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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DECEMBER 8, 1998
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Date of Report (Date of earliest event reported)
CREDENCE SYSTEMS CORPORATION
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(Exact name of registrant as specified in charter)
DELAWARE 0-22366 94-2878499
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
215 FOURIER AVENUE, FREMONT, CALIFORNIA 94539
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 657-7400
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N/A
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On December 8, 1998, the Registrant issued a press release reporting
the financial results for the fourth fiscal quarter and fiscal year ended
October 31, 1998 and a press release reporting the resignation of its Chairman
and Chief Executive Officer.
Item 7. Exhibits.
Copies of the Registrant's December 8, 1998 press releases announcing
its financial results for the fiscal quarter and fiscal year ended October 31,
1998 and the resignation of its Chairman and Chief Executive Officer are
attached hereto as Exhibits 99.1 and 99.2, respectively, and incorporated herein
by reference.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CREDENCE SYSTEMS CORPORATION
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(Registrant)
Date: December 8, 1998 By /s/ Dennis P. Wolf
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Name: Dennis P. Wolf
Title: Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit No. Description Page
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99.1 Press Release disseminated on December 8,
1998
regarding the Registrant's financial results
for the fiscal quarter and fiscal year ended
October 31, 1998.
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99.2 Press Release disseminated on December 8,
1998
regarding the resignation of the
Registrant's Chairman and Chief Executive
Officer.
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
NEWS RELEASE
For More Information Contact:
Mr. Dennis Wolf David Ranhoff
Executive Vice President Executive Vice President
(510) 657-7400 (510) 657-7400
CREDENCE SYSTEMS REPORTS RESULTS FOR
FOURTH QUARTER AND FISCAL YEAR 1998
FREMONT, Calif.--December 8, 1998--Credence Systems Corporation (Nasdaq
NMS: CMOS) today reported results for its fiscal fourth quarter and year ended
October 31, 1998. Net sales for the fourth quarter of fiscal 1998 were $22.4
million, a decrease of 68 percent from the net sales of $69.4 million in the
fourth quarter of fiscal 1997. Sales for fiscal 1998 were $216.8 million, an
increase of 6 percent over fiscal 1997. The net loss for the fourth quarter of
fiscal 1998 was $10.7 million or $0.51 per diluted share with 20,963,000
weighted average shares outstanding compared to net income of $7.3 million
during the fiscal 1997 fourth quarter or $0.32 per diluted share with 22,835,000
weighted average shares outstanding. The net loss for fiscal 1998 was $26.3
million or $1.22 per diluted share with 21,533,000 weighted average shares
outstanding, compared to net income of $10.7 million or $0.47 per diluted share
with 22,513,000 weighted average shares outstanding in fiscal 1997.
Included in the loss in the Company's recent fourth quarter are $9.4
million in special charges consisting of asset write-downs and reserves which
the Company recorded due to the continued weakness in demand for the Company's
systems and services resulting from the slowdown in the semiconductor industry.
During the fourth quarter of fiscal 1998, the Company also reduced its estimate
of the in-process research and development ("IPR&D") charge attributable to the
third quarter acquisition of selected assets of Heuristics Physics Laboratories,
Inc., and reduced the charge it took for IPR&D by approximately $2.8 million to
a net year to-date
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CREDENCE SYSTEMS REPORTS RESULTS FOR FOURTH QUARTER AND FISCAL YEAR 1998
PAGE 2
charge of approximately $2.0 million. This was done in response to the
Securities and Exchange Commission's new guidance released during the fourth
fiscal quarter concerning IPR&D charges. The Company's net loss in the fourth
fiscal quarter of 1998, excluding these $9.4 million in special charges and the
$2.8 million reduction of IPR&D charges and assuming a 35% tax benefit, would
have been approximately $8.1 million or $0.38 per diluted share. The Company's
results for the full 1998 fiscal year excluding these $9.4 million in special
charges in the fourth fiscal quarter, the $39.3 million in special charges taken
in the third fiscal quarter and the $2.0 million net charge in 1998 for IPR&D,
and assuming a 35% tax rate, would have been approximately $6.6 million or $0.30
per diluted share.
Credence's executive vice president and chief financial officer, Dennis
Wolf, said, "This has been a very trying year for Credence and the industry as a
whole. Despite encountering a steep downturn in our industry, we continued to
invest in our new products while significantly reducing operating expenses."
Credence's executive vice president, David Ranhoff added, "While we felt
the full impact of the capital equipment slowdown, we believe our products are
targeted for growth when the market recovers."
Credence Systems Corporation is a leader in the manufacture of automatic
test equipment (ATE) for the worldwide semiconductor industry. Credence offers
a wide range of products with test capabilities for digital, mixed-signal, and
memory semiconductors. Utilizing its proprietary CMOS technologies, Credence
products are designed to meet the strict time-to-market and ownership
requirements of its customers.
Headquartered in Fremont, California, the Company maintains advanced
production and design facilities in Beaverton, Oregon. Credence, an ISO 9001
certified manufacturer, is listed on the Nasdaq National Market under the symbol
CMOS. More information is available at www.credence.com.
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CREDENCE SYSTEMS REPORTS RESULTS FOR FOURTH QUARTER AND FISCAL YEAR 1998
PAGE 3
Statements in this release that are forward looking involve known and
unknown risks and uncertainties, which may cause the Company's actual results
in future periods to be materially different from the future performance that
may be suggested in this release. Such factors include, but are not limited to,
economic and currency instability in the Asia Pacific region, fluctuation in
customer demand, timing and volume of orders and shipments, competition and
pricing pressures, reliability and quality issues, product mix, underabsorption
of overhead, cyclicality and downturns in the semiconductor industry, continued
dependence on "turns" orders to achieve revenue objectives, the Company's
ability to have an appropriate amount of production capacity in a timely manner,
the timing of new technology, product introductions and the risk of early
obsolescence, the Company's ability to hire and retain key employees and the
Company's ability to finalize and implement a complete expense reduction plan
(including the ability to identify and successfully institute additional cost-
saving measures).
Further, the Company operates in an industry sector where securities values
are highly volatile and may be influenced by economic and other factors beyond
the Company's control. Reference is made to the discussion of risk factors
detailed in the Company's filings with the Securities and Exchange Commission,
including its reports on Form 10-K and 10-Q. The Company assumes no obligation
to update the information in this press release.
Credence, Credence Systems, ValStar, Kalos, and Quartet are trademarks of
Credence Systems Corporation. Other trademarks which may be mentioned in this
release are the intellectual property of their respective owners.
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CREDENCE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
(unaudited) (unaudited)
Three Months Prior Quarter
Ended Ended Fiscal Year Ended
October 31 July 31 October 31
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1998 1997 1998 1998 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales $ 22,446 $ 69,394 $ 37,322 $ 216,803 $ 204,092
Cost of goods sold - 13,001 30,505 16,901 97,004 89,956
on net sales
Cost of goods sold -
special charges 7,400 -- 20,952 28,352 --
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Gross margin 2,045 38,889 (531) 91,447 114,136
Operating expenses:
Research and 10,191 10,334 11,569 47,484 37,350
development
Selling, general and 11,925 17,752 13,987 64,151 55,701
In-process research
and development (2,840) -- 4,838 1,998 6,022
Special charges 2,000 -- 18,386 20,386 --
--------- --------- --------- --------- ---------
Total operating expenses 21,276 28,086 48,780 134,019 99,073
========= ========= ========= ========= =========
Operating income (loss) (19,231) 10,803 (49,311) (42,572) 15,063
Interest and other income
(expenses), net 151 255 (7) 1,302 3,167
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Income (loss) before
income taxes (19,080) 11,058 (49,318) (41,270) 18,230
Income taxes (8,327) 3,804 (15,682) (14,785) 7,531
Minority interest (79) 4 (50) (203) 6
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Net income (loss) ($ 10,674) $ 7,250 ($ 33,586) ($ 26,282) $ 10,693
========= ========= ========= ========= =========
Net income (loss) per share/1/
Basic ($0.51) $0.33 ($1.55) ($1.22) $0.49
========= ========= ========= ========= =========
Diluted ($0.51) $0.32 ($1.55) ($1.22) $0.47
========= ========= ========= ========= =========
Number of shares used in
computing per share amount/1/
Basic 20,963 21,949 21,674 21,533 21,865
========= ========= ========= ========= =========
Diluted 20,963 22,835 21,674 21,533 22,513
========= ========= ========= ========= =========
</TABLE>
/1/Income (loss) per share amounts for the periods ended October 31, 1997 have
been restated to reflect the Company's adoption of Financial Accounting Standard
No. 128.-
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CREDENCE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
Prior Quarter
October 31, July 31, October 31,
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1998 1998 1997
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unaudited
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $48,391 $55,621 $132,761
Restricted cash 2,400 4,600 10,002
Short-term investments 62,777 75,826 35,013
Accounts receivable, net 33,901 53,059 55,246
Inventories 37,406 36,311 42,125
Other current assets 40,676 29,855 13,001
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Total current assets 225,551 255,272 288,148
Long-term investments 20,357 27,207 8,561
Property and equipment, net 41,764 40,428 43,050
Other assets 18,517 17,066 18,382
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Total assets $306,189 $339,973 $358,141
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $8,090 $13,225 $13,182
Accrued liabilities 26,978 28,613 20,346
Income taxes payable 5,877 2,317 4,284
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Total current liabilities 40,945 44,155 37,812
Convertible subordinated notes payable 115,000 115,000 115,000
Minority interest 227 231 418
Stockholders' equity 150,017 180,587 204,911
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Total liabilities and stockholders' equity $306,189 $339,973 $358,141
======== ======== ========
</TABLE>
####
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EXHIBIT 99.2
FOR IMMEDIATE RELEASE
NEWS RELEASE
For More Information Contact:
Dennis Wolf Dave Ranhoff
Executive Vice President Executive Vice President
(510) 657-7400 (510) 657-7400
CREDENCE SYSTEMS CORPORATION ANNOUNCES RESIGNATION OF
WILMER BOTTOMS AS CHAIRMAN, DIRECTOR AND CHIEF EXECUTIVE OFFICER
FREMONT, Calif.--December 8, 1998--Credence Systems Corporation ("Credence"
or the "Company") (Nasdaq NMS: CMOS) announced the resignation of Wilmer
Bottoms, as chairman of the board of directors, board member, and chief
executive officer effective today. The Company also formed a new office of the
president and has appointed Dennis Wolf, its executive vice president and chief
financial officer, and David Ranhoff, its executive vice president, to hold such
office until a new chief executive officer is named. The Company also named
William Howard as Chairman of the Board of Directors. The Company is launching
a search for a chief executive officer.
Dr. Howard, the newly appointed Chairman of the Board of Credence,
commented that "Credence, its employees and stockholders have benefited greatly
from the many significant contributions Bill Bottoms has made to the Company
during the past fifteen years. I'm very confident that the new product
positioning and experienced management team currently in place will provide the
elements for continued success."
Dr. Howard has served as a Director of the Company since February 1995. He
held various management positions at Motorola, Inc. between 1969 to 1987, most
recently as Senior Vice President and Director of Research and Development. Dr.
Howard was a Senior Fellow at the National Academy of Engineering conducting
studies of technology management. Dr. Howard serves on the Board of Directors
of VLSI Technology, Inc., BEI Electronics, Inc., Ramtron International, Inc. and
Xilinx, Inc. as well as several private companies.
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