10-QPeriod: Q2 FY2011

KLA CORP Quarterly Report for Q2 Ended Dec 31, 2010

Filed January 28, 2011For Securities:KLAC

Summary

KLA Corporation (KLAC) reported a strong financial performance for the quarter ending December 30, 2010, with significant year-over-year revenue growth. Total revenues reached $766.3 million, a 74% increase compared to the same period in the prior year, driven primarily by a substantial rebound in product revenue, up 99%. This surge in revenue translated into a robust net income of $185.5 million, or $1.09 per diluted share, a dramatic improvement from a net income of $21.8 million, or $0.13 per diluted share, in the prior year's quarter. The company's balance sheet remains solid, with total assets increasing to $4.17 billion from $3.91 billion. Cash and cash equivalents also saw a healthy increase, reaching $596.1 million. The company's strong operational performance and healthy cash generation allowed for increased capital expenditures, significant stock repurchases, and a dividend payout, indicating confidence in future performance and a commitment to returning value to shareholders.

Financial Highlights

48 data points
Beta

Revenue

$766.33M

59.4% Gross Margin

Net Income

$185.49M

24.2% Net Margin

EPS (Diluted)

$0.11

Total Assets

$4.17B

Cash & Equivalents

$596.10M

Free Cash Flow

$182.37M

Financial Statements
Beta
Revenue$766.33M
Cost of Revenue$311.40M
Gross Profit$454.93M
R&D Expenses$94.90M
SG&A Expenses$91.17M
Operating Expenses$497.46M
Operating Income$268.87M
Interest Expense$13.49M
Net Income$185.49M
EPS (Basic)$0.11
EPS (Diluted)$0.11
Shares Outstanding (Basic)1.67B
Shares Outstanding (Diluted)1.70B

Key Highlights

  • 1Revenue surged by 74% year-over-year to $766.3 million, driven by a 99% increase in product revenue.
  • 2Net income more than eightfold, reaching $185.5 million ($1.09 per diluted share) compared to $21.8 million ($0.13 per diluted share) in the prior year's quarter.
  • 3Gross margin improved significantly to 59% from 53% in the prior year's quarter, reflecting better manufacturing efficiencies and product mix.
  • 4Engineering, Research & Development (R&D) expenses increased by 14% year-over-year to $94.9 million, underscoring continued investment in innovation.
  • 5Selling, General & Administrative (SG&A) expenses decreased by 11% year-over-year to $91.2 million, partly due to the absence of prior year impairment charges.
  • 6The company generated strong operating cash flow of $289.5 million for the six months ended December 31, 2010.
  • 7KLA Corp. repurchased $117.3 million of its common stock in the first six months of the fiscal year, a significant increase from no repurchases in the prior year period.

Frequently Asked Questions

KLA Corp. demonstrated a significant improvement in performance. Total revenues for the quarter ending December 30, 2010, increased by 74% year-over-year to $766.3 million, largely driven by a 99% surge in product revenue. This revenue growth translated into a substantial increase in net income, which rose to $185.5 million, or $1.09 per diluted share, from $21.8 million, or $0.13 per diluted share, in the same period last year.

The company maintains a strong financial position. Total assets grew to $4.17 billion as of December 31, 2010. KLA Corp. reported cash and cash equivalents of $596.1 million and marketable securities of $1.04 billion, totaling over $1.6 billion in liquid assets. The company generated robust operating cash flow, providing ample liquidity to fund operations, investments, and shareholder returns.

The substantial revenue increase was primarily driven by a strong recovery and growth in customer capital spending for both technology and capacity investments in the semiconductor industry. This was particularly evident in defect inspection equipment, which saw higher revenues in the current quarter compared to both the prior sequential quarter and the prior year's quarter. Higher factory utilization by customers also contributed to increased service revenues.

KLA Corp. is actively returning value to shareholders through both stock repurchases and dividend payments. The company repurchased $117.3 million of its common stock in the first six months of the fiscal year, a significant increase from the prior year. Additionally, the company declared and paid a cash dividend of $0.25 per share for the quarter, totaling $41.8 million in dividend payments for the period.