Lam Research Corporation Announces Earnings for the Quarter Ended December 24, 2006
Wednesday January 17, 4:05 pm ET
FREMONT, Calif.--(BUSINESS WIRE)--Lam Research Corporation (NASDAQ:LRCX - News) highlights for the December 2006 quarter were:
-- Revenue: $633.4 million
-- Operating Margin: 30.7%
-- Net Income: $167.3 million
-- Diluted EPS: $1.15
Lam Research Corporation today announced earnings for the quarter ended December 24, 2006. Revenue for the period was $633.4 million and net income was $167.3 million, or $1.15 per diluted share, compared to revenue of $604.4 million and net income of $183.5 million, or $1.27 per diluted share for the September 2006 quarter. Ongoing net income was $167.3 million, or $1.15 per diluted share in the December 2006 quarter compared with ongoing net income of $163.9 million, or $1.13 per diluted share, for the September 2006 quarter, reflecting the Company's investment in support of its long-term market share and product growth objectives.
Gross margin for the December 2006 quarter was $322.9 million, or 51.0 percent, compared to gross margin of $313.2 million, or 51.8 percent, for the September 2006 quarter. Operating expenses increased during the quarter to $128.4 million compared to operating expenses of $118.3 million for the September 2006 quarter, driven by investments supporting the Company's etch market share growth and new product development for markets adjacent to etch.
The Company's ongoing results exclude certain items noted below. Management uses the presentation of ongoing results to evaluate the Company's operating and financial results. The Company believes the presentation of ongoing results is useful to investors for analyzing ongoing business trends, comparing performance to prior periods, and enhancing the investor's ability to view the Company's results from management's perspective. 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. In the December 2006 quarter, there were no significant differences between the ongoing results and the results under GAAP. 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.
New orders recorded in backlog increased 7 percent sequentially to $779 million. The geographic distribution of new orders and revenue during the December 2006 quarter is shown in the following table:
Region New Orders Revenue
---------------------- ---------------------- ------------------------
North America 16% 17%
Europe 10% 10%
Japan 11% 16%
Korea 21% 20%
Asia Pacific 42% 37%
Cash and cash equivalents, short-term investments and restricted cash and investments balances were $1.6 billion at the end of December, and cash flows provided by operating activities were $162.0 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 $284.4 million and $176.8 million, respectively. At the end of the period, unshipped orders in backlog were approximately $719 million, and the anticipated future revenue value of orders shipped from backlog to Japanese customers that are not recorded as deferred revenue was approximately $64 million.
"Lam Research demonstrated strong financial and operating performance in the December quarter across key metrics," stated Steve Newberry, Lam Research's president and chief executive officer. "The results concluded what was an outstanding calendar 2006 in which the company generated record cash from operations, three consecutive quarters of 30 percent-plus operating margins, and 121 percent growth in operating income over calendar 2005. We saw significant market share gains in our etch markets and strong growth in our spares and services businesses reflecting the trust and confidence our customers have in Lam Research."
"In 2007 we will seek to continue achieving the benefits of our business model and expand upon the momentum in our core etch businesses. We are making excellent progress in our activities associated with our expansion into markets adjacent to etch and are confident that our new products will deliver the type of best-in-class, yield enhancing results that our customers have come to expect from Lam Research," 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 the future revenue value of orders shipped from backlog to Japanese customers, the future relationships between Lam Research and its customers, the benefits of our business model, the momentum of our core etch business, our expansion into markets adjacent to etch and the results delivered by our new products. 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, and the technical challenges presented by our current product offerings as well as our new products. 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, and Form 10-Q for the quarter ended September 24, 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
---------------------------------------
December 24, September 24, December 25,
2006 2006 2005
------------ ------------- ------------
(unaudited) (unaudited) (unaudited)
Total revenue $633,400 $604,387 $358,245
Cost of goods sold 310,484 291,223 180,735
------------ ------------- ------------
Gross margin 322,916 313,164 177,510
Gross margin as a percent
of revenue 51.0% 51.8% 49.5%
Research and development 69,060 61,623 55,742
Selling, general and
administrative 59,351 56,708 44,859
------------ ------------- ------------
Total operating expenses 128,411 118,331 100,601
Operating income 194,505 194,833 76,909
Operating margin as a
percent of revenue 30.7% 32.2% 21.5%
Other income, net 13,092 30,348 9,308
------------ ------------- ------------
Income before income taxes 207,597 225,181 86,217
Income tax expense 40,271 41,663 8,439
------------ ------------- ------------
Net income $167,326 $183,518 $77,778
============ ============= ============
Net income per share:
Basic $1.18 $1.29 $0.57
============ ============= ============
Diluted $1.15 $1.27 $0.55
============ ============= ============
Number of shares used in per
share calculations:
Basic 142,306 141,928 136,572
============ ============= ============
Diluted 145,346 144,850 142,525
============ ============= ============
Six Months Ended
--------------------------
December 24, December 25,
2006 2005
------------- ------------
(unaudited) (unaudited)
Total revenue $1,237,787 $679,152
Cost of goods sold 601,707 345,563
------------- ------------
Gross margin 636,080 333,589
Gross margin as a percent
of revenue 51.4% 49.1%
Research and development 130,683 106,984
Selling, general and
administrative 116,059 90,014
------------- ------------
Total operating expenses 246,742 196,998
Operating income 389,338 136,591
Operating margin as a
percent of revenue 31.5% 20.1%
Other income, net 43,440 17,796
------------- ------------
Income before income taxes 432,778 154,387
Income tax expense 81,934 27,118
------------- ------------
Net income $350,844 $127,269
============= ============
Net income per share:
Basic $2.47 $0.93
============= ============
Diluted $2.42 $0.89
============= ============
Number of shares used in per
share calculations:
Basic 142,120 136,499
============= ============
Diluted 145,102 142,209
============= ============
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 24, September 24, June 25,
2006 2006 2006
(unaudited) (unaudited) (1)
------------ ------------- ------------
Assets:
Cash and cash equivalents $629,117 $1,031,348 $910,815
Short-term investments 574,845 233,284 139,524
Accounts receivable, net 456,427 379,869 407,347
Inventories 212,299 188,179 168,714
Other current assets 83,968 87,920 79,969
------------ ------------- ------------
Total current assets 1,956,656 1,920,600 1,706,369
Property and equipment, net 97,034 56,786 49,893
Restricted cash and
investments 415,038 470,038 470,038
Goodwill 55,892 - -
Intangible assets, net 64,641 - -
Other assets 90,445 86,937 87,044
------------ ------------- ------------
Total assets $2,679,706 $2,534,361 $2,313,344
============ ============= ============
Liabilities and stockholders'
equity:
Current liabilities $638,363 $584,244 $566,226
------------ ------------- ------------
Long-term debt $300,000 $350,000 $350,000
Other long-term liabilities 833 924 969
Stockholders' equity 1,740,510 1,599,193 1,396,149
------------ ------------- ------------
Total liabilities and
stockholders' equity $2,679,706 $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
---------------------------------------
December 24, September 24, December 25,
2006 2006 2005
------------ ------------- ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $167,326 $183,518 $77,778
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 8,760 6,527 4,995
Deferred income taxes 7,424 6,419 (647)
Equity-based compensation 6,664 6,251 6,044
Income tax benefit on
equity-based compensation
plans 20,367 1,872 -
Excess tax benefit on
equity-based compensation
plans (14,086) (1,264) -
Other, net (1,551) 420 109
Change in working capital
accounts (32,866) 12,884 23,126
------------ ------------- ------------
Net cash provided by
operating activities 162,038 216,627 111,405
------------ ------------- ------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures and
intangible assets (13,966) (12,920) (5,036)
Acquisition of Bullen
Ultrasonics, Inc. assets (177,108) - -
Transfer of restricted cash
and investments 55,000 - -
Net sales (purchases) of
available-for-sale securities (340,774) (90,923) 14,191
------------ ------------- ------------
Net cash provided by/(used
for) investing activities (476,848) (103,843) 9,155
------------ ------------- ------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments on long-term debt and
capital lease (50,028) (44) -
Excess tax benefit on equity-
based compensation plans 14,086 1,264 -
Treasury stock purchases (75,285) (1,048) (61,917)
Reissuances of treasury stock - 5,990 -
Proceeds from issuance of
common stock 22,662 1,739 61,926
------------ ------------- ------------
Net cash provided by/(used
for) financing activities (88,565) 7,901 9
------------ ------------- ------------
Effect of exchange rate
changes on cash 1,144 (152) (1,605)
Net increase in cash and cash
equivalents (402,231) 120,533 118,964
Cash and cash equivalents at
beginning of period 1,031,348 910,815 514,818
------------ ------------- ------------
Cash and cash equivalents at
end of period $629,117 $1,031,348 $633,782
============ ============= ============
Six Months Ended
--------------------------
December 24, December 25,
2006 2005
------------- ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $350,844 $127,269
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 15,287 11,027
Deferred income taxes 13,843 14,727
Equity-based compensation 12,915 11,290
Income tax benefit on
equity-based compensation
plans 22,239 -
Excess tax benefit on
equity-based compensation
plans (15,350) -
Other, net (1,131) 1,951
Change in working capital
accounts (19,982) (7,478)
------------- ------------
Net cash provided by
operating activities 378,665 158,786
------------- ------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures and
intangible assets (26,886) (9,694)
Acquisition of Bullen
Ultrasonics, Inc. assets (177,108) -
Transfer of restricted cash
and investments 55,000 -
Net sales (purchases) of
available-for-sale securities (431,697) 65,789
------------- ------------
Net cash provided by/(used
for) investing activities (580,691) 56,095
------------- ------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments on long-term debt and
capital lease (50,072) -
Excess tax benefit on equity-
based compensation plans 15,350 -
Treasury stock purchases (76,333) (140,607)
Reissuances of treasury stock 5,990 5,137
Proceeds from issuance of
common stock 24,401 74,100
------------- ------------
Net cash provided by/(used
for) financing activities (80,664) (61,370)
------------- ------------
Effect of exchange rate
changes on cash 992 (1,979)
Net increase in cash and cash
equivalents (281,698) 151,532
Cash and cash equivalents at
beginning of period 910,815 482,250
------------- ------------
Cash and cash equivalents at
end of period $629,117 $633,782
============= ============
Reconciliation of U.S. GAAP Net Income to Ongoing Net Income
(in thousands, except per share data and percentages)
Three Months Ended
--------------------------
December 24, September 24,
2006 2006
------------ -------------
U.S. GAAP net income $167,326 $183,518
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 $167,326 $163,853
============ =============
Ongoing net income per diluted share $1.15 $1.13
============ =============
Number of shares used for diluted per share
calculation 145,346 144,850
U.S. GAAP income tax rate 19.4% 18.5%
Ongoing income tax rate 19.4% 21.7%
--------------------------------------------------------------------------------
Source: Lam Research Corporation |
