Exhibit 99.1

 

FOR IMMEDIATE RELEASE  
Investor Relations:   Media Relations:
Ed Lockwood   Meggan Powers
Sr. Director, Investor Relations   Sr. Director, Corporate Communications
(408) 875-9529   (408) 875-8733
ed.lockwood@kla-tencor.com   meggan.powers@kla-tencor.com

KLA-TENCOR REPORTS FISCAL 2011 FOURTH QUARTER AND FULL YEAR RESULTS

MILPITAS, Calif., July 28, 2011 —KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its fourth quarter and fiscal year ended June 30, 2011. KLA-Tencor reported GAAP net income of $245 million and GAAP earnings per diluted share of $1.43 on revenues of $892 million for the fourth quarter of fiscal year 2011. For the year ended June 30, 2011, the company reported GAAP net income of $794 million and GAAP earnings per diluted share of $4.66 on revenues of $3.2 billion.

“KLA-Tencor delivered record levels of revenue, earnings and cash flow from operations in the fourth quarter and the year, reflecting the successful execution of our long term strategies,” commented Rick Wallace, KLA-Tencor’s president and chief executive officer. “These outstanding results are the product of the tremendous efforts of our employees, our leading technology and our strong partnerships with our customers, all of which have us well-positioned for future success.”

 

GAAP Results  
     Q4 FY 2011      Q3 FY 2011      Q4 FY 2010  

Revenues

   $  892 million       $ 834 million       $  559 million   

Net Income

   $ 245 million       $  210 million       $ 113 million   

Earnings per Diluted Share

   $ 1.43       $ 1.22       $ 0.66   

 

Non-GAAP Results  
     Q4 FY 2011      Q3 FY 2011      Q4 FY 2010  

Net Income

   $  256 million       $  225 million       $  120 million   

Earnings per Diluted Share

   $ 1.50       $ 1.31       $ 0.70   

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 acquisitions, restatement and restructuring related items, and certain discrete tax items.

KLA-Tencor will discuss the results for its fiscal year 2011 fourth quarter and full year, along with its outlook, 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 ability of KLA-Tencor to maintain its technological advantages and its strong customer partnerships, as well as the company’s ability to leverage those advantages and partnerships


into future successful results, 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 and technology offerings by competitors; cancellation of orders by customers; the ability of KLA-Tencor’s research and development teams to successfully innovate and develop technologies and products that are responsive to customer demands; market acceptance of the company’s existing and newly issued products; 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, 2010, 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 (NASDAQ: KLAC), a leading provider of process control and yield management solutions, partners with customers around the world to develop state-of-the-art inspection and metrology technologies. These technologies serve the semiconductor, data storage, LED, photovoltaic, and other related nanoelectronics industries. With a portfolio of industry-standard products and a team of world-class engineers and scientists, the company has created superior solutions for its customers for over 30 years. Headquartered in Milpitas, California, KLA-Tencor has dedicated customer operations and service centers around the world. Additional information may be found at 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, KLA-Tencor’s financial results presented in accordance with United States GAAP.

To supplement KLA-Tencor’s condensed consolidated financial statements presented in accordance with GAAP, the company provides 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 KLA-Tencor’s operating performance and its prospects in the future. Specifically, KLA-Tencor believes that the non-GAAP information provides useful measures to both management and investors regarding financial and business trends relating to KLA-Tencor’s financial performance by excluding certain costs and expenses that the company believes are not indicative of its core operating results. The non-GAAP information is among the budgeting and planning tools that management uses for future forecasting. However, because there are no standardized or generally accepted definitions for most non-GAAP financial metrics, definitions of non-GAAP financial metrics (for example, determining which costs and expenses to exclude when calculating such a metric) are inherently subject to significant discretion. As a result, non-GAAP financial metrics may be defined very differently from company to company, or even from period to period within the same company, which can potentially limit the usefulness of such information to an investor. 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)    June 30, 2011     June 30, 2010  

ASSETS

    

Cash, cash equivalents and marketable securities

   $ 2,038,535      $ 1,534,044   

Accounts receivable, net

     583,270        440,125   

Inventories, net

     575,730        401,730   

Other current assets

     478,475        459,566   

Land, property and equipment, net

     257,358        236,752   

Goodwill

     328,156        328,006   

Purchased intangibles, net

     85,902        117,336   

Other non-current assets

     328,095        389,497   
                

Total assets

   $ 4,675,521      $ 3,907,056   
                

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 142,945      $ 107,938   

Deferred system profit

     192,338        204,764   

Unearned revenue

     44,264        37,026   

Other current liabilities

     502,471        422,059   
                

Total current liabilities

     882,018        771,787   

Non-current liabilities:

    

Long-term debt

     746,290        745,747   

Income tax payable

     78,337        53,492   

Unearned revenue

     34,905        20,354   

Other non-current liabilities

     73,078        69,065   
                

Total liabilities

     1,814,628        1,660,445   

Stockholders’ equity:

    

Common stock and capital in excess of par value

     1,010,659        921,460   

Retained earnings

     1,852,633        1,356,454   

Accumulated other comprehensive income (loss)

     (2,399     (31,303
                

Total stockholders’ equity

     2,860,893        2,246,611   
                

Total liabilities and stockholders’ equity

   $ 4,675,521      $ 3,907,056   
                


KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Operations

 

     Three months ended     Twelve months ended  
(In thousands, except per share data)    June 30, 2011     June 30, 2010     June 30, 2011     June 30, 2010  

Revenues:

        

Product

   $ 743,702      $ 430,286      $ 2,613,438      $ 1,324,270   

Service

     148,737        129,133        561,729        496,490   
                                

Total revenues

     892,439        559,419        3,175,167        1,820,760   

Costs and operating expenses:

        

Costs of revenues

     356,180        227,919        1,259,243        815,662   

Engineering, research and development

     100,929        83,309        386,163        329,560   

Selling, general and administrative

     91,261        87,349        369,431        361,372   
                                

Total costs and operating expenses

     548,370        398,577        2,014,837        1,506,594   

Income from operations

     344,069        160,842        1,160,330        314,166   

Interest income and other, net

     (10,026     (10,740     (50,264     (22,985
                                

Income before income taxes

     334,043        150,102        1,110,066        291,181   

Provision for income taxes

     89,026        37,017        315,578        78,881   
                                

Net income

   $ 245,017      $ 113,085      $ 794,488      $ 212,300   
                                

Net income per share:

        

Basic

   $ 1.46      $ 0.67      $ 4.75      $ 1.24   
                                

Diluted

   $ 1.43      $ 0.66      $ 4.66      $ 1.23   
                                

Cash dividend declared per share

   $ 0.25      $ 0.15      $ 1.00      $ 0.60   
                                

Weighted average number of shares:

        

Basic

     167,350        168,986        167,261        170,652   

Diluted

     170,884        171,275        170,352        173,034   


KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows

 

    

Three months ended
June 30,

 
(In thousands)    2011     2010  

Cash flows from operating activities:

    

Net income

   $ 245,017      $ 113,085   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     22,533        19,554   

Asset impairment charges

     3,183        4,557   

Provision for doubtful accounts

     —          (2,888

Non-cash stock-based compensation expense

     18,939        23,459   

Net gain on sale of marketable securities and other investments

     (580     (1,388

Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combinations:

    

Increase in accounts receivable, net

     (13,918     (113,496

Increase in inventories

     (20,125     (26,461

Decrease in other assets

     14,366        26,734   

Increase in accounts payable

     585        15,922   

Increase (decrease) in deferred system profit

     (37,731     37,807   

Increase (decrease) in other liabilities

     57,533        (13,607
                

Net cash provided by operating activities

     289,802        83,278   

Cash flows from investing activities:

    

Capital expenditures, net

     (14,607     (5,791

Purchase of available-for-sale securities

     (385,226     (217,123

Proceeds from sale and maturity of available-for-sale securities

     259,044        211,008   

Purchase of trading securities

     (14,183     (22,740

Proceeds from sale of trading securities

     16,106        35,622   
                

Net cash provided by (used in) investing activities

     (138,866     976   

Cash flows from financing activities:

    

Issuance of common stock

     17,925        12,054   

Tax withholding payments related to vested and released restricted stock units

     (411     (601

Common stock repurchases

     (57,974     (81,645

Payment of dividends to stockholders

     (41,862     (25,386
                

Net cash used in financing activities

     (82,322     (95,578

Effect of exchange rate changes on cash and cash equivalents

     3,957        (2,263
                

Net increase (decrease) in cash and cash equivalents

     72,571        (13,587

Cash and cash equivalents at beginning of period

     638,758        543,505   
                

Cash and cash equivalents at end of period

   $ 711,329      $ 529,918   
                

Supplemental cash flow disclosures:

    

Income taxes paid, net

   $ 64,595      $ 28,982   

Interest paid

   $ 26,231      $ 26,006   


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     Twelve months ended  
          June 30,
2011
    March 31,
2011
    June 30,
2010
    June 30,
2011
    June 30,
2010
 

GAAP net income

      $ 245,017      $ 209,783      $ 113,085      $ 794,488      $ 212,300   

Adjustments to reconcile GAAP net income to non-GAAP net income

             

Acquisition related charges

   a      7,628        7,720        8,280        31,704        32,849   

Restructuring, severance and other related charges

   b      1,915        —          3,311        941        17,778   

Restatement related charges

   c      4,133        2,501        (866     7,781        16,149   

Income tax effect of non-GAAP adjustments

   d      (4,295     (3,632     (3,824     (13,705     (24,124

Discrete tax items

   e      1,715        8,385        —          15,548        11,858   
                                           

Non-GAAP net income

      $ 256,113      $ 224,757      $ 119,986      $ 836,757      $ 266,810   
                                           

GAAP net income per diluted share

      $ 1.43      $ 1.22      $ 0.66      $ 4.66      $ 1.23   
                                           

Non-GAAP net income per diluted share

      $ 1.50      $ 1.31      $ 0.70      $ 4.91      $ 1.54   
                                           

Shares used in diluted shares calculation

        170,884        171,313        171,275        170,352        173,034   
                                           

Pre-tax impact of items included in Consolidated Statements of Operations

     Acquisition
related
charges
     Restructuring,
severance and
other related
charges
    Restatement
related charges
    Total pre-tax
GAAP to  non-

GAAP
adjustment
 

Three months ended June 30, 2011

         

Costs of revenues

   $ 5,240       $ 435      $ —        $ 5,675   

Engineering, research and development

     898         969        —          1,867   

Selling, general and administrative

     1,490         511        4,133        6,134   
                                 

Total in three months ended June 30, 2011

   $ 7,628       $ 1,915      $ 4,133      $ 13,676   
                                 

Three months ended March 31, 2011

         

Costs of revenues

   $ 5,332       $ —        $ —        $ 5,332   

Engineering, research and development

     898         —          —          898   

Selling, general and administrative

     1,490         —          2,501        3,991   
                                 

Total in three months ended March 31, 2011

   $ 7,720       $ —        $ 2,501      $ 10,221   
                                 

Three months ended June 30, 2010

         

Costs of revenues

   $ 5,790       $ (57   $ —        $ 5,733   

Engineering, research and development

     898         —          —          898   

Selling, general and administrative

     1,592         3,368        (866     4,094   
                                 

Total in three months ended June 30, 2010

   $ 8,280       $ 3,311      $ (866   $ 10,725   
                                 


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 that 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. However, because there are no standardized or generally accepted definitions for most non-GAAP financial metrics, definitions of non-GAAP financial metrics (for example, determining which costs and expenses to exclude when calculating such a metric) are inherently subject to significant discretion. As a result, non-GAAP financial metrics may be defined very differently from company to company, or even from period to period within the same company, which can potentially limit the usefulness of such information to an investor. 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 amortization of intangible assets, and inventory fair value adjustments 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 that are consistent over time for both KLA-Tencor’s newly acquired and long-held businesses. Management believes that it is appropriate to exclude acquisition related inventory fair value adjustments 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 related charges include gains and costs associated with the company’s facilities divestment and consolidation program, reductions in force, and gains and losses from sales of facilities. 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.
c Restatement related charges include legal and other expenses related to the investigation regarding the company’s historical stock option granting process and related stockholder litigation and other matters. KLA-Tencor has paid or reimbursed legal expenses incurred by a number of its current and former directors, officers and employees in connection with the investigation of the company’s historical stock option practices and the related litigation and government inquiries. KLA-Tencor is currently paying defense costs for one former officer and employee facing an SEC civil action to which the company is not a party, and the company is also obligated to pay the attorneys’ fees and expenses incurred by former employees in connection with discovery undertaken in that case. The company is further incurring costs associated with retaining counsel to respond to discovery requests and otherwise representing the company in that litigation. 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.
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 Discrete tax items include the tax impact of shortfalls in excess of cumulative windfall tax benefits recorded as provision for income taxes during the period. Windfall tax benefits arise when a company’s tax deduction for employee stock activity exceeds book compensation for the same activity and are generally recorded as increases to capital in excess of par value. Shortfalls arise when the tax deduction is less than book compensation and are recorded as decreases to capital in excess of par value to the extent that cumulative windfalls exceed cumulative shortfalls. Shortfalls in excess of cumulative windfalls are recorded as provision for income taxes. When there are shortfalls recorded as provision for income taxes during an earlier quarter, windfalls arising in subsequent quarters within the same fiscal year are recorded as a reduction to income taxes to the extent of the shortfalls recorded. 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.