Exhibit 99.1
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| Company Contacts: | Ed Lockwood | |||
| Sr. Director of Investor Relations | ||||
| (408) 875-9529 | ||||
| Ed.lockwood@kla-tencor.com | ||||
| Meggan Powers | ||||
| Sr. Director of Corporate Communications | ||||
| (408) 875-8733 | ||||
| Meggan.powers@kla-tencor.com | ||||
FOR IMMEDIATE RELEASE
KLA-TENCOR REPORTS FISCAL 2008 THIRD QUARTER RESULTS
SAN JOSE, Calif., April 24, 2008— 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™ family of films metrology systems—the Aleris 8310 and Aleris 8350. These systems utilize KLA-Tencor’s new generation of Broadband Spectroscopic Ellipsometry (BBSE™) 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, 2008 |
June 30, 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 share data) |
March 31, 2008 |
March 31, 2007 |
March 31, 2008 |
March 31, 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, 2008 |
December 31, 2007 |
March 31, 2007 |
March 31, 2008 |
March 31, 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:
| Acquisition related charges |
Restructuring, severance and other |
Restatement related charges |
Total pre-tax GAAP to non- GAAP 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, 2008 |
December 31, 2007 |
March 31, 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. |