Lam Research Corp. (LRCX, Financial) filed Quarterly Report for the period ended 2010-09-26.
Lam Research Corp. has a market cap of $5.51 billion; its shares were traded at around $45.98 with a P/E ratio of 11.2 and P/S ratio of 2.5. LRCX is in the portfolios of Arnold Schneider of Schneider Capital Management, Stanley Druckenmiller of Duquesne Capital Management, LLC, John Buckingham of Al Frank Asset Management, Inc., Chuck Royce of Royce& Associates, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors, RS Investment Management, Pioneer Investments, Richard Pzena of Pzena Investment Management LLC.
Our cash and cash equivalents, short-term investments, and restricted cash and investments balances totaled approximately $1.1 billion as of September 26, 2010 compared to $992 million as of June 27, 2010. Cash generated by operations was approximately $256 million during the September 2010 quarter. We used cash to repurchase approximately $145 million of our shares, to repay $3 million of outstanding loan amounts, and to purchase $19 million of property, plant, and equipment. Employee headcount increased to approximately 3,300 as of September 26, 2010, from approximately 3,150 in the June 2010 quarter.
The increase in R&D expenses during the September 2010 quarter compared to the same period in the prior year is due to $7 million of higher variable compensation associated with higher revenue and profit levels, $3 million of higher salaries and benefits related to annual merit increases and higher headcount, and $2 million of increased costs for supplies and outside services.
Following the voluntary independent review of our historical employee stock option grant process in 2007, we considered whether Section 409A (Section 409A) of the Internal Revenue Code of 1986, as amended (IRC) and similar provisions of state law would apply to certain stock option grants that were found to have intrinsic value at the time of their respective measurement dates. If a stock option is not considered as issued with an exercise price of at least the fair market value of the underlying stock on the date of grant, it may be subject to penalty taxes under Section 409A and similar provisions of state law. Under those circumstances, taxes may be assessed not only on the intrinsic value increase, but on the entire stock option gain as measured at various times. On March 30, 2008, our Board of Directors authorized us to assume potential tax liabilities of certain employees, including our Chief Executive Officer and certain other executive officers, relating to options that might be subject to Section 409A and similar provisions of state law. Those liabilities totaled $50.9 million; $44.5 million was recorded in operating expenses and $6.4 million in cost of goods sold in our consolidated statements of operations for fiscal year 2008. We incurred $3.2 million of expense during fiscal year 2009 consisting of interest and legal fees.
Our effective tax rate for the three months ended September 26, 2010 was 13.1%. Our effective tax rate for the three months ended September 27, 2009 was 41.8%. The change in the effective tax rate for the three months ended September 26, 2010 compared to the three months ended September 27, 2009 was primarily due to the level of income and its geographical mix in higher and lower tax jurisdictions. The effective tax rate of 13.1% for the three months ended September 26, 2010 includes the tax impact of the following discrete items which are recorded in the period in which they occur: (1) a tax expense of $2.1 million related to the reversal of accrued restructuring expenses and (2) a tax expense of $1.0 million of interest related to uncertain tax positions. The effective tax rate of 41.8% for the three months ended September 27, 2009 includes the tax impact of the following discrete items which are recorded in the period in which they occur: (1) a tax expense of $9.3 million related to a settlement of 409A liabilities, (2) a tax expense of $1.5 million related to a change in valuation allowance with respect to a California R&D credit, (3) a tax expense of $1.0 million for interest related to uncertain tax positions, and (4) a tax benefit of $1.0 million for adjustments related to the filing of prior year foreign tax returns.
We had gross deferred tax assets, related primarily to reserves and accruals that are not currently deductible and tax credit carryforwards, of $138.2 million and $137.4 million as of September 26, 2010, and June 27, 2010, respectively. The gross deferred tax assets were offset by deferred tax liabilities of $36.3 million and a valuation allowance of $37.0 million as of September 26, 2010. The gross deferred tax assets were offset by deferred tax liabilities of $36.3 million and a valuation allowance of $37.0 million as of June 27, 2010.
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Lam Research Corp. has a market cap of $5.51 billion; its shares were traded at around $45.98 with a P/E ratio of 11.2 and P/S ratio of 2.5. LRCX is in the portfolios of Arnold Schneider of Schneider Capital Management, Stanley Druckenmiller of Duquesne Capital Management, LLC, John Buckingham of Al Frank Asset Management, Inc., Chuck Royce of Royce& Associates, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors, RS Investment Management, Pioneer Investments, Richard Pzena of Pzena Investment Management LLC.
Highlight of Business Operations:
Operating expenses in the September 2010 quarter decreased $12 million as compared to the quarter ended June 27, 2010. This decrease was primarily due to a decrease in restructuring charges from a charge of approximately $13 million in the June 2010 quarter to a reversal of approximately $5 million in the September 2010 quarter. This decrease was partially offset by higher variable compensation associated with our higher revenue and profit levels, as well as increased R&D investments to support and grow our etch and clean market share.Our cash and cash equivalents, short-term investments, and restricted cash and investments balances totaled approximately $1.1 billion as of September 26, 2010 compared to $992 million as of June 27, 2010. Cash generated by operations was approximately $256 million during the September 2010 quarter. We used cash to repurchase approximately $145 million of our shares, to repay $3 million of outstanding loan amounts, and to purchase $19 million of property, plant, and equipment. Employee headcount increased to approximately 3,300 as of September 26, 2010, from approximately 3,150 in the June 2010 quarter.
The increase in R&D expenses during the September 2010 quarter compared to the same period in the prior year is due to $7 million of higher variable compensation associated with higher revenue and profit levels, $3 million of higher salaries and benefits related to annual merit increases and higher headcount, and $2 million of increased costs for supplies and outside services.
Following the voluntary independent review of our historical employee stock option grant process in 2007, we considered whether Section 409A (Section 409A) of the Internal Revenue Code of 1986, as amended (IRC) and similar provisions of state law would apply to certain stock option grants that were found to have intrinsic value at the time of their respective measurement dates. If a stock option is not considered as issued with an exercise price of at least the fair market value of the underlying stock on the date of grant, it may be subject to penalty taxes under Section 409A and similar provisions of state law. Under those circumstances, taxes may be assessed not only on the intrinsic value increase, but on the entire stock option gain as measured at various times. On March 30, 2008, our Board of Directors authorized us to assume potential tax liabilities of certain employees, including our Chief Executive Officer and certain other executive officers, relating to options that might be subject to Section 409A and similar provisions of state law. Those liabilities totaled $50.9 million; $44.5 million was recorded in operating expenses and $6.4 million in cost of goods sold in our consolidated statements of operations for fiscal year 2008. We incurred $3.2 million of expense during fiscal year 2009 consisting of interest and legal fees.
Our effective tax rate for the three months ended September 26, 2010 was 13.1%. Our effective tax rate for the three months ended September 27, 2009 was 41.8%. The change in the effective tax rate for the three months ended September 26, 2010 compared to the three months ended September 27, 2009 was primarily due to the level of income and its geographical mix in higher and lower tax jurisdictions. The effective tax rate of 13.1% for the three months ended September 26, 2010 includes the tax impact of the following discrete items which are recorded in the period in which they occur: (1) a tax expense of $2.1 million related to the reversal of accrued restructuring expenses and (2) a tax expense of $1.0 million of interest related to uncertain tax positions. The effective tax rate of 41.8% for the three months ended September 27, 2009 includes the tax impact of the following discrete items which are recorded in the period in which they occur: (1) a tax expense of $9.3 million related to a settlement of 409A liabilities, (2) a tax expense of $1.5 million related to a change in valuation allowance with respect to a California R&D credit, (3) a tax expense of $1.0 million for interest related to uncertain tax positions, and (4) a tax benefit of $1.0 million for adjustments related to the filing of prior year foreign tax returns.
We had gross deferred tax assets, related primarily to reserves and accruals that are not currently deductible and tax credit carryforwards, of $138.2 million and $137.4 million as of September 26, 2010, and June 27, 2010, respectively. The gross deferred tax assets were offset by deferred tax liabilities of $36.3 million and a valuation allowance of $37.0 million as of September 26, 2010. The gross deferred tax assets were offset by deferred tax liabilities of $36.3 million and a valuation allowance of $37.0 million as of June 27, 2010.
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