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KLA-Tencor Reports Fiscal 2018 Fourth Quarter And Full Year Results

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KLA-Tencor Reports Fiscal 2018 Fourth Quarter And Full Year Results

PR Newswire

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,
2018


March 31,
2018


June 30,
2017


June 30,
2018


June 30,
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-
related charges


Merger-related
charges


Total pre-tax
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

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