KLA-Tencor Corporation To Borrow $2.5 Billion For Special Dividend, Buybacks

KLA-Tencor Corp.

shares soared in the extended session after the company declared a special dividend of $16.50 a share and boosted its buyback program. The actions depend on borrowing $2.5 billion to fund the plan through a combination of senior notes, a term loan and a new revolving credit facility, the company said. The Milipitas, Calif. semiconductor equipment company's shares gained more than 17 percent recently, changing hands at $83 a share. KLA-Tencor, which also posted first-quarter results that beat expectations, said the special dividend, payable Dec. 31, plus its buyback plan, represents $4 billion in capital that will be returned to shareholders. The added buyback of $250 million is in addition to an existing $1 billion authorization and the company expects to complete the buybacks within 18 months. KLA-Tencor said its board approved the leveraged recapitalization based on "the substantial net cash on KLA-Tencor's balance sheet" as well as the effects of additional debt on the company's "ability to pursue strategic initiatives." Kla-Tencor also cited its ability to produce cash flow to service increased debt and fund operations. Net earnings in the recent period fell 44 percent to $72 million, or $0.44 cents a share, from $129 million, or $0.77 cents a share last year. Revenue fell 12 percent to $643 million, from $734 million a year earlier. Adjusted earnings fell to $0.47 cents a share, from $0.80 cents a year earlier. Wall Street expected adjusted $0.46 cents a share, on revenue of $620.7 million. 83.50 +12.50 (17.61%) 23% of the Company's common stock price