Novellus Systems Reports Third Quarter Results
SAN JOSE, Calif.--(BUSINESS WIRE)--Oct. 12, 1998--Novellus
Systems Inc. (Nasdaq NM:NVLS) Monday reported net sales and results
of operations for its third quarter ended Sept. 26, 1998.
Net sales for the quarter were $106.7 million, a decrease of 31
percent over third quarter 1997 net sales of $155.1 million. Net
income of $7.6 million and $0.22 per share was recorded for the
quarter, down 62 percent as compared with the third quarter 1997 net
income of $20.1 million or $0.57 per share. The per share amounts are
stated on a diluted basis. [That's 10¢ better than the mean est]
For the nine months ended Sept. 26, 1998, net sales were $412.8
million, which includes nine months of net sales of PVD products from
the June 1997 Varian Thin Film Systems division acquisition, an
increase of 11 percent from net sales of $371.2 million in the same
period of 1997. Net income for the nine months ended Sept. 26, 1998
was $44.7 million or $1.28 per share as compared with the net loss
posted in the comparable period in 1997 of $118.0 million or $3.57 per
share. Without the one-time pre-tax charges of $235.2 million
recorded during the second quarter of 1997, net income for the
comparable period would have been $52.9 million or $1.53 per share.
Cash and short term investments at Sept. 26, 1998 were $111.3
million, up 4 percent over second quarter 1998 balances of $107.4
million. Bookings fell short of achieving a 1:1 book to bill ratio
for the third quarter of 1998. [No surprise there]
"Given the severity of the current industry downturn, we are
proud of the company performance during the quarter," said Robert
Smith, executive vice president and chief financial officer. "The
execution of our aggressive cost control measures, as reflected in the
18 percent decrease in operating expenses from the second quarter of
1998, is a tribute to the efforts of our employees worldwide. These
efforts allowed us to post a sequential increase in cash and
short-term investment balances for the fifth consecutive quarter."
"The company's net sales is a result of the continued slowdown
during the quarter of capital spending by semiconductor manufacturers,
especially for capacity expansion," said Richard Hill, chairman and
chief executive officer. "During the quarter, we announced cost
reduction measures across all areas of the company in response to
the current industry slowdown. Despite these reductions, we have
maintained our expenditures and staffing levels for key new product
development projects. The company remains committed to strengthening
its market position through investments in new products, which will
further advantage the company when economic conditions become more
favorable."
"While capacity purchases by semiconductor manufacturers have
continued to be slow, strong interest in emerging, advanced technology
products continues," Hill added. "The ability of Novellus to provide
innovative, leading-edge technologies for production, such as
Damascus(TM) Complete Copper(TM), a full spectrum of production-worthy
products delivering advanced copper interconnect structures for
integrated circuit fabrication, has enabled Novellus to better weather
this downturn."
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: The statements regarding (i) the company's
commitment to its investment in new products in order to strengthen
its market position, (ii) the advantage provided by the company's new
product investment, and (iii) the company's ability to weather the
current industry downturn, as well as other matters discussed in the
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, a possible continuing slowdown in new
orders, the difficulty of curtailing expenses to necessary levels and
the inability of the company's product development efforts to continue
its position as an industry leader in deposition technologies, and
other risks indicated in filings with the Securities and Exchange
Commission (SEC). Actual results could differ materially. Novellus
assumes no obligation to update this information. For more details,
refer to Novellus' SEC filings, including its most recent Annual
Report on Form 10-K and quarterly reports on Form 10-Q.
Novellus Systems Inc. manufactures, markets, and services
advanced automated wafer fabrication systems for the deposition of
thin films. Novellus deposition systems are designed for high-volume
production of advanced, leading-edge semiconductors at the lowest
overall cost. The company's stock trades on the Nasdaq Stock Market's
National Market under the symbol "NVLS." Additional information about
the company is available on the Novellus Systems home page on the
World Wide Web, located at novellus.com.
*T
NOVELLUS SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1998 1997 1998 1997
Net Sales $106,704 $155,080 $412,761 $371,174
Cost of Sales 50,622 72,888 188,182 170,130
Gross Profit 56,082 82,192 224,579 201,044
Operating Expenses
Research & Development 23,392 25,199 83,047 61,696
Selling, General and
Administrative 21,478 25,991 74,577 62,117
In-Process Research &
Development -- -- -- 119,246
Restructuring & Other
Costs -- -- -- 14,243
Litigation Settlement &
Related Legal Costs -- -- -- 84,021
Bad Debt Write-off -- -- -- 17,700
Total Operating Expenses 44,870 51,190 157,624 359,023
Income (Loss) from
Operations 11,212 31,002 66,955 (157,979)
Interest Income,
(Expense) Net 342 (580) 759 2,923
Income (Loss) before
Income Taxes 11,554 30,422 67,714 (155,056)
Provision (Benefit) for
Income Taxes 3,931 10,343 23,025 (37,008)
Net Income (Loss) $ 7,623 $20,079 $ 44,689 $(118,048)
Basic Net Income (Loss)
Per Share $0.22 $0.60 $1.32 $(3.57)
Diluted Net Income (Loss)
Per Share $0.22 $0.57 $1.28 $(3.57)
Shares Used in Basic
Calculation 34,095 33,546 33,948 33,108
Shares Used in Diluted
Calculation 34,659 35,276 34,854 33,108
NOTE: The earnings per share amounts have been adjusted for the
2-for-1 split effective October 1997.
NOVELLUS SYSTEMS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Sept. 26, Dec. 31,
1998 1997
(Unaudited)
Assets
Current Assets:
Cash & Short-Term Investments $111,294 $ 98,089
Accounts Receivable, Net 158,963 133,925
Inventories 81,731 82,133
Deferred Taxes and Other
Current Assets 32,860 36,862
Total Current Assets 384,848 351,009
Property and Equipment, Net 104,502 93,340
Other Assets 55,528 48,951
Total Assets $544,878 $493,300
Liabilities & Shareholders' Equity
Current Liabilities:
Accounts Payable $27,201 $22,865
Short-Term Obligations 11,318 11,652
Other Accrued Liabilities 86,503 92,782
Total Current Liabilities 125,022 127,299
Long Term Debt 65,000 65,000
Total Liabilities 190,022 192,299
Shareholders' Equity:
Common Stock 164,519 154,167
Retained Earnings and Accumulated
Other Comprehensive Income 190,337 146,834
Total Shareholders' Equity 354,856 301,001
Total Liabilities &
Shareholders' Equity $544,878 $493,300
NOVELLUS SYSTEMS INC.
SUPPLEMENTAL FINANCIAL INFORMATION (a)
(in thousands except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1998 1997 1998 1997
Pro forma operating income $11,212 $31,002 $66,955 $ 77,231
Pro forma income before income
taxes $11,554 $30,422 $67,714 $ 80,152
Pro forma provision for
income taxes 3,931 10,343 23,025 27,252
Pro forma net income $ 7,623 $20,079 $44,689 $52,900
Pro forma Basic Net Income
per Share $0.22 $0.60 $1.32 $1.60
Pro forma Diluted Net Income
per Share $0.22 $0.57 $1.28 $1.53
Shares used in Basic
Calculation 34,095 33,546 33,948 33,109
Shares used in Diluted
Calculation 34,659 35,276 34,854 34,610
(a) The company's reported loss of $153.7 million or $4.66 per
share for the quarter ended June 28, 1997 includes pre-tax one-time
charges totaling $235.2 million. This supplemental financial
information does not purport to be financial statements prepared
in accordance with generally accepted accounting principles. The
information in the tables shows operating income, net income and net
income per share excluding the one-time charges.
CONTACT: Novellus Systems Inc.
Robert Smith, 408/943-9700
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS COMED EARNINGS
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