KLA-Tencor Reports Fiscal 2009 First Quarter Results
MILPITAS, Calif.--(BUSINESS WIRE)--
KLA-Tencor Corporation (NASDAQ:KLAC) today announced operating results for its first quarter of fiscal 2009, which ended on September 30, 2008. KLA-Tencor reported GAAP net income of $19 million and GAAP earnings per diluted share of $0.11 on revenue of $533 million for the first quarter of fiscal 2009.
"Macro-economic uncertainty, declining consumer demand, and limited access to financing are having an adverse impact on semiconductor capital equipment spending across all end markets and geographies. In response to sharp order declines and uncertain outlook, we are implementing actions to reduce costs, while still maintaining our strategic focus and strengthening KLA-Tencor's competitive position, and to lay the foundation for growth once the business environment improves," commented Rick Wallace, chief executive officer of KLA-Tencor. "Our market leadership, the exceptional value of our technology and our strong balance sheet provide us with the resources to maintain a high level of customer focus during this downturn."
GAAP Results
----------------------------------------------------------------------
Q1 FY 2009 Q4 FY 2008 Q1 FY 2008
----------------------------------------------------------------------
Revenues $ 533 million $ 591 million $ 693 million
----------------------------------------------------------------------
Net Income $ 19 million $ 76 million $ 88 million
----------------------------------------------------------------------
Diluted Earnings per Share $ 0.11 $ 0.43 $ 0.46
======================================================================
Non-GAAP Results
----------------------------------------------------------------------
Q1 FY 2009 Q4 FY 2008 Q1 FY 2008
----------------------------------------------------------------------
Net Income $ 55 million $ 107 million $ 145 million
----------------------------------------------------------------------
Diluted Earnings per Share $ 0.32 $ 0.60 $ 0.75
----------------------------------------------------------------------
A reconciliation between GAAP net income and non-GAAP net income 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.
Highlights for the first quarter of fiscal 2009
-- Completed the acquisition of the Microelectronic Inspection
Equipment (MIE) business unit of Vistec Semiconductor Systems.
The MIE business unit manufactures and sells advanced
semiconductor mask registration measurement tools and wafer
manufacturing defect inspection systems.
-- Generated cash flow from operations of $81 million.
-- Introduced the eS35 e-beam inspection system, capable of
detecting and classifying smaller physical defects and more
subtle electrical defects at significantly higher speeds. The
eS35 features improved sensitivity along with substantial
throughput gains, to accelerate yield of 4Xnm and 3Xnm
devices.
-- Introduced the latest stylus surface profiling system, the
P-6(TM), which offers a unique set of advanced features for
scientific research and production environments, such as
photovoltaic solar cell manufacturing.
-- Introduced the Surfscan(R) SP2XP, a new monitor-wafer
inspection system for the integrated circuit (IC) market that
features improved sensitivity to defects on silicon, poly and
metal films and enhanced ability to sort defects by type and
size, to accelerate fabs' development of 3Xnm and 2Xnm
next-generation devices.
-- Introduced the Candela(TM) 7100 series for advanced defect
inspection and classification of hard disk drive substrates
and media, designed to help manufacturers identify and
classify submicron critical defects such as pits, bumps,
particles and buried defects, for maximizing yield and
lowering total cost of inspection.
-- Introduced the die-to-database version of its latest mask
inspection technology, Wafer Plane Inspection(TM) (WPI). WPI
allows leading-edge logic and foundry mask makers to
concurrently detect defects on the mask and assess whether the
defects are likely to print on the wafer.
-- Introduced PROLITH(TM) 12, the latest industry-leading
computational lithography tool, which enables researchers to
cost-effectively explore the feasibility of various mask
designs, photo materials and processes associated with Extreme
Ultra-Violet (EUV) lithography.
KLA-Tencor will discuss its fiscal 2009 first quarter results, along with its outlook for the second quarter of fiscal 2009, 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 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 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, including ICOS Vision Systems Corporation NV and the MIE business unit; 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).
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)
P-6, Surfscan, Candela, Wafer Plane Inspection and PROLITH are all trademarks of KLA-Tencor Corporation.
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) Sept. 30, 2008 June 30, 2008
--------------- --------------
ASSETS
Cash and short- and long-term
investments $ 1,306,511 $ 1,579,383
Accounts receivable, net 370,343 492,488
Inventories, net 503,673 459,449
Other current assets 488,094 546,591
Land, property and equipment, net 350,700 355,474
Goodwill 612,977 601,882
Purchased intangibles, net 359,177 297,778
Other long-term assets 490,772 515,345
--------------- --------------
Total assets $ 4,482,247 $ 4,848,390
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 102,661 $ 104,315
Deferred system profit 82,130 150,797
Unearned revenue 61,757 56,692
Other current liabilities 529,038 638,528
--------------- --------------
Total current liabilities 775,586 950,332
Non-current liabilities:
Income tax payable 63,468 63,634
Unearned revenue 24,087 31,745
Other non-current liabilities 113,709 76,288
Long-term debt 744,796 744,661
--------------- --------------
Total liabilities 1,721,646 1,866,660
Stockholders' equity:
Common stock and capital in excess of
par value 763,925 729,629
Retained earnings 2,012,838 2,204,417
Accumulated other comprehensive
income (loss) (16,162) 47,684
--------------- --------------
Total stockholders' equity 2,760,601 2,981,730
--------------- --------------
Total liabilities and stockholders'
equity $ 4,482,247 $ 4,848,390
=============== ==============
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Operations
Three months ended
-------------------------------
Sept. 30, Sept. 30,
(In thousands except per share data) 2008 2007
--------------- --------------
Revenues:
Product $ 405,496 $ 578,432
Service 127,017 114,588
--------------- --------------
Total revenues 532,513 693,020
Costs and operating expenses:
Costs of revenues 258,203 305,893
Engineering, research and development 114,361 99,344
Selling, general and administrative 125,011 110,505
--------------- --------------
Total costs and operating expenses 497,575 515,742
--------------- --------------
Income from operations 34,938 177,278
Interest income and other, net 4,177 17,474
--------------- --------------
Income before income taxes and
minority interest 39,115 194,752
Provision for income taxes 19,826 106,594
--------------- --------------
Net income $ 19,289 $ 88,158
=============== ==============
Net income per share:
Basic $ 0.11 $ 0.47
=============== ==============
Diluted $ 0.11 $ 0.46
=============== ==============
Cash dividend paid per share $ 0.15 $ 0.15
=============== ==============
Weighted average number of shares:
Basic 172,088 187,789
Diluted 174,386 193,043
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Cash Flows
Three months ended
September 30,
-------------------------
(In thousands) 2008 2007
-------------------------------------------- ------------ ------------
Cash flows from operating activities:
Net income $ 19,289 $ 88,158
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 42,708 24,952
Impairment charges 12,358 -
Non-cash, stock-based compensation 34,382 28,083
Tax benefit (charge) from employee
stock options (618) 6,516
Excess tax benefit from stock-based
compensation (1,689) (2,840)
Net gain on sale of marketable
securities and other investments (128) (62)
Gain on sale of real estate (1,368) -
Changes in assets and liabilities:
(Increase) decrease in
accounts receivable, net 131,364 (18,755)
(Increase) decrease in
inventories (16,739) 39,697
Decrease in other assets 50,623 15,155
Increase (decrease) in
accounts payable (9,881) 26,320
Increase (decrease) in
deferred system profit (68,667) 6,299
Decrease in other liabilities (110,277) (7,738)
------------ ------------
Net cash provided by
operating activities 81,357 205,785
------------ ------------
Cash flows from investing activities:
Acquisitions of businesses, net of cash
received (127,023) -
Capital expenditures, net (10,132) (14,883)
Proceeds from sale of real estate 2,466 -
Purchase of available-for-sale
securities (394,378) (336,373)
Proceeds from sale and maturity of
available-for-sale securities 269,235 555,683
Purchase of trading securities (8,939) (23,880)
Proceeds from sale of trading securities 11,704 23,257
------------ ------------
Net cash provided by (used
in) investing activities (257,067) 203,804
------------ ------------
Cash flows from financing activities:
Issuance of common stock 5,967 96,655
Tax withholding payment related to
vested and released restricted stock
units (10,342) -
Common stock repurchases (177,469) (683,534)
Payment of dividends to stockholders (25,840) (28,459)
Excess tax benefit from stock-based
compensation 1,689 2,840
------------ ------------
Net cash used in financing
activities (205,995) (612,498)
------------ ------------
Effect of exchange rate changes on cash and
cash equivalents (12,942) (5,551)
------------ ------------
Net decrease in cash and cash equivalents (394,647) (208,460)
Cash and cash equivalents at beginning of
period 1,128,106 722,511
------------ ------------
Cash and cash equivalents at end of period $ 733,459 $ 514,051
============ ============
Supplemental cash flow disclosures:
Income taxes paid, net $ 11,042 $ 31,858
Interest paid $ 424 $ 395
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
-----------------------------
Sept. 30, June 30, Sept. 30,
2008 2008 2007
-----------------------------
GAAP net income $ 19,289 $ 76,010 $ 88,158
Adjustments to reconcile GAAP net income to non-GAAP net income
----------------------------------------------------------------------
Acquisition related charges a 40,330 50,377 12,366
Restructuring, severance and other b 4,161 (1,391) 2,279
Restatement related charges c 3,784 2,660 2,111
Income tax effect of non-GAAP
adjustments d (12,214) (12,038) (6,320)
Non recurring tax item e - (8,438) 46,613
--------- --------- ---------
Non-GAAP net income $ 55,350 $107,180 $145,207
========= ========= =========
GAAP net income per diluted share $ 0.11 $ 0.43 $ 0.46
========= ========= =========
Non-GAAP net income per diluted share $ 0.32 $ 0.60 $ 0.75
========= ========= =========
Shares used in diluted shares
calculation 174,386 178,090 193,043
========= ========= =========
Impact of items included in Condensed Consolidated Unaudited
Statements of Operations:
----------------------------------------------------------------------
Acquisition Restructuring, Restatement Total pre-
related severance and related tax GAAP
charges other charges to non-
GAAP
adjustment
--------------------------------------------------
Costs of revenues $ 18,204 $ (377) $ - $ 17,827
Engineering,
research and
development 10,126 (299) - 9,827
Sales, general and
administrative 12,000 4,837 3,784 20,621
--------------------------------------------------
Total in three
months ended
September 30, 2008 $ 40,330 $ 4,161 $ 3,784 $ 48,275
==================================================
Total in three
months ended June
30, 2008 $ 50,377 $ (1,391) $ 2,660 $ 51,646
==================================================
Total in three
months ended
September 30, 2007 $ 12,366 $ 2,279 $ 2,111 $ 16,756
==================================================
Three months ended
-----------------------------------
Sept. 30, June 30, Sept. 30,
2008 2008 2007
-----------------------------------
Stock-based compensation
-----------------------------------
Costs of revenues $ 5,456 $ 5,418 $ 6,253
Engineering, research and
development 9,971 8,870 8,592
Sales, general and administrative 18,955 14,992 13,238
-----------------------------------
Total $ 34,382 $ 29,280 $ 28,083
===================================
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.
a Acquisition related charges include impairment and amortization of
intangible assets, inventory fair value adjustments, in-process
research and development associated with acquisitions, asset
impairment from discontinuing acquired products as well as making
acquired products available for sale, and realized and unrealized
gains and losses resulting from the Euro call option contracts
related to KLA-Tencor's acquisition of ICOS Vision Systems
Corporation NV. Management believes that the expense associated
with the impairment and 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 asset impairment from
discontinuing acquired products as well as 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.
b Restructuring, severance and other includes gains and costs
associated with the company's facilities divestment program,
worldwide reduction in force, entry into a severance and
consulting agreement with its president/chief operating officer,
gains from sale of facilities and one-time inventory write-off
associated with the disposal of service inventory in excess of
future needs. 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 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 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.
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 Non recurring tax items 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 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 October 30, 2008