KLA-TENCOR MILPITAS, Calif., Oct. 23, 2014 /PRNewswire/ -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its first quarter of fiscal year 2015, which ended on September 30, 2014, and reported GAAP net income of $72 million and GAAP earnings per diluted share of $0.43 on revenues of $643 million.
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GAAP Results
Q1 FY 2015 Q4 FY 2014 Q1 FY 2014
Revenues $643 million $734 million $658 million
------------ ------------
Net Income $72 million $129 million $111 million
----------- ------------
Earnings per
Diluted Share $0.43 $0.77 $0.66
-------------- ----- ----- -----
Non-GAAP Results
Q1 FY 2015 Q4 FY 2014 Q1 FY 2014
Net Income $79 million $133 million $115 million
----------- ------------
Earnings per
Diluted Share $0.47 $0.80 $0.68
-------------- ----- ----- -----
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, and restructuring, severance and other charges.
Leveraged Recapitalization
KLA-Tencor also announced today a plan to significantly accelerate its strategy to drive stockholder returns. As part of the Company's ongoing commitment to deliver stockholder value, the Board of Directors has authorized the financing of a leveraged recapitalization, which would feature a special cash dividend of $16.50 per share, representing approximately 23% of the Company's common stock price as of October 22, 2014, or an aggregate value of approximately $2.75 billion. Subject to the close of necessary financing, the Board of Directors currently intends to declare and pay the special cash dividend before December 31, 2014. The special cash dividend would be in addition to the Company's regular $0.50 per share quarterly cash dividend. The Company's regular $0.50 per share quarterly cash dividend is expected to be declared and paid following the Company's regularly scheduled Board of Directors meeting in November 2014.
In connection with the leveraged recapitalization, the Board of Directors has approved an increase to the Company's stock repurchase program for up to 3.6 million additional shares of the Company's common stock, which is valued at approximately $250 million based upon the closing price of the Company's common stock as of October 20, 2014. This is in addition to the $1 billion stock repurchase program previously announced in July 2014. KLA-Tencor expects to complete these share repurchases within 12 to 18 months. The repurchases may occur from time to time, in the open market, with consideration given to the market price of the common stock, the Company's other investment opportunities, and general economic conditions.
Including the intended special cash dividend of $16.50 per share or an aggregate value of approximately $2.75 billion, the $250 million increase to the stock repurchase program announced today, and the $1 billion stock repurchase program previously announced in July 2014, the total capital that would be directed to stockholders would be approximately $4 billion in aggregate.
"KLA-Tencor's strong business model and the ongoing successful execution of our strategic plans enable us to continue to invest in our business at a high level to fuel our growth and support our customers' needs, while also delivering meaningful returns to stockholders," commented Rick Wallace, President and Chief Executive Officer. "These factors, coupled with a strong balance sheet and the Company's ongoing focus on cash distributions, will enable our stockholders to continue to benefit from KLA-Tencor's sustained success in the marketplace. This is another major step forward for the Company in executing our capital allocation strategies in support of our strategic objectives, while increasing returns to stockholders."
The intended special cash dividend of $2.75 billion in the aggregate will be funded in part with a portion of the cash on the Company's balance sheet, and in part with incremental debt. To fund the debt financed portion of the special cash dividend, KLA-Tencor intends to add up to $2.5 billion of incremental debt, consisting of a combination of investment grade senior notes and a pre-payable term loan facility, subject to market conditions. The Company also expects to enter into an unfunded revolving credit facility, subject to market conditions. The declaration and payment of the special cash dividend are conditioned on the Company's ability to obtain requisite debt financing on satisfactory terms and conditions. KLA-Tencor intends to manage its capital structure to preserve and maintain its investment grade rating.
In considering the proposed recapitalization, the Board of Directors took a number of factors into account, including the substantial net cash on KLA-Tencor's balance sheet, the likely effects of increased leverage on the Company's ability to pursue its strategic initiatives, and the Company's ability to generate cash flows to service the Company's increased debt and fund operations and investments designed to grow the business and serve customer needs.
KLA-Tencor will discuss the results for its fiscal year 2015 first quarter and its plan to pursue a recapitalization, 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, and benefit from, its market leadership position; KLA-Tencor's investment in its business; KLA-Tencor's ability to support its customers' needs; the declaration and payment by the Board of Directors of the special cash dividend and the regular $0.50 per share quarterly cash dividend; the completion by KLA-Tencor of the share repurchases; the issuance by KLA-Tencor of incremental debt and entry by KLA-Tencor into an unfunded revolving credit facility; and KLA-Tencor's intention to manage its capital structure to preserve and maintain its investment grade rating, 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, 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) September 30,
2014 June 30, 2014
-------------- -------------- -------------
ASSETS
Cash, cash
equivalents and
marketable
securities $2,942,492 $3,152,637
Accounts
receivable, net 444,048 492,863
Inventories 676,241 656,457
Other current
assets 305,756 284,873
Land, property and
equipment, net 329,959 330,263
Goodwill 335,315 335,355
Purchased
intangibles, net 23,624 27,697
Other non-current
assets 244,137 258,519
Total assets $5,301,572 $5,538,664
========== ==========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Current
liabilities:
Accounts payable $108,287 $103,422
Deferred system
profit 88,801 147,923
Unearned revenue 54,034 59,176
Other current
liabilities 553,715 585,090
------- -------
Total current
liabilities 804,837 895,611
Non-current
liabilities:
Long-term debt 748,054 747,919
Unearned revenue 56,003 57,500
Other non-current
liabilities 162,958 168,288
------- -------
Total liabilities 1,771,852 1,869,318
Stockholders'
equity:
Common stock and
capital in excess
of par value 1,235,986 1,220,504
Retained earnings 2,329,936 2,479,113
Accumulated other
comprehensive
income (loss) (36,202) (30,271)
------- -------
Total
stockholders'
equity 3,529,720 3,669,346
Total liabilities
and stockholders'
equity $5,301,572 $5,538,664
========== ==========
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Operations
Three months ended September
30,
-----------------------------
(In thousands, except
per share data) 2014 2013
--------------------- ---- ----
Revenues:
Product $476,598 $501,740
Service 166,303 156,597
------- -------
Total revenues 642,901 658,337
Costs and operating
expenses:
Costs of revenues 288,467 277,657
Engineering, research
and development 143,637 132,273
Selling, general and
administrative 101,644 98,496
------- ------
Total costs and
operating expenses 533,748 508,426
Income from
operations 109,153 149,911
Interest income and
other, net (10,146) (10,047)
------- -------
Income before income
taxes 99,007 139,864
Provision for income
taxes 26,774 28,667
------
Net income $72,233 $111,197
======= ========
Net income per share:
Basic $0.44 $0.67
Diluted $0.43 $0.66
Cash dividends
declared per share $0.50 $0.45
----- -----
Weighted-average
number of shares:
Basic 164,845 165,886
Diluted 166,580 168,734
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Cash Flows
Three months ended
September 30,
-------------
(In thousands) 2014 2013
------------- ---- ----
Cash flows from operating
activities:
Net income $72,233 $111,197
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and
amortization 21,159 20,637
Non-cash stock-
based compensation
expense 15,483 19,219
Excess tax benefit
from equity awards (14,223) (18,605)
Net gain on sale of
marketable
securities and other
investments (1,635) (234)
Changes in assets and liabilities:
Decrease in accounts
receivable, net 39,261 85,771
Increase in
inventories (23,445) (29,805)
Increase in other
assets (2,732) (9,425)
Increase (decrease)
in accounts payable 5,276 (1,058)
Increase (decrease)
in deferred system
profit (59,122) 7,966
Decrease in other
liabilities (17,329) (8,415)
------- ------
Net cash provided by
operating activities 34,926 177,248
Cash flows from investing
activities:
Capital expenditures,
net (13,445) (21,751)
Purchase of
available-for-sale
securities (624,860) (348,031)
Proceeds from sale of
available-for-sale
securities 732,337 203,541
Proceeds from
maturity of
available-for-sale
securities 135,097 32,058
Purchase of trading
securities (22,567) (20,851)
Proceeds from sale of
trading securities 18,986 18,366
------ ------
Net cash provided by
(used in) investing
activities 225,548 (136,668)
Cash flows from financing
activities:
Issuance of common
stock 4,677 41,047
Tax withholding
payments related to
vested and released
restricted stock
units (27,168) (48,264)
Common stock
repurchases (124,839) (60,504)
Payment of dividends
to stockholders (82,413) (74,617)
Excess tax benefit
from equity awards 14,223 18,605
------ ------
Net cash used in
financing activities (215,520) (123,733)
Effect of exchange
rate changes on cash
and cash equivalents (6,132) 2,712
------ -----
Net increase
(decrease) in cash
and cash equivalents 38,822 (80,441)
Cash and cash
equivalents at
beginning of period 630,861 985,390
------- -------
Cash and cash
equivalents at end
of period $669,683 $904,949
======== ========
Supplemental cash flow disclosures:
Income taxes paid,
net $20,361 $19,052
Interest paid $136 $217
Non-cash investing activities:
Purchase of land,
property and
equipment $3,571 $1,798
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
------------------
September 30, June 30, 2014 September 30,
2014 2013
------------- ------------- --------------
GAAP net income $72,233 $128,731 $111,197
Adjustments to reconcile GAAP
net income to non-GAAP net
income
-----------------------------
Acquisition related
charges a 3,998 4,216 4,169
Restructuring,
severance and other
related charges b 4,057 2,459 1,237
Income tax effect of
non-GAAP
adjustments c (1,539) (2,168) (1,672)
---
Non-GAAP net income $78,749 $133,238 $114,931
======= ======== ========
GAAP net income per diluted
share $0.43 $0.77 $0.66
===== ===== =====
Non-GAAP net income per
diluted share $0.47 $0.80 $0.68
===== ===== =====
Shares used in diluted shares
calculation 166,580 167,345 168,734
======= ======= =======
Pre-tax impact of items included in Condensed Consolidated Unaudited Statements of Operations
---------------------------------------------------------------------------------------------
Acquisition Restructuring, Total pre-
related severance and tax GAAP to
charges other related non-GAAP
charges adjustment
------------ --------------- -----------
Three months ended
September 30, 2014
-------------------
Costs of revenues $2,577 $355 $2,932
Engineering,
research and
development 700 2,933 3,633
Selling, general
and administrative 721 769 1,490
--- --- -----
Total in three
months ended
September 30, 2014 $3,998 $4,057 $8,055
====== ====== ======
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
====== ====== ======
Three months ended
September 30, 2013
-------------------
Costs of revenues $1,921 $651 $2,572
Engineering,
research and
development 836 306 1,142
Selling, general
and administrative 1,412 280 1,692
----- --- -----
Total in three
months ended
September 30, 2013 $4,169 $1,237 $5,406
====== ====== ======
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SOURCE KLA-Tencor Corporation
