KLA-Tencor Reports Fiscal 2013 Second Quarter Results PR Newswire MILPITAS, Calif., Jan. 24, 2013 MILPITAS, Calif., Jan.24, 2013 /PRNewswire/ -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its second quarter of fiscal year 2013, which ended on December31, 2012, and reported GAAP net income of $107 million and GAAP earnings per diluted share of $0.63 on revenues of $673 million. "In the second quarter, KLA-Tencor delivered revenue and earnings per share at or above the upper end of our range of guidance in the face of a challenging demand environment," said Rick Wallace, president and CEO of KLA-Tencor. "We believe that the accelerated pace of innovation by our customers at the leading edge, and the essential role that process control plays in the success of that innovation, will continue to provide long-term opportunities for KLA-Tencor to advance our market leadership and to deliver superior financial performance." GAAP Results Q2 FY 2013 Q1 FY 2013 Q2 FY 2012 Revenues $673 million $721 million $642 million Net Income $107 million $135 million $111 million Earnings per Diluted Share $0.63 $0.80 $0.66 Non-GAAP Results Q2 FY 2013 Q1 FY 2013 Q2 FY 2012 Net Income $106 million $142 million $122 million Earnings per Diluted Share $0.63 $0.84 $0.72 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 2013 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 market conditions in the semiconductor equipment industry, anticipatedinnovation effortsby customers, expected trends and focus areas in customers' capital investment,the importance of process control in the success of future innovation,KLA-Tencor's ability to preserve and extend itsmarket leadership position and KLA-Tencor's future financial 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 June30, 2012, 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) December31, 2012 June30, 2012 ASSETS Cash, cash equivalents and marketable $ 2,578,253 $ 2,534,444 securities Accounts receivable, net 606,115 701,280 Inventories 662,735 650,802 Other current assets 289,197 277,517 Land, property and equipment, net 292,394 277,686 Goodwill 326,779 327,716 Purchased intangibles, net 43,514 55,636 Other non-current assets 269,776 275,227 Total assets $ 5,068,763 $ 5,100,308 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 103,575 $ 139,183 Deferred system profit 156,775 147,218 Unearned revenue 53,257 63,095 Other current liabilities 468,130 513,411 Total current liabilities 781,737 862,907 Non-current liabilities: Long-term debt 747,104 746,833 Income tax payable 54,910 50,839 Unearned revenue 31,742 34,899 Other non-current liabilities 92,134 89,235 Total liabilities 1,707,627 1,784,713 Stockholders' equity: Common stock and capital in excess of par 1,123,422 1,089,480 value Retained earnings 2,252,772 2,247,258 Accumulated other comprehensive income (loss) (15,058) (21,143) Total stockholders' equity 3,361,136 3,315,595 Total liabilities and stockholders' equity $ 5,068,763 $ 5,100,308 KLA-Tencor Corporation Condensed Consolidated Unaudited Statements of Operations Three months ended December Six months ended December 31, 31, (In thousands, except per share 2012 2011 2012 2011 data) Revenues: Product $ 523,023 $ 500,659 $ 1,097,101 $ 1,150,915 Service 149,988 141,823 296,619 288,043 Total revenues 673,011 642,482 1,393,720 1,438,958 Costs and operating expenses: Costs of revenues 303,915 272,855 621,140 613,204 Engineering, research and 121,608 116,363 241,350 224,125 development Selling, general 94,241 93,801 191,426 187,877 and administrative Total costs and 519,764 483,019 1,053,916 1,025,206 operating expenses Income from 153,247 159,463 339,804 413,752 operations Interest income and (8,373) (12,556) (18,388) (19,583) other, net Income before 144,874 146,907 321,416 394,169 income taxes Provision for 38,244 36,110 79,419 91,377 income taxes Net income $ 106,630 $ 110,797 $ 241,997 $ 302,792 Net income per share: Basic $ 0.64 $ 0.67 $ 1.45 $ 1.82 Diluted $ 0.63 $ 0.66 $ 1.43 $ 1.78 Cash dividends $ 0.40 $ 0.35 $ 0.80 $ 0.70 declared per share Weighted average number of shares: Basic 166,268 166,343 166,632 166,513 Diluted 169,076 169,103 169,702 169,650 KLA-Tencor Corporation Condensed Consolidated Unaudited Statements of Cash Flows Three months ended December 31, (In thousands) 2012 2011 Cash flows from operating activities: Net income $ 106,630 $ 110,797 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 21,925 23,267 Asset impairment charges — 1,378 Net gain on sale of assets (1,160) — Non-cash stock-based compensation expense 14,958 19,646 Excess tax benefit from equity awards (6,067) — Net loss (gain) on sale of marketable securities and (1,048) 106 other investments Changes in assets and liabilities: Increase in accounts receivable, net (77,272) (83,819) Decrease (increase) in inventories 28,822 (33,142) Decrease (increase) in other assets (19,062) 31,658 Increase (decrease) in accounts payable (12,314) 14,580 Increase in deferred system profit 14,849 54,596 Increase in other liabilities 7,182 48,165 Net cash provided by operating activities 77,443 187,232 Cash flows from investing activities: Capital expenditures, net (17,091) (14,918) Proceeds from sale of assets 1,838 2,228 Purchase of available-for-sale securities (341,496) (287,987) Proceeds from sale and maturity of available-for-sale 453,096 287,236 securities Purchase of trading securities (8,744) (16,852) Proceeds from sale of trading securities 10,116 18,353 Net cash provided by (used in) investing activities 97,719 (11,940) Cash flows from financing activities: Issuance of common stock 23,607 39,396 Tax withholding payments related to vested and (9,471) (11,544) released restricted stock units Common stock repurchases (68,283) (63,580) Payment of dividends to stockholders (66,522) (58,101) Excess tax benefit from equity awards 6,067 — Net cash used in financing activities (114,602) (93,829) Effect of exchange rate changes on cash and cash (3,189) (2,424) equivalents Net increase in cash and cash equivalents 57,371 79,039 Cash and cash equivalents at beginning of period 709,942 745,947 Cash and cash equivalents at end of period $ 767,313 $ 824,986 Supplemental cash flow disclosures: Income taxes paid, net $ 48,295 $ (29,746) Interest paid $ 26,682 $ 26,904 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 December31, September30, December31, December31, December31, 2012 2012 2011 2012 2011 GAAP net $ 106,630 $ 135,367 $ 110,797 $ 241,997 $ 302,792 income Adjustments to reconcile GAAP net income to non-GAAP net income Acquisition related a 4,242 6,886 7,406 11,128 15,034 charges Restructuring, severance and b — 3,134 1,476 3,134 4,032 other related charges Restatement related c — — — — 135 charges Income tax effect of d (1,392) (2,979) (2,886) (4,371) (6,949) non-GAAP adjustments Discrete tax e (3,514) — 5,079 (3,514) 5,079 items Non-GAAP net $ 105,966 $ 142,408 $ 121,872 $ 248,374 $ 320,123 income GAAP net income per $ 0.63 $ 0.80 $ 0.66 $ 1.43 $ 1.78 diluted share Non-GAAP net income per $ 0.63 $ 0.84 $ 0.72 $ 1.46 $ 1.89 diluted share Shares used in diluted shares 169,076 169,824 169,103 169,702 169,650 calculation Pre-tax impact of items included in Consolidated Statements of Operations Restructuring, Total Acquisition severance and Restatement pre-tax related other related related GAAP to charges charges charges non-GAAP adjustment Three months ended December 31, 2012 Costs of revenues $ 1,921 $ — $ — $ 1,921 Engineering, research 835 — — 835 and development Selling, general and 1,486 — — 1,486 administrative Total in three months ended December 31, $ 4,242 $ — $ — $ 4,242 2012 Three months ended September 30, 2012 Costs of revenues $ 4,560 $ — $ — $ 4,560 Engineering, research 836 — — 836 and development Selling, general and 1,490 3,134 — 4,624 administrative Total in three months ended September 30, $ 6,886 $ 3,134 $ — $ 10,020 2012 Three months ended December 31, 2011 Costs of revenues $ 5,018 $ 243 $ — $ 5,261 Engineering, research 898 241 — 1,139 and development Selling, general and 1,490 992 — 2,482 administrative Total in three months ended December 31, $ 7,406 $ 1,476 $ — $ 8,882 2011 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. 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 a. 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. 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 b. 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. Restatement related charges include legal and other expenses related to the investigation regarding the company's historical stock option granting process and related stockholder litigation and other matters. KLA-Tencor has paid or reimbursed legal expenses incurred by a number of its current and former directors, officers and employees in connection with the investigation of the company's historical stock option practices and the c. related litigation and government inquiries. 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. Income tax effect of non-GAAP adjustments includes the income tax effects of the excluded items noted above. Management believes that it is d. appropriate to exclude the tax effects of the items noted above in order to present a more meaningful measure of non-GAAP net income. 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 e. 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 Website: http://www.kla-tencor.com Contact: Investors: Ed Lockwood, Sr. Director, Investor Relations, +1-408-875-9529, firstname.lastname@example.org, or Media: Meggan Powers, Sr. Director, Corporate Communications, +1-408-875-8733, email@example.com
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KLA-Tencor Reports Fiscal 2013 Second Quarter Results
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