Credence Narrows Loss, CEO Steps Down

By Ann Steffora Mutschler -- Electronic News, 12/7/2006

Milpitas, Calif.-based automatic test equipment supplier Credence Systems Corp. reported sales for its fiscal Q4 ended October 31, were $121.9 million, up 11 percent from $109.6 million in fiscal Q3 and up slightly from $121.6 million in fiscal Q4 2005.

At the same time, former Cadence Design Systems executive Lavi Lev has been appointed president and CEO, succeeding Dave Ranhoff who has stepped down.

Lev brings more than 20 years of experience in the design tool and semiconductor industries at companies including National Semiconductor, Intel, Sun Microsystems, Silicon Graphics, MIPS Technologies and Cadence. Most recently he served as executive VP and general manager of the products and solution business at Cadence.

Dave House, executive chairman of Credence said in a statement, “Lavi Lev is the right person to lead Credence at this time as it begins its next phase of development. While Dave Ranhoff successfully completed the integration of recent acquisitions and aligned the company on a profitable business model, it is now time to focus on the next phase that of building the products that will expand our businesses. Lavi's background in both the design tool and semiconductor businesses and his experience in product development, management and business development will serve Credence's customers, employees and investors well as we address the design-to-production test challenges faced by our customers today.”

Credence’s orders for fiscal Q4 were $120.7 million, corresponding to a book to bill ratio of 0.99.

Net loss for the quarter was $1.9 million or 2 cents 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 fiscal Q4 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 million of convertible notes.

Net loss in fiscal Q4 2005 was $22.5 million or 23 cents net loss per share.

For the full fiscal year, Credence’s sales were $474.4 million, 11 percent higher than $429.3 million in fiscal 2005.

The net loss for the fiscal year 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.

Looking ahead to fiscal Q1 2007, Credence expects sales to be approximately $118 to $122 million, with earnings per share on a GAAP basis in the range of zero to 2 cents.