Cymer Reports Fourth Quarter and 2005 Operating Results.SAN DIEGO San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. -- Cymer, Inc. (Nasdaq:CYMI), the world's leading supplier of excimer laser A gas laser in which a very short electrical pulse excites a mixture containing a halogen such as fluorine and a rare gas such as argon or krypton. It produces a brief, intense pulse of ultraviolet light. light sources used in semiconductor manufacturing, today announced operating results for the fourth quarter and year ended December December: see month. 31, 2005. Fourth quarter results were generally in line with the company's October October: see month. 18, 2005 guidance, while product gross margin continued to improve and exceeded guidance. Additional fourth quarter highlights included strong bookings growth, a record level of non-systems revenue, as well as generation of a significant amount of cash from operations. For the fourth quarter of 2005, net income totaled $16,361,000, equal to $0.45 per share (diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ), compared to net income of $10,376,000, equal to $0.28 per share (diluted), in the fourth quarter of 2004, and net income of $12,684,000, equal to $0.35 per share (diluted), in the third quarter of 2005. Total revenue for the fourth quarter of 2005 was $102,793,000 compared to total revenue of $128,111,000 in the fourth quarter of 2004, and total revenue of $99,653,000 in the third quarter of 2005. For the year ended December 31, 2005, net income increased 5 percent to $45,445,000, equal to $1.24 per share (diluted) from net income of $43,154,000, equal to $1.15 per share (diluted), in 2004. Total revenue for 2005 was $383,648,000, an 8 percent decrease from $418,079,000 in total revenue recorded in 2004. Commenting on the fourth quarter and full year of 2005, Bob Akins Akins may refer to:
This page or section lists people with the surname Akins. , Cymer's chief executive officer, said, "Throughout 2005, Cymer continued to create shareholder value through improved profitability and execution. We focused on gross margin improvement by reducing cycle times and material costs, and through realizing a product mix shift to higher value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: , higher average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. (ASP asp, popular name for several species of viper, one of which, the European asp (Vipera aspis), is native to S Europe. It is also a name for the Egyptian cobra (Naja haja). ) argon argon (är`gŏn) [Gr.,=inert], gaseous chemical element; symbol Ar; at. no. 18; at. wt. 39.948; m.p. −189.2°C;; b.p. −185.7°C;; density 1.784 grams per liter at STP; valence 0. fluoride fluoride, a salt of hydrofluoric acid; see hydrogen fluoride. See also fluoridation; fluorine. (ArF) light sources. As a result of this focus, our gross margin grew sequentially, quarter over quarter, during the year, and we achieved a 10 margin point improvement from 33 percent in the fourth quarter of 2004 to 43 percent in the fourth quarter of 2005. Additionally, though 2005 total revenue decreased 8 percent from 2004 total revenue, our 2005 net income and earnings per share increased 5 percent and 8 percent respectively over the net income and earnings per share achieved in the prior year. We believe this higher profitability on lower revenue demonstrates the effectiveness to date of our improved efficiency and execution. Our efforts to shorten (audio, compression) Shorten - A form of lossless audio compression. our cash conversion cycle and better manage our assets were also quite successful, as evidenced by our generation of $111,651,000 in cash from operations, and $93,566,000 in free cash flow for the year." Free cash flow is a non-GAAP financial measure calculated by subtracting acquisitions of property and equipment, which totaled $18,085,000 in 2005, from net cash provided by operating activities. "We recognized revenue on 48 light sources in the fourth quarter of 2005," Akins continued. "Fifty-two Adj. 1. fifty-two - being two more than fifty 52, lii cardinal - being or denoting a numerical quantity but not order; "cardinal numbers" percent of light source shipments in the fourth quarter were XLA XLA X-Linked Agammaglobulinemia XLA Excel Airways (British airline) XLA Microsoft Excel Addin XLA Xbox Live Arcade (gaming) XLA X-Band Limiter Attenuator XLA Excel Add-in XLA Xlib Archive Series light sources, with approximately one third of these ArF shipments being our most advanced, highest value-added XLA 200 and XLA 300 models. This marked the first shipments of our XLA 300, which is our fourth generation MOPA MOPA Master Oscillator Power Amplifier MOPA Mobile Office Promotion Association MoPA Ministry of Public Affairs (Singapore) (Master Oscillator oscillator Mechanical or electronic device that produces a back-and-forth periodic motion. A pendulum is a simple mechanical oscillator that swings with a constant amplitude, requiring the addition of energy at each swing only to compensate for the energy lost because of air Power Amplifier Power amplifier The final stage in multistage amplifiers, such as audio amplifiers and radio transmitters, designed to deliver appreciable power to the load. ) ArF light source, and the industry's first to operate at a 6 kilohertz One thousand cycles per second. See Hertz. repetition REPETITION, construction of wills. A repetition takes place when the same testator, by the same testamentary instrument, gives to the same legatee legacies of equal amount and of the same kind; in such case the latter is considered a repetition of the former, and the legatee is entitled rate, providing up to 60 watts of output power, and designed for use in high volume immersion lithography Immersion lithography is a photolithography resolution enhancement technique that replaces the usual air gap between the final lens and the wafer surface with a liquid medium that has a refractive index greater than one. applications. Demonstrating our commitment to aggressive development of more advanced products, in December we announced the XLA 400, our fifth generation MOPA light source, which we expect to begin shipping in the middle of 2006." As a result of the product mix shift to ArF light sources, Cymer's fourth quarter 2005 ASP rose 12 percent to $1,062,000 on a currency adjusted basis. The quarterly average utilization of the company's light sources at chipmakers in the fourth quarter rose between 7 and 8 percent over the previous quarter. This drove non-systems product revenue, which consists of consumables and spare parts Spare parts, also referred to as Service Parts is a term used to indicate extra parts available and in proximity to the mechanical item, such as a automobile, boat, engine, for which they might be used. Spare parts are also called “spares. , upgrades, and service, to a record high of $52,419,000 for the fourth quarter of 2005, equal to 51 percent of total revenue. Nancy Baker, Cymer's chief financial officer, stated, "Cymer recorded operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $14,030,000, or 14 percent of revenue in the fourth quarter of 2005, compared to operating income of $12,181,000, or 12 percent of revenue, in the third quarter of 2005. Fourth quarter 2005 bookings totaled $119,819,000, a 23 percent increase over bookings of $97,716,000 in the prior quarter, resulting in a fourth quarter 2005 book-to-bill ratio Book-to-Bill Ratio The technology industry's demand-to-supply ratio for orders on a "firm's book" to number of orders filled. Notes: This ratio tells whether the company has more orders than it can deliver (if greater than 1), has the same amount of orders that it can of 1.17. The 2005 fourth quarter-end backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. totaled $90,841,000." Cymer generated $21,209,000 in cash from operations in the fourth quarter of 2005. Cash and cash equivalents and short- and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. investments totaled $393,344,000 at December 31, 2005. Baker stated, "Capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. for the fourth quarter of 2005 totaled $3,316,000 compared to $6,920,000 in the third quarter of 2005. In the fourth quarter of 2005, we again generated a significant amount of cash, and our free cash flow, calculated as the net cash provided by operating activities less our acquisition of property and equipment, was $17,893,000." Corporate Outlook Commenting on Cymer's outlook, Akins noted, "Overall, we're we're Contraction of we are. we're we are pleased with our fourth quarter and 2005 performance, and we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our 2006 prospects. Fundamental demand for chips is growing and stressing today's worldwide chip production capacity. With capacity running at record levels, incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. growth in the market is translating directly into driving the need for real capacity expansion, as evidenced by recent announcements of increases in 2006 capital spending by leading logic, memory, and foundry A semiconductor manufacturer that makes chips for third parties. It may be a large chip maker that sells its excess manufacturing capacity or one that makes chips exclusively for other companies. manufacturers. With our installed base of approximately 200 XLA Series light sources combined with our rapid introduction of new higher performance models, we remain strongly positioned in the most rapidly growing and highest value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. segment of the DUV DUV Deep Ultraviolet DUV Data-Under-Voice DUV Design Under Verification light source market, ArF lithography lithography (lĭthŏg`rəfē), type of planographic or surface printing. It is distinguished from letterpress (relief) printing and from intaglio printing (in which the design is cut or etched into the plate). , dry and immersion immersion /im·mer·sion/ (i-mer´zhun) 1. the plunging of a body into a liquid. 2. the use of the microscope with the object and object glass both covered with a liquid. ." Based on information available at this time, Cymer is currently providing the following guidance for the first quarter of 2006, which includes the effect of stock option expensing, as the company adopted SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R as of January January: see month. 1, 2006 : --We currently estimate that total product revenue in the first quarter of 2006 should be up between 15 and 18 percent over fourth quarter 2005 revenue. --We are forecasting that foreign currency adjusted ASPs should be relatively flat with the $1,062,000 reported for the fourth quarter of 2005. Though we are seeing growing demand for our XLA 300s, our most advanced ArF light source, ASP growth will be offset somewhat by concurrent growth in demand for lower priced, capacity related krypton krypton (krĭp`tŏn) [Gr.,=hidden], gaseous chemical element; symbol Kr; at. no. 36; at. wt. 83.80; m.p. −156.6°C;; b.p. −152.3°C;; density 3.73 grams per liter at STP; valence usually 0. fluoride light sources. --We expect that gross margin should be between 44 and 45 percent. --We anticipate that R&D expenses should be between $17.5 million and $18.5 million. --We expect SG&A expenses to be between $17.5 million and $18 million. --During the first week of January, we completed a buy-out buy·out also buy-out n. 1. The purchase of the entire holdings or interests of an owner or investor. 2. The purchase of a company or business: of the minority shareholder of our Cymer Korea subsidiary. Since Cymer Korea is now a wholly-owned subsidiary, beginning with our first quarter 2006 report, the minority interest line in the statement of operations See Income statement. will only include the interest of the minority shareholder in our TCZ TCZ The Chatting Zone joint venture. --Our 2006 estimated annual effective tax rate is expected to be between 25 and 30 percent. --A net $3.2 million in insurance proceeds will be reflected in Other Income on Cymer's first quarter 2006 Statement of Operations as a result of the death of a senior executive. Cymer's management will hold a conference call at 2:00 pm (PST PST Paroxysmal supraventricular tachycardia, see there ) today, January 31, 2006, to discuss fourth quarter 2005 results and first quarter 2006 guidance. This press release, the conference call and accompanying slides may be accessed on 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . These statements include, but are not limited to statements regarding expected use of the XLA 300,, and the expected initial shipping dates for the XLA 400, 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 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; delays or cancellations by customers of their orders; cyclicality in the market for semiconductor manufacturing equipment; the rate at which semiconductor manufacturers take delivery of photolithography A lithographic technique used to transfer the design of circuit paths onto printed circuit boards as well as the circuit paths and electronic elements of a chip onto a wafer's surface. A photomask is created with the design for each layer of the board or wafer (chip). tools from the company's customers; the company's ability to secure adequate supplies of critical components for its advanced products; and the company's ability to manage its expense levels and unanticipated expenses. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and quarterly reports on Form 10-Q Form 10-Q See 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 The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. by this cautionary statement, and the company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of this press release. About Cymer Cymer, Inc. is the world's leading supplier of DUV laser illumination illumination, in art illumination, in art, decoration of manuscripts and books with colored, gilded pictures, often referred to as miniatures (see miniature painting); historiated and decorated initials; and ornamental border designs. 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 Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.cymer.com or by contacting the company directly.
Cymer, Inc. Three Months Twelve Months
Ended Dec. 31, Ended Dec. 31,
2004 2005 2004 2005
-----------------------------------------------------
Total revenues $128,111,000 $102,793,000 $418,079,000 $383,648,000
Net income $10,376,000 $16,361,000 $43,154,000 $45,445,000
Diluted earnings
per share $0.28 $0.45 $1.15 $1.24
Weighted average
common shares
outstanding -
diluted 37,444,000 36,722,000 37,584,000 36,544,000
CYMER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
For the three For the twelve
months ended months ended
December 31, December 31,
2004 2005 2004 2005
-------- -------- -------- --------
REVENUES:
Product sales $127,952 $102,640 $417,296 $382,638
Other 159 153 783 1,010
-------- -------- -------- --------
Total revenues 128,111 102,793 418,079 383,648
-------- -------- -------- --------
COST AND EXPENSES:
Cost of product sales 85,210 58,829 243,473 227,071
Research and development 15,494 16,542 58,612 64,025
Sales and marketing 5,883 6,267 23,369 25,099
General and administrative 8,643 7,125 31,630 27,240
-------- -------- -------- --------
Total costs and expenses 115,230 88,763 357,084 343,435
-------- -------- -------- --------
OPERATING INCOME 12,881 14,030 60,995 40,213
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Foreign currency exchange gain
(loss) - net 1,355 (183) 82 (1,115)
Gain on debt extinguishment - - 911 2,220
Interest and other income 2,179 3,252 8,079 10,943
Interest and other expense (2,127) (1,508) (9,493) (6,936)
-------- -------- -------- --------
Total other income (expense)
- net 1,407 1,561 (421) 5,112
-------- -------- -------- --------
INCOME BEFORE INCOME TAX PROVISION
(BENEFIT) AND MINORITY INTEREST 14,288 15,591 60,574 45,325
-------- -------- -------- --------
INCOME TAX PROVISION (BENEFIT) 3,572 (1,193) 15,144 906
MINORITY INTEREST (340) (423) (2,276) 1,026
-------- -------- -------- --------
NET INCOME $10,376 $16,361 $43,154 $45,445
======== ======== ======== ========
EARNINGS PER SHARE:
Basic earnings per share $0.28 $0.46 $1.17 $1.26
======== ======== ======== ========
Weighted average common shares
outstanding - basic 36,919 35,861 36,758 36,017
======== ======== ======== ========
Diluted earnings per share $0.28 $0.45 $1.15 $1.24
======== ======== ======== ========
Weighted average common shares
outstanding - diluted 37,444 36,722 37,584 36,544
======== ======== ======== ========
CYMER, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
Dec. 31, Dec. 31,
-------- --------
2004 2005
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $114,246 $233,745
Short-term investments 175,866 82,932
Accounts receivable - net 110,680 89,936
Foreign currency forward exchange contracts - 1,776
Inventories 110,022 91,074
Deferred income taxes 7,470 4,933
Prepaid expenses and other assets 5,726 6,497
-------- --------
Total current assets 524,010 510,893
PROPERTY AND EQUIPMENT - NET 123,548 116,786
LONG TERM INVESTMENTS 84,561 76,667
DEFERRED INCOME TAXES 67,722 79,024
GOODWILL - NET 8,358 8,358
INTANGIBLE ASSETS - NET 10,394 10,474
OTHER ASSETS 7,185 6,457
-------- --------
TOTAL ASSETS $825,778 $808,659
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $13,949 $22,685
Accrued warranty and installation 28,546 30,775
Accrued payroll and benefits 16,284 12,461
Accrued patents, royalties and other fees 6,318 6,515
Foreign currency forward exchange contracts 1,901 -
Income taxes payable 10,397 11,411
Unearned income 6,152 1,726
Accrued and other current liabilities 4,456 3,356
-------- --------
Total current liabilities 88,003 88,929
CONVERTIBLE SUBORDINATED NOTES 200,753 140,722
DEFERRED INCOME TAXES 6,237 12,327
OTHER LIABILITIES 7,282 10,582
-------- --------
Total liabilities 302,275 252,560
-------- --------
MINORITY INTEREST 6,183 16,276
-------- --------
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
36,993,000 and 38,036,000 shares 37 38
Additional paid-in capital 378,414 408,319
Treasury stock at cost (1,943,000 common shares) - (50,000)
Unearned compensation (16) -
Accumulated other comprehensive loss (4,455) (7,319)
Retained earnings 143,340 188,785
-------- --------
Total stockholders' equity 517,320 539,823
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $825,778 $808,659
======== ========
CYMER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
For the twelve
months ended
December 31
------------------
2004 2005
OPERATING ACTIVITIES:
Net income $43,154 $45,445
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on debt extinguishment (911) (2,220)
Depreciation and amortization 28,364 28,080
Non-cash stock based compensation 345 1,789
Amortization of unearned compensation 130 16
Minority interest 2,276 (1,026)
Provision for deferred income taxes (1,117) (1,851)
Loss on disposal or impairment of property
and equipment 131 55
Change in assets and liabilities:
Accounts receivable - net (47,861) 20,744
Foreign currency forward exchange contracts (679) (3,002)
Inventories (17,010) 18,948
Prepaid expenses and other assets (884) (1,936)
Accounts payable (5,150) 8,736
Accrued and other liabilities 16,975 1,968
Unearned income 5,399 (4,426)
Income taxes payable 11,008 331
-------- --------
Net cash provided by operating
activities 34,170 111,651
-------- --------
INVESTING ACTIVITIES:
Acquisition of property and equipment (19,485) (18,085)
Purchases of investments (641,674) (290,728)
Proceeds from sold or matured investments 669,421 390,580
Acquisition of patents (5,990) (2,500)
Acquisition of minority interest (2,000) -
-------- --------
Net cash provided by investing
activities 272 79,267
-------- --------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 15,446 25,217
Redemption of convertible subordinated notes (47,407) (57,336)
Minority interest investment in subsidiary - 11,120
Payments on capital lease obligations (48) (20)
Purchase of treasury stock - (50,000)
-------- --------
Net cash used in financing activities (32,009) (71,019)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 1,181 (400)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,614 119,499
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 110,632 114,246
-------- --------
CASH AND CASH EQUIVALENTS AT END OF THE YEAR $114,246 $233,745
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $9,033 $6,914
======== ========
Income taxes paid, net $3,515 $3,839
======== ========
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