LRCX Lam Research Corporation

Lam Research Corporation (NASDAQ: LRCX) highlights for the June 2010 quarter were:

  Lam Research Corporation Financial Highlights for the Quarter Ended June 27, 2010 (in thousands, except per share data and percentages)     U.S. GAAP Ongoing   • Revenue: $ 695,289 $ 695,289   • Operating Margin: 22.4 % 24.8 %   • Net Income: $ 139,997 $ 149,070   • Diluted EPS: $ 1.10 $ 1.17  

Lam Research Corporation today announced financial results for the quarter ended June 27, 2010. Revenue for the period was $695.3 million, gross margin was $321.4 million and net income was $140.0 million, or $1.10 per diluted share, compared to revenue of $632.8 million, gross margin of $292.9 million and net income of $120.3 million, or $0.94 per diluted share, for the March 2010 quarter. Shipments for the June 2010 quarter were $694 million compared to $735 million during the March 2010 quarter.

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

Ongoing net income was $149.1 million, or $1.17 per diluted share in the June 2010 quarter compared to ongoing net income of $120.3 million, or $0.94 per diluted share, for the March 2010 quarter. Ongoing gross margin for the June 2010 quarter was $324.9 million or 46.7%, compared to ongoing gross margin of $292.9 million, or 46.3%, for the March 2010 quarter. The sequential increase in gross margin was primarily due to improved factory and field utilization and a more favorable product mix. Ongoing operating expenses for the June 2010 quarter increased to $152.4 million compared with the March 2010 quarter of $143.8 million. This change is a result of higher R&D spending related to customer penetration activities associated with new products and increased variable compensation resulting from improved overall financial performance.

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

            Region Shipments Revenue North America 8% 8% Europe 10% 7% Japan 22% 17% Korea 29% 27% Taiwan 23% 33% Asia Pacific 8% 8%  

Cash and cash equivalents, short-term investments and restricted cash and investments balances were $991.7 million at the end of the June 2010 quarter, compared to $843.8 million at the end of the March 2010 quarter. Cash flows from operating activities were approximately $165.4 million during the June 2010 quarter. Deferred revenue and deferred profit balances at the end of the June 2010 quarter were $207.4 million and $123.2 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 $52 million as of June 27, 2010.

“Market share gains and solid execution drove strong results for the June quarter,” said Steve Newberry, Lam’s president and chief executive officer. “We believe that we will achieve substantial shipped market share gains in both the etch and clean businesses for calendar year 2010. We continued to win important new applications in the first half of 2010 in both businesses.”

“We are committed to creating value for our customers and shareholders and believe that we are demonstrating the results of that commitment through our business and financial performance,” Newberry concluded.

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 and continued market share gains for both the etch and clean businesses. 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 28, 2009 and the reports on Form 10-Q for the three months ended September 27, 2009, December 27, 2009, and March 28, 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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data and percentages)     Three Months Ended     Twelve Months Ended June 27,   March 28,   June 28, June 27,   June 28, 2010 2010 2009 2010 2009 (unaudited) (unaudited) (unaudited) (unaudited) (1)   Total revenue $ 695,289 $ 632,763 $ 217,764 $ 2,133,776 $ 1,115,946 Cost of goods sold 370,409 339,892 150,007 1,166,219 706,219 Cost of goods sold - restructuring and asset impairments 3,438 - - 3,438 20,993 Cost of goods sold - 409A expense   -     -     -     (10,168 )   -   Total costs of goods sold   373,847     339,892     150,007     1,159,489     727,212   Gross margin 321,442 292,871 67,757 974,287 388,734 Gross margin as a percent of revenue 46.2 % 46.3 % 31.1 % 45.7 % 34.8 % Research and development 85,644 81,845 67,491 320,859 288,269 Selling, general and administrative 66,779 61,933 47,248 240,942 233,061 Goodwill impairment - - 7,179 - 96,255 Restructuring and asset impairments 13,302 - 5,396 21,314 44,513 409A expense - - 982 (34,238 ) 3,232 Legal judgment   -     -     4,647     -     4,647   Total operating expenses   165,725     143,778     132,943     548,877     669,977   Operating income (loss) 155,717 149,093 (65,186 ) 425,410 (281,243 ) Operating margin as a percent of revenue 22.4 % 23.6 % -29.9 % 19.9 % -25.2 % Other income, net   3,541     1,616     2,869     4,731     18,150   Income (loss) before income taxes 159,258 150,709 (62,317 ) 430,141 (263,093 ) Income tax expense   19,261     30,408     26,173     83,472     39,055   Net income (loss) $ 139,997   $ 120,301   $ (88,490 ) $ 346,669   $ (302,148 ) Net income (loss) per share: Basic net income (loss) per share $ 1.11   $ 0.94   $ (0.70 ) $ 2.73   $ (2.41 ) Diluted net income (loss) per share $ 1.10   $ 0.94   $ (0.70 ) $ 2.71   $ (2.41 ) Number of shares used in per share calculations: Basic   126,339     127,307     126,273     126,933     125,595   Diluted   127,786     128,587     126,273     128,126     125,595       1   Derived from audited financial statements   LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)     June 27,   March 28,   June 28, 2010 2010 2009 (unaudited) (unaudited) (1) ASSETS Cash and cash equivalents $ 545,767 $ 461,369 $ 374,167 Short-term investments 280,690 217,178 205,221 Accounts receivable, net 499,890 521,810 253,585 Inventories 318,479 281,469 233,410 Deferred income taxes 46,158 49,363 69,043 Other current assets   65,677   73,546   101,714   Total current assets 1,756,661 1,604,735 1,237,140 Property and equipment, net 200,336 203,037 215,666 Restricted cash and investments 165,234 165,284 178,439 Deferred income taxes 26,218 14,380 17,007 Goodwill and intangible assets 236,906 242,868 260,787 Other assets   102,037   94,055   84,145   Total assets $ 2,487,392 $ 2,324,359 $ 1,993,184     LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 558,657 $ 533,361 $ 382,076     Long-term debt and capital leases $ 17,645 $ 20,314 $ 40,886 Income taxes payable 110,462 113,364 102,999 Other long-term liabilities 32,493 12,872 14,134 Stockholders' equity   1,768,135   1,644,448   1,453,089   Total liabilities and stockholders' equity $ 2,487,392 $ 2,324,359 $ 1,993,184       1   Derived from audited financial statements   LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)     Three Months Ended     Twelve Months Ended June 27,   March 28,   June 28, June 27,   June 28, 2010 2010 2009 2010 2009 (unaudited) (unaudited) (unaudited) (unaudited) (1) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 139,997 $ 120,301 $ (88,490 ) $ 346,669 $ (302,148 )

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

Depreciation and amortization 17,664 17,872 17,694 71,401 72,417 Deferred income taxes (8,633 ) 640 19,913 13,718 30,545 Restructuring charges, net 16,740 - 5,396 24,752 65,506 Goodwill impairment - - 7,179 - 96,255 Equity-based compensation expense 12,329 10,917 13,358 50,463 53,042 Income tax benefit on equity-based compensation plans 9,944 477 (1,173 ) 10,635 (14,294 ) Excess tax benefit on equity-based compensation plans (9,261 ) (370 ) (237 ) (10,234 ) 6,273 Other, net 648 1,210 2,535 3,190 9,353 Changes in operating asset and liabilities:   (13,995 )   (41,781 )   (34,295 )   (159,881 )   (95,078 ) Net cash provided by (used for) operating activities   165,433     109,266     (58,120 )   350,713     (78,129 )   CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures and intangible assets (12,042 ) (10,823 ) (5,848 ) (35,590 ) (44,282 ) Acquisitions of businesses, net of cash acquired - - - - (19,457 ) Net sales/maturities (purchases) of available-for-sale securities (63,958 ) (3,238 ) 93,056 (77,987 ) 173,764 Purchase of other investments (1,223 ) - - (2,184 ) (3,439 ) Transfer of restricted cash and investments 50 19,629 (44,458 ) 13,205 (92,206 ) Other   (800 )   -     2,000     (800 )   (8,375 ) Net cash provided by (used for) investing activities   (77,973 )   5,568     44,750     (103,356 )   6,005     CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term debt and capital lease obligations (616 ) (17,820 ) (911 ) (21,040 ) (256,047 ) Net proceeds from issuance of long-term debt - - - 336 625 Excess tax benefit on equity-based compensation plans 9,261 370 237 10,234 (6,273 ) Treasury stock purchases (17,860 ) (72,240 ) (3,197 ) (93,032 ) (30,946 ) Reissuances of treasury stock 6,173 5,518 6,271 17,452 19,797 Proceeds from issuance of common stock   5,563     1,441     6,287     13,386     12,014   Net cash provided by (used for) financing activities   2,521     (82,731 )   8,687     (72,664 )   (260,830 ) Effect of exchange rate changes on cash (5,583 ) (900 ) 4,202 (3,093 ) (25,416 ) Net increase (decrease) in cash and cash equivalents 84,398 31,203 (481 ) 171,600 (358,370 ) Cash and cash equivalents at beginning of period   461,369     430,166     374,648     374,167     732,537   Cash and cash equivalents at end of period $ 545,767   $ 461,369   $ 374,167   $ 545,767   $ 374,167       1   Derived from audited financial statements   Reconciliation of U.S. GAAP Net Income to Ongoing Net Income (in thousands, except per share data) (unaudited)     Three Months Ended     Three Months Ended June 27, March 28, 2010 2010 U.S. GAAP net income $ 139,997 $ 120,301 Pre-tax non-ongoing items: Restructuring and asset impairments - cost of goods sold 3,438 - Restructuring and asset impairments - operating expenses 13,302 - Net tax (benefit) on non-ongoing items   (7,667 )   -   Ongoing net income $ 149,070   $ 120,301   Ongoing net income per diluted share $ 1.17   $ 0.94   Number of shares used for diluted per share calculation 127,786 128,587    

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 June 27, March 28, 2010 2010 U.S. GAAP gross margin $ 321,442 $ 292,871 Pre-tax non-ongoing items: Restructuring and asset impairments - cost of goods sold   3,438     -   Ongoing gross margin $ 324,880   $ 292,871   U.S. GAAP gross margin as a percent of revenue 46.2 % 46.3 % Ongoing gross margin as a percent of revenue 46.7 % 46.3 % U.S. GAAP operating expenses $ 165,725 $ 143,778 Pre-tax non-ongoing items: Restructuring and asset impairments - operating expenses   (13,302 )   -   Ongoing operating expenses $ 152,423   $ 143,778   Ongoing operating income $ 172,457   $ 149,093   Ongoing operating margin as a percent of revenue 24.8 % 23.6 %