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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)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1995
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 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 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_ 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, as reported by the Nasdaq National Market was approximately
$1,084,494,000. 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, the Registrant had outstanding 27,320,607 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 (1995 Annual Report to 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, 1995 are incorporated by reference to Part III 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
THE COMPANY
Lam Research Corporation 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) and 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-,
Rainbow-TM-, and TCP-TM- (Transformer Coupled Plasma-TM-) product lines. In the
deposition market, Lam offers its Epic-TM- high density plasma (HDP) chemical
vapor deposition (CVD) system, which addresses advanced intermetal dielectric
applications, and its Integrity-Registered Trademark- low pressure (LP) CVD
system, a fully automated batch CVD system for interlevel dielectric
applications.
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 etching process steps of
semiconductor device manufacturing and are available as stand-alone systems or
on the Company's multichamber Alliance-TM- platform. Lam incorporates its
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 sizes 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 unprotected portions of
the wafer to produce finely etched 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 of producing devices with feature sizes smaller than 0.10 micron. In
addition, advanced manufacturing facilities are producing integrated circuits on
wafers of 150 or 200 mm (6 or 8 inches) in diameter, and wafer diameters are
expected to increase to 300 mm (12 inches) by 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, 1995, 1994 and 1993, sales of the Company's etch systems contributed
approximately 77%, 78% and 78% of the Company's total revenues, respectively.
AUTOETCH. The AutoEtch family was Lam's initial product line, with the
first AutoEtch product 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 fourteen
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-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 200mm and
feature sizes as small as 0.35 micron. The Rainbow product line 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 to 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 systems, which
was introduced in late 1992, incorporates the Company's patented Transformer
Coupled Plasma-TM- source technology for etching 0.35 micron and smaller
geometries. The Company currently offers the TCP 9600 series for metal etch
applications and the TCP 9400 series for polysilicon and polycide 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. The TCP system is 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 incorporates
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.
DEPOSITION PRODUCTS
Chemical vapor deposition (CVD) involves the deposition of thin films on a
silicon wafer by exposing the wafer to various gases containing the materials to
be deposited. Films are deposited to form both interconnect and dielectric
layers of an integrated circuit. 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 the dielectric layer is
deposited on top of the interconnect layer by CVD to provide electrical
insulation between the interconnect layers. To increase circuit functionality,
manufacturers have designed circuits with multilayer interconnections (stacked
levels of wiring separated by insulating dielectric layers) using lower
resistivity materials for improved
2
device performance. Multiple levels of interconnect allow the circuit elements
to be moved closer together, further increasing the density 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, Epic and Integrity
systems, 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) CVD system for depositing
advanced interlevel 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 to provide improved electrical performance. Integrity
has been installed at several customer sites and is currently being used for
production of semiconductor devices and in device development programs.
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 1995, 1994 and 1993, were
approximately $127.8 million, $76.3 million and $43.9 million, respectively, and
represented 15.8%, 15.5% and 16.6% 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 $2.6 million, $1.8 million and $1.6 million during fiscal 1995,
1994 and 1993, 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 USDC for the
development of an etch system, based on the Company's TCP technology. This
system will be 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 Displays (FEDs). Included in the $2.6
million of third party funded R&D for fiscal 1995 was $1.2 million from the
USDC.
The Company expects to continue to invest heavily 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 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 and process engineers that works
closely with individual customers to find solutions to their process challenges.
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 applications 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 30 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 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. 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. The Company is
currently expanding in Japan by building a third floor on this existing building
and is in the design stage of a second facility in Sagamihara.
Export sales accounted for approximately 38%, 40% and 40% of net sales in
fiscal 1995, 1994 and 1993, 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 expand its international operations including expansion of its Japan
operations and the opening of a manufacturing facility in Korea in July 1995. 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 affect on the Company's
business, financial condition and results of operations.
CUSTOMERS
The Company's customers include most of the leading semiconductor
manufacturers worldwide. Revenue from Intel accounted for 11%, 14% and 15% of
total revenue for the years ended June 30, 1995, 1994 and 1993, respectively.
Revenue from Motorola accounted for 10% of total revenue for the year ended June
30, 1994.
4
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. No assurance can be given that the Company's revenue and operating
results will not be adversely affected if downturns in the semiconductor
industry occur.
BACKLOG
The Company schedules production of its systems based upon order backlog and
customer commitments. The Company includes in backlog orders for which written
authorizations have been accepted and shipment dates have been assigned. As of
June 30, 1995, the Company's order backlog was approximately $252.6 million. As
of June 30, 1994, the Company's order backlog was approximately $145.9 million.
All orders are subject to cancellation by the customer with limited penalty.
Because of orders 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 facilities at four locations in Fremont, California
and one location in Wilmington, Massachusetts for the manufacture of its etch
and deposition products. The Company completed, in July 1995, a manufacturing
facility in CheonAn, Korea, outside of Seoul. 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
affect 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 clothed 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, 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.
EMPLOYEES
As of September 1, 1995, the Company had approximately 3,600 full-time
employees. None of the Company's employees is 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. 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
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
expires in December 1996.
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.
ITEM 2. PROPERTIES
The Company's executive offices and principal manufacturing, and research
and development facilities are located in twelve buildings in Fremont,
California, occupying over 800,000 square feet under leases expiring from 1995
to 2005. The Company is currently planning the expansion of its Fremont campus.
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, South Korea. The
Company is currently expanding its facility in Japan by building a third floor
on an existing building, and is in the design stage of a second facility in
Sagamihara.
The Company's fiscal 1995 rental payments for the facilities occupied as of
June 30, 1995 aggregated approximately $9.5 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, 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. 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
infringement 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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
7
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 1995 Annual Report to Stockholders under the heading "Selected
Financial Data" on page 16.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated by reference to the
Company's 1995 Annual Report to Stockholders under the heading "Selected
Financial Data" on page 16.
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 1995 Annual Report to Stockholders under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 17-19.
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 1995 Annual Report to Stockholders.
The unaudited quarterly results of operations are incorporated by reference to
page 16 of the Company's 1995 Annual Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
(Not applicable.)
8
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, 1995 and the
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 41 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., and IPEC. From 1980 to 1982, he was Senior Vice President of
Optical Specialties, Inc. which markets automated visual wafer inspection
equipment for the semiconductor industry.
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. Mr. Evenhuis is currently a director of Credence Systems
Corporation. 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,
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 1989 was named Vice President of Research and Development. In
January 1992, Dr. Degner was
9
appointed Vice President of the Poly Etch Business Unit. In 1995, he was named
Senior Vice President for the Poly Etch and CVD Business Units. From 1983 to
1984, he served as Director of Development for Silicon Valley Group, a
semiconductor equipment manufacturer.
Robert C. Fink joined the Company in 1993 as Vice President and Chief
Operating Officer. In 1995 he was named Executive Vice President of Corporate
Development. Mr. Fink is currently a director of SEMI/SEMATECH and Uniphase
Corporation. 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 Key joined the Company in 1988 as Vice President of Domestic
Sales. In 1991, he was appointed Vice President of Worldwide Sales and Field
Operations. Prior to joining the Company, he served as Area Director of Sales
with Gemini Research from 1982 until 1988. From 1980 to 1982 he was
Manufacturing Manager with Fairchild Semiconductor, a leading semiconductor
manufacturer.
Richard H. Lovgren joined the Company in 1995 as Vice President, General
Counsel and Secretary. Before joining the Company and since 1979, Mr. Lovgren
held various legal positions at Advanced Micro Devices, Inc. His most recent
position 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."
10
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
(2) Financial Statement Schedules: See Index to Financial Statement
Schedules, page......................................................... 12
(3) Exhibits: See Index to Exhibits, pages.................................. 16-18
(b) No reports on Form 8-K were filed during the fiscal quarter ended June 30,
1995
11
LAM RESEARCH CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PAGE(S)
IN 1995
ANNUAL
REPORT*
-------------
Consolidated Balance Sheets -- June 30, 1995 and 1994.................................................... 20
Consolidated Statements of Income -- Years Ended June 30, 1995, 1994 and 1993............................ 21
Consolidated Statements of Cash Flows -- Years Ended June 30, 1995, 1994 and 1993........................ 22
Consolidated Statements of Stockholders' Equity -- Years Ended June 30, 1995, 1994 and 1993.............. 23
Notes to Consolidated Financial Statements............................................................... 24
Report of Independent Auditors........................................................................... 32
INDEX TO FINANCIAL STATEMENT SCHEDULES
PAGE
-------------
Schedule II Valuation and Qualifying Accounts............................................................ 15
<FN>
- ------------------------
* Incorporated by reference to the Company's 1995 Annual Report to
Stockholders.
12
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 D. EMERICK_______
Roger D. Emerick,
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
Dated: September 26, 1995
13
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
- ------------------------------------------------------ -------------------------------- -----------------------
Chairman of the Board and Chief
/s/ ROGER D. EMERICK Executive
------------------------------------------- Officer (Principal September 26, 1995
Roger D. Emerick Executive Officer)
Senior Vice President and Chief
/s/ HENK J. EVENHUIS Financial Officer (Principal
------------------------------------------- Financial September 26, 1995
Henk J. Evenhuis Officer and Principal
Accounting Officer)
/s/ DAVID G. ARSCOTT
------------------------------------------- Director September 26, 1995
David G. Arscott
/s/ JACK R. HARRIS
------------------------------------------- Director September 26, 1995
Jack R. Harris
/s/ GRANT M. INMAN
------------------------------------------- Director September 26, 1995
Grant M. Inman
/s/ OSAMU KANO
------------------------------------------- Director September 26, 1995
Osamu Kano
14
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
LAM RESEARCH CORPORATION
COL. C
------------------------------
COL. B ADDITIONS
-------------- ------------------------------ 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, 1995
Deducted from asset accounts:
Allowance for doubtful
accounts................... $ 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
YEAR ENDED JUNE 30, 1994
Deducted from asset accounts:
Allowance for doubtful
accounts................... $ 485,000 $ 200,000 $ 483,000(4) $ 12,000(3) $ 1,156,000
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
<FN>
- ------------------------
(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.
15
LAM RESEARCH CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED JUNE 30, 1995
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.
4.4 Amended 1991 Stock Option Plan and Forms of Stock Option Agreements.
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.
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.
10.14(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
16
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
<FN>
- ------------------------
(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