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KLA-Tencor Reports Fiscal 2013 Second Quarter Results

            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, ed.lockwood@kla-tencor.com, or Media: Meggan Powers, Sr.
Director, Corporate Communications, +1-408-875-8733,
meggan.powers@kla-tencor.com
 
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