KLA-Tencor Reports Fiscal 2015 Fourth Quarter And Full Year Results

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KLA-Tencor Corporation

Jul 30, 2015, 04:15 ET

MILPITAS, Calif., July 30, 2015 /PRNewswire/ -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its fourth quarter and fiscal year ended June 30, 2015. KLA-Tencor reported GAAP net income of $142 million and GAAP earnings per diluted share of $0.89 on revenues of $756 million for the fourth quarter of fiscal year 2015. For the fiscal year ended June 30, 2015, the company reported GAAP net income of $366 million and GAAP earnings per diluted share of $2.24 on revenues of $2.8 billion.

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"KLA-Tencor posted solid results for the fourth quarter of fiscal year 2015, delivering earnings near the top of our range of guidance, demonstrating our market leadership and strong operational execution," said Rick Wallace, President and Chief Executive Officer. "KLA-Tencor's advanced process control solutions and services play an enabling role in helping our customers achieve their growth strategies in leading edge semiconductor device manufacturing."

GAAP Results

Q4 FY 2015

Q3 FY 2015

Q4 FY 2014

Revenues

$756 million

$738 million

$734 million

Net Income

$142 million

$132 million

$129 million

Earnings per Diluted Share

$0.89

$0.81

$0.77




Non-GAAP Results

Q4 FY 2015

Q3 FY 2015

Q4 FY 2014

Net Income

$159 million

$137 million

$133 million

Earnings per Diluted Share

$0.99

$0.84

$0.80

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, and debt extinguishment loss and recapitalization charges. KLA-Tencor will discuss the results for its fiscal year 2015 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 KLA-Tencor's ability to benefit from its market leadership position and operational execution and enable its customers with its solutions and services, 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 KLA-Tencor's existing and newly issued products; changing customer demands; and industry transitions.

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, 2014, 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, 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, Calif., 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, 2015

June 30, 2014




ASSETS


Cash, cash equivalents and marketable securities

$

2,387,111

$

3,152,637

Accounts receivable, net

585,494

492,863

Inventories

617,904

656,457

Other current assets

314,067

284,138

Land, property and equipment, net

314,591

330,263

Goodwill

335,263

335,355

Purchased intangibles, net

11,895

27,697

Other non-current assets

259,687

256,436

  Total assets

$

4,826,012

$

5,535,846




LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:


Accounts payable

$

103,342

$

103,422

Deferred system profit

148,691

147,923

Unearned revenue

71,335

59,176

Current portion of long term debt

16,981

—

Other current liabilities

661,414

585,090

  Total current liabilities

1,001,763

895,611




Non-current liabilities:


Long-term debt

3,173,435

745,101

Unearned revenue

47,145

57,500

Other non-current liabilities

182,230

168,288

  Total liabilities

4,404,573

1,866,500




Stockholders' equity:


Common stock and capital in excess of par value

474,374

1,220,504

Retained earnings (accumulated deficit)

(12,362)

2,479,113

Accumulated other comprehensive income (loss)

(40,573)

(30,271)

  Total stockholders' equity

421,439

3,669,346

  Total liabilities and stockholders' equity

$

4,826,012

$

5,535,846

KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Operations

















Three months ended

Twelve months ended

(In thousands, except per share amounts)

June 30,
2015

June 30,
2014

June 30,
2015

June 30,
2014








Revenues:






Product

$

579,733

$

570,431

$

2,125,396

$

2,286,437

Service

176,599

163,912

688,653

642,971

Total revenues

756,332

734,343

2,814,049

2,929,408








Costs and expenses:






Costs of revenues

323,267

326,665

1,215,229

1,232,962

Engineering, research and development

128,839

138,448

530,616

539,469

Selling, general and administrative

101,739

96,216

406,864

384,907

Loss on extinguishment of debt and other, net

—

—

131,669

—

Interest expense and other, net

27,549

6,408

95,540

37,609

Income before income taxes

174,938

166,606

434,131

734,461

Provision for income taxes

32,919

37,875

67,973

151,706

Net income

$

142,019

$

128,731

$

366,158

$

582,755








Net income per share:






Basic

$

0.90

$

0.78

$

2.26

$

3.51

Diluted

$

0.89

$

0.77

$

2.24

$

3.47

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

$

0.50

$

0.45

$

18.50

$

1.80








Weighted-average number of shares:






Basic

158,635

165,510

162,282

166,016

Diluted

159,965

167,345

163,701

168,118

KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows


Three months ended

June 30,

(In thousands)

2015

2014

Cash flows from operating activities:


Net income

$

142,019

$

128,731

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


Depreciation and amortization

19,966

22,010

Asset impairment charges

428

—

Non-cash stock-based compensation expense

12,204

14,128

Excess tax benefit from equity awards

(217)

(367)

Net gain on sale of marketable securities and other investments

(143)

(4,192)

Changes in assets and liabilities:


Decrease in accounts receivable, net

43,714

66,784

Decrease in inventories

16,498

21,308

Decrease (increase) in other assets

49,382

(17,559)

Increase (decrease) in accounts payable

148

(17,454)

Increase (decrease) in deferred system profit

2,337

(25,672)

Increase in other liabilities

31,143

60,923

Net cash provided by operating activities

317,479

248,640

Cash flows from investing activities:


Capital expenditures, net

(9,237)

(13,066)

Proceeds from sale of assets

—

3,836

Purchase of available-for-sale securities

(297,695)

(678,116)

Proceeds from sale of available-for-sale securities

328,498

264,287

Proceeds from maturity of available-for-sale securities

134,825

140,952

Purchase of trading securities

(11,859)

(11,007)

Proceeds from sale of trading securities

13,309

12,390

Net cash provided by (used in) investing activities

157,841

(280,724)

Cash flows from financing activities:


Repayment of debt

(29,375)

—

Issuance of common stock

17,430

20,121

Tax withholding payments related to vested and released restricted stock units

(439)

(392)

Common stock repurchases

(167,858)

(60,157)

Payment of dividends to stockholders

(79,653)

(74,466)

Excess tax benefit from equity awards

217

367

Net cash used in financing activities

(259,678)

(114,527)

Effect of exchange rate changes on cash and cash equivalents

491

1,249

Net increase (decrease) in cash and cash equivalents

216,133

(145,362)

Cash and cash equivalents at beginning of period

621,892

776,223

Cash and cash equivalents at end of period

$

838,025

$

630,861




Supplemental cash flow disclosures:


Income taxes paid, net

$

3,851

$

40,471

Interest paid

$

55,413

$

26,038

Non-cash activities:


Purchase of land, property and equipment - investing activities

$

1,843

$

3,457

Dividends payable - financing activities

$

42,002

$

—

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

Twelve months ended


June 30,
2015

March 31,
2015

June 30,
2014

June 30,
2015

June 30,
2014

GAAP net income

$

142,019

$

131,638

$

128,731

$

366,158

$

582,755

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









Acquisition related charges

a

3,578

3,928

4,216

15,336

15,812

Restructuring, severance and other related charges

b

22,417

3,636

2,459

33,409

5,698

Debt extinguishment loss and recapitalization charges

c

—

—

—

134,147

—

Income tax effect of non-GAAP adjustments

d

(9,159)

(1,840)

(2,168)

(61,258)

(6,810)

Non-GAAP net income

$

158,855

$

137,362

$

133,238

$

487,792

$

597,455











GAAP net income per diluted share

$

0.89

$

0.81

$

0.77

$

2.24

$

3.47

Non-GAAP net income per diluted share

$

0.99

$

0.84

$

0.80

$

2.98

$

3.55

Shares used in diluted shares calculation

159,965

162,794

167,345

163,701

168,118

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


Acquisition
related charges

Restructuring,
severance and
other related
charges

Total pre-tax
GAAP to non-GAAP
adjustment

Three months ended June 30, 2015




Costs of revenues

$

2,282

$

7,458

$

9,740

Engineering, research and development

650

6,310

6,960

Selling, general and administrative

646

8,649

9,295

Total in three months ended June 30, 2015

$

3,578

$

22,417

$

25,995






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






Three months ended June 30, 2014




Costs of revenues

$

2,623

$

245

$

2,868

Engineering, research and development

872

1,811

2,683

Selling, general and administrative

721

403

1,124

Total in three months ended June 30, 2014

$

4,216

$

2,459

$

6,675

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.

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 the 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.


d.

Income tax effect of non-GAAP adjustments includes the income tax effects of the excluded items noted above as well as additional true up adjustment to the tax rate arising from the tax impacts associated with the pre-tax loss on extinguishment of debt that was recognized in the three months ended December 31, 2014. 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.

SOURCE KLA-Tencor Corporation

Related Links

http://www.kla-tencor.com

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