Thursday, August 13, 2009

Company Contact:
Christine T. Hergenrother
Vice President & Chief Financial Officer
Tegal Corporation
[T] (707) 763-5600
info@tegal.com

Agency Contact:
Chris Danne
The Blue Shirt Group
[T] (415) 217-7722

Petaluma, Calif., August 13, 2009 — 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 first quarter of fiscal year 2010, which ended June 30, 2009. 

First Quarter Highlights

• The Company shipped an SMT PVD system for Aluminum Nitride deposition to a prominent North American research center. The tool will be used for research activities in RF MEMS and in piezoelectric sensors and actuators.
• Systems backlog increased during the quarter to $5.4M, an increase of $3.9M over the $1.5M recorded at the end of Q4 of FY’09.

Financial Results

Revenues for the first quarter of fiscal 2010 were $1.1 million, a decrease from the $4.7 million for the same quarter last year and a decrease of $0.8 million from the fourth quarter of fiscal 2009.  Tegal reported a net loss of ($2.6) million, or ($0.31) per share, for the quarter, compared to a net loss of ($0.8) million, or ($0.11) per share in the comparable quarter one year ago.   The reported net loss for the fourth quarter fiscal 2009 was ($3.2) million or ($0.39) per share.

“Revenues during these past few quarters have been at their lowest level in many years, symptomatic of the condition of capital spending in our industry,” said Thomas Mika, President & CEO.  “However, we are beginning to see a light at the end of the tunnel, with an increase in both our systems backlog and an uptick in spares and service revenues.  With additional cuts in expense levels, and an increase in shipments, we expect to reduce our quarterly cash burn.  Doing so will allow us ample time to consider our best strategic alternatives moving forward, which we continue to do with the assistance of Cowen and Company, LLC”

Gross profits for the first quarter of fiscal 2010 were 8.6% compared to 49.2% in the same quarter one year ago, and 26.3% for the fourth quarter of fiscal 2009.  The low gross margins resulted primarily from unabsorbed overhead. 
 
Operating losses for the first quarter were ($3.0) million, including approximately $0.5 million of non-cash charges.  Operating loss in the same period last year was ($1.0) million, which included $0.5 million of non-cash charges.  The operating loss for the fourth quarter 2009 was ($3.1) million, including approximately $1.0 million of non-cash charges.

Cash at the end of the fiscal first quarter of 2010 was $10.5 million, a $2.0 million decrease from the end of the March quarter.  
 

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.

Consolidated Financial Statement