View PDFFREMONT, Calif., Jul 29, 2008 (BUSINESS WIRE) -- 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 results.
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.
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 (R) company. The Company's World Wide Web address is www.lamresearch.com.
Consolidated Financial Tables Follow
LAM RESEARCH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
Three Months Ended
----------------------------------
June 29, March 30, June 24,
2008 2008 2007
----------- ----------- ----------
(unaudited) (unaudited) (unaudited)
Total revenue $ 566,160 $ 613,810 $ 678,519
Cost of goods sold 318,900 320,201 335,790
Cost of goods sold -
restructuring and asset
impairments 12,610 - -
Cost of goods sold - 409A expense - 6,401 -
----------- ----------- ----------
Total costs of goods sold 331,510 326,602 335,790
----------- ----------- ----------
Gross margin 234,650 287,208 342,729
Gross margin as a percent of
revenue 41.4% 46.8% 50.5%
Research and development 86,652 80,576 79,601
Selling, general and
administrative 77,704 74,491 62,779
409A expense - 43,784 -
Restructuring and asset
impairments 6,366 - -
In-process research and
development - 2,074 -
----------- ----------- ----------
Total operating expenses 170,722 200,925 142,380
----------- ----------- ----------
Operating income 63,928 86,283 200,349
Operating margin as a percent of
revenue 11.3% 14.1% 29.5%
Other income, net 10,344 49,605 10,872
----------- ----------- ----------
Income before income taxes 74,272 135,888 211,221
Income tax expense 2,094 32,364 40,990
----------- ----------- ----------
Net income $ 72,178 $ 103,524 $ 170,231
=========== =========== ==========
Net income per share:
Basic net income per share $ 0.58 $ 0.83 $ 1.31
=========== =========== ==========
Diluted net income per share $ 0.57 $ 0.82 $ 1.28
=========== =========== ==========
Number of shares used in per share
calculations:
Basic 125,046 124,768 130,169
=========== =========== ==========
Diluted 126,657 126,549 132,868
=========== =========== ==========
Twelve Months Ended
------------------------
June 29, June 24,
2008 2007
----------- -----------
(unaudited) (1)
Total revenue $2,474,911 $2,566,576
Cost of goods sold 1,282,494 1,261,522
Cost of goods sold - restructuring and asset
impairments 12,610 -
Cost of goods sold - 409A expense 6,401 -
----------- -----------
Total costs of goods sold 1,301,505 1,261,522
----------- -----------
Gross margin 1,173,406 1,305,054
Gross margin as a percent of revenue 47.4% 50.8%
Research and development 323,759 285,348
Selling, general and administrative 287,992 241,046
409A expense 43,784 -
Restructuring and asset impairments 6,366 -
In-process research and development 2,074 -
----------- -----------
Total operating expenses 663,975 526,394
----------- -----------
Operating income 509,431 778,660
Operating margin as a percent of revenue 20.6% 30.3%
Other income, net 67,545 69,063
----------- -----------
Income before income taxes 576,976 847,723
Income tax expense 137,627 161,907
----------- -----------
Net income $ 439,349 $ 685,816
=========== ===========
Net income per share:
Basic net income per share $ 3.52 $ 4.94
=========== ===========
Diluted net income per share $ 3.47 $ 4.85
=========== ===========
Number of shares used in per share
calculations:
Basic 124,647 138,714
=========== ===========
Diluted 126,504 141,524
=========== ===========
(1) Derived from audited financial statements
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 RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
----------------------------------
June 29, March 30, June 24,
2008 2008 2007
----------- ----------- ----------
(unaudited) (unaudited) (unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 72,178 $ 103,524 $ 170,231
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 19,227 12,914 10,920
Deferred income taxes (4,652) (11,995) 8,334
Equity-based compensation expense 11,629 10,272 11,766
Income tax benefit on equity-based
compensation plans 26,815 (520) 12,621
Excess tax benefit on equity-based
compensation plans (21,666) 401 (10,449)
Net gain on settlement of call
option 399 (33,694) -
Restructuring and asset
impairments 18,976 - -
Other, net (996) (14,183) 597
Changes in operating asset
accounts 76,377 79,266 89,473
----------- ----------- ----------
Net cash provided by operating
activities 198,287 145,985 293,493
----------- ----------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures and intangible
assets (18,951) (19,291) (14,305)
Acquisitions of businesses, net of
cash acquired (4,758) (475,656) (4,000)
Sales of other investments - - 3,000
Net sales (purchases) of available-
for-sale securities 16,150 83,201 540,076
Purchase of call option - (3,227) -
Proceeds from settlement of call
option 383 46,962 -
Purchase of other investments - - -
Transfer of restricted cash and
investments 17,233 (688) -
Other - 2,248 -
----------- ----------- ----------
Net cash provided by (used for)
investing activities 10,057 (366,451) 524,771
----------- ----------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal payments on long-term
debt and capital lease obligations (1,500) (250,114) (51)
Net proceeds from issuance of long-
term debt 1,915 250,000 -
Excess tax benefit on equity-based
compensation plans 21,666 (401) 10,449
Treasury stock purchases (3,590) (737) (768,400)
Reissuances of treasury stock 1,262 - 6,835
Proceeds from issuance of common
stock 2,588 - 12,175
----------- ----------- ----------
Net cash provided by (used for)
financing activities 22,341 (1,252) (738,992)
----------- ----------- ----------
Effect of exchange rate changes on
cash (1,857) (1,984) (112)
Net increase (decrease) in cash and
cash equivalents 228,828 (223,702) 79,160
Cash and cash equivalents at
beginning of period 552,353 776,055 494,807
----------- ----------- ----------
Cash and cash equivalents at end of
period $781,181 $ 552,353 $ 573,967
=========== =========== ==========
Twelve Months Ended
------------------------
June 29, June 24,
2008 2007
----------- ------------
(unaudited) (1)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 439,349 $ 685,816
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 54,704 38,097
Deferred income taxes (26,661) 17,055
Equity-based compensation expense 42,516 35,554
Income tax benefit on equity-based
compensation plans 83,472 62,437
Excess tax benefit on equity-based
compensation plans (58,904) (44,990)
Net gain on settlement of call option (33,295) -
Restructuring and asset impairments 18,976 -
Other, net (3,863) 625
Changes in operating asset accounts 71,865 28,965
----------- ------------
Net cash provided by operating activities 588,159 823,559
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets (76,803) (59,968)
Acquisitions of businesses, net of cash
acquired (480,414) (181,108)
Sales of other investments - 3,000
Net sales (purchases) of available-for-sale
securities 67,466 45,230
Purchase of call option (13,506) -
Proceeds from settlement of call option 47,345 -
Purchase of other investments (4,560) -
Transfer of restricted cash and investments 15,471 110,000
Other - -
----------- ------------
Net cash provided by (used for) investing
activities (445,001) (82,846)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt and
capital lease obligations (251,714) (100,171)
Net proceeds from issuance of long-term debt 251,915 -
Excess tax benefit on equity-based
compensation plans 58,904 44,990
Treasury stock purchases (14,552) (1,083,745)
Reissuances of treasury stock 8,563 18,123
Proceeds from issuance of common stock 12,694 42,468
----------- ------------
Net cash provided by (used for) financing
activities 65,810 (1,078,335)
----------- ------------
Effect of exchange rate changes on cash (1,754) 774
Net increase (decrease) in cash and cash
equivalents 207,214 (336,848)
Cash and cash equivalents at beginning of
period 573,967 910,815
----------- ------------
Cash and cash equivalents at end of period $ 781,181 $ 573,967
=========== ============
(1) Derived from audited financial statements
Reconciliation of U.S. GAAP Net Income to Ongoing Net Income
(in thousands, except per share data and percentages)
Three Three
Months Months
Ended 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 Three
Months Months
Ended 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%
SOURCE: Lam Research
Lam Research Corporation Carol Raeburn, 510-572-4450 Senior Director, Investor Relations carol.raeburn@lamresearch.com
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