KLA-Tencor Reports Fiscal 2012 Third Quarter Results

Apr 26, 2012, 16:31 ET from KLA-Tencor Corporation

MILPITAS, Calif., April 26, 2012 /PRNewswire/ -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its third quarter of fiscal year 2012, which ended on March 31, 2012, and reported GAAP net income of $205 million and GAAP earnings per diluted share of $1.21 on revenues of $841 million

"Fueled by rapid growth in demand for mobile electronics, KLA-Tencor's strong third quarter results reflect sustained high levels of process control adoption and demonstrate our ability to consistently deliver indispensable solutions to our customers," said Rick Wallace, president and chief executive officer of KLA-Tencor.  "As we look ahead to the second half of 2012, we are optimistic as the forces propelling KLA-Tencor's growth remain solid, and the innovation required by our customers at the leading edge is driving growth in our core process control markets."

GAAP Results

Q3 FY 2012

Q2 FY 2012

Q3 FY 2011

Revenues

$841 million

$642 million

$834 million

Net Income

$205 million

$111 million

$210 million

Earnings per Diluted Share

$1.21

$0.66

$1.22

Non-GAAP Results

Q3 FY 2012

Q2 FY 2012

Q3 FY 2011

Net Income

$216 million

$122 million

$225 million

Earnings per Diluted Share

$1.27

$0.72

$1.31

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 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 the anticipated future drivers of growth in the semiconductor equipment industry, KLA-Tencor's optimism regarding the future direction of those growth drivers, the need for future innovation by the company's customers at the leading edge, and KLA-Tencor's ability to benefit from these anticipated trends in demand and innovation, 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)

March 31, 2012

June 30, 2011

ASSETS

Cash, cash equivalents and marketable securities

$

2,369,738

$

2,038,535

Accounts receivable, net

638,375

583,270

Inventories

650,476

575,730

Other current assets

328,738

478,475

Land, property and equipment, net

270,171

257,358

Goodwill

327,887

328,156

Purchased intangibles, net

62,897

85,902

Other non-current assets

284,922

328,095

Total assets

$

4,933,204

$

4,675,521

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

139,371

$

142,945

Deferred system profit

183,698

192,338

Unearned revenue

57,353

44,264

Other current liabilities

491,933

499,314

Total current liabilities

872,355

878,861

Non-current liabilities:

Long-term debt

746,697

746,290

Income tax payable

41,801

78,337

Unearned revenue

34,916

34,905

Other non-current liabilities

78,670

76,235

Total liabilities

1,774,439

1,814,628

Stockholders' equity:

Common stock and capital in excess of par value

1,091,504

1,010,659

Retained earnings

2,075,218

1,852,633

Accumulated other comprehensive income (loss)

(7,957)

(2,399)

Total stockholders' equity

3,158,765

2,860,893

Total liabilities and stockholders' equity

$

4,933,204

$

4,675,521

 

KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Operations

Three months ended

Nine months ended

(In thousands, except per share data)

March 31, 2012

March 31, 2011

March 31, 2012

March 31, 2011

Revenues:

  Product

$

701,179

$

691,270

$

1,852,094

$

1,869,736

  Service

139,342

142,789

427,385

412,992

Total revenues

840,521

834,059

2,279,479

2,282,728

Costs and operating expenses:

  Costs of revenues

355,149

327,696

968,353

903,063

  Engineering, research and development

110,102

95,617

334,227

285,234

  Selling, general and administrative

90,996

98,967

278,873

278,170

Total costs and operating expenses

556,247

522,280

1,581,453

1,466,467

Income from operations

284,274

311,779

698,026

816,261

Interest income and other, net

(10,241)

(10,259)

(29,824)

(40,238)

Income before income taxes

274,033

301,520

668,202

776,023

Provision for income taxes

68,687

91,737

160,064

226,552

Net income

$

205,346

$

209,783

$

508,138

$

549,471

Net income per share:

  Basic

$

1.23

$

1.25

$

3.05

$

3.29

  Diluted

$

1.21

$

1.22

$

2.99

$

3.23

Cash dividends declared per share

$

0.35

$

0.25

$

1.05

$

0.75

Weighted average number of shares:

  Basic

167,070

167,629

166,748

166,978

  Diluted

170,146

171,313

170,023

169,974

 

KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows

Three months ended

March 31,

(In thousands)

2012

2011

Cash flows from operating activities:

Net income

$

205,346

$

209,783

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

Depreciation and amortization

22,400

21,075

Asset impairment charges

585

Non-cash stock-based compensation expense

20,914

18,847

Net gain on sale of marketable securities and other investments

(96)

(422)

Changes in assets and liabilities:

Increase in accounts receivable, net

(97,698)

(35,069)

Increase in inventories

(9,694)

(46,856)

Increase in other assets

(42,190)

(43,842)

Increase in accounts payable

10,481

18,994

Decrease in deferred system profit

(7,021)

(11,424)

Increase in other liabilities

159,652

112,240

Net cash provided by operating activities

262,094

243,911

Cash flows from investing activities:

Capital expenditures, net

(14,278)

(13,829)

Purchase of available-for-sale securities

(523,615)

(338,953)

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

267,256

173,391

Purchase of trading securities

(9,434)

(20,421)

Proceeds from sale of trading securities

10,939

22,556

Net cash used in investing activities

(269,132)

(177,256)

Cash flows from financing activities:

Issuance of common stock

74,640

74,927

Tax withholding payments related to vested and released restricted stock units

(364)

(1,826)

Common stock repurchases

(66,934)

(57,697)

Payment of dividends to stockholders

(58,524)

(41,942)

Net cash used in financing activities

(51,182)

(26,538)

Effect of exchange rate changes on cash and cash equivalents

(2,853)

2,537

Net increase (decrease) in cash and cash equivalents

(61,073)

42,654

Cash and cash equivalents at beginning of period

824,986

596,104

Cash and cash equivalents at end of period

$

763,913

$

638,758

Supplemental cash flow disclosures:

Income taxes paid, net

$

9,724

$

79,618

Interest paid

$

248

$

296

 

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,

2012

December 31,

2011

March 31,

2011

March 31,

2012

March 31,

2011

GAAP net income

$

205,346

$

110,797

$

209,783

$

508,138

$

549,471

Adjustments to reconcile GAAP net income to non-

GAAP net income

Acquisition related charges

a

6,996

7,406

7,720

22,030

24,076

Restructuring, severance and other related charges

b

1,476

4,032

(974)

Restatement related charges

c

2,501

135

3,648

Income tax effect of non-GAAP adjustments

d

(2,281)

(2,886)

(3,632)

(9,230)

(9,410)

Discrete tax items

e

5,718

5,079

8,385

10,797

13,833

Non-GAAP net income

$

215,779

$

121,872

$

224,757

$

535,902

$

580,644

GAAP net income per diluted share

$

1.21

$

0.66

$

1.22

$

2.99

$

3.23

Non-GAAP net income per diluted share

$

1.27

$

0.72

$

1.31

$

3.15

$

3.42

Shares used in diluted shares calculation

170,146

169,103

171,313

170,023

169,974

 

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 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 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 March 31, 2011

Costs of revenues

$

5,332

$

$

$

5,332

Engineering, research and development

898

898

Selling, general and administrative

1,490

2,501

3,991

Total in three months ended March 31, 2011

$

7,720

$

$

2,501

$

10,221

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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