisition Applied Films for the balance of Fiscal 2001, and the
 first two quarters of Fiscal 2002. These statements are forward-looking and
 subject to the qualifying safe harbor statement. Actual results may differ
 materially:
     Fiscal 2001 -- Fourth Quarter -- Revised
     -- We expect revenue for the fourth fiscal quarter of 2001 to be between
        $36-$39 million, with over 80% of our revenues recognized from the
        equipment segment of the business.
     -- Gross Profit for the fourth fiscal quarter is expected to be between
        23-25% of revenue.
     -- GAAP Earnings. We expect a loss of approximately $(0.13)-$(0.09) per
        fully diluted share for the fourth quarter 2001 on a GAAP basis.
     -- Cash Earnings.  We expect Cash Earnings of approximately $0.12-$0.15
        per fully diluted share for the fourth quarter 2001.
 
     Fiscal 2002 -- First Quarter -- Initial Guidance
     -- The Company expects revenue for the first fiscal quarter of 2002 to be
        between $37-$40 million, with approximately 85% of our revenues
        recognized from the equipment segment of the business.
     -- Gross Profit for the first fiscal quarter of 2002 are expected to be
        between 23-25% of revenue.
     -- GAAP Earnings:  We expect a GAAP loss of approximately $(0.11)-$(0.07)
        per fully diluted share for the first quarter 2002.
     -- Cash Earnings:  We expect Cash Earnings of approximately $0.13-$0.16
        per fully diluted share for the first quarter of 2002.
 
     Fiscal 2002 -- Second Quarter -- Initial Guidance
     -- The Company expects revenue for the second fiscal quarter of 2002 to be
        between $38-$41 million with approximately 85% of our revenues
        recognized from the equipment segment of the business
     -- Gross Profit for the second fiscal quarter of 2002 are expected to be
        between 23-25% of revenue.
     -- GAAP Earnings:  we expect a GAAP loss of approximately $(0.10)-$(0.06)
        per fully diluted share for the second quarter 2002.
     -- Cash Earnings:  we expect Cash Earnings of approximately $0.14-$0.17
        per fully diluted share for the second quarter of fiscal 2002.
 
     Third Fiscal Quarter 2001 Conference Call
     Applied Films Corporation will conduct a conference call and webcast at
 9:00 a.m. (MDT) on Thursday, April 26, 2001 to review third quarter fiscal
 year 2001 financial results. During the conference call and webcast, Thomas
 Edman, President and Chief Executive Officer, and Lawrence Firestone, Chief
 Financial Officer, will present the financial results for the quarter.
 
     The public is invited to participate in the conference call by dialing
 888-467-1742 or 703-871-3722 (International) at least 5-10 minutes prior to
 the start time, or via webcast at http://www.streetevents.com . A replay of
 the recorded conference call will be available until May 3, 2001. To listen to
 the replay, dial 888-266-2086 or 703-925-2435, code number 5171662.
 
     About Applied Films Corporation
     Applied Films Corporation is a leading supplier of thin film coated glass
 and physical vapor deposition (PVD) equipment to the information technology
 industry, particularly the flat panel display (FPD) industry, roll coaters for
 use in the deposition of capacitor and barrier films and large glass coaters
 for the production of thin films used in the architectural and automotive
 industries. Flat panel displays are found in a wide variety of consumer and
 industrial products, including cellular telephones, calculators, pagers, video
 games, office products, and laptop computers. FPDs have also been identified
 as a potential replacement for the CRT in televisions and computer monitors.
 Founded in 1976, the Company currently has approximately 550 employees at its
 headquarters in Longmont, Colorado, and operations in Alzenau and Hanau
 Germany; Brussels, Belgium; Hong Kong and Shanghai, China; Seoul, Korea; Tokyo
 and Osaka, Japan; and Taipei, Taiwan. For more information, please visit
 Applied Films' web site at http://www.appliedfilms.com .
 
     Safe Harbor Statement
     This press release contains forward-looking statements that involve
 substantial risks and uncertainties. Typically, these statements contain words
 such as "anticipate," "believe," "could," "estimate," "expect," "intend,"
 "may," "should," "will" and "would" or similar words. You should read
 statements that contain these words carefully because they discuss our future
 expectations, contain projections of our future results of operations or of
 our financial position or state other "forward-looking" information. You are
 cautioned that forward-looking statements, including statements regarding
 intent, belief or current expectations of the Company or its management
 regarding expansion into the color STN market and regarding acquisition of the
 LAC Division are not guaranties of future performance. Actual results may
 differ materially from such expectations. There may be events in the future
 that we are not able to predict or control. Such risks and uncertainties
 include change in the demand for coating equipment and colored STN glass, the
 effect of changing worldwide economic conditions on capital expenditures and
 production levels, including those in Asia, the effect of overall market
 conditions and market acceptance risks. Our future results may also affected
 by our ability to successfully manage and integrate the recently acquired LAC
 business. Other risks include those associated with dependencies on suppliers,
 the impact of competitive products and pricing, technological and product
 development risks and other risk factors. As a result, the Company's operating
 results may fluctuate, especially when measured on a quarterly basis. For
 further information, refer to the Company's Securities and Exchange Commission
 filings, including the Company's Registration Statement on Form S-1, Form 10-K
 and Forms 10-Q.
 
 
                   APPLIED FILMS CORPORATION AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (unaudited)
 
                             Three months ended          Nine Months Ended
                            March 31,     April 1,      March 31,    April 1,
                               2001         2000          2001         2000
 
     Net Revenues           $44,981       $11,759      $72,187       $27,455
 
     Cost of Goods Sold      35,293        10,301       59,503        23,818
     Gross Profit             9,688         1,458       12,684         3,637
 
 
     Operating Expenses:
       Selling, General and
         Administrative       6,354         1,084        9,580         2,821
       Research and
         Development          2,632           360        3,529         1,024
       Goodwill amortization
         and associated
           acquisition costs 13,969             -       13,969
     Income (Loss)
       from Operations      (13,267)           14      (14,394)         (208)
 
     Other (Expense) Income:
       Interest Income
         (Expense)              (90)           32        1,111          (200)
       Other Income             108           125          447           312
       Equity Earnings
         in Affiliate         1,041           697        3,973         1,515
     Income before
       income taxes and
       cumulative effect
       of change in
       accounting principle (12,208)          868       (8,863)        1,419
 
     Income Tax Benefit
       (provision)            5,399          (61)        5,705           224
     Income before cumulative
       effect of
       change in
       accounting principle  (6,809)          807       (3,158)        1,643
 
     Cumulative effect of
       change in accounting
         principle,
       net of taxes               -             -            -           (50)
 
     Net Income (Loss)      $(6,809)         $807      $(3,158)       $1,593
 
     Income (Loss) per
         common share before
         cumulative effect
         of change in
         accounting
         principle:
       Basic                 $(1.03)        $0.20       $(0.53)        $0.44
       Diluted               $(1.03)        $0.18       $(0.53)        $0.41
 
     Cumulative effect of
       change in accounting
       principle
       net of taxes..            $-            $-           $-        $(0.01)
 
     Net Income (Loss)
       per common share:
       Basic                 $(1.03)        $0.20       $(0.53)        $0.43
       Diluted               $(1.03)        $0.18       $(0.53)        $0.40
 
     Weighted Average Common
       Shares Outstanding:
         Basic                6,752         4,005        6,282         3,662
         Diluted              6,752         4,382        6,282         3,967
 
     Cash EPS:
       Operating Income
         before goodwill        702            14         (504)         (208)
       Interest Income
         (Expense)              (90)           32        1,111          (200)
       Other Income             108           125          447           312
       Equity Earnings        1,041           697        3,973         1,515
       Cash Earnings
         Before Taxes         1,761           868        5,027         1,419
 
     Tax Benefit
       (Provision)              252           (61)         369           224
 
     Cash earnings            1,509           807        4,658         1,593
     Cash Net Income
       Per Share:
       Basic                  $0.22         $0.20        $0.74         $0.43
       Diluted                $0.22         $0.18        $0.74         $0.40
 
 
                   APPLIED FILMS CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS EXCEPT SHARE DATA)
                                  (unaudited)
 
                                               March 31, 2001   July 1, 2000
     ASSETS
     CURRENT ASSETS:
       Cash and cash equivalents                      $17,040        $32,058
       Marketable securities                            9,043         20,167
       Accounts and trade notes
         receivable, net of allowance
         of $1,724 and $188                            19,080          6,273
       Costs and profit in excess of billings          58,232          4,571
       Due from Joint Venture                               -            219
       Inventories, net of allowance
         of $647 and $261                              16,287         10,006
       Assets held for sale                                 -          2,251
       Prepaid expenses and other                       1,410            187
       Deferred tax asset, net                          1,192            480
         Total current assets                         122,284         76,212
 
       Property, plant and equipment,
         net of accumulated depreciation
           of $9,299 and $8,479, respectively           8,272          5,320
       Goodwill and other intangible assets,
         net of accumulated amortization
           of $2,469 and $0, respectively              62,650              -
 
       Investment in Joint Venture                      9,637          5,746
       Deferred tax asset, net                          5,081            136
       Other assets                                       564             64
     Total assets                                    $208,488        $87,478
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     CURRENT LIABILITIES:
       Trade accounts payable                          11,848          9,971
       Accrued expenses                                42,304          2,138
       Income taxes payable                                 -             98
       Billings in excess of revenue                   45,500              -
       Current portion of:
         Deferred revenue                                 302            164
         Deferred gain                                     56             56
       Total current liabilities                      100,010         12,427
 
       Long-term debt                                   8,983              -
       Deferred revenue, net of current portion         2,196          1,210
       Deferred gain, net of current portion              603            644
         Total liabilities                            111,792         14,281
 
     STOCKHOLDERS' EQUITY:
       Series A Convertible Preferred Stock,
         no par value, 1,000,000 shares authorized;
         1,000 and 0 shares outstanding at
         March 31, 2001 and July 1,
         2000, respectively                             8,619              -
 
       Common Stock, no par value,
         10,000,000 shares authorized,
         6,752,215 and 6,040,856 shares issued
         and outstanding at March 31, 2001
         and July 1, 2000, respectively                82,411         64,959
       Warrants and stock options                         876              -
       Other cumulative comprehensive loss               (139)           (20)
       Retained earnings                                4,929          8,258
         Total stockholders' equity                    96,696         73,197
 
     Total liabilities & stockholders' equity        $208,488        $87,478
 
 SOURCE  Applied Films Corporation