UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED MARCH 31, 1996 Commission File No. 0-12933 LAM RESEARCH CORPORATION (Exact name of Registrant as specified in its charter) DELAWARE 94-2634797 - ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 4650 CUSHING PARKWAY, FREMONT, CALIFORNIA 94538 - ----------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (510) 659-0200 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 X NO ------- ------- As of March 31, 1996 there were 27,538,664 shares of Registrant's Common Stock outstanding.
INDEX Page No. ---- PART I. FINANCIAL INFORMATION ................................1 Item 1. Financial Statements (unaudited)......................1 Condensed Consolidated Balance Sheets............1 Condensed Consolidated Statements of Income......2 Condensed Consolidated Statements of Cash Flows..3 Notes to Condensed Consolidated Financial Statements..................................4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................7 Results of Operations............................7 Liquidity and Capital Resources..................9 Risk Factors....................................10 PART II. OTHER INFORMATION....................................14 Item 1. Legal Proceedings....................................14 Item 6. Exhibits and Reports on Form 8-K.....................15
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands except per share data) <TABLE> <CAPTION> March 31, June 30, 1996 1995 (Unaudited) (Note) ----------- -------- <S> <C> <C> Assets Cash and cash equivalents $21,183 $43,675 Short-term investments 118,302 57,334 Accounts receivable, net 249,439 195,682 Inventories 289,888 171,401 Prepaid expenses and other assets 16,851 25,263 Deferred income taxes 34,428 32,778 ----------- -------- Total Current Assets 730,091 526,133 Equipment and leasehold improvements, net 162,404 117,571 Restricted cash - 25,024 Other assets 26,615 13,921 ----------- -------- Total Assets $919,110 $682,649 ----------- -------- ----------- -------- Liabilities and Stockholders' Equity Trade accounts payable $152,102 $82,542 Accrued expenses and other current liabilities 137,787 98,633 Current portion of long-term debt and capital lease obligations 23,844 7,572 ----------- -------- Total Current Liabilities 313,733 188,747 Long-term debt and capital lease obligations, less current portion 100,075 95,928 Deferred income taxes 2,712 2,712 ----------- -------- Total Liabilities 416,520 287,387 Preferred stock: 5,000 shares authorized; none outstanding Common Stock at par value of $.001 per share Authorized -- 90,000 shares; issued and outstanding 27,539 shares at March 31, 1996 and 27,275 shares at June 30, 1995 28 27 Additional paid-in capital 229,462 224,730 Retained earnings 273,100 170,505 ----------- -------- Total Stockholders' Equity 502,590 395,262 ----------- -------- $919,110 $682,649 ----------- -------- ----------- -------- </TABLE> Note -- The Condensed Consolidated Balance Sheet at June 30, 1995 has been derived from the audited financial statements at that date. See Notes to condensed consolidated financial statements -1-
LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share data) (Unaudited) <TABLE> <CAPTION> Three Months Ended Nine Months Ended -------------------- --------------------- March 31, March 31, 1996 1995 1996 1995 -------- -------- -------- -------- <S> <C> <C> <C> <C> Net sales $342,335 $216,465 $884,277 $545,162 Royalty income 4,304 2,549 16,123 8,104 -------- -------- -------- -------- Total revenue 346,639 219,014 900,400 553,266 Costs and expenses: Cost of goods sold 178,669 112,049 461,883 285,590 Research and development 46,861 31,921 121,898 84,058 Selling, general and administrative 63,354 39,586 163,516 98,841 -------- -------- -------- -------- Operating income 57,755 35,458 153,103 84,777 Other expense, net 922 40 2,239 810 -------- -------- -------- -------- Income before income taxes 56,833 35,418 150,864 83,967 Income taxes 18,184 10,625 48,269 25,190 -------- -------- -------- -------- Net income $38,649 $24,793 $102,595 $58,777 -------- -------- -------- -------- -------- -------- -------- -------- Net income per share Primary $1.37 $0.89 $3.63 $2.18 -------- -------- -------- -------- -------- -------- -------- -------- Fully diluted $1.28 $0.83 $3.40 $2.05 -------- -------- -------- -------- -------- -------- -------- -------- Number of shares used in per share calculations Primary 28,200 27,900 28,300 26,950 -------- -------- -------- -------- -------- -------- -------- -------- Fully diluted 30,850 30,600 30,950 29,760 -------- -------- -------- -------- -------- -------- -------- -------- </TABLE> See Notes to condensed consolidated financial statements. -2-
LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) <TABLE> <CAPTION> Nine Months Ended ----------------------------- March 31, March 31, 1996 1995 ---------- --------- <S> <C> <C> Cash flows from operating activities: Net income $102,595 $58,777 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 23,287 15,360 Change in certain working capital accounts (68,806) (73,692) ---------- --------- Net cash provided by operating activities 57,076 445 Cash flows from investing activites: Capital expenditures (52,114) (50,504) Purchase of short-term investments (332,065) -- Sale of short-term investments 271,097 -- Restricted cash 25,024 (2,618) Proceeds from sales of securities 12,038 -- Other (12,694) (3,738) ---------- --------- Net cash used in investing activities (88,714) (56,860) Cash flows from financing activities: Sale of stock, net of issuance costs 4,733 119,669 Proceeds from borrowings under line of credit 15,000 -- Proceeds from long-term debt -- 7,711 Principal payments on long-term debt and capital lease obligations (8,959) (3,353) Other (1,628) -- ---------- --------- Net cash provided by financing activities 9,146 124,027 ---------- --------- Net increase (decrease) in cash and cash equivalents (22,492) 67,612 Cash and cash equivalents at beginning of period 43,675 24,092 ---------- --------- Cash and cash equivalents at end of period $21,183 $91,704 ---------- --------- ---------- --------- </TABLE> See notes to condensed consolidated financial statements. -3-
LAM RESEARCH CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 1996 (Unaudited) NOTE A -- BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of Lam Research Corporation (the "Company") for the year ended June 30, 1995, which are included in the Annual Report on Form 10-K, File number 0-12933. The results of operations for the three and nine month periods ended March 31, 1996 are not necessarily indicative of the results that may be expected for the entire fiscal year ending June 30, 1996. NOTE B -- INVENTORIES Inventories consist of the following: March 31, June 30, 1996 1995 --------- -------- (in thousands) Raw materials $142,594 $80,910 Work-in-process 117,266 73,183 Finished goods 30,028 17,308 --------- -------- $289,888 $171,401 --------- -------- --------- -------- -4-
NOTE C -- EQUIPMENT AND LEASEHOLD IMPROVEMENTS Equipment and leasehold improvements consist of the following: March 31, June 30, 1996 1995 --------- -------- (in thousands) Equipment 105,478 $80,910 Furniture & fixtures 40,335 25,372 Leasehold improvements 91,510 64,707 --------- -------- 237,323 170,989 Accumulated depreciation and amortization (74,919) (53,418) --------- -------- $162,404 $117,571 --------- -------- --------- -------- NOTE D -- INVESTMENTS In November 1995, the Financial Accounting Standards Board staff issued a Special Report, "A Guide to Implementation of Statement 115 on Accounting for Certain Investments in Debt and Equity Securities". In accordance with provisions in that Special Report, the Company elected, in December 1995, to reclassify all of its held-to-maturity securities to available-for-sale. At the time of transfer, the amortized cost of those securities was $24.1 million, which approximates the fair value. NOTE E -- LINE OF CREDIT During the quarter ended December 31, 1995, the Company entered into a syndicated bank line of credit totaling $210.0 million, which expires in December 1998. At March 31, 1996 the Company had borrowed $15.0 million against the line of credit. NOTE F -- NET INCOME PER SHARE For the three and nine month periods ended March 31, 1996 and 1995, primary net income per share is calculated using the weighted average number of shares of common stock and common stock equivalents outstanding during the period. The common stock equivalents include shares issuable upon the assumed exercise of stock options reflected under the treasury stock method. In addition, fully diluted net income per share reflects the assumed conversion of the Company's convertible subordinated debentures at the beginning of each period, and also adds the interest expense incurred on the debentures, net of income tax effect, to the net income amount for use in the fully diluted calculation. -5-
NOTE G -- OTHER EXPENSE/(INCOME), NET The significant components of other expense, net are as follows (in thousands): Three Months Ended Nine Months Ended March 31, March 31, 1996 1995 1996 1995 Interest Expense $1,926 $1,794 $6,026 $4,804 Interest Income (1,655) (1,518) (4,393) (3,607) Other 651 (236) 606 (387) ----------------- ------------------ $ 922 $ 40 $2,239 $ 810 NOTE H -- SUBSEQUENT EVENT On April 2, 1996, the Company called for the redemption on May 3, 1996 of all of its 6% convertible subordinated debentures due 2003. At March 31, 1996 the carrying value of the debentures was approximately $66.0 million. These debentures net of debt issuance costs were converted into 2,640,000 shares of the Company's common stock. NOTE I -- LITIGATION See Part II, item 1 for discussion of litigation. -6-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information in this discussion contains forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the Safe Harbor provisions created by that statute. Such statements are subject to certain risks and uncertainties, including those discussed below, that could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date hereof. Forward-looking statements are indicated by an asterisk (*). The components of the Company's statements of income, expressed as a percentage of total revenue, are as follows: Three Months Nine Months Ended Ended March 31, March 31, 1996 1995 1996 1995 -------------- -------------- Net Sales 98.8% 98.8% 98.2% 98.5% Royalty income 1.2 1.2 1.8 1.5 -------------- -------------- 100.0 100.0 100.0 100.0 Cost of goods sold 51.5 51.2 51.3 51.6 Research and development 13.5 14.6 13.5 15.2 Selling, general & administrative 18.3 18.0 18.2 17.9 -------------- -------------- Operating income 16.7 16.2 17.0 15.3 Other expense, net 0.3 -- 0.2 0.1 -------------- -------------- Income before income taxes 16.4 16.2 16.8 15.2 Income taxes 5.2 4.9 5.4 4.6 -------------- -------------- Net income 11.2% 11.3% 11.4% 10.6% -------------- -------------- -------------- -------------- RESULTS OF OPERATIONS Net sales for the three and nine month periods ended March 31, 1996 increased by 58% and 63%, respectively, over the comparable prior year periods. Increased unit sales of Transformer Coupled Plasma-TM- (TCP-TM-) and Rainbow-TM- systems accounted for approximately 76% of the sales increase for the third quarter of fiscal year 1996 as compared to the comparable prior year period. The Company's TCP etch products and its Rainbow 4500 oxide etch system experienced the highest net sales increase during the three and nine month periods ended March 31, 1996 compared to the prior year periods. Sales to foreign -7-
customers increased to 60% of net sales for both the three and nine month periods ended March 31, 1996, from 58% and 51%, respectively, of net sales for the same periods of the prior year, with the Asia Pacific and Japan regions experiencing the highest percentage increase. Net sales to Europe were also stronger than in the year-ago periods. Spares and service revenue for the three and nine month periods of fiscal 1996 increased 41% and 58%, respectively, as compared to the same periods of the prior fiscal year, as a result of increases in the Company's installed machine base. The semiconductor industry is presently experiencing volatility in terms of product demand and product pricing. As a result, semiconductor manufacturers are exercising caution in making their capital equipment decisions and have in certain cases rescheduled or cancelled planned capital purchases. As a result of the uncertainties of this current market environment, the Company anticipates that its quarterly revenues and profits will not continue to grow as they have in the past several quarters and may fluctuate from quarter to quarter.* Royalty income increased by 69% from the year-ago quarter due to improvement in the Japanese semiconductor market, which resulted in increased sales of products incorporating the Company's technology being licensed by Tokyo Electron Limited (TEL) and Sumitomo Metal Industries, Ltd. (SMI). Royalty income for the third fiscal quarter of 1996 was lower than the immediately preceding quarter, and the Company expects royalty income will continue to fluctuate on a quarterly basis.* The Company's gross margin percentage decreased to 48.5% in the third quarter of fiscal 1996 as compared to 48.8% in the comparable quarter of fiscal 1995, while the gross margin percentage increased to 48.7% for the nine month period ended March 31, 1996 as compared to 48.4% for the nine months ended March 31, 1995. The decrease in gross margin percentage during the third quarter of fiscal 1996 as compared to the year-ago period was due in part to product mix, as the Company sold a higher percentage of lower margin TCP and Alliance machines and a lower percentage of higher margin Rainbow machines. The Company anticipates that gross margin percentages will decline somewhat in succeeding quarters due in part to the increased market acceptance of the newer technology Alliance and TCP products, which currently have lower margins than the Company's Rainbow products.* The Company is actively pursuing margin improvement programs on these products. Research and development (R&D) expense increased for the three and nine month periods ended March 31, 1996 by 47% and 45% over the prior year periods, but as a percentage of total revenue was lower than the comparable prior year period. The increased expense was due to continued expenditures on advanced etch applications, continued development of CVD technologies, including Deep SubMicron (DSM-TM-) 9800 (formerly Integrity-Registered Trademark-) and Deep SubMicron(DSM-TM-) 9900 (formerly Epic-TM-), further enhancements of the TCP, Alliance and Rainbow products and continued -8-
development of the Company's flat panel display technology. Although the Company has increased engineering headcount and spending, these expenditures have increased at a slightly slower rate than the Company's revenue. During the quarter ended December 31, 1995, construction began on an additional engineering facility at the Company's Fremont campus, which the Company will occupy under an operating lease. This facility is expected to be operational by the end of the current fiscal year.* Selling, general and administrative (SG&A) expenses for the three and nine month periods ended March 31, 1996 increased by 60% and 65%, respectively, over prior year periods. The Company has added employees in all customer support, sales and administration areas to accommodate the increased sales volume. During the quarter ended March 31, 1996, the Company experienced increased expenditures for field service, compared to the same period of the prior fiscal year, to accommodate the increasing installed machine base; and for information technology support related to the occupancy of new worldwide facilities. Due to the increased revenue from foreign sales; SG&A expenditures by the Company's foreign subsidiaries rose at a rate slightly higher than in the United States. During the third quarter of fiscal 1996, the Company relocated and began the expansion of its Taiwan facility, which will include a product demonstration laboratory and a training facility. In July 1995, the Company opened a new manufacturing customer support and training center facility in Korea and is expanding its facilities in Japan. The effective tax rate for the three month and nine month fiscal 1996 periods is 32% compared to 30% for the prior year periods due primarily to the expiration of the federal research and development credit. As a result of the current business environment, the Company has implemented a number of expense and capital spending programs to manage operating costs. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities was $57.1 million for the nine months ended March 31, 1996, derived from income before depreciation and amortization expenses totaling $102.6 million, offset by the increases in inventories and accounts receivable related to the sales volume increase. In addition, $46.6 million was provided from the sale of yen-denominated Japanese receivables to a bank (under an agreement amended during the third quarter of fiscal 1996 under which the Company may sell up to a total of 6.0 billion yen of yen-denominated, $56.7 million at March 31, 1996, Japanese receivables to the bank). Capital expenditures for the nine month period were $52.1 million, primarily for new facility leasehold improvements, and furnishings at the Fremont campus, Japan facility, Taiwan facility and the new manufacturing facility in Korea. The -9-
Company had net purchases of short-term investments of $61.0 million for the nine-month period. During the third quarter of fiscal year 1996, the Company renegotiated a lease agreement related to two of its research and development buildings and as a result, $25.0 million of previously restricted investments ("restricted cash") became unrestricted and as a result have been included in short-term investments at March 31, 1996. Cash receipts from investing activities of $12.0 million were provided from the sale of Brooks Automation, Inc. securities. Also contributing to the overall use of cash were payments of $9.0 million relating to long-term debt and capital lease obligations. As of March 31, 1996, the Company had $139.5 million in cash, cash equivalents and short-term investments compared with $101.0 million at June 30, 1995. The Company has a total of $210.0 million available under a syndicated bank line of credit which expires in December 1998. At March 31, 1996, the Company had borrowed $15.0 million against the line of credit. The Company believes that its cash, cash equivalents, short-term investments and available line of credit at the end of the third quarter of fiscal 1996 are adequate to support current levels of operations for at least the next twelve months.* RISK FACTORS HIGHLY COMPETITIVE INDUSTRY The semiconductor processing equipment industry is highly competitive. The Company faces substantial competition throughout the world. The Company believes that to remain competitive, it will require significant financial resources in order to offer a broad range of products, to maintain customer service and support centers worldwide, and to invest in product and process research and development. In addition, the Company intends to continue to invest substantial resources to increase sales of its systems to Japanese semiconductor manufacturers, who represent a substantial portion of the worldwide semiconductor market and whose market is difficult for non-Japanese equipment companies to penetrate. The Company believes that the semiconductor equipment industry is becoming increasingly dominated by large manufacturers who have the resources to support customers on a worldwide basis, and certain of the Company's competitors have substantially greater financial resources and more extensive engineering, manufacturing, marketing and customer service and support capabilities than the Company. In addition, there are smaller emerging semiconductor equipment companies which provide innovative technology. The Company expects its competitors to continue to improve the design and performance of their current products and processes and to introduce new products and processes with improved price and -10-
performance characteristics. If the Company's competitors enter into strategic relationships with leading semiconductor manufacturers covering etch or deposition products similar to those sold by the Company, its ability to sell its products to those manufacturers could be adversely affected. No assurance can be given that the Company will continue to compete successfully in the United States or worldwide. DEPENDENCE ON NEW PRODUCTS AND PROCESSES; RAPID TECHNOLOGICAL CHANGE Semiconductor manufacturing equipment and processes are subject to rapid technological change. The Company believes that its future success will depend in part upon its ability to continue to enhance its existing products and their process capabilities and to develop and manufacture new products with improved process capabilities. As a result, the Company expects to continue to make significant investments in research and development. The Company also must manage product transitions successfully, as introductions of new products could adversely affect sales of existing products. There can be no assurance that future technologies, processes or product developments will not render the Company's current product offerings obsolete or that the Company will be able to develop and introduce new products or enhancements to its existing products and processes in a timely manner which satisfy customer needs or achieve market acceptance. The failure to do so could adversely affect the Company's business. Furthermore, if the Company is not successful in the development of advanced processes or equipment for manufacturers with whom it has formed strategic alliances, its ability to sell its products to those manufacturers would be adversely affected. In addition, in connection with the development of the Company's new products, the Company invests in high levels of preproduction inventory, and the failure to complete development and commercialization of these new products in a timely manner could result in inventory obsolescence, which could have an adverse effect on the Company's financial results. CURRENT VOLATILITY IN THE SEMICONDUCTOR INDUSTRY The Company's business depends upon the capital expenditures of semiconductor manufacturers, which in turn depend on the current and anticipated market demand for integrated circuits and products utilizing integrated circuits. The semiconductor industry has been cyclical in nature and historically experienced periodic downturns. While the semiconductor industry has not recently followed these cycles, it is presently experiencing volatility in terms of product demand and product pricing. This volatility has had an adverse effect on the semiconductor industry's demand for semiconductor processing equipment. No assurance can be given that the Company's revenue and operating -11-
results will not be adversely affected if downturns in the semiconductor industry occur in the future. In addition, the need for continued investments in research and development, substantial capital equipment requirements and extensive ongoing worldwide customer service and support capability will limit the Company's ability to reduce expenses. Accordingly, there is no assurance that the Company will be able to remain profitable in the future. FLUCTUATIONS IN QUARTERLY OPERATING RESULTS The Company's revenue and operating results may fluctuate from quarter to quarter. The Company derives its revenue primarily from the sale of a relatively small number of high-priced systems which can range in price from $300,000 to over $2 million. Some of these systems are ordered and shipped during the same quarter. The Company's results of operations for a particular quarter could be adversely affected if anticipated orders for even a small number of systems were not received in time to enable shipment during the quarter, if anticipated shipments were delayed or cancelled by one or more customers or if shipments were delayed due to manufacturing difficulties. In particular, the Company has experienced certain cases of rescheduling or cancellation of orders. The Company's revenue and operating results may also fluctuate due to the mix of products sold, the channel of distribution or the level of royalty income from the Company's Japanese licenses. The Company generally realizes a higher margin on sales of its mature etch products and on revenue from service and spare parts than on sales of new TCP and Alliance products. Newer products usually have lower margins in the initial phase of production. In addition, direct sales have higher margins than sales through the Company's distributor. Increases or decreases in royalty income will also have a disproportionate impact on operating income and will continue to fluctuate on a quarterly basis. The impact of these and other factors on the Company's revenues and operating results in any future periods is difficult for the Company to forecast. DEPENDENCE ON KEY SUPPLIERS Certain of the components and subassemblies included in the Company's products are obtained from a single supplier or a limited group of suppliers. The Company believes that alternative sources could be obtained and qualified to supply these products. Nevertheless, a prolonged inability to obtain certain components could have an adverse effect on the Company's operating results and could result in damage to customer relationships. -12-
ENVIRONMENTAL REGULATIONS The Company is subject to a variety of governmental regulations related to the discharge or disposal of toxic, volatile, or otherwise hazardous chemicals used in the manufacturing process. The Company believes that it is in compliance with these regulations and that it has obtained all necessary environmental permits to conduct its business, which permits generally relate to the disposal of hazardous wastes. Nevertheless, the failure to comply with present or future regulations could result in fines being imposed on the Company, suspension of production or cessation of operations. Such regulations could require the Company to acquire significant equipment or to incur substantial other expenses to comply with environmental regulations. Any failure by the Company to control the use of, or adequately restrict the discharge or disposal of hazardous substances could subject the Company to future liabilities. INTERNATIONAL SALES The Company anticipates that export sales will continue to account for a significant portion of its net sales. Additionally, the Company continues to expand its international operations, including expansion of its facilities in Asia. As a result, a significant portion of the Company's sales and operations will be subject to certain risks, including tariffs and other barriers, difficulties in staffing and managing foreign subsidiary and branch operations, difficulties in managing distributors, potentially adverse tax consequences and the possibility of difficulty in accounts receivable collection. There can be no assurance that any of these factors will not have a material adverse effect on the Company's business, financial condition and results of operations. INTELLECTUAL PROPERTY MATTERS From time to time, the Company is notified that it may be in violation of certain patents. In such cases, the Company's policy is to defend against the claims or negotiate licenses where considered appropriate. However, no assurance can be given that it will be able to obtain necessary licenses on commercially reasonable terms. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. -13-
PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In October 1993, Varian Associates, Inc. (Varian) brought suit against the Company in the United States District Court, Northern District of California, seeking monetary damages and injunctive relief based on the Company's alleged infringement of certain patents held by Varian. The lawsuit is in the late stages of discovery. No trial date has been set. The Company has asserted defenses of invalidity and unenforceability of the patents that are the subject of the lawsuit, as well as noninfringement of such patents by the Company's products. While litigation is subject to inherent uncertainties and no assurance can be given that the Company will prevail in such litigation or will obtain a license under such patents on commercially reasonable terms or at all if such patents are held valid and infringed by the Company's products, the Company believes that the Varian lawsuit if decided against the Company, will not have a material adverse effect on the Company's consolidated financial position, operating results or cash flows. In addition, the Company is from time to time notified by various parties that it may be in violation of certain patents. In such cases, it is the Company's intention to seek negotiated licenses where it is considered appropriate. The outcome of these matters will not, in management's opinion, have a material impact on the Company's consolidated financial position, operating results or cash flows. -14-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 10.29 Operating Lease Agreement between Lam Research Corporation and the Industrial Bank of Japan, Limited dated March 27, 1996 Exhibit 11.1 Statement Re: Computation of Earnings Per Share Exhibit 27 Financial Data Schedule (b) No reports on Form 8-K were filed by the Registrant during the quarter ended March 31, 1996. -15-
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 15, 1996 LAM RESEARCH CORPORATION By:\s\ Henk J. Evenhuis -------------------------------- Henk J. Evenhuis, Executive Vice President, Finance & Chief Financial Officer -16-