EX-99.1 2 f24122exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
FOR IMMEDIATE RELEASE
Lam Research Corporation Contact:
Kathleen Bela, Investor Relations, phone: 510/572-4566, e-mail: kathleen.bela@lamresearch.com
Lam Research Corporation Announces Earnings for the Quarter Ended September 24, 2006
FREMONT, Calif., October 11, 2006—Lam Research Corporation (NASDAQ: LRCX) today announced earnings for the quarter ended September 24, 2006. Highlights for the September 2006 quarter were:
                                 
• Revenue:
           $ 604.4  million                
 
• Operating Margin:
             32.2 %                
 
• Net Income:
   U.S. GAAP:   $ 183.5  million   Ongoing:   $ 163.9  million
 
• Diluted EPS:
   U.S. GAAP:   $ 1.27     Ongoing:   $ 1.13  
Revenue for the period was $604.4 million and net income was $183.5 million, or $1.27 per diluted share, compared to revenue of $525.6 million and net income of $122.1 million, or $0.84 per diluted share for the June 2006 quarter. Ongoing net income was $163.9 million, or $1.13 per diluted share in the September 2006 quarter compared with ongoing net income of $139.0 million, or $0.96 per diluted share, for the June 2006 quarter.
Gross margin for the September 2006 quarter was $313.2 million, or 51.8 percent, compared to gross margin of $274.2 million, or 52.2 percent, for the June 2006 quarter. Operating expenses increased during the quarter to $118.3 million compared to operating expenses of $114.7 million for the June 2006 quarter, driven by increases in incentive-based and equity compensation, and investments supporting our etch market share growth and new product development for markets adjacent to etch. Equity compensation expense in the September 2006 quarter recorded in cost of goods sold and operating expenses was $1.1 million and $5.2 million, respectively.
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Lam Announces Earnings for the September 2006 Quarter   Page 2 of 7
     
The Company believes the presentation of ongoing results, which excludes certain special items, is useful for analyzing ongoing business trends. A table presenting a reconciliation of ongoing performance to results under U.S. GAAP is included at the end of this press release and on the Company’s web site. The September 2006 quarter ongoing presentation removes the effects of a legal judgment in favor of the Company of $15.8 million recorded in other income, net, which was previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 25, 2006, and the successful resolution of certain foreign tax matters resulting in a net tax benefit of $10.0 million. The June 2006 quarter ongoing presentation removes the effect of tax expense associated with the Company’s decision to repatriate foreign earnings of $350 million under the provisions of the American Jobs Creation Act.
New orders recorded in backlog increased 13 percent sequentially to $725 million. The geographic distribution of new orders and revenue during the September 2006 quarter is shown in the following table:
                 
Region   New Orders   Revenue
North America
     26 %     15 %
Europe
     5 %     14 %
Japan
     17 %     18 %
Korea
     19 %     15 %
Asia Pacific
     33 %     38 %
Cash and cash equivalents, short-term investments and restricted cash and investments balances were $1.7 billion at the end of September, and cash flows provided by operating activities were $216.6 million during the quarter. Condensed Consolidated Statements of Cash Flows are included at the end of this press release. Deferred revenue and deferred profit balances were $258.2 million and $153.1 million, respectively. At the end of the period, unshipped orders in backlog were approximately $593 million, and the anticipated future revenue value of orders shipped from backlog to Japanese customers that are not recorded as deferred revenue remained constant at approximately $74 million.
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Lam Announces Earnings for the September 2006 Quarter   Page 3 of 7
     
“September results reflect another quarter of strong revenue and earnings growth for Lam Research,” stated Steve Newberry, Lam Research’s president and chief executive officer. “Operating margins and income achieved record levels, and demonstrate the leverage throughout our business model. In addition, we generated record levels of cash from operations, a consequence of our focus on a disciplined approach to asset management. Clearly, these are excellent results and provide a solid foundation for future opportunities. Our customers continue to increase their reliance on Lam to deliver next-generation capability quickly and cost-effectively. Our market share continues to grow as we effectively support our rapidly growing installed base of leading edge equipment with well characterized solutions to our customers’ most critical technical challenges,” Newberry concluded.
Statements made in this press release which 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 our business model’s ability to produce superior operating margins and income, our continuing ability to generate cash, through asset management or otherwise, our customers’ continued reliance on us, and our ability to grow market share and effectively support our installed base. Some factors that may affect these forward-looking statements include: changing business conditions in the semiconductor industry and the overall economy and our plans for reacting to those changes, changing customer demands, success of our competitors’ strategies including their development of new technologies, our ability to hire, train and retain key employees, and the success of our research and development 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 with the Securities and Exchange Commission, including specifically the report on Form 10-K for the year ended June 25, 2006, which 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 MarketSM under the symbol LRCX. Lam is a NASDAQ-100® company. The Company’s World Wide Web address is http://www.lamresearch.com.
Consolidated Financial Tables Follow
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Lam Announces Earnings for the September 2006 Quarter   Page 4 of 7
     
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
                         
    Three Months Ended  
    September 24,     June 25,     September 25,  
    2006     2006     2005  
    (unaudited)     (unaudited)     (unaudited)  
Total revenue
   $ 604,387     $ 525,596     $ 320,907  
Cost of goods sold
     291,223       251,445       164,828  
 
                  
Gross margin
     313,164       274,151       156,079  
Gross margin as a percent of revenue
     51.8 %     52.2 %     48.6 %
Research and development
     61,623       60,824       51,242  
Selling, general and administrative
     56,708       53,921       45,155  
 
                  
Total operating expenses
     118,331       114,745       96,397  
Operating income
     194,833       159,406       59,682  
Operating margin as a percent of revenue
     32.2 %     30.3 %     18.6 %
Other income, net
     30,348       9,398       8,488  
 
                  
Income before income taxes
     225,181       168,804       68,170  
Income tax expense
     41,663       46,655       18,679  
 
                  
Net income
   $ 183,518     $ 122,149     $ 49,491  
 
                  
Net income per share:
                        
Basic
   $ 1.29     $ 0.87     $ 0.36  
 
                  
Diluted
   $ 1.27     $ 0.84     $ 0.35  
 
                  
Number of shares used in per share calculations:
                        
Basic
     141,928       141,168       136,453  
 
                  
Diluted
     144,850       144,683       141,430  
 
                  

 

 

Lam Announces Earnings for the September 2006 Quarter   Page 5 of 7
     
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                 
    September 24,     June 25,  
    2006     2006  
    (unaudited)     (1)  
Assets:
                
Cash and cash equivalents
   $ 1,031,348     $ 910,815  
Short-term investments
     233,284       139,524  
Accounts receivable, net
     379,869       407,347  
Inventories
     188,179       168,714  
Other current assets
     87,920       79,969  
 
            
Total current assets
     1,920,600       1,706,369  
Property and equipment, net
     56,786       49,893  
Restricted cash and investments
     470,038       470,038  
Other assets
     86,937       87,044  
 
            
Total assets
   $ 2,534,361     $ 2,313,344  
 
            
 
                
Liabilities and stockholders’ equity:
                
Current liabilities
   $ 584,244     $ 566,226  
 
            
 
                
Long-term debt
   $ 350,000     $ 350,000  
Other long-term liabilities
     924       969  
Stockholders’ equity
     1,599,193       1,396,149  
 
            
Total liabilities and stockholders’ equity
   $ 2,534,361     $ 2,313,344  
 
            
 
(1)   Derived from audited financial statements.

 

 

Lam Announces Earnings for the September 2006 Quarter   Page 6 of 7
     
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                         
    Three Months Ended  
    September 24,     June 25,     September 25,  
    2006     2006     2005  
CASH FLOWS FROM OPERATING ACTIVITIES:
                        
Net income
   $ 183,518     $ 122,149     $ 49,491  
Adjustments to reconcile net income to net cash provided by operating activities:
                        
Depreciation and amortization
     6,527       5,765       6,032  
Deferred income taxes
     6,419       (4,936 )     15,374  
Equity-based compensation
     6,251       5,449       5,246  
Income tax benefit on equity-based compensation plans
     1,872       27,786       —  
Excess tax benefit on equity-based compensation plans
     (1,264 )     (17,805 )     —  
Other, net
     420       1,270       1,842  
Change in working capital accounts
     12,884       (47,412 )     (30,604 )
 
                  
Net cash provided by operating activities
     216,627       92,266       47,381  
 
                  
 
                        
CASH FLOWS FROM INVESTING ACTIVITIES:
                        
Capital expenditures and intangible assets
     (12,920 )     (25,939 )     (4,658 )
Transfer of restricted cash and investments
     —       (385,000 )     —  
Net sales (purchases) of available-for-sale securities
     (90,923 )     90,296       51,598  
 
                  
Net cash provided by/(used for) investing activities
     (103,843 )     (320,643 )     46,940  
 
                  
 
                        
CASH FLOWS FROM FINANCING ACTIVITIES:
                        
Payments on capital lease
     (44 )     (45 )     —  
Net proceeds from issuance of long-term debt
     —       349,632       —  
Excess tax benefit on equity-based compensation plans
     1,264       17,805       —  
Treasury stock purchases
     (1,048 )     (37,002 )     (78,690 )
Reissuances of treasury stock
     5,990       5,519       5,137  
Proceeds from issuance of common stock
     1,739       43,698       12,174  
 
                  
Net cash provided by/(used for) financing activities
     7,901       379,607       (61,379 )
 
                  
Effect of exchange rate changes on cash
     (152 )     1,740       (374 )
Net increase in cash and cash equivalents
     120,533       152,970       32,568  
Cash and cash equivalents at beginning of period
     910,815       757,845       482,250  
 
                  
Cash and cash equivalents at end of period
   $ 1,031,348     $ 910,815     $ 514,818  
 
                  

 

 

Lam Announces Earnings for the September 2006 Quarter   Page 7 of 7
     
Reconciliation of U.S. GAAP Net Income to Ongoing Net Income
(in thousands, except per share data and percentages)
                 
    Three Months Ended  
    September 24,     June 25,  
    2006     2006  
U.S. GAAP net income
   $ 183,518     $ 122,149  
Tax expense on repatriation of foreign earnings
     —       16,810  
Net tax benefit on successful resolution of certain foreign tax matters
     (9,959 )     —  
Pre-tax legal judgment — other income, net
     (15,834 )     —  
Tax expense on legal judgment
     6,128       —  
 
            
Ongoing net income
   $ 163,853     $ 138,959  
 
            
Ongoing net income per diluted share
   $ 1.13     $ 0.96  
 
            
Number of shares used for diluted per share calculation
     144,850       144,683  
U.S. GAAP income tax rate
     18.5 %     27.6 %
Ongoing income tax rate
     21.7 %     17.7 %