KLA-TENCOR MILPITAS, Calif., April 23, 2015 /PRNewswire/ -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its third quarter of fiscal year 2015, which ended on March 31, 2015, and reported GAAP net income of $132 million and GAAP earnings per diluted share of $0.81 on revenues of $738 million.
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"KLA-Tencor delivered solid results in the third quarter," said Rick Wallace, President and Chief Executive Officer of KLA-Tencor. "As the market leader in process control, we believe our technology leadership and strong product portfolio create a unique opportunity for KLA-Tencor to benefit from the 3D device and multi-patterning industry transitions currently underway in the industry, and deliver long-term value for our customers and stockholders."
GAAP Results
Q3 FY 2015 Q2 FY 2015 Q3 FY 2014
Revenues $738 million $676 million $832 million
------------ ------------
Net Income $132 million $20 million $204 million
----------- -----------
Earnings per
Diluted Share $0.81 $0.12 $1.21
-------------- ----- ----- -----
Non-GAAP Results
Q3 FY 2015 Q2 FY 2015 Q3 FY 2014
Net Income $137 million $113 million $206 million
------------ ------------
Earnings per
Diluted Share $0.84 $0.68 $1.23
-------------- ----- ----- -----
KLA-Tencor also announced a plan to reduce its global employee workforce by up to 10 percent to streamline its organization and business processes in response to changing customer requirements in its industry. The goal of this reduction is to enable continued innovation and direct KLA-Tencor's resources toward its best opportunities. KLA-Tencor expects to substantially complete the employee reduction by the end of the first quarter of fiscal year 2016, but the timing of certain employee reductions may vary by country, based on local legal requirements.
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 charges and debt extinguishment loss and recapitalization charges. KLA-Tencor will discuss the results for its fiscal year 2015 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 KLA-Tencor's ability to benefit from its market leadership position, the anticipated size of KLA-Tencor's global employee workforce reduction and the expected timing of the completion of such employee reduction, 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; industry transitions; the costs and delays related to compliance with U.S. and international labor laws and other applicable laws, including the notification procedures required thereby; and the disruption resulting from the employee reduction and its potential impact on KLA-Tencor's relationships with customers and vendors. 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 (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) March 31, 2015 June 30, 2014
------------- -------------- -------------
ASSETS
Cash, cash equivalents and
marketable securities $2,339,785 $3,152,637
Accounts receivable, net 631,608 492,863
Inventories 632,353 656,457
Other current assets 363,365 284,873
Land, property and equipment,
net 321,081 330,263
Goodwill 335,291 335,355
Purchased intangibles, net 15,548 27,697
Other non-current assets 263,189 258,519
Total assets $4,902,220 $5,538,664
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $103,189 $103,422
Deferred system profit 146,355 147,923
Unearned revenue 58,295 59,176
Current portion of long-term
debt 37,500 -
Other current liabilities 631,276 585,090
------- -------
Total current liabilities 976,615 895,611
Non-current liabilities:
Long-term debt 3,199,299 747,919
Unearned revenue 52,500 57,500
Other non-current liabilities 179,865 168,288
------- -------
Total liabilities 4,408,279 1,869,318
Stockholders' equity:
Common stock and capital in
excess of par value 534,330 1,220,504
Retained earnings (2,582) 2,479,113
Accumulated other
comprehensive income (loss) (37,807) (30,271)
------- -------
Total stockholders' equity 493,941 3,669,346
Total liabilities and
stockholders' equity $4,902,220 $5,538,664
========== ==========
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Operations
Three months ended March 31, Nine months ended March 31,
---------------------------- ---------------------------
(In thousands, except
per share amounts) 2015 2014 2015 2014
--------------------- ---- ---- ---- ----
Revenues:
Product $565,181 $670,083 $1,545,663 $1,716,006
Service 173,278 161,516 512,054 479,059
------- ------- ------- -------
Total revenues 738,459 831,599 2,057,717 2,195,065
Costs and operating
expenses:
Costs of revenues 320,282 342,826 891,962 906,297
Engineering, research
and development 124,583 134,161 401,777 401,021
Selling, general and
administrative 98,608 93,449 305,125 288,691
------ ------ ------- -------
Total costs and
operating expenses 543,473 570,436 1,598,864 1,596,009
Income from operations 194,986 261,163 458,853 599,056
Interest expense and
other, net 28,532 9,917 67,991 31,201
Loss on extinguishment
of debt and other, net - - 131,669 -
Income before income
taxes 166,454 251,246 259,193 567,855
Provision for income
taxes 34,816 47,665 35,054 113,831
------ -------
Net income $131,638 $203,581 $224,139 $454,024
======== ======== ======== ========
Net income per share:
Basic $0.81 $1.22 $1.37 $2.73
Diluted $0.81 $1.21 $1.36 $2.70
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 $18.00 $1.35
----- ----- ------ -----
Weighted-average
number of shares:
Basic 161,559 166,253 163,494 166,184
Diluted 162,794 167,989 164,930 168,355
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Cash Flows
Three months ended
March 31,
---------
(In thousands) 2015 2014
------------- ---- ----
Cash flows from operating activities:
Net income $131,638 $203,581
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 20,510 20,614
Asset impairment charges 1,698 -
Non-cash stock-based
compensation expense 12,767 12,723
Excess tax benefit from equity
awards (398) (657)
Net gain on sale of marketable
securities and other
investments (60) (281)
Changes in assets and liabilities, net of impact of
acquisition of business:
Decrease (increase) in accounts
receivable, net (1,213) 16,598
Decrease (increase) in
inventories 23,745 (14,738)
Decrease in other assets 20,096 48,463
Decrease in accounts payable (5,054) (20,818)
Decrease in deferred system
profit (21,732) (70,008)
Increase in other liabilities 60,420 42,250
------ ------
Net cash provided by operating
activities 242,417 237,727
Cash flows from investing activities:
Acquisition of non-marketable
securities - (1,345)
Acquisition of business - (18,000)
Capital expenditures, net (10,326) (18,220)
Purchase of available-for-sale
securities (339,580) (359,299)
Proceeds from sale of available-
for-sale securities 223,438 202,650
Proceeds from maturity of
available-for-sale securities 181,151 60,035
Purchase of trading securities (9,383) (20,939)
Proceeds from sale of trading
securities 13,765 22,521
------ ------
Net cash provided by (used in)
investing activities 59,065 (132,597)
Cash flows from financing activities:
Repayment of debt (9,375) -
Issuance of common stock 175 13,334
Tax withholding payments related
to vested and released
restricted stock units (1,990) (2,347)
Common stock repurchases (168,670) (59,880)
Payment of dividends to
stockholders (82,250) (74,805)
Excess tax benefit from equity
awards 398 657
--- ---
Net cash used in financing
activities (261,712) (123,041)
Effect of exchange rate changes
on cash and cash equivalents (2,743) 752
------ ---
Net increase (decrease) in cash
and cash equivalents 37,027 (17,159)
Cash and cash equivalents at
beginning of period 584,865 793,382
------- -------
Cash and cash equivalents at end
of period $621,892 $776,223
======== ========
Supplemental cash flow disclosures:
Income taxes paid, net $8,101 $9,636
Interest paid $4,341 $135
Non-cash activities:
Purchase of land, property and
equipment -investing
activities $2,255 $4,103
Dividends payable -financing
activities $41,412 $ -
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 Nine months ended
------------------ -----------------
March 31, 2015 December 31, 2014 March 31, 2014 March 31, 2015 March 31, 2014
-------------- ----------------- -------------- -------------- --------------
GAAP net income $131,638 $20,268 $203,581 $224,139 $454,024
Adjustments to reconcile GAAP
net income to non-GAAP net
income
-----------------------------
Acquisition related
charges a 3,928 3,832 3,828 11,758 11,596
Restructuring,
severance and other
related charges b 3,636 3,299 - 10,992 3,239
Debt extinguishment
loss and
recapitalization
charges c - 134,147 - 134,147 -
Income tax effect of
non-GAAP adjustments d (1,840) (48,720) (1,193) (52,099) (4,642)
Non-GAAP net income $137,362 $112,826 $206,216 $328,937 $464,217
======== ======== ======== ======== ========
GAAP net income per diluted
share $0.81 $0.12 $1.21 $1.36 $2.70
===== ===== ===== ===== =====
Non-GAAP net income per diluted
share $0.84 $0.68 $1.23 $1.99 $2.76
===== ===== ===== ===== =====
Shares used in diluted shares
calculation 162,794 165,317 167,989 164,930 168,355
======= ======= ======= ======= =======
Pre-tax impact of items included in Condensed Consolidated Unaudited Statements of Operations
---------------------------------------------------------------------------------------------
Acquisition Restructuring, Debt Total pre-
related severance and extinguishment tax GAAP to
charges other related loss and non-GAAP
charges recapitalization adjustments
charges
------------ --------------- ---------------- -----------
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
December 31, 2014
------------------
Costs of revenues $2,577 $ - $ - $2,577
Engineering, research
and development 700 1,289 - 1,989
Selling, general and
administrative 555 2,010 2,478 5,043
Loss on extinguishment
of debt and other, net - - 131,669 131,669
--- --- -------
Total in three months
ended December 31,
2014 $3,832 $3,299 $134,147 $141,278
====== ====== ======== ========
Three months ended
March 31, 2014
------------------
Costs of revenues $1,921 $ - $ - $1,921
Engineering, research
and development 836 - - 836
Selling, general and
administrative 1,071 - - 1,071
----- --- --- -----
Total in three months
ended March 31, 2014 $3,828 $ - $ - $3,828
====== === === === === ======
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
are 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
ending 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.
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SOURCE KLA-Tencor Corporation
