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 THIRD QUARTER RESULTS

MILPITAS, Calif., April 26, 2016 - KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its third quarter of fiscal year 2016, which ended on March 31, 2016, reporting GAAP net income of $176 million and GAAP earnings per diluted share of $1.12 on revenues of $712 million.

 

GAAP Results

 
     Q3 FY 2016      Q2 FY 2016      Q3 FY 2015  

Revenues

   $ 712 million       $ 710 million       $ 738 million   

Net Income

   $ 176 million       $ 152 million       $ 132 million   

Earnings per Diluted Share

   $ 1.12       $ 0.98       $ 0.81   

Non-GAAP Results

 
     Q3 FY 2016      Q2 FY 2016      Q3 FY 2015  

Net Income

   $ 179 million       $ 162 million       $ 137 million   

Earnings per Diluted Share

   $ 1.15       $ 1.04       $ 0.84   

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, merger-related charges, and debt extinguishment loss and recapitalization charges.

In light of the pending merger transaction with Lam Research Corporation, KLA-Tencor has discontinued conducting quarterly earnings conference calls to discuss financial results, but instead publish a quarterly stockholder letter and other supplemental data on the Investor Relations section of the KLA-Tencor website.

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)

 

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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.

 

2


KLA-Tencor Corporation

Condensed Consolidated Unaudited Balance Sheets

 

(In thousands)

   March 31, 2016     June 30, 2015  

ASSETS

    

Cash, cash equivalents and marketable securities

   $ 2,241,310      $ 2,387,111   

Accounts receivable, net

     624,818        585,494   

Inventories

     721,493        617,904   

Other current assets

     318,852        314,067   

Land, property and equipment, net

     287,874        314,591   

Goodwill

     335,205        335,263   

Purchased intangibles, net

     5,625        11,895   

Other non-current assets

     246,925        259,687   
  

 

 

   

 

 

 

Total assets

   $ 4,782,102      $ 4,826,012   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 126,322      $ 103,342   

Deferred system profit

     193,219        148,691   

Unearned revenue

     51,820        71,335   

Current portion of long-term debt

     —          16,981   

Other current liabilities

     626,331        661,414   
  

 

 

   

 

 

 

Total current liabilities

     997,692        1,001,763   

Non-current liabilities:

    

Long-term debt

     3,097,306        3,173,435   

Unearned revenue

     51,065        47,145   

Other non-current liabilities

     159,467        182,230   
  

 

 

   

 

 

 

Total liabilities

     4,305,530        4,404,573   

Stockholders’ equity:

    

Common stock and capital in excess of par value

     424,474        474,374   

Retained earnings (accumulated deficit)

     95,121        (12,362

Accumulated other comprehensive income (loss)

     (43,023     (40,573
  

 

 

   

 

 

 

Total stockholders’ equity

     476,572        421,439   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 4,782,102      $ 4,826,012   
  

 

 

   

 

 

 

 

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KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Operations

 

    Three months ended March 31,     Nine months ended March 31,  

(In thousands, except per share amounts)

  2016     2015     2016     2015  

Revenues:

       

Product

  $ 530,623      $ 565,181      $ 1,519,142      $ 1,545,663   

Service

    181,810        173,278        546,180        512,054   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

    712,433        738,459        2,065,322        2,057,717   

Costs and expenses:

       

Costs of revenues

    274,599        320,282        825,823        891,962   

Engineering, research and development

    115,589        124,583        353,804        401,777   

Selling, general and administrative

    87,407        98,608        275,602        305,125   

Interest expense and other, net

    24,907        28,532        80,388        67,991   

Loss on extinguishment of debt and other, net

    —          —          —          131,669   
 

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

    209,931        166,454        529,705        259,193   

Provision for income taxes

    34,154        34,816        96,824        35,054   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 175,777      $ 131,638      $ 432,881      $ 224,139   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share:

       

Basic

  $ 1.13      $ 0.81      $ 2.78      $ 1.37   
 

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

  $ 1.12      $ 0.81      $ 2.76      $ 1.36   
 

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividends declared per share (including a special cash dividend of $16.50 per share declared during the three months ended December 31, 2014)

  $ 0.52      $ 0.50      $ 1.56      $ 18.00   
 

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average number of shares:

       

Basic

    155,690        161,559        155,921        163,494   

Diluted

    156,429        162,794        156,797        164,930   

 

4


KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows

 

     Three months ended  
     March 31,  

(In thousands)

   2016     2015  

Cash flows from operating activities:

    

Net income

   $ 175,777      $ 131,638   

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

    

Depreciation and amortization

     15,780        20,510   

Asset impairment charges

     1,038        1,698   

Non-cash stock-based compensation expense

     9,185        12,767   

Excess tax benefit from equity awards

     (635     (398

Net gain on sales of marketable securities and other investments

     (2,847     (60

Changes in assets and liabilities:

    

Increase in accounts receivable, net

     (186,715     (1,213

Decrease (increase) in inventories

     (26,065     23,745   

Decrease in other assets

     8,322        20,096   

Increase (decrease) in accounts payable

     3,751        (5,054

Increase (decrease) in deferred system profit

     61,371        (21,732

Increase in other liabilities

     52,535        60,420   
  

 

 

   

 

 

 

Net cash provided by operating activities

     111,497        242,417   

Cash flows from investing activities:

    

Capital expenditures, net

     (8,954     (10,326

Proceeds from sale of assets

     2,811        —     

Purchases of available-for-sale securities

     (249,126     (339,580

Proceeds from sale of available-for-sale securities

     147,120        223,438   

Proceeds from maturity of available-for-sale securities

     146,102        181,151   

Purchases of trading securities

     (13,243     (9,383

Proceeds from sale of trading securities

     16,162        13,765   
  

 

 

   

 

 

 

Net cash provided by investing activities

     40,872        59,065   

Cash flows from financing activities:

    

Repayment of debt

     (35,000     (9,375

Issuance of common stock

     2        175   

Tax withholding payments related to vested and released restricted stock units

     (1,702     (1,990

Common stock repurchases

     —          (168,670

Payment of dividends to stockholders

     (82,109     (82,250

Excess tax benefit from equity awards

     635        398   
  

 

 

   

 

 

 

Net cash used in financing activities

     (118,174     (261,712

Effect of exchange rate changes on cash and cash equivalents

     5,188        (2,743
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     39,383        37,027   

Cash and cash equivalents at beginning of period

     886,591        584,865   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 925,974      $ 621,892   
  

 

 

   

 

 

 

Supplemental cash flow disclosures:

    

Income taxes paid, net

   $ 22,304      $ 8,101   

Interest paid

   $ 3,482      $ 4,341   

Non-cash activities:

    

Purchase of land, property and equipment - investing activities

   $ 2,311      $ 2,255   

Unsettled common stock repurchase - financing activities

   $ —        $ 12,862   

Dividends payable - financing activities

   $ 18,827      $ 41,412   

 

5


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     Nine months ended  
          March 31,
2016
    December 31,
2015
    March 31,
2015
    March 31,
2016
    March 31,
2015
 

GAAP net income

      $ 175,777      $ 152,207      $ 131,638      $ 432,881      $ 224,139   

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

             

Acquisition-related charges

   a      1,309        1,309        3,928        6,199        11,758   

Restructuring, severance and other related charges

   b      137        1,742        3,636        8,945        10,992   

Merger-related charges

   c      3,582        8,820        —          12,402        —     

Debt extinguishment loss and recapitalization charges

   d      —          —          —          —          134,147   

Income tax effect of non-GAAP adjustments

   e      (1,535     (2,321     (1,840     (7,204     (52,099
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

      $ 179,270      $ 161,757      $ 137,362      $ 453,223      $ 328,937   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP net income per diluted share

      $ 1.12      $ 0.98      $ 0.81      $ 2.76      $ 1.36   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income per diluted share

      $ 1.15      $ 1.04      $ 0.84      $ 2.89      $ 1.99   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in diluted shares calculation

        156,429        155,996        162,794        156,797        164,930   
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

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

Three months ended March 31, 2016

           

Costs of revenues

   $ 663       $ 121       $ 238       $ 1,022   

Engineering, research and development

     —           5         508         513   

Selling, general and administrative

     646         11         2,836         3,493   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total in three months ended March 31, 2016

   $ 1,309       $ 137       $ 3,582       $ 5,028   
  

 

 

    

 

 

    

 

 

    

 

 

 

Three months ended December 31, 2015

           

Costs of revenues

   $ 663       $ 470       $ 67       $ 1,200   

Engineering, research and development

     —           479         —           479   

Selling, general and administrative

     646         793         8,753         10,192   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total in three months ended December 31, 2015

   $ 1,309       $ 1,742       $ 8,820       $ 11,871   
  

 

 

    

 

 

    

 

 

    

 

 

 

Three months ended March 31, 2015

           

Costs of revenues

   $ 2,507       $ 211       $ —         $ 2,718   

Engineering, research and development

     700         680         —           1,380   

Selling, general and administrative

     721         2,745         —           3,466   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total in three months ended March 31, 2015

   $ 3,928       $ 3,636       $ —         $ 7,564   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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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, impairment of certain long-lived assets. 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. Merger-related charges that are directly related to the pending merger between KLA-Tencor and Lam as announced on October 21, 2015. Charges primarily includes costs for advisory services, appraisals, legal services, employee-related expense and auditing services. Management believes that it is appropriate to exclude these items as they are not indicative of ongoing operating results and therefore limit comparability and 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. Debt extinguishment loss and recapitalization charges include a pre-tax loss on early extinguishment of debt related to the 6.900% Senior Notes due in 2018, net and certain other expenses incurred in connection with the leveraged recapitalization plan which was completed in the second quarter of fiscal year ended June 30, 2015. Management believes that it is appropriate to exclude these items as they are not indicative of ongoing operating results and therefore limit comparability and excluding these items helps investors compare our operating performance with our results in prior periods as well as with the performance of other companies.

 

e. 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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