Thursday, November 12, 2009

Company Contact:
Christine T. Hergenrother
Vice President & Chief Financial Officer
Tegal Corporation
[T] (707) 763-5600
info@tegal.com

Agency Contact:
Chris Danne
The Blue Shirt Group
[T] (415) 217-7722

Petaluma, Calif., November 12, 2009 ? Tegal Corporation (NASDAQ: TGAL), an innovator of specialized production solutions for the fabrication of advanced MEMS, power ICs and optoelectronic devices, today announced financial results for the second quarter and fiscal year 2010, which ended September 30, 2009. 

Second Quarter Highlights

• During the quarter, the Company launched ProNova?, a third-generation high-density Inductively Coupled Plasma (ICP) reactor for Tegal DRIE Series Wafer Processing Products.  Targeted for fast-growing MEMS and 3D IC applications, delivery of the ProNova has already begun, with the first order going to a new Tegal customer in Europe.
• Shipments during the quarter included a Tegal DRIE 3200 multi-module cluster tool for a high volume manufacturer of MEMS sensors and a Tegal SMT PVD system for high quality reactive sputtering of piezoelectric aluminum nitride (AlN) films for electro acoustic devices such as BAW and FBAR filters (RF MEMS) and for other piezoelectric sensor and actuator applications.

Financial Results

Revenues for the second quarter of fiscal 2010 were $3.1 million, an increase of 55% from $2.0 million in the same period last year.  Tegal reported a net loss of ($1.7) million, or ($0.20) per share, for the quarter, compared to net loss of ($2.5) million, or ($0.34) per share in the same period last year, and a net loss of ($2.6) million, or ($0.31) per share in the prior quarter.

Gross profits for the second quarter of fiscal 2010 were 27.2% compared to 50.8% in the same period last year, and up from 8.6% in the prior quarter.
 
Operating loss for the second quarter was ($1.8) million, including approximately $0.4 million of non-cash charges.  Operating loss in the same period last year was ($2.4) million.  That period?s operating expenses included $0.5 million of non-cash charges.  The operating loss for Q1 of this fiscal year was ($3.0) million, which included $0.5 million of non-cash charges. 

Backlog at the end of the quarter was $3.6 million.

Cash at the end of the fiscal second quarter of 2010 was $8.6 million, a $1.8 million decrease from the end of the June quarter.  Over the same three month period, inventories decreased by $0.5 million to $14.5 million, accounts payable decreased by $0.3 million to $1.5 million, and accounts receivable increased by $0.7 million to $2.5 million. 

As of September 30, 2009, the Company?s total shares outstanding were 8,415,676.

?While our industry remains under pressure, we were pleased to report sequential increasing revenues, an improved backlog and a reduction in both our operating loss and cash burn,? said Thomas Mika, President and CEO of Tegal Corporation.  ?More importantly, we believe our tools are the best in the industry and we are pleased to receive new orders from customers in Europe and Japan.  This has been a challenging market for any company to win new customers and we believe that these orders are testament to our technology, value proposition and customer service.?

Safe Harbor Statement
Except for historical information, matters discussed in this news release contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.  Forward-looking statements, which are based on assumptions and describe our future plans, strategies and expectations, are generally identifiable by the use of the words "anticipate," "believe," "estimate," "expect," "intend," "project" or similar expressions.  These forward-looking statements are subject to risks, uncertainties and assumptions about the Company including, but not limited to industry conditions, economic conditions, acceptance of new technologies and market acceptance of the Company's products and services.  All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph.  For a further discussion of these risks and uncertainties, please refer to the Company's periodic filings with the Securities and Exchange Commission.

About Tegal
Tegal is an innovator of specialized production solutions for the fabrication of advanced MEMS, power ICs and optoelectronic devices found in products like smart phones, networking gear, solid-state lighting, and digital imaging.  The Company?s plasma etch and deposition tools enable sophisticated manufacturing techniques, such as 3D interconnect structures formed by intricate silicon etch, also known as Deep Reactive Ion Etching (DRIE). Tegal combines proven expertise with practical system strategies to deliver application-specific solutions that are robust and reliable, and deliver exceptional process quality and high yields at a lower overall cost of ownership.  Headquartered in Petaluma, California, the company has more than 35 years of expertise and innovation in specialized technologies, over 100 patents, and an installed base of more than 1900 systems worldwide. Please visit us on the web at www.tegal.com.

Consolidated Financial Statement