Novellus Systems Reports Fourth Quarter and Year-End 2002 Results
Tuesday January 28, 4:09 pm ET
SAN JOSE, Calif., Jan. 28 /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, 2002. Net sales for the quarter were $217.6 million, down 5.6 percent from $230.5 million in the third quarter of 2002 and up 8.8 percent from fourth quarter 2001 net sales of $200.0 million. Net income for the fourth quarter of 2002 was $3.0 million or $0.02 per diluted share, down $1.1 million or 26.8 percent from third quarter 2002 net income of $4.1 million or $0.03 per diluted share. Net income for the fourth quarter of 2002 declined $14.2 million or 82.6 percent from fourth quarter 2001 net income of $17.2 million or $0.12 per diluted share.
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Without certain charges, the fourth quarter 2002 net income would have been $15.5 million or $0.11 per diluted share. These fourth quarter 2002 charges include $3.2 million of restructuring and severance charges and an $11.5 million net loss from SpeedFam-IPEC operations subsequent to the close of the acquisition on December 6, 2002 through December 31, 2002. The $11.5 million loss on operations contributed by SpeedFam-IPEC includes a $9.0 million in-process research and development charge. Without certain charges, the third quarter 2002 net income would have been $16.1 million or $0.11 per diluted share. These third quarter 2002 charges include a $17.0 million charge for the unamortized debt issuance costs related to the retirement of $880.0 million Liquid Yield Option(TM) Notes (LYONs®). Without the benefit from the reversal of bonus and profit sharing, the fourth quarter 2001 results would have been a loss of $0.4 million or break even on a diluted per share basis. The fourth quarter 2001 benefit was a $25.4 million benefit related to a cost reduction decision to reverse the bonus and profit sharing expense recorded in the first three quarters of 2001.
Net sales for fiscal year 2002 were $840.0 million, a decrease of 37.3 percent from fiscal year 2001 net sales of $1.339 billion. Net income for the year 2002 was $22.9 million or $0.15 per diluted share, a decrease of 84.1 percent from fiscal year 2001 net income of $144.5 million or $0.97 per diluted share.
Without certain charges, the 2002 net income would have been $40.4 million or $0.27 per diluted share. These 2002 charges include a $17.0 million charge for the unamortized debt issuance costs related to the retirement of the $880.0 million LYONs, $6.5 million restructuring and severance charges, a $7.7 million benefit related to a bad debt recovery and a $4.6 million gain on the sale of an equity investment. In addition, the 2002 results include an $11.5 million net loss from SpeedFam-IPEC operations subsequent to the close of the acquisition on December 6, 2002 through December 31, 2002, which includes a $9.0 million in-process research and development charge. Without certain charges, the 2001 net income would have been $202.7 million or $1.36 per diluted share. These 2001 charges include a $13.2 million charge for merger-related expenses, $55.0 million of restructuring, severance and asset impairment charges, an $8.6 million loss from an other-than-temporary decline in an investment and a $7.7 million bad debt write-off.
Shipments of $191.0 million in the fourth quarter of 2002 represent a decline of $59.6 million or 23.8 percent compared to $250.6 million reported in the third quarter of 2002. Deferred revenue at the end of the fourth quarter of 2002 was $130.1 million, a decrease of $26.6 million or 17.0 percent from $156.7 million at the end of the third quarter of 2002. Backlog as of December 31, 2002 was $304.4 million, an increase of $37.9 million or 14.2 percent from $266.5 million as of December 31, 2001.
Cash, cash equivalents and short-term investments as of December 31, 2002 were $1.02 billion, an increase of $94.9 million or 10.3 percent from the third quarter of 2002 ending balance of $924.7 million.
Richard S. Hill, chairman and chief executive officer, said, "The industry is still experiencing a major slowdown in capital expenditures. Despite the downturn, we have been able to sustain profitability and generate cash from operations."
Additionally, Hill stated, "Despite weakened demand for semiconductor equipment, we remain committed to investing in technologies that provide competitive cost advantages for our customers. With our customers' productivity as a priority, we expanded Novellus' 300-mm product portfolio, and added chemical mechanical planarization capabilities with the acquisition of SpeedFam-IPEC in December 2002."
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements regarding (i) Novellus' sustained profitability despite the continuation of the slowdown in semiconductor equipment capital expenditures, and (ii) Novellus' commitment to investing in technologies that provide competitive cost advantages for our customers, 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 severely prolonged downturn in the semiconductor industry, unanticipated difficulties in developing and introducing technologies that provide competitive cost advantages for Novellus' customers, and other risks indicated in our filings with the Securities and Exchange Commission (SEC). Actual results could differ materially. Novellus assumes no obligation to update this information. For more details, please refer to Novellus' SEC filings, including its most recent Annual Report on Form 10-K for the year ended December 31, 2001, its Quarterly Reports on Form 10-Q for the quarters ended March 30, 2002, June 29, 2002 and September 28, 2002, and its Registration Statement on Form S-4/A filed on November 1, 2002.
About Novellus Systems:
Novellus Systems, Inc., an S&P 500 company, manufactures, markets and services advanced deposition, surface preparation and chemical mechanical planarization equipment for today's advanced integrated circuits. The company's 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, Novellus is a publicly traded company on the Nasdaq stock exchange and a component of the Nasdaq-100 Index®. Additional information about the company is available on Novellus' home page at www.novellus.com.
NOTE: Liquid Yield Option Notes is a trademark and LYONs is a registered trademark of Merrill Lynch & Co., Inc.
NOVELLUS SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except
per share amounts) Three months ended Year ended
(Unaudited) Dec. 31 Dec. 31 Dec. 31 Dec. 31
2002 2001 2002 2001
Net sales $217,637 $200,031 $839,958 $1,339,322
Cost of sales 121,589 103,427 461,435 647,971
Gross profit 96,048 96,604 378,523 691,351
% 44.1% 48.3% 45.1% 51.6%
Operating expenses
Selling, general,
and administrative 36,868 28,349 154,172 198,567
Research and
development 51,323 60,651 222,344 272,032
In-process research
and development 9,003 -- 9,003 --
Special charges 3,194 -- (1,195) 68,768
Total operating
expenses 100,388 89,000 384,324 539,367
% 46.1% 44.5% 45.8% 40.3%
Income (loss) from
operations (4,340) 7,604 (5,801) 151,984
% -2.0% 3.8% -0.7% 11.3%
Other income, net 7,328 17,274 28,721 57,393
Income before
income taxes 2,988 24,878 22,920 209,377
Provision for
income taxes -- 7,712 -- 64,907
Net income $2,988 $17,166 $22,920 $144,470
Net income per share:
Basic net income
per share $0.02 $0.12 $0.16 $1.01
Diluted net income
per share $0.02 $0.12 $0.15 $0.97
Basic shares used
in per share
calculation 144,416 143,354 144,371 142,462
Diluted shares used
in per share
calculation 147,219 148,459 148,748 148,924
NOVELLUS SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(EXCLUDING SPECIAL CHARGES AND BENEFITS AND RESULTS OF SPEEDFAM-IPEC) (A)
(in thousands,
except per share
amounts) Three months ended Year ended
(Unaudited) Dec. 31 Dec. 31 Dec. 31 Dec. 31
2002 2001 2002 2001
Net sales $215,132 $200,031 $837,453 $1,339,322
Cost of sales 119,757 107,872 459,603 640,869
Gross profit 95,375 92,159 377,850 698,453
% 44.3% 46.1% 45.1% 52.1%
Operating expenses
Selling, general,
and administrative 35,542 41,430 152,846 198,567
Research and
development 49,931 68,525 220,952 272,031
Total operating
expenses 85,473 109,955 373,798 470,598
% 39.7% 55.0% 44.6% 35.1%
Income (loss)
from operations 9,902 (17,796) 4,052 227,855
% 4.6% -8.9% 0.5% 17.0%
Other income, net 7,826 17,274 41,664 65,948
Income (loss)
before income taxes 17,728 (522) 45,716 293,803
Provision (benefit)
for income taxes 2,208 (162) 5,310 91,079
Net income (loss) $15,520 $(360) $40,406 $202,724
Net income per share:
Basic net income
per share $0.11 $0.00 $0.28 $1.42
Diluted net income
per share $0.11 $0.00 $0.27 $1.36
Basic shares used
in per share
calculation 142,910 143,354 143,994 142,462
Diluted shares
used in per share
calculation 145,704 143,354 148,369 148,924
A reconciliation
of Novellus'
net income excluding
special charges and
benefits and the
results of
SpeedFam-IPEC to
its net income
under generally
accepted accounting
principles is
presented below:
Net income (loss)
excluding special
charges and benefits
and results of
SpeedFam-IPEC $15,520 $(360) $40,406 $202,724
Special benefits
(charges):
Write-off of debt
issuance costs -- -- (17,047) --
Merger-related
expenses -- -- -- (13,160)
Restructuring and
asset impairment
charges (3,194) -- (6,467) (55,048)
Other than temporary
decline in
investment -- -- -- (8,556)
Bad debt recovery
(write-off) -- -- 7,662 (7,662)
Gain on sale of
investment -- -- 4,602 --
Reversal of bonus
and profit sharing
expense -- 25,400 -- --
Total special
charges (3,194) 25,400 (11,250) (84,426)
SpeedFam-IPEC results
of operations:
SpeedFam-IPEC net
operating loss (2,543) -- (2,543) --
In-process research
and development
charge (9,003) -- (9,003) --
Net loss (11,546) -- (11,546) --
Adjustments on
provision for
income taxes 2,208 (7,874) 5,310 26,172
Net income $2,988 $17,166 $22,920 $144,470
(A) The condensed consolidated statements of operations (excluding special charges and benefits and results of SpeedFam-IPEC) are intended to present Novellus' operating results, excluding special charges, benefits, SpeedFam-IPEC operations for the period subsequent to the closing date of December 6, 2002 through December 31, 2002, and related adjustments on provisions for income taxes. These condensed consolidated statements of operations are not in accordance with, or an alternative for, generally accepted accounting principles, and may be different from similar measures by other companies.
NOVELLUS SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited) Dec. 31 Dec. 31
2002 2001
Assets
Current assets:
Cash and short-term investments $1,019,652 $921,822
Restricted short-term investments -- 961,643
Accounts receivable, net 192,862 222,857
Inventories 257,358 244,712
Deferred taxes and other current assets 164,062 165,470
Total current assets 1,633,934 2,516,504
Property and equipment, net 179,926 177,601
Goodwill and intangible assets 193,044 38,857
Other assets 487,090 298,162
Total assets $2,493,994 $3,031,124
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued liabilities $192,691 $185,059
Deferred profit 55,613 40,835
Income taxes payable 14,070 5,870
Short-term obligations 2,799 26,179
Convertible subordinated debentures 116,437 862,659
Total current liabilities 381,610 1,120,602
Deferred income tax liabilities 19,502 21,462
Other liabilities 37,194 17,066
Total liabilities 438,306 1,159,130
Shareholders' equity:
Common stock 1,487,281 1,273,201
Retained earnings and accumulated other
comprehensive income 568,407 598,793
Total shareholders' equity 2,055,688 1,871,994
Total liabilities and shareholders' equity $2,493,994 $3,031,124
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Source: Novellus Systems, Inc. |
