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 2016 FIRST QUARTER RESULTS

AND AGREEMENT TO COMBINE WITH LAM RESEARCH

MILPITAS, Calif., October 21, 2015 - KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its first quarter of fiscal year 2016, which ended on September 30, 2015, and reported GAAP net income of $105 million and GAAP earnings per diluted share of $0.66 on revenues of $643 million.

“KLA-Tencor posted solid results for the first quarter of fiscal year 2016, with new orders and earnings per share finishing above the range of guidance, and with revenue finishing at the top end of the range of guidance, demonstrating our market leadership, the resilience of our business model, and effective operational execution,” said Rick Wallace, President and Chief Executive Officer. “The strong demand we are experiencing affirms KLA-Tencor’s ongoing focus on providing superior value to customers both in terms of meeting market requirements and delivering superior competitive offerings.”

 

GAAP Results

 
     Q1 FY 2016      Q4 FY 2015      Q1 FY 2015  

Revenues

   $ 643 million       $ 756 million       $ 643 million   

Net Income

   $ 105 million       $ 142 million       $ 72 million   

Earnings per Diluted Share

   $ 0.66       $ 0.89       $ 0.43   

Non-GAAP Results

 
     Q1 FY 2016      Q4 FY 2015      Q1 FY 2015  

Net Income

   $ 112 million       $ 159 million       $ 79 million   

Earnings per Diluted Share

   $ 0.71       $ 0.99       $ 0.47   

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, restructuring, severance and other related charges.

KLA-Tencor to Combine with Lam Research

KLA-Tencor also announced today that it has entered into a definitive agreement with Lam Research Corporation (NASDAQ: LRCX) pursuant to which KLA-Tencor would combine with Lam Research, and KLA-Tencor stockholders would be entitled to elect to receive the economic equivalent of $32.00 in cash and 0.5 of a share of Lam Research common stock for each share of KLA-Tencor stock they hold.

Conference Call information:

KLA-Tencor and Lam Research will host a joint conference call to discuss the results for KLA-Tencor’s fiscal year 2016 first quarter, along with its outlook, and the transaction to combine with Lam Research. Please refer to the separate joint press release issued by KLA-Tencor and Lam Research today for additional details regarding the conference call.

Forward-Looking Statements:

Statements in this press release other than historical facts, such as statements regarding: our ability to benefit from our market leadership position; the resilience of our business model; operational execution; our ability to provide superior value to

 

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customers, meet market requirements and deliver superior competitive offerings, 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; KLA-Tencor’s ability to successfully manage its costs; market acceptance of KLA-Tencor’s existing and newly issued products; changing customer demands; and industry transitions.

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, 2015, and other subsequent 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.

 

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About KLA-Tencor:

KLA-Tencor Corporation, 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, LED 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 nearly 40 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.

 

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KLA-Tencor Corporation

Condensed Consolidated Unaudited Balance Sheets

 

(In thousands)

   September 30, 2015     June 30, 2015  

ASSETS

    

Cash, cash equivalents and marketable securities

   $ 2,269,447      $ 2,387,111   

Accounts receivable, net

     460,813        585,494   

Inventories

     650,496        617,904   

Other current assets

     294,662        314,067   

Land, property and equipment, net

     302,868        314,591   

Goodwill

     335,218        335,263   

Purchased intangibles, net

     8,242        11,895   

Other non-current assets

     249,577        259,687   
  

 

 

   

 

 

 

Total assets

   $ 4,571,323      $ 4,826,012   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 107,363      $ 103,342   

Deferred system profit

     134,188        148,691   

Unearned revenue

     63,700        71,335   

Current portion of long-term debt

     —          16,981   

Other current liabilities

     609,990        661,414   
  

 

 

   

 

 

 

Total current liabilities

     915,241        1,001,763   

Non-current liabilities:

    

Long-term debt

     3,151,046        3,173,435   

Unearned revenue

     44,970        47,145   

Other non-current liabilities

     165,625        182,230   
  

 

 

   

 

 

 

Total liabilities

     4,276,882        4,404,573   

Stockholders’ equity:

    

Common stock and capital in excess of par value

     385,633        474,374   

Accumulated deficit

     (45,055     (12,362

Accumulated other comprehensive income (loss)

     (46,137     (40,573
  

 

 

   

 

 

 

Total stockholders’ equity

     294,441        421,439   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 4,571,323      $ 4,826,012   
  

 

 

   

 

 

 

 

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KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Operations

 

     Three months ended September 30,  

(In thousands, except per share amounts)

   2015      2014  

Revenues:

     

Product

   $ 460,739       $ 476,598   

Service

     181,905         166,303   
  

 

 

    

 

 

 

Total revenues

     642,644         642,901   

Costs and expenses:

     

Costs of revenues

     270,244         288,467   

Engineering, research and development

     119,943         143,637   

Selling, general and administrative

     91,663         101,644   

Interest expense and other, net

     26,495         10,146   
  

 

 

    

 

 

 

Income before income taxes

     134,299         99,007   

Provision for income taxes

     29,402         26,774   
  

 

 

    

 

 

 

Net income

   $ 104,897       $ 72,233   
  

 

 

    

 

 

 

Net income per share:

     

Basic

   $ 0.67       $ 0.44   
  

 

 

    

 

 

 

Diluted

   $ 0.66       $ 0.43   
  

 

 

    

 

 

 

Cash dividends declared per share

   $ 0.52       $ 0.50   
  

 

 

    

 

 

 

Weighted-average number of shares:

     

Basic

     156,820         164,845   

Diluted

     157,984         166,580   

 

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KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows

 

     Three months ended  
   September 30,  
(In thousands)    2015     2014  

Cash flows from operating activities:

    

Net income

   $ 104,897      $ 72,233   

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

    

Depreciation and amortization

     19,735        21,159   

Non-cash stock-based compensation expense

     12,248        15,483   

Excess tax benefit from equity awards

     (10,159     (14,223

Net gain on sales of marketable securities and other investments

     (1,233     (1,635

Changes in assets and liabilities

    

Decrease in accounts receivable, net

     124,925        39,261   

Increase in inventories

     (31,243     (23,445

Decrease (increase) in other assets

     34,381        (2,732

Increase in accounts payable

     4,158        5,276   

Decrease in deferred system profit

     (14,504     (59,122

Decrease in other liabilities

     (49,423     (17,329
  

 

 

   

 

 

 

Net cash provided by operating activities

     193,782        34,926   

Cash flows from investing activities:

    

Capital expenditures, net

     (7,341     (13,445

Purchases of available-for-sale securities

     (343,358     (624,860

Proceeds from sale of available-for-sale securities

     200,353        732,337   

Proceeds from maturity of available-for-sale securities

     184,973        135,097   

Purchases of trading securities

     (18,267     (22,567

Proceeds from sale of trading securities

     15,540        18,986   
  

 

 

   

 

 

 

Net cash provided by investing activities

     31,900        225,548   

Cash flows from financing activities:

    

Repayment of debt

     (40,000     —     

Issuance of common stock

     —          4,677   

Tax withholding payments related to vested and released restricted stock units

     (21,526     (27,168

Common stock repurchases

     (142,592     (124,839

Payment of dividends to stockholders

     (101,674     (82,413

Excess tax benefit from equity awards

     10,159        14,223   
  

 

 

   

 

 

 

Net cash used in financing activities

     (295,633     (215,520

Effect of exchange rate changes on cash and cash equivalents

     (4,377     (6,132
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (74,328     38,822   

Cash and cash equivalents at beginning of period

     838,025        630,861   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 763,697      $ 669,683   
  

 

 

   

 

 

 

Supplemental cash flow disclosures:

    

Income taxes paid, net

   $ 7,844      $ 20,361   

Interest paid

   $ 3,149      $ 136   

Non-cash activities:

    

Purchase of land, property and equipment - investing activities

   $ 1,490      $ 3,571   

Unsettled common stock repurchase - financing activities

   $ 9,610      $ 5,844   

Dividends payable - financing activities

   $ 20,892      $ —     

 

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KLA-Tencor Corporation

Condensed Consolidated Unaudited Supplemental Information

(In thousands, except per share amounts)

Reconciliation of GAAP Net Income to Non-GAAP Net Income

 

            Three months ended  
            September 30, 2015     June 30, 2015     September 30, 2014  

GAAP net income

      $ 104,897      $ 142,019      $ 72,233   

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

         

Acquisition related charges

     a         3,581        3,578        3,998   

Restructuring, severance and other related charges

     b         7,066        22,417        4,057   

Income tax effect of non-GAAP adjustments

     c         (3,348     (9,159     (1,539
     

 

 

   

 

 

   

 

 

 

Non-GAAP net income

      $ 112,196      $ 158,855      $ 78,749   
     

 

 

   

 

 

   

 

 

 

GAAP net income per diluted share

      $ 0.66      $ 0.89      $ 0.43   
     

 

 

   

 

 

   

 

 

 

Non-GAAP net income per diluted share

      $ 0.71      $ 0.99      $ 0.47   
     

 

 

   

 

 

   

 

 

 

Shares used in diluted shares calculation

        157,984        159,965        166,580   
     

 

 

   

 

 

   

 

 

 

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

 

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

Three months ended September 30, 2015

        

Costs of revenues

   $ 2,285       $ 2,770       $ 5,055   

Engineering, research and development

     650         1,010         1,660   

Selling, general and administrative

     646         3,286         3,932   
  

 

 

    

 

 

    

 

 

 

Total in three months ended September 30, 2015

   $ 3,581       $ 7,066       $ 10,647   
  

 

 

    

 

 

    

 

 

 

Three months ended June 30, 2015

        

Costs of revenues

   $ 2,282       $ 7,458       $ 9,740   

Engineering, research and development

     650         6,310         6,960   

Selling, general and administrative

     646         8,649         9,295   
  

 

 

    

 

 

    

 

 

 

Total in three months ended June 30, 2015

   $ 3,578       $ 22,417       $ 25,995   
  

 

 

    

 

 

    

 

 

 

Three months ended September 30, 2014

        

Costs of revenues

   $ 2,577       $ 355       $ 2,932   

Engineering, research and development

     700         2,933         3,633   

Selling, general and administrative

     721         769         1,490   
  

 

 

    

 

 

    

 

 

 

Total in three months ended September 30, 2014

   $ 3,998       $ 4,057       $ 8,055   
  

 

 

    

 

 

    

 

 

 

 

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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 includes 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 these expenses 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 costs associated with employee severance and other exit costs. 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. 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.

 

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