KLA-Tencor Reports Fiscal 2010 Fourth Quarter and Full Year Results
MILPITAS, Calif., July 29 /PRNewswire-FirstCall/ -- KLA-Tencor Corporation® (Nasdaq: KLAC) today announced operating results for its fourth quarter and fiscal year ended June 30, 2010. KLA-Tencor reported GAAP net income of $113 million and GAAP earnings per diluted share of $0.66 on revenues of $559 million for the fourth quarter of fiscal year 2010. For the year ended June 30, 2010, the company reported GAAP net income of $212 million and GAAP earnings per diluted share of $1.23 on revenues of $1.8 billion.
"Robust product demand in each of our major end markets, geographies and product offerings, coupled with solid execution by the KLA-Tencor team resulted in strong financial results in the fourth quarter," said Rick Wallace, KLA-Tencor's president and chief executive officer. "These results reflect our team's commitment to helping customers solve complex yield challenges at the leading edge, as well as KLA-Tencor's ability to execute against our strategic objectives in order to maintain our market and technology leadership."
GAAP Results
Q4 FY 2010 Q3 FY 2010 Q4 FY 2009
Revenues $ 559 million $ 478 million $ 282 million
Net Income (Loss) $ 113 million $ 57 million $(26) million
Earnings (Loss) per Diluted Share $ 0.66 $ 0.33 $ (0.15)
Non-GAAP Results
Q4 FY 2010 Q3 FY 2010 Q4 FY 2009
Net Income (Loss) $ 120 million $ 71 million $ (15) million
Earnings (Loss) per Diluted Share $ 0.70 $ 0.41 $ (0.09)
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 acquisition, restatement and restructuring related items, goodwill and intangible asset impairment, and certain discrete tax items.
KLA-Tencor will discuss the results for its fiscal year 2010 fourth quarter and full year, 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 KLA-Tencor's position as a market and technology leader 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; KLA-Tencor's ability to successfully integrate and manage businesses that it acquires; 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, 2009, 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) June 30, 2010 June 30, 2009 ASSETS Cash and short-term investments $ 1,534,044 $ 1,329,884 Accounts receivable, net 440,125 210,143 Inventories, net 401,730 370,206 Other current assets 459,566 488,384 Land, property and equipment, net 236,752 291,878 Goodwill 328,006 329,379 Purchased intangibles, net 117,336 149,080 Other non-current assets 389,497 440,584 Total assets $ 3,907,056 $ 3,609,538 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 107,938 $ 63,485 Deferred system profit 204,764 95,820 Unearned revenue 37,026 46,236 Other current liabilities 422,059 341,441 Total current liabilities 771,787 546,982 Non-current liabilities: Income tax payable 53,492 49,738 Unearned revenue 20,354 23,059 Other non-current liabilities 69,065 60,163 Long-term debt 745,747 745,204 Total liabilities 1,660,445 1,425,146 Stockholders' equity: Common stock and capital in excess of par value 921,460 835,477 Retained earnings 1,356,454 1,370,132 Accumulated other comprehensive income (loss) (31,303) (21,217) Total stockholders' equity 2,246,611 2,184,392 Total liabilities and stockholders' equity $ 3,907,056 $ 3,609,538
KLA-Tencor
Corporation
Condensed Consolidated Unaudited
Statements of Operations
Three months ended Twelve months ended
(In thousands,
except per
share data) June 30, 2010 June 30, 2009 June 30, 2010 June 30, 2009
Revenues:
Product $ 430,286 $ 176,226 $ 1,324,270 $ 1,062,126
Service 129,133 105,276 496,490 458,090
Total revenues 559,419 281,502 1,820,760 1,520,216
Costs and
operating
expenses:
Costs of
revenues 227,919 164,621 815,662 864,824
Engineering,
research and
development 83,309 79,227 329,560 371,463
Selling,
general and
administrative 87,349 72,621 361,372 415,126
Goodwill and
purchased
intangible
asset
impairment - - - 446,744
Total costs and
operating
expenses 398,577 316,469 1,506,594 2,098,157
Income (loss)
from operations 160,842 (34,967) 314,166 (577,941)
Interest
expense and
other, net (10,740) (11,409) (22,985) (24,590)
Income (loss)
before income
taxes 150,102 (46,376) 291,181 (602,531)
Provision for
(benefit from)
income taxes 37,017 (20,800) 78,881 (79,163)
Net income
(loss) $ 113,085 $ (25,576) $ 212,300 $ (523,368)
Net income
(loss) per
share:
Basic $ 0.67 $ (0.15) $ 1.24 $ (3.07)
Diluted $ 0.66 $ (0.15) $ 1.23 $ (3.07)
Cash dividend
paid per share $ 0.15 $ 0.15 $ 0.60 $ 0.60
Weighted
average number
of shares:
Basic 168,986 169,981 170,652 170,253
Diluted 171,275 169,981 173,034 170,253
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of CashFlows
Three months ended
June 30
(In thousands) 2010 2009
Cash flows from operating activities:
Net income (loss) $ 113,085 $ (25,576)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 19,554 25,732
Long-lived asset impairment charges 4,557 638
Provision for doubtful accounts (2,888) (818)
Non-cash stock-based compensation 23,459 26,092
Tax charge from equity awards - (13,223)
Net loss (gain) on sale of marketable securities and
other investments (1,388) 160
Net gain on sale of real estate assets - (353)
Changes in assets and liabilities, net of assets
acquired and liabilities assumed in business
combinations:
Decrease (increase) in accounts receivable, net (113,496) 37,261
Decrease (increase) in inventories (26,461) 53,111
Decrease (increase) in other assets 26,734 (40,943)
Increase in accounts payable 15,922 6,720
Increase in deferred system profit 37,807 21,632
Decrease in other liabilities (13,607) (16,995)
Net cash provided by operating activities 83,278 73,438
Cash flows from investing activities:
Capital expenditures, net (5,791) (1,980)
Purchase of available-for-sale securities (217,123) (349,358)
Proceeds from sale of available-for-sale securities 187,900 116,127
Proceeds from maturity of available-for-sale securities 23,108 21,000
Purchase of trading securities (22,740) (20,402)
Proceeds from sale of trading securities 35,622 27,525
Net cash provided by (used in) investing activities 976 (207,088)
Cash flows from financing activities:
Issuance of common stock 12,054 12,971
Tax withholding payments related to vested and released
restricted stock units (601) (549)
Common stock repurchases (81,645) -
Payment of dividends to stockholders (25,386) (25,490)
Net cash used in financing activities (95,578) (13,068)
Effect of exchange rate changes on cash and cash
equivalents (2,263) 6,756
Net decrease in cash and cash equivalents (13,587) (139,962)
Cash and cash equivalents at beginning of period 543,505 664,929
Cash and cash equivalents at end of period $ 529,918 $ 524,967
Supplemental cash flow disclosures:
Income tax paid (refunds received), net $ 28,982 $ (5,274)
Interest paid $ 26,006 $ 26,474
KLA-Tencor Corporation
Condensed Consolidated Unaudited Supplemental Information
(In thousands, except per share data)
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
Three months ended Twelve months ended
June 30, March 31,
2010 2010 June 30, 2009 June 30, 2010 June 30, 2009
GAAP net
income (loss) $ 113,085 $ 57,016 $ (25,576) $ 212,300 $(523,368)
Adjustments to
reconcile GAAP
net income
(loss) to
non-GAAP net
income (loss)
Acquisition
related
charges a 8,280 8,370 11,561 32,849 79,287
Restructuring,
severance and
other related
charges b 3,311 4,426 7,007 17,778 54,119
Restatement
related
charges c (866) 4,750 (1,731) 16,149 13,261
Goodwill and
purchased
intangible
asset
impairment d - - - - 446,744
Income tax
effect of
non-GAAP
adjustments e (3,824) (6,417) (5,883) (24,124) (107,503)
Discrete tax
items f - 3,165 - 11,858 -
Non-GAAP net
income (loss) $ 119,986 $ 71,310 $ (14,622) $ 266,810 $ (37,460)
GAAP net
income (loss)
per diluted
share $ 0.66 $ 0.33 $ (0.15) $ 1.23 $ (3.07)
Non-GAAP net
income (loss)
per diluted
share $ 0.70 $ 0.41 $ (0.09) $ 1.54 $ (0.22)
Shares used in
diluted shares
calculation 171,275 173,357 169,981 173,034 170,253
Pre-tax impact of items included in Condensed Consolidated Unaudited Statements
of Operations
Restructuring, Total pre-tax GAAP
Acquisition severance and Restatement to
related other related non-GAAP
charges related charges charges adjustment
Three months ended
June 30, 2010
Costs of revenues $ 5,790 $ (57) $ - $ 5,733
Engineering,
research and
development 898 - - 898
Selling, general
and administrative 1,592 3,368 (866) 4,094
Total in three
months ended June
30, 2010 $ 8,280 $ 3,311 $ (866) $ 10,725
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
Three months ended
June 30, 2009
Costs of revenues $ 9,314 $ 3,662 $ - $ 12,976
Engineering,
research and
development 742 4 - 746
Selling, general
and administrative 1,505 3,341 (1,731) 3,115
Total in three
months ended June
30, 2009 $ 11,561 $ 7,007 $ (1,731) $ 16,837
Three months ended
June 30, 2010 March 31, 2010 June 30, 2009
Stock-based compensation
Costs of revenues $ 3,869 $ 3,793 $ 5,091
Engineering, research and
development 7,176 6,843 8,650
Selling, general and
administrative 12,414 10,833 12,351
Total $ 23,459 $ 21,469 $ 26,092
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, entry into a severance and consulting agreement with the company's former president/chief operating officer during the fiscal year ended June 30, 2009, gains and losses from sales of facilities, and asset impairment (other than impairment of goodwill and purchased intangible assets, which is included within the category described in note (d) below) from discontinuing or making available for sale certain acquired product lines. 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, including an expense accrual reflecting the net amount paid by KLA-Tencor during the fiscal year ended June 30, 2010 in connection with settlements of various separate litigation matters. 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 Goodwill and purchased intangible asset impairment includes non-cash expense recognized as a result of the company's annual evaluation of goodwill or the testing for intangible asset impairment driven by certain company-specific triggering events, as well as the impairment of goodwill and intangible assets as a result of discontinuing acquired products and making acquired products available for sale. 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. e 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. f 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. A shortfall arises when the tax deduction is less than book compensation. Windfalls are recorded as increases to capital in excess of par value. Shortfalls 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. 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 July 29, 2010