MILPITAS, Calif., Dec. 7 /PRNewswire-FirstCall/ -- Credence Systems Corporation , a leading provider of test solutions from design- to-production for the worldwide semiconductor industry, today reported financial results for the fourth quarter and fiscal year ended October 31, 2006.
Net sales for the fourth quarter were $121.9 million, up 11 percent from the preceding quarter net sales of $109.6 million and up slightly from the fourth quarter of fiscal year 2005 revenue of $121.6 million. Orders for the fourth quarter of fiscal 2006 were $120.7 million, corresponding to a book to bill ratio of 0.99. Net loss for the quarter was $1.9 million or $0.02 net loss per share, versus a net loss of $461.4 million or $4.61 net loss per share in the preceding quarter. The net loss in the fourth quarter of fiscal 2006 included restructuring charges of $7.8 million resulting primarily from previously announced headcount reduction actions taken during the quarter partially offset by a $2.6 million gain associated with the repurchase of $35.0 million of convertible notes. Net loss from a year-ago fourth quarter was $22.5 million or $0.23 net loss per share.
For fiscal 2006, net sales were $474.4 million, an increase of 11 percent from net sales of $429.3 million in the fiscal year ended October 31, 2005. The net loss for fiscal 2006 was $481.6 million or $4.82 net loss per share, compared to a net loss of $119.9 million, or $1.28 net loss per share in fiscal 2005. The net loss for fiscal 2006 included a $423.9 million write-down of goodwill on the Company's books taken during the third fiscal quarter, and restructuring and inventory charges of $47.1 million.
"We made significant improvements across the company in our fourth fiscal quarter," said Dave Ranhoff, president and chief executive officer of Credence Systems Corporation. "We improved our top line revenue and bookings performance, and are particularly pleased with the gains enjoyed by our Sapphire S and ASL3000RF product lines. We continued our efforts to reduce operating costs and drive better efficiencies throughout the organization, consistent with our announced plans to fundamentally modify our business model. As we now enter our first fiscal quarter of 2007, we are better positioned to consistently deliver profitable financial growth."
First Quarter Fiscal 2007 Outlook
Net sales in the first quarter of fiscal 2007 are expected to be approximately $118.0 million to $122.0 million, with earnings per share on a GAAP basis in the range of $0.00 to $0.02.
Conference Call/Webcast
Credence will hold a conference call to discuss these results today, December 7, 2006, at 5:00 pm ET. The call will be simulcast via the Credence web site at http://www.credence.com/ under "Investor Relations -- Financial Information -- Webcasts." A replay of the call will be available via phone and web site through January 6, 2007. The replay number in the U.S. and Canada is (888) 286-8010. The replay number outside the U.S. and Canada is (617) 801-6888. The passcode is 87247437. A replay will also be available on the Credence web site http://www.credence.com/ under the Investor Relations section.
About Credence
Credence Systems Corporation is a leading provider of debug, characterization and ATE solutions for the global semiconductor industry. With a commitment to applying innovative technology to lower the cost-of-test, Credence delivers competitive cost and 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 the Company being positioned to consistently deliver profitable growth, expected net sales and earnings per share for the first quarter of fiscal 2007. 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 volatility of the trading price of our stock, the introduction of new product features including new instruments, the completion, delivery and acceptance by customers of such new product features, 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, cyclicality and downturns in the semiconductor industry, rapid technological change in the automatic test equipment market, the timing of new technology, product introductions, customer requirements relating to the customization of products, 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.
CREDENCE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Prior
Three Months Quarter Year
Ended Ended Ended
October 31, July 31, October 31,
2006 2005 2006 2006 2005
Net sales $121,897 $121,568 $109,592 $474,424 $429,320
Cost of goods
sold (1) 66,812 73,294 85,778 297,146 279,044
Gross margin 55,085 48,274 23,814 177,278 150,276
Operating
expenses:
Research and
development(2) 20,525 23,633 22,576 91,372 92,538
Selling,
general &
admini-
strative(3) 26,082 32,306 28,988 110,504 126,823
Amortization
of purchased
intangible
assets and
deferred
compensation 4,528 4,771 4,338 17,237 23,470
Reduction of
goodwill -- -- 423,875 423,875 --
Restructuring
charges 7,836 6,160 1,792 11,002 17,605
Total
operating
expenses 58,971 66,870 481,569 653,990 260,436
Operating
loss (3,886) (18,596) (457,755) (476,712) (110,160)
Interest and
other income
(expense),
net (4) 2,984 (1,097) (1,501) 1,011 1,617
Loss before
income tax
provision (902) (19,693) (459,256) (475,701) (108,543)
Income tax
provision 1,040 2,787 2,110 5,884 11,389
Net loss ($1,942) ($22,480) ($461,366) ($481,585) ($119,932)
Net loss per
share
Basic ($0.02) ($0.23) ($4.61) ($4.82) ($1.28)
Diluted ($0.02) ($0.23) ($4.61) ($4.82) ($1.28)
Number of
shares used
in computing
per share
amounts
Basic 100,527 99,364 100,017 99,981 93,864
Diluted 100,527 99,364 100,017 99,981 93,864
(1) Includes stock-based compensation under FAS 123R (adopted on November 1, 2005) of $0.1 million, $0.2 million and $0.7 million for the three months ended October 31, 2006 and July 31, 2006 and fiscal year ended October 31, 2006, respectively. Also, includes amortization expenses resulting from the write-up to fair value of the inventory, spares and fixed assets acquired as part of our acquisition of NPTest of $0.1 million, $2.8 million and $0.4 million for the three months ended October 31, 2006 and 2005 and July 31, 2006, respectively; and $1.8 million and $7.5 million for the fiscal year ended October 31, 2006 and 2005, respectively. In the three months ended and year ended October 31, 2005, cost of goods sold includes $2.6 and $4.4 million of service materials charges, relocation, travel, merger related retention bonuses and accelerated depreciation of assets. In addition, includes inventory charges and liabilities related to excess and obsolete inventory of under-performing product lines and decisions to stop significant future investments in these areas of $24.3 million, $36.1 million and $29.1 million for the three months ended July 31, 2006 and fiscal years ended October 31, 2006 and 2005, respectively.
(2) Includes stock-based compensation under FAS 123R of $0.4 million, $0.6 million and $1.9 million for the three months ended October 31, 2006 and July 31, 2006 and fiscal year ended October 31, 2006, respectively.
(3) Includes stock-based compensation under FAS 123R of $0.7 million, $0.8 million and $3.0 million for the three months ended October 31, 2006 and July 31, 2006 and fiscal year ended October 31, 2006, respectively. In addition, it includes amortization of the fixed assets write-up to fair value, resulting from NPTest acquisition of approximately $0.1 million for the three months ended October 31, 2005; and approximately $0.2 million and $1.0 million for the year ended October 31, 2006 and 2005, respectively. In addition, the three months and fiscal year ended October 31, 2005 includes $0.3 million and $10.1 million, respectively of integration expenses related to NPTest.
(4) Includes impairment of an equity investment of $0.9 million and a gain of $2.8 million associated with the repurchase of $35.0 million of convertible notes for the year ended October 31, 2006. Includes fair value adjustment to an acquired liability of $1.3 million for the year ended October 31, 2005.
CREDENCE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Prior Quarter
October 31, July 31, October 31,
2006 2006 2005 (1)
(unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents $95,635 $113,606 $142,180
Short-term investments 7,177 15,681 7,816
Accounts receivable, net 114,796 106,680 114,042
Inventories 55,200 56,966 79,054
Other current assets 24,661 23,384 27,979
Total current assets 297,469 316,317 371,071
Property and equipment, net 87,175 90,048 96,691
Other assets 132,950 141,151 578,543
Total assets $517,594 $547,516 $1,046,305
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $32,477 $28,707 $45,846
Accrued liabilities 105,089 104,422 108,027
Bank loans -- -- 5,000
Deferred profits 6,143 3,977 5,112
Total current
liabilities 143,709 137,106 163,985
Other liabilities 151,686 188,244 190,818
Long-term deferred
income taxes 9,473 9,473 9,473
Stockholders' equity 212,726 212,693 682,029
Total liabilities and
stockholder's equity $517,594 $547,516 $1,046,305
(1) Derived from the audited financial statements for the year ended October 31, 2005.
Company Contact:
John Batty
Senior Vice President & CFO
Credence Systems Corporation
Phone: 408-635-4352
FAX: 408-635-4986
E-mail:
