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Lam Research Corporation Announces Financial Results for the Quarter Ended March 28, 2010

FREMONT, Calif., Apr 21, 2010 (BUSINESS WIRE) -- Lam Research Corporation (NASDAQ:LRCX) highlights for the March 2010 quarter were:

U.S. GAAP/Ongoing
(in thousands, except per share data and percentage)
- Revenue: $ 632,763
- Operating Margin: 23.6 %
- Net Income: $ 120,301
- Diluted EPS: $ 0.94

Lam Research Corporation today announced financial results for the quarter ended March 28, 2010. Revenue for the period was $632.8 million, gross margin was $292.9 million and net income was $120.3 million, or $0.94 per diluted share, compared to revenue of $487.2 million, gross margin of $223.2 million and net income of $69.6 million, or $0.54 per diluted share, for the December 2009 quarter. Shipments for the March 2010 quarter were $735 million compared to $519 million during the December 2009 quarter.

The Company's ongoing results for the December 2009 quarter excluded certain costs for previously announced restructuring activities, the reversal of accrued liabilities due to final settlement of the remaining liabilities for Internal Revenue Code Section 409A related expenses, and the impairment of an investment. There were no adjustments to U.S. GAAP results to determine "ongoing" results for the March 2010 quarter. Management uses the presentation of ongoing gross margin, ongoing operating expenses, ongoing operating income, ongoing operating margin, ongoing net income, and ongoing net income per diluted share to evaluate the Company's operating and financial results. The Company believes the presentation of ongoing results is useful to investors for analyzing business trends and comparing performance to prior periods, along with enhancing 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 $120.3 million, or $0.94 per diluted share in the March 2010 quarter compared to ongoing net income of $60.7 million, or $0.47 per diluted share, for the December 2009 quarter. Ongoing gross margin for the March 2010 quarter was $292.9 million or 46.3%, compared to ongoing gross margin of $218.5 million, or 44.8%, for the December 2009 quarter. The sequential increase in gross margin was primarily due to improved factory utilization as a result of increased business volume and a more favorable product mix. Ongoing operating expenses for the March 2010 quarter remained essentially flat compared with the December 2009 quarter.

Lam Announces Financial Results for the March 2010 Quarter

The geographic distribution of shipments and revenue during the March 2010 quarter is shown in the following table:

Region Shipments Revenue
North America 8 % 10 %
Europe 5 % 6 %
Japan 11 % 11 %
Korea 27 % 24 %
Taiwan 37 % 33 %
Asia Pacific 12 % 16 %

Cash and cash equivalents, short-term investments and restricted cash and investments balances were $843.8 million at the end of the March 2010 quarter, compared to $830.6 million at the end of the December 2009 quarter. Cash flows from operating activities were approximately $109.3 million during the March 2010 quarter. Deferred revenue and deferred profit balances at the end of the March 2010 quarter were $238.4 million and $138.2 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 $23 million as of March 28, 2010.

"Shipments for the March 2010 quarter represented an all-time high for Lam Research reflecting market share gains in both our etch and clean businesses, supported by strong operational performance of the factory and supply chain," said Steve Newberry, Lam's president and chief executive officer. "The continued success of the spin-clean business, evidenced by the recent shipment of our 3,000th spin-clean process chamber, is complemented by our linear-clean and plasma-based bevel clean technologies. Our clean products represent a technology and productivity leadership portfolio that is advancing the success of our adjacent-market growth strategy," Newberry concluded.

Lam Announces Financial Results for the March 2010 Quarter

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 created by 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 continued success of our spin-clean business, and our continued ability to maintain strong operational performance of our factory and supply chain and to execute successfully our adjacent market growth strategy. Some factors that may affect these forward-looking statements include: business conditions in the semiconductor industry and the overall economy; the efficacy of Lam's plans for reacting to those conditions; changing customer demands; the actions of Lam's competitors; and the challenges presented by the development and marketing of 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 by us with the Securities and Exchange Commission, including specifically our report on Form 10-K for the year ended June 28, 2009 and the reports on Form 10-Q for the three months ended September 27, 2009 and December 27, 2009. 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.

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 MarketSM under the symbol LRCX. Lam is a NASDAQ-100(R) company. For more information, visit www.lamresearch.com.

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data and percentages)

(unaudited)
Three Months Ended Nine Months Ended
March 28, December 27, March 29, March 28, March 29,
2010 2009 2009

2010

2009
Total revenue $ 632,763 $ 487,176 $ 174,412 $ 1,438,487 $ 898,182
Cost of goods sold 339,892 268,685 127,680 795,810 556,212
Cost of goods sold - restructuring and asset impairments - - 10,217 - 20,993
Cost of goods sold - 409A expense - (4,713 ) - (10,168 ) -
Total costs of goods sold 339,892 263,972 137,897 785,642 577,205
Gross margin 292,871 223,204 36,515 652,845 320,977
Gross margin as a percent of revenue 46.3 % 45.8 % 20.9 % 45.4 % 35.7 %
Research and development 81,845 82,171 70,434 235,215 220,778
Selling, general and administrative 61,933 60,111 58,515 174,163 185,813
Goodwill Impairment - - 89,076 - 89,076
Restructuring and asset impairments - 5,919 13,028 8,012 39,117
409A expense - (16,345 ) 646 (34,238 ) 2,250
Total operating expenses 143,778 131,856 231,699 383,152 537,034
Operating income (loss) 149,093 91,348 (195,184 ) 269,693 (216,057 )
Operating margin as a percent of revenue 23.6 % 18.8 % -111.9 % 18.7 % -24.1 %
Other income (expense), net 1,616 (58 ) 13,497 1,190 15,281
Income (loss) before income taxes 150,709 91,290 (181,687 ) 270,883 (200,776 )
Income tax expense 30,408 21,716 16,672 64,211 12,882
Net income (loss) $ 120,301 $ 69,574 $ (198,359 ) $ 206,672 $ (213,658 )
Net income (loss) per share:
Basic net income (loss) per share $ 0.94 $ 0.55 $ (1.58 ) $ 1.63 $ (1.70 )
Diluted net income (loss) per share $ 0.94 $ 0.54 $ (1.58 ) $ 1.61 $ (1.70 )
Number of shares used in per share calculations:
Basic 127,307 127,296 125,566 127,127 125,368
Diluted 128,587 128,829 125,566 128,368 125,368
LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)
March 28, December 27, June 28,
2010 2009 2009
(unaudited) (unaudited) (1)
ASSETS
Cash and cash equivalents $ 461,369 $ 430,166 $ 374,167
Short-term investments 217,178 215,567 205,221
Accounts receivable, net 521,810 420,486 253,585
Inventories 281,469 241,296 233,410
Deferred income taxes 49,363 47,984 69,043
Other current assets 73,546 79,482 101,714
Total current assets 1,604,735 1,434,981 1,237,140
Property and equipment, net 203,037 205,089 215,666
Restricted cash and investments 165,284 184,913 178,439
Deferred income taxes 14,380 16,399 17,007
Goodwill and intangible assets 242,868 248,838 260,787
Other assets 94,055 94,622 84,145
Total assets $ 2,324,359 $ 2,184,842 $ 1,993,184
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 533,361 $ 445,243 $ 382,076
Long-term debt and capital leases $ 20,314 $ 35,145 $ 40,886
Income taxes payable 113,364 107,273 102,999
Other long-term liabilities 12,872 12,397 14,134
Stockholders' equity 1,644,448 1,584,784 1,453,089
Total liabilities and stockholders' equity $ 2,324,359 $ 2,184,842 $ 1,993,184

1 Derived from audited financial statements

LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
March 28, December 27, March 29, March 28, March 29,
2010 2009

2009

2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 120,301 $ 69,574 $ (198,359 ) $ 206,672 $ (213,658 )

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:

Depreciation and amortization 17,872 18,184 19,650 53,737 54,723
Deferred income taxes 640 9,229 12,929 22,351 10,632
Restructuring charges, net - 5,919 23,245 8,012 60,110
Goodwill Impairment - - 89,076 - 89,076
Equity-based compensation expense 10,917 13,259 10,227 38,134 39,684
Income tax benefit on equity-based compensation plans 477 303 (11,115 ) 691 (13,121 )
Excess tax benefit on equity-based compensation plans (370 ) (235 ) 7,027 (973 ) 6,510
Other, net 1,210 173 953 2,542 6,818
Changes in operating asset and liabilities: (41,781 ) (43,096 ) 22,215 (145,886 ) (60,783 )
Net cash provided by (used for) operating activities 109,266 73,310 (24,152 ) 185,280 (20,009 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets (10,823 ) (6,893 ) (10,866 ) (23,548 ) (38,434 )
Acquisitions of businesses, net of cash acquired - - (11,706 ) - (19,457 )
Net sales/maturities (purchases) of available-for-sale securities (3,238 ) (1,016 ) 33,961 (14,029 ) 80,708
Purchase of other investments - - - (961 ) (3,439 )
Transfer of restricted cash and investments 19,629 97 558 13,155 (47,748 )
Other - - (8,375 ) - (10,375 )
Net cash provided by (used for) investing activities 5,568 (7,812 ) 3,572 (25,383 ) (38,745 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt and capital lease obligations (17,820 ) (689 ) (239,703 ) (20,424 ) (255,136 )
Net proceeds from issuance of long-term debt - 52 - 336 625
Excess tax benefit on equity-based compensation plans 370 235 (7,027 ) 973 (6,510 )
Treasury stock purchases (72,240 ) (576 ) (546 ) (75,172 ) (27,749 )
Reissuances of treasury stock 5,518 - 5,942 11,279 13,526
Proceeds from issuance of common stock 1,441 4,126 1,283 7,823 5,727
Net cash provided by (used for) financing activities (82,731 ) 3,148 (240,051 ) (75,185 ) (269,517 )
Effect of exchange rate changes on cash (900 ) 357 (17,634 ) 2,490 (29,618 )
Net increase (decrease) in cash and cash equivalents 31,203 69,003 (278,265 ) 87,202 (357,889 )
Cash and cash equivalents at beginning of period 430,166 361,163 652,913 374,167 732,537
Cash and cash equivalents at end of period $ 461,369 $ 430,166 $ 374,648 $ 461,369 $ 374,648
Reconciliation of U.S. GAAP Net Income to Ongoing Net Income
(in thousands, except per share data)
(unaudited)
Three Months Ended Three Months Ended
March 28, December 27,
2010 2009
U.S. GAAP net income $ 120,301 $ 69,574
Pre-tax non-ongoing items:
Restructuring and asset impairments - operating expenses - 5,919
409A expense - cost of goods sold - (4,713 )
409A expense - operating expenses - (16,345 )
Impairment of investment - other income (expense), net - 927
Net tax expense on non-ongoing items - 5,352
Ongoing net income $ 120,301 $ 60,714
Ongoing net income per diluted share $ 0.94 $ 0.47
Number of shares used for diluted per share calculation 128,587 128,829
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)
(unaudited)
Three Months Ended Three Months Ended
March 28, December 27,
2010 2009
U.S. GAAP gross margin $ 292,871 $ 223,204
Pre-tax non-ongoing items:
Pre-tax 409A expense - cost of goods sold - (4,713 )
Ongoing gross margin $ 292,871 $ 218,491
U.S. GAAP gross margin as a percent of revenue 46.3 % 45.8 %
Ongoing gross margin as a percent of revenue 46.3 % 44.8 %
U.S. GAAP operating expenses $ 143,778 $ 131,856
Pre-tax non-ongoing items:
Restructuring and asset impairments - operating expenses - (5,919 )
409A expense - operating expenses - 16,345
Ongoing operating expenses $ 143,778 $ 142,282
Ongoing operating income $ 149,093 $ 76,209
Ongoing operating margin as a percent of revenue 23.6 % 15.6 %

SOURCE: Lam Research Corporation

Lam Research Corporation
Carol Raeburn, 510-572-4450
Managing Director, Investor Relations
carol.raeburn@lamresearch.com

Copyright Business Wire 2010

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