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false--06-30Q320192019-03-3110-Q0000707549149926529falseLarge Accelerated FilerLAM RESEARCH CORPfalseLRCX10005000000000534300049520000.51.451.103.30.0010.0014000000004000000001568920001498860001568920001498860000.0307418303020200.048750.040.0380.03750.0280.02750.0262556000000150000000042500000000.0010.0015000000500000000The Company generally invoices customers at shipment and for professional services either as provided or upon meeting certain milestones. Customer invoices are generally due within 30 to 90 days after issuance. The Company's contracts with customers typically do not include significant financing components as the period between the transfer of performance obligations and timing of payment are generally within one year.P9MP2Y164.19119679000135045000Refer to Note 2 - Recent Accounting Pronouncements for more information regarding these FASB Accounting Standard Updates. 0000707549 2018-06-25 2019-03-31 0000707549 2019-04-26 0000707549 2017-12-25 2018-03-25 0000707549 2018-12-24 2019-03-31 0000707549 2017-06-26 2018-03-25 0000707549 2019-03-31 0000707549 2018-06-24 0000707549 2018-03-25 0000707549 2017-06-25 0000707549 us-gaap:CommonStockMember 2018-06-25 2019-03-31 0000707549 us-gaap:AccountingStandardsUpdate201609Member us-gaap:RetainedEarningsMember 2018-03-25 0000707549 us-gaap:CommonStockMember 2017-12-25 2018-03-25 0000707549 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-25 2018-03-25 0000707549 us-gaap:TreasuryStockMember 2018-06-25 2019-03-31 0000707549 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Table of Contents


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
  ___________________________________________________________
FORM 10-Q
 ___________________________________________________________
 (Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
or 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 0-12933 
___________________________________________________________
LAM RESEARCH CORPORATION
(Exact name of registrant as specified in its charter)
___________________________________________________________
Delaware
 
94-2634797
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
4650 Cushing Parkway
Fremont, California
 
94538
(Address of principal executive offices)
 
(Zip Code)
(510) 572-0200
(Registrant’s telephone number, including area code)
__________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
 
x
  
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨  
  
Smaller reporting company
 
¨
 
 
 
 
 
 
 
 
 
 
 
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. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x
As of April 26, 2019, the Registrant had 149,926,529 shares of Common Stock outstanding.
 


Table of Contents



LAM RESEARCH CORPORATION
TABLE OF CONTENTS
 
 
 
Page No.
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
 
 
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



Table of Contents


PART I. FINANCIAL INFORMATION

ITEM 1.
Financial Statements

LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
 
Three Months Ended
 
Nine Months Ended
 
March 31,
2019
 
March 25,
2018
 
March 31,
2019
 
March 25,
2018
Revenue
$
2,439,048

 
$
2,892,115

 
$
7,292,412

 
$
7,951,070

Cost of goods sold
1,364,711

 
1,561,401

 
4,014,844

 
4,265,446

Gross margin
1,074,337

 
1,330,714

 
3,277,568

 
3,685,624

Research and development
318,514

 
305,412

 
895,742

 
861,801

Selling, general, and administrative
190,306

 
197,791

 
534,179

 
565,719

Total operating expenses
508,820

 
503,203

 
1,429,921

 
1,427,520

Operating income
565,517

 
827,511

 
1,847,647

 
2,258,104

Other income (expense), net
20,532

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

 
771,701

 
1,837,153

 
2,193,640

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

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

 
$
778,800

 
$
1,649,605

 
$
1,359,535

Net income per share:
 
 
 
 
 
 
 
Basic
$
3.62

 
$
4.80

 
$
10.72

 
$
8.40

Diluted
$
3.47

 
$
4.33

 
$
10.20

 
$
7.45

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

 
162,378

 
153,891

 
161,885

Diluted
157,849

 
179,779

 
161,683

 
182,565













See Notes to Condensed Consolidated Financial Statements


3



Table of Contents


LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)

 
 
Three Months Ended
 
Nine Months Ended
 
March 31,
2019
 
March 25,
2018
 
March 31,
2019
 
March 25,
2018
Net income
$
547,390

 
$
778,800

 
$
1,649,605

 
$
1,359,535

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustment
6,684

 
12,197

 
(6,845
)
 
25,305

Cash flow hedges:
 
 
 
 
 
 
 
Net unrealized (losses) gains during the period
(7,950
)
 
(36,616
)
 
4,038

 
(26,624
)
Net losses (gains) reclassified into earnings
2,086

 
5,290

 
(2,492
)
 
2,019

 
(5,864
)
 
(31,326
)
 
1,546

 
(24,605
)
Available-for-sale investments:
 
 
 
 
 
 
 
Net unrealized gains (losses) during the period
1,143

 
(25,406
)
 
1,441

 
(45,472
)
Net (gains) losses reclassified into earnings
(147
)
 
43,109

 
(201
)
 
43,070

 
996

 
17,703

 
1,240

 
(2,402
)
Defined benefit plans, net change in unrealized component
216

 
155

 
(1,152
)
 
(2,029
)
Other comprehensive income (loss), net of tax
2,032

 
(1,271
)
 
(5,211
)
 
(3,731
)
Comprehensive income
$
549,422

 
$
777,529

 
$
1,644,394

 
$
1,355,804


See Notes to Condensed Consolidated Financial Statements
4

Table of Contents


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

 
$
4,512,257

Investments
1,209,315

 
437,338

Accounts receivable, less allowance for doubtful accounts of $4,952 as of March 31, 2019, and $5,343 as of June 24, 2018
1,522,273

 
2,176,936

Inventories
1,622,242

 
1,876,162

Prepaid expenses and other current assets
156,800

 
147,218

Total current assets
9,442,241

 
9,149,911

Property and equipment, net
1,040,329

 
902,547

Restricted cash and investments
255,774

 
256,301

Goodwill
1,484,908

 
1,484,904

Intangible assets, net
223,022

 
317,836

Other assets
448,988

 
367,979

Total assets
$
12,895,262

 
$
12,479,478

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Trade accounts payable
$
416,187

 
$
510,983

Accrued expenses and other current liabilities
1,046,938

 
1,309,209

Deferred profit
378,396

 
720,086

Current portion of convertible notes, capital leases, and commercial paper
964,107

 
610,030

Total current liabilities
2,805,628

 
3,150,308

Long-term debt and capital leases, less current portion
3,801,514

 
1,806,562

Income taxes payable
863,155

 
851,936

Other long-term liabilities
83,986

 
90,629

Total liabilities
7,554,283

 
5,899,435

Commitments and contingencies

 

Temporary equity, convertible notes
49,783

 
78,192

Stockholders’ equity:
 
 
 
Preferred stock, at par value of $0.001 per share; authorized, 5,000 shares, none outstanding

 

Common stock, at par value of $0.001 per share; authorized, 400,000 shares; issued and outstanding, 149,886 shares at March 31,2019, and 156,892 shares at June 24, 2018
150

 
157

Additional paid-in capital
6,315,495

 
6,144,425

Treasury stock, at cost; 135,045 shares at March 31, 2019, and 119,679 shares at June 24, 2018
(10,509,750
)
 
(7,846,476
)
Accumulated other comprehensive loss
(62,660
)
 
(57,449
)
Retained earnings
9,547,961

 
8,261,194

Total stockholders’ equity
5,291,196

 
6,501,851

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

 
$
12,479,478

(1) Derived from audited financial statements


See Notes to Condensed Consolidated Financial Statements
5

Table of Contents


LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
 
Nine Months Ended
 
March 31, 2019
 
March 25, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
1,649,605

 
$
1,359,535

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
243,873

 
241,276

Deferred income taxes
(75,105
)
 
(209,214
)
Equity-based compensation expense
142,389

 
125,002

Amortization of note discounts and issuance costs
5,137

 
13,469

Impairment of investment

 
42,456

Other, net
(646
)
 
23,327

Changes in operating assets and liabilities
330,273

 
341,538

Net cash provided by operating activities
2,295,526

 
1,937,389

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

 
(115,697
)
Purchases of available-for-sale securities
(1,975,688
)
 
(2,377,459
)
Maturities of available-for-sales securities
395,569

 
549,539

Sales of available-for-sale securities
809,379

 
3,639,331

Other, net
(5,288
)
 
(14,358
)
Net cash (used for) provided by investing activities
(1,013,571
)
 
1,487,542

CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Principal payments on debt
(116,496
)
 
(577,415
)
Net (repayments) proceeds from issuance of commercial paper
(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

 

Treasury stock purchases
(2,672,051
)
 
(1,346,940
)
Dividends paid
(513,475
)
 
(225,604
)
Reissuance of treasury stock related to employee stock purchase plan
32,920

 
34,057

Proceeds from issuance of common stock
5,119

 
6,632

Other, net
(13,207
)
 
11

Net cash used for financing activities
(862,224
)
 
(1,111,288
)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(904
)
 
8,200

Net increase in cash, cash equivalents, and restricted cash
418,827

 
2,321,843

Cash, cash equivalents, and restricted cash at beginning of period
4,768,558

 
2,633,739

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

 
$
4,955,582

Schedule of non-cash transactions:
 
 
 
Accrued payables for stock repurchases
1,637

 
2,165

Accrued payables for capital expenditures
27,283

 
32,610

Dividends payable
164,874

 
82,030

Transfers of inventory to property and equipment, net
42,519

 
38,878

 
 
 
 
Reconciliation of cash, cash equivalents, and restricted cash
March 31, 2019
 
March 25, 2018
Cash and cash equivalents
$
4,931,611

 
$
4,698,995

Restricted cash and investments
255,774

 
256,587

Total Cash, cash equivalents, and restricted cash
$
5,187,385

 
$
4,955,582


See Notes to Condensed Consolidated Financial Statements
6

Table of Contents


LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
 
Three Months Ended
 
March 31, 2019
 
Common
Stock
Shares
 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Balance at December 23, 2018
153,961

 
$
154

 
$
6,256,942

 
$
(9,573,486
)
 
$
(64,692
)
 
$
9,165,445

 
$
5,784,363

Sale of common stock
947

 
1

 
5,009

 

 

 

 
5,010

Purchase of treasury stock
(5,702
)
 
(6
)
 

 
(936,264
)
 

 

 
(936,270
)
Equity-based compensation expense

 

 
53,240

 

 

 

 
53,240

Effect of conversion of convertible notes
680

 
1

 
(6,921
)
 

 

 

 
(6,920
)
Reclassification from temporary to permanent equity

 

 
7,225

 

 

 

 
7,225

Net income

 

 

 

 

 
547,390

 
547,390

Other comprehensive income

 

 

 

 
2,032

 

 
2,032

Cash dividends declared ($1.10 per common share)

 

 

 

 

 
(164,874
)
 
(164,874
)
Balance at March 31, 2019
149,886

 
$
150

 
$
6,315,495

 
$
(10,509,750
)
 
$
(62,660
)
 
$
9,547,961

 
$
5,291,196

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
March 31, 2019

Common
Stock
Shares
 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Balance at June 24, 2018
156,892

 
$
157

 
$
6,144,425

 
$
(7,846,476
)
 
$
(57,449
)
 
$
8,261,194

 
$
6,501,851

Sale of common stock
1,026

 
1

 
5,118

 

 

 

 
5,119

Purchase of treasury stock
(15,193
)
 
(15
)
 

 
(2,673,557
)
 

 

 
(2,673,572
)
Reissuance of treasury stock
273

 

 
22,637

 
10,283

 

 

 
32,920

Equity-based compensation expense

 

 
142,389

 

 

 

 
142,389

Effect of conversion of convertible notes
2,783

 
3

 
(27,470
)
 

 

 

 
(27,467
)
Exercise of warrants
4,105

 
4

 
(12
)
 

 

 

 
(8
)
Reclassification from temporary to permanent equity

 

 
28,408

 

 

 

 
28,408

Adoption of ASU 2014-09(1)

 

 

 

 

 
139,355

 
139,355

Adoption of ASU 2016-16(1)

 

 

 

 

 
(443
)
 
(443
)
Adoption of ASU 2018-02(1)

 

 

 

 
(2,227
)
 
2,227

 

Net income

 

 

 

 

 
1,649,605

 
1,649,605

Other comprehensive loss

 

 

 

 
(2,984
)
 

 
(2,984
)
Cash dividends declared ($3.30 per common share)

 

 

 

 

 
(503,977
)
 
(503,977
)
Balance at March 31, 2019
149,886

 
$
150

 
$
6,315,495

 
$
(10,509,750
)
 
$
(62,660
)
 
$
9,547,961

 
$
5,291,196

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Refer to Note 2 - Recent Accounting Pronouncements for more information regarding these FASB Accounting Standard Updates.
 
 

See Notes to Condensed Consolidated Financial Statements
7

Table of Contents


 
 
 
Three Months Ended
 
March 25, 2018
 
Common
Stock
Shares
 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Balance at December 24, 2017
159,451

 
$
159

 
$
5,959,945

 
$
(6,470,434
)
 
$
(64,160
)
 
$
6,717,621

 
$
6,143,131

Sale of common stock
1,367

 
1

 
2,516

 

 

 

 
2,517

Purchase of treasury stock
(1,470
)
 
(1
)
 

 
(81,196
)
 

 

 
(81,197
)
Equity-based compensation expense

 

 
41,095

 

 

 

 
41,095

Effect of conversion of convertible notes
5,147

 
5

 
(47,458
)
 

 

 

 
(47,453
)
Effect of bond hedge, cash in lieu of shares
(395
)
 

 
7

 

 

 

 
7

Reclassification from temporary to permanent equity

 

 
49,452

 

 

 

 
49,452

Net income

 

 

 

 

 
778,800

 
778,800

Other comprehensive loss

 

 

 

 
(1,271
)
 

 
(1,271
)
Cash dividends declared ($0.50 per common share)

 

 

 

 

 
(82,026
)
 
(82,026
)
Balance at March 25, 2018
164,100

 
$
164

 
$
6,005,557

 
$
(6,551,630
)
 
$
(65,431
)
 
$
7,414,395

 
$
6,803,055

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
March 25, 2018

Common
Stock
Shares
 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Balance at June 25, 2017
161,723

 
$
162

 
$
5,845,485

 
$
(5,216,187
)
 
$
(61,700
)
 
$
6,249,691

 
$
6,817,451

Sale of common stock
1,833

 
1

 
6,631

 

 

 

 
6,632

Purchase of treasury stock
(7,067
)
 
(7
)
 

 
(1,349,098
)
 

 

 
(1,349,105
)
Reissuance of treasury stock
413

 

 
20,402

 
13,655

 

 

 
34,057

Equity-based compensation expense

 

 
125,002

 

 

 

 
125,002

Effect of conversion of convertible notes
10,053

 
10

 
(80,864
)
 

 

 

 
(80,854
)
Effect of bond hedge, cash in lieu of shares
(2,855
)
 
(2
)
 
13

 

 

 

 
11

Reclassification from temporary to permanent equity

 

 
88,888

 

 

 

 
88,888

Adoption of ASU 2016-09

 

 

 

 

 
40,065

 
40,065

Net income

 

 

 

 

 
1,359,535

 
1,359,535

Other comprehensive loss

 

 

 

 
(3,731
)
 

 
(3,731
)
Cash dividends declared ($1.45 per common share)

 

 

 

 

 
(234,896
)
 
(234,896
)
Balance at March 25, 2018
164,100

 
$
164

 
$
6,005,557

 
$
(6,551,630
)
 
$
(65,431
)
 
$
7,414,395

 
$
6,803,055



See Notes to Condensed Consolidated Financial Statements
8

Table of Contents


LAM RESEARCH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2019
(Unaudited)
NOTE 1 — BASIS OF PRESENTATION
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements of Lam Research Corporation (“Lam Research” or the “Company”) for the fiscal year ended June 24, 2018, which are included in the Company’s Annual Report on Form 10-K as of and for the year ended June 24, 2018 (the “2018 Form 10-K”). The Company’s reports on Form 10-K, Form 10-Q and Form 8-K are available online at the Securities and Exchange Commission website on the Internet. The address of that site is www.sec.gov. The Company also posts its reports on Form 10-K, Form 10-Q and Form 8-K on its corporate website at http://investor.lamresearch.com. The content on any website referred to in this Form 10-Q is not a part of or incorporated by reference in this Form 10-Q unless expressly noted.
The condensed consolidated financial statements include the accounts of Lam Research and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s reporting period is a 52/53-week fiscal year. The Company’s current fiscal year will end June 30, 2019 and includes 53 weeks. The quarters ended March 31, 2019 (the “March 2019 quarter”) and March 25, 2018 (the “March 2018 quarter”) included 14 weeks and 13 weeks, respectively.
NOTE 2 — RECENT ACCOUNTING PRONOUNCEMENTS
Recently Adopted
In May 2014, the FASB released ASU 2014-09, “Revenue from Contracts with Customers,” to supersede nearly all existing revenue recognition guidance under GAAP. The FASB issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015–14, ASU 2016–08, ASU 2016–10, ASU 2016–12 and ASU 2016–20, respectively; all of which in combination with ASU 2014-09 were codified as Accounting Standard Codification Topic 606 (“ASC 606”). The core principle of the standard is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The Company adopted ASC 606 on the first day of the current fiscal year, June 25, 2018, under the modified retrospective approach, applying the amendments to prospective reporting periods. Results for reporting periods beginning on or after June 25, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under ASC 605. In conjunction with the adoption of ASC 606, the Company’s revenue recognition policy has been amended, refer to Note 3 - Revenue for a description of the amendments.
The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheet as of June 25, 2018 for the adoption of ASC 606 to all contracts with customers that were not completed as of June 24, 2018 was recorded as an adjustment to retained earnings as of the adoption date as follows:
 
June 24, 2018
 
 
 
June 25, 2018
 
As reported
 
Adjustments
 
As Adjusted
 
(In thousands)
Total assets
$
12,479,478

 
$
12,955

 
$
12,492,433

Deferred profit
$
720,086

 
$
(160,695
)
 
$
559,391

Total liabilities
$
5,899,435

 
$
(126,400
)
 
$
5,773,035

Stockholders' equity
$
6,501,851

 
$
139,355

 
$
6,641,206



9



Table of Contents


Upon adoption, the Company recorded a cumulative effect adjustment of $139.4 million, net of tax adjustment of $21.0 million, which increased the June 25, 2018 opening retained earnings balance on the Condensed Consolidated Balance Sheet, primarily as a result of changes in the timing of recognition of system sales. Under ASC 606, the Company recognizes revenue from sales of systems when the Company determines that control has passed to the customer which is generally (1) for products that have been demonstrated to meet product specifications prior to shipment upon shipment or delivery; (2) for products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized upon completion of installation and receipt of customer acceptance; (3) for transactions where legal title does not pass upon shipment or delivery and the Company does not have a right to payment, revenue is recognized when legal title passes to the customer and the Company has a right to payment, which is generally at customer acceptance.

The impact of adoption of ASC 606 on the Company's Condensed Consolidated Statement of Operations and Condensed Consolidated Balance Sheet was as follows:
 
Three months ended
 
Nine Months Ended
 
March 31, 2019
 
March 31, 2019
 
As Reported
 
Without adoption of ASC 606
 
Effect of Change Higher/(Lower)
 
As Reported
 
Without adoption of ASC 606
 
Effect of Change Higher/(Lower)
 
(In thousands)
Revenue
$
2,439,048

 
$
2,203,034

 
$
236,014

 
$
7,292,412

 
$
6,691,212

 
$
601,200

Cost of goods sold
$
1,364,711

 
$
1,213,852

 
$
150,859

 
$
4,014,844

 
$
3,705,203

 
$