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 SECOND QUARTER RESULTS

MILPITAS, Calif., January 26, 2012 —KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its second quarter of fiscal year 2012, which ended on December 31, 2011, and reported GAAP net income of $111 million and GAAP earnings per diluted share of $0.66 on revenues of $642 million.

“A resurgence in demand from foundry customers drove strong order growth in the second quarter and has given KLA-Tencor excellent momentum as we begin calendar 2012,” said Rick Wallace, KLA-Tencor’s president and CEO. “The increasing costs, complexity and competitive pressures our customers are facing at the leading edge are helping to drive higher adoption of process control and position KLA-Tencor to continue to deliver superior financial performance.”

 

GAAP Results

 
     Q2 FY 2012      Q1 FY 2012      Q2 FY 2011  

Revenues

   $ 642 million       $ 796 million       $ 766 million   

Net Income

   $ 111 million       $ 192 million       $ 185 million   

Earnings per Diluted Share

   $ 0.66       $ 1.13       $ 1.09   

 

Non-GAAP Results

 
     Q2 FY 2012      Q1 FY 2012      Q2 FY 2011  

Net Income

   $ 122 million       $ 198 million       $ 187 million   

Earnings per Diluted Share

   $ 0.72       $ 1.17       $ 1.10   

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 second quarter, along with its outlook, 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 expectation that KLA-Tencor’s strong operating performance will continue into calendar year 2012, the business and technological trends faced by KLA-Tencor’s customers, the anticipation that KLA-Tencor’s customers will continue to invest in process control and KLA-Tencor’s ability to benefit from those continuing investments in the form of future successful financial performance, 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 35 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)    December 31, 2011     June 30, 2011  

ASSETS

    

Cash, cash equivalents and marketable securities

   $ 2,176,645      $ 2,038,535   

Accounts receivable, net

     544,098        583,270   

Inventories, net

     639,641        575,730   

Other current assets

     388,675        478,475   

Land, property and equipment, net

     267,629        257,358   

Goodwill

     327,813        328,156   

Purchased intangibles, net

     70,218        85,902   

Other non-current assets

     286,269        328,095   
  

 

 

   

 

 

 

Total assets

   $ 4,700,988      $ 4,675,521   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 129,064      $ 142,945   

Deferred system profit

     190,718        192,338   

Unearned revenue

     48,165        44,264   

Other current liabilities

     462,033        499,314   
  

 

 

   

 

 

 

Total current liabilities

     829,980        878,861   

Non-current liabilities:

    

Long-term debt

     746,561        746,290   

Income tax payable

     38,736        78,337   

Unearned revenue

     36,881        34,905   

Other non-current liabilities

     80,358        76,235   
  

 

 

   

 

 

 

Total liabilities

     1,732,516        1,814,628   

Stockholders’ equity:

    

Common stock and capital in excess of par value

     1,050,788        1,010,659   

Retained earnings

     1,928,396        1,852,633   

Accumulated other comprehensive income (loss)

     (10,712     (2,399
  

 

 

   

 

 

 

Total stockholders’ equity

     2,968,472        2,860,893   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 4,700,988      $ 4,675,521   
  

 

 

   

 

 

 


KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Operations

 

     Three months ended     Six months ended  
(In thousands, except per share data)    December 31, 2011     December 31, 2010     December 31, 2011     December 31, 2010  

Revenues:

        

Product

   $ 500,659      $ 627,857      $ 1,150,915      $ 1,178,466   

Service

     141,823        138,470        288,043        270,203   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     642,482        766,327        1,438,958        1,448,669   

Costs and operating expenses:

        

Costs of revenues

     272,855        311,398        613,204        575,367   

Engineering, research and development

     116,363        94,897        224,125        189,617   

Selling, general and administrative

     93,801        91,166        187,877        179,203   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and operating expenses

     483,019        497,461        1,025,206        944,187   

Income from operations

     159,463        268,866        413,752        504,482   

Interest income and other, net

     (12,556     (17,675     (19,583     (29,979
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     146,907        251,191        394,169        474,503   

Provision for income taxes

     36,110        65,699        91,377        134,815   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 110,797      $ 185,492      $ 302,792      $ 339,688   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share:

        

Basic

   $ 0.67      $ 1.11      $ 1.82      $ 2.03   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.66      $ 1.09      $ 1.78      $ 2.00   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividends declared per share

   $ 0.35      $ 0.25      $ 0.70      $ 0.50   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares:

        

Basic

     166,343        166,886        166,513        167,052   

Diluted

     169,103        169,513        169,650        169,685   


KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows

 

     Three months ended
December 31,
 
(In thousands)    2011     2010  

Cash flows from operating activities:

    

Net income

   $ 110,797      $ 185,492   

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

    

Depreciation and amortization

     23,267        21,653   

Asset impairment charges

     1,378        6,800   

Non-cash stock-based compensation expense

     19,646        19,431   

Net loss (gain) on sale of marketable securities and other investments

     106        (430

Gain on sale of real estate assets

     —          (1,372

Changes in assets and liabilities:

    

Increase in accounts receivable, net

     (83,819     (28,890

Increase in inventories, net

     (33,142     (39,710

Decrease (increase) in other assets

     31,658        (10,151

Increase (decrease) in accounts payable

     14,580        (15,416

Increase in deferred system profit

     54,596        39,831   

Increase in other liabilities

     48,165        16,687   
  

 

 

   

 

 

 

Net cash provided by operating activities

     187,232        193,925   

Cash flows from investing activities:

    

Capital expenditures, net

     (14,918     (11,552

Proceeds from sale of assets

     2,228        18,185   

Purchase of available-for-sale securities

     (287,987     (189,361

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

     287,236        123,677   

Purchase of trading securities

     (16,852     (12,397

Proceeds from sale of trading securities

     18,353        13,905   
  

 

 

   

 

 

 

Net cash used in investing activities

     (11,940     (57,543

Cash flows from financing activities:

    

Issuance of common stock

     39,396        28,768   

Tax withholding payments related to vested and released restricted stock units

     (11,544     (10,732

Common stock repurchases

     (63,580     (57,017

Payment of dividends to stockholders

     (58,101     (41,809
  

 

 

   

 

 

 

Net cash used in financing activities

     (93,829     (80,790

Effect of exchange rate changes on cash and cash equivalents

     (2,424     2,128   
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     79,039        57,720   

Cash and cash equivalents at beginning of period

     745,947        538,384   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 824,986      $ 596,104   
  

 

 

   

 

 

 

Supplemental cash flow disclosures:

    

Income taxes paid (refund received), net

   $ (29,746   $ 71,309   

Interest paid

   $ 26,904      $ 26,095   


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  
            December 31, 2011     September 30, 2011     December 31, 2010  

GAAP net income

      $ 110,797      $ 191,995      $ 185,492   

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

         

Acquisition related charges

     a         7,406        7,628        8,178   

Restructuring, severance and other related charges

     b         1,476        2,556        (974

Restatement related charges

     c         —          135        1,147   

Income tax effect of non-GAAP adjustments

     d         (2,886     (4,063     (2,921

Discrete tax items

     e         5,079        —          (3,706
     

 

 

   

 

 

   

 

 

 

Non-GAAP net income

      $ 121,872      $ 198,251      $ 187,216   
     

 

 

   

 

 

   

 

 

 

GAAP net income per diluted share

      $ 0.66      $ 1.13      $ 1.09   
     

 

 

   

 

 

   

 

 

 

Non-GAAP net income per diluted share

      $ 0.72      $ 1.17      $ 1.10   
     

 

 

   

 

 

   

 

 

 

Shares used in diluted shares calculation

        169,103        169,835        169,513   
     

 

 

   

 

 

   

 

 

 

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 December 31, 2011

          

Costs of revenues

   $ 5,018       $ 243      $ —         $ 5,261   

Engineering, research and development

     898         241        —           1,139   

Selling, general and administrative

     1,490         992        —           2,482   
  

 

 

    

 

 

   

 

 

    

 

 

 

Total in three months ended December 31, 2011

   $ 7,406       $ 1,476      $ —         $ 8,882   
  

 

 

    

 

 

   

 

 

    

 

 

 

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 December 31, 2010

          

Costs of revenues

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

Engineering, research and development

     898         —          —           898   

Selling, general and administrative

     1,490         (974     1,147         1,663   
  

 

 

    

 

 

   

 

 

    

 

 

 

Total in three months ended December 31, 2010

   $ 8,178       $ (974   $ 1,147       $ 8,351   
  

 

 

    

 

 

   

 

 

    

 

 

 


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 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 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. 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.