Lam Research Corporation Announces Earnings for the Quarter Ended Marc

    Business Editors/High-Tech Writers

    FREMONT, Calif.--(BUSINESS WIRE)--April 13, 2005--Lam Research Corporation (Nasdaq:LRCX) today announced earnings for the quarter ended March 27, 2005. Revenue for the period was $349.3 million, and net income was $59.5 million, or $0.41 per diluted share, compared to revenue of $379.8 million and net income of $83.6 million, or $0.59 per diluted share, for the December 2004 quarter. Gross margin and operating expenses for the March 2005 quarter were $174.6 million and $95.9 million, respectively.
    The Company believes the presentation of ongoing results, which excludes certain special items, is useful for analyzing ongoing business trends. During the March 2005 quarter, the Company received a tax refund, which is recorded in selling, general and administrative expenses. The Company also recognized additional liabilities for unoccupied facilities included in prior restructuring plans. Tables that provide reconciliations of ongoing performance to results under U.S. Generally Accepted Accounting Principles (GAAP) are included at the end of this press release and on the Company's web site.
    Ongoing gross margin for the March 2005 quarter was 50.0 percent of revenue compared to 52.4 percent of revenue in the December 2004 quarter. The gross margin achieved for the March 2005 quarter was a result of lower installation and warranty expenses and improved field resource utilization. In the period, ongoing operating expenses remained essentially flat sequentially at $89.7 million. Ongoing net income of $64.1 million, or $0.44 per diluted share, in the March 2005 quarter compares with ongoing net income of $83.6 million, or $0.59 per diluted share, for the December 2004 quarter.
    New orders recorded in backlog decreased 19% sequentially to $315 million. The geographic distribution of new orders as well as revenue during the March quarter is shown in the following table:

Region New Orders Revenue ----------------- ------------- --------- North America 16% 17% Europe 19% 13% Japan 22% 18% Korea 14% 35% Asia Pacific 29% 17%

    Cash, short-term investments and restricted cash balances increased to $838.8 million at the end of March, and cash flows from operating activities were approximately $101 million during the quarter. Deferred revenue and deferred profit balances increased to $152.8 million and $86.9 million, respectively, and unshipped orders in backlog were approximately $399 million at the end of the quarter. The value of orders shipped from backlog to Japanese customers that are not recorded as deferred revenue was approximately $49 million.
    "The Company continues to deliver solid financial results in the current industry environment. Strong cash generation, healthy gross margins, and good expense management reflect our commitment to increasing shareholder value," stated James W. Bagley, Lam's Chairman and Chief Executive Officer.
    "In 2004, we announced a $250 million stock buy-back program. In this quarter we purchased approximately $68 million of common stock and plan to continue to exercise the approved plan over the coming periods."
    "The strength in our financial performance is driven by our continuing success in the markets we serve. For the fourth consecutive year, Lam is the number one provider of etch equipment to the semiconductor industry, as reported by a number of industry research firms. We believe we are well-positioned to continue to expand our market leadership, as well as our strong financial results," Bagley concluded.

    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 our future financial performance, our ability to maintain and expand our market leadership and strong financial results, our future ability to increase gross margins, generate cash and control costs, and our plans for repurchasing our common stock. Some factors that may affect these forward-looking statements include: changing business conditions in the semiconductor industry and our plans for reacting to those changes, changing customer demands, our competitors' development of new technologies that could affect our market share, margins and cash generation, and future changes to our cash requirements or spending opportunities that alter our perception of the best way to use the Company's cash reserves. These forward-looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, including specifically the reports on Form 10-K for the year ended June 27, 2004, and the Form 10-Q for the quarter ended December 26, 2004, which could cause actual results to vary from expectations. The Company undertakes no obligation to update the information or statements made in this press release.

    Lam Research Corporation is a major supplier of wafer fabrication equipment and services to the world's semiconductor industry. Lam's common stock trades on the Nasdaq National Market under the symbol LRCX. The Company's World Wide Web address is http://www.lamrc.com.

Consolidated Financial Tables Follow

LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data and percentages) (unaudited)

Three Months Ended Nine Months Ended ----------------------------- --------------------- March December March March March 27, 26, 28, 27, 28, 2005 2004 2004 2005 2004 -------- -------- -------- ---------- -------- Total revenue $349,337 $379,800 $231,128 $1,148,686 $606,374 Cost of goods sold 174,767 180,898 125,337 560,453 336,179 Cost of goods sold - restructuring recoveries - - (322) - (1,651) -------- -------- -------- ---------- -------- Total cost of goods sold 174,767 180,898 125,015 560,453 334,528 Gross margin 174,570 198,902 106,113 588,233 271,846 Gross margin as a percent of revenue 50.0% 52.4% 45.9% 51.2% 44.8% Research and development 47,226 47,057 42,914 144,641 120,518 Selling, general and administrative 34,518 43,275 37,218 120,920 105,352 Restructuring charges, net 14,201 - 1,317 14,201 8,327 -------- -------- -------- ---------- -------- Total operating expenses 95,945 90,332 81,449 279,762 234,197 Operating income 78,625 108,570 24,664 308,471 37,649 Other income, net 643 1,298 877 1,949 2,794 -------- -------- -------- ---------- -------- Income before income taxes 79,268 109,868 25,541 310,420 40,443 Income tax expense 19,817 26,254 6,385 77,605 10,110 -------- -------- -------- ---------- -------- Net income $ 59,451 $ 83,614 $ 19,156 $ 232,815 $ 30,333 ======== ======== ======== ========== ======== Net income per share: Basic $ 0.42 $ 0.61 $ 0.14 $ 1.69 $ 0.23 ======== ======== ======== ========== ======== Diluted $ 0.41 $ 0.59 $ 0.13 $ 1.64 $ 0.22 ======== ======== ======== ========== ======== Number of shares used in per share calculations: Basic 139,967 137,255 133,251 137,566 130,893 ======== ======== ======== ========== ======== Diluted 144,756 142,268 147,365 142,362 138,527 ======== ======== ======== ========== ========

LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)

March 27, December 26, June 27, 2005 2004 2004 (unaudited) (unaudited) (1) ----------- ----------- ---------- Assets: Cash, cash equivalents and short-term investments $ 726,292 $ 649,400 $ 429,472 Accounts receivable, net 257,496 248,498 245,508 Inventories 120,353 129,302 108,249 Other current assets 79,739 70,025 113,159 ---------- ---------- ---------- Total current assets 1,183,880 1,097,225 896,388 Property and equipment, net 43,167 45,154 42,444 Restricted cash 112,468 112,468 112,468 Other assets 143,506 139,154 147,326 ---------- ---------- ---------- Total assets $1,483,021 $1,394,001 $1,198,626 ========== ========== ==========

Liabilities and stockholders' equity: Current liabilities $ 375,352 $ 356,584 $ 376,606 ---------- ---------- ---------- Other long-term liabilities $ 3,318 $ 7,268 $ 9,554 Stockholders' equity 1,104,351 1,030,149 812,466 ---------- ---------- ---------- Total liabilities and stockholders' equity $1,483,021 $1,394,001 $1,198,626 ========== ========== ==========

(1) Derived from audited financial statements

Reconciliation of U.S. GAAP Net Income to Ongoing Net Income (in thousands, except per share data and percentages)

Three Months Ended ----------------------- March 27, December 26, 2005 2004 -------- -------- U.S. GAAP net income $ 59,451 $ 83,614 Pre-tax net tax refund - operating expenses (7,962) - Pre-tax net restructuring charges - operating expenses 14,201 - Tax benefit on net restructuring charges and net tax refund (1,560) - -------- -------- Ongoing net income $ 64,130 $ 83,614 ======== ======== Ongoing net income per diluted share $ 0.44 $ 0.59 ======== ======== Number of shares used for diluted per share calculation 144,756 142,268 Income tax rate 25% 24%

Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating Income to Ongoing Gross Margin, Operating Expenses and Operating Income (in thousands)

Three Months Ended ----------------------- March 27, December 26, 2005 2004 -------- -------- U.S. GAAP gross margin $174,570 $198,902 Restructuring recoveries - cost of goods sold - - -------- -------- Ongoing gross margin $174,570 $198,902 U.S. GAAP operating expenses $ 95,945 $ 90,332 Net tax refund - operating expenses 7,962 - Net restructuring charges - operating expenses (14,201) - -------- -------- Ongoing operating expenses $ 89,706 $ 90,332 -------- -------- Ongoing operating income $ 84,864 $108,570 ======== ========

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CONTACT: Lam Research Corporation Kathleen Bela, 510-572-4566 (Investor Relations) kathleen.bela@lamrc.com

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: HARDWARE MANUFACTURING SOFTWARE EARNINGS SOURCE: Lam Research Corporation

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