1
EXHIBIT 99.1
LAM RESEARCH CORPORATION ANNOUNCES FISCAL 2001 FOURTH QUARTER AND YEAR-END
RESULTS
FREMONT, Calif.--(BUSINESS WIRE)--July 24, 2001--Lam Research Corporation
(Nasdaq: LRCX) today announced financial results for the fiscal fourth quarter
and year ended June 24, 2001. Revenues of $365.5 million were 21.4 percent lower
than the March 2001 quarter. Net income for the period, including the net effect
of two one-time items totaling $16.3 million (a $16.8 million restructuring
charge and a $33.1 million gain from the Company's derivative financial
instruments), was $58.3 million, or $0.44 per diluted share. Excluding the
effect of these one-time items, net income was $36.9 million, or $0.28 per
diluted share, compared to net income of $65.1 million, or $0.48 per diluted
share, in the March 2001 quarter. Both quarters reflect the effect of the
adoption of Securities and Exchange Commission Staff Accounting Bulletin (SAB)
101 that sets forth new guidelines on revenue recognition. The impact of this
new guideline is generally to delay equipment revenue recognition from shipment
to customer acceptance.
New orders for the period decreased when compared to the previous quarter.
Regional distribution of new orders for the quarter ended June 24, 2001 was as
follows: North America, 33 percent; Europe, 20 percent; Japan, 3 percent; and
Asia Pacific, 44 percent.
Revenues for the quarter ended June 24, 2001 decreased sequentially in all
geographies except Japan and were distributed as follows: North America, 27
percent; Europe, 23 percent; Japan, 11 percent; and Asia Pacific, 39 percent.
Shipments for the quarter were approximately $259 million.
Gross margins of 40.4 percent of revenues compared with 43.6 percent in the
March 2001 quarter as declining manufacturing output resulted in excess factory
capacity. Operating expenses, excluding restructuring charges, decreased by
$12.3 million to $102.1 million, reflecting the initial impact of downsizing
activities.
Cash, short-term investments and restricted cash increased to $925.4 million,
driven by $88.3 million positive cash flow from operations and proceeds of $350
million from long-term debt transactions. Other long-term assets include the
market value ($33.1 million) at fiscal year end of the Company's equity
derivatives, as required by EITF 00-19. The adoption of SAB 101 increased
current liabilities by $250.8 million, the amount of deferred profit as of June
24, 2001.
"Business fundamentals reflect the continued weakness in semiconductor market
conditions," stated James W. Bagley, chairman and chief executive officer.
"Despite the industry-wide slowdown, Lam is well positioned with a major new
product introduction in dielectric etch and strong customer acceptance of our
full suite of 300 mm etch and CMP products."
"During SEMICON(R) West, held in San Francisco, July 16-18, 2001, Lam introduced
its newest dielectric etch system, the Exelan High Performance. The Exelan(R)
High Performance addresses critical, next-generation dielectric etch
applications and began shipping into production during the June quarter."
"Our focus and efforts during the current slowdown will be on introducing new
products and strengthening our customer positions to grow our market share when
the industry recovers," Bagley concluded.
2
Explanations of the impact of certain accounting changes required by SAB 101 and
EITF 00-19 are attached to this press release as the following exhibits:
- "Explanation of Revenue Recognition Under SAB 101"
- "Unaudited Quarterly Income Statements Using SAB 101 Accounting
Guidelines"
- "Accounting for the Company's Equity Derivatives Under EITF 00-19"
Statements made in this press release which are not statements of historical
fact are forward-looking statements and are subject to the Safe Harbor
provisions created by the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements relate, but are not limited, to future market
conditions, the prospective demand for the company's products, future market
share projections, the company's plans and objectives for future operations,
market opportunities and market and competitive conditions. Such statements are
based on current expectations and are subject to risks, uncertainties and
changes in condition, significance, value and effect as well as other risks
detailed in documents filed with the Securities and Exchange Commission, which
could cause actual results to vary from expectations. The company undertakes no
obligation to update the information in this press release.
Lam Research Corporation is a leading supplier of wafer processing equipment and
services to the worldwide semiconductor manufacturing industry. The company's
common stock trades on the Nasdaq National Market under the symbol "LRCX." Lam's
World Wide Web address is http://www.lamrc.com.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME UNDER SAB 101
(In thousands, except per share data)
Three Months Three Months Twelve Months
Ended Ended Ended
June 24, March 25, June 24,
2001 2001 2001
(unaudited) (unaudited/restated)
----------- ----------- -----------
Total revenue $ 365,536 $ 465,125 $ 1,519,789
Cost and expenses:
Cost of goods sold 213,790 262,102 862,321
Cost of goods sold
- restructuring charges 3,989 -- 3,989
----------- ----------- -----------
Gross margin 147,757 203,023 653,479
Research and
development 53,204 58,791 227,248
Selling, general
and administrative 48,872 55,615 218,919
Restructuring charge 12,780 -- 12,780
Purchased technology for
research and development -- -- 8,000
----------- ----------- -----------
Operating income 32,901 88,617 186,532
Other income, net 3,107 4,429 15,102
----------- ----------- -----------
3
Three Months Three Months Twelve Months
Ended Ended Ended
June 24, March 25, June 24,
2001 2001 2001
(unaudited) (unaudited/restated)
----------- ----------- -----------
Income before
income tax expense 36,008 93,046 201,634
Income tax expense 10,802 27,924 60,497
----------- ----------- -----------
Income before cumulative
effect of changes in
accounting principles 25,206 65,122 141,137
Cumulative effect of
the application of
EITF 00-19, Derivative
Financial Instruments
Indexed to, and Potentially
Settled in, a Company's Own
Stock, no related tax 33,074 -- 33,074
Cumulative effect of
the application of
SAB 101, Revenue Recognition
in Financial Statements, net
of $81,441 related tax
benefit -- -- (122,105)
----------- ----------- -----------
Net Income $ 58,280 $ 65,122 $ 52,106
=========== =========== ===========
Net income per share
- diluted (1):
Income before
cumulative effect of change
in accounting principles $ 0.19 $ 0.48 $ 1.07
Cumulative effect of
change in accounting
principle, application
of EITF 00-19 $ 0.25 $ -- $ 0.25
Cumulative effect of
change in accounting
principle, application
of SAB 101 $ -- $ -- $ (0.92)
----------- ----------- -----------
Diluted net income
per share $ 0.44 $ 0.48 $ 0.39
=========== =========== ===========
Number of shares used in
per share calculation -
diluted 133,531 141,901 132,243
=========== =========== ===========
(1) For the three and twelve month periods ending June 24, 2001, conversion of
the convertible subordinated notes was antidilutive and therefore excluded
from the calculation of diluted earnings per share. Diluted earnings per
share for the three month period ended March 25, 2001 assumes conversion of
the convertible subordinated notes and accordingly, interest expense net of
taxes of $3,025 must be added to net income for computing diluted earnings
per share.
4
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 24, June 25,
2001 2000
---------- ----------
Assets:
Cash and short-term investments $ 864,559 $ 371,722
Accounts receivable, net 248,910 323,935
Inventories 284,757 227,169
Other current assets 178,380 98,509
---------- ----------
Total current assets 1,576,606 1,021,335
Property and equipment, net 126,533 119,192
Restricted cash 60,800 60,348
Other assets 107,836 43,962
---------- ----------
Total assets $1,871,775 $1,244,837
========== ==========
Liabilities and
stockholders' equity:
Total current liabilities $ 499,684 $ 287,756
Long-term debt and other 659,718 321,657
Stockholders' equity 712,373 635,424
---------- ----------
Total liabilities and
stockholders' equity $1,871,775 $1,244,837
========== ==========
Lam Research Corporation
Explanation of Revenue Recognition under SAB 101
Summary of SAB 101
In December 1999 the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101 "Revenue Recognition in Financial
Statements." SAB 101 provides guidance on the recognition of revenue for sales
that involve contractual customer acceptance provisions and product installation
commitments. In October 2000 the SEC issued implementation guidance for SAB 101
in the form of "Frequently Asked Questions and Answers."
Impact of SAB 101 on the Company's Revenue Recognition Policy
Lam Research derives revenue from three sources - equipment sales, spare
parts sales and service contracts. SAB 101 had no impact on the Company's
revenue recognition policy for spare parts and service activities.
Based on the guidance provided by SAB 101, the Company changed its
revenue recognition policy for equipment sales effective June 26, 2000. Prior to
SAB 101 the Company generally recognized revenue on equipment sales on the date
the equipment was shipped to customers. Under SAB 101 the Company now recognizes
revenue on the date of customer acceptance.
The new policy has the effect of delaying revenue recognition. The new
policy has no impact on cash collections from customers.
5
The Company is providing on its Website the unaudited Income Statements
showing quarterly financial results for all four quarters of FY01, assuming the
Company had applied SAB 101 revenue recognition guidelines during those periods.
The information is presented in an exhibit titled "Unaudited Quarterly Income
Statements Using SAB 101 Accounting Guidelines."
Cumulative Effect of the Change in Accounting Principle
As a result of the change in accounting to SAB 101, Lam has reported a
change in accounting principle in accordance with APB 20, Accounting Changes, by
a cumulative effect adjustment. The Company adopted SAB 101 in the fourth fiscal
quarter, but the change is effective as of the beginning of the fiscal year
(June 26, 2000). Therefore, no cumulative effect of the change is included in
net income in the fourth quarter (June 2001). Instead, the change is made as of
the beginning of the year, financial information for the first three quarters of
FY01 are revised to reflect the new policy, and the cumulative effect is
reported in the September 2000 quarter.
Lam Research Corporation
Unaudited Quarterly Income Statements Using SAB 101
Accounting Guidelines
(In Millions)
For the quarter ended:
Sept. 24, Dec. 24, March 25, June 24,
2000 2000 2001 2001
(Revised) (Revised) (Revised) (Actual)
------- ------- ------- -------
Excluding one-time items:
Total revenue $ 305.0 $ 384.1 $ 465.1 $ 365.5
Gross margin 132.7 170.0 203.0 151.8
Research and
development 56.5 58.7 58.8 53.2
Selling, general
and administrative 52.5 62.0 55.6 48.9
Operating income 23.7 49.3 88.6 49.7
Other income, net 4.6 2.9 4.4 3.1
Income before
income tax expense 28.3 52.2 93.0 52.8
Income tax expense 8.5 15.6 27.9 15.9
------- ------- ------- -------
Net income
excluding one
time items $ 19.8 $ 36.6 $ 65.1 $ 36.9
======= ======= ======= =======
Diluted net income
per share excluding
one time items $ 0.15 $ 0.28 $ 0.48 $ 0.28
======= ======= ======= =======
6
For the quarter ended:
Sept. 24, Dec. 24, March 25, June 24,
2000 2000 2001 2001
(Revised) (Revised) (Revised) (Actual)
------- ------- ------- -------
One time items
(net of tax effect):
Restructuring
(charges) / recoveries (11.7)
Purchased technology for R&D (5.6)
Cumulative effect of
changes in
accounting principles:
SAB 101
(revenue recognition) (122.1)
EITF 00-19
(equity derivatives) 33.1
------- ------- ------- -------
Net income including
one time items ($102.3) $ 31.0 $ 65.1 $ 58.3
======= ======= ======= =======
Diluted net income
per share including
one time items ($ 0.76) $ 0.24 $ 0.48 $ 0.44
Lam Research Corporation
Accounting for the Company's Equity Derivatives Under
EITF 00-19
In November 2000 the Financial Accounting Standards Board finalized the
rules for accounting for derivative financial instruments indexed to and
potentially settled in a company's own stock. Under the revised rules Lam must
record the fair value of its put and call options on the Balance Sheet. As of
June 2001 their value was $33.1 million, which is recorded as a cumulative
effect adjustment in the June 2001 Income Statement. It is carried as a
long-term asset. The cumulative change does not net out taxes because we believe
the option settlement will be non-taxable. For future quarters, the value of
these derivatives will be re-calculated based on their market value at quarter
end and the change in value will be reported as a gain or loss in Other Income
and Expense.
CONTACT: Lam Research Corporation
Shawn Lynch, 510/572-1726 (Media)
shawn.lynch@lamrc.com
Kathleen Bela, 510/572-4566 (Investor Relations)
kathleen.bela@lamrc.com