SOURCE: Varian Semiconductor

January 24, 2008 16:25 ET

Varian Semiconductor Equipment Associates Reports Fiscal 2008 First Quarter Results

GLOUCESTER, MA--(Marketwire - January 24, 2008) - Varian Semiconductor Equipment Associates, Inc. ("Varian Semiconductor") (NASDAQ: VSEA) today announced results for its fiscal 2008 first quarter ended December 28, 2007.

Revenue for the first quarter of fiscal 2008 totaled $254.1 million, compared to revenue of $225.6 million for the same period a year ago. Varian Semiconductor recorded net income of $43.7 million, or $0.57 per diluted share during the first quarter of fiscal 2008, compared to net income of $37.0 million, or $0.44 per diluted share for the same period a year ago.

Gary Dickerson, Varian Semiconductor's chief executive officer, said, "In calendar year 2007, Varian Semiconductor achieved record market share, improved operating margins, and extended its product leadership, including the introduction of PLAD into volume production. In calendar year 2008, Varian should continue to gain market share and further advance its product leadership. However, we see calendar year 2008 as a reduced spending year for our customers, particularly for manufacturers of DRAM devices. Therefore, we will maintain a conservative operating posture for the near term."

Robert Halliday, chief financial officer, provided forward guidance for the second quarter of fiscal 2008. "We currently expect revenue to be between $250 and $260 million. Earnings per share are anticipated to range from $0.50 to $0.55 per diluted share."

Robert Halliday further added, "Although our visibility into the third quarter of fiscal 2008 is very limited, we are concerned about anticipated spending reductions by our customers and are tentatively planning for a shutdown for the last week of June and the first week of July."

Varian Semiconductor will hold a conference call, broadcast over the Internet, at 5:30 p.m. eastern time today to discuss Varian Semiconductor's operating results and outlook. Access to the call is available through the investor relations page on Varian Semiconductor's website at www.vsea.com. Replays will be available via the website for two weeks after the call.

About Varian Semiconductor Equipment Associates, Inc.

Varian Semiconductor is the leading producer of ion implantation equipment used in the manufacture of semiconductors. Varian Semiconductor is headquartered in Gloucester, Massachusetts, and operates worldwide. Varian Semiconductor maintains a website at www.vsea.com. The information contained in Varian Semiconductor'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, statements concerning the industry outlook, Varian Semiconductor's guidance for second quarter fiscal 2008 revenue and earnings per share, market share, expected product plans, financial performance, market conditions for 2008, 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; Varian Semiconductor's dependence on a small number of customers; fluctuations in Varian Semiconductor's quarterly operating results; Varian Semiconductor's transition to new products; Varian Semiconductor's exposure to risks of operating internationally; uncertain protection of Varian Semiconductor's patent and other proprietary rights; Varian Semiconductor's reliance on a limited group of suppliers; Varian Semiconductor's ability to manage potential growth, decline and strategic transactions; Varian Semiconductor's reliance on one primary manufacturing facility; and Varian Semiconductor's dependence on certain key personnel. These and other important risk factors that may affect actual results are discussed in detail under the caption "Risk Factors" in Varian Semiconductor's Annual Report on Form 10-K for the year ended September 28, 2007 and in other reports filed by Varian Semiconductor with the Securities and Exchange Commission. Varian Semiconductor cannot guarantee any future results, levels of activity, performance or achievement. Varian Semiconductor 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 INCOME
                  (In thousands, except per share amounts)

                                                Fiscal Three Months Ended
                                                ---------------------------
                                                December 28,  December 29,
                                                    2007          2006
                                                ------------- -------------
Revenue
    Product                                     $     235,510 $     202,350
    Service                                            18,529        21,477
    Royalty                                                17         1,796
                                                ------------- -------------
      Total revenue                                   254,056       225,623
Cost of revenue                                       131,852       125,170
                                                ------------- -------------
Gross profit                                          122,204       100,453
                                                ------------- -------------
Operating expenses
    Research and development                           28,743        24,223
    Marketing, general & administrative                32,563        30,469
                                                ------------- -------------
      Total operating expenses                         61,306        54,692
                                                ------------- -------------
      Operating income                                 60,898        45,761
Interest income, net                                    2,707         5,625
Other income (expense), net                                49           715
                                                ------------- -------------
Income before income taxes                             63,654        52,101
Provision for income taxes                             19,987        15,109
                                                ------------- -------------
Net income                                      $      43,667 $      36,992
                                                ============= =============
Weighted average shares outstanding - basic            74,930        83,127
Weighted average shares outstanding - diluted          76,608        84,646
      Net income per share - basic              $        0.58 $        0.45
      Net income per share - diluted            $        0.57 $        0.44




              VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                              (In thousands)

                                                December 28, September 28,
                                                    2007          2007
                                                ------------  ------------
                ASSETS
Current assets
      Cash and cash equivalents                 $    108,957  $    109,514
      Short-term investments                          80,322        88,384
      Accounts receivable, net                       214,118       189,573
      Inventories                                    176,538       170,293
      Deferred income taxes                           28,866        27,907
      Other current assets                            14,715        26,010
                                                ------------  ------------
        Total current assets                         623,516       611,681
      Long-term investments                           73,649        96,153
      Property, plant and equipment, net              68,956        73,980
      Other assets                                    17,113        17,274
                                                ------------  ------------
        Total assets                            $    783,234  $    799,088
                                                ============  ============

          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
      Current portion of long-term debt         $        521  $        510
      Accounts payable                                44,650        49,863
      Accrued expenses                                53,355        55,289
      Product warranty                                11,996        12,183
      Deferred revenue                                56,129        54,742
                                                ------------  ------------
        Total current liabilities                    166,651       172,587
      Long-term accrued expenses and other
       liabilities                                    60,229        53,904
      Deferred income taxes                            3,858         3,858
      Long-term debt                                   2,626         2,761
                                                ------------  ------------
        Total liabilities                            233,364       233,110
                                                ------------  ------------

Stockholders' equity
      Common stock                                       929           927
      Capital in excess of par value                 555,384       548,426
      Less: Cost of treasury stock                  (600,465)     (535,423)
      Retained earnings                              595,184       553,221
      Accumulated other comprehensive loss            (1,162)       (1,173)
                                                ------------  ------------
        Total stockholders' equity                   549,870       565,978
                                                ------------  ------------
          Total liabilities and stockholders'
           equity                               $    783,234  $    799,088
                                                ============  ============

Contact Information

  • Contacts:
    Bob Halliday
    Executive Vice President and Chief Financial Officer
    978.282.7597
    or
    Mary Wright
    Director, Investor Relations
    978.282.5859
    or
    Tom Baker
    Vice President, Finance
    978.282.2301