SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 22, 1998
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MEMC ELECTRONIC MATERIALS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-13828 56-1505767
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) No.)
501 Pearl Drive, St. Peters, Missouri 63376
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 279-5000
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(Not Applicable)
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(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
Private Placement and Rights Offering
MEMC Electronic Materials, Inc. issued a news release on October 22, 1998,
with respect to its intention to raise $200 million in equity capital through a
private placement and a rights offering. This news release is incorporated
herein by reference to Exhibit 99.1 attached hereto.
Third Quarter 1998 Results
MEMC Electronic Materials, Inc. issued a news release on October 26, 1998
announcing its financial results for the three and nine months ended September
30, 1998. This news release is incorporated herein by reference to Exhibit 99.2
attached hereto.
Item 7. Financial Statements and Exhibits
C. Exhibits
Exhibit No. Description
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99.1 News Release issued by MEMC Electronic Materials, Inc.
dated October 22, 1998
99.2 News Release issued by MEMC Electronic Materials, Inc.
dated October 26, 1998
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEMC Electronic Materials, Inc.
Date: October 27, 1998 /s/ James M. Stolze
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James M. Stolze
Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of Item
601 of Regulation S-K:
Exhibit No. Description
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99.1 News Release issued by MEMC Electronic Materials,
Inc. dated October 22, 1998
99.2 News Release issued by MEMC Electronic Materials,
Inc. dated October 26, 1998
Exhibit 99.1
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CONTACT: Sam Duggan
Director, Investor Relations
(314) 279-5920
Michele Katz/Connie Bienfait/
Elric Martinez
Morgen-Walke Associates
Press: Lee Foley
(212) 850-5600
MEMC ANNOUNCES INTENTION TO RAISE $200 MILLION IN EQUITY CAPITAL
THROUGH A PRIVATE PLACEMENT AND A RIGHTS OFFERING
St. Peters, MO, October 22, 1998 -- MEMC Electronic Materials, Inc. (NYSE: WFR)
today announced that the Company has filed a registration statement with the
Securities and Exchange Commission to raise approximately $94 million in equity
capital through a rights offering. MEMC also announced that VEBA Corporation,
the Company's 53.1% stockholder, has agreed to purchase approximately $106
million of MEMC common stock in a private placement, subject to certain
customary conditions.
The private placement and rights offering would complete a $350 million
financial restructuring of the Company which includes $150 million in additional
credit facilities received from VEBA AG and its affiliates over the last four
months. This restructuring also provides for the extension of all outstanding
debt with VEBA AG and its affiliates that matures prior to January 1, 2001 to
the respective rollover dates in 2001.
The private placement to VEBA Corporation is expected to close concurrently with
the Securities and Exchange Commission declaring effective the registration
statement associated with the rights offering. The per share price of MEMC's
common stock sold to VEBA Corporation is to be set at a weighted average trading
price per share of MEMC's common stock during a period shortly before the date
of the rights offering final prospectus.
Under the rights offering, MEMC plans to issue transferable rights to purchase
additional shares of common stock to the Company's stockholders of record, other
than VEBA Corporation. The rights offering would allow MEMC's stockholders an
opportunity to restore their proportionate interest in the Company at the same
price per share of common stock as paid by VEBA Corporation in the private
placement. Rights holders who exercise their rights in full would also have the
opportunity to subscribe for additional shares of common stock which are not
purchased by other eligible rights holders. VEBA Corporation has agreed to
purchase all shares not subscribed for by other stockholders in the rights
offering, subject to certain customary conditions.
A registration statement relating to the rights and the underlying common stock
has been filed with the Securities and Exchange Commission but has not yet
become effective. These securities may not be sold nor may offers to buy be
accepted prior to the time the registration statement becomes effective. This
news release shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in any state or
other jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
state or other jurisdiction. In any state or other jurisdiction where
securities, blue sky laws or other laws require the rights offering to be made
by a licensed broker or dealer, the rights offering will be deemed to be made on
behalf of the Company by the dealer managers or one or more registered brokers
or dealers licensed under the laws of such jurisdiction. The rights offering
will be made only by means of a prospectus.
The shares of common stock to be purchased by VEBA Corporation will not be
registered under the Securities Act of 1933 and may not be offered or sold in
the United States without such registration or an applicable exemption from such
registration requirements.
NationsBanc Montgomery Securities LLC and J.P. Morgan Securities Inc. are
expected to act as dealer managers in connection with this rights offering.
VEBA Corporation is a U.S. subsidiary of VEBA AG. VEBA AG (NYSE: VEB), which is
among the largest publicly held industrial corporations in Germany, is engaged
in businesses including electricity, chemicals, oil, distribution/logistics,
real estate management and telecommunications.
MEMC is the second largest producer of silicon wafers in the world. The silicon
wafer is the fundamental building block of semiconductors, which, in turn, are
found in virtually all electronics applications, including computers,
telecommunications equipment, automobiles, consumer electronics products,
industrial automation and control systems, and analytical and defense systems.
Headquartered in St. Peters, MO, MEMC operates manufacturing facilities directly
or through joint ventures in Italy, Japan, Malaysia, South Korea, Taiwan and the
United States.
# # #
Exhibit 99.2
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CONTACT: Sam Duggan
Director, Investor Relations
(314) 279-5920
Michele Katz/Connie Bienfait/
Elric Martinez
Morgen-Walke Associates
Press: Lee Foley
(212) 850-5600
MEMC ANNOUNCES THIRD QUARTER 1998 RESULTS
St. Peters, MO, October 26, 1998 -- MEMC Electronic Materials, Inc. (NYSE: WFR)
today released financial results for the three and nine months ended September
30, 1998. MEMC reported net sales of $167.7 million for the 1998 third quarter,
in line with anticipated net sales of $160 to $165 million as disclosed on
September 15, 1998. In the year-ago period, net sales totaled $260.0 million.
The Company reported a net loss of $63.5 million, or $1.57 per share in the
third quarter of 1998, compared to a net loss of $4.3 million, or $0.10 per
share in the 1997 third quarter.
For the nine months ended September 30, 1998, the Company reported net sales of
$605.1 million, and a net loss of $129.5 million, or $3.18 per share before
after-tax restructuring charges of $110.5 million, or $2.72 per share. For the
first nine months of 1997, the Company reported net sales of $728.1 million and
a net loss totaling $3.3 million, or $0.08 per share.
Advanced large diameter and epitaxial products represented 50% of product volume
for the 1998 third quarter compared to 40% in the year-ago period. The increase
in this ratio is indicative of the Company's customers utilizing 8-inch
facilities in preference to their smaller diameter facilities in order to obtain
the lowest cost per device.
In the third quarter of 1998 gross margin was a negative 16.8%, compared to a
positive 13.9% in the year-ago period. The decline in gross margin is primarily
attributable to significant declines in volume and lower prices, only partially
offset by an improved product mix. The Company noted that it believes that
product volumes in the fourth quarter are likely to decline in comparison to the
1998 third quarter. However, based on currently available information, the
Company believes the rate of decline is slowing.
"1998 has been a very difficult year for MEMC," commented Ludger H. Viefhues,
Chief Executive Officer. "Overcapacity in the semiconductor industry has been
exacerbated by weaker economic conditions in the Asia Pacific and Japanese
markets. According to industry data, these conditions have resulted in
sequential quarterly declines in product volume for the silicon wafer industry.
This will be the first year since 1985 that silicon consumption will not
increase year over year for the industry."
"Under these unprecedented market conditions, we have taken significant
initiatives to reduce costs and "right-size" our manufacturing capacity," noted
Mr. Viefhues. "At the same time, we have also sought to improve our financial
position in order to have the appropriate level of capital to make key
investments in research and development and capital expenditures and to fund
operating losses."
Marketing and administration expenses totaled $16.3 million for the 1998 third
quarter, compared to $17.1 million in the year-ago period. This represents the
lowest quarterly marketing and administration expenses in three years.
Research and development costs totaled $20.6 million for the third quarter of
1998, compared to $17.2 million in the year-ago period. The increase in research
and development is primarily due the Company's 12 inch (300 millimeter) wafer
development program and depreciation expense associated with investments made in
its pilot line in St. Peters, MO and integrated development line in Utsunomiya,
Japan during 1997 and the first half of 1998.
Interest expense totaled $11.9 million for the 1998 third quarter compared to
$5.3 million in the year-ago period. The increase in interest expense is
primarily attributable to increased borrowings, and to a lesser extent the
completion of projects for which interest costs could no longer be capitalized.
The Company noted that its effective tax rate was 22.7% for the first nine
months of 1998 compared to 43% in the year-ago period, which was primarily
attributable to the composition of worldwide taxable income, restructuring
costs, non-deductible operating expenses in Malaysia and China, the
establishment of a valuation allowance on certain deferred tax assets in Japan
and certain foreign tax credit elections.
Equity in loss of joint ventures was $11.5 million in the third quarter of 1998,
compared to $6.0 million in the year-ago period. The loss in the 1998 third
quarter included a foreign currency loss on Korean won currency exposure at PHC,
the Company's unconsolidated Korean joint venture, and a small foreign currency
gain on New Taiwanese dollar exposure at Taisil, the Company's unconsolidated
Taiwanese joint venture, that netted to a loss of $0.9 million. The loss in the
third quarter of 1998 also included the write-off of $0.8 million of deferred
tax assets at Taisil, which are not anticipated to be realized prior to the
initiation of a tax holiday. Excluding the net foreign currency losses and the
write-off, equity in loss of joint ventures would have been $9.8 million in the
third quarter of 1998, reflecting lower volumes and prices at PHC and at Taisil.
MEMC is the second largest producer of silicon wafers in the world. The silicon
wafer is the fundamental building block of semiconductors, which, in turn, are
found in virtually all electronics applications, including computers,
telecommunications equipment, automobiles, consumer electronics products,
industrial automation and control systems, and analytical and defense systems.
Headquartered in St. Peters, MO, MEMC operates manufacturing facilities directly
or through joint ventures in Italy, Japan, Malaysia, South Korea, Taiwan and the
United States. To learn more about MEMC visit its web site at www.memc.com
The matters discussed in this news release regarding the rate of decline in
product volume and silicon consumption year-over-year for 1998 are
forward-looking statements. 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 such
factors as demand for the Company's silicon wafers, demand for semiconductors
generally, general economic conditions in the Asia Pacific region and Japan,
competitors' actions and other risks described in the Company's filings with the
Securities and Exchange Commission, including the registration statement on Form
S-3 filed with the Securities and Exchange Commission on October 22, 1998. 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 -
<PAGE>
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; Dollars in thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Net sales $ 167,685 $ 260,026 $ 605,081 $ 728,090
Cost of goods sold 195,780 223,856 613,220 633,019
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Gross margin (28,095) 36,170 (8,139) 95,071
Operating expenses:
Marketing and administration 16,295 17,113 53,665 51,972
Research and development 20,563 17,241 58,330 46,417
Restructuring costs - - 139,454 -
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Operating loss (64,953) 1,816 (259,588) (3,318)
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Nonoperating (income) expense:
Interest expense 11,931 5,265 29,195 6,521
Interest income (293) (265) (1,172) (1,048)
Royalty income (1,188) (2,233) (3,712) (6,525)
Other, net 136 (755) 3,336 (7,296)
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Total nonoperating (income) expense 10,586 2,012 27,647 (8,348)
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Earnings (loss) before income taxes, equity
in loss of joint ventures and
minority interests (75,539) (196) (287,235) 5,030
Income taxes (17,642) (85) (65,136) 2,163
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Earnings (loss) before equity in loss of joint
ventures and minority interests (57,897) (111) (222,099) 2,867
Equity in loss of joint ventures (11,454) (6,033) (26,845) (9,477)
Minority interests 5,807 1,883 9,007 3,325
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Net earnings (loss) $ (63,544) $ (4,261) $ (239,937) $ (3,285)
======== ======== ======== =======
Basic earnings (loss) per share $ (1.57) $ (0.10) $ (5.90) $ (0.08)
Diluted earnings (loss) per share $ (1.57) $ (0.10) $ (5.90) $ (0.08)
====== ====== ====== ======
Weighted average shares used in computing basic
earnings (loss) per share 40,507,810 41,360,861 40,637,643 41,403,629
Weighted average shares used in computing diluted
earnings (loss) per share 40,507,810 41,360,861 40,637,643 41,403,629
========== ========== ========== ==========
</TABLE>
<PAGE>
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1998 1997
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 33,529 $ 30,053
Accounts receivable, less allowance for doubtful accounts of
$2,367 and $3,473 in 1998 and 1997, respectively 115,957 154,702
Income taxes receivable 18,255 14,382
Inventories 123,183 141,447
Deferred tax assets, net 22,210 13,206
Prepaid and other current assets 27,479 23,185
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Total current assets 340,613 376,975
Property, plant and equipment, net of accumulated depreciation of
$531,642 and $465,384 in 1998 and 1997, respectively 1,162,021 1,200,827
Investment in joint ventures 80,315 95,307
Excess of cost over net assets acquired, net of accumulated amortization
of $4,784 and $3,752 in 1998 and 1997, respectively 48,740 49,772
Other assets 115,319 54,277
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Total assets $1,747,008 $1,777,158
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt $ 102,486 $ 122,476
Accounts payable 99,840 146,172
Provision for restructuring costs 41,886 -
Accrued liabilities 57,191 48,611
Accrued wages and salaries 21,113 21,267
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Total current liabilities 322,516 338,526
Long-term debt, less current portion 718,428 510,038
Pension and similar liabilities 91,078 76,837
Customer deposits 62,260 67,141
Other liabilities 43,993 26,901
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Total liabilities 1,238,275 1,019,443
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Minority interests 50,220 59,227
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 50,000,000 shares authorized, none
issued or outstanding in 1998 or 1997 - -
Common stock, $.01 par value, 200,000,000 shares authorized,
41,436,421 and 41,440,369 issued and outstanding in 1998
and 1997 414 414
Additional paid-in capital 574,317 574,317
Retained earnings (accumulated deficit) (75,541) 164,396
Accumulated other comprehensive loss (23,392) (38,887)
Unearned restricted stock awards (265) (424)
Treasury stock, at cost: 929,205 and 36,205 shares in 1998 and
1997, respectively (17,020) (1,328)
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Total stockholders' equity 458,513 698,488
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Total liabilities and stockholders' equity $1,747,008 $1,777,158
========= =========
</TABLE>
