Published: July 29, 2010
KLA-Tencor Reports Fiscal 2010 Fourth Quarter and Full Year Results
MILPITAS, Calif., July 29 /PRNewswire-FirstCall/ -- KLA-Tencor Corporation® (Nasdaq: KLAC) today announced operating results for its fourth quarter and fiscal year ended June 30, 2010. KLA-Tencor reported GAAP net income of $113 million and GAAP earnings per diluted share of $0.66 on revenues of $559 million for the fourth quarter of fiscal year 2010. For the year ended June 30, 2010, the company reported GAAP net income of $212 million and GAAP earnings per diluted share of $1.23 on revenues of $1.8 billion.
"Robust product demand in each of our major end markets, geographies and product offerings, coupled with solid execution by the KLA-Tencor team resulted in strong financial results in the fourth quarter," said Rick Wallace, KLA-Tencor's president and chief executive officer. "These results reflect our team's commitment to helping customers solve complex yield challenges at the leading edge, as well as KLA-Tencor's ability to execute against our strategic objectives in order to maintain our market and technology leadership."
GAAP Results
Q4 FY 2010 Q3 FY 2010 Q4 FY 2009
Revenues $559 million $478 million $282 million
Net Income (Loss) $113 million $57 million $(26) million
Earnings (Loss) per
Diluted Share $0.66 $0.33 $(0.15)
Non-GAAP Results
Q4 FY 2010 Q3 FY 2010 Q4 FY 2009
Net Income (Loss) $120 million $71 million $(15) million
Earnings (Loss) per
Diluted Share $0.70 $0.41 $(0.09)
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 acquisition, restatement and restructuring related items, goodwill and intangible asset impairment, and certain discrete tax items.
KLA-Tencor will discuss the results for its fiscal year 2010 fourth quarter and full year, 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 position as a market and technology leader and the company's ability to successfully innovate, develop and sell new technologies and products that meet customer needs, 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 integrate and manage businesses that it acquires; 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, 2009, 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, data storage, LED, photovoltaic, 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 over 30 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) June 30, 2010 June 30, 2009
------------- -------------
ASSETS
Cash and short-term investments $1,534,044 $1,329,884
Accounts receivable, net 440,125 210,143
Inventories, net 401,730 370,206
Other current assets 459,566 488,384
Land, property and equipment, net 236,752 291,878
Goodwill 328,006 329,379
Purchased intangibles, net 117,336 149,080
Other non-current assets 389,497 440,584
------- -------
Total assets $3,907,056 $3,609,538
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $107,938 $63,485
Deferred system profit 204,764 95,820
Unearned revenue 37,026 46,236
Other current liabilities 422,059 341,441
------- -------
Total current liabilities 771,787 546,982
Non-current liabilities:
Income tax payable 53,492 49,738
Unearned revenue 20,354 23,059
Other non-current liabilities 69,065 60,163
Long-term debt 745,747 745,204
Total liabilities 1,660,445 1,425,146
Stockholders' equity:
Common stock and capital in excess
of par value 921,460 835,477
Retained earnings 1,356,454 1,370,132
Accumulated other comprehensive
income (loss) (31,303) (21,217)
------- -------
Total stockholders' equity 2,246,611 2,184,392
--------- ---------
Total liabilities and
stockholders' equity $3,907,056 $3,609,538
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Operations
Three months ended
------------------
(In thousands, except per June 30,
share data) 2010 June 30, 2009
--------- -------------
Revenues:
Product $430,286 $176,226
Service 129,133 105,276
------- -------
Total revenues 559,419 281,502
Costs and operating expenses:
Costs of revenues 227,919 164,621
Engineering, research and
development 83,309 79,227
Selling, general and
administrative 87,349 72,621
Goodwill and purchased
intangible asset impairment - -
--- ---
Total costs and operating
expenses 398,577 316,469
Income (loss) from operations 160,842 (34,967)
Interest expense and other,
net (10,740) (11,409)
------- -------
Income (loss) before income
taxes 150,102 (46,376)
Provision for (benefit from)
income taxes 37,017 (20,800)
Net income (loss) $113,085 $(25,576)
======== ========
Net income (loss) per share:
Basic $0.67 $(0.15)
----- ------
Diluted $0.66 $(0.15)
----- ------
Cash dividend paid per share $0.15 $0.15
----- -----
Weighted average number of
shares:
Basic 168,986 169,981
======= =======
Diluted 171,275 169,981
======= =======
Twelve months ended
-------------------
(In thousands, except per June 30, June 30,
share data) 2010 2009
--------- ---------
Revenues:
Product $1,324,270 $1,062,126
Service 496,490 458,090
------- -------
Total revenues 1,820,760 1,520,216
Costs and operating expenses:
Costs of revenues 815,662 864,824
Engineering, research and
development 329,560 371,463
Selling, general and
administrative 361,372 415,126
Goodwill and purchased
intangible asset impairment - 446,744
--- -------
Total costs and operating
expenses 1,506,594 2,098,157
Income (loss) from operations 314,166 (577,941)
Interest expense and other,
net (22,985) (24,590)
------- -------
Income (loss) before income
taxes 291,181 (602,531)
Provision for (benefit from)
income taxes 78,881 (79,163)
Net income (loss) $212,300 $(523,368)
======== =========
Net income (loss) per share:
Basic $1.24 $(3.07)
----- ------
Diluted $1.23 $(3.07)
----- ------
Cash dividend paid per share $0.60 $0.60
----- -----
Weighted average number of
shares:
Basic 170,652 170,253
======= =======
Diluted 173,034 170,253
======= =======
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Cash Flows
Three months ended
June 30
(In thousands) 2010 2009
---- ----
Cash flows from operating
activities:
Net income (loss) $113,085 $(25,576)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 19,554 25,732
Long-lived asset impairment
charges 4,557 638
Provision for doubtful accounts (2,888) (818)
Non-cash stock-based compensation 23,459 26,092
Tax charge from equity awards - (13,223)
Net loss (gain) on sale of
marketable securities and other
investments (1,388) 160
Net gain on sale of real estate
assets - (353)
Changes in assets and liabilities,
net of assets acquired and
liabilities assumed in business
combinations:
Decrease (increase) in accounts
receivable, net (113,496) 37,261
Decrease (increase) in inventories (26,461) 53,111
Decrease (increase) in other assets 26,734 (40,943)
Increase in accounts payable 15,922 6,720
Increase in deferred system profit 37,807 21,632
Decrease in other liabilities (13,607) (16,995)
------- -------
Net cash provided by operating
activities 83,278 73,438
Cash flows from investing
activities:
Capital expenditures, net (5,791) (1,980)
Purchase of available-for-sale
securities (217,123) (349,358)
Proceeds from sale of available-
for-sale securities 187,900 116,127
Proceeds from maturity of
available-for-sale securities 23,108 21,000
Purchase of trading securities (22,740) (20,402)
Proceeds from sale of trading
securities 35,622 27,525
------ ------
Net cash provided by (used in)
investing activities 976 (207,088)
Cash flows from financing
activities:
Issuance of common stock 12,054 12,971
Tax withholding payments related to
vested and released restricted
stock units (601) (549)
Common stock repurchases (81,645) -
Payment of dividends to
stockholders (25,386) (25,490)
------- -------
Net cash used in financing
activities (95,578) (13,068)
Effect of exchange rate changes on
cash and cash equivalents (2,263) 6,756
Net decrease in cash and cash
equivalents (13,587) (139,962)
Cash and cash equivalents at
beginning of period 543,505 664,929
Cash and cash equivalents at end of
period $529,918 $524,967
======== ========
Supplemental cash flow disclosures:
Income tax paid (refunds received),
net $28,982 $(5,274)
======= =======
Interest paid $26,006 $26,474
======= =======
KLA-Tencor Corporation
Condensed Consolidated Unaudited Supplemental Information
(In thousands, except per share data)
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
----------------------------------------------------------------------
Three months ended Twelve months ended
------------------ -------------------
June 30, March 31, June 30, June 30, June 30,
2010 2010 2009 2010 2009
--------- ---------- --------- --------- ---------
GAAP net income
(loss) $113,085 $57,016 $(25,576) $212,300 $(523,368)
Adjustments to
reconcile GAAP
net income
(loss) to non-
GAAP net
income (loss)
---------------
Acquisition
related
charges a 8,280 8,370 11,561 32,849 79,287
Restructuring,
severance and
other related
charges b 3,311 4,426 7,007 17,778 54,119
Restatement
related
charges c (866) 4,750 (1,731) 16,149 13,261
Goodwill and
purchased
intangible
asset
impairment d - - - - 446,744
Income tax
effect of non-
GAAP
adjustments e (3,824) (6,417) (5,883) (24,124) (107,503)
Discrete tax
items f - 3,165 - 11,858 -
--- ----- --- ------ ---
Non-GAAP net
income (loss) $119,986 $71,310 $(14,622) $266,810 $(37,460)
======== ======= ======== ======== ========
GAAP net income
(loss) per
diluted share $0.66 $0.33 $(0.15) $1.23 $(3.07)
===== ===== ====== ===== ======
Non-GAAP net
income (loss)
per diluted
share $0.70 $0.41 $(0.09) $1.54 $(0.22)
===== ===== ====== ===== ======
Shares used in
diluted shares
calculation 171,275 173,357 169,981 173,034 170,253
======= ======= ======= ======= =======
Pre-tax impact of items included in Condensed Consolidated Unaudited
Statements of Operations
--------------------------------------------------------------------
Total pre-tax
Acquisition Restructuring, Restatement GAAP to
severance and
related other related non-GAAP
charges related charges charges adjustment
------- --------------- ------- ----------
Three months
ended June 30,
2010
---------------
Costs of
revenues $5,790 $(57) $- $5,733
Engineering,
research and
development 898 - - 898
Selling, general
and
administrative 1,592 3,368 (866) 4,094
Total in three
months ended
June 30, 2010 $8,280 $3,311 $(866) $10,725
====== ====== ===== =======
Three months
ended March 31,
2010
----------------
Costs of
revenues $5,908 $345 $(98) $6,155
Engineering,
research and
development 898 11 (260) 649
Selling, general
and
administrative 1,564 4,070 5,108 10,742
Total in three
months ended
March 31, 2010 $8,370 $4,426 $4,750 $17,546
====== ====== ====== =======
Three months
ended June 30,
2009
---------------
Costs of
revenues $9,314 $3,662 $- $12,976
Engineering,
research and
development 742 4 - 746
Selling, general
and
administrative 1,505 3,341 (1,731) 3,115
Total in three
months ended
June 30, 2009 $11,561 $7,007 $(1,731) $16,837
======= ====== ======= =======
Three months ended
------------------
June 30, 2010 March 31, 2010 June 30, 2009
------------- -------------- -------------
Stock-based compensation
------------------------
Costs of revenues $3,869 $3,793 $5,091
Engineering, research and
development 7,176 6,843 8,650
Selling, general and
administrative 12,414 10,833 12,351
Total $23,459 $21,469 $26,092
======= ======= =======
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,
inventory fair value adjustments, and in-process research and
development charges 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 that it is appropriate to
exclude acquisition related inventory fair value adjustments and in-
process research and development charges 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.
b Restructuring, severance and other related charges include gains and
costs associated with the company's facilities divestment and
consolidation program, reductions in force, entry into a severance and
consulting agreement with the company's former president/chief
operating officer during the fiscal year ended June 30, 2009, gains and
losses from sales of facilities, and asset impairment (other than
impairment of goodwill and purchased intangible assets, which is
included within the category described in note (d) below) from
discontinuing or making available for sale certain acquired product
lines. Management believes that it is appropriate to exclude those
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 Restatement related charges include legal and other expenses related to
the investigation regarding the company's historical stock option
granting process and related shareholder litigation and other matters,
including an expense accrual reflecting the net amount paid by KLA-
Tencor during the fiscal year ended June 30, 2010 in connection with
settlements of various separate litigation matters. Management
believes that it is appropriate to exclude those 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.
d Goodwill and purchased intangible asset impairment includes non-cash
expense recognized as a result of the company's annual evaluation of
goodwill or the testing for intangible asset impairment driven by
certain company-specific triggering events, as well as the impairment
of goodwill and intangible assets as a result of discontinuing acquired
products and making acquired products available for sale. Management
believes that it is appropriate to exclude those 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.
e 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.
f 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. A shortfall arises when the tax deduction is less than
book compensation. Windfalls are recorded as increases to capital in
excess of par value. Shortfalls 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. 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.
SOURCE KLA-Tencor Corporation
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