Lam Research Corporation

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

FREMONT, CA -- (MARKET WIRE) -- 07/27/11 -- 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

Lam Research Corporation Contact:

Shanye Hudson

Director, Investor Relations

phone: 510/572-4589

e-mail: Email Contact



Source: Lam Research Corporation

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