SOURCE: Varian Semiconductor

April 26, 2007 16:25 ET

Varian Semiconductor Equipment Associates Reports Fiscal 2007 Second Quarter Results

GLOUCESTER, MA -- (MARKET WIRE) -- April 26, 2007 -- Varian Semiconductor Equipment Associates, Inc. ("Varian Semiconductor") (NASDAQ: VSEA) today announced record-setting results for its fiscal 2007 second quarter ended March 30, 2007.

Revenue for the second quarter of fiscal 2007 totaled $241.8 million, compared to revenue of $170.5 million for the same period a year ago. Varian Semiconductor recorded net income of $38.4 million, or $0.69 per share during the second quarter of fiscal 2007, compared to net income of $14.8 million, or $0.26 per share for the same period a year ago.

The Company also reported strong single-wafer high current tool shipments for the quarter, increasing its installed base of single-wafer high current tools to nearly 350.

Chief Executive Officer Gary Dickerson said, "The second quarter of fiscal 2007 was a record-setting one, exceeding our expectations for bookings, revenue, gross margins and earnings. Given our technology leadership and continued strong demand for our products -- we expect to continue to gain market share through the balance of 2007."

Chief Financial Officer Bob Halliday provided forward guidance for the third quarter of fiscal 2007. "We currently expect revenue to be between $271 and $286 million. Earnings per share are anticipated to range from $0.89 to $0.98 per share, assuming a tax rate of 33.7%. We are exploring alternatives with respect to reorganizing the Company to better align our processes with the geographic location of our customers and suppliers. It is expected that over the long-term, the Company will benefit from significant economic efficiencies, however over the next few quarters, our effective tax rate could increase materially depending on the extent and timing of the reorganization."

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 third quarter fiscal 2007 revenue and earnings per share, gains in market share for the balance of 2007, competitive position, continued strong demand for our products, 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 Quarterly Report on Form 10-Q for the quarter ended December 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.

              VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                 (In thousands, except per share amounts)


                                Fiscal Three Months    Fiscal Six Months
                                      Ended                  Ended
                               March 30,  March 31,   March 30,  March 31,
                                 2007       2006        2007       2006
                               ---------  ----------  ---------- ---------
Revenue
Product                        $ 219,863  $  150,649  $  422,213 $ 289,375
Service                           19,695      17,493      41,172    38,054
Royalty                            2,246       2,374       4,042     4,003
                               ---------  ----------  ---------- ---------
    Total revenue                241,804     170,516     467,427   331,432
Cost of revenue                  130,960     100,303     256,130   197,665
                               ---------  ----------  ---------- ---------
Gross profit                     110,844      70,213     211,297   133,767
                               ---------  ----------  ---------- ---------
Operating expenses
Research and development          25,556      22,272      49,779    43,859
Marketing, general and
 administrative                   32,557      31,422      63,026    59,802
                               ---------  ----------  ---------- ---------
    Total operating expenses      58,113      53,694     112,805   103,661
                               ---------  ----------  ---------- ---------
    Operating income              52,731      16,519      98,492    30,106
Interest income, net               5,794       4,938      11,419    10,369
Other income (expense), net          (22)          1         693       (40)
                               ---------  ----------  ---------- ---------
Income before income taxes        58,503      21,458     110,604    40,435
Provision for income taxes        20,080       6,640      35,189     3,339
                               ---------  ----------  ---------- ---------
Net income                     $  38,423  $   14,818  $   75,415 $  37,096
                               =========  ==========  ========== =========
Weighted average shares
 outstanding - basic              54,664      56,945      55,041    56,646
Weighted average shares
 outstanding - diluted            55,834      57,717      56,164    57,410
    Net income per share -
     basic                     $    0.70  $     0.26  $     1.37 $    0.65
    Net income per share -
     diluted                   $    0.69  $     0.26  $     1.34 $    0.65




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


                                               March 30,     September 29,
                                                 2007            2006
                                             -------------   -------------
                         ASSETS
Current assets
  Cash and cash equivalents                  $     188,103   $     258,891
  Short-term investments                           150,216         154,810
  Accounts receivable, net                         182,510         125,992
  Inventories                                      175,228         133,929
  Deferred income taxes                             31,490          31,592
  Other current assets                              19,562          18,102
                                             -------------   -------------
     Total current assets                          747,109         723,316
  Long-term investments                            126,552         135,777
  Property, plant and equipment, net                64,769          62,249
  Other assets                                      16,781          17,024
                                             -------------   -------------
     Total assets                            $     955,211   $     938,366
                                             =============   =============

           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Current portion of long-term debt          $         487   $         466
  Accounts payable                                  70,604          45,937
  Accrued expenses                                  50,336          53,947
  Product warranty                                  10,114           8,934
  Deferred revenue                                  63,483          49,840
                                             -------------   -------------
     Total current liabilities                     195,024         159,124
  Long-term accrued expenses and other
   liabilities                                      19,120          17,300
  Deferred income taxes                              3,722           3,722
  Long-term debt                                     3,021           3,270
                                             -------------   -------------
     Total liabilities                             220,887         183,416
                                             -------------   -------------

Stockholders' equity
  Common stock                                         605             593
  Capital in excess of par value                   500,590         453,229
  Less: Cost of treasury stock                    (252,712)       (108,910)
  Retained earnings                                486,429         411,014
  Accumulated other comprehensive loss                (588)           (976)
                                             -------------   -------------
     Total stockholders' equity                    734,324         754,950
                                             -------------   -------------
        Total liabilities and stockholders'
         equity                              $     955,211   $     938,366
                                             =============   =============

Contact Information

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