Genus Reports Second Quarter 2004 Results

Genus Reports Second Quarter 2004 Results 


SUNNYVALE, Calif., July 26  /PRNewswire-FirstCall/ -- Genus, Inc. (NASDAQ:GGNS)
today reported financial results for its second quarter and six months ended
June 30, 2004.  Senior management will conduct an investor conference call to
discuss these results and the company's financial outlook in more detail at 6
a.m. pacific time tomorrow, Tuesday, July 27, 2004. Access information is
provided below.

Net sales for the second quarter of 2004 were $8.8 million compared to net
sales of $14.7 million for the same quarter of 2003. Net sales for the six
months ended June 30, 2004 were $21.0 million down from $32.4 million for the
six months ended June 30, 2003.  The net loss for the second quarter 2004 was
$2.9 million or ($0.07) per diluted share compared to net loss of $1.4 million
or ($0.05) per share in the same quarter of 2003. Net loss in the second
quarter of 2004 included $821,000 of expenses related to our previously
announced proposed merger with Aixtron. The net loss for the six months ended
June 30, 2004 was $4.6 million or ($0.11) per diluted share compared to a net
loss of $950,000 or ($0.03) per share for the six months ended June 30, 2003.

"Although the quarter was disappointing from a P&L point of view, customer
activity is strong in both our CVD and ALD segments and, as indicated in our
prior conference calls, we expect the second half to be better than the first
half for both bookings and revenues. Our balance sheet also remains strong,"
commented Bill Elder, Genus chairman and CEO.

Gross margin as a percentage of revenues was 38 percent for the second quarter
of 2004 compared to 27 percent for the same quarter of 2003, resulting mainly
from a favorable product mix caused by a higher proportion of spares and
services in the second quarter of 2004, which generally have higher margins as
compared with system sales. Gross margin as a percentage of revenues was 33
percent for the six months ended June 30, 2004 compared to 31 percent for the
six months ended June 30, 2003. The total of research and development, sales,
general and administrative expenses was $4.8 million in the second quarter of
2004, almost the same level as the second quarter of 2003. In addition, in the
second quarter of 2004, Genus incurred merger related expenses of $821,000.
Operating expenses, including research and development, sales, general and
administrative expenses and merger related expenses were $10.6 million for the
six months ended June 30, 2004, approximately $500,000 higher than the level
recorded for the six months ended June 30, 2003.

Genus ended the second quarter of 2004 with cash, cash equivalents and
short-term investments, net of short-term debt of $35.7 million, up from a
balance of $34.9 million at December 31, 2003.

Conference Call Information

Genus plans to host an investor conference call on Tuesday, July 27, 2004, at 6
a.m. pacific time, featuring remarks by Bill Elder, chairman and CEO, and Shum
Mukherjee, executive vice president finance and CFO, followed by a live
question and answer session. The conference call will be accessible by dialing
888-803-6692 or 706-634-1030 and referencing call number 8959586. It will also
be broadcast live over the Internet at http://www.genus.com/.

About Genus

Genus, Inc. manufactures critical deposition processing products for the global
semiconductor industry and the data storage industry. To enable the production
of intricate micro computer chips and electronic storage devices, Genus offers
its StrataGem and LYNX series production-proven equipment for 200mm and 300mm
semiconductor production, and offers thin film deposition products for chemical
vapor deposition (CVD), atomic layer deposition (ALD), and pre-clean
capabilities.   Genus is at the forefront of market and technology developments
in the ALD marketplace, which is gaining acceptance worldwide as a critical
technology for sub 0.13-micron production of computer chips and electronic
storage devices. Genus' customers include semiconductor and data storage
manufacturers located throughout the United States, Europe and the Pacific Rim
including Korea, Japan and Taiwan. Founded in 1981, the company is
headquartered in Sunnyvale, California. For additional information visit Genus'
web site at http://www.genus.com/. LYNX2(R) and LYNX3(TM) are trademarks of
Genus, Inc.

Forward-Looking Statements

This press release contains forward-looking statements regarding the company's
future financial and business performance. These forward-looking statements are
subject to a number of risks and uncertainties. These contingencies include but
are not limited to: actual customer orders received by the company, the extent
to which ALD technology is demanded by the marketplace, the actual number of
customer orders received by the company, the timing of final acceptance of
products by customers, the financial climate and accessibility to financing,
general conditions in the thin film equipment market and in the macro-economy,
and the influence of global political events. Genus assumes no obligation to
update this information. Additional risks and uncertainties are discussed in
the Management's Discussion and Analysis of Results of Operations contained in
Genus' Annual Report on Form 10-K for the fiscal year ended December 31, 2003
filed with the Securities and Exchange Commission.

                       GENUS, INC. AND SUBSIDIARIES
       CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                  (in thousands, except per share data)

                                      Three Months Ended  Six Months Ended
                                            June 30,          June 30,
                                       2004      2003      2004     2003

  Net sales                           $8,757  $ 14,739   $20,964  $32,434
  Costs and expenses:
    Cost of goods sold                 5,406    10,813    13,956   22,390
    Research and development           1,678     1,981     3,672    4,094
    Selling, general and
     administrative                    3,133     2,868     6,151    6,042
    Expenses related to proposed
     merger                              821         0       821        0
  Loss from operations                (2,281)     (923)   (3,636)     (92)

  Other expenses, net                   (411)     (435)     (715)    (858)
  Loss before income taxes            (2,692)   (1,358)   (4,351)    (950)

  Provision for income taxes             181         0       199        0
  Net loss                           $(2,873)  $(1,358)  $(4,550)   $(950)

  Net loss per share:
    Basic                             $(0.07)   $(0.05)   $(0.11)  $(0.03)
    Diluted                           $(0.07)   $(0.05)   $(0.11)  $(0.03)

  Shares used in per share
   calculation - basic                39,664    29,313    39,628   29,114
  Shares used in per share
   calculation - diluted              39,664    29,313    39,628   29,114


                       GENUS, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                              (in thousands)

                                                   June 30,     December 31,
                                                     2003           2004
  ASSETS
  Current Assets:
    Cash and cash equivalents                      $23,585        $41,608
    Short term investment                           12,249             --
    Accounts receivable, net                         6,672          9,606
    Inventories                                     12,469          9,783
    Other current assets                               808            854
      Total current assets                          55,783         61,851
  Equipment, furniture and fixtures, net            10,693          8,748
  Other assets                                       1,041          1,169
      Total assets                                 $67,517        $71,768

  LIABILITIES
  Current Liabilities:
    Short-term bank borrowings                      $   --         $6,500
    Accounts payable                                 5,257          4,956

    Accrued expenses                                 4,512          4,130
    Deferred revenue                                 2,208            331
    Customer advances                                3,820            372
    Long term liabilities, current portion             116            249
      Total current liabilities                     15,913         16,538

  Convertible notes                                  6,139          5,806
      Total liabilities                             22,052         22,344

  SHAREHOLDERS' EQUITY
  Common stock, no par value:
    Authorized 100,000 shares;
      Issued and outstanding 39,759 shares
       at June 30, 2004 and 39,554 at
       December 31, 2003                           163,408        163,061
    Accumulated deficit                           (115,878)      (111,328)
    Note receivable from shareholder                    --           (187)
    Accumulated other comprehensive loss            (2,065)        (2,122)
      Total shareholders' equity                    45,465         49,424
      Total liabilities and shareholders' equity   $67,517        $71,768


DATASOURCE: Genus, Inc.



CONTACT:  Trine Pierik of Positio Public Relations, Inc.,

[phone], or , for Genus, Inc.; or Shum Mukherjee of

Genus, Inc., [phone], ext. 1311, or 



Web site:  http://www.genus.com/ 

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