MILPITAS, CA, Jan 08, 2008 (MARKET WIRE via COMTEX News Network) -- Credence Systems Corporation (NASDAQ: CMOS), a provider of test
solutions for the worldwide semiconductor industry, today reported
its results for the fourth quarter and fiscal year ended November 3,
2007. Highlights for the fourth quarter include a net profit of $5.6
million.
Net sales for the fourth quarter were $97.7 million, down 21 percent
from third quarter net sales of $123.5 million, and down 23 percent
from the fourth quarter of fiscal year 2006 net sales of $127.1
million. Incoming orders for the fourth quarter of fiscal 2007 were
$54.4 million, corresponding to a book-to-bill ratio of 0.55. Net
income for the quarter was $5.6 million or $0.05 per share, versus a
net income of $10.3 million or $0.10 cents per share in the third
quarter and a net loss of $1.9 million or $0.02 per share in the
fourth quarter of fiscal 2006.
For fiscal 2007, net sales were $461.1 million, down 6.5 percent from
net sales of $493.4 million in the fiscal year ended October 31, 2006.
The company achieved a net profit for fiscal 2007 of $12.5 million,
or $0.12 per share. This represents the company's first profitable
year in six years. This compares to a net loss of $481.6 million, or
$4.82 per share in fiscal 2006. In addition, Credence more than
doubled its cash and investments on the balance sheet to $242.1
million, compared with $102.8 million at the end of fiscal 2006.
The company today also outlined significant corporate changes
intended to build on core technology strengths while simplifying its
operations to meet increasing opportunities in Asia-driven consumer
semiconductor markets. Credence intends to prioritize its research
and development activities in the Diamond and industry-standard ASL
platforms to accelerate their deployment in mainstream consumer
semiconductor markets. The company intends to focus Sapphire platform
development on configurations that support leading-edge applications
for the high end of the consumer semiconductor markets. With the
highest concentration of consumer semiconductor manufacturers located
in Asia, Credence will seek to double its sales and support headcount
in the region by the end of 2008.
The company intends to divest or otherwise reduce its commitment to
businesses and products that are unrelated to its consumer
semiconductor market focus, including its Diagnostics and
Characterization business and Sapphire DPI solution. Credence also
intends to scale down its service infrastructure and align with the
self-service model commonly used by its major North American IDM
customers. Additionally, the increase in service resources in Asia
will enable the company to better serve the unique needs of this
base. Outsourced manufacturing activities will continue in accordance
with previously announced plans.
With the addition of approximately 100 employees related to the
increased consumer focus, the company anticipates that these
restructuring initiatives will result in a net worldwide headcount
reduction of 400 people, or approximately 30 percent of the workforce
by end of fiscal 2008. Credence intends to take charges of
approximately $16 million in the first fiscal quarter of 2008 in
connection with this restructuring.
"The essence of our new strategy is simplicity and focus," said Lavi
Lev, Credence's president and CEO. "This means doing fewer things
better in a focused market. For Credence, it's the high-growth
consumer semiconductor markets, where the customer pool is rich, the
application space is deep, and our growth engines, Diamond, ASL and
Sapphire are already well positioned. Executing on the new strategy
regrettably requires extremely difficult decisions that affect valued
employees and colleagues. We are nonetheless convinced that these
are the right decisions to ensure a successful future for Credence,"
added Lev.
First quarter fiscal 2008 outlook
Net sales in the first quarter of fiscal 2008 are expected to be $58
million to $62 million, with a per share loss of approximately $0.37
to $0.39.
Credence will discuss its fiscal 2007 and fourth quarter results, its
proposed restructuring activities and its outlook for Q1 2008 in a
conference call today beginning at 5:00 a.m. PST/8:00 a.m. EST. The
call will be simultaneously webcast and will be accessible at
www.credence.com under Investor Relations. A replay of the call will
be available for approximately 30 days. The number for the replay is
888-286-8010, domestically, and 617-801-6888, internationally. The
passcode for both is 97498349.
About Credence
Credence Systems Corporation is a provider of ATE solutions for the
consumer semiconductor industry. With a commitment to applying
innovative technology to lower the cost-of-test, Credence delivers
competitive cost & performance advantages to integrated device
manufacturers (IDMs), wafer foundries, outsource assembly and test
(OSAT) suppliers and fabless chip companies worldwide. A global, ISO
9001-certified company, Credence is headquartered in Milpitas,
California. More information is available at http://www.credence.com.
Forward-Looking Statements
This release contains statements that are forward-looking within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,
including statements regarding our intention to build on the company's
core technology strengths while simplifying our operations, our
intention to prioritize our research and development activites in the
Diamond and ASL platforms to accelerate their deployment, our
intention to exclusively focus Sapphire platform development on the
high-end consumer semiconductor markets, our intention to to double
our sales and support headcount in Asia, our intention to divest or
reduce our commitment to businesses and products that are unrelated
to our consumer semiconductor market focus, our intention to scale
down our service infrastructure and align with a self-service model,
our intention to increase our services resources in Asia, our
intention to continue outsourced manufacturing activities, our
estimate of headcount reductions resulting from the restructuring
activities, our estimate of charges to be taken during the first
quarter of fiscal 2008 associated with the restructuring activities,
our expectation that the implementation of the discussed changes will
ensure future success for the Company, and our expected net sales and
earnings per share for the first quarter of fiscal 2008. These
forward-looking statements involve important factors that could cause
our actual results to differ materially from those in the
forward-looking statements. Such important factors involve risks and
uncertainties including, but not limited to, the difficulties of
transferring the focus of our business into areas in which we have
limited experience, the volatility of the trading price of our stock,
the need to focus on different aspects of our business to improve
stockholder value, unanticipated challenges in assessing business
conditions and the overall market, unanticipated difficulties in
implementing improvements to our business model, the timing of new
technology, product introductions, customer requirements relating to
the customization of products, the introduction of new product
features including new instruments, the completion, delivery and
acceptance by customers of such new product features, cyclicality and
downturns in the semiconductor industry, rapid technological change
in the automatic test equipment market, the risk of a loss or
reduction of orders from one or more customers among which our
business is concentrated, fluctuation in customer demand, timing and
volume of orders and shipments, competition and pricing pressures,
reliability and quality issues, our ability to complete the
development and commercialization of our new products, product mix,
overhead absorption, continued dependence on "turns" orders to
achieve revenue objectives, intellectual property issues, the risk of
early obsolescence, our ability to control and reduce expenses
(including the ability to identify and successfully institute
additional cost-saving measures) and our need to achieve and maintain
effective internal controls over financial reporting. Reference is
made to the discussion of risk factors detailed in our filings with
the Securities and Exchange Commission, including our reports on Form
10-K and 10-Q. All projections in this release are based on limited
information currently available to us, which is subject to change.
Although any such projections and the factors influencing them will
likely change, we will not necessarily update the information, since
we are only to provide guidance at certain points during the year.
Actual events or results could differ materially and no reader of
this release should assume later in the quarter that the information
provided today is still valid. Such information speaks only as of the
date of this release.
NOTE: Credence is a registered trademark, and Credence Systems is a
trademark, of Credence Systems Corporation. Other trademarks that may
be mentioned in this release are the intellectual property of their
respective owners.
Editors: tables to follow
CREDENCE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
2007 2006 2007 2007 2006
Q4 Q4 Q3 FY FY
Actual Actual Actual Actual Actual
========== ========== ========== ========== =========
Prior
Quarter
Three Months Ended Ended Twelve Months Ended
---------------------- ---------- ----------------------
November 3, October 31, August 4, November 3, October 31,
2007 2006 2007 2007 2006
========== ========== ========== =========== ==========
Net Sales (1) 97,669 127,148 123,532 461,139 493,374
Costs of Goods
Sold - on net
sales (1)(2) 49,594 70,401 60,228 243,042 309,004
---------- ---------- ---------- ---------- ---------
Gross Margin $ 48,075 56,747 63,304 218,097 184,370
---------- ---------- ---------- ---------- ---------
Gross Margin % 49.2% 44.6% 51.2% 47.3% 37.4%
Operating
Expenses
Research &
Development (3) 16,919 20,525 18,696 77,155 91,372
Sales,
General, &
Adminis-
tration (1)(4) 23,483 27,744 27,042 105,478 117,596
Amortization
of Purchased
Intangibles 4,512 4,528 4,451 17,872 17,237
Reduction of
Goodwill - - - - 423,875
Restructure (564) 7,836 (9) 445 11,002
---------- ---------- ---------- ---------- ---------
Total Operating
Expenses 44,350 60,633 50,180 200,950 661,082
---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------
Operating
Income/(Loss) 3,725 (3,886) 13,124 17,147 (476,712)
---------- ---------- ---------- ---------- ---------
Other
Expense/
(Income) 216 (2,984) 1,163 1,199 (1,011)
---------- ---------- ---------- ---------- ---------
Income Before
Taxes 3,509 (902) 11,961 15,948 (475,701)
---------- ---------- ---------- ---------- ---------
Income Taxes (2,072) 1,040 1,623 3,494 5,884
---------- ---------- ---------- ---------- ---------
Net
Income/(Loss) 5,581 (1,942) 10,338 12,454 (481,585)
========== ========== ========== ========== =========
Net Income % 5.7% -1.5% 8.4% 2.7% -97.6%
Net Income/
(Loss) per
Share
Basic 0.05 (0.02) 0.10 0.12 (4.82)
Diluted 0.05 (0.02) 0.10 0.12 (4.82)
Number of Shares
used in
Computing per
share amounts
Basic 101,527. 100,527. 101,194. 101,085. 99,981.
Diluted 107,943. 100,527. 107,726. 101,129. 99,981.
(1) Effective the first quarter of fiscal 2007, Credence reclassified
engineering consulting and customized services as revenue instead of
as an offset to selling, general, and administrative expenses. The
labor and material associated with the delivery of these services
which had previously been reported as selling, general, and
administrative expenses are classified as cost of goods sold. For
the three and twelve month periods ended November 3, 2007, the total
amount of engineering consulting and customized services classified
as net sales is $3.0 million and $14.4 million respectively. For the
three and twelve month periods ended November 3, 2007, the total
amount of cost of goods sold is $2.4 million and $10.6 million,
respectively. For the three month period ended August 4, 2007 the
total amount of engineering consulting and customized services
classified as net sales is $2.6 million and the related cost of goods
sold is $1.6 million. For comparative purposes, for the three and
twelve month periods ended October 31, 2006, $5.2 million and
$18.9 million, respectively has been reclassified as net sales. The
related cost of goods sold of $3.6 million and $11.9 million for the
three and twelve month periods ended October 31, 2006, respectively
has been reclassified to cost of goods sold from selling, general,
and administrative expenses.
(2) Includes stock-based compensation under FAS 123R (adopted on
November 1, 2005) of $0.5 million and $0.8 million for the three and
twelve month periods ended November 3, 2007, respectively. For the
three months ended August 4, 2007 stock-based compensation expense was
$0.06 million. For the three and twelve month periods ended
October 31, 2006, stock-based compensation expense was $0.2 million
and $0.7 million, respectively. The twelve month period ended
November 3, 2007 includes a benefit of reclaimed VAT in the amount
of $1.1 million.
(3) Includes stock-based compensation under FAS 123R of $0.05 million
and $1.3 million for the three and twelve month periods ended
November 3, 2007, respectively. For the three month period ended
August 4, 2007, stock-based compensation expense was $0.5 million.
For the three and twelve month periods ended October 31, 2006,
stock-based compensation expense was $0.4 million and $1.9 million,
respectively.
(4) Includes stock-based compensation under FAS 123R of $0.7 million
and $3.3 million for the three and twelve month periods ended
November 3, 2007, respectively. For the three month period ended
August 4, 2007, stock-based compensation expense was $0.6 million.
For the three and twelve month periods ended October 31, 2006,
stock-based compensation expense was $0.7 million and $3.0 million,
respectively.
(5) Beginning in Q1 2007, Credence changed its fiscal year end from a
calendar date ending October 31 to a 52 or 53 week calendar ending on
the Saturday closest to October 31. There were 91 days in the fourth
quarter of fiscal year 2007 and fiscal year 2007 will be a 52 week
fiscal year ending November 3, 2007. This change has no impact on
Credence's results of operations, financial position, or cash flows.
CREDENCE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Prior
Quarter
-----------
November 3, August 4, October 31,
2007 2007 2006 (1)
=========== =========== ===========
(unaudited) (unaudited)
ASSETS:
Current Assets:
Cash and Cash Equivalents 179,264 118,056 95,635
Short Term Investments 62,869 72,816 7,177
Accounts Receivable, net 64,174 108,269 114,796
Inventories 62,506 67,461 55,200
Other Current Assets 26,602 26,731 24,661
----------- ----------- -----------
Total Current Assets 395,415 393,334 297,469
Property and Equipment, net 75,299 78,369 87,175
Other Assets 118,598 124,305 132,951
----------- ----------- -----------
Total Assets 589,312 596,008 517,594
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Convertibles Subordinated
Notes 70,700 70,700 0
Accounts Payable 20,365 25,320 32,477
Accrued Liabilities 94,841 102,313 105,089
Deferred Profits 2,703 6,295 6,143
----------- ----------- -----------
Total Current Liabilities 188,609 204,628 143,709
Convertible Subordinated Notes 119,728 119,278 145,000
Other Liabilities 35,247 35,381 6,686
Long-term Deferred Income Taxes 9,473 9,473 9,473
Stockholders' Equity 236,255 227,248 212,726
----------- ----------- -----------
Total Liabilities and
Stockholders' Equity 589,312 596,008 517,594
=========== =========== ===========
(1) Derived from the audited financial statements for the year ended
October 31, 2006.
Contacts:
Brenda Ropoulos
Investor Relations
Credence Systems Corporation
Phone: 408-635-4309
FAX: 408-635-4986
E-mail: Email Contact
Jane Evans-Ryan
Media Relations
Phone: 408-489-6391
Email: Email Contact
SOURCE: Credence Systems Corporation
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