Cymer, Inc. (ticker: CYMI, exchange: NASDAQ Global Select Market (.O))
News Release -
29-Jan-2008
Cymer Reports Fourth Quarter and 2007 Operating Results SAN DIEGO--(BUSINESS WIRE)--Jan. 29, 2008--Cymer, Inc. (Nasdaq:
CYMI), the world's leading supplier of light sources used in
semiconductor lithography, today announced operating results for the
fourth quarter and year ended December 31, 2007.
For the fourth quarter of 2007:
-- net income totaled $21,437,000, equal to $0.67 per share
(diluted), compared to net income of $25,411,000, equal to
$0.65 per share (diluted) in the fourth quarter of 2006 and
net income of $21,670,000, equal to $0.65 per share (diluted)
in the third quarter of 2007.
-- revenue totaled $139,922,000 compared to revenue of
$137,441,000 in the prior year's fourth quarter, and revenue
of $132,125,000 in the third quarter of 2007.
For the year ended December 31, 2007:
-- net income totaled $88,362,000 equal to $2.50 per share
(diluted), compared to net income of $95,648,000, equal to
$2.40 per share (diluted) for the year ended December 31,
2006.
-- revenue totaled $521,696,000 compared to revenue of
$543,855,000 in the prior year.
Commenting on 2007 results, Bob Akins, Cymer's chief executive
officer, said, "In 2007, we shipped a record 128 of our XL platform
argon fluoride (ArF) light sources during the year, which accounted
for 65 percent of system shipments, and a record number of light
sources for advanced ArF immersion applications. With our advanced ArF
immersion light sources accounting for such a significant percentage
of shipments, our currency adjusted annual average selling price (ASP)
for 2007 increased to a record $1.25 million, approximately 25 percent
above last year's level. With light source pulse utilization
increasing approximately 20 percent over the 2006 level, non-systems
revenue grew to a record $275.2 million for the year and accounted for
approximately 53 percent of 2007 total revenue. "
Turning to fourth quarter results, Akins continued, "Fourth
quarter 2007 revenue grew 6 percent over the prior quarter driven by
continuing strong demand for our ArF immersion light sources, and by
larger than forecasted fourth quarter non-systems revenue, which
reached a new quarterly record. Included in the 49 lasers we shipped
to our customers in the fourth quarter, were 32 XLA Series ArF light
sources, and multiple XLR 500i lasers which will be installed before
mid-year in advanced, high volume immersion production applications at
about the 45nm node. As a result of the ongoing strong demand for ArF
lasers, our currency adjusted ASP for the fourth quarter continued in
excess of $1.3 million."
The company reported gross profit on product sales of $67.2
million, yielding a 48.1 percent gross margin in the fourth quarter of
2007. "Fourth quarter gross margin came in two percentage points below
the previous quarter's level, primarily due to the larger than
forecasted end-of-year increase in non-systems revenue, which has a
lower gross margin than light sources," Akins noted. "Annual gross
margin for 2007 came in at 50 percent, the first time in our history
we've achieved annual gross margin at this level. This significant
accomplishment reflects the improvements in operating efficiencies
we've achieved over the last several years, and the strong demand for
our ArF sources," he said.
The company recorded operating income of $29.2 million, yielding a
20.9 percent operating margin in the fourth quarter of 2007. For 2007,
operating income totaled $114.5 million, yielding an operating margin
of 21.9 percent.
Nancy Baker, Cymer's chief financial officer, stated, "Deep
ultraviolet (DUV) bookings for the fourth quarter of 2007 totaled
$128.7 million, resulting in a book-to-bill ratio of 0.92. Under
current slowing industry conditions, this includes orders from
multiple direct customers for sources that are currently scheduled for
delivery beyond the current quarter. As has been the case for the last
several years, ArF continued to dominate systems orders in the fourth
quarter, with 75 percent of the systems booked in the quarter, and
about 90 percent of the value of systems booked in the quarter being
ArF. We ended the quarter with a backlog of $99.6 million, with ArF
comprising 78 percent of the units, and approximately 90 percent of
the value of systems, in backlog. Fifty-five percent of the value of
systems in backlog at quarter-end is attributable to ArF immersion."
Baker continued, "During the fourth quarter, we completed our
stock buy-back program under the $300 million authorization our board
of directors approved in April 2007. Under this program, from the
second quarter through the fourth quarter of 2007, we purchased a
total of approximately 7.5 million shares for $300 million. We
finished 2007 with approximately $357.5 million in cash, cash
equivalents and investments."
Baker concluded, "For 2007, we generated a record $142.1 million
in net cash from operations and spent approximately $26.8 million on
the acquisition of property, equipment and patent licenses for the
year, which translated to approximately $115.3 million in free cash
flow. Free cash flow is calculated as the net cash provided by
operating activities less the acquisition of property, equipment and
patent licenses."
Corporate Outlook
Commenting on Cymer's outlook, Akins noted, "Looking forward
through 2008, concerns are obviously high that a slow-down in the US
economy could have global consequences, especially on consumer
purchases of electronics. This in turn is reflected in the uncertainty
of capital planning and buying activities at chipmakers. However, the
overall thesis of the industry embracing advanced lithography
technologies - ArF immersion, double patterning, and EUV -- remains
intact, driven by the needs to increase productivity and reduce
manufacturing costs. It is progressively more a question of when, not
if, these lithography production techniques will be used. In the
memory sector, we believe the larger NAND Flash manufacturers will
continue with their strategic buying plans to drive to smaller
critical dimensions. DRAM pricing is still weak, driving the largest
manufacturers to convert their 200mm fabs to 300mm production. Logic
should remain steady. Foundries, which have been under-spending, may
need to augment their leading edge capabilities with some immersion
tools. But in all sectors, the smaller, less financially healthy
participants will most likely delay or cut portions of their capital
spending."
Akins continued, "Turning to our 2008 first quarter, over the past
few weeks we have been chasing a downward moving demand target. We
currently see the business with all three of our direct customers to
be down in the first quarter over fourth quarter levels. This is due
primarily to industry conditions resulting in push-outs from
chipmakers, particularly for capacity tools, into late 2008 or even
2009, with similar effect on the build plans of our direct customers.
Remember for Cymer, being one step further up the supply chain, that
in addition to our business slowing as our direct customers' business
slows, additionally our customers become more conservative with their
laser inventory levels, which further impacts laser demand. This has
led to significantly reduced - that is, a double-digit unit decrease -
demand for our light sources in the first quarter. Demand for our
leading edge tools will bias our product mix toward XLA and XLR Series
light sources so that the ASP of light source sales should remain at
or above the fourth quarter level. With DUV lithography now the
predominant technology for wafer processing, we anticipate continuing
growth in our non-systems revenue, as we support our customers' drive
to increase their utilization rates and productivity."
Based on information available at this time, Cymer is currently
providing the following guidance for the first quarter of 2008, and
anticipates:
-- Total revenue to be approximately 15 percent lower than
revenue reported for fourth quarter 2007 due primarily to
slowing industry conditions.
-- Foreign currency adjusted ASP to be approximately $1.35
million on the strength of XLA and XLR demand.
-- Gross margin to be approximately 47 percent to 48 percent, as
lower margined non-systems revenue continues to become a
larger percentage of total revenue.
-- Research and development (R&D) expenses to be between $23
million and $24 million as we continue to commercialize our
EUV source and TCZ technologies.
-- Selling, general and administrative expenses to be between $18
million and $18.5 million.
-- The estimated annual effective tax rate to be approximately 38
percent. This higher tax rate is the result of the U.S.
Congress not yet renewing the R&D tax credit.
Cymer's management will hold a conference call at 2:00 pm (PST)
today, January 29, 2008, to discuss fourth quarter and 2007 operating
results and provide first quarter 2008 guidance. This press release,
the conference call and accompanying slides may be accessed on the
investor relations page of the company's Web site at www.cymer.com.
Forward Looking Statements
Statements in this press release that are not strictly historical
in nature are forward-looking statements. These statements include,
but are not limited to statements regarding the company's expectations
regarding future shipments and installations, and the statements under
the caption "Corporate Outlook" above. These statements are
predictions based on current information and expectations and involve
a number of risks and uncertainties. In addition, statements regarding
backlog and book-to-bill ratios should not be read as predictions or
projections of future performance. Actual events or results may differ
materially from those projected in any of such statements due to
various factors, including but not limited to: delays or cancellations
by customers of their orders, the performance and market acceptance of
the company's new products or technologies; new and enhanced product
offerings by competitors; the company's ability to meet its production
and product development schedules; the demand for semiconductors in
general, and, in particular, for leading-edge devices with smaller
geometries; the timing of customer orders, shipments and acceptances;
cyclicality in the market for semiconductor manufacturing equipment;
the rate at which semiconductor manufacturers adopt new technologies
and purchase and take delivery of photolithography tools from the
company's customers; the company's ability to secure adequate supplies
of critical components for its advanced products; the company's
ability to manage its expense levels and unanticipated expenses, the
unpredictability and volatility of the price of the company's common
stock; the performance and conditions in the United States and world
financial markets; the policies and actions of the United States and
other governments; and general economic conditions. For a discussion
of these and other factors which may cause our actual events or
results to differ from those projected, please refer to the company's
most recent annual report on Form 10-K and quarterly reports on Form
10-Q, as well as other subsequent filings with the Securities and
Exchange Commission. You are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of
this press release. All forward-looking statements are qualified in
their entirety by this cautionary statement, and the company
undertakes no obligation to revise or update any forward-looking
statements to reflect events or circumstances after the date of this
press release.
About Cymer
Cymer, Inc. is the world's leading supplier of DUV laser
illumination sources, the essential light source for DUV
photolithography systems. DUV lithography is a key enabling
technology, which has allowed the semiconductor industry to meet the
exacting specifications and manufacturing requirements for volume
production of today's advanced semiconductor chips. Further
information on Cymer may be obtained from the Company's SEC filings,
the Internet at www.cymer.com or by contacting the company directly.
Free Cash Flow Reconciliation
For the year ended December 31, 2007
----------------------------------------------------------------------
Cash provided by operating activities $142,078,000
Less acquisition of property, equipment and patent
licenses $ 26,758,000
------------
Free cash flow $115,320,000
============
Cymer, Inc. Three Months Ended Twelve Months Ended
December 31 December 31
2006 2007 2006 2007
--------------------------------------------------
Total revenues $137,441,000 $139,922,000 $543,855,000 521,696,000
Net income $25,411,000 $21,437,000 $95,648,000 88,362,000
Diluted earnings
per share $0.65 $0.67 $2.40 $2.50
Weighted average
common shares
outstanding -
diluted 40,643,000 33,623,000 41,397,000 36,784,000
CYMER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
For the three months For the twelve months
ended December 31, ended December 31,
---------------------------------------------
2006 2007 2006 2007
REVENUES:
Product sales $136,404 $139,149 $536,098 $517,295
Product sales -
related party 901 626 7,362 3,716
Other 136 147 395 685
-------- -------- -------- --------
Total revenues 137,441 139,922 543,855 521,696
-------- -------- -------- --------
COST AND EXPENSES:
Cost of product
sales 69,509 72,596 281,243 260,280
Research and
development 18,107 21,082 73,974 81,842
Sales and marketing 7,975 6,568 30,618 26,163
General and
administrative 10,994 10,476 38,889 38,949
-------- -------- -------- --------
Total costs and
expenses 106,585 110,722 424,724 407,234
-------- -------- -------- --------
OPERATING INCOME 30,856 29,200 119,131 114,462
-------- -------- -------- --------
OTHER INCOME
(EXPENSE):
Foreign currency
exchange gain 818 69 1,674 2,025
Interest and other
income 5,958 3,824 23,852 20,074
Interest and other
expense (1,584) (1,902) (5,965) (6,709)
-------- -------- -------- --------
Total other
income - net 5,192 1,991 19,561 15,390
-------- -------- -------- --------
INCOME BEFORE INCOME
TAX PROVISION AND
MINORITY INTEREST 36,048 31,191 138,692 129,852
-------- -------- -------- --------
INCOME TAX PROVISION 11,457 10,314 46,137 44,413
MINORITY INTEREST 820 560 3,093 2,923
-------- -------- -------- --------
NET INCOME $25,411 $21,437 $95,648 $88,362
======== ======== ======== ========
EARNINGS PER SHARE:
Basic earnings per
share $0.68 $0.71 $2.53 $2.64
======== ======== ======== ========
Weighted average
common shares
outstanding -
basic 37,140 30,404 37,779 33,522
======== ======== ======== ========
Diluted earnings
per share $0.65 (a) $0.67 (a) $2.40 (a) $2.50 (a)
======== ======== ======== ========
Weighted average
common shares
outstanding -
diluted 40,643 (a) 33,623 (a) 41,397 (a) 36,784 (a)
======== ======== ======== ========
(a) As a result of applying the if-converted method for calculating
diluted earnings per share for both the three month and twelve
month periods ending December 31, 2006 and December 31, 2007,
shares have been adjusted assuming conversion of our 3.5%
convertible subordinated notes, and net income has been adjusted
for an add back of related interest expense, net of tax. Shares
have been adjusted by 2.8 million for both the three months and
twelve months ending December 31, 2006 and net income has been
adjusted by $967,000 and $3.7 million for the three months and
twelve months ending December 31, 2006, respectively. Shares have
been adjusted by 2.8 million for both the three months and twelve
months ending December 31, 2007 and net income has been adjusted
by $948,000 and $3.7 million for the three months and twelve
months ending December 31, 2007 respectively.
CYMER, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
December 31, December 31,
-------------------------
2006 2007
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $302,098 $305,707
Short-term investments 207,943 22,355
Accounts receivable - net 115,857 91,875
Accounts receivable - related party 834 1,112
Foreign currency forward exchange
contracts 652 2
Inventories 104,296 129,757
Deferred income taxes 46,943 42,147
Prepaid expenses and other assets 7,143 8,928
----------- -----------
Total current assets 785,766 601,883
PROPERTY AND EQUIPMENT - NET 112,074 116,725
LONG TERM INVESTMENTS 8,384 29,443
DEFERRED INCOME TAXES 12,766 19,272
GOODWILL - NET 8,833 8,833
INTANGIBLE ASSETS - NET 15,880 12,951
OTHER ASSETS 5,391 5,045
----------- -----------
TOTAL ASSETS $949,094 $794,152
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $18,711 $23,980
Accounts payable - related party 4,858 4,428
Accrued warranty and installation 29,974 24,832
Accrued payroll and benefits 21,707 24,406
Accrued patents, royalties and other fees 4,262 3,303
Income taxes payable 13,293 13,468
Deferred revenue 2,544 4,974
Foreign currency forward exchange
contracts - 170
Accrued and other current liabilities 3,715 3,917
----------- -----------
Total current liabilities 99,064 103,478
CONVERTIBLE SUBORDINATED NOTES 140,722 140,722
INCOME TAXES PAYABLE - 17,755
DEFERRED REVENUE - 5,562
OTHER LIABILITIES 14,781 17,401
----------- -----------
Total liabilities 254,567 284,918
----------- -----------
MINORITY INTEREST 6,633 5,711
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - authorized 5,000,000
shares; $.001 par value, no shares issued
or outstanding - -
Common stock - authorized 100,000,000
shares; $.001 par value, issued and
outstanding 41,774,000 and 42,339,000
shares 42 42
Additional paid-in capital 557,082 579,711
Treasury stock at cost (4,536,000 and
12,049,000 common shares) (150,704) (450,704)
Accumulated other comprehensive income
(loss) (4,066) 214
Retained earnings 285,540 374,260
----------- -----------
Total stockholders' equity 687,894 503,523
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $949,094 $794,152
=========== ===========
CYMER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
For the twelve months
ended December 31,
---------------------
2006 2007
OPERATING ACTIVITIES:
Net income $95,648 $88,362
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 25,127 25,523
Non-cash stock based compensation 13,235 5,642
Minority interest (3,093) (2,923)
Provision for deferred income taxes 8,558 3,408
Loss on disposal or impairment of property
and equipment 27 292
Change in assets and liabilities:
Accounts receivable - net (26,039) 23,982
Accounts receivable - related party (246) (278)
Foreign currency forward exchange
contracts 1,264 927
Inventories (15,250) (25,461)
Prepaid expenses and other assets (359) (2,218)
Accounts payable 1,001 5,269
Accounts payable - related party (117) (430)
Accrued and other liabilities 9,686 (742)
Deferred income 818 7,992
Income taxes payable 5,541 12,733
----------- ---------
Net cash provided by operating
activities 115,801 142,078
----------- ---------
INVESTING ACTIVITIES:
Acquisition of property and equipment (16,404) (26,637)
Purchases of investments (278,594) (91,440)
Proceeds from sold or matured investments 223,004 256,720
Acquisition of patents (8,200) (121)
Acquisition of minority interest (7,024) -
----------- ---------
Net cash provided by (used in)
investing activities (87,218) 138,522
----------- ---------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 116,059 15,260
Cash investment received from minority
shareholder - 2,000
Excess tax benefits from stock option
exercises 20,243 1,727
Repurchase of common stock into treasury (100,704) (300,000)
----------- ---------
Net cash provided by (used in)
financing activities 35,598 (281,013)
----------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 4,172 4,022
----------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 68,353 3,609
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE
YEAR 233,745 302,098
----------- ---------
CASH AND CASH EQUIVALENTS AT END OF THE YEAR $302,098 $305,707
=========== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $5,301 $5,469
=========== =========
Income taxes paid, net $12,111 $26,642
----------- ---------
CONTACT: Investor Relations:
Cymer, Inc.
Terry Slavin, Director, Corp. Communications & IR
858-385-5232
tslavin@cymer.com
or
Media:
Formula
Kelly Hamor, 619-234-0345
Hamor@formulapr.com
SOURCE: Cymer, Inc.
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Cymer, Inc.
