Novellus Systems Reports Fourth Quarter and Year-End Results
SAN JOSE, Calif., Feb. 3 /PRNewswire-FirstCall/ -- Novellus Systems, Inc. (Nasdaq: NVLS) today reported operating results for its fourth quarter and year ended December 31, 2009. Net sales for the fourth quarter were $244.2 million, up $67.3 million or 38.1 percent from third quarter 2009 net sales of $176.9 million, and up $55.7 million or 29.6 percent from fourth quarter 2008 net sales of $188.5 million. Net income for the fourth quarter was $35.2 million, or $0.36 per diluted share, up $39.2 million from the third quarter 2009 net loss of $4.0 million, or $0.04 per diluted share, and up $165.4 million from the fourth quarter 2008 net loss of $130.3 million, or $1.36 per diluted share.
Fourth quarter 2009 results of operations include $2.5 million in charges related to the consolidation of manufacturing facilities in our Tualatin, Oregon facility and $1.0 million in additional charges primarily due to reductions in workforce. Fourth quarter 2009 net income without those items was $38.2 million or $0.39 per diluted share. Excluding certain charges and benefits, third quarter 2009 and fourth quarter 2008 net loss was $2.5 million and $20.0 million, respectively, or $0.03 and $0.21 per diluted share, respectively. A reconciliation of non-GAAP operating results to U.S. generally accepted accounting principles ("GAAP") is included below.
Net sales for fiscal year 2009 were $639.2 million, down $371.8 million or 36.8 percent from net sales of $1.01 billion in fiscal year 2008. The net loss for the year was $85.2 million or $0.88 per diluted share compared with fiscal year 2008 net loss of $115.7 million or $1.18 per diluted share.
Fiscal year 2009 results include $42.9 million of other charges. Fiscal year 2009 net loss was $49.1 million or $0.51 per diluted share excluding those items. Excluding certain charges and benefits, fiscal year 2008 net income was $7.1 million or $0.07 per diluted share. A reconciliation of non-GAAP operating results to U.S. GAAP is included below.
Bookings in the fourth quarter were $257.6 million, up $86.1 million and 50.2 percent from third quarter 2009 bookings of $171.5 million. Shipments of $244.5 million in fourth quarter 2009 increased by $79.0 million or 47.8 percent from $165.4 million reported for the third quarter of 2009. Deferred revenue at the end of the fourth quarter was $35.9 million, an increase of $3.6 million or 11.1 percent from $32.3 million at the end of the third quarter of 2009.
Cash, cash equivalents, and short-term investments as of December 31, 2009 were $501.4 million, an increase of $17.8 million or 3.7 percent from the third quarter 2009 ending balance of $483.6 million. Long-term investments and restricted cash and cash equivalents as of December 31, 2009 were $211.9 million, a decrease of $8.3 million or 3.8 percent from the third quarter 2009 ending balance of $220.1 million. During the fourth quarter of 2009, we purchased approximately 0.6 million shares of our common stock, at an average price of $20.76 per share, for $13.1 million.
Richard S. Hill, Chairman and Chief Executive Officer said, "I'm pleased to report that efforts to restore our business model have paid off, and we ended a very difficult year with solid financial performance in the fourth quarter. Our increased operating leverage will enable us to drive for greater profitability cycle to cycle." Hill also added, "We believe the continued momentum behind the recovery in our industry is sustainable, as it is based on the return of fundamental end market demand drivers similar to the ones we saw a decade ago. While the future is never certain, we expect to see continued growth in semiconductor demand, which ultimately drives our business. This demand is being fueled by a worldwide acceleration of information technology infrastructure expansion, including the adoption of Windows 7, massive government spending worldwide to enhance security around the globe, and the rise of the Chinese consumer (who is forecasted to spend nearly four times as much on electronics as the U.S. or European consumer over the next five years). Technology has consistently been a key driver for improvement in the quality of life around the globe, and we believe there is no end in sight to the application of semiconductors to help achieve this goal."
Management uses non-GAAP measures to evaluate operating performance. The presentation of net income (loss) excluding certain charges and benefits and the discussion of revenue on a shipments basis are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. We present net income (loss) on a non-GAAP basis, excluding certain charges and benefits, because we believe this helps both management and investors to assess the operating performance of our business by comparing it to prior periods on a more consistent basis. A reconciliation between our GAAP and non-GAAP results is provided below. Non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995:
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including the statements regarding, (i) our belief that our increased operating leverage will enable the Company to drive for greater profitability cycle to cycle, (ii) our belief that the continued momentum behind recovery in the semiconductor industry is sustainable, (iii) our expectation to see continued growth in semiconductor demand, which ultimately drives our business, (iv) our belief that the application of semiconductors is a key driver for improvement in the quality of life around the globe, and that there is no end in sight to the application of semiconductors to help achieve this goal, and (v) the various factors that we believe are contributing to and fueling the increased semiconductor demand, as well as other matters discussed in this news release that are not purely historical data, are forward-looking statements. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contemplated by such statements. These risks and uncertainties include, but are not limited to, our inability to accurately predict global economic conditions and their effect on the Company's performance, our inability to sufficiently reduce our operational expenses and maintain our current cash breakeven level, our inability to accurately predict the return of fundamental end market demand drivers, the lack of improvement in industry conditions that negatively impact the semiconductor industry, our inability to accurately predict growth patterns for consumer demand for integrated circuits and electronic products which use them, our inability to accurately predict the Company's ability to maximize its position within the semiconductor industry, and other risks indicated in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2008, our Quarterly Reports on Form 10-Q for the quarters ended March 28, 2009, June 27, 2009 and September 26, 2009, respectively, and our Current Reports on Form 8-K and amendments to such reports. Forward-looking statements are made and based on information available to us on the date of this press release. We do not assume, and expressly disclaim, any obligation to update this information.
About Novellus:
Novellus Systems, Inc. (NASDAQ: NVLS) is a leading provider of advanced process equipment for the global semiconductor industry. The Company's products deliver value to customers by providing innovative technology backed by trusted productivity. An S&P 500 company, Novellus is headquartered in San Jose, CA with subsidiary offices across the globe. For more information please visit www.novellus.com.
NOVELLUS SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands,
except per share Three Months Ended Year Ended
amounts) ------------------ ----------
December September December December December
(Unaudited) 31, 2009 26, 2009 31, 2008 31, 2009 31, 2008
-------- --------- -------- -------- --------
Net sales $244,194 $176,879 $188,453 $639,194 $1,011,004
Cost of sales 130,556 106,171 119,936 398,104 575,060
------- ------- ------- ------- -------
Gross profit 113,638 70,708 68,517 241,090 435,944
% 46.5% 40.0% 36.4% 37.7% 43.1%
Operating expenses:
Selling, general
and administrative 38,560 36,648 50,378 164,125 224,233
Research and
development 36,732 37,013 50,856 149,101 219,660
Restructuring and
other charges 282 324 1,683 3,840 4,545
Impairment of
goodwill - - 99,522 - 99,522
--- --- ------ --- ------
Total operating
expenses 75,574 73,985 202,439 317,066 547,960
% 30.9% 41.8% 107.4% 49.6% 54.2%
---- ---- ----- ---- ----
Income (loss) from
operations 38,064 (3,277) (133,922) (75,976) (112,016)
% 15.6% -1.9% -71.1% -11.9% -11.1%
Other income
(expense), net 2,517 (124) (4,160) 6,595 4,920
----- ---- ------ ----- -----
Income (loss) before
income taxes $40,581 $(3,401) $(138,082) $(69,381) $(107,096)
Provision for
(benefit from)
income taxes 5,390 625 (7,831) 15,854 8,614
----- --- ------ ------ -----
Net income (loss) $35,191 $(4,026) $(130,251) $(85,235) $(115,710)
======= ======= ========= ======== =========
Net income (loss)
per share:
Basic $0.37 $(0.04) $(1.36) $(0.88) $(1.18)
===== ====== ====== ====== ======
Diluted $0.36 $(0.04) $(1.36) $(0.88) $(1.18)
===== ====== ====== ====== ======
Shares used in basic
per share
calculation 96,053 96,701 96,016 96,487 98,083
====== ====== ====== ====== ======
Shares used in
diluted per share
calculation 97,161 96,701 96,016 96,487 98,083
====== ====== ====== ====== ======
NOVELLUS SYSTEMS, INC.
RECONCILIATION OF NET INCOME (LOSS),
EXCLUDING CERTAIN CHARGES AND BENEFITS (1)
Three Months Ended Year Ended
------------------ ----------
(In thousands,
except per
share amounts) December September December December December
(Unaudited) 31, 2009 26, 2009 31, 2008 31, 2009 31, 2008
Net income (loss)
excluding
certain charges
and benefits(2): $38,228 $(2,507) $(19,986) $(49,057) $7,058
Consolidation of
manufacturing
in Oregon(3) (2,469) (1,242) - (3,711) -
Reductions in
workforce (742) (1,070) (6,947) (11,135) (11,358)
Restructuring and
other charges(4) (282) (324) (1,683) (3,840) (4,545)
Write down of
certain research
and development
assets - (354) (1,534) (897) (5,295)
Impairment of
goodwill - - (99,522) - (99,522)
Other-than-
temporary
impairment of
auction-rate
securities - - (3,491) - (3,491)
Impairment of
inventory and
evaluation
systems - - (2,628) (4,867) (9,054)
Reversal of
stock-based
compensation
expense - - 545 - 53
--- --- --- --- ---
Total charges (3,493) (2,990) (115,260) (24,450) (133,212)
Tax effect of the
above benefits
(charges) 456 439 4,995 6,675 10,444
Benefit due to
operating loss
carryforward
utilization, net - 20,730 - 20,730 -
Changes to
unrecognized
tax benefits, net - (17,115) - (17,115) -
Charge due to
California tax
law change - - - (19,435) -
Other discrete
tax charges, net - (2,583) - (2,583) -
--- ------ --- ------ ---
Net income (loss) $35,191 $(4,026) $(130,251) $(85,235) $(115,710)
======= ======= ========= ======== =========
Net income (loss)
per diluted share
excluding certain
charges and
benefits: $0.39 $(0.03) $(0.21) $(0.51) $0.07
Consolidation of
manufacturing
in Oregon (0.03) (0.01) - (0.04) -
Reductions in
workforce (0.01) (0.01) (0.07) (0.11) (0.12)
Restructuring and
other charges (0.00) (0.00) (0.02) (0.04) (0.05)
Write down of
certain research
and development
assets - (0.00) (0.01) (0.01) (0.05)
Impairment of
goodwill - - (1.04) - (1.01)
Other-than-
temporary
impairment of
auction-rate
securities - - (0.04) - (0.04)
Impairment of
inventory and
evaluation
systems - - (0.03) (0.05) (0.09)
Reversal of
stock-based
compensation
expense - - 0.01 - 0.00
Tax effect of
the above
benefits
(charges) 0.01 0.01 0.05 0.07 0.11
Benefit due to
operating loss
carryforward
utilization, net - 0.21 - 0.22 -
Changes to
unrecognized
tax benefits, net - (0.18) - (0.18) -
Charge due to
California tax
law change - - - (0.20) -
Other discrete
tax charges, net - (0.03) - (0.03) -
--- ----- --- ----- ---
Net income (loss)
per diluted share $0.36 $(0.04) $(1.36) $(0.88) $(1.18)
===== ====== ====== ====== ======
(1) The reconciliation of net income (loss), excluding certain charges and
benefits is intended to present our operating results, excluding
certain charges and benefits. This reconciliation is not in
accordance with or an alternative for GAAP and may be different from
similar measures by other companies.
(2) For the quarter ended December 31, 2009, there are net charges of $1.9
million in cost of sales, $0.7 million in selling, general and
administrative, $0.6 million in research and development and $0.3
million in restructuring and other charges. For the year ended
December 31, 2009, there are charges of $10.9 million in cost of
sales, $7.7 million in selling, general and administrative, $2.1
million in research and development, $3.8 million in restructuring and
other charges and a net benefit of $18.4 million in provision for
(benefit from) income taxes related to discrete items.
For the quarter ended September 26, 2009, there are charges of $1.2
million in cost of sales, $0.8 million in selling, general and
administrative, $0.7 million in research and development, $0.3 million
in restructuring and other charges and a net benefit of $1.0 million
in provision for (benefit from) income taxes related to discrete
items.
For the quarter ended December 31, 2008, there are net charges of $4.0
million in cost of sales, $2.7 million in selling, general and
administrative, $3.8 million in research and development, $1.7 million
in restructuring and other charges, $99.5 million in impairment of
goodwill and $3.5 million in other income (expense), net. For the
year ended December 31, 2008, there are net charges of $10.8 million
in cost of sales, $6.3 million in selling, general and administrative,
$8.6 million in research and development, $4.5 million in
restructuring and other charges, $99.5 million in impairment of
goodwill and $3.5 million in other income (expense), net.
(3) Amount includes reduction in workforce charges of $0.3 million for the
quarter ended December 31, 2009, $1.0 million for the quarter ended
September 26, 2009 and $1.3 million for the year ended December 31,
2009.
(4) Reflects changes in the estimated sublease income, including normal
accretion, for facilities previously included in restructuring
charges.
NOVELLUS SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31 December 31
2009 2008
(In thousands) (Unaudited) *
----------- -----------
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $501,370 $470,888
Accounts receivable, net 150,624 144,330
Inventories 162,213 213,305
Restricted cash and cash
equivalents, current - 116,819
Deferred taxes and other
current assets 83,615 97,260
------ ------
Total current assets 897,822 1,042,602
Property and equipment, net 239,111 271,866
Restricted cash and cash
equivalents 133,105 2,883
Investments 78,763 91,873
Goodwill 126,438 126,073
Intangible and other assets 83,739 102,230
Total assets $1,558,978 $1,637,527
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued liabilities $158,132 $177,531
Deferred profit 9,094 14,784
Current debt obligations 13 112,907
--- -------
Total current liabilities 167,239 305,222
Long-term debt 114,147 -
Long-term income taxes
payable 48,332 29,778
Other liabilities 49,483 55,745
------ ------
Total liabilities 379,201 390,745
------- -------
Shareholders' equity:
Common stock 1,179,220 1,158,637
Retained earnings and
accumulated other
comprehensive income 557 88,145
--- ------
Total shareholders' equity 1,179,777 1,246,782
--------- ---------
Total liabilities and
shareholders' equity $1,558,978 $1,637,527
========== ==========
* The December 31, 2008 condensed consolidated balance sheet was derived
from our audited consolidated financial statements.
SOURCE Novellus Systems, Inc.
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