KLA-Tencor™ Reports Fiscal 2011 Second Quarter Results
MILPITAS, Calif., Jan. 27, 2011 /PRNewswire/ -- KLA-Tencor Corporation™ (Nasdaq: KLAC) today announced operating results for its second quarter of fiscal year 2011, which ended on December 31, 2010, and reported GAAP net income of $185 million and GAAP earnings per diluted share of $1.09 on revenues of $766 million.
"KLA-Tencor ended calendar year 2010 with an outstanding quarter, as high levels of demand coupled with solid execution in our global manufacturing operations drove increased shipments, revenue and earnings," commented Rick Wallace, KLA-Tencor's president and CEO. "We begin calendar 2011 with excellent momentum, driven by our customer focus, competitive market position and a strong demand environment for process control."
GAAP Results
Q2 FY 2011 Q1 FY 2011 Q2 FY 2010
Revenues $ 766 million $ 682 million $ 440 million
Net Income $ 185 million $ 154 million $ 22 million
Earnings per Diluted Share $ 1.09 $ 0.91 $ 0.13
Non-GAAP Results
Q2 FY 2011 Q1 FY 2011 Q2 FY 2010
Net Income $ 187 million $ 169 million $ 49 million
Earnings per Diluted Share $ 1.10 $ 0.99 $ 0.28
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 second quarter, along with its outlook, on a conference call today beginning at 2:00 p.m. Pacific Standard 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 KLA-Tencor's ability to carry operating momentum into the quarter ending March 31, 2011, the company's ability to maintain its current market position, the expected levels of demand for process control and the company's ability to successfully innovate, develop and sell new technologies and products that meet customer needs 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) December 31, 2010 June 30, 2010 ASSETS Cash and marketable securities $ 1,636,400 $ 1,534,044 Accounts receivable, net 531,453 440,125 Inventories, net 504,697 401,730 Other current assets 453,761 459,566 Land, property and equipment, net 249,468 236,752 Goodwill 328,147 328,006 Purchased intangibles, net 101,900 117,336 Other non-current assets 362,635 389,497 Total assets $ 4,168,461 $ 3,907,056 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 123,166 $ 107,938 Deferred system profit 241,494 204,764 Unearned revenue 33,193 37,026 Other current liabilities 396,084 422,059 Total current liabilities 793,937 771,787 Non-current liabilities: Income tax payable 62,329 53,492 Unearned revenue 28,383 20,354 Other non-current liabilities 71,560 69,065 Long-term debt 746,018 745,747 Total liabilities 1,702,227 1,660,445 Stockholders' equity: Common stock and capital in excess of par value 972,870 921,460 Retained earnings 1,506,747 1,356,454 Accumulated other comprehensive income (loss) (13,383) (31,303) Total stockholders' equity 2,466,234 2,246,611 Total liabilities and stockholders' equity $ 4,168,461 $ 3,907,056
KLA-Tencor
Corporation
Condensed Consolidated Unaudited
Statements of Operations
Three months ended Six months ended
(In thousands,
except per share December 31, December 31, December 31, December 31,
data) 2010 2009 2010 2009
Revenues:
Product $ 627,857 $ 314,946 $ 1,178,466 $ 544,197
Service 138,470 125,409 270,203 238,845
Total revenues 766,327 440,355 1,448,669 783,042
Costs and
operating
expenses:
Costs of
revenues 311,398 207,286 575,367 379,178
Engineering,
research and
development 94,897 83,301 189,617 161,510
Selling, general
and
administrative 91,166 102,673 179,203 180,309
Total costs and
operating
expenses 497,461 393,260 944,187 720,997
Income from
operations 268,866 47,095 504,482 62,045
Interest income
and other, net (17,675) (9,079) (29,979) (1,237)
Income before
income taxes 251,191 38,016 474,503 60,808
Provision for
income taxes 65,699 16,222 134,815 18,609
Net income $ 185,492 $ 21,794 $ 339,688 $ 42,199
Net income per
share:
Basic $ 1.11 $ 0.13 $ 2.03 $ 0.25
Diluted $ 1.09 $ 0.13 $ 2.00 $ 0.24
Cash dividend
paid per share $ 0.25 $ 0.15 $ 0.50 $ 0.30
Weighted average
number of
shares:
Basic 166,886 171,408 167,052 171,053
Diluted 169,513 173,808 169,685 173,292
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Cash Flows
Three months ended
December 31,
(In thousands) 2010 2009
Cash flows from operating activities:
Net income $ 185,492 $ 21,794
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 21,653 23,240
Asset impairment charges 6,800 10,592
Non-cash stock-based compensation expense 19,431 20,855
Net gain on sale of marketable securities and other
investments (430) (1,582)
Gain on sale of real estate assets (1,372) (160)
Changes in assets and liabilities, net of assets
acquired and liabilities assumed in business
combinations:
Increase in accounts receivable, net (28,890) (55,564)
Increase in inventories (39,710) (2,621)
Decrease (increase) in other assets (10,151) 101,550
Increase (decrease) in accounts payable (15,416) 12,328
Increase in deferred system profit 39,831 32,856
Increase in other liabilities 16,687 313
Net cash provided by operating activities 193,925 163,601
Cash flows from investing activities:
Capital expenditures, net (11,552) (10,735)
Proceeds from sale of assets 18,185 5,878
Purchase of available-for-sale securities (189,361) (337,025)
Proceeds from sale and maturity of available-for-sale
securities 123,677 182,799
Purchase of trading securities (12,397) (15,001)
Proceeds from sale of trading securities 13,905 17,476
Net cash used in investing activities (57,543) (156,608)
Cash flows from financing activities:
Issuance of common stock 28,768 20,545
Tax withholding payments related to vested and released
restricted stock units (10,732) (10,371)
Common stock repurchases (57,017) -
Payment of dividends to stockholders (41,809) (25,686)
Net cash used in financing activities (80,790) (15,512)
Effect of exchange rate changes on cash and cash
equivalents 2,128 (876)
Net increase (decrease) in cash and cash equivalents 57,720 (9,395)
Cash and cash equivalents at beginning of period 538,384 540,839
Cash and cash equivalents at end of period $ 596,104 $ 531,444
Supplemental cash flow disclosures:
Income taxes paid (refunds received), net $ 71,309 $ (68,491)
Interest paid $ 26,095 $ 26,084
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 Six months ended
December 31, September December 31, December 31, December 31,
2010 30, 2010 2009 2010 2009
GAAP net
income $ 185,492 $ 154,196 $ 21,794 $ 339,688 $ 42,199
Adjustments to
reconcile GAAP
net income to
non-GAAP net
income
Acquisition
related
charges a 8,178 8,178 8,104 16,356 16,199
Restructuring,
severance and
other related
charges b (974) - 14,450 (974) 10,041
Restatement
related
charges c 1,147 - 7,077 1,147 12,265
Income tax
effect of
non-GAAP
adjustments d (2,921) (2,857) (10,762) (5,778) (13,883)
Discrete tax
items e (3,706) 9,154 8,693 5,448 8,693
Non-GAAP net
income $ 187,216 $ 168,671 $ 49,356 $ 355,887 $ 75,514
GAAP net
income per
diluted share $ 1.09 $ 0.91 $ 0.13 $ 2.00 $ 0.24
Non-GAAP net
income per
diluted share $ 1.10 $ 0.99 $ 0.28 $ 2.10 $ 0.44
Shares used in
diluted shares
calculation 169,513 169,839 173,808 169,685 173,292
Pre-tax impact of items included in Consolidated Statements of Operations
Acquisition Restructuring, Restatement Total pre-tax
related severance and related charges GAAP to non-
charges other related GAAP
charges adjustment
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
September 30, 2010
Costs of revenues $ 5,790 $ - $ - $ 5,790
Engineering,
research and
development 898 - - 898
Selling, general
and administrative 1,490 - - 1,490
Total in three
months ended
September 30, 2010 $ 8,178 $ - $ - $ 8,178
Three months ended
December 31, 2009
Costs of revenues $ 5,727 $ 2,052 $ - $ 7,779
Engineering,
research and
development 898 566 - 1,464
Selling, general
and administrative 1,479 11,832 7,077 20,388
Total in three
months ended
December 31, 2009 $ 8,104 $ 14,450 $ 7,077 $ 29,631
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. The Company 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. The Company is currently paying defense costs a former officer and employee facing SEC civil actions to which the Company is not a party. 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 January 27, 2011