LRCX Lam Research Corporation

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® 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 %