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 2012 FIRST QUARTER RESULTS

MILPITAS, Calif., October 27, 2011 —KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its first quarter of fiscal year 2012, which ended on September 30, 2011. KLA-Tencor reported GAAP net income of $192 million and GAAP earnings per diluted share of $1.13 on revenues of $796 million for the first quarter of fiscal year 2012.

“KLA-Tencor’s market leadership and strong business model enabled us to deliver solid financial results in the first quarter of fiscal year 2012, despite a challenging global economic and industry environment,” commented Rick Wallace, president and chief executive officer of KLA-Tencor. “Though some of our customers are delaying capacity expansion plans today as they assess current macroeconomic and industry conditions, we are well-positioned to benefit from the investments that our customers are continuing to make in driving their advanced technology roadmaps.”

 

GAAP Results   
     Q1 FY 2012      Q4 FY 2011      Q1 FY 2011  

Revenues

   $ 796 million       $ 892 million       $ 682 million   

Net Income

   $ 192 million       $ 245 million       $ 154 million   

Earnings per Diluted Share

   $ 1.13       $ 1.43       $ 0.91   

 

Non-GAAP Results   
     Q1 FY 2012      Q4 FY 2011      Q1 FY 2011  

Net Income

   $ 198 million       $ 256 million       $ 169 million   

Earnings per Diluted Share

   $ 1.17       $ 1.50       $ 0.99   

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 2012 first quarter, 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 expectation that KLA-Tencor’s customers will continue to invest in their advanced technology roadmaps and KLA-Tencor’s ability to maintain its technological advantages and market position and, therefore, to benefit from those continuing investments in the form of future


successful operating 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, 2011, 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)    September 30, 2011     June 30, 2011  

ASSETS

    

Cash, cash equivalents and marketable securities

   $ 2,100,151      $ 2,038,535   

Accounts receivable, net

     461,640        583,270   

Inventories, net

     612,603        575,730   

Other current assets

     422,525        478,475   

Land, property and equipment, net

     264,279        257,358   

Goodwill

     327,971        328,156   

Purchased intangibles, net

     77,949        85,902   

Other non-current assets

     298,199        328,095   
  

 

 

   

 

 

 

Total assets

   $ 4,565,317      $ 4,675,521   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 114,575      $ 142,945   

Deferred system profit

     136,122        192,338   

Unearned revenue

     47,311        44,264   

Other current liabilities

     436,211        499,314   
  

 

 

   

 

 

 

Total current liabilities

     734,219        878,861   

Non-current liabilities:

    

Long-term debt

     746,425        746,290   

Income tax payable

     37,978        78,337   

Unearned revenue

     38,857        34,905   

Other non-current liabilities

     73,243        76,235   
  

 

 

   

 

 

 

Total liabilities

     1,630,722        1,814,628   

Stockholders’ equity:

    

Common stock and capital in excess of par value

     1,031,157        1,010,659   

Retained earnings

     1,910,403        1,852,633   

Accumulated other comprehensive income (loss)

     (6,965     (2,399
  

 

 

   

 

 

 

Total stockholders’ equity

     2,934,595        2,860,893   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 4,565,317      $ 4,675,521   
  

 

 

   

 

 

 


KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Operations

 

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

Revenues:

    

Product

   $ 650,256      $ 550,609   

Service

     146,220        131,733   
  

 

 

   

 

 

 

Total revenues

     796,476        682,342   

Costs and operating expenses:

    

Costs of revenues

     340,349        263,969   

Engineering, research and development

     107,762        94,720   

Selling, general and administrative

     94,076        88,037   
  

 

 

   

 

 

 

Total costs and operating expenses

     542,187        446,726   

Income from operations

     254,289        235,616   

Interest expense and other, net

     (7,027     (12,304
  

 

 

   

 

 

 

Income before income taxes

     247,262        223,312   

Provision for income taxes

     55,267        69,116   
  

 

 

   

 

 

 

Net income

   $ 191,995      $ 154,196   
  

 

 

   

 

 

 

Net income per share:

    

Basic

   $ 1.15      $ 0.92   
  

 

 

   

 

 

 

Diluted

   $ 1.13      $ 0.91   
  

 

 

   

 

 

 

Cash dividends declared per share

   $ 0.35      $ 0.25   
  

 

 

   

 

 

 

Weighted average number of shares:

    

Basic

     166,684        167,187   
  

 

 

   

 

 

 

Diluted

     169,835        169,839   
  

 

 

   

 

 

 


KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows

 

     Three months ended  
   September 30,  
(In thousands)    2011     2010  

Cash flows from operating activities:

    

Net income

   $ 191,995      $ 154,196   

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

    

Depreciation and amortization

     23,184        20,783   

Non-cash stock-based compensation expense

     20,496        24,213   

Net gain on sale of marketable securities and other investments

     (662     (1,047

Changes in assets and liabilities:

    

Decrease (increase) in accounts receivable, net

     129,227        (50,342

Increase in inventories, net

     (43,699     (63,450

Decrease in other assets

     91,789        10,870   

Increase (decrease) in accounts payable

     (28,558     30,096   

Decrease in deferred system profit

     (56,216     (3,101

Decrease in other liabilities

     (108,571     (26,690
  

 

 

   

 

 

 

Net cash provided by operating activities

     218,985        95,528   

Cash flows from investing activities:

    

Capital expenditures, net

     (12,128     (11,163

Purchase of available-for-sale securities

     (303,101     (228,951

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

     268,931        239,650   

Purchase of trading securities

     (18,586     (16,004

Proceeds from sale of trading securities

     16,176        30,623   
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (48,708     14,155   

Cash flows from financing activities:

    

Issuance of common stock

     9,702        2,953   

Tax withholding payments related to vested and released restricted stock units

     (17,930     (9,517

Common stock repurchases

     (66,392     (62,156

Payment of dividends to stockholders

     (58,460     (41,785
  

 

 

   

 

 

 

Net cash used in financing activities

     (133,080     (110,505

Effect of exchange rate changes on cash and cash equivalents

     (2,579     9,288   
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     34,618        8,466   

Cash and cash equivalents at beginning of period

     711,329        529,918   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 745,947      $ 538,384   
  

 

 

   

 

 

 

Supplemental cash flow disclosures:

    

Income taxes paid, net

   $ 37,391      $ 46,060   

Interest paid

   $ 611      $ 352   


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  
            September 30, 2011     June 30, 2011     September 30, 2010  

GAAP net income

      $ 191,995      $ 245,017      $ 154,196   

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

         

Acquisition related charges

     a         7,628        7,628        8,178   

Restructuring, severance and other related charges

     b         2,556        1,915        —     

Restatement related charges

     c         135        4,133        —     

Income tax effect of non-GAAP adjustments

     d         (4,063     (4,295     (2,857

Discrete tax items

     e         —          1,715        9,154   
     

 

 

   

 

 

   

 

 

 

Non-GAAP net income

      $ 198,251      $ 256,113      $ 168,671   
     

 

 

   

 

 

   

 

 

 

GAAP net income per diluted share

      $ 1.13      $ 1.43      $ 0.91   
     

 

 

   

 

 

   

 

 

 

Non-GAAP net income per diluted share

      $ 1.17      $ 1.50      $ 0.99   
     

 

 

   

 

 

   

 

 

 

Shares used in diluted shares calculation

        169,835        170,884        169,839   
     

 

 

   

 

 

   

 

 

 

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 September 30, 2011

           

Costs of revenues

   $ 5,240       $ 947       $ —         $ 6,187   

Engineering, research and development

     898         1,475         —           2,373   

Selling, general and administrative

     1,490         134         135         1,759   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total in three months ended September 30, 2011

   $ 7,628       $ 2,556       $ 135       $ 10,319   
  

 

 

    

 

 

    

 

 

    

 

 

 

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 September 30, 2010

           

Costs of revenues

   $ 5,790       $ —         $ —         $ 5,790   

Engineering, research and development

     898         —           —           898   

Selling, general and administrative

     1,490         —           —           1,490   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total in three months ended September 30, 2010

   $ 8,178       $ —         $ —         $ 8,178   
  

 

 

    

 

 

    

 

 

    

 

 

 


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 and reductions in force. 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.