KLA-Tencor Reports Fiscal 2018 Fourth Quarter And Full Year Results
MILPITAS, Calif., July 30, 2018 /PRNewswire/ -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its fourth quarter and fiscal year ended June 30, 2018. KLA-Tencor reported GAAP net income of $349 million and GAAP earnings per diluted share of $2.22 on revenues of $1,070 million for the fourth quarter of fiscal year 2018. For the fiscal year ended June 30, 2018, the company reported GAAP net income of $802 million and GAAP earnings per diluted share of $5.10 on revenues of $4.0 billion.
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"We're pleased to report another strong performance by KLA-Tencor in the June quarter," commented Rick Wallace, president and chief executive officer of KLA-Tencor. "We delivered the second highest quarterly bookings result in our history, while setting all-time records in quarterly shipments, revenue, and GAAP and non-GAAP earnings per diluted share. This demonstrates KLA-Tencor's market leadership in process control, and reflects the strategic importance of inspection and metrology in enabling growth of next-generation logic and memory semiconductor markets."
GAAP Results
Q4 FY 2018 Q3 FY 2018 Q4 FY 2017
Revenues $1,070 million $1,021 million $939 million
-------------- --------------
Net Income $349 million $307 million $256 million
------------
Earnings per
Diluted Share $2.22 $1.95 $1.62
-------------- ----- ----- -----
Non-GAAP Results
Q4 FY 2018 Q3 FY 2018 Q4 FY 2017
Net Income $348 million $318 million $259 million
Earnings per
Diluted Share $2.22 $2.02 $1.64
-------------- ----- ----- -----
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, merger and other related charges and certain discrete tax items. KLA-Tencor will discuss the results for its fiscal year 2018 fourth quarter and full year, along with its outlook, on a conference call today beginning at 2:00 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 https://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) June 30, 2018 June 30, 2017
------------- ------------- -------------
ASSETS
Cash, cash
equivalents
and marketable
securities $2,880,318 $3,016,740
Accounts
receivable,
net 651,678 571,117
Inventories 931,845 732,988
Other current
assets 85,159 71,221
Land, property
and equipment,
net 286,306 283,975
Goodwill 354,698 349,526
Deferred income
taxes, non-
current 193,200 291,967
Purchased
intangibles,
net 19,333 18,963
Other non-
current assets 216,819 195,676
------- -------
Total assets $5,619,356 $5,532,173
========== ==========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Current
liabilities:
Accounts
payable $169,354 $147,380
Deferred system
profit 279,581 180,861
Unearned
revenue 69,255 65,507
Current portion
of long-term
debt - 249,983
Other current
liabilities 699,893 649,431
------- -------
Total current
liabilities 1,218,083 1,293,162
Non-current
liabilities:
Long-term debt 2,237,402 2,680,474
Unearned
revenue 71,997 59,713
Other non-
current
liabilities 471,363 172,407
------- -------
Total
liabilities 3,998,845 4,205,756
Stockholders'
equity:
Common stock
and capital in
excess of par
value 617,999 529,283
Retained
earnings 1,056,445 848,457
Accumulated
other
comprehensive
income (loss) (53,933) (51,323)
------- -------
Total
stockholders'
equity 1,620,511 1,326,417
--------- ---------
Total
liabilities
and
stockholders'
equity $5,619,356 $5,532,173
========== ==========
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Operations
Three months ended Twelve months ended
(In thousands, except per share amounts) June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
--------------------------------------- ------------- ------------- ------------- -------------
Revenues:
Product $840,500 $737,432 $3,160,671 $2,703,934
Service 229,504 201,215 876,030 776,080
------- ------- ------- -------
Total revenues 1,070,004 938,647 4,036,701 3,480,014
Costs and expenses:
Costs of revenues 377,898 347,930 1,447,369 1,287,547
Research and development 151,951 136,555 608,712 526,870
Selling, general and administrative 116,649 105,164 443,426 389,336
Interest expense and other, net 17,017 23,966 81,263 103,015
------ ------ ------ -------
Income before income taxes 406,489 325,032 1,455,931 1,173,246
Provision for income taxes 57,722 68,870 653,666 247,170
Net income $348,767 $256,162 $802,265 $926,076
======== ======== ======== ========
Net income per share:
Basic $2.24 $1.64 $5.13 $5.92
----- ----- ----- -----
Diluted $2.22 $1.62 $5.10 $5.88
----- ----- ----- -----
Cash dividends declared per share $0.75 $0.54 $2.52 $2.14
----- ----- ----- -----
Weighted-average number of shares:
Basic 155,740 156,668 156,346 156,468
Diluted 156,822 157,931 157,378 157,481
KLA-Tencor Corporation
Condensed Consolidated Unaudited Statements of Cash Flows
Three months ended
June 30,
(In thousands) 2018 2017
------------- ---- ----
Cash flows from operating activities:
Net income $348,767 $256,162
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 14,989 14,324
Stock-based compensation expense 18,804 14,485
Net gain on sales of marketable
securities and other
investments 148 (375)
Changes in assets and liabilities, net of business
acquisition:
Accounts receivable, net 2,095 167,034
Inventories (73,211) (32,464)
Other assets 44,211 5,000
Accounts payable 403 6,844
Deferred system profit 21,439 (8,655)
Other liabilities (4,132) 40,282
------ ------
Net cash provided by operating
activities 373,513 462,637
Cash flows from investing activities:
Acquisition of non-marketable
securities - (1,060)
Business acquisition, net of
cash acquired (11,913) (28,560)
Capital expenditures, net (22,828) (10,668)
Proceeds from sale of assets - 365
Purchases of available-for-
sale securities (27,657) (414,383)
Proceeds from sale of available-
for-sale securities 68,229 70,443
Proceeds from maturity of
available-for-sale securities 118,877 227,569
Purchases of trading securities (12,762) (9,694)
Proceeds from sale of trading
securities 14,829 11,629
------ ------
Net cash provided by (used in)
investing activities 126,775 (154,359)
Cash flows from financing activities:
Repayment of debt (225,000) (25,000)
Issuance of common stock 40,873 21,665
Tax withholding payments related
to vested and released
restricted stock units (2,133) -
Common stock repurchases (38,091) (25,002)
Payment of dividends to
stockholders (117,035) (84,637)
Net cash used in financing
activities (341,386) (112,974)
Effect of exchange rate changes
on cash and cash equivalents (10,202) 1,940
Net increase in cash and cash
equivalents 148,700 197,244
Cash and cash equivalents at
beginning of period 1,255,682 955,807
Cash and cash equivalents at end
of period $1,404,382 $1,153,051
========== ==========
Supplemental cash flow disclosures:
Income taxes paid, net $31,331 $43,888
Interest paid $53,210 $56,865
Non-cash activities:
Purchase of land, property and
equipment -investing
activities $7,418 $3,299
Business acquisition holdback
amounts- investing activities $ - $5,318
Dividends payable -financing
activities $9,571 $13,772
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 Twelve months ended
June 30, March 31, June 30, June 30, June 30,
2018 2018 2017 2018 2017
---- ---- ---- ---- ----
GAAP net income $348,767 $306,881 $256,162 $802,265 $926,076
Adjustments to reconcile
GAAP net income to non-
GAAP net income
------------------------
Acquisition-
related charges a 3,973 7,413 1,029 14,581 3,322
Merger-related
charges b - - 3,072 3,015 13,967
Income tax effect
of non-GAAP
adjustments c (300) (343) (1,295) (2,707) (5,406)
Discrete tax
items d (4,402) 4,184 - 441,676 (3,064)
---
Non-GAAP net income $348,038 $318,135 $258,968 $1,258,830 $934,895
======== ======== ======== ========== ========
GAAP net income per
diluted share $2.22 $1.95 $1.62 $5.10 $5.88
===== ===== ===== ===== =====
Non-GAAP net income per
diluted share $2.22 $2.02 $1.64 $8.00 $5.94
===== ===== ===== ===== =====
Shares used in diluted
shares calculation 156,822 157,201 157,931 157,378 157,481
======= ======= ======= ======= =======
Pre-tax impact of items included in Condensed Consolidated Unaudited Statements of Operations
---------------------------------------------------------------------------------------------
Acquisition- Merger-related Total pre-tax
related charges charges GAAP to non-
GAAP
adjustment
----------
Three months ended
June 30, 2018
------------------
Costs of revenues $729 $ - $729
Selling, general and
administrative 3,244 - 3,244
Total in three
months ended June
30, 2018 $3,973 $ - $3,973
====== === === ======
Three months ended
March 31, 2018
------------------
Costs of revenues $1,122 $ - $1,122
Selling, general and
administrative 6,291 - 6,291
Total in three
months ended March
31, 2018 $7,413 $ - $7,413
====== === === ======
Three months ended
June 30, 2017
------------------
Costs of revenues $708 $9 $717
Research and
development - 995 995
Selling, general and
administrative 321 2,068 2,389
Total in three
months ended June
30, 2017 $1,029 $3,072 $4,101
====== ====== ======
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 or
pending acquisitions, including
the pending acquisition of
Orbotech. 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 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 items during the
fiscal year ended June 30, 2018
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 fiscal year ended
June 30, 2017 includes 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
