SMTL » Topics » Gross Profit

This excerpt taken from the SMTL 10-Q filed May 7, 2009.

Gross Profit

Three Months Ended
Six Months Ended
March 31,
2009

March 31,
2008

March 31,
2009

March 31,
2008

(Dollars in thousands) (Dollars in thousands)

Gross profit
    $ 10,691   $ 30,072   $ 24,852   $ 54,244  
Gross margin percentage    39.4 %  47.8 %  41.3 %  48.6 %

Gross profit decreased by $19.4 million or 64.4% and by $29.4 million or 54.2% in the second quarter and first half of fiscal 2009 compared with the second quarter and first half of fiscal 2008.

Gross profit decreased in absolute dollars in both comparative periods because of lower sales volumes. Our gross margin declined 8.4 percentage points and 7.3 percentage points in the second quarter and first six months of fiscal 2009 from the second quarter and first six months of fiscal 2008 primarily due to a higher than normal level of under-absorbed overhead costs because of under-utilized plant capacity during both fiscal 2009 comparative periods and increased inventory reserves taken in response to the current economic slowdown. Tool margins declined approximately five percentage points in the second quarter of fiscal 2009 related to selective tool placements for new business opportunities. These decreases were partially offset by improved spare parts and service margins in both the second quarter and first six months of fiscal 2009.




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This excerpt taken from the SMTL 10-Q filed Feb 6, 2009.

Gross Profit

Three Months Ended
December 31,
2008

December 31,
2007

(Dollars in thousands)

Gross profit
    $ 14,161   $ 24,172  
Gross margin percentage    42.8 %  49.7 %

Gross profit decreased by $10.0 million or 41.4% in the first quarter of fiscal 2009 compared with the first quarter of fiscal 2008.

Gross profit decreased in absolute dollars because of lower sales volumes. Our gross margin declined 6.9 percentage points from the first quarter of fiscal 2008 primarily due to a higher than normal level of under-absorbed overhead costs because of under-utilized plant capacity during the quarter and increased inventory reserves taken in response to the worldwide economic slowdown. These increases were partially offset by improved spare parts and service margins. Tool gross margins were flat as compared with the first quarter of fiscal 2008.

These excerpts taken from the SMTL 10-K filed Dec 12, 2008.

Gross Profit

Year Ended September 30,
2008
2007
2006
(Dollars in thousands)

Gross profit
    $ 117,395   $ 101,491   $ 112,919  
Percentage of net sales    49.2 %  47.2 %  46.4 %

Gross profit increased $15.9 million in absolute dollars or 15.7% in fiscal 2008 as compared to fiscal 2007. Gross profit decreased $11.4 million or 10.1% in fiscal 2007 compared to fiscal 2006 gross profit.

Gross profit increased in absolute dollars in fiscal 2008 because of higher sales volumes. On a percentage basis, gross margin improved two percentage points. Tool margins declined slightly year-over-year but contributed approximately one percentage point to the margin increase because of higher sales volumes. Warranty and installation expense decreased in fiscal 2008, contributing approximately one percentage point to the margin increase. Margins improved on wafer level packaging tools primarily due to a higher percentage of installation revenue than in fiscal 2007 but declined on BEOL Raiders due to product mix and on copper interconnect tools. Geographically, margins improved in North America but declined slightly in Asia, primarily due to product mix.

Gross profit decreased in absolute dollars in fiscal 2007 because of lower sales volumes but improved by 0.8 percentage points from fiscal 2006. Margins improved a combined three percentage points on tool revenues, spare parts and service revenues and on sales from our Rhetech subsidiary. Our tool margins improved on copper interconnect, FEOL and BEOL tools. Margin improvements were realized in both North America and Asia. Installation revenues contributed more to overall revenue in both absolute dollars and on a percentage basis. Warranty and installation expense decreased in fiscal 2007 as compared with fiscal 2006, contributing approximately one percentage point to the margin increase. These margin improvements were partially offset by increased obsolescence and inventory reserve charges in the fourth quarter related to product enhancements on our Raider tool line that rendered certain component parts obsolete.



24


Gross Profit







































Year Ended September 30,
2008
2007
2006
(Dollars in thousands)

Gross profit
    $ 117,395   $ 101,491   $ 112,919  
Percentage of net sales    49.2 %  47.2 %  46.4 %




Gross profit increased $15.9 million
in absolute dollars or 15.7% in fiscal 2008 as compared to fiscal 2007. Gross profit
decreased $11.4 million or 10.1% in fiscal 2007 compared to fiscal 2006 gross profit.




Gross profit increased in absolute
dollars in fiscal 2008 because of higher sales volumes. On a percentage basis, gross
margin improved two percentage points. Tool margins declined slightly year-over-year but
contributed approximately one percentage point to the margin increase because of higher
sales volumes. Warranty and installation expense decreased in fiscal 2008, contributing
approximately one percentage point to the margin increase. Margins improved on wafer level
packaging tools primarily due to a higher percentage of installation revenue than in
fiscal 2007 but declined on BEOL Raiders due to product mix and on copper interconnect
tools. Geographically, margins improved in North America but declined slightly in Asia,
primarily due to product mix.




Gross profit decreased in absolute
dollars in fiscal 2007 because of lower sales volumes but improved by 0.8 percentage
points from fiscal 2006. Margins improved a combined three percentage points on tool
revenues, spare parts and service revenues and on sales from our Rhetech subsidiary. Our
tool margins improved on copper interconnect, FEOL and BEOL tools. Margin improvements
were realized in both North America and Asia. Installation revenues contributed more to
overall revenue in both absolute dollars and on a percentage basis. Warranty and
installation expense decreased in fiscal 2007 as compared with fiscal 2006, contributing
approximately one percentage point to the margin increase. These margin improvements were
partially offset by increased obsolescence and inventory reserve charges in the fourth
quarter related to product enhancements on our Raider tool line that rendered certain
component parts obsolete.









24











This excerpt taken from the SMTL 10-Q filed Aug 8, 2008.

Gross Profit

Three Months Ended
Nine Months Ended
June 30,
2008

June 30,
2007

June 30,
2008

June 30,
2007

(Dollars in thousands) (Dollars in thousands)

Gross profit
    $ 32,102   $ 22,109   $ 86,346   $ 81,255  
Gross margin percentage    47.9 %  47.4 %  48.4 %  48.4 %

Gross profit increased by $10.0 million or 45.2% in the third quarter of fiscal 2008 compared with the third quarter of fiscal 2007. Our third quarter fiscal 2008 gross margin percentage increased approximately 0.5 percentage points to 47.9% from the 47.4% reported in the third quarter of fiscal 2007. Gross profit increased $5.1 million in the first nine months of fiscal 2008 as compared with the first nine months of fiscal 2007 while our gross margin percentage was stable in the year-to-date comparative periods.



15


In both the quarterly and year-to-date comparisons, gross profit increased in absolute dollars because of higher sales volumes. As a percentage of net sales, gross margins improved in the quarterly comparison because warranty and installation costs were lower as a percentage of net sales. Year-to-date, gross margin was flat as a percentage of sales.

This excerpt taken from the SMTL 10-Q filed May 8, 2008.

Gross Profit

Three Months Ended
Six Months Ended
March 31,
2008

March 31,
2007

March 31,
2008

March 31,
2007

(Dollars in thousands) (Dollars in thousands)

Gross profit
    $ 30,072   $ 26,381   $ 54,244   $ 59,146  
Gross margin percentage    47.8 %  49.3 %  48.6 %  48.7 %

Gross profit increased by $3.7 million or 14.0% in the second quarter of fiscal 2008 compared with the second quarter of fiscal 2007. Our second quarter fiscal 2008 gross margin percentage declined approximately 1.5 percentage points to 47.8% from the 49.3% reported in the second quarter of fiscal 2007. The gross margin percentage was stable in the year-to-date comparative periods, but due to lower revenues in fiscal 2008, gross profit decreased $4.9 million in the first half of fiscal 2008 as compared with the first half of fiscal 2007.

In the quarterly comparison, gross profit increased in absolute dollars because of higher sales volumes. Our gross profit was negatively impacted by the expense related to sales incentives provided to a major new prospective customer that has subsequently placed additional tool orders with us. Exclusive of that incentive, our gross margin percentage in the second quarter of fiscal 2008 would have been slightly higher than the second quarter fiscal 2007 gross margin percentage. Tool gross margins were benefitted by approximately two percentage points by lower warranty and installation costs as actual warranty costs reported were lower than in the comparable period of fiscal 2007. This savings was offset by lower margins on spares parts and restorations.

Year-to-date, our gross margins decreased in absolute dollars, but remained flat as a percentage of sales. Exclusive of the customer incentive described in the quarterly results, margins would have improved approximately one percentage point primarily due to lower warranty and installation costs reported in the first half of fiscal 2008 as compared with the first half of fiscal 2007.



15


This excerpt taken from the SMTL 10-Q filed Feb 8, 2008.

Gross Profit

Three Months Ended
December 31,
2007

December 31,
2006

(Dollars in thousands)

Gross profit
    $ 24,172   $ 32,765  
Gross margin percentage    49.7 %  48.2 %

Gross profit decreased by $8.6 million or 26.2% in the first quarter of fiscal 2008 compared with the first quarter of fiscal 2007. Our first quarter fiscal 2008 gross margin improved by approximately 1.5 percentage points to 49.7% from 48.2% in the first quarter of fiscal 2007.

Gross profit decreased in absolute dollars because of lower sales volumes. Our gross margin increased during the first quarter of fiscal 2008 primarily because spare parts and service, which historically have a higher gross margin percentage than tools, contributed more to net sales in the first quarter of fiscal 2008. Tool gross margins benefited by lower warranty and installation costs, which declined approximately three percentage points from first quarter fiscal 2007 as actual warranty costs reported were lower than in the comparable period of fiscal 2007.

This excerpt taken from the SMTL 10-K filed Dec 14, 2007.

Gross Profit

Year Ended September 30,
2007
2006
2005
(Dollars in thousands)

Gross profit
    $ 101,491   $ 112,919   $ 96,969  
Percentage of net sales       47.2 %   46.4 %   50.9 %

Gross profit declined $11.4 million in absolute dollars or 10.1% in fiscal 2007 as compared to fiscal 2006. Gross profit increased $16.0 million or 16.4% in fiscal 2006 compared to the fiscal 2005 gross profit of $97.0 million. As a percentage of net sales, gross profit increased 0.8 percentage points in fiscal 2007 as compared to fiscal 2006 after decreasing 4.5 percentage points in fiscal 2006 from 50.9% in fiscal 2005.

Gross profit decreased in absolute dollars in fiscal 2007 because of lower sales volumes and improved by 0.8 percentage points from fiscal 2006. Margins improved a combined three percentage points on tool revenues, spare parts and service revenues and on sales from our Rhetech subsidiary. Our tool margins improved on copper interconnect, FEOL and BEOL tools. Margin improvements were realized in both North America and Asia. Installation revenues contributed more to overall revenue in both absolute dollars and on a percentage basis. Warranty and installation expense decreased in fiscal 2007, contributing approximately one percentage point to the margin increase. These margin improvements were partially offset by increased obsolescence and inventory reserve charges in the fourth quarter related to product enhancements on our Raider tool line that rendered certain component parts obsolete.

Gross profit increased in absolute dollars in fiscal 2006 because of higher sales volumes but declined by 4.5 percentage points from fiscal 2005. The gross margin percentage was negatively impacted by selected tool installations of new applications for first-time customers. One-time pricing incentives coupled, in certain instances, with increased manufacturing costs, impacted the gross margin by approximately four percentage points in fiscal 2006. The gross margin benefited slightly by a one-time order cancellation fee in the second quarter while increased warranty and installation costs also reduced the gross margin by approximately one percentage point in fiscal 2006.

This excerpt taken from the SMTL 10-Q filed Aug 8, 2007.

Gross Profit

Three Months Ended
June 30,

Nine Months Ended
June 30,

2007
2006
2007
2006
(Dollars in thousands)

Gross profit
    $ 22,109   $ 27,640   $ 81,255   $ 81,957  
Percentage of net sales    47.4 %  46.8 %  48.4 %  46.0 %

Gross profit decreased by $5.5 million or 20.0% in the third quarter of fiscal 2007 compared with the third quarter of fiscal 2006 and decreased by $702,000 or 0.9% in the first nine months of fiscal 2007 as compared with the first nine months of fiscal 2006. Third quarter fiscal 2007 margins gained 0.6 percentage points over third quarter fiscal 2006 levels and rebounded 2.4 percentage points in the first nine months of fiscal 2007 as compared with the same period in fiscal 2006.



14


Gross profit decreased in absolute dollars in the third quarter, primarily due to lower sales volumes. Gross profit improved on a percentage basis in both periods of fiscal 2007. The primary drivers impacting gross margin in the quarterly and year-to-date comparisons include:

  • Tool margins improved slightly in the quarterly comparison and by more than two points in the year-to-date comparison. Fiscal 2006 tool margins were negatively impacted by approximately five percentage points by selected tool installations for first time customer use of new applications whereas the third quarter and year-to-date gross profit in fiscal 2007 have been minimally impacted by strategic tool placements.

  • Period costs, including reserves for excess inventory, increased in both the quarterly and nine-month comparison, negatively impacting gross margin percentages by approximately two and three percentage points, respectively, as compared to the same periods in fiscal 2006.

  • Spare parts, service and restorations increased as a percentage of net sales in fiscal 2007 and therefore contributed more to the overall gross margin than in fiscal 2006. Margins on spare parts, service and restorations are typically higher than tool margins and improved by approximately two percentage points in both comparative periods.

  • Warranty and installation costs were flat in the quarterly comparison and decreased by one percentage point in the year-to-date comparison.

Additionally, fiscal 2007 tool margins have been more favorably impacted than in fiscal 2006 by increased installation revenue, with minimal related cost of goods sold.


This excerpt taken from the SMTL 10-Q filed May 9, 2007.

Gross Profit

Three Months Ended
March 31,

Six Months Ended
March 31,

2007
2006
2007
2006
(Dollars in thousands)

Gross profit
    $ 26,381   $ 30,309   $ 59,146   $ 54,317  
Percentage of net sales    49.3 %  47.5 %  48.7 %  45.6 %

Gross profit decreased by $3.9 million or 13.0% in the second quarter of fiscal 2007 compared with the second quarter of fiscal 2006 but increased by $4.8 million or 8.9% in the first six months of fiscal 2007 as compared with the first six months of fiscal 2006. Second quarter fiscal 2007 margins gained 1.8 percentage points over second quarter fiscal 2006 levels and rebounded 3.1 percentage points in the first six months of fiscal 2007 as compared with the same period in fiscal 2006.



14


Gross profit decreased in absolute dollars in the second quarter, in part, because of lower sales volumes. Gross profit improved on a percentage basis in both periods of fiscal 2007 primarily for the following reasons:

  • The second quarter and year-to-date gross profit in fiscal 2006 were negatively impacted by approximately six percentage points and five percentage points, respectively, by selected tool installations for first-time customer use of new applications whereas the second quarter and year-to-date gross profit in fiscal 2007 were minimally impacted by strategic tool placements.
  • Installation revenues, with minimal related cost of goods sold, increased almost $2.6 million in the second quarter of fiscal 2007 and $4.0 million for the first six months of fiscal 2007, contributing five percentage points and three percentage points, respectively, to the second quarter and year-to-date gross profit increase. These gains were partially offset by the margin contribution in the second quarter of fiscal 2006 from a one-time tool cancellation fee.
  • Warranty and installation costs decreased slightly in the quarterly comparison and decreased by one percentage point in the year-to-date comparison.

Margins for tools, spare parts, service and restorations also improved somewhat in both comparative periods. These margin increases were partially offset by increased period costs.

This excerpt taken from the SMTL 10-Q filed Feb 8, 2007.

Gross Profit

Three Months Ended
December 31,
2006

December 31,
2005

(Dollars in thousands)

Gross profit
    $ 32,765   $ 24,008  
Percentage of net sales    48.2 %  43.4 %

Gross profit increased by $8.8 million or 36.5% in the first quarter of fiscal 2007 compared with the first quarter of fiscal 2006. First quarter fiscal 2007 margins rebounded by approximately 4.8 percentage points to 48.2% from 43.4%.

Gross profit increased in absolute dollars, in part, because of higher sales volumes. Gross profit also increased during the first quarter of fiscal 2007 primarily for the following reasons:

  • Installation revenues, with minimal related cost of goods sold, increased almost $1.5 million, or approximately two percentage points, over first quarter fiscal 2006 levels as we obtained final installation acceptance on almost twice as many tools in the first quarter of fiscal 2007 as in the first quarter of fiscal 2006;
  • Warranty and installation costs declined approximately two percentage points from first quarter fiscal 2006 levels as actual warranty costs reported were lower than in the first quarter of fiscal 2006.

Margins for spare parts, service and restorations also improved in the first quarter of fiscal 2007. These margin increases were partially offset by slightly lower margins on tools, including certain low margin tools, and increased inventory reserves.


13


This excerpt taken from the SMTL 10-K filed Dec 14, 2006.

Gross Profit

Year Ended September 30,
2006
2005
2004
(Dollars in thousands)

Gross profit
    $ 112,919   $ 96,969   $ 77,421  
Percentage of net sales    46.4 %  50.9 %  55.4 %

Gross profit increased $16.0 million or 16.4% in fiscal 2006 compared to fiscal 2005. Fiscal 2005 gross profit increased $19.5 million or 25.2% compared to fiscal 2004 gross profit of $77.4 million.

Gross profit increased in absolute dollars in fiscal 2006 because of higher sales volumes but declined by 4.5 percentage points from fiscal 2005. The gross margin percentage was negatively impacted by selected tool installations of new applications for first-time customers. One-time pricing incentives coupled, in certain instances, with increased manufacturing costs, impacted the gross margin by approximately four percentage points in fiscal 2006. The gross margin benefited slightly by a one-time order cancellation fee in the second quarter while increased warranty and installation costs also reduced the gross margin by approximately one percentage point in fiscal 2006.

Gross profit increased in absolute dollars in fiscal 2005 and declined by 4.5 percentage points from fiscal 2004. The fiscal 2004 gross margin was favorably impacted by the license initiation fees discussed above. Exclusive of the license initiation fees, gross margin would have been essentially flat year over year, declining less than one percentage point. The variability in gross margin year over year is primarily related to product mix as spare parts and service sales contributed a higher percentage to overall sales revenues in fiscal 2004 than in fiscal 2005. Spare parts and service sales typically provide for a higher gross margin than do tool sales.

Fiscal 2004 gross margin was favorably impacted by approximately 1.0 percentage point due to the sale of tools that contained certain parts that had been previously written-down. Revenues on those sales totaled $9.0 million.

This excerpt taken from the SMTL 10-Q filed Aug 9, 2006.

Gross Profit

Three Months Ended
June 30,

Nine Months Ended
June 30,

2006
2005
2006
2005
(Dollars in thousands)

Gross profit
    $ 27,640   $ 24,651   $ 81,957   $ 72,150  
Percentage of net sales    46.8 %  52.0 %  46.0 %  50.6 %

Gross profit increased $3.0 million or 12.1% in the third quarter of fiscal 2006 compared to the third quarter of fiscal 2005 and $9.8 million or 13.6% in the first nine months of fiscal 2006 as compared with fiscal 2005. As a percentage of net sales, gross profit declined 5.2 percentage points to 46.8% in the third quarter of fiscal 2006 from 52.0% in the same period of fiscal 2005 and declined 4.6 percentage points to 46.0% in the first nine months of fiscal 2006 from 50.6% in the first nine months of fiscal 2005.

Gross profit increased in both the quarterly and year-to-date comparative periods in absolute dollar terms because of higher sales volumes. The gross margin percentage in both periods was negatively impacted due to up-front investments on selected tool installations of new applications for first-time customer use. One-time pricing incentives coupled, in certain instances, with increased manufacturing costs, impacted the gross margin by approximately three percentage points in the third quarter of fiscal 2006 and by approximately four percentage points in the first nine months of fiscal 2006. The year-to-date margin was benefited slightly by a one-time order cancellation fee in the second quarter while increased warranty and installation costs also reduced the gross margin by approximately one percentage point in both comparative periods. Our product mix continues to be weighted toward our Raider platform tools. While we expect warranty expense on the Raider platform to be lower than the prior platform for our automated plating and cleaning tools, warranty rates are higher on the more advanced tool lines than on our less complex batch tools.


15


This excerpt taken from the SMTL 10-Q filed May 9, 2006.

Gross Profit

Three Months Ended
March 31,

Six Months Ended
March 31,

2006
2005
2006
2005
(Dollars in thousands)

Gross profit
    $ 30,309   $ 24,067   $ 54,317   $ 47,499  
Percentage of net sales    47.5 %  51.9 %  45.6 %  49.9 %

Gross profit increased $6.2 million or 25.9% in the second quarter of fiscal 2006 compared to the second quarter of fiscal 2005 and $6.8 million or 14.4% in the first half of fiscal 2006 as compared with fiscal 2005. As a percentage of net sales, gross profit declined 4.4 percentage points to 47.5% in the second quarter of fiscal 2006 from 51.9% in the same period of fiscal 2005 and declined 4.3 percentage points to 45.6% in the first six months of fiscal 2006 from 49.9% in the first six months of fiscal 2005.

Gross profit increased in both the quarterly and year-to-date comparative periods in absolute dollar terms because of higher sales volumes. The gross margin percentage in both comparative periods was negatively impacted due to up-front investments on selected tool installations for first-time customer use of new applications. One-time pricing concessions coupled, in certain instances, with increased manufacturing costs related to customer-driven needs, impacted the gross margin by approximately six percentage points in the second quarter of fiscal 2006 and by approximately five percentage points in the first six months of fiscal 2006. This was partially offset by approximately one percentage point in both periods by a one-time order cancellation fee. Increased warranty and installation costs also slightly reduced the gross margin percentage in the year-to-date comparison. Our product mix continues to be weighted toward our Raider platform tools. While we expect warranty expense on the Raider platform to be lower than the prior platform for our automated plating and cleaning tools, warranty rates are higher on the more advanced tool lines than on our less complex batch tools.


15


This excerpt taken from the SMTL 10-Q filed Feb 9, 2006.

Gross Profit

Three Months Ended
December 31,
2005

December 31,
2004

(Dollars in thousands)

Gross Profit
    $ 24,008   $ 23,432  
Percentage of net sales    43.4 %  48.0 %

Gross profit increased $576,000 or 2.5% in the first quarter of fiscal 2006 compared to the first quarter of fiscal 2005. As a percentage of net sales, gross profit declined 4.6 percentage points to 43.4% in the first quarter of fiscal 2006 from 48.0% in the same period of fiscal 2005.

Gross profit increased from the comparative period in absolute dollar terms because of higher sales volumes. The gross margin percentage in the first quarter of fiscal 2006 was negatively impacted by approximately four percentage points due to up-front investments on selected tool installations for first-time customer use of new applications. Increased warranty and installation costs also reduced the gross margin percentage by one percentage point. Our product mix continues to be weighted toward our Raider platform tools. While we expect warranty expense on the Raider platform to be lower than the prior platform for our automated plating and cleaning tools, warranty rates are higher on the more advanced tool lines than on our less complex batch tools.

This excerpt taken from the SMTL 10-K filed Dec 14, 2005.

Gross Profit

Year Ended September 30,
2005
2004
2003
(Dollars in thousands)

Gross profit
    $ 96,969   $ 77,421   $ 35,254  
Percentage of net sales    50.9 %  55.4 %  30.1 %

Gross profit increased $19.5 million or 25.2% in fiscal 2005 compared to fiscal 2004. Fiscal 2004 gross profit increased $42.2 million or 119.6% compared with fiscal 2003 gross profit of $35.3 million. We recorded a $19.1 million inventory write-down in fiscal 2003 due to obsolescence caused by the introduction of our new Raider product.

Gross profit increased in absolute dollars in fiscal 2005 and declined by 4.5 percentage points from fiscal 2004. The fiscal 2004 gross margin was favorably impacted by the $10.8 million license initiation fees discussed above. Exclusive of the license initiation fees, gross margin would have been essentially flat year over year, declining less than one percentage point. The variability in gross margin year over year is primarily related to product mix as spare parts and service sales contributed a higher percentage to overall sales revenues in fiscal 2004 than in fiscal 2005. Spare parts and service sales typically provide for a higher gross margin than do tool sales.

Excess and obsolete inventory charges were lower in fiscal 2004 as compared to fiscal 2003 because of the inventory write-down in fiscal 2003. Of the 25.3 percentage point difference in gross margin in fiscal 2004 as compared with fiscal 2003, the inventory write-down in fiscal 2003 accounted for 11 percentage points. The receipt of $10.8 million in license initiation fees for our seed layer enhancement patents also contributed over six points to the increase in margin in fiscal 2004. Improved absorption of manufacturing costs also contributed to the improved margin in fiscal 2004 because our factory operated at higher levels of output.

Fiscal 2005 gross margin was not significantly impacted by sales of tools containing parts that had been previously written-down. Fiscal 2004 gross margin was favorably impacted by approximately 1.0 percentage point due to the sale of tools that contained certain parts that had been previously written-down. Revenues on those sales totaled $9.0 million.

This excerpt taken from the SMTL 10-Q filed Aug 9, 2005.

Gross Profit

Three Months Ended
Nine Months Ended
June 30,
2005

June 30,
2004

June 30,
2005

June 30,
2004

(Dollars in thousands)

Gross Profit
                   
  Product and service revenue   $ 24,651   $ 13,631   $ 72,150   $ 44,058  
  License fees    --    --    --    7,500  




Total gross profit   $ 24,651   $ 13,631   $ 72,150   $ 51,558  




Percentage of net revenue    52.0 %  51.2 %  50.6 %  57.4 %

Gross profit increased $11.0 million in the third quarter of fiscal 2005 compared to the third quarter of fiscal 2004. In the first nine months of fiscal 2005, gross profit increased $20.6 million as compared to the same period of fiscal 2004. As a percentage of net revenue, gross profit increased 0.8 percentage points to 52.0% in the third quarter of fiscal 2005 from 51.2% in fiscal 2004‘s third fiscal quarter. Year-to-date, gross margin declined 6.8 percentage points to 50.6% from 57.4% for the same period in fiscal 2004.

Gross profit increased in both comparative periods in absolute dollar terms because of higher sales volumes. Additionally, the year-to-date fiscal 2004 gross profit benefited from the receipt of a $7.5 million license initiation fee. Exclusive of the license initiation fee, gross margin for the nine month period of fiscal 2004 was 53.5%. The gross margin percentage in the fiscal 2005 year-do-date comparison was negatively impacted by increased warranty and installation expense that added approximately three percentage points to our cost of goods sold. The product mix in fiscal 2005 is weighted toward our Raider platform tools. While we expect warranty expense on the Raider platform to be lower than the prior platform for our automated plating and cleaning tools, warranty rates are higher on the more advanced tool lines than on our less complex batch tools. The fiscal 2004 gross margin percentage was favorably impacted by expirations and changes in estimates of pre-existing warranties.


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