10-QPeriod: Q3 FY2016

LAM RESEARCH CORP Quarterly Report for Q3 Ended Mar 27, 2016

Filed April 25, 2016For Securities:LRCX

Summary

Lam Research Corporation reported solid financial results for the nine months ended March 27, 2016, demonstrating resilience in a dynamic semiconductor industry. While revenue for the three months ended March 27, 2016, saw a slight decrease compared to the prior year period, it rebounded from the preceding quarter, driven by increased investments from 3D NAND customers. The company maintained strong gross margins and continued to invest heavily in research and development to support next-generation technologies like FinFET and 3D NAND. Financially, Lam Research ended the period with a robust cash position and significant investments, totaling approximately $4.8 billion. The company successfully managed its operating expenses and cash flows, providing confidence in its ability to support ongoing operations, R&D, and capital expenditures. Looking ahead, Lam Research is navigating a significant strategic development with its announced agreement to acquire KLA-Tencor, which is expected to reshape its market position and future growth trajectory. Investors should monitor the progress of this acquisition and its impact on the company's competitive landscape and financial leverage.

Financial Highlights

54 data points
Beta

Revenue

$1.31B

43.5% Gross Margin

Net Income

$143.45M

10.9% Net Margin

EPS (Diluted)

$0.08

Total Assets

$10.02B

Cash & Equivalents

$2.23B

Free Cash Flow

$182.91M

Financial Statements
Beta
Revenue$1.31B
Cost of Revenue$742.79M
Gross Profit$571.26M
R&D Expenses$221.49M
SG&A Expenses$159.02M
Operating Expenses$380.51M
Operating Income$190.75M
Interest Expense$38.06M
Net Income$143.45M
EPS (Basic)$0.09
EPS (Diluted)$0.08
Shares Outstanding (Basic)1.59B
Shares Outstanding (Diluted)1.74B

Key Highlights

  • 1Revenue for the nine months ended March 27, 2016, increased by 15% to $4.34 billion compared to $3.78 billion in the same period last year.
  • 2Net income for the nine months ended March 27, 2016, was $655.1 million, a significant increase from $524.3 million in the prior year period.
  • 3Gross margin for the nine months ended March 27, 2016, improved to 44.2% from 43.5% in the prior year period, reflecting favorable changes in customer concentration.
  • 4The company maintained a strong liquidity position, with total cash and investments of approximately $4.8 billion as of March 27, 2016.
  • 5Research and Development (R&D) spending increased by approximately 12% for the nine months ended March 27, 2016, to $676.5 million, reflecting continued investment in new technologies.
  • 6Lam Research announced an agreement to acquire KLA-Tencor Corporation in October 2015, a move intended to enhance its market position.
  • 7The company continued to return capital to shareholders through dividends, paying $0.30 per share in the quarter ended March 27, 2016, up from $0.18 in the prior year quarter.

Frequently Asked Questions

For the three months ended March 27, 2016, Lam Research reported revenue of $1,314.1 million, a decrease of 6% compared to $1,393.3 million in the same period last year. However, this represented an increase of 12% compared to the immediately preceding quarter ended December 27, 2015, primarily driven by increased 3D NAND capacity investments from customers.

Lam Research announced an agreement to acquire KLA-Tencor Corporation in October 2015. The filing mentions that the consummation of the merger is subject to customary conditions, including the receipt of required regulatory approvals. The company is actively pursuing this strategic combination.

Lam Research has a significant debt structure including convertible senior notes and senior notes. The company also secured a $900 million term loan facility and has a $750 million revolving credit facility. For the KLA-Tencor acquisition, the company obtained commitments for bridge financing and intends to fund the cash portion through a combination of its balance sheet cash, term loans, revolving credit facility, debt securities, and potentially borrowings under the bridge facility. The increased leverage post-acquisition is a key consideration.

The company is prioritizing increased R&D spending, particularly for emerging technology areas such as 3D NAND, FinFET, and multiple patterning. Investments are also focused on enhancing the performance of its installed base of approximately 35,000 tools. R&D expenses increased for the nine months ended March 27, 2016, reflecting higher employee compensation and additional spending in IT and facilities.