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Lam Research Corporation Reports Financial Results For The Quarter Ended September 27, 2015

The following excerpt is from the company's SEC filing.

FREMONT, Calif., October 21, 2015 - Lam Research Corp. (Nasdaq: LRCX) today announced financial results for the quarter ended September 27, 2015. A conference call and webcast will be held beginning at 5:00 a.m. Pacific Time. Please dial in 5-10 minutes prior to the start time using the dial in and Conference ID below:

Conference ID: 4899617

Participant, Intl Toll: 719-325-2494

Participants, US/CAN Toll Free: 888-438-5453

Highlights for the September 2015 quarter were as follows:

Revenue of $1,600 million, up 8% from the prior quarter

GAAP gross margin of 45.1%, GAAP operating margin of 21.0% and GAAP diluted EPS of $1.66

Non-GAAP gross margin of 46.5%, non-GAAP operating margin of 23.8%, and non-GAAP diluted EPS of $1.82

Key Financial Data for the Quarters Ended September 27, 2015 and June 28, 2015

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

U.S. GAAP

September 2015

June 2015

Change Q/Q

1,600,043

1,481,370

Shipments

1,579,298

1,615,968

Gross margin as percentage of revenue

+180 bps

Operating margin as percentage of revenue

+810 bps

Diluted EPS

June 2015

Change Q/Q

+100 bps

+220 bps

GAAP Financial Results

For the September 2015 quarter, revenue was $1,600.0 million, gross margin was $722.4 million, or 45.1% of revenue, operating expenses were $386.9 million, operating margin was 21.0% of revenue, and net income was $288.7 million, or $1.66 per diluted share on a GAAP basis. This compares to revenue of $1,481.4 million, gross margin of $641.5 million, or 43.3% of revenue, operating expenses of $450.5 million, operating margin of 12.9% of revenue, and net income of $131.3 million, or $0.74 per diluted share, for the quarter ended June 28, 2015 (the June 2015 quarter). The September 2015 operating expenses, operating margin, net income and income per diluted share were negatively impacted by $7.3 million of restructuring charges. 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, the June 2015 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 September 2015 quarter, non-GAAP gross margin was $744.0 million or 46.5% of revenue, non-GAAP operating expenses were $363.6 million, non-GAAP operating margin was 23.8% of revenue, and non-GAAP net income was $313.0 million, or $1.82 per diluted share. This compares to non-GAAP gross margin of $673.8 million or 45.5% of revenue, non-GAAP operating expenses of $354.5 million, non-GAAP operating margin of 21.6% of revenue, and non-GAAP net income of $260.0 million, or $1.50 per diluted share for the June 2015 quarter.

Lam posted record revenue and earnings in the September quarter and is on track to deliver over 20% revenue growth for the third consecutive year in calendar 2015, said Martin Anstice, Lam Researchs president and chief executive officer. We are positioning the company for continued outperformance by focusing on our commitment to helping our customers solve their most critical challenges, through the delivery of differentiated products and services in the market expanding technology inflections.

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Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments, and restricted cash and investments balances increased to $4.5 billion at the end of the September 2015 quarter compared to $4.2 billion at the end of the June 2015 quarter. This increase was primarily the result of approximately $449.0 million in cash flows from operating activities which was partially offset by approximately $98.4 million of treasury stock repurchases, including net share settlement on employee stock-based compensation; approximately $49.5 million of capital expenditures; and approximately $47.7 million of dividends paid to stockholders during the September 2015 quarter.

Deferred revenue at the end of the September 2015 quarter remained stable at $517.4 million, as compared to $518.1 million at the end of the June 2015 quarter, while deferred profit balances at the end of the September 2015 quarter increased to $325.0 million, as compared to $322.1 million at the end of the June 2015 quarter. Lams 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 $146.7 million as of September 27, 2015.

Geographic Distribution

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

Region

Taiwan

United States

Southeast Asia

Europe

Outlook

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

Reconciling

1.275 Billion

75 Million

1.410 Billion

1.410 Billion

21 Million

37 Million

Net income per diluted share

38 Million

Diluted share count

174 Million

2 Million

172 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, 2 million shares.

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