Lam Research Corporation
NOVELLUS SYSTEMS INC (Form: 425, Received: 04/18/2012 16:33:45)

Filed by Lam Research Corporation

Pursuant to Rule 425 under the Securities Act of 1933

and deemed filed pursuant to Rule 14a-12

under the Securities Exchange Act of 1934

Subject Company: Novellus Systems, Inc.

Commission File No.: 000-17157


FOR IMMEDIATE RELEASE

Lam Research Corporation Contact:

Shanye Hudson, Director, Investor Relations, phone: 510/572-4589, e-mail: shanye.hudson@lamresearch.com

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

FREMONT, Calif., April 18, 2012—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.

~more~

 

page 1 of 7


Lam Announces Financial Results for the March 2012 Quarter

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.”

~more~

 

page 2 of 7


Lam Announces Financial Results for the March 2012 Quarter

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

###

 

page 3 of 7


Lam Announces Financial Results for the March 2012 Quarter

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data and percentages)

(unaudited)

 

     Three Months Ended     Nine Months Ended  
     March 25,
2012
    December 25,
2011
    March 27,
2011
    March 25,
2012
    March 27,
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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

page 4 of 7


Lam Announces Financial Results for the March 2012 Quarter

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

     March 25,
2012
     December 25,
2011
     June 26,
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

 

page 5 of 7


Lam Announces Financial Results for the March 2012 Quarter

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

     Three Months Ended     Nine Months Ended  
     March 25,
2012
    December 25,
2011
    March 27,
2011
    March 25,
2012
    March 27,
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   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

page 6 of 7


Lam Announces Financial Results for the March 2012 Quarter

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 25,
2012
    December 25,
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 Ended     Three Months Ended  
     March 25,
2012
    December 25,
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

 

page 7 of 7