Highlights for the December 2013 quarter were as follows:
- Shipments of $1,139 million, up 15% from the prior quarter
- Revenue of $1,116 million, up 10% from the prior quarter
- GAAP gross margin of 43.7%, GAAP operating margin of 14.7% and GAAP diluted EPS of $0.87
- Non-GAAP gross margin of 45.8%, non-GAAP operating margin of 18.7%, and non-GAAP diluted EPS of $1.10
Lam Research Corporation Financial Highlights for the Quarters Ended December 29, 2013 and September 29, 2013 (in thousands, except per share data and percentages) U.S. GAAP ------------------------------------------------------------------------- December 2013 September 2013 Change Q/Q -------------- --------------- -------------- Revenue $ 1,116,061 $ 1,015,059 +10% Gross margin as percentage of revenue 43.7% 42.5% +120bps Operating margin as percentage of revenue 14.7% 10.4% +430bps Diluted EPS $ 0.87 $ 0.50 +74% Non-GAAP ------------------------------------------------------------------------- December 2013 September 2013 Change Q/Q -------------- --------------- -------------- Revenue $ 1,116,061 $ 1,015,059 +10% Gross margin as percentage of revenue 45.8% 45.0% +80bps Operating margin as percentage of revenue 18.7% 16.2% +250bps Diluted EPS $ 1.10 $ 0.81 +36%
GAAP Financial Results
Revenue for the period was $1,116 million, gross margin was $487.8 million, or 43.7% of revenue, operating expenses were $323.3 million, and net income was $149.0 million, or $0.87 per diluted share on a GAAP basis. This compares to revenue of $1,015 million, gross margin of $431.9 million, or 42.5% of revenue, operating expenses of $326.5 million, and net income of $85.5 million, or $0.50 per diluted share, for the September 2013 quarter.
Non-GAAP Financial Results
Non-GAAP gross margin was $510.8 million, or 45.8% of revenue, non-GAAP operating expenses were $302.1 million, and non-GAAP net income was $188.7 million, or $1.10 per diluted share. This compares to non-GAAP gross margin of $456.7 million, or 45.0% of revenue, non-GAAP operating expenses of $291.9 million, and non-GAAP net income of $139.2 million, or $0.81 per diluted share, for the September 2013 quarter.
"Calendar 2013 was an extraordinary year for Lam Research, highlighted by strong operating and financial performance. Our December quarter results closed the year with record shipments, record revenues and earnings that exceeded our expectations," stated Martin Anstice, Lam Research's president and chief executive officer. "Our outlook for continued healthy levels of wafer fab equipment spending in 2014 reflects our customers' planned investments in key technology inflections tempered by their focus on maintaining balanced supply and demand. Against this industry back drop, we are further strengthening our emphasis on customer trust and improving competitiveness to reinforce the opportunities for future growth and enhanced financial performance of Lam."
Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and restricted cash and investment balances increased to $2.7 billion at the end of the December 2013 quarter compared to $2.6 billion at the end of the September 2013 quarter. This increase was primarily the result of approximately $129 million in cash flows from operating activities during the December 2013 quarter, partially offset by $48 million of stock repurchases.
Deferred revenue and deferred profit balances at the end of the December 2013 quarter increased to $405.0 million and $224.4 million, respectively, as compared to $334.0 million and $188.4 million, respectively, at the end of the September 2013 quarter. Lam's 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 $53.5 million as of December 29, 2013.
Geographic Distribution
The geographic distribution of shipments and revenue during the December 2013 quarter is shown in the following table:
Region Shipments Revenue -------------------------------------------- --------------- --------------- North America 9% 13% Europe 7% 5% Japan 13% 17% Korea 24% 19% Taiwan 22% 28% Asia Pacific 25% 18%
Outlook
For the March 2014 quarter, Lam is providing the following guidance on a non-GAAP basis:
- Shipments of approximately $1.250 billion plus or minus $30 million
- Revenue of approximately $1.215 billion plus or minus $30 million
- Gross margin of approximately 45.0% plus or minus 1.0%
- Operating margin as a percent of revenue of approximately 19.5% plus or minus 1.0%
- Earnings per share of approximately $1.15 plus or minus $0.05, assuming a diluted share count of 173 million
Use of Non-GAAP Financial Results
In addition to U.S. GAAP results, this press release also contains non-GAAP financial results. The Company's non-GAAP results for both the December 2013 and September 2013 quarters exclude costs associated with the fair-value impact of acquisition-related inventory, amortization related to intangible assets acquired in the Novellus transaction, certain integration-related costs, rationalization of certain product configurations, the impairment of a long-lived asset, the amortization of convertible note discounts, and the tax benefit on successful resolution of certain tax matters. Additionally, the December 2013 quarter non-GAAP results exclude the gain on sale of an investment and the September 2013 quarter non-GAAP results excluded certain restructuring charges and the tax expense associated with legal-entity integration.
Management uses non-GAAP gross margin, operating income, operating expenses, operating margin, net income, and net income per diluted share to evaluate the Company's operating and financial results. The Company believes the presentation of non-GAAP results is useful to investors for analyzing business trends and comparing performance to prior periods, along with enhancing the investors' ability to view the Company's results from management's perspective. Tables presenting reconciliations of non-GAAP results to U.S. GAAP results are included at the end of this press release and on the Company's web site at http://investor.lamresearch.com.
Caution Regarding Forward-Looking Statements
Statements made in this press release that are not of historical fact are forward-looking statements and are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, but are not limited to, the anticipated revenue from shipments to Japanese customers, our opportunities for growth, our financial performance, our wafer fab equipment spending outlook, the expected rate of investment in key technology inflections, the success of our strategies for maintaining customer trust and improving competitiveness, the support from our customers, and our guidance for shipments, revenue, gross margin, operating margin, and earnings per share. Some factors that may affect these forward-looking statements include: business conditions in the consumer electronics industry, the semiconductor industry and the overall economy; the strength of the financial performance of our existing and prospective customers; the introduction of new and innovative technologies; the occurrence and pace of technology transitions and conversions; the actions of our competitors, consumers, semiconductor companies and key suppliers and subcontractors; and the success of research and development and sales and marketing 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 by us with the Securities and Exchange Commission, including specifically our report on Form 10-K for the year ended June 30, 2013 and Form 10-Q for the three months ended September 29, 2013. These uncertainties and changes could cause actual results to vary from expectations. The Company undertakes no obligation to update the information or statements made in this press release.
About Lam Research
Lam Research Corp. (
Consolidated Financial Tables Follow.
LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data and percentages) (unaudited) Three Months Ended Six Months Ended ---------------------------------- ---------------------- December September December December December 29, 29, 23, 29, 23, 2013 2013 2012 2013 2012 ---------- ---------- ---------- ---------- ---------- Revenue $1,116,061 $1,015,059 $ 860,886 $2,131,120 $1,767,774 Cost of goods sold 628,272 583,201 545,472 1,211,473 1,118,474 ---------- ---------- ---------- ---------- ---------- Gross margin 487,789 431,858 315,414 919,647 649,300 Gross margin as a percent of revenue 43.7% 42.5% 36.6% 43.2% 36.7% Research and development 174,477 170,567 165,951 345,044 329,262 Selling, general and administrative 148,838 155,883 145,421 304,721 299,284 ---------- ---------- ---------- ---------- ---------- Total operating expenses 323,315 326,450 311,372 649,765 628,546 ---------- ---------- ---------- ---------- ---------- Operating income 164,474 105,408 4,042 269,882 20,754 Operating margin as a percent of revenue 14.7% 10.4% 0.5% 12.7% 1.2% Other expense, net (3,837) (14,262) (13,390) (18,099) (23,328) ---------- ---------- ---------- ---------- ---------- Income before income taxes 160,637 91,146 (9,348) 251,783 (2,574) Income tax expense (benefit) 11,645 5,640 (15,756) 17,285 (11,750) ---------- ---------- ---------- ---------- ---------- Net income $ 148,992 $ 85,506 $ 6,408 $ 234,498 $ 9,176 ========== ========== ========== ========== ========== Net income per share: Basic net income per share $ 0.92 $ 0.52 $ 0.04 $ 1.44 $ 0.05 ========== ========== ========== ========== ========== Diluted net income per share $ 0.87 $ 0.50 $ 0.04 $ 1.37 $ 0.05 ========== ========== ========== ========== ========== Number of shares used in per share calculations: Basic 162,305 162,896 170,699 162,603 175,314 ========== ========== ========== ========== ========== Diluted 171,757 171,363 173,027 171,592 177,490 ========== ========== ========== ========== ========== LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) December 29, September 29, June 30, 2013 2013 2013 ------------- ------------- ----------- (unaudited) (unaudited) (1) ASSETS Cash and cash equivalents $ 1,132,555 $ 1,156,184 $ 1,162,473 Short-term investments 1,389,735 1,300,031 1,334,745 Accounts receivable, net 909,720 713,524 602,624 Inventories 661,572 614,790 559,317 Deferred income taxes 17,095 29,090 27,674 Other current assets 138,359 110,633 106,996 ------------- ------------- ----------- Total current assets 4,249,036 3,924,252 3,793,829 Property and equipment, net 546,193 564,845 603,910 Restricted cash and investments 166,395 166,385 166,536 Goodwill and intangible assets 2,453,066 2,484,900 2,526,541 Other assets 141,108 149,963 159,499 ------------- ------------- ----------- Total assets $ 7,555,798 $ 7,290,345 $ 7,250,315 ============= ============= =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 1,522,572 $ 1,402,890 $ 1,404,475 ------------- ------------- ----------- Long-term debt, convertible notes, and capital leases $ 803,276 $ 796,373 $ 789,256 Income taxes payable 248,996 248,462 246,479 Other long-term liabilities 129,710 129,306 134,313 ------------- ------------- ----------- Total liabilities 2,704,554 2,577,031 2,574,523 ============= ============= =========== Senior convertible notes 185,154 186,042 186,920 Stockholders' equity (2) 4,666,090 4,527,272 4,488,872 ------------- ------------- ----------- Total liabilities and stockholders' equity $ 7,555,798 $ 7,290,345 $ 7,250,315 ============= ============= =========== (1) Derived from audited financial statements (2) Common shares issued and outstanding were 162,169 shares as of December 29, 2013, 162,217 shares as of September 29, 2013 and 162,873 shares as of June 30, 2013. LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three Months Ended Six Months Ended ---------------------------------- ---------------------- December September December December December 29, 29, 23, 29, 23, 2013 2013 2012 2013 2012 ---------- ---------- ---------- ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 148,992 $ 85,506 $ 6,408 $ 234,498 $ 9,176 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 73,552 74,331 78,388 147,883 153,204 Deferred income taxes 12,457 - (7,320) 12,457 (19,337) Impairment of long-lived asset 628 7,004 - 7,632 - Equity-based compensation expense 23,046 23,235 24,027 46,281 48,441 Amortization of convertible note discount 8,217 8,122 7,843 16,339 15,595 Other, net (2,428) 4,115 14,694 1,687 25,744 Changes in operating assets and liabilities: (135,441) (150,388) 69,186 (285,829) 209,665 ---------- ---------- ---------- ---------- ---------- Net cash provided by operating activities 129,023 51,925 193,226 180,948 442,488 ---------- ---------- ---------- ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures and intangible assets (38,323) (23,778) (38,924) (62,101) (82,889) Cash paid for business acquisition (18,388) - (8,716) (18,388) (8,716) Net sales/maturities (purchases) of available-for- sale securities (88,754) 42,567 (23,250) (46,187) (39,888) (Issuance) repayments of notes receivable 10,000 - - 10,000 - Proceeds from sale of assets 21,635 - 660 21,635 660 Transfer of restricted cash and investments - 150 33 150 179 ---------- ---------- ---------- ---------- ---------- Net cash provided by (used for) investing activities (113,830) 18,939 (70,197) (94,891) (130,654) ---------- ---------- ---------- ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term debt and capital lease obligations (719) (88) (115) (807) (780) Treasury stock purchases (47,910) (104,285) (355,010) (152,195) (710,089) Reissuances of treasury stock related to employee stock purchase plan (35) 15,154 - 15,119 9,925 Proceeds from issuance of common stock 8,449 12,574 6,583 21,023 7,534 ---------- ---------- ---------- ---------- ---------- Net cash used for financing activities (40,215) (76,645) (348,542) (116,860) (693,410) ---------- ---------- ---------- ---------- ---------- Effect of exchange rate changes on cash 1,393 (508) 4,236 885 7,013 Net decrease in cash and cash equivalents (23,629) (6,289) (221,277) (29,918) (374,563) Cash and cash equivalents at beginning of period 1,156,184 1,162,473 1,411,466 1,162,473 1,564,752 ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents at end of period $1,132,555 $1,156,184 $1,190,189 $1,132,555 $1,190,189 ========== ========== ========== ========== ========== Non-GAAP Financial Summary (in thousands, except percentages and per share data) (unaudited) Three Months Three Months Ended Ended --------------- --------------- December 29, September 29, 2013 2013 --------------- --------------- Revenue $ 1,116,061 $ 1,015,059 Gross margin $ 510,769 $ 456,709 Gross margin as percentage of revenue 45.8% 45.0% Operating expenses $ 302,103 $ 291,887 Operating income $ 208,666 $ 164,882 Operating margin as a percentage of revenue 18.7% 16.2% Net income $ 188,745 $ 139,227 Net income per diluted share $ 1.10 $ 0.81 Shares used in per share calculation - diluted 171,757 171,363 Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income (in thousands, except per share data) (unaudited) Three Months Three Months Ended Ended --------------- --------------- December 29, September 29, 2013 2013 --------------- --------------- U.S. GAAP net income $ 148,992 $ 85,506 Pre-tax non-GAAP items: Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold 21,491 21,480 Acquisition-related inventory fair value impact - cost of goods sold 1,225 2,047 Integration costs - cost of goods sold 264 1,324 Integration costs - operating expenses 2,785 8,063 Amortization related to intangible assets acquired in Novellus transaction - operating expenses 16,953 16,947 Restructuring charges - operating expenses - 1,705 Costs associated with rationalization of certain product configurations - operating expenses 846 844 Impairment of long lived asset - operating expenses 628 7,004 Amortization of convertible note discount, Lam notes - other expense, net 7,329 7,243 Amortization of convertible note discount, Novellus assumed notes - other expense, net 762 859 Gain on sale of investment - other expense, net (4,813) - Net tax benefit on non-GAAP items (6,404) (11,646) Net tax benefit on successful resolution of certain tax matters (1,313) (2,286) Tax expense associated with legal-entity integration - 137 --------------- --------------- Non-GAAP net income $ 188,745 $ 139,227 =============== =============== Non-GAAP net income per diluted share $ 1.10 $ 0.81 =============== =============== Number of shares used for diluted per share calculation 171,757 171,363 Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating Income to Non-GAAP Gross Margin, Operating Expenses and Operating Income (in thousands, except percentages) (unaudited) Three Months Three Months Ended Ended --------------- --------------- December 29, September 29, 2013 2013 --------------- --------------- U.S. GAAP gross margin $ 487,789 $ 431,858 Pre-tax non-GAAP items: Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold 21,491 21,480 Acquisition-related inventory fair value impact - cost of goods sold 1,225 2,047 Integration costs - cost of goods sold 264 1,324 --------------- --------------- Non-GAAP gross margin $ 510,769 $ 456,709 =============== =============== U.S. GAAP gross margin as a percentage of revenue 43.7% 42.5% Non-GAAP gross margin as a percentage of revenue 45.8% 45.0% U.S. GAAP operating expenses $ 323,315 $ 326,450 Pre-tax non-GAAP items: Integration costs - operating expenses (2,785) (8,063) Amortization related to intangible assets acquired in Novellus transaction - operating expenses (16,953) (16,947) Restructuring charges - operating expenses - (1,705) Costs associated with rationalization of certain product configurations - operating expenses (846) (844) Impairment of long lived asset - operating expenses (628) (7,004) --------------- --------------- Non-GAAP operating expenses $ 302,103 $ 291,887 =============== =============== Non-GAAP operating income $ 208,666 $ 164,822 =============== =============== Non-GAAP operating margin as a percent of revenue 18.7% 16.2%
Lam Research Corporation Contacts: Shanye Hudson Investor Relations phone: 510-572-4589 e-mail: shanye.hudson@lamresearch.com