Varian Semiconductor Equipment Associates Reports Fiscal 2003 First Quarter Results
Thursday January 23, 4:06 pm ET
GLOUCESTER, Mass.--(BUSINESS WIRE)--Jan. 23, 2003--Varian Semiconductor Equipment Associates, Inc. (Nasdaq: VSEA - News) today announced results for its fiscal 2003 first quarter ended December 27, 2002.
Revenue for the first quarter of fiscal 2003 totaled $84 million, compared to revenue of $78 million for the same period a year ago. Shipments for the first quarter of fiscal 2003 were $72 million. The Company recorded net income of $3 million, or $0.08 per diluted share during the first quarter of fiscal 2003, compared to $5 million, or $0.15 per diluted share for the same period a year ago. Gross margin for the first quarter of fiscal 2003 was 42 percent, compared to 52 percent for the same period a year ago.
Revenue and gross profit for the first quarter of fiscal 2002 included $28 million of royalty and license income from Lam Research Corporation (Nasdaq: LCRX - News). Excluding the effect of the Lam agreement, pro forma revenue and gross margin for the first quarter of fiscal 2002 would have been $50 million and 25 percent, respectively. Gross profit for the first quarter of fiscal 2003 reflected a reduction in inventory-related reserves totaling $3 million due to improved supply chain management and factory operations and the sale of inventories that had been previously reserved. Gross profit for the first quarter of fiscal 2002 was adversely affected by excess factory capacity and excess inventory levels, resulting in approximately $8 million of inventory-related charges.
Richard A. Aurelio, Varian Semiconductor's chairman and chief executive officer, said, "We are seeing a continuing concentration of equipment spending among the major chip manufacturers, all of whom are key Varian Semiconductor customers, as demonstrated by our recent 300mm, high current wins at two of the largest producers."
Robert J. Halliday, chief financial officer, added, "Our first quarter results reflect our ongoing efforts to increase our operating leverage. We ended the quarter with $327 million in cash and short-term investments, an increase of $19 million from the fourth quarter of fiscal 2002. This was achieved due to our ongoing cost reduction efforts and continued focus on working capital management as demonstrated by a 21 day reduction in days sales outstanding for the quarter."
Halliday also provided forward guidance, noting that, "We currently expect revenue for the second quarter of fiscal 2003 to be between $100 and $115 million, and shipments to range from $95 to $110 million. Gross margin is expected to be in the mid- to high- 30s as a percentage of revenue due to increased pricing pressure in the industry as a result of low customer capital spending. Earnings per share are anticipated to range between $0.10 to $0.20 per share."
Varian Semiconductor will hold a conference call, broadcast over the Internet, at 4:30 p.m. eastern time today to discuss the Company's operating results and outlook. Access to the call is available through the investor relations page on the Company's website at www.vsea.com. Replays will be available via the website for two weeks after the call.
About Varian Semiconductor
Varian Semiconductor Equipment Associates, Inc. is a leading producer of ion implantation equipment used in the manufacture of semiconductors. The Company is headquartered in Gloucester, Massachusetts, and operates worldwide. Varian Semiconductor maintains a website at www.vsea.com. The information contained in the Company's website is not incorporated by reference into this release, and the website address is included in this release as an inactive textual reference only.
Note: This release contains forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. For this purpose, statements concerning the industry outlook, the Company's guidance for second quarter fiscal 2003 revenue and gross margins, market share, operating efficiencies, capacity utilization and technological improvements and benefits, and any statements using the terms "believes," "anticipates," "will," "expects," "plans" 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: volatility in the semiconductor equipment industry; intense competition in the semiconductor equipment industry; the Company's dependence on a small number of customers; fluctuations in the Company's quarterly operating results; the Company's transition to new products; uncertain protection of the Company's patent and other proprietary rights; concentration in the Company's customer base and lengthy sales cycles; the Company's reliance on a limited group of suppliers; potential environmental liabilities; the Company's dependence on certain key personnel; the Company's limited operating history; and the risk of substantial indemnification obligations under the agreements governing the spin-off of the Company from Varian Associates, Inc. on April 2, 1999. These and other important risk factors that may affect our actual results are discussed in detail under the caption "Risk Factors" in the Company's Annual Report on Form 10-K and in other reports filed by the Company 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 release.
VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Fiscal Three Months Ended
December 27, December 28,
2002 2001
------------- --------------
Revenue
Product $ 61,940 $ 34,138
Service 19,320 14,032
Royalty and license 2,449 29,610
------ ------
Total revenue 83,709 77,780
Cost of revenue 48,264 37,697
------ ------
Gross profit 35,445 40,083
------ ------
Operating expenses
Research and development 13,569 12,850
Marketing, general and administrative 18,931 18,948
Restructuring costs - 2,200
------ ------
Total operating expenses 32,500 33,998
------ ------
Operating income 2,945 6,085
Interest income, net 1,236 1,620
Other income, net 58 440
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Income before income taxes 4,239 8,145
Provision for income taxes 1,398 3,095
----- -----
Net income $ 2,841 $ 5,050
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Weighted average shares outstanding -
basic 33,915 32,690
Weighted average shares outstanding -
diluted 34,746 34,325
Net income per share - basic $ 0.08 $ 0.15
Net income per share - diluted $ 0.08 $ 0.15
VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 27, September 27,
2002 2002
------------- -------------
ASSETS
Current assets
Cash and cash equivalents $ 315,460 $ 307,840
Short-term investments 11,500 -
Accounts receivable, net 55,747 85,793
Inventories, net 78,756 81,779
Deferred income taxes 42,576 42,311
Other current assets 9,545 9,530
------- -------
Total current assets 513,584 527,253
Property, plant and equipment, net 43,498 46,718
Other assets 15,639 15,534
------ -------
Total assets $ 572,721 $ 589,505
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable and other short-term
borrowings $ 5,005 $ 5,779
Accounts payable 16,714 21,398
Accrued expenses 43,008 48,560
Product warranty 8,383 8,656
Deferred revenue 46,212 60,269
------- -------
Total current liabilities 119,322 144,662
Long-term accrued expenses 5,653 5,674
Deferred taxes 3,182 2,933
------- -------
Total liabilities 128,157 153,269
------- -------
Stockholders' equity
Common stock 341 338
Capital in excess of par value 268,954 263,470
Retained earnings 175,269 172,428
------- -------
Total stockholders' equity 444,564 436,236
------- -------
Total liabilities and stockholders'
equity $ 572,721 $ 589,505
======= =======
Pro forma Financial Information
Management believes that pro forma financial information provides
useful information to aid in understanding operating results. Pro
forma gross margin is prepared by beginning with the Condensed
Consolidated Statement of Operations, which complies with U.S.
Generally Accepted Accounting Principles ("GAAP"), and then excludes
the effects of the Lam royalty and licensing agreement, which we
believe is unusual and non-recurring.
The reconciliation of GAAP gross margin to pro forma gross margin
is as follows:
Fiscal Three Months Ended
(In thousands) December 28, 2001
-------------------------------------
Revenue Gross Profit Gross Margin
------- ------------ ------------
GAAP $77,780 $40,083 52%
Lam royalty and license
agreement (27,800) (27,800)
-------- --------
Pro forma $49,980 $12,283 25%
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Contact:
Varian Semiconductor Equipment Associates, Inc.
Bob Halliday, 978/282-7597 |
