10-QPeriod: Q1 FY2013

KLA CORP Quarterly Report for Q1 Ended Sep 30, 2012

Filed October 26, 2012For Securities:KLAC

Summary

KLA-TENCOR CORPORATION (KLAC) reported a sequential and year-over-year decrease in total revenues for the quarter ended September 30, 2012, primarily driven by reduced customer spending on capital equipment in the foundry and logic segments, coupled with a challenging demand environment in the memory segment. This downturn reflects the cyclical nature of the semiconductor industry. Despite the revenue decline, the company maintained a strong liquidity position with over $2.6 billion in cash, cash equivalents, and marketable securities. Management highlighted the company's commitment to research and development to drive future growth and addressed a strategic decision to exit the solar inspection business due to deteriorating market conditions. Investors should monitor the company's ability to navigate the cyclical semiconductor market and its continued investment in innovation.

Financial Highlights

48 data points
Beta

Revenue

$720.71M

56.0% Gross Margin

Net Income

$135.37M

18.8% Net Margin

EPS (Diluted)

$0.08

Total Assets

$5.07B

Cash & Equivalents

$709.94M

Free Cash Flow

$225.12M

Financial Statements
Beta
Revenue$720.71M
Cost of Revenue$317.23M
Gross Profit$403.48M
R&D Expenses$119.74M
SG&A Expenses$97.19M
Operating Expenses$534.15M
Operating Income$186.56M
Interest Expense$13.50M
Net Income$135.37M
EPS (Basic)$0.08
EPS (Diluted)$0.08
Shares Outstanding (Basic)1.67B
Shares Outstanding (Diluted)1.70B

Key Highlights

  • 1Total revenues for the quarter ended September 30, 2012, decreased by 10% year-over-year to $720.7 million, impacted by reduced customer spending in the semiconductor capital equipment industry.
  • 2Net income decreased to $135.4 million ($0.80 per diluted share) from $192.0 million ($1.13 per diluted share) in the prior year's comparable quarter.
  • 3The company ended the quarter with a strong liquidity position, holding $2.64 billion in cash, cash equivalents, and marketable securities.
  • 4Product revenues saw a significant decline of 12% year-over-year, reflecting the cyclical downturn in customer capital equipment procurement.
  • 5Service revenues remained relatively flat year-over-year, demonstrating a stabilizing element within the business model.
  • 6KLA-Tencor decided to exit the solar inspection business due to adverse market conditions, recognizing related expenses.
  • 7The company repurchased approximately $68.3 million of its common stock during the quarter and increased its quarterly dividend to $0.40 per share.

Frequently Asked Questions

The decline in revenue was primarily due to a reduction in customer spending on process control and yield management equipment. This was influenced by cyclical industry factors affecting foundry and logic customers, a challenging demand environment for memory customers, and overall macro-economic uncertainty.

KLA-Tencor maintained a strong financial position, with total cash, cash equivalents, and marketable securities amounting to $2.64 billion as of September 30, 2012. This robust liquidity provides a buffer against market fluctuations and supports ongoing operations and strategic initiatives.

KLA-Tencor is focused on continuous investment in research and development to drive innovation and develop advanced technologies. The company believes these investments will enable it to address future customer yield challenges and maintain its competitive advantage, which is crucial for navigating the cyclical capital spending patterns of its customers.

The company exited the solar inspection business due to deteriorating solar industry fundamentals and declining near-term business opportunities in that market. This strategic move allows the company to refocus resources on its core semiconductor and nanoelectronics industries.