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 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Item 9.01. | Financial Statements and Exhibits |
Date: | January 24, 2018 | 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 $2.63 billion and revenue of $2.58 billion. |
• | U.S. GAAP gross margin of 46.7%, U.S. GAAP operating margin of 28.6%, and U.S. GAAP diluted EPS of $(0.06). |
• | Non-GAAP gross margin of 47.6%, non-GAAP operating margin of 30.2%, and non-GAAP diluted EPS of $4.34. |
U.S. GAAP | ||||||||||
December 2017 | September 2017 | Change Q/Q | ||||||||
Shipments | $ | 2,631,723 | $ | 2,381,565 | 11% | |||||
Revenue | $ | 2,580,815 | $ | 2,478,140 | + 4% | |||||
Gross margin as percentage of revenue | 46.7 | % | 46.4 | % | + 30 bps | |||||
Operating margin as percentage of revenue | 28.6 | % | 28.0 | % | + 60 bps | |||||
Diluted EPS | $ | (0.06 | ) | $ | 3.21 | - 102% | ||||
Non-GAAP | ||||||||||
December 2017 | September 2017 | Change Q/Q | ||||||||
Shipments | $ | 2,631,723 | $ | 2,381,565 | 11% | |||||
Revenue | $ | 2,580,815 | $ | 2,478,140 | + 4% | |||||
Gross margin as percentage of revenue | 47.6 | % | 47.2 | % | + 40 bps | |||||
Operating margin as percentage of revenue | 30.2 | % | 29.6 | % | + 60 bps | |||||
Diluted EPS | $ | 4.34 | $ | 3.46 | + 25% |
Region | Shipments | Revenue | |||
Korea | 32 | % | 30 | % | |
Taiwan | 15 | % | 15 | % | |
Japan | 14 | % | 16 | % | |
China | 14 | % | 11 | % | |
United States | 10 | % | 11 | % | |
Southeast Asia | 10 | % | 11 | % | |
Europe | 5 | % | 6 | % |
U.S. GAAP | Reconciling Items | Non-GAAP | ||||||||||
Shipments | $3.175 Billion | +/- | $125 Million | — | $3.175 Billion | +/- | $125 Million | |||||
Revenue | $2.850 Billion | +/- | $125 Million | — | $2.850 Billion | +/- | $125 Million | |||||
Gross margin | 45.2% | +/- | 1% | $ | 22 | Million | 46.0% | +/- | 1% | |||
Operating margin | 27.6% | +/- | 1% | $ | 39 | Million | 29.0% | +/- | 1% | |||
Net income per diluted share | $4.10 | +/- | $0.15 | $ | 37 | Million | $4.35 | +/- | $0.15 | |||
Diluted share count | 183 Million | 2 | Million | 181 Million |
• | Gross margin - amortization related to intangible assets acquired through business combinations, $22 million. |
• | Operating margin - amortization related to intangible assets acquired through business combinations, $39 million. |
• | Earnings per share - amortization related to intangible assets acquired though business combinations, $39 million; amortization of note discounts, $3 million; and associated tax benefit for non-GAAP items ($5 million); totaling $37 million. |
• | Diluted share count - impact of a note hedge issued contemporaneously with the convertible notes due 2018, 2 million shares. |
Three Months Ended | Six Months Ended | ||||||||||||||||||
December 24, 2017 | September 24, 2017 | December 25, 2016 | December 24, 2017 | December 25, 2016 | |||||||||||||||
Revenue | $ | 2,580,815 | $ | 2,478,140 | $ | 1,882,299 | $ | 5,058,955 | $ | 3,514,718 | |||||||||
Cost of goods sold | 1,375,248 | 1,328,797 | 1,035,502 | 2,704,045 | 1,951,724 | ||||||||||||||
Gross margin | 1,205,567 | 1,149,343 | 846,797 | 2,354,910 | 1,562,994 | ||||||||||||||
Gross margin as a percent of revenue | 46.7 | % | 46.4 | % | 45.0 | % | 46.5 | % | 44.5 | % | |||||||||
Research and development | 281,311 | 275,078 | 246,804 | 556,389 | 482,044 | ||||||||||||||
Selling, general and administrative | 186,885 | 181,043 | 160,165 | 367,928 | 325,175 | ||||||||||||||
Total operating expenses | 468,196 | 456,121 | 406,969 | 924,317 | 807,219 | ||||||||||||||
Operating income | 737,371 | 693,222 | 439,828 | 1,430,593 | 755,775 | ||||||||||||||
Operating income as a percent of revenue | 28.6 | % | 28.0 | % | 23.4 | % | 28.3 | % | 21.5 | % | |||||||||
Other expense, net | (3,152 | ) | (5,502 | ) | (55,023 | ) | (8,654 | ) | (78,177 | ) | |||||||||
Income before income taxes | 734,219 | 687,720 | 384,805 | 1,421,939 | 677,598 | ||||||||||||||
Income tax expense | (744,174 | ) | (97,030 | ) | (52,014 | ) | (841,204 | ) | (80,972 | ) | |||||||||
Net (loss) income | $ | (9,955 | ) | $ | 590,690 | $ | 332,791 | $ | 580,735 | $ | 596,626 | ||||||||
Net (loss) income per share: | |||||||||||||||||||
Basic | $ | (0.06 | ) | $ | 3.64 | $ | 2.05 | $ | 3.59 | $ | 3.69 | ||||||||
Diluted | $ | (0.06 | ) | $ | 3.21 | $ | 1.81 | $ | 3.16 | $ | 3.28 | ||||||||
Number of shares used in per share calculations: | |||||||||||||||||||
Basic | 161,135 | 162,141 | 162,659 | 161,638 | 161,633 | ||||||||||||||
Diluted | 161,135 | 183,880 | 183,543 | 183,958 | 181,780 | ||||||||||||||
Cash dividend declared per common share | $ | 0.50 | $ | 0.45 | $ | 0.45 | $ | 0.95 | $ | 0.75 |
December 24, 2017 | September 24, 2017 | June 25, 2017 | |||||||||
(unaudited) | (unaudited) | (1) | |||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 1,745,173 | $ | 2,406,462 | $ | 2,377,534 | |||||
Investments | 3,954,526 | 3,775,925 | 3,663,628 | ||||||||
Accounts receivable, net | 2,279,044 | 1,530,762 | 1,673,398 | ||||||||
Inventories | 1,507,435 | 1,328,297 | 1,232,916 | ||||||||
Other current assets | 179,944 | 187,334 | 195,022 | ||||||||
Total current assets | 9,666,122 | 9,228,780 | 9,142,498 | ||||||||
Property and equipment, net | 807,340 | 745,600 | 685,595 | ||||||||
Restricted cash and investments | 255,984 | 256,045 | 256,205 | ||||||||
Goodwill and intangible assets | 1,866,159 | 1,904,389 | 1,796,668 | ||||||||
Other assets | 316,660 | 263,812 | 241,799 | ||||||||
Total assets | $ | 12,912,265 | $ | 12,398,626 | $ | 12,122,765 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current portion of debt and capital leases | $ | 1,401,660 | $ | 639,907 | $ | 908,439 | |||||
Other current liabilities | 2,510,035 | 2,148,724 | 2,041,676 | ||||||||
Total current liabilities | 3,911,695 | 2,788,631 | 2,950,115 | ||||||||
Long-term debt and capital leases | 1,789,958 | 1,793,477 | 1,784,974 | ||||||||
Income taxes payable | 818,880 | 129,611 | 120,178 | ||||||||
Other long-term liabilities | 118,177 | 278,733 | 280,186 | ||||||||
Total liabilities | 6,638,710 | 4,990,452 | 5,135,453 | ||||||||
Temporary equity, convertible notes | 130,424 | 136,996 | 169,861 | ||||||||
Stockholders’ equity (2) | 6,143,131 | 7,271,178 | 6,817,451 | ||||||||
Total liabilities and stockholders’ equity | $ | 12,912,265 | $ | 12,398,626 | $ | 12,122,765 |
(1) | Derived from audited financial statements. |
(2) | Common shares issued and outstanding were 159,451 as of December 24, 2017, 162,144 as of September 24, 2017, and 161,723 as of June 25, 2017. |
Three Months Ended | Six Months Ended | ||||||||||||||||||
December 24, 2017 | September 24, 2017 | December 25, 2016 | December 24, 2017 | December 25, 2016 | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||
Net (loss) income | $ | (9,955 | ) | $ | 590,690 | $ | 332,791 | $ | 580,735 | $ | 596,626 | ||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 79,898 | 79,142 | 77,065 | 159,040 | 151,627 | ||||||||||||||
Deferred income taxes | (271,478 | ) | 43,204 | 34,615 | (228,274 | ) | 42,248 | ||||||||||||
Equity-based compensation expense | 42,124 | 41,783 | 32,255 | 83,907 | 70,850 | ||||||||||||||
Loss on extinguishment of debt | — | — | 36,325 | — | 36,325 | ||||||||||||||
Amortization of note discounts and issuance costs | 4,539 | 4,588 | 6,202 | 9,127 | 13,032 | ||||||||||||||
Other, net | (1,108 | ) | 6,569 | (1,292 | ) | 5,461 | 15,515 | ||||||||||||
Changes in operating assets and liabilities | 184,684 | 92,330 | (113,863 | ) | 277,014 | (48,901 | ) | ||||||||||||
Net cash provided by operating activities | 28,704 | 858,306 | 404,098 | 887,010 | 877,322 | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||
Capital expenditures and intangible assets | (84,693 | ) | (60,064 | ) | (36,513 | ) | (144,757 | ) | (78,492 | ) | |||||||||
Business acquisitions, net of cash acquired | (84 | ) | (115,613 | ) | — | (115,697 | ) | — | |||||||||||
Net purchase of available-for-sale securities | (205,701 | ) | (117,774 | ) | (1,990,928 | ) | (323,475 | ) | (1,559,178 | ) | |||||||||
Transfers of restricted cash and investments | 61 | 160 | 465 | 221 | (4,754 | ) | |||||||||||||
Other, net | (4,396 | ) | (10,600 | ) | (241 | ) | (14,996 | ) | (8,041 | ) | |||||||||
Net cash used for investing activities | (294,813 | ) | (303,891 | ) | (2,027,217 | ) | (598,704 | ) | (1,650,465 | ) | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||
Principal payments on long-term debt and capital lease obligations and payments for debt issuance costs | (47,522 | ) | (301,727 | ) | (1,616,270 | ) | (349,249 | ) | (1,616,641 | ) | |||||||||
Net proceeds from commercial paper | 798,947 | — | — | 798,947 | — | ||||||||||||||
Proceeds from borrowings on revolving credit facility | 750,000 | — | — | 750,000 | — | ||||||||||||||
Repayments of borrowings on revolving credit facility | (750,000 | ) | — | — | (750,000 | ) | — | ||||||||||||
Treasury stock purchases | (1,111,450 | ) | (155,385 | ) | (67,668 | ) | (1,266,835 | ) | (69,522 | ) | |||||||||
Dividends paid | (73,127 | ) | (72,738 | ) | (48,397 | ) | (145,865 | ) | (96,449 | ) | |||||||||
Reissuance of treasury stock related to employee stock purchase plan | 34,057 | — | — | 34,057 | 19,320 | ||||||||||||||
Proceeds from issuance of common stock | 3,073 | 1,042 | 3,121 | 4,115 | 4,580 | ||||||||||||||
Other, net | — | 4 | (44 | ) | 4 | (54 | ) | ||||||||||||
Net cash used for financing activities | (396,022 | ) | (528,804 | ) | (1,729,258 | ) | (924,826 | ) | (1,758,766 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 842 | 3,317 | (5,364 | ) | 4,159 | (3,453 | ) | ||||||||||||
Net (decrease) increase in cash and cash equivalents | (661,289 | ) | 28,928 | (3,357,741 | ) | (632,361 | ) | (2,535,362 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 2,406,462 | 2,377,534 | 5,861,701 | 2,377,534 | 5,039,322 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 1,745,173 | $ | 2,406,462 | $ | 2,503,960 | $ | 1,745,173 | $ | 2,503,960 |
Three Months Ended | |||||||
December 24, 2017 | September 24, 2017 | ||||||
Revenue | $ | 2,580,815 | $ | 2,478,140 | |||
Gross margin | $ | 1,227,961 | $ | 1,170,905 | |||
Gross margin as percentage of revenue | 47.6 | % | 47.2 | % | |||
Operating expenses | $ | 448,667 | $ | 438,056 | |||
Operating income | $ | 779,294 | $ | 732,849 | |||
Operating margin as a percentage of revenue | 30.2 | % | 29.6 | % | |||
Net income | $ | 787,863 | $ | 627,754 | |||
Net income per diluted share | $ | 4.34 | $ | 3.46 | |||
Shares used in per share calculation - diluted | 181,655 | 181,412 |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 24, 2017 | September 24, 2017 | June 25, 2017 | March 26, 2017 | December 24, 2017 | |||||||||||||||
U.S. GAAP net (loss) income | $ | (9,955 | ) | $ | 590,690 | $ | 526,424 | $ | 574,713 | $ | 1,681,872 | ||||||||
Pre-tax non-GAAP items: | |||||||||||||||||||
Amortization related to intangible assets acquired through certain business combinations - cost of goods sold | 22,394 | 21,562 | 21,250 | 21,250 | 86,456 | ||||||||||||||
Amortization related to intangible assets acquired through certain business combinations - selling, general and administrative | 17,074 | 16,413 | 16,083 | 16,083 | 65,653 | ||||||||||||||
Costs associated with business process reengineering - selling, general and administrative | 1,362 | 716 | 4,813 | 2,674 | 9,565 | ||||||||||||||
Business combination acquisition and integration related costs - selling, general and administrative | 1,093 | 936 | — | — | 2,029 | ||||||||||||||
Amortization of note discounts - other expense, net | 3,410 | 4,104 | 5,631 | 5,654 | 18,799 | ||||||||||||||
Net income tax benefit on non-GAAP items | (4,404 | ) | (6,114 | ) | (5,697 | ) | (6,418 | ) | (22,633 | ) | |||||||||
Income tax expense associated with U.S. tax reform | 756,889 | — | — | — | 756,889 | ||||||||||||||
Income tax benefit on conclusion of certain tax matters | — | (553 | ) | (2,986 | ) | (106,205 | ) | (109,744 | ) | ||||||||||
Non-GAAP net income | $ | 787,863 | $ | 627,754 | $ | 565,518 | $ | 507,751 | $ | 2,488,886 | |||||||||
Non-GAAP net income per diluted share | $ | 4.34 | $ | 3.46 | $ | 3.11 | $ | 2.80 | $ | 13.70 | |||||||||
GAAP net (loss) income per diluted share | $ | (0.06 | ) | $ | 3.21 | $ | 2.82 | $ | 3.10 | $ | 9.10 | ||||||||
U.S. GAAP number of shares used for per diluted share calculation | 161,135 | 183,880 | 186,427 | 185,094 | 184,859 | ||||||||||||||
Effect of potentially dilutive securities: | |||||||||||||||||||
Employee stock plans | 2,757 | — | — | — | — | ||||||||||||||
Convertible notes | 15,423 | — | — | — | — | ||||||||||||||
Warrants | 4,721 | — | — | — | — | ||||||||||||||
Effect of convertible note hedge | (2,381 | ) | (2,468 | ) | (4,334 | ) | (3,555 | ) | (3,184 | ) | |||||||||
Non-GAAP number of shares used for per diluted share calculation | 181,655 | 181,412 | 182,093 | 181,539 | 181,675 |
Three Months Ended | |||||||
December 24, 2017 | September 24, 2017 | ||||||
U.S. GAAP gross margin | $ | 1,205,567 | $ | 1,149,343 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired through certain business combinations | 22,394 | 21,562 | |||||
Non-GAAP gross margin | $ | 1,227,961 | $ | 1,170,905 | |||
U.S. GAAP gross margin as a percentage of revenue | 46.7 | % | 46.4 | % | |||
Non-GAAP gross margin as a percentage of revenue | 47.6 | % | 47.2 | % | |||
U.S. GAAP operating expenses | $ | 468,196 | $ | 456,121 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired through certain business combinations | (17,074 | ) | (16,413 | ) | |||
Costs associated with business process reengineering | (1,362 | ) | (716 | ) | |||
Business combination acquisition and integration related costs | (1,093 | ) | (936 | ) | |||
Non-GAAP operating expenses | $ | 448,667 | $ | 438,056 | |||
Non-GAAP operating income | $ | 779,294 | $ | 732,849 | |||
U.S. GAAP operating margin as percent of revenue | 28.6 | % | 28.0 | % | |||
Non-GAAP operating margin as a percent of revenue | 30.2 | % | 29.6 | % |