LRCX Lam Research Corporation

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): April 20, 2015

 

 

LAM RESEARCH CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		0-12933		94-2634797
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification Number)

4650 Cushing Parkway

Fremont, California 94538

(Address of principal executive offices including zip code)

(510) 572-0200

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Table of Contents

Table of Contents

 

Item 2.02. Results of Operations and Financial Condition			3
Item 9.01. Financial Statements and Exhibits			3
SIGNATURES			4
EXHIBIT INDEX			5
EX-99.1

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Table of Contents

Item 2.02.

Results of Operations and Financial Condition

On April 20, 2015, Lam Research Corporation (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended March 29, 2015, the text of which is attached hereto as Exhibit 99.1.

The information in this Current Report on Form 8-K, including the exhibit, is furnished pursuant to Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, the information in the Current Report on Form 8-K, including the exhibit, shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended.

 

Item 9.01.

Financial Statements and Exhibits

(d) Exhibits

 

99.1		Press Release dated April 20, 2015 announcing financial results for the fiscal quarter ended March 29, 2015.

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 20, 2015

 

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Table of Contents

EXHIBIT INDEX

 

99.1		Press Release dated April 20, 2015 announcing financial results for the fiscal quarter ended March 29, 2015.

Exhibit 99.1

FOR IMMEDIATE RELEASE

Lam Research Corporation Contact:

Audrey Charles, Investor Relations, phone: 510-572-1615, e-mail: audrey.charles@lamresearch.com

Lam Research Corporation Reports Financial Results for the Quarter Ended March 29, 2015

FREMONT, Calif., April 20, 2015 - Lam Research Corp. (NASDAQ: LRCX) today announced financial results for the quarter ended March 29, 2015 (the “March 2015 quarter”).

Highlights for the March 2015 quarter were as follows:

 

•

Shipments of $1,497 million, up 20% from the prior quarter.

 

•

Revenue of $1,393 million, up 13% from the prior quarter.

 

•

GAAP gross margin of 43.1%, GAAP operating margin of 17.2%, and GAAP diluted EPS of $1.16

 

•

Non-GAAP gross margin of 44.7%, non-GAAP operating margin of 19.9%, and non-GAAP diluted EPS of $1.40

Lam Research Corporation

Financial Highlights for the Quarters Ended March 29, 2015 and December 28, 2014

(in thousands, except per share data and percentages)

 

GAAP
		March 2015				December 2014				Change Q/Q
Revenue		$	1,393,333			$	1,232,241				13	%
Gross margin as percentage of revenue			43.1	%			43.6	%			-50	bps
Operating margin as percentage of revenue			17.2	%			15.3	%			190	bps
Diluted EPS		$	1.16			$	1.00				16	%
Non-GAAP
		March 2015				December 2014				Change Q/Q
Revenue		$	1,393,333			$	1,232,241				13	%
Gross margin as percentage of revenue			44.7	%			45.4	%			-70	bps
Operating margin as percentage of revenue			19.9	%			18.7	%			120	bps
Diluted EPS		$	1.40			$	1.19				18	%

GAAP Financial Results

For the March 2015 quarter, revenue was $1,393.3 million, gross margin was $600.6 million, or 43.1% of revenue, operating expenses were $360.6 million, operating margin was 17.2% of revenue, and net income was $206.3 million, or $1.16 per diluted share on a GAAP basis. This compares to revenue of $1,232.2 million, gross margin of $536.7 million, or 43.6% of revenue, operating expenses of $347.9 million, operating margin of 15.3% of revenue, and net income of $176.9 million, or $1.00 per diluted share, for the quarter ended December 28, 2014 (the “December 2014 quarter”).

Non-GAAP Financial Results

For the March 2015 quarter, non-GAAP gross margin was $622.2 million or 44.7% of revenue, non-GAAP operating expenses were $345.0 million, non-GAAP operating margin was 19.9% of revenue, and non-GAAP net income was $244.9 million, or $1.40 per diluted share on a non-GAAP basis. This compares to non-GAAP gross margin of $560.0 million or 45.4% of revenue, non-GAAP operating expenses of $330.2 million, non-GAAP operating margin of 18.7% of revenue, and non-GAAP net income of $207.6 million, or $1.19 per diluted share for the December 2014 quarter.

“Lam’s March quarter results reached record levels further extending our outperformance trajectory,” said Martin Anstice, Lam Research’s president and chief executive officer. “Our differentiated products and services are directly addressing the market driving technology inflections of multi-patterning, 3D device architecture and advanced packaging. Through ever closer collaboration with our customers we are partnering to solve their most critical challenges solidifying our growth opportunity.”

~more~

 

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Balance Sheet and Cash Flow Results

The successful issuance of $1.0 billion in bonds in the March 2015 quarter helped increase cash and cash equivalents, short-term investments, and restricted cash and investment balances to $4.1 billion at the end of the March 2015 quarter compared to $3.0 billion at the end of the December 2014 quarter. Cash provided by operating activities was utilized for approximately $124.9 million of treasury stock purchases, including net share settlement on employee stock-based compensation, $31.9 million of capital expenditures and $28.7 million of cash dividends paid to stockholders during the March 2015 quarter.

Deferred revenue at the end of the March 2015 quarter increased to $485.2 million as compared to $373.7 million at the end of the December 2014 quarter. Deferred profit at the end of the March 2015 quarter increased to $303.3 million as compared to $254.8 million at the end of the December 2014 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 $45.4 million as of March 29, 2015.

Geographic Distribution

The geographic distribution of shipments and revenue during the March 2015 quarter is shown in the following table:

 

Region		Shipments				Revenue
Korea			34	%			35	%
Taiwan			19	%			20	%
China			19	%			15	%
Japan			10	%			11	%
United States			10	%			10	%
Europe			6	%			7	%
Southeast Asia			2	%			2	%

Outlook

For the quarter ending June 28, 2015, Lam is providing the following guidance:

 

GAAP

Reconciling Items

Non-GAAP

Shipments

$1.60 Billion

+/-

$50 Million

—

$1.60 Billion

+/-

$50 Million

Revenue

$1.46 Billion

+/-

$50 Million

—

$1.46 Billion

+/-

$50 Million

Gross margin

44.1%

+/-

1%

$21 Million

45.5%

+/-

1%

Operating margin

18.5%

+/-

1%

$37 Million

21.0%

+/-

1%

Earnings per share

$1.21

+/-

$0.07

$39 Million

$1.46

+/-

$0.07

Diluted share count

177 Million

3 Million

174 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 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, $21 million.

 

•

Operating margin - amortization related to intangible assets acquired in the Novellus transaction, $37 million.

 

•

Earnings per share - amortization related to intangible assets acquired in the Novellus transaction, $37 million; amortization of note discounts, $9 million; and associated tax benefit for non-GAAP items ($7) million; totaling $39 million.

 

•

Diluted share count - impact of a note hedge issued contemporaneously with the convertible notes due in 2016 and 2018, 3 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 March 2015 and December 2014 quarters include the impact of the note hedge issued contemporaneously with the convertible notes due in 2016 and 2018 and exclude amortization related to intangible assets acquired in the Novellus transaction; acquisition-related inventory fair value impact; selected restructuring charges, net; the amortization of note discounts; and tax benefit of non-GAAP items. Additionally, the March 2015 quarter non-GAAP results exclude the tax benefit on the successful resolution of certain tax matters. The December 2014 quarter non-GAAP results exclude the net tax benefit on the reinstatement of the research and development credit.

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 web site at http://investor.lamresearch.com.

 

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Lam Announces Financial Results for the March 2015 Quarter

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 ability to continue to reach record levels and outperform the semiconductor equipment industry; our ability to collaborate with our customers and partner to solve their most critical challenges; our ability to continue to grow our revenue and make progress on our market share objectives; our ability to differentiate our products and services, address market driving technology inflections, and deliver performance that meets or exceeds our plans, including our abilities to execute on our priorities, and deliver growth; the scope of opportunities we have; our ability to expand our served market; the ability of the market to continue to expand and the extent of any such expansion; and our guidance for shipments, revenue, gross margin, operating margin, earnings per share, and diluted share count. 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, including those 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 29, 2014 and our reports on Form 10-Q for the quarters ended September 28, 2014 and December 28, 2014. 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. (NASDAQ: 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, strip, and wafer cleaning 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, 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 Fremont, Calif., Lam Research is a NASDAQ-100 Index ^® and S&P 500 ^® company whose common stock trades on the NASDAQ ^® Global Select Market™ under the symbol LRCX. For more information, please visit http://www.lamresearch.com. (LRCX-F)

Consolidated Financial Tables Follow.

###

 

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Lam Announces Financial Results for the March 2015 Quarter

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data and percentages)

(unaudited)

 

		Three Months Ended												Nine Months Ended
		March 29, 2015				December 28, 2014				March 30, 2014				March 29, 2015				March 30, 2014
Revenue		$	1,393,333			$	1,232,241			$	1,227,392			$	3,777,942			$	3,358,512
Cost of goods sold			792,731				695,584				696,594				2,135,144				1,908,067
Gross margin			600,602				536,657				530,798				1,642,798				1,450,445
Gross margin as a percent of revenue			43.1	%			43.6	%			43.2	%			43.5	%			43.2	%
Research and development			217,865				196,768				185,978				603,567				531,022
Selling, general and administrative			142,772				151,148				152,883				442,227				457,604
Total operating expenses			360,637				347,916				338,861				1,045,794				988,626
Operating income			239,965				188,741				191,937				597,004				461,819
Operating margin as a percent of revenue			17.2	%			15.3	%			15.6	%			15.8	%			13.8	%
Other expense, net			(11,389	)			(9,799	)			(9,855	)			(26,836	)			(27,954	)
Income before income taxes			228,576				178,942				182,082				570,168				433,865
Income tax expense			22,291				2,002				17,686				45,862				34,971
Net income		$	206,285			$	176,940			$	164,396			$	524,306			$	398,894
Net income per share:
Basic net income per share		$	1.30			$	1.11			$	1.01			$	3.28			$	2.46
Diluted net income per share		$	1.16			$	1.00			$	0.96			$	2.96			$	2.33
Number of shares used in per share calculations:
Basic			158,992				159,248				162,238				159,975				161,904
Diluted			177,531				177,046				171,636				177,231				171,051
Cash dividend declared per share		$	0.18			$	0.18			$	—			$	0.54			$	—

 

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Lam Announces Financial Results for the March 2015 Quarter

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

		March 29, 2015				December 28, 2014				June 29, 2014
		(unaudited)				(unaudited)				(1)
ASSETS
Cash and cash equivalents		$	1,635,636			$	981,275			$	1,452,677
Short-term investments			2,313,495				1,902,402				1,612,967
Accounts receivable, net			1,046,800				944,014				800,616
Inventories			919,679				913,390				740,503
Other current assets			145,357				173,731				176,899
Total current assets			6,060,967				4,914,812				4,783,662
Property and equipment, net			579,824				585,372				543,496
Restricted cash and investments			164,300				155,455				146,492
Goodwill and intangible assets			2,242,977				2,282,006				2,360,303
Other assets			190,473				173,044				159,353
Total assets		$	9,238,541			$	8,110,689			$	7,993,306
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities		$	1,734,996			$	1,708,656			$	1,582,001
Long-term debt, convertible notes, and capital leases		$	1,831,094			$	830,880			$	817,202
Income taxes payable			205,536				205,535				258,357
Other long-term liabilities			189,291				183,678				122,662
Total liabilities			3,960,917				2,928,749				2,780,222
Senior convertible notes			180,569				181,505				183,349
Stockholders’ equity (2)			5,097,055				5,000,435				5,029,735
Total liabilities and stockholders’ equity		$	9,238,541			$	8,110,689			$	7,993,306

 

(1)	Derived from audited financial statements

(2)	Common shares issued and outstanding were 158,485 shares as of March 29, 2015, 159,294 shares as of December 28, 2014 and 162,350 shares as of June 29, 2014.

 

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Lam Announces Financial Results for the March 2015 Quarter

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

		Three Months Ended												Nine Months Ended
		March 29, 2015				December 28, 2014				March 30, 2014				March 29, 2015				March 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	206,285			$	176,940			$	164,396			$	524,306			$	398,894
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			70,322				69,536				73,256				207,743				221,139
Deferred income taxes			1,739				3,320				(816	)			8,245				11,641
Impairment of long-lived asset			—				—				4,000				—				11,632
Equity-based compensation expense			32,948				30,632				24,334				95,620				70,615
Income tax benefit on equity-based compensation plans			2,438				1,141				—				13,440				—
Excess tax benefit on equity-based compensation plans			(2,204	)			(599	)			—				(13,207	)			—
Amortization of convertible note discount			8,749				8,609				8,313				25,867				24,652
Gain on sale of business			—				—				—				(7,431	)			—
Other, net			1,902				1,607				2,741				9,035				4,428
Changes in operating assets and liabilities:			(131,142	)			(129,947	)			13,986				(370,181	)			(271,843	)
Net cash provided by operating activities			191,037				161,239				290,210				493,437				471,158
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets			(31,898	)			(61,363	)			(41,638	)			(135,132	)			(103,739	)
Cash paid for business acquisition			—				—				—				(1,137	)			(18,388	)
Net purchases of available-for-sale securities			(359,416	)			(321,590	)			(82,744	)			(671,361	)			(128,931	)
Purchase of other investment			(2,500	)			—				—				(2,500	)			—
Repayment of notes receivable			—				3,978				—				3,978				10,000
Proceeds from sale of business, net			—				—				—				41,212				—
Proceeds from sale of assets			—				—				—				—				21,635
Transfer of restricted cash and investments			(822	)			100				28,572				(700	)			28,722
Net cash used for investing activities			(394,636	)			(378,875	)			(95,810	)			(765,640	)			(190,701	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt and capital lease obligations			(119	)			(674	)			(112	)			(900	)			(919	)
Proceeds from issuance of long-term debt, net issuance costs			991,880				—				—				991,880				—
Excess tax benefit (expense) on equity-based compensation plans			2,204				599				(296	)			13,207				(296	)
Treasury stock purchases			(124,943	)			(65,536	)			(52,415	)			(498,901	)			(204,610	)
Dividends paid			(28,724	)			(29,381	)			—				(87,345	)			—
Reissuances of treasury stock related to employee stock purchase plan			14,934				—				13,210				31,853				28,329
Proceeds from issuance of common stock			7,403				4,223				5,111				16,235				26,134
Net cash provided by (used for) financing activities			862,635				(90,769	)			(34,502	)			466,029				(151,362	)
Effect of exchange rate changes on cash			(4,675	)			(3,998	)			(152	)			(10,867	)			733
Net increase (decrease) in cash and cash equivalents			654,361				(312,403	)			159,746				182,959				129,828
Cash and cash equivalents at beginning of period			981,275				1,293,678				1,132,555				1,452,677				1,162,473
Cash and cash equivalents at end of period		$	1,635,636			$	981,275			$	1,292,301			$	1,635,636			$	1,292,301

 

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Lam Announces Financial Results for the March 2015 Quarter

Non-GAAP Financial Summary

(in thousands, except percentages, share, and per share data)

(unaudited)

 

		Three Months Ended				Three Months Ended
		March 29, 2015				December 28, 2014
Revenue		$	1,393,333			$	1,232,241
Gross margin		$	622,196			$	560,044
Gross margin as percentage of revenue			44.7	%			45.4	%
Operating expenses		$	345,049			$	330,213
Operating income		$	277,147			$	229,831
Operating margin as a percentage of revenue			19.9	%			18.7	%
Net income		$	244,911			$	207,631
Net income per diluted share		$	1.40			$	1.19
Shares used in per share calculation - diluted			174,471				174,316

Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income and U.S. GAAP number of dilutive shares to

Non-GAAP number of dilutive shares

(in thousands, except share and per share data)

(unaudited)

 

		Three Months Ended				Three Months Ended
		March 29, 2015				December 28, 2014
U.S. GAAP net income		$	206,285			$	176,940
Pre-tax non-GAAP items:
Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold			21,286				21,286
Acquisition-related inventory fair value impact - cost of goods sold			308				2,101
Amortization related to intangible assets acquired in Novellus transaction - operating expenses			16,083				16,083
Restructuring (benefits) charges - operating expenses			(495	)			1,620
Amortization of note discounts - other expense, net			8,749				8,609
Net tax benefit on non-GAAP items			(7,181	)			(7,914	)
Net tax benefit on reinstatement of research and development credit			—				(11,094	)
Net tax benefit on successful resolution of certain tax matters			(124	)			—
Non-GAAP net income		$	244,911			$	207,631
Non-GAAP net income per diluted share		$	1.40			$	1.19
U.S. GAAP number of shares used for diluted per share calculation			177,531				177,046
Effect of convertible note hedge			(3,060	)			(2,730	)
Non-GAAP number of shares used for diluted per share calculation			174,471				174,316

 

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Lam Announces Financial Results for the March 2015 Quarter

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 Ended				Three Months Ended
		March 29, 2015				December 28, 2014
U.S. GAAP gross margin		$	600,602			$	536,657
Pre-tax non-GAAP items:
Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold			21,286				21,286
Acquisition-related inventory fair value impact - cost of goods sold			308				2,101
Non-GAAP gross margin		$	622,196			$	560,044
U.S. GAAP gross margin as a percentage of revenue			43.1	%			43.6	%
Non-GAAP gross margin as a percentage of revenue			44.7	%			45.4	%
U.S. GAAP operating expenses		$	360,637			$	347,916
Pre-tax non-GAAP items:
Amortization related to intangible assets acquired in Novellus transaction - operating expenses			(16,083	)			(16,083	)
Restructuring benefits (charges) - operating expenses			495				(1,620	)
Non-GAAP operating expenses		$	345,049			$	330,213
Non-GAAP operating income		$	277,147			$	229,831
GAAP operating margin as a percent of revenue			17.2	%			15.6	%
Non-GAAP operating margin as a percent of revenue			19.9	%			18.7	%

 

 

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