EXHIBIT 99.1
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FOR IMMEDIATE RELEASE
CONTACTS:
David Ringler Pat O'Connor Kathleen Bela
Lam Research Corp. OnTrak Systems, Inc. OnTrak Systems, Inc
Phone: 510-572-6848 Phone: 408-952-5470 Phone: 408-952-5502
Fax: 510-572-6454 Fax 408-952-5501 Fax: 408-952-5501
e-mail: david.ringler@lamrc.com
LAM RESEARCH TO ACQUIRE ONTRAK SYSTEMS
IN TRANSACTION VALUED AT $225 MILLION
-- ONTRAK'S BAGLEY TO BECOME CEO OF LAM RESEARCH --
-- COMBINATION OF LAM AND ONTRAK SYSTEMS AND APPOINTMENT OF JAMES BAGLEY
"POSITION LAM RESEARCH FOR FUTURE PROFITABILITY AND GROWTH,"
SAYS LAM CHAIRMAN ROGER EMERICK --
-- LAM EXPECTS TO REPORT THIRD-QUARTER LOSS --
FREMONT and SAN JOSE, Calif. - March 24, 1997 - Lam Research Corporation
(Nasdaq: LRCX), a world leader in the manufacture of semiconductor etch and
chemical vapor deposition (CVD) equipment, and OnTrak Systems Inc. (Nasdaq:
ONTK), the leading supplier of chemical mechanical planarization (CMP) cleaning
systems used to fabricate semiconductor devices, today jointly announced that
they have signed a definitive agreement under which Lam will acquire OnTrak in a
tax-free pooling transaction valued at about $225 million, based on today's
closing price of Lam common stock. The combination of Lam and OnTrak will
establish Lam as a major participant in CMP, which, with a 31 percent projected
compound annual growth rate through 2001 according to Dataquest, is the most
rapidly growing segment of the $21 billion global semiconductor equipment
industry.
Under the terms of the agreement, which was unanimously approved today by the
boards of directors of both companies, each of the shares and options of OnTrak
outstanding will be exchanged for 0.83 shares (or options in the case of OnTrak
options) of Lam, in which case stockholders of OnTrak will hold approximately 19
percent of Lam after the merger
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is completed. If Lam's average stock price during a specified period prior to
closing falls below $30 per share, and if that average price represents more
than a 15 percent decline relative to an index of semiconductor equipment
companies during the period, Lam will have the option to fix the consideration
at $24.90 per OnTrak share by adjusting the exchange ratio upwards to equal
$24.90 divided by the average value of Lam's common stock over a specified
period preceding the closing. If Lam does not fix the consideration, OnTrak will
have the right to terminate the transaction.
Completion of the transaction is subject to the approval of Lam and OnTrak
stockholders, certain regulatory approvals and other customary closing
conditions. OnTrak stockholders representing 26 percent of that company's common
stock have committed to support the transaction.
Upon completion of the transaction, which is anticipated by mid-year, James W.
Bagley, who served as chief operating officer and vice chairman of Applied
Materials, Inc. before joining OnTrak Systems, Inc. as chairman and CEO in June
1996, will become Lam's chief executive officer, and will join Roger Emerick in
the newly created Office of the Chairman. Way Tu, president of Lam, will report
to Mr. Bagley.
Lam's Board of Directors will be expanded from five to seven members upon
completion of the transaction with the addition of Mr. Bagley and Richard J.
Elkus, Jr., currently a member of the OnTrak Board of Directors.
Mr. Emerick said: "The strategic business combination of Lam and OnTrak creates
a company with leading positions in three processes essential to the production
of the most advanced deep-submicron semiconductor devices: etch, CVD and CMP,
which includes both polishing and cleaning. Lam is a global leader in etch and
CVD, a $6 billion combined market expected to grow at an annual rate of about 13
percent over the next five years. OnTrak is the industry leader in the cleaning
segment of CMP, with more than 60 percent global market share, and is also
currently introducing a next-generation
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CMP polishing tool. This combination provides our customers with the most cost-
effective integrated process solutions available. Under the proven leadership of
Jim Bagley, it positions Lam for a new level of growth and profitability," Mr.
Emerick said.
"OnTrak's combination with Lam will produce several benefits," said Mr. Bagley.
"For example, Lam's global infrastructure of more than forty regional sales,
service and technical support offices will allow us to accelerate our combined
introduction to customers of complementary etch, CVD and CMP process solutions.
And Lam's standard-setting research organization offers significant leverage to
OnTrak's ongoing product development programs. I am particularly pleased by the
prospect of working closely with Roger Emerick, who has grown Lam into the
world's fourth-largest semiconductor capital equipment company. Roger and I
share the mutual goal of aggressively moving Lam into the number-one industry
position," Mr. Bagley said.
-- LAM EXPECTS TO REPORT THIRD-QUARTER LOSS --
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Separately, Lam said that as a result of a writedown reflecting a faster-than-
anticipated customer transition from Lam's single-chamber etch platforms to its
next-generation etch cluster tools and a $10-15 million revenue shortfall
primarily related to customer-requested shipment delays, the company now expects
to report a loss for its third quarter ending March 31, 1997, of approximately
$1.40 per share. Accelerating customer demand for Lam's deep-submicron etch and
CVD tools, including the company's advanced Alliance platform, will require
higher-than-anticipated reserve provisions for excess and obsolete manufacturing
and spare parts inventories and additional provisions for installation and
warranty costs. Lam will announce its third-quarter results on Tuesday, April
15, 1997, pre-market.
"The financial steps we have taken reflect our determination to deal decisively
with the effects of the faster-than-expected transition to our current line of
next-generation, high-density products and thereby build a solid platform for
future profitability and growth," Mr. Emerick stated.
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ABOUT THE COMPANIES
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OnTrak Systems is the leading supplier of chemical mechanical planarization
equipment used to clean silicon wafers that yield up to several hundred advanced
semiconductor devices each. These complex chips feature design rules of 0.5
microns and below and can include several stacked insulation and metal layers.
Using chemical mechanical planarization to polish and clean these layers allows
chipmakers to stack more layers precisely, resulting in better device
performance. The company currently is introducing a next-generation proprietary
CMP polishing system that features a linear technology for achieving increased
local and global planarity (flatness across each chip die and the entire wafer
surface) on the wafer. Key customers for the company's cleaning products include
Intel, IBM, Siemens, and Motorola. OnTrak revenues for fiscal year 1996 ended
June 30, 1996 were $55.8 million and were $65.3 million for calendar year 1996.
OnTrak is located in San Jose, Calif. and employs approximately 350 people.
Founded in 1980, Lam is headquartered in Fremont, Calif., and maintains customer
support centers throughout the United States, Europe, Japan and the Asia/Pacific
region to support its global customer base. Lam's broad product offerings are
focused on etch and deposition, two of the most vital steps in the fabrication
of current and future integrated circuits. The company's common stock trades on
the Nasdaq National Market under the symbol LRCX. Lam's World Wide Web address
is: http://www.lamrc.com.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION ACT OF 1995:
This press release contains certain forward-looking statements, including, but
not limited to, Lam's acquisition of OnTrak Systems, the terms and effect of
such acquisition, the size and growth of the semiconductor equipment market and
Lam, effect of the acquisition on Lam's management structure, Board and
workforce, synergies between the two companies, and Lam's anticipated third
quarter loss. These statements are subject to various risks and uncertainties
that could cause results to differ materially, including but not limited to
governmental or market opposition to the proposed merger, a significant drop in
Lam's stock price, a continued downturn in the semiconductor industry, customer
acceptance of
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the combined companies and their products, including OnTrak's CMP polishing
tool, additional delays in shipment or other factors that could increase the
size of the anticipated loss, and other risks detailed from time to time in the
companies' SEC reports, including Lam's Form 10-Q report for the quarter ended
December 31, 1996 and OnTrak's report on Form 10-Q for the quarter ended
December 31, 1996. The companies assume no obligation to update the information
in this release.
Nothing herein shall constitute an offer to sell or a solicitation of an offer
to purchase common stock of Lam, or a solicitation of proxies from any
shareholder of Lam or OnTrak. Offers to sell or purchase shares, or
solicitation of proxies, shall only be made pursuant to a definitive prospectus
and/or definitive proxy materials to be mailed to shareholders at a later date.
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