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KLA-Tencor to trim another 10% of workforce, cut other expenses

30 March 2009 | By Tom Cheyney | News > Wafer Processing

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kla_tencor_wallaceIn yet another move indicative of the global recession's impact on the semiconductor manufacturing sector, KLA-Tencor said it will trim its global workforce by another 10% and implement several other cost-cutting measures. The action comes on the heels of an earlier round of layoffs announced in November.

In addition to the workforce reduction, the company said it will consolidate several of its facilities, implement additional forced time off, and reduce employee stock purchase plan benefits over the next few quarters. Despite the cuts, KLA-Tencor reiterated its commitment to maintain a healthy R&D program and sustain its strategic business focus on providing superior process control technologies to its customers.

"Although we have been successful in our efforts to reduce operating costs in late 2008 and early 2009, we must now further reduce our operating expenses in order to respond to the current demand environment," said Rick Wallace, CEO of KLA-Tencor (pictured at left). "Today’s reduction in force is an extremely difficult decision as we realize the effect this action will have on both impacted and remaining employees."

The company said that its cost-saving actions are designed to help reduce its quarterly non-GAAP operating expenses to a range of US$140 million-US$145 million per quarter by the end of calendar year 2009, adjusted from the company’s previously announced target of US$165 million-US$170 million per quarter.

The company estimates that, in connection with the latest cost-reduction activities, it will incur charges in the US$20 million-US$30 million range, including US$18 million-US$22 million related to estimated severance costs associated with the workforce reduction, with the rest of the charges related to facilities consolidation.

A large portion of these restructuring charges will be recorded in KLA-Tencor's fiscal quarter ending March 31. The company said that the latest restructuring measures will result in approximately US$18 million-US$22 million in cash payments (reflecting the estimated severance costs associated with the restructuring), which it believes will be paid out by the end of calendar year 2009. The remainder will be a non-cash accounting-related charge associated with facilities consolidations.

The company anticipates incurring additional restructuring charges, which will likely include severance costs, lease termination charges, other exit costs associated with facility site consolidations or closures, and other expenses in connection with the cost reduction actions through the remainder of 2009, but said it cannot estimate the aggregate amount of these additional charges.

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