April 26, 2016

KLA-Tencor Reports Fiscal 2016 Third Quarter Results

MILPITAS, Calif., April 26, 2016 /PRNewswire/ -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its third quarter of fiscal year 2016, which ended on March 31, 2016, reporting GAAP net income of $176 million and GAAP earnings per diluted share of $1.12 on revenues of $712 million.

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GAAP Results


Q3 FY 2016

Q2 FY 2016

Q3 FY 2015

Revenues

$712 million

$710 million

$738 million

Net Income

$176 million

$152 million

$132 million

Earnings per Diluted Share

$1.12

$0.98

$0.81





Non-GAAP Results


Q3 FY 2016

Q2 FY 2016

Q3 FY 2015

Net Income

$179 million

$162 million

$137 million

Earnings per Diluted Share

$1.15

$1.04

$0.84

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, restructuring, severance and other related charges, merger-related charges, and debt extinguishment loss and recapitalization charges.

In light of the pending merger transaction with Lam Research Corporation, KLA-Tencor has discontinued conducting quarterly earnings conference calls to discuss financial results, but instead publish a quarterly stockholder letter and other supplemental data on the Investor Relations section of the KLA-Tencor website.

About KLA-Tencor:

KLA-Tencor Corporation, 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 nearly 40 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, 2016


June 30, 2015

ASSETS




Cash, cash equivalents and marketable securities

$

2,241,310



$

2,387,111


Accounts receivable, net

624,818



585,494


Inventories

721,493



617,904


Other current assets

318,852



314,067


Land, property and equipment, net

287,874



314,591


Goodwill

335,205



335,263


Purchased intangibles, net

5,625



11,895


Other non-current assets

246,925



259,687


Total assets

$

4,782,102



$

4,826,012


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

126,322



$

103,342


Deferred system profit

193,219



148,691


Unearned revenue

51,820



71,335


Current portion of long-term debt



16,981


Other current liabilities

626,331



661,414


Total current liabilities

997,692



1,001,763


Non-current liabilities:




Long-term debt

3,097,306



3,173,435


Unearned revenue

51,065



47,145


Other non-current liabilities

159,467



182,230


Total liabilities

4,305,530



4,404,573


Stockholders' equity:




Common stock and capital in excess of par value

424,474



474,374


Retained earnings (accumulated deficit)

95,121



(12,362)


Accumulated other comprehensive income (loss)

(43,023)



(40,573)


Total stockholders' equity

476,572



421,439


Total liabilities and stockholders' equity

$

4,782,102



$

4,826,012


 

KLA-Tencor Corporation







Condensed Consolidated Unaudited Statements of Operations











Three months ended March 31,


Nine months ended March 31,

(In thousands, except per share amounts)

2016


2015


2016


2015

Revenues:








Product

$

530,623



$

565,181



$

1,519,142



$

1,545,663


Service

181,810



173,278



546,180



512,054


Total revenues

712,433



738,459



2,065,322



2,057,717


Costs and expenses:








Costs of revenues

274,599



320,282



825,823



891,962


Engineering, research and development

115,589



124,583



353,804



401,777


Selling, general and administrative

87,407



98,608



275,602



305,125


Interest expense and other, net

24,907



28,532



80,388



67,991


Loss on extinguishment of debt and other, net







131,669


Income before income taxes

209,931



166,454



529,705



259,193


Provision for income taxes

34,154



34,816



96,824



35,054


Net income

$

175,777



$

131,638



$

432,881



$

224,139


Net income per share:








Basic

$

1.13



$

0.81



$

2.78



$

1.37


Diluted

$

1.12



$

0.81



$

2.76



$

1.36


Cash dividends declared per share (including a special cash dividend of $16.50 per share declared during the three months ended December 31, 2014)

$

0.52



$

0.50



$

1.56



$

18.00


Weighted-average number of shares:








Basic

155,690



161,559



155,921



163,494


Diluted

156,429



162,794



156,797



164,930


 

KLA-Tencor Corporation

Condensed Consolidated Unaudited Statements of Cash Flows




Three months ended

March 31,

(In thousands)

2016


2015

Cash flows from operating activities:




Net income

$

175,777



$

131,638


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




Depreciation and amortization

15,780



20,510


Asset impairment charges

1,038



1,698


Non-cash stock-based compensation expense

9,185



12,767


Excess tax benefit from equity awards

(635)



(398)


Net gain on sales of marketable securities and other investments

(2,847)



(60)


Changes in assets and liabilities:




Increase in accounts receivable, net

(186,715)



(1,213)


Decrease (increase) in inventories

(26,065)



23,745


Decrease in other assets

8,322



20,096


Increase (decrease) in accounts payable

3,751



(5,054)


Increase (decrease) in deferred system profit

61,371



(21,732)


Increase in other liabilities

52,535



60,420


Net cash provided by operating activities

111,497



242,417


Cash flows from investing activities:




Capital expenditures, net

(8,954)



(10,326)


Proceeds from sale of assets

2,811




Purchases of available-for-sale securities

(249,126)



(339,580)


Proceeds from sale of available-for-sale securities

147,120



223,438


Proceeds from maturity of available-for-sale securities

146,102



181,151


Purchases of trading securities

(13,243)



(9,383)


Proceeds from sale of trading securities

16,162



13,765


Net cash provided by investing activities

40,872



59,065


Cash flows from financing activities:




Repayment of debt

(35,000)



(9,375)


Issuance of common stock

2



175


Tax withholding payments related to vested and released restricted stock units

(1,702)



(1,990)


Common stock repurchases



(168,670)


Payment of dividends to stockholders

(82,109)



(82,250)


Excess tax benefit from equity awards

635



398


Net cash used in financing activities

(118,174)



(261,712)


Effect of exchange rate changes on cash and cash equivalents

5,188



(2,743)


Net increase in cash and cash equivalents

39,383



37,027


Cash and cash equivalents at beginning of period

886,591



584,865


Cash and cash equivalents at end of period

$

925,974



$

621,892


Supplemental cash flow disclosures:




Income taxes paid, net

$

22,304



$

8,101


Interest paid

$

3,482



$

4,341


Non-cash activities:




Purchase of land, property and equipment - investing activities

$

2,311



$

2,255


Unsettled common stock repurchase - financing activities

$



$

12,862


Dividends payable - financing activities

$

18,827



$

41,412


 

KLA-Tencor Corporation

Condensed Consolidated Unaudited Supplemental Information

(In thousands, except per share amounts)


Reconciliation of GAAP Net Income to Non-GAAP Net Income





Three months ended


Nine months ended




March 31, 2016


December 31, 2015


March 31, 2015


March 31, 2016


March 31, 2015

GAAP net income


$

175,777



$

152,207



$

131,638



$

432,881



$

224,139


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












Acquisition-related charges

a

1,309



1,309



3,928



6,199



11,758



Restructuring, severance and other related charges

b

137



1,742



3,636



8,945



10,992



Merger-related charges

c

3,582



8,820





12,402





Debt extinguishment loss and recapitalization charges

d









134,147



Income tax effect of non-GAAP adjustments

e

(1,535)



(2,321)



(1,840)



(7,204)



(52,099)


Non-GAAP net income


$

179,270



$

161,757



$

137,362



$

453,223



$

328,937


GAAP net income per diluted share


$

1.12



$

0.98



$

0.81



$

2.76



$

1.36


Non-GAAP net income per diluted share


$

1.15



$

1.04



$

0.84



$

2.89



$

1.99


Shares used in diluted shares calculation


156,429



155,996



162,794



156,797



164,930


 

Pre-tax impact of items included in Condensed Consolidated Unaudited Statements of Operations



Acquisition-related charges


Restructuring, severance and other related charges


Merger-related charges


Total pre-tax GAAP to non-GAAP adjustments

Three months ended March 31, 2016








Costs of revenues

$

663



$

121



$

238



$

1,022


Engineering, research and development



5



508



513


Selling, general and administrative

646



11



2,836



3,493


Total in three months ended March 31, 2016

$

1,309



$

137



$

3,582



$

5,028


Three months ended December 31, 2015








Costs of revenues

$

663



$

470



$

67



$

1,200


Engineering, research and development



479





479


Selling, general and administrative

646



793



8,753



10,192


Total in three months ended December 31, 2015

$

1,309



$

1,742



$

8,820



$

11,871


Three months ended March 31, 2015








Costs of revenues

$

2,507



$

211



$



$

2,718


Engineering, research and development

700



680





1,380


Selling, general and administrative

721



2,745





3,466


Total in three months ended March 31, 2015

$

3,928



$

3,636



$



$

7,564


 

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 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 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 employee severance and other exit costs, impairment of certain long-lived assets. 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.     

Merger-related charges that are directly related to the pending merger between KLA-Tencor and Lam as announced on October 21, 2015. Charges primarily includes costs for advisory services, appraisals, legal services, employee-related expense and auditing services. Management believes that it is appropriate to exclude these items as they are not indicative of ongoing operating results and therefore limit comparability and 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.    

Debt extinguishment loss and recapitalization charges include a pre-tax loss on early extinguishment of debt related to the 6.900% Senior Notes due in 2018, net and certain other expenses incurred in connection with the leveraged recapitalization plan which was completed in the second quarter of fiscal year ended June 30, 2015. Management believes that it is appropriate to exclude these items as they are not indicative of ongoing operating results and therefore limit comparability and 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.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/kla-tencor-reports-fiscal-2016-third-quarter-results-300257830.html

SOURCE KLA-Tencor Corporation

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