KLA-Tencor Reports Fiscal 2008 Second Quarter Results
SAN JOSE, Calif.--(BUSINESS WIRE)--
KLA-Tencor Corporation (NASDAQ:KLAC) today announced operating results for its second quarter of fiscal 2008, which ended on December 31, 2007. The Company reported GAAP net income of $84 million and GAAP earnings per diluted share of $0.45 on revenue of $636 million for the second quarter of fiscal 2008.
"The actions we have taken over the past several quarters to globalize our operations, reduce overhead, and streamline our cost structure are driving efficiencies throughout our business, even in this challenging demand environment," said Rick Wallace, CEO of KLA-Tencor.
GAAP Results
Q2 FY 2008 Q1 FY 2008 Q2 FY 2007
Revenues $ 636 million $ 693 million $ 649 million
Net Income $ 84 million $ 88 million $ 90 million
Earnings per Share
(diluted) $0.45 $0.46 $0.44
Non-GAAP Results (includes stock-based compensation)
Q2 FY 2008 Q1 FY 2008 Q2 FY 2007
Net Income $ 138 million $ 145 million $ 154 million
Earnings per Share
(diluted) $0.75 $0.75 $0.75
A reconciliation between GAAP net income and non-GAAP net income is provided in the tables accompanying this release. Non-GAAP results include the impact of stock-based compensation, but exclude the impact of acquisition, restatement and restructuring related items.
Financial Highlights for the second quarter of fiscal 2008
-- KLA-Tencor reached an agreement in principle for the
settlement of a securities class action relating to its
historical stock option practices. Under the agreement,
KLA-Tencor will be required to make a payment of $65 million
to the settlement class. The proposed settlement, which is
subject to a final agreement and court approval, will provide
a full release of KLA-Tencor and the other named defendants in
connection with the allegations raised in the lawsuit.
-- The Company declared and paid dividends of $27 million and
repurchased $126 million of its common stock.
-- KLA-Tencor generated cash flow from operations of $126
million.
Business Highlights for the second quarter of fiscal 2008
-- KLA-Tencor introduced the WaferSight 2(TM), the semiconductor
industry's first metrology system that enables wafer suppliers
and chipmakers to measure bare wafer flatness, shape, edge
roll-off and nanotopography in a single system with the high
precision and tool matching required for 45nm and beyond.
-- KLA-Tencor and Nikon Corporation have collaborated to develop
a set of fully automated overlay correction control system
tools, called Scanner Match Maker (SMM), that chipmakers can
use to correct overlay errors common to "mix and match"
lithography strategies which use lithography tools of varying
capabilities and from different suppliers. The SMM technology
is aimed at elevating the performance of all scanners,
enabling chipmakers to reduce their dedication of leading-edge
scanners to specific layers, thus cutting overall lithography
tool costs at more advanced nodes and extending the lifetime
of lithography tools.
-- KLA-Tencor introduced the Aleris(TM) family of films metrology
systems, beginning with the Aleris 8500, which is the
industry's first system to combine production-worthy
composition and multi-layer film thickness metrology.
-- KLA-Tencor introduced a unique application for its
SensArray(TM) wafer-level metrology tools, called
PlasmaWafer(TM) Suite, which provides chipmakers and etch
equipment suppliers with an easy-to-use measurement capability
to help verify plasma etch chamber health and quickly identify
problems such as drift, non-uniformity and slight differences
in chamber matching.
KLA-Tencor will discuss its fiscal 2008 second quarter results, along with its outlook for the third quarter of fiscal 2008, 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 success of collaborations with other companies, the benefit to customers of and demand for KLA-Tencor's products, and the finalization and approval of the securities class action settlement, 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 information 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 are adjusted from results based on GAAP to exclude certain costs and expenses, as well as other supplemental information. The non-GAAP and supplemental information are 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 provide 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.
KLA-Tencor Corporation
Condensed Consolidated Unaudited Balance Sheets
(In thousands) December 31, 2007 June 30, 2007
----------------- -------------
ASSETS
Current assets:
Cash and investments $ 1,297,204 $ 1,710,629
Accounts receivable, net 578,595 581,500
Inventories 482,948 535,370
Other current assets 453,563 425,272
----------------- -------------
Total current assets 2,812,310 3,252,771
Land, property and equipment, net 361,725 382,240
Goodwill 310,209 311,856
Purchased intangibles, net 153,023 175,432
Other assets 516,558 500,950
----------------- -------------
Total assets $ 4,153,825 $ 4,623,249
================= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 114,691 $ 92,165
Deferred system profit 194,680 201,747
Unearned revenue 53,838 52,304
Other current liabilities 577,683 659,346
----------------- -------------
Total current liabilities 940,892 1,005,562
Non-current liabilities
Income tax payable 84,289 -
Unearned revenue 47,279 46,950
Other non-current liabilities 37,586 20,695
----------------- -------------
Total Liabilities 1,110,046 1,073,207
Stockholders' equity:
Common stock and capital in excess of
par value 674,703 967,886
Retained earnings 2,340,557 2,570,751
Accumulated other comprehensive
income 28,519 11,405
----------------- -------------
Total stockholders' equity 3,043,779 3,550,042
----------------- -------------
Total liabilities and stockholders'
equity $ 4,153,825 $ 4,623,249
================= =============
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements Of Operations
Three months ended Six months ended
-----------------------------------------
(In thousands except per December December December December
share data) 31, 31, 31, 2007 31, 2006
2007 2006
-----------------------------------------
Revenues:
Product $ 513,449 $ 544,302 $1,091,881 $1,075,229
Service 122,334 104,968 236,922 203,404
-------- -------- --------- ---------
Total revenues 635,783 649,270 1,328,803 1,278,633
-------- -------- --------- ---------
Costs and operating
expenses:
Cost of revenues 285,005 297,772 590,898 567,891
Engineering, research and
development 97,513 108,101 196,857 207,394
Selling, general and
administrative 159,778 165,038 270,283 270,999
-------- -------- --------- ---------
Total costs and operating
expenses 542,296 570,911 1,058,038 1,046,284
-------- -------- --------- ---------
Income from operations 93,487 78,359 270,765 232,349
Interest income and other,
net 13,269 22,657 30,743 45,114
-------- -------- --------- ---------
Income before income taxes
and minority interest 106,756 101,016 301,508 277,463
Provision for income taxes 22,821 11,637 129,415 53,005
-------- -------- --------- ---------
Income before minority
interest 83,935 89,379 172,093 224,458
Minority interest - 670 - 1,513
-------- -------- --------- ---------
Net income $ 83,935 $ 90,049 $ 172,093 $ 225,971
======== ======== ========= =========
Net income per share:
Basic $ 0.46 $ 0.45 $ 0.93 $ 1.13
Diluted $ 0.45 $ 0.44 $ 0.91 $ 1.11
Weighted average number of
shares:
Basic 181,241 199,789 184,516 199,603
Diluted 185,199 204,955 189,122 203,826
KLA-TENCOR CORPORATION
Condensed Consolidated Unaudited Statements of Cash Flows
Three months ended
December 31,
----------------------
(In thousands) 2007 2006
----------------------------------------------- ---------- -----------
Cash flows from operating activities:
Net income $ 83,935 $ 90,049
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 28,345 29,049
Impairment charges 6,163 56,830
Non-cash, stock-based compensation 23,252 16,068
Tax benefit from employee stock
options (340) -
Excess tax benefit from stock-based
compensation (284) -
Minority interest - (670)
Net gain on sale of marketable
securities and other investments (409) (710)
Net gain on sale of real estate (9,042) -
Changes in assets and liabilities:
Accounts receivable, net 48,905 (17,055)
Inventories 17,782 (25,794)
Other assets (31,646) (16,562)
Accounts payable (4,543) (10,273)
Deferred system profit (13,366) 14,804
Other liabilities (22,325) 13,904
---------- -----------
Net cash provided by operating
activities 126,427 149,640
---------- -----------
Cash flows from investing activities:
Acquisitions of businesses, net of cash
received (3,966) (390,162)
Capital expenditures, net (22,609) (19,493)
Proceeds from sale of real estate 34,622 -
Purchase of available-for-sale securities (247,426) (877,429)
Proceeds from sale of available-for-sale
securities 262,191 789,089
Proceeds from maturity of available-for-
sale securities 6,500 30,397
---------- -----------
Net cash provided by (used in)
investing activities 29,312 (467,598)
---------- -----------
Cash flows from financing activities:
Issuance of common stock 31,764 -
Common stock repurchases (126,237) -
Payment of dividends to stockholders (27,151) (23,967)
Excess tax benefit from stock-based
compensation 284 -
---------- -----------
Net cash used in financing
activities (121,340) (23,967)
---------- -----------
Effect of exchange rate changes on cash and
cash equivalents (807) 5,340
---------- -----------
Net increase (decrease) in cash and cash
equivalents 33,592 (336,585)
Cash and cash equivalents at beginning of
period 514,051 1,199,969
---------- -----------
Cash and cash equivalents at end of period $ 547,643 $ 863,384
========== ===========
Supplemental cash flow disclosures:
Income taxes paid, net $ 105,549 $ 41,072
========== ===========
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 September December December December
31, 2007 30, 2007 31, 2006 31, 2007 31, 2006
----------------------------------------------------
GAAP Net income $ 83,935 $ 88,158 $ 90,049 $172,093 $225,971
Adjustments to
reconcile GAAP
net income
to non-GAAP net
income
---------------
Acquisition- a
related
charges 21,904 12,366 18,074 34,270 18,892
Restructuring, b
severance and
others (5,986) 2,279 67,180 (3,707) 67,180
Restatement c
related
charges 67,000 2,111 15,357 69,111 17,860
Income tax d
effect of non-
GAAP
adjustments (28,747) (6,320) (36,330) (35,067) (37,582)
Non recurring e
tax item - 46,613 - 46,613 -
--------- --------- --------- --------- ---------
Non-GAAP net
income $138,106 $145,207 $154,330 $283,313 $292,321
========= ========= ========= ========= =========
GAAP Net income
per diluted
share $ 0.45 $ 0.46 $ 0.44 $ 0.91 $ 1.11
========= ========= ========= ========= =========
Non-GAAP net
income per
diluted share $ 0.75 $ 0.75 $ 0.75 $ 1.50 $ 1.43
========= ========= ========= ========= =========
Shares used in
diluted shares
calculation 185,199 193,043 204,955 189,122 203,826
========= ========= ========= ========= =========
Impact of items included in Condensed
Statements of Operations:
---------------------------------------------
Acquisition- Restructuring, Restatement- Total Pre-
Related Severance and Related tax GAAP
Charges Other Charges to Non-
GAAP
Adjustment
------------ -------------- ------------ -----------
Cost of revenues $15,261 $ 1,243 $ 0 $ 16,504
Engineering,
research and
development 4,172 388 0 4,560
Sales, general
and
administrative 2,471 (7,617) 67,000 61,854
------------ -------------- ------------ -----------
Total in Q2 FY
2008 $21,904 $(5,986) $67,000 $ 82,918
============ ============== ============ ===========
Total in Q1 FY
2008 $12,366 $ 2,279 $ 2,111 $ 16,756
============ ============== ============ ===========
Total in Q2 FY
2007 $18,074 $67,180 $15,357 $100,611
============ ============== ============ ===========
Q2 FY 2008 Q1 FY 2008 Q2 FY 2007
------------ -------------- ------------
Stock-based
compensation
-----------------
Cost of revenues 4,700 6,253 8,002
Engineering,
research and
development 7,109 8,592 11,243
Sales, general
and
administrative 11,443 13,238 (3,177)
Provision for
income taxes (8,038) (8,475) (4,858)
============ ============== ============
Total 15,214 19,608 11,210
============ ============== ============
To supplement our condensed consolidated financial statements presented in accordance with GAAP, we provide non-GAAP financial information, which are adjusted from results based on GAAP to exclude certain costs and expenses, as well as other supplemental information. The non-GAAP and supplemental information are 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 provide 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, as well as asset impairment from discontinuing acquired products. 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 it is not indicative of ongoing operating results or limits comparability. Management believes excluding these items helps investors compare our operating performance with that of other companies.
b Restructuring, severance and other includes costs associated with facilities divestment program, worldwide reduction in force, and gains from sale of facilities. Management believes that it is appropriate to exclude those items as they are not indicative of ongoing operating results or 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, 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 or 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. Management believes that it is appropriate to exclude the tax effects of the items noted above in order to present a more meaningful measure on 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 these items helps investors compare our operating performance with that of other companies.
Source: KLA-Tencor Corporation
Released January 24, 2008