Cymer Reports Results for Second Quarter 2001; Earnings Top Company's Expectations
SAN DIEGO, July 24 /PRNewswire/ -- Cymer, Inc. (Nasdaq: CYMI - news), the world's leading supplier of excimer light sources used in semiconductor manufacturing, today announced operating results for the second quarter ended June 30, 2001.
Second quarter net income exceeded the company's expectations and totaled $4,835,000, equal to $0.15 per share (diluted), compared to $15,275,000 or $0.50 per share (diluted) in the second quarter of 2000. Total revenue for the second quarter of 2001 was $70,411,000, versus total revenue of $86,251,000 posted in the second quarter of the prior year.
On a sequential basis, second quarter net income was 42 percent below the $8,299,000 or $0.27 per share (diluted) recorded for the first quarter of 2001. Total revenue for the second quarter decreased 23 percent from the $91,197,000 of revenue posted in the first quarter.
For the first six months of 2001, net income was $13,134,000, equal to $0.42 per share (diluted), compared to $25,450,000 or $0.82 per share (diluted) in the first half of 2000. Total revenue for the first six months of 2001 was $161,608,000, 3 percent below the $166,867,000 in total revenue recorded in the first half of the prior year.
Commenting on the company's second quarter performance, Bob Akins, Cymer's chairman and chief executive officer, noted, ``In the second quarter, the effectiveness of our cost-cutting measures, coupled with the continuing improvement in our operating efficiencies caused by enhanced corporate processes contributed to a higher than expected gross margin of 45 percent, and to our better-than-anticipated earnings. As expected in a downturn, the most advanced technology continues to sell, and our product mix shifted further toward our newer, higher value-added products. The ELS-6010TM, the industry's only 2.5 kHz krypton fluoride (KrF) light source accounted for 21 percent of revenue unit shipments, while our argon fluoride (ArF) light sources accounted for 16 percent of revenue unit shipments for the second quarter.''
Akins continued, ``We recognized 90 system units for revenue in the second quarter of 2001 compared to 128 units in the prior quarter. Cymer installed 91 light sources at chipmakers and other end users in the second quarter, and as of June 30, 2001, the number of Cymer light sources installed at end users totaled 1,553. Additionally, the balance between our shipments and installs brought stability to the inventory of Cymer light sources at our direct customers, which is an important objective to have reached in a downturn.''
Bill Angus, senior vice president and chief financial officer, stated, ``System unit shipments in the second quarter decreased 30 percent compared to shipments in the first quarter of 2001. On a currency adjusted basis, system average selling prices (ASPs) increased to $575,000 in the second quarter from $533,000 in the first quarter of 2001. ASPs are expected to continue this upward trend during the remainder of this year and may exceed $600,000 by year-end because of the anticipated shipment of a growing number of ELS-6010 systems as well as ArF systems, which carry higher selling prices. Non- systems product revenue, which consists of upgrades, consumables and service, decreased 23 percent from first quarter levels, and constituted 27 percent of second quarter revenue.
``Gross margins declined to 45 percent and operating margins to 8 percent in the second quarter from 47 percent and 12 percent, respectively, in the first quarter of 2001,'' Angus continued. ``Our investment in R&D rose to 23 percent of revenue for the second quarter, but is necessary at these levels to maintain our market and product leadership, and to position the company to take full advantage of the next upturn, whenever it begins. Operating income decreased to $5,413,000 in the second quarter from $11,111,000 in the first quarter of this year. Net income in the second quarter of this year was higher than anticipated partly due to an extraordinary gain on debt extinguishment of $540,000, or $0.02 per share (diluted), which resulted from the company's buy-back of $23,500,000 of its convertible debentures. Bookings in the second quarter were $47,696,000, and backlog declined 14 percent to $105,200,000 at June 30, 2001 from $122,804,000 at March 31, 2001. The overall book-to-bill ratio was .73 for the second quarter.''
Cash and cash equivalents and short- and long-term investments totaled $187,362,000 as of June 30, 2001. Capital spending and depreciation and amortization for the second quarter were approximately $6,969,000 and $6,168,000 respectively, compared with the company's actual capital expenditures and depreciation and amortization of $3,685,000 and $5,664,000 respectively for the first quarter of 2001.
Corporate Outlook
Commenting on the outlook for Cymer's market, Akins concluded, ``Our visibility has deteriorated in the last couple of months, and at this time our clarity looking forward is now less than one quarter. High chip inventories coupled with low chip sales have forced utilization rates at chip manufacturers and foundries below viable levels. This has resulted in an alarming number of announcements of temporary closures of eight-inch fabs, leading to idling or completely shutting down a number of tools, including Cymer light sources. Our consumables business has tracked the fab utilization trend downward, and though none of our customers has cancelled any orders at this time, the conservative approach in the current difficult environment is to assume that cancellations and or push-outs could happen.''
Based on information available at this time, Cymer is currently providing the following guidance for the third quarter of 2001, subject to future revision:
Cymer anticipates a further decline in unit shipments and additional reductions in consumable sales from second quarter levels. Therefore, Cymer believes that total revenue in the third quarter will decline by between 20 percent and 25 percent from the second quarter 2001 level, but could potentially decline by as much as 25 percent to 30 percent.
Cymer is forecasting gross margins in a range of 37 percent to 40 percent.
Cymer is targeting research and development spending in the third quarter at approximately 25 percent to 27 percent of total revenue, and anticipates selling, general and administrative (SG&A) expenses to be approximately 15 percent to 17 percent of revenue.
Cymer expects amortization of goodwill and intangible assets to total $894,000 on a quarterly basis.
Cymer currently models net other income/expense at a negative $800,000 per quarter prior to the inclusion of foreign exchange gains or losses, and estimates the tax rate for the remainder of 2001 to be 25 percent.
Because of market uncertainty, Cymer is reassessing its position monthly and will issue a third quarter update the first week of September 2001.
Forward Looking Statements
Statements in this press release that are not strictly historical in nature are forward-looking statements. These statements include, but are not limited to, references to the expectation that newer products will account for a growing percentage of Cymer's system shipments and that ASPs will continue to increase, continued slowing in the capital equipment sector and additional cuts in capital spending by chipmakers, the importance of chipmakers purchasing the most advanced technology, the potential for cancellations and or order push-outs, and all of the statements under the caption ``Corporate Outlook'' above, including references to expected financial and operating results. These statements are only predictions based on current information and expectations and involve a number of risks and uncertainties. Actual events or results may differ materially from those projected in such statements due to various factors, including but not limited to: the demand for semiconductors in general, and, in particular, for leading-edge devices with smaller geometries; the rate at which semiconductor manufacturers take delivery of photolithography tools from the company's customers; delays or cancellations by customers of their orders; new and enhanced product offerings by competitors; the timing of customer orders, shipments and acceptances; inability by the company to meet its production and/or product development schedules; inability of the company to secure adequate supplies of critical components for its advanced products; and failure by the company to manage its expense levels and unanticipated expenses. For a discussion of these and other factors which may cause our actual events or results to differ from those projected, please refer to the company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q, as well as other subsequent filings with the Securities and Exchange Commission.
Cymer, Inc. is the world's leading supplier of excimer laser illumination sources, the essential light source for deep ultraviolet (DUV) photolithography systems. DUV lithography is a key enabling technology, which has allowed the semiconductor industry to meet the exact specifications and manufacturing requirements for volume production of today's advanced semiconductor chips. Further information on Cymer may be obtained from the Company's SEC filings, the Internet at cymer.com or by contacting the company directly.
Cymer, Inc. Quarter ending June 30 Six Months ending June 30
2000 2001 2000 2001
Total revenues $86,251,000 $70,411,000 $166,867,000 $161,608,000
Amortization of
goodwill and
intangibles 0 894,000 0 1,359,000
Purchased in-process
research 0 0 0 5,050,000
Extraordinary gain on
debt extinguishment 0 540,000 0 540,000
Cumulative change in
accounting principle 0 0 0 (370,000)
Net income 15,275,000 4,835,000 25,450,000 13,134,000
Share earnings
(basic) $0.53 $0.16 $0.88 $0.43
Share earnings
(diluted) $0.50 $0.15 $0.82 $0.42
Weighted average
common and common
equivalent shares
outstanding
(diluted) 30,745,000 31,357,000 31,001,000 31,043,000
CYMER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
For the three For the six
months months
ended June 30 ended June 30
2000 2001 2000 2001
REVENUES:
Product sales $85,802 $69,479 $166,333 $160,131
Other 449 932 534 1,477
Total revenues 86,251 70,411 166,867 161,608
COSTS AND EXPENSES:
Cost of product sales 43,645 38,539 89,796 86,569
Research and development 10,639 15,843 21,402 30,280
Sales and marketing 4,738 4,959 8,536 11,341
General and administrative 4,723 4,763 9,297 10,485
Amortization of goodwill and
intangibles 0 894 0 1,359
Purchased in-process research 0 0 0 5,050
Total costs and expenses 63,745 64,998 129,031 145,084
OPERATING INCOME 22,506 5,413 37,836 16,524
OTHER INCOME (EXPENSE):
Foreign currency exchange gain
(loss) -- net (37) (8) (20) 1,597
Interest and other income 2,786 2,187 5,174 4,919
Interest and other expense (3,255) (2,670) (6,163) (5,576)
Total other income
(expense) -- net (506) (491) (1,009) 940
INCOME BEFORE INCOME TAX PROVISION
AND MINORITY INTEREST 22,000 4,922 36,827 17,464
INCOME TAX PROVISION 6,600 603 11,048 4,366
MINORITY INTEREST (125) (24) (329) (134)
INCOME BEFORE EXTRAORDINARY ITEM AND
CUMULATIVE CHANGE IN ACCOUNTING
PRINCIPLE $15,275 $4,295 $25,450 $12,964
Extraordinary gain on debt
extinguishment $0 $540 $0 $540
Cumulative change in accounting
principle $0 $0 $0 ($370)
NET INCOME $15,275 $4,835 $25,450 $13,134
EARNINGS PER SHARE:
Basic earnings per share:
Before extraordinary item and
cumulative change in
accounting principle $0.53 $0.14 $0.88 $0.43
Extraordinary gain on debt
extinguishment $0.00 $0.02 $0.00 $0.01
Cumulative change in accounting
principle $0.00 $0.00 $0.00 ($0.01)
Basic earnings per share $0.53 $0.16 $0.88 $0.43
Weighted average common shares
outstanding 29,065 30,512 28,888 30,234
Diluted earnings per share:
Before extraordinary item and
cumulative change in
accounting principle $0.50 $0.13 $0.82 $0.42
Extraordinary gain on debt
extinguishment $0.00 $0.02 $0.00 $0.01
Cumulative change in accounting
principle $0.00 $0.00 $0.00 ($0.01)
Diluted earnings per share $0.50 $0.15 $0.82 $0.42
Weighted average common and
common equivalent shares
outstanding 30,745 31,357 31,001 31,043
CYMER, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
December 31, June 30,
ASSETS 2000 2001
CURRENT ASSETS:
Cash and cash equivalents $79,678 $87,380
Short-term investments 117,017 88,759
Accounts receivable -- net 85,569 79,823
Foreign currency forward exchange
contracts 2,664 4,462
Inventories 76,887 67,047
Deferred income taxes 23,503 23,457
Prepaid expenses and other 4,571 2,972
Total current assets 389,889 353,900
PROPERTY -- net 91,080 90,828
LONG-TERM INVESTMENTS 8,984 11,223
DEFERRED TAXES -- NON-CURRENT 6,060 7,377
GOODWILL -- net 0 11,401
INTANGIBLE ASSETS -- net 0 11,457
OTHER ASSETS 5,549 4,742
TOTAL ASSETS $501,562 $490,928
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $23,471 $17,377
Accrued and other liabilities 67,853 59,355
Income taxes payable 11,274 7,120
Revolving loan 8,745 0
Total current liabilities 111,343 83,852
Convertible subordinated notes 172,335 148,835
Other liabilities 3,175 3,190
Total liabilities 286,853 235,877
MINORITY INTEREST 1,741 1,876
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock -- authorized
5,000,000 shares; $.001 par
value,
no shares issued or outstanding
Common stock -- authorized
50,000,000 shares; $.001 par
value,
issued and outstanding
29,496,000 and 30,612,000
shares 29 31
Paid-in capital 145,996 179,011
Treasury stock at cost (2,000,000
common shares) (24,871) (24,871)
Unearned compensation 0 (4,023)
Accumulated other comprehensive
loss (1,691) (3,612)
Retained earnings 93,505 106,639
Total stockholders' equity 212,968 253,175
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $501,562 $490,928
SOURCE: Cymer, Inc. |
