KLA-TENCOR 
By MILPITAS, Calif., Jan. 26, 2012 /PRNewswire/ -- 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 Q1 FY Q2 FY
2012 2012 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 Q1 FY Q2 FY
2012 2012 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
December 31,
(In thousands) 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 December December 31, December December 31,
data) 31, 2011 2010 31, 2011 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, September 30, December 31,
2011 2011 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
------------------------------------------------
Restructuring,
severance Total pre-
Acquisition and other Restatement tax GAAP to
related related related non-GAAP
charges charges charges 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.
SOURCE KLA-Tencor Corporation
