The loss worsened from the March quarter ($6.6 million) and a year ago $(4.9 million). CFO Jeffrey Buchanan blamed product pricing and mix issues at the EMS firm's Redmond, WA, facility and the integration of Integrex, another EMS company.

Gross margin was 5.4%, excluding writeoffs and the Redmond plant results. Overall the gross margin showed a loss of 0.5%.

For the quarter, operating cash outflow was $5.4 million and net capital expenditures were $5.1 million. At quarter's end TFS had $18.7 million in cash, vs. $26.5 million sequentially.

Sequentially, sales outstanding improved by three days, to 59 days. Inventory turns slowed to 5.4 from 5.7

TFS guided for third-quarter sales of $38 million and $41 million and a net loss of 24 to 26 cents. Q4 revenue of $48 million and $60 million is expected.

"We are pleased with the results, particularly in a third quarter, which is traditionally a challenging quarter for us," said Garry W. Rogerson, president and CEO, in a statement.

Pro-forma net earnings were $16.1 million, up from $12.3 million last year. GAAP net earnings were $15.4 million, vs. $10.7 million, when the company wrote down $1.6 million in restructuring and other one-time charges.

Last quarter Varian took $1.6 million in restructuring charges due to a previously announced consolidation of consumables factories in southern California.

EMS revenues were up 17.5%, to $52.7 million, on higher demand for medical and industrial equipment. The EMS pro-forma and GAAP operating profit margin was 12.2%.

Overall, the operating profit margin was 10.5% on a pro-forma basis and 8.9% on a GAAP basis.

Weymouth, UK -- DEK (www.dek.com) has developed a high throughput backside wafer coating process, hosted on a mass imaging platform and capable of exceeding the ± 12.5 µm total thickness variation (TTV) stipulated by most wafer processing specialists. The new process is compatible with underfill or adhesive-type coatings, normally applied at a nominal 50 µm thickness to the backside of semiconductor wafers ahead of singulation.

"TTV is the critical success factor for any backside wafer coating process," said Clive Ashmore of DEK's global applied process engineering group. "By demonstrating our ability to meet the established criteria for backside wafer processing, we have opened new opportunities for semiconductor packaging specialists to increase throughput and reduce the cost per package by using high accuracy mass imaging."

The new process is compatible with the company's metal stencil and emulsion screen technologies.

Ian deSouza, Universal senior vice president of operations and systems, was promoted to president, effective Aug. 16.

"I also look forward to the prospect of having very little to change. Our customers will notice no difference, except our continuing progress, growth and commitment," deSouza said in a press statement. 

During the past three years, deSouza was responsibile for global supply chain, software development and manufacturing activities, including the company's new operations in China.

In a statement, Universal said DeSouza is considered the "right and natural choice" to take the company forward. For over three years he has been McEvoy's deputy.

"I welcome the opportunity to take the reins from an old friend who has distinguished himself well in the role," said deSouza.

McEvoy plans to return to the U.K., where his family resides. He is credited for pulling the company through the 2001-02 recession and returning it to profitability in 2003.

McEvoy and deSouza worked closely for the past 20 years, through prior stints at Domino Printing Science and Cambridge Instruments. They were colloquially known within Universal as the "two Ian's."