Fourth Quarter 2008 Financial Results
Net sales for the fourth quarter were $13.1 million, compared to $30.0 million in the previous quarter, and $52.3 million in the fourth quarter of 2007. Net sales for the fourth quarter of 2007 included royalties from DNS of $2.9 million. Gross margin for the fourth quarter was 4.6 percent, compared to 25.5 percent in the previous quarter, and 47.1 percent in the fourth quarter of 2007. The decline in gross margin is primarily attributable to inventory reserves of $4.3 million and manufacturing under-absorption at these low revenue volumes.
Operating expenses for the fourth quarter were $60.1 million, compared to $28.8 million in the third quarter and $23.5 million for the fourth quarter of 2007. Fourth quarter operating expenses included the following: i) previously announced significant items totaling $30.9 million related to restructuring charges of $3.4 million, impairment of goodwill of $18.1 million, and impairment of intangibles and long-lived assets of $9.4 million, and ii) $5.5 million in SG&A costs related to accelerated amortization on evaluation tools placed at customer sites and incremental receivable reserves. Third quarter 2008 operating expenses included $1.9 million in restructuring expenses.
Net loss for the fourth quarter was $60.5 million, or $1.22 loss per share, compared with a net loss of $20.7 million, or $0.42 loss per share, for the previous quarter and net income of $4.8 million, or $0.09 earnings per diluted share, for the fourth quarter of 2007. Included in the net loss for the fourth quarter were restructuring and impairment charges totaling $30.9 million or $0.62 loss per share, compared to restructuring charges of $1.9 million or $0.04 loss per share in the previous quarter.
Cash, cash equivalents and short-term investments at the end of the fourth quarter were $103.4 million, compared to $117.7 million at the end of the previous quarter, and $152.6 million at the end of 2007. Cash decreased by $14.3 million in the fourth quarter compared to a decrease of $18.0 million in the third quarter, despite lower revenue levels.
David L. Dutton, Mattson president and chief executive officer, noted, The semiconductor industry is clearly experiencing the most difficult period in its history, driven by the continuing deterioration of the global economy. We responded by taking decisive actions to reduce costs, and align our operating plans and structure with the business environment in order to improve our operating efficiency. Due to the limited visibility, we are prepared for what could be a broad-based and protracted downturn. Our strategy is to continue with our aggressive cost reduction programs to preserve our balance sheet, while protecting our investment in new products in order to successfully penetrate the new markets of dielectric etch and millisecond anneal.
Dutton concluded, We have not just restructured the Company for the down-cycle. Rather, we have strategically built a new and more efficient Mattson Technology that has increased customer centricity and operating efficiencies. Upon a return to improved market conditions, we believe that our operating model will generate higher earnings and cash flow per revenue dollar, while leveraging our new market positions.
