Varian Semiconductor Equipment Associates Reports FY 2001 Third Quarter Results
GLOUCESTER, Mass.--(BUSINESS WIRE)--July 24, 2001--Varian Semiconductor Equipment Associates, Inc. (NASDAQ: VSEA - news) today announced results for the third quarter of fiscal 2001, ended June 29, 2001.
Third quarter revenue totaled $127 million, a 34 percent decline from $193 million in the previous year's same quarter. Net income was $3 million, or $0.08 per diluted share, compared with $28 million, or $0.82 per diluted share for the same quarter of the previous fiscal year. Revenue for the first nine months of fiscal 2001 totaled $528 million, compared with $459 million in fiscal 2000's same period. Net income for the first nine months reached $61 million, or $1.79 per diluted share, compared with $54 million, or $1.62 per diluted share in the same period of the previous fiscal year.
Gross margin in the third quarter was 30 percent, compared with 40 percent in fiscal 2000's third quarter, reflecting the effects of further deterioration of sales volume throughout our industry, as well as the Company's ongoing costs associated with the introduction of the VIISta product line.
Richard A. Aurelio, Varian Semiconductor's chairman and chief executive, said, ``We continue to manage the fundamentals of our business through this cycle while focusing on the technology that we believe will allow us to continue our record of market share gains and customer satisfaction results. We are moving ahead on a number of fronts, including: maintaining our leading market share for the 300 mm products, and creating the industry's first sub-70 nm technology development center with Ultratech Stepper, Inc. (NASDAQ: UTEK - news) and Tokyo Electron Limited (TEL). Together, we intend to work to meet the accelerated industry roadmap demands for scaling of ultra shallow junctions, considered one of the critical challenges for complementary metal-oxide semiconductor technologies below the 100 nm design nodes, and essential to advancing the performance of future semiconductor devices.''
Aurelio also noted, ``Even in this weak market, we continue to outperform the competition as our customers shift to single-wafer platforms. With an increasing share of our business coming from technology sales, the VIISta common platform, single-wafer ion implanters today represent about two thirds of our systems orders. In addition, we have begun shipping the VIISta 3000, the world's first high energy, single-wafer ion implanter for 300 mm applications. The VIISta 3000 completes the VIISta platform and enables Varian Semiconductor to provide a comprehensive single wafer ion implantation approach for all doping applications.''
Robert J. Halliday, chief financial officer, further commented, ``Our goal is to aggressively manage costs without taking our eye off our product development goals and our commitment to customer satisfaction. Expenses are down 9 percent from the second quarter of this fiscal year, and we continue to make further progress in cost control. During the third quarter our cash increased by $67 million primarily from reductions in accounts receivable and inventories.''
Halliday also offered the company's guidance for the fourth quarter, noting that, ``We can only reiterate what others have said -- future performance metrics are still highly uncertain in our industry. Although some have expressed hopeful signs, our outlook remains conservative until the industry settles into more predictable trends. Right now, we anticipate that fourth quarter revenue will be down 60 - 70 percent from the same quarter last year, resulting in a full year decline in revenues of 10 - 13 percent. In addition, given our anticipation of lower sales volumes, we continue to aggressively reduce inventory and production levels, which results in ongoing pressure on our gross margin. We anticipate below breakeven performance in the fourth quarter.''
Aurelio concluded, ``We have endured these cycles before, and each time we have emerged with strong growth and increased market share. We remain optimistic about our future.''
Note: On September 30, 2000, the company changed its accounting for domestic inventories from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method to conform to industry practice. A table highlighting what quarterly results would have been had the company's prior year been reported on FIFO is attached to the company's first quarter earnings release of January 25, 2001, and is available in the news release section of the company's web site at www.vsea.com.
Varian Semiconductor will hold a conference call, broadcast over the Internet, at 5 p.m. Eastern Time today for interested analysts, investors and media, to discuss the company's operating results and outlook for the fourth fiscal quarter of 2001. Access to the call is available through the company's web site at www.vsea.com, and replays will be available for two weeks after the call.
About Varian Semiconductor
Varian Semiconductor Equipment Associates is the 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 web site at www.vsea.com. The information contained in our web site is not incorporated by reference into this release, and our web site address is included in this release as an inactive textual reference only.
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, market share, capacity utilization and technological improvements and benefits, and any statements using the terms ``believes,'' ``anticipates,'' ``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; 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.
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VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Fiscal Three Fiscal Nine
Months Ended Months Ended
----------------- ------------------
June June June June
29, 30, 29, 30,
2001 2000 2001 2000
----------------- ------------------
Revised(1) Revised(1)
Revenue
Product revenue $ 110,720 $ 177,619 479,844 $ 416,224
Service revenue 12,072 11,481 34,534 35,958
Royalties 3,909 3,697 13,494 6,621
--------- --------- ------- ---------
Total revenue 126,701 192,797 527,872 458,803
--------- --------- ------- ---------
Cost of revenue
Cost of product and service
revenue 88,718 115,763 328,426 278,623
--------- --------- ------- ---------
Gross profit 37,983 77,034 199,446 180,180
Operating Expenses
Research and development 11,697 11,986 38,476 33,972
Marketing, general and
administrative 24,412 24,873 76,435 70,384
--------- --------- ------- ---------
Total operating expenses 36,109 36,859 114,911 104,356
--------- --------- ------- ---------
Operating Income 1,874 40,175 84,535 75,824
Other income - - - 2,700
Interest income 2,270 1,533 6,288 3,095
--------- --------- ------- ---------
Income before taxes 4,144 41,708 90,823 81,619
Income tax provision 1,368 13,491 29,971 27,513
--------- --------- ------- ---------
Net Income $ 2,776 $ 28,217 $ 60,852 $ 54,106
========= ========= ========= =========
Weighted average shares
outstanding--basic 32,340 31,812 32,185 31,144
========= ========= ========= =========
Weighted average shares
outstanding--diluted 34,457 34,245 33,911 33,482
========= ========= ========= =========
Net income per
share--basic $ 0.09 $ 0.89 $ 1.89 $ 1.74
========= ========= ========= =========
Net income per
share--diluted $ 0.08 $ 0.82 $ 1.79 $ 1.62
========= ========= ========= =========
(1) Effective September 30, 2000, the Company changed its method
of valuing domestic inventories from the last-in, first-out (LIFO)
method to the first-in, first out (FIFO) method. This change resulted
in an increase of $0.01 and $0.08 net income per diluted share for the
three period and nine month periods ended June 30, 2000, respectively.
VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
June 29, Sept. 29,
2001 2000
----------------------------------
(Unaudited) Revised(1)
ASSETS
Current Assets
Cash and cash equivalents $ 237,595 $ 121,692
Accounts receivable, net 117,229 182,396
Inventories, net 114,639 148,234
Other current assets 34,389 17,749
---------- ----------
Total Current Assets 503,852 470,071
---------- ----------
Property, plant and equipment 113,008 104,525
Accumulated depreciation and
amortization (65,121) (60,770)
---------- ----------
Net property, plant and equipment 47,887 43,755
Other assets 17,621 19,869
---------- ----------
Total Assets $ 569,360 $ 533,695
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable and short term
borrowings $ 14,603 $ 5,541
Accounts payable 26,819 63,392
Accrued expenses 79,105 78,875
Product warranty 25,142 28,190
---------- ----------
Total Current Liabilities 145,669 175,998
Long-term accrued expenses 7,244 6,792
Deferred taxes 1,364 1,546
---------- ----------
Total Liabilities 154,277 184,336
---------- ----------
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 32,473,000 at
June 29, 2001 and 32,103,000 at
September 29, 2000 325 321
Capital in excess of par value 228,131 223,263
Retained earnings 186,627 125,775
---------- ----------
Total Stockholders' Equity 415,083 349,359
---------- ----------
Total Liabilities and
Stockholders' Equity $ 569,360 $ 533,695
========== ==========
(1) Effective September 30, 2000, the Company changed its method
of valuing domestic inventories from the last-in, first-out (LIFO)
method to the first-in, first out (FIFO) method. This change resulted
in a net increase to total assets of $14.2 million for the year ended
September 29, 2000.
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