KLA-Tencor (KLAC) Updates on Headcount Reduction Initiative, Expected Charges

KLA-Tencor (NASDAQ: KLAC) disclosed the following Friday:

On April 23, 2015, KLA-Tencor Corporation (the “Company”) filed a Current Report on Form 8-K (the “Original Form 8-K”) announcing the Company’s plan to reduce its global employee workforce. At the time the Original Form 8-K was filed, the Company was unable to make a good faith determination of the cost estimates, or ranges of cost estimates, associated with all of the activities under the global employee workforce reduction plan.

This Form 8-K/A amends the Original Form 8-K to update the expected timing of the completion of the employee reduction and provide a range of estimated charges that the Company expects to recognize in connection with the global employee workforce reduction plan. As a result of the Company’s determination of the range of estimated charges and other severance costs that the Company expects to recognize in the fourth quarter of fiscal year 2015, the Company is updating certain preliminary guidance previously provided by the Company during the Company’s quarterly earnings conference call on April 23, 2015. Except as described below, all other information in the Original Form 8-K remains unchanged.

Item 2.05

Costs Associated with Exit or Disposal Activities.

On April 23, 2015, the Company announced a plan to reduce its global employee workforce by up to 10 percent to streamline its organization and business processes in response to changing customer requirements in its industry. The goal of this reduction is to enable continued innovation and direct the Company’s resources toward its best opportunities. The Company expects to substantially complete the employee reduction by the end of the first quarter of fiscal year 2016, but certain reductions will occur in the second quarter of fiscal year 2016.

The Company currently estimates that, in connection with the global employee workforce reduction plan, it will recognize net charges in the range of approximately $26 to $36 million for estimated severance costs and other related costs. Substantially all of these net charges are expected to be cash expenditures. The Company expects to recognize a majority of these charges in the fourth quarter of fiscal year 2015.

Item 7.01

Regulation FD Disclosure.

On April 23, 2015, during the Company’s quarterly earnings conference call, the Company previously provided preliminary guidance for non-GAAP diluted earnings per share (a range of $0.78 to $1.02 per share) for the fourth quarter of fiscal year 2015. In a slide presentation available on the Company’s Investor Relations website, the Company reconciled non-GAAP diluted earnings per share to GAAP diluted earnings per share (a range of $0.75 to $0.99 per share). As a result of the Company’s determination of the range of estimated net charges associated with the global employee workforce reduction plan and other severance costs that the Company expects to recognize in the fourth quarter of fiscal year 2015, the Company is updating such preliminary guidance.

For the fourth quarter of fiscal year 2015, the Company expects the guidance for non-GAAP diluted earnings per share to remain unchanged from previously issued guidance. The Company expects GAAP diluted earnings to be in the range of $0.65 to $0.91 per share. The revised GAAP diluted earnings per share range includes the effects of amortization of acquired intangible assets and restructuring and other related charges, which have a tax adjusted impact of approximately $0.02 and $0.01 per share, respectively, and the estimated net charges associated with the global employee workforce reduction plan and other severance costs that the Company expects to recognize in the fourth quarter of fiscal year 2015, which have a tax adjusted impact of approximately $0.08 to $0.10 per share.

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