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KLA-Tencor Reports Fiscal 2011 Fourth Quarter and Full Year Results
Jul 28, 2011 (04:07 PM EDT)


MILPITAS, Calif., July 28, 2011 /PRNewswire/ -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its fourth quarter and fiscal year ended June 30, 2011.  KLA-Tencor reported GAAP net income of $245 million and GAAP earnings per diluted share of $1.43 on revenues of $892 million for the fourth quarter of fiscal year 2011.  For the year ended June 30, 2011, the company reported GAAP net income of $794 million and GAAP earnings per diluted share of $4.66 on revenues of $3.2 billion.

"KLA-Tencor delivered record levels of revenue, earnings and cash flow from operations in the fourth quarter and the year, reflecting the successful execution of our long term strategies," commented Rick Wallace, KLA-Tencor's president and CEO. "These outstanding results are the product of the tremendous efforts of our employees, our leading technology and our strong partnerships with our customers, all of which have us well-positioned for future success."

GAAP Results


Q4 FY 2011

Q3 FY 2011

Q4 FY 2010

Revenues

$ 892 million

$ 834 million

$ 559 million

Net Income

$ 245 million

$ 210 million

$ 113 million

Earnings per Diluted Share

$ 1.43

$ 1.22

$ 0.66



Non-GAAP Results


Q4 FY 2011

Q3 FY 2011

Q4 FY 2010

Net Income

$ 256 million

$ 225 million

$ 120 million    

Earnings per Diluted Share

$ 1.50

$ 1.31

$ 0.70



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 2011 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 ability of KLA-Tencor to maintain its technological advantages and its strong customer partnerships, as well as the company's ability to leverage those advantages and partnerships into future successful results, 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, 2010, 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 30 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, 2011


June 30, 2010






ASSETS





Cash, cash equivalents and marketable securities

$

2,038,535

$

1,534,044

Accounts receivable, net


583,270


440,125

Inventories, net


575,730


401,730

Other current assets


478,475


459,566

Land, property and equipment, net


257,358


236,752

Goodwill


328,156


328,006

Purchased intangibles, net


85,902


117,336

Other non-current assets


328,095


389,497

Total assets

$

4,675,521

$

3,907,056






LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:





Accounts payable

$

142,945

$

107,938

Deferred system profit


192,338


204,764

Unearned revenue


44,264


37,026

Other current liabilities


502,471


422,059

Total current liabilities


882,018


771,787






Non-current liabilities:





Long-term debt


746,290


745,747

Income tax payable


78,337


53,492

Unearned revenue


34,905


20,354

Other non-current liabilities


73,078


69,065

Total liabilities


1,814,628


1,660,445






Stockholders' equity:





Common stock and capital in excess of par value


1,010,659


921,460

Retained earnings


1,852,633


1,356,454

Accumulated other comprehensive income (loss)


(2,399)


(31,303)

Total stockholders' equity


2,860,893


2,246,611

Total liabilities and stockholders' equity

$

4,675,521

$

3,907,056








KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Operations





















Three months ended


Twelve months ended

(In thousands, except per share data)


June 30, 2011


June 30, 2010


June 30, 2011


June 30, 2010










Revenues:









Product

$

743,702

$

430,286

$

2,613,438

$

1,324,270

Service


148,737


129,133


561,729


496,490

Total revenues


892,439


559,419


3,175,167


1,820,760










Costs and operating expenses:









Costs of revenues


356,180


227,919


1,259,243


815,662

Engineering, research and development


100,929


83,309


386,163


329,560

Selling, general and administrative


91,261


87,349


369,431


361,372

Total costs and operating expenses


548,370


398,577


2,014,837


1,506,594

Income from operations


344,069


160,842


1,160,330


314,166










Interest income and other, net


(10,026)


(10,740)


(50,264)


(22,985)

Income before income taxes


334,043


150,102


1,110,066


291,181

Provision for income taxes


89,026


37,017


315,578


78,881










Net income

$

245,017

$

113,085

$

794,488

$

212,300










Net income per share:









Basic

$

1.46

$

0.67

$

4.75

$

1.24

Diluted

$

1.43

$

0.66

$

4.66

$

1.23










Cash dividend declared per share

$

0.25

$

0.15

$

1.00

$

0.60










Weighted average number of shares:









Basic


167,350


168,986


167,261


170,652

Diluted


170,884


171,275


170,352


173,034




KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows




Three months ended


June 30,

(In thousands)


2011


2010

Cash flows from operating activities:





Net income

$

245,017

$

113,085

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





Depreciation and amortization


22,533


19,554

Asset impairment charges


3,183


4,557

Provision for doubtful accounts


-


(2,888)

Non-cash stock-based compensation expense


18,939


23,459

Net gain on sale of marketable securities and other investments


(580)


(1,388)

Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combinations:





Increase in accounts receivable, net


(13,918)


(113,496)

Increase in inventories


(20,125)


(26,461)

Decrease in other assets


14,366


26,734

Increase in accounts payable


585


15,922

Increase (decrease) in deferred system profit


(37,731)


37,807

Increase (decrease) in other liabilities


57,533


(13,607)

Net cash provided by operating activities


289,802


83,278






Cash flows from investing activities:





Capital expenditures, net


(14,607)


(5,791)

Purchase of available-for-sale securities


(385,226)


(217,123)

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


259,044


211,008

Purchase of trading securities


(14,183)


(22,740)

Proceeds from sale of trading securities


16,106


35,622

Net cash provided by (used in) investing activities


(138,866)


976






Cash flows from financing activities:





Issuance of common stock


17,925


12,054

Tax withholding payments related to vested and released restricted stock units


(411)


(601)

Common stock repurchases


(57,974)


(81,645)

Payment of dividends to stockholders


(41,862)


(25,386)

Net cash used in financing activities


(82,322)


(95,578)






Effect of exchange rate changes on cash and cash equivalents


3,957


(2,263)






Net increase (decrease) in cash and cash equivalents


72,571


(13,587)






Cash and cash equivalents at beginning of period


638,758


543,505






Cash and cash equivalents at end of period

$

711,329

$

529,918






Supplemental cash flow disclosures:





Income taxes paid, net

$

64,595

$

28,982

Interest paid

$

26,231

$

26,006




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,
2011

March 31,
2011

June 30,
2010


June 30,
2011

June 30,
2010









GAAP net income


$   245,017

$   209,783

$  113,085


$  794,488

$  212,300

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








Acquisition related charges

a

7,628

7,720

8,280


31,704

32,849

Restructuring, severance and other related charges

b

1,915

-

3,311


941

17,778

Restatement related charges

c

4,133

2,501

(866)


7,781

16,149

Income tax effect of non-GAAP adjustments

d

(4,295)

(3,632)

(3,824)


(13,705)

(24,124)

Discrete tax items

e

1,715

8,385

-


15,548

11,858

Non-GAAP net income


$  256,113

$  224,757

$  119,986


$  836,757

$  266,810









GAAP net income per diluted share


$        1.43

$        1.22

$        0.66


$        4.66

$        1.23

Non-GAAP net income per diluted share


$        1.50

$        1.31

$        0.70


$        4.91

$        1.54

Shares used in diluted shares calculation


170,884

171,313

171,275


170,352

173,034




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, 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






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






Three months ended June 30, 2010





Costs of revenues

$   5,790

$              (57)

$            -

$       5,733

Engineering, research and development

898

-

-

898

Selling, general and administrative

1,592

3,368

(866)

4,094

Total in three months ended June 30, 2010

$   8,280

$          3,311

$      (866)

$     10,725



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, and inventory fair value adjustments 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 that it is appropriate to exclude acquisition related inventory fair value adjustments 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.



b

Restructuring, severance and other related charges include gains and costs associated with the company's facilities divestment and consolidation program, reductions in force, and gains and losses from sales of facilities.  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. KLA-Tencor is currently paying defense costs for one former officer and employee facing an SEC civil action to which the company is not a party, and the company is also obligated to pay the attorneys' fees and expenses incurred by former employees in connection with discovery undertaken in that case. The company is further incurring costs associated with retaining counsel to respond to discovery requests and otherwise representing the company in that litigation. 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