Verigy Reports Third Quarter 2006 Results; $214 Million in Revenue Up 81 Percent Year Over Year
August 14 2006 - 3:05PM
Business Wire
Verigy Ltd. (NASDAQ:VRGY), a premier semiconductor test company,
reported today revenue of $214 million for its third fiscal quarter
ending July 31, 2006, 81 percent above last year. Orders were $199
million, up 36 percent over the same period a year ago. Third
quarter net income on a GAAP basis was $13 million, or $0.23 per
share, compared with a loss of $22 million, or $0.44 per share, in
the prior year period. Included in GAAP results are $24 million of
net charges related principally to separation and restructuring
activities undertaken in connection with Verigy's spin-off from
Agilent Technologies. Excluding these charges and $2 million of
share-based compensation expense, Verigy reported third quarter
non-GAAP net income of $39 million, or $0.71 per share. On a
comparable basis, the business lost $21 million, or $0.42 per
share, in the prior year period. "We had a very strong quarter as
we continued to see the results of positive customer acceptance of
our enhanced SOC and Flash test products," said Keith Barnes,
Verigy president and chief executive officer. "Our separation from
Agilent has proceeded as planned and progress toward our targeted,
focused operating model is on track. We have expanded our Served
Available Market through technology innovations, while our revenue
success is customer validation that our strategy of delivering real
customer value on scalable platforms is sound. We also believe we
are well positioned to capitalize on the anticipated demand for new
leading edge consumer-oriented semiconductors." Outlook For the
fiscal fourth quarter ending Oct. 31, 2006, the company provided
the following guidance: -0- *T -- Revenue is expected to be in the
range of $185 to $200 million. -- GAAP net income is expected to be
in the range of $7 to $16 million, or $0.12 to $0.27 per share. --
On a non-GAAP basis, the company expects to report net income of
$25 to $34 million, or $0.43 to $0.58 per share. To reconcile
fourth quarter net income under GAAP to non-GAAP net income, the
company expects to exclude: -- $16 to $18 million of charges
related principally to separation and restructuring activities
undertaken in connection with Verigy's spin-off from Agilent
Technologies. -- $2 to $3 million of share-based compensation
expense. *T This guidance is forward-looking, and actual results
may differ materially. The company has no obligation to update this
guidance. Conference Call and Webcast Verigy's management will
present more details on its third quarter FY2006 financial results
on a conference call with investors today beginning at 2:30 p.m.
(Pacific). This event will be webcast live in listen-only mode.
Listeners may log on at http://investor.verigy.com and select "Q3
2006 Verigy Earnings Conference Call" in the "Webcasts &
Presentations" section. The webcast will remain available on the
company's Web site for seven days. A telephone replay of the
conference call will be available from 4:30 p.m. (Pacific) today
through August 21, 2006. The replay number is +1-866-543-6403
toll-free, or international callers may dial 1-617-213-8896; enter
pass code 59436506. About Verigy Verigy designs, develops,
manufactures and sells advanced test systems and solutions for the
semiconductor industry. Verigy comprises the semiconductor test
business recently separated from Agilent Technologies. The company
began doing business as Verigy on June 1, and completed its initial
public offering on June 13, 2006. Information about Verigy can be
found at www.verigy.com. Forward-Looking Statements In our earnings
release, some of the comments are forward-looking, including
statements regarding Verigy's revenue and earnings; guidance for
the fourth quarter; and other statements that express the company's
expectations, beliefs, plans and forecasts. Words such as expect,
anticipate, intend, plan, believe, estimate and variations of such
words and similar expressions may identify additional
forward-looking statements. These forward-looking statements are
based on current information and estimates, and are not guarantees
of future performance or events. These 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,
unforeseen changes in demand for semiconductors and thus for
semiconductor test solutions, the strength of our customers'
businesses, and unforeseen changes in the demand for current and
new products and technologies. Additional factors that may cause
results to differ materially from those in the forward-looking
statements are discussed in our registration statement on Form S-1,
filed with and declared effective by the SEC on June 12, 2006, and
in our Quarterly Report on Form 10-Q for the quarter ended April
30, 2006. The forward-looking statements, including guidance, are
only valid as of this date, and Verigy undertakes no duty to update
any forward-looking statements. Information About Non-GAAP Measures
Our management uses non-GAAP measures to evaluate the performance
of our core businesses, to estimate future core performance and to
compensate employees. Since management finds this measure to be
useful, we believe that our investors benefit from seeing our
results "through the eyes" of management in addition to seeing our
GAAP results. This information also facilitates our management's
internal comparisons to our historical operating results as well as
to the operating results of our competitors. The non-GAAP net
income (loss) and earnings per share reconciliation is estimated
based on our current information. 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. -0- *T VERIGY LTD. CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (In millions, except per share
amounts) (Unaudited) Three Months Nine Months Ended Ended July 31,
July 31, --------------- --------------- 2006 2005 2006 2005
------- ------- ------- ------- Orders: $199 $146 $688 $323 Net
revenue: Products $181 $93 $482 $224 Services 33 25 94 73 -------
------- ------- ------- Total net revenue 214 118 576 297 Cost of
sales Cost of products 88 58 243 147 Cost of services 23 22 72 65
------- ------- ------- ------- Total cost of sales 111 80 315 212
Operating expenses Research and development 25 24 75 76 Selling,
general and administrative 37 33 114 101 Restructuring charges 2 1
16 1 Separation costs 21 - 56 - ------- ------- ------- -------
Total operating expenses 85 58 261 178 Income (loss) from
operations 18 (20) - (93) Other income (expense), net 2 - 2 -
------- ------- ------- ------- Income (loss) before taxes 20 (20)
2 (93) Provision for taxes 7 2 16 11 ------- ------- -------
------- Net profit (loss) $13 $(22) $(14) $(104) ======= =======
======= ======= Net income (loss) per share- basic: $0.23 $(0.44)
$(0.28) $(2.08) Net income (loss) per share- diluted: $0.23 $(0.44)
$(0.28) $(2.08) Weighted average shares used in computing net
income (loss) per share: Basic 54,662 50,000 51,571 50,000 Diluted
54,681 50,000 51,590 50,000 Historical amounts were reclassified to
conform with current period presentation. Weighted average shares
are presented in thousands VERIGY LTD. CONDENSED CONSOLIDATED
BALANCE SHEET (In millions, except share amounts) (Unaudited) July
October 31 31, 2006 2005 ----- ------- ASSETS Current assets: Cash
and cash equivalents $206 $- Trade accounts receivable, net 156 75
Related Party accounts receivable, net 23 - Inventory 79 110 Other
current assets 36 14 ----- ------- Total current assets 500 199
Property, plant and equipment, net 36 18 Goodwill 18 17 Other
assets 50 26 ----- ------- Total assets $604 $260 ===== =======
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $69 $21 Related Party Payable 14 - Employee compensation
and benefits 33 40 Deferred revenue 57 42 Income and other taxes
payable 8 32 Other accrued liabilities 14 23 ----- ------- Total
current liabilities 195 158 Long-term Liabilities 33 15 -----
------- Total liabilities 228 173 Stockholders' equity Owner's net
investment - 86 Ordinary shares issued and outstanding at July 31,
2007, 58,651,559 - - Additional paid in capital 358 Retained
earnings 19 - Accumulated other comprehensive income (loss) (1) 1
----- ------- Total stockholders' equity 376 87 ----- ------- Total
liabilities and stockholders' equity $604 $260 ===== ======= VERIGY
LTD. RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET
INCOME (LOSS) (In millions, except per share amounts) (Unaudited)
Three Months Ended Nine Months Ended
---------------------------------------- ------------- July EPS
April EPS January EPS July EPS 31, 30, 31, 31, 2006 2006 2006 2006
------------ ------------ -------------- ------------- GAAP net
income (loss) $13 $0.23 $(11) (0.22) $(16) (0.32) $(14)$(0.28)
Non-GAAP adjustments: Restructuring charges in cost of sales 2.2
0.04 2.4 0.05 0.9 0.02 5.5 0.11 Restructuring charges in operating
expenses 1.6 0.03 8.0 0.16 6.0 0.12 15.6 0.30 Separation related
costs in cost of sales - - 3.7 0.07 - - 3.7 0.07 Separation related
costs in operating expenses 20.9 0.38 20.0 0.40 15.0 0.30 55.9 1.08
Share-based compensation expense 1.7 0.03 2.5 0.05 4.0 0.08 8.2
0.16 Other - - (0.7) (0.01) - - (0.7) (0.01) ------------
------------ -------------- ------------- Non-GAAP net income $39
$0.71 $25 $0.50 $10 $0.20 $74 $1.43 ============ ============
============== ============= Three Months Ended Nine Months Ended
---------------------------------------- ------------- July EPS
April EPS January EPS July EPS 31, 30, 31, 31, 2005 2005 2005 2005
------------ ------------ -------------- ------------- GAAP net
loss $(22) (0.44) $(37) (0.74) $(45) (0.90) $(104) (2.08) Non-GAAP
adjustments: Restructuring charges in cost of sales - - - - - - - -
Restructuring charges in operating expenses 1.0 0.02 - - - - 1.0
0.02 Separation related costs in cost of sales - - - - - - - -
Separation related costs in operating expenses - - - - - - - -
Share-based compensation expense - - - - - - - - ------------
------------ -------------- ------------- Non-GAAP net loss
$(21)$(0.42) $(37)$(0.74) $(45)$(0.90) $(103)$(2.06) ============
============ ============== ============= *T
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