Lam Research Corporation

Lam Research Corporation Announces Financial Results for the Quarter Ended December 27, 2009

FREMONT, Calif., Jan 27, 2010 (BUSINESS WIRE) -- Lam Research Corporation (NASDAQ: LRCX) highlights for the December 2009 quarter were:

   
  (in thousands, except per share data and percentages)
           
  Revenue:   $ 487,176      
           
      U.S. GAAP   Ongoing
  Operating Margin:     18.8 %     15.6 %
           
  Net Income:   $ 69,574     $ 60,714  
           
  Diluted EPS:   $ 0.54     $ 0.47  
                   

Lam Research Corporation today announced financial results for the quarter ended December 27, 2009. Revenue for the period was $487.2 million, gross margin was $223.2 million and net income was $69.6 million, or $0.54 per diluted share, compared to revenue of $318.5 million, gross margin of $136.8 million and net income of $16.8 million, or $0.13 per diluted share, for the September 2009 quarter. Shipments for the December 2009 quarter were $519 million compared to $355 million during the September 2009 quarter.

The Company's ongoing results for the December 2009 quarter exclude certain costs for previously announced restructuring activities, the reversal of accrued liabilities due to final settlement of the remaining liabilities for Internal Revenue Code Section 409A related expenses, and the impairment of an investment. The Company's ongoing results for the September 2009 quarter excluded certain costs for previously announced restructuring activities and the reversal of accrued liabilities due to settlement of a portion of certain liabilities for Internal Revenue Code Section 409A related expenses. Management uses the presentation of ongoing gross margin, ongoing operating expenses, ongoing operating income, ongoing operating margin, ongoing net income, and ongoing net income 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 business trends and comparing performance to prior periods, along with enhancing 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 income was $60.7 million, or $0.47 per diluted share in the December 2009 quarter compared to ongoing net income of $4.2 million, or $0.03 per diluted share, for the September 2009 quarter. Ongoing gross margin for the December 2009 quarter was $218.5 million or 44.8%, compared to ongoing gross margin of $131.3 million, or 41.2%, for the September 2009 quarter. The sequential increase in gross margin was primarily due to improved factory utilization as a result of increased business volume and a more favorable product mix. Ongoing operating expenses for the December 2009 quarter increased to $142.3 million compared with the September 2009 quarter of $123.3 million. This increase was a function of higher variable compensation expense associated with our improvement in profitability, new product material spending to support additional market opportunities arising from an improved business outlook, and the restoration of employee salaries and accompanying benefits (excluding executive management) to levels prior to the actions to reduce base compensation in the March 2009 quarter.

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

Region   Shipments   Revenue
North America   7 %   8 %
Europe   6 %   6 %
Japan   12 %   15 %
Korea   26 %   25 %
Taiwan   37 %   35 %
Asia Pacific   12 %   11 %

Cash and cash equivalents, short-term investments and restricted cash and investments balances were $830.6 million at the end of the December 2009 quarter, compared to $761.2 million at the end of the September 2009 quarter. Cash flows from operating activities were approximately $73.3 million during the December 2009 quarter. Deferred revenue and deferred profit balances at the end of the December 2009 quarter were $134.4 million and $73.9 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 $11 million as of December 27, 2009.

"In the December 2009 quarter we saw significant growth in shipments, revenue and earnings for Lam Research. As we move into 2010 we will continue to focus on delivering market share gains in our etch and clean businesses to expand revenues, earnings per share and cash generation from cycle to cycle," said Steve Newberry, Lam's president and chief executive officer. "I would like to thank our employees, suppliers and shareholders for their continued commitment to our success," Newberry concluded.

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 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, and Lam's focus on delivering market share gains in its etch and clean businesses to expand revenues, earnings per share and cash generation from cycle to cycle. Some factors that may affect these forward-looking statements include: business conditions in the semiconductor industry and the overall economy, and the efficacy of Lam's plans for reacting to those conditions, changing customer demands, the actions of Lam's competitors, and the challenges presented by the development and marketing of 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 28, 2009 and the report on Form 10-Q for the three months ended September 27, 2009. 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.

 
LAM RESEARCH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
                     
    Three Months Ended   Six Months Ended
    December 27,   September 27,   December 28,   December 27,   December 28,
      2009       2009       2008       2009       2008  
Total revenue   $ 487,176     $ 318,548     $ 283,409     $ 805,724     $ 723,770  
Cost of goods sold     268,685       187,233       174,329       455,918       428,532  
Cost of goods sold - restructuring and asset impairments     -       -       7,728       -       10,776  
Cost of goods sold - 409A expense     (4,713 )     (5,455 )     -       (10,168 )     -  
Total costs of goods sold     263,972       181,778       182,057       445,750       439,308  
Gross margin     223,204       136,770       101,352       359,974       284,462  
Gross margin as a percent of revenue     45.8 %     42.9 %     35.8 %     44.7 %     39.3 %
Research and development     82,171       71,199       68,781       153,370       150,344  
Selling, general and administrative     60,111       52,119       57,699       112,230       125,998  
Restructuring and asset impairments     5,919       2,093       10,121       8,012       26,089  
409A expense     (16,345 )     (17,893 )     2,143       (34,238 )     2,904  
Total operating expenses     131,856       107,518       138,744       239,374       305,335  
Operating income (loss)     91,348       29,252       (37,392 )     120,600       (20,873 )
Operating margin as a percent of revenue     18.8 %     9.2 %     -13.2 %     15.0 %     -2.9 %
Other income (expense), net     (58 )     (368 )     (7,233 )     (426 )     1,784  
Income (loss) before income taxes     91,290       28,884       (44,625 )     120,174       (19,089 )
Income tax expense (benefit)     21,716       12,087       (20,453 )     33,803       (3,790 )
Net income (loss)   $ 69,574     $ 16,797     $ (24,172 )   $ 86,371     $ (15,299 )
Net income (loss) per share:                    
Basic net income (loss) per share   $ 0.55     $ 0.13     $ (0.19 )   $ 0.68     $ (0.12 )
Diluted net income (loss) per share   $ 0.54     $ 0.13     $ (0.19 )   $ 0.67     $ (0.12 )
Number of shares used in per share calculations:                    
Basic     127,296       126,774       125,084       127,035       125,266  
Diluted     128,829       127,890       125,084       128,389       125,266  
                     
See Notes to Condensed Consolidated Financial Statements
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
             
    December 27,   September 27,   June 28,
      2009     2009     2009  
    (unaudited)   (unaudited)    

(1)

 

ASSETS            
Cash and cash equivalents   $ 430,166   $ 361,163   $ 374,167  
Short-term investments     215,567     215,031     205,221  
Accounts receivable, net     420,486     325,756     253,585  
Inventories     241,296     220,083     233,410  
Deferred income taxes     47,984     57,293     69,043  
Other current assets     79,482     61,128     60,401  
Total current assets     1,434,981     1,240,454     1,195,827  
Property and equipment, net     205,089     211,348     215,666  
Restricted cash and investments     184,913     185,010     178,439  
Deferred income taxes     16,399     16,298     17,007  
Goodwill and intangible assets     248,838     254,816     260,787  
Other assets     94,622     87,179     84,145  
Total assets   $ 2,184,842   $ 1,995,105   $ 1,951,871  
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities   $ 445,243   $ 336,911   $ 340,763  
             
Long-term debt and capital leases   $ 35,145   $ 35,787   $ 40,886  
Income taxes payable     107,273     105,925     102,999  
Other long-term liabilities     12,397     12,722     14,134  
Stockholders' equity     1,584,784     1,503,760     1,453,089  
Total liabilities and stockholders' equity   $ 2,184,842   $ 1,995,105   $ 1,951,871  
             
1 Derived from audited financial statements
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                     
    Three Months Ended   Six Months Ended
    December 27,   September 27,   December 28,   December 27,   December 28,
      2009       2009       2008       2009       2008  
CASH FLOWS FROM OPERATING ACTIVITIES:                    
Net income (loss)   $ 69,574     $ 16,797     $ (24,172 )   $ 86,371     $ (15,299 )

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

                   
Depreciation and amortization     18,184       17,681       17,177       35,865       35,073  
Deferred income taxes     9,229       12,482       10,110       21,711       (2,297 )
Restructuring charges, net     5,919       2,093       17,849       8,012       36,865  
Equity-based compensation expense     13,259       13,958       14,049       27,217       29,457  
Income tax benefit on equity-based compensation plans     303       (89 )     (7,045 )     214       (2,006 )
Excess tax benefit on equity-based compensation plans     (235 )     (368 )     3,752       (603 )     (517 )
Other, net     173       1,159       3,200       1,332       5,865  
Changes in operating asset and liabilities:     (43,096 )     (61,009 )     (73,909 )     (104,105 )     (82,998 )
Net cash provided by (used for) operating activities     73,310       2,704       (38,989 )     76,014       4,143  
                     
CASH FLOWS FROM INVESTING ACTIVITIES:                    
Capital expenditures and intangible assets     (6,893 )     (5,832 )     (12,417 )     (12,725 )     (27,568 )
Acquisitions of businesses, net of cash acquired     -       -       (8,763 )     -       (11,190 )
Net sales/maturities (purchases) of available-for-sale securities     (1,016 )     (9,775 )     39,767       (10,791 )     46,747  
Purchase of other investments     -       (961 )     -       (961 )     -  
Transfer of restricted cash and investments     97       (6,571 )     (32,178 )     (6,474 )     (48,306 )
Other     -       -       (2,000 )     -       (2,000 )
Net cash used for investing activities     (7,812 )     (23,139 )     (15,591 )     (30,951 )     (42,317 )
                     
CASH FLOWS FROM FINANCING ACTIVITIES:                    
Principal payments on long-term debt and capital lease obligations     (689 )     (1,915 )     (13,060 )     (2,604 )     (15,433 )
Net proceeds from issuance of long-term debt     52       284       515       336       625  
Excess tax benefit on equity-based compensation plans     235       368       (3,752 )     603       517  
Treasury stock purchases     (576 )     (2,356 )     (24,448 )     (2,932 )     (27,203 )
Reissuances of treasury stock     -       5,761       -       5,761       7,584  
Proceeds from issuance of common stock     4,126       2,256       1,294       6,382       4,444  
Net cash provided by (used for) financing activities     3,148       4,398       (39,451 )     7,546       (29,466 )
Effect of exchange rate changes on cash     357       3,033       1,512       3,390       (11,984 )
Net increase (decrease) in cash and cash equivalents     69,003       (13,004 )     (92,519 )     55,999       (79,624 )
Cash and cash equivalents at beginning of period     361,163       374,167       745,432       374,167       732,537  
Cash and cash equivalents at end of period   $ 430,166     $ 361,163     $ 652,913     $ 430,166     $ 652,913  
                     
                     
See Notes to Condensed Consolidated Financial Statements
Reconciliation of U.S. GAAP Net Income to Ongoing Net Income
(in thousands, except per share data)
(unaudited)
         
    Three Months Ended   Three Months Ended
    December 27,   September 27,
      2009       2009  
U.S. GAAP net income   $ 69,574     $ 16,797  
Pre-tax non-ongoing items:        
Restructuring and asset impairments - operating expenses     5,919       2,093  
409A expense - cost of goods sold     (4,713 )     (5,455 )
409A expense - operating expenses     (16,345 )     (17,893 )
Impairment of investment - other income (expense), net     927       -  
Net tax expense on non-ongoing items     5,352       8,639  
Ongoing net income   $ 60,714     $ 4,181  
Ongoing net income per diluted share   $ 0.47     $ 0.03  
Number of shares used for diluted per share calculation     128,829       127,890  
         
         
Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating Income to Ongoing Gross Margin, Operating Expenses and Operating Income
(in thousands, except percentages)
(unaudited)
         
    Three Months Ended   Three Months Ended
    December 27,   September 27,
      2009       2009  
U.S. GAAP gross margin   $ 223,204     $ 136,770  
Pre-tax non-ongoing items:        
Pre-tax 409A expense - cost of goods sold     (4,713 )     (5,455 )
Ongoing gross margin   $ 218,491     $ 131,315  
U.S. GAAP gross margin as a percent of revenue     45.8 %     42.9 %
Ongoing gross margin as a percent of revenue     44.8 %     41.2 %
         
U.S. GAAP operating expenses   $ 131,856     $ 107,518  
Pre-tax non-ongoing items:        
Restructuring and asset impairments - operating expenses     (5,919 )     (2,093 )
409A expense - operating expenses     16,345       17,893  
Ongoing operating expenses   $ 142,282     $ 123,318  
Ongoing operating income   $ 76,209     $ 7,997  
Ongoing operating margin as a percent of revenue     15.6 %     2.5 %

SOURCE: Lam Research Corporation

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

Copyright Business Wire 2010