Jmar Technologies Reports Third Quarter Results - Company Financial Information

Edge: Work-Group Computing Report, Nov 15, 1999

JMAR Technologies Inc. (Nasdaq:JMAR), a provider of precision micro-technology products, has announced its results for the third quarter and nine months ended Sept. 30, 1999.

Sales for the first nine months of 1999 improved 12% to $18,141,946 -- an all-time high for any comparable period in the company's history -- from revenues of $16,162,974 in the 1998 period. For the quarter, the company achieved revenues of $4,677,464 versus $5,799,458 for the comparable quarter a year ago.

JMAR incurred a net loss for the 1999 third quarter of $(438,897), or $(0.02) per share, compared to net income of $301,937, or $0.02 per share, in the third quarter of last year. The company had a net loss for the first nine months of 1999 of $(1,296,255), or $(0.07) per share, versus net income of $619,141, or $0.03, per share, in the comparable period of last year.

Commenting on the company's results, JMAR Chairman and Chief Executive Officer, John S. Martinez, Ph.D. said, "A number of factors combined to decrease JMAR's sales and earnings for the third quarter. These included a general worldwide slowdown in the hard disk drive industry, a slower than anticipated transition of our precision equipment sales to the growing semiconductor market, delays in manufacturing certain equipment for our X-ray lithography source program at JMAR Research Inc. (JRI) and a two-month delay at JMAR Semiconductor (JSI) in shipping a key semiconductor laser lithography system."

Martinez continued, "Late last year, in response to major shifts within our primary markets, we began to re-focus the emphasis of our equipment business at JMAR Precision Systems Inc. (JPSI) from the computer disk drive industry to the rapidly expanding semiconductor and biochip equipment markets. We are especially encouraged by the continuing growth during the quarter of our lithography equipment sales to the rapidly growing DNA biochip industry, which partially offset the drop in equipment sales to disk drive manufacturers. The pace of our transition to the semiconductor equipment sector was slower than expected, but based on recent ordering activity we believe it will pay substantial dividends in the near future.

"To better implement this transition in a timely and successful manner, E. Fred Schiele, JMAR's president and chief operating officer, has assumed full-time leadership of JPSI. He will use his extensive semiconductor equipment industry background to sharpen the division's customer focus to enhance penetration of the targeted semiconductor positioning, measurement and inspection equipment markets.

"We also welcomed the success of earlier financial management actions as our gross profit margins rebounded 39% from the beginning of the year. Furthermore, lower G&A expenses allowed us to expand our R&D investment to expedite the transition of development-stage programs into commercially successful products. Accordingly, during this quarter our product development expenditures, including that portion of customer-funded efforts directly attributable to the commercialization of JMAR's proprietary semiconductor products and equipment, were 30.3% of sales," Martinez noted.

"I am pleased to also report substantial progress in advancing other promising initiatives which may significantly improve JMAR's future growth and profitability," Martinez said. "Foremost among these accomplishments was the rapid growth of our profitable 'fabless' semiconductor products and processing business at JMAR Semiconductor where third quarter sales grew from $300 thousand, last year, to $1.4 million this quarter. Furthermore, the formation of a broad array of new semiconductor industry alliances gives JSI the ability to rapidly transition its proprietary semiconductor product designs into many exciting fast-growth markets. Most prominent among these is the broad bandwidth telecommunications semiconductor market.

"During this quarter, we made substantial technical and marketing progress toward positioning JSI as an important provider of proprietary, high-performance chips to support the rapidly growing infrastructure for Internet and other major voice, data and video applications."

"As we move into the fourth quarter of 1999, I am pleased to report that the backlog for orders of JMAR's equipment products has once again started to grow," Martinez said. "This may indicate that the worst is now behind us in this segment and that sales of our precision equipment will begin to improve. While we continue to expect JMAR's sales for the 1999 year to exceed 1998, we have tempered our outlook in reflection of our third quarter results. However, the very encouraging trends we're seeing in both our semiconductor operations and our Advanced Light X-ray business make us optimistic about the outlook for the coming year," Martinez concluded.

JMAR Technologies Inc. develops, manufactures and markets precision measurement, positioning and custom manufacturing systems and provides specialty semiconductor products for the microelectronics industry. It also is a leading developer of proprietary advanced light sources for lithography and other high value manufacturing and metrology applications for the semiconductor and related industries. FMI: www.jmar.com for additional information on the company.