What was the impact of the SEZ Holding AG acquisition on the financial results?

The acquisition of SEZ Holding AG was completed in March 2008 for $614.3 million in cash. It added $1.7 million to revenue in the current quarter and resulted in a net loss of $5.6 million from the acquired business. The company also incurred a $2.1 million charge for in-process R&D related to this acquisition and recognized $49.3 million in foreign exchange gains from settling a hedge related to the acquisition. The acquisition also added $34.1 million in debt.

What caused the significant increase in operating expenses and the related 409A charge?

Operating expenses were significantly impacted by a $43.8 million charge recorded to assume employee liabilities related to Section 409A of the Internal Revenue Code. This arose from a voluntary internal stock option review which found that certain stock option grants might not have been issued at fair market value on the original grant date. An additional $6.4 million related to this issue was recorded in cost of goods sold.

How did the gross margin performance change compared to the previous year?

Gross margin as a percentage of revenue decreased to 46.8% in the current quarter, down from 50.2% in the same quarter last year. This decline is primarily attributed to decreased factory utilization due to lower shipment volumes, unfavorable customer and product mix, and the inclusion of $6.4 million in 409A expense, which represented 1% of revenue for the quarter.

What is the company's liquidity position as of March 30, 2008?

Lam Research maintained a strong liquidity position, with $552.4 million in cash and cash equivalents and $290.5 million in short-term investments. Total cash and investments stood at approximately $1.0 billion, which the company believes is sufficient to support its anticipated operations, investments, and debt service requirements for at least the next 12 months.

LRCX 10-Q Quarterly Report Q3 FY2008 — Revenue, Net Income, EPS

Summary

Lam Research Corporation (LRCX) reported its quarterly results for the period ending March 30, 2008. The company experienced a decrease in revenue year-over-year, down 6% to $613.8 million, and a notable decline in gross margin percentage to 46.8% from 50.2% in the prior year's comparable quarter. This margin compression was attributed to lower factory utilization, unfavorable customer and product mix, and a $6.4 million charge related to Section 409A compliance issues stemming from stock option accounting. A significant event during the quarter was the acquisition of SEZ Holding AG for $614.3 million in cash, which expands Lam Research's offerings into single-wafer clean technology. This acquisition, however, contributed to increased operating expenses and complexity. The company also recorded a $2.1 million charge for in-process R&D related to this acquisition. Despite these challenges, the company maintained a strong liquidity position with $1.0 billion in cash and investments.

Key Highlights

1Revenue for the quarter was $613.8 million, a 6% decrease compared to the same period in the prior year, but slightly up sequentially.
2Gross margin declined to 46.8% from 50.2% in the prior year's quarter, impacted by lower utilization, product mix, and a $6.4 million 409A expense charge.
3Net income decreased to $103.5 million ($0.82 per diluted share) from $164.7 million ($1.15 per diluted share) in the prior year's quarter.
4The company completed the acquisition of SEZ Holding AG for $614.3 million in cash, adding single-wafer clean technology to its portfolio.
5Operating expenses were significantly impacted by a $43.8 million charge related to assuming employee liabilities under Section 409A from stock option accounting issues.
6The company maintained a strong liquidity position with $552.4 million in cash and cash equivalents and $290.5 million in short-term investments as of March 30, 2008.
7The outlook for the next quarter (ending June 2008) is cautious, with expected revenue between $490 million and $530 million, reflecting customer equipment utilization decisions and potential imbalances in the memory market.

LAM RESEARCH CORP Quarterly Report for Q3 Ended Mar 30, 2008

Summary

Key Highlights

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