Rudolph Technologies Reports Record 2012 Year End Results

  Rudolph Technologies Reports Record 2012 Year End Results

Record Revenue of $218 Million for 2012 Driven by Major Foundry and Outsourced
                         Assembly and Test Customers;

     Fourth Quarter Revenue of $54.3 Million Up 25 Percent Year-Over-Year

Business Wire

FLANDERS, N.J. -- February 4, 2013

Rudolph Technologies, Inc. (Nasdaq: RTEC), a leading provider of process
characterization equipment and software for wafer fabs and advanced packaging
facilities, today announced financial results for the fourth quarter and year
ended 2012.

2012 Fourth Quarter and Year End Highlights:

  *Full year revenue of $218.5 million increased 17 percent, compared to
    $187.2 million in 2011, and well ahead of the overall semiconductor
    capital equipment industry performance.
  *Fourth quarter revenue of $54.3 million increased 25 percent compared to
    $43.6 million in the 2011 fourth quarter, and down from $62.2 million in
    the 2012 third quarter.
  *Fourth quarter GAAP net income of $29.0 million, or $0.88 per diluted
    share, included reversal of tax valuation allowance of $23.3 million.
    Non-GAAP earnings per diluted share were $0.17.
  *Gross margins continued strong at 53 percent for the fourth quarter and
    for the full year.
  *Cash from operations totaled $22.1 million for 2012.

2012 Business Highlights:

  *In mid-December Rudolph acquired Azores Corp., an established provider of
    precision photolithography steppers for the flat panel industry, and
    entered the semiconductor back-end lithography market with a disruptive
    innovation for the Advanced Packaging market. Rudolph’s total lithography
    system contains established hardware and software solutions including the
    JetStep™ - a revolutionary 2X reduction stepper.
  *Rudolph’s yield management system was chosen for the manufacture of high
    definition displays in mobile devices.
  *Rudolph’s MetaPULSE^® system was selected for advanced packaging R&D.
  *Rudolph delivered new metal film metrology capability to the mobile
    display market.
  *In late June, Rudolph acquired NanoPhotonics, adding new technologies to
    enhance the Company’s inspection products in the high-growth Advanced
    Packaging market.

Industry Leading Position in Advanced Packaging Fuels Record Revenue for 2012
“2012 was an exceptional year for Rudolph Technologies,” commented Paul F.
McLaughlin, Chairman and Chief Executive Officer, “and we closed the year
having delivered solid operating results and wins on a number of fronts. Our
leading position in the Advanced Packaging market helped to fuel record yearly
revenue of $218 million, for a double-digit increase of 17 percent
year-over-year. In addition, on a GAAP basis, we grew 2012 operating income by
60 percent, net income increased 75 percent, and earnings per diluted share of
$1.34 increased 72 percent as compared with $0.78 for 2011. Rudolph’s
record-setting results for the year were achieved despite the well-documented
softness in both front-end and back-end capital equipment spending in the
second half of 2012.”

Strategically Positioned in High-Growth Advanced Packaging Market
“Our vision is focused on further strengthening Rudolph Technologies’ position
as an industry-leading provider of process characterization solutions for both
the front-end and back-end of the semiconductor fabrication process,” added
Mr. McLaughlin. “Through strategic innovation and positioning, we have rapidly
become a key player in the emerging high-growth Advanced Packaging market,
which is a significant financial driver for Rudolph’s market share expansion.
In 2012 our two acquisitions bolstered our position in this high-growth
market. We acquired IP-rich NanoPhotonics GmbH in late June, which brought new
technologies to the Rudolph product suite, adding inspection capability for
new markets in unpatterned wafer inspection, specifically wafer manufacturing
and mask blank inspection markets. In addition, we further expanded Rudolph
with the mid-December acquisition of Azores Corp., which enabled us to enter
the back-end lithography market with a breakthrough total solution for the
Advanced Packaging market. Leveraging Rudolph’s extensive experience supplying
process control solutions in that market, we now deliver an innovative
capability that is required for many of the new Advanced Packaging processes
currently being developed. Our “Total Lithography Solution” delivers
capability that is unique to Advanced Packaging requirements and features our
new JetStep™ 2X stepper, the first of which is already installed at a leading
OSAT.”

Mr. McLaughlin concluded, “Rudolph utilizes a highly strategic diversification
strategy that enables us to serve multiple markets, all with above-average
growth opportunities – and we enjoy the #1 or #2 market share position in most
markets we serve. The new Rudolph benefits from a hybrid business model of
front-end and back-end exposure, which enables the Company to mitigate the
inherent cyclicality associated with the routine ebb-and-flow of the
semiconductor capital equipment industry. By summer 2012, the front-end
industry was experiencing a slowdown, while the back-end market was
experiencing growth from a strong mobile products market. Our unique front-end
and back-end business model gave rise to Rudolph’s back-end customer solutions
making significant contributions to the Company’s overall growth in 2012.
However, despite holiday sales starting off on a high note, there was a drop
in consumer confidence combined with fiscal cliff issues that drove a slow
finish to results at year end. Back-end bookings for the industry as whole
declined to new cycle lows late in December. Nonetheless, Rudolph’s revenues
from our back-end customers grew from 29 percent in 2011 to 43 percent in 2012
as our expanding suite of Advanced Packaging solutions garnered increasing
traction at foundry, OSAT, IDM and fabless companies. Recent stronger than
expected capex spending has been forecast from several of the top chip
manufacturers and it is widely anticipated that orders will rebound in the
second half of 2013 for the front-end, with potential further upside if NAND
capacity is needed for new mobile consumer devices. The back-end market is
providing substantial long-term growth opportunities for Rudolph and is
off-cycle to our front-end markets; and in fact we see back-end business
strengthening in the normally stronger second and third quarters. We believe
that Rudolph has demonstrated its ability to outperform in the current
semiconductor capital equipment market slow down; and we are uniquely
positioned to deliver notably more shareholder value in the impending up cycle
in our markets.”

Fourth Quarter 2012 and Full Year Financial Results
Fourth quarter revenue totaled $54.3 million, an increase of 25 percent
compared to revenue of $43.6 million in the 2011 fourth quarter and a 13
percent decrease compared with $62.2 million for the 2012 third quarter. The
Azores acquisition in the fourth quarter had an immaterial impact on revenue.
For the full year, revenues totaled $218.5 million, an increase of 17 percent
compared to $187.2 million for 2011.

During the fourth quarter, international sales represented approximately 70
percent of revenue, while domestic sales accounted for 30 percent. In the 2012
third quarter, international sales represented approximately 88 percent of
revenue and domestic sales accounted for 12 percent. Revenue from front-end
semiconductor customers accounted for approximately 62 percent of revenue and
back-end customers accounted for 38 percent in the 2012 fourth quarter.

Gross margin was 53 percent of revenues in both the 2012 third and fourth
quarters. In the fourth quarter, gross margin was impacted by lower software
revenue, but that decrease was offset by stronger customer service margins in
the quarter.

Operating expenses for the fourth quarter of 2012 totaled $21.2 million, an
increase of $0.1 million from $21.1 million in the 2012 third quarter. R&D
expenses for the fourth quarter totaled $9.9 million, compared with $10.2
million in the 2012 third quarter. S,G&A expenses for the fourth quarter
totaled $10.8 million, compared with $10.3 million in the third quarter of
2012. The increase in operating expenses is primarily due to an increase in
compensations costs, mainly commissions, offset by lower projects cost for the
quarter.

GAAP net income for the fourth quarter of 2012 was $29.0 million, or $0.88 per
diluted share, compared with net income of $6.7 million or $0.20 per diluted
share, for the third quarter of 2012. The fourth quarter results were
positively impacted by the reversal of tax valuation allowances against the
Company’s deferred tax assets and other tax adjustments. Also impacting the
quarter were costs associated with patent lawsuits, the Azores acquisition and
share based compensation, which negatively impacted the financial results.
Excluding the impact of the above items, which totaled $23.3 million or $0.71
per diluted share, the fourth quarter non-GAAP net income was $5.7 million, or
$0.17 per diluted share. For the full year 2012, GAAP net income totaled $43.9
million or $1.34 per diluted share and non-GAAP net income totaled $24.3
million, or $0.74 per diluted share.

Balance Sheet Strength
At December 31, 2012, cash and marketable securities totaled $169.2 million
and 2012 cash flow from operations totaled $22.1 million. Accounts receivable
increased to $57.1 million and inventory increased to $63.4 million at
year-end, both of which were impacted by the Azores acquisition. Excluding the
acquisition, both accounts receivable and inventory decreased from the
previous quarter. Working capital ended the year at $257.0 million.

Conference Call
Rudolph Technologies will discuss its 2012 fourth quarter results on a
conference call it is hosting today at 5:00 PM EST. To access the live
conference call, please dial (888) 603-6873 and reference Conference ID#
90934149. A live audio webcast will also be available to investors on the
Company’s website at www.rudolphtech.com. To listen to the live call, please
go to the website at least fifteen minutes early to register, download and
install any necessary software. A digital replay of the conference call will
be available on Rudolph’s website for one week following the live broadcast.

Discussion of Non-GAAP Financial Measures
In this press release, we have presented financial measures, which have not
been determined in accordance with generally accepted accounting principles
(GAAP) and are therefore non-GAAP financial measures. Non-GAAP financial
measures exclude the impact of litigation fees, acquisition related costs, the
establishment of a charitable gift program, and share-based compensation. We
believe that this presentation of non-GAAP financial measures allows investors
to better assess the Company’s operating performance by comparing it to prior
periods on a more consistent basis. We have included a reconciliation of
various non-GAAP financial measures to those measures reported in accordance
with GAAP. To that end, non-GAAP financial measures should be evaluated in
conjunction with, and are not a substitute for, GAAP financial measures.
Because our calculation of non-GAAP financial measures may differ from similar
measures used by other companies, investors should be careful when comparing
our non-GAAP financial measures to those of other companies.

About Rudolph Technologies
Rudolph Technologies, Inc. is a worldwide leader in the design, development,
manufacture and support of defect inspection, advanced packaging lithography,
process control metrology, and data analysis systems and software used by
semiconductor device manufacturers worldwide. Rudolph provides a full-fab
solution through its families of proprietary products that provide critical
yield-enhancing information, enabling microelectronic device manufacturers to
drive down the costs and time to market of their products. The Company’s
expanding portfolio of equipment and software solutions is used in both the
wafer processing and final manufacturing of ICs, and in adjacent markets such
as FPD, LED and Solar. Headquartered in Flanders, New Jersey, Rudolph supports
its customers with a worldwide sales and service organization. Additional
information can be found on the Company’s website at www.rudolphtech.com.

Forward Looking Statements
This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 (the “Act”) which include
Rudolph’s business momentum and future growth; the benefit to customers of
Rudolph’s products and customer service; Rudolph’s ability to both deliver
products and services consistent with our customers’ demands and expectations
and strengthen its market position; Rudolph’s expectations regarding
semiconductor market outlook; as well as other matters that are not purely
historical data. Rudolph wishes to take advantage of the “safe harbor”
provided for by the Act and cautions that actual results may differ materially
from those projected as a result of various factors, including risks and
uncertainties, many of which are beyond Rudolph’s control. Such factors
include, but are not limited to, the Company’s ability to leverage its
resources to improve its position in its core markets; its ability to weather
difficult economic environments; its ability to open new market opportunities
and target high-margin markets; and the strength/weakness of the back-end
and/or front-end semiconductor market segments. Additional information and
considerations regarding the risks faced by Rudolph are available in Rudolph’s
Form 10-K report for the year ended December 31, 2011 and other filings with
the Securities and Exchange Commission. As the forward-looking statements are
based on Rudolph’s current expectations, the Company cannot guarantee any
related future results, levels of activity, performance or achievements.
Rudolph does not assume any obligation to update the forward-looking
information contained in this press release.



RUDOLPH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) - (Unaudited)
                                                        
                                       December 31, 2012     December 31, 2011
                                                            (Audited)
                                                             
                                                             
ASSETS
Current assets
Cash and marketable securities         $     169,216         $     167,559
Accounts receivable, net                     57,113                41,036
Inventories                                  63,422                49,501
Prepaid and other assets                    4,301                5,005
Total current assets                         294,052               263,101
Net property, plant and equipment            11,909                12,530
Intangibles                                  23,729                12,306
Other assets                                36,694               17,974
Total assets                           $     366,384         $     305,911
                                                             
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable and accrued           $     15,696          $     12,201
liabilities
Other current liabilities                   21,352               16,656
Total current liabilities                    37,048                28,857
Senior convertible notes                     49,010                46,524
Other non-current liabilities               9,837                8,752
Total liabilities                            95,895                84,133
Stockholders’ equity                        270,489              221,778
Total liabilities and                  $     366,384         $     305,911
stockholders’ equity
                                                                   


RUDOLPH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts) - (Unaudited)
                                                          
                    Three Months Ended              Twelve Months Ended
                    December       December 31,     December       December
                    31,                             31,            31,
                    2012           2011             2012           2011
                                                                   
Revenues            $  54,299      $  43,620        $  218,486     $ 187,196
Cost of               25,736        20,677         102,811      86,843  
revenues
Gross profit          28,563        22,943         115,675      100,353 
Operating
expenses:
Research and           9,901          9,578            39,331        36,298
development
Selling,
general and            10,806         12,740           40,225        40,826
administrative
Amortization          498           425            1,853        1,757   
Total operating       21,205        22,743         81,409       78,881  
expenses
Operating              7,358          200              34,266        21,472
income
Interest               1,097          1,118            4,377         1,925
expense
Other expense         229           101            482          (847    )
(income)
Income (loss)
before income          6,032          (1,019  )        29,407        20,394
taxes
Benefit for           22,964        7,249          14,458       4,832   
income taxes
Net income          $  28,996      $  6,230        $  43,865      $ 25,226  
                                                                   
Net income per
share:
                                                                   
Basic               $  0.90        $  0.20          $  1.36        $ 0.79
Diluted             $  0.88        $  0.19          $  1.34        $ 0.78
                                                                   
Weighted
average shares
outstanding:
                                                                   
Basic                  32,354         31,873           32,226        31,744
Diluted                33,045         32,458           32,853        32,256
                                                                             


RUDOLPH TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts) - (Unaudited)
                                                           
                   Three Months Ended               Twelve Months Ended
                   December 31,     December        December        December
                                    31,             31,             31,
                   2012             2011            2012            2011
                                                                    
GAAP operating     $  7,358         $  200          $ 34,266        $ 21,472
income
Non-GAAP
adjustments:
Establishment
of charitable         —                —              —               500
matching gift
program
Acquisition           508              —              879             —
related (1)
Litigation            638              5,850          2,649           7,888
costs
Share-based          991            1,032        4,001         4,802  
compensation
Total non-GAAP       2,137          6,882        7,529         13,190 
adjustments
Non-GAAP
operating          $  9,495        $  7,082       $ 41,795       $ 34,662 
income
                                                                    
                                                                    
GAAP net           $  28,996        $  6,230        $ 43,865        $ 25,226
income
Total non-GAAP        2,137            6,882          7,529           13,190
adjustments
Income tax
effect of
non-GAAP              (742    )        (351   )       (2,587  )       (1,554 )
adjustments
(2)
Other tax
adjustments          (24,737 )       (7,754 )      (24,540 )      (7,656 )
(3)
Non-GAAP net       $  5,654        $  5,007       $ 24,267       $ 29,206 
income
                                                                    
Net income per
share:
Basic              $  0.17          $  0.16         $ 0.75          $ 0.92
Diluted            $  0.17          $  0.15         $ 0.74          $ 0.91


1) During the three and twelve month periods ended December 31, 2012, the
Company recorded acquisition related expenses of $0.5 million and $0.9
million, respectively, for costs related to the acquisition of Azores Corp.
during the fourth quarter and inventory written up to fair value in purchase
accounting for the year.
2) For the twelve month periods ended December 31, 2012 and 2011, the non-GAAP
adjustments were taxed at a marginal tax rate of 34.3% and 11.8%,
respectively.
3) Represents a tax valuation allowance reversal of $23.3 million and tax
true-up adjustments of $1.3 million recorded during the twelve months ended
December 31, 2012. Represents a tax valuation allowance reversal of $8.4
million, partially offset by tax true-up adjustments of $0.7 million recorded
during the twelve months ended December 31, 2011.

Contact:

Rudolph Technologies, Inc.
Investors:
Steven R. Roth, 973-448-4302
steven.roth@rudolphtech.com
or
Trade Press:
Virginia Becker, 952-259-1647
virginia.becker@rudolphtech.com