KLA-Tencor Reports Fiscal 2013 Fourth Quarter And Full Year Results

News provided by

KLA-Tencor Corporation

Jul 25, 2013, 04:15 ET

MILPITAS, Calif., July 25, 2013 /PRNewswire/ -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its fourth quarter and fiscal year ended June 30, 2013. KLA-Tencor reported GAAP net income of $135 million and GAAP earnings per diluted share of $0.80 on revenues of $720 million for the fourth quarter of fiscal year 2013. For the year ended June 30, 2013, the company reported GAAP net income of $543 million and GAAP earnings per diluted share of $3.21 on revenues of $2.8 billion.

"In the fourth quarter, KLA-Tencor delivered another period of strong financial performance, maintaining our market leadership position and releasing new products focused on addressing our customers' challenges at the leading edge," said Rick Wallace, KLA-Tencor's president and CEO. "These results highlight a continuation of the trend of high levels of process control adoption as the increasing cost and complexity associated with managing yields makes process control critical to our customers' success."

GAAP Results

Q4 FY 2013

Q3 FY 2013

Q4 FY 2012

Revenues

$720 million

$729 million

$892 million

Net Income

$135 million

$166 million

$248 million

Earnings per Diluted Share

$0.80

$0.98

$1.46


Non-GAAP Results

Q4 FY 2013

Q3 FY 2013

Q4 FY 2012

Net Income

$139 million

$171 million

$253 million

Earnings per Diluted Share

$0.82

$1.01

$1.49

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 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 maintain its market leadership position, trends in the semiconductor industry relating to process control adoption and increasing costs and complexity, and the anticipated importance of process control in the semiconductor manufacturing process, 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)

June 30, 2013

June 30, 2012


ASSETS


Cash, cash equivalents and marketable securities

$

2,918,881

$

2,534,444

Accounts receivable, net

524,610

701,280

Inventories

634,448

650,802

Other current assets

273,564

277,517

Land, property and equipment, net

305,281

277,686

Goodwill

326,635

327,716

Purchased intangibles, net

34,515

55,636

Other non-current assets

269,423

275,227

Total assets

$

5,287,357

$

5,100,308




LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:


Accounts payable

$

115,680

$

139,183

Deferred system profit

157,965

147,218

Unearned revenue

60,838

63,095

Other current liabilities

527,049

513,411

Total current liabilities

861,532

862,907




Non-current liabilities:


Long-term debt

747,376

746,833

Pension liabilities

57,959

53,943

Income tax payable

59,494

50,839

Unearned revenue

42,228

34,899

Other non-current liabilities

36,616

35,292

Total liabilities

1,805,205

1,784,713




Stockholders' equity:


Common stock and capital in excess of par value

1,159,565

1,089,480

Retained earnings

2,359,233

2,247,258

Accumulated other comprehensive income (loss)

(36,646)

(21,143)

Total stockholders' equity

3,482,152

3,315,595

Total liabilities and stockholders' equity

$

5,287,357

$

5,100,308

KLA-Tencor Corporation


Condensed Consolidated Unaudited Statements of Operations


















Three months ended

Twelve months ended

(In thousands, except per share data)

June 30, 2013

June 30, 2012

June 30, 2013

June 30, 2012






Revenues:






Product

$

570,300

$

745,662

$

2,247,147

$

2,597,755

Service

149,732

146,803

595,634

574,189

Total revenues

720,032

892,465

2,842,781

3,171,944








Costs and operating expenses:






Costs of revenues

306,804

361,663

1,237,452

1,330,016

Engineering, research and development

127,694

118,710

487,832

452,937

Selling, general and administrative

97,899

93,793

387,812

372,666

Total costs and operating expenses

532,397

574,166

2,113,096

2,155,619

Income from operations

187,635

318,299

729,685

1,016,325

Interest income and other, net

(10,545)

(12,407)

(39,064)

(42,231)

Income before income taxes

177,090

305,892

690,621

974,094

Provision for income taxes

42,320

58,015

147,472

218,079

Net income

$

134,770

$

247,877

$

543,149

$

756,015








Net income per share:






Basic

$

0.81

$

1.48

$

3.27

$

4.53

Diluted

$

0.80

$

1.46

$

3.21

$

4.44

Cash dividends declared per share

$

0.40

$

0.35

$

1.60

$

1.40








Weighted-average number of shares:






Basic

165,463

166,938

166,089

166,795

Diluted

168,685

170,178

169,260

170,147

KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows




Three months ended

June 30,

(In thousands)

2013

2012

Cash flows from operating activities:


    Net income

$

134,770

$

247,877

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


         Depreciation and amortization

20,425

23,282

         Asset impairment charges

—

1,500

         Non-cash stock-based compensation expense

17,606

17,779

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

(218)

15

         Excess tax benefit from equity awards

(233)

—

         Changes in assets and liabilities:


                Increase in accounts receivable, net

(73,102)

(61,632)

                Decrease (increase) in inventories

14,116

(6,610)

                Decrease in other assets

13,538

38,412

                Increase (decrease) in accounts payable

8,054

(235)

                Increase (decrease) in deferred system profit

21,150

(36,480)

                Increase in other liabilities

19,463

49,398

                       Net cash provided by operating activities

175,569

273,306

Cash flows from investing activities:


         Capital expenditures, net

(18,910)

(16,272)

         Purchase of available-for-sale securities

(304,916)

(407,721)

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

306,332

223,242

         Purchase of trading securities

(6,933)

(11,034)

         Proceeds from sale of trading securities

8,019

12,674

                      Net cash used in investing activities

(16,408)

(199,111)

Cash flows from financing activities:


         Issuance of common stock

30,579

39,831

         Tax withholding payments related to vested and released restricted stock units

(522)

(409)

         Excess tax benefit from equity awards

233

—

         Common stock repurchases

(68,311)

(66,958)

         Payment of dividends to stockholders

(66,181)

(58,476)

                     Net cash used in financing activities

(104,202)

(86,012)

Effect of exchange rate changes on cash and cash equivalents

(3,770)

(802)

Net increase (decrease) in cash and cash equivalents

51,189

(12,619)

Cash and cash equivalents at beginning of period

934,201

763,913

Cash and cash equivalents at end of period

$

985,390

$

751,294




Supplemental cash flow disclosures:


Income taxes paid, net

$

33,097

$

2,649

Interest paid

$

26,574

$

26,760

Non-cash investing activities:


Purchase of land, property and equipment

$

6,839

$

—

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, 2013

March 31, 2013

June 30, 2012

June 30, 2013

June 30, 2012

GAAP net income

$

134,770

$

166,382

$

247,877

$

543,149

$

756,015

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









Acquisition related charges

a

4,169

4,180

6,942

19,477

28,972

Restructuring, severance and other related charges

b

1,418

2,845

—

7,397

4,032

Restatement related charges

c

—

—

—

—

135

Income tax effect of non-GAAP adjustments

d

(1,776)

(2,212)

(2,307)

(8,359)

(11,537)

Discrete tax items

e

—

—

878

(3,514)

11,675

Non-GAAP net income

$

138,581

$

171,195

$

253,390

$

558,150

$

789,292











GAAP net income per diluted share

$

0.80

$

0.98

$

1.46

$

3.21

$

4.44

Non-GAAP net income per diluted share

$

0.82

$

1.01

$

1.49

$

3.30

$

4.64

Shares used in diluted shares calculation

168,685

169,180

170,178

169,260

170,147

Pre-tax impact of items included in Consolidated 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, 2013




Costs of revenues

$

1,921

$

950

$

2,871

Engineering, research and development

836

514

1,350

Selling, general and administrative

1,412

(46)

1,366

Total in three months ended June 30, 2013

$

4,169

$

1,418

$

5,587






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 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

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