Delaware | 0-12933 | 94-2634797 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition |
Item 9.01. | Financial Statements and Exhibits |
Date: | October 16, 2018 | LAM RESEARCH CORPORATION | |
(Registrant) | |||
/s/ Douglas R. Bettinger | |||
Douglas R. Bettinger | |||
Executive Vice President, Chief Financial Officer | |||
(Principal Financial Officer and Principal Accounting Officer) |
• | Revenue of $2.33 billion. |
• | U.S. GAAP gross margin of 45.4%, U.S. GAAP operating income as a percentage of revenue of 25.4%, and U.S. GAAP diluted EPS of $3.23. |
• | Non-GAAP gross margin of 46.4%, non-GAAP operating income as a percentage of revenue of 27.0%, and non-GAAP diluted EPS of $3.36. |
U.S. GAAP(1) | ||||||||||
September 2018 | June 2018 | Change Q/Q | ||||||||
Revenue | $ | 2,330,691 | $ | 3,125,928 | - 25% | |||||
Gross margin as percentage of revenue | 45.4 | % | 47.3 | % | - 190 bps | |||||
Operating margin as percentage of revenue | 25.4 | % | 30.6 | % | - 520 bps | |||||
Diluted EPS | $ | 3.23 | $ | 5.82 | - 45% | |||||
Non-GAAP(1) | ||||||||||
September 2018 | June 2018 | Change Q/Q | ||||||||
Revenue | $ | 2,330,691 | $ | 3,125,928 | - 25% | |||||
Gross margin as percentage of revenue | 46.4 | % | 48.0 | % | - 160 bps | |||||
Operating margin as percentage of revenue | 27.0 | % | 31.8 | % | - 480 bps | |||||
Diluted EPS | $ | 3.36 | $ | 5.31 | - 37% |
Region | Revenue |
Japan | 29% |
China | 25% |
Korea | 16% |
Taiwan | 12% |
Southeast Asia | 9% |
United States | 5% |
Europe | 4% |
U.S. GAAP | Reconciling Items | Non-GAAP | ||||||||||
Revenue | $2.5 Billion | +/- | $150 Million | — | $2.5 Billion | +/- | $150 Million | |||||
Gross margin as a percentage of revenue | 45.1% | +/- | 1% | $ | 22 | Million | 46.0% | +/- | 1% | |||
Operating income as a percentage of revenue | 26.1% | +/- | 1% | $ | 34 | Million | 27.5% | +/- | 1% | |||
Net income per diluted share | $3.47 | +/- | $0.20 | $ | 30 | Million | $3.65 | +/- | $0.20 | |||
Diluted share count | 163 Million | — | 163 million |
• | Gross margin as a percentage of revenue - amortization related to intangible assets acquired through business combinations, $22 million. |
• | Operating income as a percentage of revenue - amortization related to intangible assets acquired through business combinations, $34 million. |
• | Earnings per share - amortization related to intangible assets acquired though business combinations, $34 million; amortization of note discounts, $1 million; and associated tax benefit for non-GAAP items ($5 million); totaling $30 million. |
Three Months Ended | |||||||||||
September 23, 2018 | June 24, 2018 | September 24, 2017 | |||||||||
Revenue | $ | 2,330,691 | $ | 3,125,928 | $ | 2,478,140 | |||||
Cost of goods sold | 1,272,493 | 1,646,520 | 1,328,797 | ||||||||
Gross margin | 1,058,198 | 1,479,408 | 1,149,343 | ||||||||
Gross margin as a percent of revenue | 45.4 | % | 47.3 | % | 46.4 | % | |||||
Research and development | 291,672 | 327,713 | 275,078 | ||||||||
Selling, general and administrative | 174,775 | 196,500 | 181,043 | ||||||||
Total operating expenses | 466,447 | 524,213 | 456,121 | ||||||||
Operating income | 591,751 | 955,195 | 693,222 | ||||||||
Operating income as a percent of revenue | 25.4 | % | 30.6 | % | 28.0 | % | |||||
Other (expense) income, net | (377 | ) | 2,954 | (5,502 | ) | ||||||
Income before income taxes | 591,374 | 958,149 | 687,720 | ||||||||
Income tax (expense) benefit | (58,014 | ) | 62,997 | (97,030 | ) | ||||||
Net income | $ | 533,360 | $ | 1,021,146 | $ | 590,690 | |||||
Net income per share: | |||||||||||
Basic | $ | 3.43 | $ | 6.35 | $ | 3.64 | |||||
Diluted | $ | 3.23 | $ | 5.82 | $ | 3.21 | |||||
Number of shares used in per share calculations: | |||||||||||
Basic | 155,658 | 160,916 | 162,141 | ||||||||
Diluted | 165,327 | 175,432 | 183,880 | ||||||||
Cash dividend declared per common share | $ | 1.10 | $ | 1.10 | $ | 0.45 |
September 23, 2018 | June 24, 2018 | September 24, 2017 | |||||||||
(unaudited) | (1) | (unaudited) | |||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 2,568,085 | $ | 4,512,257 | $ | 2,406,462 | |||||
Investments | 1,050,863 | 437,338 | 3,775,925 | ||||||||
Accounts receivable, net | 1,846,845 | 2,176,936 | 1,530,762 | ||||||||
Inventories | 1,874,194 | 1,876,162 | 1,328,297 | ||||||||
Other current assets | 175,886 | 147,218 | 187,334 | ||||||||
Total current assets | 7,515,873 | 9,149,911 | 9,228,780 | ||||||||
Property and equipment, net | 951,376 | 902,547 | 745,600 | ||||||||
Restricted cash and investments | 255,924 | 256,301 | 256,045 | ||||||||
Goodwill and intangible assets | 1,767,562 | 1,802,740 | 1,904,389 | ||||||||
Other assets | 466,842 | 367,979 | 263,812 | ||||||||
Total assets | $ | 10,957,577 | $ | 12,479,478 | $ | 12,398,626 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current portion of convertible notes and capital leases | $ | 550,369 | $ | 610,030 | $ | 639,907 | |||||
Other current liabilities | 2,274,596 | 2,540,278 | 2,148,724 | ||||||||
Total current liabilities | 2,824,965 | 3,150,308 | 2,788,631 | ||||||||
Long-term debt and capital leases | 1,805,091 | 1,806,562 | 1,793,477 | ||||||||
Income taxes payable | 845,740 | 851,936 | 129,611 | ||||||||
Other long-term liabilities | 100,144 | 90,629 | 278,733 | ||||||||
Total liabilities | 5,575,940 | 5,899,435 | 4,990,452 | ||||||||
Temporary equity, convertible notes | 58,812 | 78,192 | 136,996 | ||||||||
Stockholders’ equity (2) | 5,322,825 | 6,501,851 | 7,271,178 | ||||||||
Total liabilities and stockholders’ equity | $ | 10,957,577 | $ | 12,479,478 | $ | 12,398,626 |
(1) | Derived from audited financial statements. |
(2) | Common shares issued and outstanding were 153,384 as of September 23, 2018, 156,892 as of June 24, 2018, and 162,144 as of September 24, 2017. |
Three Months Ended | |||||||||||
September 23, 2018 | June 24, 2018 | September 24, 2017 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income | $ | 533,360 | $ | 1,021,146 | $ | 590,690 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 79,805 | 85,119 | 79,142 | ||||||||
Deferred income taxes | (83,501 | ) | 212,260 | 43,204 | |||||||
Equity-based compensation expense | 50,343 | 47,214 | 41,783 | ||||||||
Amortization of note discounts and issuance costs | 1,245 | 959 | 4,588 | ||||||||
Other, net | 2,191 | 10,391 | 6,569 | ||||||||
Changes in operating assets and liabilities | 136,843 | (658,731 | ) | 92,330 | |||||||
Net cash provided by operating activities | 720,286 | 718,358 | 858,306 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Capital expenditures and intangible assets | (56,098 | ) | (79,655 | ) | (60,064 | ) | |||||
Business acquisition, net of cash acquired | — | — | (115,613 | ) | |||||||
Net (purchase) sale of available-for-sale securities | (612,583 | ) | 1,341,475 | (117,774 | ) | ||||||
Other, net | (3,650 | ) | (826 | ) | (10,600 | ) | |||||
Net cash (used for) provided by investing activities | (672,331 | ) | 1,260,994 | (304,051 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Principal payments on debt | (79,831 | ) | (178,279 | ) | (301,727 | ) | |||||
Net repayments from issuance of commercial paper | (86 | ) | (638,367 | ) | — | ||||||
Treasury stock purchases | (1,735,895 | ) | (1,306,309 | ) | (155,385 | ) | |||||
Dividends paid | (174,372 | ) | (82,005 | ) | (72,738 | ) | |||||
Reissuance of treasury stock related to employee stock purchase plan | — | 41,567 | — | ||||||||
Proceeds from issuance of common stock | — | 2,626 | 1,042 | ||||||||
Other, net | (9 | ) | (2 | ) | 4 | ||||||
Net cash used for financing activities | (1,990,193 | ) | (2,160,769 | ) | (528,804 | ) | |||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (2,311 | ) | (5,607 | ) | 3,317 | ||||||
Net (decrease) increase in cash, cash equivalents, and restricted cash | (1,944,549 | ) | (187,024 | ) | 28,768 | ||||||
Cash, cash equivalents, and restricted cash at beginning of period | 4,768,558 | 4,955,582 | 2,633,739 | ||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 2,824,009 | $ | 4,768,558 | $ | 2,662,507 |
Three Months Ended | |||||||
September 23, 2018 | June 24, 2018 | ||||||
Revenue | $ | 2,330,691 | $ | 3,125,928 | |||
Gross margin | $ | 1,080,540 | $ | 1,501,750 | |||
Gross margin as percentage of revenue | 46.4 | % | 48.0 | % | |||
Operating expenses | $ | 450,540 | $ | 507,416 | |||
Operating income | $ | 630,000 | $ | 994,334 | |||
Operating income as a percentage of revenue | 27.0 | % | 31.8 | % | |||
Net income | $ | 555,460 | $ | 931,956 | |||
Net income per diluted share | $ | 3.36 | $ | 5.31 | |||
Shares used in per share calculation - diluted | 165,327 | 175,432 |
Three Months Ended | |||||||
September 23, 2018 | June 24, 2018 | ||||||
U.S. GAAP net income | $ | 533,360 | $ | 1,021,146 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired through certain business combinations - cost of goods sold | 22,342 | 22,342 | |||||
Amortization related to intangible assets acquired through certain business combinations - selling, general and administrative | 12,490 | 16,069 | |||||
Restructuring charges - selling, general and administrative | 3,417 | — | |||||
Business combination acquisition and integration related costs - selling, general and administrative | — | 728 | |||||
Amortization of note discounts - other expense, net | 900 | 1,851 | |||||
Net income tax benefit on non-GAAP items | (5,838 | ) | (4,686 | ) | |||
Income tax benefit on the conclusion of certain tax matters | — | (9,656 | ) | ||||
Income tax benefit associated with U.S. tax reform | (11,211 | ) | (115,838 | ) | |||
Non-GAAP net income | $ | 555,460 | $ | 931,956 | |||
Non-GAAP net income per diluted share | $ | 3.36 | $ | 5.31 | |||
GAAP net income per diluted share | $ | 3.23 | $ | 5.82 | |||
U.S. GAAP number of shares used for per diluted share calculation | 165,327 | 175,432 |
Three Months Ended | |||||||
September 23, 2018 | June 24, 2018 | ||||||
U.S. GAAP gross margin | $ | 1,058,198 | $ | 1,479,408 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired through certain business combinations | 22,342 | 22,342 | |||||
Non-GAAP gross margin | $ | 1,080,540 | $ | 1,501,750 | |||
U.S. GAAP gross margin as a percentage of revenue | 45.4 | % | 47.3 | % | |||
Non-GAAP gross margin as a percentage of revenue | 46.4 | % | 48.0 | % | |||
U.S. GAAP operating expenses | $ | 466,447 | $ | 524,213 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired through certain business combinations | (12,490 | ) | (16,069 | ) | |||
Restructuring charges | (3,417 | ) | — | ||||
Business combination acquisition and integration related costs | — | (728 | ) | ||||
Non-GAAP operating expenses | $ | 450,540 | $ | 507,416 | |||
Non-GAAP operating income | $ | 630,000 | $ | 994,334 | |||
U.S. GAAP operating income as percent of revenue | 25.4 | % | 30.6 | % | |||
Non-GAAP operating income as a percent of revenue | 27.0 | % | 31.8 | % |