Varian Semiconductor Equipment Associates, Inc. ("Varian
Semiconductor") (Nasdaq: VSEA) today announced results for its
fiscal 2005 and fourth quarter ended September 30, 2005. Revenue
for the fourth quarter of fiscal 2005 totaled $146.3 million,
compared to revenue of $154.8 million for the same period a year
ago. Varian Semiconductor recorded net income of $13.6 million, or
$0.36 per diluted share during the fourth quarter of fiscal 2005,
compared to net income of $23.0 million, or $0.62 per diluted share
for the same period a year ago. Revenue for fiscal 2005 totaled
$600.5 million, compared to revenue of $530.1 million for fiscal
2004. Varian Semiconductor recorded net income of $72.0 million, or
$1.92 per diluted share for fiscal 2005, compared to net income of
$61.1 million, or $1.65 per diluted share for fiscal 2004. Gary
Dickerson, Varian Semiconductor's chief executive officer, said,
"We are encouraged by our continued momentum in gaining market
share, especially in the high current implant segment, as evidenced
by our recent selections at a major Japanese chipmaker and at a
major North American logic manufacturer. Furthermore, at the 65nm
node, customer evaluations of our tools are proceeding well, and
the outlook for additional selections is positive. We estimate that
our 2005 calendar year market share will approximate 40% for both
high current and overall implant business." Robert Halliday, chief
financial officer, provided forward guidance for the first quarter
of fiscal 2006. "We currently expect revenue to be between $150 and
$160 million. Earnings per share are anticipated to range from
$0.30 to $0.38 per diluted share, excluding stock-based
compensation costs and the impact of an anticipated tax benefit.
The impact from the new accounting pronouncement related to
stock-based compensation is expected to range from $0.05 to $0.07
per diluted share. Additionally, in the first quarter of fiscal
2006, we anticipate recognizing a tax benefit of $0.21 to $0.30 per
diluted share related to the favorable conclusion of a multi-year
tax examination." 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 first quarter fiscal 2006 revenue, gross margin and
earnings per share, market share, competitive position, expected
first quarter fiscal 2006 product shipments, 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 Annual
Report on Form 10-K 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. This press release
includes, within Varian Semiconductor's forward guidance, a
non-GAAP measure of earnings per share. The non-GAAP earnings per
share excludes stock-based compensation costs and the impact of an
anticipated tax benefit. To be comparable with fiscal 2005 fourth
quarter results, the earnings per share forward guidance for the
first quarter of fiscal 2006 excludes stock-based compensation
costs, a direct result of the implementation of FAS 123(R), which
is effective for Varian Semiconductor on October 1, 2005. The
forward guidance also excludes the impact of the anticipated tax
benefit as it is a non-recurring event. Management believes that
investors may find it useful for these items to be excluded. The
reconciliation of GAAP earnings per share is as follows: -0- *T
First Quarter Fiscal 2006 Guidance Low High Non-GAAP EPS Range
$0.30 $0.38 Stock-Based Compensation (0.05) (0.07) Anticipated Tax
Benefit 0.21 0.30 GAAP EPS Range $0.46 $0.61 VARIAN SEMICONDUCTOR
EQUIPMENT ASSOCIATES, INC. CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (In thousands, except per share amounts) Fiscal Fiscal Three
Months Ended Year Ended Sept. 30, Oct. 1, Sept. 30, Oct. 1, 2005
2004 2005 2004 ----------- ----------- ----------- -----------
Revenue Product $ 121,360 $ 133,351 $ 488,719 $ 456,217 Service
23,494 19,650 84,078 65,947 Royalty 1,455 1,804 27,724 7,945
----------- ----------- ----------- ----------- Total revenue
146,309 154,805 600,521 530,109 Cost of revenue 82,466 81,992
331,814 290,269 ----------- ----------- ----------- -----------
Gross profit 63,843 72,813 268,707 239,840 ----------- -----------
----------- ----------- Operating expenses Research and development
20,580 16,995 77,661 67,715 Marketing, general & administrative
26,930 23,059 104,883 85,615 Restructuring costs -- -- 914 --
----------- ----------- ----------- ----------- Total operating
expenses 47,510 40,054 183,458 153,330 ----------- -----------
----------- ----------- Operating income 16,333 32,759 85,249
86,510 Interest income, net 3,413 1,507 16,348 4,277 Other income
(expense), net 11 (425) 2,765 (923) ----------- -----------
----------- ----------- Income before income taxes 19,757 33,841
104,362 89,864 Provision for income taxes 6,125 10,829 32,352
28,756 ----------- ----------- ----------- ----------- Net income $
13,632 $ 23,012 $ 72,010 $ 61,108 =========== ===========
=========== =========== Weighted average shares outstanding - basic
37,397 36,390 36,813 36,085 Weighted average shares outstanding -
diluted 38,235 36,944 37,597 36,978 Net income per share - basic $
0.36 $ 0.63 $ 1.96 $ 1.69 Net income per share - diluted $ 0.36 $
0.62 $ 1.92 $ 1.65 VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) September 30,
October 1, 2005 2004 -------------- ------------- ASSETS Current
assets Cash and cash equivalents $ 193,426 $ 218,578 Short-term
investments 280,646 173,891 Accounts receivable, net 123,612
123,749 Inventories 127,374 99,356 Deferred income taxes 30,865
27,691 Other current assets 32,796 38,482 --------------
------------- Total current assets 788,719 681,747 Property, plant
and equipment, net 58,435 52,344 Other assets 15,665 15,405
-------------- ------------- Total assets $ 862,819 $ 749,496
============== ============= LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities Notes payable and current portion of long-term
debt $ 426 $ 4,016 Accounts payable 33,272 34,134 Accrued expenses
59,280 53,234 Product warranty 8,585 7,841 Deferred revenue 52,118
54,509 -------------- ------------- Total current liabilities
153,681 153,734 Long-term accrued expenses 10,849 10,905 Deferred
income taxes 5,477 4,615 Long-term debt 3,736 4,162 --------------
------------- Total liabilities 173,743 173,416 --------------
------------- Stockholders' equity Common stock 380 364 Capital in
excess of par value 382,445 331,701 Retained earnings 316,330
244,320 Deferred compensation (9,366) (149) Accumulated other
comprehensive loss (713) (156) -------------- ------------- Total
stockholders' equity 689,076 576,080 -------------- -------------
Total liabilities and stockholders' equity $ 862,819 $ 749,496
============== ============= Backlog $ 166,637 $ 184,370
============== ============= *T
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