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 8.01. | Other Events |
Item 9.01. | Financial Statements and Exhibits |
Date: | January 23, 2019 | LAM RESEARCH CORPORATION | |
(Registrant) | |||
/s/ Douglas R. Bettinger | |||
Douglas R. Bettinger | |||
Executive Vice President, Chief Financial Officer | |||
(Principal Financial Officer and Principal Accounting Officer) |
• | Revenue of $2.52 billion. |
• | U.S. GAAP gross margin of 45.4%, U.S. GAAP operating income as a percentage of revenue of 27.4%, and U.S. GAAP diluted EPS of $3.51. |
• | Non-GAAP gross margin of 46.3%, non-GAAP operating income as a percentage of revenue of 28.8%, and non-GAAP diluted EPS of $3.87. |
U.S. GAAP | |||||||||||
December 2018 | September 2018 | Change Q/Q | |||||||||
Revenue | $ | 2,522,673 | $ | 2,330,691 | + 8% | ||||||
Gross margin as percentage of revenue | 45.4 | % | 45.4 | % | — | ||||||
Operating income as percentage of revenue | 27.4 | % | 25.4 | % | + 200 bps | ||||||
Diluted EPS | $ | 3.51 | $ | 3.23 | + 9% | ||||||
Non-GAAP | |||||||||||
December 2018 | September 2018 | Change Q/Q | |||||||||
Revenue | $ | 2,522,673 | $ | 2,330,691 | + 8% | ||||||
Gross margin as percentage of revenue | 46.3 | % | 46.4 | % | - 10 bps | ||||||
Operating income as percentage of revenue | 28.8 | % | 27.0 | % | + 180 bps | ||||||
Diluted EPS | $ | 3.87 | $ | 3.36 | + 15% |
Region | Revenue |
Japan | 27% |
Korea | 25% |
Taiwan | 17% |
China | 14% |
Southeast Asia | 7% |
United States | 5% |
Europe | 5% |
U.S. GAAP | Reconciling Items | Non-GAAP | ||||||||||
Revenue | $2.4 Billion | +/- | $150 Million | — | $2.4 Billion | +/- | $150 Million | |||||
Gross margin as a percentage of revenue | 43.6% | +/- | 1% | $ | 22 | Million | 44.5% | +/- | 1% | |||
Operating income as a percentage of revenue | 23.6% | +/- | 1% | $ | 34 | Million | 25.0% | +/- | 1% | |||
Net income per diluted share | $3.21 | +/- | $0.20 | $ | 30 | Million | $3.40 | +/- | $0.20 | |||
Diluted share count | 159 Million | — | 159 Million |
• | Gross margin as a percentage of revenue - amortization related to intangible assets acquired through business combinations, $22 million. |
• | Operating income as a percentage of revenue - amortization related to intangible assets acquired through business combinations, $34 million. |
• | Earnings per share - amortization related to intangible assets acquired though business combinations, $34 million; amortization of note discounts, $1 million; and associated tax benefit for non-GAAP items ($5 million); totaling $30 million. |
Three Months Ended | Six Months Ended | ||||||||||||||||||
December 23, 2018 | September 23, 2018 | December 24, 2017 | December 23, 2018 | December 24, 2017 | |||||||||||||||
Revenue | $ | 2,522,673 | $ | 2,330,691 | $ | 2,580,815 | $ | 4,853,364 | $ | 5,058,955 | |||||||||
Cost of goods sold | 1,377,640 | 1,272,493 | 1,375,248 | 2,650,133 | 2,704,045 | ||||||||||||||
Gross margin | 1,145,033 | 1,058,198 | 1,205,567 | 2,203,231 | 2,354,910 | ||||||||||||||
Gross margin as a percent of revenue | 45.4 | % | 45.4 | % | 46.7 | % | 45.4 | % | 46.5 | % | |||||||||
Research and development | 285,556 | 291,672 | 281,311 | 577,228 | 556,389 | ||||||||||||||
Selling, general and administrative | 169,098 | 174,775 | 186,885 | 343,873 | 367,928 | ||||||||||||||
Total operating expenses | 454,654 | 466,447 | 468,196 | 921,101 | 924,317 | ||||||||||||||
Operating income | 690,379 | 591,751 | 737,371 | 1,282,130 | 1,430,593 | ||||||||||||||
Operating income as a percent of revenue | 27.4 | % | 25.4 | % | 28.6 | % | 26.4 | % | 28.3 | % | |||||||||
Other expense, net | (30,649 | ) | (377 | ) | (3,152 | ) | (31,026 | ) | (8,654 | ) | |||||||||
Income before income taxes | 659,730 | 591,374 | 734,219 | 1,251,104 | 1,421,939 | ||||||||||||||
Income tax expense | (90,875 | ) | (58,014 | ) | (744,174 | ) | (148,889 | ) | (841,204 | ) | |||||||||
Net income (loss) | $ | 568,855 | $ | 533,360 | $ | (9,955 | ) | $ | 1,102,215 | $ | 580,735 | ||||||||
Net income (loss) per share: | |||||||||||||||||||
Basic | $ | 3.67 | $ | 3.43 | $ | (0.06 | ) | $ | 7.10 | $ | 3.59 | ||||||||
Diluted | $ | 3.51 | $ | 3.23 | $ | (0.06 | ) | $ | 6.73 | $ | 3.16 | ||||||||
Number of shares used in per share calculations: | |||||||||||||||||||
Basic | 155,022 | 155,658 | 161,135 | 155,340 | 161,638 | ||||||||||||||
Diluted | 162,170 | 165,327 | 161,135 | 163,749 | 183,958 | ||||||||||||||
Cash dividend declared per common share | $ | 1.10 | $ | 1.10 | $ | 0.50 | $ | 2.20 | $ | 0.95 |
December 23, 2018 | September 23, 2018 | June 24, 2018 | |||||||||
(unaudited) | (unaudited) | (1) | |||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 3,359,793 | $ | 2,568,085 | $ | 4,512,257 | |||||
Investments | 275,670 | 1,050,863 | 437,338 | ||||||||
Accounts receivable, net | 1,868,842 | 1,846,845 | 2,176,936 | ||||||||
Inventories | 1,703,307 | 1,874,194 | 1,876,162 | ||||||||
Prepaid expenses and other current assets | 148,233 | 175,886 | 147,218 | ||||||||
Total current assets | 7,355,845 | 7,515,873 | 9,149,911 | ||||||||
Property and equipment, net | 1,013,306 | 951,376 | 902,547 | ||||||||
Restricted cash and investments | 255,292 | 255,924 | 256,301 | ||||||||
Goodwill and intangible assets | 1,736,468 | 1,767,562 | 1,802,740 | ||||||||
Other assets | 407,547 | 466,842 | 367,979 | ||||||||
Total assets | $ | 10,768,458 | $ | 10,957,577 | $ | 12,479,478 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current portion of convertible notes, capital leases and commercial paper | $ | 187,102 | $ | 550,369 | $ | 610,030 | |||||
Other current liabilities | 1,979,735 | 2,274,596 | 2,540,278 | ||||||||
Total current liabilities | 2,166,837 | 2,824,965 | 3,150,308 | ||||||||
Long-term debt and capital leases | 1,813,190 | 1,805,091 | 1,806,562 | ||||||||
Income taxes payable | 859,232 | 845,740 | 851,936 | ||||||||
Other long-term liabilities | 87,827 | 100,144 | 90,629 | ||||||||
Total liabilities | 4,927,086 | 5,575,940 | 5,899,435 | ||||||||
Temporary equity, convertible notes | 57,009 | 58,812 | 78,192 | ||||||||
Stockholders’ equity (2) | 5,784,363 | 5,322,825 | 6,501,851 | ||||||||
Total liabilities and stockholders’ equity | $ | 10,768,458 | $ | 10,957,577 | $ | 12,479,478 |
(1) | Derived from audited financial statements. |
(2) | Common shares issued and outstanding were 153,961 as of December 23, 2018, 153,384 as of September 23, 2018, and 156,892 as of June 24, 2018. |
Three Months Ended | Six Months Ended | ||||||||||||||||||
December 23, 2018 | September 23, 2018 | December 24, 2017 | December 23, 2018 | December 24, 2017 | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||
Net income (loss) | $ | 568,855 | $ | 533,360 | $ | (9,955 | ) | $ | 1,102,215 | $ | 580,735 | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 81,794 | 79,805 | 79,898 | 161,599 | 159,040 | ||||||||||||||
Deferred income taxes | 20,797 | (83,501 | ) | (271,478 | ) | (62,704 | ) | (228,274 | ) | ||||||||||
Equity-based compensation expense | 38,806 | 50,343 | 42,124 | 89,149 | 83,907 | ||||||||||||||
Amortization of note discounts and issuance costs | 1,031 | 1,245 | 4,539 | 2,276 | 9,127 | ||||||||||||||
Other, net | (1,343 | ) | 2,191 | (1,108 | ) | 848 | 5,461 | ||||||||||||
Changes in operating assets and liabilities | (67,521 | ) | 136,843 | 184,684 | 69,322 | 277,014 | |||||||||||||
Net cash provided by operating activities | 642,419 | 720,286 | 28,704 | 1,362,705 | 887,010 | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||
Capital expenditures and intangible assets | (105,923 | ) | (56,098 | ) | (84,693 | ) | (162,021 | ) | (144,757 | ) | |||||||||
Business acquisition, net of cash acquired | — | — | (84 | ) | — | (115,697 | ) | ||||||||||||
Net sale (purchases) of available-for-sale securities | 773,223 | (612,583 | ) | (205,701 | ) | 160,640 | (323,475 | ) | |||||||||||
Other, net | (369 | ) | (3,650 | ) | (4,396 | ) | (4,019 | ) | (14,996 | ) | |||||||||
Net cash provided by (used for) investing activities | 666,931 | (672,331 | ) | (294,874 | ) | (5,400 | ) | (598,925 | ) | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||
Principal payments on debt | (6,440 | ) | (79,831 | ) | (47,522 | ) | (86,271 | ) | (349,249 | ) | |||||||||
Net (repayments) proceeds from issuance of commercial paper | (359,518 | ) | (86 | ) | 798,947 | (359,604 | ) | 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 | (1,519 | ) | (1,735,895 | ) | (1,111,450 | ) | (1,737,414 | ) | (1,266,835 | ) | |||||||||
Dividends paid | (167,907 | ) | (174,372 | ) | (73,127 | ) | (342,279 | ) | (145,865 | ) | |||||||||
Reissuance of treasury stock related to employee stock purchase plan | 32,920 | — | 34,057 | 32,920 | 34,057 | ||||||||||||||
Proceeds from issuance of common stock | 109 | — | 3,073 | 109 | 4,115 | ||||||||||||||
Other, net | (13,198 | ) | (9 | ) | — | (13,207 | ) | 4 | |||||||||||
Net cash used for financing activities | (515,553 | ) | (1,990,193 | ) | (396,022 | ) | (2,505,746 | ) | (924,826 | ) | |||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (2,721 | ) | (2,311 | ) | 842 | (5,032 | ) | 4,159 | |||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 791,076 | (1,944,549 | ) | (661,350 | ) | (1,153,473 | ) | (632,582 | ) | ||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 2,824,009 | 4,768,558 | 2,662,507 | 4,768,558 | 2,633,739 | ||||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 3,615,085 | $ | 2,824,009 | $ | 2,001,157 | $ | 3,615,085 | $ | 2,001,157 |
Three Months Ended | |||||||
December 23, 2018 | September 23, 2018 | ||||||
Revenue | $ | 2,522,673 | $ | 2,330,691 | |||
Gross margin | $ | 1,167,375 | $ | 1,080,540 | |||
Gross margin as percentage of revenue | 46.3 | % | 46.4 | % | |||
Operating expenses | $ | 439,808 | $ | 450,540 | |||
Operating income | $ | 727,567 | $ | 630,000 | |||
Operating income as a percentage of revenue | 28.8 | % | 27.0 | % | |||
Net income | $ | 628,196 | $ | 555,460 | |||
Net income per diluted share | $ | 3.87 | $ | 3.36 | |||
Shares used in per share calculation - diluted | 162,170 | 165,327 |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 23, 2018 | September 23, 2018 | June 24, 2018 | March 25, 2018 | December 23, 2018 | |||||||||||||||
U.S. GAAP net income | $ | 568,855 | $ | 533,360 | $ | 1,021,146 | $ | 778,800 | $ | 2,902,161 | |||||||||
Pre-tax non-GAAP items: | |||||||||||||||||||
Amortization related to intangible assets acquired through certain business combinations - cost of goods sold | 22,342 | 22,342 | 22,342 | 22,342 | 89,368 | ||||||||||||||
Amortization related to intangible assets acquired through certain business combinations - selling, general and administrative | 12,490 | 12,490 | 16,069 | 17,074 | 58,123 | ||||||||||||||
Restructuring charges - selling, general and administrative | 2,356 | 3,417 | — | — | 5,773 | ||||||||||||||
Business combination acquisition and integration related costs - selling, general and administrative | — | — | 728 | 107 | 835 | ||||||||||||||
Amortization of note discounts - other expense, net | 886 | 900 | 1,851 | 2,860 | 6,497 | ||||||||||||||
Realized loss on sale or impairment of investments - other expense, net | — | — | — | 46,641 | 46,641 | ||||||||||||||
Net income tax benefit on non-GAAP items | (5,704 | ) | (5,838 | ) | (4,686 | ) | (11,518 | ) | (27,746 | ) | |||||||||
Income tax benefit on the conclusion of certain tax matters | (1,635 | ) | — | (9,656 | ) | (4,511 | ) | (15,802 | ) | ||||||||||
Income tax expense (benefit) associated with U.S. tax reform | 28,606 | (11,211 | ) | (115,838 | ) | — | (98,443 | ) | |||||||||||
Non-GAAP net income | $ | 628,196 | $ | 555,460 | $ | 931,956 | $ | 851,795 | $ | 2,967,407 | |||||||||
Non-GAAP net income per diluted share | $ | 3.87 | $ | 3.36 | $ | 5.31 | $ | 4.79 | $ | 17.44 | |||||||||
GAAP net income per diluted share | $ | 3.51 | $ | 3.23 | $ | 5.82 | $ | 4.33 | $ | 17.00 | |||||||||
U.S. GAAP number of shares used for per diluted share calculation | 162,170 | 165,327 | 175,432 | 179,779 | 170,677 | ||||||||||||||
Effect of potential dilutive securities: | |||||||||||||||||||
Effect of convertible note hedge | — | — | — | (1,993 | ) | (498 | ) | ||||||||||||
Non-GAAP number of shares used for per diluted share calculation | 162,170 | 165,327 | 175,432 | 177,786 | 170,179 |
Three Months Ended | |||||||
December 23, 2018 | September 23, 2018 | ||||||
U.S. GAAP gross margin | $ | 1,145,033 | $ | 1,058,198 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired through certain business combinations | 22,342 | 22,342 | |||||
Non-GAAP gross margin | $ | 1,167,375 | $ | 1,080,540 | |||
U.S. GAAP gross margin as a percentage of revenue | 45.4 | % | 45.4 | % | |||
Non-GAAP gross margin as a percentage of revenue | 46.3 | % | 46.4 | % | |||
U.S. GAAP operating expenses | $ | 454,654 | $ | 466,447 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired through certain business combinations | (12,490 | ) | (12,490 | ) | |||
Restructuring charges | (2,356 | ) | (3,417 | ) | |||
Non-GAAP operating expenses | $ | 439,808 | $ | 450,540 | |||
U.S. GAAP operating income | $ | 690,379 | $ | 591,751 | |||
Non-GAAP operating income | $ | 727,567 | $ | 630,000 | |||
U.S. GAAP operating income as percent of revenue | 27.4 | % | 25.4 | % | |||
Non-GAAP operating income as a percent of revenue | 28.8 | % | 27.0 | % |