8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

December 3, 2007

VERIGY LTD.

(Exact name of registrant as specified in its charter)

Singapore	000-52038	N/A
(State or Other Jurisdiction of	(Commission File Number)	(IRS Employer
Incorporation)		Identification No.)

Verigy Ltd.

No. 1 Yishun Ave. 7

Singapore 768923

(Address of principal executive offices, including zip code)

+65 6755-2033

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02              Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e)           On December 3, 2007, Verigy’s Compensation Committee determined the actual performance results for the performance measures under Verigy’s incentive compensation bonus program and approved the amount of the bonus to which each plan participant is entitled under the terms of the program for the six-month period ended October 31, 2007.

Actual bonuses paid to the participants in the program for the second half of the fiscal year under the incentive compensation bonus program were earned based on the achievement of operating profit goals, short-term financial goals based on the company’s fiscal 2007 financial plan, and individuals’ key strategic goals.  Individual target bonuses for the company’s named executive officers ranged from 55% to 100% of base salary.   The actual percent achieved by these participants for the six-month program period ended October 31, 2007, ranged from 63% to 149% of individual target bonuses.

The following table sets forth the semi-annual bonus amounts earned in the second half of fiscal year 2007 for the company’s named executive officers.

Name and Current Position	Fiscal Year 2007 Semi-Annual Bonus Amount
Keith Barnes, President and Chief Executive Officer	$	251,654
Robert Nikl, Chief Financial Officer	$	169,070	(1)
Gayn Erickson, Vice President Memory Test	$	63,438
Pascal Ronde, Vice President Sales, Service and Support	$	65,751
Kenneth Siegel, Vice President and General Counsel	$	94,051

(1)  $24,375 of this bonus will be paid subject to the unqualified report of the company's independent auditors with respect to the company's fiscal 2007 financial statements and assessment of internal controls.

Fiscal 2008 Executive Compensation

On December 3, 2007, Verigy’s Compensation Committee approved executive compensation arrangements for fiscal 2008 for the chief executive officer and other executive officers of the company as part of their annual review process.  The Compensation Committee approved base salary, effective as of November 1, 2007, target bonus percentages and annual equity awards for certain officers, including the company’s named executive officers, as follows:

Name/Title of Executive	Base  Compensation		Target Bonus (as  a % of Base  Compensation)  (1)						Aggregate  Four-Tranche  Stock Options  Awarded  (2)			Restricted  Shares  Awarded  (3)
Keith Barnes, President and Chief Executive Officer	$	582,400	100			%			112,500			45,000
Robert Nikl, Chief Financial Officer	$	335,000	70			%			48,000			19,200
Gayn Erickson, Vice President, Memory Test	$	268,000		60			%			30,000		12,000
Pascal Ronde, Vice President Sales, Service and Support	$	362,009			60			%			35,000		14,000
Kenneth Siegel, Vice President and General Counsel	$	278,000			55			%			21,500		8,600

(1)  Verigy’s incentive compensation bonus program is designed to provide short-term incentive compensation based upon the achievement of business-specific goals.  The program is administered in six-month performance periods that coincide with each half of Verigy’s fiscal year and provides for cash

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bonuses to be paid semi-annually based on achievement of performance targets.  The target bonus for each participant is equal to a stated percentage of the participant’s base salary.  The Compensation Committee has not yet determined the specific performance targets for the fiscal year 2008 incentive compensation.

(2)  The share numbers indicated are aggregate award levels for the executives.  These awards were issued using the company’s four-tranche option approach.  For purposes of establishing the exercise price of the options, the option is divided into four tranches of 25% each. Except for awards granted to Pascal Ronde, the exercise price of the four tranches is determined as follows (1):

•The first tranche (25%) is priced at $26.43 per share, the closing price of the company’s ordinary shares on December 3, 2007, the date of the award;

•The second tranche (25%) is priced at the fair market value (closing price) of the company’s ordinary shares on the third business day following the public announcement of the company’s financial results for the quarter ending January 31, 2008;

•The third tranche (25%) is priced at the fair market value (closing price) of the company’s ordinary shares on the third business day following the public announcement of the company’s financial results for the quarter ending April 30, 2008; and

•The fourth tranche (25%) is priced at the fair market value (closing price) of the company’s ordinary shares on the third business day following the public announcement of the company’s financial results for the quarter ending July 31, 2008.

In the case of Pascal Ronde, each of the four tranches will be priced at the earliest date allowable subsequent to the release of the company's financial results for the quarters ending October 31, 2007, January 31, 2008, April 30, 2008 and July 31, 2008, in accordance with applicable French regulations regarding tax qualification for option grants.  Generally, the pricing will occur on the 11th business day following the public announcement of the company’s financial results, or on the 11th business day following a material announcement that occurs within that 11 day period.  The option price will be the greater of (A) the fair market value (closing price) of the company’s ordinary shares on the pricing date, or (B) 80% of the average of the fair market values (closing prices) for the twenty trading days preceeding the pricing date.

(3)  The restricted shares vest and are paid out quarterly over a four-year period from the grant date.  Verigy has adopted an arrangement whereby the company deducts from the number of shares deliverable at each vesting date a number of shares with a fair market value equal to the employee’s tax withholding obligation arising in connection with the vesting.  The after-tax net shares are issued to the individual at each vesting event.

Item 8.01.             Other Events.

Entry into Definitive Agreement to Purchase Inovys Corporation

On December 6, 2007, the company issued a press release announcing that it entered into a definitive agreement with Inovys Corporation, a privately held company that provides innovative solutions for design debug, failure analysis and yield acceleration for complex semiconductor devices and processes.  The press release is attached hereto as Exhibit 99.1.

Item 9.01              Financial Statements and Exhibits.

(d) Exhibits

The following exhibit is furnished herewith:

Exhibit Number	Description
99.1	Text of press release issued by Verigy Ltd. dated December 6, 2007, regarding the entry into a definitive agreement to purchase Inovys Corporation.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Verigy Ltd.
By:	/s/ Kenneth M. Siegel
Kenneth M. Siegel

Date:  December 6, 2007

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Text of press release issued by Verigy Ltd. dated December 6, 2007, regarding the entry into a definitive agreement to purchase Inovys Corporation.

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EX-99.1

Exhibit 99.1

Press Release

EDITORIAL CONTACT:

Jana Knezovich, PR Manager

+1 408-864-5987

jana.knezovich@verigy.com

INVESTOR CONTACT:

Judy Davies, VP, Investor Relations

+1 408-864-7549

judy.davies@verigy.com

Verigy Signs Agreement to Acquire Inovys

To Offer Best-in-Class Time-to-Yield for Semiconductor Manufacturing

CUPERTINO, Calif. —Dec. 6, 2007— Verigy (NASDAQ: VRGY), a premier semiconductor test company, and Inovys today announced that they have signed a definitive agreement for Verigy to acquire Inovys. Inovys, privately held, provides innovative solutions for design debug, failure analysis and yield acceleration for complex semiconductor devices and processes. Financial details were not disclosed. The acquisition is expected to be final in 30 to 60 days, subject to certain closing conditions.

This acquisition enables Verigy to offer a best-in-class, integrated time-to-yield solution for semiconductor manufacturers. Inovys’ products uniquely bridge the gap between electronic design automation (EDA) and test, providing a seamless path between design and production. Inovys has created a comprehensive test suite that enables semiconductor companies to reduce design debug from weeks to hours, lower production test costs by a factor of up to three, and support real-time yield enhancements with unique failure analysis tools. Inovys tools combined with Verigy’s proven V93000 SoC test platform have shown tremendous economic benefits in a recent customer experience.

The design complexity of advanced system-on-chip (SoC) devices combined with challenging nanoelectronics process technologies drives up the cost of

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manufacturing. The 300mm fabs are very capital-intensive. Return-on-investment requires achieving a specified level of yield, or “entitled yield”. Minimizing the time required to reach that yield becomes critical. Additionally, the challenges of the distributed manufacturing model used between fabless companies and their foundry partners drive demand for higher levels of integration for design and production test.

“Time-to-entitled-yield becomes a critical metric that places the focus squarely on test,” said Keith Barnes, chairman, CEO and president of Verigy. “Verigy’s production workhorse V93000 system combined with Inovys’ design-for-test and design-for-manufacturing tools have demonstrated significant time-to-yield value for Verigy customers. Inovys’ and Verigy’s solid track records for technology innovation, quality products and superb customer service will allow us to raise the bar in delivering world-class solutions to the industry.”

“Joining forces with Verigy will expand Inovys’ reach and accelerate our ability to develop solutions at the crossroads of design, manufacturing and yield metrology,” said Paul Sakamoto, Inovys’ CEO. “Together we bridge the gap between design validation/silicon debug and high-volume manufacturing. We are excited to have found a company with such a complementary culture, product line, commitment to customer satisfaction, and vision — and with Verigy’s increasing market share at the more challenging designs and process nodes, we are even more confident of our success moving forward.”

Inovys was established in 1999. Despite its relatively small size, it has garnered a substantial customer base of more than 50 customers representing integrated device manufacturers (IDMs), fabless, outsource semiconductor assembly and test (OSAT) and foundry companies which are a good complement to Verigy’s customer base.

Inovys earned the top spot in the esteemed VLSI Research 2007 10 BEST Test Equipment Award for Customer Satisfaction, and the Technology Innovation Showcase Award for its YieldVision software at SEMICON West in July 2007.

More information about the acquisition will be presented at the Verigy-hosted Analyst Event on December 11, 2007 at 2:00 PM ET, at The Westin New York at Times Square Hotel, 270 West 43rd Street, New York City. A live webcast of the meeting will be available in listen-only mode.  Listeners may log on at http://investor.verigy.com and select “2007 Analyst Day” in the “Webcasts & Presentations” section.

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About Inovys Corporation

Inovys provides innovative yield enhancement, failure analysis, and design debug solutions for the semiconductor industry. Inovys customers include the industry leading Integrated Device Manufacturers (IDMs), Fabless companies, Foundry and Test subcontractors. These companies use Inovys solutions to accelerate their new product introductions and optimize yield ramps of their advanced system on chip (SOC) devices. The revolutionary Inovys Design For Test (DFT) analysis toolset enables customers to reduce electrical failure resolution cycle times from weeks to hours. Learn more about Inovys at www.inovys.com.

About Verigy

Verigy designs, develops, manufactures, sells and services advanced test systems and solutions for the memory and system-on-chip segments of the semiconductor industry. Verigy’s scalable platform systems are used by leading semiconductor companies worldwide in design validation, characterization, and high volume manufacturing test. Formerly part of Agilent Technologies, the company began doing business as Verigy on June 1, 2006, and completed its initial public offering on June 13, 2006. Information about Verigy can be found at www.verigy.com.

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Forward-Looking Statements

This news release contains forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. The forward-looking statements contained herein include, but are not limited to, the timing of closing the acquisition, the ability to integrate Verigy’s and Inovys’ products and the customer benefits that will be derived from this integration as well as statements that include words such as expect, anticipate, intend, plan, believe, estimate and variations of such words and similar expressions. 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, events which could postpone or cause the acquisition not to close, demand for the combined solutions specifically and demand semiconductors

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and thus for semiconductor test solutions. Additional factors that may cause Verigy’s results to differ materially from those in the forward-looking statements are discussed in our Quarterly Report on Form 10-Q for the quarter ended July 31, 2007. The forward-looking statements, including guidance, are only valid as of this date, and Verigy undertakes no duty to update any forward-looking statements.

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