GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

LTXCredence Corp. Reports Operating Results (10-Q)

December 10, 2010 | About:
10qk

10qk

18 followers
LTXCredence Corp. (LTXC) filed Quarterly Report for the period ended 2010-10-31.

Ltxcredence Corp. has a market cap of $348.9 million; its shares were traded at around $7.09 with a P/E ratio of 7.1 and P/S ratio of 1.6. LTXC is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, Paul Tudor Jones of The Tudor Group.

Highlight of Business Operations:

We sell capital equipment to companies that design, manufacture, assemble, and test semiconductor devices. We are exposed to a number of economic and industry factors that could result in portions of our inventory becoming either obsolete or in excess of anticipated usage. These factors include, but are not limited to, changes in our customers capital expenditures, technological changes in our markets, our ability to meet changing customer requirements, competitive pressures in products and prices, and the availability of key components from our suppliers. Our policy is to establish inventory reserves when conditions exist that suggest our inventory may be in excess of anticipated demand or is obsolete based upon our assumptions about future demand for our products or market conditions. We regularly evaluate the ability to realize the value of our inventory based on a combination of factors including the following: historical usage rates, forecasted sales or usage, estimated product end of life dates, estimated current and future market values and new product introductions. Purchasing and alternative usage options are also explored to mitigate inventory exposure. When recorded, our reserves are intended to reduce the carrying value of our inventory to its net realizable value. Pursuant to SAB Topic 5-BB, inventory reserves establish a new cost basis for inventory. Such reserves are not reversed until the related inventory is sold or otherwise disposed. For the three months ended October 31, 2010, we recorded $0.3 million in sales of previously written-off inventory. There were $0 of sales related to previously reserved items recorded for the three months ended October 31, 2009. The net incremental gross margin and net income for these transactions did not have a significant impact on operating margins and overall operating results. As of October 31, 2010 and July 31, 2010, our inventory of $19.0 million and $21.0 million, respectively is stated net of inventory reserves of $41.6 million and $45.6 million, respectively and consists of Fusion products, X-Series products, ASL products, and Diamond products.

Net income (loss). Net income was $19.7 million, or $0.40 per basic and $0.39 per diluted share, in the three months ended October 31, 2010, as compared to a net loss of $3.2 million, or $0.06 per basic and diluted share, in the same quarter of the prior year.

Accounts receivable from trade customers, net of allowances, was $41.7 million at October 31, 2010, as compared to $45.6 million at July 31, 2010. The trade receivable decreased during the quarter despite a quarter on quarter revenue increase of $2.5 million due to strong collection results. The allowance for doubtful accounts was $0.1 million, or 0.2% of gross trade accounts receivable, at October 31, 2010 and $0.1 million, or 0.2% of gross trade accounts receivable at July 31, 2010.

We had $25.0 million in net cash provided by operating activities for the three months ended October 31, 2010 as compared to net cash used in operating activities of $4.0 million for the three months ended October 31, 2009. The net cash provided by operating activities for the three months ended October 31, 2010 was primarily related to our net income of $19.7 million, and non-cash items, principally depreciation and amortization, of approximately $5.8 million offset in part by a net increase in working capital of $0.5 million. The net cash used in operating activities for the three months ended October 31, 2009 was primarily related to our net loss of $3.2 million and a net increase in working capital of $7.7 million, offset in part by non-cash items, principally depreciation and amortization, of approximately $6.9 million.

We used $14.3 million in net cash for investing activities for the three months ended October 31, 2010 as compared to net cash provided by investing activities of $7.2 million for the three months ended October 31, 2009. The net cash used in investing activities for the three months ended October 31, 2010 was primarily related to $14.5 million in purchases of available-for-sale securities, and $1.2 million in purchases of property and equipment, offset in part by $1.4 million of proceeds from sales and maturities of available-for-sale securities. The net cash provided by investing activities for the three months ended October 31, 2009 was primarily related to $8.3 million in proceeds from sales and maturities of available-for-sale securities, offset in part by $0.8 million in purchases of property and equipment and $0.3 million of payments on purchases of available-for-sale securities.

We used $0.8 million in net cash for financing activities for the three months ended October 31, 2010 as compared to net cash used in financing activities of $13.0 million for the three months ended October 31, 2009. The net cash used in financing activities for the three months ended October 31, 2010 was primarily related to payments of tax withholdings for vested restricted stock units. The net cash used in financing activities for the three months ended October 31, 2009 was primarily related to payments made on our term loan to Silicon Valley Bank of $12.2 million, payments of tax withholdings for vested RSUs of $0.5 million, as well as net payments of convertible senior notes of $0.3 million.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 3.3/5 (3 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK