-- (Marketwired) -- -- (: LRCX)today announced financial results for the quarter ended (the ' quarter').

Highlights for the quarter were as follows:

  • Shipments of and revenue of .
  • GAAP gross margin of 43.9%, GAAP operating margin of 16.8%, and GAAP diluted EPS of .
  • Non-GAAP gross margin of 45.5%, non-GAAP operating margin of 20.8%, and non-GAAP diluted EPS of .
Key Financial Data for the Quarters Ended and
(in thousands, except per-share data, percentages, and basis points)
GAAP
Change Q/Q
Shipments $ 1,287,893 $ 1,579,298 -18 %
Revenue $ 1,425,534 $ 1,600,043 -11 %
Gross margin as percentage of revenue 43.9 % 45.1 % -120 bps
Operating margin as percentage of revenue 16.8 % 21.0 % -420 bps
Diluted EPS $ 1.28 $ 1.66 -23 %
Non-GAAP
Change Q/Q
Shipments $ 1,287,893 $ 1,579,298 -18 %
Revenue $ 1,425,534 $ 1,600,043 -11 %
Gross margin as percentage of revenue 45.5 % 46.5 % -100 bps
Operating margin as percentage of revenue 20.8 % 23.8 % -300 bps
Diluted EPS $ 1.57 $ 1.82 -14 %

GAAP Financial Results

For the quarter, revenue was , gross margin was , or 43.9% of revenue, operating expenses were , operating margin was 16.8% of revenue, and net income was , or per diluted share on a GAAP basis. This compares to revenue of , gross margin of , or 45.1% of revenue, operating expenses of , operating margin of 21.0% of revenue, and net income of , or per diluted share, for the quarter ended (the ' quarter').

Non-GAAP Financial Results

For the quarter, non-GAAP gross margin was or 45.5% of revenue, non-GAAP operating expenses were , non-GAAP operating margin was 20.8% of revenue, and non-GAAP net income was , or per diluted share. This compares to non-GAAP gross margin of $744 million or 46.5% of revenue, non-GAAP operating expenses of , non-GAAP operating margin of 23.8% of revenue, and non-GAAP net income of , or per diluted share for the quarter.

'Lam's strong December quarter concludes a historic year for Lam, headlined by the delivery of nearly in shipments and revenue, and over in EPS,' said , president and chief executive officer. 'Strong execution combined with our ability to capitalize on the inflection-driven market expansion continued to drive outperformance in profitable growth. We remain committed to invest proactively and broadly to create enabling value for our customers and growth for Lam. We are excited about our proposed business combination with KLA-Tencor, which upon completion will deliver a new and unmatched capability to the benefit of the global semiconductor industry.'

Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments, and restricted cash and investments balances increased to at the end of the quarter compared to at the end of the quarter. This increase was primarily the result of approximately in cash flows from operating activities which was partially offset by approximately of treasury stock repurchases related to net share settlement on employee stock-based compensation; approximately of capital expenditures; and approximately of dividends paid to stockholders during the quarter.

Deferred revenue at the end of the quarter decreased to as compared to at the end of the quarter. Deferred profit at the end of the quarter decreased to as compared to at the end of the 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 estimated future revenue from shipments to Japanese customers was approximately as of .

Geographic Distribution

The geographic distribution of shipments and revenue during the quarter is shown in the following table:

Region Shipments Revenue
38 % 31 %
21 % 22 %
9 % 17 %
15 % 15 %
8 % 7 %
5 % 5 %
4 % 3 %

Outlook

For the quarter, Lam is providing the following guidance:

GAAP Reconciling Items Non-GAAP
Shipments +/- - +/-
Revenue +/- - +/-
Gross margin 42.4% +/- 1% 44.0% +/- 1%
Operating margin 14.2% +/- 1% 17.0% +/- 1%
Net income per diluted share +/- +/-
Diluted share count 174.5 Million 2 Million 172.5 Million

The information provided above is only an estimate of what the Company believes is realizable as of the date of this release, and does not incorporate the potential impact of any KLA-Tencor related acquisition or integration expenses, business combinations, asset acquisitions, divestitures, financing arrangements, other investments, or other significant transactions that may be completed after the date of this release. GAAP to non-GAAP reconciling items provided include only those items that are known and can be estimated as of the date of this release. Actual results will vary from this model and the variations may be material. Reconciling items included above are as follows:

  • Gross Margin -- amortization related to intangible assets acquired in the Novellus transaction, .
  • Operating margin -- amortization related to intangible assets acquired in the Novellus transaction, .
  • Earnings per share -- amortization related to intangible assets acquired in the Novellus transaction, ; amortization of note discounts, ; amortization of bridge loan issuance costs associated with the KLA-Tencor acquisition, and associated tax benefit for non-GAAP items ; totaling .
  • Diluted share count -- impact of a note hedge issued contemporaneously with the convertible notes due 2016 and 2018, 2 million shares.

Use of Non-GAAP Financial Results

In addition to GAAP results, this press release also contains non-GAAP financial results. The Company's non-GAAP results for both the and quarters exclude amortization related to intangible assets acquired in the Novellus transaction, restructuring impacts, the amortization of notes discounts, and tax expense (benefit) of non-GAAP items. Additionally, the quarter non-GAAP results exclude costs associated with the KLA-Tencor acquisition, amortization of bridge loan issuance costs associated with the KLA-Tencor acquisition, and income tax benefit from tax extenders primarily the research and development credit; and the quarter non-GAAP results exclude cumulative income tax benefits due to a court ruling.

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 investors' ability to view the Company's results from management's perspective. Tables presenting reconciliations of non-GAAP results to GAAP results are included at the end of this press release and on the Company's website at http://investor.lamresearch.com.

Cautionary Statement 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 created by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, but are not limited to; the estimated future revenue from shipments to Japanese customers, our expected revenue growth, our ability to continue to successfully execute our growth strategy and solve our customers' critical challenges through the delivery of differentiated products and services in market expanding technology inflections, our ability to achieve market growth gains at key inflections, our ability to continue to outperform, our commitment and ability to deliver growth and value for our customers and our stockholders; the nature of the capabilities we deliver for the benefit of the global semiconductor industry following our proposed acquisition of KLA-Tencor Corporation ('KLA-Tencor') (the 'proposed transaction'); the extent of inflection driven expansion in our served available market, and our guidance for shipments, revenue, gross margin, operating margin, earnings per share, and diluted earnings per share and share count. Some factors that may affect these forward-looking statements include: the proposed transaction may not close and if it does close we may not receive the expected benefits of the proposed transaction, such as the scale and breadth of critical technologies and better financial performance for our stockholders; our stockholders and the KLA-Tencor stockholders may not support the proposed transaction; business conditions in the consumer electronics industry, the semiconductor industry and the overall economy may deteriorate; and the strength of the financial position reflected in documents filed or furnished by us with the Securities and Exchange Commission, including specifically our annual report on Form 10-K for the fiscal year ended and quarterly report on Form 10-Q for the fiscal quarter ended , may not be as anticipated. 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. Nothing contained herein constitutes or will be deemed to constitute a forecast, projection or estimate of the future financial performance of Lam, KLA-Tencor, or the merged company, following the implementation of the proposed transaction or otherwise. No statement contained herein should be interpreted to mean that the revenue, margins, earnings per share, cash flows or other financial performance metrics of or the merged company for the current or future financial years would necessarily match or exceed the historical published figures.

Additional Information and Where to Find It

This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The proposed transaction will be submitted to the stockholders of each of Lam and KLA-Tencor for their consideration. On , Lam and KLA-Tencor filed with the a Registration Statement on Form S-4 that includes a preliminary joint proxy statement of Lam and KLA-Tencor and a prospectus for Lam. The Registration Statement on Form S-4 was amended on and declared effective by the on . Each of Lam and KLA-Tencor mailed the definitive joint proxy statement/prospectus to their respective stockholders on or about . Lam and KLA-Tencor also plan to file other documents with the regarding the proposed transaction. This document is not a substitute for any prospectus, proxy statement or any other document that Lam or KLA-Tencor may file with the in connection with the proposed transaction. Investors and security holders of Lam and KLA-Tencor are urged to read the joint proxy statement/prospectus and any other relevant documents that will be filed with the carefully and in their entirety when they become available because they contain, or will contain, important information about the proposed transaction. You may obtain copies of all documents filed with the regarding this transaction, free of charge, at the website (www.sec.gov). In addition, investors and stockholders are able to obtain free copies of the joint proxy statement/prospectus and other documents filed with the by Lam on Lam's Investor Relations website (investor.lamresearch.com) or by writing to , Investor Relations, , 94538-6401 (for documents filed with the by Lam), or by KLA-Tencor on KLA-Tencor's Investor Relations website (ir.kla-tencor.com) or by writing to KLA-Tencor Corporation, Investor Relations, , 95035 (for documents filed with the by KLA-Tencor).

Participants in the Solicitation

Lam, KLA-Tencor, their respective directors, and certain of their respective executive officers, other members of management and employees, may, under rules, be deemed to be participants in the solicitation of proxies from Lam and KLA-Tencor stockholders in connection with the proposed transaction. Information regarding the persons who, under rules, are or may be deemed to be participants in the solicitation of Lam and KLA-Tencor stockholders in connection with the proposed transaction is set forth in the definitive joint proxy statement/prospectus that was filed with the on .

About

(: LRCX)is a trusted global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. Lam's broad portfolio of market-leading deposition, etch, and clean solutions helps customers achieve success on the wafer by enabling device features that are 1,000 times smaller than a grain of sand, resulting in smaller, faster, more powerful, and more power-efficient chips. Through collaboration, continuous innovation, and delivering on commitments, Lam is transforming atomic-scale engineering and enabling its customers to shape the future of technology. Based in , is a Nasdaq-100 Index ® and S&P 500 ® company whose common stock trades on the Nasdaq Global Select Market(SM) under the symbol LRCX. For more information, please visit http://www.lamresearch.com. (LRCX-F)

Consolidated Financial Tables Follow.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
Three Months Ended Six Months Ended
, , , , ,
2015 2015
 2014
 2015
 2014
(unaudited)
Revenue $ 1,425,534 $ 1,600,043 $ 1,232,241 $ 3,025,577 $ 2,384,609
Cost of goods sold 799,024 877,680 695,584 1,676,704 1,342,413
Gross margin 626,510 722,363 536,657 1,348,873 1,042,196
Gross margin as a percent of revenue 43.9 % 45.1 % 43.6 % 44.6 % 43.7 %
Research and development 220,754 234,209 196,768 454,963 385,702
Selling, general and administrative 166,922 152,726 151,148 319,648 299,455
Total operating expenses 387,676 386,935 347,916 774,611 685,157
Operating income 238,834 335,428 188,741 574,262 357,039
Operating income as a percent of revenue 16.8 % 21.0 % 15.3 % 19.0 % 15.0 %
Other expense, net (29,935 ) (27,121 ) (9,799 ) (57,056 ) (15,447 )
Income before income taxes 208,899 308,307 178,942 517,206 341,592
Income tax benefit (expense) 14,081 (19,628 ) (2,002 ) (5,547 ) (23,571 )
Net income $ 222,980 $ 288,679 $ 176,940 $ 511,659 $ 318,021
Net income per share:
Basic $ 1.41 $ 1.82 $ 1.11 $ 3.23 $ 1.98
Diluted $ 1.28 $ 1.66 $ 1.00 $ 2.94 $ 1.80
Number of shares used in per share calculations:
Basic 158,424 158,352 159,248 158,388 160,467
Diluted 174,242 174,374 177,046 174,308 177,082
Cash dividend declared per share $ 0.30 $ 0.30 $ 0.18 $ 0.60 $ 0.36
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
, , ,
2015 2015 2015
(unaudited) (unaudited) (1)
ASSETS
Cash and cash equivalents $ 1,967,873 $ 1,744,325 $ 1,501,539
Investments 2,507,607 2,587,474 2,574,947
Accounts receivable, net 1,089,850 1,088,942 1,093,582
Inventories 879,821 916,683 943,346
Other current assets 225,046 178,557 157,435
Total current assets 6,670,197 6,515,981 6,270,849
Property and equipment, net 643,746 636,769 621,418
Restricted cash and investments 207,568 183,455 170,969
and intangible assets 2,039,213 2,076,164 2,115,649
Other assets 189,697 182,062 185,763
Total assets $ 9,750,421 $ 9,594,431 $ 9,364,648
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of convertible notes and capital leases $ 973,697 $ 969,392 $ 1,359,650
Other current liabilities 1,249,283 1,312,549 1,271,711
Total current liabilities 2,222,980 2,281,941 2,631,361
Long-term debt and capital leases 1,404,683 1,400,615 1,001,382
Income taxes payable 257,502 247,448 202,930
Other long-term liabilities 135,303 127,607 184,023
Total liabilities 4,020,468 4,057,611 4,019,696
Temporary equity, convertible notes 177,662 178,665 241,808
Stockholders' equity 5,552,291 5,358,155 5,103,144
Total liabilities and stockholders' equity $ 9,750,421 $ 9,594,431 $ 9,364,648
(1) Derived from audited financial statements
(2) Common shares issued and outstanding were 158,568 as of , 158,101 as of September 27, 2015, and 158,531 as of
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended Six Months Ended
,
,
,
,
,
2015
 2015
 2014
 2015
 2014
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 222,980 $ 288,679 $ 176,940 $ 511,659 $ 318,021
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 71,798 70,590 69,536 142,388 137,421
Deferred income taxes 8,176 (5,563 ) 3,320 2,613 6,506
Equity-based compensation expense 32,570 35,774 30,632 68,344 62,672
Income tax benefit on equity-based compensation plans 2,168 3,545 1,141 5,713 11,002
Excess tax benefit on equity-based compensation plans (2,181 ) (3,572 ) (599 ) (5,753 ) (11,003 )
Amortization of note discounts and issuance costs 23,649 9,831 9,199 33,480 18,299
Gain on sale of business - - - - (7,431 )
Other, net 10,592 10,011 1,607 20,603 7,133
Changes in operating assets and liabilities (75,207 ) 39,702 (130,537 ) (35,505 ) (240,220 )
Net cash provided by operating activities 294,545 448,997 161,239 743,542 302,400
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets (28,143 ) (49,454 ) (61,363 ) (77,597 ) (103,234 )
Business acquisitions, net of cash acquired - - - - (1,137 )
Net sale (purchase) of available-for-sale securities 39,202 (28,203 ) (321,590 ) 10,999 (311,945 )
Repayment of notes receivable 8,082 - 3,978 8,082 3,978
Proceeds from sale of business - - - - 41,212
Other, net (4,746 ) (1,500 ) 100 (6,246 ) 122
Net cash provided by (used for) investing activities 14,395 (79,157 ) (378,875 ) (64,762 ) (371,004 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt and capital lease obligations and payments for debt issuance costs (28,374 ) (96 ) (674 ) (28,470 ) (781 )
Excess tax benefit on equity-based compensation plans 2,181 3,572 599 5,753 11,003
stock purchases (12,798 ) (98,385 ) (65,536 ) (111,183 ) (373,958 )
Dividends paid (47,896 ) (47,659 ) (29,381 ) (95,555 ) (58,621 )
Re-issuance of treasury stock related to employee stock purchase plan - 19,245 - 19,245 16,919
Proceeds from issuance of common stock 1,173 377 4,223 1,550 8,832
Other, net (22 ) (300 ) - (322 ) -
Net cash used for financing activities (85,736 ) (123,246 ) (90,769 ) (208,982 ) (396,606 )
Effect of exchange rate changes on cash and cash equivalents 344 (3,808 ) (3,998 ) (3,464 ) (6,192 )
Net increase (decrease) in cash and cash equivalents 223,548 242,786 (312,403 ) 466,334 (471,402 )
Cash and cash equivalents at beginning of period 1,744,325 1,501,539 1,293,678 1,501,539 1,452,677
Cash and cash equivalents at end of period $ 1,967,873 $ 1,744,325 $ 981,275 $ 1,967,873 $ 981,275
Non-GAAP Financial Summary
(in thousands, except percentages and per share data)
(unaudited)
Three Months Ended
, ,
2015 2015
Revenue $ 1,425,534 $ 1,600,043
Gross margin $ 648,409 $ 743,984
Gross margin as percentage of revenue 45.5 %
 46.5 %
Operating expenses $ 352,135 $ 363,596
Operating income $ 296,274 $ 380,388
Operating margin as a percentage of revenue 20.8 % 23.8 %
Net income $ 270,313 $ 313,045
Net income per diluted share $ 1.57 $ 1.82
Shares used in per share calculation - diluted 171,796 172,046
Reconciliation of GAAP Net Income to Non-GAAP Net Income and GAAP number of dilutive shares to Non-GAAP number of dilutive shares
(in thousands, except per share data)
(unaudited)
Three Months Ended
,
,
,
,
2015
 2015
 2015
 2015
GAAP net income $ 222,980 $ 288,679 131,271 206,285
Pre-tax non-GAAP items:
Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold 21,250 21,250 21,286 21,286
Acquisition-related inventory fair value impact - cost of goods sold 649 - 1,192 308
Impairment of long lived asset - cost of goods sold - - 9,821 -
Restructuring charges - cost of goods sold - 371 - -
Restructuring charges - research and development 34 4,206 - -
Acquisition costs - selling, general and administrative 17,392 - - -
Amortization related to intangible assets acquired in Novellus transaction - selling, general and administrative 16,083 16,083 16,083 16,083
Restructuring charges - selling, general and administrative 2,032 3,050 434 (495 )
impairment - selling, general and administrative - - 79,444 -
Amortization of note discounts - other expense, net 9,258 9,122 9,019 8,749
Amortization of bridge loan issuance costs - other expense, net 13,573 - - -
Net income tax benefit on non-GAAP items (19,335 ) (7,791 ) (9,605 ) (7,181 )
Cumulative income tax benefit due to a court ruling - (21,925 ) - -
Income tax expense (benefit) on resolution or additional accrual for certain tax matters - - 1,078 (124 )
Income tax benefit from tax extenders, primarily the research and development credit (13,603 ) - - -
Non-GAAP net income $ 270,313 $ 313,045 $ 260,023 $ 244,911
Non-GAAP net income per diluted share $ 1.57 $ 1.82 $ 1.50 $ 1.40
GAAP number of shares used for per diluted share calculation 174,242 174,374 176,575 177,531
Effect of convertible note hedge (2,446 ) (2,328 ) (2,934 ) (3,060 )
Non-GAAP number of shares used for per diluted share calculation 171,796 172,046 173,641 174,471
Reconciliation of GAAP Gross Margin, Operating Expenses and Operating Income to Non-GAAP Gross Margin, Operating Expenses and Operating Income
(unaudited)
Three Months Ended
, ,
2015 2015
GAAP gross margin $ 626,510 $ 722,363
Pre-tax non-GAAP items:
Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold 21,250 21,250
Acquisition-related inventory fair value impact - cost of goods sold 649 -
Restructuring charges - cost of goods sold - 371
Non-GAAP gross margin $ 648,409 $ 743,984
GAAP gross margin as a percentage of revenue 43.9 % 45.1 %
Non-GAAP gross margin as a percentage of revenue 45.5 % 46.5 %
GAAP operating expenses $ 387,676 $ 386,935
Pre-tax non-GAAP items:
Restructuring charges - research and development (34 ) (4,206 )
Acquisition costs - selling, general and administrative (17,392 ) -
Amortization related to intangible assets acquired in Novellus transaction - selling, general and administrative (16,083 ) (16,083 )
Restructuring charges - selling, general and administrative (2,032 ) (3,050 )
Non-GAAP operating expenses $ 352,135 $ 363,596
Non-GAAP operating income $ 296,274 $ 380,388
GAAP operating margin as percent of revenue 16.8 % 21.0 %
Non-GAAP operating margin as a percent of revenue 20.8 % 23.8 %

Lam Research Corporation Contacts:
Investor Relations
phone: 510-572-3232
e-mail: satya.kumar@lamresearch.com

Source:

News Provided by Acquire Media

Lam Research Corporation issued this content on 27 January 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 29 January 2016 21:19:28 UTC

Original Document: http://investor.lamresearch.com/releasedetail.cfm?ReleaseID=952034