Novellus Systems Reports Fourth Quarter and Year-End Results
Wednesday January 25, 4:05 pm ET
SAN JOSE, Calif., Jan. 25 /PRNewswire-FirstCall/ -- Novellus Systems, Inc. (Nasdaq: NVLS - News) today reported net sales and results of operations for its fourth quarter and year ended December 31, 2005. Net sales for the fourth quarter were $332.3 million, down $6.6 million or 2.0 percent from the third quarter 2005 net sales of $338.9 million and down $8.0 million or 2.4 percent from the fourth quarter 2004 net sales of $340.3 million. Net income for the fourth quarter was $23.0 million or $0.17 per diluted share, similar to net income for the third quarter 2005 of $23.4 million or $0.17 per diluted share. Net income for the fourth quarter 2005 decreased by $14.5 million or 38.8 percent from the fourth quarter 2004 net income of $37.5 million or $0.27 per diluted share.
The fourth quarter results reflect net pre-tax restructuring and other charges of $5.9 million. These charges include a pre-tax restructuring of $8.8 million related to the relocation of certain operations activities from Chandler, Arizona to San Jose, California, which was partially offset by a $2.9 million pre-tax reversal of a previously recorded restructuring accrual resulting from a change in estimated sublease income over the remaining lease term. Without the restructuring charges, net income would have been $26.6 million, or $0.20 per diluted share. The third quarter 2005 results included net pre-tax restructuring and other charges of $3.4 million and, within cost of sales, a pre-tax inventory write-down of $5.2 million. Without these charges, the third quarter 2005 net income would have been $28.7 million, or $0.21 per diluted share.
Net sales for the fiscal year 2005 were $1.34 billion, down $16.8 million or 1.2 percent compared with net sales of $1.36 billion in fiscal year 2004. Net income for the year was $110.1 million, or $0.80 per diluted share, compared with the fiscal year 2004 net income of $156.7 million, or $1.06 per diluted share.
The fiscal year 2005 results include net pre-tax restructuring and other charges of $9.2 million and, within cost of sales, a pre-tax inventory write- down of $5.2 million. Without the restructuring charges and inventory write- down, net income for fiscal year 2005 would have been $118.9 million, or $0.86 per diluted share. In comparison, the fiscal year 2004 results include net pre-tax restructuring and other charges of $1.5 million, pre-tax acquired in- process research and development write-offs of $6.1 million, net pre-tax recovery from legal settlements of $2.6 million and the pre-tax reversal of previously accrued royalty payments of $8.1 million. Without these charges and benefits, net income for fiscal year 2004 would have been $156.3 million, or $1.06 per diluted share.
Bookings were $351.0 million in the fourth quarter, up 22.3 percent over third quarter bookings of $286.9 million. Shipments of $316.6 million in the fourth quarter were essentially flat with third quarter 2005 shipments of $316.4 million. Deferred revenue at the end of the quarter was $143.0 million, a decrease of $15.7 million or 9.9 percent from $158.7 million at the end of the third quarter 2005.
The financial measures set forth above, which present net income excluding unusual charges and benefits, revenue on a shipments basis and bookings, are not in accordance with U.S. generally accepted accounting principles (GAAP). The Company believes that these non-GAAP financial measures provide further insight into the results of ongoing operations and enhance the comparability of those results to results in prior periods because they assist shareholder understanding of the effects of unusual charges and benefits on the quarter's and the year's results.
Cash, cash equivalents, restricted cash and short-term investments as of December 31, 2005 were $789.4 million, a decrease of $90.2 million or 10.3 percent from the third quarter 2005 ending balance of $879.5 million.
"2005 finished with strong bookings momentum in the fourth quarter. We are pleased with this improved momentum on orders which was driven primarily by increased demand from both memory and logic customers," said Richard S. Hill, chairman and chief executive officer of Novellus Systems, Inc. "We also believe we have reached a low water mark on gross margins in the fourth quarter, and we expect to improve margins and earnings going forward."
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995:
The statement regarding the Company's expectation that margins and earnings will improve, as well as other matters discussed in this news release that are not purely historical data, are forward-looking statements. The forward-looking statements involve risks and uncertainties, including, but not limited to, the Company's inability to keep cost of services down and ineffective pricing techniques, and other risks indicated in our filings with the Securities and Exchange Commission (SEC). Actual results could differ materially. We assume no obligation to update this information. For more details, please refer to our SEC filings, including our Annual Report on Form 10-K and 10K/A for the year ended December 31, 2004, our Quarterly Reports on Form 10-Q and 10Q/A for the quarters ended October 1, 2005, July 2, 2005 and April 2, 2005, and our Current Reports on Form 8-K.
About Novellus:
Novellus Systems, Inc., an S&P 500 company, manufactures, markets and services advanced deposition, ultraviolet thermal processing (UVTP), surface preparation and chemical mechanical planarization equipment for today's advanced integrated circuits. Our products are designed for high-volume production of advanced, leading-edge semiconductor devices at the lowest possible cost. Headquartered in San Jose, Calif., with subsidiaries throughout the United States, as well as in the United Kingdom, France, Germany, the Netherlands, Ireland, Israel, Italy, India, China, Japan, Korea, Malaysia, Singapore and Taiwan, we are a publicly traded company on the Nasdaq stock exchange. Additional information about Novellus is available on our home page at www.novellus.com.
NOVELLUS SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except
per share amounts)
Three Months Ended Year Ended
(Unaudited) December 31 October 1 December 31 December 31 December 31
2005 2005 2004 2005 2004
Net sales $332,268 $338,878 $340,272 $1,340,471 $1,357,288
Cost of sales 191,767 191,684 170,538 741,345 692,158
Gross profit 140,501 147,194 169,734 599,126 665,130
% 42.3% 43.4% 49.9% 44.7% 49.0%
Operating expenses:
Selling, general
and
administrative 51,489 53,365 55,439 206,939 194,652
Research and
development 60,492 61,263 61,453 247,315 252,083
Restructuring
and other
charges 5,888 3,361 2,407 9,175 1,484
Acquired in-
process research
and development -- -- -- -- 6,124
Legal settlement -- -- -- -- 5,400
Total operating
expenses 117,869 117,989 119,299 463,429 459,743
% 35.5% 34.8% 35.1% 34.6% 33.9%
Income from
operations 22,632 29,205 50,435 135,697 205,387
% 6.8% 8.6% 14.8% 10.1% 15.1%
Other income, net 13,368 2,405 2,433 22,916 17,804
Income before
income taxes 36,000 31,610 52,868 158,613 223,191
Provision for
income taxes 13,010 8,195 15,332 48,506 66,501
Net income $22,990 $23,415 $37,536 $110,107 $156,690
Net income per
share:
Basic net income
per share $0.17 $0.17 $0.27 $0.80 $1.07
Diluted net income
per share $0.17 $0.17 $0.27 $0.80 $1.06
Shares used in
basic per share
calculation 133,980 137,848 139,466 137,447 145,956
Shares used in
diluted per share
calculation 134,752 138,895 140,687 138,423 147,937
NOVELLUS SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(EXCLUDING CERTAIN UNUSUAL (CHARGES) BENEFITS)(1)
(In thousands, except
per share amounts)
Three Months Ended Year Ended
(Unaudited) December 31 October 1 December 31 December 31 December 31
2005 2005 2004 2005 2004
Net sales $332,268 $338,878 $340,272 $1,340,471 $1,357,288
Cost of sales 191,767 186,434 170,538 736,095 692,158
Gross profit 140,501 152,444 169,734 604,376 665,130
% 42.3% 45.0% 49.9% 45.1% 49.0%
Operating expenses:
Selling, general
and
administrative 51,489 53,365 55,439 206,939 202,728
Research and
development 60,492 61,263 61,453 247,315 252,083
Total operating
expenses 111,981 114,628 116,892 454,254 454,811
% 33.7% 33.8% 34.4% 33.9% 33.5%
Income from
operations 28,520 37,816 52,842 150,122 210,319
% 8.6% 11.2% 15.5% 11.2% 15.5%
Other income, net 13,368 2,405 2,433 22,916 9,804
Income before
income taxes 41,888 40,221 55,275 173,038 220,123
Provision for
income taxes 15,277 11,535 16,030 54,091 63,835
Net income $26,611 $28,686 $39,245 $118,947 $156,288
Net income
per share:
Basic net income
per share $0.20 $0.21 $0.28 $0.87 $1.07
Diluted net
income per
share $0.20 $0.21 $0.28 $0.86 $1.06
Shares used in
basic per share
calculation 133,980 137,848 139,466 137,447 145,956
Shares used in
diluted per
share
calculation 134,752 138,895 140,687 138,423 147,937
A reconciliation of our net income excluding certain unusual charges and benefits to our net income under accounting principles generally accepted in the United States of America is presented below:
Net income
excluding
unusual
(charges) and
benefits $26,611 $28,686 $39,245 $118,947 $156,288
Unusual (charges)
and benefits:
Inventory write-
down -- (5,250) -- (5,250) --
Reversal of
liability in
connection
with Applied
Materials
settlement
(included in
SG&A) -- -- -- -- 8,076
Restructuring
and other
charges (5,888) (3,361) (2,407) (9,175) (1,484)
Acquired in-
process research
and development -- -- -- -- (6,124)
Legal settlement -- -- -- -- (5,400)
Cash receipt from
Applied Materials
settlement
(included in
Other income, net) -- -- -- -- 8,000
Total (charges)
and benefits (5,888) (8,611) (2,407) (14,425) 3,068
Adjustments on
provision for
income taxes 2,267 3,340 698 5,585 (2,666)
Net income $22,990 $23,415 $37,536 $110,107 $156,690
(1) The condensed consolidated statements of operations (excluding
certain unusual charges and benefits) are intended to present our
operating results, excluding certain unusual charges, benefits and
related adjustments on provisions for income taxes. These condensed
consolidated statements of operations are not in accordance with or
an alternative for accounting principles generally accepted in the
United States of America and may be different from similar measures
used by other companies.
NOVELLUS SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) December 31 December 31
2005 2004
(Unaudited) *
ASSETS
Current assets:
Cash and short-term investments $649,240 $587,762
Accounts receivable, net 397,534 395,522
Inventories 193,787 261,046
Deferred taxes and other current assets 125,478 124,994
Total current assets 1,366,039 1,369,324
Property and equipment, net 423,749 476,492
Restricted cash 140,112 176,708
Goodwill 255,584 278,972
Intangible and other assets 107,292 100,336
Total assets $2,292,776 $2,401,832
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $253,977 $235,020
Deferred profit 68,718 71,216
Income taxes payable 8,425 14,691
Current obligations under lines of credit 15,751 3,103
Total current liabilities 346,871 324,030
Long-term debt 124,858 161,103
Other liabilities 41,764 54,865
Total liabilities 513,493 539,998
Shareholders' equity:
Common stock 1,393,805 1,456,670
Retained earnings and accumulated other
comprehensive income 385,478 405,164
Total shareholders' equity 1,779,283 1,861,834
Total liabilities and shareholders' equity $2,292,776 $2,401,832
* The December 31, 2004 condensed consolidated balance sheet was derived from our audited consolidated financial statements.
--------------------------------------------------------------------------------
Source: Novellus Systems, Inc. |
