Lam Research Corporation Reports Financial Results for the Quarter Ended December 29, 2013

About Lam Research
Lam Research Corp. (NASDAQ: LRCX) is a trusted global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. Lam's broad portfolio of market-leading etch, deposition, strip, and wafer cleaning solutions help customers achieve success on the wafer by enabling device features that are 1,000 times smaller than a grain of sand, resulting in smaller, faster, and more power-efficient chips. Through collaboration, continuous innovation and delivering on commitments, Lam is transforming atomic-scale engineering and enabling our customers to shape the future of technology. Based in Fremont, Calif., Lam Research is an S&P 500 ® company whose common stock trades on the NASDAQ Global Select Market under the symbol LRCX. For more information, please visit http://www.lamresearch.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             Six Months Ended    
                 ----------------------------------  ---------------------- 
                  December    September   December    December    December  
                     29,         29,         23,         29,         23,    
                    2013        2013        2012        2013        2012    
                 ----------  ----------  ----------  ----------  ---------- 
Revenue          $1,116,061  $1,015,059  $  860,886  $2,131,120  $1,767,774 
  Cost of goods                                                             
   sold             628,272     583,201     545,472   1,211,473   1,118,474 
                 ----------  ----------  ----------  ----------  ---------- 
    Gross margin    487,789     431,858     315,414     919,647     649,300 
    Gross margin                                                            
     as a                                                                   
     percent of                                                             
     revenue           43.7%       42.5%       36.6%       43.2%       36.7%
Research and                                                                
 development        174,477     170,567     165,951     345,044     329,262 
Selling, general                                                            
 and                                                                        
 administrative     148,838     155,883     145,421     304,721     299,284 
                   ----------    ----------    ----------    ----------    ----------  
        Total                                                                                                                                      
          operating                                                                                                                            
          expenses              323,315          326,450          311,372          649,765          628,546  
                                  ----------    ----------    ----------    ----------    ----------  
        Operating                                                                                                                              
          income                  164,474          105,408              4,042          269,882            20,754  
        Operating                                                                                                                              
          margin  as  a                                                                                                                        
          percent  of                                                                                                                          
          revenue                      14.7%              10.4%                0.5%              12.7%                1.2%
Other  expense,                                                                                                                            
  net                                  (3,837)        (14,262)        (13,390)        (18,099)        (23,328)
                                  ----------    ----------    ----------    ----------    ----------  
    Income  before                                                                                                                          
      income  taxes          160,637            91,146            (9,348)        251,783            (2,574)
Income  tax                                                                                                                                    
  expense                                                                                                                                        
  (benefit)                      11,645              5,640          (15,756)          17,285          (11,750)
                                  ----------    ----------    ----------    ----------    ----------  
    Net  income          $    148,992    $      85,506    $        6,408    $    234,498    $        9,176  
                                  ==========    ==========    ==========    ==========    ==========  
Net  income  per                                                                                                                            
  share:                                                                                                                                          
    Basic  net                                                                                                                                  
      income  per                                                                                                                              
      share                  $          0.92    $          0.52    $          0.04    $          1.44    $          0.05  
                                  ==========    ==========    ==========    ==========    ==========  
    Diluted  net                                                                                                                              
      income  per                                                                                                                              
      share                  $          0.87    $          0.50    $          0.04    $          1.37    $          0.05  
                                  ==========    ==========    ==========    ==========    ==========  
Number  of  shares                                                                                                                        
  used  in  per                                                                                                                                
  share                                                                                                                                            
  calculations:                                                                                                                            
    Basic                          162,305          162,896          170,699          162,603          175,314  
                                  ==========    ==========    ==========    ==========    ==========  
    Diluted                      171,757          171,363          173,027          171,592          177,490  
                                  ==========    ==========    ==========    ==========    ==========  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                    LAM  RESEARCH  CORPORATION                                                    
                                        CONDENSED  CONSOLIDATED  BALANCE  SHEETS                                      
                                                              (in  thousands)                                                              
                                                                                                                                                        
                                                                            December  29,  September  29,      June  30,  
                                                                                    2013                    2013                  2013      
                                                                          -------------  -------------  -----------
                                                                            (unaudited)      (unaudited)            (1)        
ASSETS                                                                                                                                            
Cash  and  cash  equivalents                        $      1,132,555  $      1,156,184  $  1,162,473
Short-term  investments                                      1,389,735          1,300,031      1,334,745
Accounts  receivable,  net                                      909,720              713,524          602,624
Inventories                                                                661,572              614,790          559,317
Deferred  income  taxes                                              17,095                29,090            27,674
Other  current  assets                                              138,359              110,633          106,996
                                                                          -------------  -------------  -----------
    Total  current  assets                                      4,249,036          3,924,252      3,793,829
Property  and  equipment,  net                                546,193              564,845          603,910
Restricted  cash  and  investments                        166,395              166,385          166,536
Goodwill  and  intangible  assets                      2,453,066          2,484,900      2,526,541
Other  assets                                                              141,108              149,963          159,499
                                                                          -------------  -------------  -----------
    Total  assets                                              $      7,555,798  $      7,290,345  $  7,250,315
                                                                          =============  =============  ===========
                                                                                                                                                        
LIABILITIES  AND  STOCKHOLDERS'  EQUITY                                                                                
Current  liabilities                                    $      1,522,572  $      1,402,890  $  1,404,475
                                                                          -------------  -------------  -----------
                                                                                                                                                        
Long-term  debt,  convertible  notes,                                                                                    
  and  capital  leases                                    $          803,276  $          796,373  $      789,256
Income  taxes  payable                                              248,996              248,462          246,479
Other  long-term  liabilities                                129,710              129,306          134,313
                                                                          -------------  -------------  -----------
    Total  liabilities                                            2,704,554          2,577,031      2,574,523
                                                                          =============  =============  ===========
                                                                                                                                                        
Senior  convertible  notes                                      185,154              186,042          186,920
Stockholders'  equity  (2)                                  4,666,090          4,527,272      4,488,872
                                                                          -------------  -------------  -----------
    Total  liabilities  and                                                                                                          
      stockholders'  equity                            $      7,555,798  $      7,290,345  $  7,250,315
                                                                          =============  =============  ===========
                                                                                                                                                        
(1)  Derived  from  audited  financial  statements                                                              
                                                                                                                                                        
(2)  Common  shares  issued  and  outstanding  were  162,169  shares  as  of  December  
  29,  2013,  162,217  shares  as  of  September  29,  2013  and  162,873  shares  as  of  
  June  30,  2013.                                                                                                                          
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                    LAM  RESEARCH  CORPORATION                                                    
                              CONDENSED  CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS                            
                                                              (in  thousands)                                                              
                                                                  (unaudited)                                                                
                                                                                                                                                        
                                                  Three  Months  Ended                          Six  Months  Ended        
                                  ----------------------------------    ----------------------  
                                    December        September      December        December        December    
                                          29,                  29,                  23,                  29,                  23,        
                                        2013                2013                2012                2013                2012        
                                  ----------    ----------    ----------    ----------    ----------  
CASH  FLOWS  FROM                                                                                                                          
  OPERATING                                                                                                                                    
  ACTIVITIES:                                                                                                                                
Net  income              $    148,992    $      85,506    $        6,408    $    234,498    $        9,176  
Adjustments  to                                                                                                                            
  reconcile  net                                                                                                                            
  income  to  net                                                                                                                            
  cash  provided  by                                                                                                                      
  operating                                                                                                                                    
  activities:                                                                                                                                
    Depreciation                                                                                                                            
      and                                                                                                                                            
      amortization            73,552            74,331            78,388          147,883          153,204  
    Deferred  income                                                                                                                      
      taxes                          12,457                      -            (7,320)          12,457          (19,337)
    Impairment  of                                                                                                                          
      long-lived                                                                                                                              
      asset                                628              7,004                      -              7,632                      -  
    Equity-based                                                                                                                            
      compensation                                                                                                                          
      expense                      23,046            23,235            24,027            46,281            48,441  
    Amortization  of                                                                                                                      
      convertible                                                                                                                            
      note  discount            8,217              8,122              7,843            16,339            15,595  
    Other,  net                  (2,428)            4,115            14,694              1,687            25,744  
    Changes  in                                                                                                                                
      operating                                                                                                                                
      assets  and                                                                                                                              
      liabilities:        (135,441)      (150,388)          69,186        (285,829)        209,665  
                                  ----------    ----------    ----------    ----------    ----------  
        Net  cash                                                                                                                                
          provided  by                                                                                                                        
          operating                                                                                                                            
          activities          129,023            51,925          193,226          180,948          442,488  
                                  ----------    ----------    ----------    ----------    ----------  
                                                                                                                                                        
CASH  FLOWS  FROM                                                                                                                          
  INVESTING                                                                                                                                    
  ACTIVITIES:                                                                                                                                
Capital                                                                                                                                          
  expenditures  and                                                                                                                      
  intangible                                                                                                                                  
  assets                          (38,323)        (23,778)        (38,924)        (62,101)        (82,889)
Cash  paid  for                                                                                                                              
  business                                                                                                                                      
  acquisition                (18,388)                    -            (8,716)        (18,388)          (8,716)
Net                                                                                                                                                  
  sales/maturities                                                                                                                      
  (purchases)  of                                                                                                                          
  available-for-                                                                                                                          
  sale  securities        (88,754)          42,567          (23,250)        (46,187)        (39,888)
(Issuance)                                                                                                                                    
  repayments  of                                                                                                                            
  notes  receivable        10,000                      -                      -            10,000                      -  
Proceeds  from                                                                                                                              
  sale  of  assets            21,635                      -                  660            21,635                  660  
Transfer  of                                                                                                                                  
  restricted  cash                                                                                                                        
  and  investments                    -                  150                    33                  150                  179  
                                  ----------    ----------    ----------    ----------    ----------  
        Net  cash                                                                                                                                
          provided  by                                                                                                                        
          (used  for)                                                                                                                          
          investing                                                                                                                            
          activities        (113,830)          18,939          (70,197)        (94,891)      (130,654)
                                  ----------    ----------    ----------    ----------    ----------  
                                                                                                                                                        
CASH  FLOWS  FROM                                                                                                                          
  FINANCING                                                                                                                                    
  ACTIVITIES:                                                                                                                                
Principal                                                                                                                                      
  payments  on                                                                                                                                
  long-term  debt                                                                                                                          
  and  capital                                                                                                                                
  lease                                                                                                                                            
  obligations                      (719)                (88)              (115)              (807)              (780)
Treasury  stock                                                                                                                            
  purchases                    (47,910)      (104,285)      (355,010)      (152,195)      (710,089)
Reissuances  of                                                                                                                            
  treasury  stock                                                                                                                          
  related  to                                                                                                                                  
  employee  stock                                                                                                                          
  purchase  plan                    (35)          15,154                      -            15,119              9,925  
Proceeds  from                                                                                                                              
  issuance  of                                                                                                                                
  common  stock                  8,449            12,574              6,583            21,023              7,534  
                                  ----------    ----------    ----------    ----------    ----------  
        Net  cash  used                                                                                                                      
          for                                                                                                                                        
          financing                                                                                                                            
          activities          (40,215)        (76,645)      (348,542)      (116,860)      (693,410)
                                  ----------    ----------    ----------    ----------    ----------  
Effect  of                                                                                                                                      
  exchange  rate                                                                                                                            
  changes  on  cash            1,393                (508)            4,236                  885              7,013  
Net  decrease  in                                                                                                                          
  cash  and  cash                                                                                                                            
  equivalents                (23,629)          (6,289)      (221,277)        (29,918)      (374,563)
Cash  and  cash                                                                                                                              
  equivalents  at                                                                                                                          
  beginning  of                                                                                                                              
  period                      1,156,184      1,162,473      1,411,466      1,162,473      1,564,752  
                                  ----------    ----------    ----------    ----------    ----------  
Cash  and  cash                                                                                                                              
  equivalents  at                                                                                                                          
  end  of  period      $1,132,555    $1,156,184    $1,190,189    $1,132,555    $1,190,189  
                                  ==========    ==========    ==========    ==========    ==========  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                  Non-GAAP  Financial  Summary                                                  
                      (in  thousands,  except  percentages  and  per  share  data)                        
                                                                (unaudited)                                                                  
                                                                                                                                                        
                                                                                          Three  Months          Three  Months    
                                                                                                Ended                        Ended            
                                                                                      ---------------    ---------------  
                                                                                          December  29,        September  29,    
                                                                                                  2013                          2013            
                                                                                      ---------------    ---------------  
                                                                                                                                                        
Revenue                                                                        $          1,116,061    $          1,015,059  
Gross  margin                                                              $              510,769    $              456,709  
Gross  margin  as  percentage  of  revenue                                  45.8%                        45.0%
Operating  expenses                                                  $              302,103    $              291,887  
Operating  income                                                      $              208,666    $              164,882  
Operating  margin  as  a  percentage  of                                                                                  
  revenue                                                                                            18.7%                        16.2%
Net  income                                                                  $              188,745    $              139,227  
Net  income  per  diluted  share                              $                    1.10    $                    0.81  
Shares  used  in  per  share  calculation  -                                                                            
  diluted                                                                                      171,757                    171,363  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
              Reconciliation  of  U.S.  GAAP  Net  Income  to  Non-GAAP  Net  Income                
                                      (in  thousands,  except  per  share  data)                                        
                                                                (unaudited)                                                                  
                                                                                                                                                        
                                                                                          Three  Months          Three  Months    
                                                                                                Ended                        Ended            
                                                                                      ---------------    ---------------  
                                                                                          December  29,        September  29,    
                                                                                                  2013                          2013            
                                                                                      ---------------    ---------------  
U.S.  GAAP  net  income                                              $              148,992    $                85,506  
Pre-tax  non-GAAP  items:                                                                                                          
    Amortization  related  to  intangible                                                                                
      assets  acquired  in  Novellus  transaction                                                                    
      -  cost  of  goods  sold                                                          21,491                      21,480  
    Acquisition-related  inventory  fair  value                                                                    
      impact  -  cost  of  goods  sold                                              1,225                        2,047  
    Integration  costs  -  cost  of  goods  sold                              264                        1,324  
    Integration  costs  -  operating  expenses                          2,785                        8,063  
    Amortization  related  to  intangible                                                                                
      assets  acquired  in  Novellus  transaction                                                                    
      -  operating  expenses                                                          16,953                      16,947  
    Restructuring  charges  -  operating                                                                                  
      expenses                                                                                            -                        1,705  
    Costs  associated  with  rationalization  of                                                                    
      certain  product  configurations  -                                                                                  
      operating  expenses                                                                    846                            844  
    Impairment  of  long  lived  asset  -                                                                                    
      operating  expenses                                                                    628                        7,004  
    Amortization  of  convertible  note                                                                                    
      discount,  Lam  notes  -  other  expense,                                                                          
      net                                                                                              7,329                        7,243  
    Amortization  of  convertible  note                                                                                    
      discount,  Novellus  assumed  notes  -                                                                              
      other  expense,  net                                                                    762                            859  
    Gain  on  sale  of  investment  -  other                                                                                
      expense,  net                                                                          (4,813)                              -  
Net  tax  benefit  on  non-GAAP  items                                      (6,404)                  (11,646)
Net  tax  benefit  on  successful  resolution                                                                        
  of  certain  tax  matters                                                          (1,313)                    (2,286)
Tax  expense  associated  with  legal-entity                                                                        
  integration                                                                                          -                            137  
                                                                                      ---------------    ---------------  
Non-GAAP  net  income                                                $              188,745    $              139,227  
                                                                                      ===============    ===============  
Non-GAAP  net  income  per  diluted  share            $                    1.10    $                    0.81  
                                                                                      ===============    ===============  
Number  of  shares  used  for  diluted  per                                                                              
  share  calculation                                                                  171,757                    171,363  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
  Reconciliation  of  U.S.  GAAP  Gross  Margin,  Operating  Expenses  and  Operating  
    Income  to  Non-GAAP  Gross  Margin,  Operating  Expenses  and  Operating  Income    
                                          (in  thousands,  except  percentages)                                          
                                                                (unaudited)                                                                  
                                                                                                                                                        
                                                                                          Three  Months          Three  Months    
                                                                                                Ended                        Ended            
                                                                                      ---------------    ---------------  
                                                                                          December  29,        September  29,    
                                                                                                  2013                          2013            
                                                                                      ---------------    ---------------  
U.S.  GAAP  gross  margin                                          $              487,789    $              431,858  
Pre-tax  non-GAAP  items:                                                                                                          
    Amortization  related  to  intangible                                                                                
      assets  acquired  in  Novellus  transaction                                                                    
      -  cost  of  goods  sold                                                          21,491                      21,480  
    Acquisition-related  inventory  fair  value                                                                    
      impact  -  cost  of  goods  sold                                              1,225                        2,047  
    Integration  costs  -  cost  of  goods  sold                              264                        1,324  
                                                                                      ---------------    ---------------  
Non-GAAP  gross  margin                                            $              510,769    $              456,709  
                                                                                      ===============    ===============  
U.S.  GAAP  gross  margin  as  a  percentage  of                                                                      
  revenue                                                                                            43.7%                        42.5%
Non-GAAP  gross  margin  as  a  percentage  of                                                                        
  revenue                                                                                            45.8%                        45.0%
U.S.  GAAP  operating  expenses                              $              323,315    $              326,450  
Pre-tax  non-GAAP  items:                                                                                                          
    Integration  costs  -  operating  expenses                        (2,785)                    (8,063)
    Amortization  related  to  intangible                                                                                
      assets  acquired  in  Novellus  transaction                                                                    
      -  operating  expenses                                                        (16,953)                  (16,947)
    Restructuring  charges  -  operating                                                                                  
      expenses                                                                                            -                      (1,705)
    Costs  associated  with  rationalization  of                                                                    
      certain  product  configurations  -                                                                                  
      operating  expenses                                                                  (846)                        (844)
    Impairment  of  long  lived  asset  -                                                                                    
      operating  expenses                                                                  (628)                    (7,004)
                                                                                      ---------------    ---------------  
Non-GAAP  operating  expenses                                $              302,103    $              291,887  
                                                                                      ===============    ===============  
Non-GAAP  operating  income                                    $              208,666    $              164,822  
                                                                                      ===============    ===============  
Non-GAAP  operating  margin  as  a  percent  of                                                                      
  revenue                                                                                            18.7%                        16.2%
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
 

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