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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 DECEMBER 31, 1998
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 December 31, 1998 there were 38,404,364 shares of Registrant's Common
Stock outstanding.
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INDEX
Page
No.
----
PART I. FINANCIAL INFORMATION ..........................................3
Item 1. Financial Statements (unaudited) ...............................3
Condensed Consolidated Balance Sheets ....................3
Condensed Consolidated Statements of Operations ..........4
Condensed Consolidated Statements of Cash Flows ..........5
Notes to Condensed Consolidated Financial Statements .....6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ......................................9
Results of Operations ....................................10
Liquidity and Capital Resources ..........................15
Risk Factors............................................. 15
Item 3. Quantitative and Qualitative Disclosures about Market
Risk ...........................................................21
PART II. OTHER INFORMATION ..............................................22
Item 1. Legal Proceedings ..............................................22
Item 4. Submission of Matters to Vote of Security Holders ..............22
Item 6. Exhibits and Reports on Form 8-K ...............................23
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ITEM 1. FINANCIAL STATEMENTS
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
December 31,
1998 June 30,
(unaudited) 1998
----------- -----------
Assets
Cash and cash equivalents $ 44,000 $ 13,509
Short-term investments 267,510 383,647
Accounts receivable, net 141,421 176,029
Inventories 191,254 220,610
Prepaid expenses and other assets 43,639 25,809
Deferred income taxes 77,485 77,485
----------- -----------
Total Current Assets 765,309 897,089
Equipment and leasehold improvements, net 107,912 144,252
Restricted cash 51,357 51,357
Other assets 55,088 58,074
----------- -----------
$ 979,666 $ 1,150,772
=========== ===========
Liabilities and Stockholders' Equity
Trade accounts payable $ 31,214 $ 67,703
Accrued expenses and other current liabilities 186,031 208,442
Current portion of long-term debt and capital lease obligations 11,925 17,364
----------- -----------
Total Current Liabilities 229,170 293,509
Long-term debt and capital lease obligations, less current portion 337,486 334,174
----------- -----------
Total Liabilities 566,656 627,683
Preferred stock: 5,000 shares authorized; none outstanding
Common Stock, at par value of $0.001 per share Authorized -- 90,000 shares;
issued and outstanding 38,404 shares at December 31, 1998 and 38,267 shares
at June 30, 1998 38 38
Additional paid-in capital 381,033 381,011
Accumulated other comprehensive income (loss) (268) 295
Retained earnings 32,207 141,745
----------- -----------
Total Stockholders' Equity 413,010 523,089
----------- -----------
$ 979,666 $ 1,150,772
=========== ===========
- ------------------------
See Notes to condensed consolidated financial statements.
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LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
-------------------------- --------------------------
December 31, December 31,
-------------------------- --------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
Total revenue $ 141,895 $ 292,056 $ 284,094 $ 581,982
Costs and expenses:
Cost of goods sold 94,803 178,960 186,846 355,900
Research and development 33,992 54,474 69,106 108,651
Selling, general and administrative 37,578 53,455 79,414 106,659
Restructuring charge 53,372 -- 53,372 --
Purchased technology for
research and development 5,000 -- 5,000 --
Merger costs -- -- -- 17,685
--------- --------- --------- ---------
Operating income (loss) (82,850) 5,167 (109,644) (6,913)
Other (income) expense, net (84) 466 (106) 1,264
--------- --------- --------- ---------
Income (loss) before taxes (82,766) 4,701 (109,538) (8,177)
Income taxes -- 1,176 -- 470
--------- --------- --------- ---------
Net income (loss) $ (82,766) $ 3,525 $(109,538) $ (8,647)
========= ========= ========= =========
Net income (loss) per share
Basic $ (2.16) $ 0.09 $ (2.85) $ (0.23)
========= ========= ========= =========
Diluted $ (2.16) $ 0.09 $ (2.85) $ (0.23)
========= ========= ========= =========
Number of shares used in
per share calculations
Basic 38,400 38,000 38,400 37,800
========= ========= ========= =========
Diluted 38,400 38,600 38,400 37,800
========= ========= ========= =========
See Notes to condensed consolidated financial statements.
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LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
------------------------------
December 31, December 31,
1998 1997
----------- -----------
Cash flows from operating activities:
Net loss $ (109,538) $ (8,647)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation and amortization 28,792 32,111
Deferred taxes -- 1,976
Restructuring 34,141 --
Change in certain working capital
accounts (21,322) (17,559)
----------- -----------
Net cash provided by (used in) operating
activities (67,927) 7,881
Cash flows from investing activities:
Capital expenditures, net (17,137) (22,851)
Purchase of short-term investments (1,665,335) (5,573,042)
Sale/maturities of short-term investments 1,781,472 5,202,203
Other 6,350 (1,295)
----------- -----------
Net cash provided by (used in)
investing activities 105,350 (394,985)
----------- -----------
Cash flows from financing activities:
Repayments of borrowings under
line of credit -- (35,000)
Common stock repurchase (3,937) --
Sale of stock, net of issuance
costs 3,959 14,277
Net proceeds from issuance of
long-term debt 12,076 301,000
Principal payments on long-term debt
and capital lease obligations (18,467) (12,821)
Foreign currency translation adjustment (563) (166)
----------- -----------
Net cash provided by (used in) financing
activities (6,932) 267,290
----------- -----------
Net increase (decrease) in cash and
cash equivalents 30,491 (119,814)
Cash and cash equivalents at beginning
of period 13,509 140,872
----------- -----------
Cash and cash equivalents at end of
period $ 44,000 $ 21,058
=========== ===========
See Notes to condensed consolidated financial statements.
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LAM RESEARCH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
(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" or
"Lam") for the fiscal year ended June 30, 1998, which are included in the Annual
Report on Form 10-K, File Number 0-12933.
NOTE B -- INVENTORIES
Inventories consist of the following:
December 31, June 30,
(in thousands) 1998 1998
------------ --------
Raw materials $150,838 $147,794
Work-in-process 33,641 52,374
Finished goods 6,775 20,442
-------- --------
$191,254 $220,610
======== ========
NOTE C -- EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements consist of the following:
December 31, June 30,
(in thousands) 1998 1998
------------ ---------
Equipment $ 112,554 $ 139,358
Furniture & fixtures 52,176 60,353
Leasehold improvements 76,440 95,075
--------- ---------
241,170 294,786
Accumulated depreciation and
amortization (133,258) (150,534)
--------- ---------
$ 107,912 $ 144,252
========= =========
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NOTE D -- OTHER (INCOME) EXPENSE, NET
The significant components of other (income) expense, net are as
follows:
Three Months Ended Six Months Ended
(in thousands) December 31, December 31,
------------------------ ------------------------
1998 1997 1998 1997
-------- -------- -------- --------
Interest expense $ 5,121 $ 5,302 $ 9,992 $ 8,018
Interest income (5,853) (6,280) (11,785) (9,479)
Other 648 1,444 1,687 2,725
-------- -------- -------- --------
$ (84) $ 466 $ (106) $ 1,264
======== ======== ======== ========
NOTE E -- NET INCOME (LOSS) PER SHARE
All net income (loss) amounts for all periods have been presented to
conform to the FAS 128 requirements. Basic net income (loss) per share is
calculated using the weighted average number of shares of common stock
outstanding during the period. Diluted net income (loss) per share is calculated
using the weighted average number of shares of common stock outstanding during
the period. The assumed conversion of the convertible subordinated notes to
potential common shares was excluded from diluted earnings per share because its
effect would have been antidilutive. Options were outstanding during the three
month period ended December 31, 1998 and the six month periods ended December
31, 1998 and December 31, 1997, respectively, but were excluded from the
computation of diluted net income (loss) per share because the effect in periods
with a net loss would have been antidilutive. The Company's basic and diluted
net income (loss) per share amounts, as calculated according to FAS 128, are as
follows:
Three Months Ended Six Months Ended
December 31, December 31,
----------------------- -------------------------
(in thousands, except per share data) 1998 1997 1998 1997
-------- ------- --------- --------
Numerator:
Numerator for basic net income (loss) per share $(82,766) $ 3,525 $(109,538) $ (8,647)
-------- ------- --------- --------
Numerator for diluted net income (loss) per
share $(82,766) $ 3,525 $(109,538) $ (8,647)
-------- ------- --------- --------
Denominator:
Basic net income (loss) per share - average
shares outstanding 38,400 38,000 38,400 37,800
-------- ------- --------- --------
Effect of potential dilutive securities:
Employee stock options -- 600 -- --
-------- ------- --------- --------
Potential dilutive common shares -- 600 -- --
-------- ------- --------- --------
Diluted net income (loss) per share - average
shares outstanding and assumed conversions 38,400 38,600 38,400 37,800
-------- ------- --------- --------
Basic net income (loss) per share $ (2.16) $ 0.09 $ (2.85) $ (0.23)
======== ======= ========= ========
Diluted net income (loss) per share $ (2.16) $ 0.09 $ (2.85) $ (0.23)
======== ======= ========= ========
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NOTE F -- COMPREHENSIVE INCOME (LOSS)
As of July 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 13, "Reporting Comprehensive Income," ("FAS 130"). FAS
130 establishes new rules for the reporting and display of comprehensive income
and its components; however, the adoption of this statement had no impact on the
Company's net income (loss) or stockholders' equity. FAS 130 requires that
unrealized gains or losses on available-for-sale securities and foreign currency
translation adjustments are to be included in other comprehensive income (loss).
Prior to adoption, unrealized gains and losses and foreign currency translation
adjustments were reported by the Company as a component of stockholders' equity.
The components of comprehensive income (loss), net of tax, are as follows:
Three Months Ended Six Months Ended
(in thousands) December 31, December 31,
----------------------- ------------------------
1998 1997 1998 1997
-------- ------- --------- -------
Net income (loss) $(82,766) $ 3,525 $(109,538) $(8,647)
Foreign currency translation adjustment 442 (124) (563) (166)
-------- ------- --------- -------
Comprehensive income (loss) $(82,324) $ 3,401 $(110,101) $(8,813)
======== ======= ========= =======
Accumulated other comprehensive income (loss) presented on the
accompanying consolidated condensed balance sheets consists of the accumulated
foreign currency translation adjustment.
NOTE G -- RESTRUCTURING
During the quarter ended December 31, 1998, in response to continued
deterioration of the semiconductor equipment market and continued decline in
product revenues, the Company announced plans to reduce its workforce and
eliminate additional facilities and fixed assets. The Company recorded a
restructuring charge of $53.4 million, relating primarily to severance
compensation and benefits, the write-off of facilities and fixed assets and
other restructuring charges. At December 31, 1998, $14.1 million of the charge
remained accrued on the balance sheet. During the quarter ended December 31,
1998, the Company made approximately $5.1 million of cash payments relating
primarily to severance and benefits. At December 31, 1998, the Company has
approximately $14.1 million of remaining future cash payments relating to the
restructuring charge taken during the second quarter of fiscal 1999. There will
be further charges against the restructuring reserves established during the
second quarter of fiscal 1999 during the remainder of fiscal 1999 and into
fiscal 2000, as the Company completes this restructuring program.
During the quarters ended March 31, 1998 and June 30, 1998, the Company
announced plans to restructure its operations to focus more on its core etch and
Chemical Mechanical Planarization ("CMP") product groups, and to exit its Flat
Panel Display ("FPD") and Chemical Vapor Deposition ("CVD") operations. As a
result of the restructurings, the Company reduced its global workforce by
approximately 28% and downsized and consolidated its manufacturing operations
and facilities. During fiscal 1998, the Company recorded a total restructuring
charge of
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$148.9 million for severance compensation and benefits, the write-off of
facilities, fixed assets and excess and obsolete inventory and other exit costs.
At December 31, 1998, $27.2 million of the charge remains accrued on the balance
sheet. During the six month period ended December 31, 1998, the Company made
approximately $20.7 million of cash payments in connection with those fiscal
1998 charges, relating primarily to severance benefits and rent on idle
facilities. At December 31, 1998, the Company has approximately $24.8 million of
future cash payments relating to the fiscal 1998 restructurings. There will be
further charges against the restructuring reserves established in fiscal 1998
during the remainder of fiscal 1999 and into fiscal 2000, as the Company
completes this restructuring program.
Restructuring activity:
Facilities
Severance and Excess and
and Fixed Obsolete Other Exit
(in thousands) Benefits Assets Inventory Costs Total
--------- ----------- ----------- ----------- --------
Restructuring provision $40,317 $64,339 $31,933 $12,269 $148,858
Spending and charges 9,766 48,859 31,933 9,857 100,415
------- ------- ------- ------- --------
Balance at June 30, 1998 $30,551 $15,480 $ -- $ 2,412 $ 48,443
Additional restructuring provision 16,521 29,266 -- 7,585 53,372
Spending and charges 24,408 30,107 -- 6,000 60,515
------- ------- ------- ------- --------
Balance at December 31, 1998 $22,664 $14,639 $ -- $ 3,997 $ 41,300
======= ======= ======= ======= ========
NOTE H -- DEBT
During the quarter ended September 30, 1998, the Company renegotiated a
replacement facility for a Yen 1.7 billion yen-denominated loan ($12.6 million),
reducing the amount of available borrowing to Yen 1.4 billion ($12.1 million at
December 31, 1998). Principal payments on the new facility are due annually on
September 30 through September 30, 2001. The new facility was renegotiated at
terms which were more favorable than the previous yen-denominated loan.
During the quarter ended December 31, 1998, the Company also amended its
Credit Agreement and revised some of its financial covenant requirements.
NOTE I -- LITIGATION
See Part II, item 1 for discussion of litigation.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
With the exception of historical facts, the statements contained in this
discussion are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, and are subject to the Safe Harbor provisions created by that statute.
Such forward-looking statements include, but are not limited to, statements that
relate to the Company's future revenue, product development, demand, acceptance
and market share, competitiveness, royalty income, gross margins, levels of
research and development and operating expenses, management's plans
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and objectives for current and future operations of the Company, the effects of
the Company's on-going restructuring and consolidation of operations and
facilities, the ability of the Company to complete restructurings or
consolidations on time or within anticipated costs, and the sufficiency of
financial resources to support future operations and capital expenditures. Such
statements are based on current expectations and are subject to risks,
uncertainties, and changes in condition, significance, value and effect,
including those discussed below under the heading Risk Factors, and other
documents the Company files from time to time with the Securities and Exchange
Commission, specifically the Company's last filed Annual Report on the Form
10-K. Such risks, uncertainties and changes in condition, significance, value
and effect could cause actual results to differ materially from those expressed
herein and in ways not readily foreseeable. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date hereof and of information currently and reasonably known. The Company
undertakes no obligation to release the results of any revisions to these
forward-looking statements which may be made to reflect events or circumstances
which occur after the date hereof or to reflect the occurrence or effect of
anticipated or unanticipated events. This discussion should be read in
conjunction with the Condensed Consolidated Financial Statements and Notes
presented thereto on pages 3 to 9 of this Form 10-Q for a full understanding of
the Company's financial position and results of operations for the three and six
months ended December 31, 1998.
Results of Operations
Net sales for both the three and six month periods ended December 31,
1998 decreased 51% compared to the comparable periods of the prior fiscal year.
The Company experienced decreased revenues for all of its product lines during
both the three and six month periods of fiscal 1999 compared to the year-ago
periods.
Geographic breakdown of revenue is as follows:
Three months ended Six Months ended
December 31, December 31,
------------------- -------------------
1998 1997 1998 1997
---- ---- ---- ----
North America 51% 44% 54% 46%
Europe 22% 19% 21% 15%
Asia Pacific 19% 32% 17% 32%
Japan 8% 5% 8% 7%
The global semiconductor industry has been experiencing a worldwide
slowdown in equipment demand which was brought on by depressed DRAM pricing,
production overcapacity as well as uncertainty in the worldwide financial
markets. However, the Company anticipates that net sales may increase slightly
during the third or fourth quarters of fiscal 1999, compared to the quarter
ended December 31, 1998, as the Company sees signs of increased order activity
in the semiconductor industry.
Gross margin percentage declined to 33.2% and 34.2%, respectively, in
the three and six month periods ended December 31, 1998, compared with 38.7% and
38.8%, respectively, for the year-ago periods. The lower overall gross margin
percentage is a result of competitive pricing
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pressures and excess manufacturing capacity resulting from the Company's lower
volume of sales.
Research and development ("R&D") expenses for the three and six month
periods ended December 31, 1998 were 37.6% and 36.4%, lower than the year-ago
periods, respectively. As a percentage of total revenue R&D expenses for the
three and six month periods ended December 31, 1998 increased to 24.0% and
24.3%, respectively, of total revenue compared to 18.7% of total revenue for
both the three and six month periods of the prior fiscal year. The decrease in
R&D expenses is a result of the Company's program to exit from its FPD and CVD
operations. However, the Company will continue to invest heavily in strategic
R&D programs and initiatives in etch and CMP.
Selling, general and administrative ("SG&A") expenses decreased by 29.7%
and 25.5%, respectively, for the three and six month periods of fiscal 1999 when
compared to the year-ago period. The decrease in SG&A expenses is a result of
the Company's restructurings in both fiscal 1998 and 1999. The Company continues
to monitor closely its expenditures and capital spending relative to revenue
levels.
During the quarter ended December 31, 1998, in response to continued
deterioration of the semiconductor equipment market and continued decline in
product revenues, the Company announced plans to reduce its workforce and
eliminate additional facilities and fixed assets. The Company recorded a
restructuring charge of $53.4 million, relating primarily to severance
compensation and benefits, the write-off of facilities and fixed assets and
other restructuring charges. At December 31, 1998, $14.1 million of the charge
remained accrued on the balance sheet. During the quarter ended December 31,
1998, the Company made approximately $5.1 million of cash payments relating
primarily to severance and benefits. At December 31, 1998, the Company has
approximately $14.1 million of remaining future cash payments relating to the
restructuring charge taken during the second quarter of fiscal 1999. There will
be further charges against the restructuring reserves established during the
second quarter of fiscal 1999 during the remainder of fiscal 1999 and into
fiscal 2000, as the Company completes this restructuring program.
During the quarters ended March 31, 1998 and June 30, 1998, the Company
announced plans to restructure its operations to focus more on its core etch and
CMP product groups, and to exit its FPD and CVD operations. As a result of the
restructurings, the Company reduced its global workforce by approximately 28%
and downsized and consolidated its manufacturing operations and facilities.
During fiscal 1998, the Company recorded a total restructuring charge of $148.9
million for severance compensation and benefits, the write-off of facilities,
fixed assets and excess and obsolete inventory and other exit costs. At December
31, 1998, $27.2 million of the charge remains accrued on the balance sheet.
During the six month period ended December 31, 1998, the Company made
approximately $20.7 million of cash payments in connection with those fiscal
1998 charges, relating primarily to severance benefits and rent on idle
facilities. At December 31, 1998, the Company has approximately $24.8 million of
future cash payments relating to the restructurings. There will be further
charges against the restructuring reserves established in fiscal 1998 during the
remainder of fiscal 1999 and into fiscal 2000, as the Company completes this
restructuring program.
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During the third quarter of fiscal 1998, Lam purchased a non-exclusive
license for Trikon's MRI(TM) source technology. Lam recorded a charge of $12.1
million for the license and for the purchase of an R&D system from Trikon. The
technology was acquired for use in a discrete technology development project and
has no alternative future uses in other development projects. The results of
this ongoing development effort have not yet to date reached technological
feasibility. Pursuant to the license and achievement of certain milestones, $5.0
million in additional fees became due and payable under the agreement during the
second quarter of fiscal 1999 (separate from royalties owed on any shipments of
MRI source-based systems, determined by rates prescribed in the license). During
the quarter ended December 31, 1998, the Company recorded the additional $5.0
million of fees as a result of this obligation.
During the first quarter of fiscal 1998, the Company recorded costs of
$17.7 million related to the merger with OnTrak Systems, Inc. ("OnTrak"). Such
expenses related to investment advisory fees, legal and accounting fees,
financial printing costs and other merger-related costs.
Other (income) and expenses, net increased $0.5 million and $1.4
million, respectively, during the three and six month periods of fiscal 1999,
compared to the year-ago periods. During the first quarter of fiscal 1998, the
Company issued $310.0 million of convertible subordinated notes ("the Notes")
bearing interest at 5% which are due to mature on September 1, 2002. During the
first six months of fiscal 1999, the Company's rate of return on its investments
exceeded the interest rate it pays on the Notes. During the three and six month
periods ended December 31, 1997, the Company recorded higher foreign currency
translation losses, primarily due to the exchange rate fluctuations in Korea and
Taiwan.
Due to tax benefits for the Company's significant tax loss and credit
carryovers being recorded in future periods, Lam did not record any tax benefit
during the first six months of fiscal 1999.
The Company established a team to address issues raised by the
introduction of the Single European Currency ("Euro") for initial implementation
as of January 1, 1999, and through the transition period to January 1, 2002. Lam
met all related legal requirements by January 1, 1999, and expects to meet all
legal requirements through the transition period. Lam does not expect the cost
of any system modifications to be material and does not currently expect that
introduction and use of the Euro will materially affect its foreign exchange and
hedging activities or will result in any material increase in transaction costs.
The Company will continue to evaluate the impact over time of the introduction
of the Euro; however, based on currently available information management does
not believe that the introduction of the Euro will have a material adverse
impact on the Company's financial condition or the overall trends in results of
its operations.
The Company relies heavily on its existing application software and
operating systems. The Year 2000 compliance issue (in which systems do not
properly recognize date sensitive information when the year changes to 2000)
creates risks for the Company: if internal data management, accounting and/or
manufacturing or operational software and systems do not adequately or
accurately process or manage day or date
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information beyond the year 1999, there could be an adverse impact on the
Company's operations. To address the issue, the Company has assembled a task
force to review and assess internal software, data management, accounting, and
manufacturing and operational systems to ensure that they do not malfunction as
a result of the Year 2000 date transition. The review and corrective measures
are proceeding in parallel. These review and corrective measures are intended to
encompass all significant categories of internal systems used by the Company,
including data management, accounting, manufacturing, sales, human resources and
operational software and systems. The Company is also working with its
significant suppliers of products and systems to assure that the products and
systems supplied to the Company, and the products the Company supplies to its
customers, are Year 2000 compliant.
With respect to internal systems, the Company has identified all
critical systems necessary to the Company's operations and has asked suppliers
to provide assurances that such systems are Year 2000 compliant, or to identify
replacement or upgrade systems. The Company has received and is in the process
of evaluating and assessing the adequacy of responses from its various
suppliers, and requesting further responses and assurances where appropriate.
This process is expected to be completed by the middle of calendar 1999.
The Company's next-generation enterprise resource planning and
information system will replace many of the system operations currently being
performed by existing internal system software. Implementation of this
next-generation system is on schedule for completion during the second half of
calendar 1999, and the Company has received assurances that it will be Year 2000
compliant. As a contingency, in the event implementation of the next generation
system is delayed or experiences problems, the Company's internal system
encompassing core manufacturing, service, sales, inventory and warranty
operations, which will be replaced by the next-generation system, is currently
Year 2000 compliant and can continue to support the Company's significant
operational systems, if needed. Many of the Company's cash management and
payroll operations are handled on an out-sourced basis, and the Company has
received assurances that the systems providing these outsourced services are
Year 2000 compliant. As separate internal systems affecting individual and
group-level company operations are replaced or upgraded over time in the
ordinary course of business, all such replacement or upgrade systems will be
Year 2000 compliant. Such separate individual and group level internal systems
are not believed to affect material operations of the Company and the cost to
replace or upgrade such individual or group level internal systems in the
ordinary course of business, though not fully known at this time, is not
expected to be material.
With respect to compliance of the products the Company supplies to its
customers, the Company intends to adhere to Year 2000 test case scenarios
established by SEMATECH, an industry group comprised of US semiconductor
manufacturers. The Company's compliance efforts and review and identification of
corrective measures and contingency planning (where necessary) are substantially
complete. The application systems and software of a significant number of the
products currently supplied to the Company's customers are Year 2000 compliant,
with the remainder expected to be so by the end of fiscal 1999. With respect to
certain of the Company's products already installed in the field, the Company
has determined that in most all instances where the application systems and
software are not Year 2000 compliant, there is either no appreciable effect or
the effect during the product's operation is limited to certain aspects of the
product's ability to report data concerning its operational parameters. However,
the products' operation, manufacturing capabilities or quality are not affected.
The Company is in the process of identifying and offering to customers
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product upgrades by the end of fiscal 1999, with the goal of resolving all
material programs and systems prior to the Year 2000 date transition. In this
regard, the Company is incurring, and will continue to incur throughout fiscal
1999, various costs to provide customer support regarding Year 2000 issues.
Through the end of this second fiscal quarter, these costs have totaled less
than $2 million, with total program costs estimated going forward and through
completion to be less than $5 million. The Company estimates that most, if not
substantially all, of these estimated costs going forward will be off-set by
revenues from product upgrades and customer service and support. Accordingly,
the full cost of these activities is not expected to be material and, to the
extent will be borne by the Company, have already in large part been incurred by
the Lam.
In connection with its review and implementation of corrective measures,
both to ensure that its internal products and systems, and the application
systems accompanying the products sold to its customers are Year 2000 compliant,
the Company expects both to replace some software and systems and to upgrade
others where appropriate. As a contingency with respect to products the Company
currently offers to its customers, the Company may replace all non-compliant
application systems and software with systems and software demonstrated to be
Year 2000 compliant. With respect to products and systems supplied to the
Company for use internally, the Company may upgrade all non-compliant products
and systems and, where necessary or where no reasonable upgrade is available,
replace such non-compliant products and systems with products and systems
demonstrated to be Year 2000 compliant.
The Company's failure to ensure, at all or in a timely or reasonable
manner, that its products are Year 2000 compliant may cause disruption in the
ability of the Company's customers to derive expected productivity from those
products or to integrate the products fully and functionally into certain
automated manufacturing environments. With respect to products and systems the
Company purchases for use internally, failure to ensure Year 2000 compliance may
cause disruption in the Company's automated accounting, financial planning, data
management and manufacturing operations which could have a material effect on
the Company's short-term ability to manage its day-to-day operations in an
efficient, cost-effective and reliable manner.
The Company believes that its Year 2000 compliance project will be
completed on a timely basis, and in advance of the Year 2000 date transition and
will not have a material adverse effect on the Company's financial condition or
overall trends in the results of operations. However, there can be no assurance
that unexpected delays or problems, including the failure to ensure Year 2000
compliance by systems or products supplied to the Company by a third party, will
not have an adverse effect on the Company, its financial performance, or the
competitiveness or customer acceptance of its products. Further, the Company's
current understanding of expected costs is subject to change as the project
progresses, and does not include potential costs related to actual customer
claims, or the cost of internal software and hardware replaced in the normal
course of business (whose installation otherwise in the normal course of
business may be accelerated to provide solutions to Year 2000 compliance
issues).
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Liquidity and Capital Resources
As of December 31, 1998, the Company had $362.9 million in cash, cash
equivalents, short-term investments and restricted cash, compared with $448.5
million at June 30, 1998. The Company has a total of $100.0 million available
under a syndicated bank line of credit which is due to expire in April 2001.
Borrowings under the line of credit bear interest at the bank's prime rate or
0.55% to 0.95% over London Interbank Offered Rate. During the quarter ended
December 31, 1998, the Company amended its Credit Agreement and revised some of
its financial covenant requirements.
Net cash used in operating activities was $67.9 million for the six
months ended December 31, 1998. The Company used $21.3 million of working
capital. Cash payouts relating to the fiscal 1998 and 1999 restructurings were
approximately $25.8 million. Decreases in accounts payable, accrued liabilities
and increases in prepaid expenses were offset by decreases in accounts
receivables and inventory, resulting in a use of cash of $21.3 million. Cash
provided by investing activities was $105.4 million, which was primarily from
the net sales of short-term investments. Capital expenditures, net of
retirements, for the six month period ended December 31, 1998 were $17.1
million. The Company used $6.9 million in financing activities from the
principal payments of long-term debt and capital lease obligations of $18.5
million offset by proceeds from the issuance of long-term debt of $12.1 million.
The Company renegotiated a replacement facility for a Yen 1.7 billion
yen-denominated loan ($12.6 million), reducing the amount of available borrowing
to Yen 1.4 billion ($12.1 million at December 31, 1998). During the quarter
ended September 30, 1998, the Company used $3.9 million for the repurchase of
common stock which was partially offset by the sale of common stock through the
Company's employee stock purchase program.
The Company's cash, cash equivalents, short-term investments and
available lines of credit at the end of the second quarter of fiscal 1999 are
considered adequate to support current levels of operations for at least the
next twelve months.
Risk Factors
Fluctuations in Quarterly Revenues and Operating Results
The Company's quarterly revenues have fluctuated in the past and may
fluctuate in the future. The Company's revenues are dependent on many factors,
including, but not limited to, the economic conditions in the semiconductor
industry generally, and equipment industry specifically, customer capacity
requirements, the size and timing of the receipt of orders from customers,
customer cancellations or delays of shipments, the Company's ability to develop,
introduce and market new, enhanced and competitive products, at all and on a
timely basis, the introduction of new products by its competitors, challenges to
the Company's products and technology, changes in average selling prices and
product mix, and exchange rate fluctuations, among others. The Company's expense
levels will be based, in part, on expectations of future revenues. If revenue
levels in a particular quarter do not meet expectations, operating results could
be adversely affected.
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The Company derives its revenue primarily from the sale of a relatively
small number of high-priced systems. The Company's systems can range in price
from approximately $150,000 to over $2.5 million per unit. The sale of fewer
systems than anticipated in any quarter may have a substantial negative impact
on the Company's operating results for the quarter. The Company's results of
operations for a particular quarter could be adversely affected if anticipated
orders are not received in time to enable shipment during that quarter, if
anticipated shipments are delayed or canceled by one or more customers, or if
shipments are delayed due to procurement shortages or manufacturing
difficulties. Further, as a result of the continuing consolidation of
manufacturing operations and capacity at the Company's Fremont, California
facility, natural, physical or other events affecting the facility, including
labor disruptions, could adversely impact the Company's operations and revenue.
Volatility in the Semiconductor Equipment Industry
The business of the Company depends on 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
has historically experienced periodic downturns. During the past twelve months
the semiconductor industry has been experiencing a severe slowdown of product
demand and extreme volatility in product pricing. This slowdown and volatility
caused the semiconductor industry to reduce or delay significantly purchases of
semiconductor manufacturing equipment and construction of new fabrication
facilities. This slowdown and volatility is expected to continue throughout
fiscal 1999; however, the Company is beginning to see indications of a potential
but slow recovery. As previously described, a continued slowdown and market
volatility will continue to affect materially the Company's aggregate bookings,
revenues and operating results. Even during periods of reduced revenues, in
order to remain competitive the Company will continue to invest in R&D and to
maintain extensive ongoing worldwide customer service and support capabilities,
which could adversely affect its financial results.
Dependence on New Products and Processes; Rapid Technological Change
Rapid technological changes in semiconductor manufacturing processes
subject the semiconductor equipment industry to increased pressure to maintain
technological parity with deep submicron process technology. The Company
believes that its future success will depend in part upon its ability to
develop, manufacture and introduce successfully new products and product lines
with improved capabilities and to continue to enhance existing products. Due to
the risks inherent in transitioning to new products, the Company will be
required to forecast accurately demand for new products while managing the
transition from older products. If new products have reliability or quality
problems, reduced orders, higher manufacturing costs, delays in acceptance of
and payment for new products and additional service and warranty expenses may
result. In the past, the Company has experienced some delays, as well as
reliability and quality problems, in connection with product introductions.
There can be no assurance that the Company will
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successfully develop and manufacture new products, or that new products
introduced by it will be accepted in the marketplace. If Lam does not
successfully introduce new products, the Company's results from operations will
be materially adversely affected.
The Company expects to continue to make significant investments in R&D
and to pursue joint development relationships with customers or other members of
the industry. The Company must manage product transitions or joint development
relationships successfully, as introduction 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 existing products which satisfy
customer needs in a timely manner 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 marketing and selling of advanced processes or
equipment to customers with whom it has formed strategic alliances, selling of
its existing products to those customers could be adversely affected. In
addition, in connection with the development of the Company's new products, the
Company will invest 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 its financial results.
Introduction of New Product
Lam currently anticipates shipping its Teres(TM) CMP system in fiscal
1999, which is expected to face significant competition from multiple current
and future competitors. Among the companies currently offering polishing systems
are Applied Materials, Inc., Cybeq Systems, Ebara Corporation, IPEC, SpeedFam
Corp., Strasbaugh and Sumitomo. Lam believes that other companies are developing
polishing systems and are planning to introduce new products to this market
before or during the same time frame as the Company's anticipated introduction
of its Teres CMP polishing system.
Product Concentration; Lack of Product Revenue Diversification
A substantial percentage of the Company's revenues to date have been
derived from a limited number of products, and such products are expected to
continue to account for a substantial percentage of the Company's revenues in
the near term. Continued market acceptance of its primary products is therefore
critical to the future success of the Company. Any decline in demand for or
failure to achieve continued market acceptance of such products or any new
version of such products, if any, as a result of competition, technological
change, failure of the Company to release new versions of these products on
time, or otherwise, could have a material adverse effect on the business,
operating results, financial condition and cash flows of the Company.
Dependence Upon Key Suppliers and Key Distributors
Certain of the components and subassemblies included in the products of
the Company are obtained from a single supplier or a
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limited group of suppliers. The Company's key suppliers include Bullen
Ultrasonics, Inc., which supplies electrodes, Edwards High Vacuum Inc., Lam's
supplier of chillers, Brooks Automation, Inc. Lam's supplier of transport
modules and robotics, Coors Technical Ceramics Company, which supplies ceramics,
Dorsey Guage, Inc. which supplies electrostatic chucks and Advanced Energy
Industries, Lam's RF generator supplier. The Company purchases in excess of
$500,000 of supplies on a monthly basis from these suppliers. Each of these
suppliers has a one year blanket purchase contract under which Lam may issue
purchase orders. These contracts may be renewed periodically. Each of these
suppliers has sold products to Lam during at least the last four years, and
there is no reason to expect that these contracts will not continue to be
renewed in the future or otherwise replaced with competent alternative source
suppliers. Management 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.
Highly Competitive Industry
The semiconductor equipment industry is highly competitive. The Company
expects to continue to face substantial competition throughout the world. A
substantial investment is required by semiconductor manufacturers to install and
integrate capital equipment into a semiconductor production line. The Company
believes that as a result once a semiconductor manufacturer has selected a
particular supplier's capital equipment, the manufacturer generally relies upon
that equipment for the specific production line application and frequently will
attempt to consolidate its other capital equipment requirements with the same
supplier. Accordingly, Lam would expect to experience difficulty in selling to a
given customer if that customer had initially selected or selects a competitor's
capital equipment. The Company believes that to remain competitive, significant
financial resources are required in order to offer a broad range of products, to
maintain customer service and support centers worldwide, and to invest in
product and process R&D.
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 Lam's competitors have substantially greater
financial resources and more extensive engineering, manufacturing, marketing and
customer service and support. In addition, there are smaller, emerging
semiconductor equipment companies that provide innovative technology that may
have performance advantages over systems offered by the Company.
Competitors are expected 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
competitors enter into strategic relationships with leading semiconductor
manufacturers covering products similar to those sold or being developed by the
Company, its ability to sell products to those manufacturers could be adversely
affected. No assurance can be given that Lam will continue to compete
successfully in the United States or worldwide.
Present or future competitors may be able to develop products comparable
or superior to those offered by the Company or adapt more quickly to new
technologies or evolving customer requirements. In particular, while Lam
currently is developing additional product
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enhancements that it believes addresses customer requirements, there can be no
assurance that the development or introduction of these additional product
enhancements will be successfully completed, at all or on a timely basis, or
that these product enhancements will achieve market acceptance or be
competitive. Accordingly, there can be no assurance that the Company will be
able to continue to compete effectively in its markets, that competition will
not intensify or that future competition will not have a material adverse effect
on the business, operating results, financial condition and cash flows of the
Company.
International Sales
International sales accounted for 46% and 54%, respectively, of net
revenues for the first six months of fiscal 1999 and 1998, and 55%, 57% and 63%,
respectively, of net revenues for fiscal years 1998, 1997 and 1996.
Historically, sales to the Asian regions have accounted for a substantial
portion of international sales. Recent economic, banking and currency problems
in the Asian regions have had and will continue to have a significant adverse
impact on the Company's revenue and operations, including specifically revenues
and operations for fiscal 1999.
Sales of products currently are denominated in United States dollars. In
Korea, devaluation of the Won and difficulties by customers in obtaining credit
have curtailed semiconductor equipment investment and have led to cancellation
or delay of orders by the Company's customers, and are likely to continue to do
so in fiscal 1999.
In Japan, the Company's sales are denominated in Japanese Yen. A
weakening of the value of the Japanese Yen as compared to the U.S. dollar could
negatively impact operating margins. Currently, the Company enters into foreign
currency forward contracts to minimize the impact of exchange rate fluctuations
on yen-denominated assets and liabilities and will continue to enter into such
hedging transactions in the future.
In Europe, sales following January 1, 1999 are subject to certain
provisions governing the transition of commercial transactions to the Euro. Lam
met the related legal requirements by January 1, 1999, and expects to be able to
meet the related legal requirements through the transition period. The Company
does not currently expect that introduction and use of the Euro will materially
affect its foreign exchange and hedging activities or will result in any
material increase in transaction costs. Lam will continue to evaluate the impact
over time of the introduction of the Euro. Based on currently available
information management does not believe that the introduction of the Euro will
have a material adverse impact on Lam's financial condition or the overall
trends in results of operations.
The impact of these and other factors on the Company's revenues and
operating results in any future period is difficult to forecast. There can be no
assurance that these and other factors relating to international sales and
operations by the Company will not materially adversely affect future business
and financial results, or in ways not readily foreseeable.
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Potential Volatility of Common Stock Price
The market price for Lam Common Stock has been volatile and it could
continue to be subject to significant fluctuations in response to market or
industry conditions generally, or specific variations in quarterly operating
results, shortfalls in revenues or earnings from levels expected by securities
analysts and other factors such as announcements of restructurings,
technological innovations, reductions in force, departure of key employees,
consolidations of operations or introduction of new products by the Company or
by the Company's competitors, government regulations, developments in patent or
other proprietary rights, disruptions with key customers or the occurrence of
political, economic or environmental events globally or in key sales regions. In
addition, the stock market has in recent years experienced significant price
fluctuations. These fluctuations often have been unrelated to the operating
performance of the specific companies whose stocks are traded. Recent
fluctuations affecting Lam Common Stock have been tied in part to the Asian and
Russian financial crisis, actual or anticipated fluctuations in interest rates,
and the price of and market for semiconductors. Broad market fluctuations, as
well as economic conditions generally in the semiconductor industry, may
adversely affect the market price of Lam Common Stock.
Intellectual Property Matters
From time to time, Lam has received notices from third parties alleging
infringement of such parties' patent or other intellectual property rights by
the Company's products. In such cases, it is the policy of the Company to defend
the claims or negotiate licenses on commercially reasonable terms, where
considered appropriate. However, no assurance can be given that Lam will be able
in the future to negotiate necessary licenses on commercially reasonable terms,
or at all, or that any litigation resulting from such claims would not have a
material adverse effect on the Company's business and financial results.
In October 1993, Varian brought suit against Lam 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 Company has asserted defenses of invalidity and
unenforceability of the patents that are the subject of the lawsuit, as well as
non-infringement of such patents by the Company's products. No trial date is
currently scheduled. While litigation is subject to inherent uncertainties and
no assurance can be given that Lam 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 will not have a material adverse effect
on the Company's operating results or the Company's financial position.
The Company's success depends in part on its proprietary technology.
While Lam attempts to protect its proprietary technology through patents,
copyrights and trade secret protection, it believes that its success will depend
on more technological expertise, continuing the development of new systems,
market penetration and growth of its installed base and the ability to provide
comprehensive support and service to customers. There can be no
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assurance that the Company will be able to protect its technology or that
competitors will not be able to develop similar or more competitive technology
independently. Lam currently holds a number of United States and foreign patents
and patent applications pending. There can be no assurance that any patents
issued to the Company will not be challenged, invalidated or circumvented, that
pending applications will be issued or that the rights granted or anticipated
thereunder will provide competitive advantages.
Year 2000 Compliance
See discussion in Management's Discussion and Analysis of Financial
Condition and Results of Operations on page 12 to 15.
Restructurings and Consolidation of Operations
The Company substantially restructured and consolidated its operations
during the quarters ended December 31, 1998, March 31, 1998 and June 30, 1998.
Implementation of these restructurings and consolidations involves several
risks, including that of simplifying and modifying its product line offerings
(which will increase its dependence on fewer products and potentially reduce
overall sales).
Although the Company believes that the actions it is taking and
contemplates taking in connection with the restructurings and consolidations,
including the reduction in workforce, the consolidation of manufacturing sales
and service operations and the exiting from FPD and CVD operations, should help
more closely align Lam with its business outlook, there can be no assurance that
such actions will enable the Company to achieve its objectives of reducing
costs, or can be accomplished at specific or optimum values or on time or as
intended. In addition, there can be no assurance that the size of the
restructuring charges will not exceed current estimates. The Company's future
consolidated operating results and financial condition could be adversely
affected should it encounter difficulty in effectively and timely managing and
completing the restructurings and consolidations.
ITEM 3. Quantitative And Qualitative Disclosures About Market Risk
For financial market risks related to changes in interest rates and
foreign currency exchange rates, refer to Part II, Item 7A, Quantitative and
Qualitative Disclosures About Market Risk, in the Company's Annual Report on
Form 10-K for the year ended June 30, 1998.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
In October 1993, 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 Company has asserted defenses of invalidity
and unenforceability of the patents that are the subject of the lawsuit,
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as well as non-infringement of such patents by the Company's products. No trial
date is currently scheduled. While litigation is subject to inherent
uncertainties and no assurance can be given that Lam 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 will not have a
material adverse effect on the Company's operating results or the Company's
financial position.
In addition, the Company is from time to time notified by various
parties that its products 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 flow statements.
ITEM 4. Submission of Matters to Vote of Security Holders
The Annual Meeting of Stockholders of Lam Research Corporation was held
at the principal office of the Company at 4300 Cushing Parkway, Fremont,
California 94538 on November 5, 1998.
Out of 38,128,300 shares of Common Stock entitled to vote at the
meeting, 34,871,576 shares were present in person or by proxy.
The vote for nominated directors, to serve for the ensuing year, and
until their successors are elected, was as follows:
NOMINEE IN FAVOR WITHHELD
---------- -------
James W. Bagley 34,427,641 443,935
Roger D. Emerick 34,315,866 555,710
David G. Arscott 34,386,076 485,500
Richard J. Elkus, Jr 34,433,380 438,196
Jack R. Harris 34,377,893 493,683
Grant M. Inman 34,416,798 454,778
Kenneth M. Thompson 34,414,611 456,965
The results of voting on the following items were as set forth below:
(a) Approval and adoption of the Company's 1999 Employee Stock Purchase
Plan:
IN FAVOR OPPOSED ABSTAIN BROKER NON-VOTE
-------- ------- ------- ---------------
21,598,973 669,464 79,293 12,523,846
(b) Ratification of appointment of Ernst & Young LLP as independent auditors
for the Company for the fiscal year ending June 30, 1999:
IN FAVOR OPPOSED ABSTAIN
-------- ------- -------
34,734,709 87,381 49,486
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ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 4.8 1999 Stock Option Plan.
Exhibit 4.9 Amended and Restated 1997 Stock Incentive
Plan.
Exhibit 10.61 Second Amendment To Credit Agreement
between ABN AMRO BANK, N.V. and Lam Research
Corporation, dated December 18, 1998.
Exhibit 10.62 First Amendment To Guaranty between ABN
AMRO BANK, N.V. and Lam Research Corporation,
dated December 25, 1998.
Exhibit 10.63 Supplemental Agreement of Receivables
Purchase Agreement dated December 26, 1997
between ABN AMRO BANK, N.V. and Lam Research
Corporation, dated December 25, 1998.
Exhibit 10.64 Supplemental Agreement of Loan Agreement
dated September 30, 1998 between ABN AMRO BANK,
N.V. and Lam Research Corporation, dated
December 25, 1998.
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a Form 8-K on November 16, 1998 making an Item 5
disclosure to disclose the Company's announcement of a restructuring.
The Company filed a Form 8-K on January 20, 1999 making an Item 5
disclosure to disclose the Company's previously announced restructuring
charge.
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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: February 11, 1999
LAM RESEARCH CORPORATION
By: /s/ Mercedes Johnson
---------------------------------
Mercedes Johnson, Vice President,
Finance & Chief Financial Officer
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(a) Exhibits
Exhibit 4.8 1999 Stock Option Plan
Exhibit 4.9 Amended and Restated 1997 Stock Incentive
Plan.
Exhibit 10.61 Second Amendment To Credit Agreement
between ABN AMRO BANK, N.V and Lam Research
Corporation, dated December 18, 1998.
Exhibit 10.62 First Amendment To Guaranty between ABN
AMRO BANK, N.V and Lam Research Corporation,
dated December 25, 1998.
Exhibit 10.63 Supplemental Agreement of Receivables
Purchase Agreement dated December 26, 1997
between ABN AMRO BANK, N.V and Lam Research
Corporation, dated December 25, 1998.
Exhibit 10.64 Supplemental Agreement of Loan Agreement
dated September 30, 1998 between ABN AMRO BANK,
N.V and Lam Research Corporation, dated December
25, 1998.
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K