KLA-Tencor™ Reports Fiscal 2011 Third Quarter Results
MILPITAS, Calif., April 28, 2011 /PRNewswire/ -- KLA-Tencor Corporation™ (NASDAQ: KLAC) today announced operating results for its third quarter of fiscal year 2011, which ended on March 31, 2011, and reported GAAP net income of $210 million and GAAP earnings per diluted share of $1.22 on revenues of $834 million.
"KLA-Tencor's solid third quarter financial results reflect the strong demand environment and our ability to deliver innovative solutions that enable our customers to meet their critical yield challenges," commented Rick Wallace, KLA-Tencor's president and CEO. "We're continuing our focus on delivering strong financial performance by leveraging our market and technology leadership."
GAAP Results
Q3 FY 2011 Q2 FY 2011 Q3 FY 2010
Revenues $ 834 million $ 766 million $ 478 million
Net Income $ 210 million $ 185 million $ 57 million
Earnings per Diluted Share $ 1.22 $ 1.09 $ 0.33
Non-GAAP Results
Q3 FY 2011 Q2 FY 2011 Q3 FY 2010
Net Income $ 225 million $ 187 million $ 71 million
Earnings per Diluted Share $ 1.31 $ 1.10 $ 0.41
A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements that are part of this release. Non-GAAP results include the impact of stock-based compensation, but exclude the impact of acquisitions, restatement and restructuring related items, and certain discrete tax items.
KLA-Tencor will discuss the results for its fiscal year 2011 third quarter, along with its outlook, on a conference call today beginning at 2:00 p.m. Pacific Daylight Time. A webcast of the call will be available at: www.kla-tencor.com
Forward-Looking Statements:
Statements in this press release other than historical facts, such as statements regarding the ability of KLA-Tencor's solutions to successfully address customer needs, the company's current and future focus on delivering strong financial performance, its ability to deliver such performance, and the company's ability to continue to successfully operate its business model (including maintaining and leveraging its current market and technology positions) are forward-looking statements, and are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current information and expectations, and involve a number of risks and uncertainties. Actual results may differ materially from those projected in such statements due to various factors, including but not limited to: the demand for semiconductors; the financial condition of the global capital markets and the general macroeconomic environment; new and enhanced product and technology offerings by competitors; cancellation of orders by customers; the ability of KLA-Tencor's research and development teams to successfully innovate and develop technologies and products that are responsive to customer demands; market acceptance of the company's existing and newly issued products; and changing customer demands. For other factors that may cause actual results to differ materially from those projected and anticipated in forward-looking statements in this release, please refer to KLA-Tencor's Annual Report on Form 10-K for the year ended June 30, 2010, subsequently filed Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission (including, but not limited to, the risk factors described therein). KLA-Tencor assumes no obligation to, and does not currently intend to, update these forward-looking statements.
About KLA-Tencor:
KLA-Tencor Corporation (NASDAQ: KLAC), a leading provider of process control and yield management solutions, partners with customers around the world to develop state-of-the-art inspection and metrology technologies. These technologies serve the semiconductor, data storage, LED, photovoltaic, and other related nanoelectronics industries. With a portfolio of industry-standard products and a team of world-class engineers and scientists, the company has created superior solutions for its customers for over 30 years. Headquartered in Milpitas, California, KLA-Tencor has dedicated customer operations and service centers around the world. Additional information may be found at www.kla-tencor.com. (KLAC-F)
Use of Non-GAAP Financial Information:
The non-GAAP and supplemental information provided in this press release is a supplement to, and not a substitute for, KLA-Tencor's financial results presented in accordance with United States GAAP.
To supplement KLA-Tencor's condensed consolidated financial statements presented in accordance with GAAP, the company provides certain non-GAAP financial information, which is adjusted from results based on GAAP to exclude certain costs and expenses, as well as other supplemental information. The non-GAAP and supplemental information is provided to enhance the user's overall understanding of KLA-Tencor's operating performance and its prospects in the future. Specifically, KLA-Tencor believes that the non-GAAP information provides useful measures to both management and investors regarding financial and business trends relating to KLA-Tencor's financial performance by excluding certain costs and expenses that the company believes are not indicative of its core operating results. The non-GAAP information is among the budgeting and planning tools that management uses for future forecasting. However, because there are no standardized or generally accepted definitions for most non-GAAP financial metrics, definitions of non-GAAP financial metrics (for example, determining which costs and expenses to exclude when calculating such a metric) are inherently subject to significant discretion. As a result, non-GAAP financial metrics may be defined very differently from company to company, or even from period to period within the same company, which can potentially limit the usefulness of such information to an investor. The presentation of non-GAAP and supplemental information is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with United States GAAP.
KLA-Tencor Corporation Condensed Consolidated Unaudited Balance Sheets (In thousands) March 31, 2011 June 30, 2010 ASSETS Cash, cash equivalents and marketable securities $ 1,839,574 $ 1,534,044 Accounts receivable, net 566,069 440,125 Inventories, net 556,798 401,730 Other current assets 468,450 459,566 Land, property and equipment, net 250,571 236,752 Goodwill 328,159 328,006 Purchased intangibles, net 93,855 117,336 Other non-current assets 345,867 389,497 Total assets $ 4,449,343 $ 3,907,056 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 142,126 $ 107,938 Deferred system profit 230,069 204,764 Unearned revenue 45,908 37,026 Other current liabilities 438,634 422,059 Total current liabilities 856,737 771,787 Non-current liabilities: Long-term debt 746,154 745,747 Income tax payable 68,178 53,492 Unearned revenue 35,064 20,354 Other non-current liabilities 70,193 69,065 Total liabilities 1,776,326 1,660,445 Stockholders' equity: Common stock and capital in excess of par value 1,006,949 921,460 Retained earnings 1,674,589 1,356,454 Accumulated other comprehensive income (loss) (8,521) (31,303) Total stockholders' equity 2,673,017 2,246,611 Total liabilities and stockholders' equity $ 4,449,343 $ 3,907,056
KLA-Tencor
Corporation
Condensed Consolidated
Unaudited Statements of
Operations
Three months ended Nine months ended
(In thousands,
except per March 31,
share data) 2011 March 31, 2010 March 31, 2011 March 31, 2010
Revenues:
Product $ 691,270 $ 349,787 $ 1,869,736 $ 893,984
Service 142,789 128,512 412,992 367,357
Total revenues 834,059 478,299 2,282,728 1,261,341
Costs and
operating
expenses:
Costs of
revenues 327,696 208,565 903,063 587,743
Engineering,
research and
development 95,617 84,741 285,234 246,251
Selling,
general and
administrative 98,967 93,714 278,170 274,023
Total costs
and operating
expenses 522,280 387,020 1,466,467 1,108,017
Income from
operations 311,779 91,279 816,261 153,324
Interest
income and
other, net (10,259) (11,008) (40,238) (12,245)
Income before
income taxes 301,520 80,271 776,023 141,079
Provision for
income taxes 91,737 23,255 226,552 41,864
Net income $ 209,783 $ 57,016 $ 549,471 $ 99,215
Net income per
share:
Basic $ 1.25 $ 0.33 $ 3.29 $ 0.58
Diluted $ 1.22 $ 0.33 $ 3.23 $ 0.57
Cash dividend
paid per share $ 0.25 $ 0.15 $ 0.75 $ 0.45
Weighted
average number
of shares:
Basic 167,629 171,506 166,978 171,202
Diluted 171,313 173,357 169,974 173,432
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Cash Flows
Three months ended
March 31,
(In thousands) 2011 2010
Cash flows from operating activities:
Net income $ 209,783 $ 57,016
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 21,075 21,420
Asset impairment charges 585 -
Non-cash stock-based compensation expense 18,847 21,469
Net gain on sale of marketable securities and other
investments (422) (815)
Changes in assets and liabilities, net of assets
acquired and liabilities assumed in business
combinations:
Increase in accounts receivable, net (35,069) (23,518)
Increase in inventories (46,856) (25,604)
Decrease (increase) in other assets (43,842) 20,117
Increase in accounts payable 18,994 4,843
Increase (decrease) in deferred system profit (11,424) 19,378
Increase in other liabilities 112,240 33,366
Net cash provided by operating activities 243,911 127,672
Cash flows from investing activities:
Acquisition of business, net of cash received - (1,500)
Capital expenditures, net (13,829) (10,041)
Purchase of available-for-sale securities (338,953) (262,618)
Proceeds from sale and maturity of available-for-sale
securities 173,391 239,575
Purchase of trading securities (20,421) (15,981)
Proceeds from sale of trading securities 22,556 18,354
Net cash used in investing activities (177,256) (32,211)
Cash flows from financing activities:
Issuance of common stock 74,927 351
Tax withholding payments related to vested and released
restricted stock units (1,826) (709)
Common stock repurchases (57,697) (54,630)
Payment of dividends to stockholders (41,942) (25,731)
Net cash used in financing activities (26,538) (80,719)
Effect of exchange rate changes on cash and cash
equivalents 2,537 (2,681)
Net increase in cash and cash equivalents 42,654 12,061
Cash and cash equivalents at beginning of period 596,104 531,444
Cash and cash equivalents at end of period $ 638,758 $ 543,505
Supplemental cash flow disclosures:
Income taxes paid, net $ 79,618 $ 14,929
Interest paid $ 296 $ 102
KLA-Tencor Corporation
Condensed Consolidated Unaudited Supplemental Information
(In thousands, except per share data)
Reconciliation of GAAP Net Income to Non-GAAP Net Income
Three months ended Nine months ended
March 31, December 31, March 31, March 31,
2011 2010 2010 2011 March 31, 2010
GAAP net
income $ 209,783 $ 185,492 $ 57,016 $ 549,471 $ 99,215
Adjustments to
reconcile GAAP
net income to
non-GAAP net
income
Acquisition
related
charges a 7,720 8,178 8,370 24,076 24,569
Restructuring,
severance and
other related
charges b - (974) 4,426 (974) 14,467
Restatement
related
charges c 2,501 1,147 4,750 3,648 17,015
Income tax
effect of
non-GAAP
adjustments d (3,632) (2,921) (6,417) (9,410) (20,300)
Discrete tax
items e 8,385 (3,706) 3,165 13,833 11,828
Non-GAAP net
income $ 224,757 $ 187,216 $71,310 $ 580,644 $ 146,824
GAAP net
income per
diluted share $ 1.22 $ 1.09 $ 0.33 $ 3.23 $ 0.57
Non-GAAP net
income per
diluted share $ 1.31 $ 1.10 $ 0.41 $ 3.42 $ 0.85
Shares used in
diluted shares
calculation 171,313 169,513 173,357 169,974 173,432
Pre-tax impact of items included in Consolidated Statements of Operations
Restructuring,
Total pre-tax
severance and GAAP
Acquisition other related Restatement to non-GAAP
related charges charges related charges adjustment
Three months
ended March 31,
2011
Costs of revenues $ 5,332 $ - $ - $ 5,332
Engineering,
research and
development 898 - - 898
Selling, general
and
administrative 1,490 - 2,501 3,991
Total in three
months ended
March 31, 2011 $ 7,720 $ - $ 2,501 $ 10,221
Three months
ended December
31, 2010
Costs of revenues $ 5,790 $ - $ - $ 5,790
Engineering,
research and
development 898 - - 898
Selling, general
and
administrative 1,490 (974) 1,147 1,663
Total in three
months ended
December 31, 2010 $ 8,178 $ (974) $ 1,147 $ 8,351
Three months
ended March 31,
2010
Costs of revenues $ 5,908 $ 345 $ (98) $ 6,155
Engineering,
research and
development 898 11 (260) 649
Selling, general
and
administrative 1,564 4,070 5,108 10,742
Total in three
months ended
March 31, 2010 $ 8,370 $ 4,426 $ 4,750 $ 17,546
To supplement our condensed consolidated financial statements presented in accordance with GAAP, we provide certain non-GAAP financial information, which is adjusted from results based on GAAP to exclude certain costs and expenses, as well as other supplemental information. The non-GAAP and supplemental information is provided to enhance the user's overall understanding of our operating performance and our prospects in the future. Specifically, we believe that the non-GAAP information provides useful measures to both management and investors regarding financial and business trends relating to our financial performance by excluding certain costs and expenses that we believe are not indicative of our core operating results. The non-GAAP information is among the budgeting and planning tools that management uses for future forecasting. However, because there are no standardized or generally accepted definitions for most non-GAAP financial metrics, definitions of non-GAAP financial metrics (for example, determining which costs and expenses to exclude when calculating such a metric) are inherently subject to significant discretion. As a result, non-GAAP financial metrics may be defined very differently from company to company, or even from period to period within the same company, which can potentially limit the usefulness of such information to an investor. The presentation of non-GAAP and supplemental information is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with United States GAAP.
a Acquisition related charges include amortization of intangible assets, inventory fair value adjustments, and in-process research and development charges associated with acquisitions. Management believes that the expense associated with the amortization of acquisition related intangible assets is appropriate to be excluded because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have short lives, and exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both KLA-Tencor's newly acquired and long-held businesses. Management believes that it is appropriate to exclude acquisition related inventory fair value adjustments and in-process research and development charges as they are not indicative of ongoing operating results and therefore limit comparability. Management believes excluding these items helps investors compare our operating performance with our results in prior periods as well as with the performance of other companies. b Restructuring, severance and other related charges include gains and costs associated with the company's facilities divestment and consolidation program, reductions in force, and gains and losses from sales of facilities. Management believes that it is appropriate to exclude those items as they are not indicative of ongoing operating results and therefore limit comparability. Management believes excluding these items helps investors compare our operating performance with our results in prior periods as well as with the performance of other companies. c Restatement related charges include legal and other expenses related to the investigation regarding the company's historical stock option granting process and related shareholder litigation and other matters. KLA-Tencor paid or reimbursed legal expenses incurred in connection with the investigation of its historical stock option practices and the related litigation and government inquiries by a number of its current and former directors, officers and employees. KLA-Tencor is currently paying defense costs for a former officer and employee facing SEC civil actions to which the company is not a party, and the company is also obligated to pay the attorneys' fees and expenses incurred by former employees in connection with discovery undertaken in that case. The company is further incurring costs associated with retaining counsel to respond to discovery requests and otherwise representing the company in that litigation. Management believes that it is appropriate to exclude those items as they are not indicative of ongoing operating results and therefore limit comparability. Management believes excluding these items helps investors compare our operating performance with our results in prior periods as well as with the performance of other companies. d Income tax effect of non-GAAP adjustments includes the income tax effects of the excluded items noted above. Management believes that it is appropriate to exclude the tax effects of the items noted above in order to present a more meaningful measure of non-GAAP net income. e Discrete tax items include the tax impact of shortfalls in excess of cumulative windfall tax benefits recorded as provision for income taxes during the period. Windfall tax benefits arise when a company's tax deduction for employee stock activity exceeds book compensation for the same activity and are generally recorded as increases to capital in excess of par value. Shortfalls arises when the tax deduction is less than book compensation and are recorded as decreases to capital in excess of par value to the extent that cumulative windfalls exceed cumulative shortfalls. Shortfalls in excess of cumulative windfalls are recorded as provision for income taxes. When there are shortfalls recorded as provision for income taxes during an earlier quarter, windfalls arising in subsequent quarters within the same fiscal year are recorded as a reduction to income taxes to the extent of the shortfalls recorded. Management believes that it is appropriate to exclude these items as they are not indicative of ongoing operating results and therefore limit comparability. Management believes excluding these items helps investors compare our operating performance with our results in prior periods as well as with the performance of other companies.
SOURCE KLA-Tencor Corporation
Released April 28, 2011