10-QPeriod: Q1 FY2011

KLA CORP Quarterly Report for Q1 Ended Sep 30, 2010

Filed October 29, 2010For Securities:KLAC

Summary

KLA-Tencor Corporation (KLAC) reported a significant increase in financial performance for the quarter ended September 30, 2010, compared to the same period in the prior year. Total revenues more than doubled, driven by a substantial surge in product revenue, indicating a strong recovery and increased capital spending by customers in the semiconductor industry. This top-line growth translated directly into a dramatic improvement in profitability, with net income increasing from $20.4 million to $154.2 million, and diluted earnings per share rising from $0.12 to $0.91. The company maintained a healthy gross margin of 61% and demonstrated effective cost management, leading to a significant increase in operating income. KLA-Tencor also reported robust cash flow from operations, underscoring its financial strength and ability to generate cash. The company continues to invest in research and development to maintain its competitive edge in the rapidly evolving semiconductor technology landscape.

Financial Highlights

48 data points
Beta

Revenue

$682.34M

61.3% Gross Margin

Net Income

$154.20M

22.6% Net Margin

EPS (Diluted)

$0.09

Total Assets

$4.00B

Cash & Equivalents

$538.38M

Free Cash Flow

$84.36M

Financial Statements
Beta
Revenue$682.34M
Cost of Revenue$263.97M
Gross Profit$418.37M
R&D Expenses$94.72M
SG&A Expenses$88.04M
Operating Expenses$446.73M
Operating Income$235.62M
Interest Expense$13.53M
Net Income$154.20M
EPS (Basic)$0.09
EPS (Diluted)$0.09
Shares Outstanding (Basic)1.67B
Shares Outstanding (Diluted)1.70B

Key Highlights

  • 1Total revenues surged to $682.3 million for the three months ended September 30, 2010, up from $342.7 million in the prior year's comparable period, representing a 99% increase.
  • 2Net income dramatically increased to $154.2 million, a significant jump from $20.4 million in the same quarter last year.
  • 3Diluted earnings per share (EPS) rose to $0.91, up from $0.12 in the prior year quarter.
  • 4Gross margin improved significantly to 61% from 50% in the prior year quarter, reflecting improved pricing, product mix, and manufacturing efficiencies.
  • 5Operating cash flow remained strong at $95.5 million for the quarter, indicating healthy cash generation from business activities.
  • 6The company repurchased $62.2 million of its common stock during the quarter, indicating a commitment to returning capital to shareholders.
  • 7Inventories increased by approximately $62.5 million sequentially, suggesting anticipation of continued demand.

Frequently Asked Questions

The primary driver behind the substantial revenue increase is the significant rise in product revenue, which more than doubled year-over-year. This is attributed to increased capital spending by customers in the semiconductor industry for both technology and capacity-related investments, responding to anticipated end-market demand.

Profitability has improved dramatically. Net income increased from $20.4 million to $154.2 million, and diluted earnings per share rose from $0.12 to $0.91. This is a result of the significant revenue growth combined with improved gross margins and effective cost management.

The company generated strong cash flow from operations ($95.5 million for the quarter). They also utilized cash for financing activities, including $62.2 million in stock repurchases and $41.8 million in dividend payments, indicating a commitment to returning capital to shareholders while maintaining operational liquidity.

Total assets increased to $4.0 billion from $3.9 billion sequentially. Key changes include an increase in accounts receivable and inventories, suggesting higher sales activity and potential anticipation of future demand. Long-term debt remained stable. Stockholders' equity increased due to retained earnings.