KLA-Tencor Reports Fiscal 2018 Second Quarter Results
MILPITAS, Calif., Jan. 25, 2018 /PRNewswire/ -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its second quarter of fiscal year 2018, which ended on Dec. 31, 2017, and reported GAAP net loss of $(134) million and GAAP loss per diluted share of $(0.86) on revenues of $976 million.
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"KLA-Tencor reported a record quarter in December 2017, delivering new quarterly highs in shipments, revenues, gross margin, and non-GAAP earnings per diluted share in the period. Full year results in calendar 2017 also set records for each of these metrics, as well as in free cash flow generation," commented Rick Wallace, president and chief executive officer of KLA-Tencor. "These outstanding results demonstrate the dedication that runs throughout our organization to serving our customers and delivering results to our stockholders, as well as the long-term value generated in successful execution of the Company's strategic objectives."
GAAP Results
Q2 FY 2018 Q1 FY 2018 Q2 FY 2017
Revenues $976 million $970 million $877 million
-------- ------------ ------------ ------------
Net Income
(Loss) $(134) million $281 million $238 million
-------------- ------------ ------------
Earnings (Loss)
per Diluted
Share $(0.86) $1.78 $1.52
--------------- ------ ----- -----
Non-GAAP Results
Q2 FY 2018 Q1 FY 2018 Q2 FY 2017
Net Income $309 million $284 million $238 million
------------ ------------ ------------
Earnings per
Diluted Share $1.97 $1.80 $1.52
-------------- ----- ----- -----
A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements included in this release. Non-GAAP results include the impact of stock-based compensation, but exclude the impact of acquisitions, restructuring, severance, merger and other related charges and certain discrete tax items. KLA-Tencor will discuss the results for its fiscal year 2018 second quarter, along with its outlook, on a conference call today beginning at 3:00 p.m. Pacific Time. A webcast of the call will be available at: www.kla-tencor.com.
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 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 40 years. Headquartered in Milpitas, Calif., KLA-Tencor has dedicated customer operations and service centers around the world. Additional information may be found at http://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 (benefits), 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 (benefits) 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 (benefits) 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) Dec. 31, 2017 June 30, 2017
------------- ------------- -------------
ASSETS
Cash, cash
equivalents
and marketable
securities $2,758,190 $3,016,740
Accounts
receivable,
net 740,903 571,117
Inventories 787,971 732,988
Other current
assets 66,929 71,221
Land, property
and equipment,
net 281,634 283,975
Goodwill 350,023 349,526
Deferred income
taxes, non-
current 193,740 291,967
Purchased
intangibles,
net 16,563 18,963
Other non-
current assets 211,315 195,676
Total assets $5,407,268 $5,532,173
========== ==========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Current
liabilities:
Accounts
payable $149,844 $147,380
Deferred system
profit 248,829 180,861
Unearned
revenue 64,256 65,507
Current portion
of long-term
debt - 249,983
Other current
liabilities 703,619 649,431
------- -------
Total current
liabilities 1,166,548 1,293,162
Non-current
liabilities:
Long-term debt 2,486,426 2,680,474
Unearned
revenue 67,927 59,713
Other non-
current
liabilities 460,742 172,407
------- -------
Total
liabilities 4,181,643 4,205,756
Stockholders'
equity:
Common stock
and capital in
excess of par
value 548,691 529,283
Retained
earnings 729,456 848,457
Accumulated
other
comprehensive
income (loss) (52,522) (51,323)
------- -------
Total
stockholders'
equity 1,225,625 1,326,417
--------- ---------
Total
liabilities
and
stockholders'
equity $5,407,268 $5,532,173
========== ==========
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Operations
Three months ended Dec. 31, Six months ended Dec. 31,
(In thousands, except
per share amounts) 2017 2016 2017 2016
--------------------- ---- ---- ---- ----
Revenues:
Product $761,587 $683,733 $1,522,374 $1,245,486
Service 214,235 193,152 423,029 382,072
------- ------- ------- -------
Total revenues 975,822 876,885 1,945,403 1,627,558
Costs and expenses:
Costs of revenues 347,334 318,507 700,783 596,343
Research and
development 156,745 130,912 303,477 260,145
Selling, general and
administrative 105,546 93,532 213,259 187,920
Interest expense and
other, net 18,890 27,089 44,425 54,085
------ ------ ------ ------
Income before income
taxes 347,307 306,845 683,459 529,065
Provision for income
taxes 481,626 68,594 536,842 112,713
------ ------- -------
Net income (loss) $(134,319) $238,251 $146,617 $416,352
========= ======== ======== ========
Net income (loss) per
share:
Basic $(0.86) $1.52 $0.94 $2.66
Diluted $(0.86) $1.52 $0.93 $2.65
Cash dividends
declared per share $0.59 $0.54 $1.18 $1.06
----- ----- ----- -----
Weighted-average
number of shares:
Basic 156,587 156,335 156,707 156,232
Diluted 156,587 157,123 157,688 157,071
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Cash Flows
Three months ended
Dec. 31,
(In thousands) 2017 2016
------------- ---- ----
Cash flows from operating activities:
Net income (loss) $(134,319) $238,251
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 16,130 14,892
Non-cash stock-based
compensation expense 13,739 12,444
Net (gain) loss on sales of
marketable securities and other
investments 69 (681)
Accounts receivable, net (73,877) (24,386)
Inventories (24,240) 13,132
Other assets 84,502 (28,315)
Accounts payable 11,069 11,786
Deferred system profit 39,562 8,302
Other liabilities 196,736 (23,012)
------- -------
Net cash provided by operating
activities 129,371 222,413
Cash flows from investing activities:
Acquisition of non-marketable
securities (3,377) (900)
Business acquisition (4,780) -
Capital expenditures, net (13,369) (8,629)
Proceeds from sale of assets - 2,582
Purchases of available-for-
sale securities (134,268) (372,950)
Proceeds from sale of available-
for-sale securities 56,506 78,136
Proceeds from maturity of
available-for-sale securities 123,095 159,077
Purchases of trading securities (18,914) (20,813)
Proceeds from sale of trading
securities 21,062 23,164
------ ------
Net cash provided by (used in)
investing activities 25,955 (140,333)
Cash flows from financing activities:
Proceeds from revolving credit
facility, net of debt issuance
costs 248,693 -
Repayment of debt (540,000) (40,000)
Issuance of common stock 20,579 23,694
Tax withholding payments related
to vested and released
restricted stock units (2,567) (79)
Common stock repurchases (40,427) -
Payment of dividends to
stockholders (92,575) (84,529)
Net cash used in financing
activities (406,297) (100,914)
Effect of exchange rate changes
on cash and cash equivalents 3,668 (10,458)
----- -------
Net decrease in cash and cash
equivalents (247,303) (29,292)
Cash and cash equivalents at
beginning of period 1,320,697 966,325
--------- -------
Cash and cash equivalents at end
of period $1,073,394 $937,033
========== ========
Supplemental cash flow disclosures:
Income taxes paid, net $123,625 $71,164
Interest paid $55,693 $56,773
Non-cash activities:
Purchase of land, property and
equipment -investing
activities $5,548 $1,985
Unsettled common stock
repurchase -financing
activities $1,289 $ -
Dividends payable -financing
activities $7,590 $12,763
KLA-Tencor Corporation
Condensed Consolidated Unaudited Supplemental Information
(In thousands, except per share amounts)
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income
---------------------------------------------------------------
Three months ended Six months ended
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
GAAP net income (loss) $(134,319) $280,936 $238,251 $146,617 $416,352
Adjustments to reconcile GAAP net
income (loss) to non-GAAP net
income:
---------------------------------
Acquisition-related charges a 1,608 1,587 513 3,195 1,780
Merger-related charges b - 3,015 4,069 3,015 7,674
Income tax effect of non-GAAP
adjustments c (465) (1,599) (1,580) (2,064) (2,839)
Discrete tax items d 441,894 - (3,064) 441,894 (3,064)
Non-GAAP net income $308,718 $283,939 $238,189 $592,657 $419,903
======== ======== ======== ======== ========
GAAP net income (loss) per
diluted share $(0.86) $1.78 $1.52 $0.93 $2.65
====== ===== ===== ===== =====
Non-GAAP net income per diluted
share $1.97 $1.80 $1.52 $3.76 $2.67
===== ===== ===== ===== =====
Shares used in diluted shares
calculation 156,587 157,846 157,123 157,688 157,071
======= ======= ======= ======= =======
Pre-tax impact of items included in Condensed Consolidated Unaudited Statements of Operations
---------------------------------------------------------------------------------------------
Acquisition- Merger-
related
charges Total pre-tax
related charges GAAP to non-
GAAP
adjustments
------------
Three months ended
Dec. 31, 2017
------------------
Costs of revenues $1,530 $ - $1,530
Selling, general and
administrative 78 - 78
Total in three
months ended Dec.
31, 2017 $1,608 $ - $1,608
====== === === ======
Three months ended
Sept. 30, 2017
------------------
Costs of revenues $1,530 $405 $1,935
Research and
development - 1,147 1,147
Selling, general and
administrative 57 1,463 1,520
--- -----
Total in three
months ended Sept.
30, 2017 $1,587 $3,015 $4,602
====== ====== ======
Three months ended
Dec. 31, 2016
------------------
Costs of revenues $500 $348 $848
Research and
development - 1,054 1,054
Selling, general and
administrative 13 2,667 2,680
Total in three
months ended Dec.
31, 2016 $513 $4,069 $4,582
==== ====== ======
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 and inventory fair value
adjustments, 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 performances
with our results in prior periods
as well as with the performance of
other companies.
b. Merger-related charges associated
with the terminated merger
agreement between KLA-Tencor and
Lam Research Corporation ("Lam")
primarily includes employee
retention-related expenses, legal
expenses and other costs.
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.
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 item during the three
months ended Dec. 31, 2017
includes the income tax effects of
an income tax expense from the
enacted tax reform legislation
through the Tax Cuts and Jobs-Act
("the Act"), which was signed into
law on Dec. 22, 2017, of which the
impact is primarily related to the
provisional tax amounts recorded
for the transition tax on
accumulated foreign earnings and
the re-measurement of certain
deferred tax assets and
liabilities as a result of the
enactment of the Act. Discrete tax
item during the three months ended
Dec. 31, 2016 include the tax
impact of certain merger-related
charges that only became
deductible during the three months
ended Dec. 31, 2016 as a result of
the termination of the proposed
merger between KLA-Tencor and
Lam. 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.
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SOURCE KLA-Tencor Corporation
