EXHIBIT 13
Selected Financial Data
(In thousands, except per share data)
- -----------------------------------------------------------------------------------------------------------------
Year ended June 30, 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------
Operations:
Total revenue $810,557 $493,695 $265,038 $171,416 $144,026
Gross profit 391,739 227,664 125,110 86,192 67,614
Operating income 118,392 60,206 28,153 15,267 9,434
Net income 89,211 37,756 18,907 9,947 6,063
Net income per share
Primary $ 3.27 $ 1.55 $ 0.79 $ 0.49 $ 0.33
Fully diluted $ 3.06 $ 1.51 $ 0.79 $ 0.49 $ 0.33
Balance sheet:
Working capital $337,386 $171,918 $154,723 $ 81,521 $ 51,830
Total assets 682,649 381,497 268,839 156,600 116,934
Long-term obligations, less current portion 95,928 78,843 79,066 13,698 21,938
- ------------------------------------------------------------------------------------------------------------------------
Quarterly 1995 1ST 2ND 3RD 4TH
- ------------------------------------------------------------------------------------------------------------------------
Total revenue $161,513 $172,739 $219,014 $257,291
Gross profit 76,823 83,888 106,965 124,063
Operating income 22,380 26,939 35,458 33,615
Net income 15,053 18,931 24,793 30,434
Net income per share
Primary $ 0.61 $ 0.68 $ 0.89 $ 1.07
Fully diluted $ 0.58 $ 0.64 $ 0.83 $ 1.00
Price range per share $25.75-42.50 $ 35-46.75 $35.25-51.50 $42.50-68.50
- ------------------------------------------------------------------------------------------------------------------------
Fourth quarter net income includes the effect of a $10.4 million pre-tax gain on
the sale of Brooks Automation, Inc. securities.
- ------------------------------------------------------------------------------------------------------------------------
Quarterly 1994 1ST 2ND 3RD 4TH
- ------------------------------------------------------------------------------------------------------------------------
Total revenue $100,889 $115,740 $127,701 $149,365
Gross profit 47,152 53,961 58,313 68,238
Operating income 13,294 13,344 15,028 18,540
Net income 8,038 8,526 9,556 11,636
Net income per share
Primary $ 0.33 $ 0.35 $ 0.39 $ 0.48
Fully diluted $ 0.33 $ 0.34 $ 0.38 $ 0.46
Price range per share $24.17-36.75 $24.50-34.25 $27.75-39.50 $22.75-34.75
- ------------------------------------------------------------------------------------------------------------------------
Stock and Dividend Information:
The Company's Common Stock is traded in the over-the-counter market under
the Nasdaq National Market symbol LRCX. The price range per share is the highest
and lowest bid prices as reported by the National Association of Security
Dealers, Inc.
As of June 30, 1995, the Company had 903 stockholders of record.
No cash dividends have been declared or are anticipated to be paid by the
Company as all available funds are intended to be employed in the development of
the business, and the Company's bank lines of credit restrict the payment of
dividends.
Lam Research Corporation / 16
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
The following table sets forth, for the fiscal years indicated, certain
income and expense items as a percentage of total revenues:
- ----------------------------------------------------------------------
Year ended June 30, 1995 1994 1993
- ----------------------------------------------------------------------
Net sales 98.5% 98.2% 98.3%
Royalty income 1.5 1.8 1.7
- ----------------------------------------------------------------------
Total revenue 100.0 100.0 100.0
Cost of goods sold 51.7 53.8 52.8
Research and development 15.8 15.5 16.6
Selling, general and administrative 17.9 18.5 20.0
- ----------------------------------------------------------------------
Operating income 14.6 12.2 10.6
Other income/(expense) 1.1 (0.6) ( 0.4)
- ----------------------------------------------------------------------
Income before income taxes 15.7 11.6 10.2
Income tax expense 4.7 3.9 3.1
- ----------------------------------------------------------------------
Net income 11.0% 7.7% 7.1%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
FISCAL 1995 VS. 1994
Lam's net sales for fiscal year 1995 increased to $798.2 million, a 65%
increase from the prior year, as the Company continued to participate
strongly in the worldwide expansion of the semiconductor chip market.
Approximately two-thirds of the increase was due to increased unit shipments
of the Company's Rainbow and TCP product lines, with shipments of the more
advanced TCP products rising at a slightly higher rate when compared to the
prior year. Of the remaining increase, approximately half was due to the
first volume shipments of the Company's Alliance cluster tool, with most of
that product's revenue growth occurring in the last two quarters of the
fiscal year. Increased spares and service revenue, resulting from the
Company's growing installed base, accounted for most of the remainder of the
sales increase, with spares and service revenue representing 20% of the
Company's total revenue. Geographically, for the first time in its history,
more than half of the Company's revenues came from foreign customers, with
foreign sales representing 54.0% of total revenue, up from 48.4% in the prior
year. During fiscal year 1995, the Company commenced direct sales of its TCP
products to customers in Japan, which accounted for almost 41.5% of the TCP
product lines' growth over the prior year. These sales are Japanese
yen-denominated (the only significant sales which are not U.S.
dollar-denominated) and the Company's practice is to enter into yen forward
exchange contracts at or near the date purchase orders for TCP systems are
received from Japanese customers in order to minimize the subsequent foreign
exchange fluctuations. Korea continued to be the Company's largest single
foreign market and accounted for 16.3% and 15.1% of net sales in fiscal 1995
and 1994, respectively, and sales to European customers increased by over 47%
from the prior year.
Royalty income increased by 40.3% from fiscal year 1994 due to increased
sales of systems incorporating Lam technology by Tokyo Electron Limited (TEL)
and Sumitomo Metal Industries, Ltd. (Sumitomo). The Company believes that
sales of systems incorporating the Company's technologies to Japanese
customers and royalty income derived therefrom will continue to fluctuate on
a quarterly and annual basis.
Gross margin for fiscal 1995 was 48.3% compared to 46.2% for the prior
year. The improvement in gross margin was due in approximately equal measure
to lower unit manufacturing costs and lower installation and warranty costs.
Most of the decrease in unit manufacturing costs was due to reduced average
material costs as a result of higher volume purchasing (material costs
represent a relatively high percentage of total costs). Reductions in
installation and warranty costs were achieved as a result of active cost
reduction programs, increased training of field service and customer
personnel, as well as ongoing system design improvements.
Research and development (R&D) spending dollars increased by 67% in fiscal
1995 over fiscal 1994, and as a percentage of total revenues, increased
slightly to 15.8%, up from 15.5% for the prior fiscal year. The Company
operates in a constantly changing and highly competitive market, and
therefore the Company believes it is critical to continue to make its
investment in R&D programs in order to maintain its position as a technology
leader. During fiscal year 1995, the Company opened a major new R&D facility
at its Fremont, California campus and continued to add scientific and
engineering personnel to staff its ongoing development
Lam Research Corporation / 17
projects, which included improvements to its existing etch products,
continued development of its cluster tool and chemical vapor deposition (CVD)
products, and new product development, including the flat panel display
system.
Selling, general and administrative (S,G&A) expenses increased by 60% in
fiscal 1995 over fiscal 1994, but continued to decrease as a percentage of
total revenue to 17.9% from 18.5% for the prior fiscal year. The Company
added significant facilities and information technology infrastructure in
fiscal 1995 to accommodate the rapidly expanding growth in its sales, field
service, customer support, and administration areas as a result of the
increased sales volume. S,G&A headcount increased by 57% in fiscal 1995 over
fiscal 1994. The Company now occupies twelve major buildings in Fremont,
California and has expanded its foreign operations, which are primarily sales
and service offices.
Interest expense increased by 30.6% over the prior fiscal year, due to
additional yen-based borrowings by its Japanese subsidiary, additional
interest expense related to an interest rate swap described in Note D to the
consolidated financial statements, and the increased acquisition of equipment
under capital leases. Interest income increased due to the investment of the
proceeds of a public offering of the Company's common stock completed in the
first quarter of fiscal 1995. Other income includes a $10.4 million gain
recorded in the fourth quarter of fiscal 1995 from the sale of stock held in
Brooks Automation, Inc., a vendor of the Company.
The combined effective tax rate for fiscal 1995 of 30% decreased over the
prior year's 34% due to an increase in benefits resulting from federal and
state research and other tax credits. The Company expects its effective tax
rate to rise slightly in fiscal 1996 as the tax credits become a smaller
percentage of the Company's tax liability. The Company believes its future
income will be sufficient to realize its net deferred tax assets.
FISCAL 1994 VS. 1993
Lam's net sales for fiscal year 1994 increased to $484.9 million, an 86%
increase from the prior year. The Company's increased net sales were driven
by strong sales of the Company's Rainbow and TCP etch product lines, and, to
a lesser extent, by the addition of etch product lines acquired from Drytek,
Inc. in July 1993. Sales of the Company's etch systems, principally Rainbow
and TCP products, contributed approximately 76% of the Company's revenue in
fiscal 1994 compared with 78% in 1993. The increase in etch product sales in
fiscal 1994 reflected strong growth across all three of Lam's major etch
applications (polysilicon, oxide and metal), as well as the ongoing
transition of semiconductor manufacturers to more advanced products and
processes. As a result, sales of TCP products to support these manufacturers'
requirements grew at a faster rate than Rainbow products. Average machine
selling prices increased 18% over the prior year, as TCP systems have
significantly higher average sell-ing prices than Rainbow systems, and unit
machine sales increased by 59% over the prior year. Spares and service
revenue increased 74% as a result of the Company's expanding installed
machine base and represented approximately 19% of the Company's net sales.
Geographically, foreign sales represented 49% of net sales in fiscal 1994
compared to 47% in fiscal 1993, based on strong net sales growth in the Asia
Pacific region and Europe. Major multi-unit shipments to Korean customers
accounted for the largest portion of the increase. Substantially all of the
Company's export sales in fiscal 1994 were denominated in the U.S. dollar.
Royalty income increased by 92% from fiscal 1993 due to increased sales of
systems incorporating its technology by TEL and Sumitomo.
Gross margin for fiscal 1994 was 46.2% compared to 47.2% for the prior
fiscal year. The decline in margin reflected higher provision for
installation and warranty expenses due in part to the strong sales of the
Company's new TCP machines in fiscal 1994, as well as increased provisions
for excess and obsolete inventories, particularly spare parts inventories
related to the Company's expansion of its operations worldwide. To a lesser
extent, the lower gross margin in fiscal 1994 reflects discounts on certain
multi-unit orders from Korean customers, and increased sales of Rainbow
modules at low margins to Sumitomo in Japan. These factors were offset in
part by increased margins for Lam's mature Rainbow machines due to higher
average selling prices and by an increase in spare parts and service margins.
R&D spending, net of third party funding, increased by 74% in fiscal 1994
over fiscal 1993, although as a percentage of total revenues, it decreased to
15.5%, slightly less
Lam Research Corporation / 18
than fiscal year 1993. The increased spending was due to enhancements of
existing etch and deposition products.
S,G&A expenses increased by 72% in fiscal 1994 over fiscal 1993, but
decreased as a percentage of total revenue to 18.5% from 20.0%. The Company
added employees in all S,G&A areas to accommodate the increased sales volume,
in particular in field service and customer support, both in the United
States and in its foreign sales and service subsidiaries. Fiscal year 1994
marked the first full year of operation for the Company's development center
in Japan. The Company also established a new customer and employee training
facility at its Fremont headquarters, and facility-related expenses in
general have risen due to increasing employee headcount.
The increase in other expense from fiscal 1993 to fiscal 1994 was due
primarily to higher interest expense resulting from the Company's May 1993
$66 million convertible subordinated debenture offering. The effective tax
rate for fiscal 1994 of 34% increased over the prior year's 30% due primarily
to a decrease in estimated business tax credits available for use in fiscal
1994 and the 1% income tax rate increase as a result of passage of the
Revenue Reconciliation Act of 1993.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities provided approximately $19.1 million in cash flows for
fiscal 1995. Approximately $112.7 million of net cash was generated from net
income plus non-cash depreciation and amortization, which was partially
offset by increases in accounts receivable and inventories less increases in
trade accounts payable and accrued expenses, all such increases being due to
the Company's increased sales volume. During fiscal year 1995, the Company
entered into two agreements with banks which allow the Company to sell up to
$70.0 million of yen-denominated accounts receivable to the banks. At June
30, 1995, $37.6 million of receivables had been sold to the banks, with $30.1
million still uncollected by the banks and subject to recourse provisions.
Net cash used in investing activities for fiscal 1995 was $124.7 million,
primarily for capital expenditures including acquisition of equipment used
in manufacturing and research and development and construction of
demonstration labs and leasehold improvements. In July 1995, the Company
completed construction of a new manufacturing facility in Korea which is
expected to supply a portion of the systems requirements of the Company's
customers there by the end of fiscal 1996. Other uses of cash in investing
activities included purchases of short-term investments totaling $58.2
million (net of sales). The short-term investments consisted primarily of
money market preferred issues and floating rate municipal bonds which had
terms of less than 90 days.
In addition to internally generated sources of cash flows, the Company
completed a public offering of its Common Stock during the first quarter of
fiscal 1995, raising $115.0 million from the sale of 3,100,000 shares.
Additionally, the Company made primarily Japanese yen-denominated borrowings
totaling approximately $9.5 million during fiscal 1995.
As of June 30, 1995, the Company had $101.0 million in cash, cash
equivalents and short-term investments compared with $38.3 million at June
30, 1994. The Company also had $50.0 million available under four bank lines
of credit which expire between September 1995 and June 1996; the Company
expects to negotiate extensions on all of the lines of credit upon
substantially similar terms. Borrowings under the lines are unsecured. There
were no outstanding borrowings on the lines at June 30, 1995.
During fiscal 1994, the Company entered into a lease for a new research
and development facility at its Fremont headquarters. Under the terms of a
pledge agreement related to this lease, the Company is required to provide
collateral (restricted investments) equal to 110% of the construction costs.
The restricted investments were $25.0 million at June 30, 1995. The Company
is currently renegotiating the pledge agreement to reduce the amount of
restricted investments.
The Company's commitments consist primarily of debt obligations and
operating and capital lease commitments for its facilities and equipment.
Based upon current forecasts, the Company's cash, cash equivalents,
short-term investments and available lines of credit at June 30, 1995 should
be sufficient to support anticipated levels of operations and capital
expenditures through June 30, 1996.
Lam Research Corporation / 19
Consolidated Balance Sheets
(in thousands, except per share data)
- ----------------------------------------------------------------------------------------
June 30, 1995 1994
- ----------------------------------------------------------------------------------------
Assets
Cash and cash equivalents $ 43,675 $ 24,092
Short-term investments 57,334 14,194
Accounts receivable less allowance for doubtful accounts
of $1,189 in 1995 and $1,156 in 1994 195,682 120,326
Inventories 171,401 115,569
Prepaid expenses and other assets 25,263 6,023
Deferred income taxes 32,778 17,537
- ----------------------------------------------------------------------------------------
Total current assets 526,133 297,741
Equipment and leasehold improvements, net 117,571 61,749
Restricted investments 25,024 9,928
Other assets 13,921 12,079
- ----------------------------------------------------------------------------------------
$682,649 $381,497
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Trade accounts payable $ 82,542 $ 66,127
Accrued expenses and other liabilities 98,633 52,866
Current portion of long-term debt and capital
lease obligations 7,572 6,830
- ----------------------------------------------------------------------------------------
Total current liabilities 188,747 125,823
Long-term debt and capital lease obligations,
less current portion 95,928 78,843
Deferred income taxes 2,712 --
Commitments and contingencies
Preferred Stock; 5,000 shares authorized, none outstanding -- --
Common stock at par value of $.001 per share
Authorized--90,000 shares; issued and outstanding--27,275
shares at June 30, 1995 and 23,528 shares at June 30, 1994 27 24
Additional paid-in capital 224,730 95,513
Retained earnings 170,505 81,294
- ----------------------------------------------------------------------------------------
Total stockholders' equity 395,262 176,831
- ----------------------------------------------------------------------------------------
$682,649 $381,497
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Lam Research Corporation / 20
Consolidated Statements of Income
(in thousands, except per share data)
- ------------------------------------------------------------------------------------------
Year ended June 30, 1995 1994 1993
- ------------------------------------------------------------------------------------------
Net sales $798,209 $484,892 $260,454
Royalty income 12,348 8,803 4,584
- ------------------------------------------------------------------------------------------
Total revenue 810,557 493,695 265,038
Costs and expenses:
Cost of goods sold 418,818 266,031 139,928
Research and development 127,840 76,328 43,888
Selling, general and administrative 145,507 91,130 53,069
- ------------------------------------------------------------------------------------------
692,165 433,489 236,885
- ------------------------------------------------------------------------------------------
Operating income 118,392 60,206 28,153
- ------------------------------------------------------------------------------------------
Other income (expense):
Interest income 5,138 1,743 818
Interest expense (6,732) (5,155) (2,112)
Other 10,646 363 151
- ------------------------------------------------------------------------------------------
9,052 (3,049) (1,143)
- ------------------------------------------------------------------------------------------
Income before income taxes 127,444 57,157 27,010
Income tax expense 38,233 19,401 8,103
- ------------------------------------------------------------------------------------------
Net income $ 89,211 $ 37,756 $ 18,907
- ------------------------------------------------------------------------------------------
Net income per share
Primary $ 3.27 $ 1.55 $ 0.79
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Fully diluted $ 3.06 $ 1.51 $ 0.79
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Number of shares used in per share calculations
Primary 27,300 24,300 24,000
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Fully diluted 30,300 27,000 24,600
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Lam Research Corporation / 21
Consolidated Statements of Cash Flows
(in thousands)
- ------------------------------------------------------------------------------------------
Year ended June 30, 1995 1994 1993
- ------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 89,211 $ 37,756 $ 18,907
- ------------------------------------------------------------------------------------------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 23,532 18,438 12,690
Deferred income taxes (12,529) (13,310) (2,808)
Changes in certain working capital accounts:
Accounts receivable (75,356) (50,382) (24,727)
Inventories (55,832) (51,280) (36,513)
Prepaid expenses and other assets (19,240) (2,635) (761)
Trade accounts payable 16,415 35,289 13,624
Accrued expenses and other liabilities 52,895 32,378 10,066
- ------------------------------------------------------------------------------------------
Total adjustments (70,115) (31,502) (28,429)
- ------------------------------------------------------------------------------------------
Net cash provided by (used in)
operating activities 19,096 6,254 (9,522)
Cash flows from investing activities:
Capital expenditures (63,405) (18,975) (14,218)
Purchase of short-term investments (348,204) (14,194) --
Sale of short-term investments 289,968 -- --
Purchase of restricted investments -- (9,928) --
Acquisition of Drytek, Inc., net of cash acquired -- (5,785) --
Other (3,026) (2,102) (2,731)
- ------------------------------------------------------------------------------------------
Net cash used in investing activities (124,667) (50,984) (16,949)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 9,468 5,724 71,738
Principal payments on long-term debt and
capital lease obligations (6,406) (6,843) (6,260)
Proceeds from issuance of common stock 122,092 2,688 2,414
- ------------------------------------------------------------------------------------------
Net cash provided by financing activities 125,154 1,569 67,892
- ------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 19,583 (43,161) 41,421
Cash and cash equivalents at beginning of year 24,092 67,253 25,832
- ------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 43,675 $ 24,092 $ 67,253
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Cash payments for interest $ 6,614 $ 4,575 $ 1,582
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Cash payments for income taxes $ 31,319 $ 20,289 $ 6,065
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Lam Research Corporation / 22
Consolidated Statements of Stockholders' Equity
(in thousands)
- -------------------------------------------------------------------------------------------------------------
Common Common Additional
Stock Stock Paid-in Retained
Shares Amount Capital Earnings Total
- --------------------------------------------------------------------------------------------------------------
Balance at June 30, 1992 22,290 $22 $ 81,939 $ 24,631 $106,592
Sale of Common Stock, net of repurchases 774 1 2,413 -- 2,414
Income tax benefit from stock option
transactions -- -- 1,735 -- 1,735
Common Stock issued to acquire
Monkowski-Rhine, Inc. 78 -- 622 -- 622
Net income -- -- -- 18,907 18,907
- --------------------------------------------------------------------------------------------------------------
Balance at June 30, 1993 23,142 23 86,709 43,538 130,270
Sale of Common Stock, net of repurchases 350 1 2,687 -- 2,688
Income tax benefit from stock option
transactions -- -- 4,939 -- 4,939
Common Stock issued to acquire
Monkowski-Rhine, Inc. 36 -- 1,178 -- 1,178
Net income -- -- -- 37,756 37,756
- --------------------------------------------------------------------------------------------------------------
Balance at June 30, 1994 23,528 24 95,513 81,294 176,831
Sale of Common Stock, net of repurchases 3,747 3 122,089 -- 122,092
Income tax benefit from stock option
transactions -- -- 7,128 -- 7,128
Net income -- -- -- 89,211 89,211
- --------------------------------------------------------------------------------------------------------------
Balance at June 30, 1995 27,275 $27 $224,730 $170,505 $395,262
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Lam Research Corporation / 23
Notes to Consolidated Financial Statements
June 30, 1995
-------------------------------------------
A Summary of Significant Accounting Policies
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All intercompany accounts and transactions
have been eliminated in consolidation.
CASH EQUIVALENTS
All highly liquid investments purchased with an original maturity of three
months or less are considered to be cash equivalents.
INVESTMENTS
Effective July 1, 1994, the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (FAS 115), which requires investments in debt and marketable
equity securities to be classified as either held-to-maturity, trading or
available-for-sale. The Company reviewed its portfolio and determined that
its investments are to be classified as either available-for-sale or
held-to-maturity. Under FAS 115, securities classified as available-for-sale
are stated at fair value and any difference between an investment's cost and
its fair value is recorded in stockholders' equity. Debt securities
classified as held-to-maturity are stated at amortized cost.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or
market. The Company adjusts the carrying value of excess or obsolete
inventory as appropriate.
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements are stated at cost. Equipment is
depreciated by the straight-line method over the estimated useful lives of
the assets, generally three to five years. Leasehold improvements are
amortized by the straight-line method over the shorter of the life of the
related asset or the term of the lease. Amortization of equipment under
capital leases is included with depreciation.
REVENUE RECOGNITION
Sales of the Company's products are generally recorded upon shipment.
Estimated costs to be incurred by the Company related to product installation
and warranty fulfillment are accrued at the date of shipment.
FOREIGN CURRENCY
The Company has foreign sales and service operations. With respect to all
foreign subsidiaries excluding Japan, the functional currency is the U.S.
dollar and transaction and translation gains and losses are included in net
income and have not been material in any year presented. Due to the changing
nature of the operation of the Company's Japanese subsidiary, effective
January 1, 1994, the Company determined that the functional currency of this
subsidiary is the Japanese yen. Accordingly, translation gains and losses
related to the Japan subsidiary are included as a component of stockholders'
equity subsequent to January 1994, but have not been material through June
30, 1995.
INCOME PER SHARE
Income per share computations are based upon the weighted average number of
shares of Common Stock and common stock equivalents outstanding during the
year. The common stock equivalents include shares issuable upon the assumed
exercise of the stock options reflected under the treasury stock method. The
convertible subordinated debentures are not common stock equivalents and,
accordingly, are excluded from the calculation of primary income per share.
Fully diluted income per share includes the effect of the convertible
subordinated debentures and net income is adjusted to reflect the exclusion
of net interest expense and net amortization expense of debt issuance costs
related to the debentures assuming their conversion at the beginning of the
period.
Lam Research Corporation / 24
INCOME TAXES
In February 1992, the Financial Accounting Standards Board issued FAS No.
109, "Accounting for Income Taxes." The Company adopted the provisions of the
standard as of July 1, 1993, the beginning of fiscal year 1994. Adoption of
FAS 109 had no current or cumulative impact on the Company's income at the
date of adoption. As permitted by FAS 109, the Company has elected not to
restate the financial statements for the years prior to adoption.
-------------------------------------------
B Company and Industry Information
Lam Research Corporation is a leading supplier of technically complex thin
film processing equipment used in primary stages of semiconductor
manufacturing. The Company's product offerings include single wafer plasma
etch systems with a wide range of applications and chemical vapor deposition
(CVD) systems. The Company sells its products primarily to large companies
involved in the production of semiconductors in the United States, Europe,
Japan and Asia Pacific. Credit evaluations are performed on all customers and
the Company usually does not require collateral on sales.
During fiscal 1995, the Company entered into two agreements totaling
approximately $70,000,000 to sell specific Japanese yen-denominated
receivables subject to recourse provisions. At June 30, 1995, $37,612,000 of
receivables had been sold to the bank, of which $30,107,000 remained
uncollected by the bank at June 30, 1995.
One customer accounted for 11%, 14% and 15% of sales for fiscal 1995, 1994
and 1993, respectively. Another customer accounted for 10% of sales for
fiscal 1994.
The Company operates in four geographic regions, the United States,
Europe, Japan and Asia Pacific. The following is a summary of local
operations by geographic region at June 30:
- --------------------------------------------------------------
(in thousands) 1995 1994 1993
- --------------------------------------------------------------
Revenues:
United States $820,418 $491,909 $262,268
Europe 38,604 23,776 10,913
Japan 52,923 5,705 946
Asia Pacific 38,162 13,522 4,376
Elimination (139,550) (41,217) (13,465)
- --------------------------------------------------------------
Total $810,557 $493,695 $265,038
- --------------------------------------------------------------
- --------------------------------------------------------------
Operating income (loss):
United States $111,284 $ 57,694 $ 27,959
Europe 9,874 7,902 1,902
Japan 520 793 44
Asia Pacific 13,199 2,885 (1,679)
Elimination (16,485) (9,068) (73)
- --------------------------------------------------------------
Total $118,392 $ 60,206 $ 28,153
- --------------------------------------------------------------
- --------------------------------------------------------------
Identifiable assets:
United States $772,696 $411,838 $271,745
Europe 28,936 26,067 6,220
Japan 64,135 10,993 5,149
Asia Pacific 32,832 15,346 5,660
Elimination (215,950) (82,747) (19,935)
- --------------------------------------------------------------
Total $682,649 $381,497 $268,839
- --------------------------------------------------------------
- --------------------------------------------------------------
Sales between geographic areas are accounted for at prices which the Company
believes are arm's length prices, which in general are in accordance with the
rules and regulations of the respective governing authorities. Total export
reve-nues consisting of sales from the Company's U.S. operating subsidiary to
nonaffiliated customers by geographic region for years ended June 30 are as
follows:
- --------------------------------------------------------------
(in thousands) 1995 1994 1993
- --------------------------------------------------------------
Asia Pacific $173,549 $102,763 $ 56,591
Europe 105,349 73,563 39,417
Japan 29,477 19,612 9,388
- --------------------------------------------------------------
$308,375 $195,938 $105,396
- --------------------------------------------------------------
- --------------------------------------------------------------
Lam Research Corporation / 25
-------------------------------------------
C Financial Instruments
During fiscal 1995, the Company adopted FAS 115 "Accounting for Certain
Investments in Debt and Equity Securities."
Due to insignificant differences at the date of adoption of FAS 115
between cost and fair value of the Company's investments in debt and equity
securities, the adoption of FAS 115 had no effect on the Company's financial
statements. In accordance with FAS 115, prior period financial statements
have not been restated.
Investments at June 30, 1995 are comprised of the following:
- --------------------------------------------------------------------------------
Gross Gross Estimated
Unrealized Unrealized Fair
(in thousands) Cost Gains Losses Value
- --------------------------------------------------------------------------------
Available-for-Sale:
Commercial Paper $12,983 $ -- $ -- $12,983
Institutional
Money Markets 15,050 -- -- 15,050
US Treasury Notes 1,973 -- -- 1,973
- --------------------------------------------------------------------------------
Amounts included
in cash and
cash equivalents 30,006 -- -- 30,006
- --------------------------------------------------------------------------------
Floating Rate
Municipal Bonds 50,334 -- -- 50,334
Money Market
Preferred Issues 7,000 -- -- 7,000
- --------------------------------------------------------------------------------
Amounts included
in short-term
investments 57,334 -- -- 57,334
- --------------------------------------------------------------------------------
Total
Available-for-sale $87,340 $ -- $ -- $87,340
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Held-to-Maturity:
US Treasury Notes $25,024 $ -- $(509) $24,515
- --------------------------------------------------------------------------------
Amounts included
in restricted cash $25,024 $ -- $(509) $24,515
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The amortized cost and estimated fair value of investments in debt
securities at June 30, 1995, by contractual maturities are as follows:
- ------------------------------------------------------------------
Estimated
Fair
(in thousands) Cost Value
- ------------------------------------------------------------------
Due in less than one year $ 87,340 $ 87,340
Due after one year through
five years 25,024 24,515
- ------------------------------------------------------------------
Total investments in debt securities $112,364 $111,855
- ------------------------------------------------------------------
- ------------------------------------------------------------------
During fiscal 1995, the Company transferred $15,096,000 of short-term
investments to restricted investments to comply with the collateral
requirements under a facility lease agreement.
The carrying and fair values of the Company's other financial instruments
at June 30 are as follows:
- -----------------------------------------------------------------------------------
1995 1994
Estimated Estimated
Carrying Fair Carrying Fair
(in thousands) Value Value Value Value
- -----------------------------------------------------------------------------------
Cash & cash
equivalents $43,675 $ 43,675 $24,092 $24,092
Convertible
subordinated
debentures $66,000 $169,868 $66,000 $83,160
Other long-term
debt $37,500 $ 37,200 $19,673 $19,963
- -----------------------------------------------------------------------------------
The fair values of the Company's short-term investments, restricted
investments, and convertible subordinated debentures are based on quoted
market prices at June 30, 1995 and 1994. The fair value of the Company's
other long-term debt is estimated based on the current rates offered to the
Company for similar debt instruments of the same remaining maturities.
During the fourth quarter of fiscal 1995, the Company sold all of its
shareholdings of Brooks Automation, Inc., (Brooks) for a pre-tax gain of
$10,399,000, which is included as other income. At June 30, 1995, the
receivable related to the sale of these securities is included in other
current assets. The shares the Company sold were included as part of a Brooks
secondary public offering of common stock on June 27, 1995. Roger Emerick,
the Company's Chief Executive Officer, serves on the board of directors of
Brooks.
Lam Research Corporation / 26
-------------------------------------------
D Derivative Financial Instruments
During fiscal 1995, the Company adopted Statement of Financial Accounting
Standards No. 119, "Disclosure about Derivative Financial Instruments and
Fair Value of Financial Instruments" (FAS 119).
The Company enters into forward foreign currency exchange contracts to
hedge the value of Japanese yen-denominated sales transactions against
fluctuations in exchange rates. The purpose of entering into these forward
yen contracts is to attempt to minimize the impact of exchange rate
fluctuations on the value of the yen-denominated assets and liabilities.
Substantially all forward contracts entered into by the Company have
maturities of 360 days or less. The realized and unrealized gains and losses
on these contracts are deferred and are offset against realized and
unrealized gains and losses from the settlement of the related yen
receivables. At June 30, 1995, the Company had forward contracts to sell
$30,701,000 in Japanese yen. The unrealized gain on these contracts at June
30, 1995 was $464,000. The realized losses on forward yen contracts during
fiscal 1995 were offset by underlying gains on the receivables. At June 30,
1994, the outstanding face amounts of currency forward contracts was
approximately $8,000,000, all of which hedge Japanese yen purchase
commitments from Japanese customers.
In May 1993, the Company entered into a three year interest-rate swap
agreement with a third party which is scheduled to mature in May 1996. Under
the agreement the third party is assuming 4.5% of the 6% fixed interest rate
payments related to the Company's $66,000,000 convertible subordinated
debentures while the Company is assuming variable interest rate (equal to the
six-month London Interbank Offered Rate (LIBOR), 6.375% at June 30, 1995)
payments of the third party on a like principal amount. The net amount of
interest payments assumed by the third party and interest payments made by
the Company is included in interest expense. The fair value of the liability
related to the Company's interest rate swap was $1,216,000 at June 30, 1995.
-------------------------------------------
E Inventories
Inventories consist of the following at June 30:
- ------------------------------------------------------------
(in thousands) 1995 1994
- ------------------------------------------------------------
Raw materials $ 80,910 $ 52,018
Work-in-process 73,183 50,189
Finished goods 17,308 13,362
- ------------------------------------------------------------
$171,401 $115,569
- ------------------------------------------------------------
- ------------------------------------------------------------
-------------------------------------------
F Equipment and Leasehold Improvements
Equipment and leasehold improvements consist of the following at June 30:
- ------------------------------------------------------------
(in thousands) 1995 1994
- ------------------------------------------------------------
Equipment $ 80,910 $ 65,653
Furniture and fixtures 25,372 14,815
Leasehold improvements 64,707 32,237
- ------------------------------------------------------------
170,989 112,705
Less allowance for depreciation
and amortization (53,418) (50,956)
- ------------------------------------------------------------
$117,571 $ 61,749
- ------------------------------------------------------------
- ------------------------------------------------------------
-------------------------------------------
G Other Assets
Patents and other intangibles are amortized on a straight-line basis over
their estimated useful lives. Debt issuance costs related to the convertible
subordinated debentures issued by the Company in May 1993 are being amortized
ratably over ten years. Accumulated amortization of patents, other
intangibles, and debt issuance costs was $522,000 and $3,951,000 at June 30,
1995 and 1994, respectively. In the fourth quarter of fiscal 1995, the
Company determined the future usefulness of certain capitalized patents and
other intangibles was in significant doubt and that the carrying value of
these assets would not be realized through future cash flows. Accordingly,
the Company wrote off the net book value ($1,960,000) of these assets.
Lam Research Corporation / 27
-------------------------------------------
H Accrued Expenses and Other Liabilities
The significant components of accrued expenses and other liabilities consist
of the following at June 30:
- ------------------------------------------------------------
(in thousands) 1995 1994
- ------------------------------------------------------------
Warranty, installation, and
product improvement reserves $40,986 $21,609
Accrued compensation 22,260 12,471
Income and other taxes payable 22,546 11,641
Other 12,841 7,145
- ------------------------------------------------------------
$98,633 $52,866
- ------------------------------------------------------------
- ------------------------------------------------------------
-------------------------------------------
I Lines of Credit, Long-Term Debt and
Capital Lease Obligations
Long-term debt and capital lease obligations at June 30 consist of the
following:
- ------------------------------------------------------------
(in thousands) 1995 1994
- ------------------------------------------------------------
6% convertible subordinated
debentures due 2003,
convertible into 2,640,000
shares of Common Stock
at $25 per share at any time
prior to maturity $ 66,000 $66,000
Japanese yen-denominated bank
loans with fixed interest rates
from 3.5% to 4.9%; principal
payable in quarterly installments
from July 1995 to April 2003 16,572 7,919
Notes payable to leasing
companies with interest rates
from 4.9% to 11.2%, payable
in monthly installments
through July 1996 2,391 4,826
Long-term obligation for
technology rights 2,250 4,250
Capitalized lease obligations
with varying interest rates
from 6.3% to 10.5% 15,508 2,517
Other 779 161
- ------------------------------------------------------------
103,500 85,673
Less current portion (7,572) (6,830)
- ------------------------------------------------------------
$ 95,928 $78,843
- ------------------------------------------------------------
- ------------------------------------------------------------
The Company has lines of credit available with four banks totalling
$50,000,000 on which borrowings bear interest at the bank's prime rate or 1%
over either the three month LIBOR rate or Eurodollar rate. No borrowings were
outstanding at June 30, 1995 or June 30, 1994. The Company's lines of credit
restrict the Company from paying dividends. These lines expire between
September 1995 and June 1996, and the Company expects to renegotiate
extensions on all of them with similar terms.
The notes payable to leasing companies are collateralized by equipment
additions with a cost equal to the original principal amount of the notes.
At June 30, 1995, future maturities of long-term debt and minimum payments
for capital lease obligations are as follows:
- ------------------------------------------------------------------------------
Capital
Year ending June 30 Long term Lease
(in thousands) Debt Obligations Total
- ------------------------------------------------------------------------------
1996 $ 4,782 $ 5,726 $ 10,508
1997 5,194 5,194 10,388
1998 3,815 4,283 8,098
1999 2,881 2,104 4,985
2000 1,968 479 2,447
Thereafter 69,352 -- 69,352
Less amounts representing interest -- (2,278) (2,278)
- ------------------------------------------------------------------------------
$87,992 $15,508 $103,500
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Long-term debt and capital lease obligations are collateralized by
equipment included in equipment and leasehold improvements with a cost and
accumulated depreciation and amortization of $27,009,000 and $(16,136,000),
respectively, at June 30, 1995, and $18,296,000 and $(11,613,000),
respectively, at June 30, 1994.
-------------------------------------------
J Incentive Stock Option Plans and
Stock Purchase Plan
The Company has adopted incentive stock option plans that provide for the
granting to qualified employees of incentive stock options to purchase shares
of Common Stock.
Lam Research Corporation / 28
In addition, the plans permit the granting of nonstatutory stock options to
paid consultants and employees and provide for the automatic grant of
nonstatutory stock options to outside directors. The option price is
determined by the Board of Directors, but in no event will it be less than
the fair market value on the date of grant (no less than 85% of the fair
market value at the date of grant in case of nonstatutory options). Options
granted under the plans vest over a period determined by the Board of
Directors. Under the automatic grant program, each outside director receives
an option exercisable for 6,000 shares of Common Stock during January of each
year with the exercise price equal to the fair market value on date of grant.
A summary of incentive stock option plan transactions follows:
- ------------------------------------------------------------------------
Authorized Outstanding Option Price
- ------------------------------------------------------------------------
June 30, 1992 710,467 1,706,602 $ 0.34-9.21
Granted (524,400) 524,400 8.17-20.21
Exercised -- (674,243) 0.34-9.21
Cancelled 46,247 (46,247) 2.04-5.83
Expired (6,195) -- --
- ------------------------------------------------------------------------
June 30, 1993 226,119 1,510,512 0.34-20.21
Additional amount
authorized 900,000 -- --
Granted (743,225) 743,225 26.29-35.88
Exercised -- (281,528) 0.34-20.00
Cancelled 100,589 (100,589) 0.34-35.88
Expired (9,767) -- --
- ------------------------------------------------------------------------
June 30, 1994 473,716 1,871,620 2.04-35.88
Additional amount
authorized 1,075,000 -- --
Granted (820,600) 820,600 28.00-63.88
Exercised -- (563,965) 2.04-35.88
Cancelled 49,654 (49,654) 1.70-50.63
Expired (5,481) -- --
- ------------------------------------------------------------------------
June 30, 1995 772,289 2,078,601 $2.04-63.88
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
At June 30, 1995, 2,850,890 shares of Common Stock were reserved for
future issuance under the stock option plans and options to purchase 698,864
shares were exercisable at a range of $2.04-$36.63.
Common Stock is sold to employees under the 1984 Employee Stock Purchase
Plan. The purchase price per share is the lower of 85% of the fair market
value of the Common Stock on the first or last day of a six-month offering
period. A total of 808,932 shares of the Company's Common Stock was issued
under the plan through June 30, 1995 at prices ranging from $2.65 to $32.67
per share. At June 30, 1995, 378,568 shares remain available for sale under
this plan.
-------------------------------------------
K Profit Sharing Plan and Benefit Plan
During fiscal 1995, the Company revised the profit sharing plan for its
domestic employees. Distributions to employees by the Company are made
quarterly based upon a percentage of base salary provided that a threshold
level of the Company's financial performance is met. Upon achievement of the
threshold, the profit sharing is awarded based upon performance against
certain corporate financial and operating goals. Prior to fiscal 1995,
distributions to the domestic employees under the profit sharing plan were
made semi-annually based on 5% of pretax income provided certain minimum net
income goals were met. Profit sharing plan expense for fiscal 1995, 1994 and
1993 was $9,506,000, $3,008,000, and $1,422,000 respectively.
The Company maintains a 401(k) retirement savings plan for its full-time
domestic employees. Each participant in the plan may elect to contribute 2%
to 20% of his or her annual salary to the plan, subject to statutory
limitations. Beginning January 1, 1994, the Company began to match employee
contributions to the plan at the rate of 50% of the first 6% of salary
contributed. The Company match expense for fiscal 1995 and 1994 was
$2,342,000 and $770,000, respectively.
Lam Research Corporation / 29
-------------------------------------------
L Commitments
The Company leases its administrative, research and development, and
manufacturing facilities, regional sales/service offices and certain
equipment under noncancelable operating leases, which expire at various dates
through 2005. All of the Company's facility leases for buildings located at
its Fremont, California headquarters and certain other operating leases
provide the Company an option to extend the lease for additional periods.
Certain of the Company's other facility leases provide for periodic rent
increases based on the general rate of inflation.
Future minimum lease payments for the years ended June 30 and in the
aggregate under operating leases consist of the following:
- -------------------------------------------------
(in thousands)
- -------------------------------------------------
1996 $ 18,720
1997 15,398
1998 12,746
1999 8,819
2000 8,230
Thereafter 40,125
- -------------------------------------------------
$104,038
- -------------------------------------------------
- -------------------------------------------------
During fiscal 1994, the Company entered into a lease for a new research
and development facility at its Fremont headquarters. Under the terms of a
pledge agreement related to this lease, the Company is required to provide
collateral (restricted investments) for 110% of the construction costs. The
restricted investments were $25,024,000 at June 30, 1995.
Total rental expense for all leases amounted to approximately $9,528,000,
$6,173,000, and $5,370,000 for the years ended June 30, 1995, 1994 and 1993,
respectively.
-------------------------------------------
M Licensing/Royalty Agreements
The Company has an agreement with Sumitomo Metal Industries, Ltd. (Sumitomo)
giving the Company the right to distribute Sumitomo's ECR CVD systems in the
United States and Europe while giving Sumitomo the right to distribute Lam's
Rainbow etch systems in Japan. The Company's sales of Rainbow (for the entire
fiscal year 1995) and TCP (through October 1994) etch systems to Sumitomo
were approximately $18,800,000, $23,300,000, and $9,800,000, for fiscal 1995,
1994, and 1993, respectively. Royalty income earned from Sumitomo for fiscal
1995, 1994 and 1993 amounted to approximately $1,700,000, $1,800,000, and
$1,300,000.
The Company also receives royalty income from Tokyo Electron, Limited
(TEL) under a licensing agreement signed in fiscal 1987 and extended in
fiscal 1992. For the years ended June 30, 1995, 1994 and 1993, the Company
earned approximately $10,500,000, $7,000,000, and $3,300,000, of royalty
income, respectively from TEL.
During fiscal 1995, the Company earned $100,000 of royalty income from other
sources.
-------------------------------------------
N Income Taxes
Income tax expense consists of the following:
- ----------------------------------------------------------------
(in thousands) 1995 1994 1993
- ----------------------------------------------------------------
Federal:
Current $36,093 $23,544 $7,025
Deferred (10,247) (13,310) (2,808)
- ----------------------------------------------------------------
25,846 10,234 4,217
State:
Current 6,131 3,572 1,728
Deferred (2,282) -- --
- ----------------------------------------------------------------
3,849 3,572 1,728
Foreign:
Current 8,538 5,595 2,158
- ----------------------------------------------------------------
$38,233 $19,401 $8,103
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Actual current tax liabilities are lower than reflected above for fiscal
years 1995, 1994 and 1993 by $7,128,000, $4,939,000 and $1,735,000
respectively, for the stock
Lam Research Corporation / 30
option deduction benefits recorded as a credit to stockholders' equity.
Under FAS No. 109, deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's net deferred tax assets as
of June 30, are as follows:
- ----------------------------------------------------------
(in thousands) 1995 1994
- ----------------------------------------------------------
Deferred tax assets:
Inventory valuation differences $15,969 $ 8,330
Accounting reserves and
accruals deductible in
different periods 16,809 8,901
Other -- 306
- ----------------------------------------------------------
Total deferred tax assets 32,778 17,537
Deferred tax liabilities:
Other (2,712) --
- ----------------------------------------------------------
Total deferred tax liabilities (2,712) --
- ----------------------------------------------------------
Net deferred tax assets $30,066 $17,537
- ----------------------------------------------------------
- ----------------------------------------------------------
The Company believes its future income will be sufficient to realize its
net deferred tax assets.
A reconciliation of income tax expense provided at the federal statutory
rate (35% in 1995 and 1994, and 34% in 1993) to income tax expense follows:
- ----------------------------------------------------------------
(in thousands) 1995 1994 1993
- ----------------------------------------------------------------
Income tax expense
computed at federal
statutory rate $44,605 $20,005 $9,183
Tax credits used (2,800) (701) (1,575)
State income taxes,
net of federal
tax benefits 2,502 2,322 1,140
Foreign sales
corporation tax
benefits (5,250) (2,038) (1,099)
Other (824) (187) 454
- ----------------------------------------------------------------
$38,233 $19,401 $8,103
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Income from foreign operations for fiscal years 1995, 1994 and 1993 was
$17,830,000, $12,859,000, and $3,235,000, respectively.
-------------------------------------------
O Acquisition of Drytek, Inc.
On July 1, 1993, the Company purchased the assets and assumed the liabilities
of Drytek, Inc. (a Massachusetts corporation and wholly-owned subsidiary of
General Signal Corporation (GSC), a New York corporation). The purchase price
was approximately $5,800,000 in cash. The assets acquired consisted primarily
of accounts receivable, inventory and fixed assets, while the liabilities
assumed consisted primarily of trade accounts payable and other specified
general liabilities. Drytek, Inc. was a manufacturer of semiconductor etch
equipment since its founding in 1980.
-------------------------------------------
P Litigation
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 infringed 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.
Lam Research Corporation / 31
Report of Ernst & Young LLP, Independent Auditors
Board of Directors
Lam Research Corporation
Fremont, California
We have audited the accompanying consolidated balance sheets of Lam Research
Corporation as of June 30, 1995 and 1994, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the
three years in the period ended June 30, 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Lam Research
Corporation at June 30, 1995 and 1994, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
June 30, 1995, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
August 3, 1995
San Jose, California
Lam Research Corporation / 32
Corporate Directory
Board of Directors
Roger D. Emerick
Chairman of the Board and
Chief Executive Officer
Lam Research Corporation
Osamu Kano*
Chairman of Lam Research Co., Ltd.
and President of Innoquest Corporation
David G. Arscott*+
General Partner
Compass Technology Partners
Jack R. Harris*+
President
Optical Specialties Inc.
Grant M. Inman*+
General Partner
Inman & Bowman
Officers
Roger D. Emerick
Chairman of the Board
Chief Executive Officer
Henk J. Evenhuis
Senior Vice President, Finance,
Chief Financial Officer
Alexander M. Voshchenkov
Vice President and
Chief Technical Officer
Raymond L. Degner
Senior Vice President
Robert C. Fink
Executive Vice President
G. Dennis Key
Vice President
Richard H. Lovgren
Vice President, General Counsel
and Secretary
Larry N. Stewart
Vice President
Hsui-Sheng (Way) Tu
Vice President
Thomas O. Yep
Vice President
Corporate Headquarters
Lam Research Corporation
4650 Cushing Parkway
Fremont, California 94538
Telephone: (510) 659-0200
Fax: (510) 572-6454
Worldwide Sales and Support Offices
DOMESTIC
Tempe, Arizona
Costa Mesa, California
Fremont, California
San Jose, California
Colorado Springs, Colorado
Bradford, Connecticut
Danbury, Connecticut
Boise, Idaho
Franklin, Massachusetts
Wilmington, Massachusetts
Albuquerque, New Mexico
Fishkill, New York
Aloha, Oregon
Austin, Texas
Richardson, Texas
Williston, Vermont
Vancouver, Washington
INTERNATIONAL
Beijing, China
Shanghai, China
Grenoble, France
Mennecy, France
Achenmuhle, Germany
Leixlip, County Kildare, Ireland
Milan, Italy
Jerusalem, Israel
Sagamihara, Japan
CheonAn, Korea
East Kilbride, Scotland
Singapore
Hsin-Chu, Taiwan
Legal Counsel
Wilson, Sonsini, Goodrich
& Rosati, P.C.
Palo Alto, California
Independent Auditors
Ernst & Young LLP
San Jose, California
Transfer Agent and Registrar
For a response to questions regarding
misplaced stock certificates, changes
of address, or the consolidation of
accounts, please contact the Company's
transfer agent.
Chemical Mellon Shareholders Services
50 California Street, 10th Floor
San Francisco, California 94111
(800) 356-2017
Investor Relations
Lam Research Corporation welcomes
inquiries from its stockholders and other
interested investors. For further
information on the Company's activities,
additional copies of this report,
the Form 10-K or other financial materials,
please contact:
Lam Research Corporation
Investor Relations Department
4650 Cushing Parkway
Fremont, California 94538
(510) 572-6820
Stock Listing
The Company's Common Stock is
traded in the over-the-counter market
on the Nasdaq National Market under
the symbol LRCX.
Annual Meeting
The annual meeting of stockholders
will be held at 10:00 a.m. on Thursday,
October 26, 1995 at the Company's
corporate headquarters.
*Design: Heiney & Craig, Inc., San Francisco
*Member of Audit Committee
+Member of Compensation Committee