KLA-Tencor Reports Fiscal 2012 Fourth Quarter and Full Year Results

MILPITAS, Calif., July 26, 2012 /PRNewswire/ -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its fourth quarter and fiscal year ended June 30, 2012. KLA-Tencor reported GAAP net income of $248 million and GAAP earnings per diluted share of $1.46 on revenues of $892 million for the fourth quarter of fiscal year 2012. For the year ended June 30, 2012, the company reported GAAP net income of $756 million and GAAP earnings per diluted share of $4.44 on revenues of $3.2 billion.

"Global consumer demand for advanced mobile devices continued to fuel exceptional growth for KLA-Tencor in fiscal year 2012, as we delivered strong financial performance and increased the cash returned to our stockholders through our dividend program," said Rick Wallace, KLA-Tencor's president and CEO. "Looking to fiscal year 2013, we anticipate our leading-edge process control technology will increasingly be adopted by IC manufacturers worldwide to cost-effectively make smaller, more complex chips. As a market leader, we're committed to extending the limits of manufacturing technology to further advance the mobility market, enabling manufacturers to add more functionality while decreasing power consumption: a critical combination to drive the ongoing development of affordable, next-generation devices."

GAAP Results


Q4 FY 2012

Q3 FY 2012

Q4 FY 2011

Revenues

$892 million

$841 million

$892 million

Net Income

$248 million

$205 million

$245 million

Earnings per Diluted Share

$1.46

$1.21

$1.43





Non-GAAP Results


Q4 FY 2012

Q3 FY 2012

Q4 FY 2011

Net Income

$253 million

$216 million

$256 million

Earnings per Diluted Share

$1.49

$1.27

$1.50

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 fourth quarter and full year, 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 the anticipated increase in adoption of KLA-Tencor's process control technology; the future uses of the company's products; the anticipated cost, operational and other benefits realizable by users of the company's products; KLA-Tencor's ability to maintain its market leadership position; future trends and growth drivers in the semiconductor industry; and the company's ability to successfully develop new technologies that will meet customer needs and address those future trends and growth drivers, 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)

June 30, 2012


June 30, 2011





ASSETS




Cash, cash equivalents and marketable securities

$

2,534,444



$

2,038,535


Accounts receivable, net

701,280



583,270


Inventories

650,802



575,730


Other current assets

277,517



478,475


Land, property and equipment, net

277,686



257,358


Goodwill

327,716



328,156


Purchased intangibles, net

55,636



85,902


Other non-current assets

275,227



328,095


Total assets

$

5,100,308



$

4,675,521






LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

139,183



$

142,945


Deferred system profit

147,218



192,338


Unearned revenue

63,095



44,264


Other current liabilities

513,411



499,314


Total current liabilities

862,907



878,861






Non-current liabilities:




Long-term debt

746,833



746,290


Income tax payable

50,839



78,337


Unearned revenue

34,899



34,905


Other non-current liabilities

89,235



76,235


Total liabilities

1,784,713



1,814,628






Stockholders' equity:




Common stock and capital in excess of par value

1,089,480



1,010,659


Retained earnings

2,247,258



1,852,633


Accumulated other comprehensive income (loss)

(21,143)



(2,399)


Total stockholders' equity

3,315,595



2,860,893


Total liabilities and stockholders' equity

$

5,100,308



$

4,675,521





KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Operations










Three months ended


Twelve months ended

(In thousands, except per share data)

June 30, 2012


June 30, 2011


June 30, 2012


June 30, 2011









Revenues:








Product

$

745,662



$

743,702



$

2,597,755



$

2,613,438


Service

146,803



148,737



574,189



561,729


Total revenues

892,465



892,439



3,171,944



3,175,167










Costs and operating expenses:








Costs of revenues

361,663



356,180



1,330,016



1,259,243


Engineering, research and development

118,710



100,929



452,937



386,163


Selling, general and administrative

93,793



91,261



372,666



369,431


Total costs and operating expenses

574,166



548,370



2,155,619



2,014,837


Income from operations

318,299



344,069



1,016,325



1,160,330










Interest income and other, net

(12,407)



(10,026)



(42,231)



(50,264)


Income before income taxes

305,892



334,043



974,094



1,110,066


Provision for income taxes

58,015



89,026



218,079



315,578










Net income

$

247,877



$

245,017



$

756,015



$

794,488










Net income per share:








Basic

$

1.48



$

1.46



$

4.53



$

4.75


Diluted

$

1.46



$

1.43



$

4.44



$

4.66










Cash dividends declared per share

$

0.35



$

0.25



$

1.40



$

1.00










Weighted average number of shares:








Basic

166,938



167,350



166,795



167,261


Diluted

170,178



170,884



170,147



170,352





KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows




Three months ended

June 30,

(In thousands)

2012


2011

Cash flows from operating activities:




Net income

$

247,877



$

245,017


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




Depreciation and amortization

23,282



22,533


Asset impairment charges

1,500



3,183


Non-cash stock-based compensation expense

17,779



18,939


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

15



(580)


Changes in assets and liabilities:




Increase in accounts receivable, net

(61,632)



(13,918)


Increase in inventories

(6,610)



(20,125)


Decrease in other assets

38,412



14,366


Increase (decrease) in accounts payable

(235)



585


Decrease in deferred system profit

(36,480)



(37,731)


Increase in other liabilities

49,398



57,533


Net cash provided by operating activities

273,306



289,802






Cash flows from investing activities:




Capital expenditures, net

(16,272)



(14,607)


Purchase of available-for-sale securities

(407,721)



(385,226)


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

223,242



259,044


Purchase of trading securities

(11,034)



(14,183)


Proceeds from sale of trading securities

12,674



16,106


Net cash used in investing activities

(199,111)



(138,866)






Cash flows from financing activities:




Issuance of common stock

39,831



17,925


Tax withholding payments related to vested and released restricted stock units

(409)



(411)


Common stock repurchases

(66,958)



(57,974)


Payment of dividends to stockholders

(58,476)



(41,862)


Net cash used in financing activities

(86,012)



(82,322)






Effect of exchange rate changes on cash and cash equivalents

(802)



3,957






Net increase (decrease) in cash and cash equivalents

(12,619)



72,571






Cash and cash equivalents at beginning of period

763,913



638,758






Cash and cash equivalents at end of period

$

751,294



$

711,329






Supplemental cash flow disclosures:




Income taxes paid, net

$

2,649



$

64,595


Interest paid

$

26,760



$

26,231





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


Twelve months ended



June 30,
2012


March 31,
2012


June 30,
2011


June 30,
2012


June 30,
2011

GAAP net income


$

247,877



$

205,346



$

245,017



$

756,015



$

794,488


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











Acquisition related charges

a

6,942



6,996



7,628



28,972



31,704


Restructuring, severance and other related charges

b





1,915



4,032



941


Restatement related charges

c





4,133



135



7,781


Income tax effect of non-GAAP adjustments

d

(2,307)



(2,281)



(4,295)



(11,537)



(13,705)


Discrete tax items

e

878



5,718



1,715



11,675



15,548


Non-GAAP net income


$

253,390



$

215,779



$

256,113



$

789,292



$

836,757













GAAP net income per diluted share


$

1.46



$

1.21



$

1.43



$

4.44



$

4.66


Non-GAAP net income per diluted share


$

1.49



$

1.27



$

1.50



$

4.64



$

4.91


Shares used in diluted shares calculation


170,178



170,146



170,884



170,147



170,352



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 June 30, 2012








Costs of revenues

$

4,560



$



$



$

4,560


Engineering, research and development

892







892


Selling, general and administrative

1,490







1,490


Total in three months ended June 30, 2012

$

6,942



$



$



$

6,942










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










Three months ended June 30, 2011








Costs of revenues

$

5,240



$

435



$



$

5,675


Engineering, research and development

898



969





1,867


Selling, general and administrative

1,490



511



4,133



6,134


Total in three months ended June 30, 2011

$

7,628



$

1,915



$

4,133



$

13,676





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



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