Varian Semiconductor Equipment Associates Reports Fiscal 2002 First Quarter Results
GLOUCESTER, MA--(BUSINESS WIRE)--January 23, 2002--Varian Semiconductor Equipment Associates, Inc. (Nasdaq: VSEA - news) today announced results for its fiscal 2002 first quarter ended December 28, 2001.
Revenue for the fiscal 2002 first quarter totaled $78 million, including $28 million of royalty and license revenue from Lam Research Corporation (Nasdaq: LRCX - news) discussed below. Net income was $5 million, or $0.15 per diluted share. Excluding the Lam royalty and license revenue, the Company's net loss was $12 million, or a $0.37 per share net loss. Revenue for the same period a year ago totaled $226 million, and net income was $41 million, or $1.21 per diluted share before the SAB 101 cumulative effect of accounting change. Shipments, which approximate pre-SAB 101 revenue, excluding the Lam royalty and license revenue, were $45 million for the quarter. An explanation of the Company's adoption of the SAB 101 accounting method is contained in its earnings release of October 25, 2001.
The royalty and license revenue from Lam were for past use of certain patented Varian Semiconductor technology. Under terms of the agreement between the Company and Lam, Varian Semiconductor received a warrant, valued at $23 million, to purchase two million shares of Lam common stock. The royalty and license revenue recorded from Lam in the quarter includes the value of the warrant and a $5 million cash payment received from Lam during the first quarter 2002. Under the agreement, which continues through December 2004, Lam will make $1.25 million royalty and license payments quarterly.
Gross margin in the first quarter of fiscal 2002, excluding the Lam royalty, was 25 percent, as compared to 43 percent for the same period a year ago. The decline in gross margin is primarily a result of lower revenue.
Richard A. Aurelio, Varian Semiconductor's chairman and chief executive officer, said, ``There are signs from customers that indicate that an upturn may not be far off, but our orders do not yet confirm that positive effect. In addition, we see commitment on the part of major customers toward investment in 300mm, and signs of recovery in the DRAM market.''
Aurelio continued, ``The value of our technology has increased customer interest in our single wafer VIISta platform, including our next-generation VIISta 10 P2LAD. We recently signed a joint development agreement with a leading device manufacturer to validate our expectations of the VIISta 10 P2LAD's breakthrough productivity improvement for ultra-shallow junction formation. We anticipate that this program will help propel our innovative technology to broad market acceptance.''
Robert J. Halliday, chief financial officer, added, ``During the first quarter, we generated positive cash flow, while increasing research and development spending from the previous quarter and tightly managing overall operating expenses. Our efforts to respond to short-term economic conditions continue as we pursue long-term priorities for technology development and continued industry leadership.''
Halliday also provided forward guidance, noting that, ``We currently expect revenue for the second fiscal quarter of 2002 to range between $45 and $55 million, and shipments to range as well between $45 and $55 million.''
Varian Semiconductor will hold a conference call, broadcast over the Internet, at 4:30 p.m. eastern time today for analysts, investors and media to discuss the Company's operating results and outlook. Access to the call is available through the Company's web site at www.vsea.com. Replays will be available via the web site for two weeks after the call.
About Varian Semiconductor
Varian Semiconductor Equipment Associates, Inc. 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 the Company's web site is not incorporated by reference into this release, and the 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,'' ``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; economic problems in Asian-Pacific markets; 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 press release.
VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended
December 28, December 29,
2001 2000
Revenue
Product revenue $34,138 $ 195,577
Service revenue 14,032 25,491
Royalties 29,610 5,346
Total revenue 77,780 226,414
Cost of revenue 37,697 128,868
Gross profit 40,083 97,546
Operating expenses
Research and development 12,850 13,865
Marketing, general and
administrative 18,948 25,274
Restructuring costs 2,200 -
Total operating expenses 33,998 39,139
Operating income 6,085 58,407
Other income, net 440 -
Interest income, net 1,620 2,043
Income before taxes and cumulative
effect of change in accounting
principle 8,145 60,450
Provision for income taxes 3,095 19,949
Income before cumulative effect of
change in accounting
principle 5,050 40,501
Cumulative effect of change
in accounting principle,
net of tax - (27,038)
Net income $5,050 $ 13,463
Weighted average shares
outstanding - basic 32,690 32,092
Weighted average shares
outstanding - diluted 34,325 33,480
Income per share before cumulative effect
of change in accounting
principle - basic $ 0.15 $ 1.26
Income per share before cumulative effect
of change in accounting
principle - diluted $ 0.15 $ 1.21
Cumulative effect of change in accounting
principle -basic $ - $ (0.84)
Cumulative effect of change in accounting
principle -diluted $ - $ (0.81)
Net income per share
- basic $ 0.15 $ 0.42
Net income per share
- diluted $ 0.15 $ 0.40
VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 28, September 28,
2001 2001
ASSETS
Current assets
Cash and cash equivalents $ 285,214 $ 278,641
Accounts receivable, net 52,916 85,455
Inventories, net 108,073 115,689
Other current assets 46,337 44,525
Total current assets 492,540 524,310
Property, plant and equipment,
net 45,568 46,288
Other assets 40,486 17,459
Total assets $ 578,594 $ 588,057
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable and other
short-term borrowings $ 12,970 $ 15,900
Accounts payable 17,072 19,271
Accrued expenses 51,937 43,149
Product warranty 14,646 20,075
Deferred revenue 67,021 81,137
Total current liabilities 163,646 179,532
Long-term accrued expenses 7,118 7,292
Deferred taxes 1,897 1,788
Total liabilities 172,661 188,612
Stockholders' equity
Common stock 328 326
Capital in excess of par value 237,134 235,700
Retained earnings 168,471 163,419
Total stockholders' equity 405,933 399,445
Total liabilities and
stockholders' equity $ 578,594 $ 588,057 |
