The shipments for the December 2008 quarter were $226 million compared to $345 million during the September 2008 quarter.
The company’s ongoing results for December 2008 quarter exclude certain costs for restructuring activities and asset impairments designed to better align the company’s cost structure with its business opportunities in consideration of market and the economic uncertainties, a net tax benefit related to the renewal of the research and development tax credit, net tax expense on resolution of certain tax items, one-time costs associated with the restructuring of an employee benefit plan, exchange rate loss associated with the company’s accelerated tax planning strategy, and interest on the tax liability associated with the outcome of the company’s previously disclosed voluntary internal stock option review. The company’s September 2008 quarter excluded certain costs for restructuring activities and asset impairments related to the integration of SEZ, net tax expense on accelerated tax planning strategy, and interest on the tax liability associated with the outcome of the company’s previously disclosed voluntary internal stock option review. Management uses the presentation of ongoing gross margin, ongoing operating income, ongoing net income, and ongoing diluted earnings per share to evaluate the company’s operating and financial results. The company believes the presentation of ongoing results is useful to investors for analyzing ongoing business trends and comparing performance to prior periods, and enhances the investor’s ability to view the company’s results from management’s perspective.
The ongoing net loss was $11.7 million, or $0.09 per diluted share in the December 2008 quarter compared to ongoing net income of $32.6 million, or $0.26 per diluted share, for the September 2008 quarter. Ongoing gross margin for the December 2008 quarter was $109.1 million or 38.5%, compared to ongoing gross margin of $186.2 million, or 42.3%, for the September 2008 quarter. The sequential decline in gross margin was primarily due to reduced manufacturing and field utilization levels and product mix challenges resulting from the reduced business activity. Ongoing operating expenses for the December 2008 quarter decreased to $126.5 million compared with the September 2008 quarter of $149.9 million. This decrease was driven by a reduction in employee variable compensation expenses, a reduction in deferred compensation liabilities due to recent stock market declines, and the partial quarter impact of the company’s December quarter restructuring activities.
The cash and cash equivalents, short-term investments and restricted cash and investments balances were $1.1 billion at the end of the December 2008 quarter, compared to $1.2 billion at the end of the September 2008 quarter. Cash flows from operating activities were about $39 million during the December quarter. Deferred revenue and deferred profit balances at the end of the December 2008 quarter were $68.4 million and $54.2 million, respectively. At the end of the December 2008 quarter, the anticipated future revenue value of orders shipped to Japanese customers that was not recorded as deferred revenue was about $8.6 million.
The global semiconductor industry has entered one of the most difficult periods in its history, one that is presenting severe challenges to our customers and thus severely limiting investment in wafer fab equipment, said Steve Newberry, Lam Research’s president and chief executive officer. While this environment will persist near-term, we remain optimistic about our long-term technology roadmap in etch, clean and other new markets. During the pause in customer spending we are strategically targeting our capital resources to new penetration opportunities, qualifying our next-generation tools and delivering cost-effective technology solutions aimed at reducing our customers’ production costs. Our objective through these actions is to deliver superior value to our customers and emerge from this period of reduced spending well positioned to deliver strong financial and operational performance, Newberry concluded.
