Exhibit 99.1
FOR IMMEDIATE RELEASE
Investor Relations Contact: | | Media Contact: |
Terry Slavin | | Meggan Powers |
Director, Corp. Communications & IR | | PR Manager |
Cymer, Inc. | | Cymer, Inc. |
(858) 385-5232 | | (858) 385-6327 |
tslavin@cymer.com | | mpowers@cymer.com |
CYMER REPORTS FIRST QUARTER 2006 OPERATING RESULTS
SAN DIEGO, Calif., April 18, 2006 - Cymer, Inc. (Nasdaq NM: CYMI), the world’s leading supplier of excimer laser light sources used in semiconductor manufacturing, today announced operating results for the first quarter ended March 31, 2006. First quarter revenue and gross margin exceeded the company’s January 31, 2006 guidance, and Cymer achieved record quarterly bookings.
For the first quarter of 2006, net income rose to $20,603,000, equal to $0.52 per share (diluted), a 283 percent increase over net income of $5,385,000, equal to $0.14 per share (diluted), in the first quarter of 2005, and an 18 percent increase over net income of $17,468,000, equal to $0.48 per share (diluted), in the fourth quarter of 2005. Included in the first quarter 2006 net income are the effects of stock option expensing which became effective January 1, 2006. In addition, first quarter 2006 diluted earnings per share was calculated by applying the “if-converted” method associated with the company’s convertible subordinated notes outstanding, as their effect was dilutive in the first quarter of 2006, whereas their effect was anti-dilutive in the first and fourth quarters of 2005.
Revenue for the first quarter of 2006 climbed to $127,117,000, a 50 percent increase over revenue of $84,810,000 in the first quarter of 2005, and a 24 percent increase over revenue of $102,793,000 in the fourth quarter of 2005.
Commenting on the first quarter of 2006, Bob Akins, Cymer’s chief executive officer, said, “We continued successfully executing our initiatives to increase operating efficiencies and improve financial performance to grow shareholder value, evidenced in our gross margin increasing to 46 percent. We realized a 67 percent quarter-over-quarter increase in operating income on a 24 percent quarter-over-quarter increase in revenue, clearly demonstrating the operating leverage in our business model.
“We recognized revenue on 70 light sources in the first quarter, up 46 percent over the prior quarter,” Akins continued. “During the first quarter, we were pleased to see that demand for our krypton fluoride (KrF) light sources grew more than we had anticipated. We also experienced continued strong shipments of our XLA Series of argon fluoride (ArF) products, with approximately 17 percent of system shipments being our most advanced XLA 200 and XLA 300 models. Our XLA 300 is targeted at high volume immersion production and we are currently installing the first unit of this model at a major chipmaker. While only 37 percent of light sources recognized for revenue in the first quarter were XLA Series models, due to their higher average selling price (ASP), they constituted 59 percent of systems revenue.”
With the product mix more heavily weighted toward KrF light sources, Cymer’s first quarter 2006 ASP declined to $970,000 on a currency adjusted basis. The quarterly average utilization of the company’s light sources at chipmakers in the first quarter increased slightly over the previous quarter’s level. This drove non-systems product revenue, which consists of consumables and spare parts, upgrades, and service, to $59,021,000 for the first quarter, equal to 46 percent of total revenue.
First quarter 2006 bookings rose to $135,575,000, the highest quarterly level in Cymer’s history and a 13 percent increase over bookings of $119,819,000 in the prior quarter. The first quarter 2006 book-to-bill ratio was 1.07, and the quarter-end backlog totaled $99,299,000.
Cymer recorded operating income of $24,273,000, or 19 percent of revenue in the first quarter of 2006, compared to operating income of $14,493,000, or 14 percent of revenue, in the fourth quarter of 2005.
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CYMER REPORTS FIRST QUARTER 2006 OPERATING RESULTS
Nancy Baker, Cymer’s chief financial officer, stated, “Cymer generated $869,000 in cash from operations in the first quarter of 2006 and incurred capital spending of $3,661,000, resulting in negative free cash flow of $2,792,000. Free cash flow is calculated as the net cash provided by operating activities less the acquisition of property and equipment. The quarter’s negative free cash flow is primarily attributable to high account receivable balances resulting from back-end loaded shipments during the quarter, front-end loaded inventory levels to support forecasted growing demand, and the impact of classifying excess tax benefits from stock option exercises in financing activities rather than operating activities, in accordance with SFAS 123R. The receivable and inventory activities are primarily the result of ramping operations to meet 2006 growing demand. Therefore, Cymer expects to generate a significant amount of cash from operations in the second quarter and the remainder of 2006 as revenue and profitability continue to grow and inventory turns increase.”
Corporate Outlook
Commenting on Cymer’s outlook, Akins noted, “The growth opportunities we see for semiconductor equipment in general and for lithography in particular are based on strong continuing demand for consumer electronics. Medium-term growth opportunities are promising because of the large number of multi-year product cycles that are in early stages of development, including NAND flash-enabled portable devices, new video game platforms, and mobile broadband internet use, to name a few. Fab utilization was in the low to mid-90 percent range in the first quarter, and is expected to remain high in the near to medium term. A number of chipmakers have recently announced their intentions to increase their capital spending substantially either in 2006, or in both 2006 and 2007. Chipmakers’ order patterns are remaining rational and disciplined relative to their lithography tool purchases, and we believe DUV lithography will grow even faster than lithography overall as more wafer layers must transition to DUV production.”
Based on information available at this time, Cymer is currently providing the following guidance for the second quarter of 2006:
• We currently estimate that total revenue in the second quarter of 2006 should be up between 5 and 10 percent over first quarter 2006 revenue.
• We are forecasting that foreign currency adjusted ASPs should be relatively flat with the $970,000 reported for the first quarter of 2006. Growth in demand for lower priced, capacity related KrF light sources is offsetting ASP growth that would otherwise result from strong demand for our XLA Series of light sources.
• We expect that gross margin should be between 48 and 49 percent.
• We anticipate that R&D expenses should be between $18.5 million and $19.5 million.
• We expect SG&A expenses to be between $17.0 million and $17.5 million.
• Our 2006 estimated annual effective tax rate is expected to be approximately 34 percent, which is higher than our previous estimate due to an increase in our currently forecasted growth rate for 2006 and the associated rise in pre-tax income, as well as the expiration of the federal research credit which congress has yet to renew for 2006.
Cymer’s management will hold a conference call at 2:00 pm (PDT) today, April 18, 2006, to discuss first quarter 2006 results and second quarter 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 future cash generation and inventory declining, 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
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CYMER REPORTS FIRST QUARTER 2006 OPERATING RESULTS
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 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 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
Cash provided by operating activities | | $ | 869,000 | |
Less acquisition of property and equipment | | $ | 3,661,000 | |
Free cash flow | | $ | (2,792,000 | ) |
Cymer, Inc.
| | Three months ended March 31, | |
| | 2005 | | 2006 | |
Total revenues | | $ | 84,810,000 | | $ | 127,117,000 | |
| | | | | |
Net income | | $ | 5,385,000 | | $ | 20,603,000 | |
Diluted earnings per share | | $ | 0.14 | | $ | 0.52 | |
Weighted average common and common equivalent shares outstanding (diluted) | | 37,230,000 | | 41,126,000 | |
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CYMER REPORTS FIRST QUARTER 2006 OPERATING RESULTS
CYMER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
| | For the three months
ended March 31, | |
| | 2005 | | 2006 | |
REVENUES: | | | | | |
Product sales | | $ | 84,609 | | $ | 124,902 | |
Product sales - related party | | — | | 2,154 | |
Other | | 201 | | 61 | |
Total revenues | | 84,810 | | 127,117 | |
| | | | | |
COST AND EXPENSES: | | | | | |
Cost of product sales | | 53,031 | | 68,691 | |
Research and development | | 14,624 | | 18,124 | |
Sales and marketing | | 5,774 | | 6,849 | |
General and administrative | | 6,304 | | 9,180 | |
| | | | | |
Total costs and expenses | | 79,733 | | 102,844 | |
| | | | | |
OPERATING INCOME | | 5,077 | | 24,273 | |
| | | | | |
OTHER INCOME (EXPENSE): | | | | | |
Foreign currency exchange gain (loss) - net | | (194 | ) | 619 | |
Interest and other income | | 2,401 | | 6,986 | |
Interest and other expense | | (2,127 | ) | (1,402 | ) |
| | | | | |
Total other income - net | | 80 | | 6,203 | |
| | | | | |
INCOME BEFORE INCOME TAX PROVISION AND MINORITY INTEREST | | 5,157 | | 30,476 | |
| | | | | |
INCOME TAX PROVISION | | — | | 10,554 | |
MINORITY INTEREST | | 228 | | 681 | |
| | | | | |
NET INCOME | | $ | 5,385 | | $ | 20,603 | |
| | | | | |
EARNINGS PER SHARE: | | | | | |
Basic earnings per share | | $ | 0.15 | | $ | 0.55 | |
Weighted average common shares outstanding-basic | | 36,884 | | 37,278 | |
| | | | | |
Diluted earnings per share | | $ | 0.14 | | $ | 0.52 | (a) |
Weighted average common shares outstanding-diluted | | 37,230 | | 41,126 | (a) |
| | | | | | | | | |
(a) As a result of applying the if-converted method for calculating diluted earnings per share, shares have been adjusted by an additional 2.8 million assuming conversion of our 3.5% convertible subordinated notes, and net income has been adjusted by $873,000 for an add back of related interest expense, net of tax.
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CYMER REPORTS FIRST QUARTER 2006 OPERATING RESULTS
CYMER, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
| | December 31,
2005 | | March 31,
2006 | |
ASSETS | | | | | |
| | | | | |
CURRENT ASSETS: | | | | | |
Cash and cash equivalents | | $ | 233,745 | | $ | 269,937 | |
Short-term investments | | 130,204 | | 151,213 | |
Accounts receivable - net | | 89,818 | | 111,571 | |
Accounts receivable - related party | | 588 | | 2,789 | |
Foreign currency forward exchange contracts | | 1,776 | | 276 | |
Inventories | | 89,046 | | 101,252 | |
Deferred income taxes | | 33,338 | | 33,855 | |
Prepaid expenses and other assets | | 6,497 | | 5,963 | |
| | | | | |
Total current assets | | 585,012 | | 676,856 | |
| | | | | |
PROPERTY AND EQUIPMENT - NET | | 117,251 | | 115,252 | |
LONG TERM INVESTMENTS | | 29,395 | | 29,369 | |
DEFERRED INCOME TAXES | | 34,429 | | 29,603 | |
GOODWILL - NET | | 8,358 | | 8,833 | |
INTANGIBLE ASSETS - NET | | 10,474 | | 9,839 | |
OTHER ASSETS | | 6,457 | | 6,116 | |
| | | | | |
TOTAL ASSETS | | $ | 791,376 | | $ | 875,868 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
CURRENT LIABILITIES: | | | | | |
Accounts payable | | $ | 17,710 | | $ | 23,911 | |
Accounts payable - related party | | 4,975 | | 4,157 | |
Accrued warranty and installation | | 30,775 | | 31,666 | |
Accrued payroll and benefits | | 12,461 | | 14,003 | |
Accrued patents, royalties and other fees | | 7,180 | | 6,214 | |
Income taxes payable | | 7,268 | | 1,135 | |
Unearned income | | 1,726 | | 1,782 | |
Accrued and other current liabilities | | 3,247 | | 2,130 | |
| | | | | |
Total current liabilities | | 85,342 | | 84,998 | |
| | | | | |
CONVERTIBLE SUBORDINATED NOTES | | 140,722 | | 140,722 | |
OTHER LIABILITIES | | 10,582 | | 12,478 | |
| | | | | |
Total liabilities | | 236,646 | | 238,198 | |
| | | | | |
MINORITY INTEREST | | 16,276 | | 9,046 | |
| | | | | |
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 38,036,000 and 39,869,000 shares | | 38 | | 40 | |
Additional paid-in capital | | 407,549 | | 474,312 | |
Treasury stock at cost (1,943,000 common shares) | | (50,000 | ) | (50,000 | ) |
Accumulated other comprehensive loss | | (9,025 | ) | (6,223 | ) |
Retained earnings | | 189,892 | | 210,495 | |
| | | | | |
Total stockholders’ equity | | 538,454 | | 628,624 | |
| | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 791,376 | | $ | 875,868 | |
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CYMER REPORTS FIRST QUARTER 2006 OPERATING RESULTS
CYMER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
| | For the three months
ended March 31 | |
| | 2005 | | 2006 | |
| | | | | |
OPERATING ACTIVITIES: | | | | | |
Net income | | $ | 5,385 | | $ | 20,603 | |
Adjustments to reconcile net income to net cash | | | | | |
provided by operating activities: | | | | | |
Depreciation and amortization | | 7,264 | | 6,484 | |
Non-cash stock based compensation | | 152 | | 2,519 | |
Amortization of unearned compensation | | 16 | | — | |
Minority interest | | (228 | ) | (681 | ) |
Provision for deferred income taxes | | 89 | | 4,230 | |
Loss on disposal or impairment of property and equipment | | 2 | | 6 | |
Change in assets and liabilities: | | | | | |
Accounts receivable - net | | 30,988 | | (21,753 | ) |
Accounts receivable - related party | | — | | (2,201 | ) |
Foreign currency forward exchange contracts | | (1,898 | ) | 1,636 | |
Inventories | | 7,361 | | (12,206 | ) |
Prepaid expenses and other assets | | 160 | | 680 | |
Accounts payable | | 891 | | 6,201 | |
Accounts payable - related party | | — | | (818 | ) |
Accrued and other liabilities | | (5,194 | ) | 2,246 | |
Unearned income | | 774 | | 56 | |
Income taxes payable | | (1,289 | ) | (6,133 | ) |
| | | | | |
Net cash provided by operating activities | | 44,473 | | 869 | |
| | | | | |
INVESTING ACTIVITIES: | | | | | |
Acquisition of property and equipment | | (5,180 | ) | (3,661 | ) |
Purchases of investments | | (141,521 | ) | (54,484 | ) |
Proceeds from sold or matured investments | | 133,719 | | 33,572 | |
Acquisition of minority interest | | — | | (7,024 | ) |
| | | | | |
Net cash used in investing activities | | (12,982 | ) | (31,597 | ) |
| | | | | |
FINANCING ACTIVITIES: | | | | | |
Proceeds from issuance of common stock | | 1,557 | | 54,090 | |
Excess tax benefits from equity-based compensation plans | | — | | 10,154 | |
Payments on capital lease obligations | | (12 | ) | — | |
Purchase of treasury stock | | (8,287 | ) | — | |
| | | | | |
Net cash provided by (used in) financing activities | | (6,742 | ) | 64,244 | |
| | | | | |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | 484 | | 2,676 | |
| | | | | |
NET INCREASE IN CASH AND CASH EQUIVALENTS | | 25,233 | | 36,192 | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD | | 114,246 | | 233,745 | |
| | | | | |
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD | | $ | 139,479 | | $ | 269,937 | |
| | | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | |
Interest paid | | $ | 3,627 | | $ | 2,522 | |
Income taxes paid, net | | $ | 1,356 | | $ | 1,536 | |
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