UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 1996
Commission File No. 0-12933
LAM RESEARCH CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 94-2634797
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4650 CUSHING PARKWAY, FREMONT, CALIFORNIA 94538
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 659-0200
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
------- -------
As of March 31, 1996 there were 27,538,664 shares of Registrant's Common Stock
outstanding.
INDEX
Page
No.
----
PART I. FINANCIAL INFORMATION ................................1
Item 1. Financial Statements (unaudited)......................1
Condensed Consolidated Balance Sheets............1
Condensed Consolidated Statements of Income......2
Condensed Consolidated Statements of Cash Flows..3
Notes to Condensed Consolidated Financial
Statements..................................4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................7
Results of Operations............................7
Liquidity and Capital Resources..................9
Risk Factors....................................10
PART II. OTHER INFORMATION....................................14
Item 1. Legal Proceedings....................................14
Item 6. Exhibits and Reports on Form 8-K.....................15
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except per share data)
March 31, June 30,
1996 1995
(Unaudited) (Note)
----------- --------
Assets
Cash and cash equivalents $21,183 $43,675
Short-term investments 118,302 57,334
Accounts receivable, net 249,439 195,682
Inventories 289,888 171,401
Prepaid expenses and other assets 16,851 25,263
Deferred income taxes 34,428 32,778
----------- --------
Total Current Assets 730,091 526,133
Equipment and leasehold improvements, net 162,404 117,571
Restricted cash - 25,024
Other assets 26,615 13,921
----------- --------
Total Assets $919,110 $682,649
----------- --------
----------- --------
Liabilities and Stockholders' Equity
Trade accounts payable $152,102 $82,542
Accrued expenses and other
current liabilities 137,787 98,633
Current portion of long-term debt and
capital lease obligations 23,844 7,572
----------- --------
Total Current Liabilities 313,733 188,747
Long-term debt and capital lease
obligations, less current portion 100,075 95,928
Deferred income taxes 2,712 2,712
----------- --------
Total Liabilities 416,520 287,387
Preferred stock: 5,000 shares authorized;
none outstanding
Common Stock at par value of $.001 per share
Authorized -- 90,000 shares; issued and
outstanding 27,539 shares at March 31,
1996 and 27,275 shares at June 30, 1995 28 27
Additional paid-in capital 229,462 224,730
Retained earnings 273,100 170,505
----------- --------
Total Stockholders' Equity 502,590 395,262
----------- --------
$919,110 $682,649
----------- --------
----------- --------
Note -- The Condensed Consolidated Balance Sheet at June 30, 1995 has
been derived from the audited financial statements at that
date.
See Notes to condensed consolidated financial statements
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LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
-------------------- ---------------------
March 31, March 31,
1996 1995 1996 1995
-------- -------- -------- --------
Net sales $342,335 $216,465 $884,277 $545,162
Royalty income 4,304 2,549 16,123 8,104
-------- -------- -------- --------
Total revenue 346,639 219,014 900,400 553,266
Costs and expenses:
Cost of goods sold 178,669 112,049 461,883 285,590
Research and development 46,861 31,921 121,898 84,058
Selling, general and
administrative 63,354 39,586 163,516 98,841
-------- -------- -------- --------
Operating income 57,755 35,458 153,103 84,777
Other expense, net 922 40 2,239 810
-------- -------- -------- --------
Income before income taxes 56,833 35,418 150,864 83,967
Income taxes 18,184 10,625 48,269 25,190
-------- -------- -------- --------
Net income $38,649 $24,793 $102,595 $58,777
-------- -------- -------- --------
-------- -------- -------- --------
Net income per share
Primary $1.37 $0.89 $3.63 $2.18
-------- -------- -------- --------
-------- -------- -------- --------
Fully diluted $1.28 $0.83 $3.40 $2.05
-------- -------- -------- --------
-------- -------- -------- --------
Number of shares used in
per share calculations
Primary 28,200 27,900 28,300 26,950
-------- -------- -------- --------
-------- -------- -------- --------
Fully diluted 30,850 30,600 30,950 29,760
-------- -------- -------- --------
-------- -------- -------- --------
See Notes to condensed consolidated financial statements.
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LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
-----------------------------
March 31, March 31,
1996 1995
---------- ---------
Cash flows from operating activities:
Net income $102,595 $58,777
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 23,287 15,360
Change in certain working capital
accounts (68,806) (73,692)
---------- ---------
Net cash provided by operating
activities 57,076 445
Cash flows from investing activites:
Capital expenditures (52,114) (50,504)
Purchase of short-term investments (332,065) --
Sale of short-term investments 271,097 --
Restricted cash 25,024 (2,618)
Proceeds from sales of securities 12,038 --
Other (12,694) (3,738)
---------- ---------
Net cash used in investing activities (88,714) (56,860)
Cash flows from financing activities:
Sale of stock, net of issuance
costs 4,733 119,669
Proceeds from borrowings under line
of credit 15,000 --
Proceeds from long-term debt -- 7,711
Principal payments on long-term debt
and capital lease obligations (8,959) (3,353)
Other (1,628) --
---------- ---------
Net cash provided by financing
activities 9,146 124,027
---------- ---------
Net increase (decrease) in cash and
cash equivalents (22,492) 67,612
Cash and cash equivalents at beginning
of period 43,675 24,092
---------- ---------
Cash and cash equivalents at end of
period $21,183 $91,704
---------- ---------
---------- ---------
See notes to condensed consolidated financial statements.
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LAM RESEARCH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring adjustments) considered necessary for a fair
presentation have been included. The accompanying unaudited condensed
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements of Lam Research Corporation (the "Company")
for the year ended June 30, 1995, which are included in the Annual Report on
Form 10-K, File number 0-12933.
The results of operations for the three and nine month periods ended March
31, 1996 are not necessarily indicative of the results that may be expected for
the entire fiscal year ending June 30, 1996.
NOTE B -- INVENTORIES
Inventories consist of the following:
March 31, June 30,
1996 1995
--------- --------
(in thousands)
Raw materials $142,594 $80,910
Work-in-process 117,266 73,183
Finished goods 30,028 17,308
--------- --------
$289,888 $171,401
--------- --------
--------- --------
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NOTE C -- EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements consist of the following:
March 31, June 30,
1996 1995
--------- --------
(in thousands)
Equipment 105,478 $80,910
Furniture & fixtures 40,335 25,372
Leasehold improvements 91,510 64,707
--------- --------
237,323 170,989
Accumulated depreciation and
amortization (74,919) (53,418)
--------- --------
$162,404 $117,571
--------- --------
--------- --------
NOTE D -- INVESTMENTS
In November 1995, the Financial Accounting Standards Board staff issued a
Special Report, "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities". In accordance with
provisions in that Special Report, the Company elected, in December 1995, to
reclassify all of its held-to-maturity securities to available-for-sale. At the
time of transfer, the amortized cost of those securities was $24.1 million,
which approximates the fair value.
NOTE E -- LINE OF CREDIT
During the quarter ended December 31, 1995, the Company entered into a
syndicated bank line of credit totaling $210.0 million, which expires in
December 1998. At March 31, 1996 the Company had borrowed $15.0 million against
the line of credit.
NOTE F -- NET INCOME PER SHARE
For the three and nine month periods ended March 31, 1996 and 1995, primary
net income per share is calculated using the weighted average number of shares
of common stock and common stock equivalents outstanding during the period. The
common stock equivalents include shares issuable upon the assumed exercise of
stock options reflected under the treasury stock method. In addition, fully
diluted net income per share reflects the assumed conversion of the Company's
convertible subordinated debentures at the beginning of each period, and also
adds the interest expense incurred on the debentures, net of income tax effect,
to the net income amount for use in the fully diluted calculation.
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NOTE G -- OTHER EXPENSE/(INCOME), NET
The significant components of other expense, net are as follows (in
thousands):
Three Months Ended Nine Months Ended
March 31, March 31,
1996 1995 1996 1995
Interest Expense $1,926 $1,794 $6,026 $4,804
Interest Income (1,655) (1,518) (4,393) (3,607)
Other 651 (236) 606 (387)
----------------- ------------------
$ 922 $ 40 $2,239 $ 810
NOTE H -- SUBSEQUENT EVENT
On April 2, 1996, the Company called for the redemption on May 3, 1996 of
all of its 6% convertible subordinated debentures due 2003. At March 31, 1996
the carrying value of the debentures was approximately $66.0 million. These
debentures net of debt issuance costs were converted into 2,640,000 shares of
the Company's common stock.
NOTE I -- LITIGATION
See Part II, item 1 for discussion of litigation.
-6-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information in this discussion contains forward looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and is subject to the Safe Harbor provisions created by that statute.
Such statements are subject to certain risks and uncertainties, including those
discussed below, that could cause actual results to differ materially from those
projected. Readers are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date hereof. Forward-looking
statements are indicated by an asterisk (*).
The components of the Company's statements of income, expressed as a
percentage of total revenue, are as follows:
Three Months Nine Months
Ended Ended
March 31, March 31,
1996 1995 1996 1995
-------------- --------------
Net Sales 98.8% 98.8% 98.2% 98.5%
Royalty income 1.2 1.2 1.8 1.5
-------------- --------------
100.0 100.0 100.0 100.0
Cost of goods sold 51.5 51.2 51.3 51.6
Research and development 13.5 14.6 13.5 15.2
Selling, general
& administrative 18.3 18.0 18.2 17.9
-------------- --------------
Operating income 16.7 16.2 17.0 15.3
Other expense, net 0.3 -- 0.2 0.1
-------------- --------------
Income before income taxes 16.4 16.2 16.8 15.2
Income taxes 5.2 4.9 5.4 4.6
-------------- --------------
Net income 11.2% 11.3% 11.4% 10.6%
-------------- --------------
-------------- --------------
RESULTS OF OPERATIONS
Net sales for the three and nine month periods ended March 31, 1996
increased by 58% and 63%, respectively, over the comparable prior year periods.
Increased unit sales of Transformer Coupled Plasma-TM- (TCP-TM-) and Rainbow-TM-
systems accounted for approximately 76% of the sales increase for the third
quarter of fiscal year 1996 as compared to the comparable prior year period.
The Company's TCP etch products and its Rainbow 4500 oxide etch system
experienced the highest net sales increase during the three and nine month
periods ended March 31, 1996 compared to the prior year periods. Sales to
foreign
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customers increased to 60% of net sales for both the three and nine month
periods ended March 31, 1996, from 58% and 51%, respectively, of net sales
for the same periods of the prior year, with the Asia Pacific and Japan regions
experiencing the highest percentage increase. Net sales to Europe were also
stronger than in the year-ago periods. Spares and service revenue for the three
and nine month periods of fiscal 1996 increased 41% and 58%, respectively, as
compared to the same periods of the prior fiscal year, as a result of increases
in the Company's installed machine base. The semiconductor industry is
presently experiencing volatility in terms of product demand and product
pricing. As a result, semiconductor manufacturers are exercising caution in
making their capital equipment decisions and have in certain cases rescheduled
or cancelled planned capital purchases. As a result of the uncertainties of
this current market environment, the Company anticipates that its quarterly
revenues and profits will not continue to grow as they have in the past several
quarters and may fluctuate from quarter to quarter.*
Royalty income increased by 69% from the year-ago quarter due to
improvement in the Japanese semiconductor market, which resulted in increased
sales of products incorporating the Company's technology being licensed by Tokyo
Electron Limited (TEL) and Sumitomo Metal Industries, Ltd. (SMI). Royalty
income for the third fiscal quarter of 1996 was lower than the immediately
preceding quarter, and the Company expects royalty income will continue to
fluctuate on a quarterly basis.*
The Company's gross margin percentage decreased to 48.5% in the third
quarter of fiscal 1996 as compared to 48.8% in the comparable quarter of fiscal
1995, while the gross margin percentage increased to 48.7% for the nine month
period ended March 31, 1996 as compared to 48.4% for the nine months ended March
31, 1995. The decrease in gross margin percentage during the third quarter of
fiscal 1996 as compared to the year-ago period was due in part to product mix,
as the Company sold a higher percentage of lower margin TCP and Alliance
machines and a lower percentage of higher margin Rainbow machines. The Company
anticipates that gross margin percentages will decline somewhat in succeeding
quarters due in part to the increased market acceptance of the newer technology
Alliance and TCP products, which currently have lower margins than the Company's
Rainbow products.* The Company is actively pursuing margin improvement programs
on these products.
Research and development (R&D) expense increased for the three and nine
month periods ended March 31, 1996 by 47% and 45% over the prior year periods,
but as a percentage of total revenue was lower than the comparable prior year
period. The increased expense was due to continued expenditures on advanced
etch applications, continued development of CVD technologies, including Deep
SubMicron (DSM-TM-) 9800 (formerly Integrity-Registered Trademark-) and Deep
SubMicron(DSM-TM-) 9900 (formerly Epic-TM-), further enhancements of the TCP,
Alliance and Rainbow products and continued
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development of the Company's flat panel display technology. Although the
Company has increased engineering headcount and spending, these expenditures
have increased at a slightly slower rate than the Company's revenue. During
the quarter ended December 31, 1995, construction began on an additional
engineering facility at the Company's Fremont campus, which the Company will
occupy under an operating lease. This facility is expected to be operational
by the end of the current fiscal year.*
Selling, general and administrative (SG&A) expenses for the three and
nine month periods ended March 31, 1996 increased by 60% and 65%,
respectively, over prior year periods. The Company has added employees in
all customer support, sales and administration areas to accommodate the
increased sales volume. During the quarter ended March 31, 1996, the Company
experienced increased expenditures for field service, compared to the same
period of the prior fiscal year, to accommodate the increasing installed
machine base; and for information technology support related to the occupancy
of new worldwide facilities. Due to the increased revenue from foreign
sales; SG&A expenditures by the Company's foreign subsidiaries rose at a rate
slightly higher than in the United States. During the third quarter of
fiscal 1996, the Company relocated and began the expansion of its Taiwan
facility, which will include a product demonstration laboratory and a
training facility. In July 1995, the Company opened a new manufacturing
customer support and training center facility in Korea and is expanding its
facilities in Japan.
The effective tax rate for the three month and nine month fiscal 1996
periods is 32% compared to 30% for the prior year periods due primarily to the
expiration of the federal research and development credit.
As a result of the current business environment, the Company has
implemented a number of expense and capital spending programs to manage
operating costs.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $57.1 million for the nine
months ended March 31, 1996, derived from income before depreciation and
amortization expenses totaling $102.6 million, offset by the increases in
inventories and accounts receivable related to the sales volume increase. In
addition, $46.6 million was provided from the sale of yen-denominated Japanese
receivables to a bank (under an agreement amended during the third quarter of
fiscal 1996 under which the Company may sell up to a total of 6.0 billion yen of
yen-denominated, $56.7 million at March 31, 1996, Japanese receivables to the
bank). Capital expenditures for the nine month period were $52.1 million,
primarily for new facility leasehold improvements, and furnishings at the
Fremont campus, Japan facility, Taiwan facility and the new manufacturing
facility in Korea. The
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Company had net purchases of short-term investments of $61.0 million for the
nine-month period. During the third quarter of fiscal year 1996, the Company
renegotiated a lease agreement related to two of its research and development
buildings and as a result, $25.0 million of previously restricted investments
("restricted cash") became unrestricted and as a result have been included in
short-term investments at March 31, 1996. Cash receipts from investing
activities of $12.0 million were provided from the sale of Brooks Automation,
Inc. securities. Also contributing to the overall use of cash were payments of
$9.0 million relating to long-term debt and capital lease obligations.
As of March 31, 1996, the Company had $139.5 million in cash, cash
equivalents and short-term investments compared with $101.0 million at June 30,
1995. The Company has a total of $210.0 million available under a syndicated
bank line of credit which expires in December 1998. At March 31, 1996, the
Company had borrowed $15.0 million against the line of credit.
The Company believes that its cash, cash equivalents, short-term
investments and available line of credit at the end of the third quarter of
fiscal 1996 are adequate to support current levels of operations for at least
the next twelve months.*
RISK FACTORS
HIGHLY COMPETITIVE INDUSTRY
The semiconductor processing equipment industry is highly competitive. The
Company faces substantial competition throughout the world. The Company
believes that to remain competitive, it will require significant financial
resources in order to offer a broad range of products, to maintain customer
service and support centers worldwide, and to invest in product and process
research and development. In addition, the Company intends to continue to
invest substantial resources to increase sales of its systems to Japanese
semiconductor manufacturers, who represent a substantial portion of the
worldwide semiconductor market and whose market is difficult for non-Japanese
equipment companies to penetrate. The Company believes that the semiconductor
equipment industry is becoming increasingly dominated by large manufacturers who
have the resources to support customers on a worldwide basis, and certain of the
Company's competitors have substantially greater financial resources and more
extensive engineering, manufacturing, marketing and customer service and support
capabilities than the Company. In addition, there are smaller emerging
semiconductor equipment companies which provide innovative technology. The
Company expects its competitors to continue to improve the design and
performance of their current products and processes and to introduce new
products and processes with improved price and
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performance characteristics. If the Company's competitors enter into strategic
relationships with leading semiconductor manufacturers covering etch or
deposition products similar to those sold by the Company, its ability to sell
its products to those manufacturers could be adversely affected. No assurance
can be given that the Company will continue to compete successfully in the
United States or worldwide.
DEPENDENCE ON NEW PRODUCTS AND PROCESSES; RAPID TECHNOLOGICAL CHANGE
Semiconductor manufacturing equipment and processes are subject to rapid
technological change. The Company believes that its future success will depend
in part upon its ability to continue to enhance its existing products and their
process capabilities and to develop and manufacture new products with improved
process capabilities. As a result, the Company expects to continue to make
significant investments in research and development. The Company also must
manage product transitions successfully, as introductions of new products could
adversely affect sales of existing products. There can be no assurance that
future technologies, processes or product developments will not render the
Company's current product offerings obsolete or that the Company will be able to
develop and introduce new products or enhancements to its existing products and
processes in a timely manner which satisfy customer needs or achieve market
acceptance. The failure to do so could adversely affect the Company's business.
Furthermore, if the Company is not successful in the development of advanced
processes or equipment for manufacturers with whom it has formed strategic
alliances, its ability to sell its products to those manufacturers would be
adversely affected. In addition, in connection with the development of the
Company's new products, the Company invests in high levels of preproduction
inventory, and the failure to complete development and commercialization of
these new products in a timely manner could result in inventory obsolescence,
which could have an adverse effect on the Company's financial results.
CURRENT VOLATILITY IN THE SEMICONDUCTOR INDUSTRY
The Company's business depends upon the capital expenditures of
semiconductor manufacturers, which in turn depend on the current and anticipated
market demand for integrated circuits and products utilizing integrated
circuits. The semiconductor industry has been cyclical in nature and
historically experienced periodic downturns. While the semiconductor industry
has not recently followed these cycles, it is presently experiencing volatility
in terms of product demand and product pricing. This volatility has had an
adverse effect on the semiconductor industry's demand for semiconductor
processing equipment. No assurance can be given that the Company's revenue and
operating
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results will not be adversely affected if downturns in the semiconductor
industry occur in the future. In addition, the need for continued investments
in research and development, substantial capital equipment requirements and
extensive ongoing worldwide customer service and support capability will limit
the Company's ability to reduce expenses. Accordingly, there is no assurance
that the Company will be able to remain profitable in the future.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company's revenue and operating results may fluctuate from quarter to
quarter. The Company derives its revenue primarily from the sale of a
relatively small number of high-priced systems which can range in price from
$300,000 to over $2 million. Some of these systems are ordered and shipped
during the same quarter. The Company's results of operations for a particular
quarter could be adversely affected if anticipated orders for even a small
number of systems were not received in time to enable shipment during the
quarter, if anticipated shipments were delayed or cancelled by one or more
customers or if shipments were delayed due to manufacturing difficulties. In
particular, the Company has experienced certain cases of rescheduling or
cancellation of orders. The Company's revenue and operating results may also
fluctuate due to the mix of products sold, the channel of distribution or the
level of royalty income from the Company's Japanese licenses. The Company
generally realizes a higher margin on sales of its mature etch products and on
revenue from service and spare parts than on sales of new TCP and Alliance
products. Newer products usually have lower margins in the initial phase of
production. In addition, direct sales have higher margins than sales through
the Company's distributor. Increases or decreases in royalty income will also
have a disproportionate impact on operating income and will continue to
fluctuate on a quarterly basis. The impact of these and other factors on the
Company's revenues and operating results in any future periods is difficult for
the Company to forecast.
DEPENDENCE ON KEY SUPPLIERS
Certain of the components and subassemblies included in the Company's
products are obtained from a single supplier or a limited group of suppliers.
The Company believes that alternative sources could be obtained and qualified to
supply these products. Nevertheless, a prolonged inability to obtain certain
components could have an adverse effect on the Company's operating results and
could result in damage to customer relationships.
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ENVIRONMENTAL REGULATIONS
The Company is subject to a variety of governmental regulations related to
the discharge or disposal of toxic, volatile, or otherwise hazardous chemicals
used in the manufacturing process. The Company believes that it is in
compliance with these regulations and that it has obtained all necessary
environmental permits to conduct its business, which permits generally relate to
the disposal of hazardous wastes. Nevertheless, the failure to comply with
present or future regulations could result in fines being imposed on the
Company, suspension of production or cessation of operations. Such regulations
could require the Company to acquire significant equipment or to incur
substantial other expenses to comply with environmental regulations. Any
failure by the Company to control the use of, or adequately restrict the
discharge or disposal of hazardous substances could subject the Company to
future liabilities.
INTERNATIONAL SALES
The Company anticipates that export sales will continue to account for a
significant portion of its net sales. Additionally, the Company continues to
expand its international operations, including expansion of its facilities in
Asia. As a result, a significant portion of the Company's sales and operations
will be subject to certain risks, including tariffs and other barriers,
difficulties in staffing and managing foreign subsidiary and branch operations,
difficulties in managing distributors, potentially adverse tax consequences and
the possibility of difficulty in accounts receivable collection. There can be
no assurance that any of these factors will not have a material adverse effect
on the Company's business, financial condition and results of operations.
INTELLECTUAL PROPERTY MATTERS
From time to time, the Company is notified that it may be in violation of
certain patents. In such cases, the Company's policy is to defend against the
claims or negotiate licenses where considered appropriate. However, no
assurance can be given that it will be able to obtain necessary licenses on
commercially reasonable terms.
The Company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
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PART II. OTHER INFORMATION
ITEM 1. 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. No trial date has been set. 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 if decided against the Company, will
not have a material adverse effect on the Company's consolidated financial
position, operating results or cash flows.
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.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 10.29 Operating Lease Agreement between Lam Research Corporation
and the Industrial Bank of Japan, Limited dated March 27,
1996
Exhibit 11.1 Statement Re: Computation of Earnings Per
Share
Exhibit 27 Financial Data Schedule
(b) No reports on Form 8-K were filed by the Registrant during
the quarter ended March 31, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 15, 1996
LAM RESEARCH CORPORATION
By:\s\ Henk J. Evenhuis
--------------------------------
Henk J. Evenhuis, Executive Vice
President, Finance & Chief
Financial Officer
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