Lam Research Corporation

Lam Research Corporation Reports Financial Results for the Quarter Ended March 31, 2013

FREMONT, CA -- (Marketwired) -- 04/24/13 -- Lam Research Corp. (NASDAQ: LRCX) today announced financial results for the quarter ended March 31, 2013. Highlights for the quarter were as follows:

Lam Research Corporation
Financial Highlights for the Quarter Ended March 31, 2013
(in thousands, except per share data and percentages)
U.S. GAAP
March 2013 December 2012 Change Q/Q
Revenue $ 844,928 $ 860,886 -2 %
Operating Margin 1.3 % 0.5 % +80 bps
Net Income $ 18,996 $ 6,408 +196.4 %
Diluted EPS $ 0.11 $ 0.04 +$0.07
Non-GAAP
March 2013 December 2012 Change Q/Q
Revenue $ 844,928 $ 860,886 -2 %
Operating Margin 8.8 % 11.5 % -270 bps
Net Income $ 74,474 $ 77,278 -3.6 %
Diluted EPS $ 0.44 $ 0.45 -$0.01

GAAP Financial Results

Revenue for the period was $844.9 million, gross margin was $339.8 million, or 40.2% of revenue, operating expenses were $329.0 million, and net income was $19.0 million, or $0.11 per diluted share on a GAAP basis. This compares to revenue of $860.9 million, gross margin of $315.4 million, or 36.6% of revenue, operating expenses of $311.4 million, and net income of $6.4 million, or $0.04 per diluted share, for the December 2012 quarter.

Non-GAAP Financial Results

Non-GAAP gross margin was $370.7 million, or 43.9% of revenue, non-GAAP operating expenses were $296.0 million, and non-GAAP net income was $74.5 million, or $0.44 per diluted share. This compares to non-GAAP gross margin of $380.5 million, or 44.2% of revenue, non-GAAP operating expenses of $281.5 million, and non-GAAP net income of $77.3 million, or $0.45 per diluted share, for the December 2012 quarter.

"Lam delivered solid March quarter results, which underscore our ability to execute well as a newly integrated company," stated Martin Anstice, Lam's president and chief executive officer. "We are off to a great start this year and continue to make progress against our multi-year growth strategic plan by building upon our technology leadership in key product areas and further strengthening our competitive differentiation."

Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments and restricted cash and investment balances decreased to $2.5 billion at the end of the March 2013 quarter, as planned, compared to $2.7 billion at the end of the December 2012 quarter. This decrease was primarily the result of approximately $243 million of stock repurchases, offset by approximately $102 million in cash flow from operating activities during the March 2013 quarter.

Deferred revenue and deferred profit balances at the end of the March 2013 quarter increased to $326.6 million and $193.3 million, respectively, as compared to $282.0 million and $169.0 million, respectively, at the end of the December 2012 quarter. 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 $49.9 million as of March 31, 2013.

Geographic Distribution

The geographic distribution of shipments and revenue during the March 2013 quarter is shown in the following table:

Region Shipments Revenue
North America 21% 26%
Europe 9% 10%
Japan 11% 11%
Korea 12% 14%
Taiwan 33% 26%
Asia Pacific 14% 13%

Use of Non-GAAP Financial Results

In addition to U.S. GAAP results, this commentary also contains non-GAAP financial results. The Company's non-GAAP results for both the March 2013 and December 2012 quarters exclude costs associated with the fair value impact of acquisition-related inventory, amortization related to intangible assets acquired in the Novellus transaction, certain integration-related costs, the amortization of convertible note discounts, and rationalization of certain product configurations. Additionally, the March 2013 quarter non-GAAP results exclude the impairment of an investment, tax benefit on reinstatement of R&D tax credit, and tax expense associated with legal entity integration, and the December 2012 quarter non-GAAP results exclude restructuring charges and tax benefits from the successful resolution of certain tax matters.

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.

Caution Regarding Forward-Looking Statements

Statements made in this press release that are not 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 to, but are not limited to, the anticipated revenue from shipments to Japanese customers, our expectations for growth and future demand for semiconductor equipment, our ability to execute as an integrated company, our ability to build on our technology leadership, our ability to strengthen our competitive differentiation, our ability to make progress against multi-year goals, and our plans pertaining to expense management, funding technology investments and positioning our products with customers as well as our ability to execute those plans. 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 24, 2012 and Form 10-Qs for the three months ended September 23, 2012 and December 23, 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.

About Lam Research

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 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)
(unaudited)
Three Months Ended Nine Months Ended
March 31, December 23, March 25, March 31, March 25,
2013 2012 2012 2013 2012
Revenue $ 844,928 $ 860,886 $ 658,961 $ 2,612,702 $ 1,923,378
Cost of goods sold 505,096 545,472 391,814 1,623,570 1,138,381
Cost of goods sold - restructuring and impairments - - - (859 )
Total cost of goods sold 505,096 545,472 391,814 1,623,570 1,137,522
Gross margin 339,832 315,414 267,147 989,132 785,856
Gross margin as a percent of revenue 40.2 % 36.6 % 40.5 % 37.9 % 40.9 %
Research and development 174,206 165,951 113,448 503,468 320,031
Selling, general and administrative 154,807 144,400 95,581 453,070 259,037
Restructuring and impairments - 1,021 - 1,021 1,725
Total operating expenses 329,013 311,372 209,029 957,559 580,793
Operating income 10,819 4,042 58,118 31,573 205,063
Operating margin as a percent of revenue 1.3 % 0.5 % 8.8 % 1.2 % 10.7 %
Other expense, net (15,834 ) (13,390 ) (3,568 ) (39,162 ) (23,426 )
Income (loss) before income taxes (5,015 ) (9,348 ) 54,550 (7,589 ) 181,637
Income tax expense (benefit) (24,011 ) (15,756 ) 8,946 (35,761 ) 30,983
Net income $ 18,996 $ 6,408 $ 45,604 $ 28,172 $ 150,654
Net income per share:
Basic net income per share $ 0.12 $ 0.04 $ 0.38 $ 0.16 $ 1.25
Diluted net income per share $ 0.11 $ 0.04 $ 0.38 $ 0.16 $ 1.24
Number of shares used in per share calculations:
Basic 163,034 170,699 119,841 171,016 120,904
Diluted 168,504 173,027 120,956 174,306 121,830
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 23, June 24,
2013 2012 2012
(unaudited) (unaudited) (1)
ASSETS
Cash and cash equivalents $ 1,019,109 $ 1,190,189 $ 1,564,752
Short-term investments 1,337,819 1,330,498 1,297,931
Accounts receivable, net 544,070 590,925 765,818
Inventories 545,036 530,272 632,853
Deferred income taxes 137,729 139,300 47,782
Other current assets 86,156 65,224 105,973
Total current assets 3,669,919 3,846,408 4,415,109
Property and equipment, net 594,916 590,547 584,596
Restricted cash and investments 166,196 166,166 166,335
Goodwill and intangible assets 2,562,986 2,608,221 2,686,730
Other assets 152,285 151,822 151,882
Total assets $ 7,146,302 $ 7,363,164 $ 8,004,652
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 801,013 $ 825,482 $ 1,426,928
Long-term debt, convertible notes, and capital leases $ 1,294,599 $ 1,286,729 $ 761,783
Income taxes payable 250,339 260,063 274,240
Other long-term liabilities 258,151 294,300 219,577
Total liabilities 2,604,102 2,666,574 2,682,528
Senior convertible notes - - 190,343
Stockholders' equity (2) 4,542,200 4,696,590 5,131,781
Total liabilities and stockholders' equity $ 7,146,302 $ 7,363,164 $ 8,004,652
(1) Derived from audited financial statements
(2) Common shares issued and outstanding were 161,802 shares as of March 31, 2013, 165,846 shares as of December 23, 2012, and 186,656 shares as of June 24, 2012.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
March 31, December 23, March 25, March 31, March 25,
2013 2012 2012 2013 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 18,996 $ 6,408 $ 45,604 $ 28,172 $ 150,654
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 74,861 78,388 22,517 228,065 66,249
Deferred income taxes (27,934 ) (7,320 ) 3,723 (47,271 ) 3,090
Restructuring and impairment charges, net - 1,021 - 1,021 866
Equity-based compensation expense 25,648 24,027 16,417 74,089 52,385
Income tax benefit on equity-based compensation plans (847 ) - (1,048 ) (847 ) 81
Excess tax benefit on equity-based compensation plans 903 - (137 ) 903 (2,292 )
Amortization of convertible note discount 7,935 7,843 6,750 23,530 20,014
Impairment of investment, net of foreign exchange effect 3,711 - - 3,711 1,724
Other, net 6,115 13,673 1,165 30,838 3,671
Changes in operating assets and liabilities: (6,931 ) 69,186 51,406 202,734 105,871
Net cash provided by operating activities 102,457 193,226 146,397 544,945 402,313
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets (34,766 ) (38,924 ) (27,978 ) (117,655 ) (70,392 )
Cash paid for business acquisition (400 ) (8,716 ) - (9,116 ) -
Net purchases of available-for-sale securities (12,075 ) (23,250 ) (282,225 ) (51,963 ) (371,678 )
Purchase of equity method investment - - - - (10,740 )
Receipt of loan payment - - - - 8,375
Proceeds from sale of assets - 660 - 660 2,677
Transfer of restricted cash and investments (32 ) 33 3 147 23
Net cash used for investing activities (47,273 ) (70,197 ) (310,200 ) (177,927 ) (441,735 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt and capital lease obligations (756 ) (115 ) (1,024 ) (1,536 ) (4,164 )
Excess tax benefit on equity-based compensation plans (903 ) - 137 (903 ) 2,292
Net cash received in settlement (paid in advance for) stock repurchase contracts - - 79,189 - 55,194
Treasury stock purchases (243,297 ) (355,010 ) (18,909 ) (953,386 ) (111,604 )
Reissuances of treasury stock related to employee stock purchase plan 8,494 - 7,902 18,419 16,760
Proceeds from issuance of common stock 15,132 6,583 301 22,666 1,776
Net cash provided by (used for) financing activities (221,330 ) (348,542 ) 67,596 (914,740 ) (39,746 )
Effect of exchange rate changes on cash (4,934 ) 4,236 (454 ) 2,079 (2,697 )
Net decrease in cash and cash equivalents (171,080 ) (221,277 ) (96,661 ) (545,643 ) (81,865 )
Cash and cash equivalents at beginning of period 1,190,189 1,411,466 1,506,928 1,564,752 1,492,132
Cash and cash equivalents at end of period $ 1,019,109 $ 1,190,189 $ 1,410,267 $ 1,019,109 $ 1,410,267
Non-GAAP Financial Summary
(in thousands, except percentages and per share data)
(unaudited)
Three Months
Ended
Three Months
Ended
March 31, December 23,
2013 2012
Revenue $ 844,928 $ 860,886
Gross margin $ 370,658 $ 380,475
Gross margin as percentage of revenue 43.9 % 44.2 %
Operating expenses $ 296,002 $ 281,499
Operating income $ 74,656 $ 98,976
Operating margin as a percentage of revenue 8.8 % 11.5 %
Net income $ 74,474 $ 77,278
Net income per diluted share $ 0.44 $ 0.45
Shares used in per share calculation - diluted 168,504 173,027
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
March 31, December 23,
2013 2012
U.S. GAAP net income $ 18,996 $ 6,408
Pre-tax non-GAAP items:
Costs associated with rationalization of certain product configurations - cost of goods sold 207 17,434
Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold 20,763 20,745
Acquisition-related inventory fair value impact - cost of goods sold 7,448 26,882
Integration costs - cost of goods sold 2,408 -
Integration costs - operating expenses 13,123 8,971
Amortization related to intangible assets acquired in Novellus transaction - operating expenses 19,445 19,438
Restructuring charges - operating expenses - 1,021
Costs associated with rationalization of certain product configurations - operating expenses 443 443
Amortization of convertible note discount, Lam notes - other expense, net 7,075 6,992
Amortization of convertible note discount, Novellus assumed notes - other expense, net 893 821
Impairment of investment - other expense, net 3,711 -
Net tax benefit on non-GAAP items (11,700 ) (14,883 )
Tax benefit on reinstatement of R&D tax credit (11,493 ) -
Tax expense associated with legal entity integration 3,155 -
Net tax benefit on successful resolution of certain tax matters - (16,994 )
Non-GAAP net income $ 74,474 $ 77,278
Non-GAAP net income per diluted share $ 0.44 $ 0.45
Number of shares used for diluted per share calculation 168,504 173,027
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 Ended Three Months Ended
March 31, December 23,
2013 2012
U.S. GAAP gross margin $ 339,832 $ 315,414
Pre-tax non-GAAP items:
Costs associated with rationalization of certain product configurations - cost of goods sold 207 17,434
Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold 20,763 20,745
Acquisition-related inventory fair value impact - cost of goods sold 7,448 26,882
Integration costs - cost of goods sold 2,408 -
Non-GAAP gross margin $ 370,658 $ 380,475
U.S. GAAP gross margin as a percentage of revenue 40.2 % 36.6 %
Non-GAAP gross margin as a percentage of revenue 43.9 % 44.2 %
U.S. GAAP operating expenses $ 329,013 $ 311,372
Pre-tax non-GAAP items:
Integration costs - operating expenses (13,123 ) (8,971 )
Amortization related to intangible assets acquired in Novellus transaction - operating expenses (19,445 ) (19,438 )
Restructuring charges - operating expenses - (1,021 )
Costs associated with rationalization of certain product configurations - operating expenses (443 ) (443 )
Non-GAAP operating expenses $ 296,002 $ 281,499
Non-GAAP operating income $ 74,656 $ 98,976
Non-GAAP operating margin as a percent of revenue 8.8 % 11.5 %

Lam Research Corporation Contact:
Shanye Hudson
Investor Relations
phone: 510-572-4589
e-mail: shanye.hudson@lamresearch.com

Ed Rebello
Corporate Communications
phone: 510-572-6603
e-mail: edward.rebello@lamresearch.com

Source: Lam Research Corporation

News Provided by Acquire Media