Lam Research Corporation Announces Earnings for the Quarter Ended December 25, 2005
Wednesday January 18, 4:51 pm ET
FREMONT, Calif.--(BUSINESS WIRE)--Jan. 18, 2006--Lam Research Corporation (NASDAQ:LRCX - News) today announced earnings for the quarter ended December 25, 2005. Revenue for the period was $358.2 million, and net income was $77.8 million, or $0.55 per diluted share, compared to revenue of $320.9 million, and net income of $49.5 million, or $0.35 per diluted share, for the September 2005 quarter. Gross margin was $177.5 million and operating expenses were $100.6 million for the December 2005 quarter compared to gross margin of $156.1 million and operating expenses of $96.4 million for the September 2005 quarter.
Gross margin as a percent of revenue for the December quarter was 49.5 percent compared to 48.6 percent in the September quarter. The increase in operating expenses was primarily the result of increases in R&D spending, including equity and incentive-based compensation expense.
The income tax expense of $8.4 million in the December 2005 quarter reflects a fiscal year 2006 effective tax rate assumption of 21.5 percent.
New orders recorded in backlog increased 24 percent sequentially to $403 million. The geographic distribution of new orders as well as revenue during the December quarter is shown in the following table:
Region New Orders Revenue
------------------ -------------- -----------
North America 13% 13%
Europe 12% 13%
Japan 23% 25%
Korea 23% 20%
Asia Pacific 29% 29%
Cash, short-term investments and restricted cash balances were $977.3 million at the end of December, and cash flows provided by operating activities were $111.4 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 $161.4 million and $98.0 million, respectively. At the end of the period, unshipped orders in backlog were approximately $404 million, and the anticipated future revenue value of orders shipped from backlog to Japanese customers that are not recorded as deferred revenue was approximately $46 million.
"Business conditions continued to strengthen in the December quarter," stated Steve Newberry, president and chief executive officer of Lam. "Improving demand for wafer processing equipment and services coupled with recent market share gains have resulted in a significant increase in new orders. We believe the continued increase in selection of our equipment into today's most advanced wafer processing fabs as well as recent next-generation technology wins is a reflection of the Company's ongoing competitiveness."
"The rise in new orders is among several achievements during the quarter. Profitability was strong, resulting in gross margins of 49.5 percent and operating margins of 21.5 percent. In addition, for calendar year 2005, we have generated $375 million of net free cash flow, which is 27 percent of revenue. Results achieved during the December quarter, and the year, illustrate our employees' outstanding performance and the Company's commitment to setting the standard of excellence for the wafer fab equipment industry," Newberry concluded.
The Company believes the presentation of net free cash flows, which is derived by subtracting capital expenditures from net cash provided by operating activities, is useful for analyzing the Company's financial performance as a reflection of the Company's ability to generate cash exclusive of capital expenditures. A table that provides a calculation of net free cash flows is included at the end of this press release.
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 the levels of demand for wafer processing equipment and services and our customers' continuing selection of our equipment. 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, the level of demand for new consumer products, our competitors' development of new technologies that could affect our market share, 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 26, 2005, and Form 10-Q for the quarter ended September 25, 2005, 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 National Market® under the symbol LRCX. Lam is a NASDAQ-100® company. The Company's World Wide Web address is lamresearch.com.
Consolidated Financial Tables Follow
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
(unaudited)
Three Months Ended Six Months Ended
----------------------------- -------------------
December September December December December
25, 25, 26, 25, 26,
2005 2005 2004 2005 2004
--------- --------- --------- --------- ---------
Total revenue $358,245 $320,907 $379,800 $679,152 $799,349
Cost of goods sold 180,735 164,828 180,898 345,563 385,686
--------- --------- --------- --------- ---------
Gross margin 177,510 156,079 198,902 333,589 413,663
Gross margin as
a percent of
revenue 49.5% 48.6% 52.4% 49.1% 51.7%
Research and
development 55,742 51,242 47,057 106,984 97,415
Selling, general
and
administrative 44,859 45,155 43,275 90,014 86,402
--------- --------- --------- --------- ---------
Total operating
expenses 100,601 96,397 90,332 196,998 183,817
Operating income 76,909 59,682 108,570 136,591 229,846
Operating margin
as a percent of
revenue 21.5% 18.6% 28.6% 20.1% 28.8%
Other income,
net 9,308 8,488 1,298 17,796 1,306
--------- --------- --------- --------- ---------
Income before income
taxes 86,217 68,170 109,868 154,387 231,152
Income tax expense 8,439 18,679 26,254 27,118 57,788
--------- --------- --------- --------- ---------
Net income $77,778 $49,491 $83,614 $127,269 $173,364
========= ========= ========= ========= =========
Net income per
share:
Basic $0.57 $0.36 $0.61 $0.93 $1.27
========= ========= ========= ========= =========
Diluted $0.55 $0.35 $0.59 $0.89 $1.23
========= ========= ========= ========= =========
Number of shares
used in per
share calculations:
Basic 136,572 136,453 137,255 136,499 136,366
========= ========= ========= ========= =========
Diluted 142,525 141,430 142,268 142,209 141,108
========= ========= ========= ========= =========
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December September June
25, 25, 26,
2005 2005 2005
(unaudited) (unaudited) (1)
----------- ----------- -----------
Assets:
Cash and cash equivalents $633,782 $514,818 $482,250
Short-term investments 258,463 273,998 $327,003
Accounts receivable, net 279,185 220,955 232,005
Inventories 114,051 113,702 110,051
Other current assets 95,012 99,463 93,527
----------- ----------- -----------
Total current assets 1,380,493 1,222,936 1,244,836
Property and equipment, net 41,652 40,010 41,082
Restricted cash 85,038 85,038 85,038
Other assets 75,088 76,690 77,859
----------- ----------- -----------
Total assets $1,582,271 $1,424,674 $1,448,815
=========== =========== ===========
Liabilities and stockholders'
equity:
Current liabilities $439,191 $364,649 $379,133
----------- ----------- -----------
Other long-term liabilities $1,279 $1,364 $2,786
Stockholders' equity 1,141,801 1,058,661 1,066,896
----------- ----------- -----------
Total liabilities and
stockholders' equity $1,582,271 $1,424,674 $1,448,815
=========== =========== ===========
(1) Derived from audited financial statements.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
----------------------------- -------------------
December September December December December
25, 25, 26, 25, 26,
2005 2005 2004 2005 2004
--------- --------- --------- --------- ---------
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Net income $77,778 $49,491 $83,614 $127,269 $173,364
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization 4,995 6,032 6,694 11,027 12,888
Deferred income
taxes (647) 15,374 21,954 14,727 51,578
Stock-based
compensation 6,044 5,246 266 11,290 293
Other, net 109 1,842 129 1,951 1,323
Change in working
capital accounts 23,126 (30,604) 37,708 (7,478) (48,699)
--------- --------- --------- --------- ---------
Net cash
provided by
operating
activities 111,405 47,381 150,365 158,786 190,747
--------- --------- --------- --------- ---------
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Capital expenditures (5,036) (4,658) (8,845) (9,694) (13,983)
Net sales
(purchases) of
available-for-sale
securities 14,191 51,598 (41,412) 65,789 (58,720)
--------- --------- --------- --------- ---------
Net cash
provided by/
(used for)
investing
activities 9,155 46,940 (50,257) 56,095 (72,703)
--------- --------- --------- --------- ---------
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Treasury stock
purchases (61,917) (78,690) - (140,607) -
Reissuances of
treasury stock - 5,137 - 5,137 -
Proceeds from
issuance of common
stock 61,926 12,174 30,986 74,100 41,925
--------- --------- --------- --------- ---------
Net cash
provided by/
(used for)
financing
activities 9 (61,379) 30,986 (61,370) 41,925
--------- --------- --------- --------- ---------
Effect of exchange
rate changes on
cash (1,605) (374) 2,350 (1,979) 2,801
Net increase in cash
and cash
equivalents 118,964 32,568 133,444 151,532 162,770
Cash and cash
equivalents at
beginning of period 514,818 482,250 192,729 482,250 163,403
--------- --------- --------- --------- ---------
Cash and cash
equivalents at end
of period $633,782 $514,818 $326,173 $633,782 $326,173
========= ========= ========= ========= =========
LAM RESEARCH CORPORATION
CALCULATION OF NET FREE CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Twelve
Months
Ended
-------------------------------------- ---------
March June September December December
27, 26, 25, 25, 25,
2005 2005 2005 2005 2005
--------- --------- -------- --------- ---------
Net cash provided by
operating
activities $101,299 $133,884 $47,381 $111,405 $393,969
Capital expenditures (4,640) (4,226) (4,658) (5,036) (18,560)
--------- --------- -------- --------- ---------
Net free cash flows $96,659 $129,658 $42,723 $106,369 $375,409
========= ========= ======== ========= =========
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Source: Lam Research Corporation |
