SAN JOSE, Calif., Oct. 21 /PRNewswire-FirstCall/ -- Novellus Systems, Inc. today reported operating results for its third quarter ended September 26, 2009. Net sales for the third quarter of 2009 were $176.9 million, up $57.7 million or 48.4 percent from second quarter 2009 net sales of $119.2 million, and down $73.2 million or 29.3 percent from third quarter 2008 net sales of $250.1 million. The net loss for the third quarter of 2009 was $4.0 million, or $0.04 per diluted share, $46.0 million less than second quarter 2009 net loss of $50.0 million, or $0.52 per diluted share. Third quarter 2008 net income was $1.4 million, or $0.01 per diluted share.
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Third quarter 2009 results of operations include $1.2 million in charges related to the consolidation of manufacturing facilities in our Tualatin, Oregon facility and $1.8 million in additional charges primarily due to reductions in workforce. These charges are offset by several discrete tax items with a net aggregate tax benefit of $1.0 million for the third quarter of 2009. Third quarter 2009 net loss without those items was $2.5 million, or $0.03 per diluted share. Excluding certain charges, second quarter 2009 net loss was $39.3 million, or $0.41 per diluted share, and third quarter 2008 net income was $2.8 million, or $0.03 per diluted share. A reconciliation of pro forma operating results to U.S. generally accepted accounting principles ("GAAP") is included below.
Bookings in the third quarter of 2009 were $171.5 million, up $60.4 million or 54.3 percent from second quarter 2009 bookings of $111.2 million. Third quarter 2009 shipments of $165.4 million were up by $45.5 million or 37.9 percent from $120.0 million reported for the second quarter of 2009. Deferred revenue at the end of the third quarter of 2009 was $32.3 million, a decrease of $11.5 million or 26.3 percent from $43.8 million at the end of the second quarter of 2009.
Cash, cash equivalents, and short-term investments as of September 26, 2009 were $483.6 million, an increase of $7.3 million or 1.5 percent from the second quarter 2009 ending balance of $476.3 million. Long-term investments and restricted cash and cash equivalents as of September 26, 2009 were $220.1 million, a decrease of $3.3 million or 1.5 percent from the second quarter 2009 ending balance of $223.4 million. During the third quarter of 2009, we purchased approximately 0.5 million shares of our common stock, at an average price of $20.83 per share, for $10.0 million.
Richard S. Hill, Chairman and Chief Executive Officer said, "This quarter was characterized by strong customer order activity driven by improved fab utilization levels, increased memory prices and demand for PCs and smartphones." Hill added, "The combination of our strong and well-positioned product portfolio, improved customer satisfaction, and our actions to right-size the company are starting to show results. Going forward these factors will have an increasingly positive leverage effect on earnings as business conditions improve."
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 pro forma 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) the continued combination of our strong and well-positioned product portfolio, improved customer satisfaction and actions to right-size the company; (ii) that such factors will have an increasingly positive leverage effect on our earnings; (iii) that business conditions will improve; and (iv) other matters discussed in this news release that are not purely historical data. 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 (i) our inability to sufficiently reduce and manage our cost structure; (ii) our inability to prevent or predict unexpected cost increases associated with the manufacturing of our products; (iii) our inability to accurately predict our customers'' capital spending; (iv) our inability to maintain customer satisfaction; (v) the failure of the economy, or the specific markets in which we operate, to improve; and (vi) 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 Report on Form 10-Q for the quarter ended June 27, 2009, 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. 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 http://www.novellus.com/.
NOVELLUS SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Nine Months Ended ---------------------------- ------------------- (In thousands, except September June September September September per share amounts) 26, 27, 27, 26, 27, (Unaudited) 2009 2009 2008 2009 2008 ---------------------- -------- -------- -------- -------- -------- Net sales $176,879 $119,208 $250,098 $395,000 $822,551 Cost of sales 106,171 88,202 138,574 267,548 455,124 -------- -------- -------- -------- -------- Gross profit 70,708 31,006 111,524 127,452 367,427 -------- -------- -------- -------- -------- % 40.0% 26.0% 44.6% 32.3% 44.7% Selling, general and administrative 36,648 46,128 52,039 125,565 173,856 Research and development 37,013 39,341 51,649 112,369 168,804 Restructuring charges 324 2,921 1,819 3,558 2,861 -------- -------- -------- -------- -------- Total operating expenses 73,985 88,390 105,507 241,492 345,521 -------- -------- -------- -------- -------- % 41.8% 74.1% 42.2% 61.1% 42.0% Operating income (loss) (3,277) (57,384) 6,017 (114,040) 21,906 % -1.9% -48.1% 2.4% -28.9% 2.7% Other income (expense), net (124) 2,906 3,055 4,078 9,080 -------- -------- -------- -------- -------- Income (loss) before income taxes (3,401) (54,478) 9,072 (109,962) 30,986 Provision for (benefit from) income taxes 625 (4,470) 7,675 10,464 16,445 -------- -------- -------- -------- -------- Net income (loss) $(4,026) $(50,008) $1,397 $(120,426) $14,541 ======== ======== ======== ======== ======== Net income (loss) per share: Basic $(0.04) $(0.52) $0.01 $(1.25) $0.15 ======== ======== ======== ======== ======== Diluted $(0.04) $(0.52) $0.01 $(1.25) $0.15 ======== ======== ======== ======== ======== Shares used in basic per share calculation 96,701 96,472 97,581 96,459 98,807 ======== ======== ======== ======== ======== Shares used in diluted per share calculation 96,701 96,472 98,348 96,459 99,550 ======== ======== ======== ======== ======== NOVELLUS SYSTEMS, INC. RECONCILIATION OF NET INCOME (LOSS), EXCLUDING CERTAIN CHARGES AND BENEFITS (1) Three Months Ended Nine Months Ended ---------------------------- ------------------- (In thousands, except September June September September September per share amounts) 26, 27, 27, 26, 27, (Unaudited) 2009 2009 2008 2009 2008 ---------------------- -------- -------- -------- -------- -------- Net income (loss) excluding certain charges and benefits (2): $(2,507) $(39,265) $2,790 $(87,287) $25,245 Reductions in workforce (1,070) (7,592) (388) (10,393) (4,411) Consolidation of manufacturing in Oregon (3) (1,242) - - (1,242) - Impairment of inventory and evaluation systems - (4,867) - (4,867) (6,426) Write down of certain research and development assets (354) (543) - (897) (3,761) Restructuring charges (4) (324) (2,921) (1,819) (3,558) (2,861) -------- -------- -------- -------- -------- Total charges (2,990) (15,923) (2,207) (20,957) (17,459) Tax effect of the above charges 439 5,180 814 6,221 6,755 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) $(4,026) $(50,008) $1,397 $(120,426) $14,541 ======== ======== ======== ======== ======== Net income (loss) per diluted share excluding certain charges and benefits: $(0.03) $(0.41) $0.03 $(0.90) $0.26 Reductions in workforce (0.01) (0.08) (0.01) (0.11) (0.04) Consolidation of manufacturing in Oregon (0.01) - - (0.01) - Impairment of inventory and evaluation systems - (0.05) - (0.05) (0.06) Write down of certain research and development assets (0.00) (0.01) - (0.01) (0.04) Restructuring charges (0.00) (0.03) (0.02) (0.03) (0.03) Tax effect of the above charges 0.01 0.06 0.01 0.06 0.06 Benefit due to operating loss carryforward utilization, net 0.21 - - 0.21 - 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 $(0.04) $(0.52) $0.01 $(1.25) $0.15 ======== ======== ======== ======== ======== (1) The reconciliation of net income (loss), excluding certain charges and benefits is not in accordance with or an alternative for GAAP and may be different from similar measures presented by other companies. (2) For the three months 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 charges and a net benefit of $1.0 million in provision for (benefit from) income taxes related to discrete items. For the nine months ended September 26, 2009, there are net charges of $8.9 million in cost of sales, $6.9 million in selling, general and administrative, $1.6 million in research and development, $3.6 million in restructuring charges and $18.4 million in the provision for (benefit from) income taxes related to discrete items. For the three months ended June 27, 2009, there are charges of $7.6 million in cost of sales, $4.5 million in selling, general and administrative, $0.9 million in research and development and $2.9 million in restructuring charges. For the three months ended September 27, 2008, there are charges of $0.4 million in selling, general and administrative and $1.8 million in restructuring charges. For the nine months ended September 27, 2008, there are charges of $6.5 million in cost of sales, $3.3 million in selling, general and administrative, $4.8 million in research and development and $2.9 million in restructuring charges. (3) Amount includes reduction in workforce charges of $1.0 million. (4) Reflects changes in the estimated sublease income for facilities previously included in restructuring charges. NOVELLUS SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) September December 26, 31, 2009 2008 (Unaudited) * ---------- ---------- ASSETS Current assets: Cash, cash equivalents and short-term investments $483,584 $470,888 Accounts receivable, net 111,324 144,330 Inventories 149,876 213,305 Restricted cash and cash equivalents - 116,819 Deferred taxes and other current assets 78,707 97,260 ---------- ---------- Total current assets 823,491 1,042,602 Property and equipment, net 248,013 271,866 Non-current restricted cash and cash equivalents 140,663 2,883 Long-term investments 79,476 91,873 Goodwill 126,950 126,073 Intangible and other assets 107,326 102,230 ---------- ---------- Total assets $1,525,919 $1,637,527 ========== ========== LIABILITIES AND SHAREHOLDERS'' EQUITY Current liabilities: Accounts payable and accrued liabilities $145,705 $177,531 Deferred profit 6,301 14,784 Current debt obligations 1,656 112,907 ---------- ---------- Total current liabilities 153,662 305,222 Long-term debt obligations 117,431 - Long-term income taxes payable 49,403 29,778 Other liabilities 51,201 55,745 ---------- ---------- Total liabilities 371,697 390,745 ---------- ---------- Shareholders'' equity: Common stock 1,179,956 1,158,637 Retained earnings (accumulated deficit) and accumulated other comprehensive loss (25,734) 88,145 ---------- ---------- Total shareholders'' equity 1,154,222 1,246,782 ---------- ---------- Total liabilities and shareholders'' equity $1,525,919 $1,637,527 ========== ========== *The December 31, 2008 condensed consolidated balance sheet was derived from our audited consolidated financial statements.
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