Lam Research Corporation Announces Fiscal 2001 Fourth Quarter and Year-End Results
FREMONT, Calif.--(BUSINESS WIRE)--July 24, 2001--Lam Research Corporation (Nasdaq: LRCX - news) today announced financial results for the fiscal fourth quarter and year ended June 24, 2001. Revenues of $365.5 million were 21.4 percent lower than the March 2001 quarter. Net income for the period, including the net effect of two one-time items totaling $16.3 million (a $16.8 million restructuring charge and a $33.1 million gain from the Company's derivative financial instruments), was $58.3 million, or $0.44 per diluted share. Excluding the effect of these one-time items, net income was $36.9 million, or $0.28 per diluted share, compared to net income of $65.1 million, or $0.48 per diluted share, in the March 2001 quarter. Both quarters reflect the effect of the adoption of Securities and Exchange Commission Staff Accounting Bulletin (SAB) 101 that sets forth new guidelines on revenue recognition. The impact of this new guideline is generally to delay equipment revenue recognition from shipment to customer acceptance.
New orders for the period decreased when compared to the previous quarter. Regional distribution of new orders for the quarter ended June 24, 2001 was as follows: North America, 33 percent; Europe, 20 percent; Japan, 3 percent; and Asia Pacific, 44 percent.
Revenues for the quarter ended June 24, 2001 decreased sequentially in all geographies except Japan and were distributed as follows: North America, 27 percent; Europe, 23 percent; Japan, 11 percent; and Asia Pacific, 39 percent. Shipments for the quarter were approximately $259 million.
Gross margins of 40.4 percent of revenues compared with 43.6 percent in the March 2001 quarter as declining manufacturing output resulted in excess factory capacity. Operating expenses, excluding restructuring charges, decreased by $12.3 million to $102.1 million, reflecting the initial impact of downsizing activities.
Cash, short-term investments and restricted cash increased to $925.4 million, driven by $88.3 million positive cash flow from operations and proceeds of $350 million from long-term debt transactions. Other long-term assets include the market value ($33.1 million) at fiscal year end of the Company's equity derivatives, as required by EITF 00-19. The adoption of SAB 101 increased current liabilities by $250.8 million, the amount of deferred profit as of June 24, 2001.
``Business fundamentals reflect the continued weakness in semiconductor market conditions,'' stated James W. Bagley, chairman and chief executive officer. ``Despite the industry-wide slowdown, Lam is well positioned with a major new product introduction in dielectric etch and strong customer acceptance of our full suite of 300 mm etch and CMP products.''
``During SEMICON® West, held in San Francisco, July 16-18, 2001, Lam introduced its newest dielectric etch system, the Exelan High Performance. The Exelan® High Performance addresses critical, next-generation dielectric etch applications and began shipping into production during the June quarter.''
``Our focus and efforts during the current slowdown will be on introducing new products and strengthening our customer positions to grow our market share when the industry recovers,'' Bagley concluded.
Explanations of the impact of certain accounting changes required by SAB 101 and EITF 00-19 are attached to this press release as the following exhibits:
``Explanation of Revenue Recognition Under SAB 101''
``Unaudited Quarterly Income Statements Using SAB 101 Accounting Guidelines''
``Accounting for the Company's Equity Derivatives Under EITF 00-19''
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 future market conditions, the prospective demand for the company's products, future market share projections, the company's plans and objectives for future operations, market opportunities and market and competitive conditions. Such statements are based on current expectations and are subject to risks, uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, which could cause actual results to vary from expectations. The company undertakes no obligation to update the information in this press release.
Lam Research Corporation is a leading supplier of wafer processing equipment and services to the worldwide semiconductor manufacturing industry. The company's common stock trades on the Nasdaq National Market under the symbol ``LRCX.'' Lam's World Wide Web address is lamrc.com.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME UNDER SAB 101
(In thousands, except per share data)
Three Months Three Months Twelve Months
Ended Ended Ended
June 24, March 25, June 24,
2001 2001 2001
(unaudited)(unaudited/restated)
----------- ----------- -----------
Total revenue $ 365,536 $ 465,125 $ 1,519,789
Cost and expenses:
Cost of goods sold 213,790 262,102 862,321
Cost of goods sold
- restructuring charges 3,989 -- 3,989
----------- ----------- -----------
Gross margin 147,757 203,023 653,479
Research and
development 53,204 58,791 227,248
Selling, general
and administrative 48,872 55,615 218,919
Restructuring charge 12,780 -- 12,780
Purchased technology for
research and development -- -- 8,000
----------- ----------- -----------
Operating income 32,901 88,617 186,532
Other income, net 3,107 4,429 15,102
----------- ----------- -----------
Income before
income tax expense 36,008 93,046 201,634
Income tax expense 10,802 27,924 60,497
----------- ----------- -----------
Income before cumulative
effect of changes in
accounting principles 25,206 65,122 141,137
Cumulative effect
of the application of
EITF 00-19, Derivative
Financial Instruments
Indexed to, and Potentially
Settled in, a Company's Own
Stock, no related tax 33,074 -- 33,074
Cumulative effect of
the application of
SAB 101, Revenue Recognition
in Financial Statements, net
of $81,441 related tax
benefit -- -- (122,105)
----------- ----------- -----------
Net Income $ 58,280 $ 65,122 $ 52,106
=========== =========== ===========
Net income per share
- diluted (1):
Income before
cumulative effect of change
in accounting principles $ 0.19 $ 0.48 $ 1.07
Cumulative effect of
change in accounting
principle, application
of EITF 00-19 $ 0.25 $ -- $ 0.25
Cumulative effect of
change in accounting
principle, application
of SAB 101 $ -- $ -- $ (0.92)
----------- ----------- -----------
Diluted net income
per share $ 0.44 $ 0.48 $ 0.39
=========== =========== ===========
Number of shares used in
per share calculation -
diluted 133,531 141,901 132,243
=========== =========== ===========
(1) For the three and twelve month periods ending June 24, 2001,
conversion of the convertible subordinated notes was antidilutive
and therefore excluded from the calculation of diluted earnings
per share. Diluted earnings per share for the three month period
ended March 25, 2001 assumes conversion of the convertible
subordinated notes and accordingly, interest expense net of taxes
of $3,025 must be added to net income for computing diluted
earnings per share.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 24, June 25,
2001 2000
---------- ----------
Assets:
Cash and short-term investments $ 864,559 $ 371,722
Accounts receivable, net 248,910 323,935
Inventories 284,757 227,169
Other current assets 178,380 98,509
---------- ----------
Total current assets 1,576,606 1,021,335
Property and equipment, net 126,533 119,192
Restricted cash 60,800 60,348
Other assets 107,836 43,962
---------- ----------
Total assets $1,871,775 $1,244,837
========== ==========
Liabilities and
stockholders' equity:
Total current liabilities $ 499,684 $ 287,756
Long-term debt and other 659,718 321,657
Stockholders' equity 712,373 635,424
---------- ----------
Total liabilities and
stockholders' equity $1,871,775 $1,244,837
========== ==========
Lam Research Corporation
Explanation of Revenue Recognition under SAB 101
Summary of SAB 101
In December 1999 the Securities and Exchange Commission issued
Staff Accounting Bulletin ("SAB") No. 101 "Revenue Recognition in
Financial Statements." SAB 101 provides guidance on the recognition of
revenue for sales that involve contractual customer acceptance
provisions and product installation commitments. In October 2000 the
SEC issued implementation guidance for SAB 101 in the form of
"Frequently Asked Questions and Answers."
Impact of SAB 101 on the Company's Revenue Recognition Policy
Lam Research derives revenue from three sources - equipment sales,
spare parts sales and service contracts. SAB 101 had no impact on the
Company's revenue recognition policy for spare parts and service
activities.
Based on the guidance provided by SAB 101, the Company changed its
revenue recognition policy for equipment sales effective June 26,
2000. Prior to SAB 101 the Company generally recognized revenue on
equipment sales on the date the equipment was shipped to customers.
Under SAB 101 the Company now recognizes revenue on the date of
customer acceptance.
The new policy has the effect of delaying revenue recognition. The
new policy has no impact on cash collections from customers.
The Company is providing on its Website the unaudited Income
Statements showing quarterly financial results for all four quarters
of FY01, assuming the Company had applied SAB 101 revenue recognition
guidelines during those periods. The information is presented in an
exhibit titled "Unaudited Quarterly Income Statements Using SAB 101
Accounting Guidelines."
Cumulative Effect of the Change in Accounting Principle
As a result of the change in accounting to SAB 101, Lam has
reported a change in accounting principle in accordance with APB 20,
Accounting Changes, by a cumulative effect adjustment. The Company
adopted SAB 101 in the fourth fiscal quarter, but the change is
effective as of the beginning of the fiscal year (June 26, 2000).
Therefore, no cumulative effect of the change is included in net
income in the fourth quarter (June 2001). Instead, the change is made
as of the beginning of the year, financial information for the first
three quarters of FY01 are revised to reflect the new policy, and the
cumulative effect is reported in the September 2000 quarter.
Lam Research Corporation
Unaudited Quarterly Income Statements Using SAB 101
Accounting Guidelines
(In Millions)
For the quarter ended:
Sept. 24, Dec. 24, March 25, June 24,
2000 2000 2001 2001
(Revised) (Revised) (Revised) (Actual)
------ ------ ------ ------
Excluding one-time items:
Total revenue $ 305.0 $ 384.1 $ 465.1 $ 365.5
Gross margin 132.7 170.0 203.0 151.8
Research and
development 56.5 58.7 58.8 53.2
Selling, general
and administrative 52.5 62.0 55.6 48.9
Operating income 23.7 49.3 88.6 49.7
Other income, net 4.6 2.9 4.4 3.1
Income before
income tax expense 28.3 52.2 93.0 52.8
Income tax expense 8.5 15.6 27.9 15.9
------ ------ ------ ------
Net income
excluding one
time items $ 19.8 $ 36.6 $ 65.1 $ 36.9
====== ====== ====== ======
Diluted net income
per share excluding
one time items $ 0.15 $ 0.28 $ 0.48 $ 0.28
====== ====== ====== ======
One time items
(net of tax effect):
Restructuring
(charges) / recoveries (11.7)
Purchased technology for R&D (5.6)
Cumulative effect of
changes in
accounting principles:
SAB 101
(revenue recognition) (122.1)
EITF 00-19
(equity derivatives) 33.1
------ ------ ------ ------
Net income including
one time items ($102.3) $31.0 $ 65.1 $ 58.3
====== ====== ====== ======
Diluted net income
per share including
one time items ($0.76) $0.24 $ 0.48 $0.44
Lam Research Corporation
Accounting for the Company's Equity Derivatives Under
EITF 00-19
In November 2000 the Financial Accounting Standards Board
finalized the rules for accounting for derivative financial
instruments indexed to and potentially settled in a company's own
stock. Under the revised rules Lam must record the fair value of its
put and call options on the Balance Sheet. As of June 2001 their value
was $33.1 million, which is recorded as a cumulative effect adjustment
in the June 2001 Income Statement. It is carried as a long-term asset.
The cumulative change does not net out taxes because we believe the
option settlement will be non-taxable. For future quarters, the value
of these derivatives will be re-calculated based on their market value
at quarter end and the change in value will be reported as a gain or
loss in Other Income and Expense. |
