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Table of Contents

 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 29, 2008
LAM RESEARCH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of Incorporation)
     
0-12933
(Commission File Number)
  94-2634797
(IRS Employer Identification Number)
4650 Cushing Parkway
Fremont, California 94538

(Address of principal executive offices including zip code)
(510) 572-0200
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 


TABLE OF CONTENTS

Item 2.02. Results of Operations and Financial Condition
Item 9.01. Financial Statements and Exhibits
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1


Table of Contents

Item 2.02. Results of Operations and Financial Condition
On July 29, 2008, Lam Research Corporation (the “Company”) issued a press release announcing its earnings for the fiscal quarter ended June 29, 2008, the text of which is attached hereto as Exhibit 99.1.
The information in this Current Report on Form 8-K, including the exhibit, is furnished pursuant to Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, the information in the Current Report on Form 8-K, including the exhibit, shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits
     (c) Exhibits
     
99.1
  Press Release dated July 29, 2008 announcing earnings for the fiscal quarter ended June 29, 2008

 


Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 29, 2008
         
  LAM RESEARCH CORPORATION
 
 
  By:   /s/ Martin B. Anstice    
    Martin B. Anstice   
    Senior Vice President,
Chief Financial Officer, and
Chief Accounting Officer
 
 
 

 


Table of Contents

EXHIBIT INDEX
     
99.1
  Press Release dated July 29, 2008 announcing earnings for the fiscal quarter ended June 29, 2008

 

exv99w1
Exhibit 99.1
FOR IMMEDIATE RELEASE
Lam Research Corporation Contact:
Carol Raeburn, Senior Director, Investor Relations, phone: 510/572-4450, e-mail:
carol.raeburn@lamresearch.com
Lam Research Corporation Announces Earnings for the Quarter Ended June 29, 2008
FREMONT, Calif., July 29, 2008 —Lam Research Corporation (NASDAQ: LRCX) highlights for the June 2008 quarter were:
(in thousands, except per share data and percentages)
                                 
 
     Revenue:
          $ 566,160                  
 
                               
     Operating Margin:
  U.S. GAAP:     11.3 %   Ongoing:     15.3 %
 
                               
     Net Income:
  U.S. GAAP:   $ 72,178     Ongoing:   $ 75,837  
 
                               
     Diluted EPS:
  U.S. GAAP:   $ 0.57     Ongoing:   $ 0.60  
Lam Research Corporation today announced earnings for the quarter ended June 29, 2008. Revenue for the period was $566.2 million, gross margin was $234.7 million and net income was $72.2 million, or $0.57 per diluted share, compared to revenue of $613.8 million, gross margin of $287.2 million and net income of $103.5 million, or $0.82 per diluted share for the March 2008 quarter. Shipments for the June 2008 quarter were $495 million compared to $658 million during the March 2008 quarter.
The Company’s ongoing results for the June quarter exclude certain costs for restructuring activities and asset impairments related to an accelerated integration of SEZ, a net tax benefit as the result of the successful resolution of certain foreign tax matters, foreign currency gains on the purchase of SEZ, and costs associated with its voluntary internal stock option review. The Company’s March 2008 quarter excluded certain costs related to the recent acquisition of SEZ, including the foreign currency gains on the purchase and the one-time charge for in-process research and development expense as well as the costs associated with its voluntary internal stock option review. Management uses the presentation of ongoing gross margin, ongoing operating income, ongoing net income, and ongoing diluted earnings per share to evaluate the Company’s operating and financial results. The Company believes the presentation of ongoing results is useful to investors for analyzing ongoing business trends and comparing performance to prior periods, and enhances the investor’s ability to view the Company’s results from management’s perspective. A table presenting a reconciliation of ongoing results to results under U.S. GAAP is included at the end of this press release and on the Company’s web site.
Ongoing net income was $75.8 million, or $0.60 per diluted share in the June 2008 quarter compared to ongoing net income of $109.8 million, or $0.87 per diluted share, for the March 2008 quarter. Ongoing gross margin for the June 2008 quarter was $247.3 million or 43.7% compared to ongoing gross margin of $293.6 million, or 47.8%, for the March 2008 quarter. The sequential decline was primarily due to unfavorable customer and product mix, factory utilization levels, and inclusion of a full quarter of SEZ results. Ongoing operating expenses for the June 2008 quarter increased to $160.7 million compared with the March 2008 quarter of $148.9 million. This increase was due to the inclusion of a full quarter of SEZ.
~more~

 


 

     
Lam Announces Earnings for the June 2008 Quarter   Page 2 of 7
The geographic distribution of shipments and revenue during the June 2008 quarter is shown in the following table:
                 
Region   Shipments     Revenue
North America
    13%     14 %
Europe
    9%     9 %
Japan
    26%     20 %
Korea
    22%     28 %
Asia Pacific
    30%     29 %
Cash and cash equivalents, short-term investments and restricted cash and investments balances increased to $1.2 billion at the end of the June 2008 quarter compared to $1.0 billion at the end of the March 2008 quarter. Cash flows from operating activities were $198.3 million during the June quarter. Deferred revenue and deferred profit balances at the end of the June 2008 quarter were $193.6 million and $128.3 million, respectively. At the end of the June 2008 period, the anticipated future revenue value of orders shipped to Japanese customers that is not recorded as deferred revenue was approximately $52 million.
“During this period of continued reductions in wafer fab equipment investment, Lam Research is leveraging its flexible business model to reduce expenses while utilizing our strong cash generation capability to allow for continued strong investments in R&D activities, both in etch and adjacent new markets, that offer the opportunity for significant long-term revenue and earnings expansion,” said Steve Newberry, Lam’s president and chief executive officer.
“The largest of those new opportunities is in single-wafer clean, where we continue to make significant investments. We have created a new organization for all of our clean products by integrating SEZ together with our C3 linear clean technology and 2300 Coronus plasma bevel clean divisions. We expect the investments in our family of clean products will provide us an excellent opportunity to grow our business in a market that we expect to double in size over the next few years.” Newberry concluded.
~more~

 


 

     
Lam Announces Earnings for the June 2008 Quarter   Page 3 of 7
Statements made in this press release which are not statements of historical fact are forward-looking statements and are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate, but are not limited, to the future revenue value of orders shipped to Japanese customers, our expectations for wafer fab equipment investment, the leverage we can obtain from our business model and our ability and plan to reduce expenses, the value of continued investments in R&D activities and our family of clean products, the existence and magnitude of any opportunity for long-term revenue and earnings expansion, and the anticipated size of the market for our family of clean products. Some factors that may affect these forward-looking statements include: changing business conditions in the semiconductor industry and the overall economy and the efficacy of our plans for reacting to those changes, changing customer demands, success of our competitors’ strategies including their development of new technologies, and the technical challenges presented by our new products. 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 with the Securities and Exchange Commission, including specifically the report on Form 10-K for the year ended June 24, 2007, and Forms 10-Q for the quarters ended September 23, 2007, December 23, 2007, and March 30, 2008, which could cause actual results to vary from expectations. The Company undertakes no obligation to update the information or statements made in this press release.
Lam Research Corporation is a major provider of wafer fabrication equipment and services to the world’s semiconductor industry. Lam’s common stock trades on The NASDAQ Global Select Market SM under the symbol LRCX. Lam is a NASDAQ-100 ® company. The Company’s World Wide Web address is www.lamresearch.com.
Consolidated Financial Tables Follow
###

 


 

     
Lam Announces Earnings for the June 2008 Quarter   Page 4 of 7
LAM RESEARCH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
                                         
    Three Months Ended     Twelve Months Ended  
    June 29,     March 30,     June 24,     June 29,     June 24,  
    2008     2008     2007     2008     2007  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)     (1)  
Total revenue
  $ 566,160     $ 613,810     $ 678,519     $ 2,474,911     $ 2,566,576  
Cost of goods sold
    318,900       320,201       335,790       1,282,494       1,261,522  
Cost of goods sold — restructuring and asset impairments
    12,610                   12,610        
Cost of goods sold - 409A expense
          6,401             6,401        
 
                             
Total costs of goods sold
    331,510       326,602       335,790       1,301,505       1,261,522  
 
                             
Gross margin
    234,650       287,208       342,729       1,173,406       1,305,054  
Gross margin as a percent of revenue
    41.4 %     46.8 %     50.5 %     47.4 %     50.8 %
Research and development
    86,652       80,576       79,601       323,759       285,348  
Selling, general and administrative
    77,704       74,491       62,779       287,992       241,046  
409A expense
          43,784             43,784        
Restructuring and asset impairments
    6,366                   6,366        
In-process research and development
          2,074             2,074        
 
                             
Total operating expenses
    170,722       200,925       142,380       663,975       526,394  
 
                             
Operating income
    63,928       86,283       200,349       509,431       778,660  
Operating margin as a percent of revenue
    11.3 %     14.1 %     29.5 %     20.6 %     30.3 %
Other income, net
    10,344       49,605       10,872       67,545       69,063  
 
                             
Income before income taxes
    74,272       135,888       211,221       576,976       847,723  
Income tax expense
    2,094       32,364       40,990       137,627       161,907  
 
                             
Net income
  $ 72,178     $ 103,524     $ 170,231     $ 439,349     $ 685,816  
 
                             
Net income per share:
                                       
Basic net income per share
  $ 0.58     $ 0.83     $ 1.31     $ 3.52     $ 4.94  
 
                             
Diluted net income per share
  $ 0.57     $ 0.82     $ 1.28     $ 3.47     $ 4.85  
 
                             
Number of shares used in per share calculations:
                                       
Basic
    125,046       124,768       130,169       124,647       138,714  
 
                             
Diluted
    126,657       126,549       132,868       126,504       141,524  
 
                             
 
(1)   Derived from audited financial statements

 


 

     
Lam Announces Earnings for the June 2008 Quarter   Page 5 of 7
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                         
    June 29,     March 30,     June 24,  
    2008     2008     2007  
    (unaudited)     (unaudited)     (1)  
ASSETS
                       
Cash and cash equivalents
  $ 781,181     $ 552,353     $ 573,967  
Short-term investments
    277,555       290,542       96,724  
Accounts receivable, net
    412,356       599,719       410,013  
Inventories
    282,218       305,802       235,431  
Deferred income taxes
    96,748       76,725       61,727  
Other current assets
    67,649       65,542       38,499  
 
                 
Total current assets
    1,917,707       1,890,683       1,416,361  
Property and equipment, net
    235,735       231,748       113,725  
Restricted cash and investments
    146,072       169,841       360,038  
Deferred income taxes
    19,793       35,164       27,414  
Goodwill and intangible assets
    403,187       391,909       130,650  
Other assets
    84,261       74,919       53,417  
 
                 
Total assets
  $ 2,806,755     $ 2,794,264     $ 2,101,605  
 
                 
 
                       
LIABILITIES AND STOCKHOLDERS’ EQUITY
                       
 
                       
Current liabilities
  $ 637,679     $ 725,042     $ 672,798  
 
                 
 
                       
Long-term debt and capital leases
  $ 276,503     $ 287,330     $ 250,000  
Income taxes payable
    85,611       85,501        
Other long-term liabilities
    23,018       23,060       2,487  
Minority interests
    5,347       9,274        
Stockholders’ equity
    1,778,597       1,664,057       1,176,320  
 
                 
Total liabilities and stockholders’ equity
  $ 2,806,755     $ 2,794,264     $ 2,101,605  
 
                 
 
1   Derived from audited financial statements

 


 

     
Lam Announces Earnings for the June 2008 Quarter   Page 6 of 7
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                         
    Three Months Ended     Twelve Months Ended  
    June 29,     March 30,     June 24,     June 29,     June 24,  
    2008     2008     2007     2008     2007  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)     (1)  
CASH FLOWS FROM OPERATING ACTIVITIES:
                                       
Net income
  $ 72,178     $ 103,524     $ 170,231     $ 439,349     $ 685,816  
Adjustments to reconcile net income to net cash provided by operating activities:
                                       
Depreciation and amortization
    19,227       12,914       10,920       54,704       38,097  
Deferred income taxes
    (4,652 )     (11,995 )     8,334       (26,661 )     17,055  
Equity-based compensation expense
    11,629       10,272       11,766       42,516       35,554  
Income tax benefit on equity-based compensation plans
    26,815       (520 )     12,621       83,472       62,437  
Excess tax benefit on equity-based compensation plans
    (21,666 )     401       (10,449 )     (58,904 )     (44,990 )
Net gain on settlement of call option
    399       (33,694 )           (33,295 )      
Restructuring and asset impairments
    18,976                   18,976        
Other, net
    (996 )     (14,183 )     597       (3,863 )     625  
Changes in operating asset accounts
    76,377       79,266       89,473       71,865       28,965  
 
                             
Net cash provided by operating activities
    198,287       145,985       293,493       588,159       823,559  
 
                             
 
                                       
CASH FLOWS FROM INVESTING ACTIVITIES:
                                       
Capital expenditures and intangible assets
    (18,951 )     (19,291 )     (14,305 )     (76,803 )     (59,968 )
Acquisitions of businesses, net of cash acquired
    (4,758 )     (475,656 )     (4,000 )     (480,414 )     (181,108 )
Sales of other investments
                3,000             3,000  
Net sales (purchases) of available-for-sale securities
    16,150       83,201       540,076       67,466       45,230  
Purchase of call option
          (3,227 )           (13,506 )      
Proceeds from settlement of call option
    383       46,962             47,345        
Purchase of other investments
                      (4,560 )      
Transfer of restricted cash and investments
    17,233       (688 )           15,471       110,000  
Other
          2,248                    
 
                             
Net cash provided by (used for) investing activities
    10,057       (366,451 )     524,771       (445,001 )     (82,846 )
 
                             
 
                                       
CASH FLOWS FROM FINANCING ACTIVITIES:
                                       
Principal payments on long-term debt and capital lease obligations
    (1,500 )     (250,114 )     (51 )     (251,714 )     (100,171 )
Net proceeds from issuance of long-term debt
    1,915       250,000             251,915        
Excess tax benefit on equity-based compensation plans
    21,666       (401 )     10,449       58,904       44,990  
Treasury stock purchases
    (3,590 )     (737 )     (768,400 )     (14,552 )     (1,083,745 )
Reissuances of treasury stock
    1,262             6,835       8,563       18,123  
Proceeds from issuance of common stock
    2,588             12,175       12,694       42,468  
 
                             
Net cash provided by (used for) financing activities
    22,341       (1,252 )     (738,992 )     65,810       (1,078,335 )
 
                             
Effect of exchange rate changes on cash
    (1,857 )     (1,984 )     (112 )     (1,754 )     774  
Net increase (decrease) in cash and cash equivalents
    228,828       (223,702 )     79,160       207,214       (336,848 )
Cash and cash equivalents at beginning of period
    552,353       776,055       494,807       573,967       910,815  
 
                             
Cash and cash equivalents at end of period
  $ 781,181     $ 552,353     $ 573,967     $ 781,181     $ 573,967  
 
                             
 
(1)   Derived from audited financial statements

 


 

     
Lam Announces Earnings for the June 2008 Quarter   Page 7 of 7
Reconciliation of U.S. GAAP Net Income to Ongoing Net Income
(in thousands, except per share data and percentages)
                 
    Three Months Ended     Three Months Ended  
    June 29,     March 30,  
    2008     2008  
U.S. GAAP net income
  $ 72,178     $ 103,524  
Pre-tax non-ongoing items:
               
Restructuring and asset impairments — cost of goods sold
    12,610        
Restructuring and asset impairments — operating expenses
    6,366        
409A expense — cost of goods sold
          6,401  
409A expense — operating expenses
          43,784  
Voluntary internal stock option review — operating expenses
    3,669       6,190  
Foreign exchange gain on SEZ acquisition — other income (expense), net
    (570 )     (49,285 )
Net tax benefit on ongoing items
    (6,141 )     (2,861 )
In-process r&d for SEZ acquisition — operating expenses
          2,074  
Net tax benefit on successful resolution of certain foreign tax matters
    (12,275 )      
 
           
Ongoing net income
  $ 75,837     $ 109,827  
 
           
Ongoing net income per diluted share
  $ 0.60     $ 0.87  
 
           
Number of shares used for diluted per share calculation
    126,657       126,549  
U.S. GAAP income tax rate
    2.8 %     23.8 %
Ongoing income tax rate
    21.3 %     24.3 %
Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating Income to Ongoing Gross Margin, Operating
Expenses and Operating Income
(in thousands, except percentages)
                 
    Three Months Ended     Three Months Ended  
    June 29,     March 30,  
    2008     2008  
U.S. GAAP gross margin
  $ 234,650     $ 287,208  
Pre-tax non-ongoing items:
               
Restructuring and asset impairments — cost of goods sold
    12,610     $  
409A expense — cost of goods sold
          6,401  
 
           
Ongoing gross margin
  $ 247,260     $ 293,609  
 
       
U.S. GAAP gross margin as a percent of revenue
    41.4 %     46.8 %
Ongoing gross margin as a percent of revenue
    43.7 %     47.8 %
U.S. GAAP operating expenses
  $ 170,722     $ 200,925  
Pre-tax non-ongoing items:
               
Restructuring and asset impairments — operating expenses
    (6,366 )      
409A expense — operating expenses
          (43,784 )
Voluntary internal stock option review — operating expenses
    (3,669 )     (6,190 )
In-process r&d for SEZ acquisition — operating expenses
          (2,074 )
 
           
Ongoing operating expenses
  $ 160,687     $ 148,877  
 
           
Ongoing operating income
  $ 86,573     $ 144,732  
 
           
Ongoing operating income as a percent of revenue
    15.3 %     23.6 %