10-QPeriod: Q1 FY2013

LAM RESEARCH CORP Quarterly Report for Q1 Ended Sep 23, 2012

Filed November 1, 2012For Securities:LRCX

Summary

Lam Research Corporation (LRCX) reported its quarterly results for the period ending September 23, 2012. The company experienced a significant increase in revenue compared to the prior year, largely driven by the full quarter inclusion of operations from the Novellus acquisition. However, this acquisition also impacted gross margins due to inventory fair value adjustments and amortization of acquired intangible assets. Operating expenses also rose due to combined operations and integration efforts. Despite the increased revenue, net income saw a substantial decrease year-over-year, resulting in a significantly lower diluted earnings per share. The company maintains a strong liquidity position with substantial cash and investments. Investors should note the impact of the Novellus acquisition on financial results, including increased revenues but also higher expenses and a reduced gross margin percentage. The semiconductor industry's cyclical nature and broader economic conditions remain significant risk factors. While the company is focused on integrating Novellus and realizing synergies, its future performance will depend on its ability to navigate industry cycles and technological advancements.

Financial Statements
Beta

Key Highlights

  • 1Revenue for the quarter increased significantly to $906.9 million, up 33% from $680.4 million in the same period last year, largely due to the inclusion of Novellus operations.
  • 2Gross margin as a percentage of revenue decreased to 36.8% from 41.7% in the prior year's quarter, primarily due to acquisition-related inventory fair value adjustments and amortization of acquired intangible assets.
  • 3Operating expenses rose substantially, with R&D increasing by 59% and SG&A by 92% year-over-year, reflecting the full quarter impact of combined operations and integration costs.
  • 4Net income for the quarter was $2.8 million, a sharp decline from $71.8 million in the prior year's quarter, leading to diluted EPS of $0.02 compared to $0.58.
  • 5The company maintained a strong liquidity position, with total cash and investments of $2.9 billion as of September 23, 2012.
  • 6Significant share repurchases were made, with $355.1 million used for treasury stock purchases during the quarter under an authorized repurchase program.
  • 7The company completed the acquisition of Novellus Systems, Inc. on June 4, 2012, valued at approximately $3.0 billion, which significantly impacted the current quarter's financial statements.

Frequently Asked Questions

The primary driver of the revenue increase was the full quarter inclusion of operations from the acquisition of Novellus Systems, Inc., which closed on June 4, 2012. This significantly boosted top-line performance compared to the prior year's quarter.

The decrease in gross margin percentage is attributed to acquisition-related accounting adjustments. Specifically, the company incurred inventory fair value adjustments and amortization of acquired intangible assets from the Novellus acquisition, which negatively impacted the gross margin percentage.

The company views the semiconductor capital equipment industry as cyclical. While demand has declined due to weaker macroeconomic conditions and reduced capital expenditures by some manufacturers, they believe long-term demand will increase as customers invest to address increasing complexity in semiconductor manufacturing and growing demand, particularly in the mobility sector.

Lam Research maintains a strong liquidity position. As of September 23, 2012, the company had approximately $2.9 billion in cash and cash equivalents, short-term investments, and restricted cash and investments, which is expected to be sufficient to support operations for at least the next 12 months.