Attached files
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| 8-K - 8-K - LAM RESEARCH CORP | d665782d8k.htm |
FOR IMMEDIATE RELEASE
Lam Research Corporation Contacts:
Shanye Hudson, Investor Relations, phone: 510-572-4589, e-mail: shanye.hudson@lamresearch.com
Lam Research Corporation Reports Financial Results for the Quarter Ended December 29, 2013
FREMONT, Calif., January 29, 2014—Lam Research Corp. (NASDAQ: LRCX) today announced financial results for the quarter ended December 29, 2013.
Highlights for the December 2013 quarter were as follows:
| • | Shipments of $1,139 million, up 15% from the prior quarter |
| • | Revenue of $1,116 million, up 10% from the prior quarter |
| • | GAAP gross margin of 43.7%, GAAP operating margin of 14.7% and GAAP diluted EPS of $0.87 |
| • | Non-GAAP gross margin of 45.8%, non-GAAP operating margin of 18.7%, and non-GAAP diluted EPS of $1.10 |
Lam Research Corporation
Financial Highlights for the Quarters Ended December 29, 2013 and September 29, 2013
(in thousands, except per share data and percentages)
| U.S. GAAP |
||||||||||||
| December 2013 | September 2013 | Change Q/Q | ||||||||||
| Revenue |
$ | 1,116,061 | $ | 1,015,059 | +10% | |||||||
| Gross margin as percentage of revenue |
43.7 | % | 42.5 | % | +120 bps | |||||||
| Operating margin as percentage of revenue |
14.7 | % | 10.4 | % | +430 bps | |||||||
| Diluted EPS |
$ | 0.87 | $ | 0.50 | +74% | |||||||
| Non-GAAP |
||||||||||||
| December 2013 | September 2013 | Change Q/Q | ||||||||||
| Revenue |
$ | 1,116,061 | $ | 1,015,059 | +10% | |||||||
| Gross margin as percentage of revenue |
45.8 | % | 45.0 | % | +80 bps | |||||||
| Operating margin as percentage of revenue |
18.7 | % | 16.2 | % | +250 bps | |||||||
| Diluted EPS |
$ | 1.10 | $ | 0.81 | +36% | |||||||
GAAP Financial Results
Revenue for the period was $1,116 million, gross margin was $487.8 million, or 43.7% of revenue, operating expenses were $323.3 million, and net income was $149.0 million, or $0.87 per diluted share on a GAAP basis. This compares to revenue of $1,015 million, gross margin of $431.9 million, or 42.5% of revenue, operating expenses of $326.5 million, and net income of $85.5 million, or $0.50 per diluted share, for the September 2013 quarter.
Non-GAAP Financial Results
Non-GAAP gross margin was $510.8 million, or 45.8% of revenue, non-GAAP operating expenses were $302.1 million, and non-GAAP net income was $188.7 million, or $1.10 per diluted share. This compares to non-GAAP gross margin of $456.7 million, or 45.0% of revenue, non-GAAP operating expenses of $291.9 million, and non-GAAP net income of $139.2 million, or $0.81 per diluted share, for the September 2013 quarter.
“Calendar 2013 was an extraordinary year for Lam Research, highlighted by strong operating and financial performance. Our December quarter results closed the year with record shipments, record revenues and earnings that exceeded our expectations,” stated Martin Anstice, Lam Research’s president and chief executive officer. “Our outlook for continued healthy levels of wafer fab equipment spending in 2014 reflects our customers’ planned investments in key technology inflections tempered by their focus on maintaining balanced supply and demand. Against this industry back drop, we are further strengthening our emphasis on customer trust and improving competitiveness to reinforce the opportunities for future growth and enhanced financial performance of Lam.”
~more~
page 1 of 8
Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and restricted cash and investment balances increased to $2.7 billion at the end of the December 2013 quarter compared to $2.6 billion at the end of the September 2013 quarter. This increase was primarily the result of approximately $129 million in cash flows from operating activities during the December 2013 quarter, partially offset by $48 million of stock repurchases.
Deferred revenue and deferred profit balances at the end of the December 2013 quarter increased to $405.0 million and $224.4 million, respectively, as compared to $334.0 million and $188.4 million, respectively, at the end of the September 2013 quarter. Lam’s deferred revenue balance does not include shipments to Japanese customers, to whom title does not transfer until customer acceptance. Shipments to Japanese customers are classified as inventory at cost until the time of acceptance. The anticipated future revenue from shipments to Japanese customers was approximately $53.5 million as of December 29, 2013.
Geographic Distribution
The geographic distribution of shipments and revenue during the December 2013 quarter is shown in the following table:
| Region |
Shipments | Revenue | ||||||
| North America |
9 | % | 13 | % | ||||
| Europe |
7 | % | 5 | % | ||||
| Japan |
13 | % | 17 | % | ||||
| Korea |
24 | % | 19 | % | ||||
| Taiwan |
22 | % | 28 | % | ||||
| Asia Pacific |
25 | % | 18 | % | ||||
Outlook
For the March 2014 quarter, Lam is providing the following guidance on a non-GAAP basis:
| • | Shipments of approximately $1.250 billion plus or minus $30 million |
| • | Revenue of approximately $1.215 billion plus or minus $30 million |
| • | Gross margin of approximately 45.0% plus or minus 1.0% |
| • | Operating margin as a percent of revenue of approximately 19.5% plus or minus 1.0% |
| • | Earnings per share of approximately $1.15 plus or minus $0.05, assuming a diluted share count of 173 million |
Use of Non-GAAP Financial Results
In addition to U.S. GAAP results, this press release also contains non-GAAP financial results. The Company’s non-GAAP results for both the December 2013 and September 2013 quarters exclude costs associated with the fair-value impact of acquisition-related inventory, amortization related to intangible assets acquired in the Novellus transaction, certain integration-related costs, rationalization of certain product configurations, the impairment of a long-lived asset, the amortization of convertible note discounts, and the tax benefit on successful resolution of certain tax matters. Additionally, the December 2013 quarter non-GAAP results exclude the gain on sale of an investment and the September 2013 quarter non-GAAP results excluded certain restructuring charges and the tax expense associated with legal-entity integration.
Management uses non-GAAP gross margin, operating income, operating expenses, operating margin, net income, and net income per diluted share to evaluate the Company’s operating and financial results. The Company believes the presentation of non-GAAP results is useful to investors for analyzing business trends and comparing performance to prior periods, along with enhancing the investors’ ability to view the Company’s results from management’s perspective. Tables presenting reconciliations of non-GAAP results to U.S. GAAP results are included at the end of this press release and on the Company’s web site at http://investor.lamresearch.com.
~more~
page 2 of 8
Lam Announces Financial Results for the December 2013 Quarter
Caution Regarding Forward-Looking Statements
Statements made in this press release that are not of historical fact are forward-looking statements and are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, but are not limited to, the anticipated revenue from shipments to Japanese customers, our opportunities for growth, our financial performance, our wafer fab equipment spending outlook, the expected rate of investment in key technology inflections, the success of our strategies for maintaining customer trust and improving competitiveness, the support from our customers, and our guidance for shipments, revenue, gross margin, operating margin, and earnings per share. Some factors that may affect these forward-looking statements include: business conditions in the consumer electronics industry, the semiconductor industry and the overall economy; the strength of the financial performance of our existing and prospective customers; the introduction of new and innovative technologies; the occurrence and pace of technology transitions and conversions; the actions of our competitors, consumers, semiconductor companies and key suppliers and subcontractors; and the success of research and development and sales and marketing 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 by us with the Securities and Exchange Commission, including specifically our report on Form 10-K for the year ended June 30, 2013 and Form 10-Q for the three months ended September 29, 2013. These uncertainties and changes could cause actual results to vary from expectations. The Company undertakes no obligation to update the information or statements made in this press release.
About Lam Research
Lam Research Corp. (NASDAQ:LRCX) is a trusted global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. Lam’s broad portfolio of market-leading etch, deposition, strip, and wafer cleaning solutions help customers achieve success on the wafer by enabling device features that are 1,000 times smaller than a grain of sand, resulting in smaller, faster, and more power-efficient chips. Through collaboration, continuous innovation and delivering on commitments, Lam is transforming atomic-scale engineering and enabling our customers to shape the future of technology. Based in Fremont, Calif., Lam Research is an S&P 500 ® company whose common stock trades on the NASDAQ Global Select Market under the symbol LRCX. For more information, please visit http://www.lamresearch.com.
Consolidated Financial Tables Follow.
###
page 3 of 8
Lam Announces Financial Results for the December 2013 Quarter
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
(unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| December 29, | September 29, | December 23, | December 29, | December 23, | ||||||||||||||||
| 2013 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||
| Revenue |
$ | 1,116,061 | $ | 1,015,059 | $ | 860,886 | $ | 2,131,120 | $ | 1,767,774 | ||||||||||
| Cost of goods sold |
628,272 | 583,201 | 545,472 | 1,211,473 | 1,118,474 | |||||||||||||||
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| Gross margin |
487,789 | 431,858 | 315,414 | 919,647 | 649,300 | |||||||||||||||
| Gross margin as a percent of revenue |
43.7 | % | 42.5 | % | 36.6 | % | 43.2 | % | 36.7 | % | ||||||||||
| Research and development |
174,477 | 170,567 | 165,951 | 345,044 | 329,262 | |||||||||||||||
| Selling, general and administrative |
148,838 | 155,883 | 145,421 | 304,721 | 299,284 | |||||||||||||||
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| Total operating expenses |
323,315 | 326,450 | 311,372 | 649,765 | 628,546 | |||||||||||||||
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| Operating income |
164,474 | 105,408 | 4,042 | 269,882 | 20,754 | |||||||||||||||
| Operating margin as a percent of revenue |
14.7 | % | 10.4 | % | 0.5 | % | 12.7 | % | 1.2 | % | ||||||||||
| Other expense, net |
(3,837 | ) | (14,262 | ) | (13,390 | ) | (18,099 | ) | (23,328 | ) | ||||||||||
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| Income before income taxes |
160,637 | 91,146 | (9,348 | ) | 251,783 | (2,574 | ) | |||||||||||||
| Income tax expense (benefit) |
11,645 | 5,640 | (15,756 | ) | 17,285 | (11,750 | ) | |||||||||||||
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| Net income |
$ | 148,992 | $ | 85,506 | $ | 6,408 | $ | 234,498 | $ | 9,176 | ||||||||||
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| Net income per share: |
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| Basic net income per share |
$ | 0.92 | $ | 0.52 | $ | 0.04 | $ | 1.44 | $ | 0.05 | ||||||||||
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| Diluted net income per share |
$ | 0.87 | $ | 0.50 | $ | 0.04 | $ | 1.37 | $ | 0.05 | ||||||||||
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| Number of shares used in per share calculations: |
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| Basic |
162,305 | 162,896 | 170,699 | 162,603 | 175,314 | |||||||||||||||
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| Diluted |
171,757 | 171,363 | 173,027 | 171,592 | 177,490 | |||||||||||||||
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page 4 of 8
Lam Announces Financial Results for the December 2013 Quarter
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| December 29, | September 29, | June 30, | ||||||||||
| 2013 | 2013 | 2013 | ||||||||||
| (unaudited) | (unaudited) | (1) | ||||||||||
| ASSETS |
||||||||||||
| Cash and cash equivalents |
$ | 1,132,555 | $ | 1,156,184 | $ | 1,162,473 | ||||||
| Short-term investments |
1,389,735 | 1,300,031 | 1,334,745 | |||||||||
| Accounts receivable, net |
909,720 | 713,524 | 602,624 | |||||||||
| Inventories |
661,572 | 614,790 | 559,317 | |||||||||
| Deferred income taxes |
17,095 | 29,090 | 27,674 | |||||||||
| Other current assets |
138,359 | 110,633 | 106,996 | |||||||||
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| Total current assets |
4,249,036 | 3,924,252 | 3,793,829 | |||||||||
| Property and equipment, net |
546,193 | 564,845 | 603,910 | |||||||||
| Restricted cash and investments |
166,395 | 166,385 | 166,536 | |||||||||
| Goodwill and intangible assets |
2,453,066 | 2,484,900 | 2,526,541 | |||||||||
| Other assets |
141,108 | 149,963 | 159,499 | |||||||||
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| Total assets |
$ | 7,555,798 | $ | 7,290,345 | $ | 7,250,315 | ||||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current liabilities |
$ | 1,522,572 | $ | 1,402,890 | $ | 1,404,475 | ||||||
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| Long-term debt, convertible notes, and capital leases |
$ | 803,276 | $ | 796,373 | $ | 789,256 | ||||||
| Income taxes payable |
248,996 | 248,462 | 246,479 | |||||||||
| Other long-term liabilities |
129,710 | 129,306 | 134,313 | |||||||||
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| Total liabilities |
2,704,554 | 2,577,031 | 2,574,523 | |||||||||
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| Senior convertible notes |
185,154 | 186,042 | 186,920 | |||||||||
| Stockholders’ equity (2) |
4,666,090 | 4,527,272 | 4,488,872 | |||||||||
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| Total liabilities and stockholders’ equity |
$ | 7,555,798 | $ | 7,290,345 | $ | 7,250,315 | ||||||
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| (1) | Derived from audited financial statements |
| (2) | Common shares issued and outstanding were 162,169 shares as of December 29, 2013, 162,217 shares as of September 29, 2013 and 162,873 shares as of June 30, 2013. |
page 5 of 8
Lam Announces Financial Results for the December 2013 Quarter
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| December 29, | September 29, | December 23, | December 29, | December 23, | ||||||||||||||||
| 2013 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
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| Net income |
$ | 148,992 | $ | 85,506 | $ | 6,408 | $ | 234,498 | $ | 9,176 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation and amortization |
73,552 | 74,331 | 78,388 | 147,883 | 153,204 | |||||||||||||||
| Deferred income taxes |
12,457 | — | (7,320 | ) | 12,457 | (19,337 | ) | |||||||||||||
| Impairment of long-lived asset |
628 | 7,004 | — | 7,632 | — | |||||||||||||||
| Equity-based compensation expense |
23,046 | 23,235 | 24,027 | 46,281 | 48,441 | |||||||||||||||
| Amortization of convertible note discount |
8,217 | 8,122 | 7,843 | 16,339 | 15,595 | |||||||||||||||
| Other, net |
(2,428 | ) | 4,115 | 14,694 | 1,687 | 25,744 | ||||||||||||||
| Changes in operating assets and liabilities: |
(135,441 | ) | (150,388 | ) | 69,186 | (285,829 | ) | 209,665 | ||||||||||||
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| Net cash provided by operating activities |
129,023 | 51,925 | 193,226 | 180,948 | 442,488 | |||||||||||||||
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| CASH FLOWS FROM INVESTING ACTIVITIES: |
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| Capital expenditures and intangible assets |
(38,323 | ) | (23,778 | ) | (38,924 | ) | (62,101 | ) | (82,889 | ) | ||||||||||
| Cash paid for business acquisition |
(18,388 | ) | — | (8,716 | ) | (18,388 | ) | (8,716 | ) | |||||||||||
| Net sales/maturities (purchases) of available-for-sale securities |
(88,754 | ) | 42,567 | (23,250 | ) | (46,187 | ) | (39,888 | ) | |||||||||||
| (Issuance) repayments of notes receivable |
10,000 | — | — | 10,000 | — | |||||||||||||||
| Proceeds from sale of assets |
21,635 | — | 660 | 21,635 | 660 | |||||||||||||||
| Transfer of restricted cash and investments |
— | 150 | 33 | 150 | 179 | |||||||||||||||
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| Net cash provided by (used for) investing activities |
(113,830 | ) | 18,939 | (70,197 | ) | (94,891 | ) | (130,654 | ) | |||||||||||
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| CASH FLOWS FROM FINANCING ACTIVITIES: |
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| Principal payments on long-term debt and capital lease obligations |
(719 | ) | (88 | ) | (115 | ) | (807 | ) | (780 | ) | ||||||||||
| Treasury stock purchases |
(47,910 | ) | (104,285 | ) | (355,010 | ) | (152,195 | ) | (710,089 | ) | ||||||||||
| Reissuances of treasury stock related to employee stock purchase plan |
(35 | ) | 15,154 | — | 15,119 | 9,925 | ||||||||||||||
| Proceeds from issuance of common stock |
8,449 | 12,574 | 6,583 | 21,023 | 7,534 | |||||||||||||||
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| Net cash used for financing activities |
(40,215 | ) | (76,645 | ) | (348,542 | ) | (116,860 | ) | (693,410 | ) | ||||||||||
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| Effect of exchange rate changes on cash |
1,393 | (508 | ) | 4,236 | 885 | 7,013 | ||||||||||||||
| Net decrease in cash and cash equivalents |
(23,629 | ) | (6,289 | ) | (221,277 | ) | (29,918 | ) | (374,563 | ) | ||||||||||
| Cash and cash equivalents at beginning of period |
1,156,184 | 1,162,473 | 1,411,466 | 1,162,473 | 1,564,752 | |||||||||||||||
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| Cash and cash equivalents at end of period |
$ | 1,132,555 | $ | 1,156,184 | $ | 1,190,189 | $ | 1,132,555 | $ | 1,190,189 | ||||||||||
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page 6 of 8
Lam Announces Financial Results for the December 2013 Quarter
Non-GAAP Financial Summary
(in thousands, except percentages and per share data)
(unaudited)
| Three Months Ended | Three Months Ended | |||||||
| December 29, | September 29, | |||||||
| 2013 | 2013 | |||||||
| Revenue |
$ | 1,116,061 | $ | 1,015,059 | ||||
| Gross margin |
$ | 510,769 | $ | 456,709 | ||||
| Gross margin as percentage of revenue |
45.8 | % | 45.0 | % | ||||
| Operating expenses |
$ | 302,103 | $ | 291,887 | ||||
| Operating income |
$ | 208,666 | $ | 164,822 | ||||
| Operating margin as a percentage of revenue |
18.7 | % | 16.2 | % | ||||
| Net income |
$ | 188,745 | $ | 139,227 | ||||
| Net income per diluted share |
$ | 1.10 | $ | 0.81 | ||||
| Shares used in per share calculation - diluted |
171,757 | 171,363 | ||||||
Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(unaudited)
| Three Months Ended | Three Months Ended | |||||||
| December 29, | September 29, | |||||||
| 2013 | 2013 | |||||||
| U.S. GAAP net income |
$ | 148,992 | $ | 85,506 | ||||
| Pre-tax non-GAAP items: |
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| Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold |
21,491 | 21,480 | ||||||
| Acquisition-related inventory fair value impact - cost of goods sold |
1,225 | 2,047 | ||||||
| Integration costs - cost of goods sold |
264 | 1,324 | ||||||
| Integration costs - operating expenses |
2,785 | 8,063 | ||||||
| Amortization related to intangible assets acquired in Novellus transaction - operating expenses |
16,953 | 16,947 | ||||||
| Restructuring charges - operating expenses |
— | 1,705 | ||||||
| Costs associated with rationalization of certain product configurations - operating expenses |
846 | 844 | ||||||
| Impairment of long lived asset - operating expenses |
628 | 7,004 | ||||||
| Amortization of convertible note discount, Lam notes - other expense, net |
7,329 | 7,243 | ||||||
| Amortization of convertible note discount, Novellus assumed notes - other expense, net |
762 | 859 | ||||||
| Gain on sale of investment - other expense, net |
(4,813 | ) | — | |||||
| Net tax benefit on non-GAAP items |
(6,404 | ) | (11,646 | ) | ||||
| Net tax benefit on successful resolution of certain tax matters |
(1,313 | ) | (2,286 | ) | ||||
| Tax expense associated with legal-entity integration |
— | 137 | ||||||
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| Non-GAAP net income |
$ | 188,745 | $ | 139,227 | ||||
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| Non-GAAP net income per diluted share |
$ | 1.10 | $ | 0.81 | ||||
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| Number of shares used for diluted per share calculation |
171,757 | 171,363 | ||||||
page 7 of 8
Lam Announces Financial Results for the December 2013 Quarter
Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating Income to Non-GAAP Gross Margin, Operating Expenses and Operating Income
(in thousands, except percentages)
(unaudited)
| Three Months Ended | Three Months Ended | |||||||
| December 29, | September 29, | |||||||
| 2013 | 2013 | |||||||
| U.S. GAAP gross margin |
$ | 487,789 | $ | 431,858 | ||||
| Pre-tax non-GAAP items: |
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| Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold |
21,491 | 21,480 | ||||||
| Acquisition-related inventory fair value impact - cost of goods sold |
1,225 | 2,047 | ||||||
| Integration costs - cost of goods sold |
264 | 1,324 | ||||||
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| Non-GAAP gross margin |
$ | 510,769 | $ | 456,709 | ||||
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| U.S. GAAP gross margin as a percentage of revenue |
43.7 | % | 42.5 | % | ||||
| Non-GAAP gross margin as a percentage of revenue |
45.8 | % | 45.0 | % | ||||
| U.S. GAAP operating expenses |
$ | 323,315 | $ | 326,450 | ||||
| Pre-tax non-GAAP items: |
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| Integration costs - operating expenses |
(2,785 | ) | (8,063 | ) | ||||
| Amortization related to intangible assets acquired in Novellus transaction - operating expenses |
(16,953 | ) | (16,947 | ) | ||||
| Restructuring charges - operating expenses |
— | (1,705 | ) | |||||
| Costs associated with rationalization of certain product configurations - operating expenses |
(846 | ) | (844 | ) | ||||
| Impairment of long lived asset - operating expenses |
(628 | ) | (7,004 | ) | ||||
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| Non-GAAP operating expenses |
$ | 302,103 | $ | 291,887 | ||||
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| Non-GAAP operating income |
$ | 208,666 | $ | 164,822 | ||||
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| Non-GAAP operating margin as a percent of revenue |
18.7 | % | 16.2 | % | ||||
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