Lam Research Corporation

Lam Research Corporation Announces Financial Results for the Quarter Ended June 24, 2012

FREMONT, CA -- (Marketwire) -- 07/25/12 -- Lam Research Corporation's (NASDAQ: LRCX) highlights for the June 2012 quarter were:




                          Lam Research Corporation

          Financial Highlights for the Quarter Ended June 24, 2012

           (in thousands, except per share data and percentages)



                                                                   Lam

                                   Combined       Combined      Stand-alone

                                  U.S. GAAP       Non-GAAP       Non-GAAP

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



Revenue:                        $     741,814  $     741,814  $     715,971



Gross Margin:                            40.2%          42.1%          41.9%



Operating Margin:                         4.4%          13.2%          14.7%



Net Income:                     $      18,069  $      80,873  $      88,164



Diluted EPS:                    $        0.13  $        0.60  $        0.75



Lam Research Corporation today announced financial results for the quarter ended June 24, 2012. The Company completed the merger with Novellus Systems Inc. (Novellus) on June 4, 2012; results reflect twenty days of contributed financial performance resulting from that purchase, prior period comparable results represent Lam Stand-alone performance without exception. Revenue for the period was $741.8 million, gross margin was $298.2 million, or 40.2%, operating expenses were $265.5 million, and net income was $18.1 million, or $0.13 per diluted share, compared to revenue of $659.0 million, gross margin of $267.1 million, or 40.5%, operating expenses of $209.0 million, and net income of $45.6 million, or $0.38 per diluted share, for the March 2012 quarter. Shipments for the June 2012 quarter were $816 million compared to $713 million during the March 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 June 2012 and March 2012 quarters exclude the amortization of convertible note discounts and certain acquisition and integration-related costs. Additionally, the Company's non-GAAP results for the June 2012 quarter exclude costs associated with rationalization of certain product configurations, amortization related to intangible assets acquired in the Novellus transaction, and acquisition-related inventory fair value impact. The non-GAAP results for the March 2012 quarter exclude certain costs associated with a customer bankruptcy filing. 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.

Comparative highlights between the June 2012 quarter and March 2012 quarter are as follows:




                                                 June 2012     March 2012

                                                  Quarter        Quarter

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

Lam Stand-alone



  Non-GAAP gross margin                        $     300,253  $     269,757



  Non-GAAP gross margin as a percentage of

   revenue                                              41.9%          40.9%



  Non-GAAP operating expenses                  $     194,678  $     196,753



  Non-GAAP net income                          $      88,164  $      60,621



  Non-GAAP net income per diluted share        $        0.75  $        0.50



Lam Stand-alone non-GAAP gross margin performance improved in the June 2012 quarter as compared to the March 2012 quarter due to favorable customer and product mix and improved factory and field utilization. Lam Stand-alone non-GAAP operating expenses decreased in the June 2012 quarter as compared to the March 2012 quarter due to reductions in employee-related benefit costs.

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




                                 Shipments                  Revenue

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

                                           Lam                       Lam

         Region            Combined    Stand-alone   Combined    Stand-alone

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

North America                     15%          14%          13%          12%

Europe                             6%           6%           7%           7%

Japan                              7%           8%           7%           7%

Korea                             31%          32%          38%          39%

Taiwan                            29%          28%          24%          25%

Asia Pacific                      12%          12%          11%          10%









Cash and cash equivalents, short-term investments and restricted cash and investments balances increased to $3.0 billion at the end of the June 2012 quarter, compared to $2.6 billion at the end of the March 2012 quarter. This increase included the impact of $1.1 billion acquired in connection with the Novellus transaction, primarily offset by stock repurchases. Cash flows from operating activities were approximately $96.7 million during the June 2012 quarter. Deferred revenue and deferred profit balances at the end of the June 2012 quarter increased to $335.4 million and $164.8 million, respectively. Deferred revenue and deferred profit balances included $87.1 million and $21.1 million from Novellus related operations, 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 $23.4 million as of June 24, 2012.

"Lam delivered solid financial performance in the June quarter, with sequential growth across our core product and service businesses," said Martin Anstice, Lam's president and chief executive officer. "The quarter also marked the closing of our acquisition of Novellus Systems, and integration is already underway. As we've shared over the past couple of quarters, this combination offers the potential for accelerated growth and we remain focused on aggressively executing our plans to achieve that potential."

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 potential for accelerated growth arising from the acquisition of Novellus and the Company's future plans for its 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; 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, December 25, 2011, and March 25, 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 Corp. 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® company and NASDAQ-100® 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)



                          Three Months Ended           Twelve Months Ended

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

                   June 24,   March 25,    June 26,    June 24,   June 26,

                     2012        2012        2011        2012       2011

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

                 (unaudited) (unaudited) (unaudited) (unaudited)     (1)

Total revenue     $  741,814 $   658,961 $   752,018 $ 2,665,192 $3,237,693



  Cost of goods

   sold              443,601     391,814     413,564   1,581,982  1,740,461

  Cost of goods

   sold -

   restructuring

   and

   impairments             -           -           -        (859)         -

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

    Total costs

     of goods

     sold            443,601     391,814     413,564   1,581,123  1,740,461

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

    Gross margin     298,213     267,147     338,454   1,084,069  1,497,232

    Gross margin

     as a percent

     of revenue         40.2%       40.5%       45.0%       40.7%      46.2%

Research and

 development         124,528     113,448      99,583     444,559    373,293

Selling, general

 and

 administrative      141,015      95,581      79,938     400,052    308,075

Restructuring and

 impairments               -           -      16,742       1,725     11,579

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

    Total

     operating

     expenses        265,543     209,029     196,263     846,336    692,947

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

    Operating

     income           32,670      58,118     142,191     237,733    804,285

    Operating

     margin as a

     percent of

     revenue             4.4%        8.8%       18.9%        8.9%      24.8%

Other income

 (expense), net       (9,889)     (3,568)     (5,131)    (33,315)    (3,409)

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

    Income before

     income taxes     22,781      54,550     137,060     204,418    800,876

Income tax

 expense               4,712       8,946      11,132      35,695     77,128

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

    Net income    $   18,069 $    45,604 $   125,928 $   168,723 $  723,748

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

Net income per

 share:

  Basic net

   income per

   share          $     0.13 $      0.38 $      1.02 $      1.36 $     5.86

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

  Diluted net

   income per

   share          $     0.13 $      0.38 $      1.01 $      1.35 $     5.79

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

Number of shares

 used in per

 share

 calculations:

  Basic              133,997     119,841     123,863     124,176    123,529

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

  Diluted            135,842     120,956     125,086     125,233    125,019

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



(1) Derived from audited financial statements






                          LAM RESEARCH CORPORATION

                    CONDENSED CONSOLIDATED BALANCE SHEETS

                               (in thousands)



                                            June 24,   March 25,   June 26,

                                              2012        2012       2011

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

                                          (unaudited) (unaudited)     (1)

ASSETS

Cash and cash equivalents                 $ 1,564,752 $ 1,410,267 $1,492,132

Short-term investments                      1,297,931     993,696    630,115

Accounts receivable, net                      765,818     471,776    590,568

Inventories                                   632,853     376,126    396,607

Deferred income taxes                          47,782      78,719     78,435

Other current assets                          105,973      93,325     85,408

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

  Total current assets                      4,415,109   3,423,909  3,273,265

Property and equipment, net                   584,596     279,955    270,458

Restricted cash and investments               166,335     165,220    165,256

Deferred income taxes                               -           -      3,892

Goodwill and intangible assets              2,686,730     203,276    216,616

Other assets                                  151,882     120,903    124,380

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

  Total assets                            $ 8,004,652 $ 4,193,263 $4,053,867

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



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities                       $ 1,426,928 $   651,655 $  680,759

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



Long-term debt and capital leases         $   761,783 $   755,427 $  738,488

Income taxes payable                          274,240     115,570    113,582

Other long-term liabilities                   219,577      61,469     51,193

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

  Total liabilities                       $ 2,682,528 $ 1,584,121 $1,584,022

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



Senior convertible notes                      190,343           -          -



Stockholders' equity                        5,131,781   2,609,142  2,469,845

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

  Total liabilities and stockholders'

   equity                                 $ 8,004,652 $ 4,193,263 $4,053,867

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



(1) Derived from audited financial statements






                          LAM RESEARCH CORPORATION

              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                               (in thousands)



                          Three Months Ended           Twelve Months Ended

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

                   June 24,   March 25,    June 26,    June 24,   June 26,

                     2012        2012        2011        2012       2011

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

                  (unaudited

                       )     (unaudited) (unaudited) (unaudited)     (1)

CASH FLOWS FROM

 OPERATING

 ACTIVITIES:

Net income        $   18,069 $    45,604 $   125,928 $   168,723 $  723,748

Adjustments to

 reconcile net

 income to net

 cash provided by

 operating

 activities:

  Depreciation

   and

   amortization       34,576      22,517      19,972     100,825     74,759

  Deferred income

   taxes              39,356       3,723      (6,166)     42,446    (10,721)

  Restructuring

   charges, net            -           -      16,742         866     11,579

  Equity-based

   compensation

   expense            29,174      16,417      14,788      81,559     53,012

  Income tax

   benefit on

   equity-based

   compensation

   plans               1,429      (1,048)      9,283       1,510     28,775

  Excess tax

   benefit on

   equity-based

   compensation

   plans                (394)       (137)     (8,184)     (2,686)   (23,290)

  Impairment of

   investment              -           -           -       1,724          -

  Amortization of

   convertible

   note discount       7,014       6,750       3,554      27,028      3,554

  Other, net           7,206       1,165         477      10,877     (2,341)

  Changes in

   operating

   asset and

   liabilities:      (39,715)     51,406      21,714      66,156     21,953

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

    Net cash

     provided by

     operating

     activities       96,715     146,397     198,108     499,028    881,028

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



CASH FLOWS FROM

 INVESTING

 ACTIVITIES:

Capital

 expenditures and

 intangible

 assets              (36,880)    (27,978)    (34,571)   (107,272)  (127,495)

Cash acquired in

 business

 acquisition         418,681           -           -     418,681          -

Purchase of other

 investments               -           -           -           -       (417)

Net

 sales/maturities

 (purchases) of

 available-for-

 sale securities     329,689    (282,225)   (316,789)    (41,989)  (353,523)

Purchase of

 equity method

 investment                -           -           -     (10,740)         -

Receipt of loan

 payments                  -           -           -       8,375          -

Proceeds from

 sale of assets            -           -           -       2,677      1,544

Transfer of

 restricted cash

 and investments         (29)          3          (8)         (6)       (22)

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

    Net cash

     provided by

     (used for)

     investing

     activities      711,461    (310,200)   (351,368)    269,726   (479,913)

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



CASH FLOWS FROM

 FINANCING

 ACTIVITIES:

Principal

 payments on

 long-term debt

 and capital

 lease

 obligations          (1,101)     (1,024)        (81)     (5,265)    (4,530)

Net proceeds from

 issuance of

 long-term debt            -           -     882,831           -    882,831

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                   394         137       8,184       2,686     23,290

Treasury stock

 purchases          (661,059)    (18,909)    (53,753)   (772,663)  (211,316)

Net cash received

 in settlement of

 (paid in advance

 for) stock

 repurchase

 contracts                 -      79,189     (99,589)     55,194   (149,589)

Reissuances of

 treasury stock        8,765       7,902       7,518      25,525     21,194

Proceeds from

 issuance of

 common stock              -         301       2,179       1,776     12,401

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

    Net cash

     provided by

     (used for)

     financing

     activities     (653,001)     67,596     699,994    (692,747)   526,986

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

Effect of

 exchange rate

 changes on cash        (690)       (454)      2,688      (3,387)    18,264

Net increase

 (decrease) in

 cash and cash

 equivalents         154,485     (96,661)    549,422      72,620    946,365

Cash and cash

 equivalents at

 beginning of

 period            1,410,267   1,506,928     942,710   1,492,132    545,767

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

Cash and cash

 equivalents at

 end of period    $1,564,752 $ 1,410,267 $ 1,492,132 $ 1,564,752 $1,492,132

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



(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      Three

                                                         Months     Months

                                                         Ended      Ended

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

                                                        June 24,  March 25,

                                                          2012       2012

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

U.S. GAAP net income                                   $  18,069  $  45,604

Pre-tax non-GAAP items:

  Costs associated with rationalization of certain

   product configurations - cost of goods sold             4,045          -

  Amortization related to intangible assets acquired

   in Novellus transaction - cost of goods sold            4,540          -

  Acquisition-related inventory fair value impact -

   cost of goods sold                                      5,864          -

  Costs associated with customer bankruptcy filing -

   cost of goods sold                                          -      2,610

  Acquisition-related costs - operating expenses          37,374      3,195

  Integration costs - operating expenses                   7,293      8,441

  Amortization related to intangible assets acquired

   in Novellus transaction - operating expenses            4,256          -

  Costs associated with rationalization of certain

   product configurations - operating expenses             1,850          -

  Bad debt and other expenses associated with customer

   bankruptcy filing - operating expenses                      -        640

  Amortization of convertible note discount, Lam notes

   - other income (expense), net                           6,830      6,750

  Amortization of convertible note discount, Novellus

   assumed notes - other income (expense), net               184          -

  Acquisition-related costs - other income (expense),

   net                                                     2,300          -

Net tax benefit on non-GAAP items                        (11,732)    (6,619)

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

Non-GAAP net income                                    $  80,873  $  60,621

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

Non-GAAP net income per diluted share                  $    0.60  $    0.50

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

Number of shares used for diluted per share

 calculation                                             135,842    120,956





 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      Three

                                                         Months     Months

                                                         Ended      Ended

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

                                                        June 24,  March 25,

                                                          2012       2012

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

U.S. GAAP gross margin                                 $ 298,213  $ 267,147

Pre-tax non-GAAP items:

  Costs associated with rationalization of certain

   product configurations - cost of goods sold             4,045          -

  Amortization related to intangible assets acquired

   in Novellus transaction - cost of goods sold            4,540          -

  Acquisition-related inventory fair value impact -

   cost of goods sold                                      5,864          -

  Costs associated with customer bankruptcy filing -

   cost of goods sold                                          -      2,610

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

Non-GAAP gross margin                                  $ 312,662  $ 269,757

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

U.S. GAAP gross margin as a percentage of revenue           40.2%      40.5%

Non-GAAP gross margin as a percentage of revenue            42.1%      40.9%

U.S. GAAP operating expenses                           $ 265,543  $ 209,029

Pre-tax non-GAAP items:

  Acquisition-related costs - operating expenses         (37,374)    (3,195)

  Integration costs - operating expenses                  (7,293)    (8,441)

  Amortization related to intangible assets acquired

   in Novellus transaction - operating expenses           (4,256)         -

  Costs associated with rationalization of certain

   product configurations - operating expenses            (1,850)         -

  Bad debt and other expenses associated with customer

   bankruptcy filing - operating expenses                      -       (640)

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

Non-GAAP operating expenses                            $ 214,770  $ 196,753

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

Non-GAAP operating income                              $  97,892  $  73,004

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

Non-GAAP operating margin as a percent of revenue           13.2%      11.1%





 Reconciliation of U.S. GAAP Other Income (Expense), Net to Non-GAAP Other

                            Income (Expense), Net

                               (in thousands)

                                (unaudited)



                                                        Three Months Ended

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

                                                        June 24,  March 25,

                                                          2012       2012

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

U.S. GAAP other income (expense), net                  $  (9,889) $  (3,568)

Pre-tax non-GAAP items:

  Amortization of convertible note discount, Lam notes     6,830      6,750

  Amortization of convertible note discount, Novellus

   assumed notes                                             184          -

  Acquisition-related costs                                2,300          -

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

Non-GAAP other income (expense), net                   $    (575) $   3,182

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





 Reconciliation of Combined Non-GAAP Statement of Operations to Lam Stand-

                   alone Non-GAAP Statement of Operations

                      Three Months Ended June 24, 2012

           (in thousands, except per share data and percentages)

                                (unaudited)



                                                  Less:

                                                 Non-GAAP

                                                  Results           Lam

                                   Combined    Attributable     Stand-alone

                                    Non-GAAP    to Novellus       Non-GAAP

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



Revenue                           $   741,814  $     25,843     $   715,971

Cost of goods sold                    429,152        13,434         415,718

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

    Gross margin                      312,662        12,409         300,253

    Gross margin as a percent of

     revenue                             42.1%                         41.9%

Total operating expenses              214,770        20,092         194,678

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

    Operating income (loss)            97,892        (7,683)        105,575

    Operating margin as a percent

     of revenue                          13.2%                         14.7%

Other income (expense), net              (575)         (572)             (3)

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

    Income (loss) before income

     taxes                             97,317        (8,255)        105,572

Income tax expense (benefit)           16,444          (964)         17,408

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

    Net income (loss)             $    80,873  $     (7,291)    $    88,164

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

Net income per share:

  Basic net income per share      $      0.60                   $      0.76

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

  Diluted net income per share    $      0.60                   $      0.75

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

Number of shares used in per

 share calculations:

  Basic                               133,997        18,167  (1)    115,830

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

  Diluted                             135,842        19,027  (2)    116,815

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



(1) Excludes shares issued as acquisition consideration and acquired stock

compensation award activity subsequent to acquisition

(2) Excludes dilutive impact of assumed Novellus stock compensation awards

and convertible note

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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