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 |
Item 9.01. | Financial Statements and Exhibits |
Date: | July 26, 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 $2.54 billion and revenue of $2.34 billion. |
• | GAAP gross margin of 45.6%, GAAP operating margin of 25.9%, and GAAP diluted EPS of $2.82. |
• | Non-GAAP gross margin of 46.5%, non-GAAP operating margin of 27.7%, and non-GAAP diluted EPS of $3.11. |
U.S. GAAP | ||||||||||
June 2017 | March 2017 | Change Q/Q | ||||||||
Shipments | $ | 2,542,664 | $ | 2,412,656 | + 5% | |||||
Revenue | $ | 2,344,907 | $ | 2,153,995 | + 9% | |||||
Gross margin as percentage of revenue | 45.6 | % | 45.1 | % | + 50 bps | |||||
Operating margin as percentage of revenue | 25.9 | % | 25.0 | % | + 90 bps | |||||
Diluted EPS | $ | 2.82 | $ | 3.10 | - 9% | |||||
Non-GAAP | ||||||||||
June 2017 | March 2017 | Change Q/Q | ||||||||
Shipments | $ | 2,542,664 | $ | 2,412,656 | + 5% | |||||
Revenue | $ | 2,344,907 | $ | 2,153,995 | + 9% | |||||
Gross margin as percentage of revenue | 46.5 | % | 46.1 | % | + 40 bps | |||||
Operating margin as percentage of revenue | 27.7 | % | 26.9 | % | + 80 bps | |||||
Diluted EPS | $ | 3.11 | $ | 2.80 | + 11% |
Region | Shipments | Revenue | |||
Korea | 36 | % | 38 | % | |
Japan | 21 | % | 17 | % | |
China | 16 | % | 16 | % | |
Taiwan | 14 | % | 16 | % | |
United States | 8 | % | 9 | % | |
Europe | 3 | % | 3 | % | |
Southeast Asia | 2 | % | 1 | % |
U.S. GAAP | Reconciling Items | Non-GAAP | ||||||||||
Shipments | $2.35 Billion | +/- | $100 Million | — | $2.35 Billion | +/- | $100 Million | |||||
Revenue | $2.45 Billion | +/- | $100 Million | — | $2.45 Billion | +/- | $100 Million | |||||
Gross margin | 45.6% | +/- | 1% | $ | 21 | Million | 46.5% | +/- | 1% | |||
Operating margin | 26.5% | +/- | 1% | $ | 37 | Million | 28.0% | +/- | 1% | |||
Net income per diluted share | $2.98 | +/- | $0.12 | $ | 37 | Million | $3.25 | +/- | $0.12 | |||
Diluted share count | 187 Million | 4 | Million | 183 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, 4 million shares. |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
June 25, 2017 | March 26, 2017 | June 26, 2016 | June 25, 2017 | June 26, 2016 | |||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (1) | |||||||||||||||
Revenue | $ | 2,344,907 | $ | 2,153,995 | $ | 1,546,261 | $ | 8,013,620 | $ | 5,885,893 | |||||||||
Cost of goods sold | 1,275,946 | 1,182,591 | 847,477 | 4,410,261 | 3,266,971 | ||||||||||||||
Gross margin | 1,068,961 | 971,404 | 698,784 | 3,603,359 | 2,618,922 | ||||||||||||||
Gross margin as a percent of revenue | 45.6 | % | 45.1 | % | 45.2 | % | 45.0 | % | 44.5 | % | |||||||||
Research and development | 285,712 | 265,986 | 237,255 | 1,033,742 | 913,712 | ||||||||||||||
Selling, general and administrative | 175,310 | 167,000 | 152,288 | 667,485 | 630,954 | ||||||||||||||
Total operating expenses | 461,022 | 432,986 | 389,543 | 1,701,227 | 1,544,666 | ||||||||||||||
Operating income | 607,939 | 538,418 | 309,241 | 1,902,132 | 1,074,256 | ||||||||||||||
Operating income as a percent of revenue | 25.9 | % | 25.0 | % | 20.0 | % | 23.7 | % | 18.3 | % | |||||||||
Other expense, net | (4,444 | ) | (7,838 | ) | (27,249 | ) | (90,459 | ) | (114,139 | ) | |||||||||
Income before income taxes | 603,495 | 530,580 | 281,992 | 1,811,673 | 960,117 | ||||||||||||||
Income tax (expense) benefit | (77,071 | ) | 44,133 | (23,053 | ) | (113,910 | ) | (46,068 | ) | ||||||||||
Net income | $ | 526,424 | $ | 574,713 | $ | 258,939 | $ | 1,697,763 | $ | 914,049 | |||||||||
Net income per share: | |||||||||||||||||||
Basic | $ | 3.25 | $ | 3.52 | $ | 1.62 | $ | 10.47 | $ | 5.75 | |||||||||
Diluted | $ | 2.82 | $ | 3.10 | $ | 1.46 | $ | 9.24 | $ | 5.22 | |||||||||
Number of shares used in per share calculations: | |||||||||||||||||||
Basic | 162,213 | 163,408 | 159,862 | 162,222 | 158,919 | ||||||||||||||
Diluted | 186,427 | 185,094 | 177,649 | 183,770 | 175,159 | ||||||||||||||
Cash dividend declared per common share | $ | 0.45 | $ | 0.45 | $ | 0.30 | $ | 1.65 | $ | 1.20 | |||||||||
(1) Derived from audited financial statements. |
June 25, 2017 | March 26, 2017 | June 26, 2016 | |||||||||||
(unaudited) | (unaudited) | (1) | |||||||||||
ASSETS | |||||||||||||
Cash and cash equivalents | $ | 2,377,534 | $ | 2,128,570 | $ | 5,039,322 | |||||||
Investments | 3,663,628 | 3,755,036 | 1,788,612 | ||||||||||
Accounts receivable, net | 1,673,398 | 1,636,090 | 1,262,145 | ||||||||||
Inventories | 1,232,916 | 1,133,196 | 971,911 | ||||||||||
Other current assets | 195,022 | 223,056 | 151,160 | (2 | ) | ||||||||
Total current assets | 9,142,498 | 8,875,948 | 9,213,150 | ||||||||||
Property and equipment, net | 685,595 | 675,707 | 639,608 | ||||||||||
Restricted cash and investments | 256,205 | 256,157 | 250,421 | ||||||||||
Goodwill and intangible assets | 1,796,668 | 1,835,150 | 1,951,197 | ||||||||||
Other assets | 241,799 | 232,224 | 209,939 | (2 | ) | ||||||||
Total assets | $ | 12,122,765 | $ | 11,875,186 | $ | 12,264,315 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||
Current portion of convertible notes and capital leases | $ | 908,439 | $ | 905,288 | $ | 947,733 | (2 | ) | |||||
Other current liabilities | 2,041,676 | 1,851,451 | 1,470,308 | ||||||||||
Total current liabilities | 2,950,115 | 2,756,739 | 2,418,041 | ||||||||||
Long-term debt and capital leases | 1,784,974 | 1,777,297 | 3,378,129 | (2 | ) | ||||||||
Income taxes payable | 120,178 | 137,173 | 231,514 | ||||||||||
Other long-term liabilities | 280,186 | 282,615 | 134,562 | ||||||||||
Total liabilities | 5,135,453 | 4,953,824 | 6,162,246 | ||||||||||
Temporary equity, convertible notes | 169,861 | 175,108 | 207,552 | ||||||||||
Stockholders’ equity (3) | 6,817,451 | 6,746,254 | 5,894,517 | ||||||||||
Total liabilities and stockholders’ equity | $ | 12,122,765 | $ | 11,875,186 | $ | 12,264,315 | |||||||
(1) Derived from audited financial statements. | |||||||||||||
(2) 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. | |||||||||||||
(3) Common shares issued and outstanding were 161,723 as of June 25, 2017, 163,969 as of March 26, 2017 and 160,201 as of June 26, 2016. |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
June 25, 2017 | March 26, 2017 | June 26, 2016 | June 25, 2017 | June 26, 2016 | |||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (1) | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||
Net income | $ | 526,424 | $ | 574,713 | $ | 258,939 | $ | 1,697,763 | $ | 914,049 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 79,036 | 76,242 | 74,976 | 306,905 | 291,028 | ||||||||||||||
Deferred income taxes | 35,069 | 27,619 | (46,708 | ) | 104,936 | (49,003 | ) | ||||||||||||
Equity-based compensation expense | 43,802 | 35,323 | 39,288 | 149,975 | 142,348 | ||||||||||||||
(Gain) Loss on early extinguishment of debt | (73 | ) | — | — | 36,252 | — | |||||||||||||
Income tax benefit (expense) on equity-based compensation plans | 38,747 | — | (8,048 | ) | 38,747 | (1,023 | ) | ||||||||||||
Excess tax (benefit) expense on equity-based compensation plans | (38,635 | ) | — | 9,035 | (38,635 | ) | 1,020 | ||||||||||||
Amortization of note discounts and issuance costs | 6,114 | 6,136 | 14,584 | 25,282 | 70,522 | ||||||||||||||
Gain on sale of assets, net | (163 | ) | — | (15,223 | ) | (163 | ) | (15,223 | ) | ||||||||||
Other, net | 8,275 | (4,738 | ) | 17,929 | 19,052 | 48,788 | |||||||||||||
Changes in operating assets and liabilities | 30,676 | (292,607 | ) | 79,052 | (310,832 | ) | (52,229 | ) | |||||||||||
Net cash provided by operating activities | 729,272 | 422,688 | 423,824 | 2,029,282 | 1,350,277 | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||
Capital expenditures and intangible assets | (34,811 | ) | (44,116 | ) | (51,726 | ) | (157,419 | ) | (175,330 | ) | |||||||||
Net sale (purchase) of available-for-sale securities | 93,858 | (418,566 | ) | 605,891 | (1,883,886 | ) | 798,828 | ||||||||||||
Proceeds from sale of assets | 290 | — | 79,730 | 1,291 | 79,730 | ||||||||||||||
Transfers of restricted cash and investments | (48 | ) | (982 | ) | (112,381 | ) | (5,784 | ) | (112,381 | ) | |||||||||
Other, net | (187 | ) | (3,586 | ) | — | (12,815 | ) | 1,636 | |||||||||||
Net cash provided by (used for) investing activities | 59,102 | (467,250 | ) | 521,514 | (2,058,613 | ) | 592,483 | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||
Principal payments on long-term debt and capital lease obligations | (2,445 | ) | (69,227 | ) | (450,624 | ) | (1,688,313 | ) | (451,497 | ) | |||||||||
Proceeds from issuance of long-term debt, net of issuance costs | — | — | 2,374,220 | — | 2,338,144 | ||||||||||||||
Excess tax benefit (expense) on equity-based compensation plans | 38,635 | — | (9,035 | ) | 38,635 | (1,020 | ) | ||||||||||||
Treasury stock purchases | (525,778 | ) | (216,373 | ) | (27,114 | ) | (811,672 | ) | (158,389 | ) | |||||||||
Dividends paid | (73,709 | ) | (73,337 | ) | (47,308 | ) | (243,495 | ) | (190,402 | ) | |||||||||
Re-issuance of treasury stock related to employee stock purchase plan | 23,120 | 17,223 | 20,360 | 59,663 | 55,992 | ||||||||||||||
Proceeds from issuance of common stock | 369 | 7,964 | 1,547 | 12,913 | 3,405 | ||||||||||||||
Other, net | (1 | ) | (70 | ) | (159 | ) | (125 | ) | (488 | ) | |||||||||
Net cash (used for) provided by financing activities | (539,809 | ) | (333,820 | ) | 1,861,887 | (2,632,394 | ) | 1,595,745 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | 399 | 2,992 | 76 | (63 | ) | (722 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | 248,964 | (375,390 | ) | 2,807,301 | (2,661,788 | ) | 3,537,783 | ||||||||||||
Cash and cash equivalents at beginning of period | 2,128,570 | 2,503,960 | 2,232,021 | 5,039,322 | 1,501,539 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 2,377,534 | $ | 2,128,570 | $ | 5,039,322 | $ | 2,377,534 | $ | 5,039,322 | |||||||||
(1) Derived from audited financial statements. |
Three Months Ended | |||||||
June 25, 2017 | March 26, 2017 | ||||||
Revenue | $ | 2,344,907 | $ | 2,153,995 | |||
Gross margin | $ | 1,090,211 | $ | 992,654 | |||
Gross margin as percentage of revenue | 46.5 | % | 46.1 | % | |||
Operating expenses | $ | 440,126 | $ | 414,229 | |||
Operating income | $ | 650,085 | $ | 578,425 | |||
Operating margin as a percentage of revenue | 27.7 | % | 26.9 | % | |||
Net income | $ | 565,518 | $ | 507,751 | |||
Net income per diluted share | $ | 3.11 | $ | 2.80 | |||
Shares used in per share calculation - diluted | 182,093 | 181,539 |
Three Months Ended | |||||||
June 25, 2017 | March 26, 2017 | ||||||
U.S. GAAP net income | $ | 526,424 | $ | 574,713 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold | 21,250 | 21,250 | |||||
Amortization related to intangible assets acquired in Novellus transaction -selling, general and administrative | 16,083 | 16,083 | |||||
Cost associated with business process reengineering- selling, general and administrative | 4,813 | 2,674 | |||||
Amortization of note discounts - other expense, net | 5,631 | 5,654 | |||||
Net income tax benefit on non-GAAP items | (5,697 | ) | (6,418 | ) | |||
Income tax benefit on conclusion of certain tax matters | (2,986 | ) | (106,205 | ) | |||
Non-GAAP net income | $ | 565,518 | $ | 507,751 | |||
Non-GAAP net income per diluted share | $ | 3.11 | $ | 2.80 | |||
U.S. GAAP number of shares used for per diluted share calculation | 186,427 | 185,094 | |||||
Effect of convertible note hedge | (4,334 | ) | (3,555 | ) | |||
Non-GAAP number of shares used for per diluted share calculation | 182,093 | 181,539 |
Twelve Months Ended | |||||||
June 25, 2017 | June 26, 2016 | ||||||
U.S. GAAP net income | $ | 1,697,763 | $ | 914,049 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold | 85,000 | 85,000 | |||||
Product rationalization - cost of goods sold | 6,127 | — | |||||
Novellus acquisition-related inventory fair value impact - cost of goods sold | — | 777 | |||||
Restructuring charges - cost of goods sold | — | 371 | |||||
Restructuring charges - research and development | — | 4,355 | |||||
Product rationalization - research and development | 1,650 | — | |||||
Cost associated with campus consolidation - research and development | 3,556 | 7,763 | |||||
KLA-Tencor acquisition-related costs - selling, general and administrative | 9,972 | 50,985 | |||||
Gain on sale of assets, net associated exit costs - selling, general and administrative | — | (15,223 | ) | ||||
Amortization related to intangible assets acquired in Novellus transaction -selling, general and administrative | 64,332 | 64,333 | |||||
Restructuring charges - selling, general and administrative | — | 4,997 | |||||
Costs associated with business process reengineering - selling, general and administrative | 7,487 | — | |||||
Litigation settlement - selling, general and administrative | 4,000 | — | |||||
Amortization of note discounts - other expense, net | 22,869 | 35,205 | |||||
Costs related to early termination of KLA-Tencor acquisition funding - other expense, net | 34,518 | — | |||||
Amortization of bridge loan issuance costs and other related fees - other expense, net | — | 33,843 | |||||
KLA-Tencor pre-acquisition funding interest expense, net - other expense, net | 20,391 | 3,821 | |||||
Net income tax benefit on non-GAAP items | (47,941 | ) | (49,859 | ) | |||
Income tax benefit on conclusion of certain tax matters | (109,191 | ) | (3,017 | ) | |||
Change to income tax benefit due to a court ruling | — | (22,812 | ) | ||||
Income tax benefit related to tax extenders, primarily the research and development credit | — | (13,603 | ) | ||||
Non-GAAP net income | $ | 1,800,533 | $ | 1,100,985 | |||
Non-GAAP net income per diluted share | $ | 9.98 | $ | 6.37 | |||
U.S. GAAP number of shares used for per diluted share calculation | 183,770 | 175,159 | |||||
Effect of convertible note hedge | (3,302 | ) | (2,398 | ) | |||
Non-GAAP number of shares used for per diluted share calculation | 180,468 | 172,761 |
Three Months Ended | |||||||||||||||
June 25, 2017 | March 26, 2017 | December 25, 2016 | September 25, 2016 | ||||||||||||
U.S. GAAP gross margin | $ | 1,068,961 | $ | 971,404 | $ | 846,797 | $ | 716,197 | |||||||
Pre-tax non-GAAP items: | |||||||||||||||
Amortization related to intangible assets acquired in Novellus transaction | 21,250 | 21,250 | 21,250 | 21,250 | |||||||||||
Product rationalization | — | — | 6,127 | — | |||||||||||
Non-GAAP gross margin | $ | 1,090,211 | $ | 992,654 | $ | 874,174 | $ | 737,447 | |||||||
U.S. GAAP gross margin as a percentage of revenue | 45.6 | % | 45.1 | % | 45.0 | % | 43.9 | % | |||||||
Non-GAAP gross margin as a percentage of revenue | 46.5 | % | 46.1 | % | 46.4 | % | 45.2 | % | |||||||
U.S. GAAP operating expenses | $ | 461,022 | $ | 432,986 | $ | 406,969 | $ | 400,250 | |||||||
Pre-tax non-GAAP items: | |||||||||||||||
Amortization related to intangible assets acquired in Novellus transaction | (16,083 | ) | (16,083 | ) | (16,083 | ) | (16,083 | ) | |||||||
Costs associated with business process reengineering | (4,813 | ) | (2,674 | ) | — | — | |||||||||
KLA-Tencor acquisition-related costs | — | — | — | (9,972 | ) | ||||||||||
Product rationalization | — | — | (1,650 | ) | — | ||||||||||
Cost associated with campus consolidation | — | — | (995 | ) | (2,561 | ) | |||||||||
Litigation settlement | — | — | (4,000 | ) | — | ||||||||||
Non-GAAP operating expenses | $ | 440,126 | $ | 414,229 | $ | 384,241 | $ | 371,634 | |||||||
Non-GAAP operating income | $ | 650,085 | $ | 578,425 | $ | 489,933 | $ | 365,813 | |||||||
GAAP operating margin as percent of revenue | 25.9 | % | 25.0 | % | 23.4 | % | 19.4 | % | |||||||
Non-GAAP operating margin as a percent of revenue | 27.7 | % | 26.9 | % | 26.0 | % | 22.4 | % |