KLA-Tencor Reports Fiscal 2008 Third Quarter Results
SAN JOSE, Calif.--(BUSINESS WIRE)--
KLA-Tencor Corporation (NASDAQ:KLAC) today announced operating results for its third quarter of fiscal 2008, which ended on March 31, 2008. The Company reported GAAP net income of $111 million and GAAP earnings per diluted share of $0.61 on revenue of $602 million for third quarter of fiscal 2008.
"The challenging industry-wide demand environment presents an opportunity for us to further strengthen our industry leadership position. In order to capitalize on the opportunity, we continue to drive efficiencies throughout our business, while investing, internally and externally, in the technologies our customers will need to accelerate their development and production ramps," said Rick Wallace, CEO of KLA-Tencor.
GAAP Results
----------------------------------------------------------------------
Q3 FY 2008 Q2 FY 2008 Q3 FY 2007
---------------------------- ------------- ------------- -------------
Revenues $602 million $636 million $716 million
---------------------------- ------------- ------------- -------------
Net Income $111 million $84 million $155 million
---------------------------- ------------- ------------- -------------
Diluted Earnings per Share $0.61 $0.45 $0.76
---------------------------- ------------- ------------- -------------
Non-GAAP Results
----------------------------------------------------------------------
Q3 FY 2008 Q2 FY 2008 Q3 FY 2007
---------------------------- ------------- ------------- -------------
Net Income $121 million $138 million $176 million
---------------------------- ------------- ------------- -------------
Diluted Earnings per Share $0.67 $0.75 $0.87
---------------------------- ------------- ------------- -------------
A reconciliation between GAAP net income and non-GAAP net income is provided in a table below. Non-GAAP results include the impact of stock-based compensation, but exclude the impact of acquisition, restatement or restructuring related items.
Highlights for the third quarter of fiscal 2008
-- Announced an agreement under which KLA-Tencor agreed to make a
tender offer to acquire ICOS Vision Systems Corporation NV, a
leading supplier of packaging and interconnect inspection
solutions for the semiconductor industry, as well as a leader
in the inspection of photovoltaic solar technologies and LED
lighting products.
-- Declared and paid dividends of $27 million and repurchased
$180 million of stock.
-- Generated cash flow from operations of $148 million.
-- Introduced TeraFab, a new family of Mask Inspection Systems
that offers wafer fabs flexible options to qualify incoming
masks and inspect production masks for contaminants. The
TeraFab systems are offered in multiple configurations to
provide chipmakers with advanced tools for cost-effective mask
quality control.
-- Introduced two additions to its Aleris(TM) family of films
metrology systems - the Aleris 8310 and Aleris 8350. These
systems utilize KLA-Tencor's new generation of Broadband
Spectroscopic Ellipsometry (BBSE(TM)) optics which allow
chipmakers to measure multi-layer film thickness, refractive
index, and stress, meeting advanced films metrology
requirements.
KLA-Tencor will discuss its fiscal 2008 third quarter results, along with its outlook for the fourth quarter of fiscal 2008, 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 market conditions, potential market opportunities for KLA-Tencor 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; new and enhanced product offerings by competitors; cancellation of orders by customers; 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 the Company's Annual Report on Form 10-K for the year ended June 30, 2007, 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 is the world's leading supplier of process control and yield management solutions for the semiconductor and related microelectronics industries. Headquartered in San Jose, Calif., 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 on the Internet at http://www.kla-tencor.com
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 GAAP.
To supplement our condensed consolidated financial statements presented in accordance with GAAP, we provide 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 this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with United States GAAP.
KLA-Tencor Corporation
Condensed Consolidated Unaudited Balance Sheets
(In thousands) March 31, June 30,
2008 2007
--------- ---------
ASSETS
Cash, restricted cash, short and long-term
investments $1,314,572 $1,710,629
Accounts receivable, net 573,284 581,500
Inventories 443,710 535,370
Other current assets 491,939 425,272
Land, property and equipment, net 341,186 382,240
Goodwill 315,617 311,856
Purchased intangibles, net 144,937 175,432
Other long-term assets 485,760 500,950
--------- ---------
Total assets $4,111,005 $4,623,249
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 101,239 $ 92,165
Deferred system profit 188,300 201,747
Unearned revenue 52,216 52,304
Other current liabilities 642,143 659,346
--------- ---------
Total current liabilities 983,898 1,005,562
Non-current liabilities:
Income tax payable 58,921 -
Unearned revenue 41,885 46,950
Other non-current liabilities 37,211 20,695
--------- ---------
Total liabilities 1,121,915 1,073,207
Stockholders' equity:
Common stock and capital in excess of par value 700,028 967,886
Retained earnings 2,257,049 2,570,751
Accumulated other comprehensive income 32,013 11,405
--------- ---------
Total stockholders' equity 2,989,090 3,550,042
--------- ---------
Total liabilities and stockholders' equity $4,111,005 $4,623,249
========= =========
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements Of Operations
Three months ended Nine months ended
-------------------- --------------------
(In thousands except per March 31, March 31, March 31, March 31,
share data) 2008 2007 2008 2007
--------- --------- --------- ---------
Revenues:
Product $ 476,274 $ 607,390 $1,568,155 $1,682,619
Service 125,945 108,818 362,867 312,222
--------- --------- --------- ---------
Total revenues 602,219 716,208 1,931,022 1,994,841
Costs and operating
expenses:
Costs of revenues 285,650 306,751 876,548 874,642
Engineering, research and
development 96,646 106,265 293,503 313,659
Selling, general and
administrative 94,723 120,537 365,006 391,536
--------- --------- --------- ---------
Total costs and operating
expenses 477,019 533,553 1,535,057 1,579,837
--------- --------- --------- ---------
Income from operations 125,200 182,655 395,965 415,004
Interest income and other,
net 36,009 20,817 66,752 65,931
--------- --------- --------- ---------
Income before income taxes
and minority interest 161,209 203,472 462,717 480,935
Provision for income taxes 50,229 48,546 179,644 101,551
--------- --------- --------- ---------
Income before minority
interest 110,980 154,926 283,073 379,384
Minority interest - (141) - 1,372
--------- --------- --------- ---------
Net income $ 110,980 $ 154,785 $ 283,073 $ 380,756
========= ========= ========= =========
Net income per share:
Basic $ 0.62 $ 0.78 $ 1.55 $ 1.91
========= ========= ========= =========
Diluted $ 0.61 $ 0.76 $ 1.52 $ 1.87
========= ========= ========= =========
Weighted average number of
shares:
Basic 178,112 197,930 182,397 199,053
Diluted 180,617 203,474 186,303 203,976
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Cash Flows
Three months ended
March 31,
----------------------
(In thousands) 2008 2007
----------------------------------------------- ---------- -----------
Cash flows from operating activities:
Net income $ 110,980 $ 154,785
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 26,610 29,305
Non-cash, stock-based compensation 25,854 20,126
Tax benefit from employee stock
options 5,397 1,833
Excess tax benefit from stock-based
compensation (4,421) (2,777)
Minority interest -- 141
Net gain on sale of marketable
securities and other investments (20,335) (314)
Net gain on sale of real estate (8,641) --
Changes in assets and liabilities:
Accounts receivable, net 26,078 (43,308)
Inventories 29,630 37,223
Other assets (4,748) 2,468
Accounts payable (8,885) (12,934)
Deferred system profit (6,380) (16,161)
Other liabilities (22,927) 28,221
---------- -----------
Net cash provided by operating
activities 148,212 198,608
---------- -----------
Cash flows from investing activities:
Restricted cash (581,540) --
Acquisitions of businesses, net of cash
received (1,525) (49,029)
Capital expenditures, net (10,202) (22,834)
Proceeds from sale of real estate 28,668 --
Purchase of available-for-sale securities (139,513) (878,095)
Proceeds from sale of available-for-sale
securities 746,146 1,164,228
Proceeds from maturity of available-for-
sale securities 7,065 9,535
---------- -----------
Net cash provided by investing
activities 49,099 223,805)
---------- -----------
Cash flows from financing activities:
Issuance of common stock 2,609 104,196
Common stock repurchases (179,889) (763,582)
Payment of dividends to stockholders (26,557) (23,893)
Excess tax benefit from stock-based
compensation 4,421 2,777
---------- -----------
Net cash used in financing
activities (199,416) (680,502)
---------- -----------
Effect of exchange rate changes on cash and
cash equivalents 17,944 (879)
---------- -----------
Net increase (decrease) in cash and cash
equivalents 15,839 (258,968)
Cash and cash equivalents at beginning of
period 547,643 863,384
---------- -----------
Cash and cash equivalents at end of period $ 563,482 $ 604,416
========== ===========
Supplemental cash flow disclosures:
Income taxes paid, net $ 53,200 $ 37,585
Interest paid $ 1,435 $ 339
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 March 31, March 31, March 31,
2008 31, 2007 2007 2008 2007
-------------------------------------------------
GAAP net income $110,980 $ 83,935 $154,785 $283,073 $380,756
Adjustments to
reconcile GAAP net
income to non-GAAP
net income
--------------------
Acquisition related
charges a (2,174) 21,904 18,023 32,096 36,915
Restructuring,
severance and
others b 13,477 (5,986) - 9,770 67,180
Restatement related
charges c 5,169 67,000 15,289 74,280 33,149
Income tax effect of
non-GAAP
adjustments d (6,210) (28,747) (11,921) (41,277) (49,503)
Non recurring tax
item e - - - 46,613 -
--------- --------- --------- --------- ---------
Non-GAAP net income $121,242 $138,106 $176,176 $404,555 $468,497
========= ========= ========= ========= =========
GAAP net income per
diluted share $ 0.61 $ 0.45 $ 0.76 $ 1.52 $ 1.87
========= ========= ========= ========= =========
Non-GAAP net income
per diluted share $ 0.67 $ 0.75 $ 0.87 $ 2.17 $ 2.30
========= ========= ========= ========= =========
Shares used in
diluted shares
calculation 180,617 185,199 203,474 186,303 203,976
========= ========= ========= ========= =========
Impact of items included in Condensed Statements of Operations:
----------------------------------------------------------------------
Total pre-
tax GAAP
Acquisition Restructuring, Restatement to non-
related severance and related GAAP
charges other charges adjustment
----------- -------------- ----------- -----------
Cost of revenues $ 6,322 $ 19,624 $ - $ 25,946
Engineering,
research and
development 1,223 642 - 1,865
Sales, general and
administrative 2,137 (6,789) 5,169 517
Interest income and
other, net (11,856) - - (11,856)
----------- -------------- ----------- -----------
Total in three
months ended March
31, 2008 $ (2,174) $ 13,477 $ 5,169 $ 16,472
=========== ============== =========== ===========
Total in three
months ended
December 31, 2007 $ 21,904 $ (5,986) $ 67,000 $ 82,918
=========== ============== =========== ===========
Total in three
months ended March
31, 2007 $ 18,023 $ - $ 15,289 $ 33,312
=========== ============== =========== ===========
Three months ended
---------------------------------
March 31, December 31, March 31,
2008 2007 2007
---------------------------------
Stock-based compensation
-------------------------------------
Costs of revenues $ 5,670 $ 4,700 $ 6,629
Engineering, research and development 8,052 7,109 11,036
Sales, general and administrative 12,133 11,443 11,604
Provision for income taxes (7,757) (8,038) (9,349)
=================================
Total $ 18,098 $ 15,214 $19,920
=================================
To supplement our condensed consolidated financial statements presented in accordance with GAAP, we provide 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 budgeting and planning tools that management uses for future forecasting. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with United States GAAP.
a Acquisition related charges include impairment and amortization of intangibles, inventory fair value adjustments, in-process research and development associated with acquisitions, asset impairment from discontinuing acquired products, as well as unrealized gains resulting from the Euro call option contracts related to the ICOS acquisition. 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 the Company's newly acquired and long-held business. Management believes that it is appropriate to exclude asset impairment from discontinuing acquired products as well as gains 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 that of other companies. b Restructuring, severance and others includes costs associated with facilities divestment program, worldwide reduction in force, 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 that of other companies. c Restatement related charges include compensation related to reimbursement of 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 that of other companies. d Income tax effect on 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 item includes the U.S. tax impact associated with the implementation of our global manufacturing strategy. Management believes that it is appropriate to exclude this item as it limits comparability. Management believes excluding this item helps investors compare our operating performance with that of other companies.
Source: KLA-Tencor Corporation
Released April 24, 2008