SAN JOSE, Calif., Jan. 31, 2011 /PRNewswire/ -- Novellus Systems, Inc. (Nasdaq: NVLS) today reported operating results for its fourth quarter and year ended December 31, 2010. Net sales for the fourth quarter were $384.4 million, up $17.2 million or 4.7 percent from third quarter 2010 net sales of $367.2 million, and up $140.2 million or 57.4 percent from fourth quarter 2009 net sales of $244.2 million. Net income for the fourth quarter was $81.5 million, or $0.89 per diluted share, up $5.2 million from the third quarter 2010 net income of $76.3 million, or $0.82 per diluted share, and up $46.3 million from the fourth quarter 2009 net income of $35.2 million, or $0.36 per diluted share.
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Fourth quarter 2010 results of operations include $2.4 million in charges related to the consolidation of our Industrial Applications Group manufacturing facilities in Germany, $9.9 million in charges due to the adoption of our accelerated stock vesting retirement plan and $0.7 million in adjustments to prior restructuring charges. Net income excluding these charges was $94.3 million or $1.03 per diluted share. Excluding certain charges and benefits, third quarter 2010 and fourth quarter 2009 net income was $81.3 million and $38.2 million, respectively, or $0.88 and $0.39 per diluted share, respectively. A reconciliation of non-GAAP operating results to U.S. generally accepted accounting principles ("GAAP") is included below.
Net sales for fiscal year 2010 were $1.3 billion, up $710.0 million or 111.1 percent from net sales of $639.2 million in fiscal year 2009. Net income for the year was $262.3 million or $2.79 per diluted share compared with a net loss of $85.2 million or $0.88 per diluted share for fiscal year 2009.
Fiscal year 2010 results of operations include $7.2 million in charges related to the consolidation of our Industrial Applications Group manufacturing facilities in Germany, $0.5 million in charges related to reductions in workforce, $0.9 million in charges due to consolidation of manufacturing in Oregon, $9.9 million in charges due to the adoption of our accelerated stock vesting retirement plan, $1.4 million in adjustments to prior restructuring charges and $4.4 million in charges due to legal fees for the Linear trial. Fiscal year 2010 net income was $284.8 million or $3.03 per diluted share excluding those items. Excluding certain charges and benefits, fiscal year 2009 net loss was $49.1 million or $0.51 per diluted share. A reconciliation of non-GAAP operating results to GAAP is included below.
Bookings in the fourth quarter were $410.6 million, up $3.7 million or 0.9 percent from third quarter 2010 bookings of $406.9 million. Fourth quarter 2010 shipments of $417.9 million were up by $54.6 million or 15.0 percent from $363.3 million in the third quarter of 2010. Deferred revenue at the end of the quarter was $75.8 million, an increase of $28.4 million or 60.0 percent from $47.4 million at the end of the third quarter of 2010. Deferred revenue in the fourth and third quarters of 2010 included $59.7 million and $32.4 million, respectively, related to system sales.
Cash, cash equivalents and short-term investments as of December 31, 2010 were $671.3 million, an increase of $76.7 million or 12.9 percent from the third quarter 2010 ending balance of $594.5 million. Long-term investments and restricted cash and cash equivalents as of December 31, 2010 were $189.9 million, a decrease of $1.4 million or 0.7 percent from the third quarter 2010 ending balance of $191.3 million. During the fourth quarter of 2010, we repurchased approximately 3.5 million shares of our common stock at an average price of $29.50 per share for $103.2 million and we received $98.6 million from the exercise of stock options. Cash flow from operations during the fourth quarter of 2010 was $88.4 million, up $6.6 million or 8.1 percent from $81.8 million in the third quarter of 2010.
Richard S. Hill, Chairman and Chief Executive Officer said, "I am extremely pleased to report that 2010 was an outstanding year, with record earnings per share which was achieved without record revenue levels. We also generated strong cash flow from operations, and returned to shareholders in excess of $263 million through share repurchases in 2010, bringing our program total to over $2 billion since 2002." Hill added, "Demand for semiconductors continues to remain robust due to the confluence of multiple demand drivers across the industrial, public and global consumer sectors. PC and laptop demand remains strong as the adoption of Windows 7 continues unabated. Additionally, we see continued progress in the gentrification of the Internet and worldwide communications infrastructure and the China consumer continues to spend. We expect these positive factors will continue to drive semiconductor demand and consequently the need for capacity expansion through 2011. While the equipment industry remains cyclical, any current pause in capital spending is likely to be digestion of recently delivered equipment rather than a slowing in end demand for electronic products that drive capacity expansion. We emerged from one of the worst downturns as a stronger company with a solid portfolio of products and we are optimistic about our future prospects."
Management uses non-GAAP measures to evaluate operating performance. The discussion of bookings and shipments and the discussion of gross profit, operating expenses, operating income (loss), income (loss) before taxes, provision for income taxes, effective tax rate, net income (loss), and net income (loss) per diluted share, each excluding certain charges and benefits are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. We discuss these non-GAAP measures because we believe these metrics 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. 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 demand for semiconductors and the need for capacity expansion in 2011; (ii) PC and laptop demand and the unabated adoption of Windows 7; (iii) the gentrification of the Internet and worldwide communications infrastructure; (iv) continued Chinese consumer spending; and (v) the likely causes for any current pauses in capital spending. 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) the economy or the specific markets in which we operate may fail to continue to improve; (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, and (vi) other risks indicated in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2009, our Quarterly Reports on Form 10-Q for the quarters ended March 27, 2010, June 26, 2010 and September 25, 2010, respectively, and 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. (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.
NOVELLUS SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended ------------------ (In thousands, except per December September December share amounts) 31, 25, 31, (Unaudited) 2010 2010 2009 ---- ---- ---- Net sales $384,357 $367,203 $244,194 Cost of sales 190,357 186,774 130,556 ------- ------- ------- Gross profit 194,000 180,429 113,638 % 50.5% 49.1% 46.5% Operating expenses: Selling, general and administrative 54,974 46,426 38,560 Research and development 49,992 44,271 36,732 Restructuring and other charges 716 240 282 --- --- --- Total operating expenses 105,682 90,937 75,574 % 27.5% 24.8% 30.9% ---- ---- ---- Income (loss) from operations 88,318 89,492 38,064 % 23.0% 24.4% 15.6% Other income (expense), net 1,330 (132) 2,517 ----- ---- ----- Income (loss) before income taxes $89,648 $89,360 $40,581 Provision for income taxes 8,145 13,095 5,390 ----- ------ ----- Net income (loss) $81,503 $76,265 $35,191 ======= ======= ======= Net income (loss) per share: Basic $0.91 $0.83 $0.37 ===== ===== ===== Diluted $0.89 $0.82 $0.36 ===== ===== ===== Shares used in basic per share calculation 89,576 91,512 96,053 ====== ====== ====== Shares used in diluted per share calculation 91,934 92,859 97,161 ====== ====== ======
Year Ended ---------- (In thousands, except per December December share amounts) 31, 31, (Unaudited) 2010 2009 ---- ---- Net sales $1,349,158 $639,194 Cost of sales 683,824 398,104 ------- ------- Gross profit 665,334 241,090 % 49.3% 37.7% Operating expenses: Selling, general and administrative 189,483 164,125 Research and development 174,740 149,101 Restructuring and other charges 1,373 3,840 ----- ----- Total operating expenses 365,596 317,066 % 27.1% 49.6% ---- ---- Income (loss) from operations 299,738 (75,976) % 22.2% -11.9% Other income (expense), net 4,920 6,595 ----- ----- Income (loss) before income taxes $304,658 $(69,381) Provision for income taxes 42,326 15,854 ------ ------ Net income (loss) $262,332 $(85,235) ======== ======== Net income (loss) per share: Basic $2.83 $(0.88) ===== ====== Diluted $2.79 $(0.88) ===== ====== Shares used in basic per share calculation 92,690 96,487 ====== ====== Shares used in diluted per share calculation 94,084 96,487 ====== ======
NOVELLUS SYSTEMS, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)
Three Months Ended ------------------ (In thousands, except per share December September December amounts) 31, 25, 31, (Unaudited) 2010 2010 2009 Gross profit - GAAP $194,000 $180,429 $113,638 % of sales 50.5% 49.1% 46.5% Adjustment for: Consolidation of IAG manufacturing in Germany 1,403 2,474 - Reductions in workforce - - (288) Consolidation of semiconductor manufacturing in Oregon - - 2,187 Accelerated stock vesting retirement plan adoption 809 - - Impairment of inventory and evaluation systems - - - --- --- --- Gross profit excluding certain charges and benefits $196,212 $182,903 $115,537 ======== ======== ======== % of sales 51.0% 49.8% 47.3% Operating expenses - GAAP $105,682 $90,937 $75,574 % of sales 27.5 % 24.8% 30.9% Adjustment for: Consolidation of IAG manufacturing in Germany (968) (2,387) - Reductions in workforce - - (1,030) Consolidation of semiconductor manufacturing in Oregon - - (282) Accelerated stock vesting retirement plan adoption (9,043) - - Restructuring charges (716) (240) (282) Legal fees for Linear trial - - - Write down of certain research and development assets - - - --- --- --- Operating expenses excluding certain charges and benefits $94,955 $88,310 $73,980 ======= ======= ======= % of sales 24.7 % 24.0% 30.3% Operating income (loss) - GAAP $88,318 $89,492 $38,064 % of sales 23.0% 24.4 % 15.6% Adjustment for: Consolidation of IAG manufacturing in Germany 2,371 4,861 - Reductions in workforce - - 742 Consolidation of semiconductor manufacturing in Oregon - - 2,469 Accelerated stock vesting retirement plan adoption 9,852 - - Impairment of inventory and evaluation systems - - - Restructuring charges 716 240 282 Legal fees for Linear trial - - - Write down of certain research and development assets - - - --- --- --- Operating income (loss) excluding certain charges and benefits $101,257 $94,593 $41,557 ======== ======= ======= % of sales 26.3% 25.8% 17.0 % Income (loss) before income taxes -GAAP $89,648 $89,360 $40,581 Adjustment for: Consolidation of IAG manufacturing in Germany 2,371 4,861 - Reductions in workforce - - 742 Consolidation of semiconductor manufacturing in Oregon - - 2,469 Accelerated stock vesting retirement plan adoption 9,852 - - Impairment of inventory and evaluation systems - - - Restructuring charges 716 240 282 Legal fees for Linear trial - - - Write down of certain research and development assets - - - --- --- --- Income (loss) before income taxes excluding certain charges and benefits $102,587 $94,461 $44,074 ======== ======= ======= Provision for income taxes - GAAP $8,145 $13,095 $5,390 % of income (loss) before income taxes 9.1% 14.7% 13.3% Income tax effect of non-GAAP adjustments 94 26 456 Benefit due to operating loss carryforward utilization, net - - - Changes to unrecognized tax benefits, net - - - Charge due to California tax law change - - - Other discrete tax charges, net - - - Provision for income taxes excluding certain charges and benefits $8,239 $13,121 $5,846 ====== ======= ====== % of income (loss) before income taxes 8.0% 13.9% 13.3% Net income (loss) - GAAP $81,503 $76,265 $35,191 Adjustment for: Consolidation of IAG manufacturing in Germany 2,371 4,861 - Reductions in workforce - - 742 Consolidation of semiconductor manufacturing in Oregon - - 2,469 Accelerated stock vesting retirement plan adoption 9,852 - - Impairment of inventory and evaluation systems - - - Restructuring charges 716 240 282 Legal fees for Linear trial - - - Write down of certain research and development assets - - - Income tax effect of non-GAAP adjustments (94) (26) (456) Discrete tax items - - - Net income (loss) excluding certain charges and benefits $94,348 $81,340 $38,228 ======= ======= ======= Net income (loss) per diluted share -GAAP $0.89 $0.82 $0.36 Adjustment for certain charges and benefits 0.14 0.06 0.03 ---- ---- ---- Net income (loss) per diluted share excluding certain charges and benefits $1.03 $0.88 $0.39 ===== ===== =====
Year Ended ---------- December December (In thousands, except per share amounts) 31, 31, (Unaudited) 2010 2009 Gross profit - GAAP $665,334 $241,090 % of sales 49.3% 37.7% Adjustment for: Consolidation of IAG manufacturing in Germany 3,877 - Reductions in workforce 126 2,630 Consolidation of semiconductor manufacturing in Oregon 485 3,338 Accelerated stock vesting retirement plan adoption 809 - Impairment of inventory and evaluation systems - 4,867 --- ----- Gross profit excluding certain charges and benefits $670,631 $251,925 ======== ======== % of sales 49.7% 39.4% Operating expenses - GAAP $365,596 $317,066 % of sales 27.1% 49.6% Adjustment for: Consolidation of IAG manufacturing in Germany (3,355) - Reductions in workforce (385) (8,505) Consolidation of semiconductor manufacturing in Oregon (390) (373) Accelerated stock vesting retirement plan adoption (9,043) - Restructuring charges (1,373) (3,840) Legal fees for Linear trial (4,428) - Write down of certain research and development assets - (897) --- ---- Operating expenses excluding certain charges and benefits $346,622 $303,451 ======== ======== % of sales 25.7 % 47.5% Operating income (loss) - GAAP $299,738 $(75,976) % of sales 22.2% -11.9 % Adjustment for: Consolidation of IAG manufacturing in Germany 7,232 - Reductions in workforce 511 11,135 Consolidation of semiconductor manufacturing in Oregon 875 3,711 Accelerated stock vesting retirement plan adoption 9,852 - Impairment of inventory and evaluation systems - 4,867 Restructuring charges 1,373 3,840 Legal fees for Linear trial 4,428 - Write down of certain research and development assets - 897 --- --- Operating income (loss) excluding certain charges and benefits $324,009 $(51,526) ======== ======== % of sales 24.0 % -8.1 % Income (loss) before income taxes - GAAP $304,658 $(69,381) Adjustment for: Consolidation of IAG manufacturing in Germany 7,232 - Reductions in workforce 511 11,135 Consolidation of semiconductor manufacturing in Oregon 875 3,711 Accelerated stock vesting retirement plan adoption 9,852 - Impairment of inventory and evaluation systems - 4,867 Restructuring charges 1,373 3,840 Legal fees for Linear trial 4,428 - Write down of certain research and development assets - 897 --- --- Income (loss) before income taxes excluding certain charges and benefits $328,929 $(44,931) ======== ======== Provision for income taxes - GAAP $42,326 $15,854 % of income (loss) before income taxes 13.9% -22.9 % Income tax effect of non-GAAP adjustments 1,790 6,675 Benefit due to operating loss carryforward utilization, net - 20,730 Changes to unrecognized tax benefits, net - (17,115) Charge due to California tax law change - (19,435) Other discrete tax charges, net - (2,583) ------ Provision for income taxes excluding certain charges and benefits $44,116 $4,126 ======= ====== % of income (loss) before income taxes 13.4% - 9.2% Net income (loss) - GAAP $262,332 $(85,235) Adjustment for: Consolidation of IAG manufacturing in Germany 7,232 - Reductions in workforce 511 11,135 Consolidation of semiconductor manufacturing in Oregon 875 3,711 Accelerated stock vesting retirement plan adoption 9,852 - Impairment of inventory and evaluation systems - 4,867 Restructuring charges 1,373 3,840 Legal fees for Linear trial 4,428 - Write down of certain research and development assets - 897 Income tax effect of non-GAAP adjustments (1,790) (6,675) Discrete tax items - 18,403 ------ Net income (loss) excluding certain charges and benefits $284,813 $(49,057) ======== ======== Net income (loss) per diluted share - GAAP $2.79 $(0.88) Adjustment for certain charges and benefits 0.24 0.37 ---- ---- Net income (loss) per diluted share excluding certain charges and benefits $3.03 $(0.51) ===== ======
(1) The reconciliation of gross profit, operating expenses, operating income (loss), income (loss) before income taxes, provision for income taxes, net income (loss) and net income (loss) per diluted share is intended to present our operating results, excluding certain charges and benefits. This reconciliation is not in accordance with or an alternative for GAAP and may be different from similar measures by other companies.
NOVELLUS SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
December December 31 31 2010 2009* (In thousands) (Unaudited) ----- ----------- ASSETS Current assets: Cash, cash equivalents and short-term investments $671,251 $501,370 Accounts receivable, net 256,731 150,624 Inventories 208,894 162,213 Deferred taxes and other current assets 65,525 83,615 ------ ------ Total current assets 1,202,401 897,822 Property and equipment, net 218,569 239,111 Non-current restricted cash and cash equivalents 121,226 133,105 Long-term investments 68,645 78,763 Goodwill 125,043 126,438 Intangible and other assets 96,513 83,739 ------ ------ Total assets $1,832,397 $1,558,978 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $261,220 $162,387 Deferred profit 29,693 9,094 Current debt obligations 98 13 --- --- Total current liabilities 291,011 171,494 Long-term debt 105,592 114,147 Long-term income taxes payable 61,381 48,332 Other liabilities 46,275 45,228 ------ ------ Total liabilities 504,259 379,201 ------- ------- Shareholders' equity: Common stock 1,206,887 1,179,220 Retained earnings and accumulated other comprehensive income 121,251 557 ------- --- Total shareholders' equity 1,328,138 1,179,777 --------- --------- Total liabilities and shareholders' equity $1,832,397 $1,558,978 ========== ==========
* The December 31, 2009 condensed consolidated balance sheet was derived from our audited consolidated financial statements.
SOURCE Novellus Systems, Inc.