Quantcast
Last updated on April 23, 2014 at 21:24 EDT

KLA-Tencor Reports Fiscal 2013 Third Quarter Results

April 25, 2013

MILPITAS, Calif., April 25, 2013 /PRNewswire/ — KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its third quarter of fiscal year 2013, which ended on March 31, 2013, and reported GAAP net income of $166 million and GAAP earnings per diluted share of $0.98 on revenues of $729 million.

“KLA-Tencor delivered solid financial results in the March quarter, demonstrating consistent execution against our long-term strategic objectives,” said president and CEO Rick Wallace. “The importance of process control to our customers is increasing as the yield challenges at the leading edge become more complex. We believe that this trend, paired with KLA-Tencor’s superior technology and customer focus, will enable KLA-Tencor to continue generating strong operating results and maintain its market leadership position.”

                                          GAAP Results
                                          ------------

                                                                                              Q3 FY 2013    Q2 FY 2013    Q3 FY 2012

    Revenues                                                                                 $729 million  $673 million  $841 million
                                                                                                                         ------------                              ------------

    Net Income                                                                               $166 million  $107 million  $205 million
                                                                                                                         ------------                              ------------

    Earnings per Diluted Share                                                                      $0.98         $0.63         $1.21
    --------------------------                                                                      -----         -----         -----

                                        Non-GAAP Results
                                        ----------------

                                                                                              Q3 FY 2013    Q2 FY 2013    Q3 FY 2012

    Net Income                                                                               $171 million  $106 million  $216 million
                                                                                                                         ------------                              ------------

    Earnings per Diluted Share                                                                      $1.01         $0.63         $1.27
    --------------------------                                                                      -----         -----         -----

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 2013 third 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 market conditions in the semiconductor equipment industry, anticipated innovation efforts by customers, expected trends and focus areas in customers’ capital investment, the importance of process control in the success of future innovation, KLA-Tencor’s ability to preserve and extend its market leadership position and KLA-Tencor’s future 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; KLA-Tencor’s ability to successfully manage its costs; 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, 2012, 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, 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 more than 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)                                  March 31, 2013  June 30, 2012
    -------------                                   --------------  -------------

    ASSETS

    Cash, cash equivalents and marketable
     securities                                         $2,879,503    $2,534,444

    Accounts receivable, net                               454,224       701,280

    Inventories                                            649,822       650,802

    Other current assets                                   280,107       277,517

    Land, property and equipment, net                      298,617       277,686

    Goodwill                                               326,792       327,716

    Purchased intangibles, net                              39,008        55,636

    Other non-current assets                               266,400       275,227

    Total assets                                        $5,194,473    $5,100,308
                                                        ==========    ==========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:

    Accounts payable                                      $107,753      $139,183

    Deferred system profit                                 136,816       147,218

    Unearned revenue                                        63,751        63,095

    Other current liabilities                              511,688       513,411
                                                           -------       -------

    Total current liabilities                              820,008       862,907

    Non-current liabilities:

    Long-term debt                                         747,240       746,833

    Income tax payable                                      59,104        50,839

    Unearned revenue                                        32,321        34,899

    Other non-current liabilities                           89,417        89,235
                                                            ------        ------

    Total liabilities                                    1,748,090     1,784,713

    Stockholders' equity:

    Common stock and capital in excess of
     par value                                           1,141,959     1,089,480

    Retained earnings                                    2,329,251     2,247,258

    Accumulated other comprehensive income
     (loss)                                                (24,827)      (21,143)
                                                           -------       -------

    Total stockholders' equity                           3,446,383     3,315,595

    Total liabilities and stockholders'
     equity                                             $5,194,473    $5,100,308
                                                        ==========    ==========

    KLA-Tencor Corporation

    Condensed Consolidated Unaudited Statements of Operations

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

    (In thousands, except
     per share data)                               2013                  2012       2013                   2012
    ---------------------                          ----                  ----       ----                   ----

    Revenues:

    Product                                               $579,746              $701,179                         $1,676,847 $1,852,094

    Service                                     149,283               139,342    445,902                427,385
                                                -------               -------    -------                -------

    Total revenues                              729,029               840,521  2,122,749              2,279,479

    Costs and operating
     expenses:

    Costs of revenues                           309,508               355,149    930,648                968,353

    Engineering, research
     and development                            118,788               110,102    360,138                334,227

    Selling, general and
     administrative                              98,487                90,996    289,913                278,873
                                                 ------                ------    -------                -------

    Total costs and
     operating expenses                         526,783               556,247  1,580,699              1,581,453

    Income from operations                      202,246               284,274    542,050                698,026

    Interest income and
     other, net                                 (10,131)              (10,241)   (28,519)               (29,824)
                                                -------               -------    -------                -------

    Income before income
     taxes                                      192,115               274,033    513,531                668,202

    Provision for income
     taxes                                       25,733                68,687    105,152                160,064
                                                                       ------    -------                -------

    Net income                                            $166,382              $205,346                           $408,379   $508,138
                                                          ========              ========                           ========   ========

    Net income per share:

    Basic                                                    $1.00                 $1.23                              $2.46      $3.05

    Diluted                                                  $0.98                 $1.21                              $2.41      $2.99

    Cash dividends declared
     per share                                               $0.40                 $0.35                              $1.20      $1.05
                                                             -----                 -----                              -----      -----

    Weighted average number
     of shares:

    Basic                                       166,234               167,070    166,297                166,748

    Diluted                                     169,180               170,146    169,425                170,023

    KLA-Tencor Corporation

    Condensed Consolidated
     Unaudited Statements of Cash
     Flows

                                                     Three months ended

                                        March 31,
                                        ---------

    (In thousands)                                      2013                2012
    -------------                                       ----                ----

    Cash flows from operating activities:

    Net income                                      $166,382            $205,346

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

    Depreciation and amortization                     21,168              22,400

    Non-cash stock-based
     compensation expense                             18,536              20,914

    Excess tax benefit from equity
     awards                                             (872)                 -

    Net gain on sale of marketable
     securities and other
     investments                                        (712)                (96)

    Changes in assets and liabilities:

    Decrease (increase) in accounts
     receivable, net                                 142,764             (97,698)

    Decrease (increase) in
     inventories                                      11,138              (9,694)

    Decrease (increase) in other
     assets                                            2,753             (42,190)

    Increase in accounts payable                       4,552              10,481

    Decrease in deferred system
     profit                                          (19,959)             (7,021)

    Increase in other liabilities                     69,033             159,652
                                                      ------             -------

    Net cash provided by operating
     activities                                      414,783             262,094

    Cash flows from investing activities:

    Capital expenditures, net                        (18,300)            (14,278)

    Purchase of available-for-
     sale securities                                (426,630)           (523,615)

    Proceeds from sale and maturity
     of available-for-sale
     securities                                      288,244             267,256

    Purchase of trading securities                   (14,005)             (9,434)

    Proceeds from sale of trading
     securities                                       15,054              10,939
                                                      ------              ------

    Net cash used in investing
     activities                                     (155,637)           (269,132)

    Cash flows from financing activities:

    Issuance of common stock                          48,685              74,640

    Tax withholding payments
     related to vested and released
     restricted stock units                             (728)               (364)

    Common stock repurchases                         (68,343)            (66,934)

    Payment of dividends to
     stockholders                                    (66,561)            (58,524)

    Excess tax benefit from equity
     awards                                              872                  -
                                                         ---                ---

    Net cash used in financing
     activities                                      (86,075)            (51,182)

    Effect of exchange rate changes
     on cash and cash equivalents                     (6,183)             (2,853)
                                                      ------              ------

    Net increase (decrease) in cash
     and cash equivalents                            166,888             (61,073)

    Cash and cash equivalents at
     beginning of period                             767,313             824,986
                                                     -------             -------

    Cash and cash equivalents at
     end of period                                  $934,201            $763,913
                                                    ========            ========

    Supplemental cash flow disclosures:

    Income taxes paid, net                           $11,041              $9,724

    Interest paid                                       $204                $248

    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                                  Nine months ended
                                                                 ------------------                                  -----------------

                                                   March 31,              December 31,                March 31,              March 31,              March 31,
                                                      2013                    2012                       2012                   2013                   2012
                                                  ----------             -------------               ----------             ----------             ----------

    GAAP net income                                            $166,382                                $106,630                          $205,346                           $408,379                          $508,138

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

    Acquisition related charges                   a               4,180                       4,242                  6,996                 15,308                  22,030

    Restructuring, severance and other
     related charges                              b               2,845                           -                      -                  5,979                   4,032

    Restatement related charges                   c                   -                           -                      -                      -                     135

    Income tax effect of non-GAAP
     adjustments                                  d              (2,212)                     (1,392)                (2,281)                (6,583)                 (9,230)

    Discrete tax items                            e                   -                      (3,514)                 5,718                 (3,514)                 10,797
                                                  ---

    Non-GAAP net income                                        $171,195                                $105,966                          $215,779                           $419,569                          $535,902
                                                               ========                                ========                          ========                           ========                          ========

    GAAP net income per diluted share                             $0.98                                   $0.63                             $1.21                              $2.41                             $2.99
                                                                  =====                                   =====                             =====                              =====                             =====

    Non-GAAP net income per diluted share                         $1.01                                   $0.63                             $1.27                              $2.48                             $3.15
                                                                  =====                                   =====                             =====                              =====                             =====

    Shares used in diluted shares calculation        169,180                   169,076                  170,146                169,425                170,023
                                                     =======                   =======                  =======                =======                =======

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

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

    Three months ended March 31, 2013
    ---------------------------------

    Costs of revenues                              $1,921                           $713     $       -          $2,634

    Engineering,
     research and
     development                                      835                          2,405            -           3,240

    Selling, general
     and administrative                             1,424                           (273)           -           1,151
                                                    -----                           ----          ---           -----

    Total in three
     months ended March
     31, 2013                                      $4,180                         $2,845     $       -          $7,025
                                                   ======                         ======   ===     ===          ======

    Three months ended December 31,
     2012
    -------------------------------

    Costs of revenues                              $1,921                     $        -     $       -          $1,921

    Engineering,
     research and
     development                                      835                             -            -             835

    Selling, general
     and administrative                             1,486                             -            -           1,486
                                                    -----                           ---          ---           -----

    Total in three
     months ended
     December 31, 2012                             $4,242                     $        -     $       -          $4,242
                                                   ======                   ===      ===   ===     ===          ======

    Three months ended March 31, 2012
    ---------------------------------

    Costs of revenues                              $4,608                     $        -     $       -          $4,608

    Engineering,
     research and
     development                                      898                             -            -             898

    Selling, general
     and administrative                             1,490                             -            -           1,490
                                                    -----                           ---          ---           -----

    Total in three
     months ended March
     31, 2012                                      $6,996                     $        -     $       -          $6,996
                                                   ======                   ===      ===   ===     ===          ======

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 costs
                     associated with the company's
                     decision in the first quarter of
                     fiscal year 2013 to exit from the
                     solar inspection business, as well
                     as those associated with
                     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 or
                     other adjustments to the
                     cumulative windfall tax benefit
                     that are not indicative of ongoing
                     operating results and 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


Source: PR Newswire