Company Quick10K Filing
Quick10K
Lam Research
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$182.21 153 $27,800
10-Q 2018-12-23 Quarter: 2018-12-23
10-Q 2018-09-23 Quarter: 2018-09-23
10-K 2018-06-24 Annual: 2018-06-24
10-Q 2018-03-25 Quarter: 2018-03-25
10-Q 2017-12-24 Quarter: 2017-12-24
10-Q 2017-09-24 Quarter: 2017-09-24
10-K 2017-06-25 Annual: 2017-06-25
10-Q 2017-03-26 Quarter: 2017-03-26
10-Q 2016-12-25 Quarter: 2016-12-25
10-Q 2016-09-25 Quarter: 2016-09-25
10-K 2016-06-26 Annual: 2016-06-26
10-Q 2016-03-27 Quarter: 2016-03-27
10-Q 2015-12-27 Quarter: 2015-12-27
8-K 2019-01-23 Earnings, Earnings, Other Events, Exhibits
8-K 2019-01-23 Earnings, Earnings, Other Events, Exhibits
8-K 2018-12-10 Regulation FD, Regulation FD, Exhibits
8-K 2018-12-05 Officers, Regulation FD, Exhibits
8-K 2018-11-30 Officers, Exhibits
8-K 2018-11-06 Shareholder Vote, Shareholder Vote
8-K 2018-10-16 Earnings, Earnings, Exhibits
8-K 2018-09-17 Regulation FD, Regulation FD, Exhibits
8-K 2018-07-26 Earnings, Earnings, Exhibits
8-K 2018-06-12 Regulation FD, Regulation FD, Exhibits
8-K 2018-05-10 Officers
8-K 2018-04-17 Earnings, Earnings, Exhibits
8-K 2018-03-12 Regulation FD, Regulation FD, Exhibits
8-K 2018-03-06 Other Events, Other Events, Exhibits
8-K 2018-01-24 Earnings, Officers, Exhibits
8-K 2018-01-02 Officers, Exhibits
DE Deere
FTV Fortive
SNA Snap-On
EAF GrafTech
ESL Esterline Technologies
AIMC Altra Industrial Motion
LCUT Lifetime Brands
CPST Capstone Systems
TAYD Taylor Devices
CLIR Clearsign Combustion
LRCX 2018-12-23
Part I. Financial Information
Item 1. Financial Statements
Note 1 - Basis of Presentation
Note 2 - Recent Accounting Pronouncements
Note 3 - Revenue
Note 4 - Equity-Based Compensation Plans
Note 5 - Other Expense, Net
Note 6 - Income Tax Expense
Note 7 - Net Income (Loss) per Share
Note 8 - Financial Instruments
Note 9 - Inventories
Note 10 - Goodwill and Intangible Assets
Note 11 - Accrued Expenses and Other Current Liabilities
Note 12 - Long-Term Debt and Other Borrowings
Note 13 - Commitments and Contingencies
Note 14 - Stock Repurchase Program
Note 15 - Accumulated Other Comprehensive Loss
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 lrcx2q2019exhibit311.htm
EX-31.2 lrcx2q2019exhibit312.htm
EX-32.1 lrcx2q2019exhibit321.htm
EX-32.2 lrcx2q2019exhibit322.htm

Lam Research Earnings 2018-12-23

LRCX 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
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Table of Contents


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
  ___________________________________________________________
FORM 10-Q
 ___________________________________________________________
 (Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 23, 2018
or 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 0-12933 
___________________________________________________________
LAM RESEARCH CORPORATION
(Exact name of registrant as specified in its charter)
___________________________________________________________
Delaware
 
94-2634797
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
4650 Cushing Parkway
Fremont, California
 
94538
(Address of principal executive offices)
 
(Zip Code)
(510) 572-0200
(Registrant’s telephone number, including area code)
__________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
 
x
  
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨  
  
Smaller reporting company
 
¨
 
 
 
 
 
 
 
 
 
 
 
Emerging growth company
 
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x
As of January 28, 2019, the Registrant had 152,593,454 shares of Common Stock outstanding.
 


Table of Contents



LAM RESEARCH CORPORATION
TABLE OF CONTENTS
 
 
 
Page No.
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
 
 
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



Table of Contents


PART I. FINANCIAL INFORMATION

ITEM 1.
Financial Statements

LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
 
Three Months Ended
 
Six Months Ended
 
December 23, 2018
 
December 24, 2017
 
December 23, 2018
 
December 24, 2017
Revenue
$
2,522,673

 
$
2,580,815

 
$
4,853,364

 
$
5,058,955

Cost of goods sold
1,377,640

 
1,375,248

 
2,650,133

 
2,704,045

Gross margin
1,145,033

 
1,205,567

 
2,203,231

 
2,354,910

Research and development
285,556

 
281,311

 
577,228

 
556,389

Selling, general, and administrative
169,098

 
186,885

 
343,873

 
367,928

Total operating expenses
454,654

 
468,196

 
921,101

 
924,317

Operating income
690,379

 
737,371

 
1,282,130

 
1,430,593

Other expense, net
(30,649
)
 
(3,152
)
 
(31,026
)
 
(8,654
)
Income before income taxes
659,730

 
734,219

 
1,251,104

 
1,421,939

Income tax expense
(90,875
)
 
(744,174
)
 
(148,889
)
 
(841,204
)
Net income (loss)
$
568,855

 
$
(9,955
)
 
$
1,102,215

 
$
580,735

Net income (loss) per share:
 
 
 
 
 
 
 
Basic
$
3.67

 
$
(0.06
)
 
$
7.10

 
$
3.59

Diluted
$
3.51

 
$
(0.06
)
 
$
6.73

 
$
3.16

Number of shares used in per share calculations:
 
 
 
 
 
 
 
Basic
155,022

 
161,135

 
155,340

 
161,638

Diluted
162,170

 
161,135

 
163,749

 
183,958













See Notes to Condensed Consolidated Financial Statements


3



Table of Contents


LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)

 
 
Three Months Ended
 
Six Months Ended
 
December 23,
2018
 
December 24, 2017
 
December 23, 2018
 
December 24, 2017
Net income (loss)
$
568,855

 
$
(9,955
)
 
$
1,102,215

 
$
580,735

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustment
(7,268
)
 
5,239

 
(13,529
)
 
13,108

Cash flow hedges:
 
 
 
 
 
 
 
Net unrealized gains during the period
5,122

 
6,930

 
11,988

 
9,992

Net gains reclassified into earnings
(5,726
)
 
(5,459
)
 
(4,578
)
 
(3,271
)
 
(604
)
 
1,471

 
7,410

 
6,721

Available-for-sale investments:
 
 
 
 
 
 
 
Net unrealized gains (losses) during the period
585

 
(18,339
)
 
298

 
(20,066
)
Net (gains) losses reclassified into earnings
(51
)
 
84

 
(54
)
 
(39
)
 
534

 
(18,255
)
 
244

 
(20,105
)
Defined benefit plans, net change in unrealized component
375

 
172

 
(1,368
)
 
(2,184
)
Other comprehensive loss, net of tax
(6,963
)
 
(11,373
)
 
(7,243
)
 
(2,460
)
Comprehensive income (loss)
$
561,892

 
$
(21,328
)
 
$
1,094,972

 
$
578,275


See Notes to Condensed Consolidated Financial Statements
4

Table of Contents


LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
 
 
December 23,
2018
 
June 24,
2018
 
(unaudited)
 
(1)
ASSETS
 
 
 
Cash and cash equivalents
$
3,359,793

 
$
4,512,257

Investments
275,670

 
437,338

Accounts receivable, less allowance for doubtful accounts of $5,308 as of December 23, 2018, and $5,343 as of June 24, 2018
1,868,842

 
2,176,936

Inventories
1,703,307

 
1,876,162

Prepaid expenses and other current assets
148,233

 
147,218

Total current assets
7,355,845

 
9,149,911

Property and equipment, net
1,013,306

 
902,547

Restricted cash and investments
255,292

 
256,301

Goodwill
1,484,570

 
1,484,904

Intangible assets, net
251,898

 
317,836

Other assets
407,547

 
367,979

Total assets
$
10,768,458

 
$
12,479,478

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Trade accounts payable
$
343,942

 
$
510,983

Accrued expenses and other current liabilities
1,203,577

 
1,309,209

Deferred profit
432,216

 
720,086

Current portion of convertible notes, capital leases, and commercial paper
187,102

 
610,030

Total current liabilities
2,166,837

 
3,150,308

Long-term debt and capital leases, less current portion
1,813,190

 
1,806,562

Income taxes payable
859,232

 
851,936

Other long-term liabilities
87,827

 
90,629

Total liabilities
4,927,086

 
5,899,435

Commitments and contingencies

 

Temporary equity, convertible notes
57,009

 
78,192

Stockholders’ equity:
 
 
 
Preferred stock, at par value of $0.001 per share; authorized, 5,000 shares, none outstanding

 

Common stock, at par value of $0.001 per share; authorized, 400,000 shares; issued and outstanding, 153,961 shares at December 23, 2018, and 156,892 shares at June 24, 2018
154

 
157

Additional paid-in capital
6,256,942

 
6,144,425

Treasury stock, at cost; 128,920 shares at December 23, 2018, and 119,679 shares at June 24, 2018
(9,573,486
)
 
(7,846,476
)
Accumulated other comprehensive loss
(64,692
)
 
(57,449
)
Retained earnings
9,165,445

 
8,261,194

Total stockholders’ equity
5,784,363

 
6,501,851

Total liabilities and stockholders’ equity
$
10,768,458

 
$
12,479,478

(1) Derived from audited financial statements


See Notes to Condensed Consolidated Financial Statements
5

Table of Contents


LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
 
Six Months Ended
 
December 23, 2018
 
December 24, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
1,102,215

 
$
580,735

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
161,599

 
159,040

Deferred income taxes
(62,704
)
 
(228,274
)
Equity-based compensation expense
89,149

 
83,907

Amortization of note discounts and issuance costs
2,276

 
9,127

Other, net
848

 
5,461

Changes in operating assets and liabilities
69,322

 
277,014

Net cash provided by operating activities
1,362,705

 
887,010

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Capital expenditures and intangible assets
(162,021
)
 
(144,757
)
Business acquisition, net of cash acquired

 
(115,697
)
Purchases of available-for-sale securities
(785,188
)
 
(2,251,486
)
Sales and maturities of available-for-sale securities
945,828

 
1,928,011

Other, net
(4,019
)
 
(14,996
)
Net cash used for investing activities
(5,400
)
 
(598,925
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Principal payments on debt
(86,271
)
 
(349,249
)
Net (repayments) proceeds from issuance of commercial paper
(359,604
)
 
798,947

Proceeds from borrowings on revolving credit facility

 
750,000

Repayments of borrowings on revolving credit facility

 
(750,000
)
Treasury stock purchases
(1,737,414
)
 
(1,266,835
)
Dividends paid
(342,279
)
 
(145,865
)
Reissuance of treasury stock related to employee stock purchase plan
32,920

 
34,057

Proceeds from issuance of common stock
109

 
4,115

Other, net
(13,207
)
 
4

Net cash used for financing activities
(2,505,746
)
 
(924,826
)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(5,032
)
 
4,159

Net decrease in cash, cash equivalents, and restricted cash
(1,153,473
)
 
(632,582
)
Cash, cash equivalents, and restricted cash at beginning of period
4,768,558

 
2,633,739

Cash, cash equivalents, and restricted cash at end of period
$
3,615,085

 
$
2,001,157

Schedule of non-cash transactions:
 
 
 
Accrued payables for stock repurchases
4

 
1,073

Accrued payables for capital expenditures
36,582

 
29,031

Dividends payable
171,196

 
79,743

Transfers of inventory to property and equipment, net
33,723

 
29,977

 
 
 
 
Reconciliation of cash, cash equivalents, and restricted cash
December 23, 2018
 
December 24, 2017
Cash and cash equivalents
$
3,359,793

 
$
1,745,173

Restricted cash and investments
255,292

 
255,984

Total Cash, cash equivalents, and restricted cash
$
3,615,085

 
$
2,001,157


See Notes to Condensed Consolidated Financial Statements
6

Table of Contents


LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
 
Three Months Ended
 
December 23, 2018
 
Common
Stock
Shares
 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Balance at September 23, 2018
153,384

 
$
153

 
$
6,195,024

 
$
(9,582,409
)
 
$
(57,729
)
 
$
8,767,786

 
$
5,322,825

Sale of common stock
47

 

 
109

 

 

 

 
109

Purchase of treasury stock
(1,683
)
 
(1
)
 

 
(1,360
)
 

 

 
(1,361
)
Reissuance of treasury stock
273

 

 
22,637

 
10,283

 

 

 
32,920

Equity-based compensation expense

 

 
38,806

 

 

 

 
38,806

Effect of conversion of convertible notes
141

 

 
(1,435
)
 

 

 

 
(1,435
)
Exercise of warrants
1,799

 
2

 
(2
)
 

 

 

 

Reclassification from temporary to permanent equity

 

 
1,803

 

 

 

 
1,803

Net income

 

 

 

 

 
568,855

 
568,855

Other comprehensive loss

 

 

 

 
(6,963
)
 

 
(6,963
)
Cash dividends declared ($1.10 per common share)

 

 

 

 

 
(171,196
)
 
(171,196
)
Balance at December 23, 2018
153,961

 
$
154

 
$
6,256,942

 
$
(9,573,486
)
 
$
(64,692
)
 
$
9,165,445

 
$
5,784,363

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended
 
December 23, 2018

Common
Stock
Shares
 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Balance at June 24, 2018
156,892

 
$
157

 
$
6,144,425

 
$
(7,846,476
)
 
$
(57,449
)
 
$
8,261,194

 
$
6,501,851

Sale of common stock
79

 

 
109

 

 

 

 
109

Purchase of treasury stock
(9,491
)
 
(9
)
 

 
(1,737,293
)
 

 

 
(1,737,302
)
Reissuance of treasury stock
273

 

 
22,637

 
10,283

 

 

 
32,920

Equity-based compensation expense

 

 
89,149

 

 

 

 
89,149

Effect of conversion of convertible notes
2,103

 
2

 
(20,549
)
 

 

 

 
(20,547
)
Exercise of warrants
4,105

 
4

 
(12
)
 

 

 

 
(8
)
Reclassification from temporary to permanent equity

 

 
21,183

 

 

 

 
21,183

Adoption of ASU 2014-09(1)

 

 

 

 

 
139,355

 
139,355

Adoption of ASU 2016-16(1)

 

 

 

 

 
(443
)
 
(443
)
Adoption of ASU 2018-02(1)

 

 

 

 
(2,227
)
 
2,227

 

Net income

 

 

 

 

 
1,102,215

 
1,102,215

Other comprehensive loss

 

 

 

 
(5,016
)
 

 
(5,016
)
Cash dividends declared ($2.20 per common share)

 

 

 

 

 
(339,103
)
 
(339,103
)
Balance at December 23, 2018
153,961

 
$
154

 
$
6,256,942

 
$
(9,573,486
)
 
$
(64,692
)
 
$
9,165,445

 
$
5,784,363

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Refer to Note 2 - Recent Accounting Pronouncements for more information regarding these FASB Accounting Standard Updates.
 
 

See Notes to Condensed Consolidated Financial Statements
7

Table of Contents


 
Three Months Ended
 
December 24, 2017
 
Common
Stock
Shares
 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Balance at September 24, 2017
162,144

 
$
162

 
$
5,891,549

 
$
(5,375,920
)
 
$
(52,787
)
 
$
6,808,174

 
$
7,271,178

Sale of common stock
398

 

 
3,073

 

 

 

 
3,073

Purchase of treasury stock
(3,807
)
 
(4
)
 

 
(1,108,169
)
 

 

 
(1,108,173
)
Reissuance of treasury stock
413

 

 
20,402

 
13,655

 

 

 
34,057

Equity-based compensation expense

 

 
42,124

 

 

 

 
42,124

Effect of conversion of convertible notes
670

 
1

 
(3,774
)
 

 

 

 
(3,773
)
Effect of bond hedge, cash in lieu of shares
(367
)
 

 

 

 

 

 

Reclassification from temporary to permanent equity

 

 
6,571

 

 

 

 
6,571

Adoption of ASU 2016-09

 

 

 

 

 
(855
)
 
(855
)
Net income

 

 

 

 

 
(9,955
)
 
(9,955
)
Other comprehensive loss

 

 

 

 
(11,373
)
 

 
(11,373
)
Cash dividends declared ($0.50 per common share)

 

 

 

 

 
(79,743
)
 
(79,743
)
Balance at December 24, 2017
159,451

 
$
159

 
$
5,959,945

 
$
(6,470,434
)
 
$
(64,160
)
 
$
6,717,621

 
$
6,143,131

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended
 
December 24, 2017

Common
Stock
Shares
 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Balance at June 25, 2017
161,723

 
$
162

 
$
5,845,485

 
$
(5,216,187
)
 
$
(61,700
)
 
$
6,249,691

 
$
6,817,451

Sale of common stock
466

 

 
4,115

 

 

 

 
4,115

Purchase of treasury stock
(5,597
)
 
(6
)
 

 
(1,267,902
)
 

 

 
(1,267,908
)
Reissuance of treasury stock
413

 

 
20,402

 
13,655

 

 

 
34,057

Equity-based compensation expense

 

 
83,907

 

 

 

 
83,907

Effect of conversion of convertible notes
4,906

 
5

 
(33,406
)
 

 

 

 
(33,401
)
Effect of bond hedge, cash in lieu of shares
(2,460
)
 
(2
)
 
6

 

 

 

 
4

Reclassification from temporary to permanent equity

 

 
39,436

 

 

 

 
39,436

Adoption of ASU 2016-09

 

 

 

 

 
40,065

 
40,065

Net income

 

 

 

 

 
580,735

 
580,735

Other comprehensive loss

 

 

 

 
(2,460
)
 

 
(2,460
)
Cash dividends declared ($0.95 per common share)

 

 

 

 

 
(152,870
)
 
(152,870
)
Balance at December 24, 2017
159,451

 
$
159

 
$
5,959,945

 
$
(6,470,434
)
 
$
(64,160
)
 
$
6,717,621

 
$
6,143,131



See Notes to Condensed Consolidated Financial Statements
8

Table of Contents


LAM RESEARCH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 23, 2018
(Unaudited)
NOTE 1 — BASIS OF PRESENTATION
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements of Lam Research Corporation (“Lam Research” or the “Company”) for the fiscal year ended June 24, 2018, which are included in the Company’s Annual Report on Form 10-K as of and for the year ended June 24, 2018 (the “2018 Form 10-K”). The Company’s reports on Form 10-K, Form 10-Q and Form 8-K are available online at the Securities and Exchange Commission website on the Internet. The address of that site is www.sec.gov. The Company also posts its reports on Form 10-K, Form 10-Q and Form 8-K on its corporate website at http://investor.lamresearch.com. The content on any website referred to in this Form 10-Q is not a part of or incorporated by reference in this Form 10-Q unless expressly noted.
The condensed consolidated financial statements include the accounts of Lam Research and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s reporting period is a 52/53-week fiscal year. The Company’s current fiscal year will end June 30, 2019 and includes 53 weeks. The quarters ended December 23, 2018 (the “December 2018 quarter”) and December 24, 2017 (the “December 2017 quarter”) included 13 weeks.
NOTE 2 — RECENT ACCOUNTING PRONOUNCEMENTS
Recently Adopted
In May 2014, the FASB released ASU 2014-09, “Revenue from Contracts with Customers,” to supersede nearly all existing revenue recognition guidance under GAAP. The FASB issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015–14, ASU 2016–08, ASU 2016–10, ASU 2016–12 and ASU 2016–20, respectively; all of which in combination with ASU 2014-09 were codified as Accounting Standard Codification Topic 606 (“ASC 606”). The core principle of the standard is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The Company adopted ASC 606 on the first day of the current fiscal year, June 25, 2018, under the modified retrospective approach, applying the amendments to prospective reporting periods. Results for reporting periods beginning on or after June 25, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under ASC 605. In conjunction with the adoption of ASC 606, the Company’s revenue recognition policy has been amended, refer to Note 3 - Revenue for a description of the amendments.
The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheet as of June 25, 2018 for the adoption of ASC 606 to all contracts with customers that were not completed as of June 24, 2018 was recorded as an adjustment to retained earnings as of the adoption date as follows:
 
June 24, 2018
 
 
 
June 25, 2018
 
As reported
 
Adjustments
 
As Adjusted
 
(In thousands)
Total assets
$
12,479,478

 
$
12,955

 
$
12,492,433

Deferred profit
$
720,086

 
$
(160,695
)
 
$
559,391

Total liabilities
$
5,899,435

 
$
(126,400
)
 
$
5,773,035

Stockholders' equity
$
6,501,851

 
$
139,355

 
$
6,641,206



9



Table of Contents


Upon adoption, the Company recorded a cumulative effect adjustment of $139.4 million, net of tax adjustment of $21.0 million, which increased the June 25, 2018 opening retained earnings balance on the Condensed Consolidated Balance Sheet, primarily as a result of changes in the timing of recognition of system sales. Under ASC 606, the Company recognizes revenue from sales of systems when the Company determines that control has passed to the customer which is generally (1) for products that have been demonstrated to meet product specifications prior to shipment upon shipment or delivery; (2) for products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized upon completion of installation and receipt of customer acceptance; (3) for transactions where legal title does not pass upon shipment or delivery and the Company does not have a right to payment, revenue is recognized when legal title passes to the customer and the Company has a right to payment, which is generally at customer acceptance.

The impact of adoption of ASC 606 on the Company's Condensed Consolidated Statement of Operations and Condensed Consolidated Balance Sheet was as follows:
 
Three months ended
 
Six Months Ended
 
December 23, 2018
 
December 23, 2018
 
As Reported
 
Without adoption of ASC 606
 
Effect of Change Higher/(Lower)