EX-99.1 2 f50179exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
FOR IMMEDIATE RELEASE
Lam Research Corporation Contact:
Carol Raeburn, Senior Director, Investor Relations, phone: 510/572-4450, e-mail:
carol.raeburn@lamresearch.com
Lam Research Corporation Announces Earnings for the Quarter Ended September 28, 2008
FREMONT, Calif., October 22, 2008 —Lam Research Corporation (NASDAQ: LRCX) highlights for the September 2008 quarter were:
                                 
(in thousands, except per share data and percentages)
•   Revenue:
           $ 440,361                  
 
                                
•   Operating Margin:
   U.S. GAAP:     3.8 %   Ongoing:     8.2 %
 
                                
•   Net Income:
   U.S. GAAP:   $ 8,873     Ongoing:   $ 32,635  
 
                                
•   Diluted EPS:
   U.S. GAAP:   $ 0.07     Ongoing:   $ 0.26  
Lam Research Corporation today announced earnings for the quarter ended September 28, 2008. Revenue for the period was $440.4 million, gross margin was $183.1 million and net income was $8.9 million, or $0.07 per diluted share, compared to revenue of $566.2 million, gross margin of $234.7 million and net income of $72.2 million, or $0.57 per diluted share for the June 2008 quarter. Shipments for the September 2008 quarter were $345 million compared to $495 million during the June 2008 quarter.
The Company’s ongoing results for the September quarter exclude certain costs for restructuring activities and asset impairments related to the integration of SEZ, net tax expense on accelerated tax planning strategy, and interest on the tax liability associated with the outcome of our previously disclosed voluntary internal stock option review. The Company’s June 2008 quarter excluded certain SEZ integration costs, a net foreign tax benefit, foreign currency gains on the purchase of SEZ, and costs associated with our voluntary internal stock option review. Management uses the presentation of ongoing gross margin, ongoing operating income, ongoing net income, and ongoing diluted earnings per share to evaluate the Company’s operating and financial results. The Company believes the presentation of ongoing results is useful to investors for analyzing ongoing business trends and comparing performance to prior periods, and enhances the investor’s ability to view the Company’s results from management’s perspective. A table presenting a reconciliation of ongoing results to results under U.S. GAAP is included at the end of this press release and on the Company’s web site.
Ongoing net income was $32.6 million, or $0.26 per diluted share in the September 2008 quarter compared to ongoing net income of $75.8 million, or $0.60 per diluted share, for the June 2008 quarter. Ongoing gross margin for the September 2008 quarter was $186.2 million or 42.3%, compared to ongoing gross margin of $247.3 million, or 43.7%, for the June 2008 quarter. The sequential decline in gross margin was primarily due to reduced factory utilization levels consistent with reduced business activity. Ongoing operating expenses for the September 2008 quarter decreased to $149.9 million compared with the June 2008 quarter of $160.7 million. This decrease was primarily due to savings realized from the June quarter restructuring activities and a significant decrease in all-employee variable compensation on lower profit levels.
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Page 2 of 7
Lam Announces Earnings for the September 2008 Quarter
The geographic distribution of shipments and revenue during the September 2008 quarter is shown in the following table:
                 
Region   Shipments   Revenue
North America
     15 %     15 %
Europe
     11 %     10 %
Japan
     18 %     17 %
Korea
     29 %     27 %
Asia Pacific
     27 %     31 %
Cash and cash equivalents, short-term investments and restricted cash and investments balances remained at approximately $1.2 billion at the end of the September 2008 quarter, similar to the level at the end of the June 2008 quarter. Cash flows from operating activities were approximately $43 million during the September quarter. Deferred revenue and deferred profit balances at the end of the September 2008 quarter were $103.5 million and $76.4 million, respectively. At the end of the September 2008 quarter, the anticipated future revenue value of orders shipped to Japanese customers that was not recorded as deferred revenue was approximately $41 million.
“Our September quarter results reflect the challenging environment for semiconductor equipment and the worsening conditions throughout the global economy,” said Steve Newberry, Lam’s president and chief executive officer. “While the length and volatility of this downturn are unpredictable at this time, we remain focused on our ability to deliver long term sustainable growth while implementing appropriate actions consistent with our shorter term financial objectives. We are managing through the current weakness by making effective use of our strong balance sheet and significant cash position to make targeted, strategic investments while also prudently managing our operating expense structure. We believe these efforts will help us emerge from the present environment in a strong position to enable future revenue and profit growth,” Newberry concluded.
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Page 3 of 7
Lam Announces Earnings for the September 2008 Quarter
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 future plans and areas of focus, our expectations for our ability to deliver long term growth, our belief that our efforts will help us emerge from the current environment in a strong position to enable future revenue and profit growth, and the future revenue value of orders shipped to Japanese customers. Some factors that may affect these forward-looking statements include: changing business conditions in the semiconductor industry and the overall economy and the efficacy of our plans for reacting to those changes, changing customer demands, and the challenges presented by our new products and the integration of acquired businesses and technologies into our existing business. 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 29, 2008, 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 Market SM under the symbol LRCX. Lam is a NASDAQ-100 ® company. For more information, visit www.lamresearch.com.
Consolidated Financial Tables Follow
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Page 4 of 7
Lam Announces Earnings for the September 2008 Quarter
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
(unaudited)
                         
    Three Months Ended  
    September 28,     June 29,     September 23,  
    2008     2008     2007  
Total revenue
   $ 440,361     $ 566,160     $ 684,621  
Cost of goods sold
     254,203       318,900       340,734  
Cost of goods sold — restructuring and asset impairments
     3,048       12,610       —  
 
                  
Total cost of goods sold
     257,251       331,510       340,734  
Gross margin
     183,110       234,650       343,887  
Gross margin as a percent of revenue
     41.6 %     41.4 %     50.2 %
Research and development
     81,563       86,652       76,288  
Selling, general and administrative
     69,060       77,704       69,713  
Restructuring and asset impairments
     15,968       6,366       —  
 
                  
Total operating expenses
     166,591       170,722       146,001  
 
                  
Operating income
     16,519       63,928       197,886  
Operating margin as a percent of revenue
     3.8 %     11.3 %     28.9 %
Other income, net
     9,017       10,344       7,633  
 
                  
Income before income taxes
     25,536       74,272       205,519  
Income tax expense
     16,663       2,094       56,931  
 
                  
Net income
   $ 8,873     $ 72,178     $ 148,588  
 
                  
Net income per share:
                        
Basic net income per share
   $ 0.07     $ 0.58     $ 1.20  
 
                  
Diluted net income per share
   $ 0.07     $ 0.57     $ 1.18  
 
                  
Number of shares used in per share calculations:
                        
Basic
     125,527       125,046       124,057  
 
                  
Diluted
     126,819       126,657       126,358  
 
                  

 

 

Page 5 of 7
Lam Announces Earnings for the September 2008 Quarter
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                 
    September 28,     June 29,  
    2008     2008  
    (unaudited)     (1)  
ASSETS
                
Cash and cash equivalents
   $ 745,432     $ 732,537  
Short-term investments
     313,803       326,199  
Accounts receivable, net
     311,633       412,356  
Inventories
     272,215       282,218  
Deferred income taxes
     95,186       96,748  
Other current assets
     69,983       67,649  
 
            
Total current assets
     1,808,252       1,917,707  
Property and equipment, net
     230,377       235,735  
Restricted cash and investments
     156,148       146,072  
Deferred income taxes
     33,762       19,793  
Goodwill and intangible assets
     374,538       403,187  
Other assets
     81,493       84,261  
 
            
Total assets
   $ 2,684,570     $ 2,806,755  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
 
                
Current liabilities
   $ 533,722     $ 637,679  
 
            
 
                
Long-term debt and capital leases
   $ 269,256     $ 276,121  
Income taxes payable
     94,184       85,611  
Other long-term liabilities
     21,875       23,400  
Minority interests
     4,789       5,347  
Stockholders’ equity
     1,760,744       1,778,597  
 
            
Total liabilities and stockholders’ equity
   $ 2,684,570     $ 2,806,755  
 
            
 
1   Derived from audited financial statements

 

 

Page 6 of 7
Lam Announces Earnings for the September 2008 Quarter
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                         
    Three Months Ended  
    September 28,     June 29,     September 23,  
    2008     2008     2007  
    (unaudited)     (unaudited)     (unaudited)  
CASH FLOWS FROM OPERATING ACTIVITIES:
                        
Net income
   $ 8,873     $ 72,178     $ 148,588  
Adjustments to reconcile net income to net cash provided by operating activities:
                        
Depreciation and amortization
     17,896       19,227       11,239  
Deferred income taxes
     (12,407 )     (4,652 )     (10,790 )
Equity-based compensation expense
     15,408       11,629       10,802  
Income tax benefit on equity-based compensation plans
     5,039       26,815       35,900  
Excess tax benefit on equity-based compensation plans
     (4,269 )     (21,666 )     (21,151 )
Net gain on settlement of call option
     —       399       —  
Restructuring and asset impairments
     19,016       18,976       —  
Other, net
     2,665       (996 )     1,377  
Changes in operating asset accounts
     (9,089 )     78,537       46,482  
 
                  
Net cash provided by operating activities
     43,132       200,447       222,447  
 
                  
 
                        
CASH FLOWS FROM INVESTING ACTIVITIES:
                        
Capital expenditures and intangible assets
     (15,151 )     (18,951 )     (14,144 )
Acquisitions of businesses, net of cash acquired
     (2,427 )     (6,918 )     —  
Net sales (purchases) of available-for-sale securities
     6,980       (32,494 )     (15,985 )
Proceeds from settlement of call option
     —       383       —  
Transfer of restricted cash and investments
     (16,128 )     17,233       —  
 
                  
Net cash used for investing activities
     (26,726 )     (40,747 )     (30,129 )
 
                  
 
                        
CASH FLOWS FROM FINANCING ACTIVITIES:
                        
Principal payments on long-term debt and capital lease obligations
     (2,390 )     (1,500 )     (49 )
Net proceeds from issuance of long-term debt
     127       1,915       —  
Excess tax benefit on equity-based compensation plans
     4,269       21,666       21,151  
Treasury stock purchases
     (2,755 )     (3,590 )     (9,464 )
Reissuances of treasury stock
     7,584       1,262       7,301  
Proceeds from issuance of common stock
     3,150       2,588       6,708  
 
                  
Net cash provided by financing activities
     9,985       22,341       25,647  
 
                  
Effect of exchange rate changes on cash
     (13,496 )     (1,857 )     1,236  
Net increase in cash and cash equivalents
     12,895       180,184       219,201  
Cash and cash equivalents at beginning of period
     732,537       552,353       573,967  
 
                  
Cash and cash equivalents at end of period
   $ 745,432     $ 732,537     $ 793,168  
 
                  

 

 

Page 7 of 7
Lam Announces Earnings for the September 2008 Quarter
Reconciliation of U.S. GAAP Net Income to Ongoing Net Income
(in thousands, except per share data and percentages)
                 
    Three Months Ended     Three Months Ended  
    September 28,     June 29,  
    2008     2008  
U.S. GAAP net income
   $ 8,873     $ 72,178  
Pre-tax non-ongoing items:
                
Restructuring and asset impairments — cost of goods sold
     3,048       12,610  
Restructuring and asset impairments — operating expenses
     15,968       6,366  
Voluntary internal stock option review — operating expenses
    761       3,669  
 
                
Foreign exchange gain on SEZ acquisition — other income (expense), net
     —       (570 )
Net tax benefit on non-ongoing items
     (5,325 )     (6,141 )
Net tax benefit on successful resolution of certain foreign tax matters
     —       (12,275 )
Net tax expense on accelerated tax planning strategy
     9,310       —  
 
            
Ongoing net income
   $ 32,635     $ 75,837  
 
            
Ongoing net income per diluted share
   $ 0.26     $ 0.60  
 
            
Number of shares used for diluted per share calculation
     126,819       126,657  
U.S. GAAP income tax rate
     65.3 %     2.8 %
Ongoing income tax rate
     28.0 %     21.3 %
Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating Income to Ongoing Gross Margin, Operating
Expenses and Operating Income
(in thousands, except percentages)
                 
    Three Months Ended     Three Months Ended  
    September 28,     June 29,  
    2008     2008  
U.S. GAAP gross margin
   $ 183,110     $ 234,650  
Pre-tax non-ongoing items:
                
Restructuring and asset impairments — cost of goods sold
     3,048       12,610  
 
            
Ongoing gross margin
   $ 186,158     $ 247,260  
 
            
U.S. GAAP gross margin as a percent of revenue
     41.6 %     41.4 %
Ongoing gross margin as a percent of revenue
     42.3 %     43.7 %
U.S. GAAP operating expenses
   $ 166,591     $ 170,722  
Pre-tax non-ongoing items:
                
Restructuring and asset impairments — operating expenses
     (15,968 )     (6,366 )
Voluntary internal stock option review — operating expenses
     (761 )     (3,669 )
 
            
Ongoing operating expenses
   $ 149,862     $ 160,687  
 
            
Ongoing operating income
   $ 36,296     $ 86,573  
 
            
Ongoing operating income as a percent of revenue
     8.2 %     15.3 %