-- Revenue is expected to be in the range of $115 million to $120 million.
-- At the present time, the company is not providing GAAP earnings per
share since it is not yet able to assess the total amount of
transaction-related expenses and potential restructuring costs that it
will be incurring in Q1. These expenses may be significant.
-- 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 between $4.3 million
to $4.5 million.
Conference Call and Webcast
Verigy's management will present details of its fourth quarter and fiscal
year 2010 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 2010 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 7, 2010. The replay number is
+1 888-286-8010 toll-free, or international callers may dial
+1 617-801-6888; enter pass code 74845406.
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 expected revenue, expenses, earnings and share
repurchase plans. 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, unforeseen changes in
the demand for current and new products and technologies, the impact of our
pending merger with LTX-Credence and the receipt of necessary shareholder
approvals. Additional factors that may cause results to differ materially
from those in the forward-looking statements are discussed in our most
recent SEC filings. 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 income for the quarter ended October 31, 2010,
excludes the effects of charges related to restructuring actions,
impairment of goodwill and fixed assets, merger transaction costs, and a
loss on the sale of an investment. Non-GAAP net income for the year ended
October 31, 2010, 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, and
can be found in the IR section of the company's website at
http://investor.verigy.com. 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 Twelve Months
Ended Ended
October 31, October 31,
-------------- --------------
2010 2009 2010 2009
------ ------ ------ ------
Net revenue:
Products $ 123 $ 68 $ 409 $ 201
Services 36 29 130 122
------ ------ ------ ------
Total net revenue 159 97 539 323
Cost of sales:
Cost of products (*) 56 35 193 133
Cost of services (*) 24 20 87 82
------ ------ ------ ------
Total cost of sales 80 55 280 215
Operating expenses:
Research and development (*) 26 22 96 92
Selling, general and administrative (*) 35 29 131 117
Restructuring charges 1 1 3 8
Goodwill impairment 5 - 5 -
------ ------ ------ ------
Total operating expenses 67 52 235 217
Income (loss) from operations 12 (10) 24 (109)
Other (expense) income, net (1) - (4) 4
Impairment of investments - (2) (1) (18)
------ ------ ------ ------
Income (loss) before income taxes 11 (12) 19 (123)
Provision for income taxes 1 - 3 4
------ ------ ------ ------
Net income (loss) $ 10 $ (12) $ 16 $ (127)
====== ====== ====== ======
Net income (loss) per share- basic: $ 0.17 $(0.20) $ 0.26 $(2.17)
Net income (loss) per share- diluted: $ 0.17 $(0.20) $ 0.26 $(2.17)
Weighted average shares (presented in
thousands) used in computing net income
(loss) per share:
Basic 60,000 58,823 59,567 58,437
Diluted 60,139 58,823 59,905 58,437
* Share-based compensation expense by
function:
Cost of products $ 0.6 $ 0.6 $ 2.4 $ 2.2
Cost of services $ 0.3 $ 0.3 $ 1.1 $ 1.2
Research and development $ 0.5 $ 0.5 $ 2.2 $ 2.1
Selling, general and administrative $ 2.9 $ 3.5 $ 13.4 $ 13.5
VERIGY LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
October 31, October 31,
2010 2009
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 296 $ 197
Short-term marketable securities 135 167
Trade accounts receivable, net 94 54
Inventory 85 55
Other current assets 47 42
----------- -----------
Total current assets 657 515
Property, plant and equipment, net 45 41
Long-term marketable securities 38 75
Goodwill and other intangibles, net 14 20
Other long-term assets 63 62
----------- -----------
Total assets $ 817 $ 713
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 69 $ 40
Employee compensation and benefits 35 32
Deferred revenue, current 44 26
Income taxes and other taxes payable 6 5
Other current liabilities 18 22
----------- -----------
Total current liabilities 172 125
Long-term liabilities:
Convertible senior notes 138 138
Income taxes payable 18 15
Other long-term liabilities 60 33
----------- -----------
Total liabilities 388 311
Shareholders' equity
Ordinary shares, no par value, 60,015,188 and
58,841,248 issued and outstanding at October
31, 2010 and October 31, 2009, respectively
Additional paid in capital 449 429
Accumulated deficit (7) (23)
Accumulated other comprehensive loss (13) (4)
----------- -----------
Total shareholders' equity 429 402
----------- -----------
Total liabilities and shareholders'
equity $ 817 $ 713
=========== ===========
VERIGY LTD.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In millions, except per share amounts)
(Unaudited)
Three Months Ended
-------------------------------------------
October 31, 2010
Net Gross Gross Operating
income EPS (*) profit margin expenses
------- ------- ------- ------- -------
GAAP 10 $ 0.17 $ 79 50% $ 67
Non-GAAP adjustments:
Restructuring charges in
cost of sales 0.2 - 0.2 0.1% -
Restructuring charges in
operating expenses 1.0 0.01 - - (1.0)
Impairment of auction
rate securities - - - - -
Impairment of goodwill 5.0 0.08 - - (5.0)
Impairment of fixed
assets in cost of sales 0.4 0.01 0.4 0.3% -
Impairment of fixed
assets in operating
expenses 0.1 - - - (0.1)
Loss (gain) on sale of
investments 0.5 0.01 - - -
Non-Recurring operating
expenses - - - - -
Merger related deal costs
in operating expenses 1.0 0.01 - - (1.0)
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 (0.0) - (0.0) 0.0% -
Transition related
charges in operating
expenses - - - - -
------- ------- ------- ------- -------
Non-GAAP 18 0.29 $ 80 50% $ 60
======= ======= ======= ======= =======
Twelve Months Ended
-------------------------------------------
October 31, 2010
Net Gross Gross Operating
income EPS (*) profit margin expenses
------- ------- -------- ------- -------
GAAP $ 16 $ 0.26 $ 259 48% $ 235
Non-GAAP adjustments:
Restructuring charges in
cost of sales 1.6 0.03 1.6 0.3% -
Restructuring charges in
operating expenses 3.1 0.05 - - (3.1)
Impairment of auction
rate securities 1.0 0.02 - - -
Impairment of goodwill 5.0 0.08 - - (5.0)
Impairment of fixed
assets in cost of sales 0.4 0.01 0.4 0.1% -
Impairment of fixed
assets in operating
expenses 0.1 - - - (0.1)
Loss (gain) on sale of
investments (0.1) - - - -
Non-Recurring operating
expenses 0.4 0.01 - - (0.4)
Merger related deal costs
in operating expenses 1.0 0.02 - - (1.0)
Acquisition related
charges in cost of sales 0.2 - 0.2 0.0% -
Acquisition related
charges in operating
expenses 0.3 - - - (0.3)
Transition related
charges in cost of sales 4.2 0.07 4.2 0.8% -
Transition related
charges in operating
expenses 0.9 0.02 - - (0.9)
------- ------- -------- ------- -------
Non-GAAP $ 34 0.57 $ 265 49% $ 224
======= ======= ======== ======= =======
Three Months Ended
-------------------------------------------
October 31, 2009
Net Gross Gross Operating
loss EPS profit margin expenses
------- ------- ------- ------- -------
GAAP $ (12) $ (0.20) $ 42 43% $ 52
Non-GAAP adjustments:
Restructuring charges in
cost of sales 0.9 0.01 0.9 0.9% -
Restructuring charges in
operating expenses 0.8 0.01 - - (0.8)
Impairment of auction
rate securities 1.6 0.03 - - -
Impairment of cost method
investment - - - - -
Non-Recurring operating
expenses (0.3) - - - (0.3)
Acquisition related
charges in cost of sales 0.1 - 0.1 0.1% -
Acquisition related
charges in operating
expenses 0.0 - - - (0.0)
Transition related
charges in cost of sales 1.7 0.03 1.7 1.8% -
Transition related
charges in operating
expenses 0.1 - - - (0.1)
Tax impact for transfer
of intellectual property - - - - -
Tax impact related to
acquisition - - - - -
------- ------- ------- ------- -------
Non-GAAP $ (7) $ (0.12) $ 45 46% $ 51
======= ======= ======= ======= =======
Twelve Months Ended
--------------------------------------------
October 31, 2009
Net Gross Gross Operating
loss EPS profit margin expenses
------- ------- ------- ------- -------
GAAP $ (127) (2.17) $ 108 33% $ 217
Non-GAAP adjustments:
Restructuring charges in
cost of sales 5.5 0.09 5.5 1.7% -
Restructuring charges in
operating expenses 8.2 0.14 - - (8.2)
Impairment of auction
rate securities 10.8 0.19 - - -
Impairment of cost method
investment 6.2 0.11 - - -
Non-Recurring operating
expenses 2.4 0.04 - - (2.4)
Acquisition related
charges in cost of sales 0.2 0.01 0.2 0.1% -
Acquisition related
charges in operating
expenses 4.1 0.07 - - (4.1)
Transition related
charges in cost of sales 2.3 0.04 2.3 0.7% -
Transition related
charges in operating
expenses 0.2 - - - (0.2)
Tax impact for transfer
of intellectual property 1.2 0.02 - - -
Tax impact related to
acquisition (1.5) (0.03) - - -
------- ------- -------- ------- -------
Non-GAAP $ (87) $ (1.49) $ 116 36% $ 202
======= ======= ======== ======= =======
* In accordance with accounting guidance, the computation of diluted EPS
for the three months ended October 31, 2010 includes the dilutive effect
of our convertible senior notes. As a result, non-GAAP net income is
adjusted to add back the related interest expense of approximately
$1.9 million.
The convertible senior notes are antidilutive for the twelve months ended
October 31, 2010 on a non-GAAP basis and are also anitdilutive for both the
three and the twelve months ended October 31, 2010 on a GAAP basis.
Weighted average shares (presented in thousands) used in computing net
income per share:
Three Months Ended Twelve Months Ended
October 31, October 31,
2010 2010
------- -------
Diluted 60,139 59,905
Convertible senior notes 10,526 -
------- -------
Total diluted 70,665 59,905
======= =======
Contact Information: INVESTOR CONTACT: Judy Davies VP, Investor Relations and Marketing Communications +1 408-864-7549