Lam Research Corporation Reports Financial Results for the

Lam Research Corporation Reports Financial Results for the Quarter
Ended September 23, 2012 
FREMONT, CA -- (Marketwire) -- 10/17/12 --  Lam Research Corporation
(NASDAQ: LRCX) 


 
--  Achieved revenue of $906.9 million, up 22.3% from prior quarter, in
    first full quarter of consolidated results with Novellus
--  Reported GAAP gross margin of 36.8%, GAAP operating margin of 1.8% and
    GAAP EPS of $0.02
--  Exceeded earnings guidance across multiple non-GAAP metrics: gross
    margin of 44.4%, operating margin of 13.0%, EPS of $0.53
--  Delivered targeted progress toward integration and synergies

  
Lam Research Corporation's (NASDAQ: LRCX) highlights for the September
2012 quarter were: 


 
                                                                            
                          Lam Research Corporation                          
       Financial Highlights for the Quarter Ended September 23, 2012        
           (in thousands, except per share data and percentages)            
                                                                            
                                                   U.S. GAAP      Non-GAAP  
                                                  -----------   ----------- 
                                                                            
Revenue:                                          $   906,888   $   906,888 
                                                                            
Operating Margin:                                         1.8%         13.0%
                                                                            
Net Income:                                       $     2,768   $    97,013 
                                                                            
Diluted EPS:                                      $      0.02   $      0.53 

 
Lam Research Corporation today announced financial results for the
quarter ended September 23, 2012. Revenue for the period was $906.9
million, gross margin was $333.9 million, or 36.8%, operating
expenses were $317.2 million, and net income was $2.8 million, or
$0.02 per diluted share, compared to revenue of $741.8 million, gross
margin of $298.2 mi
llion, or 40.2%, operating expenses of $265.5
million, and net income of $18.1 million, or $0.13 per diluted share,
for the June 2012 quarter. Shipments for the September 2012 quarter
were $935 million compared to $816 million during the June 2012
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 both the September 2012 and June 2012
quarters exclude costs associated with acquisition-related inventory
fair value impact, amortization related to intangible assets acquired
in the Novellus transaction, certain acquisition and
integration-related costs, the amortization of convertible note
discounts, and rationalization of certain product configurations. See
"Use of Non-GAAP Financial Measures" below for additional
information. 
Non-GAAP net income was $97.0 million, or $0.53 per diluted share, in
the September 2012 quarter compared to non-GAAP net income of $80.9
million, or $0.60 per diluted share, for the June 2012 quarter.
Non-GAAP gross margin for the September 2012 quarter was $402.3
million, or 44.4%, compared to non-GAAP gross margin of $312.7
million, or 42.1%, for the June 2012 quarter. Gross margin
performance reflected solid execution combined with more favorable
customer and product mix. Non-GAAP operating expenses for the
September 2012 quarter increased to $284.3 million compared with the
June quarter of $214.8 million primarily reflecting a full quarter of
post-acquisition activity as a combined company. 
"Despite a more uncertain industry environment, Lam Research achieved
strong financial performance in the September quarter, delivering
gross margin and operating profits above the high end of our
guidance," said Martin Anstice, Lam's president and chief executive
officer. "Our results reflect strong operational execution and solid
progress towards the synergy targets that we've outlined. While the
near-term outlook for semiconductor equipment demand has softened, we
are committed to achieving the appropriate balance between cost
management and continued investment in next-generation solutions for
our customers. We believe that these activities will drive profitable
growth for Lam when industry conditions improve," Anstice concluded. 
Cash and cash equivalents, short-term investments and restricted cash
and investments balances decreased to $2.9 billion at the end of the
September 2012 quarter, compared to $3.0 billion at the end of the
June 2012 quarter. This decrease was primarily the result of stock
repurchases during the quarter, offset by cash flows from operating
activities, which were approximately $249 million during the
September 2012 quarter. Deferred revenue and deferred profit balances
at the end of the September 2012 quarter increased to $363.5 million
and $208.1 million, respectively, as compared to $335.4 million and
$164.8 million, respectively, at the end of the June 2012 quarter.
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 $20.7 million as of
September 23, 2012. 
The geographic distribution of shipments and revenue during the
September 2012 quarter is shown in the following table: 


 
                                                                            
                      Region                       Shipments      Revenue   
                                                  -----------   ----------- 
North America                                              18%           18%
Europe                                                      7%            7%
Japan                                                       8%            8%
Korea                                                      16%           24%
Taiwan                                                     29%           28%
Asia Pacific                                               22%           15%

 
Use of Non-GAAP Fi
nancial Measures 
Management uses non-GAAP gross margin, 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. 
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, industry conditions, our ability to make progress towards
our synergy targets for the Novellus transaction, our ability to
achieve the appropriate balance between cost management and continued
investment in next-generation solutions for our customers, and our
ability to realize profitable growth for Lam. 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 24, 2012. 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 supplier of innovative wafer
fabrication equipment and services to the worldwide semiconductor
industry. For more than 30 years, the Company has driven continuous
improvements in chip performance, power consumption, and cost,
contributing to the global proliferation of smartphones, computers,
tablets, and other electronic products. Lam Research has been the
leading supplier of high-throughput plasma etch equipment for more
than a decade and expanded its product offerings in 2008 to include
single-wafer clean systems. The Company added thin-film deposition
and wafer surface preparation technologies to its product portfolio
in 2012 with the acquisition of Novellus Systems, Inc. Headquartered
in Fremont, Calif., Lam Research maintains a global network of
service facilities throughout North America, Asia, and Europe to
rapidly meet the needs of its global customer base. It is an S&P 500
(R) company and NASDAQ-100 (R) company whose common stock trades on
the NASDAQ Global Select Market SM under the symbol LRCX. For more
information, please visit http://www.lamresearch.com. 
Consolidated Financial Tables Follow 


 
                                                                            
                          LAM RESEARCH CORPORATION                          
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
           (in thousands, except per share data and percentages)            
                                (unaudited)                                 
                                                                            
                                              Three Months Ended            
                                   ---------------------------------------- 
                                   September 23,   June 24,    September 25,    
 
                                       2012          2012          2011     
                                   ------------  ------------  ------------ 
Revenue                            $    906,888  $    741,814  $    680,436 
Cost of goods sold                      573,002       443,601       396,553 
                                   ------------  ------------  ------------ 
    Gross margin                        333,886       298,213       283,883 
    Gross margin as a percent of                                            
     revenue                               36.8%         40.2%         41.7%
Research and development                163,311       124,528       102,559 
Selling, general and                                                        
 administrative                         153,863       141,015        80,200 
Restructuring and impairments                 -             -         1,725 
                                   ------------  ------------  ------------ 
    Total operating expenses            317,174       265,543       184,484 
                                   ------------  ------------  ------------ 
    Operating income                     16,712        32,670        99,399 
    Operating margin as a percent                                           
     of revenue                             1.8%          4.4%         14.6%
Other income (expense), net              (9,938)       (9,889)      (12,073)
                                   ------------  ------------  ------------ 
    Income before income taxes            6,774        22,781        87,326 
Income tax expense                        4,006         4,712        15,488 
                                   ------------  ------------  ------------ 
    Net income                     $      2,768  $     18,069  $     71,838 
                                   ============  ============  ============ 
Net income per share:                                                       
  Basic net income per share       $       0.02  $       0.13  $       0.
58 
                                   ============  ============  ============ 
  Diluted net income per share     $       0.02  $       0.13  $       0.58 
                                   ============  ============  ============ 
Number of shares used in per share                                          
 calculations:                                                              
  Basic                                 179,928       133,997       123,130 
                                   ============  ============  ============ 
  Diluted                               181,926       135,842       124,049 
                                   ============  ============  ============ 
                                                                            
                                                                            
                                                                            
                          LAM RESEARCH CORPORATION                          
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                               (in thousands)                               
                                                                            
                                                 September 23,    June 24,  
                                                      2012          2012    
                                                 ------------- -------------
                                                  (unaudited)       (1)     
ASSETS                                                                      
Cash and cash equivalents                        $   1,411,466 $   1,564,752
Short-term investments                               1,312,767     1,297,931
Accounts receivable, net                               640,217       765,818
Inventories                                            567,920       632,853
Deferred income taxes                                  136,556        47,782
Other current assets                                   100,490       105,973
                                                 ------------- -------------
  Total current assets                               4,169,416     4,415,109
Property and equipment, net                            593,202       584,596
Restricted cash and investments                        166,196       166,335
Goodwill and intangible assets                       2,642,770     2,686,730
Other assets                                           152,762       151,882
                                                 ------------- -------------
  Total assets                                   $   7,724,346 $   8,004,652
                                                 ============= =============
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
Current liabilities                              $     854,257 $   1,426,928
                         
                        ------------- -------------
                                                                            
Long-term debt, convertible notes, and capital                              
 leases                                          $   1,278,792 $     761,783
Income taxes payable                                   282,844       274,240
Other long-term liabilities                            296,807       219,577
                                                 ------------- -------------
  Total liabilities                                  2,712,700     2,682,528
                                                 ============= =============
                                                                            
Senior convertible notes                                     -       190,343
Stockholders' equity                                 5,011,646     5,131,781
                                                 ------------- -------------
  Total liabilities and stockholders' equity     $   7,724,346 $   8,004,652
                                                 ============= =============
                                                                            
(1) Derived from audited financial statements                               
                                                                            
                                                                            
                                                                            
                          LAM RESEARCH CORPORATION                          
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS               
                               (in thousands)                               
                                (unaudited)                                 
                                                                            
                                              Three Months Ended            
                                   ---------------------------------------- 
                                   September 23,   June 24,    September 25,    
 
                                       2012          2012          2011     
                                   ------------  ------------  ------------ 
CASH FLOWS FROM OPERATING                                                   
 ACTIVITIES:                                                                
Net income                         $      2,768  $     18,069  $     71,838 
Adjustments to reconcile net                                                
 income to net cash provided by                                             
 operating activities:                                                      
  Depreciation and amortization          74,816        34,576        21,360 
  Deferred income taxes                 (12,017)       39,356             - 
  Restructuring and impairment                                              
   charges, net                               -             -         1,725 
  Equity-based compensation                                                 
   expense                               24,414        29,174        17,744 
  Income tax benefit on equity-                                             
   based compensation plans                   -         1,429           659 
  Excess tax benefit on equity-                                             
   based compensation plans                   -          (394)       (1,951)
  Amortization of convertible note                                          
   discount                               7,752         7,014         6,593 
  Impairment of investment                    -             -         1,724 
  Other, net                              8,406         7,206         1,423 
  Changes in operating assets and                                           
   liabilities:                         143,123       (39,715)      (34,215)
                                   ------------  -----------
-  ------------ 
    Net cash provided by operating                                          
     activities                         249,262        96,715        86,900 
                                   ------------  ------------  ------------ 
                                                                            
CASH FLOWS FROM INVESTING                                                   
 ACTIVITIES:                                                                
Capital expenditures and                                                    
 intangible assets                      (43,965)      (36,880)      (15,732)
Cash acquired in business                                                   
 acquisition                                  -       418,681             - 
Net sales/maturities (purchases)                                            
 of available-for-sale securities       (16,638)      329,689       (85,259)
Transfer of restricted cash and                                             
 investments                                146           (29)           17 
                                   ------------  ------------  ------------ 
    Net cash provided by (used                                              
     for) investing activities          (60,457)      711,461      (100,974)
                                   ------------  ------------  ------------ 
                                                                            
CASH FLOWS FROM FINANCING                                                   
 ACTIVITIES:                                                                
Principal payments on long-term                                             
 debt and capital lease                                                     
 obligations                               (665)       (1,101)       (1,564)
Excess tax benefit on equity-based                                          
 compensation plans                           -           394         1,951 
Net cash received in settlement                                             
 (paid in advance for) stock                                                
 repurchase contracts                         -             -       (75,000)
Treasury stock purchases               (355,079)     (661,059)      (72,053)
Reissuances of treasury stock                                               
 related to employee stock                                                  
 purchase plan                            9,925         8,765         8,858 
Proceeds from issuance of common                                            
 stock                                      951             -           164 
                                   ------------  ------------  ------------ 
    Net cash used for financing                                             
     activities                        (344,868)     (653,001)     (137,644)
                                   ------------  ------------  ------------ 
Effect of exchange rate changes on                                          
 cash                                     2,777          (690)       (1,096)
Net increase (decrease) in cash                                             
 and cash equivalents                  (153,286)      154,485      (152,814)
Cash and cash equivalents at                                                
 beginning of period                  1,564,752     1,410,267     1,492,132 
                                   ------------  ------------  ------------ 
Cash and cash equivalents at end                                            
 of period                         $  1,411,466  $  1,564,752  $  1,339,318 
                                   ============  ============  ============ 
                                                                            
                                                                            
                                                                            
       Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income        
                   (in thousands, except per share data)                    
                                (unaudited)                                 
                                                                            
                                                Three Months   Three Months 
                                                   Ended          Ended     
                                               -------------  ------------- 
                                               September 23,     June 24,   
                                                    2012           2012     
                                               -------------  ------------- 
U.S. GAAP net income                           $       2,768  $      18,069 
Pre-tax non-GAAP items:                                                     
  Costs associated with rationalization of                                  
   certain product configuration
s - cost of                                 
   goods sold                                          3,210          4,045 
  Amortization related to intangible assets                                 
   acquired in Novellus transaction - cost of                               
   goods sold                                         20,715          4,540 
  Acquisition-related inventory fair value                                  
   impact - cost of goods sold                        43,842          5,864 
  Integration costs - cost of goods sold                 694              - 
  Acquisition-related costs - operating                                     
   expenses                                                -         37,374 
  Integration costs - operating expenses              13,500          7,293 
  Amortization related to intangible assets                                 
   acquired in Novellus transaction -                                       
   operating expenses                                 19,418          4,256 
  Costs associated with rationalization of                                  
   certain product configurations - operating                               
   expenses                                                -          1,850 
  Amortization of convertible note discount,                                
   Lam notes - other income (expense), net             6,910          6,830 
  Amortization of convertible note discount,                                
   Novellus assumed notes - other income                                    
   (expense), net                                        842            184 
  Acquisition-related costs - other income                                  
   (expense), net                                          -          2,300 
Net tax benefit on non-GAAP items                    (14,886)       (11,732)
                                               -------------  ------------- 
Non-GAAP net income                            $      97,013  $      80,873 
                                               =============  ============= 
Non-GAAP net income per diluted share          $        0.53  $        0.60 
                                               =============  ============= 
Number of shares used for diluted per share                                 
 calculation                                         181,926        135,842 
                                                                            
                                                                            
                                                                            
 Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating 
  Income to Non-GAAP Gross Margin, Operating Expenses and Operating Income  
                     (in thousands, except percentages)                     
                                (unaudited)                                 
                                                                            
                                                Three Months   Three Months 
                                                   Ended          Ended     
                                               -------------  ------------- 
                                               September 23,     June 24,   
                                                    2012           2012     
                                               -------------  ------------- 
U.S. GAAP gross margin                         $     333,886  $     298,213 
Pre-tax non-GAAP items:                                                     
  Costs associated with rationalization of                                  
   certain product configurations - cost of                                 
   goods sold                                          3,210          4,045 
  Amortization related to intangible assets                                 
   acquired in Novellus transaction - cost of                           
    
   goods sold                                         20,715          4,540 
  Acquisition-related inventory fair value                                  
   impact - cost of goods sold                        43,842          5,864 
  Integration costs - cost of goods sold                 694              - 
                                               -------------  ------------- 
Non-GAAP gross margin                          $     402,347  $     312,662 
                                               =============  ============= 
U.S. GAAP gross margin as a percentage of                                   
 revenue                                                36.8%          40.2%
Non-GAAP gross margin as a percentage of                                    
 revenue                                                44.4%          42.1%
U.S. GAAP operating expenses                   $     317,174  $     265,543 
Pre-tax non-GAAP items:                                                     
  Acquisition-related costs - operating                                     
   expenses                                                -        (37,374)
  Integration costs - operating expenses             (13,500)        (7,293)
  Amortization related to intangible assets                                 
   acquired in Novellus transaction -                                       
   operating expenses                                (19,418)        (4,256)
  Costs associated with rationalization of                                  
   certain product configurations - operating                               
   expenses                                                -         (1,850)
                                               -------------  ------------- 
Non-GAAP operating expenses                    $     284,256  $     214,770 
                                               =============  ============= 
Non-GAAP operating income                      $     118,091  $      97,892 
                                               =============  ============= 
Non-GAAP operating margin as a percent of                                   
 revenue                                                13.0%          13.2%

  
Lam Research Corporation Contact:
Shanye Hudson
Investor Relations
phone: 510-572-4589
e-mail: shanye.hudson@lamresearch.com 
Ed Rebello
Corporate Communications
phone: 510-572-6603
e-mail: edward.rebello@lamresearch.com 
 
 
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