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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 19951996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER
0-12933
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LAM RESEARCH CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-2634797
(State of other (I.R.S. Employer jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
of incorporation)
4650 CUSHING PARKWAY, 94538
FREMONT, CALIFORNIA (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (510) 659-0200
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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.001 PER SHARE
6% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003
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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_X No
____--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based on the average of the closing price of the Common Stock on
September 1, 1995,August 30, 1996, as reported by the Nasdaq National Market was approximately
$1,084,494,000.$604,136,000. Shares of Common Stock held by each officer and director and by
each person who owns 5% or more of the outstanding Common Stock have been
excluded from this computation in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
As of September 1, 1995,August 30, 1996, the Registrantregistrant had outstanding 27,320,60730,298,633 shares of
Common Stock.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended
June 30, 1995 (19951996 ("1996 Annual Report to Stockholders)Stockholders"), are incorporated by
reference into Parts I, II and IV of this Form 10-K Report.
Parts of Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on October 26, 199531, 1996 are incorporated by reference to
PartParts III and IV of this Form 10-K Report. (The Compensation Committee Report
and the stock performance graph of the Registrant's Proxy Statement are
expressly not incorporated by reference herein.)
PART I
ITEM 1. BUSINESS
This Report on Form 10-K contains certain forward looking statements
regarding future events with respect to the Company. Actual events or results
may differ materially as a result of the factors described herein and in the
documents incorporated herein by reference, including, in particular, those
factors described under "Risk Factors." Forward-looking statements are indicated
by an asterisk (*).
THE COMPANY
Lam Research Corporation (Lam) designs, manufactures, markets and
services semiconductor processing equipment used in the fabrication of
integrated circuits. Lam is recognized by its customers worldwide as a leading
supplier of semiconductor production equipment. The Company's products are used
to deposit special films on a silicon wafer (deposition) andto selectively etch
away portions of various films (etch) to create an integrated circuit.
Deposition and etch processes, which are repeated numerous times during the
fabrication cycle, are required to manufacture every semiconductor device
produced today.
The Company currently sells a broad range of plasma (dry) etch products
to address specific applications, including the AutoEtch-Registered
Trademark-, Advanced Capabilities Rainbow-TM-, and TCP-TM- (TransformerTransformer Coupled
Plasma-TM-(TCP-TM-) product lines. In the deposition market, Lam offers its
Epic-TM- high density plasma (HDP)Deep SubMicron-TM- (DSM-TM- 9800) (formerly Integrity-Registered Trademark-)
low pressure (LP) chemical vapor deposition (CVD) system, a fully automated
batch thermal CVD system for pre-metal dielectric applications, and its Deep
SubMicron (DSM 9900) (formerly Epic-TM-) high density plasma (HDP) CVD
system, which addresses advanced intermetal passivation dielectric
applications for logic and its Integrity-Registered Trademark- low pressure (LP) CVD
system, a fully automated batch CVD systemmicroprocessor integrated circuits as well as
shallow trenches for interlevel dielectric
applications.isolation in memory circuits.
PRODUCTS
Semiconductor wafers are subjected to a complex series of process steps
that result in the simultaneous creation of many individual semiconductor
circuits. The basic steps include deposition, photolithography, etching,
assembly and testing. Lam's products are used in the deposition and etchingetch
process steps of semiconductor device manufacturing and are available as
stand-alone systems or on the Company's Advanced Capabilities Alliance
multichamber Alliance-TM-cluster platform. Lam incorporates its Envision-TM- interactive
control system software Envision-TM-, for advanced production management on each of its
systems.
ETCH PRODUCTS
The etch process defines line-widths and other feature sizesmicro features on integrated
circuits. Plasma etching, a dry etch technique, was developed to meet the
demand for device geometries with line-widths smaller than three microns.
Plasma etching uses ionized gases that chemically react with unprotectedexposed portions of the wafer
to produce finely etcheddelineated features that form the lines and patterns of the integrated circuit.
Today manufacturers of advanced integrated circuits require etch systems
that can produce line-widths as small as 0.25 micron (approximately 1/300 the
thickness of a human hair) and in the future are expected to require systems
capable
2
of producing devices with feature sizes smaller than 0.100.1 micron. In
addition, advanced manufacturing facilities are producing integrated circuits on
wafers of 150 or 200 mm (6 or 8 inches) in diameter, and a transition in wafer
diameters areis expected to increase to 300 mm (12 inches) bystarting in 1998. To
accommodate these decreasing line-widths and increasing wafer diameters,
manufacturers increasingly require more precise control over the etching
process.
1
Lam's family of etch systems incorporates plasma technologies designed to
meet both current and future device requirements. In the fiscal years ended
June 30, 1996, 1995 1994 and 1993,1994, sales of the Company's etch systems contributed
approximately 77%, 78%77% and 78% of the Company's total revenues, respectively.
AUTOETCH. The AutoEtch family was Lam's initial product line, with the
first AutoEtch productetcher sold in January 1982. The AutoEtch product line includes
the 490, 590 and 690 series for etching polysilicon, oxide and aluminum film,
applications, respectively. Although the AutoEtch series is more than fourteenfifteen
years old, continued improvements in both reliability and performance have
enabled Lam to continue to offer it as a suitable product for film applications
involving line-widthsline widths of 0.8 micron or greater and wafer sizes of six inches or
smaller. In addition, Lam offers the service of refurbishing or remanufacturing
AutoEtch systems.
RAINBOW. The first Rainbow etch system was introduced in 1987. The
Rainbow series of products addresses processes that utilize wafer sizes up to
200mm200 mm and feature sizes as small as 0.35 micron. The Rainbow product line
also available on the Alliance platform, includes the Rainbow 4400, 4500,
4600 and 4700 series for etching polysilicon, oxide, aluminum and tungsten
films, respectively. These systems are designed to accommodate evolving
customer needs through hardware and process enhancements.
The Rainbow product series incorporates a number of unique features that
offer semiconductor manufacturers improved etch capability, reliability and
performance. These features include a patented wafer handling system, a
proprietary source for generating stable plasma, and an overall product design
for which Lam has received industry awards for quality and reliability. These
and other features of the Rainbow product are designed tofeatures enable the semiconductor manufacturer to
reduce wafer particle contamination to a level that exceeds industry
standards, and to improve etch selectivity and uniformity while maintaining
profile control and process flexibility.
TCP. Lam's TCP product line of high density, low pressure etch systems,
which was introduced in late 1992, incorporates the Company's patented
Transformer Coupled Plasma-TM-Plasma source technology for etching 0.35 micron and
smaller geometries. The Company currently offers the TCP 9600 series9600SE for metal
etch applications, the TCP 9400SE for polysilicon and polycide etch
applications and the TCP 9400 series9100 for polysilicon and polycideoxide etch applications. These systems
are currently used to produce a broad range of advanced logic and memory devices
and the Company believes these products offer technological capability to enable
manufacturers to produce the next generations of advanced devices. The TCP
series operates at lower pressures for improved pattern transfer control and
higher plasma density for higher etch rates with independent power control to
the lower electrode, which improves etch results across a wider process window.
TheLam's TCP system issystems are designed to offer customers a reliable, lower cost of
ownership solution to their advanced needs. OXIDE 9500. The Oxide 9500 is a next-generation oxide etch system developed
to address 0.35 micron and smaller geometries. This product, which incorporatesTCP systems are available as
stand-alone, single wafer tools, or on the Company's technology with certain technology obtained in connection with the
Drytek acquisition (See Note O to the Consolidated Financial Statements included
in Item 8) onto the standard Rainbow platform, is designed to offer customers
high reliability and lower cost of ownership. The Company began selling the
Oxide 9500 system in fiscal 1995.Alliance multichamber cluster
platform.
DEPOSITION PRODUCTS
Chemical vapor deposition (CVD)CVD involves the deposition of thin films on a silicon wafer by exposing
the wafer to various reactant gases containing the materials to be deposited.
FilmsInsulating films are deposited to form both interconnect and dielectric layers of anon integrated
circuit.circuits. The metal interconnect layer is typically deposited on the wafer
surface by a sputtering process to provide electrical connection between the
various circuit elements, and theelements. The dielectric layer is deposited on top ofover the
interconnectinterconnects and subsequent layer by CVD to provide electrical insulation between
the interconnect layers. To increase circuit functionality, manufacturers
have designed circuits with multilayermultilevel interconnections (stacked levels of
wiring separated by insulating dielectric layers) using lower resistivity
materials for improved 2
device performance. Multiple levels of interconnectinterconnects
allow the circuit elementsdevice manufacturers to be moved closer together, further increasingincrease the density and complexity of the
integrated circuit. Current state-of-the-art devices may have as many as or more than,
five interconnect and dielectric layers on the integrated circuit. Lam
currently manufactures two dielectric layer deposition products, Epicthe DSM 9800
and Integrity
systems,DSM 9900, to address advanced multilevel films.
EPIC. Lam introduced its Epic high density plasma (HDP) CVD system in July
1993. The Epic system incorporates electron cyclotron resonance (ECR) technology
to form a high-density, low-pressure plasma. Its ability to deposit and etch
simultaneously an intermetal dielectric film enables it to fill gaps as small as
0.35 micron and below and to generate a film that is easily planarized. The
resulting film exhibits superior electrical qualities and significantly reduces
the need for additional chemical mechanical polishing. The Epic technology,
available on Lam's Alliance platform, has been installed at several customer
sites and is currently being used for production of certain advanced
microprocessors and in device development programs.
INTEGRITY. Integrity is a low pressure (LP)requirements.
3
DSM 9800. DSM 9800 LP CVD system for depositing advanced interlevelpre-metal
dielectric films. This system utilizes a patented integrated process design
for flowing gases rapidly over the wafer, forming films that are highly
uniform and planar at a lower thermal budget to provide improved electricaldevice
performance. IntegrityDSM 9800 has been installed at several customer sitesworldwide and is currently being
used for production of semiconductor devices at 0.35 micron and beyond.
DSM 9900. Lam introduced its DSM 9900 HDP CVD system in November 1995.
DSM 9900 represents the next generation in HDP CVD technology first
introduced in the Epic system with the DSM 9900 having a smaller footprint,
high reliability and improved throughput. The DSM 9900 is well suited for the
demanding requirements of high production environments. Like the Epic, the
DSM 9900 makes use of electron cyclotron resonance (ECR) technology to form a
high density, low pressure plasma. ECR enables remote plasma coupling that
minimizes particulate contamination and maximizes throughput while filling
gaps as small as 0.18 microns with aspect ratios as high as 3:1. The
intermetal dielectric films created by simultaneously depositing and etching
are planarized more easily, by chemical mechanical polishing, than films that
are repeatedly deposited and etched by conventional techniques. The DSM 9900
technology, available on Lam's Alliance platform, has been installed at
several customer sites and is being qualified for production of quarter- and
sub-quarter-micron logic, microprocessor, and memory integrated circuits. The
Epic system is still being supported and is used for production of
microprocessors.
Lam, Lam Research, Transformer Coupled Plasma, TCP, Deep SubMicron, DSM,
Rainbow, Continuum, Alliance and Envision are trademarks of Lam Research
Corporation. AutoEtch is a registered trademark of Lam Research Corporation.
THE RESTRUCTURING
In August 1996, the Company announced a restructuring (the restructuring)
of its operations, consolidating its previous business unit structure into
centralized functional organizations. As a result of the restructuring, and in
device development programs.response to industry conditions, the Company reduced its workforce by
approximately 11%. For the first quarter of fiscal 1997, the Company will record
a restructuring charge of $11.0 to 12.0 million for costs resulting primarily
from severance compensation and consolidation of related facilities.
RESEARCH AND DEVELOPMENT
The market for semiconductor capital equipment is characterized by rapid
technological change. The Company believes that continued and timely
development of new products and enhancements to existing products are necessary
for it to maintain its competitive position. Accordingly, the Company devotes a
significant portion of its personnel and financial resources to research and
development (R&D) programs and seeks to maintain close relationships with its
customers to be responsive to their product needs.
The Company's net R&D expenses during fiscal 1996, 1995 1994 and 1993,1994, were
approximately $173.0 million, $127.8 million $76.3 million and $43.9$76.3 million, respectively,
and represented 15.8%13.6%, 15.5%15.8% and 16.6%15.5% of total revenue, respectively. Such R&D
expenses were net of third party funding, from SEMATECH, an industry consortium,
the United States Display Consortium (USDC), and customers, representing approximately $3.4 million, $2.6 million $1.8 million and $1.6$1.8
million during fiscal 1996, 1995 1994 and 1993,1994, respectively. Such expenditures were
used for the development of new products and film applications, and the
continued enhancement of existing products. Current projects include the
development of advanced etch and deposition products.
In June 1994, the Company received a two year contract from the USDCUnited
States Display Consortium (USDC) for the development of ana flat panel display
etch system, based on the Company's TCP technology. ThisThe Continuum-TM- etch
system will beis designed for use in the manufacture of large scale flat panel
displays for several new technologies including active matrix liquid crystal
displays (AMLCDs) and Field Emission Displaysfield emission displays (FEDs). Included in the $3.4
million and $2.6 million of third party funded R&D for fiscal 1996 and 1995
was $3.2 million and $1.2 million from the USDC.
The Company expects to continue to invest heavilymake substantial investments
in R&D.* 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 product
4
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 process
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 3
high levels of pre-production inventory,
and the failure to complete development and commercialization of these new
products in a timely manner could result in inventory obsolescence, which
could reduce the Company's financial results.
MARKETING, SALES AND SERVICE
The Company's marketing and sales efforts are focused on building long-term
relationships with its customers. These efforts are supported by a team of
product marketing managers, sales personnel, equipment engineers and process
engineers that works closely with individual customers to find solutions to
their process challenges.needs. After-sales support is also an essential element of the
Company's marketing and sales program. The Company maintains an ongoing support
relationship with its customers and has an extensive network of field service
personnel in place across the United States, Europe, Japan and Asia Pacific. In
addition, the Company maintains an in-house group of highly skilled applicationsapplication
engineers to respond to customer process needs worldwide when a higher level of
technical expertise is required. The Company believes that its extensive
support programs and close working relationships with its customers give it a
competitive advantage. The Company also believes that, by assisting its
customers in the development of their advanced manufacturing processes, the
customers are less likely to change equipment vendors.
The Company has 3040 sales and support centers located throughout the United
States, Europe, Japan, and Asia Pacific, through which direct sales personnel
and independent sales representatives sell and service the Company's products.
The Company has expanded its sales and support offices in Japan to support the
direct sales efforts there which began in October 1994. More recently, the Company
has increased that effort by furthering its direct sales and service capability
in Japan to directly market and support its advanced etch products. The Company
now offers its customers a comprehensive, two-year warranty package on all
released products with 24 hour, seven days a week service.
In Japan, the Company has licensing arrangements with Sumitomo Metal
Industries, Ltd. (Sumitomo) and Tokyo Electron Limited (TEL). Sumitomo
manufactures, sells and distributes certain of the Company's Rainbow products to
specific customers in Japan.Japan under an exclusive license agreement with Lam. TEL
has a non-exclusive license to sell products incorporating certain features of
Lam's proprietary etch technology. In June 1991, the Company opened the Lam
Technology Center near Tokyo, Japan, to establish a presence in Japan and to
assist Sumitomo in serving Japanese customers. In May 1993, Lam completed its
advanced development and demonstration laboratory in Sagamihara, Japan, which
allows customers to evaluate the Company's recently introduced advanced
technology products. TheDuring fiscal 1996, the Company is
currently expandingexpanded in Japan by
building a third floor on this existing building
and is inbuilding. In July 1996, the design stageCompany
began construction of a second facility in Sagamihara.Sagamihara, Japan.
Export sales accounted for approximately 38%41%, 40%38% and 40% of net sales in
fiscal 1996, 1995 1994 and 1993,1994, respectively. Export sales consist of sales from
the Company's U.S. operating subsidiary to nonaffiliated customers in foreign
countries. The Company anticipates that export sales will continue to account
for a significant portion of its net sales. Additionally, the Company continues
to expandexpanded its international operations,
including expansion of its Japan operations, and the opening of a manufacturing
facility in Korea in July 1995.1995 and the relocation and expansion of the Taiwan
facility to a technology development center. 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 affecteffect on the Company's
business, financial condition andposition, results of operations.operations and cash flows.
CUSTOMERS
The Company's customers include most of the leading semiconductor
manufacturers worldwide. In fiscal 1996, no single customer accounted for more
than 10% of Lam's total revenue. Revenue from Intel accounted for 11%, and 14% and 15% of
5
total revenue for the years ended June 30, 1995 1994 and 1993,1994, respectively. Revenue
from Motorola accounted for 10% of total revenue for the year ended June 30,
1994.
4
1995.
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 is currently experiencing a slowdown in
terms of product demand and product pricing. This has caused semiconductor
manufacturers to exercise caution in making their capital equipment purchase
decisions and in certain cases customers have either rescheduled or cancelled
capital equipment purchases. In response to market conditions, the Company
announced a restructuring of its operations, consolidating its previous business
unit structure into centralized functional organizations. No assurance can be
given that the Company's revenue and operating results will not be further
adversely affected if downturns in the semiconductor industry occur.
BACKLOG
The Company schedules production of its systems based upon order backlog
and customer commitments. TheIncluded in backlog for the Company includes in backlogare
orders for which written authorizations have been accepted
and shipment dates have been assigned. As of June 30, 1996, the Company's order
backlog was approximately $328.0 million. As of June 30, 1995, the Company's
order backlog was approximately $252.6 million. AsThe semiconductor market is
presently experiencing volatility in terms of June 30, 1994, the Company's order backlog was approximately $145.9 million.product demand and product
pricing. This has caused certain semiconductor manufacturers to exercise caution
in making their capital equipment purchase decisions and in certain cases to
reschedule or cancel capital equipment purchases. All orders are subject to
cancellation by the customer with limited penalty. Because ofsome orders are
received for systems to be shipped in the same quarter and possible customer
changes in delivery schedules and cancellations of orders, the Company's backlog
at any particular date is not necessarily indicative of actual sales for any
succeeding period.
MANUFACTURING
The Company maintains U.S. facilities at fourfive locations in Fremont,
California and one location in Wilmington, Massachusetts for the manufacture
of its etch and deposition products. The Company completed,In addition, in July 1995, the Company
completed a manufacturing facility in CheonAn, Korea, outside of Seoul.Korea. The Company's Korean
manufacturing facility may experience difficulties in management,
procurement, production and staffing. There can be no assurances that these
factors will not have an adverse affecteffect on the Company's business, financial
condition and results of operations.
The Company's manufacturing activities consist of assembling and testing
components and subassemblies that are then integrated into finished systems.
Once the manufacturing department has completed final testing of all electronic
and electromechanical subassemblies that make up one of the Company's products,
the completed system is process tested. Stringent cleanliness controls are
present throughout the manufacturing, process and testing areas of these
facilities to reduce particle contamination. Much of the assembly and testing
of the Company's products is conducted in cleanroom environments where personnel
are properly clothedattired to reduce particulate contamination. Prior to shipping a
completed system, the customer's engineers may perform acceptance tests at Lam's
facility, using the customer's own wafers. After passing the acceptance test,
the system is vacuum-bagged in a cleanroom environment and prepared for
shipment.
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, whichbusiness. These 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.
6
EMPLOYEES
As of September 1, 1995,August 30, 1996, the Company had approximately 3,6004,500 full-time
employees. As a result of the restructuring in August 1996, the Company
reduced its workforce by approximately 11%. None of the Company's employees
isare represented by a union, and the Company has never experienced a work
stoppage. Management considers its employee relations to be satisfactory.
In addition, each employee of the Company has signed agreements to maintain
the confidentiality of the Company's proprietary information, and most key
employees have stock or stock option arrangements with the Company that
provide for the vesting of their interests over several years.
5
COMPETITION
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 to offer a broad range of products, to maintain customer service and
support centers worldwide and to invest in product and process R&D. Certain of
the Company's existing and potential competitors have substantially greater
financial resources, more extensive engineering, manufacturing, marketing and
customer service and support capabilities as well as greater name recognition
than the Company.organizations. 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
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.
Significant competitive factors in the etch equipment market include etch
quality, repeatability, process capability and flexibility and overall cost of
ownership, including reliability, software automation, throughput, customer
support and system price. Although the Company believes that it competes
favorably with respect to each of these factors, the Company's ability to
compete successfully in this market will depend upon its ability to introduce
product enhancements and new products on a timely basis. There can be no
assurance that the Company will continue to compete successfully in the future.
In the etch equipment market, the Company's primary competitors are Applied
Materials, Inc., TEL, and Hitachi Ltd.
Significant competitive factors in the deposition equipment market include
film quality, flow uniformity, contamination control, temperature control and
overall cost of ownership, including throughput, system reliability, cost of
consumables, system price and customer support. In the deposition equipment
market, the principal suppliers of equipment are Applied Materials, Inc., Canon
Sales Co. Inc., Novellus Systems, Inc. and Watkins-Johnson Company.
PATENTS AND LICENSES
The Company has a policy of seeking patents on inventions governing new
products and processes developed as part of its ongoing research, engineering
and manufacturing activities. The Company holds United States patents and
corresponding foreign patents covering various aspects of its products. The
Company believes that the duration of its patents generally exceeds the life
cycles of the technologies disclosed and claimed therein. The Company believes
that although the patents it holds and may obtain will be of value, they will
not determine the Company's success, which depends principally upon its
engineering, marketing, service and manufacturing skills. However, in the
absence of patent protection, the Company may be vulnerable to competitors who
attempt to imitate the Company's products, or processes and manufacturing
techniques and processes. In addition, other companies and inventors may
receive patents that contain claims applicable to the Company's products and
processes. The sale of the Company's products covered by such patents could
require licenses that may not be available on acceptable terms.
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 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. In October 1993, Varian Associates, Inc. (Varian) brought suit
against the Company in the United States District Court, Northern District of
7
California, seeking monetary damages and injunctive relief based on the
Company's alleged infringement of certain patents held by Varian. See "Item 3.
Legal Proceedings."
6
In December 1986, the Company entered into a non-exclusive license
agreement with TEL, licensing the Company's AutoEtch technology and chamber
design. This license expired in December 1991, and, in January 1992, the Company
entered into a new five year license agreement with TEL on substantially similar
terms which expireswas due to expire in December 1996.1996 but has been extended at a
substantially lower royalty.
The Company has two license agreements with Sumitomo. Under one agreement,
Lam granted Sumitomo an exclusive license for the manufacture and sale of
certain Rainbow etch systems in the Japanese market. Under the other agreement,
Sumitomo granted the Company an exclusive license for the manufacture and sale
of Sumitomo's ECR CVD systems in North America and Europe.
RISK FACTORS
CURRENT SLOWDOWN AND VOLATILITY IN THE SEMICONDUCTOR INDUSTRY
The Company's business depends upon the capital equipment 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. The semiconductor industry is
presently experiencing a slowdown in terms of product demand and volatility in
terms of product pricing. This slowdown and volatility has caused the
semiconductor industry to reduce its demand for semiconductor processing
equipment. No assurance can be given that the Company's revenue and operating
results will not be adversely affected during this and possible future downturns
in the semiconductor industry. 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.
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 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
8
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.
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 $3 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 geographic region 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.
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.
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
9
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, or at all, or any litigation resulting from such
claims could have a material adverse effect on the Company's business and
financial condition.
ITEM 2. PROPERTIES
The Company's executive offices and principal manufacturing, and research
and development facilities are located in twelveeighteen buildings in Fremont,
California, occupying over 800,0001,500,000 square feet under leases expiring from 19951998
to 2005. The2006. Due to the restructuring, the Company is currently planning the expansionhas excess capacity
and will consolidate and/or sublease some of its idle
facilities in Fremont, campus.California. The Company also operates a research and
manufacturing facility in Wilmington, Massachusetts.
In addition, the Company leases office space for its service and sales
personnel throughout the United States, Europe, Japan and Asia Pacific. The
Company completed, in July 1995, construction of a manufacturing, sales and
service facility of 40,000 square feet, outside of Seoul,in CheonAn, South Korea. TheIn fiscal
1996, the Company is currently expandingexpanded its current facility in Japan by building a third
floor on an existing building and is incompleted the design stage offor a second facility in
Sagamihara. Construction of the second facility began in July 1996.
The Company's fiscal 19951996 rental payments for the facilities occupied as of
June 30, 19951996 aggregated approximately $9.5$35.3 million and are subject to periodic
increases. The Company believes that its existing facilities are well
maintained and in good operating condition.
The Company continues to consider leasing
additional facilities as necessary to support its expanding operations.
ITEM 3. LEGAL PROCEEDINGS
In October 1993, Varian Associates, Inc. (Varian) brought suit against the
Company in the United States District Court, for the 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.discovery and has recently been reassigned to a new
judge. 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 infringementinfringed by the
Company's products, the Company believes that the Varian lawsuit will not have a
material adverse effect on the Company's consolidated financial statements.
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.flow statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
710
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The information required by this Item is incorporated by reference to the
Company's 19951996 Annual Report to Stockholders under the heading "Selected
Financial Data" on page 16.14.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated by reference to the
Company's 19951996 Annual Report to Stockholders under the heading "Selected
Financial Data" on page 16.14.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this Item is incorporated by reference to the
Company's 19951996 Annual Report to Stockholders under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 17-19.15-19.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements required by this Item are
incorporated by reference to pages 20-32 of the Company's 19951996 Annual Report to
Stockholders. The unaudited quarterly results of operations are incorporated by
reference to page 1614 of the Company's 19951996 Annual Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
(NotNot applicable.)
8
11
PART III
Certain information required by Part III is omitted from this Report in
that the Registrant will file a definitive proxy statement within 120 days after
the end of its fiscal year pursuant to Regulation 14A (the "Proxy Statement")
for its Annual Meeting of Stockholders to be held October 26, 199531, 1996 and
thecertain information included therein is incorporated herein by reference.
(The Compensation Committee Report and the stock performance graph of the
Registrant's Proxy Statement are expressly not incorporated by reference
herein.)
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning the Company's directors required by this Item is
incorporated by reference to "Election of Directors" in the Company's Proxy
Statement.
The executive officers of the Company, who are elected by and serve at the
discretion of the Board of Directors, are as follows:
NAME AGE POSITION WITH THE COMPANY
- -------------------------------- --- ------------------------------------------------------
Roger D. Emerick 56 Chairman of the Board and Chief Executive Officer
Henk J. Evenhuis 52 Senior Vice President, Finance, and Chief Financial
Officer
Alexander M. Voshchenkov 50 Vice President and Chief Technical Officer
Raymond L. Degner 51 Senior Vice President
Robert C. Fink 60 Executive Vice President
G. Dennis Key 52 Vice President
Richard H. Lovgren 41NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
Roger D. Emerick 57 Chairman of the Board and Chief
Executive Officer
Hsui-Sheng (Way) Tu 39 President
Henk J. Evenhuis 53 Executive Vice President, Finance, and
Chief Financial Officer
Alexander M. Voshchenkov 51 Vice President and Chief Technical Officer
Raymond L. Degner 52 Senior Vice President
Thomas O. Yep 57 Senior Vice President
Robert C. Fink 61 Senior Vice President
Rick Friedman 39 Vice President
George R Canavan 49 Vice President
Richard H. Lovgren 42 Vice President, General Counsel and Secretary
Larry N. Stewart 43 Vice President
Hsui-Sheng (Way) Tu 38 Vice President
Thomas O. Yep 56 Vice President
Roger D. Emerick joined the Company in 1982 as President, Chief Executive
Officer and a Director. In 1984, he was elected Chairman of the Board of
Directors. Mr. Emerick is currently a director of Electroglas, Inc., Brooks
Automation, Inc., Integrated Process Equipment Corp., and IPEC.Semiconductor
Equipment and Materials International (SEMI). From 1980 to 1982, he was
Senior Vice President of Optical Specialties, Inc. which markets automated
visual wafer inspection equipment for the semiconductor industry.
Hsui-Sheng (Way) Tu joined the Company in 1983 and has held various
positions with the Company. In fiscal 1996, Mr. Tu was named President of Lam
Research Corporation. In 1994, Mr. Tu was named Vice President of the Oxide Etch
Business Unit. In 1992, he was named Vice President of Asian Operations. Before
joining the Company, Mr. Tu was Process Engineering Supervisor for Fairchild
Semiconductor.
Henk J. Evenhuis joined the Company in 1987 as Vice President of Finance
and Administration and Chief Financial Officer and was named Senior Vice
President of Finance in 1988. In fiscal 1996, Mr. Evenhuis was named Executive
Vice President of the Company. Mr. Evenhuis is currently a director of Credence
Systems Corporation.Corporation, a test equipment manufacturer. Before joining the Company
and since 1986, Mr. Evenhuis was Vice President of Finance and Administration
and Chief Financial Officer for Corvus Systems Inc. He was Vice President of
Finance and Administration and Chief Financial Officer of Trimedia Corporation
from 1985, until Trimedia was acquired by Xidex Corporation in 1986.
Alexander M. Voshchenkov, Ph.D., joined the Company in 1993 as Vice
President and Chief Technical Officer. Before joining the Company and since
1972, Dr. Voshchenkov was a Member of the Technical Staff at AT&T Bell Labs,
12
serving in various research and managerial positions. His most recent position
was as Supervisor of the High Speed Electronics Department.
Raymond L. Degner, Ph.D., joined the Company in 1984 as Vice President of
Engineering and in 1989Engineering. In August 1996, he was named Senior Vice President of Research and Development.Etch
Products. In January 1992, Dr. Degner was
9
appointed Vice President of the Poly
Etch Business Unit. In 1995,1989 he was named Senior Vice President for the Poly Etchof Research and
CVD Business Units.Development. From 1983 to 1984, he served as Director of Development for Silicon
Valley Group, a semiconductor equipment manufacturer.
Thomas O. Yep, Ph.D., joined the Company in 1985 as Director of Process
Technology, and in 1989 was named Vice President of Process Technology. In
August 1996, he was named to Senior Vice President of the CVD Products and
Japan. In February 1992, he was named Vice President of the Metal Etch Business
Unit. Before joining the Company and since 1980, he served as Manager for the
plasma etch and thin film program at Intel Corporation. From 1969 to 1980,
Dr. Yep served as solid-state physicist at Varian Central Research.
Robert C. Fink joined the Company in 1993 as Vice President and Chief
Operating Officer. In August 1996 he was named Senior Vice President of
Corporate Support. In 1995 he was named ExecutiveSenior Vice President of Corporate
Development. Mr. Fink is currently a director of SEMI/SEMATECH and Uniphase
Corporation.Consilium
Inc. Before joining the Company and since 1988, Mr. Fink served as President of
Drytek, Inc., a former subsidiary of General Signal Corporation. From 1984 to
1988, he was Director of VLSI Operations (North America) for ITT Corporation's
Semiconductor Division. Prior to ITT, Mr. Fink served 12 years with General
Instrument Corporation's Microelectronics Division, serving most recently as
Director of Worldwide Manufacturing Resources.
G. Dennis KeyRick Friedman joined the Company in 19881993 as Vice Presidentdirector of Domestic
Sales.strategic
development in Lam's Wilmington, Massachusetts facility. In 1991,February 1996,
he was appointedpromoted to Vice President of Worldwide Sales and Field
Operations.Service. In 1995, he
was promoted to Vice President of North America Sales and Service. Prior to that
he was Director of Western Region Sales and Service. Before joining Lam he held
various positions at Drytek, Inc. (mid 1980's to 1993). His most recent
position at Drytek, Inc. was North American sales manager.
George Canavan joined the Company in December 1994 as Director of Business
Development for the Oxide Etch Business Unit. In August 1996, he was named to
Vice President of Marketing. In December 1995, he was promoted to Vice President
of Oxide Etch Business Unit. Prior to joining the Company, he servedLam, Mr. Canavan spent three years
at Applied Materials, Inc. as Area Directorglobal marketing manager and two years as Vice
President of Sales with Gemini Research from 1982 until 1988. From 1980and Marketing at ADVANTAGE Production Technology Inc.
Prior to 1982that he was
Manufacturing Manager with Fairchildheld various marketing positions at Applied Materials, Inc.,
and engineering and operations positions at Amdahl Corporation and National
Semiconductor a leading semiconductor
manufacturer.Corp.
Richard H. Lovgren joined the Company in 1995 as Vice President, General
Counsel and Corporate Secretary. Before joining the Company and since 1979, Mr.
Lovgren held various legal positions at Advanced Micro Devices, Inc. His most
recent position at Advanced Micro Devices, Inc. was Director and Deputy General
Counsel.
Larry N. Stewart joined the Company in 1991 as Product Engineer Manager and
in 1993 was named Director of the CVD Business Unit. In 1994 he was named Vice
President of the CVD Business Unit. From 1988 until joining the Company, Mr.
Stewart served as Systems Engineering Manager with Nanometrics. From 1985 to
1988 he was Section Manager in engineering for Photolythics, a division of
General Signal Corporation. From 1982 until 1985 he served as Manufacturing
Engineering Manager for Genus, Inc.
Hsui-Sheng (Way) Tu joined the Company in 1983 and has held various
positions with the Company. In 1991, he was named Vice President of Asian
Operations. In 1994, Mr. Tu was named Vice President of the Oxide Etch Business
Unit. Before joining the Company, Mr. Tu was Process Engineer Supervisor for
Fairchild Semiconductor.
Thomas O. Yep, Ph.D., joined the Company in 1985 as Director of Process
Technology, and in 1989 was named Vice President of Process Technology. In
February 1992, he was named Vice President of the Metal Etch Business Unit.
Before joining the Company and since 1980, he served as Manager for the plasma
etch and thin film program at Intel Corporation. From 1969 to 1980, Dr. Yep
served as solid-state physicist at Varian Central Research.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the
Company's Proxy Statement under the heading "Executive Compensation and Other
Information."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the
Company's Proxy Statement under the heading "Election of Directors" and
"Security Ownership of Certain Beneficial Owners and Management."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference to the
Company's Proxy Statement under the heading "Certain Relationships and Related
Transactions."
1013
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements: See Index to Financial Statements, page.......... 12
page 15
(2) Financial Statement Schedules: See Index to Financial Statement Schedules, page......................................................... 12page 15
(3) Exhibits: See Index to Exhibits, pages.................................. 16-18pages 19-21
(b) No reports on Form 8-K were filed during the fiscal quarteryear ended June 30, 19951996
1114
LAM RESEARCH CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PAGE(S)
IN 19951996
ANNUAL
REPORT*
-------------
Consolidated Balance Sheets --- June 30, 1996 and 1995 and 1994............................................................................................... 20
Consolidated Statements of Income --- Years Ended June 30, 1996, 1995 and 1994 and 1993............................................... 21
Consolidated Statements of Cash Flows --- Years Ended June 30, 1996, 1995 and 1994 and 1993....................................... 22
Consolidated Statements of Stockholders' Equity -- Years - Ended June 30, 1996, 1995 and 1994 and 1993................... 23
Notes to Consolidated Financial Statements...............................................................Statements ..................................................... 24
Report of Independent Auditors...........................................................................Auditors ................................................................. 32
INDEX TO FINANCIAL STATEMENT SCHEDULES
PAGE
-------------
Schedule II Valuation and Qualifying Accounts............................................................ 15
- ------------------------
* Incorporated by reference to the Company's 1995Accounts ................................................... 18
* Incorporated by reference to the Company's 1996 Annual Report to Stockholders.
1215
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
LAM RESEARCH CORPORATION
By ________/s/_ROGER/s/ ROGER D. EMERICK_______EMERICK
Roger D. Emerick,
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER (PRINCIPAL EXECUTIVE OFFICER)
Dated: September 26, 1995
1323, 1996
16
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Roger D. Emerick and Henk J. Evenhuis, jointly
and severally, his attorneys-in-fact, each with the power of substitution, for
him in any and all capacities, to sign any amendments to this Report of
Form 10-K, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the date indicated.
SIGNATURES TITLE DATE
- ------------------------------------------------------ -------------------------------- -----------------------
/s/ ROGER D. EMERICK Chairman of the Board and Chief /s/ ROGER D. EMERICK Executive ------------------------------------------- Officer September 23, 1996
(Principal September 26, 1995Executive Officer)
Roger D. Emerick
/s/ HENK J. EVENHUIS Executive Officer)
Senior Vice President and Chief /s/ HENK J. EVENHUIS Financial Officer September 23, 1996
(Principal ------------------------------------------- Financial September 26, 1995Officer and Principal
Henk J. Evenhuis Officer and Principal Accounting Officer)
/s/ DAVID G. ARSCOTT ------------------------------------------- Director September 26, 199523, 1996
David G. Arscott
/s/ JACK R. HARRIS ------------------------------------------- Director September 26, 199523, 1996
Jack R. Harris
/s/ GRANT M. INMAN ------------------------------------------- Director September 26, 199523, 1996
Grant M. Inman
/s/ OSAMU KANO ------------------------------------------- Director September 26, 199523, 1996
Osamu Kano
1417
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
LAM RESEARCH CORPORATION
ADDITIONS
DESCRIPTION BALANCE AT CHARGED TO COSTS CHARGED TO OTHER DEDUCTIONS - BALANCE AT END OF
---------- BEGINNING OF AND EXPENSES ACCOUNTS - DESCRIBE DESCRIBE PERIOD
PERIOD
COL. C
------------------------------A COL. B ADDITIONS
-------------- ------------------------------COL. C COL. D COL. E
COL. A BALANCE AT CHARGED TO CHARGED TO -------------- --------------
- ------------------------------ BEGINNING OF COSTS AND OTHER ACCOUNTS DEDUCTIONS -- BALANCE AT END
DESCRIPTION PERIOD EXPENSES -- DESCRIBE DESCRIBE OF PERIOD
- ------------------------------ -------------- -------------- -------------- -------------- -------------------- ------ ------ ------ ------
YEAR ENDED JUNE 30, 1996
Deducted from asset accounts:
Allowance for doubtful
accounts...................... $1,189,000 $500,000 $0 $26,000(3) $1,663,000
Product warranty and
improvement reserves (2)........ $40,986,000 $101,743,000 $0 $80,549,000(1) $62,180,000
YEAR ENDED JUNE 30, 1995
Deducted from asset accounts:
Allowance for doubtful
accounts................... $ 1,156,000 $ 217,000 $ 0 $ 184,000(3) $ 1,189,000accounts...................... $1,156,000 $217,000 $0 $184,000(3) $1,189,000
Product warranty and
improvement reserves (2)..... $ 21,609,000 $ 65,296,000 $ 0 $ 45,919,000(1) $ 40,986,000........ $21,609,000 $65,296,000 $0 $45,919,000(1) $40,986,000
YEAR ENDED JUNE 30, 1994
Deducted from asset accounts:
Allowance for doubtful
accounts................... $ 485,000 $ 200,000 $ 483,000(4) $ 12,000(3) $ 1,156,000accounts...................... $485,000 $200,000 $483,000(4) $12,000(3) $1,156,000
Product warranty and
improvement reserves (2)..... $ 7,549,000 $ 43,599,000 $ 0 $ 29,539,000(1) $ 21,609,000
YEAR ENDED JUNE 30, 1993
Deducted from asset accounts:
Allowance for doubtful
accounts................... $ 498,000 $ 0 $ 0 $ 13,000(3) $ 485,000
Product warranty and
improvement reserves (2)..... $ 4,314,000 $ 14,892,000 $ 0 $ 11,657,000(1) $ 7,549,000
- ------------------------........ $7,549,000 $43,599,000 $0 $29,539,000(1) $21,609,000
- - -----------
(1) Costs incurred for warranty repair and/or product improvements during this
year.
(2) Included in the Balance Sheet under the caption "Accrued expenses and other
liabilities."
(3) Represents specific customer accounts written off.
(4) Includes $236,000 related to the accounts receivable of Drytek, Inc.
acquired July 1, 1993 and $247,000 reclassification of reserve which was
included in a liability account at June 30, 1993.
1518
LAM RESEARCH CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED JUNE 30, 19951996
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
3.1 Certificate of Incorporation of the Registrant, as amended.
3.2(1) ByLaws of the Registrant.
4.1(2) Amended 1981 Incentive Stock Option Plan and Forms of Stock Option Agreements.
4.2(2) Amended 1984 Incentive Stock Option Plan and Forms of Stock Option Agreements.
4.3 1984 Employee Stock Purchase Plan and Form of Subscription Agreement.
4.4EXHIBIT DESCRIPTION
------- -----------
3.1(20) Certificate of Incorporation of the Registrant, as amended.
3.2(1) ByLaws of the Registrant.
4.1(2) Amended 1981 Incentive Stock Option Plan and Forms of Stock Option
Agreements.
4.2(2) Amended 1984 Incentive Stock Option Plan and Forms of Stock Option
Agreements.
4.3(22) Amended 1984 Employee Stock Purchase Plan and Form of Subscription
Agreement.
4.4(22) Amended 1991 Stock Option Plan and Forms of Stock Option
Agreements.
4.5 1996 Performance-Based Restricted Stock Plan
10.1(3) Lease dated November 10, 1986 between the Registrant and Northport
Associates No. 17.
10.2(1) Amendments to lease dated November 10, 1986 between the
Registrant and Northport Associates No. 17.
10.3(4) Form of Indemnification Agreement.
10.4(9) Lease agreements dated January 1, 1990 between the Registrant and
Aetna Life Insurance Company.
10.5(5) Agreements dated July 6, 1988 between the Registrant and Sumitomo
Metal Industries, Ltd.
10.7(5) Roger D. Emerick Promissory Note and Deed of Trust.
10.8(7) Patent Purchase and Sale Agreement dated February 22, 1989
between the Registrant and The Perkin-Elmer Corporation.
10.9(6) Acquisition Agreement dated June 7, 1989 among the Registrant, Monkowski-Rhine, Incorporated and the
shareholders of
Monkowski-Rhine, Incorporated and the shareholders of Monkowski-
Rhine, Incorporated.
10.10(6) Common Stock Purchase Agreement dated May 18, 1989 between the
Registrant and Sumitomo Metal Industries, Ltd.
10.12(8) ECR Technology License Agreement and Rainbow Technology License
Agreement by and between Registrant and Sumitomo Metal
Industries, Ltd.
10.13(10) Amended and Restated Revolving Credit Agreement dated March 28,
1991 between First Interstate Bank, Silicon Valley Bank and Lam
Research Corporation.
10.14(11) Lease agreement dated July 24, 1991 between the Registrant and
Northport Associates No. 18
10.15(12) Technology Licensing Agreement dated October 25, 1991 between the
Registrant and International Business Machines Corporation.
10.16(13) License Agreement effective January 1, 1992 between the
Registrant and Tokyo Electron Limited.
10.17(17) Fourth Amendment to Revolving Credit and Amended and Restated Term Loan Agreement dated April 20,
1992 between First Interstate Bank and the Registrant, dated June 28, 1994.
10.18(14) Business Sales Agreement dated June 21, 1993 by and among Lam
Research Corporation, Drytek Incorporated, and General Signal
Corporation.
10.19(15) Deferred Compensation Agreement with Roger D. Emerick.
10.20(17) Credit Agreement dated June 24, 1994 between Lam Research
Corporation and ABN Amro Bank
1610.21(17) Credit Agreement dated July 22, 1994 between Lam Research
Corporation and Union Bank
10.22(16) Trust Indenture
10.25(19) Receivables Purchase Agreement between Lam Research Corporation
and ABN-AMRO Bank N.V., Cayman Islands Branch
10.26(20) Amendment to Receivables Purchase Agreement between Lam Research
Corporation and ABN-AMRO Bank N.V., Cayman Islands Branch
10.27(20) Receivables Purchase Agreement between Lam Research Corporation
and ABN-AMRO Bank N.V., Tokyo Branch
10.28(20) Guaranty of Supplemental Receivables Purchase Agreement between
Lam Research Corporation and ABN-AMRO Bank N.V., Tokyo Branch
dated June 28, 1995
10.29(22) Credit Agreement Between Lam Research Corporation and ABN-AMRO
Bank N.V. dated December 20, 1995
10.30(23) Operating Lease Agreement Between Lam Research Corporation and
the Industrial Bank of Japan, Limited dated March 27, 1996
10.31 Term Loan Agreement between The Sakura Bank and Lam Research Co.
Ltd. dated June 26, 1996
19
10.21(17) Credit Agreement dated July 22, 1994 between Lam Research Corporation and Union Bank
10.22(16) Trust Indenture
10.23(17) Lease dated December 8, 1993 between Sumitomo Bank Leasing and Finance, Inc. as landlord and
Registrant and related documents thereto, including: (i) Memorandum of Lease dated and recorded
December 10, 1993; (ii) Promissory Note in the amount of $22,250,000 dated December 10, 1993, as
amended; (iii) Deed of Trust, Financing Statement, Security Agreement and Fixture Filing (with
Assignment of Rents and Leases) dated December 10, 1993; (iv) Construction Deed of Trust, Financing
Statement, Security Agreement and Fixture Filing (with Assignment of Rents and Leases) dated
December 10, 1993; (v) Absolute Assignment of Leases dated December 10, 1993; (vi) Environmental
Indemnity Agreement dated December 10, 1993; (vii) Pledge Agreement dated December 10, 1993; and
(viii) Letter Agreement regarding guarantor and surety dated December 10, 1993.
10.24(18) Credit Agreement dated as of November 10, 1994 between Lam Research Corporation and Bank of America
National Trust and Savings Association
10.25(19) Receivables Purchase Agreement between Lam Research Corporation and ABN-AMRO Bank N.V., Cayman
Islands Branch
10.26 Supplemental Receivables Purchase Agreement between Lam Research Corporation and ABN-AMRO Bank N.V.,
Cayman Islands Branch, Lam Research Co., Ltd. and ABN AMED N.V., Tokyo Branch dated June 28, 1995
10.27 Receivables Purchase Agreement between Lam Research Co., Ltd. and ABN-AMRO Bank N.V., Tokyo Branch
dated June 22, 1995
10.28 Guaranty of Supplemental Receivables Purchase Agreement between Lam Research Corporation and ABN AMRO
Bank N.V., Tokyo Branch dated June 28, 1995
11.1 Computation of Earnings Per Share
13.1 Registrant's Annual Report to Stockholders for the year ended June 30, 1995 (to be deemed filed only
to the extent required by the instruction to exhibits for reports on Form 10-K).
21 Subsidiaries of the Registrant.
23 Consent of Ernst & Young LLP, Independent Auditors.
24 Power of Attorney (see page 14).
27 Financial Data Schedule
- ------------------------10.32 The Continuing Guaranty between The Sakura Bank Ltd. and Lam
Research Corporation dated June 26, 1996
11.1 Computation of Earnings Per Share
13.1 Annual Report to Stockholders for the year ended June 30, 1996
(to be deemed filed only to the extent required by the instruction
to exhibits for reports on Form 10-K
21 Subsidiaries of the Registrant.
23 Consent of Ernst & Young LLP, Independent Auditors.
24 Power of Attorney (see page 17).
27 Financial Data Schedule
- - -------
(1) Incorporated by reference to the Registrant's Registration Statement
on Form 8-B filed with the Securities and Exchange Commission on April 11,
1990.
(2) Incorporated by reference to Post Effective Amendment No. 1 to the
Registrant's Registration Statement on Form S-8 (No. 33-32160) filed with the
Securities and Exchange Commission on May 10, 1990.
(3) Incorporated by reference to Registrant's Quarterly Report on Form
10-Q for the quarter ended December 28, 1986.
(4) Incorporated by reference to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended April 3, 1988.
(5) Incorporated by reference to Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1988.
17
(6) Incorporated by reference to Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1989.
(7) Incorporated by reference to Registrant's Quarterly Report on Form
10-Q for the quarter ended April 2, 1989.
(8) Incorporated by reference to Registrant's Quarterly Report on Form
10-Q for the quarter ended December 31, 1989.
(9) Incorporated by reference to Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1990.
(10) Incorporated by reference to Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1991.
(11) Incorporated by reference to Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1991.
(12) Incorporated by reference to Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1991.
(13) Incorporated by reference to Registrant's Quarterly Report on Form
10-Q for the quarter ended December 31, 1991.
(14) Incorporated by reference to Registrant's Report on Form 8-K dated
July 1, 1993.
(15) Incorporated by reference to Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1993.
(16) Incorporated by reference to Registrant's Registration Statement on
Form S-3 (No. 33-61726) declared effective by the Securities and Exchange
Commission on May 4, 1993.
(17) Incorporated by reference to Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1994.
(18) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994
(19) Incorporated by reference to Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1995.
18(20) Incorporated by reference to Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1995.
20
(21) Incorporated by reference to Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1995
(22) Incorporated by reference to Registrant's Quarterly Report on Form
10-Q for the quarter ended December 31, 1995.
(23) Incorporated by reference to Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1996.
21
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
EXHIBITS
TO
FORM 10-K
-----------
LAM RESEARCH CORPORATION
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
22