KLA-Tencor Reports Fiscal 2009 Second Quarter Results
MILPITAS, Calif.--(BUSINESS WIRE)-- KLA-Tencor Corporation (NASDAQ:KLAC) today announced operating results for its second quarter of fiscal 2009, which ended on December 31, 2008. KLA-Tencor reported a GAAP net loss of $434 million and a GAAP loss per share of $2.57 on revenues of $397 million for the second quarter of fiscal 2009. The results for the second quarter of fiscal 2009 include the pre-tax impact of a $435 million charge related to the aggregate impairment of goodwill and purchased intangible assets. KLA-Tencor reported a non-GAAP net loss of $20 million and a non-GAAP loss per share of $0.12 for the second quarter of fiscal 2009.
"The continuing worldwide economic slowdown drove sharp reductions in our customers' capital budgets, and KLA-Tencor experienced a greater-than-expected decline in orders and revenue at the end of the December quarter, including service revenue," said Rick Wallace, president and chief executive officer of KLA-Tencor. "In light of the current economic environment and our limited visibility regarding future market conditions, KLA-Tencor has been taking aggressive steps to reduce operating expenses and drive structural efficiencies across our organization, while maintaining a high level of investment in research and development, as well as our focus on customer service. We are confident these actions will allow us to sustain our technological and market leadership during this severe downturn and position us well when industry conditions improve, while protecting our balance sheet."
GAAP Results
Q2 FY 2009 Q1 FY 2009 Q2 FY 2008
Revenues $ 397 million $ 533 million $ 636 million
Net (Loss) Income $(434) million $ 19 million $ 84 million
(Loss) Earnings per Share $ (2.57) $ 0.11 $ 0.45
Non-GAAP Results
Q2 FY 2009 Q1 FY 2009 Q2 FY 2008
Net (Loss) Income $ (20) million $ 55 million $ 138 million
(Loss) Earnings per Share $ (0.12) $ 0.32 $ 0.75
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, goodwill and intangible asset impairment, restatement, and restructuring related items.
KLA-Tencor will discuss its fiscal 2009 second quarter results, 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 the benefit to customers of KLA-Tencor's products, anticipated performance of the company's products, anticipated market conditions, potential market opportunities for KLA-Tencor, anticipated steps designed to reduce KLA-Tencor's costs and the success of such efforts, KLA-Tencor's ability to sustain its current technological and market position in the future, and demand for KLA-Tencor's products, 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 offerings by competitors; cancellation of orders by customers; KLA-Tencor's inability to successfully integrate and manage businesses that it acquires; 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, 2008, 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 is the world's leading supplier of process control and yield management solutions for the semiconductor and related nanoelectronics industries. Headquartered in Milpitas, California, the company has sales and service offices around the world. An S&P 500 company, KLA-Tencor is traded on the NASDAQ Global Select Market under the symbol KLAC. Additional information about the company is available at http://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, our financial results presented in accordance with United States GAAP.
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 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. 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) Dec. 31, 2008 June 30, 2008 ASSETS Cash and short- and long-term investments $ 1,222,400 $ 1,579,383 Accounts receivable, net 332,353 492,488 Inventories, net 472,585 459,449 Other current assets 523,775 546,591 Land, property and equipment, net 323,020 355,474 Goodwill 337,572 601,882 Purchased intangibles, net 162,075 297,778 Other non-current assets 482,313 515,345 Total assets $ 3,856,093 $ 4,848,390 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 103,817 $ 104,315 Deferred system profit 83,433 150,797 Unearned revenue 70,949 56,692 Other current liabilities 421,433 638,528 Total current liabilities 679,632 950,332 Non-current liabilities: Income tax payable 55,934 63,634 Unearned revenue 9,225 31,745 Other non-current liabilities 79,239 76,288 Long-term debt 744,932 744,661 Total liabilities 1,568,962 1,866,660 Stockholders' equity: Common stock and capital in excess of par 786,464 729,629 value Retained earnings 1,532,417 2,204,417 Accumulated other comprehensive income (loss) (31,750) 47,684 Total stockholders' equity 2,287,131 2,981,730 Total liabilities and stockholders' equity $ 3,856,093 $ 4,848,390
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Operations
Three months ended Six months ended
(In thousands Dec. 31,
except per 2008 Dec. 31, 2007 Dec. 31, 2008 Dec. 31, 2007
share data)
Revenues:
Product $ 273,072 $ 513,449 $ 678,568 $ 1,091,881
Service 123,517 122,334 250,534 236,922
Total revenues 396,589 635,783 929,102 1,328,803
Costs and
operating
expenses:
Costs of 238,167 279,167 490,980 585,060
revenues
Engineering,
research and 95,266 97,513 209,627 196,857
development
Selling,
general and 133,954 159,453 252,444 269,958
administrative
Goodwill and
intangible 434,833 6,163 446,744 6,163
asset
impairment
Total costs
and operating 902,220 542,296 1,399,795 1,058,038
expenses
Income (loss)
from (505,631) 93,487 (470,693) 270,765
operations
Interest
income (12,472) 13,269 (8,295) 30,743
(expense) and
other, net
Income (loss)
before income (518,103) 106,756 (478,988) 301,508
taxes
Provision for
(benefit from) (83,849) 22,821 (64,023) 129,415
income taxes
Net income $ (434,254) $ 83,935 $ (414,965) $ 172,093
(loss)
Net income
(loss) per
share:
Basic $ (2.57) $ 0.46 $ (2.43) $ 0.93
Diluted $ (2.57) $ 0.45 $ (2.43) $ 0.91
Cash dividend $ 0.15 $ 0.15 $ 0.30 $ 0.30
paid per share
Weighted
average number
of shares:
Basic 169,022 181,241 170,552 184,516
Diluted 169,022 185,199 170,552 189,122
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Cash
Flows
Three months ended
December 31,
(In thousands) 2008 2007
Cash flows from operating activities:
Net income (loss) $ (434,254) $ 83,935
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 35,646 28,345
Goodwill, purchased intangible assets and long-lived 436,833 6,163
asset impairment
Provision for doubtful accounts 23,887 -
Non-cash, stock-based compensation 22,303 23,252
Tax charge from stock-based compensation (3,294) (340)
Excess tax benefit from stock-based compensation (2) (284)
Net loss (gain) on sale of marketable securities and 641 (409)
other investments
Gain on sale of real estate assets (1,997) (9,042)
Changes in assets and liabilities, net of assets
acquired and liabilities assumed in business
combinations:
Decrease in accounts receivable, net 31,119 48,905
Decrease in inventories 30,322 17,782
Increase in other assets (16,314) (31,646)
Increase (decrease) in accounts payable 736 (4,543)
Increase (decrease) in deferred system profit 1,302 (13,366)
Decrease in other liabilities (162,528) (23,544)
Net cash provided by (used in) operating activities (35,600) 125,208
Cash flows from investing activities:
Acquisition of businesses, net of cash received (13,952) (3,966)
Capital expenditures, net (6,967) (22,609)
Proceeds from sale of real estate assets 19,348 34,622
Purchase of available-for-sale securities (124,775) (247,426)
Proceeds from sale and maturity of available-for-sale 129,770 268,691
securities
Purchase of trading securities (19,206) (14,017)
Proceeds from sale of trading securities 18,707 15,236
Net cash provided by investing activities 2,925 30,531
Cash flows from financing activities:
Issuance of common stock 21,118 31,764
Common stock repurchases (49,046) (126,237)
Payment of dividends to stockholders (25,335) (27,151)
Excess tax benefit from stock-based compensation 2 284
Net cash used in financing activities (53,261) (121,340)
Effect of exchange rate changes on cash and cash 8,807 (807)
equivalents
Net increase (decrease) in cash and cash equivalents (77,129) 33,592
Cash and cash equivalents at beginning of period 733,459 514,051
Cash and cash equivalents at end of period $ 656,330 $ 547,643
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 Six months ended
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2007 2008 2007
GAAP net $ (434,254 ) $ 19,289 $ 83,935 $ (414,965 ) $ 172,093
income (loss)
Adjustments to
reconcile GAAP
net income
(loss) to
non-GAAP net
income (loss)
Acquisition
related a 22,590 28,418 15,741 51,008 28,107
charges
Restructuring,
severance and b 23,621 4,161 (5,986 ) 27,782 (3,707 )
other
Restatement
related c 9,190 3,784 67,000 12,974 69,111
charges
Goodwill and
intangible d 434,833 11,911 6,163 446,744 6,163
asset
impairment
Income tax
effect of e (75,882 ) (12,214 ) (28,747 ) (88,096 ) (35,067 )
non-GAAP
adjustments
Non recurring f - - - - 46,613
tax item
Non-GAAP net $ (19,902 ) $ 55,349 $ 138,106 $ 35,447 $ 283,313
income (loss)
GAAP net
income (loss) $ (2.57 ) $ 0.11 $ 0.45 $ (2.43 ) $ 0.91
per diluted
share
Non-GAAP net
income (loss) $ (0.12 ) $ 0.32 $ 0.75 $ 0.21 $ 1.50
per diluted
share
Shares used in
diluted shares 169,022 174,386 185,199 170,552 189,122
calculation
Impact of items included in Condensed Consolidated Unaudited
Statements of Operations:
Goodwill Total
and Acquisition Restructuring, Restatement pre-tax
intangible related severance and related GAAP to
asset charges other charges non-GAAP
impairment adjustment
Costs of $ - $ 15,354 $ 9,759 $ - $ 25,113
revenues
Engineering,
research and - 1,606 4,484 - 6,090
development
Sales, general
and - 5,630 9,378 9,190 24,198
administrative
Goodwill and
intangible 434,833 - - - 434,833
asset
impairment
Total in three
months ended $ 434,833 $ 22,590 $ 23,621 $ 9,190 $ 490,234
Dec. 31, 2008
Total in three
months ended $ 11,911 $ 28,418 $ 4,161 $ 3,784 $ 48,274
Sept. 30, 2008
Total in three
months ended $ 6,163 $ 15,741 $ (5,986 ) $ 67,000 $ 82,918
Dec. 31, 2007
Three months ended
Dec. 31, 2008 Sept. 30, 2008 Dec. 31, 2007
Stock-based compensation
Costs of revenues $ 4,679 $ 5,456 $ 4,700
Engineering, research and 6,981 9,971 7,109
development
Sales, general and 10,643 18,955 11,443
administrative
Total $ 22,303 $ 34,382 $ 23,252
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 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. 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.
Acquisition related charges include amortization of intangible assets, inventory fair value adjustments, and in-process research and development 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 a that are consistent over time for both KLA-Tencor's newly acquired and long-held businesses. Management believes that it is appropriate to exclude inventory fair value adjustments, in-process research and development and gains and losses on foreign exchange contracts associated with business acquisitions 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. Restructuring, severance and other includes gains and costs associated with the company's facilities divestment program, reductions in force, entry into a severance and consulting agreement during the quarter ended September 30, 2008 with its former president/chief operating officer, and gains from sale b 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. Restatement related charges include compensation related to reimbursement payments by KLA-Tencor to non-executive employees for penalty taxes under section 409A of the Internal Revenue Code, as well as legal and other expenses related to the stock option investigation, shareholder litigation c and related 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. Goodwill and intangible asset impairment includes non-cash expense recognized as a result of the company's annual testing for goodwill impairment performed in the second quarter of every fiscal year and testing for intangible asset impairment driven by certain macroeconomic and company-specific triggering events, as well as the impairment of goodwill and intangible assets as a d 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. Income tax effect of non-GAAP adjustments includes the income tax effects of e 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. Non recurring tax item includes the U.S. tax impact associated with the implementation of our global manufacturing strategy and a benefit from revision of the amount of undistributed earnings of foreign subsidiaries considered to be permanently reinvested outside the United States. Management f 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 29, 2009