SOURCE: Varian Semiconductor

April 24, 2008 16:20 ET

Varian Semiconductor Equipment Associates Reports Fiscal 2008 Second Quarter Results

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

Revenue for the second quarter of fiscal 2008 totaled $255.3 million, compared to revenue of $241.8 million for the same period a year ago. Varian Semiconductor recorded net income of $34.1 million, or $0.45 per diluted share during the second quarter of fiscal 2008, compared to net income of $38.4 million, or $0.46 per diluted share for the same period a year ago.

Gary Dickerson, Varian Semiconductor's chief executive officer, said, "Varian's market share increased from 43.2% in 2006 to 64.5% in 2007. We increased market share in the high current and medium current market segments and maintained 100% of the fast-growing, ultra high dose market. Our market share increases across the segments were driven by the product development and financial leverage of the VIISta common product platform. We expect to continue to leverage the VIISta platform for additional rapid product introductions and operating leverage."

Bob Halliday, chief financial officer, stated, "Second quarter revenues and operating margin were approximately what we expected for the quarter. However, the outlook for the remainder of the year softened during the quarter, particularly in Asia. This reduced foreign outlook resulted in a higher share of U.S. taxable income, which is taxed at a higher tax rate. The tax rate for the year-to-date period has increased to 38.2%, with a second quarter tax rate of 45% to catch up for the amount recorded previously. With a normalized business mix in the future, we expect Varian's tax rate to trend down over the next few years. The higher tax rate in the second quarter reduced earnings by $0.10 per diluted share."

Bob Halliday also provided forward guidance for the third quarter of fiscal 2008. "We currently expect revenue to be between $175 and $185 million. Earnings per share are anticipated to range from $0.21 to $0.26 per diluted share due to a tax rate of approximately 39.5%."

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 2008 revenue and earnings per share, market share, expected product plans, financial performance, market conditions, Varian Semiconductor's positioning new products and applications for ion implant, 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-Q for the quarter ended December 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   Fiscal Six Months
                             Ended                Ended
                      March 28,  March 30,  March 28,  March 30,                    
                        2008       2007       2008       2007
                     ---------- ---------  ---------- ---------- 
Revenue
  Product            $  234,962 $ 219,863  $  470,472 $  422,213
  Service                20,347    19,695      38,876     41,172
  Royalty                    29     2,246          46      4,042
                     ---------- ---------  ---------- ---------- 
    Total
     revenue            255,338   241,804     509,394    467,427
Cost of revenue         134,093   130,960     265,945    256,130
                     ---------- ---------  ---------- ---------- 
Gross profit            121,245   110,844     243,449    211,297
                     ---------- ---------  ---------- ---------- 
Operating expenses
  Research and
   development           28,539    25,556      57,282     49,779
Marketing, general
 and administrative      32,838    32,557      65,401     63,026
                     ---------- ---------  ---------- ----------
    Total
     operating
     expenses            61,377    58,113     122,683    112,805
                     ---------- ---------  ---------- ----------
    Operating
     income              59,868    52,731     120,766     98,492
Interest income, net      2,156     5,794       4,863     11,419
Other income
 (expense), net              44       (22)         93        693
                     ---------- ---------  ---------- ---------- 
Income before income
 taxes                   62,068    58,503     125,722    110,604
Provision for income
 taxes                   28,014    20,080      48,001     35,189
                     ---------- ---------  ---------- ---------- 
Net income           $   34,054 $  38,423  $   77,721 $   75,415
                     ========== =========  ========== ========== 
Weighted average
 shares outstanding
 - basic                 74,106    81,996      74,518     82,562
Weighted average
 shares outstanding
 - diluted               75,252    83,751      76,002     84,246
    Net income
     per share -
     basic           $     0.46 $    0.47  $     1.04 $     0.91
    Net income
     per share -
     diluted         $     0.45 $    0.46  $     1.02 $     0.90




              VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES, INC.              
                  CONDENSED CONSOLIDATED BALANCE SHEETS                    
                              (In thousands)                               
                                                                           
                                           March 28, September 28,
                                             2008       2007
                                           ---------  ---------
                                                           
      ASSETS
Current assets
  Cash and cash equivalents                $ 111,967  $ 109,514
  Short-term investments                      57,042     88,384
  Accounts receivable, net                   242,654    189,573
  Inventories                                164,733    170,293
  Deferred income taxes                       27,873     27,907
  Other current assets                        14,898     26,010
                                           ---------  ---------  
    Total current assets                     619,167    611,681
  Long-term investments                       77,653     96,153
  Property, plant and equipment, net          70,208     73,980
  Other assets                                17,235     17,274
                                           ---------  ---------  
    Total assets                           $ 784,263  $ 799,088
                                           =========  =========  

  LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Current portion of long-term debt        $     533  $     510
  Accounts payable                            47,114     49,863
  Accrued expenses                            50,968     55,289
  Product warranty                            11,505     12,183
  Deferred revenue                            51,059     54,742
                                           ---------  --------- 
    Total current liabilities                161,179    172,587
  Long-term accrued expenses and other
   liabilities                                62,762     53,904
  Deferred income taxes                        3,858      3,858
  Long-term debt                               2,488      2,761
                                           ---------  ---------  
    Total liabilities                        230,287    233,110
                                           ---------  --------- 

Stockholders' equity
  Common stock                                   932        927
  Capital in excess of par value             564,843     548,426
  Less: Cost of treasury stock              (639,785)   (535,423)
  Retained earnings                          629,238     553,221
  Accumulated other comprehensive loss        (1,252)     (1,173)
                                           ---------  ----------  
    Total stockholders' equity               553,976     565,978
                                           ---------  ----------  
      Total liabilities and 
       stockholders' equity                $ 784,263  $  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