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Cymer Reports Fourth Quarter and 2008 Operating Results

SAN DIEGO, Feb. 11, 2009 (GLOBE NEWSWIRE) -- Cymer, Inc. (Nasdaq:CYMI), the world's leading supplier of light sources used by chipmakers to create advanced semiconductor chips, today announced operating results for the fourth quarter and year ended December 31, 2008.

For the fourth quarter of 2008:

  • net income totaled $3,984,000, equal to $0.13 per share (diluted), compared to net income of $21,437,000, equal to $0.67 per share (diluted) in the fourth quarter of 2007 and net income of $5,331,000*, equal to $0.18* per share (diluted), in the third quarter of 2008.
  • revenue totaled $100,448,000, compared to revenue of $139,922,000 in the fourth quarter of 2007 and revenue of $110,619,000* in the third quarter of 2008.

For the year ended December 31, 2008:

  • net income totaled $36,540,000, equal to $1.22 per share (diluted), compared to net income of $88,362,000, equal to $2.50 per share (diluted), for the year ended December 31, 2007.
  • revenue totaled $459,010,000, compared to revenue of $521,696,000 in the prior year.

Commenting on the fourth quarter results, Bob Akins, Cymer's chief executive officer, said, "Cymer employees executed well in a very difficult business environment. Our operating results were generally in line with our fourth quarter guidance. We extended our argon fluoride (ArF) immersion market leadership and made continued progress towards the development and commercialization of our extreme ultraviolet (EUV) light source technology."

In the fourth quarter of 2008, the company shipped 19 light sources, including 15 XLRs, resulting in an average selling price (ASP) of approximately $1.9 million. Installed Base Products (IBP) revenue totaled $63.2 million. During the quarter, the company installed 15 light sources at chipmaker locations. The company reported gross profit on product sales of $44.7 million, yielding a 44.5 percent gross margin. Fourth quarter 2008 cost of revenues included additional field inventory charges of approximately $2.3 million in response to lower chipmaker utilization. Excluding the additional field inventory charge, non-GAAP gross margin would have been 46.8 percent. Operating expenses of $40.3 million included $1.9 million of costs associated with the November 2008 reduction in workforce and a $1.9 million additional allowance for doubtful accounts receivable related to certain customer's deteriorating financial condition. Operating income totaled $4.4 million, and the fourth quarter effective tax rate was approximately 5%, primarily due to the passage of the federal research and development tax credit in October 2008 which was effective retroactively to January 1, 2008.

Deep ultraviolet (DUV) bookings for the fourth quarter of 2008 totaled $83.7 million, resulting in a book-to-bill ratio of 0.83. All of the light source systems bookings in the fourth quarter were XLR. The company ended the quarter with a DUV backlog of approximately $33.7 million, with ArF immersion light sources comprising approximately 84 percent of the value of systems in backlog.

For the full year 2008, the company shipped a total of 100 light sources, including 48 XLRs for advanced chip making applications. Cymer's full year revenue, at $459 million, was down 12 percent from 2007. Higher average selling prices, driven by the strong adoption of the XL Series of products, and approximately 10 percent annual growth in IBP revenue helped offset the decline in lithography light source demand. Through increased operational efficiency and XL platform reliability improvements, the company achieved a gross margin of 47.3 percent on product sales in 2008.

During the fourth quarter, the company increased cash and investments by approximately $16 million, and at December 31, 2008, cash and investments totaled $293 million. The company anticipates repaying its $140.7 million convertible note when it matures on February 15, 2009.

Corporate Outlook

Commenting on the outlook, Akins stated, "The current business environment is quite uncertain, characterized by shrinking lithography tool demand, and decreasing chipmaker factory utilization in the second half of 2008. Looking at the first quarter of 2009, demand for new light sources and installed base products has declined further since our mid January preliminary revenue estimate. It is noteworthy that utilization of our light sources held steady for the month of January in all three chip sectors. While visibility into 2009 is extremely limited, our expectation for the year is for advanced ArF immersion orders to continue to represent the vast majority of scanner and light source demand. We have taken action to reduce Cymer's cost structure, and we will continue to focus on maintaining operating costs in-line with business conditions. We feel Cymer is well positioned for the future with our strong DUV, EUV, Installed Base Products and TCZ portfolio."

Based on information available at this time, Cymer is currently providing the following guidance for the first quarter of 2009, and anticipates:

  • Revenue to decrease approximately 45%, plus or minus 5% compared to the revenue reported for the fourth quarter of 2008
  • Foreign currency adjusted ASP to be approximately $ 1.6 million to $1.7 million due to the anticipated inclusion of some KrF shipments
  • Gross margin to be approximately 40%, plus or minus 3%, depending on revenue levels
  • R&D expenses to be approximately $18.5 million to $19 million
  • SG&A expenses to be approximately $11.5 million to $12 million
  • Charges related to the January 15, 2009 cost reduction actions to be approximately $4.5 million, with approximately 25% associated with cost of revenues and 75% attributable to operating expenses
  • Our estimated first quarter effective tax rate to be approximately 30%. This rate may vary significantly depending on the actual extent of loss before tax

Cymer's management will hold a conference call at 2:00 pm (PST) today, February 11, 2009, to discuss fourth quarter and 2008 operating results and first quarter 2009 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 ArF immersion market leadership, commercialization of EUV source technology, 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: the demand for semiconductors in general, and, in particular, for leading-edge devices with smaller geometries; cyclicality in the market for semiconductor manufacturing equipment; the timing of customer orders, shipments and acceptances; 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 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 company's ability to achieve its forecasted gross margin; the company's ability to achieve forecasted savings from its cost reduction actions; the company's ability to align its cost structure with forecasted business levels; the company's ability to manage its foreign currency exposure; 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. (Nasdaq:CYMI) is the market leader in developing light sources, used by chipmakers worldwide to pattern advanced semiconductor chips. Cymer's light sources have been widely adopted by the world's top chipmakers, and the company's installed base comprises more than 3,300 systems. Continuing its legacy of leadership, Cymer is currently pioneering the industry's transition to extreme ultraviolet lithography, the next viable step on the technology roadmap for the creation of smaller, faster chips. The company was founded and is headquartered in San Diego, Calif. and supports its customers from numerous offices around the globe. Cymer maintains a Web site to which it regularly posts press releases, Securities and Exchange Commission (SEC) report filings, and additional information about Cymer. Interested persons can also subscribe to automated e-mail alerts or RSS feeds. Please visit www.cymer.com.



 Cymer, Inc.    Three Months Ended Dec.31   Twelve Months Ended Dec.31
                    2008          2007          2008*         2007
                ------------------------------------------------------
 Total
  revenues      $100,448,000  $139,922,000  $459,010,000  $521,696,000

 Net income       $3,984,000   $21,437,000   $36,540,000   $88,362,000
 Diluted
  earnings
  per share            $0.13         $0.67         $1.22         $2.50
 Weighted
  average
  common shares
  outstanding -
  diluted         29,645,000    33,623,000    29,992,000    36,784,000

* Includes a correction of an immaterial error for the third quarter of 2008 related to foreign currency translation of our consolidated statements of income. This correction decreased revenue by $774,000, net income by $404,000 and earnings per share (diluted) by $0.01 for the three months ended September 30, 2008.



 GROSS MARGIN NON-GAAP RESULTS
                                                 Amount    Percent of
                                                 ($ M's)     Revenue
                                               -----------------------
 Q4 2008 Gross Margin GAAP                          $44.7        44.5%
 Q4 2008 Additional Field Inventory Charge           $2.3         2.3%
 Q4 2008 Gross Margin Non-GAAP                      $47.0        46.8%





 CYMER, INC.
 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 (In thousands, except per share data)
 ---------------------------------------------

                           For the three months  For the twelve months
                            ended December 31,    ended December 31,
                           -------------------------------------------
                             2008        2007      2008(b)      2007

 Revenues                   $99,967    $139,296   $456,729    $517,980
 Revenues - related party       481         626      2,281       3,716
                           --------    --------   --------    --------
      Total revenues        100,448     139,922    459,010     521,696
                           --------    --------   --------    --------

 COST OF REVENUES            55,749      72,596    241,881     260,280

                           --------    --------   --------    --------
 GROSS PROFIT                44,699      67,326    217,129     261,416
                           --------    --------   --------    --------

 OPERATING EXPENSES:
  Research and development   25,192      21,082     96,464      81,842
  Sales and marketing         5,673       6,568     24,039      26,163
  General and
   administrative             9,454      10,476     36,544      38,949
                           --------    --------   --------    --------

   Total operating expenses  40,319      38,126    157,047     146,954
                           --------    --------   --------    --------

 OPERATING INCOME             4,380      29,200     60,082     114,462
                           --------    --------   --------    --------

 OTHER INCOME (EXPENSE):
  Foreign currency exchange
   gain (loss) - net           (214)         69     (6,642)      2,025
  Write-down of investment     (206)         --     (5,309)         --
  Interest and other income   1,123       3,824      8,845      20,074
  Interest and other
    expense                  (1,769)     (1,902)    (6,712)     (6,709)
                           --------    --------   --------    --------

   Total other income
    (expense) - net          (1,066)      1,991     (9,818)     15,390
                           --------    --------   --------    --------

 INCOME BEFORE INCOME TAX
  PROVISION AND MINORITY
  INTEREST                    3,314      31,191     50,264     129,852
                           --------    --------   --------    --------

 INCOME TAX PROVISION           154      10,314     16,587      44,413
 MINORITY INTEREST              824         560      2,863       2,923
                           --------    --------   --------    --------

 NET INCOME                  $3,984     $21,437    $36,540     $88,362
                           ========    ========   ========    ========

 EARNINGS PER SHARE:
  Basic earnings per share    $0.13       $0.71      $1.22       $2.64
                           ========    ========   ========    ========
  Weighted average common
   shares outstanding-basic  29,596      30,404     29,924      33,522
                           ========    ========   ========    ========

  Diluted earnings per
   share                      $0.13     $0.67(a)     $1.22    $2.50(a)
                           ========    ========   ========    ========
  Weighted average common
   shares outstanding-
   diluted                   29,645    33,623(a)    29,992    36,784(a)
                           ========    ========   ========    ========


 (a)As a result of applying the if-converted method for calculating
    diluted earnings per share for the three month and year ended
    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 year ended December 31, 2007, and net income has been adjusted
    by $948,000 and $3.7 million for the three months and year ended
    December 31, 2007, respectively.

 (b)Includes a correction of an immaterial error for the third quarter
    of 2008 related to foreign currency translation of our consolidated
    statements of income. This correction decreased revenue by
    $774,000, net income by $404,000 and earnings per share (diluted)
    by $0.01 for the three months ended September 30, 2008.

 CYMER, INC.
 CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 (In thousands, except share data)
 ---------------------------------------------------------------------


                                           December 31,   December 31,
                                           ---------------------------
                                               2008           2007
 ASSETS

 CURRENT ASSETS:
  Cash and cash equivalents                  $252,391       $305,707
  Short-term investments                       30,900         22,355
  Accounts receivable - net                    64,296         91,875
  Accounts receivable - related party             818          1,112
  Inventories                                 194,746        129,757
  Deferred and prepaid income taxes            46,886         42,147
  Prepaid expenses and other assets             9,344          8,930
                                           -----------    -----------

   Total current assets                       599,381        601,883

 PROPERTY AND EQUIPMENT - NET                 114,390        116,725
 LONG TERM INVESTMENTS                          9,456         29,443
 DEFERRED INCOME TAXES                         29,168         19,272
 GOODWILL - NET                                 8,833          8,833
 INTANGIBLE ASSETS - NET                        9,898         12,951
 OTHER ASSETS                                   6,318          5,045
                                           -----------    -----------

 TOTAL ASSETS                                $777,444       $794,152
                                           ===========    ===========

 LIABILITIES AND STOCKHOLDERS' EQUITY

 CURRENT LIABILITIES:
  Accounts payable                            $15,003        $23,980
  Accounts payable - related party              4,108          4,428
  Accrued warranty                             23,565         24,350
  Accrued payroll and benefits                 12,682         24,406
  Accrued patents, royalties and other fees     3,795          3,303
  Convertible subordinated notes              140,722             --
  Income taxes payable                          1,085         13,468
  Deferred revenue                             15,344          4,974
  Accrued and other current liabilities         8,278          4,569
                                           -----------    -----------

     Total current liabilities                224,582        103,478

 CONVERTIBLE SUBORDINATED NOTES                    --        140,722
 INCOME TAXES PAYABLE                          18,447         17,755
 DEFERRED REVENUE                                  --          5,562
 OTHER LIABILITIES                             11,791         17,401
                                           -----------    -----------

      Total liabilities                       254,820        284,918
                                           -----------    -----------

 MINORITY INTEREST                              4,848          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, 42,461,000
   shares issued and 29,609,000 shares
   outstanding at December 31, 2008;
   42,339,000 shares issued and 30,290,000
   shares outstanding at December 31, 2007         42             42
  Additional paid-in capital                  586,539        579,711
  Treasury stock at cost (12,852,000 and
   12,049,000 common shares) at
   December 31, 2008 and 2007, respectively  (473,580)      (450,704)
  Accumulated other comprehensive
   income (loss)                               (6,025)           214
  Retained earnings                           410,800        374,260
                                           -----------    -----------

   Total stockholders' equity                 517,776        503,523
                                           -----------    -----------

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $777,444       $794,152
                                           ===========    ===========

 CYMER, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS  (UNAUDITED)
 (In thousands)
 ---------------------------------------------------------------------

                                                   For the year
                                                ended December 31,
                                           ---------------------------
                                               2008            2007

 OPERATING ACTIVITIES:
  Net income                                  $36,540        $88,362
  Adjustments to reconcile net income to
   net cash provided by (used in) operating
   activities:
   Depreciation and amortization               26,633         25,523
   Stock based compensation                     5,630          5,642
   Minority interest                           (2,863)        (2,923)
   Provision for deferred income taxes        (16,152)         3,408
   Loss on disposal or impairment of
    property and equipment                        297            292
   Write-down of investments                    5,309             --
   Change in assets and liabilities:
    Accounts receivable - net                  28,160         23,982
    Accounts receivable - related party           294           (278)
    Inventories                               (63,620)       (25,461)
    Prepaid expenses and other assets          (2,414)        (2,218)
    Accounts payable                           (8,788)         5,269
    Accounts payable - related party             (320)          (430)
    Accrued and other liabilities             (13,557)           185
    Deferred income                             4,909          7,992
    Income taxes payable                      (11,234)        12,733
                                           -----------    -----------

     Net cash provided by (used in)
      operating activities                    (11,176)       142,078
                                           -----------    -----------

 INVESTING ACTIVITIES:
  Acquisition of property and equipment       (23,689)       (26,637)
  Purchases of investments                    (90,309)       (91,440)
  Proceeds from sold or matured investments    95,051        256,720
  Acquisition of patents                           --           (121)
                                           -----------    -----------
   Net cash provided by (used in) investing
    activities                               (18,947)        138,522
                                           -----------    -----------

 FINANCING ACTIVITIES:
  Proceeds from issuance of common stock        2,506         15,260
  Cash investment received from minority
   shareholder                                  2,000          2,000
  Tax windfall from stock option exercises         58          1,727
  Repurchase of common stock into treasury    (22,876)      (300,000)
                                           -----------    -----------
   Net cash used in financing activities      (18,312)      (281,013)
                                           -----------    -----------
 EFFECT OF EXCHANGE RATE CHANGES ON CASH
  AND CASH EQUIVALENTS                         (4,881)         4,022
                                           -----------    -----------
 NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                 (53,316)         3,609
 CASH AND CASH EQUIVALENTS AT BEGINNING
   OF THE YEAR                                305,707        302,098
                                           -----------    -----------
 CASH AND CASH EQUIVALENTS AT END OF
  THE YEAR                                   $252,391       $305,707
                                           ===========    ===========


 SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION:
  Interest paid                                $5,569         $5,469
                                           ===========    ===========
  Income taxes paid, net                      $43,256        $26,642
                                           ===========    ===========

CONTACT:
Cymer, Inc.
Investor Relations:
Paul Bowman, Interim CFO and V.P., Investor Relations
(858) 385-5312
pbowman@cymer.com

Formula
Media:
Kelly Hamor
(619) 234-0345
Hamor@formulapr.com

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Cymer, Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.