"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,
|
|
December 31,
|
|
March 31,
|
|
March 31,
|
|
March 31,
| ||||||||||||||||||
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
|
|
Restructuring,
|
|
Total pre-tax GAAP
| |||||
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 |