SOURCE: Rudolph Technologies, Inc.

February 07, 2007 16:05 ET

Rudolph Technologies Announces Record 2006 Quarterly Earnings in Line With Guidance

FLANDERS, NJ -- (MARKET WIRE) -- February 7, 2007 -- Rudolph Technologies, Inc. (NASDAQ: RTEC), a leading provider of process control equipment for thin film measurements and macro-defect inspection during integrated circuit manufacturing, today announced financial results for the fourth quarter and year ended December 31, 2006.

Highlights for the fourth quarter include:

--  Revenue of $54.5 million, aided by strong logic business
--  Operating income of 19 percent of revenues as Rudolph continues to
    operate within the Company's long-term operating model of  18 to 25 percent
--  Earning per share at $0.29
--  Cash and marketable securities increased $13.6 million to $106.2
Highlights for the 2006 year include:
--  Revenue of $201.2 million (includes August Technology results from
    February 16, 2006)
--  Successfully integrated August Technology merger
Discussing the fourth quarter results, Paul F. McLaughlin, Chairman and Chief Executive Officer, commented, "We are pleased that we were able to meet our previously stated guidance in a rather difficult period in which we experienced order push outs and cancellations. The well-publicized weakness in the back-end market continues to impact our results; however, our front-end logic business picked up nicely in the quarter allowing us to report peak 2006 quarterly earnings. I am also pleased to report that the integration of August Technology exceeded all our performance objectives. This merger was, in my estimation, a clear case of 1 + 1 equaling 3. We now have attained the scope and scale necessary to be increasingly important to our customers and to become a consolidator in our space."

The Company's fourth quarter revenue totaled $54.5 million, a 6% decrease compared to $58.2 million for the third quarter of 2006. During the fourth quarter, international sales represented approximately 67% of revenue while domestic sales accounted for 33%. In the 2006 third quarter, international sales represented approximately 73% of revenue and domestic sales accounted for 27%. Approximately 69% of the Company's fourth quarter tool revenue was from 300mm product sales.

Fourth quarter net income totaled $8.4 million, or $0.29 per share, compared to $8.1 million, or $0.28 per share for the 2006 third quarter. The Company reported net income of $206 thousand, or $0.01 per share, in the 2005 fourth quarter.

Fourth quarter gross margin was 51% and was negatively impacted by 1% due to purchase accounting adjustments. The 2006 third quarter gross margin was 53%. The decrease in margin was primarily due to product mix and lower revenue volumes.

Research and development (R&D) expenses for the fourth quarter totaled $7.4 million, compared to $7.5 million in the third quarter of 2006. As a percentage of revenue, R&D was 14% of revenue in the 2006 fourth quarter compared to 13% in the 2006 third quarter. The decrease in R&D in absolute dollars was primarily due to cost containment initiatives. The Company anticipates that first quarter 2007 spending on R&D will be approximately 15% to 16% of revenue.

Selling, general and administrative (S,G&A) expenses totaled $9.3 million in both the fourth and third quarters of 2006. S,G&A was 17% of revenue in the fourth quarter of 2006, and 16% in the 2006 third quarter. The Company expects that S,G&A will be approximately 18% to 19% of revenue in the first quarter of 2007.

The fourth quarter effective tax rate was 24% primarily due to the retroactive reinstatement of the research tax credit by the U.S. federal government in the fourth quarter 2006. Also contributing to the lower tax rate was the utilization of foreign subsidiary net operating loss carryovers.

Balance Sheet Strength

At December 31, 2006, the Company's cash and marketable securities totaled $106.2 million, an increase of $13.6 million from the balance at September 30, 2006. Working capital increased $19.4 million from September 30, 2006 to $200.4 million as of December 31, 2006.


The Company is anticipating the current near term weakness in the industry to continue particularly in the back-end market and is forecasting revenue for the first quarter ending March 31, 2007 to be between $46 million and $50 million. The Company is expecting earnings per share to be between $0.17 and $0.20 in the 2007 first quarter.

Conference Call

Rudolph Technologies will be hosting a conference call today at 4:45 PM ET. A live webcast will also be available to investors on the Company's website at To listen to the live call, please go to the website at least fifteen minutes early to register, download and install any necessary audio software.

About Rudolph Technologies

Rudolph Technologies is a worldwide leader in the design, development, manufacture and support of high-performance process control metrology, defect inspection and data analysis systems used by semiconductor device manufacturers. Rudolph provides a full-fab solution through its families of proprietary products that provide critical yield-enhancing information, enabling microelectronic device manufacturers to drive down costs and time to market. Rudolph has enhanced the competitiveness of its products in the marketplace by anticipating and addressing many emerging trends driving the semiconductor industry's growth. Rudolph's strategy for continued technological and market leadership includes aggressive research and development of complementary metrology and inspection solutions. Headquartered in Flanders, New Jersey, Rudolph supports its customers with a worldwide sales and service organization. Additional information can be found on the Company's website at

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, statements related to our expectations regarding our revenue and earnings expectations for the first quarter of 2007, increases in customer orders and bookings, future growth of our business, and the overall market environment. In some cases, you can identify those so-called "forward-looking statements" by words such as "may," "will," "would," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of those words and other comparable words. Rudolph wishes to take advantage of the "safe harbor" provided for by the Private Securities Litigation Reform Act of 1995 and you are cautioned that actual events or results may differ materially from the expectations expressed in such forward-looking statements as a result of various factors, including risks and uncertainties, many of which are beyond the control of Rudolph. Factors that could cause actual results to differ materially from the expectations expressed in such forward-looking statements include, but are not limited to: (1) cyclicality of the semiconductor industry; (2) customer concentration; (3) introduction of new products by Rudolph's competitors; (4) sole or limited sources of supply; (5) revenues may be lower than expected; (6) costs, customer loss and business disruption, including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers, may be greater than expected, or the effects of purchase accounting, when finalized, may be different from the company's expectations; (7) the industry may be subject to future regulatory or legislative actions that could adversely affect the company; (8) the impact of a slowdown in the overall economy; (9) uncertainty of the current global political environment; (10) the potential for terrorist attacks; (11) changes in customer demands for our existing and new products, the timing, cancellation or delay of customer orders and shipments; (12) the timing of revenue recognition of shipments and services provided; (13) changes in or an inability to execute our business strategy; (14) unanticipated manufacturing or supply problems and (15) changes in tax rules. Rudolph cannot guarantee future results, levels of activity, performance, or achievements. Additional factors that may affect the future results of Rudolph are set forth in its Form 10-K report for the year ended December 31, 2005 and other filings with the Securities and Exchange Commission ("SEC"), which are available at, the SEC's website, and at the Company's website which is These factors are updated from time to time through the filing of reports and registration statements with the SEC. Rudolph Technologies does not assume any obligation to update the forward-looking information contained in this press release.

                        RUDOLPH TECHNOLOGIES, INC.
                           ($000) - (Unaudited)

                                                  December 31, December 31,
                                                      2006        2005
                                                  ------------ ------------
Current assets
Cash and marketable securities                    $    106,193 $     80,807
Accounts receivable, net                                65,373       26,046
Inventories                                             55,433       30,073
Prepaid expenses and other assets                        9,745        3,093
                                                  ------------ ------------
   Total current assets                                236,744      140,019
Net property, plant and equipment                       16,882        8,599
Intangibles                                            182,577       21,873
Other assets                                             4,283        9,510
                                                  ------------ ------------
Total assets                                      $    440,486 $    180,001
                                                  ============ ============

Current liabilities
Accounts payable and accrued liabilities          $     18,966 $      9,952
Other current liabilities                               17,338        4,773
                                                  ------------ ------------
   Total current liabilities                            36,304       14,725
Non-current liabilities                                 11,306          742
                                                  ------------ ------------
   Total liabilities                                    47,610       15,467
Stockholders’ equity                                   392,876      164,534
                                                  ------------ ------------
Total liabilities and stockholders’ equity        $    440,486 $    180,001
                                                  ============ ============

                        RUDOLPH TECHNOLOGIES, INC.
            (In 000’s, except per share amounts) - (Unaudited)

                                    Three Months Ended      Year Ended
                                    ------------------- -------------------
                                     December  December  December  December
                                        31,       31,       31,       31,
                                       2006      2005      2006      2005
                                    --------- --------  --------- ---------

Revenues                            $  54,462 $ 18,275  $ 201,168 $  82,918
Cost of revenues                       26,527   10,157    103,726    44,390
                                    --------- --------  --------- ---------
   Gross profit                        27,935    8,118     97,442    38,528
Operating expenses:
 Research and development               7,397    2,455     27,560    11,901
 In-process research and development        -        -      9,900         -
 Selling, general and administrative    9,327    5,503     34,689    20,373
 Amortization                           1,125      219      4,048       876
                                    --------- --------  --------- ---------
Total operating expenses               17,849    8,177     76,197    33,150
                                    --------- --------  --------- ---------
      Operating income (loss)          10,086      (59)    21,245     5,378
Interest income and other, net            909      339      3,191     1,388
Provision for income taxes              2,605       74     11,730     1,789
                                    --------- --------  --------- ---------
Net income                          $   8,390 $    206  $  12,706 $   4,977
                                    ========= ========  ========= =========

Net income per share:
   Basic                            $    0.29 $   0.01  $    0.47 $    0.29
   Diluted                          $    0.29 $   0.01  $    0.46 $    0.29

Weighted average shares outstanding:
   Basic                               28,954   16,936     27,276    16,899
   Diluted                             29,342   16,963     27,574    16,942

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