Lam Research Corporation Announces Earnings for the Quarter Ended September 24, 2006
Wednesday October 11, 4:05 pm ET
FREMONT, Calif.--(BUSINESS WIRE)--Lam Research Corporation (NASDAQ:LRCX - News) today announced earnings for the quarter ended September 24, 2006. Highlights for the September 2006 quarter were:
-- Revenue: $604.4 million
-- Operating Margin: 32.2%
-- Net Income: U.S. GAAP: $183.5 million Ongoing: $163.9 million
-- Diluted EPS: U.S. GAAP: $1.27 Ongoing: $1.13
Revenue for the period was $604.4 million and net income was $183.5 million, or $1.27 per diluted share, compared to revenue of $525.6 million and net income of $122.1 million, or $0.84 per diluted share for the June 2006 quarter. Ongoing net income was $163.9 million, or $1.13 per diluted share in the September 2006 quarter compared with ongoing net income of $139.0 million, or $0.96 per diluted share, for the June 2006 quarter.
Gross margin for the September 2006 quarter was $313.2 million, or 51.8 percent, compared to gross margin of $274.2 million, or 52.2 percent, for the June 2006 quarter. Operating expenses increased during the quarter to $118.3 million compared to operating expenses of $114.7 million for the June 2006 quarter, driven by increases in incentive-based and equity compensation, and investments supporting our etch market share growth and new product development for markets adjacent to etch. Equity compensation expense in the September 2006 quarter recorded in cost of goods sold and operating expenses was $1.1 million and $5.2 million, respectively.
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. GAAP is included at the end of this press release and on the Company's web site. The September 2006 quarter ongoing presentation removes the effects of a legal judgment in favor of the Company of $15.8 million recorded in other income, net, which was previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended June 25, 2006, and the successful resolution of certain foreign tax matters resulting in a net tax benefit of $10.0 million. The June 2006 quarter ongoing presentation removes the effect of tax expense associated with the Company's decision to repatriate foreign earnings of $350 million under the provisions of the American Jobs Creation Act.
New orders recorded in backlog increased 13 percent sequentially to $725 million. The geographic distribution of new orders and revenue during the September 2006 quarter is shown in the following table:
Region New Orders Revenue
--------------- ------------- ---------
North America 26% 15%
Europe 5% 14%
Japan 17% 18%
Korea 19% 15%
Asia Pacific 33% 38%
Cash and cash equivalents, short-term investments and restricted cash and investments balances were $1.7 billion at the end of September, and cash flows provided by operating activities were $216.6 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 $258.2 million and $153.1 million, respectively. At the end of the period, unshipped orders in backlog were approximately $593 million, and the anticipated future revenue value of orders shipped from backlog to Japanese customers that are not recorded as deferred revenue remained constant at approximately $74 million.
"September results reflect another quarter of strong revenue and earnings growth for Lam Research," stated Steve Newberry, Lam Research's president and chief executive officer. "Operating margins and income achieved record levels, and demonstrate the leverage throughout our business model. In addition, we generated record levels of cash from operations, a consequence of our focus on a disciplined approach to asset management. Clearly, these are excellent results and provide a solid foundation for future opportunities. Our customers continue to increase their reliance on Lam to deliver next-generation capability quickly and cost-effectively. Our market share continues to grow as we effectively support our rapidly growing installed base of leading edge equipment with well characterized solutions to our customers' most critical technical challenges," 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 our business model's ability to produce superior operating margins and income, our continuing ability to generate cash, through asset management or otherwise, our customers' continued reliance on us, and our ability to grow market share and effectively support our installed base. 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 their development of new technologies, our ability to hire, train and retain key employees, 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 25, 2006, 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 Global Select Market(SM) 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)
Three Months Ended
------------------------------------------
September 24, June 25, September 25,
2006 2006 2005
------------- ------------- --------------
(unaudited) (unaudited) (unaudited)
Total revenue $604,387 $525,596 $320,907
Cost of goods sold 291,223 251,445 164,828
------------- ------------- --------------
Gross margin 313,164 274,151 156,079
Gross margin as a
percent of revenue 51.8% 52.2% 48.6%
Research and development 61,623 60,824 51,242
Selling, general and
administrative 56,708 53,921 45,155
------------- ------------- --------------
Total operating
expenses 118,331 114,745 96,397
Operating income 194,833 159,406 59,682
Operating margin as a
percent of revenue 32.2% 30.3% 18.6%
Other income, net 30,348 9,398 8,488
------------- ------------- --------------
Income before income taxes 225,181 168,804 68,170
Income tax expense 41,663 46,655 18,679
------------- ------------- --------------
Net income $183,518 $122,149 $49,491
============= ============= ==============
Net income per share:
Basic $1.29 $0.87 $0.36
============= ============= ==============
Diluted $1.27 $0.84 $0.35
============= ============= ==============
Number of shares used in
per share calculations:
Basic 141,928 141,168 136,453
============= ============= ==============
Diluted 144,850 144,683 141,430
============= ============= ==============
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 24, June 25,
2006 2006
(unaudited) (1)
--------------- --------------
Assets:
Cash and cash equivalents $1,031,348 $910,815
Short-term investments 233,284 139,524
Accounts receivable, net 379,869 407,347
Inventories 188,179 168,714
Other current assets 87,920 79,969
--------------- --------------
Total current assets 1,920,600 1,706,369
Property and equipment, net 56,786 49,893
Restricted cash and investments 470,038 470,038
Other assets 86,937 87,044
--------------- --------------
Total assets $2,534,361 $2,313,344
=============== ==============
Liabilities and stockholders' equity:
Current liabilities $584,244 $566,226
--------------- --------------
Long-term debt $350,000 $350,000
Other long-term liabilities 924 969
Stockholders' equity 1,599,193 1,396,149
--------------- --------------
Total liabilities and stockholders'
equity $2,534,361 $2,313,344
=============== ==============
(1) Derived from audited financial statements.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
-------------------------------------
September 24, June 25, September 25,
2006 2006 2005
------------- --------- -------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $183,518 $122,149 $49,491
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 6,527 5,765 6,032
Deferred income taxes 6,419 (4,936) 15,374
Equity-based compensation 6,251 5,449 5,246
Income tax benefit on equity-
based compensation plans 1,872 27,786 -
Excess tax benefit on equity-
based compensation plans (1,264) (17,805) -
Other, net 420 1,270 1,842
Change in working capital
accounts 12,884 (47,412) (30,604)
------------- --------- -------------
Net cash provided by
operating activities 216,627 92,266 47,381
------------- --------- -------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures and
intangible assets (12,920) (25,939) (4,658)
Transfer of restricted cash and
investments - (385,000) -
Net sales (purchases) of
available-for-sale securities (90,923) 90,296 51,598
------------- --------- -------------
Net cash provided by/(used
for) investing activities (103,843) (320,643) 46,940
------------- --------- -------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments on capital lease (44) (45) -
Net proceeds from issuance of
long-term debt - 349,632 -
Excess tax benefit on equity-
based compensation plans 1,264 17,805 -
Treasury stock purchases (1,048) (37,002) (78,690)
Reissuances of treasury stock 5,990 5,519 5,137
Proceeds from issuance of common
stock 1,739 43,698 12,174
------------- --------- -------------
Net cash provided by/(used
for) financing activities 7,901 379,607 (61,379)
------------- --------- -------------
Effect of exchange rate changes
on cash (152) 1,740 (374)
Net increase in cash and cash
equivalents 120,533 152,970 32,568
Cash and cash equivalents at
beginning of period 910,815 757,845 482,250
------------- --------- -------------
Cash and cash equivalents at end
of period $1,031,348 $910,815 $514,818
============= ========= =============
Reconciliation of U.S. GAAP Net Income to Ongoing Net Income
(in thousands, except per share data and percentages)
Three Months Ended
------------------------
September 24, June 25,
2006 2006
------------- ----------
U.S. GAAP net income $183,518 $122,149
Tax expense on repatriation of foreign
earnings - 16,810
Net tax benefit on successful resolution of
certain foreign tax matters (9,959) -
Pre-tax legal judgment - other income, net (15,834) -
Tax expense on legal judgment 6,128 -
------------- ----------
Ongoing net income $163,853 $138,959
============= ==========
Ongoing net income per diluted share $1.13 $0.96
============= ==========
Number of shares used for diluted per share
calculation 144,850 144,683
U.S. GAAP income tax rate 18.5% 27.6%
Ongoing income tax rate 21.7% 17.7%
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Source: Lam Research Corporation |
