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): July 29, 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

 

2

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Item 2.02. Results of Operations and Financial Condition

On July 29, 2015, Lam Research Corporation (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended June 28, 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 the 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 July 29, 2015 announcing financial results for the fiscal quarter ended June 28, 2015

 

3

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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: July 29, 2015

 

 

4

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EXHIBIT INDEX

 

99.1		Press Release dated July 29, 2015 announcing financial results for the fiscal quarter ended June 28, 2015

 

5

Exhibit 99.1

FOR IMMEDIATE RELEASE

Lam Research Corporation Contacts:

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

Lam Research Corporation Reports Financial Results for the Quarter Ended June 28, 2015

FREMONT, Calif., July 29, 2015 - Lam Research Corp. (NASDAQ: LRCX) today announced financial results for the quarter ended June 28, 2015.

Highlights for the June 2015 quarter were as follows:

 

•

Shipments of $1,616 million, up 8% from the prior quarter

 

•

Revenue of $1,481 million, up 6% from the prior quarter

 

•

GAAP gross margin of 43.3%, GAAP operating margin of 12.9% and GAAP diluted EPS of $0.74

 

•

Non-GAAP gross margin of 45.5%, non-GAAP operating margin of 21.6%, and non-GAAP diluted EPS of $1.50

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

(in thousands, except per-share data, percentages, and basis points)

 

U.S. GAAP
		June 2015				March 2015				Change Q/Q
Revenue		$	1,481,370			$	1,393,333				+6	%
Gross margin as percentage of revenue			43.3	%			43.1	%			+20bps
Operating margin as percentage of revenue			12.9	%			17.2	%			-430 bps
Diluted EPS		$	0.74			$	1.16				-36	%
Non-GAAP
		June 2015				March 2015				Change Q/Q
Revenue		$	1,481,370			$	1,393,333				+6	%
Gross margin as percentage of revenue			45.5	%			44.7	%			+80 bps
Operating margin as percentage of revenue			21.6	%			19.9	%			+170 bps
Diluted EPS		$	1.50			$	1.40				+7	%

GAAP Financial Results

For the June 2015 quarter, revenue was $1,481.4 million, gross margin was $641.5 million, or 43.3% of revenue, operating expenses were $450.5 million, operating margin was 12.9% of revenue, and net income was $131.3 million, or $0.74 per diluted share on a GAAP basis. This compares to revenue of $1,393.3 million, gross margin of $600.6 million, or 43.1% of revenue, operating expenses of $360.6 million, operating margin of 17.2% of revenue, and net income of $206.3 million, or $1.16 per diluted share, for the quarter ended March 29, 2015 (the “March 2015 quarter”). The June 2015 operating expenses, operating margin, net income and income per diluted share were negatively impacted by a goodwill impairment charge of $79.4 million. In addition, gross margin, operating margin, net income and income per diluted share were negatively impacted by an impairment charge related to a long-lived asset of $9.8 million.

Non-GAAP Financial Results

For the June 2015 quarter, non-GAAP gross margin was $673.8 million or 45.5% of revenue, non-GAAP operating expenses were $354.5 million, non-GAAP operating margin was 21.6% of revenue, and non-GAAP net income was $260.0 million, or $1.50 per diluted share. This compares to non-GAAP gross margin of $622.2 million or 44.7% of revenue, non-GAAP operating expenses of $345.0 million, non-GAAP operating margin of 19.9% of revenue, and non-GAAP net income of $244.9 million, or $1.40 per diluted share for the March 2015 quarter.

“Lam posted record June quarter results and concluded the strongest fiscal year in our history by delivering over $5 billion in both shipments and revenue and $1 billion in operating income for the first time,” said Martin Anstice, Lam Research’s president and chief executive officer. “The inflection driven expansion in our served available market over the next several years combined with our enduring focus on supporting our customers’ long term success, creates exciting opportunity. Our technology and productivity leadership, our execution discipline and our model of collaboration, we believe, position us for continued outperformance.”

 

~more~

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Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments, and restricted cash and investment balances increased to $4.2 billion at the end of the June 2015 quarter compared to $4.1 billion at the end of the March 2015 quarter. This increase was primarily the result of approximately $292.1 million in cash flows from operating activities which was partially offset by approximately $74.3 million of treasury stock repurchases, including net share settlement on employee stock-based compensation; approximately $63.1 million of capital expenditures; and approximately $28.7 million of dividends paid to stockholders during the June 2015 quarter.

Deferred revenue and profit balances at the end of June 2015 quarter increased to $518.1 million and $322.1 million, respectively, as compared to $485.2 million and $303.3 million at the end of the March 2015 quarter, respectively. 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 $164.4 million as of June 28, 2015.

Geographic Distribution

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

 

Region		Shipments				Revenue
Korea			23	%			28	%
Taiwan			24	%			19	%
China			12	%			17	%
United States			13	%			14	%
Japan			20	%			14	%
Europe			4	%			4	%
Southeast Asia			4	%			4	%

Outlook

For the September 2015 quarter, Lam is providing the following guidance:

 

GAAP

Reconciling Items

Non-GAAP

Shipments

$1.58 Billion

+/-

$75 Million

—

$1.58 Billion

+/-

$75 Million

Revenue

$1.60 Billion

+/-

$75 Million

—

$1.60 Billion

+/-

$75 Million

Gross margin

44.2%

+/-

1%

$21 Million

45.5%

+/-

1%

Operating margin

20.2%

+/-

1%

$37 Million

22.5%

+/-

1%

Net income per diluted share

$1.46

+/-

$0.10

$38 Million

$1.70

+/-

$0.10

Diluted share count

177 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 ($8) million; totaling $38 million.

 

•

Diluted share count – impact of a note hedge issued contemporaneously with the convertible notes due in 2016 and 2018, 3 million shares.

 

~more~

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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 June 2015 and March 2015 quarters exclude amortization related to intangible assets acquired in the Novellus transaction, acquisition-related inventory fair value impact, restructuring impacts, the amortization of notes discounts, tax expense (benefit) of non-GAAP items, and net income tax benefit on successful resolution of certain tax matters. Additionally, the June 2015 quarter non-GAAP results exclude long-lived asset impairment, goodwill impairment, and additional accrual for certain tax matters.

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 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 ability to continue to successfully execute our growth strategy, our ability to continue to successfully collaborate closely with and to support our customers and their long term success, our ability to achieve market growth and share gains at key inflections, our ability to continue to outperform, our ability to deliver growth and value for our customers and our stockholders, 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: business conditions in the consumer electronics industry, the semiconductor industry and the overall economy; the strength of the financial 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 Forms 10-Q for the quarters ended September 28, 2014, December 28, 2014 and March 29, 2015. 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 June 2015 Quarter

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data and percentages)

 

		Three Months Ended												Twelve Months Ended
		June 28, 2015				March 29, 2015				June 29, 2014				June 28, 2015				June 29, 2014
		(unaudited)				(unaudited)				(unaudited)				(unaudited)				(1)
Revenue		$	1,481,370			$	1,393,333			$	1,248,797			$	5,259,312			$	4,607,309
Cost of goods sold			839,832				792,731				691,761				2,974,976				2,599,828
Gross margin			641,538				600,602				557,036				2,284,336				2,007,481
Gross margin as a percent of revenue			43.3	%			43.1	%			44.6	%			43.4	%			43.6	%
Research and development			221,675				217,865				185,449				825,242				716,471
Selling, general and administrative			149,384				142,772				155,737				591,611				613,341
Goodwill impairment			79,444				—				—				79,444				—
Total operating expenses			450,503				360,637				341,186				1,496,297				1,329,812
Operating income			191,035				239,965				215,850				788,039				677,669
Operating margin as a percent of revenue			12.9	%			17.2	%			17.3	%			15.0	%			14.7	%
Gain on sale of real estate			—				—				83,090				—				83,090
Other expense, net			(20,353	)			(11,389	)			(9,442	)			(47,189	)			(37,396	)
Income before income taxes			170,682				228,576				289,498				740,850				723,363
Income tax expense			(39,411	)			(22,291	)			(56,103	)			(85,273	)			(91,074	)
Net income		$	131,271			$	206,285			$	233,395			$	655,577			$	632,289
Net income per share:
Basic net income per share		$	0.83			$	1.30			$	1.44			$	4.11			$	3.84
Diluted net income per share		$	0.74			$	1.16			$	1.35			$	3.70			$	3.62
Number of shares used in per share calculations:
Basic			158,590				158,992				162,215				159,629				164,741
Diluted			176,575				177,531				173,345				177,067				174,503
Cash dividend declared per share		$	0.30			$	0.18			$	0.18			$	0.84			$	0.18

 

(1)	Derived from audited financial statements

 

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Lam Announces Financial Results for the June 2015 Quarter

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

		June 28, 2015				March 29, 2015				June 29, 2014
		(unaudited)				(unaudited)				(1)
ASSETS
Cash and cash equivalents		$	1,501,539			$	1,635,636			$	1,452,677
Short-term investments			2,574,947				2,313,495				1,612,967
Accounts receivable, net			1,093,582				1,046,800				800,616
Inventories			943,346				919,679				740,503
Other current assets			157,435				145,357				176,899
Total current assets			6,270,849				6,060,967				4,783,662
Property and equipment, net			621,418				579,824				543,496
Restricted cash and investments			170,969				164,300				146,492
Goodwill and intangible assets			2,115,649				2,242,977				2,360,303
Other assets			185,763				190,473				159,353
Total assets		$	9,364,648			$	9,238,541			$	7,993,306
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt, convertible notes, and capital leases		$	1,359,650			$	518,267			$	520,686
Other current liabilities			1,271,711				1,216,729				1,061,315
Total current liabilities			2,631,361				1,734,996				1,582,001
Long-term debt and capital leases		$	1,001,382			$	1,831,094			$	817,202
Income taxes payable			202,930				205,536				258,357
Other long-term liabilities			184,023				189,291				122,662
Total liabilities		$	4,019,696			$	3,960,917			$	2,780,222
Senior convertible notes			241,808				180,569				183,349
Stockholders’ equity (2)			5,103,144				5,097,055				5,029,735
Total liabilities and stockholders’ equity		$	9,364,648			$	9,238,541			$	7,993,306

 

(1)	Derived from audited financial statements

(2)	Common shares issued and outstanding were 158,531 as of June 28, 2015, 158,485 shares as of March 29, 2015, and 162,350 shares as of June 29, 2014.

 

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Lam Announces Financial Results for the June 2015 Quarter

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

		Three Months Ended												Twelve Months Ended
		June 28, 2015				March 29, 2015				June 29, 2014				June 28, 2015				June 29, 2014
		(unaudited)				(unaudited)				(unaudited)				(unaudited)				(1)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	131,271			$	206,285			$	233,395			$	655,577			$	632,289
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			70,177				70,322				71,115				277,920				292,254
Deferred income taxes			(2,694	)			1,739				(4,104	)			5,551				7,537
Impairment of long-lived assets			9,821				—				—				9,821				11,632
Equity-based compensation expense			39,734				32,948				33,085				135,354				103,700
Income tax benefit (expense) on equity-based compensation plans			(2,124	)			2,438				6,269				11,316				5,973
Excess tax (benefit) expense on equity-based compensation plans			1,809				(2,204	)			(6,361	)			(11,398	)			(6,065	)
Amortization of note discounts and issuance costs			11,023				9,409				9,002				37,550				35,482
Gain on sale of business			—				—				—				(7,431	)			—
Gain on sale of real estate			—				—				(83,090	)			—				(83,090	)
Goodwill impairment			79,444				—				—				79,444				—
Other, net			3,621				1,902				8,241				12,656				12,669
Changes in operating asset and liabilities:			(50,016	)			(131,802	)			(21,661	)			(420,857	)			(295,332	)
Net cash provided by operating activities			292,066				191,037				245,891				785,503				717,049
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets			(63,133	)			(31,898	)			(41,764	)			(198,265	)			(145,503	)
Cash paid for business acquisition			—				—				(11,839	)			(1,137	)			(30,227	)
Net purchases of available-for-sale securities			(278,379	)			(359,416	)			(155,035	)			(949,740	)			(283,966	)
Proceeds from sale of business			—				—				—				41,212				—
Purchase of other investment			—				(2,500	)			—				(2,500	)			—
Repayments of notes receivable			—				—				—				3,978				10,000
Proceeds from sale of assets			—				—				134,762				—				156,397
Transfer of restricted cash and investments			1,056				(822	)			(637	)			356				28,085
Net cash used for investing activities			(340,456	)			(394,636	)			(74,513	)			(1,106,096	)			(265,214	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt and capital lease obligations			(615	)			(119	)			(739	)			(1,515	)			(1,658	)
Proceeds from issuance of long-term debt, net issuance costs and captial lease obligations			345				991,880				—				992,225				—
Excess tax benefit (expense) on equity-based compensation plans			(1,809	)			2,204				6,361				11,398				6,065
Treasury stock purchases			(74,339	)			(124,943	)			(40,249	)			(573,240	)			(244,859	)
Dividends paid			(28,714	)			(28,724	)			—				(116,059	)			—
Reissuances of treasury stock related to employee stock purchase plan			16,950				14,934				14,597				48,803				42,926
Proceeds from issuance of common stock			1,285				7,403				8,657				17,520				34,791
Other			(660	)			—				—				(660	)			—
Net cash provided by (used for) financing activities			(87,557	)			862,635				(11,373	)			378,472				(162,735	)
Effect of exchange rate changes on cash			1,850				(4,675	)			371				(9,017	)			1,104
Net increase (decrease) in cash and cash equivalents			(134,097	)			654,361				160,376				48,862				290,204
Cash and cash equivalents at beginning of period			1,635,636				981,275				1,292,301				1,452,677				1,162,473
Cash and cash equivalents at end of period		$	1,501,539			$	1,635,636			$	1,452,677			$	1,501,539			$	1,452,677

 

(1)	Derived from audited financial statements

 

page 6 of 8

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Lam Announces Financial Results for the June 2015 Quarter

Non-GAAP Financial Summary

(in thousands, except percentages and per share data)

(unaudited)

 

		Three Months Ended				Three Months Ended
		June 28, 2015				March 29, 2015
Revenue		$	1,481,370			$	1,393,333
Gross margin		$	673,837			$	622,196
Gross margin as percentage of revenue			45.5	%			44.7	%
Operating expenses		$	354,542			$	345,049
Operating income		$	319,295			$	277,147
Operating margin as a percentage of revenue			21.6	%			19.9	%
Net income		$	260,023			$	244,911
Net income per diluted share		$	1.50			$	1.40
Shares used in per share calculation - diluted			173,641				174,471

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 per share data)

(unaudited)

 

		Three Months Ended				Three Months Ended
		June 28, 2015				March 29, 2015
U.S. GAAP net income		$	131,271			$	206,285
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			1,192				308
Impairment of long lived asset - cost of goods sold			9,821				—
Amortization related to intangible assets acquired in Novellus transaction - operating expenses			16,083				16,083
Restructuring charges/(benefits) - operating expenses			434				(495	)
Goodwill impairment - operating expenses			79,444				—
Amortization of note discounts - other expense, net			9,019				8,749
Net tax benefit on non-GAAP items			(9,605	)			(7,181	)
Net income tax expense (benefit) on resolution or additional accrual for certain tax matters			1,078				(124	)
Non-GAAP net income		$	260,023			$	244,911
Non-GAAP net income per diluted share		$	1.50			$	1.40
U.S. GAAP number of shares used for diluted per share calculation			176,575				177,531
Effect of convertible note hedge			(2,934	)			(3,060	)
Non-GAAP number of shares used for diluted per share calculation			173,641				174,471

 

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Lam Announces Financial Results for the June 2015 Quarter

Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating Income to Non-GAAP Gross Margin, Operating Expenses and Operating Income

(unaudited)

 

		Three Months Ended				Three Months Ended				Three Months Ended				Three Months Ended
		June 28, 2015				March 29, 2015				December 28, 2014				September 28, 2014
U.S. GAAP gross margin		$	641,538			$	600,602			$	536,657			$	505,539
Pre-tax non-GAAP items:
Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold			21,286				21,286				21,286				20,893
Acquisition-related inventory fair value impact - cost of goods sold			1,192				308				2,101				—
Impairment of long lived asset - cost of goods sold			9,821				—				—				—
Costs associted with rationalization of certain product configurations - cost of goods sold			—				—				—				1,600
Non-GAAP gross margin		$	673,837			$	622,196			$	560,044			$	528,032
U.S. GAAP gross margin as a percentage of revenue			43.3	%			43.1	%			43.6	%			43.9	%
Non-GAAP gross margin as a percentage of revenue			45.5	%			44.7	%			45.4	%			45.8	%
U.S. GAAP operating expenses		$	450,503			$	360,637			$	347,916			$	337,241
Pre-tax non-GAAP items:
Amortization related to intangible assets acquired in Novellus transaction - operating expenses			(16,083	)			(16,083	)			(16,083	)			(16,083	)
Restructuring (charges)/benefits - operating expenses			(434	)			495				(1,620	)			—
Goodwill impairment - operating expenses			(79,444	)			—				—				—
Non-GAAP operating expenses		$	354,542			$	345,049			$	330,213			$	321,158
Non-GAAP operating income		$	319,295			$	277,147			$	229,831			$	206,874
GAAP operating margin as percent of revenue			12.9	%			17.2	%			15.3	%			14.6	%
Non-GAAP operating margin as a percent of revenue			21.6	%			19.9	%			18.7	%			18.0	%

 

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