<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------------- ------------------
COMMISSION FILE NUMBER 0-9992
KLA INSTRUMENTS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 04-2564110
-------- ----------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
160 Rio Robles
San Jose, California
(Address of principal executive offices)
95134
(Zip Code)
Registrant's telephone number, including area code: (408) 434-4200
================================================
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Common shares outstanding at March 31, 1995: 23,443,000
This report, including all exhibits and attachments, contains 21 pages.
PAGE 1
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KLA INSTRUMENTS CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
PART I FINANCIAL INFORMATION Number
- ------ --------------------- ------
<S> <C>
Item 1 Financial Statements:
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 1994 and 1995 . . . . . . . 3
Nine Months Ended March 31, 1994 and 1995 . . . . . . . . 4
Condensed Consolidated Balance Sheet . . . . . . . . . . 5
Condensed Consolidated Statement of Cash Flow . . . . . . 6
Notes to Condensed Consolidated Financial Information . . 7
Item 2 Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . . . . 8-10
PART II OTHER INFORMATION
- ------- -----------------
Items 1-6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
PAGE 2
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KLA INSTRUMENTS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31,
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Net sales $ 62,665 $ 118,142
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Costs and expenses:
Cost of sales 33,308 54,202
Engineering, research and development 5,486 12,294
Selling, general and administrative 12,014 21,565
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50,808 88,061
--------- ----------
Income from operations 11,857 30,081
Interest income and other, net 642 2,327
Interest expense (458) (643)
--------- ----------
Income before income taxes 12,041 31,765
Provision for income taxes 3,010 10,927
--------- ----------
Net income $ 9,031 $ 20,838
========= ==========
Net income per share $ 0.40 $ 0.86
========= ==========
Weighted average number of common and
dilutive common equivalent shares outstanding 22,729 24,266
</TABLE>
See accompanying notes to condensed consolidated financial information.
PAGE 3
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KLA INSTRUMENTS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED MARCH 31,
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Net sales $ 171,656 $ 306,032
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Costs and expenses:
Cost of sales 96,886 143,178
Engineering, research and development 15,262 29,284
Selling, general and administrative 33,257 59,754
Write-off of acquired in-process technology -- 25,240
--------- ---------
145,405 257,456
--------- ---------
Income from operations 26,251 48,576
Interest income and other, net 1,191 5,359
Interest expense (1,453) (1,725)
--------- ---------
Income before income taxes 25,989 52,210
Provision for income taxes 6,500 17,528
--------- ---------
Net income $ 19,489 $ 34,682
========= =========
Net income per share $ 0.91 $ 1.44
========= =========
Weighted average number of common and
dilutive common equivalent shares outstanding 21,479 24,080
</TABLE>
See accompanying notes to condensed consolidated financial information.
PAGE 4
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KLA INSTRUMENTS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
June 30, March 31,
1994 1995
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 139,126 $ 59,723
Short-term investments -- 23,596
Accounts receivable, net 74,226 122,513
Inventories 53,265 75,001
Other current assets 11,838 11,957
--------- ---------
Total current assets 278,455 292,790
Land, property and equipment, net 37,149 44,172
Marketable securities -- 57,708
Other assets 5,966 6,638
--------- ---------
Total assets $ 321,570 $ 401,308
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 4,673 $ 2,721
Current portion of long-term debt -- 20,000
Accounts payable 11,890 14,306
Income taxes payable 12,466 22,982
Other current liabilities 36,553 63,209
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Total current liabilities 65,582 123,218
--------- ---------
Deferred income taxes 8,606 8,606
Long-term debt 20,000 --
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 1,000 shares authorized,
none outstanding -- --
Common stock, $0.001 par value, 75,000 shares authorized,
22,864 and 23,443 shares issued and outstanding 23 23
Capital in excess of par value 147,358 153,204
Retained earnings 80,275 114,957
Treasury stock (581) (581)
Net unrealized gain on investments -- 571
Cumulative translation adjustment 307 1,310
--------- ---------
Total stockholders' equity 227,382 269,484
--------- ---------
Total liabilities and stockholders' equity $ 321,570 $ 401,308
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial information.
PAGE 5
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KLA INSTRUMENTS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
NINE MONTHS ENDED MARCH 31,
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
1994 1995
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 19,489 $ 34,682
Adjustments required to reconcile net income to cash
provided by (used for) operations:
Depreciation and amortization 8,530 7,994
Write-off of acquired in-process technology -- 16,154
Changes in assets and liabilities:
Accounts receivable, net (34,022) (47,701)
Inventories, net (7,088) (18,354)
Other current assets (196) (90)
Accounts payable 1,580 1,439
Income taxes payable and deferred income taxes 3,356 10,516
Other current liabilities 1,439 22,562
Other assets (174) (2,559)
--------- ---------
Cash provided by (used for) operating activities (7,086) 24,643
--------- ---------
Cash flows from investing activities:
Capital expenditures (3,297) (12,756)
Short-term investments -- (23,596)
Long-term marketable securities -- (57,708)
Net unrealized gain on investments 571
Acquisition of Metrologix -- (14,182)
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Cash (used for) investing activities (3,297) (107,671)
--------- ---------
Cash flows from financing activities:
Short-term borrowings and current portion of
long-term debt, net (3,500) (3,225)
Sales of common stock 75,388 5,847
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Cash provided by financing activities 71,888 2,622
--------- ---------
Effect of exchange rate changes on cash 57 1,003
--------- ---------
Increase/(decrease) in cash and cash equivalents 61,562 (79,403)
Cash and cash equivalents at beginning of period 52,362 139,126
--------- ---------
Cash and cash equivalents at end of period $ 113,924 $ 59,723
========= =========
Supplemental disclosure for cash flow information.
CASH PAID DURING THE PERIOD FOR:
INTEREST $ 1,096 $ 1,712
INCOME TAXES 2,802 15,530
</TABLE>
See accompanying notes to condensed consolidated financial information.
PAGE 6
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KLA INSTRUMENTS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(IN '000'S)
UNAUDITED
1) This information is unaudited but, in the opinion of the Company's
management, all adjustments (consisting only of adjustments that are of
a normal recurring nature) necessary for a fair statement of results
have been included. The results for the quarter and the nine month
period ended March 31, 1995, are not necessarily indicative of results
to be expected for the entire fiscal year. This financial information
should be read in conjunction with the Company's Annual Report on Form
10-K (including items incorporated by reference therein) for the year
ended June 30, 1994.
2) Effective July 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Investments in Certain
Debt and Equity Securities" (FAS 115), which requires investment
securities to be classified as either held to maturity, trading or
available for sale. The Company reviewed its portfolio and determined
that its investment portfolio would be classified as available for
sale. Under FAS 115, for those investments classified as available for
sale, the difference between an investment's cost and its fair value
has been recorded as a separate component of stockholder's equity.
3) Details of certain balance sheet components:
<TABLE>
<CAPTION>
June 30, March 31,
1994 1995
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<S> <C> <C>
Inventories:
-----------
Systems raw materials $ 12,597 $ 17,878
Customer service spares 12,220 11,994
Work-in-process 13,348 25,007
Demonstration equipment 15,100 20,122
-------- --------
$ 53,265 $ 75,001
======== ========
Other Current Liabilities:
-------------------------
Accrued compensation and benefits $ 16,328 $ 26,005
Accrued warranty and installation 14,367 20,075
Unearned service contract revenue 3,054 12,098
Other 2,804 5,031
-------- --------
$ 36,553 $ 63,209
======== ========
</TABLE>
4) In December 1994, the Company acquired Metrologix Inc., (Metrologix), a
manufacturer of advanced electron beam measurement equipment for $14.2
million in cash. This acquisition was accounted for as a purchase and
the total acquisition cost of $16.1 million has been allocated to
assets acquired and liabilities assumed. A significant portion of the
acquisition cost was allocated to acquired in-process technology.
During December 1994, the Company wrote-off the acquired in-process
technology resulting in an after-tax charge of $16.2 million ($25.2
million pre-tax). The results of operations for Metrologix from the
date of the acquisition to March 31, 1995 were immaterial.
5) In April, 1995, the Company raised approximately $90.7 million, net of
offering costs, in a public offering of 1,500,000 new shares of common
stock.
PAGE 7
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KLA INSTRUMENTS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Third Quarter and Nine Months of Fiscal 1995 Compared with Third Quarter and
Nine Months of Fiscal 1994
Metrologix
In December 1994, the Company acquired Metrologix Inc., (Metrologix), a
manufacturer of advanced electron beam measurement equipment. Except for the
non-recurring write-off of the Metrologix technology, the acquisition did not
have a material impact on the financial performance of the Company. The Company
does not expect the Metrologix business to have a significant impact on earnings
during the remainder of the fiscal year.
Net Sales
Net sales increased 88.5% and 78.3%, respectively, for the three and nine month
periods ended March 31, 1995 as compared to the prior fiscal year. Sales of
wafer inspection units by the Company's WISARD business unit (WISARD) were
predominantly responsible for the dollar increase in net sales. The Company
attributes the continuing increase of WISARD's sales primarily to the fact that
the world's most sophisticated users of KLA's yield monitoring systems continued
the trend of adopting multiple units per fab. Presently, the most extensive
users have between six and nine KLA yield monitoring units installed or on order
per fab. The Metrology division also recorded significant increases in net
sales, due to overall strength in the semiconductor industry and increasing
customer acceptance of the KLA 5100.
Gross Margin
Gross margins were 54.1% and 53.2%, respectively, for the three and nine month
periods ended March 31, 1995 compared to 46.8% and 43.6% for the same periods of
the prior fiscal year. The increase in the gross margins was due primarily to
the increasing favorable mix of business towards the more profitable WISARD
products. Volume efficiencies also contributed to gross margin improvement in
WISARD and in the Metrology division. The Metrology division's gross margin
increase was also attributable to a favorable product mix.
Engineering, Research and Development
Engineering, research and development expenses were 10.4% and 9.6% of net sales,
respectively, for the three and nine month periods ended March 31, 1995 compared
to 8.8% and 8.9% of net sales, for the same periods of the prior fiscal year.
Net engineering expenditures rose $6.8 million and $14.0 million, respectively,
during the three and nine month periods of fiscal 1995 compared to the prior
fiscal year. WISARD, the Rapid business unit, and new product lines (PRISM and
E-Beam Metrology) each contributed to the dollar increase in engineering
expenses. WISARD's increase was due to the business unit's on-going effort to
add and expand research and development programs.
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KLA INSTRUMENTS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Selling, General and Administrative
Selling, general and administrative expenses were 18.3% and 19.5% of net sales,
respectively, for the three and nine month periods ended March 31, 1995 compared
to 19.2% and 19.4% of net sales, for the same periods of the prior fiscal year.
During the quarter ended March 31, 1995, administrative expenses and
representative commissions grew at a rate slower than sales. This was partially
offset by profit sharing and sales expenses, which grew faster than revenues.
For the nine months ended March 31, 1995, the percentage decrease in sales and
administrative expenses was slightly smaller than the percentage increase in
profit sharing expense and representative commissions.
Write -off of Acquired In-process Technology
In December 1994, the Company acquired Metrologix, a manufacturer of advanced
electron beam measurement equipment. A significant portion of the purchase price
was allocated to acquired in-process technology. During December 1994, the
Company wrote-off the acquired in-process technology resulting in a pre-tax
charge of $25.2 million ($16.2 million after-tax).
Interest Income and Other, net
Interest income and other, net increased $1.7 million and $4.2 million,
respectively, for the three and nine month periods ended March 31, 1995 as
compared to the same periods of the prior fiscal year. This increase is
attributable to both higher average cash, cash equivalent and marketable
security balances and to higher average interest rates.
Provision for Income Taxes
The 33.6% estimated effective tax rate for the nine month period ended March 31,
1995 is lower than the U.S. statutory rate primarily as a result of (a) income
in foreign jurisdictions having a lower than U.S. tax rate, (b) the realization
of Foreign Sales Corporation benefits, (c) the utilization of research and
development tax credits and (d) the realization of net deferred tax assets
previously reserved, including tax credit carryforwards.
Future Operating Results
The Company's future results will depend on its ability to continuously
introduce new products and enhancements to its customers as demands for higher
performance yield management and process control systems change or increase. Due
to the risks inherent in transitioning to new products, the Company must
accurately forecast demand in both volume and configuration and also manage the
transition from older products. The Company's results could be affected by the
ability of competitors to introduce new products which have technological and/or
pricing advantages. The Company's results also will be affected by strategic
decisions made by management regarding whether to continue particular product
lines, and by volume, mix and timing of orders received during a period,
fluctuations in foreign exchange rates, and changing conditions in both the
semiconductor industry and key semiconductor markets around the world. As a
result, the Company's operating results may fluctuate, especially when measured
on a quarterly basis.
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Liquidity and Capital Resources
Cash and cash equivalents decreased $79.4 million at March 31, 1995 compared to
June 30, 1994. The decrease in cash and cash equivalents is due to the adoption
of new investment strategies and the reclassification of $81.3 million from cash
and cash equivalents to short term investments and marketable securities. Cash
generated by operations was $24.6 million. Included in the cash generated from
operations was a cash use of $47.7 million for accounts receivable. Receivables
increased in part because of a $44.9 million increase in net quarterly sales
from the fourth fiscal quarter of 1994 to the third fiscal quarter of 1995. The
Company used $14.2 million to acquire Metrologix in December 1994. The Company
also invested $12.8 million in new cleanrooms, leasehold improvements and
computer equipment. Proceeds from the exercise of stock options and the employee
stock purchase plan were $5.8 million. In order to accommodate increasing demand
for its products, the Company has begun the construction of an additional
facility at its San Jose campus. In May 1995, the Company received net proceeds
of approximately $90.7 million from its public offering of 1,500,000 new shares
of common stock. The Company believes that its current level of liquid assets,
credit facilities and cash generated from operations are sufficient to fund
growth through the foreseeable future.
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[KLA CORPORATION LOGO] INSTRUMENTS CORPORATION
FORM 10-Q
PART II: OTHER INFORMATION
<TABLE>
<S> <C>
Item 1 - Legal Proceedings Not Applicable
Item 2 - Changes in Securities Not Applicable
Item 3 - Defaults Upon Senior Securities Not Applicable
Item 4 - Submission of Matters to a Vote of Security Holders Not Applicable
Item 5 - Other Events Not Applicable
Item 6 - Exhibits and Reports on Form 8-K Page 12
</TABLE>
Page 11
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ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
See exhibit index on page 14. The Company had no Form 8-K filings during the
period ended March 31, 1995.
Page 12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
[KLA CORPORATION LOGO] INSTRUMENTS CORPORATION
May 11, 1995 /s/ Robert J. Boehlke
- ----------------- -------------------------------
[Date] Robert J. Boehlke
V.P. Finance and Administration
Chief Financial Officer
Page 13
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
(i) EXHIBITS INCORPORATED BY REFERENCE:
<S> <C>
3.1 Certificate of Incorporation as amended(7)
3.2 Bylaws, as amended(7)
4.1 Rights Agreement dated as of March 15, 1989, between the Company and
First National Bank of Boston, as Rights Agent. The Rights Agreement
includes as Exhibit A, the form of Right Certificate, and as
Exhibit B, the form of Summary of Rights to Purchase Common Stock(1)
10.15 Statement of Partnership to Triangle Partners dated April 12, 1983(2)
10.16 Lease Agreement and Addendum thereto dated January 10, 1983, between
BBK Partnership and the Company(2)
10.18 Purchase and Sale Agreement dated January 10, 1983, between BBK
Partnership, Triangle Partners and the Company(2)
10.35 Research and Development Agreement, Cross License and Technology
Transfer Agreement and Agreement for Option to License and Purchase
Resulting Technology, all dated October 1, 1986, by and between KLA
Development No. 4, Ltd., and the Company(3)
10.45 Distribution Agreement dated July 1990, by and between Tokyo Electron
Limited, a Japanese Corporation, and the Company(4)
10.46 Principle facility Purchase Agreement dated July 1990, including
all exhibits and amendments; Lease Agreement, Termination of Lease,
Lot line adjustment, rights of first refusal, Deeds of Trust(4)
10.47 Joint Venture Agreement between the Company and Nippon Mining Company,
Limited, dated September 18, 1990(5)
10.49 Exercise of Option to Purchase made effective as of January 1, 1990,
by and between KLA Development No. 4, and the Company(5)
10.54 Micrion Corporation Series E Preferred Stock Purchase Agreement, dated
September 13, 1991(6)
10.67 Amendment of Credit Agreement between Bank of America NT & SA and the
Company, dated March 31, 1994(9)
10.68 Credit Agreement between Bank of America NT & SA and the Company, dated
April 30, 1994(9)
10.71 1990 Outside Directors Stock Option Plan(8)
10.73 Amendment of Credit Agreement between Bank of America NT & SA and the
Company dated December 31, 1994(10)
10.74 1981 Employee Stock Purchase Plan, as amended by the Board of Directors
on October 7, 1994(10)
10.75 1982 Stock Option Plan, as amended by the Board of Directors on
October 7, 1994(10)
(ii) EXHIBITS INCLUDED HEREWITH:
10.76 Amendment of Credit Agreement between Bank of America NT & SA and the
Company dated February 15, 1995
27 Financial Data Schedule
</TABLE>
- ----------------
(1) Filed as exhibit number 1 to Form 8-A, filed effective March 23, 1989
(2) Filed as the same exhibit number as set forth herein to Registrant's Form
10-K for the year ended June 30, 1983
(3) Filed as the same exhibit number as set forth herein to Registrant's Form
10-K for the year ended June 30, 1987
(4) Filed as the same exhibit number as set forth herein to Registrant's Form
10-K for the year ended June 30, 1990
(5) Filed as the same exhibit number as set forth herein to Registrant's Form
10-K for the year ended June 30, 1991
(6) Filed as the same exhibit number as set forth herein to Registrant's Form
10-K for the year ended June 30, 1992
(7) Filed as the same exhibit number to Registrant's registration statement
no.33-51819 on Form S-3, dated February 2, 1994
(8) Filed as exhibit number 4.6 as set forth herein to Registrant's Form 10-K
for the year ended June 30, 1991
(9) Filed as the same exhibit number as set forth herein to Registrant's Form
10-K for the year ended June 30, 1994
(10) Filed as the same exhibit number as set forth herein to Registrant's Form
10-Q for the quarter ended December 31, 1994
Page 14
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EXHIBIT 10.76
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the " Amendment"), dated as
of February 15, 1995, is entered into by and between KLA INSTRUMENTS
CORPORATION (the "Borrower") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (the "Bank").
RECITALS
A. The Borrower and the Bank are parties to a Credit Agreement dated as
of April 30, 1994, as amended by that certain First Amendment to Credit
Agreement dated as of December 31, 1994 (as so amended, the "Credit Agreement")
pursuant to which the Bank has extended certain credit facilities to the
Borrower and certain of its Subsidiaries.
B. The Borrower has requested that the Bank agree to certain amendments
of the Credit Agreement.
C. The Bank is willing to amend the Credit Agreement, subject to the
terms and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms
used herein shall have the meanings, if any, assigned to them in the Credit
Agreement.
2. Amendments to Credit Agreement.
(a) Section 1.01 of the Credit Agreement shall be amended as
follows:
(i) The definition of "Acceptable Subsidiary" shall be amended
and restated in its entirety as follows:
"'Acceptable Subsidiary': a Subsidiary of the Borrower
acceptable to the Bank in its sole discretion that (a) is specified as a
"Borrower" on a continuing guaranty executed by the Borrower in form and
substance satisfactory to the Bank, (b) has executed such credit and related
documentation with and in favor of the Bank as the Bank may request, and (c) for
purposes of Section 2.05, is located outside of the United States."
(ii) The definition of "Availability Period" set forth in such
Section shall be amended by deleting "February 15, 1995" and inserting "December
31, 1995" in lieu thereof.
<PAGE> 2
(iii) The definition of "Final Maturity Date" set forth in such
Section shall be amended in its entirety to read as follows:
"'Final Maturity Date': (a) in respect of any Advances, June
30, 1996; (b) in respect of any commercial letters of credit, June 30, 1996; and
(c) in respect of any standby letters of credit, December 31, 1996."
(b) Section 2.01(b) of the Credit Agreement shall be amended in
its entirety to read as follows:
"(b) Advances hereunder may be made in (i) dollars ("Dollar
Advances"), to the Borrower and Acceptable Subsidiaries, (ii) in a lawful
currency other than dollars which is freely transferable and convertible into
dollars and is traded in the offshore interbank currency markets at the time of
the Advance (an "Offshore Currency") ("Offshore Currency Advances"), to the
Borrower and Acceptable Subsidiaries, or (iii) in a lawful currency other than
dollars which is available at a branch or affiliate of the Bank located in a
country other than the United States and is the legal tender of that country
where the branch or affiliate is located (a "Local Currency") ("Local Currency
Advances"), to Acceptable Subsidiaries located outside of the United States."
(c) Section 2.02(b) of the Credit Agreement shall be amended by
deleting "0.875%" and inserting "0.75%" in lieu thereof.
(d) Section 2.02(c) of the Credit Agreement shall be amended by
deleting "0.875%" and inserting "0.75%" in lieu thereof.
(e) Section 2.04(c) of the Credit Agreement shall be amended by
(i) deleting "0.875%" and inserting "0.75%" in lieu thereof, and (ii) deleting
".0625%" and inserting "0.5%" in lieu thereof.
(f) Section 2.05 of the Credit Agreement shall be amended and
restated in its entirety as follows:
"2.05 Local Currency Advances. (a) From time to time during the
Availability Period, the Bank, through any Offshore Credit Provider may, in its
sole discretion, make Local Currency Advances to Acceptable Subsidiaries.
(b) Neither the Bank nor any Offshore Credit Provider shall
have any obligation to make any Local Currency Advance unless the following
conditions are satisfied:
(i) the Bank, the Offshore Credit Provider and the relevant
Acceptable Subsidiary agree, at the time of such
2
<PAGE> 3
Acceptable Subsidiary's request for a Local Currency Advance, on the currency,
the amount, the principal payment date(s), the interest rate and payment
date(s), the prepayment and overdue payment terms, and the reserve, tax and
other material provisions for such Advance; and
(ii) The Acceptable Subsidiary and the Borrower shall
execute such additional documentation as the Bank or such Offshore Credit
Provider may require relating to each Local Currency Advance."
(g) Section 2.07 of the Credit Agreement shall be amended and
restated in its entirety as follows:
"2.07 Commitment Fee. The Borrower shall pay to the Bank a
commitment fee at the rate of 0.20% per annum on the average daily unused
portion of the credit provided under this Agreement. For purposes of computing
the unused portion, the L/C Outstanding Amount shall be deemed to be usage. The
commitment fee shall be computed on a calendar quarter basis, except for the
first period which shall commence on February 15, 1995, and end on March 31,
1995, and the last period which shall end on the last day of the Availability
Period. The commitment fee shall be payable in arrears on March 31, 1995, on the
last day of each successive calendar quarter thereafter, and on the last day of
the Availability Period."
(h) Section 7.02 of the Credit Agreement shall be amended by
deleting "$145,000,000" and inserting "$215,000,000" in lieu thereof.
(i) Section 7.03 of the Credit Agreement shall be amended and
restated in its entirety as follows:
"7.03 Quick Ratio. The Borrower shall not permit as of the last
day of any fiscal quarter on a consolidated basis, "A" to be less than 1.25
times "B". For purposes of this Section, "A" means the sum of cash, short-term
cash investments, marketable securities not classified as long-term investments
and accounts receivable, and "B" means current liabilities.
(j) Section 7.05 of the Credit Agreement shall be amended by
deleting the word "The" at the beginning thereof and inserting the words "From
and after January 1, 1995, the " in lieu thereof.
3. Representations and Warranties. The Borrower hereby represents and
warrants to the Bank as follows:
(a) No Default or Event of Default has occurred and is
continuing.
3
<PAGE> 4
(b) The execution, delivery and performance by the Borrower of
this Amendment have been duly authorized by all necessary corporate and other
action and do not and will not require any registration with, consent or
approval of, notice to or action by, any person (including any governmental
authority) in order to be effective and enforceable. The Credit Agreement as
amended by this Amendment constitutes the legal, valid and binding obligations
of the Borrower, enforceable against it in accordance with its respective terms,
without defense, counterclaim or offset.
(c) All representations and warranties of the Borrower
contained in the Credit Agreement are true and correct.
(d) The Borrower is entering into this Amendment on the basis
of its own investigation and for its own reasons, without reliance upon the Bank
or any other person.
4. Effective Date. This Amendment will become effective as of February
15, 1995 (the "Effective Date"), provided that each of the following conditions
precedent has been satisfied:
(a) The Bank has received from the Borrower a duly executed
original of this Amendment.
(b) The Bank has received from the Borrower a copy of a
resolution passed by the board of directors of such corporation, certified by
the Secretary or an Assistant Secretary of such corporation as being in full
force and effect on the date hereof, authorizing the execution, delivery and
performance of this Amendment.
5. Reservation of Rights. The Borrower acknowledges and agrees that the
execution and delivery by the Bank of this Amendment shall not be deemed to
create a course of dealing or otherwise obligate the Bank to forbear or execute
similar amendments under the same or similar circumstances in the future.
6. Payment of Facility Fee. The Borrower covenants to pay the Bank,
upon receipt of an invoice therefor, for all facility fees payable under Section
2.07 of the Credit Agreement (without giving effect to this Amendment) accrued
and unpaid through the Effective Date.
7. Miscellaneous.
(a) Except as herein expressly amended, all terms, covenants
and provisions of the Credit Agreement are and shall remain in full force and
effect and all references therein to such Credit Agreement shall henceforth
refer to the Credit Agreement as amended by this Amendment. This Amendment shall
be deemed incorporated into, and a part of, the Credit Agreement.
4
<PAGE> 5
(b) This Amendment shall be binding upon and inure to the
benefit of the parties hereto and thereto and their respective successors and
assigns. No third party beneficiaries are intended in connection with this
Amendment.
(c) This Amendment shall be governed by and construed in
accordance with the law of the State of California.
(d) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
(e) This Amendment, together with the Credit Agreement,
contains the entire and exclusive agreement of the parties hereto with reference
to the matters discussed herein and therein. This Amendment supersedes all prior
drafts and communications with respect thereto. This Amendment may not be
amended or modified except in writing executed by both of the parties hereto.
(f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment or the
Credit Agreement, respectively.
(g) Borrower covenants to pay to or reimburse the Bank, upon
demand, for all costs and expenses (including allocated costs of in-house
counsel) incurred in connection with the development, preparation, negotiation,
execution and delivery of this Amendment.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Amendment as of the date first above written.
KLA INSTRUMENTS CORPORATION
By: /s/ Christopher Stoddart
---------------------------
Title: Treasurer
------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Stephen L. Parry
---------------------------
Title: Vice President
6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF OPERATIONS, THE CONSOLIDATED BALANCE SHEET AND THE
ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 59,723
<SECURITIES> 23,596
<RECEIVABLES> 123,914
<ALLOWANCES> 1,401
<INVENTORY> 75,001
<CURRENT-ASSETS> 292,790
<PP&E> 84,833
<DEPRECIATION> 40,661
<TOTAL-ASSETS> 401,308
<CURRENT-LIABILITIES> 123,218
<BONDS> 0
<COMMON> 23
0
0
<OTHER-SE> 269,461
<TOTAL-LIABILITY-AND-EQUITY> 401,308
<SALES> 306,032
<TOTAL-REVENUES> 0
<CGS> 143,178
<TOTAL-COSTS> 143,178
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,725
<INCOME-PRETAX> 52,210
<INCOME-TAX> 17,528
<INCOME-CONTINUING> 34,682
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,682
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 1.44
</TABLE>
