KLA-Tencor Reports Fiscal 2014 Third Quarter Results
[ Back ]   [ More News ]   [ Home ]
KLA-Tencor Reports Fiscal 2014 Third Quarter Results

MILPITAS, Calif., April 24, 2014 — (PRNewswire) — KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its third quarter of fiscal year 2014, which ended on March 31, 2014, and reported GAAP net income of $204 million and GAAP earnings per diluted share of $1.21 on revenues of $832 million.

"KLA-Tencor delivered solid results for the third quarter of fiscal year 2014, demonstrating our market leadership and strong operational execution," commented Rick Wallace, President and CEO of KLA-Tencor. "Semiconductor device manufacturers are facing enormous challenges in transitioning from planar to 3D transistor structures and in implementing new process technologies at the leading edge such as multi-patterning lithography. Although the semiconductor capital equipment industry is currently experiencing a pause in demand after a strong initial ramp of some of these new technologies, we remain focused on partnering with our customers to address yield issues associated with these ramps."

GAAP Results


Q3 FY 2014

Q2 FY 2014

Q3 FY 2013

Revenues

$832 million

$705 million

$729 million

Net Income

$204 million

$139 million

$166 million

Earnings per Diluted Share

$1.21

$0.83

$0.98





Non-GAAP Results


Q3 FY 2014

Q2 FY 2014

Q3 FY 2013

Net Income

$206 million

$143 million

$171 million

Earnings per Diluted Share

$1.23

$0.85

$1.01

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 2014 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 maintain, and benefit from, its market leadership position; technological challenges and focus areas of KLA-Tencor's customers; the future outlook for growth in the semiconductor equipment industry; and KLA-Tencor's anticipated future 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; 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, 2013, 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, 2014


June 30, 2013

ASSETS




Cash, cash equivalents and marketable securities

$

3,026,824


$

2,918,881

Accounts receivable, net

557,661


524,610

Inventories

680,919


634,448

Other current assets

276,925


273,564

Land, property and equipment, net

326,049


305,281

Goodwill

335,246


326,635

Purchased intangibles, net

31,988


34,515

Other non-current assets

251,239


269,423

Total assets

$

5,486,851


$

5,287,357

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

120,771


$

115,680

Deferred system profit

173,595


157,965

Unearned revenue

46,179


60,838

Other current liabilities

547,102


527,049

Total current liabilities

887,647


861,532

Non-current liabilities:




Long-term debt

747,783


747,376

Pension liabilities

58,408


57,959

Income tax payable

59,765


59,494

Unearned revenue

57,818


42,228

Other non-current liabilities

35,502


36,616

Total liabilities

1,846,923


1,805,205

Stockholders' equity:




Common stock and capital in excess of par value

1,206,377


1,159,565

Retained earnings

2,464,901


2,359,233

Accumulated other comprehensive income (loss)

(31,350)


(36,646)

Total stockholders' equity

3,639,928


3,482,152

Total liabilities and stockholders' equity

$

5,486,851


$

5,287,357

 

KLA-Tencor Corporation






Condensed Consolidated Unaudited Statements of Operations








Three months ended March 31,


Nine months ended March 31,

(In thousands, except per share data)

2014


2013


2014


2013

Revenues:








Product

$

670,083


$

579,746


$

1,716,006


$

1,676,847

Service

161,516


149,283


479,059


445,902

Total revenues

831,599


729,029


2,195,065


2,122,749

Costs and operating expenses:








Costs of revenues

342,826


309,508


906,297


930,648

Engineering, research and development

134,161


118,788


401,021


360,138

Selling, general and administrative

93,449


98,487


288,691


289,913

Total costs and operating expenses

570,436


526,783


1,596,009


1,580,699

Income from operations

261,163


202,246


599,056


542,050

Interest income and other, net

(9,917)


(10,131)


(31,201)


(28,519)

Income before income taxes

251,246


192,115


567,855


513,531

Provision for income taxes

47,665


25,733


113,831


105,152

Net income

$

203,581


$

166,382


$

454,024


$

408,379

Net income per share:








Basic

$

1.22


$

1.00


$

2.73


$

2.46

Diluted

$

1.21


$

0.98


$

2.70


$

2.41

Cash dividends declared per share

$

0.45


$

0.40


$

1.35


$

1.20

Weighted-average number of shares:








Basic

166,253


166,234


166,184


166,297

Diluted

167,989


169,180


168,355


169,425

 

KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows




Three months ended

March 31,

(In thousands)

2014


2013

Cash flows from operating activities:




Net income

$

203,581


$

166,382

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




Depreciation and amortization

20,614


21,168

Non-cash stock-based compensation expense

12,723


18,536

Excess tax benefit from equity awards

(657)


(872)

Net gain on sale of marketable securities and other investments

(281)


(712)

Changes in assets and liabilities:




Decrease in accounts receivable, net

16,598


142,764

Decrease (increase) in inventories

(14,738)


11,138

Decrease in other assets

48,463


2,753

Increase (decrease) in accounts payable

(20,818)


4,552

Decrease in deferred system profit

(70,008)


(19,959)

Increase in other liabilities

42,250


69,033

Net cash provided by operating activities

237,727


414,783

Cash flows from investing activities:




Acquisition of cost method investment

(1,345)


Acquisition of business

(18,000)


Capital expenditures, net

(18,220)


(18,300)

Purchase of available-for-sale securities

(359,299)


(460,124)

Proceeds from sale of available-for-sale securities

202,650


258,067

Proceeds from maturity of available-for-sale securities

60,035


63,671

Purchase of trading securities

(20,939)


(14,005)

Proceeds from sale of trading securities

22,521


15,054

Net cash used in investing activities

(132,597)


(155,637)

Cash flows from financing activities:




Issuance of common stock

13,334


48,685

Tax withholding payments related to vested and released restricted stock units

(2,347)


(728)

Common stock repurchases

(59,880)


(68,343)

Payment of dividends to stockholders

(74,805)


(66,561)

Excess tax benefit from equity awards

657


872

Net cash used in financing activities

(123,041)


(86,075)

Effect of exchange rate changes on cash and cash equivalents

752


(6,183)

Net increase (decrease) in cash and cash equivalents

(17,159)


166,888

Cash and cash equivalents at beginning of period

793,382


767,313

Cash and cash equivalents at end of period

$

776,223


$

934,201

Supplemental cash flow disclosures:




Income taxes paid, net

$

9,636


$

11,041

Interest paid

$

135


$

204

Non-cash investing activities:




Purchase of land, property and equipment

$

4,103


$

 

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


Nine months ended



March 31,
2014


December 31,
2013


March 31,
2013


March 31,
2014


March 31,
2013

GAAP net income


$

203,581


$

139,246


$

166,382


$

454,024


$

408,379

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











Acquisition related charges

a

3,828


3,599


4,180


11,596


15,308

Restructuring, severance and other related charges

b


2,002


2,845


3,239


5,979

Income tax effect of non-GAAP adjustments

c

(1,193)


(1,777)


(2,212)


(4,642)


(6,583)

Discrete tax items

d





(3,514)

Non-GAAP net income


$

206,216


$

143,070


$

171,195


$

464,217


$

419,569

GAAP net income per diluted share


$

1.21


$

0.83


$

0.98


$

2.70


$

2.41

Non-GAAP net income per diluted share


$

1.23


$

0.85


$

1.01


$

2.76


$

2.48

Shares used in diluted shares calculation


167,989


168,206


169,180


168,355


169,425

 

Pre-tax impact of items included in Condensed Consolidated Unaudited Statements of Operations



Acquisition related
charges


Restructuring,
severance and other
related charges


Total pre-tax GAAP
to non-GAAP
adjustment

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

Three months ended December 31, 2013






Costs of revenues

$

1,921


$

469


$

2,390

Engineering, research and development

836


1,132


1,968

Selling, general and administrative

842


401


1,243

Total in three months ended December 31, 2013

$

3,599


$

2,002


$

5,601

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

 

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 and transaction costs associated with acquisitions.  Management believes that the expense associated with the amortization of acquisition related intangible assets and acquisition related costs 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 our 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.  

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.



d.  

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

Contact:
KLA-Tencor Corporation
Investor Relations: Ed Lockwood, Sr. Director, Investor Relations, (408) 875-9529
Email Contact Media Relations: Meggan Powers, Sr. Director, Corporate Communications, (408) 875-8733
Email Contact
Web: http://www.kla-tencor.com