10-QPeriod: Q1 FY2011

LAM RESEARCH CORP Quarterly Report for Q1 Ended Sep 26, 2010

Filed November 3, 2010For Securities:LRCX

Summary

Lam Research Corporation (LRCX) reported a significant increase in revenue and net income for the quarter ended September 26, 2010, compared to the same period in the prior year. Revenue more than doubled, driven by improved customer demand in the semiconductor industry following a downturn. The company's gross margin also improved, reflecting higher revenues, favorable product mix, and increased factory utilization. Operating expenses increased, primarily due to higher R&D and SG&A investments to support growth, but were partially offset by a reversal of restructuring charges. The balance sheet shows a healthy increase in cash and cash equivalents, indicating strong operational cash flow generation. The company also continued its share repurchase program, demonstrating a commitment to returning capital to shareholders. Overall, the filing suggests a positive recovery and growth trajectory for Lam Research.

Financial Highlights

49 data points
Beta

Revenue

$805.87M

46.8% Gross Margin

Net Income

$193.72M

24.0% Net Margin

EPS (Diluted)

$0.15

Total Assets

$2.65B

Cash & Equivalents

$628.28M

Free Cash Flow

$255.74M

Financial Statements
Beta
Revenue$805.87M
Cost of Revenue$428.55M
Gross Profit$377.33M
R&D Expenses$86.35M
SG&A Expenses$72.14M
Operating Expenses$153.33M
Operating Income$223.99M
Interest Expense$101K
Net Income$193.72M
EPS (Basic)$0.16
EPS (Diluted)$0.15
Shares Outstanding (Basic)1.24B
Shares Outstanding (Diluted)1.25B

Key Highlights

  • 1Revenue surged to $805.9 million for the quarter ended September 26, 2010, a substantial increase from $318.5 million in the prior year period.
  • 2Net income dramatically improved to $193.7 million, or $1.55 per diluted share, compared to $16.8 million, or $0.13 per diluted share, in the prior year period.
  • 3Gross margin increased to 46.8% from 42.2% year-over-year, driven by higher volumes and a favorable product mix.
  • 4Operating income saw a significant recovery, reaching $224.0 million, a substantial improvement from $29.3 million in the prior year quarter.
  • 5Cash and cash equivalents, short-term investments, and restricted cash increased to $1.1 billion as of September 26, 2010, up from $992 million as of June 27, 2010.
  • 6The company actively repurchased shares, utilizing $144.8 million for treasury stock purchases during the quarter, and announced an additional $250 million repurchase authorization.
  • 7Research and Development (R&D) expenses as a percentage of revenue decreased to 10.7% from 22.4% year-over-year, indicating improved operating leverage despite increased R&D spending in absolute terms.

Frequently Asked Questions

The primary driver is the significant recovery and improvement in customer demand within the semiconductor industry, following a downturn experienced in the previous year. This led to increased shipments and revenue, supported by higher factory utilization and a favorable product mix.

The company's liquidity has strengthened considerably. Total cash, cash equivalents, short-term investments, and restricted cash and investments increased to approximately $1.1 billion as of September 26, 2010, from $992 million as of June 27, 2010, reflecting strong cash generation from operations.

Lam Research is actively returning capital to shareholders through its share repurchase program. During this quarter, the company spent $144.8 million on treasury stock purchases and completed its existing authorization. Furthermore, it announced a new authorization for up to an additional $250 million in share repurchases.

The filing acknowledges the cyclical nature of the semiconductor equipment industry and the potential for volatility in quarterly results. Key risks include global economic conditions impacting customer spending, competition, reliance on a few key customers and suppliers, and the challenge of managing resource allocation effectively during industry upswings and downturns. The company also notes ongoing R&D investments are crucial for maintaining market share.