Lam Research Corporation Announces Earnings for the Quarter Ended March 26, 2006
Wednesday April 12, 4:18 pm ET
FREMONT, Calif.--(BUSINESS WIRE)--April 12, 2006--Lam Research Corporation (Nasdaq:LRCX - News) today announced earnings for the quarter ended March 26, 2006. Revenue for the period was $437.4 million, and net income was $86.3 million, or $0.60 per diluted share, compared to revenue of $358.2 million, and net income of $77.8 million, or $0.55 per diluted share, for the December 2005 quarter. Gross margin was $219.7 million and operating expenses were $109.4 million for the March 2006 quarter compared to gross margin of $177.5 million and operating expenses of $100.6 million for the December 2005 quarter.
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. Generally Accepted Accounting Principles (GAAP) is included at the end of this press release and on the Company's web site. The March 2006 quarter ongoing presentation removes the effect of tax expense associated with the Company's decision to repatriate up to $150 million of foreign earnings in the June 2006 quarter under the provisions of the American Jobs Creation Act. In the December 2005 quarter, there were no significant differences between the ongoing results and the results under U.S. GAAP.
Gross margin as a percent of revenue for the March 2006 quarter was 50.2 percent compared to 49.5 percent in the December 2005 quarter. Operating expenses increased during the quarter as planned at $109 million. Equity compensation expense recorded in cost of goods sold and operating expenses was $1.3 million and $4.7 million, respectively, during the March 2006 quarter. Ongoing net income increased to $93.7 million, or $0.65 per diluted share, in the March 2006 quarter compared with ongoing net income of $77.8 million, or $0.55 per diluted share, for the December 2005 quarter.
New orders recorded in backlog increased 29 percent sequentially to $520 million. The geographic distribution of new orders as well as revenue during the March quarter is shown in the following table:
Region New Orders Revenue
--------------- ------------- ----------
North America 15% 15%
Europe 15% 13%
Japan 13% 15%
Korea 29% 29%
Asia Pacific 28% 28%
Cash and cash equivalents, short-term investments and restricted cash balances were $1.1 billion at the end of March, and cash flows provided by operating activities were $109.6 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 $195.3 million and $119.2 million, respectively. At the end of the period, unshipped orders in backlog were constant at 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 $90 million.
"Market share gains and solid execution drove strong results for the March quarter," stated Steve Newberry, president and chief executive officer of Lam. "We achieved important new application wins with our diversified portfolio of etch systems and believe our innovative and production-proven technology will enable us to post gains in market share in calendar 2006. Recently, at our analyst and investors event, we announced our entrance into the clean and strip market segments and believe these areas will provide additional opportunities for growth in the future.
"Revenue grew 22 percent in the quarter and operating income grew 43 percent, when compared to the December quarter, and we generated cash from operations at 25 percent of revenue. We are committed to creating value for our customers, shareholders, and employees, and believe we are demonstrating the results of that commitment throughout our business," 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 expectations of future market share gains, additional opportunities for growth and our ability to create value for our customers, shareholders, and employees in the future. 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 development of new technologies by our competitors that could affect our market share, our ability to compete successfully in the clean and strip market segments, 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 December 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.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
(unaudited)
Three Months Ended Nine Months Ended
----------------------------- ----------------------
March 26, Dec. 25, March 27, March 26, March 27,
2006 2005 2005 2006 2005
--------- --------- --------- ----------- ----------
Total revenue $437,423 $358,245 $349,337 $1,116,575 $1,148,686
Cost of goods
sold 217,769 180,735 174,767 563,332 560,453
--------- --------- --------- ----------- ----------
Gross margin 219,654 177,510 174,570 553,243 588,233
Gross margin as
a percent of
revenue 50.2% 49.5% 50.0% 49.5% 51.2%
Research and
development 61,083 55,742 47,226 168,067 144,641
Selling,
general and
administrative 48,303 44,859 34,518 138,317 120,920
Restructuring
charges, net -- -- 14,201 -- 14,201
--------- --------- --------- ----------- ----------
Total
operating
expenses 109,386 100,601 95,945 306,384 279,762
Operating
income 110,268 76,909 78,625 246,859 308,471
Operating margin
as a percent of
revenue 25.2% 21.5% 22.5% 22.1% 26.9%
Other income,
net 7,828 9,308 643 25,624 1,949
--------- --------- --------- ----------- ----------
Income before
income taxes 118,096 86,217 79,268 272,483 310,420
Income tax
expense 31,759 8,439 19,817 58,877 77,605
--------- --------- --------- ----------- ----------
Net income $ 86,337 $ 77,778 $ 59,451 $ 213,606 $ 232,815
========= ========= ========= =========== ==========
Net income per
share:
Basic $ 0.62 $ 0.57 $ 0.42 $ 1.55 $ 1.69
========= ========= ========= =========== ==========
Diluted $ 0.60 $ 0.55 $ 0.41 $ 1.49 $ 1.64
========= ========= ========= =========== ==========
Number of shares
used in per
share
calculations:
Basic 140,122 136,572 139,967 137,703 137,566
========= ========= ========= =========== ==========
Diluted 144,846 142,525 144,756 143,298 142,362
========= ========= ========= =========== ==========
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 26, December 25, June 26,
2006 2005 2005
(unaudited) (unaudited) (1)
------------- ----------- -----------
Assets:
Cash and cash equivalents $ 757,845 $ 633,782 $ 482,250
Short-term investments 233,528 258,463 $327,003
Accounts receivable, net 319,150 279,185 232,005
Inventories 144,259 114,051 110,051
Other current assets 84,986 95,012 93,527
------------- ----------- -----------
Total current assets 1,539,768 1,380,493 1,244,836
Property and equipment, net 43,903 41,652 41,082
Restricted cash 85,038 85,038 85,038
Other assets 70,116 75,088 77,859
------------- ----------- -----------
Total assets $1,738,825 $1,582,271 $1,448,815
============= =========== ===========
Liabilities and stockholders'
equity:
Current liabilities $ 507,309 $ 439,191 $ 379,133
------------- ----------- -----------
Other long-term liabilities $ 1,605 $ 1,279 $ 2,786
Stockholders' equity 1,229,911 1,141,801 1,066,896
------------- ----------- -----------
Total liabilities and
stockholders' equity $1,738,825 $1,582,271 $1,448,815
============= =========== ===========
(1) Derived from audited financial statements.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
---------------------------- -------------------
March 26, Dec. 25, March 27, March 26, March 27,
2006 2005 2005 2006 2005
--------- --------- --------- --------- ---------
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Net income $86,337 $77,778 $59,451 $213,606 $232,815
Adjustments to
reconcile net
income to net cash
provided by
operating
activities:
Depreciation and
amortization 5,208 4,995 6,324 16,235 19,212
Deferred income
taxes 17,935 (647) (13,413) 32,662 38,165
Restructuring
charges, net -- -- 14,201 -- 14,201
Stock-based
compensation 6,029 6,044 74 17,319 367
Income tax benefit
from stock option
exercises -- -- 30,353 -- 30,353
Other, net (864) 109 1,308 1,087 2,631
Change in working
capital accounts (5,010) 23,126 3,001 (12,488) (45,698)
--------- --------- --------- --------- ---------
Net cash
provided by
operating
activities 109,635 111,405 101,299 268,421 292,046
--------- --------- --------- --------- ---------
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Capital expenditures (6,447) (5,036) (4,640) (16,141) (18,623)
Net sales
(purchases) of
available-for-sale
securities 26,703 14,191 30,976 92,492 (27,744)
--------- --------- --------- --------- ---------
Net cash
provided by/
(used for)
investing
activities 20,256 9,155 26,336 76,351 (46,367)
--------- --------- --------- --------- ---------
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Payments on capital
lease (67) -- -- (67) --
Treasury stock
purchases (73,602) (61,917) (67,793) (214,209) (67,793)
Reissuances of
treasury stock 4,515 -- -- 9,652 --
Proceeds from
issuance of common
stock 61,602 61,926 48,923 135,702 90,848
--------- --------- --------- --------- ---------
Net cash
provided by/
(used for)
financing
activities (7,552) 9 (18,870) (68,922) 23,055
--------- --------- --------- --------- ---------
Effect of exchange
rate changes on
cash 1,724 (1,605) 1,524 (255) 4,325
Net increase in
cash and cash
equivalents 124,063 118,964 110,289 275,595 273,059
Cash and cash
equivalents at
beginning of period 633,782 514,818 326,173 482,250 163,403
--------- --------- --------- --------- ---------
Cash and cash
equivalents at end
of period $757,845 $633,782 $436,462 $757,845 $436,462
========= ========= ========= ========= =========
Reconciliation of U.S. GAAP Net Income to Ongoing Net Income
(in thousands, except per share data and percentages)
Three Months Ended
-------------------------
March 26, December 25,
2006 2005
----------- -------------
U.S. GAAP net income $86,337 $77,778
Tax expense on planned repatriation of
foreign earnings 7,397 --
----------- -------------
Ongoing net income $93,734 $77,778
=========== =============
Ongoing net income per diluted share $ 0.65 $ 0.55
=========== =============
Number of shares used for diluted per share
calculation 144,846 142,525
U.S. GAAP income tax rate 26.9% 9.8%
Ongoing income tax rate 20.6% 9.8%
--------------------------------------------------------------------------------
Source: Lam Research Corporation |
