(Source: Business Wire)
Lam Research Corporation (NASDAQ:LRCX) highlights for the March 2009 quarter were:
(in thousands, except per share data and percentages) ? Revenue: $ 174,412 U.S. GAAP Ongoing ? Operating Margin: -111.9 % -47.1 % ? Net Loss: $ (198,359 ) $ (89,771 ) ? Diluted EPS: $ (1.58 ) $ (0.71 ) -------------------------------------------------------------------------------
Lam Research Corporation today announced financial results for the quarter ended March 29, 2009. Revenue for the period was $174.4million, gross margin was $36.5million and net loss was $(198.4) million, or $(1.58) per diluted share, compared to revenue of $283.4million, gross margin of $101.4million and net loss of $(24.2)million, or $(0.19) per diluted share, for the December2008 quarter. Shipments for the March 2009 quarter were $159million compared to $226million during the December2008 quarter.
As a result of a combination of factors, including the current economic environment, a sustained decline in the Company's market valuation and a decline in the Company's operating results, the Company has concluded that the fair value of its Clean Product Group has been reduced below its carrying value. As a result, the Company has recorded a non-cash goodwill impairment charge of approximately $89.1 million during the March 2009 quarter. The goodwill impairment charge is based on the Company's current best estimate. If there is a change to this estimate, it will be reflected in the March 2009 quarter financial statements included in the Company's quarterly report on Form 10-Q for the quarter ended March 29, 2009, which is anticipated to be filed on or before May 8, 2009.
The Company's ongoing results for the March 2009 quarter exclude certain costs for previously announced restructuring activities and asset impairments, the goodwill impairment charge noted above, a net tax expense for a change in state tax law, a net tax expense and an exchange rate gain associated with the Company's accelerated tax planning strategy, an investment impairment, and interest on the tax liability associated with the outcome of the Company's previously disclosed voluntary internal stock option review. The Company's ongoing results for the December2008 quarter excluded certain costs for restructuring activities and asset impairments, a net tax benefit related to the renewal of the research and development tax credit, net tax expense on resolution of certain tax items, one-time costs associated with the restructuring of an employee benefit plan, a net tax benefit and an exchange rate loss associated with the Company's accelerated tax planning strategy, and interest on the tax liability associated with the outcome of the Company's previously disclosed voluntary internal stock option review. Management uses the presentation of ongoing gross margin, ongoing operating expenses, ongoing operating loss, ongoing net loss, and ongoing net loss per diluted share 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 and comparing performance to prior periods, and enhances the investor's ability to view the Company's results from management's perspective. A table presenting a reconciliation of ongoing results to results under U.S. GAAP is included at the end of this press release and on the Company's web site.
Ongoing net loss was $(89.8) million, or $(0.71) per diluted share in the March 2009 quarter compared to ongoing net loss of $(11.7)million, or $(0.09) per diluted share, for the December2008 quarter. Ongoing gross margin for the March 2009 quarter was $46.7million or 26.8%, compared to ongoing gross margin of $109.1million, or 38.5%, for the December2008 quarter. The sequential decline in gross margin was primarily due to lower manufacturing and field utilization levels resulting from reduced business activity as well as product mix. Ongoing operating expenses for the March 2009 quarter increased to $128.9million compared with the December2008 quarter of $126.5million. This increase was driven by additional accounts receivables reserves for specific distressed customers, partially offset by a reduction in employee expenses as a result of restructuring and other cost-savings activities.
The geographic distribution of shipments and revenue during the March 2009 quarter is shown in the following table:
Region Shipments Revenue North America 16% 15% Europe 17% 14% Japan 27% 24% Korea 17% 19% Taiwan 15% 20% Asia Pacific 8% 8% -------------------------------------------------------------------------------
Cash and cash equivalents, short-term investments and restricted cash and investments balances were $806.4million at the end of the March 2009 quarter, compared to $1.1billion at the end of the December2008 quarter. The Company paid the outstanding principal balance of $237.5 million of its long-term debt during the March 2009 quarter. Cash flows from operating activities were approximately $(24.2) million during the March 2009 quarter. Deferred revenue and deferred profit balances at the end of the March 2009 quarter were $43.7million and $36.1million, respectively. Our deferred revenue balance does not include shipments to Japanese customers, to whom title does not transfer until customer acceptance. Shipments to Japanese customers are classified as inventory at cost until the time of acceptance. The anticipated future revenue from shipments to Japanese customers was approximately $7.5million as of March 29, 2009.
"We are developing next-generation technology solutions alongside our customers and are continuing to win new application tool selection decisions in both etch and clean at the leading-edge technology nodes. We are fortunate to have a strong balance sheet with sufficient cash to: continue making investments in key R&D programs, place next-generation tools at customer sites for joint development projects and evaluations, and deploy inventories to meet short-term shipment requirements as well as respond to any future increases in demand," said Steve Newberry, Lam's president and chief executive officer. "Our focus remains on investing in strategic opportunities while aggressively managing the cost structure and cash expenditures of the Company. This will enhance our ability to meet the expectations and needs of our customers and strengthen our market position for the next upturn," 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 estimate of the goodwill impairment charge, the anticipated revenue from shipments to Japanese customers, the potential uses of our cash and other assets, and our ability to develop next generation technology solutions, win new application tool selection decisions in both etch and clean, continue to be able to invest in research and development, place next-generation tools at customer sites, be successful in deploying our inventory to meet demand, focus on and invest in strategic opportunities, be successful in managing our cost structure and cash expenditures, meet the expectations and needs of our customers, and strengthen our market position. Some factors that may affect these forward-looking statements include: difficult business conditions in the semiconductor industry and the overall economy and the efficacy of our plans for reacting to those conditions, factors that tend to make our quarterly results more volatile (such as exchange rate fluctuations), changing customer demands, the actions of our competitors, and the challenges presented by the development and marketing of our new products and the integration of acquired businesses and technologies into our existing business. 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 June29, 2008, and Form 10-Q for the quarters ended September28, 2008 and December 28, 2008, 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 MarketSM under the symbol LRCX. Lam is a NASDAQ-100® company. For more information, visit www.lamresearch.com.
Consolidated Financial Tables Follow
LAM RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data and percentages) (unaudited) Three Months Ended Nine Months Ended March 29, December 28, March 30, March 29, March 30, 2009 2008 2008 2009 2008 Total revenue $ 174,412 $ 283,409 $ 613,810 $ 898,182 $ 1,908,751 Cost of goods sold 127,680 174,329 320,201 556,212 963,594 Cost of goods sold - 409A expense - - 6,401 - 6,401 Cost of goods sold - restructuring and asset impairments 10,217 7,728 - 20,993 - Total cost of goods sold 137,897 182,057 326,602 577,205 969,995 Gross margin 36,515 101,352 287,208 320,977 938,756 Gross margin as a percent of revenue 20.9 % 35.8 % 46.8 % 35.7 % 49.2 % Research and development 70,434 68,781 80,576 220,778 237,107 Selling, general and administrative 58,515 59,842 74,491 185,813 210,288 Goodwill impairment 89,076 - - 89,076 - Restructuring and asset impairments 13,028 10,121 - 39,117 - 409A expense 646 - 43,784 2,250 43,784 In-process research and development - - 2,074 - 2,074 Total operating expenses 231,699 138,744 200,925 537,034 493,253 Operating income (loss) (195,184 ) (37,392 ) 86,283 (216,057 ) 445,503 Operating margin as a percent of revenue -111.9 % -13.2 % 14.1 % -24.1 % 23.3 % Other income (expense), net 13,497 (7,233 ) 49,605 15,281 57,201 Income (loss) before income taxes (181,687 ) (44,625 ) 135,888 (200,776 ) 502,704 Income tax expense (benefit) 16,672 (20,453 ) 32,364 12,882 135,533 Net income (loss) $ (198,359 ) $ (24,172 ) $ 103,524 $ (213,658 ) $ 367,171 Net income (loss) per share: Basic net income (loss) per share $ (1.58 ) $ (0.19 ) $ 0.83 $ (1.70 ) $ 2.95 Diluted net income (loss) per share $ (1.58 ) $ (0.19 ) $ 0.82 $ (1.70 ) $ 2.90 Number of shares used in per share calculations: Basic 125,566 125,084 124,768 125,368 124,509 Diluted 125,566 125,084 126,549 125,368 126,531 -------------------------------------------------------------------------------
LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) March 29, December 28, June 29, 2009 2008 2008 (unaudited) (unaudited) (1) ASSETS Cash and cash equivalents $ 374,648 $ 652,913 $ 732,537 Short-term investments 248,500 297,399 326,199 Accounts receivable, net 196,842 290,565 412,356 Inventories 260,667 269,959 282,218 Deferred income taxes 90,541 93,002 96,748 Other current assets 82,273 56,648 67,649 Total current assets 1,253,471 1,660,486 1,917,707 Property and equipment, net 225,864 233,250 235,735 Restricted cash and investments 183,277 168,405 146,072 Deferred income taxes 15,281 25,836 19,793 Goodwill and intangible assets 268,249 371,987 403,187 Other assets 87,340 78,457 84,261 Total assets $ 2,033,482 $ 2,538,421 $ 2,806,755 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 369,998 $ 446,412 $ 637,679 Long-term debt and capital leases $ 39,943 $ 257,135 $ 276,121 Income taxes payable 99,807 92,382 85,611 Other long-term liabilities 20,476 21,300 23,400 Minority interests - - 5,347 Stockholders' equity 1,503,258 1,721,192 1,778,597 Total liabilities and stockholders' equity $ 2,033,482 $ 2,538,421 $ 2,806,755 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 29, December 28, March 30, March 29, March 30, 2009 2008 2008 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (198,359 ) $ (24,172 ) $ 103,524 $ (213,658 ) $ 367,171 Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: Depreciation and amortization 19,650 17,177 12,914 54,723 35,477 Deferred income taxes 12,929 10,110 (11,995 ) 10,632 (22,009 ) Equity-based compensation expense 10,227 14,049 10,272 39,684 30,887 Income tax benefit on equity-based compensation plans (11,115 ) (7,045 ) (520 ) (13,121 ) 56,657 Excess tax benefit on equity-based compensation plans 7,027 3,752 401 6,510 (37,238 ) Net gain on settlement of call option - - (40,864 ) - (33,694 ) Goodwill impairment 89,076 - - 89,076 - Restructuring and asset impairments 23,245 17,849 - 60,110 - Other, net 953 3,200 (7,013 ) 6,818 (2,867 ) Changes in operating asset accounts 22,215 (73,909 ) 79,266 (60,783 ) (4,512 ) Net cash provided by (used for) operating activities (24,152 ) (38,989 ) 145,985 (20,009 ) 389,872 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures and intangible assets (10,866 ) (12,417 ) (19,291 ) (38,434 ) (57,852 ) Acquisitions of businesses, net of cash acquired (11,706 ) (8,763 ) (473,408 ) (22,896 ) (475,656 ) Net sales (purchases) of available-for-sale securities 33,961 39,767 83,201 80,708 51,316 Purchase of call option - - (3,227 ) - (13,506 ) Proceeds from settlement of call option - - 46,962 46,962 Purchases of other investments - - - - (4,560 ) Other (8,375 ) (2,000 ) - (10,375 ) - Transfer of restricted cash and investments 558 (32,178 ) (688 ) (47,748 ) (1,762 ) Net cash provided by (used for) investing activities 3,572 (15,591 ) (366,451 ) (38,745 ) (455,058 ) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term debt and capital lease obligations (239,703 ) (13,060 ) (250,114 ) (255,136 ) (250,214 ) Net proceeds from issuance of long-term debt - 515 250,000 625 250,000 Excess tax benefit on equity-based compensation plans (7,027 ) (3,752 ) (401 ) (6,510 ) 37,238 Treasury stock purchases (546 ) (24,448 ) (737 ) (27,749 ) (10,962 ) Reissuances of treasury stock 5,942 - - 13,526 7,301 Proceeds from issuance of common stock 1,283 1,294 - 5,727 10,106 Net cash provided by (used for) financing activities (240,051 ) (39,451 ) (1,252 ) (269,517 ) 43,469 Effect of exchange rate changes on cash (17,634 ) 1,512 (1,984 ) (29,618 ) 103 Net decrease in cash and cash equivalents (278,265 ) (92,519 ) (223,702 ) (357,889 ) (21,614 ) Cash and cash equivalents at beginning of period 652,913 745,432 776,055 732,537 573,967 Cash and cash equivalents at end of period $ 374,648 $ 652,913 $ 552,353 $ 374,648 $ 552,353 -------------------------------------------------------------------------------
Reconciliation of U.S. GAAP Net Loss to Ongoing Net Loss (in thousands, except per share data) Three Months Ended Three Months Ended March 29, December 28, 2009 2008 U.S. GAAP net loss $ (198,359 ) $ (24,172 ) Pre-tax non-ongoing items: Goodwill impairment - operating expenses 89,076 - Restructuring and asset impairments - cost of goods sold 10,217 7,728 Restructuring and asset impairments - operating expenses 13,028 10,121 Restructuring of employee benefit plan - operating expenses - 1,300 Voluntary internal stock option review - operating expenses 646 843 Impairment of investment - other income (expense), net 1,543 - Exchange rate (gain) loss associated with accelerated tax planning strategy - other income (expense), net (6,674 ) 7,569 Net tax benefit on non-ongoing items (5,506 ) (7,375 ) Net tax benefit on renewal of R&D tax credit - (5,751 ) Net tax expense on resolution of certain tax matters - 1,396 Net tax expense on change in state tax law 5,244 - Net tax expense (benefit) on accelerated tax planning strategy 1,014 (3,407 ) Ongoing net loss $ (89,771 ) $ (11,748 ) Ongoing net loss per diluted share $ (0.71 ) $ (0.09 ) Number of shares used for diluted per share calculation 125,566 125,084 Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating Loss to Ongoing Gross Margin, Operating Expenses and Operating Loss (in thousands, except percentages) Three Months Ended Three Months Ended March 29, December 28, 2009 2008 U.S. GAAP gross margin $ 36,515 $ 101,352 Pre-tax non-ongoing items: Restructuring and asset impairments - cost of goods sold 10,217 7,728 Ongoing gross margin $ 46,732 $ 109,080 U.S. GAAP gross margin as a percent of revenue 20.9% 35.8% Ongoing gross margin as a percent of revenue 26.8% 38.5% U.S. GAAP operating expenses $ 231,699 $ 138,744 Pre-tax non-ongoing items: Goodwill impairment - operating expenses (89,076 ) - Restructuring and asset impairments - operating expenses (13,028 ) (10,121 ) Restructuring of employee benefit plan - operating expenses - (1,300 ) Voluntary internal stock option review - operating expenses (646 ) (843 ) Ongoing operating expenses $ 128,949 $ 126,480 Ongoing operating loss $ (82,217 ) $ (17,400 ) Ongoing operating loss as a percent of revenue -47.1 % -6.1 % -------------------------------------------------------------------------------
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