KLA-Tencor Reports Fiscal 2014 Second Quarter Results - KTRE.com | Lufkin and Nacogdoches, Texas

KLA-Tencor Reports Fiscal 2014 Second Quarter Results

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SOURCE KLA-Tencor Corporation

MILPITAS, Calif., Jan. 23, 2014 /PRNewswire/ -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its second quarter of fiscal year 2014, which ended on December 31, 2013, and reported GAAP net income of $139 million and GAAP earnings per diluted share of $0.83 on revenues of $705 million.

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"KLA-Tencor's strong shipments, revenue and earnings during the second quarter demonstrate our market leadership and robust business model," commented Rick Wallace, President and CEO of KLA-Tencor. "As we begin 2014, the prevailing outlook is for growth in the semiconductor equipment industry, with leading device manufacturers increasing their capital expenditures to adopt complex new device architectures and process technologies at the leading edge. The heightened yield challenges associated with these transitions are driving demand for process control and positioning KLA-Tencor for continued future success as a critical business partner to our customers."

GAAP Results


Q2 FY 2014

Q1 FY 2014

Q2 FY 2013

Revenues

$705 million

$658 million

$673 million

Net Income

$139 million

$111 million

$107 million

Earnings per Diluted Share

$0.83

$0.66

$0.63





Non-GAAP Results


Q2 FY 2014

Q1 FY 2014

Q2 FY 2013

Net Income

$143 million

$115 million

$106 million

Earnings per Diluted Share

$0.85

$0.68

$0.63

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 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 KLA-Tencor's ability to maintain its market leadership position; the future outlook for growth in the semiconductor equipment industry; trends in the semiconductor industry relating to capital expenditures, technological advances, process control demand and next-generation technology investment by KLA-Tencor's customers; the anticipated yield and other challenges associated with these trends; 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)

December 31, 2013


June 30, 2013

ASSETS




Cash, cash equivalents and marketable securities

$

2,950,661


$

2,918,881

Accounts receivable, net

573,077


524,610

Inventories

663,040


634,448

Other current assets

320,756


273,564

Land, property and equipment, net

325,856


305,281

Goodwill

326,578


326,635

Purchased intangibles, net

26,098


34,515

Other non-current assets

254,668


269,423

Total assets

$

5,440,734


$

5,287,357

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

141,545


$

115,680

Deferred system profit

243,603


157,965

Unearned revenue

47,629


60,838

Other current liabilities

495,222


527,049

Total current liabilities

927,999


861,532

Non-current liabilities:




Long-term debt

747,647


747,376

Pension liabilities

57,621


57,959

Income tax payable

62,777


59,494

Unearned revenue

58,653


42,228

Other non-current liabilities

35,830


36,616

Total liabilities

1,890,527


1,805,205

Stockholders' equity:




Common stock and capital in excess of par value

1,193,654


1,159,565

Retained earnings

2,386,801


2,359,233

Accumulated other comprehensive income (loss)

(30,248)


(36,646)

Total stockholders' equity

3,550,207


3,482,152

Total liabilities and stockholders' equity

$

5,440,734


$

5,287,357

 

KLA-Tencor Corporation








Condensed Consolidated Unaudited Statements of Operations
















Three months ended December 31,


Six months ended December 31,

(In thousands, except per share data)

2013


2012


2013


2012

Revenues:








Product

$

544,183


$

523,023


$

1,045,923


$

1,097,101

Service

160,946


149,988


317,543


296,619

Total revenues

705,129


673,011


1,363,466


1,393,720

Costs and operating expenses:








Costs of revenues

285,814


303,915


563,471


621,140

Engineering, research and development

134,587


121,608


266,860


241,350

Selling, general and administrative

96,746


94,241


195,242


191,426

Total costs and operating expenses

517,147


519,764


1,025,573


1,053,916

Income from operations

187,982


153,247


337,893


339,804

Interest income and other, net

(11,237)


(8,373)


(21,284)


(18,388)

Income before income taxes

176,745


144,874


316,609


321,416

Provision for income taxes

37,499


38,244


66,166


79,419

Net income

$

139,246


$

106,630


$

250,443


$

241,997

Net income per share:








Basic

$

0.84


$

0.64


$

1.51


$

1.45

Diluted

$

0.83


$

0.63


$

1.49


$

1.43

Cash dividends declared per share

$

0.45


$

0.40


$

0.90


$

0.80

Weighted-average number of shares:








Basic

166,414


166,268


166,150


166,632

Diluted

168,206


169,076


168,478


169,702

 

KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Cash Flows













Three months ended

December 31,

(In thousands)

2013


2012

Cash flows from operating activities:




Net income

$

139,246


$

106,630

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




Depreciation and amortization

19,811


21,925

Asset impairment charges

1,374


-

Net gain on sale of assets

-


(1,160)

Non-cash stock-based compensation expense

14,870


14,958

Excess tax benefit from equity awards

(925)


(6,067)

Net gain on sale of marketable securities and other investments

(1,213)


(1,048)

Changes in assets and liabilities:




Decrease in accounts receivable, net

(136,562)


(77,272)

Decrease (increase) in inventories

(2,938)


28,822

Increase in other assets

(30,567)


(19,062)

Increase (decrease) in accounts payable

26,997


(12,314)

Increase in deferred system profit

77,672


14,849

Increase in other liabilities

7,506


7,182

Net cash provided by operating activities

115,271


77,443

Cash flows from investing activities:




Capital expenditures, net

(14,465)


(17,091)

Proceeds from sale of assets

-


1,838

Purchase of available-for-sale securities

(448,777)


(374,904)

Proceeds from sale of available-for-sale securities

317,034


424,900

Proceeds from maturity of available-for-sale securities

18,831


61,604

Purchase of trading securities

(11,256)


(8,744)

Proceeds from sale of trading securities

12,513


10,116

Net cash provided by (used in) investing activities

(126,120)


97,719

Cash flows from financing activities:




Issuance of common stock

37,719


23,607

Tax withholding payments related to vested and released restricted stock units

(945)


(9,471)

Common stock repurchases

(60,302)


(68,283)

Payment of dividends to stockholders

(74,983)


(66,522)

Excess tax benefit from equity awards

925


6,067

Net cash used in financing activities

(97,586)


(114,602)

Effect of exchange rate changes on cash and cash equivalents

(3,132)


(3,189)

Net increase (decrease) in cash and cash equivalents

(111,567)


57,371

Cash and cash equivalents at beginning of period

904,949


709,942

Cash and cash equivalents at end of period

$

793,382


$

767,313

Supplemental cash flow disclosures:




Income taxes paid, net

$

48,189


$

48,295

Interest paid

$

26,084


$

26,682

Non-cash investing activities:




Purchase of land, property and equipment

$

5,923


$

-

 

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


Six months ended



December 31,
2013


September 30,
2013


December 31,
2012


December 31,
2013


December 31,
2012

GAAP net income


$

139,246


$

111,197


$

106,630


$

250,443


$

241,997

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











Acquisition related charges

a

3,599


4,169


4,242


7,768


11,128

Restructuring, severance and other related charges

b

2,002


1,237


-


3,239


3,134

Income tax effect of non-GAAP adjustments

c

(1,777)


(1,672)


(1,392)


(3,449)


(4,371)

Discrete tax items

d

-


-


(3,514)


-


(3,514)

Non-GAAP net income


$

143,070


$

114,931


$

105,966


$

258,001


$

248,374

GAAP net income per diluted share


$

0.83


$

0.66


$

0.63


$

1.49


$

1.43

Non-GAAP net income per diluted share


$

0.85


$

0.68


$

0.63


$

1.53


$

1.46

Shares used in diluted shares calculation


168,206


168,734


169,076


168,478


169,702

 

Pre-tax impact of items included in 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 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 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

Three months ended December 31, 2012






Costs of revenues

$

1,921


$

-


$

1,921

Engineering, research and development

835


-


835

Selling, general and administrative

1,486


-


1,486

Total in three months ended December 31, 2012

$

4,242


$

-


$

4,242

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 costs associated with the company's 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.

©2012 PR Newswire. All Rights Reserved.

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