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Verigy Reports Financial Results for its Fourth Quarter and Fiscal Year 2009CUPERTINO, Calif. --(Business Wire)-- Verigy Ltd. (News - Alert) (NASDAQ:VRGY), a premier semiconductor test company, today reported financial results for its fourth quarter and fiscal year ended Oct. 31, 2009. Total revenue for the fourth quarter was $97 million, a sequential increase of 11 percent from $87 million in the previous quarter. For fiscal year 2009, total revenue was $323 million, a year-over-year decrease of 53 percent from $691 million in 2008. Net loss for the fourth quarter was $12 million, or ($0.20) per share, compared to a net loss of $21 million, or ($0.36) per share, in the prior quarter, and a net loss of $36 million, or ($0.60) per share, in last year's comparable quarter. The results for the fourth quarter included approximately $3 million of charges related to the company's restructuring and manufacturing transition actions and $1.6 million of impairment charges on its investments. After excluding the impact of these charges, Verigy reported a non-GAAP net loss of $7 million, or ($0.12) per share, for its fourth quarter of fiscal 2009. For fiscal year 2009, net loss was $127 million, or ($2.17) per share, compared to last year's net income of $28 million, or $0.47 per share. On a non-GAAP basis, the company reported full year net loss of $87 million, or ($1.49) per share, compared to last year's non-GAAP net income of $71 million, or $1.18 per share. A reconciliation of the company's GAAP to non-GAAP results is included in the tables accompanying this press release. Orders for the fourth quarter were $109 million, a sequential increase of approximately 17 percent and represented a book-to-bill ratio of 1.12. For fiscal year 2009, orders totaled $323 million, a decrease of approximately 48 percent from last year, and represented a book-to-bill ratio of 1.00 for the year. "We ended the fiscal year with a clearly improving business environment," said Keith Barnes, Verigy's chairman, chief executive officer and president. "We are feeling increasingly optimistic about both the SOC and memory markets and we expect to see significant revenue growth in 2010. After a very challenging 2009 we believe that our investments in new and innovative products will enable continued share gain." "While we are coming off a low base, we are encouraged by the improved demand that we are seeing from customers with revenue increasing for the third consecutive quarter," said Bob Nikl, Verigy's chief financial officer. "As we enter the new fiscal year, we can expect improvements in our operating leverage as a result of the significant benefits from our restructuring programs." Outlook for Q1 2010 For the first quarter ending Jan. 31, 2010, the company is providing the following guidance: Revenue is expected to be in the range of $105 million to $115 million. Loss per share on a GAAP basis is expected to be in the range of ($0.13) to ($0.06). After excluding restructuring and manufacturing transition-related charges, loss per share on a non-GAAP basis is expected to be in the range of ($0.09) to ($0.02). Share based compensation expense is expected to be between $5 million to $5.2 million. Weighted average shares outstanding is expected to be approximately 59.4 million. Conference Call and Webcast Verigy's management will present details of its fourth quarter and fiscal year 2009 financial results on a conference call with investors today beginning at 1:30 p.m. (Pacific). This event will be webcast live in listen-only mode. Listeners may log on at http://investor.verigy.com and select "Q4 and Fiscal Year 2009 Verigy Earnings Conference Call" in the "Webcasts & Presentations" section. The webcast will remain available on the company's web site for fourteen days. A telephone replay of the conference call will be available from 4:30 p.m. (Pacific) today through December 3, 2009. The replay number is +1 888-286-8010 toll-free, or international callers may dial +1 617-801-6888; enter pass code 26622810. About Verigy Verigy provides advanced semiconductor test systems and solutions used by leading companies worldwide in design validation, characterization, and high-volume manufacturing test. Verigy offers scalable platforms for a wide range of system-on-chip (SOC) test solutions, and memory test solutions for Flash, DRAM including high-speed memories, as well as multi-chip packages (MCP). Verigy also provides advanced analysis tools that accelerate design debug and yield ramp processes. Additional information about Verigy can be found at www.verigy.com. Forward-Looking Statements This earnings release contains forward-looking statements, including statements about expenses and our expected revenue and loss per share. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. The risks and uncertainties include, but are not limited to, uncertainty surrounding the timing and strength of the global economic recovery and the impact on our industry, the strength of our customers' businesses and unforeseen changes in the demand for current and new products and technologies. Additional factors that may cause results to differ materially from those in the forward-looking statements are discussed in our most recent periodic reports filed with the SEC (News - Alert). In those filings you will find descriptions of risk factors that could affect our future results. These forward-looking statements are only valid as of this date, and Verigy undertakes no duty to update any forward-looking statements. Information About Non-GAAP Measures Verigy is supplementing its financial results presented on a GAAP basis by providing non-GAAP measures to evaluate the operating performance of the company. Non-GAAP net loss for the quarter ended October 31, 2009, excludes the effects of charges for the company's previously announced restructuring actions and manufacturing transition, and impairment charges on its investments. Non-GAAP net loss for the year ended October 31, 2009, also excludes additional items, as set forth in the attached tables. Since management finds the non-GAAP information to be useful, the company believes that its investors may also benefit from seeing the company's results "through the eyes" of management in addition to seeing its GAAP results. This information also facilitates management's internal comparisons to historical operating results as well as to the operating results of its competitors. A reconciliation between the company's GAAP and non-GAAP results is provided in the attached tables. Readers are reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. They should be read in conjunction with the GAAP financial measures. VERIGY LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except share and per share amounts) (Unaudited) Three Months Ended Twelve Months Ended October 31, October 31, 2009 2008 2009 2008 Net revenue: Products $ 68 $ 108 $ 201 $ 531 Services 29 42 122 160 Total net revenue 97 150 323 691 Cost of sales: Cost of products (*) 35 68 133 270 Cost of services (*) 20 28 82 114 Total cost of sales 55 96 215 384 Operating expenses: Research and development (*) 22 25 92 103 Selling, general and administrative (*) 29 38 117 154 Restructuring charges 1 1 8 2 Total operating expenses 52 64 217 259 (Loss) income from operations (10 ) (10 ) (109 ) 48 Interest income and other - 6 4 23 Impairment of Investments (2 ) (29 ) (18 ) (31 ) (Loss) income before income taxes (12 ) (33 ) (123 ) 40 Provision for income taxes - 3 4 12 Net (loss) income $ (12 ) $ (36 ) $ (127 ) $ 28 Net (loss) income per share- basic: $ (0.20 ) $ (0.60 ) $ (2.17 ) $ 0.48 Net (loss) income per share- diluted: $ (0.20 ) $ (0.60 ) $ (2.17 ) $ 0.47 Weighted average shares (presented in thousands) used in computing net (loss) income per share: Basic 58,823 58,416 58,437 59,574 Diluted 58,823 58,416 58,437 60,360 * Share-based compensation expense by function: Cost of products $ 0.6 $ 0.6 $ 2.2 $ 2.2 Cost of services $ 0.3 $ 0.2 $ 1.2 $ 0.9 Research and development $ 0.5 $ 0.5 $ 2.1 $ 2.0 Selling, general and administrative $ 3.5 $ 3.1 $ 13.5 $ 11.7 VERIGY LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except share amounts) (Unaudited) October 31, July 31, October 31, 2009 2009 2008 ASSETS Current assets: Cash and cash equivalents $ 197 $ 281 $ 144 Short-term marketable securities 167 104 196 Trade accounts receivable, net 54 35 74 Inventory 55 64 78 Other current assets 40 43 46 Total current assets 513 527 538 Property, plant and equipment, net 41 40 42 Long-term marketable securities 75 57 71 Goodwill and other intangibles, net 20 20 18 Other long-term assets 62 61 65 Total assets $ 711 $ 705 $ 734 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 40 $ 36 $ 65 Employee compensation and benefits 32 28 41 Deferred revenue, current 26 26 53 Income taxes and other taxes payable 3 3 3 Other current liabilities 22 17 34 Total current liabilities 123 110 196 Long-term liabilities: Convertible senior notes 138 138 - Income taxes payable 15 14 13 Other long-term liabilities 33 41 36 Total liabilities 309 303 245 Shareholders' equity Ordinary shares, no par value, 58,841,248, 58,727,123 and 57,822,242 issuedand outstanding at October 31, 2009, July 31, 2009 and October 31, 2008, respectively Additional paid in capital 429 424 406 (Accumulated deficit) retained earnings (23 ) (11 ) 105 Accumulated other comprehensive loss (4 ) (11 ) (22 ) Total shareholders' equity 402 402 489 Total liabilities and shareholders' equity $ 711 $ 705 $ 734 VERIGY LTD. RECONCILIATION OF GAAP NET (News - Alert) (LOSS) INCOME TO NON-GAAP NET (LOSS) INCOME (In millions, except per share amounts) (Unaudited) Three Months Ended Twelve Months Ended October 31, 2009 EPS October 31, 2009 EPS GAAP net loss $ (12 ) $ (0.20 ) $ (127 ) $ (2.17 ) Non-GAAP adjustments: Restructuring charges in cost of sales 0.9 0.01 5.5 0.09 Restructuring charges in operating expenses 0.8 0.01 8.2 0.14 Impairment of auction rate securities 1.6 0.03 10.8 0.19 Impairment of cost method investment - 0 6.2 0.11 Non-Recurring operating expenses (0.3 ) 0 2.4 0.04 Acquisition related charges in cost of sales 0.1 0 0.3 0.01 Acquisition related charges in operating expenses 0.0 0 4.1 0.07 Transition related charges in cost of sales 1.7 0.03 2.3 0.04 Transition related charges in operating expenses 0.1 0 0.2 - Tax impact for transfer of intellectual property - 0 1.2 0.02 Tax impact related to acquisition - 0 (1.5 ) (0.03 ) Non-GAAP net loss $ (7 ) $ (0.12 ) $ (87 ) $ (1.49 ) Three Months Ended Twelve Months Ended October 31, 2008 EPS October 31, 2008 EPS GAAP net (loss) income $ (36 ) $ (0.60 ) $ 28 $ 0.47 Non-GAAP adjustments: Incremental excess and obsolescence inventory charges in cost of sales * 14.7 0.25 14.7 0.25 Impairment of auction rate securities and money market investments 18.1 0.31 18.1 0.30 Impairment of cost method investments in other (expense) income, net 11.1 0.19 11.1 0.18 Related tax impacted (0.6 ) (0.01 ) (0.6 ) (0.01 ) Restructuring charges in cost of sales - - 0.2 - Restructuring charges in operating expenses - 1.1 0.02 Separation related costs in cost of sales - - 0.1 - Acquisition related charges in cost of sales - - 0.6 0.01 Acquisition related charges in operating expenses - - - - FX gain relating to remeasurement of taxes - - (2.4 ) (0.04 ) Non-recurring operating expenses - - (0.1 ) - Non-GAAP net income $ 8 $ 0.14 $ 71 $ 1.18 * Total excess and obsolete inventory write-downs included in cost of sales for the three and twelve months ended October 31, 2008 were $19 million and $27 million, respectively, of which $4 million and $12 million were considered to be consistent with our historical run rate and thus have not been included in the non-GAAP adjustment. The balance of $14.7 million represents incremental inventory write-downs recorded in the fourth quarter that resulted from the extraordinary drop in memory tester demand in general as well as the impact of the introduction of our new V6000 series product on our inventory of earlier generation products. |
