SOURCE: Varian Semiconductor

January 25, 2007 16:25 ET

Varian Semiconductor Equipment Associates Reports Fiscal 2007 First Quarter Results

GLOUCESTER, MA -- (MARKET WIRE) -- January 25, 2007 -- Varian Semiconductor Equipment Associates, Inc. ("Varian Semiconductor") (NASDAQ: VSEA) today announced results for its fiscal 2007 first quarter ended December 29, 2006.

Revenue for the first quarter of fiscal 2007 totaled $225.6 million, compared to revenue of $160.9 million for the same period a year ago. Varian Semiconductor recorded net income of $37.0 million, or $0.66 per diluted share during the first quarter of fiscal 2007, compared to net income of $22.3 million, or $0.39 per diluted share for the same period a year ago.

Gary Dickerson, Varian Semiconductor's chief executive officer, said, "The first quarter of fiscal 2007 exceeded our financial guidance. The first quarter of fiscal 2007 was even more compelling from a competitive perspective. In the quarter, we had extraordinary customer acceptance of our high current and medium current tools by logic manufacturers and very strong progress in qualifying our PLAD tools with memory manufacturers. Given our strength in the foundry, logic and memory segments, we expect to continue to gain more market share in 2007."

Robert Halliday, chief financial officer, provided forward guidance for the second quarter of fiscal 2007. "We currently expect revenue to be between $232 and $242 million. Earnings per share are anticipated to range from $0.62 to $0.68 per diluted share."

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 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 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 2007 revenue and earnings per share, market share, competitive position, expected product shipments, and financial performance, market conditions, 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; potential environmental liabilities; Varian Semiconductor's ability to manage potential growth, decline and strategic transactions; Varian Semiconductor's reliance on one primary manufacturing facility; Varian Semiconductor's dependence on certain key personnel; and the risk of substantial indemnification obligations under the agreements governing the spin-off of Varian Semiconductor from Varian Associates, Inc. on April 2, 1999. These and other important risk factors that may affect actual results are discussed in detail under the caption "Risk Factors" in Varian Semiconductor's Report on Form 10-K for the year ended September 29, 2006 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.

                 (In thousands, except per share amounts)

                                              Fiscal Three Months Ended
                                              December 29,    December 30,
                                                 2006             2005
                                            --------------   -------------
   Product                                  $      202,350   $     138,726
   Service                                          21,477          20,561
   Royalty                                           1,796           1,629
                                            --------------   -------------
      Total revenue                                225,623         160,916
Cost of revenue                                    125,170          97,362
                                            --------------   -------------
Gross profit                                       100,453          63,554
                                            --------------   -------------
Operating expenses
   Research and development                         24,223          21,587
   Marketing, general & administrative              30,469          28,380
                                            --------------   -------------
      Total operating expenses                      54,692          49,967
                                            --------------   -------------
      Operating income                              45,761          13,587
Interest income, net                                 5,625           5,431
Other income (expense), net                            715             (41)
                                            --------------   -------------
Income before income taxes                          52,101          18,977
Provision for (benefit from) income taxes           15,109          (3,301)
                                            --------------   -------------
Net income                                  $       36,992   $      22,278
                                            ==============   =============
Weighted average shares outstanding – basic         55,418          56,347
Weighted average shares outstanding – diluted       56,430          57,072
      Net income per share – basic          $         0.67   $        0.40
      Net income per share – diluted        $         0.66   $        0.39

                              (In thousands)

                                             December 29,    September 29,
                                                 2006             2006
                                            -------------    -------------

Current assets
      Cash and cash equivalents             $     219,498    $     258,891
      Short-term investments                      162,009          154,810
      Accounts receivable, net                    178,244          125,992
      Inventories                                 151,532          133,929
      Deferred income taxes                        30,836           31,592
      Other current assets                         13,011           18,102
                                            -------------    -------------
          Total current assets                    755,130          723,316
      Long-term investments                       151,368          135,777
      Property, plant and equipment, net           63,814           62,249
      Other assets                                 17,087           17,024
                                            -------------    -------------
          Total assets                      $     987,399    $     938,366
                                            =============    =============

Current liabilities
      Current portion of long-term debt     $         476    $         466
      Accounts payable                             66,665           45,937
      Accrued expenses                             57,227           54,070
      Product warranty                              9,691            8,934
      Deferred revenue                             56,077           49,840
                                            -------------    -------------
          Total current liabilities               190,136          159,247
      Long-term accrued expenses and other
       liabilities                                 18,563           17,300
      Deferred income taxes                         3,722            3,722
      Long-term debt                                3,147            3,270
                                            -------------    -------------
          Total liabilities                       215,568          183,539
                                            -------------    -------------

Stockholders' equity
      Common stock                                    599              593
      Capital in excess of par value              476,638          453,229
      Less: Cost of treasury stock               (152,202)        (108,910)
      Retained earnings                           448,006          411,014
      Accumulated other comprehensive loss         (1,210)          (1,099)
                                            -------------    -------------
          Total stockholders' equity              771,831          754,827
                                            -------------    -------------
             Total liabilities and
              stockholders'equity           $     987,399    $     938,366
                                            =============    =============

Contact Information

  • Contacts:
    Bob Halliday
    Executive Vice President and
    Chief Financial Officer


    Mary Wright
    Director, Investor Relations