Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - NOVELLUS SYSTEMS INC | d247019d8k.htm |
Exhibit 99.1
| Contacts: |
John Hertz | Robin Yim | ||
| Chief Financial Officer | Investor Relations | |||
| Novellus Systems, Inc. | Novellus Systems, Inc. | |||
| Phone: (408) 943-9700 | Phone: (408) 943-9700 |
FOR IMMEDIATE RELEASE
NOVELLUS SYSTEMS REPORTS THIRD QUARTER RESULTS
SAN JOSE, Calif., October 26, 2011—Novellus Systems, Inc. (NASDAQ: NVLS) today reported operating results for its third quarter ended September 24, 2011. Net sales for the third quarter were $306.7 million, down $43.5 million or 12.4 percent from second quarter 2011 net sales of $350.2 million, and down $60.5 million or 16.5 percent from third quarter 2010 net sales of $367.2 million. Net income for the third quarter was $51.1 million, or $0.73 per diluted share, down $13.6 million from second quarter 2011 net income of $64.7 million, or $0.79 per diluted share, and down $25.2 million from third quarter 2010 net income of $76.3 million, or $0.82 per diluted share.
Bookings in the third quarter of 2011 were $226.9 million, down $84.7 million or 27.2 percent from second quarter 2011 bookings of $311.6 million. Third quarter shipments of $301.6 million were down $57.7 million or 16.1 percent from $359.3 million in the second quarter of 2011. (1)
Cash, cash equivalents, and short-term investments at the end of the third quarter were $736.6 million, a decrease of $75.8 million or 9.3 percent from the second quarter 2011 ending balance of $812.4 million. Long-term investments and non-current restricted cash and cash equivalents at the end of the third quarter were $186.0 million, a decrease of $2.8 million or 1.5 percent from the second quarter 2011 ending balance of $188.8 million. During the third quarter of 2011, we repurchased 5.2 million shares of our common stock at an average price of $29.19 per share, for $150.6 million. Cash flows from operations during the third quarter of 2011 were $99.7 million, up $4.5 million or 4.7 percent from $95.2 million in the second quarter of 2011, and up $17.9 million or 21.9 percent from $81.8 million in the third quarter of 2010.
Richard S. Hill, Chairman and Chief Executive Officer, said “The current global market volatility has affected capital intensive business investment but we are optimistic that the underlying demand for technology products will enable us to profitably ride through this period of uncertainty.” Hill added, “We remain confident that our investments in Novellus’ core products, and our investments in new technologies to support the enabling processing trends in 3-dimensional NAND, advanced logic, and advanced packaging are the right technologies at the right time. We believe this will allow us to drive revenue growth and profitability for the long term.”
“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 the underlying demand for technology products will enable us to profitably ride through this period of uncertainty; (ii) our investments in our core products and in new technologies are the right technologies at the right time, and our belief that this will allow us to drive revenue growth and profitability for the long term; and (iii) our belief in the future of 3-dimensional NAND, advanced logic, and advanced packaging. 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) disruptions in the economy or the specific markets in which we operate; (ii) our ability to manage costs of operation; (iii) increased competition from new competitors or current competitors with new products; (iv) our ability to maintain customer satisfaction; (v) our continued efforts in product development; (vi) demand and growth in the semiconductor industry; and (vii) other risks indicated in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, and any 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.
| (1) | Bookings and shipments are non-GAAP measures; they are not in accordance with or an alternative for U.S. GAAP (generally accepted accounting principles) and may be different from similar measures used by other companies. For more information regarding non-GAAP measures, please see footnote (2). |
NOVELLUS SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| (In thousands, except per share amounts) (Unaudited) |
September 24, 2011 |
June 25, 2011 |
September 25, 2010 |
September 24, 2011 |
September 25, 2010 |
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| Net sales |
$ | 306,731 | $ | 350,223 | $ | 367,203 | $ | 1,070,139 | $ | 964,801 | ||||||||||
| Cost of sales |
158,824 | 173,913 | 186,774 | 537,644 | 493,468 | |||||||||||||||
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| Gross profit |
147,907 | 176,310 | 180,429 | 532,495 | 471,333 | |||||||||||||||
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| % |
48.2 | % | 50.3 | % | 49.1 | % | 49.8 | % | 48.9 | % | ||||||||||
| Selling, general and administrative |
44,364 | 47,378 | 46,426 | 141,082 | 134,509 | |||||||||||||||
| Research and development |
47,827 | 47,270 | 44,271 | 141,818 | 124,747 | |||||||||||||||
| Restructuring charges (benefits), net |
(1,258 | ) | 141 | 240 | (936 | ) | 657 | |||||||||||||
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| Total operating expenses |
90,933 | 94,789 | 90,937 | 281,964 | 259,913 | |||||||||||||||
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| % |
29.6 | % | 27.1 | % | 24.8 | % | 26.3 | % | 26.9 | % | ||||||||||
| Income from operations |
56,974 | 81,521 | 89,492 | 250,531 | 211,420 | |||||||||||||||
| % |
18.6 | % | 23.3 | % | 24.4 | % | 23.4 | % | 21.9 | % | ||||||||||
| Interest income |
1,340 | 1,484 | 1,549 | 4,321 | 5,625 | |||||||||||||||
| Interest expense |
(5,979 | ) | (3,253 | ) | (411 | ) | (9,658 | ) | (1,037 | ) | ||||||||||
| Other income (expense) |
2,785 | (1,236 | ) | (1,270 | ) | 1,195 | (998 | ) | ||||||||||||
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| Income before income taxes |
55,120 | 78,516 | 89,360 | 246,389 | 215,010 | |||||||||||||||
| Provision for income taxes |
4,038 | 13,783 | 13,095 | 34,216 | 34,181 | |||||||||||||||
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| Net income |
$ | 51,082 | $ | 64,733 | $ | 76,265 | $ | 212,173 | $ | 180,829 | ||||||||||
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| Net income per share: |
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| Basic |
$ | 0.74 | $ | 0.81 | $ | 0.83 | $ | 2.67 | $ | 1.93 | ||||||||||
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| Diluted |
$ | 0.73 | $ | 0.79 | $ | 0.82 | $ | 2.60 | $ | 1.90 | ||||||||||
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| Shares used in basic per share calculation |
68,883 | 80,068 | 91,512 | 79,401 | 93,833 | |||||||||||||||
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| Shares used in diluted per share calculation |
70,379 | 82,074 | 92,859 | 81,464 | 94,986 | |||||||||||||||
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NOVELLUS SYSTEMS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (2)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| (In thousands, except per share amounts) (Unaudited) |
September 24, 2011 |
June 25, 2011 |
September 25, 2010 |
September 24, 2011 |
September 25, 2010 |
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| Gross profit - GAAP |
$ | 147,907 | $ | 176,310 | $ | 180,429 | $ | 532,495 | $ | 471,333 | ||||||||||
| % of sales |
48.2 | % | 50.3 | % | 49.1 | % | 49.8 | % | 48.9 | % | ||||||||||
| Adjustment for: |
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| Consolidation of IAG manufacturing in Germany |
— | — | 2,474 | — | 2,474 | |||||||||||||||
| Reductions in workforce |
— | — | — | — | 126 | |||||||||||||||
| Consolidation of semiconductor manufacturing in Oregon |
— | — | — | — | 484 | |||||||||||||||
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| Gross profit excluding certain charges and benefits |
$ | 147,907 | $ | 176,310 | $ | 182,903 | $ | 532,495 | $ | 474,417 | ||||||||||
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| % of sales |
48.2 | % | 50.3 | % | 49.8 | % | 49.8 | % | 49.2 | % | ||||||||||
| Operating expenses - GAAP |
$ | 90,933 | $ | 94,789 | $ | 90,937 | $ | 281,964 | $ | 259,913 | ||||||||||
| % of sales |
29.6 | % | 27.1 | % | 24.8 | % | 26.3 | % | 26.9 | % | ||||||||||
| Adjustment for: |
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| Supplier settlement |
2,350 | — | — | 2,350 | — | |||||||||||||||
| Consolidation of IAG manufacturing in Germany |
— | — | (2,386 | ) | — | (2,386 | ) | |||||||||||||
| Reductions in workforce |
(1,962 | ) | — | — | (1,962 | ) | (385 | ) | ||||||||||||
| Consolidation of semiconductor manufacturing in Oregon |
— | — | — | — | (390 | ) | ||||||||||||||
| Restructuring charges |
1,258 | (141 | ) | (240 | ) | 936 | (657 | ) | ||||||||||||
| Legal fees for Linear trial |
— | — | — | — | (4,428 | ) | ||||||||||||||
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| Operating expenses excluding certain charges and benefits |
$ | 92,579 | $ | 94,648 | $ | 88,311 | $ | 283,288 | $ | 251,667 | ||||||||||
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| % of sales |
30.2 | % | 27.0 | % | 24.0 | % | 26.5 | % | 26.1 | % | ||||||||||
| Operating income - GAAP |
$ | 56,974 | $ | 81,521 | $ | 89,492 | $ | 250,531 | $ | 211,420 | ||||||||||
| % of sales |
18.6 | % | 23.3 | % | 24.4 | % | 23.4 | % | 21.9 | % | ||||||||||
| Adjustment for: |
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| Supplier settlement |
(2,350 | ) | — | — | (2,350 | ) | — | |||||||||||||
| Consolidation of IAG manufacturing in Germany |
— | — | 4,861 | — | 4,861 | |||||||||||||||
| Reductions in workforce |
1,962 | — | — | 1,962 | 511 | |||||||||||||||
| Consolidation of semiconductor manufacturing in Oregon |
— | — | — | — | 875 | |||||||||||||||
| Restructuring charges |
(1,258 | ) | 141 | 240 | (936 | ) | 657 | |||||||||||||
| Legal fees for Linear trial |
— | — | — | — | 4,428 | |||||||||||||||
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| Operating income excluding certain charges and benefits |
$ | 55,328 | $ | 81,662 | $ | 94,593 | $ | 249,207 | $ | 222,752 | ||||||||||
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| % of sales |
18.0 | % | 23.3 | % | 25.8 | % | 23.3 | % | 23.1 | % | ||||||||||
| Income before income taxes - GAAP |
$ | 55,120 | $ | 78,516 | $ | 89,360 | $ | 246,389 | $ | 215,010 | ||||||||||
| Adjustment for: |
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| Supplier settlement |
(2,350 | ) | — | — | (2,350 | ) | — | |||||||||||||
| Consolidation of IAG manufacturing in Germany |
— | — | 4,861 | — | 4,861 | |||||||||||||||
| Reductions in workforce |
1,962 | — | — | 1,962 | 511 | |||||||||||||||
| Consolidation of semiconductor manufacturing in Oregon |
— | — | — | — | 875 | |||||||||||||||
| Restructuring charges |
(1,258 | ) | 141 | 240 | (936 | ) | 657 | |||||||||||||
| Legal fees for Linear trial |
— | — | — | — | 4,428 | |||||||||||||||
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| Income before income taxes excluding certain charges and benefits |
$ | 53,474 | $ | 78,657 | $ | 94,461 | $ | 245,065 | $ | 226,342 | ||||||||||
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| Provision for income taxes - GAAP |
$ | 4,038 | $ | 13,783 | $ | 13,095 | $ | 34,216 | $ | 34,181 | ||||||||||
| % of income before income taxes |
7.3 | % | 17.6 | % | 14.7 | % | 13.9 | % | 15.9 | % | ||||||||||
| Income tax effect of non-GAAP adjustments |
(1,081 | ) | 53 | 26 | (960 | ) | 1,840 | |||||||||||||
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| Provision for income taxes excluding certain charges and benefits |
$ | 2,957 | $ | 13,836 | $ | 13,121 | $ | 33,256 | $ | 36,021 | ||||||||||
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| % of income before income taxes excluding certain charges and benefits |
5.5 | % | 17.6 | % | 13.9 | % | 13.6 | % | 15.9 | % | ||||||||||
| Net income - GAAP |
$ | 51,082 | $ | 64,733 | $ | 76,265 | $ | 212,173 | $ | 180,829 | ||||||||||
| Adjustment for: |
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| Supplier settlement |
(2,350 | ) | — | — | (2,350 | ) | — | |||||||||||||
| Consolidation of IAG manufacturing in Germany |
— | — | 4,861 | — | 4,861 | |||||||||||||||
| Reductions in workforce |
1,962 | — | — | 1,962 | 511 | |||||||||||||||
| Consolidation of semiconductor manufacturing in Oregon |
— | — | — | — | 875 | |||||||||||||||
| Restructuring charges |
(1,258 | ) | 141 | 240 | (936 | ) | 657 | |||||||||||||
| Legal fees for Linear trial |
— | — | — | — | 4,428 | |||||||||||||||
| Income tax effect of non-GAAP adjustments |
1,081 | (53 | ) | (26 | ) | 960 | (1,840 | ) | ||||||||||||
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| Net income excluding certain charges and benefits |
$ | 50,517 | $ | 64,821 | $ | 81,340 | $ | 211,809 | $ | 190,321 | ||||||||||
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| Net income per diluted share - GAAP |
$ | 0.73 | $ | 0.79 | $ | 0.82 | $ | 2.60 | $ | 1.90 | ||||||||||
| Adjustment for certain charges and benefits |
(0.01 | ) | 0.00 | 0.06 | 0.00 | 0.10 | ||||||||||||||
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| Net income per diluted share excluding certain charges and benefits |
$ | 0.72 | $ | 0.79 | $ | 0.88 | $ | 2.60 | $ | 2.00 | ||||||||||
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| (2) | The discussion of bookings and shipments and the presentation of gross profit, operating expenses, operating income, income before taxes, provision for income taxes, effective tax rate, net income, and net income per diluted share, set forth in the table above, each excludes certain charges and benefits and are not in accordance with U.S. GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. The non-GAAP financial measures we provide have certain limitations because they do not reflect all of the costs associated with the operation of our business as determined in accordance with GAAP. The non-GAAP measures are in addition to, and not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. We endeavor to compensate for the limitations of these non-GAAP measures by providing GAAP financial statements, descriptions of the reconciling items, and a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures so that investors can appropriately incorporate the non-GAAP measures and their limitations into their analyses. |
Management uses certain non-GAAP measures to evaluate operating performance. We discuss these non-GAAP measures because we believe they provide additional insight into underlying operating results and prospects for the future, allowing investors to assess certain business trends in the same way that these trends are utilized by management in its financial and operational decision making. Shipments consist of products shipped to customers, without regard to net sales adjustments such as deferrals associated with customer acceptance. Bookings consist of current period orders less current period cancellations and other adjustments. We do not report bookings for systems with delivery dates more than 12 months from the latest balance sheet date. Shipments and bookings are used to forecast and plan future operations. Further, we believe the presentation of non-GAAP measures provides investors with additional insight into underlying operating results by excluding certain charges and benefits related to (i) supplier settlements, (ii) consolidation of our IAG manufacturing in Germany, (iii) reductions in workforce, (iv) consolidation of semiconductor manufacturing in Oregon, (v) restructuring charges, and (vi) certain legal expenses. These certain charges and benefits may not be indicative of our ongoing operations or economic performance.
NOVELLUS SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| (In thousands) |
September 24, 2011 |
December 31, 2010 |
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| (Unaudited) | * | |||||||
| ASSETS | ||||||||
| Current assets: |
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| Cash and cash equivalents and short-term investments |
$ | 736,609 | $ | 671,251 | ||||
| Accounts receivable, net |
222,764 | 256,731 | ||||||
| Inventories |
216,865 | 208,894 | ||||||
| Deferred taxes and other current assets |
84,778 | 65,525 | ||||||
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| Total current assets |
1,261,016 | 1,202,401 | ||||||
| Property and equipment, net |
205,783 | 218,569 | ||||||
| Non-current restricted cash and cash equivalents |
132,540 | 121,226 | ||||||
| Long-term investments |
53,456 | 68,645 | ||||||
| Goodwill |
125,468 | 125,043 | ||||||
| Intangible and other assets |
95,010 | 96,513 | ||||||
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| Total assets |
$ | 1,873,273 | $ | 1,832,397 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
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| Accounts payable and accrued liabilities |
$ | 230,857 | $ | 261,318 | ||||
| Deferred profit |
20,775 | 29,693 | ||||||
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| Total current liabilities |
251,632 | 291,011 | ||||||
| Senior convertible notes |
271,291 | — | ||||||
| Other long-term debt obligations |
108,235 | 105,592 | ||||||
| Long-term income taxes payable |
63,073 | 61,381 | ||||||
| Long-term deferred tax liabilities |
169,810 | 3,815 | ||||||
| Other liabilities |
39,051 | 42,460 | ||||||
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| Total liabilities |
903,092 | 504,259 | ||||||
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| Shareholders’ equity: |
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| Common stock |
1,195,235 | 1,206,887 | ||||||
| Retained earnings (accumulated deficit) and accumulated other comprehensive income (loss) |
(225,054 | ) | 121,251 | |||||
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| Total shareholders’ equity |
970,181 | 1,328,138 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 1,873,273 | $ | 1,832,397 | ||||
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| * | The December 31, 2010 condensed consolidated balance sheet was derived from our audited consolidated financial statements. |
NOVELLUS SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended | ||||||||
| September 24, 2011 |
September 25, 2010 |
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| (In thousands) | ||||||||
| Cash flows from operating activities: |
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| Net income |
$ | 212,173 | $ | 180,829 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation and amortization |
26,466 | 30,775 | ||||||
| Deferred income taxes |
22,859 | (2,876 | ) | |||||
| Stock-based compensation |
31,307 | 25,706 | ||||||
| Excess tax benefit from stock-based compensation |
0 | (392 | ) | |||||
| Other non-cash charges, net |
4,713 | 4,939 | ||||||
| Changes in operating assets and liabilities, net |
(18,872 | ) | 9,030 | |||||
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| Net cash provided by operating activities |
278,646 | 248,011 | ||||||
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| Cash flows from investing activities: |
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| Net sales, maturities and purchases of investments |
33,221 | (25,151 | ) | |||||
| Capital expenditures |
(15,509 | ) | (12,916 | ) | ||||
| Decrease (increase) in restricted cash and cash equivalents |
(9,590 | ) | 8,652 | |||||
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| Net cash provided by (used in) investing activities |
8,122 | (29,415 | ) | |||||
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| Cash flows from financing activities: |
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| Proceeds from employee stock compensation plans |
112,711 | 7,641 | ||||||
| Proceeds from senior convertible notes, net of issuance costs |
684,250 | — | ||||||
| Net proceeds from (repayments of) other debt obligations |
(72 | ) | 510 | |||||
| Repurchases of common stock |
(977,666 | ) | (161,037 | ) | ||||
| Excess tax benefit from stock-based compensation |
0 | 392 | ||||||
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| Net cash used in financing activities |
(180,777 | ) | (152,494 | ) | ||||
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| Effects of exchange rate changes on cash and cash equivalents |
81 | (262 | ) | |||||
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| Net increase in cash and cash equivalents |
106,072 | 65,840 | ||||||
| Cash and cash equivalents at the beginning of the period |
247,055 | 142,047 | ||||||
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| Cash and cash equivalents at the end of the period |
$ | 353,127 | $ | 207,887 | ||||
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