Lam Research Earnings 2020-03-29

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 29, 2020



☐	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)

Registrant’s telephone number, including area code: (510) 572-0200

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.001 Per Share	LRCX	The Nasdaq Stock Market
		(Nasdaq Global Select Market)

__________________________________________________

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 ☒ 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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	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 ☒

As of April 24, 2020, the Registrant had 145,162,229 shares of Common Stock outstanding.

Table of Contents

LAM RESEARCH CORPORATION

TABLE OF CONTENTS



		Page No.
	PART I. Financial Information

Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Statements of Operations for the three and nine months ended March 29, 2020 and March 31, 2019	3
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended March 29, 2020, and March 31, 2019	4
	Condensed Consolidated Balance Sheets as of March 29, 2020, and June 30, 2019	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended March 29, 2020, and March 31, 2019	6
	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended March 29, 2020, and March 31, 2019	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40
Item 4.	Controls and Procedures	41

	PART II. Other Information

Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	54
Item 6.	Exhibits	55
Signatures		56

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						Nine Months Ended
	March 29, 2020			March 31, 2019			March 29, 2020			March 31, 2019
Revenue	$	2,503,625		$	2,439,048		$	7,252,872		$	7,292,412
Cost of goods sold	1,336,618			1,364,711			3,924,511			4,014,844
Gross margin	1,167,007			1,074,337			3,328,361			3,277,568
Research and development	307,914			318,514			913,602			895,742
Selling, general, and administrative	164,979			190,306			496,679			534,179
Total operating expenses	472,893			508,820			1,410,281			1,429,921
Operating income	694,114			565,517			1,918,080			1,847,647
Other (expense) income, net	(64,619		)	20,532			(91,271		)	(10,494		)
Income before income taxes	629,495			586,049			1,826,809			1,837,153
Income tax expense	(54,714		)	(38,659		)	(271,729		)	(187,548		)
Net income	$	574,781		$	547,390		$	1,555,080		$	1,649,605
Net income per share:
Basic	$	3.96		$	3.62		$	10.75		$	10.72
Diluted	$	3.88		$	3.47		$	10.39		$	10.20
Number of shares used in per share calculations:
Basic	145,301			151,201			144,654			153,891
Diluted	148,165			157,849			149,648			161,683

See Notes to Condensed Consolidated Financial Statements

Table of Contents

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)



	Three Months Ended						Nine Months Ended
	March 29, 2020			March 31, 2019			March 29, 2020			March 31, 2019
Net income	$	574,781		$	547,390		$	1,555,080		$	1,649,605
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	(18,225		)	6,684			(19,412		)	(6,845		)
Cash flow hedges:
Net unrealized (losses) gains during the period	(29,456		)	(7,950		)	(26,068		)	4,038
Net (gains) losses reclassified into earnings	(924		)	2,086			1,810			(2,492		)
	(30,380		)	(5,864		)	(24,258		)	1,546
Available-for-sale investments:
Net unrealized (losses) gains during the period	(4,129		)	1,143			(6,842		)	1,441
Net losses (gains) reclassified into earnings	27			(147		)	1,010			(201		)
	(4,102		)	996			(5,832		)	1,240
Defined benefit plans, net change in unrealized component	278			216			856			(1,152		)
Other comprehensive (loss) income, net of tax	(52,429		)	2,032			(48,646		)	(5,211		)
Comprehensive income	$	522,352		$	549,422		$	1,506,434		$	1,644,394

See Notes to Condensed Consolidated Financial Statements

Table of Contents

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)



	March 29, 2020			June 30, 2019
	(unaudited)			(1)
ASSETS
Cash and cash equivalents	$	3,961,586		$	3,658,219
Investments	1,431,550			1,772,984
Accounts receivable, less allowance for doubtful accounts of $5,332 as of March 29, 2020, and $5,021 as of June 30, 2019	2,191,070			1,455,522
Inventories	1,674,740			1,540,140
Prepaid expenses and other current assets	149,839			133,544
Total current assets	9,408,785			8,560,409
Property and equipment, net	1,048,619			1,059,077
Restricted cash and investments	254,155			255,177
Goodwill	1,484,050			1,484,597
Intangible assets, net	182,682			216,950
Other assets	560,344			425,123
Total assets	$	12,938,635		$	12,001,333
LIABILITIES AND STOCKHOLDERS’ EQUITY
Trade accounts payable	$	498,860		$	376,561
Accrued expenses and other current liabilities	1,024,793			946,641
Deferred profit	539,601			381,317
Current portion of long-term debt and finance lease obligations	42,407			667,131
Total current liabilities	2,105,661			2,371,650
Long-term debt and finance lease obligations, less current portion	5,043,931			3,822,768
Income taxes payable	889,287			892,790
Other long-term liabilities	350,603			190,821
Total liabilities	8,389,482			7,278,029
Commitments and contingencies
Temporary equity, convertible notes	11,546			49,439
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, 145,156 shares at March 29, 2020, and 144,433 shares at June 30, 2019	145			144
Additional paid-in capital	6,577,822			6,409,405
Treasury stock, at cost; 145,493 shares at March 29, 2020, and 140,573 shares at June 30, 2019	(12,918,730		)	(11,602,573		)
Accumulated other comprehensive loss	(112,676		)	(64,030		)
Retained earnings	10,991,046			9,930,919
Total stockholders’ equity	4,537,607			4,673,865
Total liabilities and stockholders’ equity	$	12,938,635		$	12,001,333

(1) Derived from audited financial statements

See Notes to Condensed Consolidated Financial Statements

Table of Contents

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)



	Nine Months Ended
	March 29, 2020			March 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,555,080		$	1,649,605
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	197,442			243,873
Deferred income taxes	74,516			(75,105		)
Equity-based compensation expense	136,044			142,389
Amortization of note discounts and issuance costs	4,611			5,137
Other, net	11,510			(646		)
Changes in operating assets and liabilities	(665,800		)	330,273
Net cash provided by operating activities	1,313,403			2,295,526
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets	(152,685		)	(237,543		)
Purchases of available-for-sale securities	(1,889,823		)	(1,975,688		)
Maturities of available-for-sales securities	1,163,555			395,569
Sales of available-for-sale securities	1,065,618			809,379
Other, net	(540		)	(5,288		)
Net cash provided by (used for) investing activities	186,125			(1,013,571		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt	(664,589		)	(116,496		)
Net repayments of commercial paper	—			(61,754		)
Proceeds from borrowings on revolving credit facility	1,250,000			—
Proceeds from issuance of long-term debt, net of issuance costs	—			2,476,720
Treasury stock purchases	(1,328,632		)	(2,672,051		)
Dividends paid	(489,099		)	(513,475		)
Reissuance of treasury stock related to employee stock purchase plan	38,447			32,920
Proceeds from issuance of common stock	6,215			5,119
Other, net	328			(13,207		)
Net cash used for financing activities	(1,187,330		)	(862,224		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(9,853		)	(904		)
Net increase in cash, cash equivalents, and restricted cash	302,345			418,827
Cash, cash equivalents, and restricted cash at beginning of period	3,913,396			4,768,558
Cash, cash equivalents, and restricted cash at end of period	$	4,215,741		$	5,187,385
Schedule of non-cash transactions:
Accrued payables for stock repurchases	295			1,637
Accrued payables for capital expenditures	29,690			27,283
Dividends payable	167,740			164,874
Transfers of inventory to property and equipment, net	34,155			42,519

Reconciliation of cash, cash equivalents, and restricted cash	March 29, 2020			March 31, 2019
Cash and cash equivalents	$	3,961,586		$	4,931,611
Restricted cash and investments	254,155			255,774
Total cash, cash equivalents, and restricted cash	$	4,215,741		$	5,187,385

See Notes to Condensed Consolidated Financial Statements

Table of Contents

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)



	Three Months Ended
	March 29, 2020
	Common Stock Shares		Common Stock			Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance at December 29, 2019	142,462		$	142		$	6,528,821		$	(12,673,292	)	$	(60,247	)	$	10,584,005		$	4,379,429
Sale of common stock	1,047		1			1,713			—			—			—			1,714
Purchase of treasury stock	(1,576	)	(1		)	—			(245,438		)	—			—			(245,439		)
Equity-based compensation expense	—		—			47,414			—			—			—			47,414
Effect of conversion of convertible notes	3,223		3			(26,884		)	—			—			—			(26,881		)
Reclassification from temporary to permanent equity	—		—			26,758			—			—			—			26,758
Net income	—		—			—			—			—			574,781			574,781
Other comprehensive loss	—		—			—			—			(52,429		)	—			(52,429		)
Cash dividends declared ($1.15 per common share)	—		—			—			—			—			(167,740		)	(167,740		)
Balance at March 29, 2020	145,156		$	145		$	6,577,822		$	(12,918,730	)	$	(112,676	)	$	10,991,046		$	4,537,607

	Nine Months Ended
	March 29, 2020
	Common Stock Shares		Common Stock			Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance at June 30, 2019	144,433		$	144		$	6,409,405		$	(11,602,573	)	$	(64,030	)	$	9,930,919		$	4,673,865
Sale of common stock	1,230		1			6,214			—			—			—			6,215
Purchase of treasury stock	(5,215	)	(4		)	—			(1,328,894		)	—			—			(1,328,898		)
Reissuance of treasury stock	296		—			25,710			12,737			—			—			38,447
Equity-based compensation expense	—		—			136,044			—			—			—			136,044
Effect of conversion of convertible notes	4,412		4			(37,444		)	—			—			—			(37,440		)
Reclassification from temporary to permanent equity	—		—			37,893			—			—			—			37,893
Adoption of ASU 2016-02	—		—			—			—			—			3,018			3,018
Net income	—		—			—			—			—			1,555,080			1,555,080
Other comprehensive loss	—		—			—			—			(48,646		)	—			(48,646		)
Cash dividends declared ($3.45 per common share)	—		—			—			—			—			(497,971		)	(497,971		)
Balance at March 29, 2020	145,156		$	145		$	6,577,822		$	(12,918,730	)	$	(112,676	)	$	10,991,046		$	4,537,607

See Notes to Condensed Consolidated Financial Statements

Table of Contents



	Three Months Ended
	March 31, 2019
	Common Stock Shares		Common Stock			Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance at December 23, 2018	153,961		$	154		$	6,256,942		$	(9,573,486	)	$	(64,692	)	$	9,165,445		$	5,784,363
Sale of common stock	947		1			5,009			—			—			—			5,010
Purchase of treasury stock	(5,702	)	(6		)	—			(936,264		)	—			—			(936,270		)
Equity-based compensation expense	—		—			53,240			—			—			—			53,240
Effect of conversion of convertible notes	680		1			(6,921		)	—			—			—			(6,920		)
Reclassification from temporary to permanent equity	—		—			7,225			—			—			—			7,225
Net income	—		—			—			—			—			547,390			547,390
Other comprehensive income	—		—			—			—			2,032			—			2,032
Cash dividends declared ($1.10 per common share)	—		—			—			—			—			(164,874		)	(164,874		)
Balance at March 31, 2019	149,886		$	150		$	6,315,495		$	(10,509,750	)	$	(62,660	)	$	9,547,961		$	5,291,196


	Nine Months Ended
	March 31, 2019
	Common Stock Shares		Common Stock			Additional Paid-in Capital			Treasury Stock

Price	230.08	EPS	14
Shares	151	P/E	16
MCap	34,669	P/FCF	15
Net Debt	-445	EBIT	2,519
TEV	34,224	TEV/EBIT	14
TTM 2019-09-29, in MM, except price, ratios

10-Q	2020-03-29	Filed 2020-04-28
10-Q	2019-12-29	Filed 2020-02-04
10-Q	2019-09-29	Filed 2019-10-29
10-K	2019-06-30	Filed 2019-08-20
10-Q	2019-03-31	Filed 2019-04-30
10-Q	2018-12-23	Filed 2019-01-30
10-Q	2018-09-23	Filed 2018-10-23
10-K	2018-06-24	Filed 2018-08-14
10-Q	2018-03-25	Filed 2018-04-24
10-Q	2017-12-24	Filed 2018-01-30
10-Q	2017-09-24	Filed 2017-10-23
10-K	2017-06-25	Filed 2017-08-15
10-Q	2017-03-26	Filed 2017-04-24
10-Q	2016-12-25	Filed 2017-01-30
10-Q	2016-09-25	Filed 2016-10-25
10-K	2016-06-26	Filed 2016-08-17
10-Q	2016-03-27	Filed 2016-04-25
10-Q	2015-12-27	Filed 2016-02-03
10-Q	2015-09-27	Filed 2015-11-03
10-K	2015-06-28	Filed 2015-08-13
10-Q	2015-03-29	Filed 2015-04-30
10-Q	2014-12-28	Filed 2015-02-03
10-Q	2014-09-28	Filed 2014-11-03
10-K	2014-06-29	Filed 2014-08-26
10-Q	2014-03-30	Filed 2014-05-08
10-Q	2013-12-29	Filed 2014-02-06
10-Q	2013-09-29	Filed 2013-11-07
10-K	2013-06-30	Filed 2013-08-27
10-Q	2013-03-31	Filed 2013-05-09
10-Q	2012-12-23	Filed 2013-01-31
10-Q	2012-09-23	Filed 2012-11-01
10-K	2012-06-24	Filed 2012-08-22
10-Q	2012-03-25	Filed 2012-05-03
10-Q	2011-12-25	Filed 2012-02-03
10-Q	2011-09-25	Filed 2011-11-03
10-K	2011-06-26	Filed 2011-08-19
10-Q	2011-03-27	Filed 2011-05-03
10-Q	2010-12-26	Filed 2011-02-03
10-Q	2010-09-26	Filed 2010-11-03
10-K	2010-06-27	Filed 2010-08-23
10-Q	2010-03-28	Filed 2010-05-05
10-Q	2009-12-27	Filed 2010-02-05

8-K	2020-07-29	Earnings, Exhibits
8-K	2020-06-19
8-K	2020-05-12
8-K	2020-05-05
8-K	2020-04-30
8-K	2020-04-22
8-K	2020-03-27
8-K	2020-03-17
8-K	2020-03-16
8-K	2020-01-29
8-K	2019-12-13
8-K	2019-11-05
8-K	2019-10-23
8-K	2019-10-04
8-K	2019-08-21
8-K	2019-08-08
8-K	2019-07-31
8-K	2019-06-14
8-K	2019-06-03
8-K	2019-05-08
8-K	2019-04-24
8-K	2019-03-26
8-K	2019-03-04
8-K	2019-02-25
8-K	2019-01-23
8-K	2018-12-10
8-K	2018-12-05
8-K	2018-11-30
8-K	2018-11-06
8-K	2018-10-16
8-K	2018-09-17
8-K	2018-07-26
8-K	2018-06-12
8-K	2018-05-10
8-K	2018-04-17
8-K	2018-03-12
8-K	2018-03-06
8-K	2018-01-24
8-K	2018-01-02

EX-10.1	lrcx3q2020exhibit10120.htm
EX-10.2	lrcx3q2020exhibit10220.htm
EX-31.1	lrcx3q2020exhibit311.htm
EX-31.2	lrcx3q2020exhibit312.htm
EX-32.1	lrcx3q2020exhibit321.htm
EX-32.2	lrcx3q2020exhibit322.htm

LRCX 10Q Quarterly Report

Lam Research Earnings 2020-03-29