1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) June 11, 1999
------------------
Lam Research Corporation
------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware
----------------------------------------------
(State or Other Jurisdiction of Incorporation)
0-12933 94-2634797
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
4650 Cushing Parkway, Fremont, California 94538
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (510) 659-0200
-----------------------------
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
2
ITEM 5. OTHER EVENTS.
The Board of Directors of the Company has authorized the Company to acquire from
independent third parties (the "Third Parties") options to purchase up to 3.5
million shares of the Company's common stock. These call options are to be
acquired to offset the anticipated dilutive effect of a potential conversion
into common stock of subordinated debt previously issued by the Company and due
September 2, 2002. The Board also authorized the Company to enter into put
options with the same Third Parties covering up to 5.25 million shares of the
Company's common stock. The premiums the Company will receive over the course of
the program from the sale of the put options to the Third Parties are intended
to offset in full the premium cost to the Company of the call options.
Pursuant to this authorization, described above, the Company has as of June 11,
1999 acquired options to purchase 1.24 million shares of common stock; the
weighted average exercise price of these options is $33.87. The call options
provide that the maximum benefit to the Company of the call options at
expiration is $53.90 per option share (the difference between $87.77, which is
the conversion price of the debentures, and the weighted average exercise price
of the call options). The Company has also entered put options with the same
Third Parties covering 1.86 million shares of its common stock, giving those
Third Parties the right to sell to the Company shares of the Company's common
stock at a weighted average price of $28.43 per share.
The call and put options are European style options exercisable upon expiration;
all of the options expire not later than September 3, 2002, which is the
business day preceding the date on which the Company's subordinated debt must
either be converted or retired. Upon option exercise, the Company has the
ability, at its option, to permit the options to be physically settled (i.e.,
shares would be delivered to the Company against payment of the exercise price),
settled in cash (i.e., by a payment from one party to the other of the value of
the option being exercised) or, "net settled" in shares (i.e., by delivery of a
number of shares of common stock having a value equal to the value of the option
being exercised). The Company can also unwind the options prior to expiration
for a settlement value determined from time to time by the appropriate Third
Party. While the options are only exercisable at expiration, the terms of the
contracts with the Third Parties provide for early termination and settlement of
the options upon the occurrence of certain events, including without limitation
the Company's material breach of the agreement, default on certain indebtedness
or covenants relating to the Company's financial condition, reduction in the
Company's Standard & Poor's credit rating below B or a drop in the price of the
Company's common stock to less than $5.00 per share.
3
The option positions described above will be of value to the Company if the
Company's stock price exceeds the exercise price of the call options at the time
the option is exercised. Of course, the Company's stock price could also
decline. If the Company's stock price on the exercise date of the options were
below the put option exercise price, the Company would have to settle its
obligations with respect to the put options based on the difference between the
then price of the Company's stock and the put option exercise price, and the
resulting expenditure (whether settled in cash or stock) could be significant.
If settlement were to occur prior to option expiration because of the occurrence
of an event giving the Third Parties the right to terminate the transactions,
the Company will be required both to pay to the Third Parties the value of their
position (which would depend on a number of factors, including the time
remaining to expiration and the volatility of the Company's common stock) which
could be greater or lesser than the difference between the options' exercise
prices and the then market price of the Company's stock, as well as any costs or
expenses incurred by the Third Parties as a result of unwinding the
transactions.
The Company has to date deposited $8.49 million as security for its obligations
under the put options. The Company is required to increase this amount if the
Company enters into additional option transactions with the Third Parties. The
Company will also have to increase the amount of this security deposit by the
amount from time to time that the put options are actually in the money.
The Company may enter into additional call or put option transactions with the
Third Parties or others, pursuant to the board authorization described above and
subject to market conditions and the Company's normal blackout periods and
prices.
This option purchase program is separate from share repurchase programs
previously announced by the Company in Form 8-K filings with the Securities and
Exchange Commission dated September 16, 1998 and March 4, 1999.
ITEM 7. EXHIBITS.
All options transactions completed to date have been completed pursuant to
documents either in the form of those attached as Exhibit 10.67 or as Exhibit
10.68.
Exhibit No. Description
----------- -----------
10.67 OTS Issuer Stock Option Master Agreement
between the Company and Goldman Sachs & Co.
and Collateral Appendix thereto.
10.68 Form of ISDA Master Agreement and related
documents between the Company and Credit
Suisse Financial Products.
99.1 Press Release dated June 21, 1999.
4
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 hereunto duly authorized.
Lam Research Corporation
----------------------------------------
(Registrant)
Date June 21, 1999 By: Mercedes Johnson
------------------------ -----------------------------------
Title: Vice President
--------------------------------
Chief Financial Officer
--------------------------------
5
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
10.67 OTS Issuer Stock Option Master Agreement
between the Company and Goldman Sachs & Co.
and Collateral Appendix thereto.
10.68 Form of ISDA Master Agreement and related
documents between the Company and Credit
Suisse Financial Products.
99.1 Press Release dated June 21, 1999.