Cymer: even success can mean stress

Electronic News, August 11, 1997

San Diego--Cymer, Inc. is on a roll and more investors should participate. To that end, the company, which recently reported very strong second quarter and year-to-date results, said its board has approved a two-for-one split of its common stock.

At the same time, rapid growth is presenting a "significant challenge" to both Cymer and its suppliers, it was noted, as the company strives to fulfill delivery specifications.

Cymer, which is a provider of excimer laser illumination sources for use in deep ultraviolet photolithography systems targeted at the pilot and production segments of the semiconductor manufacturing market, recently reported revenues and earnings for the three-month and six month periods ended June 30, 1997.

For 2Q97, net income was $7.4 million, or 48 cents per share, on revenues of $50.1 million. This, in contrast to net income of $1.2 million, or 13 cents per share, on revenues of $12.0 million, for the quarter ended June 30, 1996. Weighted average shares outstanding at the end of the quarter were 15.3 million versus to 9.7 million a year ago.

For the first six months of 1997, Cymer recorded net income of $11.8 million, or 77 cents per share, on revenues of $87.1 million, compared to net income of $957,000, or 10 cents per share, on revenues of $19.2 million, in the first six months of 1996.

Sequential revenues increased 36 percent from 1Q97 to 2Q97. Product sales revenue for 2Q97 included 117 laser systems for semiconductor photolithography applications, the company said.

Said President/CEO Robert P. Akins: "We believe that we have essentially satisfied our customers' near-term demand to fill their production lines with lasers. Our continued growth rate will be a function of the speed at which our customers ship steppers and scanners to the chip makers as well as our ability to meet their delivery schedules."

The 12-month rolling backlog at June 30, 1997 totaled $122.8 million.

Gross Margin

Gross margin on product sales for 2Q97 was 38 percent compared to 40 percent in 1Q97; for the first six months of 1997, the gross margin on product sales was 39 percent. During the quarter, Cymer made the additional commitments to proactively make certain hardware and software changes to lasers already shipped to customers as a preventive maintenance measure to meet performance levels specified by the company.

"The rapid growth in demand for our products presented a significant challenge to both Cymer and our suppliers," noted Scott Scholler, senior VP, operations. "Understandably, we were learning as we ramped production. Based upon that learning process, we are making appropriate changes. Our customers and our suppliers are very supportive of this activity," said Mr. Scholler.

Bill Angus, CFO, observed that: "These additional specific warranty reserves definitely had an impact on gross margin performance. Without such reserves, the gross margin for the second quarter and six-month periods in 1997 would have been 43 percent and 45 percent respectively."

Operating income for 2Q97 totaled $8.0 million, or 16 percent of revenues, and increased 14 percent over 1Q97.

Meanwhile, Cymer reported that stockholders of record on Aug. 21, 1997 will be issued certificates reflecting the additional shares. These certificates will be distributed on or about Sept. 11, 1997. The split will increase the number of shares of common stock outstanding from approximately 14,253,000 shares to about 28,506,000 shares.

The board authorized the split with the intention of benefiting the stockholders by obtaining wider distribution and improving marketability of the common stock, it was said.

At June 30, 1997, cash, cash equivalents and short-term investments totaled $30 million with a quick ratio of 1.5:1 and a current ratio of 2.1:1. Working capital totaled $78.9 million.

Separately, the company also announced that it has completed the pricing of a private placement of $150 million of its 3 1/2% /7 1/4% Step-Up Convertible Subordinated Notes Due 2004.

Cymer is traded on the Nasdaq stock market under the symbol "CYMI."