Lam Research Corporation Announces Earnings for the Quarter Ended June 27, 2004
Wednesday July 21, 4:05 pm ET
FREMONT, Calif.--(BUSINESS WIRE)--July 21, 2004--Lam Research Corporation (Nasdaq:LRCX - News) today announced earnings for the quarter ended June 27, 2004. Revenue for the period was $329.6 million, and net income was $52.7 million, or $0.38 per diluted share, compared to revenue of $231.1 million and net income of $19.2 million, or $0.13 per diluted share, for the March 2004 quarter. Gross margin and operating expenses for the June 2004 quarter were $159.2 million and $90.7 million, respectively.
The Company believes the presentation of ongoing results, which excludes certain special items, is useful for analyzing ongoing business trends. This presentation removes the effects of CMP impairment charges, net gains associated with the early retirement of the Company's 4% notes and the related interest rate swap, and prior period expense recognition connected with the Company's outsourcing strategy and consolidation. Tables that provide reconciliations of ongoing performance to results under U.S. Generally Accepted Accounting Principles (GAAP) are included at the end of this press release.
Ongoing net income increased by 159 percent, driven by sequential revenue growth in excess of 42 percent combined with the leverage from the Company's business model. Ongoing gross margin for the June 2004 quarter was 49 percent of revenue due to volume growth, continued expense control, and improved utilization of factory and field resources. In the period, ongoing operating expenses increased to $90.1 million, primarily due to planned increases in variable compensation and investments in information systems. Ongoing net income of $51.5 million, or $0.37 per diluted share, in the June 2004 quarter compares with ongoing net income of $19.9 million, or $0.14 per diluted share, for the previous quarter.
Continued growth in capital investment by semiconductor manufacturers resulted in new orders of $408 million, which represent a 17 percent increase over the prior period. The geographic distribution of new orders as well as revenue is shown in the following table:
Region New Orders Revenue
------ ---------- -------
North America 18% 14%
Europe 10% 16%
Japan 10% 12%
Asia Pacific 62% 58%
Cash, short-term investments and restricted cash balances totaled $541.9 million at the end of June. Earnings leverage and the Company's continuing focus on working capital management generated cash flow from operating activities of approximately $82 million during the quarter. As planned, the Company settled its interest rate swap and repaid its 4% convertible notes in June 2004, two years prior to maturity, resulting in a net cash outlay of $292.1 million. Deferred revenue and profit balances were $196.9 million and $108.4 million, respectively, and backlog was $402.9 million at the end of the quarter.
"The June quarter's financial results clearly indicate that our business model delivers the performance that we predicted, and this model will maximize our profit and cash generation over the course of an entire cycle," stated James W. Bagley, chairman and chief executive officer of Lam. "The growth in revenue and bookings substantiates the market position gains that we have described throughout the downturn. Our financial achievement and our success in the etch market are the products of outstanding performance by our employees," Bagley 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 the benefits of the Company's market position and business model, the Company's ability to maximize profit and cash generation going forward, and the Company's ability to remain successful in the etch market and to continue growth in revenue and bookings.
Such 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 reports on Form 10-K for the year ended June 29, 2003, and the Form 10-Q for the quarter ended March 28, 2004, 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 supplier 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. The Company's World Wide Web address is lamrc.com.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
Three Months Ended
-------------------------------------
June 27, March 28, June 29,
2004 2004 2003
-------- -------- --------
(unaudited) (unaudited) (unaudited)
Total revenue $329,572 $231,128 $186,086
Cost of goods sold 170,369 125,337 109,625
Cost of goods sold -
restructuring recoveries - (322) (663)
-------- -------- --------
Total cost of goods sold 170,369 125,015 108,962
Gross margin 159,203 106,113 77,124
Gross margin as a percent
of revenue 48.3% 45.9% 41.4%
Research and development 49,961 42,914 40,391
Selling, general and
administrative 40,711 37,218 34,501
Restructuring charges, net - 1,317 9,805
-------- -------- --------
Total operating expenses 90,672 81,449 84,697
Operating income (loss) 68,531 24,664 (7,573)
Other income (expense):
Loss on equity derivative
contracts in Company stock - - -
Other income, net 1,676 877 1,710
-------- -------- --------
Income (loss) before income taxes 70,207 25,541 (5,863)
Income tax expense (benefit) 17,552 6,385 (9,562)
-------- -------- --------
Net income (loss) $ 52,655 $ 19,156 $ 3,699
======== ======== ========
Net income (loss) per share:
Basic $ 0.39 $ 0.14 $ 0.03
======== ======== ========
Diluted (1) $ 0.38 $ 0.13 $ 0.03
======== ======== ========
Number of shares used in per
share calculations:
Basic 134,414 133,251 126,872
======== ======== ========
Diluted (1) 139,820 147,365 131,420
======== ======== ========
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
Twelve Months Ended
-----------------------
June 27, June 29,
2004 2003
-------- --------
Total revenue $935,946 $755,234
Cost of goods sold 506,548 452,369
Cost of goods sold - restructuring
recoveries (1,651) (964)
-------- --------
Total cost of goods sold 504,897 451,405
Gross margin 431,049 303,829
Gross margin as a percent of revenue 46.1% 40.2%
Research and development 170,479 160,493
Selling, general and administrative 146,063 132,820
Restructuring charges, net 8,327 15,901
-------- --------
Total operating expenses 324,869 309,214
Operating income (loss) 106,180 (5,385)
Other income (expense):
Loss on equity derivative contracts
in Company stock - (16,407)
Other income, net 4,470 6,147
-------- --------
Income (loss) before income taxes 110,650 (15,645)
Income tax expense (benefit) 27,662 (7,906)
-------- --------
Net income (loss) $ 82,988 $ (7,739)
======== ========
Net income (loss) per share:
Basic $ 0.63 $ (0.06)
======== ========
Diluted (1) $ 0.59 $ (0.06)
======== ========
Number of shares used in per share
calculations:
Basic 131,776 126,300
======== ========
Diluted (1) 144,928 126,300
======== ========
(1) The following table provides a reconciliation of the denominator
of the basic and diluted computations for net income (loss)
per share:
(in thousands)
Basic average shares
outstanding 134,414 133,251 126,872 131,776 126,300
Employee stock plans 5,169 6,958 4,548 6,538 -
Warrant 237 479 - 359 -
Assumed conversion of
convertible subordinated
4% notes - 6,677 - 6,255 -
-------- -------- -------- -------- --------
Diluted average shares
outstanding 139,820 147,365 131,420 144,928 126,300
======== ======== ======== ======== ========
Employee stock options, warrant and assumed conversion of
convertible 4% and 5% notes were excluded from diluted net income per
share calculations for the twelve months ended June 29, 2003, because
the effect was antidilutive due to the net loss for the period. The
warrant and assumed conversion of convertible 4% notes were excluded
from diluted net income per share calculations in other periods
because the effect would have been antidilutive. Diluted net income
per share for the three months ended March 28, 2004, and the twelve
months ended June 27, 2004, includes the assumed conversion of the
convertible 4% notes. Accordingly, interest expense, net of taxes, of
$0.4 million for the March quarter and $3.2 million for the twelve
months ended June 27, 2004, must be added back to net income for
computing diluted earnings per share.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 27, March 28, June 29,
2004 2004 2003
(unaudited) (unaudited) (1)
----------- ----------- ----------
Assets:
Cash, cash equivalents and
short-term investments $ 429,472 $ 633,070 $ 507,413
Accounts receivable, net 245,508 179,606 107,602
Inventories 108,249 110,746 112,016
Other current assets 113,159 147,440 145,745
---------- ---------- ----------
Total current assets 896,388 1,070,862 872,776
Property and equipment, net 42,444 37,477 48,771
Restricted cash 112,468 118,468 118,468
Other assets 147,326 143,887 158,260
---------- ---------- ----------
Total assets $1,198,626 $1,370,694 $1,198,275
========== ========== ==========
Liabilities and stockholders' equity:
Other current liabilities $ 376,606 $ 300,069 $ 216,982
---------- ---------- ----------
Long-term debt and other liabilities 9,554 322,944 332,209
Stockholders' equity 812,466 747,681 649,084
---------- ---------- ----------
Total liabilities and
stockholders' equity $1,198,626 $1,370,694 $1,198,275
========== ========== ==========
(1) Derived from audited financial statements
Reconciliation of U.S. GAAP Net Income to Ongoing Net Income
(in thousands, except per share data and percentages)
Three Months Ended
-----------------------
June 27, March 28,
2004 2004
-------- --------
U.S. GAAP net income $ 52,655 $ 19,156
Pre-tax adjustments:
CMP impairment - cost of goods sold 2,425 -
CMP impairment - operating expenses 600 -
Net gain on notes and swap - other
income, net (4,505)
Restructuring recoveries - cost of
goods sold - (322)
Net restructuring charges - operating
expenses - 1,317
Tax expense (benefit) on net reconciling items 370 (249)
-------- --------
Ongoing net income $ 51,545 $ 19,902
======== ========
Ongoing net income per diluted share $ 0.37 $ 0.14
======== ========
Number of shares used for diluted
per share calculation 139,820 147,365
Income tax rate 25% 25%
Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and
Operating Income to Ongoing Gross Margin, Operating Expenses
and Operating Income
(in thousands)
Three Months Ended
-----------------------
June 27, March 28,
2004 2004
-------- --------
U.S. GAAP gross margin $159,203 $106,113
CMP impairment - cost of goods sold 2,425 -
Restructuring recoveries - cost of goods sold - (322)
-------- --------
Ongoing gross margin $161,628 $105,791
U.S. GAAP operating expenses $ 90,672 $ 81,449
CMP impairment - operating expenses (600) -
Net restructuring charges - operating expenses - (1,317)
-------- --------
Ongoing operating expenses $ 90,072 $ 80,132
-------- --------
Ongoing operating income $ 71,556 $ 25,659
======== ========
Ongoing gross margin as a percent of revenue 49.0% 45.8%
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Contact:
Lam Research Corporation
Kathleen Bela, 510-572-4566 (Investor Relations)
kathleen.bela@lamrc.com
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Source: Lam Research Corporation |
