TechWeb

KLA-Tencor Reports Fiscal 2012 Second Quarter Results

Jan 26, 2012 (03:01 PM EST)
URL: http://www.techweb.com/show-press-release/X885788/kla-tencor-reports-fiscal-2012-second-quarter-results.html

MILPITAS, Calif., Jan. 26, 2012 /PRNewswire/ -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its second quarter of fiscal year 2012, which ended on December 31, 2011, and reported GAAP net income of $111 million and GAAP earnings per diluted share of $0.66 on revenues of $642 million.  

"A resurgence in demand from foundry customers drove strong order growth in the second quarter and has given KLA-Tencor excellent momentum as we begin calendar 2012," said Rick Wallace, KLA-Tencor's president and CEO. "The increasing costs, complexity and competitive pressures our customers are facing at the leading edge are helping to drive higher adoption of process control and position KLA-Tencor to continue to deliver superior financial performance."

GAAP Results


Q2 FY 2012

Q1 FY 2012

Q2 FY 2011

Revenues

$ 642 million

$ 796 million

$ 766 million

Net Income

$ 111 million

$ 192 million

$ 185 million

Earnings per Diluted Share

$ 0.66

$ 1.13

$ 1.09



Non-GAAP Results


Q2 FY 2012

Q1 FY 2012

Q2 FY 2011

Net Income

$ 122 million

$ 198 million

$ 187 million    

Earnings per Diluted Share

$ 0.72

$ 1.17

$ 1.10



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 second quarter, along with its outlook, on a conference call today beginning at 2:00 p.m. Pacific Standard 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 expectation that KLA-Tencor's strong operating performance will continue into calendar year 2012, the business and technological trends faced by KLA-Tencor's customers, the anticipation that KLA-Tencor's customers will continue to invest in process control and KLA-Tencor's ability to benefit from those continuing investments in the form of future successful financial performance, 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)


December 31, 2011


June 30, 2011






ASSETS





Cash, cash equivalents and marketable securities

$

2,176,645

$

2,038,535

Accounts receivable, net


544,098


583,270

Inventories, net


639,641


575,730

Other current assets


388,675


478,475

Land, property and equipment, net


267,629


257,358

Goodwill


327,813


328,156

Purchased intangibles, net


70,218


85,902

Other non-current assets


286,269


328,095

Total assets

$

4,700,988

$

4,675,521






LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:





Accounts payable

$

129,064

$

142,945

Deferred system profit


190,718


192,338

Unearned revenue


48,165


44,264

Other current liabilities


462,033


499,314

Total current liabilities


829,980


878,861






Non-current liabilities:





Long-term debt


746,561


746,290

Income tax payable


38,736


78,337

Unearned revenue


36,881


34,905

Other non-current liabilities


80,358


76,235

Total liabilities


1,732,516


1,814,628






Stockholders' equity:





Common stock and capital in excess of par value


1,050,788


1,010,659

Retained earnings


1,928,396


1,852,633

Accumulated other comprehensive income (loss)


(10,712)


(2,399)

Total stockholders' equity


2,968,472


2,860,893

Total liabilities and stockholders' equity

$

4,700,988

$

4,675,521











KLA-Tencor Corporation









Condensed Consolidated Unaudited Statements of Operations


























Three months ended


Six months ended

(In thousands, except per share data)


December  31, 2011


December 31, 2010


December  31, 2011


December 31, 2010










Revenues:









  Product

$

500,659

$

627,857

$

1,150,915

$

1,178,466

  Service


141,823


138,470


288,043


270,203

Total revenues


642,482


766,327


1,438,958


1,448,669










Costs and operating expenses:









  Costs of revenues


272,855


311,398


613,204


575,367

  Engineering, research and development


116,363


94,897


224,125


189,617

  Selling, general and administrative


93,801


91,166


187,877


179,203

Total costs and operating expenses


483,019


497,461


1,025,206


944,187

Income from operations


159,463


268,866


413,752


504,482










Interest income and other, net


(12,556)


(17,675)


(19,583)


(29,979)

Income before income taxes


146,907


251,191


394,169


474,503

Provision for income taxes


36,110


65,699


91,377


134,815










Net income

$

110,797

$

185,492

$

302,792

$

339,688










Net income per share:









  Basic

$

0.67

$

1.11

$

1.82

$

2.03

  Diluted

$

0.66

$

1.09

$

1.78

$

2.00










Cash dividends declared per share

$

0.35

$

0.25

$

0.70

$

0.50










Weighted average number of shares:









  Basic


166,343


166,886


166,513


167,052

  Diluted


169,103


169,513


169,650


169,685




KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows




Three months ended


December 31,

(In thousands)


2011


2010

Cash flows from operating activities:





Net income

$

110,797

$

185,492

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





Depreciation and amortization


23,267


21,653

Asset impairment charges


1,378


6,800

Non-cash stock-based compensation expense


19,646


19,431

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


106


(430)

Gain on sale of real estate assets


-


(1,372)

Changes in assets and liabilities:





Increase in accounts receivable, net


(83,819)


(28,890)

Increase in inventories, net


(33,142)


(39,710)

Decrease (increase) in other assets


31,658


(10,151)

Increase (decrease) in accounts payable


14,580


(15,416)

Increase in deferred system profit


54,596


39,831

Increase in other liabilities


48,165


16,687

Net cash provided by operating activities


187,232


193,925






Cash flows from investing activities:





Capital expenditures, net


(14,918)


(11,552)

Proceeds from sale of assets


2,228


18,185

Purchase of available-for-sale securities


(287,987)


(189,361)

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


287,236


123,677

Purchase of trading securities


(16,852)


(12,397)

Proceeds from sale of trading securities


18,353


13,905

Net cash used in investing activities


(11,940)


(57,543)






Cash flows from financing activities:





Issuance of common stock


39,396


28,768

Tax withholding payments related to vested and released restricted stock units


(11,544)


(10,732)

Common stock repurchases


(63,580)


(57,017)

Payment of dividends to stockholders


(58,101)


(41,809)

Net cash used in financing activities


(93,829)


(80,790)






Effect of exchange rate changes on cash and cash equivalents


(2,424)


2,128






Net increase in cash and cash equivalents


79,039


57,720






Cash and cash equivalents at beginning of period


745,947


538,384






Cash and cash equivalents at end of period

$

824,986

$

596,104






Supplemental cash flow disclosures:





Income taxes paid (refund received), net

$

(29,746)

$

71,309

Interest paid

$

26,904

$

26,095




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



December 31, 2011

September 30, 2011

December 31, 2010

GAAP net income


$    110,797

$    191,995

$   185,492

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





Acquisition related charges

(a)

7,406

7,628

8,178

Restructuring, severance and other related charges

(b)

1,476

2,556

(974)

Restatement related charges

(c)

-

135

1,147

Income tax effect of non-GAAP adjustments

(d)

(2,886)

(4,063)

(2,921)

Discrete tax items

(e)

5,079

-

(3,706)

Non-GAAP net income


$   121,872

$    198,251

$   187,216






GAAP net income per diluted share


$         0.66

$          1.13

$         1.09

Non-GAAP net income per diluted share


$         0.72

$          1.17

$         1.10

Shares used in diluted shares calculation


169,103

169,835

169,513




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 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 September 30, 2011





Costs of revenues

$   5,240

$            947

$            -

$      6,187

Engineering, research and development

898

1,475

-

2,373

Selling, general and administrative

1,490

134

135

1,759

Total in three months ended September 30, 2011

$   7,628

$         2,556

$       135

$    10,319






Three months ended December 31, 2010





Costs of revenues

$   5,790

$                 -

$            -

$      5,790

Engineering, research and development

898

-

-

898

Selling, general and administrative

1,490

(974)

1,147

1,663

Total in three months ended December 31, 2010

$   8,178

$           (974)

$    1,147

$      8,351




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