Lam Research Corporation Announces Financial Results for the Quarter Ended September 26, 2010
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Lam Research Corporation Announces Financial Results for the Quarter Ended September 26, 2010

FREMONT, Calif. — (BUSINESS WIRE) — October 20, 2010 — Lam Research Corporation (NASDAQ: LRCX) highlights for the September 2010 quarter were:

Lam Research Corporation
Financial Highlights for the Quarter Ended September 26, 2010
(in thousands, except per share data and percentages)
   
U.S. GAAP Ongoing
 
• Revenue: $ 805,874 $ 805,874
 
• Operating Margin: 27.8 % 27.2 %
 
• Net Income: $ 193,724 $ 190,622
 
• Diluted EPS: $ 1.55 $ 1.52

Lam Research Corporation today announced financial results for the quarter ended September 26, 2010. Revenue for the period was $805.9 million, gross margin was $377.3 million, and net income was $193.7 million, or $1.55 per diluted share, compared to revenue of $695.3 million, gross margin of $321.4 million, and net income of $140.0 million, or $1.10 per diluted share, for the June 2010 quarter. Shipments for the September 2010 quarter were $808 million compared to $694 million during the June 2010 quarter.

The Company’s ongoing results for the September 2010 and June 2010 quarters exclude certain costs and/or benefits for restructuring activities and asset impairments. 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 at http://investor.lamrc.com.

Ongoing net income was $190.6 million, or $1.52 per diluted share in the September 2010 quarter compared to ongoing net income of $149.1 million, or $1.17 per diluted share, for the June 2010 quarter. Ongoing gross margin for the September 2010 quarter was $377.3 million or 46.8%, compared to ongoing gross margin of $324.9 million, or 46.7%, for the June 2010 quarter. Ongoing operating expenses for the September 2010 quarter were $158.5 million compared with the June 2010 quarter of $152.4 million. This change is primarily due to increased variable compensation resulting from improved overall financial performance.

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

Region   Shipments   Revenue
North America 5% 5%
Europe 11% 10%
Japan 12% 12%
Korea 29% 36%
Taiwan 28% 21%
Asia Pacific 15% 16%

Cash and cash equivalents, short-term investments and restricted cash and investments balances were $1.1 billion at the end of the September 2010 quarter, compared to $991.7 million at the end of the June 2010 quarter. Cash flows from operating activities were approximately $255.7 million during the September 2010 quarter. The Company used approximately $145 million in cash to repurchase shares of its common stock during the quarter. Deferred revenue and deferred profit balances at the end of the September 2010 quarter were $217.3 million and $132.3 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 $50.0 million as of September 26, 2010.

“Strong shipment and revenue performance along with solid execution drove record earnings for the September quarter. These results reflect continued market share gains in both etch and single-wafer clean while also demonstrating our ability to leverage an operating model that is scalable and cost effective in meeting customer requirements,” said Steve Newberry, Lam Research’s president and chief executive officer. “We are well positioned for future growth as we expand our markets and execute to our strategy,” Newberry concluded.

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; our positioning for future growth, and our ability to expand our markets and execute to our strategy. Some factors that may affect these forward-looking statements include: business conditions in 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; 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 27, 2010. 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 Market SM under the symbol LRCX. Lam is a NASDAQ-100® company. For more information, visit www.lamresearch.com.

LAM RESEARCH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
(unaudited)
     
Three Months Ended
September 26,

     June 27,     

September 27,
  2010     2010     2009  
Total revenue $ 805,874 $ 695,289 $ 318,548
Cost of goods sold 428,548 370,409 187,233
Cost of goods sold - restructuring and asset impairments - 3,438 -
Cost of goods sold - 409A expense   -     -     (3,120 )
Total costs of goods sold   428,548     373,847     184,113  
Gross margin 377,326 321,442 134,435
Gross margin as a percent of revenue 46.8 % 46.2 % 42.2 %
Research and development 86,353 85,644 71,199
Selling, general and administrative 72,142 66,779 52,119
Restructuring and asset impairments (5,163 ) 13,302 2,093
409A expense   -     -     (20,228 )
Total operating expenses   153,332     165,725     105,183  
Operating income 223,994 155,717 29,252
Operating margin as a percent of revenue 27.8 % 22.4 % 9.2 %
Other income (expense), net   (979 )   3,541     (368 )
Income before income taxes 223,015 159,258 28,884
Income tax expense   29,291     19,261     12,087  
Net income $ 193,724   $ 139,997   $ 16,797  
Net income per share:
Basic net income per share $ 1.57   $ 1.11   $ 0.13  
Diluted net income per share $ 1.55   $ 1.10   $ 0.13  
Number of shares used in per share calculations:
Basic   123,665     126,339     126,774  
Diluted   125,202     127,786     127,890  
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
   
September 26,

        June 27,        

2010   2010  
(unaudited) (1)
ASSETS
Cash and cash equivalents $ 628,281 $ 545,767
Short-term investments 304,992 280,690
Accounts receivable, net 526,904 499,890
Inventories 338,335 318,479
Deferred income taxes 46,191 46,158
Other current assets   74,728   65,677  
Total current assets 1,919,431 1,756,661
Property and equipment, net 206,238 200,336
Restricted cash and investments 165,244 165,234
Deferred income taxes 26,968 26,218
Goodwill and intangible assets 231,688 236,906
Other assets   102,727   102,037  
Total assets $ 2,652,296 $ 2,487,392  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 612,397 $ 558,657  
 
Long-term debt and capital leases $ 15,077 $ 17,645
Income taxes payable 114,946 110,462
Other long-term liabilities 23,248 32,493
Stockholders' equity   1,886,628   1,768,135  
Total liabilities and stockholders' equity $ 2,652,296 $ 2,487,392  
 

1 Derived from audited financial statements

LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
     
Three Months Ended
September 26,

     June 27,     

September 27,
  2010     2010     2009  
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 193,724 $ 139,997 $ 16,797
Adjustments to reconcile net income to net cash provided
by (used for) operating activities:
Depreciation and amortization 17,948 17,664 17,681
Deferred income taxes (783 ) (8,633 ) 12,482
Restructuring charges, net (5,163 ) 16,740 2,093
Equity-based compensation expense 13,009 12,329 13,958
Income tax benefit on equity-based compensation plans 5,083 9,944 (89 )
Excess tax benefit on equity-based compensation plans (3,939 ) (9,261 ) (368 )
Other, net (1,964 ) 648 1,159
Changes in operating asset and liabilities:   37,829     (13,995 )   (61,009 )
Net cash provided by operating activities   255,744     165,433     2,704  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets (19,130 ) (12,042 ) (5,832 )
Net sales/maturities (purchases) of available-for-sale securities (24,506 ) (63,958 ) (9,775 )
Purchase of other investments - (1,223 ) (961 )
Transfer of restricted cash and investments (10 ) 50 (6,571 )
Other   -     (800 )   -  
Net cash used for investing activities   (43,646 )   (77,973 )   (23,139 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt and capital lease obligations (3,333 ) (616 ) (1,915 )
Net proceeds from issuance of long-term debt - - 284
Excess tax benefit on equity-based compensation plans 3,939 9,261 368
Treasury stock purchases (144,795 ) (17,860 ) (2,356 )
Reissuances of treasury stock 7,155 6,173 5,761
Proceeds from issuance of common stock   835     5,563     2,256  
Net cash provided by (used for) financing activities   (136,199 )   2,521     4,398  
Effect of exchange rate changes on cash 6,615 (5,583 ) 3,033
Net increase (decrease) in cash and cash equivalents 82,514 84,398 (13,004 )
Cash and cash equivalents at beginning of period   545,767     461,369     374,167  
Cash and cash equivalents at end of period $ 628,281   $ 545,767   $ 361,163  

Reconciliation of U.S. GAAP Net Income to Ongoing Net Income

(in thousands, except per share data)

(unaudited)

       
Three Months Ended Three Months Ended
September 26, June 27,
  2010     2010  

U.S. GAAP net income

$

193,724

$

139,997

Pre-tax non-ongoing items:

Restructuring and asset impairments - cost of goods sold

-

3,438

Restructuring and asset impairments - operating expenses

(5,163

)

13,302

Net tax (benefit) expense on non-ongoing items

 

2,061

   

(7,667

)

Ongoing net income

$

190,622

 

$

149,070

 

Ongoing net income per diluted share

$

1.52

 

$

1.17

 

Number of shares used for diluted per share calculation

125,202

127,786

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
September 26, June 27,
  2010     2010  

U.S. GAAP gross margin

$

377,326

$

321,442

Pre-tax non-ongoing items:

Restructuring and asset impairments - cost of goods sold

 

-

   

3,438

 

Ongoing gross margin

$

377,326

 

$

324,880

 

U.S. GAAP gross margin as a percent of revenue

46.8%

46.2%

Ongoing gross margin as a percent of revenue

46.8%

46.7%

U.S. GAAP operating expenses

$

153,332

$

165,725

Pre-tax non-ongoing items:

Restructuring and asset impairments - operating expenses

 

5,163

   

(13,302

)

Ongoing operating expenses

$

158,495

 

$

152,423

 

Ongoing operating income

$

218,831

 

$

172,457

 

Ongoing operating margin as a percent of revenue

27.2

%

24.8

%



Contact:

Lam Research Corporation
Carol Raeburn
Managing Director, Investor Relations
510-572-4450
Email Contact