KLA-Tencor Soars 16% On Special Dividend, Share Buyback; Q1 Results Top View

(RTTNews) - Shares of KLA-Tencor Corp. (KLAC) soared nearly 16 percent in extended trading on Thursday after the chip equipment maker announced plans for the payment of a special cash dividend and expanded its stock repurchase program.

KLA-Tencor also reported a profit for the first quarter that declined from last year, reflecting lower product revenues as well as higher costs and operating expenses. Both adjusted earnings per share and quarterly revenues topped analysts' expectations.

The company also announced a plan to pursue a leveraged recapitalization that features a $2.75 billion special cash dividend and an expanded stock repurchase program.

"KLA-Tencor's strong business model and the ongoing successful execution of our strategic plans enable us to continue to invest in our business at a high level to fuel our growth and support our customers' needs, while also delivering meaningful returns to stockholders," President and CEO Rick Wallace said in a statement.

As part of the company's ongoing commitment to deliver stockholder value, KLA-Tencor said its Board of Directors has authorized the financing of a leveraged recapitalization, which would feature a special cash dividend of $16.50 per share.

Subject to the close of necessary financing, the Board currently plans to declare and pay the special cash dividend before December 31, 2014. The special cash dividend would be in addition to the company's regular $0.50 per share quarterly cash dividend.

The intended special cash dividend will be funded in part with a portion of the cash on the company's balance sheet, and in part with incremental debt.

In connection with the leveraged recapitalization, the KLA-Tenco board has also approved an additional stock repurchase program for up to 3.6 million of the company's common stock. This will add to the $1 billion stock repurchase program previously announced in July.

The Milpitas, California-based company reported net income of $72.23 million or $0.43 per share for the first quarter, lower than $111.20 million or $0.66 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $78.75 million or $0.47 per share, compared to $114.93 million or $0.68 per share in the year-ago quarter.

On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $0.46 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter declined to $642.90 million from $658.34 million in the same quarter last year, but topped seventeen Wall Street analysts' consensus estimate of $620.65 million.

Product revenues for the quarter decreased to $476.60 million from $501.74 million, while service revenues grew to $166.30 million from $156.60 million last year.

Total costs and operating expenses increased to $533.75 million from $508.43 million last year.

KLAC closed Thursday's regular trading session at $71.00, up $0.70 or 1.00% on a volume of 3.93 million shares. The stock soared a further $11.25 or 15.85% in after-hours trading.