Lam Research Corporation Announces Financial Results for the Quarter Ended June 28, 2009

July 29, 2009

FREMONT, Calif., Jul 29, 2009 (BUSINESS WIRE) -- Lam Research Corporation (NASDAQ: LRCX) highlights for the June 2009 quarter were:


(in thousands, except per share data and percentages)

Revenue:		$	217,764

Operating Margin:	U.S. GAAP:		-29.9	%	Ongoing:		-21.4	%

Net Loss:	U.S. GAAP:	$	(88,490	)	Ongoing:	$	(57,005	)

Diluted EPS:	U.S. GAAP:	$	(0.70	)	Ongoing:	$	(0.45	)

Lam Research Corporation today announced financial results for the quarter ended June 28, 2009. Revenue for the period was $217.8 million, gross margin was $67.8 million and net loss was $(88.5) million, or $(0.70) per diluted share, compared to revenue of $174.4 million, gross margin of $36.5 million and net loss of $(198.4) million, or $(1.58) per diluted share, for the March 2009 quarter. Shipments for the June 2009 quarter were $246 million compared to $159 million during the March 2009 quarter.

The Company's ongoing results for the June 2009 quarter exclude certain costs for previously announced restructuring activities and asset impairments, a legal judgment, a non-cash goodwill impairment charge, certain one-time contract termination costs, a net tax expense for valuation allowance, net tax expense on resolution of certain tax matters, and interest and legal fees related to Internal Revenue Code Section 409A tax expenses. The Company's ongoing results for the March 2009 quarter excluded certain costs for previously announced restructuring activities and asset impairments, a non-cash goodwill impairment charge, a net tax expense for a change in state tax law, a net tax expense and an exchange rate gain associated with the Company's accelerated tax planning strategy, an investment impairment, and interest on Internal Revenue Code Section 409A tax expenses. Management uses the presentation of ongoing gross margin, ongoing operating expenses, ongoing operating loss, ongoing operating margin, ongoing net loss, and ongoing net loss 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 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 loss was $(57.0) million, or $(0.45) per diluted share in the June 2009 quarter compared to ongoing net loss of $(89.8) million, or $(0.71) per diluted share, for the March 2009 quarter. Ongoing gross margin for the June 2009 quarter was $67.8 million or 31.1%, compared to ongoing gross margin of $46.7 million, or 26.8%, for the March 2009 quarter. The sequential increase in gross margin was primarily due to improved factory and field utilization due to increased business volume. Ongoing operating expenses for the June 2009 quarter decreased to $114.3 million compared with the March 2009 quarter of $128.9 million. This decrease was driven by a full quarter savings in employee-related expenses and other cost reduction measures that were a part of the March 2009 quarter restructuring. In addition, in the March 2009 quarter, the Company recorded accounts receivable reserves for specific distressed customers that did not recur in the June 2009 quarter.

The geographic distribution of shipments and revenue during the June 2009 quarter is shown in the following table:


Region	Shipments	Revenue
North America	16%	18%
Europe	8%	10%
Japan	17%	17%
Korea	16%	14%
Taiwan	30%	29%
Asia Pacific	13%	12%

Cash and cash equivalents, short-term investments and restricted cash and investments balances were $757.8 million at the end of the June 2009 quarter, compared to $806.4 million at the end of the March 2009 quarter. Cash flows from operating activities were approximately $(58.1) million during the June 2009 quarter. Deferred revenue and deferred profit balances at the end of the June 2009 quarter were $64.7 million and $45.8 million, respectively. Our 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 $13 million as of June 28, 2009.

"Relative to the March quarter, business conditions improved in the June quarter, contributing to Lam's ability to show improved financial results for the quarter. Shipments and revenues increased as a result of customer investments to add wafer starts at the leading edge in both foundry and memory, as well as higher fab utilization contributing to improvement in the customer service business," said Steve Newberry, Lam's president and chief executive officer. "While we are encouraged that our customers have increased spending on equipment, we plan to maintain our focus on cash management while continuing our strategic investments in leading-edge solutions for our customers' current and next-generation wafer fabrication needs," 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 anticipated revenue from shipments to Japanese customers, the potential uses of our cash and other assets, our business focus on minimizing cash expenditures and making strategic investments in providing leading-edge solutions, and our projections for future business conditions. Some factors that may affect these forward-looking statements include: difficult business conditions in the semiconductor industry and the overall economy and the efficacy of our plans for reacting to those conditions, changing customer demands, the actions of our competitors, and the challenges presented by the development and marketing of 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 29, 2008, and the reports on Form 10-Q for the quarters ended September 28, 2008, December 28, 2008, and March 29, 2009, 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^{^®} company. For more information, visit www.lamresearch.com.


LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)


	Three Months Ended									Twelve Months Ended
	June 28,			March 29,			June 29,			June 28,			June 29,
		2009			2009			2008			2009			2008
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(1)
Total revenue	$	217,764		$	174,412		$	566,160		$	1,115,946		$	2,474,911
Cost of goods sold		150,007			127,680			318,900			706,219			1,282,494
Cost of goods sold - restructuring and asset impairments		-			10,217			12,610			20,993			12,610
Cost of goods sold - 409A expense		-			-			-			-			6,401
Total cost of goods sold		150,007			137,897			331,510			727,212			1,301,505
Gross margin		67,757			36,515			234,650			388,734			1,173,406
Gross margin as a percent of revenue		31.1	%		20.9	%		41.4	%		34.8	%		47.4	%
Research and development		67,491			70,434			86,652			288,269			323,759
Selling, general and administrative		47,248			58,515			76,994			233,061			287,282
Goodwill impairment		7,179			89,076			-			96,255			-
Restructuring and asset impairments		5,396			13,028			6,366			44,513			6,366
409A expense		982			646			710			3,232			44,494
Legal judgment		4,647			-			-			4,647			-
In-process research and development		-			-			-			-			2,074
Total operating expenses		132,943			231,699			170,722			669,977			663,975
Operating income (loss)		(65,186	)		(195,184	)		63,928			(281,243	)		509,431
Operating margin as a percent of revenue		-29.9	%		-111.9	%		11.3	%		-25.2	%		20.6	%
Other income, net		2,869			13,497			10,344			18,150			67,545
Income (loss) before income taxes		(62,317	)		(181,687	)		74,272			(263,093	)		576,976
Income tax expense		26,173			16,672			2,094			39,055			137,627
Net income (loss)	$	(88,490	)	$	(198,359	)	$	72,178		$	(302,148	)	$	439,349
Net income (loss) per share:
Basic net income (loss) per share	$	(0.70	)	$	(1.58	)	$	0.58		$	(2.41	)	$	3.52
Diluted net income (loss) per share	$	(0.70	)	$	(1.58	)	$	0.57		$	(2.41	)	$	3.47
Number of shares used in per share calculations:
Basic		126,273			125,566			125,046			125,595			124,647
Diluted		126,273			125,566			126,657			125,595			126,504

(1) Derived from audited financial statements


LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)


	June 28,		March 29,		June 29,
	2009		2009		2008
	(unaudited)		(unaudited)		(1)
ASSETS
Cash and cash equivalents	$	374,167	$	374,648	$	732,537
Short-term investments		205,221		248,500		326,199
Accounts receivable, net		253,585		196,842		412,356
Inventories		233,410		260,667		282,218
Deferred income taxes		69,043		90,541		96,748
Other current assets		60,401		82,273		67,649
Total current assets		1,195,827		1,253,471		1,917,707
Property and equipment, net		215,666		225,864		235,735
Restricted cash and investments		178,439		183,277		146,072
Deferred income taxes		17,007		15,281		19,793
Goodwill and intangible assets		260,787		268,249		403,187
Other assets		84,145		87,340		84,261
Total assets	$	1,951,871	$	2,033,482	$	2,806,755

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities	$	340,763	$	369,998	$	637,679

Long-term debt and capital leases	$	40,886	$	40,708	$	276,503
Income taxes payable		102,999		99,807		85,611
Other long-term liabilities		14,134		19,711		23,018
Minority interests		-		-		5,347
Stockholders' equity		1,453,089		1,503,258		1,778,597
Total liabilities and stockholders' equity	$	1,951,871	$	2,033,482	$	2,806,755

(1) Derived from audited financial statements


LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)


	Three Months Ended									Twelve Months Ended
	June 28,			March 29,			June 29,			June 28,			June 29,
		2009			2009			2008			2009			2008
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(1)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(88,490	)	$	(198,359	)	$	72,178		$	(302,148	)	$	439,349
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization		17,694			19,650			19,227			72,417			54,704
Deferred income taxes		19,913			12,929			(4,652	)		30,545			(26,661	)
Equity-based compensation expense		13,358			10,227			11,629			53,042			42,516
Income tax benefit on equity-based compensation plans		(1,173	)		(11,115	)		26,815			(14,294	)		83,472
Excess tax benefit on equity-based compensation plans		(237	)		7,027			(21,666	)		6,273			(58,904	)
Net gain on settlement of call option		-			-			399			-			(33,839	)
Goodwill impairment		7,179			89,076			-			96,255			-
Restructuring and asset impairments		5,396			23,245			18,976			65,506			18,976
Other, net		2,535			953			(996	)		9,353			(3,319	)
Changes in operating asset accounts		(34,295	)		22,215			78,537			(95,078	)		74,025
Net cash provided by (used for) operating activities		(58,120	)		(24,152	)		200,447			(78,129	)		590,319

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets		(5,848	)		(10,866	)		(18,951	)		(44,282	)		(76,803	)
Acquisitions of businesses, net of cash acquired		-			(11,706	)		(6,918	)		(19,457	)		(482,574	)
Net sales (purchases) of available-for-sale securities		93,056			33,961			(32,494	)		173,764			18,822
Purchase of call option		-			-			-			-			(13,506	)
Proceeds from settlement of call option		-			-			383			-			47,345
Purchase of other investments		-			-			-			(3,439	)		(4,560	)
Transfer of restricted cash and investments		(44,458	)		558			17,233			(92,206	)		15,471
Other		2,000			(8,375	)		-			(8,375	)		-
Net cash provided by (used for) investing activities		44,750			3,572			(40,747	)		6,005			(495,805	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt and capital lease obligations		(911	)		(239,703	)		(1,500	)		(256,047	)		(251,714	)
Net proceeds from issuance of long-term debt		-			-			1,915			625			251,915
Excess tax benefit on equity-based compensation plans		237			(7,027	)		21,666			(6,273	)		58,904
Treasury stock purchases		(3,197	)		(546	)		(3,590	)		(30,946	)		(14,552	)
Reissuances of treasury stock		6,271			5,942			1,262			19,797			8,563
Proceeds from issuance of common stock		6,287			1,283			2,588			12,014			12,694
Net cash provided by (used for) financing activities		8,687			(240,051	)		22,341			(260,830	)		65,810
Effect of exchange rate changes on cash		4,202			(17,634	)		(1,857	)		(25,416	)		(1,754	)
Net increase (decrease) in cash and cash equivalents		(481	)		(278,265	)		180,184			(358,370	)		158,570
Cash and cash equivalents at beginning of period		374,648			652,913			552,353			732,537			573,967
Cash and cash equivalents at end of period	$	374,167		$	374,648		$	732,537		$	374,167		$	732,537

(1) Derived from audited financial statements


Reconciliation of U.S. GAAP Net Loss to Ongoing Net Loss
(in thousands, except per share data and percentages)

	Three Months Ended			Three Months Ended
	June 28,			March 29,
		2009			2009
U.S. GAAP net loss	$	(88,490	)	$	(198,359	)
Pre-tax non-ongoing items:
Goodwill impairment - operating expenses		7,179			89,076
Legal judgment - operating expenses		4,647			-
Restructuring and asset impairments - cost of goods sold		-			10,217
Restructuring and asset impairments - operating expenses		5,396			13,028
409A expense - operating expenses		982			646
One-time contract termination costs - operating expenses		413			-
Impairment of investment - other income, net		-			1,543
Exchange rate gain associated with accelerated tax planning strategy - other income, net		-			(6,674	)
Net tax benefit on non-ongoing items		(4,556	)		(5,506	)
Net tax expense on resolution of certain tax matters		3,637			-
Net tax expense for valuation allowance		13,787			-
Net tax expense on change in state tax law		-			5,244
Net tax expense on accelerated tax planning strategy		-			1,014
Ongoing net loss	$	(57,005	)	$	(89,771	)
Ongoing net loss per diluted share	$	(0.45	)	$	(0.71	)
Number of shares used for diluted per share calculation		126,273			125,566


Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating Loss to Ongoing Gross Margin, Operating Expenses and Operating Loss
(in thousands, except percentages)

	Three Months Ended			Three Months Ended
	June 28,			March 29,
		2009			2009
U.S. GAAP gross margin	$	67,757		$	36,515
Pre-tax non-ongoing items:
Pre-tax restructuring and asset impairments - cost of goods sold		-		$	10,217
Ongoing gross margin	$	67,757		$	46,732
U.S. GAAP gross margin as a percent of revenue		31.1	%		20.9	%
Ongoing gross margin as a percent of revenue		31.1	%		26.8	%
U.S. GAAP operating expenses	$	132,943		$	231,699
Pre-tax non-ongoing items:
Goodwill impairment - operating expenses		(7,179	)		(89,076	)
Legal judgment - operating expenses		(4,647	)		-
Restructuring and asset impairments - operating expenses		(5,396	)		(13,028	)
One-time contract termination costs - operating expenses		(413	)		-
409A expense - operating expenses		(982	)		(646	)
Ongoing operating expenses	$	114,326		$	128,949
Ongoing operating loss	$	(46,569	)	$	(82,217	)
Ongoing operating margin as a percent of revenue		-21.4	%		-47.1	%

SOURCE: Lam Research Corporation

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

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