Varian Semiconductor Equipment Associates Reports Fiscal 2002 Third Quarter Results
GLOUCESTER, Mass.--(BUSINESS WIRE)--July 23, 2002--Varian Semiconductor Equipment Associates, Inc. (Nasdaq: VSEA - News) today announced results for its third quarter of fiscal 2002 ended June 28, 2002.
Revenue for the third quarter of fiscal 2002 totaled $95 million, compared to revenue of $147 million for the same period a year ago. The Company recorded net income of $3 million, or $0.07 per diluted share during the third quarter of fiscal 2002, compared to net income of $8 million, or $0.24 per diluted share for the same period a year ago.
For the first nine months of fiscal 2002 revenue totaled $240 million and net income was $8 million or $0.22 per diluted share, compared to revenue and net income of $562 million and $45 million or $1.34 per diluted share, respectively, for the same period a year ago.
The first nine months of fiscal 2002 included $28 million in royalty and license revenue and a $5 million gain from the sale of the Lam Research warrant. The first nine months of fiscal 2001 included a cumulative effect adjustment recorded upon the adoption of SAB 101 of $27 million, or $0.79 per diluted share. Excluding the non-recurring effects of the Lam royalty and license agreement in fiscal 2002 and the cumulative effect of the adoption of SAB 101 in fiscal 2001, revenue and net loss were $212 million and $14 million, or $0.44 per share in the first nine months of fiscal 2002, compared to revenue and net income of $562 million and $72 million, or $2.13 per diluted share in the first nine months of fiscal 2001.
Gross margin for the third quarter of fiscal 2002 was 39 percent, compared to 31 percent for the same period a year ago. Gross margin for the first nine months of fiscal 2002 was 35 percent (excluding the Lam royalty and license revenue of $28 million), compared to 39 percent for the same period a year ago.
Shipments, which approximate pre-SAB 101 revenue, were $95 million for the third quarter of fiscal 2002 and $196 for the first nine months of fiscal year 2002 (excluding the Lam royalty and license revenue of $28 million).
Richard A. Aurelio, Varian Semiconductor's chairman and chief executive officer, said, "We are benefiting from strong pockets of business, primarily in Asia, where we have been able to meet unanticipated requests for early delivery of our leading-edge tools. As the business environment improves, the interest in our VIISta platform of tools continues to strengthen. However, even considering these indicators of rising activity and growing acceptance of our technology, we do not see enough evidence of continued sustainable growth in worldwide demand at the present time."
Robert J. Halliday, chief financial officer, added, "We are very pleased with our profitability at current revenue levels. Long-term, we remain committed to driving down our costs, which is critical in the current competitive environment, and to maximizing our long-term profitability. In addition, we will be increasing our investment in R&D spending to further strengthen our leading position in ion implantation technology."
Halliday also provided forward guidance, noting that, "We currently expect revenue for the fourth quarter of fiscal 2002 to be between $85 and $105 million, and shipments to range from $105 to $125 million. Revenue is expected to be lower than shipments during the fourth quarter of fiscal 2002 as we expect to ship more VIISta 810HPs, for which revenue is not recognized until customer acceptance. Gross margin may be down slightly in the fourth quarter compared to the third quarter."
Varian Semiconductor will hold a conference call, broadcast over the Internet, at 5:00 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 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 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 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 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 guidance on fourth quarter 2002 revenue and gross margins, 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; 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)
Fiscal Three Fiscal Nine
Months Ended Months Ended
June 28, June 29, June 28, June 29,
2002 2001 2002 2001
----------- ----------- ----------- -----------
Revenue
Product revenue $ 74,834 $ 122,869 $ 156,840 $ 479,201
Service revenue 17,635 20,390 48,843 69,504
Royalty and license
revenue 2,188 3,909 _33,972 13,494
----------- ----------- ----------- -----------
Total revenue 94,657 147,168 239,655 562,199
Cost of revenue 57,765 101,135 138,176 345,562
----------- ----------- ----------- -----------
Gross profit 36,892 46,033 101,479 216,637
Operating expenses
Research and
development 12,515 11,697 37,997 38,476
Marketing, general
and administrative 22,086 24,412 61,651 76,435
----------- ----------- ----------- -----------
Total operating
expenses 34,601 36,109 99,648 114,911
----------- ----------- ----------- -----------
Operating income 2,291 9,924 1,831 101,726
Interest income, net 1,469 2,270 4,405 6,288
Other income, net - - 5,149 -
----------- ----------- ----------- -----------
Income before income
taxes and cumulative
effect of change in
accounting principle 3,760 12,194 11,385 108,014
----------- ----------- ----------- -----------
Provision for
income taxes 1,141 4,024 3,757 35,645
----------- ----------- ----------- -----------
Income before
cumulative effect
of change in
accounting
principle 2,619 8,170 7,628 72,369
----------- ----------- ----------- -----------
Cumulative effect of
change in accounting
principle, net of
tax - - - (27,038)
-----------
Net income $ 2,619 $ 8,170 $ 7,628 $ 45,331
=========== =========== =========== ===========
Weighted average
shares outstanding -
basic 33,420 32,340 32,990 32,185
Weighted average
shares outstanding -
diluted 35,269 34,457 34,827 33,911
Income per share
before cumulative
effect of change
in accounting
principle - basic $ 0.08 $ 0.25 $ 0.23 $ 2.25
Income per share
before cumulative
effect of change
in accounting
principle - diluted $ 0.07 $ 0.24 $ 0.22 $ 2.13
Cumulative effect of
change in accounting
principle - basic $ 0.00 $ 0.00 $ 0.00 $ (0.84)
Cumulative effect of
change in accounting
principle - diluted $ 0.00 $ 0.00 $ 0.00 $ (0.79)
Net income per
share - basic $ 0.08 $ 0.25 $ 0.23 $ 1.41
Net income per
share - diluted $ 0.07 $ 0.24 $ 0.22 $ 1.34
VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 28, Sept. 28,
2002 2001
----------- -----------
ASSETS
Current assets
Cash and cash equivalents $ 320,686 $ 278,641
Accounts receivable, net 53,827 85,455
Inventories, net 92,819 115,689
Other current assets 47,721 44,525
----------- -----------
Total current assets 515,053 524,310
Property, plant and equipment, net 45,628 46,288
Other assets 16,104 17,459
----------- -----------
Total assets $ 576,785 $ 588,057
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable and other short-term borrowings $ 5,207 $ 15,900
Accounts payable 28,810 19,271
Accrued expenses 54,654 43,149
Product warranty 10,266 20,075
Deferred revenue 48,381 81,137
----------- -----------
Total current liabilities 147,318 179,532
Long-term accrued expenses 5,676 7,292
Deferred taxes 1,893 1,788
----------- -----------
Total liabilities 154,887 188,612
Stockholders' equity
Common stock 337 326
Capital in excess of par value 250,512 235,700
Retained earnings 171,049 163,419
----------- -----------
Total stockholders' equity 421,898 399,445
Total liabilities and
stockholders' equity $ 576,785 $ 588,057
=========== ===========
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