Verigy Ltd. (NASDAQ: VRGY), a premier semiconductor test company,
today reported financial results for its first quarter ended
January 31, 2011. Revenue for the first quarter was $120 million, a
decrease of $39 million, or 25 percent, from the prior quarter and
an increase of $14 million, or 13 percent, from the comparable
prior year period.
Net loss for the first quarter was $5 million, or ($0.08) per
share, compared to net income of $10 million, or $0.17 per share
last quarter, and net loss of $6 million, or ($0.10) per share, in
the prior year period.
Results for the first quarter included approximately $7.9
million of charges associated with the company's merger-related
transaction costs and restructuring actions as well as gains on the
sale of investments. After excluding these items, Verigy reported
non-GAAP net income of $3 million, or $0.05 per share, including
$4.1 million of share-based compensation expense.
A reconciliation between GAAP and non-GAAP net income is
provided following the financial statements that are part of this
press release.
"First quarter revenue of $120 million was at the high end of
our guidance range, and we exceeded our expectations on a non-GAAP
earnings per share basis," said Bob Nikl, Verigy chief financial
officer. "We are continuing to reduce our operating expenses for
sustainable profitability."
"Sales of our 93K HSM product picked up significantly and demand
for our Port Scale RF product continued to be strong," added Jorge
Titinger, Verigy president and chief executive officer. "However,
uncertainty regarding the LTX-Credence merger and Advantest
proposal has caused certain customers to delay final purchase
decisions. As we move forward, we understand that this period of
uncertainty is challenging for all involved -- our customers,
employees and shareholders -- and it is our desire to resolve the
uncertainty in the coming weeks."
The company will be providing a status update on its M&A
activity during its first quarter of fiscal year 2011 conference
call scheduled today at 1:30 p.m. (Pacific). Conference call and
webcast details are noted below.
Outlook for Q2 2011
For the second quarter ending April 30, 2011, the company is
providing the following outlook:
-- Revenue is expected to be in the range of $115 million to $120 million.
-- The company is not providing GAAP EPS guidance at this time since it is
unable to assess the amount of merger-related expenses and potential
restructuring costs it will incur. These amounts could be significant.
-- After excluding charges expected to be incurred due to merger-related
transaction activities and potential restructuring, earnings per share
on a non-GAAP basis are expected to be in the range of ($0.03) to
$0.02.
-- Share-based compensation expense is expected to be approximately $3.6
million to $3.8 million.
-- Weighted average shares outstanding is expected to be approximately 61
million.
Conference Call and Webcast
Verigy's management will present more details on its first
quarter fiscal year 2011 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 "Q1 FY'11 Verigy Earnings
Conference Call" in the "Events & Webcast" section under "IR
News & Events." The webcast will remain available on the
company's web site for 14 days.
A telephone replay of the conference call will be available from
4:30 p.m. (Pacific) today through March 10, 2011. The replay number
is +1 888-286-8010 toll-free, or international callers may dial +1
617-801-6888; enter passcode 15114156.
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 our estimated second quarter revenue,
non-GAAP earnings per share and share-based compensation expense.
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, the results of
discussions with Advantest; actions of LTX-Credence in response to
discussions with Advantest; the impact of actions of other parties
with respect to any discussions and the potential consummation of a
transaction with Advantest or LTX-Credence; the commencement of
litigation relating to the Advantest discussions or to the proposed
transaction with LTX-Credence; the ability to retain key employees;
delays in or cancellations of orders by customers awaiting
resolution of the Advantest discussions and the pending merger with
LTX-Credence; conditions of the semiconductor and semiconductor
test industries; the strength of our customers' businesses;
unanticipated delays in meeting product demand and delivery
requirements; and other economic, business, competitive, and/or
regulatory factors affecting the businesses of Verigy generally,
including those set forth in Verigy's filings with the Securities
and Exchange Commission, especially in the "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" sections of its annual report on Form 10-K
and quarterly reports on Form 10-Q, current reports on Form 8-K and
other SEC filings. The forward-looking statements in this press
release 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 measures presented on a
GAAP basis by providing non-GAAP measures to provide additional
meaningful comparisons between current results and results in prior
operating periods to evaluate the operating performance of the
company. Management believes that these non-GAAP financial measures
can provide additional meaningful information of underlying trends
of the business because they provide a comparison of historical
information that excludes certain items that impact the overall
comparability. Non-GAAP net income for the quarter ended January
31, 2011 excludes the effects of charges related to the company's
merger transaction costs, restructuring actions, and gains on the
sale of investments. Management uses this information to make
operational decisions and for comparisons to historical operating
results and the operating results of its competitors. Management
finds the non-GAAP information to be useful and 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. A reconciliation between the company's GAAP and non-GAAP
measures is provided in the attached tables. Non-GAAP numbers are
merely a supplement to, and not a replacement for, GAAP financial
measures. They should be read and evaluated 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
January 31,
--------------------
2011 2010
--------- ---------
Net revenue:
Products $ 83 $ 76
Services 37 30
--------- ---------
Total net revenue 120 106
Cost of sales:
Cost of products (*) 42 40
Cost of services (*) 22 19
--------- ---------
Total cost of sales 64 59
Operating expenses:
Research and development (*) 23 22
Selling, general and administrative (*) 38 29
Restructuring charges - 1
--------- ---------
Total operating expenses 61 52
Loss from operations (5) (5)
Other (expense) income, net - (1)
--------- ---------
Loss before income taxes (5) (6)
Provision for income taxes - -
--------- ---------
Net loss $ (5) $ (6)
========= =========
Loss per share- basic: $ (0.08) $ (0.10)
Loss per share- diluted: $ (0.08) $ (0.10)
Weighted average shares (presented in thousands) used
in computing net loss per share:
Basic 60,455 59,148
Diluted 60,455 59,148
*Share-based compensation expense by function:
Cost of products $ 0.3 $ 0.5
Cost of services $ 0.5 $ 0.3
Research and development $ 0.5 $ 0.4
Selling, general and administrative $ 6.0 $ 3.4
VERIGY LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
January 31, October 31,
2011 2010
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 272 $ 296
Short-term marketable securities 138 135
Trade accounts receivable, net 81 94
Inventory 91 85
Other current assets 46 47
---------- ----------
Total current assets 628 657
Property, plant and equipment, net 43 45
Long-term marketable securities 31 38
Goodwill and other intangibles, net 14 14
Other long-term assets 64 63
---------- ----------
Total assets $ 780 $ 817
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 54 $ 69
Employee compensation and benefits 19 35
Deferred revenue, current 41 44
Income taxes and other taxes payable 2 6
Other current liabilities 14 18
---------- ----------
Total current liabilities 130 172
Long-term liabilities:
Convertible senior notes 138 138
Income taxes payable 18 18
Other long-term liabilities 59 60
---------- ----------
Total liabilities 345 388
Shareholders' equity
Ordinary shares, no par value, 60,632,795 and
60,015,188 issued and outstanding at January
31, 2011 and October 31, 2010, respectively
Additional paid in capital 459 449
Accumulated deficit (12) (7)
Accumulated other comprehensive loss (12) (13)
---------- ----------
Total shareholders' equity 435 429
---------- ----------
Total liabilities and shareholders' equity $ 780 $ 817
========== ==========
VERIGY LTD.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In millions, except per share amounts)
(Unaudited)
Three Months Ended
--------------------------------------------
January 31, 2011
Net
income Gross Gross Operating
(loss) EPS (*) profit margin expenses
------- ------- -------- ------- --------
GAAP (5) $ (0.08) $ 56 47% $ 61
Non-GAAP adjustments:
Restructuring charges in
operating expenses 0.4 0.01 - - (0.4)
Gain on sale of
investments (1.6) (0.03) - - -
Merger related deal
costs in operating
expenses, net of tax 8.9 0.15 - - (8.9)
Acquisition related
charges in cost of
sales 0.1 - 0.1 0.1% -
Acquisition related
charges in operating
expenses 0.1 - - - (0.1)
------- ------- -------- ------- --------
Non-GAAP 3 0.05 $ 56 47% $ 52
======= ======= ======== ======= ========
Three Months Ended
--------------------------------------------
January 31, 2010
Gross Gross Operating
Net loss EPS (*) profit margin expenses
------- ------- -------- ------- --------
GAAP (6) $ (0.10) $ 47 44% $ 52
Non-GAAP adjustments:
Restructuring charges in
cost of sales 0.3 - 0.3 0.3% -
Restructuring charges in
operating expenses 1.0 0.02 - - (1.0)
Gain on sale of
investments (0.5) (0.01) - - -
Acquisition related
charges in cost of
sales 0.1 - 0.1 0.1% -
Acquisition related
charges in operating
expenses 0.1 - - - (0.1)
Transition related
charges in cost of
sales 3.4 0.06 3.4 3.2% -
Transition related
charges in operating
expenses 0.1 - - - (0.1)
------- ------- -------- ------- --------
Non-GAAP (2) (0.03) $ 51 48% $ 51
======= ======= ======== ======= ========
* The convertible senior notes are antidilutive for the three months ended
January 31, 2011 and 2010 on both non-GAAP and GAAP basis.
Weighted average shares (presented in thousands) used in computing net
income per share for the three months ended January 31, 2011:
Diluted 60,975
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INVESTOR CONTACT: Judy Davies VP, Investor Relations and
Marketing Communications +1 408-864-7549 Email Contact
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