Verigy Ltd. (NASDAQ:VRGY), a premier semiconductor test company,
today reported financial results for its first quarter, ended
January 31, 2010. Revenue for the first quarter was $106 million,
an increase of $9 million, or 9 percent, from the prior quarter,
and an increase of $38 million, or 56 percent, from the prior year
period.
Net loss for the first quarter was $6 million, or ($0.10) per
share, compared to a net loss of $12 million, or ($0.20) per share,
last quarter, and a net loss of $64 million, or ($1.09) per share,
in the prior year period.
The results for the first quarter included approximately $5.0
million of charges related to the company’s restructuring and
manufacturing transition actions as well as an investment gain of
approximately $0.5 million. After excluding these items, Verigy
reported a non-GAAP net loss of $2 million, or ($0.03) per share,
for its first quarter of fiscal 2010.
A reconciliation between GAAP and non-GAAP operating results is
provided following the financial statements that are part of this
press release. Non-GAAP results include the impact of share-based
compensation of $4.6 million, but exclude the items noted
above.
“Over the past year, Verigy significantly expanded its product
portfolio, and entered new markets,” said Keith Barnes, Verigy
chairman, chief executive officer and president. “We are optimistic
about the improving business environment and as the semiconductor
industry emerges from the downturn, we believe that we are
well-positioned to benefit. We expect our fiscal 2010 revenue to
reflect more than 50 percent year-over-year growth.”
“First quarter results represented the fourth consecutive
quarter of improvement in orders and revenue, and we achieved
breakeven on a non-GAAP operating margin basis,” said Bob Nikl,
Verigy chief financial officer. “Based on current revenue
expectations, we believe that we will return to profitability in
our third fiscal quarter.”
Outlook for Q2
2010
For the second quarter ending April 30, 2010, the company is
providing the following outlook:
- Revenue is expected to be in the
range of $107 million to $117 million.
- Loss per share on a GAAP basis
is expected to be in the range of ($0.12) to ($0.03).
- After excluding restructuring
and manufacturing transition-related charges, earnings per share on
a non-GAAP basis are expected to be in the range of ($0.08) to
$0.01.
- Share-based compensation expense
is expected to be approximately $5.2 million to $5.4 million.
Conference Call and
Webcast
Verigy’s management will present more details on its first
quarter 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 “Q1 FY’10 Verigy Earnings
Conference Call” in the “Events & Webcast” 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 March 9, 2010. The replay number
is +1 888-286-8010 toll-free, or international callers may dial +1
617-801-6888; enter passcode 54399489.
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 the semiconductor and semiconductor test
industries’ recovery, our estimated second quarter revenue and
earnings (loss) per share, our expected share-based compensation
expense, our expected fiscal 2010 revenue growth, and our return to
profitability in the third quarter. 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 the
semiconductor and semiconductor test industries, the strength of
our customers’ businesses and unforeseen changes in the demand for
our current and new products. 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 loss for the quarter ended
January 31, 2010 excludes the effects of charges for the company’s
previously announced restructuring actions and manufacturing
transition as well as an investment gain. 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 January 31, 2010 2009 Net revenue:
Products $ 76 $ 33 Services 30 35 Total
net revenue 106 68 Cost of sales: Cost of products (*) 40 36
Cost of services (*) 19 23 Total cost
of sales 59 59 Operating expenses: Research and development
(*) 22 25 Selling, general and administrative (*) 29 31
Restructuring Charges 1 4 Total
operating expenses 52 60 Loss from operations (5 ) (51 )
Other (expense) income, net (1 ) 2 Impairment of investments
- (14 ) Loss before income taxes (6 ) (63 )
Provision for income taxes - 1
Net loss $ (6 ) $ (64 ) Net loss per share-
basic: $ (0.10 ) $ (1.09 ) Net loss per share- diluted: $
(0.10 ) $ (1.09 ) Weighted average shares (presented
in thousands) used in computing net loss per share: Basic 59,148
58,149 Diluted 59,148 58,149 * Share-based compensation
expense by function: Cost of products $ 0.5 $ 0.5 Cost of services
$ 0.3 $ 0.3 Research and development $ 0.4 $ 0.5 Selling, general
and administrative $ 3.4 $ 3.5
VERIGY LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS (In millions,
except share data) (Unaudited)
January 31, October 31, 2010 2009
ASSETS Current assets: Cash and cash equivalents $ 213 $ 197
Short-term marketable securities 147 167 Trade accounts receivable,
net 70 54 Inventory 61 55 Other current assets 40
42 Total current assets 531 515 Property,
plant and equipment, net 41 41 Long-term marketable securities 67
75 Goodwill and other intangibles, net 19 20 Other long-term assets
62 62 Total assets $ 720 $ 713
LIABILITIES AND SHAREHOLDERS’ EQUITY Current
liabilities: Accounts payable $ 51 $ 40 Employee compensation and
benefits 27 32 Deferred revenue, current 32 26 Other current
liabilities 21 27 Total current
liabilities 131 125 Long-term liabilities: Convertible
senior notes 138 138 Income taxes payable 16 15 Other long-term
liabilities 33 33 Total liabilities 318
311 Shareholders' equity Ordinary shares, no
par value; 59,259,463 and 58,841,248 issued and outstanding at
January 31, 2010 and October 31, 2009, respectively Additional paid
in capital 436 429 Accumulated deficit (29 ) (23 ) Accumulated
other comprehensive loss (5 ) (4 ) Total
shareholders' equity 402 402 Total
liabilities and shareholders’ equity $ 720 $ 713
VERIGY LTD. RECONCILIATION OF GAAP NET LOSS TO
NON-GAAP NET LOSS
(In millions, except per share
amounts)
(Unaudited) Three
Months Ended January 31, 2010 EPS GAAP net
loss $ (6 ) $ (0.10 ) Non-GAAP adjustments: . Restructuring charges
in cost of sales 0.3 - Restructuring charges in operating expenses
1.0 0.02 Gain on sale of investments (0.5 ) (0.01 ) Acquisition
related charges in cost of sales 0.1 - Acquisition related charges
in operating expenses 0.1 - Transition related charges in cost of
sales 3.4 0.06 Transition related charges in operating expenses
0.1 - Non-GAAP net loss $ (2 )
$ (0.03 )
Three Months Ended
January 31, 2009 EPS GAAP net loss $ (64 ) $
(1.09 ) Non-GAAP adjustments: Restructuring charges in cost of
sales 1.5 0.03 Restructuring charges in operating expenses 4.2 0.07
Impairment of auction rate securities 7.7 0.13 Impairment of cost
method investment 6.2 0.11 Non-Recurring operating expenses 3.0
0.05 Acquisition related charges in cost of sales 0.2 - Acquisition
related charges in operating expenses 0.2
- Non-GAAP net loss $ (41 ) $ (0.70 )
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