Lam Research Corporation

Lam Research Corporation Announces Financial Results for the Quarter Ended March 25, 2012

FREMONT, CA -- (Marketwire) -- 04/18/12 -- Lam Research Corporation's (NASDAQ: LRCX) highlights for the March 2012 quarter were:




                          Lam Research Corporation

         Financial Highlights for the Quarter Ended March 25, 2012

           (in thousands, except per share data and percentages)



                                                 U.S. GAAP       Non-GAAP

                                               -------------  -------------



Revenue:                                       $     658,961  $     658,961



Operating Margin:                                        8.8%          11.1%



Net Income:                                    $      45,604  $      60,621



Diluted EPS:                                   $        0.38  $        0.50



Lam Research Corporation today announced financial results for the quarter ended March 25, 2012. Revenue for the period was $659.0 million, gross margin was $267.1 million, or 40.5%, operating expenses were $209.0 million, and net income was $45.6 million, or $0.38 per diluted share, compared to revenue of $584.0 million, gross margin of $234.8 million, or 40.2%, operating expenses of $187.3 million, and net income of $33.2 million, or $0.27 per diluted share, for the December 2011 quarter. Shipments for the March 2012 quarter were $713 million compared to $563 million during the December 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 both the March 2012 and December 2011 quarters exclude the amortization of convertible note discounts and certain acquisition-related costs. Additionally, the Company's non-GAAP results for the March 2012 quarter exclude certain integration-related costs and certain costs associated with a customer bankruptcy filing, and non-GAAP results for the December 2011 quarter exclude certain restructuring and impairment charges. 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.

Non-GAAP net income was $60.6 million, or $0.50 per diluted share, in the March 2012 quarter compared to non-GAAP net income of $41.0 million, or $0.34 per diluted share, for the December 2011 quarter. Non-GAAP gross margin for the March 2012 quarter was $269.8 million, or 40.9%, compared to non-GAAP gross margin of $234.0 million, or 40.1%, for the December 2011 quarter. Gross margin performance reflected improved factory utilization as a result of greater business volumes offset by less favorable customer mix. Non-GAAP operating expenses for the March 2012 quarter increased to $196.8 million compared with the December 2011 quarter of $180.4 million primarily due to increased levels of investment in support of our strategic growth initiatives as well as higher levels of variable compensation, aligned with the improved financial performance.

The geographic distribution of shipments and revenue during the March 2012 quarter is shown in the following table:




                    Region                       Shipments       Revenue

---------------------------------------------- -------------  -------------

North America                                             12%            20%

Europe                                                     8%             9%

Japan                                                      7%             7%

Korea                                                     48%            37%

Taiwan                                                    14%            16%

Asia Pacific                                              11%            11%





Cash and cash equivalents, short-term investments and restricted cash and investments balances were $2.6 billion at the end of the March 2012 quarter, compared to $2.4 billion at the end of the December 2011 quarter. The increase in cash and cash equivalents, short-term investments and restricted cash and investments balances during the quarter was primarily due to operating activities and the cash settlement of a stock repurchase agreement that did not execute. Cash flows from operating activities were approximately $146.4 million during the March 2012 quarter. Deferred revenue and deferred profit balances at the end of the March 2012 quarter increased to $246.2 million and $139.6 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 $18.5 million as of March 25, 2012.

"Lam began 2012 on a strong note, delivering against our financial commitments for the March quarter while executing against the significant plans which support our strategic growth objectives," stated Martin Anstice, Lam's president and chief executive officer. "We continue to make substantive progress in advancing the capabilities of our core products in etch and single-wafer clean to help our customers address next-generation process challenges. Additionally, we are moving steadily towards the expected completion of our acquisition of Novellus Systems, with integration planning well underway. These activities combine to make calendar 2012 a transformative year for the Company, and we are excited about the opportunities we see ahead."

Participants in the Solicitation

The directors and executive officers of Lam Research and Novellus Systems, Inc. ("Novellus," and together with Lam Research and their subsidiaries, the "Merged Company") may be deemed to be participants in the solicitation of proxies in connection with the approval of the proposed merger of Lam Research and Novellus (the "Merger"). Lam Research filed a registration statement that includes the joint proxy statement/prospectus with the Securities and Exchange Commission ("SEC") in connection with the solicitation of proxies to approve the proposed transaction, which the SEC declared effective on March 28, 2012. Information regarding Lam Research's directors and executive officers and their respective interests in Lam Research by security holdings or otherwise is available in its Annual Report on Form 10-K filed with the SEC on August 19, 2011 and its Proxy Statement on Schedule 14A filed with the SEC on September 19, 2011. Information regarding Novellus Systems' directors and executive officers and their respective interests in Novellus Systems by security holdings or otherwise is available in its Annual Report on Form 10-K filed with the SEC on February 24, 2012, its Annual Report on Form 10-K/A filed with the SEC on March 23, 2012, and its Proxy Statement on Schedule 14A filed with the SEC on April 8, 2011. Additional information regarding the interests of such potential participants is included in the joint proxy statement/prospectus and registration statement, and other relevant materials to be filed with the SEC, when they become available, including in connection with the solicitation of proxies to approve the proposed transaction.

How to Find Further Information

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed merger, Lam Research filed with the SEC a registration statement on Form S-4, which the SEC declared effective on March 28, 2012 that includes a joint proxy statement of Lam Research and Novellus Systems and that also constitutes a prospectus of Lam Research. Lam Research and Novellus Systems will furnish the joint proxy statement/prospectus and other relevant documents to their respective security holders in connection with the proposed merger of Lam Research and Novellus Systems. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, WE URGE SECURITY HOLDERS AND INVESTORS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT LAM RESEARCH AND NOVELLUS SYSTEMS AND THE PROPOSED MERGER. The proposals for the merger are made solely through the joint proxy statement/prospectus. In addition, a copy of the joint proxy statement/prospectus may be obtained free of charge from Lam Research Corporation, Investor Relations, 4650 Cushing Parkway, Fremont, CA 94538-6401, or from Novellus Systems, Investor Relations, 4000 North First Street, San Jose, CA 95134. Security holders are able to obtain, free of charge, copies of the joint proxy statement/prospectus and S-4 Registration Statement and any other documents filed by Lam Research or Novellus Systems with the SEC in connection with the proposed Merger at the SEC's website at http://www.sec.gov, and at the companies' websites at www.LamResearch.com and www.Novellus.com, respectively.

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, the closure of our acquisition of Novellus Systems and the benefits of that acquisition, the future capabilities of our core products, and the future opportunities for our business. 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; regulatory approvals and shareholder votes related to our merger with Novellus Systems; 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 26, 2011 and the reports on Form 10-Q for the three months ended September 25, 2011 and December 25, 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.

Nothing contained herein shall be deemed to be a forecast, projection or estimate of the future financial performance of Lam Research, Novellus Systems, or the Merged Company, following the implementation of the Merger or otherwise. No statement in this announcement should be interpreted to mean that the earnings per share, profits, margins or cash flows of Lam Research or the Merged Company for the current or future financial years would necessarily match or exceed the historical published figures.

Lam Research Corporation is a major supplier of wafer fabrication equipment and services to the world's semiconductor industry, where the company has been advancing semiconductor manufacturing for more than 30 years. As a technology and market share leader in plasma etch and single-wafer clean, Lam Research is leveraging its combined expertise to address some of today's most advanced semiconductor processing challenges. Headquartered in Fremont, Calif., Lam Research maintains a global network of service facilities throughout North America, Asia, and Europe to meet the complex and changing needs of its global customer base. 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 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        Nine Months Ended

                        ----------------------------- ---------------------

                                   December

                        March 25,    25,    March 27,  March 25,  March 27,

                           2012      2011      2011      2012       2011

                        --------- --------- --------- ---------- ----------

Revenue                 $ 658,961 $ 583,981 $ 809,087 $1,923,378 $2,485,675



  Cost of goods sold      391,814   350,014   435,068  1,138,381  1,326,897

  Cost of goods sold -

   restructuring and

   impairments                  -      (859)        -       (859)         -

                        --------- --------- --------- ---------- ----------

    Total costs of

     goods sold           391,814   349,155   435,068  1,137,522  1,326,897

                        --------- --------- --------- ---------- ----------

    Gross margin          267,147   234,826   374,019    785,856  1,158,778

    Gross margin as a

     percent of revenue      40.5%     40.2%     46.2%      40.9%      46.6%

Research and

 development              113,448   104,024    96,880    320,031    273,710

Selling, general and

 administrative            95,581    83,256    80,143    259,037    228,137

Restructuring and

 impairments                    -         -         -      1,725     (5,163)

                        --------- --------- --------- ---------- ----------

    Total operating

     expenses             209,029   187,280   177,023    580,793    496,684

                        --------- --------- --------- ---------- ----------

    Operating income       58,118    47,546   196,996    205,063    662,094

    Operating margin as

     a percent of

     revenue                  8.8%      8.1%     24.3%      10.7%      26.6%

Other income (expense),

 net                       (3,568)   (7,785)    1,663    (23,426)     1,722

                        --------- --------- --------- ---------- ----------

    Income before

     income taxes          54,550    39,761   198,659    181,637    663,816

Income tax expense          8,946     6,549    16,419     30,983     65,996

                        --------- --------- --------- ---------- ----------

    Net income          $  45,604 $  33,212 $ 182,240 $  150,654 $  597,820

                        ========= ========= ========= ========== ==========

Net income per share:

  Basic net income per

   share                $    0.38 $    0.28 $    1.47 $     1.25 $     4.84

                        ========= ========= ========= ========== ==========

  Diluted net income

   per share            $    0.38 $    0.27 $    1.45 $     1.24 $     4.78

                        ========= ========= ========= ========== ==========

Number of shares used

 in per share

 calculations:

  Basic                   119,841   119,739   123,674    120,904    123,482

                        --------- --------- --------- ---------- ----------

  Diluted                 120,956   120,873   125,293    121,830    125,097

                        --------- --------- --------- ---------- ----------







                          LAM RESEARCH CORPORATION

                    CONDENSED CONSOLIDATED BALANCE SHEETS

                               (in thousands)



                                     March 25,    December 25,    June 26,

                                        2012          2011          2011

                                   ------------- ------------- -------------

                                    (unaudited)   (unaudited)       (1)

ASSETS

Cash and cash equivalents          $   1,410,267 $   1,506,928 $   1,492,132

Short-term investments                   993,696       712,856       630,115

Accounts receivable, net                 471,776       462,243       590,568

Inventories                              376,126       373,130       396,607

Deferred income taxes                     78,719        78,479        78,435

Other current assets                      93,325        79,215        85,408

                                   ------------- ------------- -------------

  Total current assets                 3,423,909     3,212,851     3,273,265

Property and equipment, net              279,955       272,409       270,458

Restricted cash and investments          165,220       165,217       165,256

Deferred income taxes                          -         4,184         3,892

Goodwill and intangible assets           203,276       207,568       216,616

Other assets                             120,903       115,918       124,380

                                   ------------- ------------- -------------

  Total assets                     $   4,193,263 $   3,978,147 $   4,053,867

                                   ============= ============= =============



LIABILITIES AND STOCKHOLDERS'

 EQUITY

Current liabilities                $     651,655 $     593,605 $     680,759

                                   ------------- ------------- -------------



Long-term debt, convertible notes,

 and capital leases                $     755,427 $     749,078 $     738,488

Income taxes payable                     115,570       115,616       113,582

Other long-term liabilities               61,469        57,104        51,193

Stockholders' equity                   2,609,142     2,462,744     2,469,845

                                   ------------- ------------- -------------

  Total liabilities and

   stockholders' equity            $   4,193,263 $   3,978,147 $   4,053,867

                                   ============= ============= =============



(1) Derived from audited financial statements










                          LAM RESEARCH CORPORATION

              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                               (in thousands)

                                (unaudited)



                              Three Months Ended         Nine Months Ended

                       ------------------------------- --------------------

                                   December

                        March 25,     25,    March 27,  March 25, March 27,

                          2012       2011       2011      2012       2011

                       ---------- ---------- --------- ---------- ---------

CASH FLOWS FROM

 OPERATING ACTIVITIES:

Net income             $   45,604 $   33,212 $ 182,240 $  150,654 $ 597,820

Adjustments to

 reconcile net income

 to net cash provided

 by operating

 activities:

  Depreciation and

   amortization            22,517     22,372    18,176     66,249    54,787

  Deferred income

   taxes                    3,723       (633)     (733)     3,090    (4,555)

  Restructuring and

   impairment charges,

   net                          -       (859)        -        866    (5,163)

  Equity-based

   compensation

   expense                 16,417     18,224    12,456     52,385    38,224

  Income tax benefit

   on equity-based

   compensation plans      (1,048)       470    15,327         81    19,492

  Excess tax benefit

   on equity-based

   compensation plans        (137)      (204)  (11,878)    (2,292)  (15,106)

  Amortization of

   convertible note

   discount                 6,750      6,671         -     20,014         -

  Impairment of

   investment                   -          -         -      1,724         -

  (Gain) loss on

   equity method

   investment                (208)       202         -         (6)        -

  Other, net                1,373        881       746      3,677    (2,818)

  Changes in operating

   assets and

   liabilities:            51,406     88,680    25,259    105,871       239

                       ---------- ---------- --------- ---------- ---------

    Net cash provided

     by operating

     activities           146,397    169,016   241,593    402,313   682,920

                       ---------- ---------- --------- ---------- ---------



CASH FLOWS FROM

 INVESTING ACTIVITIES:

Capital expenditures

 and intangible assets    (27,978)   (26,682)  (35,769)   (70,392)  (92,924)

Net sales/maturities

 (purchases) of

 available-for-sale

 securities              (282,225)    (4,194)  (11,068)  (371,678)  (36,734)

Purchase of equity

 method investment              -    (10,740)        -    (10,740)        -

Purchase of other

 investments                    -          -      (417)         -      (417)

Receipt of loan

 payments                       -      8,375         -      8,375         -

Proceeds from sale of

 assets                         -      2,677         -      2,677     1,544

Transfer of restricted

 cash and investments           3          3        (4)        23       (14)

                       ---------- ---------- --------- ---------- ---------

    Net cash used for

     investing

     activities          (310,200)   (30,561)  (47,258)  (441,735) (128,545)

                       ---------- ---------- --------- ---------- ---------



CASH FLOWS FROM

 FINANCING ACTIVITIES:

Principal payments on

 long-term debt and

 capital lease

 obligations               (1,024)    (1,576)   (1,038)    (4,164)   (4,449)

Excess tax benefit on

 equity-based

 compensation plans           137        204    11,878      2,292    15,106

Net cash received in

 settlement (paid in

 advance for) stock

 repurchase contracts      79,189     51,005         -     55,194   (50,000)

Treasury stock

 purchases                (18,909)   (20,642)   (8,617)  (111,604) (157,563)

Reissuances of

 treasury stock

 related to employee

 stock purchase plan        7,902          -     6,521     16,760    13,676

Proceeds from issuance

 of common stock              301      1,311     5,980      1,776    10,222

                       ---------- ---------- --------- ---------- ---------

    Net cash provided

     by (used for)

     financing

     activities            67,596     30,302    14,724    (39,746) (173,008)

                       ---------- ---------- --------- ---------- ---------

Effect of exchange

 rate changes on cash        (454)    (1,147)    4,591     (2,697)   15,576

Net increase

 (decrease) in cash

 and cash equivalents     (96,661)   167,610   213,650    (81,865)  396,943

Cash and cash

 equivalents at

 beginning of period    1,506,928  1,339,318   729,060  1,492,132   545,767

                       ---------- ---------- --------- ---------- ---------

Cash and cash

 equivalents at end of

 period                $1,410,267 $1,506,928 $ 942,710 $1,410,267 $ 942,710

                       ========== ========== ========= ========== =========







       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

                                               -------------  -------------

                                                 March 25,     December 25,

                                                    2012           2011

                                               -------------  -------------

U.S. GAAP net income                           $      45,604  $      33,212

Pre-tax non-GAAP items:

  Costs associated with customer bankruptcy

   filing - cost of goods sold                         2,610              -

  Restructuring and impairments - cost of

   goods sold                                              -           (859)

  Acquisition costs - operating expenses               3,195          6,860

  Integration costs - operating expenses               8,441              -

  Bad debt and other expenses associated with

   customer bankruptcy filing - operating

   expenses                                              640              -

  Amortization of convertible note discount -

   other income (expense), net                         6,750          6,671

Net tax benefit on non-GAAP items                     (6,619)        (4,871)

                                               -------------  -------------

Non-GAAP net income                            $      60,621  $      41,013

                                               =============  =============

Non-GAAP net income per diluted share          $        0.50  $        0.34

                                               -------------  -------------

Number of shares used for diluted per share

 calculation                                         120,956        120,873







 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

                                               -------------  -------------

                                                 March 25,     December 25,

                                                    2012           2011

                                               -------------  -------------

U.S. GAAP gross margin                         $     267,147  $     234,826

Pre-tax non-GAAP items:

  Costs associated with customer bankruptcy

   filing - cost of goods sold                         2,610              -

  Restructuring and impairments - cost of

   goods sold                                              -           (859)

                                               -------------  -------------

Non-GAAP gross margin                          $     269,757  $     233,967

                                               -------------  -------------

U.S. GAAP gross margin as a percentage of

 revenue                                                40.5%          40.2%

Non-GAAP gross margin as a percentage of

 revenue                                                40.9%          40.1%



U.S. GAAP operating expenses                   $     209,029  $     187,280

Pre-tax non-GAAP items:

  Acquisition costs - operating expenses              (3,195)        (6,860)

  Integration costs - operating expenses              (8,441)             -

  Bad debt and other expenses associated with

   customer bankruptcy filing - operating

   expenses                                             (640)             -

                                               -------------  -------------

Non-GAAP operating expenses                    $     196,753  $     180,420

                                               -------------  -------------

Non-GAAP operating income                      $      73,004  $      53,547

                                               =============  =============

Non-GAAP operating margin as a percent of

 revenue                                                11.1%           9.2%



Lam Research Corporation Contact:

Shanye Hudson

Director, Investor Relations

phone: 510-572-4589

e-mail: shanye.hudson@lamresearch.com



Source: Lam Research Corporation

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