SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
AUGUST 18, 1998
_____________________________________
Date of Report (Date of earliest event reported)
CREDENCE SYSTEMS CORPORATION
_____________________________________
(Exact name of registrant as specified in its charter)
Delaware 000-22366 94-2878499
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(State of incorporation (Commission (IRS Employer
or organization) 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
------------------
NONE
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Former name or former address, if changed since last report.
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ITEM 5. OTHER EVENTS
On August 18, 1998, Registrant issued a press release reporting the
financial results for its third quarter ended July 31, 1998.
ITEM 7. EXHIBITS
A copy of the Registrant's press release announcing its financial results
for the third quarter ended July 31, 1998 is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, as
amended, the registrant duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
CREDENCE SYSTEMS CORPORATION
--------------------------------------------
(Registrant)
August 19, 1998 /s/ DENNIS P. WOLF
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Date Dennis P. Wolf
Senior Vice President,
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description
------- -----------
99.1 Press Release disseminated August 18, 1998 regarding
the Registrant's financial results for the third quarter
ended July 31, 1998.
EXHIBIT 99.1
[LETTERHEAD OF CREDENCE SYSTEMS CORPORATION]
FOR IMMEDIATE RELEASE
NEWS RELEASE
------------
For More Information Contact:
Dr. Wilmer Bottoms Mr. Dennis Wolf
Chief Executive Officer Chief Financial Officer
(510) 657-7400 (510) 657-7400
CREDENCE SYSTEMS REPORTS RESULTS FOR FISCAL 1998 THIRD QUARTER
FREMONT, Calif.--August 18, 1998--Credence Systems Corporation (Nasdaq NMS:
CMOS) today reported results for its fiscal third quarter which ended July 31,
1998. Net sales for the third quarter of fiscal 1998 were $37.3 million, a
decrease of 27 percent from the net sales of $51.1 million in the third quarter
of fiscal 1997. The net loss for the third quarter of fiscal 1998 totaled $33.6
million or $1.55 per share compared to a net loss during the third quarter of
fiscal 1997 of $897,000 or $0.04 per share. Of the $33.6 million net loss during
the Company's most recent quarter, $25.6 million is due to a one-time charge
associated with costs relating to facilities, severance and asset writedowns and
reserves to restructure the company and reflect the recent slowdown in the
Company's business. An additional one-time charge of $4.7 million is related to
the purchase of in-process research and development attributable to the
acquisition of assets of two of Heuristic Physics Laboratories, Inc. divisions.
The net loss for the third quarter of fiscal 1998 without one time charges
totaled $3.3 million or $0.15 per share.
Credence's chairman and chief executive officer, Dr. Wilmer Bottoms, said,
"This has been a very difficult quarter for Credence and the industry as a
whole. Throughout the quarter the business outlook continued to deteriorate and
did not allow sufficient response time to avoid an operating loss despite the
significant actions taken."
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CREDENCE SYSTEMS REPORTS RESULTS FOR FISCAL 1998 THIRD QUARTER Page 2
Dr. Bottom's continued, "During the first half of our fiscal year 1998, we
experienced almost a doubling of revenue from the same period last year, and we
invested in inventory and capability to take advantage of this opportunity.
However, this has been followed by an even more dramatic reduction in revenue
during Q3. This ramp up of production capacity and subsequent drop in demand
occurred during an almost complete rollover of our product lines as more new
products, than at any time in our history, were introduced. This resulted in a
significant inventory exposure, and, accordingly, we are taking appropriate
measures. In order to bring operating expenses in line with revenue during this
downturn, we have tightened the focus of our investments to include only
projects that are essential to our long-term growth and short-term revenue
objectives and, consequently, have taken charges against non-essential project
expenditures and excess facilities."
Dr. Bottom's added, "In spite of industry conditions, our new products are
being well received. During the quarter, we realized revenue on three products
introduced this year: ValStar, Kalos, and BTMA-2001. We also shipped our first
Triton for domestic production. At Semicon West last month, we introduced our
new Quartet series which has been given high acclaim. All of these new products
are designed to support revenue growth for Credence if and when industry growth
resumes."
Dr. Bottom's concluded, "The Board of Directors has authorized a stock
repurchasing program for up to $20 million in value of our common stock. We plan
to purchase these shares in the open market at prevailing prices and believe
this to be a very sound investment on behalf of our shareholders."
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 patented CMOS technologies, Credence
products are designed to meet the strict time-to-market and cost of ownership
requirements of its customers.
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CREDENCE SYSTEMS REPORTS RESULTS FOR FISCAL 1998 THIRD QUARTER Page 3
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.
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 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 as well as
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, Triton, ValStar, Kalos, BTMA-2001 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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<TABLE>
<CAPTION>
CREDENCE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
Three Months Prior Quarter Nine Months
Ended Ended Ended
July 31, April 30, July 31,
--------------------- ------------- ---------------------
1998 1997 1998 1998 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales $ 37,322 $ 51,082 $ 74,660 $194,357 $134,698
Cost of goods sold - on 16,901 21,638 31,664 84,003 59,451
net sales
Cost of goods sold - 20,952 -- -- 20,952 --
restructure and other
--------- --------- --------- --------- ---------
Gross margin (531) 29,444 42,996 89,402 75,247
Operating expenses:
Research and development 11,569 9,257 12,233 37,293 27,016
Selling, general and 13,987 14,529 17,931 52,226 37,949
administrative
In-process research and 4,838 6,022 -- 4,838 6,022
development
Restructure and other 18,386 -- -- 18,386 --
--------- --------- --------- ---------- ---------
Total operating 48,780 29,808 30,164 112,743 70,987
expenses
--------- --------- --------- ---------- ---------
Operating income (loss) (49,311) (364) 12,832 (23,341) 4,260
Interest and other
income (expenses), net (7) 1,011 200 1,151 2,912
--------- --------- --------- ---------- ---------
Income (loss) before (49,318) 647 13,032 (22,190) 7,172
income taxes
Income taxes (15,682) 1,542 4,290 (6,458) 3,727
Minority interest (50) 2 (45) (124) 2
--------- --------- --------- ---------- ---------
Net income (loss) ($33,586) ($897) $ 8,787 ($15,608) $ 3,443
========= ========= ========= ========== =========
Net income (loss) per
share/1/
Basic ($1.55) ($0.04) $ 0.41 ($0.72) $0.16
========= ========= ========= ========== =========
Diluted ($1.55) ($0.04) $ 0.40 ($0.72) $0.15
========= ========= ========= ========== =========
Number of shares used in
computing per share
amount/1/
Basic 21,674 21,873 21,634 21,726 21,813
========= ========= ========= ========== =========
Diluted 21,674 21,873 22,146 21,726 22,323
========= ========= ========= ========== =========
</TABLE>
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/1/ Income(loss) per share amounts for the periods ended July 30, 1997 have been
restated to reflect the Company's adoption of Financial Accounting Standard No.
128.
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<TABLE>
<CAPTION>
CREDENCE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Prior Quarter
July 31, April 30, October 31,
--------- ------------- -----------
1998 1998 1997
--------- --------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 55,621 $ 65,841 $132,761
Restricted cash 4,600 5,012 10,002
Short-term investments 75,826 78,313 35,013
Accounts receivable, net 53,059 60,770 55,246
Inventories 36,311 52,723 42,125
Other current assets 29,855 13,900 13,001
--------- --------- ---------
Total current assets 255,272 276,559 288,148
Long-term investments 27,207 27,980 8,561
Property and equipment, net 40,428 45,930 43,050
Other assets 17,066 19,466 18,382
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Total assets $339,973 $369,935 $358,141
========= ========= =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 13,225 $ 12,935 $ 13,182
Accrued liabilities 28,613 24,343 20,346
Income taxes payable 2,317 4,331 4,284
--------- --------- ---------
Total current liabilities 44,155 41,609 37,812
Convertible subordinated notes payable 115,000 115,000 115,000
Minority interest 231 312 418
Stockholders' equity 180,587 213,014 204,911
--------- --------- ---------
Total liabilities and stockholders' equity $339,973 $369,935 $358,141
========= ========= =========
</TABLE>
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