SOURCE: Lam Research Corporation

Lam Research Corporation

July 27, 2011 16:45 ET

Lam Research Corporation Announces Financial Results for the Quarter Ended June 26, 2011

FREMONT, CA--(Marketwire - Jul 27, 2011) - Lam Research Corporation's (NASDAQ: LRCX) highlights for the June 2011 quarter were:

Lam Research Corporation
Financial Highlights for the Quarter Ended June 26, 2011
(in thousands, except per share data and percentages)
U.S. GAAP Non-GAAP
• Revenue: $ 752,018 $ 752,018
• Operating Margin: 18.9 % 21.1 %
• Net Income: $ 125,928 $ 142,289
• Diluted EPS: $ 1.01 $ 1.14

Lam Research Corporation today announced financial results for the quarter ended June 26, 2011. Revenue for the period was $752.0 million, gross margin was $338.5 million (45.0%), and net income was $125.9 million, or $1.01 per diluted share, compared to revenue of $809.1 million, gross margin of $374.0 million (46.2%), and net income of $182.2 million, or $1.45 per diluted share, for the March 2011 quarter. Shipments for the June 2011 quarter were $793 million compared to $813 million during the March 2011 quarter.

In addition to U.S. Generally Accepted Accounting Principles (GAAP) results, this commentary contains non-GAAP financial measures. The Company's non-GAAP results for the June 2011 quarter exclude certain costs for restructuring and impairments, the non-cash portion of convertible debt interest expense, and tax expense associated with legal entity restructuring. There were no adjustments to U.S. GAAP results to determine "non-GAAP" results for the March 2011 quarter. Management uses non-GAAP operating income, operating expenses, operating margin, net income, and net income per diluted share to evaluate the Company's operating and financial results. The Company believes the presentation of non-GAAP results is useful to investors for analyzing business trends and comparing performance to prior periods, along with enhancing the investors' ability to view the Company's results from management's perspective. Tables presenting reconciliations of non-GAAP results to U.S. GAAP results are included at the end of this press release and on the Company's web site at http://investor.lamresearch.com.

Non-GAAP net income was $142.3 million, or $1.14 per diluted share, in the June 2011 quarter compared to non-GAAP net income of $182.2 million, or $1.45 per diluted share, for the March 2011 quarter. Gross margin for the June 2011 quarter was $338.5 million or 45.0%, compared to gross margin of $374.0 million or 46.2%, for the March 2011 quarter. The sequential decrease in gross margin was primarily due to lower factory and field utilization as a result of the decline in volume from the March to the June quarter. Non-GAAP operating expenses for the June 2011 quarter were $179.5 million compared with the March 2011 quarter of $177.0 million and reflect our continued investments in strategic development activities.

The geographic distribution of shipments and revenue during the June 2011 quarter is shown in the following table:

Region Shipments Revenue
North America 15 % 15 %
Europe 12 % 11 %
Japan 19 % 15 %
Korea 18 % 21 %
Taiwan 17 % 21 %
Asia Pacific 19 % 17 %

Cash and cash equivalents, short-term investments and restricted cash and investments balances were $2.3 billion at the end of the June 2011 quarter, compared to $1.4 billion at the end of the March 2011 quarter. Cash flows from operating activities were approximately $198.1 million or 26% of revenue during the June 2011 quarter. Additionally, during the quarter the Company completed a convertible debt financing and generated $835.5 million in net cash, which includes proceeds from warrant sales, offset by issuance fees and purchase of a convertible note hedge. Deferred revenue and deferred profit balances at the end of the June 2011 quarter were $257.6 million and $157.2 million, respectively. Lam's deferred revenue balance does not include shipments to Japanese customers, to whom title does not transfer until customer acceptance. Shipments to Japanese customers are classified as inventory at cost until the time of acceptance. The anticipated future revenue from shipments to Japanese customers was approximately $70.4 million as of June 26, 2011.

"Lam delivered solid operating performance and financial results for the June quarter," said Steve Newberry, Lam's chief executive officer and vice chairman. "We are seeing significant near term declines in wafer fab equipment spending, and as result our September quarter shipments, revenues and earnings per share will be well below our June quarter results. Even in this environment, we continue to execute to our strategic priorities and make key R&D investments that position the company for future growth opportunities. Longer term, we continue to believe that on a rolling average basis, twelve-month wafer fab equipment spending should be healthy over the next several years and our outstanding product portfolio, supported by our solid balance sheet and strong cash generation capabilities enable the company to deliver increased value to our customers and our shareholders in that environment," Newberry concluded.

Caution Regarding Forward-Looking Statements
Statements made in this press release that are not statements of historical fact are forward-looking statements and are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate, but are not limited, to the anticipated revenue from shipments to Japanese customers; our future commitment to our current strategic priorities; the return on our R&D investments, the market success of our product portfolio, our cash generation capability, future spending in the wafer fab equipment sector, and our ability to meet customers' future technology needs and our future market position. Some factors that may affect these forward-looking statements include: business conditions in the consumer electronics industry, the semiconductor industry and the overall economy; the strength of the financial performance of our existing and prospective customers; the introduction of new and innovative technologies; the occurrence and pace of technology transitions and conversions; the actions of our competitors, consumers, semiconductor companies and key suppliers and subcontractors; and the success of research and development and sales and marketing programs. These forward-looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed by us with the Securities and Exchange Commission, including specifically our report on Form 10-K for the year ended June 27, 2010 and the reports on Form 10-Q for the three months ended September 26, 2010, December 26, 2010, and March 27, 2011. These uncertainties and changes could cause actual results to vary from expectations. The Company undertakes no obligation to update the information or statements made in this press release.

Lam Research Corporation is a major provider of wafer fabrication equipment and services to the world's semiconductor industry. Lam's common stock trades on The NASDAQ Global Select Market(SM) under the symbol LRCX. Lam is a NASDAQ-100® company. For more information, visit www.lamresearch.com.

Consolidated Financial Tables Follow

LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
Three Months Ended Twelve Months Ended
June 26, March 27, June 27, June 26, June 27,
2011 2011 2010 2011 2010
(unaudited) (unaudited) (unaudited) (unaudited) (1)
Total revenue $ 752,018 $ 809,087 $ 695,289 $ 3,237,693 $ 2,133,776
Cost of goods sold 413,564 435,068 370,409 1,740,461 1,166,219
Cost of goods sold - restructuring and impairments - - 3,438 - 3,438
Cost of goods sold - 409A expense - - - - (5,816 )
Total costs of goods sold 413,564 435,068 373,847 1,740,461 1,163,841
Gross margin 338,454 374,019 321,442 1,497,232 969,935
Gross margin as a percent of revenue 45.0 % 46.2 % 46.2 % 46.2 % 45.5 %
Research and development 99,583 96,880 85,644 373,293 320,859
Selling, general and administrative 79,938 80,143 66,779 308,075 240,942
Restructuring and impairments 16,742 - 13,302 11,579 21,314
409A expense - - - - (38,590 )
Total operating expenses 196,263 177,023 165,725 692,947 544,525
Operating income 142,191 196,996 155,717 804,285 425,410
Operating margin as a percent of revenue 18.9 % 24.3 % 22.4 % 24.8 % 19.9 %
Other income (expense), net (5,131 ) 1,663 3,541 (3,409 ) 4,731
Income before income taxes 137,060 198,659 159,258 800,876 430,141
Income tax expense 11,132 16,419 19,261 77,128 83,472
Net income $ 125,928 $ 182,240 $ 139,997 $ 723,748 $ 346,669
Net income per share:
Basic net income per share $ 1.02 $ 1.47 $ 1.11 $ 5.86 $ 2.73
Diluted net income per share $ 1.01 $ 1.45 $ 1.10 $ 5.79 $ 2.71
Number of shares used in per share calculations:
Basic 123,863 123,674 126,339 123,529 126,933
Diluted 125,086 125,293 127,786 125,019 128,126

1 Derived from audited financial statements

LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 26, March 27, June 27,
2011 2011 2010
(unaudited) (unaudited) (1)
ASSETS
Cash and cash equivalents $ 1,492,132 $ 942,710 $ 545,767
Short-term investments 630,115 312,879 280,690
Accounts receivable, net 590,568 637,795 499,890
Inventories 396,607 355,734 318,479
Deferred income taxes 78,435 45,934 46,158
Other current assets 88,935 77,722 65,677
Total current assets 3,276,792 2,372,774 1,756,661
Property and equipment, net 270,458 251,954 200,336
Restricted cash and investments 165,256 165,248 165,234
Deferred income taxes 3,892 29,578 26,218
Goodwill and intangible assets 216,616 221,146 236,906
Other assets 124,380 107,795 102,037
Total assets $ 4,057,394 $ 3,148,495 $ 2,487,392
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 684,286 $ 667,391 $ 558,657
Long-term debt and capital leases $ 738,488 $ 15,949 $ 17,645
Income taxes payable 113,582 116,911 110,462
Other long-term liabilities 51,193 25,088 32,493
Stockholders' equity 2,469,845 2,323,156 1,768,135
Total liabilities and stockholders' equity $ 4,057,394 $ 3,148,495 $ 2,487,392

1 Derived from audited financial statements

LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended Twelve Months Ended
June 26, March 27, June 27, June 26, June 27,
2011 2011 2010 2011 2010
(unaudited) (unaudited) (unaudited) (unaudited) (1)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 125,928 $ 182,240 $ 139,997 $ 723,748 $ 346,669
Adjustments to reconcile net income to net cash provided
by (used for) operating activities:
Depreciation and amortization 19,972 18,176 17,664 74,759 71,401
Deferred income taxes (6,166 ) (733 ) (8,633 ) (10,721 ) 13,718
Restructuring charges, net 16,742 - 16,740 11,579 24,752
Non-cash interest expense 3,554 - - 3,554 -
Equity-based compensation expense 14,788 12,456 12,329 53,012 50,463
Income tax benefit on equity-based compensation plans 9,283 15,327 9,944 28,775 10,635
Excess tax benefit on equity-based compensation plans (8,184 ) (11,878 ) (9,261 ) (23,290 ) (10,234 )
Other, net 477 746 648 (2,341 ) 3,190
Changes in operating asset and liabilities: 21,714 25,259 (13,995 ) 21,953 (159,881 )
Net cash provided by operating activities 198,108 241,593 165,433 881,028 350,713
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets (34,571 ) (35,769 ) (12,042 ) (127,495 ) (35,590 )
Net sales/maturities (purchases) of available-for-sale securities (316,789 ) (11,068 ) (63,958 ) (353,523 ) (77,987 )
Purchase of other investments - (417 ) (1,223 ) (417 ) (2,184 )
Proceeds from sale of assets - - - 1,544 -
Transfer of restricted cash and investments (8 ) (4 ) 50 (22 ) 13,205
Other - - (800 ) - (800 )
Net cash used for investing activities (351,368 ) (47,258 ) (77,973 ) (479,913 ) (103,356 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt and capital lease obligations (81 ) (1,038 ) (616 ) (4,530 ) (21,040 )
Net proceeds from issuance of long-term debt 882,831 - - 882,831 336
Proceeds from sale of warrants 133,830 - - 133,830 -
Purchase of convertible note hedge (181,125 ) - - (181,125 ) -
Excess tax benefit on equity-based compensation plans 8,184 11,878 9,261 23,290 10,234
Treasury stock purchases (53,753 ) (8,617 ) (17,860 ) (211,316 ) (93,032 )
Net cash received in settlement of (paid in advance for) stock repurchase contracts (99,589 ) - - (149,589 ) -
Reissuances of treasury stock 7,518 6,521 6,173 21,194 17,452
Proceeds from issuance of common stock 2,179 5,980 5,563 12,401 13,386
Net cash provided by (used for) financing activities 699,994 14,724 2,521 526,986 (72,664 )
Effect of exchange rate changes on cash 2,688 4,591 (5,583 ) 18,264 (3,093 )
Net increase in cash and cash equivalents 549,422 213,650 84,398 946,365 171,600
Cash and cash equivalents at beginning of period 942,710 729,060 461,369 545,767 374,167
Cash and cash equivalents at end of period $ 1,492,132 $ 942,710 $ 545,767 $ 1,492,132 $ 545,767

1 Derived from audited financial statements

Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(unaudited)
Three Months Ended Three Months Ended
June 26, March 27,
2011 2011
U.S. GAAP net income $ 125,928 $ 182,240
Pre-tax non-GAAP items:
Restructuring and impairments - operating expenses 16,742 -
Non-cash convertible debt interest expense - other income (expense), net 3,554 -
Net tax benefit on non-GAAP items (8,224 ) -
Tax expense associated with legal entity restructuring 4,289 -
Non-GAAP net income $ 142,289 $ 182,240
Non-GAAP net income per diluted share $ 1.14 $ 1.45
Number of shares used for diluted per share calculation 125,086 125,293
Reconciliation of U.S. GAAP Operating Expenses and Operating Income to Non-GAAP Operating Expenses and Operating Income
(in thousands, except percentages)
(unaudited)
Three Months Ended Three Months Ended
June 26, March 27,
2011 2011
U.S. GAAP gross margin $ 338,454 $ 374,019
U.S. GAAP operating expenses $ 196,263 $ 177,023
Pre-tax non-GAAP items:
Restructuring and impairments - operating expenses (16,742 ) -
Non-GAAP operating expenses $ 179,521 $ 177,023
Non-GAAP operating income $ 158,933 $ 196,996
Non-GAAP operating margin as a percent of revenue 21.1 % 24.3 %

1 Derived from audited financial statements

Contact Information

  • Lam Research Corporation Contact:
    Shanye Hudson
    Director, Investor Relations
    phone: 510/572-4589
    e-mail: Email Contact