Lam Research Corporation

Lam Research Corporation Announces Financial Results for the Quarter Ended June 28, 2009

FREMONT, Calif., Jul 29, 2009 (BUSINESS WIRE) -- Lam Research Corporation (NASDAQ: LRCX) highlights for the June 2009 quarter were:

             
            (in thousands, except per share data and percentages)
                                       
         

 

Revenue:

          $ 217,764                
                                       
         

 

Operating Margin:       U.S. GAAP:     -29.9 %       Ongoing:       -21.4 %
                                       
            Net Loss:       U.S. GAAP:   $ (88,490 )       Ongoing:     $ (57,005 )
                                       
            Diluted EPS:       U.S. GAAP:   $ (0.70 )       Ongoing:     $ (0.45 )
                                               

Lam Research Corporation today announced financial results for the quarter ended June 28, 2009. Revenue for the period was $217.8 million, gross margin was $67.8 million and net loss was $(88.5) million, or $(0.70) per diluted share, compared to revenue of $174.4 million, gross margin of $36.5 million and net loss of $(198.4) million, or $(1.58) per diluted share, for the March 2009 quarter. Shipments for the June 2009 quarter were $246 million compared to $159 million during the March 2009 quarter.

The Company's ongoing results for the June 2009 quarter exclude certain costs for previously announced restructuring activities and asset impairments, a legal judgment, a non-cash goodwill impairment charge, certain one-time contract termination costs, a net tax expense for valuation allowance, net tax expense on resolution of certain tax matters, and interest and legal fees related to Internal Revenue Code Section 409A tax expenses. The Company's ongoing results for the March 2009 quarter excluded certain costs for previously announced restructuring activities and asset impairments, a non-cash goodwill impairment charge, a net tax expense for a change in state tax law, a net tax expense and an exchange rate gain associated with the Company's accelerated tax planning strategy, an investment impairment, and interest on Internal Revenue Code Section 409A tax expenses. Management uses the presentation of ongoing gross margin, ongoing operating expenses, ongoing operating loss, ongoing operating margin, ongoing net loss, and ongoing net loss per diluted share to evaluate the Company's operating and financial results. The Company believes the presentation of ongoing results is useful to investors for analyzing ongoing business trends and comparing performance to prior periods, and enhances the investor's ability to view the Company's results from management's perspective. A table presenting a reconciliation of ongoing results to results under U.S. GAAP is included at the end of this press release and on the Company's web site.

Ongoing net loss was $(57.0) million, or $(0.45) per diluted share in the June 2009 quarter compared to ongoing net loss of $(89.8) million, or $(0.71) per diluted share, for the March 2009 quarter. Ongoing gross margin for the June 2009 quarter was $67.8 million or 31.1%, compared to ongoing gross margin of $46.7 million, or 26.8%, for the March 2009 quarter. The sequential increase in gross margin was primarily due to improved factory and field utilization due to increased business volume. Ongoing operating expenses for the June 2009 quarter decreased to $114.3 million compared with the March 2009 quarter of $128.9 million. This decrease was driven by a full quarter savings in employee-related expenses and other cost reduction measures that were a part of the March 2009 quarter restructuring. In addition, in the March 2009 quarter, the Company recorded accounts receivable reserves for specific distressed customers that did not recur in the June 2009 quarter.

The geographic distribution of shipments and revenue during the June 2009 quarter is shown in the following table:

                       
              Region   Shipments   Revenue
              North America   16%   18%
              Europe   8%   10%
              Japan   17%   17%
              Korea   16%   14%
              Taiwan   30%   29%
              Asia Pacific   13%   12%
                       

Cash and cash equivalents, short-term investments and restricted cash and investments balances were $757.8 million at the end of the June 2009 quarter, compared to $806.4 million at the end of the March 2009 quarter. Cash flows from operating activities were approximately $(58.1) million during the June 2009 quarter. Deferred revenue and deferred profit balances at the end of the June 2009 quarter were $64.7 million and $45.8 million, respectively. Our 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 $13 million as of June 28, 2009.

"Relative to the March quarter, business conditions improved in the June quarter, contributing to Lam's ability to show improved financial results for the quarter. Shipments and revenues increased as a result of customer investments to add wafer starts at the leading edge in both foundry and memory, as well as higher fab utilization contributing to improvement in the customer service business," said Steve Newberry, Lam's president and chief executive officer. "While we are encouraged that our customers have increased spending on equipment, we plan to maintain our focus on cash management while continuing our strategic investments in leading-edge solutions for our customers' current and next-generation wafer fabrication needs," Newberry concluded.

Statements made in this press release which are not statements of historical fact are forward-looking statements and are subject to the safe harbor provisions created by 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, the potential uses of our cash and other assets, our business focus on minimizing cash expenditures and making strategic investments in providing leading-edge solutions, and our projections for future business conditions. Some factors that may affect these forward-looking statements include: difficult business conditions in the semiconductor industry and the overall economy and the efficacy of our plans for reacting to those conditions, changing customer demands, the actions of our competitors, and the challenges presented by the development and marketing of our new products. 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 with the Securities and Exchange Commission, including specifically the report on Form 10-K for the year ended June 29, 2008, and the reports on Form 10-Q for the quarters ended September 28, 2008, December 28, 2008, and March 29, 2009, which 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 MarketSM under the symbol LRCX. Lam is a NASDAQ-100® company. For more information, visit www.lamresearch.com.

 
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
                     
                     
    Three Months Ended   Twelve Months Ended
    June 28,   March 29,   June 29,   June 28,   June 29,
      2009       2009       2008       2009       2008  
    (unaudited)   (unaudited)   (unaudited)   (unaudited)   (1)
Total revenue   $ 217,764     $ 174,412     $ 566,160     $ 1,115,946     $ 2,474,911  
Cost of goods sold     150,007       127,680       318,900       706,219       1,282,494  
Cost of goods sold - restructuring and asset impairments     -       10,217       12,610       20,993       12,610  
Cost of goods sold - 409A expense     -       -       -       -       6,401  
Total cost of goods sold     150,007       137,897       331,510       727,212       1,301,505  
Gross margin     67,757       36,515       234,650       388,734       1,173,406  
Gross margin as a percent of revenue     31.1 %     20.9 %     41.4 %     34.8 %     47.4 %
Research and development     67,491       70,434       86,652       288,269       323,759  
Selling, general and administrative     47,248       58,515       76,994       233,061       287,282  
Goodwill impairment     7,179       89,076       -       96,255       -  
Restructuring and asset impairments     5,396       13,028       6,366       44,513       6,366  
409A expense     982       646       710       3,232       44,494  
Legal judgment     4,647       -       -       4,647       -  
In-process research and development     -       -       -       -       2,074  
Total operating expenses     132,943       231,699       170,722       669,977       663,975  
Operating income (loss)     (65,186 )     (195,184 )     63,928       (281,243 )     509,431  
Operating margin as a percent of revenue     -29.9 %     -111.9 %     11.3 %     -25.2 %     20.6 %
Other income, net     2,869       13,497       10,344       18,150       67,545  
Income (loss) before income taxes     (62,317 )     (181,687 )     74,272       (263,093 )     576,976  
Income tax expense     26,173       16,672       2,094       39,055       137,627  
Net income (loss)   $ (88,490 )   $ (198,359 )   $ 72,178     $ (302,148 )   $ 439,349  
Net income (loss) per share:                    
Basic net income (loss) per share   $ (0.70 )   $ (1.58 )   $ 0.58     $ (2.41 )   $ 3.52  
Diluted net income (loss) per share   $ (0.70 )   $ (1.58 )   $ 0.57     $ (2.41 )   $ 3.47  
Number of shares used in per share calculations:                    
Basic     126,273       125,566       125,046       125,595       124,647  
Diluted     126,273       125,566       126,657       125,595       126,504  
                     
(1) Derived from audited financial statements
 
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
    June 28,   March 29,   June 29,
    2009   2009   2008
    (unaudited)   (unaudited)  

(1)

ASSETS            
Cash and cash equivalents   $ 374,167   $ 374,648   $ 732,537
Short-term investments     205,221     248,500     326,199
Accounts receivable, net     253,585     196,842     412,356
Inventories     233,410     260,667     282,218
Deferred income taxes     69,043     90,541     96,748
Other current assets     60,401     82,273     67,649
Total current assets     1,195,827     1,253,471     1,917,707
Property and equipment, net     215,666     225,864     235,735
Restricted cash and investments     178,439     183,277     146,072
Deferred income taxes     17,007     15,281     19,793
Goodwill and intangible assets     260,787     268,249     403,187
Other assets     84,145     87,340     84,261
Total assets   $ 1,951,871   $ 2,033,482   $ 2,806,755
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities   $ 340,763   $ 369,998   $ 637,679
             
Long-term debt and capital leases   $ 40,886   $ 40,708   $ 276,503
Income taxes payable     102,999     99,807     85,611
Other long-term liabilities     14,134     19,711     23,018
Minority interests     -     -     5,347
Stockholders' equity     1,453,089     1,503,258     1,778,597
Total liabilities and stockholders' equity   $ 1,951,871   $ 2,033,482   $ 2,806,755
 

(1) Derived from audited financial statements

 
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 

 
    Three Months Ended     Twelve Months Ended
    June 28,   March 29,   June 29,     June 28,   June 29,
      2009       2009       2008         2009       2008  
    (unaudited)   (unaudited)   (unaudited)     (unaudited)   (1)
CASH FLOWS FROM OPERATING ACTIVITIES:                      
Net income (loss)   $ (88,490 )   $ (198,359 )   $ 72,178       $ (302,148 )   $ 439,349  

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:

                     
Depreciation and amortization     17,694       19,650       19,227         72,417       54,704  
Deferred income taxes     19,913       12,929       (4,652 )       30,545       (26,661 )
Equity-based compensation expense     13,358       10,227       11,629         53,042       42,516  
Income tax benefit on equity-based compensation plans     (1,173 )     (11,115 )     26,815         (14,294 )     83,472  
Excess tax benefit on equity-based compensation plans     (237 )     7,027       (21,666 )       6,273       (58,904 )
Net gain on settlement of call option     -       -       399         -       (33,839 )
Goodwill impairment     7,179       89,076       -         96,255       -  
Restructuring and asset impairments     5,396       23,245       18,976         65,506       18,976  
Other, net     2,535       953       (996 )       9,353       (3,319 )
Changes in operating asset accounts     (34,295 )     22,215       78,537         (95,078 )     74,025  
Net cash provided by (used for) operating activities     (58,120 )     (24,152 )     200,447         (78,129 )     590,319  
                       
CASH FLOWS FROM INVESTING ACTIVITIES:                      
Capital expenditures and intangible assets     (5,848 )     (10,866 )     (18,951 )       (44,282 )     (76,803 )
Acquisitions of businesses, net of cash acquired     -       (11,706 )     (6,918 )       (19,457 )     (482,574 )
Net sales (purchases) of available-for-sale securities     93,056       33,961       (32,494 )       173,764       18,822  
Purchase of call option     -       -       -         -       (13,506 )
Proceeds from settlement of call option     -       -       383         -       47,345  
Purchase of other investments     -       -       -         (3,439 )     (4,560 )
Transfer of restricted cash and investments     (44,458 )     558       17,233         (92,206 )     15,471  
Other     2,000       (8,375 )     -         (8,375 )     -  
Net cash provided by (used for) investing activities     44,750       3,572       (40,747 )       6,005       (495,805 )
                       
CASH FLOWS FROM FINANCING ACTIVITIES:                      
Principal payments on long-term debt and capital lease obligations     (911 )     (239,703 )     (1,500 )       (256,047 )     (251,714 )
Net proceeds from issuance of long-term debt     -       -       1,915         625       251,915  
Excess tax benefit on equity-based compensation plans     237       (7,027 )     21,666         (6,273 )     58,904  
Treasury stock purchases     (3,197 )     (546 )     (3,590 )       (30,946 )     (14,552 )
Reissuances of treasury stock     6,271       5,942       1,262         19,797       8,563  
Proceeds from issuance of common stock     6,287       1,283       2,588         12,014       12,694  
Net cash provided by (used for) financing activities     8,687       (240,051 )     22,341         (260,830 )     65,810  
Effect of exchange rate changes on cash     4,202       (17,634 )     (1,857 )       (25,416 )     (1,754 )
Net increase (decrease) in cash and cash equivalents     (481 )     (278,265 )     180,184         (358,370 )     158,570  
Cash and cash equivalents at beginning of period     374,648       652,913       552,353         732,537       573,967  
Cash and cash equivalents at end of period   $ 374,167     $ 374,648     $ 732,537       $ 374,167     $ 732,537  
 
(1) Derived from audited financial statements
 
Reconciliation of U.S. GAAP Net Loss to Ongoing Net Loss
(in thousands, except per share data and percentages)
         
    Three Months Ended   Three Months Ended
    June 28,   March 29,
      2009       2009  
U.S. GAAP net loss   $ (88,490 )   $ (198,359 )
Pre-tax non-ongoing items:        
Goodwill impairment - operating expenses     7,179       89,076  
Legal judgment - operating expenses     4,647       -  
Restructuring and asset impairments - cost of goods sold     -       10,217  
Restructuring and asset impairments - operating expenses     5,396       13,028  
409A expense - operating expenses     982       646  
One-time contract termination costs - operating expenses     413       -  
Impairment of investment - other income, net     -       1,543  
Exchange rate gain associated with accelerated tax planning strategy - other income, net     -       (6,674 )
Net tax benefit on non-ongoing items     (4,556 )     (5,506 )
Net tax expense on resolution of certain tax matters     3,637       -  
Net tax expense for valuation allowance     13,787       -  
Net tax expense on change in state tax law     -       5,244  
Net tax expense on accelerated tax planning strategy     -       1,014  
Ongoing net loss   $ (57,005 )   $ (89,771 )
Ongoing net loss per diluted share   $ (0.45 )   $ (0.71 )
Number of shares used for diluted per share calculation     126,273       125,566  
 

Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating Loss to
Ongoing Gross Margin, Operating Expenses and Operating Loss

(in thousands, except percentages)
 
    Three Months Ended   Three Months Ended
    June 28,   March 29,
      2009       2009  
U.S. GAAP gross margin   $ 67,757     $ 36,515  
Pre-tax non-ongoing items:        
Pre-tax restructuring and asset impairments - cost of goods sold     -     $ 10,217  
Ongoing gross margin   $ 67,757     $ 46,732  
U.S. GAAP gross margin as a percent of revenue     31.1 %     20.9 %
Ongoing gross margin as a percent of revenue     31.1 %     26.8 %
U.S. GAAP operating expenses   $ 132,943     $ 231,699  
Pre-tax non-ongoing items:        
Goodwill impairment - operating expenses     (7,179 )     (89,076 )
Legal judgment - operating expenses     (4,647 )     -  
Restructuring and asset impairments - operating expenses     (5,396 )     (13,028 )
One-time contract termination costs - operating expenses     (413 )     -  
409A expense - operating expenses     (982 )     (646 )
Ongoing operating expenses   $ 114,326     $ 128,949  
Ongoing operating loss   $ (46,569 )   $ (82,217 )
Ongoing operating margin as a percent of revenue     -21.4 %     -47.1 %

SOURCE: Lam Research Corporation

Lam Research Corporation
Carol Raeburn, 510-572-4450
Senior Director, Investor Relations
carol.raeburn@lamresearch.com

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