Varian Semiconductor Equipment Associates Announces Record Fourth Quarter and Full Year Results for FY 2000
Continuing Strong Demand Drives Record Quarterly and Full Year Revenue and Net Income
GLOUCESTER, MA--(BUSINESS WIRE)--October 26, 2000-- Varian Semiconductor Equipment Associates, Inc. (NASDAQ: VSEA - news) today announced record results for its fourth quarter and full year of fiscal 2000, which ended September 29, 2000.
Fourth quarter revenue totaled a record $229 million, up 168 percent from $85 million of recurring revenue in the previous year's same quarter. Net income was also at record levels, reaching $47.2 million, or $1.38 per diluted share, including a $10.8 million after-tax, or $0.32 per diluted share, non-recurring gain related to a litigation settlement. That compares with net income of $16.1 million, or $0.50 per diluted share, in the same quarter of the previous fiscal year, which during that period included non-recurring royalty revenue of $13.8 million after-tax, or $0.43 per diluted share.
Revenue increased 19 percent sequentially over revenue in fiscal 2000's third quarter. At 40.6 percent, gross margin exceeded the company's 40 percent gross margin target, a quarter earlier than had been projected. Gross margin had been 39.5 percent during the previous sequential quarter and 34.3 percent during the fourth quarter of fiscal 1999.
Fiscal 2000 full-year revenue reached a record $688 million, a 175 percent increase over the previous fiscal year's recurring revenue of $250 million. Net income reached $99 million, or $2.94 per diluted share, including a non-recurring gain related to a litigation settlement of $10.8 million after tax, or $0.32 per share. Fiscal 1999's net loss was $13.2 million, or $0.43 per share, including non-recurring royalty revenue of $13.8 million after-tax, or $0.43 per diluted share. Royalty revenue in fiscal 2000 was $10.1 million, compared with $6.6 million of recurring royalty revenue in fiscal 1999.
Richard A. Aurelio, Varian Semiconductor's president and chief executive, said, ``We continue to build our business on strong fundamentals:
-- Market leadership, confirmed by the third consecutive quarter of
market-leading record revenue, and growth in demand that has
resulted in a backlog of $360 million at fiscal year end, double
the backlog at the end of the last fiscal year.
-- Technology leadership, demonstrated by mounting demand for the
company's innovative VIISta single-wafer platform, including the
latest generation of plasma doping technology, the VIISta 10
P2LAD. This proprietary technology creates significant low energy
ion implantation opportunities beyond beam-line ion implantation
and enables us to meet critical ultra-shallow junction
requirements for advanced devices.
-- Customer satisfaction leadership, enhanced by our recent
electronic customer service solutions for tool monitoring and
maintenance: vCare(TM), vCommerce(TM) and VCS(TM) (Varian Control
System), and confirmed by numerous customer-specific and
industry-wide awards related to outstanding service and support
for our tools and technology.
``A robust combination of technology and capacity needs of our customers is driving our business to current record levels,'' Aurelio said. ``Over the last 12 months, we have doubled our capacity, output and backlog while reducing cycle time. We accomplished this while increasing cash flow and profitability. Next month, we will enter the 300 mm high energy market with the introduction of our VIISta 3000 single-wafer platform at Semicon Japan.''
Ernest L. Godshalk, chief financial officer, offered the company's business outlook. ``Our expectations for fiscal 2001 remain high, given the momentum we see in the markets we serve. Those markets are strong, although we are mindful of recent financial news, which suggests caution in our operational and budgetary planning for fiscal 2001.''
He explained that for fiscal 2001:
-- Annual revenue is expected to grow by approximately one-third.
-- Gross profit as a percent of sales is expected to improve by 2-3
percent.
-- Selling, general and administrative expense will continue to be
managed carefully and is expected to hold at approximately 12-13
percent of sales.
-- Research and development investment will continue to increase, as
the company anticipates customer demand for more advanced
technological requirements, especially for 300 mm product.
-- The company's balance sheet remains strong, with a significant
increase in cash and strong cash flow. Those trends are not
expected to change.
-- Capital expenditures are projected to increase to approximately
$25-30 million.
-- Recurring net income is expected to grow by 50 to 60 percent over
fiscal 2000.
Until April 2, 1999, the company operated as part of Varian Associates, Inc. (now known as Varian Medical Systems, Inc.), which spun off 100 percent of Varian Semiconductor as a separate publicly traded company. (Varian Semiconductor is no longer affiliated with Varian Medical Systems or with Varian, Inc., which was also spun out of Varian Associates.)
Varian Semiconductor will hold a conference call, broadcast over the Internet, at 5 p.m. Eastern time today for interested persons. Access to the call is available through the company's web site at www.vsea.com/invrel/index.htm, and a replay of the call will also be available at the same location.
About Varian Semiconductor
Varian Semiconductor Equipment Associates is a leading producer of ion implantation equipment used in the manufacture of semiconductors. The company is headquartered in Gloucester, Massachusetts, and operates from three manufacturing sites and 26 worldwide offices. Varian Semiconductor maintains a web site at www.vsea.com.
-0- Note: This press release contains forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. For this purpose, the statements concerning the industry outlook, the company's sales growth, future financial results, market share, capacity utilization and technological improvements and benefits, and any statements using the terms ``believes,'' ``anticipates,'' ``expects,'' ``plans,'' ``appears'' or similar expressions, are forward-looking statements. The forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: the short operating history for the company as a separate entity; volatility in the semiconductor equipment industry; significant fluctuations in the company's quarterly operating results; risks associated with the company's transition to a new information technology infrastructure; the impact of rapid technological change and the company's dependence on the development and introduction of new products; the company's concentration on ion implantation systems and related products; concentration in the company's customer base and lengthy sales cycles; the highly competitive market in which the company competes; risks of international sales; foreign currency risks; uncertain protection of patent and other proprietary rights; potential environmental liabilities; the company's reliance on a limited group of suppliers; the ability of the company's suppliers to respond to increased demand for parts; the company's dependence on certain key personnel; as well as other risk factors described from time to time in the company's periodic reports and registration statements filed with the Securities and Exchange Commission. The company cannot guarantee any future results, levels of activity, performance or achievement. The company undertakes no obligation to update any of the forward-looking statements after the date of this press release.
VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Fiscal Three Months Ended Fiscal Twelve Months Ended
------------------------- --------------------------
September 29, October 1, September 29, October 1,
2000 1999 2000 1999
------------- ---------- ------------- ----------
Revenue
Product revenue $209,995 $ 72,357 $626,219 $206,419
Service revenue 15,474 9,790 51,432 36,614
Royalties 3,447 25,331 10,068 28,852
------------- ---------- ---------- ----------
Total revenue 228,916 107,478 687,719 271,885
------------- ---------- ---------- ----------
Operating Costs and Expenses
Cost of product and
service revenue 136,056 56,052 418,573 182,604
Research and
development 13,053 10,061 47,025 37,582
Marketing, general and
administrative 27,679 18,591 98,063 70,310
Restructuring costs - - - 2,688
------------- ---------- --------- ---------
Total operating costs
and expenses 176,788 84,704 563,661 293,184
------------- ---------- --------- ---------
Operating earnings
(loss) 52,128 22,774 124,058 (21,299)
Other income 16,000 2,009 18,700 2,009
Interest income 1,502 664 4,597 1,821
------------- ---------- --------- --------
Earnings (loss) before
taxes 69,630 25,447 147,355 (17,469)
Income tax provision
(benefit) on
earnings (loss) 22,409 9,338 48,490 (4,262)
------------- ---------- --------- -------
Net earnings
(loss) $ 47,221 $ 16,109 $ 98,865 $ (13,207)
============= ========== ========= =======
Weighted average shares
outstanding--basic 32,066 30,444 31,375 30,428
------------ ---------- --------- ------
Weighted average shares
outstanding--
diluted 34,275 31,998 33,681 30,428
------------ ---------- --------- ------
Net earnings (loss)
per share---basic $ 1.47 $ 0.53 $ 3.15 $ (0.43)
------------ ---------- --------- ------
Net earnings (loss) per
share---diluted $ 1.38 $ 0.50 $ 2.94 $ (0.43)
------------ ---------- --------- -------
VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Amounts in thousands, except share data)
September 29, October 1,
2000 1999
------------ -------------
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 121,692 $ 65,968
Restricted cash - 1,000
Accounts receivable, net 182,396 100,497
Inventories, net 125,766 70,437
Deferred taxes 18,128 32,536
Other current assets 7,884 2,887
------------ -------------
Total Current Assets 455,866 273,325
------------ -------------
Property, plant and equipment 104,525 92,364
Accumulated depreciation
and amortization (60,770) (54,066)
------------ -------------
Net property, plant and equipment 43,755 38,298
Other assets 19,869 22,521
------------ -------------
Total Assets $ 519,490 $ 334,144
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable $ 5,541 $ 5,523
Accounts payable 63,392 30,709
Accrued expenses 74,309 76,455
Product warranty 28,190 15,899
Advance payments from customers 4,566 4,212
------------ -------------
Total Current Liabilities 175,998 132,798
Long-term accrued expenses 6,792 7,176
Deferred taxes 1,546 985
------------ -------------
Total Liabilities 184,336 140,959
------------ -------------
Stockholders' Equity
Preferred stock, par value $.01;
authorized 5,000,000 shares,
issued none.
Common stock, par value $.01;
authorized 150,000,000 shares,
issued and outstanding 32,103,167
at September 29, 2000 and
30,474,492 at October 1, 1999 321 305
Capital in excess of par value 223,263 180,175
Retained earnings 111,570 12,705
------------ -------------
Total Stockholders' Equity 335,154 193,185
------------ -------------
Total Liabilities and
Stockholders' Equity $ 519,490 $ 334,144
============ ============= |
