MEMC ELECTRONIC MATERIALS, INC. 
By Summary of fourth quarter results:
-- Net sales of $425.7 million
-- Gross profit of $193.0 million (45.3% of net sales)
-- Operating income of $169.3 million (39.8% of net sales)
-- Cash and investment balances of $1.4 billion
The company reported fourth quarter 2008 net sales of
Gross profit in the quarter was
The company reported operating income during the quarter of
Using an estimated effective cash tax rate of 15%, non-GAAP net income for the fourth quarter of 2008, excluding the non-cash effects of the quarterly valuation of the Suntech warrants, was
During the fourth quarter, the company generated operating cash flow of
For the full year ended
MEMC generated operating cash flow of
"The fourth quarter of 2008 saw deteriorating semiconductor and solar market conditions, amid the rapidly weakening global macroeconomic environment," said
First Quarter 2009 Outlook
"End market weakness and low order visibility across both semiconductor and solar applications continues in the first quarter, as reduced consumer spending, limited access to credit and other results of the macroeconomic environment weigh on both markets," continued Turner. "This environment is exacerbated by continued inventory reductions at semiconductor customers, the combination of which is resulting in a significant sequential reduction in semiconductor wafer demand which is, in turn, leading to the diversion of some polysilicon output from semiconductor to solar markets. This is having the effect of reducing pricing for polysilicon and wafers in the solar market. The unusually low levels of visibility that many of our customers have in the current environment reduces our ability to provide meaningful quarterly, annual or long term guidance at this time. Our current view of the markets we serve indicates that first quarter 2009 revenue could decline by as much as 50% from the fourth quarter of 2008. The reduced pricing and significantly lower factory utilization assumed in this view, the latter of which would result in significant underutilization charges, could result in gross margins declining to the 20 percent range."
Conference Call
MEMC will host a conference call today,
A replay of the conference call will be available from
About MEMC
MEMC is a global leader in the manufacture and sale of wafers and related intermediate products to the semiconductor and solar industries. MEMC has been a pioneer in the design and development of wafer technologies over the past fifty years. With R&D and manufacturing facilities in the U.S.,
Certain matters discussed in this news release are forward-looking statements, including that first quarter 2009 revenue could decline by as much as 50% from the 2008 fourth quarter, with gross margins declining to the 20 percent range. 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 market demand for semiconductors and silicon wafers, as well as polysilicon; changes in the pricing environment for both silicon wafers and polysilicon; general economic conditions; inventory levels of our customers; utilization of our manufacturing capacity and any charges we might incur to reduce manufacturing capacity or headcount; supply chain difficulties or problems; interruption of production; good working order of our manufacturing facilities; our ability to reduce manufacturing and operating costs; delays in capacity expansion; customer acceptance of our new products; assumptions underlying management's financial estimates; actions by competitors, customers and suppliers; changes in product specifications and manufacturing processes; changes in financial market conditions; changes in the composition of worldwide taxable income; the impact of competitive products and technologies; changes in interest and currency exchange rates and other risks described in the company's filings with the Securities and Exchange Commission. 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.
-tables to follow-
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; In millions, except per share data)
Three Months Ended Twelve Months Ended
------------------ -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2007 2008 2007
---- ---- ---- ---- ----
Net sales $425.7 $546.0 $535.9 $2,004.5 $1,921.8
Cost of goods sold 232.7 276.3 242.3 999.7 921.3
----- ----- ----- ----- -----
Gross profit 193.0 269.7 293.6 1,004.8 1,000.5
Operating
expenses:
Marketing and
administration 13.5 31.9 28.3 106.3 111.3
Research and
development 10.2 10.3 10.5 40.8 39.3
---- ---- ---- ---- ----
Operating
income 169.3 227.5 254.8 857.7 849.9
Nonoperating
(income) expense:
Interest expense 0.4 0.8 0.3 1.8 1.4
Interest income (11.1) (11.2) (14.0) (46.4) (45.0)
Loss (gain) on
fair
value of warrant 61.2 9.6 (204.7) 292.5 (220.8)
Other, net 9.7 6.6 1.0 20.3 2.5
--- --- --- ---- ---
Total
nonoperating
(income)
expense 60.2 5.8 (217.4) 268.2 (261.9)
---- --- ------ ----- ------
Income before
income tax
expense
and minority
interests 109.1 221.7 472.2 589.5 1,111.8
Income tax
expense 37.0 38.1 94.8 197.0 282.2
---- ---- ---- ----- -----
Income before
minority
interests 72.1 183.6 377.4 392.5 829.6
Minority interests 1.1 (0.8) (1.0) (2.2) (3.4)
--- ---- ---- ---- ----
Net income $73.2 $182.8 $376.4 $390.3 $826.2
----- ------ ------ ------ ------
Basic income per
share $0.33 $0.81 $1.65 $1.72 $3.66
Diluted income per
share $0.33 $0.80 $1.62 $1.71 $3.56
Weighted-average
shares used in
computing basic
income per share 224.5 226.3 228.2 226.9 225.6
Weighted-average
shares used in
computing diluted
income per share 225.1 227.6 232.5 228.6 232.3
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited; In millions)
Dec. 31, Dec. 31,
2008 2007
---- ----
ASSETS
Current assets:
Cash and cash equivalents $988.3 $859.3
Short-term investments 148.4 457.1
Accounts receivable, net 201.8 197.9
Inventories 81.3 36.4
Prepaid and other current
assets 38.9 38.8
---- ----
Total current assets 1,458.7 1,589.5
Investments 284.7 12.7
Property, plant and
equipment, net 1,041.2 834.0
Deferred tax assets, net 68.1 89.3
Other assets 86.9 361.7
---- -----
Total assets $2,939.6 $2,887.2
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-
term debt $6.1 $5.3
Accounts payable 162.4 168.3
Accrued liabilities 67.5 40.8
Accrued wages and salaries 31.7 31.9
Customer deposits 187.0 122.0
Income taxes payable 17.9 75.9
---- ----
Total current liabilities 472.6 444.2
Long-term debt, less current
portion 26.1 25.6
Pension and post-employment
liabilities 46.3 60.6
Deferred revenue 88.8 81.4
Other liabilities 186.1 204.6
----- -----
Total liabilities 819.9 816.4
----- -----
Minority interests 34.8 35.8
Commitments and contingencies
Stockholders' equity:
Preferred stock - -
Common stock 2.3 2.3
Additional paid-in capital 425.6 358.0
Retained earnings 2,150.0 1,760.5
Accumulated other
comprehensive (loss)
income (55.6) 29.8
Treasury stock (437.4) (115.6)
------ ------
Total stockholders'
equity 2,084.9 2,035.0
------- -------
Total liabilities and
stockholders' equity $2,939.6 $2,887.2
-------- --------
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; In millions)
Three Months Ended Twelve Months Ended
------------------ -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2007 2008 2007
---- ---- ---- ---- ----
Cash flows
from operating
activities:
Net income $73.2 $182.8 $376.4 $390.3 $826.2
Adjustments to
reconcile net
income to net cash
provided by
operating
activities:
Depreciation and
amortization 28.4 27.3 20.8 104.0 80.7
Stock-based
compensation (5.6) 11.9 7.4 28.5 31.1
Loss
(gain)
on fair
value of
warrant 61.2 9.6 (204.7) 292.5 (220.8)
Pension and post-
employment
liabilities (4.3) (64.2) (0.2) (72.4) (9.9)
Working
capital and
other (29.9) (52.1) 38.8 (102.4) 209.9
----- ----- ---- ------ -----
Net cash
provided by
operating
activities 123.0 115.3 238.5 640.5 917.2
----- ----- ----- ----- -----
Cash flows
from investing
activities:
Proceeds
from sales and
maturities of
investments 107.9 64.7 46.8 485.5 93.2
Purchases of
investments (68.4) (208.7) (348.8) (517.3) (506.4)
Capital
expenditures (60.9) (73.1) (103.3) (303.2) (276.4)
Other - - 0.2 - 0.7
- - --- - ---
Net cash used
in investing
activities (21.4) (217.1) (405.1) (335.0) (688.9)
----- ------ ------ ------ ------
Cash flows
from financing
activities:
Net proceeds
from customer
deposits
related to
long-term
supply agreements - 89.5 3.5 138.0 115.3
Principal
payments on
long-term debt (3.1) - (2.7) (6.0) (5.2)
Dividend to
minority
interest - - - (3.2) (6.2)
Excess tax
benefits from
stock-based
payment
arrangements - 0.4 7.5 19.0 40.0
Common stock
repurchased (35.5) (130.6) (62.9) (321.0) (111.2)
Proceeds
from
issuance
of common
stock 0.1 1.2 17.4 19.9 44.2
--- --- ---- ---- ----
Net cash
(used in)
provided by
financing
activities (38.5) (39.5) (37.2) (153.3) 76.9
----- ----- ----- ------ ----
Effect of
exchange rate
changes on
cash and cash
equivalents (7.1) (37.3) 10.8 (23.2) 26.6
---- ------ ------ ----- -----
Net increase
(decrease)
in cash and
cash
equivalents 56.0 (178.6) (193.0) 129.0 331.8
Cash and
cash
equivalents
at
beginning
of period 932.3 1,110.9 1,052.3 859.3 527.5
----- ------- ------- ----- -----
Cash and cash
equivalents
at end of
period $988.3 $932.3 $859.3 $988.3 $859.3
------ ------ ------ ------ ------
Reconciliation of GAAP Net Income and Diluted EPS
to non-GAAP Net Income and Diluted EPS
(Unaudited; In millions, except per share data)
Twelve Months Ended Three Months Ended
Dec. 31, Dec. 31, Dec. 31,
2008 2007 2008
Net Net Net
Income EPS Income EPS Income EPS
------- --- ------- --- ------- ---
GAAP Net Income $390.3 $1.71 $826.2 $3.56 $73.2 $0.33
Cash Tax Difference* 108.6 0.47 115.4 0.49 20.6 0.09
----- ---- ----- ---- ---- ----
Non-GAAP 498.9 2.18 941.6 4.05 93.8 0.42
Loss (Gain) on
Warrants at Cash
Tax Rate** 248.6 1.09 (187.7) (0.80) 52.1 0.23
----- ---- ------ ----- ---- ----
Non-GAAP
Income Excluding
Warrants $747.5 $3.27 $753.9 $3.25 $145.9 $0.65
====== ===== ====== ===== ====== =====
Estimated annual
book tax rate 33% 25% 34%
Estimated cash tax rate 15% 15% 15%
Three Months Ended
------------------
Sept. 30, Dec. 31,
2008 2007
Net Net
Income EPS Income EPS
------- --- ------- ---
GAAP Net Income $182.8 $0.80 $376.4 $1.62
Cash Tax Difference* 4.8 0.02 24.0 0.10
--- ---- ---- ----
Non-GAAP 187.6 0.82 400.4 1.72
Loss (Gain) on Warrants at Cash
Tax Rate** 8.2 0.04 (174.0) (0.75)
--- ---- ------ -----
Non-GAAP Income Excluding
Warrants $195.8 $0.86 $226.4 $0.97
====== ===== ====== =====
Estimated annual book tax rate 23% 20%
Estimated cash tax rate 15% 15%
*Our estimated cash tax rate is the estimated tax payable on our tax returns as a percentage of estimated annual pre-tax book income. The annual cash tax rate is estimated quarterly by reference to book taxable income and then taking into account temporary book/tax differences and any tax basis items reflected on our annual tax returns. The company uses an estimated cash tax rate to adjust for the historical variation in the effective book tax rate associated with the reversal of valuation allowances, foreign tax credits and loss carry-forwards that are not tied to actual operating results, because the company believes that the cash tax rate provides a more transparent view of the company's operating results. Please note that the actual book rate used for the purposes of calculating actual book net income for the 2008 fourth quarter was 33.9%.
**Because the value of the Suntech warrant may vary significantly from quarter to quarter, the company believes excluding its effect for non-GAAP EPS comparisons provides a more transparent view of the company's operating results.
SOURCE MEMC Electronic Materials, Inc.
