Document



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): April 24, 2019
  
LAM RESEARCH CORPORATION
(Exact name of registrant as specified in its charter)
 
 
Delaware
 
0-12933
 
94-2634797
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(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):
¨

 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
¨

 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
¨

 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
¨

 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company     ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ¨








Table of Contents
 
 
 
 
 
 
Item 2.02.
  
Results of Operations and Financial Condition
 
Item 9.01.
  
Financial Statements and Exhibits
 
SIGNATURES
 
EX-99.1
 
 
 
 
 
 
 







 Item 2.02.
Results of Operations and Financial Condition
On April 24, 2019, Lam Research Corporation (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended March 31, 2019, the text of which is attached hereto as Exhibit 99.1.
The information in this item of this Current Report on Form 8-K, including Exhibit 99.1, 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 (the “Exchange Act”), or otherwise subject to the liabilities under that Section. Furthermore, the information in this item of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended, or the Exchange Act.
 Item 9.01.
Financial Statements and Exhibits
(d) Exhibits
99.1







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:
April 24, 2019
 
LAM RESEARCH CORPORATION
 
 
 
(Registrant)
 
 
 
/s/ Douglas R. Bettinger
 
 
 
Douglas R. Bettinger
 
 
 
Executive Vice President, Chief Financial Officer
 
 
 
(Principal Financial Officer and Principal Accounting Officer)
 



Exhibit


Exhibit 99.1
FOR IMMEDIATE RELEASE        
Lam Research Corporation Contacts:
Tina Correia, Investor Relations, phone: 510-572-1615, e-mail: investor.relations@lamresearch.com
Lam Research Corporation Reports Financial Results for the Quarter Ended March 31, 2019
FREMONT, Calif., April 24, 2019 - Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended March 31, 2019 (the “March 2019 quarter”).
Highlights for the March 2019 quarter were as follows:
Revenue of $2.44 billion.
U.S. GAAP gross margin of 44.0%, U.S. GAAP operating income as a percentage of revenue of 23.2%, and U.S. GAAP diluted EPS of $3.47.
Non-GAAP gross margin of 45.1%, non-GAAP operating income as a percentage of revenue of 25.1%, and non-GAAP diluted EPS of $3.70.
Key Financial Data for the Quarters Ended
March 31, 2019 and December 23, 2018
(in thousands, except per-share data, percentages, and basis points) 
U.S. GAAP
 
  
March 2019
 
December 2018
 
Change Q/Q
Revenue
  
$
2,439,048

 
$
2,522,673

 
- 3%
Gross margin as percentage of revenue
  
44.0
%
 
45.4
%
 
- 140 bps
Operating income as percentage of revenue
  
23.2
%
 
27.4
%
 
- 420 bps
Diluted EPS
  
$
3.47

 
$
3.51

 
- 1%
 
 
 
 
 
 
 
Non-GAAP
 
  
March 2019
 
December 2018
 
Change Q/Q
Revenue
  
$
2,439,048

 
$
2,522,673

 
- 3%
Gross margin as percentage of revenue
  
45.1
%
 
46.3
%
 
- 120 bps
Operating income as percentage of revenue
  
25.1
%
 
28.8
%
 
- 370 bps
Diluted EPS
  
$
3.70

 
$
3.87

 
- 4%

U.S. GAAP Financial Results
For the March 2019 quarter, revenue was $2,439 million, gross margin was $1,074 million, or 44.0% of revenue, operating expenses were $509 million, operating income was 23.2% of revenue, and net income was $547 million, or $3.47 per diluted share on a U.S. GAAP basis. This compares to revenue of $2,523 million, gross margin of $1,145 million, or 45.4% of revenue, operating expenses of $455 million, operating income of 27.4% of revenue, and net income of $569 million, or $3.51 per diluted share, for the quarter ended December 23, 2018 (the “December 2018 quarter”). The March 2019 quarter included 14 weeks; the December 2018 quarter included 13 weeks.
Non-GAAP Financial Results
For the March 2019 quarter, non-GAAP gross margin was $1,100 million or 45.1% of revenue, non-GAAP operating expenses were $488 million, non-GAAP operating income was 25.1% of revenue, and non-GAAP net income was $584 million, or $3.70 per diluted share. This compares to non-GAAP gross margin of $1,167 million or 46.3% of revenue, non-GAAP operating expenses of $440 million, non-GAAP operating income of 28.8% of revenue, and non-GAAP net income of $628 million, or $3.87 per diluted share for the December 2018 quarter.
“Lam’s March quarter results demonstrate strong execution in a challenging near-term industry environment,” said Timothy Archer, Lam Research’s President and Chief Executive Officer. “By continuing to focus on customer needs and investing to extend differentiation in our product and services portfolio, Lam is well positioned to emerge stronger as market conditions improve.”










Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and restricted cash and investments balances increased to $6.4 billion at the end of the March 2019 quarter as compared to $3.9 billion at the end of the December 2018 quarter. This increase was primarily the result of approximately $2.5 billion of proceeds from issuance of senior notes during the March 2019 quarter.

Deferred revenue and deferred profit at the end of the March 2019 quarter decreased to $441 million and $378 million, respectively, as compared to $493 million and $432 million, respectively, at the end of the December 2018 quarter. Lam’s deferred revenue balance does not include shipments to customers in Japan, to whom title does not transfer until customer acceptance. Shipments to customers in Japan are classified as inventory at cost until the time of acceptance. The estimated future revenue from shipments to customers in Japan was approximately $80 million as of March 31, 2019 and $262 million as of December 23, 2018.
Geographic Distribution
The geographic distribution of revenue during the March 2019 quarter is shown in the following table:
Region
Revenue
Korea
25%
Taiwan
23%
Japan
17%
China
17%
United States
9%
Southeast Asia
5%
Europe
4%
Outlook
For the June 2019 quarter, Lam is providing the following guidance:
 
U.S. GAAP
 
Reconciling Items
 
Non-GAAP
Revenue
$2.35 Billion
+/-
$150 Million
 
 
$2.35 Billion
+/-
$150 Million
Gross margin as a percentage of revenue
45.4%
+/-
1%
 
$
3

Million
 
45.5%
+/-
1%
Operating income as a percentage of revenue
25.3%
+/-
1%
 
$
16

Million
 
26.0%
+/-
1%
Net income per diluted share
$3.31
+/-
$0.20
 
$
14

Million
 
$3.40
+/-
$0.20
Diluted share count
155 Million
 
 
155 Million
The information provided above is only an estimate of what the Company believes is realizable as of the date of this release, and does not incorporate the potential impact of any business combinations, asset acquisitions, divestitures, restructuring, balance sheet valuation adjustments, financing arrangements, other investments, or other significant transactions that may be completed after the date of this release. U.S. GAAP to non-GAAP reconciling items provided include only those items that are known and can be estimated as of the date of this release. Actual results will vary from this model and the variations may be material. Reconciling items included above are as follows:
Gross margin as a percentage of revenue - amortization related to intangible assets acquired through business combinations, $3 million.
Operating income as a percentage of revenue - amortization related to intangible assets acquired through business combinations, $16 million.
Earnings per share - amortization related to intangible assets acquired though business combinations, $16 million; amortization of note discounts, $1 million; and associated tax benefit for non-GAAP items ($3 million); totaling $14 million.





Use of Non-GAAP Financial Results
In addition to U.S. GAAP results, this press release also contains non-GAAP financial results. The Company’s non-GAAP results for both the March 2019 and December 2018 quarters exclude amortization related to intangible assets acquired through business combinations, restructuring charges, amortization of note discounts, income tax benefit of non-GAAP items, and income tax benefit on the conclusion of tax matters related to a prior business combination. Additionally, the December 2018 quarter non-GAAP results exclude estimated income tax impacts associated with U.S. tax reform.
Management uses non-GAAP gross margin, operating expense, operating income, 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 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 website 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 created by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, but are not limited to: our focus on customer needs; our investments to extend differentiation in our products and services; the estimated future revenue from shipments to customers in Japan; the timing and amount of revenue and profit earned from any booked deferred revenue and profit; market trends and semiconductor demand; our technology leadership; our installed base growth; our positioning as market conditions change; technology demand trends; the legal and business factors that may affect our future tax rate; our engineering capabilities; our commitment to customer success; our continued ability to accelerate innovation and enhance device performance; and our guidance for revenue, gross margin (both as a dollar value and a percentage of revenue), operating income (both as a dollar value and a percentage of revenue), net income or earnings per diluted share, and diluted share count. Some factors that may affect these forward-looking statements include: business, political and/or regulatory conditions in the consumer electronics industry, the semiconductor industry and the overall economy may deteriorate or change; and the actions of our customers and competitors may be inconsistent with our expectations, as well as the other risks and uncertainties that are described in the documents filed or furnished by us with the Securities and Exchange Commission, including specifically the Risk Factors described in our annual report on Form 10-K for the fiscal year ended June 24, 2018 and our quarterly report on Form 10-Q for the fiscal quarters ended September 23, 2018 and December 23, 2018. These uncertainties and changes could materially affect the forward looking statements and cause actual results to vary from expectations in a material way. The Company undertakes no obligation to update the information or statements made in this release.
About Lam Research
Lam Research Corporation is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. As a trusted, collaborative partner to the world’s leading semiconductor companies, we combine superior systems engineering capability, technology leadership, and unwavering commitment to customer success to accelerate innovation through enhanced device performance. Lam Research (Nasdaq: LRCX) is a FORTUNE 500® company headquartered in Fremont, Calif., with operations around the globe. Learn more at www.lamresearch.com. (LRCX-F)

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,
2019
 
December 23,
2018
 
March 25,
2018
 
March 31,
2019
 
March 25,
2018
Revenue
$
2,439,048

 
$
2,522,673

 
$
2,892,115

 
$
7,292,412

 
$
7,951,070

Cost of goods sold
1,364,711

 
1,377,640

 
1,561,401

 
4,014,844

 
4,265,446

Gross margin
1,074,337

 
1,145,033

 
1,330,714

 
3,277,568

 
3,685,624

Gross margin as a percent of revenue
44.0
%
 
45.4
%
 
46.0
%
 
44.9
%
 
46.4
%
Research and development
318,514

 
285,556

 
305,412

 
895,742

 
861,801

Selling, general and administrative
190,306

 
169,098

 
197,791

 
534,179

 
565,719

Total operating expenses
508,820

 
454,654

 
503,203

 
1,429,921

 
1,427,520

Operating income
565,517

 
690,379

 
827,511

 
1,847,647

 
2,258,104

Operating income as a percent of revenue
23.2
%
 
27.4
%
 
28.6
%
 
25.3
%
 
28.4
%
Other income (expense), net
20,532

 
(30,649
)
 
(55,810
)
 
(10,494
)
 
(64,464
)
Income before income taxes
586,049

 
659,730

 
771,701

 
1,837,153

 
2,193,640

Income tax (expense) benefit
(38,659
)
 
(90,875
)
 
7,099

 
(187,548
)
 
(834,105
)
Net income
$
547,390

 
$
568,855

 
$
778,800

 
$
1,649,605

 
$
1,359,535

Net income per share:
 
 
 
 
 
 
 
 
 
Basic
$
3.62

 
$
3.67

 
$
4.80

 
$
10.72

 
$
8.40

Diluted
$
3.47

 
$
3.51

 
$
4.33

 
$
10.20

 
$
7.45

Number of shares used in per share calculations:
 
 
 
 
 
 
 
 
 
Basic
151,201

 
155,022

 
162,378

 
153,891

 
161,885

Diluted
157,849

 
162,170

 
179,779

 
161,683

 
182,565

Cash dividend declared per common share
$
1.10

 
$
1.10

 
$
0.50

 
$
3.30

 
$
1.45


 

















 LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
March 31,
2019
 
December 23,
2018
 
June 24,
2018
 
(unaudited)
 
(unaudited)
 
(1)
ASSETS
 
 
 
 
 
Cash and cash equivalents
$
4,931,611

 
$
3,359,793

 
$
4,512,257

Investments
1,209,315

 
275,670

 
437,338

Accounts receivable, net
1,522,273

 
1,868,842

 
2,176,936

Inventories
1,622,242

 
1,703,307

 
1,876,162

Prepaid expenses and other current assets
156,800

 
148,233

 
147,218

Total current assets
9,442,241

 
7,355,845

 
9,149,911

Property and equipment, net
1,040,329

 
1,013,306

 
902,547

Restricted cash and investments
255,774

 
255,292

 
256,301

Goodwill and intangible assets
1,707,930

 
1,736,468

 
1,802,740

Other assets
448,988

 
407,547

 
367,979

Total assets
$
12,895,262

 
$
10,768,458

 
$
12,479,478

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
Current portion of convertible notes, capital leases and commercial paper
$
964,107

 
$
187,102

 
$
610,030

Other current liabilities
1,841,521

 
1,979,735

 
2,540,278

Total current liabilities
2,805,628

 
2,166,837

 
3,150,308

Long-term debt and capital leases
3,801,514

 
1,813,190

 
1,806,562

Income taxes payable
863,155

 
859,232

 
851,936

Other long-term liabilities
83,986

 
87,827

 
90,629

Total liabilities
7,554,283

 
4,927,086

 
5,899,435

Temporary equity, convertible notes
49,783

 
57,009

 
78,192

Stockholders’ equity (2)
5,291,196

 
5,784,363

 
6,501,851

Total liabilities and stockholders’ equity
$
12,895,262

 
$
10,768,458

 
$
12,479,478

 
(1)
Derived from audited financial statements.
(2)
Common shares issued and outstanding were 149,886 as of March 31, 2019, 153,961 as of December 23, 2018, and 156,892 as of June 24, 2018.
 







 
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
 
Three Months Ended
 
Nine Months Ended
 
March 31,
2019
 
December 23,
2018
 
March 25,
2018
 
March 31,
2019
 
March 25,
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Net income
$
547,390

 
$
568,855

 
$
778,800

 
$
1,649,605

 
$
1,359,535

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
82,274

 
81,794

 
82,236

 
243,873

 
241,276

Deferred income taxes
(12,401
)
 
20,797

 
19,060

 
(75,105
)
 
(209,214
)
Equity-based compensation expense
53,240

 
38,806

 
41,095

 
142,389

 
125,002

Impairment of investment

 

 
42,456

 

 
42,456

Amortization of note discounts and issuance costs
2,861

 
1,031

 
4,342

 
5,137

 
13,469

Other, net
(1,494
)
 
(1,343
)
 
17,866

 
(646
)
 
23,327

Changes in operating assets and liabilities
260,951

 
(67,521
)
 
64,524

 
330,273

 
341,538

Net cash provided by operating activities
932,821

 
642,419

 
1,050,379

 
2,295,526

 
1,937,389

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Capital expenditures and intangible assets
(75,522
)
 
(105,923
)
 
(49,057
)
 
(237,543
)
 
(193,814
)
Business acquisition, net of cash acquired

 

 

 

 
(115,697
)
Net (purchase) sale of available-for-sale securities
(931,380
)
 
773,223

 
2,134,886

 
(770,740
)
 
1,811,411

Other, net
(1,269
)
 
(369
)
 
638

 
(5,288
)
 
(14,358
)
Net cash (used for) provided by investing activities
(1,008,171
)
 
666,931

 
2,086,467

 
(1,013,571
)
 
1,487,542

CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Principal payments on debt
(30,225
)
 
(6,440
)
 
(228,166
)
 
(116,496
)
 
(577,415
)
Net proceeds (repayments) from issuance of commercial paper
297,850

 
(359,518
)
 
199,024

 
(61,754
)
 
997,971

Proceeds from borrowings on revolving credit facility

 

 

 

 
750,000

Repayments of borrowings on revolving credit facility

 

 

 

 
(750,000
)
Proceeds from issuance of long-term debt, net of issuance costs
2,476,720

 

 

 
2,476,720

 

Treasury stock purchases
(934,637
)
 
(1,519
)
 
(80,105
)
 
(2,672,051
)
 
(1,346,940
)
Dividends paid
(171,196
)
 
(167,907
)
 
(79,739
)
 
(513,475
)
 
(225,604
)
Reissuance of treasury stock related to employee stock purchase plan

 
32,920

 

 
32,920

 
34,057

Proceeds from issuance of common stock
5,010

 
109

 
2,517

 
5,119

 
6,632

Other, net

 
(13,198
)
 
7

 
(13,207
)
 
11

Net cash provided by (used for) financing activities
1,643,522

 
(515,553
)
 
(186,462
)
 
(862,224
)
 
(1,111,288
)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
4,128

 
(2,721
)
 
4,041

 
(904
)
 
8,200

Net increase in cash, cash equivalents, and restricted cash
1,572,300

 
791,076

 
2,954,425

 
418,827

 
2,321,843

Cash, cash equivalents, and restricted cash at beginning of period
3,615,085

 
2,824,009

 
2,001,157

 
4,768,558

 
2,633,739

Cash, cash equivalents, and restricted cash at end of period
$
5,187,385

 
$
3,615,085

 
$
4,955,582

 
$
5,187,385

 
$
4,955,582

                          






 
Non-GAAP Financial Summary
(in thousands, except percentages and per share data)
(unaudited)
 
Three Months Ended
 
March 31,
2019
 
December 23,
2018
Revenue
$
2,439,048

 
$
2,522,673

Gross margin
$
1,099,550

 
$
1,167,375

Gross margin as percentage of revenue
45.1
%
 
46.3
%
Operating expenses
$
488,389

 
$
439,808

Operating income
$
611,161

 
$
727,567

Operating income as a percentage of revenue
25.1
%
 
28.8
%
Net income
$
584,350

 
$
628,196

Net income per diluted share
$
3.70

 
$
3.87

Shares used in per share calculation - diluted
157,849

 
162,170

Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(unaudited) 
 
Three Months Ended
 
March 31, 2019
 
December 23,
2018
U.S. GAAP net income
$
547,390

 
$
568,855

Pre-tax non-GAAP items:
 
 
 
Amortization related to intangible assets acquired through certain business combinations - cost of goods sold
22,342

 
22,342

Restructuring charges - cost of goods sold
2,871

 

Restructuring charges - research and development
4,698

 

Amortization related to intangible assets acquired through certain business combinations - selling, general and administrative
12,446

 
12,490

Restructuring charges - selling, general and administrative
3,287

 
2,356

Amortization of note discounts - other expense, net
956

 
886

Net income tax benefit on non-GAAP items
(6,718
)
 
(5,704
)
Income tax benefit on the conclusion of certain tax matters
(2,922
)
 
(1,635
)
Income tax expense associated with U.S. tax reform

 
28,606

Non-GAAP net income
$
584,350

 
$
628,196

Non-GAAP net income per diluted share
$
3.70

 
$
3.87

GAAP net income per diluted share
$
3.47

 
$
3.51

U.S. GAAP number of shares used for per diluted share calculation
157,849

 
162,170







 
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
 
March 31,
2019
 
December 23,
2018
U.S. GAAP gross margin
$
1,074,337

 
$
1,145,033

Pre-tax non-GAAP items:
 
 
 
Amortization related to intangible assets acquired through certain business combinations
22,342

 
22,342

Restructuring charges
2,871

 

Non-GAAP gross margin
$
1,099,550

 
$
1,167,375

U.S. GAAP gross margin as a percentage of revenue
44.0
%
 
45.4
%
Non-GAAP gross margin as a percentage of revenue
45.1
%
 
46.3
%
U.S. GAAP operating expenses
$
508,820

 
$
454,654

Pre-tax non-GAAP items:
 
 
 
Amortization related to intangible assets acquired through certain business combinations
(12,446
)
 
(12,490
)
Restructuring charges
(7,985
)
 
(2,356
)
Non-GAAP operating expenses
$
488,389

 
$
439,808

U.S. GAAP operating income
$
565,517

 
$
690,379

Non-GAAP operating income
$
611,161

 
$
727,567

U.S. GAAP operating income as percent of revenue
23.2
%
 
27.4
%
Non-GAAP operating income as a percent of revenue
25.1
%
 
28.8
%