Delaware | 0-12933 | 94-2634797 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Item 2.02. | Results of Operations and Financial Condition | 3 | ||
Item 9.01. | Financial Statements and Exhibits | 3 | ||
SIGNATURES | 4 | |||
EXHIBIT INDEX | 5 | |||
EX-99.1 |
Item 2.02. | Results of Operations and Financial Condition |
Item 9.01. | Financial Statements and Exhibits |
Date: | January 25, 2017 | LAM RESEARCH CORPORATION | |
(Registrant) | |||
/s/ Douglas R. Bettinger | |||
Douglas R. Bettinger | |||
Executive Vice President, Chief Financial Officer | |||
(Principal Financial Officer and Principal Accounting Officer) |
• | Shipments of $1.92 billion and revenue of $1.88 billion. |
• | GAAP gross margin of 45.0%, GAAP operating margin of 23.4%, and GAAP diluted EPS of $1.81. |
• | Non-GAAP gross margin of 46.4%, non-GAAP operating margin of 26.0%, and non-GAAP diluted EPS of $2.24. |
U.S. GAAP | ||||||||||
December 2016 | September 2016 | Change Q/Q | ||||||||
Shipments | $ | 1,922,549 | $ | 1,708,483 | + 13% | |||||
Revenue | $ | 1,882,299 | $ | 1,632,419 | + 15% | |||||
Gross margin as percentage of revenue | 45.0 | % | 43.9 | % | + 110 bps | |||||
Operating margin as percentage of revenue | 23.4 | % | 19.4 | % | + 400 bps | |||||
Diluted EPS | $ | 1.81 | $ | 1.47 | + 23% | |||||
Non-GAAP | ||||||||||
December 2016 | September 2016 | Change Q/Q | ||||||||
Shipments | $ | 1,922,549 | $ | 1,708,483 | + 13% | |||||
Revenue | $ | 1,882,299 | $ | 1,632,419 | + 15% | |||||
Gross margin as percentage of revenue | 46.4 | % | 45.2 | % | + 120 bps | |||||
Operating margin as percentage of revenue | 26.0 | % | 22.4 | % | + 360 bps | |||||
Diluted EPS | $ | 2.24 | $ | 1.81 | + 24% |
Region | Shipments | Revenue | |||
Taiwan | 37 | % | 37 | % | |
Korea | 25 | % | 26 | % | |
China | 8 | % | 10 | % | |
Japan | 12 | % | 8 | % | |
United States | 8 | % | 7 | % | |
Europe | 6 | % | 7 | % | |
Southeast Asia | 4 | % | 5 | % |
U.S. GAAP | Reconciling Items | Non-GAAP | ||||||||||
Shipments | $2.350 Billion | +/- | $75 Million | — | $2.350 Billion | +/- | $75 Million | |||||
Revenue | $2.125 Billion | +/- | $75 Million | — | $2.125 Billion | +/- | $75 Million | |||||
Gross margin | 44.5% | +/- | 1% | $ | 21 | Million | 45.5% | +/- | 1% | |||
Operating margin | 23.8% | +/- | 1% | $ | 37 | Million | 25.5% | +/- | 1% | |||
Net income per diluted share | $2.31 | +/- | $0.10 | $ | 37 | Million | $2.55 | +/- | $0.10 | |||
Diluted share count | 183 Million | 3 | Million | 180 Million |
• | Gross margin - amortization related to intangible assets acquired in the Novellus transaction, $21 million. |
• | Operating margin - amortization related to intangible assets acquired in the Novellus transaction, $37 million. |
• | Earnings per share - amortization related to intangible assets acquired in the Novellus transaction, $37 million; amortization of note discounts, $6 million; and associated tax benefit for non-GAAP items ($6) million; totaling $37 million. |
• | Diluted share count - impact of a note hedge issued contemporaneously with the convertible notes due 2018, 3 million shares. |
Three Months Ended | Six Months Ended | ||||||||||||||||||
December 25, 2016 | September 25, 2016 | December 27, 2015 | December 25, 2016 | December 27, 2015 | |||||||||||||||
Revenue | $ | 1,882,299 | $ | 1,632,419 | $ | 1,425,534 | $ | 3,514,718 | $ | 3,025,577 | |||||||||
Cost of goods sold | 1,035,502 | 916,222 | 799,024 | 1,951,724 | 1,676,704 | ||||||||||||||
Gross margin | 846,797 | 716,197 | 626,510 | 1,562,994 | 1,348,873 | ||||||||||||||
Gross margin as a percent of revenue | 45.0 | % | 43.9 | % | 43.9 | % | 44.5 | % | 44.6 | % | |||||||||
Research and development | 246,804 | 235,240 | 220,754 | 482,044 | 454,963 | ||||||||||||||
Selling, general and administrative | 160,165 | 165,010 | 166,922 | 325,175 | 319,648 | ||||||||||||||
Total operating expenses | 406,969 | 400,250 | 387,676 | 807,219 | 774,611 | ||||||||||||||
Operating income | 439,828 | 315,947 | 238,834 | 755,775 | 574,262 | ||||||||||||||
Operating income as a percent of revenue | 23.4 | % | 19.4 | % | 16.8 | % | 21.5 | % | 19.0 | % | |||||||||
Other expense, net | (55,023 | ) | (23,154 | ) | (29,935 | ) | (78,177 | ) | (57,056 | ) | |||||||||
Income before income taxes | 384,805 | 292,793 | 208,899 | 677,598 | 517,206 | ||||||||||||||
Income tax (expense) benefit | (52,014 | ) | (28,958 | ) | 14,081 | (80,972 | ) | (5,547 | ) | ||||||||||
Net income | $ | 332,791 | $ | 263,835 | $ | 222,980 | $ | 596,626 | $ | 511,659 | |||||||||
Net income per share: | |||||||||||||||||||
Basic | $ | 2.05 | $ | 1.64 | $ | 1.41 | $ | 3.69 | $ | 3.23 | |||||||||
Diluted | $ | 1.81 | $ | 1.47 | $ | 1.28 | $ | 3.28 | $ | 2.94 | |||||||||
Number of shares used in per share calculations: | |||||||||||||||||||
Basic | 162,659 | 160,607 | 158,424 | 161,633 | 158,388 | ||||||||||||||
Diluted | 183,543 | 180,017 | 174,242 | 181,780 | 174,308 | ||||||||||||||
Cash dividend declared per common share | $ | 0.45 | $ | 0.30 | $ | 0.30 | $ | 0.75 | $ | 0.60 |
December 25, 2016 | September 25, 2016 | June 26, 2016 | ||||||||||
(unaudited) | (unaudited) | (1) | ||||||||||
ASSETS | ||||||||||||
Cash and cash equivalents | $ | 2,503,960 | $ | 5,861,701 | $ | 5,039,322 | ||||||
Investments | 3,329,425 | 1,352,775 | 1,788,612 | |||||||||
Accounts receivable, net | 1,426,307 | 1,290,317 | 1,262,145 | |||||||||
Inventories | 1,018,891 | 931,581 | 971,911 | |||||||||
Other current assets | 225,291 | 162,628 | 151,160 | (3) | ||||||||
Total current assets | 8,503,874 | 9,599,002 | 9,213,150 | |||||||||
Property and equipment, net | 672,553 | 649,587 | 639,608 | |||||||||
Restricted cash and investments | 255,175 | 255,640 | 250,421 | |||||||||
Goodwill and intangible assets | 1,873,581 | 1,912,431 | 1,951,197 | |||||||||
Other assets | 215,876 | 219,702 | 209,939 | (3) | ||||||||
Total assets | $ | 11,521,059 | $ | 12,636,362 | $ | 12,264,315 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current portion of convertible notes and capital leases | $ | 957,895 | $ | 952,999 | $ | 947,733 | (3) | |||||
Other current liabilities | 1,700,123 | 1,533,253 | 1,470,308 | |||||||||
Total current liabilities | 2,658,018 | 2,486,252 | 2,418,041 | |||||||||
Long-term debt and capital leases | 1,768,713 | 3,378,179 | 3,378,129 | (3) | ||||||||
Income taxes payable | 238,968 | 241,671 | 231,514 | |||||||||
Other long-term liabilities | 262,351 | 142,910 | 134,562 | |||||||||
Total liabilities | 4,928,050 | 6,249,012 | 6,162,246 | |||||||||
Temporary equity, convertible notes | 197,313 | 202,467 | 207,552 | |||||||||
Stockholders’ equity (2) | 6,395,696 | 6,184,883 | 5,894,517 | |||||||||
Total liabilities and stockholders’ equity | $ | 11,521,059 | $ | 12,636,362 | $ | 12,264,315 |
(1) | Derived from audited financial statements. |
(2) | Common shares issued and outstanding were 162,357 as of December 25, 2016, 161,706 as of September 25, 2016, and 160,201 as of June 26, 2016. |
(3) | Adjusted for effects of retrospective implementation of ASU 2015-3, regarding the simplification of the presentation of bond issuance costs, which requires that bond issuance costs related to a recognized liability be presented on the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. |
Three Months Ended | Six Months Ended | ||||||||||||||||||
December 25, 2016 | September 25, 2016 | December 27, 2015 | December 25, 2016 | December 27, 2015 | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||
Net income | $ | 332,791 | $ | 263,835 | $ | 222,980 | $ | 596,626 | $ | 511,659 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 77,065 | 74,562 | 71,798 | 151,627 | 142,388 | ||||||||||||||
Deferred income taxes | 34,615 | 7,633 | 8,176 | 42,248 | 2,613 | ||||||||||||||
Equity-based compensation expense | 32,255 | 38,595 | 32,570 | 70,850 | 68,344 | ||||||||||||||
Loss on extinguishment of debt | 36,325 | — | — | 36,325 | — | ||||||||||||||
Amortization of note discounts and issuance costs | 6,202 | 6,830 | 23,649 | 13,032 | 33,480 | ||||||||||||||
Other, net | (1,292 | ) | 16,807 | 10,579 | 15,515 | 20,563 | |||||||||||||
Changes in operating assets and liabilities | (113,863 | ) | 64,962 | (75,207 | ) | (48,901 | ) | (35,505 | ) | ||||||||||
Net cash provided by operating activities | 404,098 | 473,224 | 294,545 | 877,322 | 743,542 | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||
Capital expenditures and intangible assets | (36,513 | ) | (41,979 | ) | (28,143 | ) | (78,492 | ) | (77,597 | ) | |||||||||
Net (purchase) sale of available-for-sale securities | (1,990,928 | ) | 431,750 | 39,202 | (1,559,178 | ) | 10,999 | ||||||||||||
(Issuance) repayment of notes receivable | (500 | ) | — | 8,082 | (500 | ) | 8,082 | ||||||||||||
Transfers of restricted cash and investments | 465 | (5,219 | ) | — | (4,754 | ) | — | ||||||||||||
Other, net | 259 | (7,800 | ) | (4,746 | ) | (7,541 | ) | (6,246 | ) | ||||||||||
Net cash (used for) provided by investing activities | (2,027,217 | ) | 376,752 | 14,395 | (1,650,465 | ) | (64,762 | ) | |||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||
Principal payments on long-term debt and capital lease obligations and payments for debt issuance costs | (1,616,270 | ) | (371 | ) | (28,374 | ) | (1,616,641 | ) | (28,470 | ) | |||||||||
Treasury stock purchases | (67,668 | ) | (1,854 | ) | (12,798 | ) | (69,522 | ) | (111,183 | ) | |||||||||
Dividends paid | (48,397 | ) | (48,052 | ) | (47,896 | ) | (96,449 | ) | (95,555 | ) | |||||||||
Reissuance of treasury stock related to employee stock purchase plan | — | 19,320 | — | 19,320 | 19,245 | ||||||||||||||
Proceeds from issuance of common stock | 3,121 | 1,459 | 1,173 | 4,580 | 1,550 | ||||||||||||||
Other, net | (44 | ) | (10 | ) | 2,159 | (54 | ) | 5,431 | |||||||||||
Net cash used for financing activities | (1,729,258 | ) | (29,508 | ) | (85,736 | ) | (1,758,766 | ) | (208,982 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (5,364 | ) | 1,911 | 344 | (3,453 | ) | (3,464 | ) | |||||||||||
Net (decrease) increase in cash and cash equivalents | (3,357,741 | ) | 822,379 | 223,548 | (2,535,362 | ) | 466,334 | ||||||||||||
Cash and cash equivalents at beginning of period | 5,861,701 | 5,039,322 | 1,744,325 | 5,039,322 | 1,501,539 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 2,503,960 | $ | 5,861,701 | $ | 1,967,873 | $ | 2,503,960 | $ | 1,967,873 |
Three Months Ended | |||||||
December 25, 2016 | September 25, 2016 | ||||||
Revenue | $ | 1,882,299 | $ | 1,632,419 | |||
Gross margin | $ | 874,174 | $ | 737,447 | |||
Gross margin as percentage of revenue | 46.4 | % | 45.2 | % | |||
Operating expenses | $ | 384,241 | $ | 371,634 | |||
Operating income | $ | 489,933 | $ | 365,813 | |||
Operating margin as a percentage of revenue | 26.0 | % | 22.4 | % | |||
Net income | $ | 405,190 | $ | 322,074 | |||
Net income per diluted share | $ | 2.24 | $ | 1.81 | |||
Shares used in per share calculation - diluted | 180,613 | 177,628 |
Three Months Ended | |||||||
December 25, 2016 | September 25, 2016 | ||||||
U.S. GAAP net income | $ | 332,791 | $ | 263,835 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold | 21,250 | 21,250 | |||||
Product rationalization - cost of goods sold | 6,127 | — | |||||
Costs associated with campus consolidation - research and development | 995 | 2,561 | |||||
Product rationalization - research and development | 1,650 | — | |||||
Amortization related to intangible assets acquired in Novellus transaction - selling, general and administrative | 16,083 | 16,083 | |||||
KLA-Tencor acquisition-related costs - selling, general and administrative | — | 9,972 | |||||
Litigation settlement - selling general and administrative | 4,000 | — | |||||
KLA-Tencor acquisition funding interest expense, net - other expense, net | 2,682 | 17,709 | |||||
Amortization of note discounts - other expense, net | 5,671 | 5,913 | |||||
Costs related to early termination of KLA-Tencor acquisition funding - other expense, net | 34,518 | — | |||||
Net income tax benefit on non-GAAP items | (20,577 | ) | (15,249 | ) | |||
Non-GAAP net income | $ | 405,190 | $ | 322,074 | |||
Non-GAAP net income per diluted share | $ | 2.24 | $ | 1.81 | |||
U.S. GAAP number of shares used for per diluted share calculation | 183,543 | 180,017 | |||||
Effect of convertible note hedge | (2,930 | ) | (2,389 | ) | |||
Non-GAAP number of shares used for per diluted share calculation | 180,613 | 177,628 |
Three Months Ended | |||||||
December 25, 2016 | September 25, 2016 | ||||||
U.S. GAAP gross margin | $ | 846,797 | $ | 716,197 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired in Novellus transaction | 21,250 | 21,250 | |||||
Product rationalization | $ | 6,127 | $ | — | |||
Non-GAAP gross margin | $ | 874,174 | $ | 737,447 | |||
U.S. GAAP gross margin as a percentage of revenue | 45.0 | % | 43.9 | % | |||
Non-GAAP gross margin as a percentage of revenue | 46.4 | % | 45.2 | % | |||
U.S. GAAP operating expenses | $ | 406,969 | $ | 400,250 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired in Novellus transaction | (16,083 | ) | (16,083 | ) | |||
KLA-Tencor acquisition-related costs | — | (9,972 | ) | ||||
Costs associated with campus consolidation | (995 | ) | (2,561 | ) | |||
Product rationalization | (1,650 | ) | — | ||||
Litigation settlement | (4,000 | ) | — | ||||
Non-GAAP operating expenses | $ | 384,241 | $ | 371,634 | |||
Non-GAAP operating income | $ | 489,933 | $ | 365,813 | |||
GAAP operating margin as percent of revenue | 23.4 | % | 19.4 | % | |||
Non-GAAP operating margin as a percent of revenue | 26.0 | % | 22.4 | % |