What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-08-24 compared with 2021-08-17 · 189 added, 194 removed, 1105 unchanged (26% of the section changed)

Financial Statements and Supplementary Data

There were no retrospective changes to the Consolidated Statements of Operation for any quarters in the two most recent fiscal years that would require disclosure under Item 302 of Regulation S-K.

Index to Consolidated Financial Statements

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Notes to Consolidated Financial Statements 45

Reports of Independent Registered Public Accounting Firm 74

Reports of Independent Registered Public Accounting Firm (PCAOB ID:

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Operating income 5,381,822 4,482,023 2,673,802

Other expense, net ( 111,219 ) ( 98,824 ) ( 18,161 )

Other income (expense), net ( 188,708 ) ( 111,219 ) ( 98,824 )

Income before income taxes 5,193,114 4,370,804 2,574,978

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Net unrealized (losses) gains during the period ( 4,638 ) ( 4,098 ) 1,842

Net losses (gains) reclassified into net income 786 935 ( 199 )

Net losses reclassified into net income 1,390 786 935

( 3,248 ) ( 3,312 ) 2,777

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Commitments and contingencies

Temporary equity, convertible notes — 10,995

Stockholders’ equity:

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CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from issuance of long-term debt $ — $ 1,974,651 $ 2,476,720

Principal payments on long-term debt and finance lease obligations and payments for debt issuance costs $ ( 11,889 ) $ ( 862,060 ) $ ( 667,537 )

Net (repayment) from commercial paper — — ( 361,754 )

Net proceeds from issuance of long-term debt — — 1,974,651

Proceeds from borrowings on revolving credit facility — — 1,250,000

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Effect of conversion of convertible notes 4,468 4 ( 12,328 ) — — — ( 12,324 )

Exercise of warrants 4,105 4 ( 12 ) — — — ( 8 )

Reclassification from temporary to permanent equity — — 38,444 — — — 38,444

Adoption of ASU 2016-02 — — — — — 3,018 3,018

— — — — — 139,355 139,355

Adoption of ASU 2016-16

— — — — — ( 443 ) ( 443 )

Adoption of ASU 2018-02

— — — — ( 2,227 ) 2,227 —

Net income — — — — — 2,251,753 2,251,753

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Adoption of ASU 2018-18 — — — — — 1,157 1,157

— — — — — 3,018 3,018

Net income — — — — — 3,908,458 3,908,458

Other comprehensive loss — — — — ( 30,181 ) — ( 30,181 )

Other comprehensive income — — — — 30,083 — 30,083

Cash dividends declared ($ 5.20 per common share)

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Equity-based compensation expense — — 259,064 — — — 259,064

Effect of conversion of convertible notes 1,416 2 24,869 — — — 24,871

Reclassification from temporary to permanent equity — — 10,995 — — — 10,995

Adoption of ASU 2018-18

— — — — — 1,157 1,157

Net income — — — — — 4,605,286 4,605,286

Other comprehensive income — — — — 30,083 — 30,083

Other comprehensive loss — — — — ( 45,854 ) — ( 45,854 )

Cash dividends declared ($ 6.00 per common share)

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For these and other reasons, the Company’s results of operations for fiscal years 2022, 2021, and 2020 may not necessarily be indicative of future operating results.

Reclassification:

Certain amounts for the fiscal year 2021 footnotes have been reclassified to conform to the fiscal year 2022 presentation.

Summary of Significant Accounting Policies

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Revenue from services is recognized over time as services are completed or ratably over the contractual period of generally one year or less.

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Inventory Valuation:

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Finished goods are reported as inventories until the point of title transfer to the customer.

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specified in the terms of sale, title generally transfers at the physical transfer of the products to the freight carriers.

Unless specified in the terms of sale, title generally transfers at the physical transfer of the products to the freight carriers.

Transfer of title for shipments to Japanese customers occurs at the time of customer acceptance.

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The goodwill assigned to a reporting unit is the difference between the acquisition consideration assigned to the reporting unit on a relative fair value basis and the fair value of acquired assets and liabilities that can be specifically attributed to the reporting unit.

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The Company reviews goodwill at least annually for impairment during the fourth quarter of each fiscal year and if certain events or indicators of impairment occur between annual impairment tests.

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When reviewing goodwill for impairment, the Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.

In performing a

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qualitative assessment, it consider business conditions and other factors including, but not limited to (i) adverse industry or economic trends, (ii) restructuring actions and lower projections that may impact future operating results, (iii) sustained decline in share price, and (iv) overall financial performance and other events affecting the reporting units.

In performing a qualitative assessment, it considers business conditions and other factors including, but not limited to (i) adverse industry or economic trends, (ii) restructuring actions and lower projections that may impact future operating results, (iii) sustained decline in share price, and (iv) overall financial performance and other events affecting the reporting units.

If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative impairment test is performed by estimating the fair value of the reporting unit and comparing it to its carrying value, including goodwill allocated to that reporting unit.

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Changes in judgment on these assumptions and estimates could result in a goodwill impairment charge.

If after completing the quantitative assessment the carrying value of a reporting unit exceeds its fair value, the Company would record an impairment charge equal to the excess of the carrying value of the reporting unit over its fair value, up to the amount the goodwill assigned to the reporting uni t.

Impairment of Long-lived Assets (Excluding Goodwill):

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The Company follows a 52/53-week fiscal reporting calendar, and its fiscal year ends on the last Sunday of June each year.

The Company’s most recent fiscal years ended June 27, 2021 and June 28, 2020 each included 52 weeks, and the fiscal year ended June 30, 2019 included 53 weeks.

The Company’s most recent fiscal years ended June 26, 2022, June 27, 2021, and June 28, 2020, and each included 52 weeks.

Principles of Consolidation:

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Investments classified as trading securities are recorded at fair value based upon quoted market prices.

Differences between the cost and fair value of trading securities are recognized as other expense, net in the Consolidated Statement of Operations.

Differences between the cost and fair value of trading securities are recognized as other income (expense), net in the Consolidated Statement of Operations.

The investments classified as available-for-sale are recorded at fair value based upon quoted market prices, and difference between the cost and fair value of available-for-sale securities is presented as a component of accumulated other comprehensive income (loss).

Following the adoption of Accounting Standard Codification Topic 326 (see additional information in Note 3:

Recent Accounting Pronouncements) , under Subtopic 326-30, the Company evaluates its investments with fair value less than amortized cost by first considering whether the Company has the intent to sell the security or whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis.

Following the fiscal year 2021 adoption of Accounting Standard Codification Topic 326, under Subtopic 326-30, the Company evaluates its investments with fair value less than amortized cost by first considering whether the Company has the intent to sell the security or whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis.

In either such situation, the difference between fair value and amortized cost is recognized as a loss in the income statement.

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All other differences between fair value and amortized cost are recognized in other comprehensive income.

No such losses were recognized through the income statement during the year ended June 27, 2021.

No other-than-temporary impairment charges were recognized during the years ended June 28, 2020 or June 30, 2019.

No such losses were recognized through the income statement during the years ended June 26, 2022 and June 27, 2021.

No other-than-temporary impairment charges were recognized during the year ended June 28, 2020.

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Allowance for Expected Credit Losses:

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In circumstances where specific invoices are deemed uncollectible, the Company provides a specific allowance against the amount due to reduce the net recognized receivable to the amount it reasonably believes will be collected.

The Company also

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provides allowances based on its write-off history.

The Company also provides allowances based on its write-off history.

Bad debt expense was not material for fiscal years ended June 26, 2022, June 27, 2021, and June 28, 2020.

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The revenue and expenses are hedged and designated as cash flow hedges to protect the Company from exposures to fluctuations in foreign currency exchange rates.

If the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the related hedge gains and losses on the cash flow hedge are reclassified from accumulated other comprehensive income (loss) to other expense, net on the Consolidated Statement of Operations at that time.

If the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the related hedge gains and losses on the cash flow hedge are reclassified from accumulated other comprehensive income (loss) to other income (expense), net on the Consolidated Statement of Operations at that time.

Lease expense for operating leases is recognized on a straight-line basis over the lease term.

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The resulting translation adjustments are recorded as cumulative translation adjustments and are a component of accumulated other comprehensive income (loss).

Remeasurement adjustments are recorded in other expense, net, where the U.S.

Remeasurement adjustments are recorded in other income (expense), net, where the U.S.

dollar is the functional currency.

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Recent Accounting Pronouncements

Recently Adopted or Effective

In June 2016, the Financial Accounting Standards Board (“FASB”) released Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326).” The amendment revises the impairment model to utilize an expected loss methodology in place of the previously used incurred loss methodology, which results in more timely recognition of losses on financial instruments, including but not limited to, available for sale debt securities and accounts receivable.

The FASB issued a subsequent

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amendment to the initial guidance in April 2019 and November 2019 within ASU 2019-04 and ASU 2019-11, respectively.

The adoption of these standards in the first quarter of fiscal year 2021 did not have a material impact on the Company’s Consolidated Financial Statements.

In November 2018, the FASB issued ASU 2018-18, “Collaborative Arrangements (Topic 808).” The amendment clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under Topic 606 when the counterparty is a customer for a good or service that is a distinct unit of account.

The amendment also precludes entities from presenting consideration from transactions with a collaborator that is not a customer together with revenue recognized from contracts with customers.

The adoption of this standard in the first quarter of fiscal year 2021 did not have a material impact on the Company’s Consolidated Financial Statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued.

In January 2021, the FASB issued ASU 2021-01, “ Reference Rate Reform (Topic 848),” which permits entities to apply optional expedients in Topic 848 to derivative instruments modified because of discounting transition resulting from reference rate reform.

ASU 2020-04 became effective upon issuance and may be applied prospectively to contract modifications made on or before December 31, 2022.

ASU 2021-01 became effective upon issuance and may be applied on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 or prospectively for contract modifications made on or before December 31, 2022.

The Company has not yet applied the relief afforded by these standard amendments and is currently assessing contracts that will require modification due to reference rate reform to which these standard amendments may be applied.

The Company did not adopt any new accounting standards during fiscal year 2022 that had a material impact on the Company’s Consolidated Financial Statements.

Updates Not Yet Effective

In August 2020, the FASB issued ASU No.

2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity.

Among other changes, ASU 2020-06 removes from U.S.

GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt.

ASU 2020-06 also eliminates the treasury stock method to calculate diluted earnings per share and requires the if-converted method.

The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020.

The Company is required to adopt this standard in the first quarter of fiscal year 2023.

The update permits the use of either the modified retrospective or fully retrospective method of transition.

In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, “Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance,” which requires business entities to make annual disclosures, including the nature of transactions and the related accounting policy used to account for the transactions, significant terms and conditions, and line items affected, about transactions with a government (including government assistance) that are accounted for by analogizing to a grant or contribution accounting model.

The guidance is effective for financial statements issued for annual periods beginning after December 15, 2021, with early adoption permitted.

The Company is required to adopt this standard in the first quarter of fiscal year 2023 for the annual reporting period ending June 25, 2023.

The guidance may be applied either prospectively to all in-scope transactions at the date of initial application or retrospectively.

The Company does not expect adoption of this standard to have a material impact on its Consolidated Financial Statements.

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions,” which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair values;

it also requires additional disclosures, including the nature and remaining duration of such restrictions.

The guidance is effective for financial statements issued for annual periods beginning after December 15, 2023, with early adoption permitted.

The Company is required to adopt this standard prospectively in the first quarter of fiscal year 2025 for the annual reporting period ending June 29, 2025.

The Company does not expect adoption of this standard to have a material impact on its Consolidated Financial Statements .

Deferred Revenue

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(1) This amount is reported in Deferred profit on the Company's Consolidated Balance Sheets as the customers can demand the liability to be performed at any time.

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Disaggregation of Revenue

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Refer to Note 20 - Segment, Geographic Information, and Major Customers ;

for additional information regarding the Company’s evaluation of reportable business segments and the disaggregation of revenue by the geographic regions in which the Company operates.

for additional information

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regarding the Company’s evaluation of reportable business segments and the disaggregation of revenue by the geographic regions in which the Company operates.

Additionally, the Company serves three primary markets:

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Logic/integrated device manufacturing 14 % 7 % 11 %

Equity-based Compensation Plans

Equity-based Compensation Plan

The Company has stock plans that provide for grants of equity-based awards to eligible participants, including stock options and restricted stock units, of the Company’s Common Stock.

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The Company also has an employee stock purchase plan that allows employees to purchase its Common Stock at a discount through payroll deductions.

The Lam Research Corporation 2007 Stock Incentive Plan, as amended and restated, 2011 Stock Incentive Plan, as amended and restated, and the 2015 Stock Incentive Plan (collectively the “Stock Plans”), provide for the grant of non-qualified equity-based awards to eligible employees, consultants and advisors, and non-employee directors of the Company and its subsidiaries.

The 2015 Stock Incentive Plan was approved by stockholders authorizing up to 18,000,000 shares for issuance under the plan.

Additionally, 1,232,068 shares that remained available for grants under the Company’s 2007 Stock Incentive Plan were added to the shares available for issuance under the 2015 Stock Incentive Plan.

As of June 27, 2021, there were a total of 8,585,404 shares available for future issuance under the Stock Plans.

New shares are issued from the Company’s balance of authorized Common Stock from the 2015 Stock Incentive Plan to satisfy stock option exercises and vesting of awards.

The Lam Research Corporation 2015 Stock Incentive Plan (the “Plan”) was approved by the stockholders and provides for the grant of non-qualified equity-based awards to eligible employees, consultants, advisors, and non-employee directors of the Company and its subsidiaries.

As of the date of stockholder approval 19,232,068 authorized shares were available for issuance under the Plan;

as of June 26, 2022, 8,038,265 shares remain available for future issuance to satisfy stock option exercises and vesting of awards.

The Company recognized the following equity-based compensation expense and benefits in the Consolidated Statements of Operations:

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The estimated fair value of the Company’s equity-based awards, less expected forfeitures, is amortized over the awards’ vesting terms on a straight-line basis.

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Restricted Stock Units

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Based upon the terms of such awards, the number of shares that can be earned over the performance periods is based on the Company’s Common Stock price performance compared to the market price performance of a designated benchmark index, ranging from 0 % to 150 % of target.

The designated benchmark index was the Philadelphia Semiconductor Total Return Index (“XSOX”) for market-based PRSUs issued in 2021 and 2020 and the Philadelphia Semiconductor Sector Index (“SOX”) for market-based PRSUs issued in 2019.

The designated benchmark index was the Philadelphia Semiconductor Total Return Index (“XSOX”).

The stock price performance or market price performance is measured using the closing price for the 50 -trading days prior to the dates the performance period begins and ends.

The target number of shares represented by the market-based PRSUs is increased by 2 % of target for each 1 % that Common Stock price performance exceeds the market price performance of the designated benchmark index.

Market-based PRSUs issued in 2021 and 2020 utilized the XSOX, which index gives effect to the reinvestment of dividends paid on its constituent holdings, as the benchmark;

Market-based PRSUs utilize the XSOX, which index gives effect to the reinvestment of dividends paid on its constituent holdings, as the benchmark;

and accordingly, the Company's Common Stock price performance was adjusted for the reinvestment of dividends on Common Stock on the ex-dividend date.

By contrast, market-based PRSUs issued in 2019 utilized the SOX as a benchmark, which excluded the impact of dividends;

accordingly the Company's Common Stock price performance was not adjusted for the reinvestment of dividends.

The result of the vesting formula is rounded down to the nearest whole number.

Total stockholder return is a measure of stock price appreciation in this performance period.

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The following table summarizes the Company’s combined service-based RSUs and market-based PRSUs:

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Outstanding, June 26, 2022 1,101 $ 475.33

Of the 1.3 million shares outstanding at June 27, 2021, 1.0 million are service-based RSUs and 0.3 million are market-based PRSUs.

Of the 1.1 million shares outstanding at June 26, 2022, 904.0 thousand are service-based RSUs and 196.6 thousand are market-based PRSUs.

The fair value of the Company’s service-based RSUs was calculated based on the fair market value of the Company’s stock at the date of grant, discounted for dividends.

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At June 26, 2022, approximately 5.7 million shares were available for purchase, and the Company had $ 32.3 million of total unrecognized compensation cost, which is expected to be recognized over a remaining period of less than one year .

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Other Expense, Net

The significant components of other expense, net, were as follows:

Other Income (Expense), Net

The significant components of other income (expense), net, were as follows:

2022 June 27,

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Interest expense ( 184,759 ) ( 208,597 ) ( 177,440 )

Gains on deferred compensation plan related assets, net 61,838 5,999 10,464

(Losses) gains on deferred compensation plan related assets, net ( 38,053 ) 61,838 5,999

Foreign exchange (losses) gains, net ( 723 ) ( 6,962 ) ( 3,317 )

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$ ( 188,708 ) $ ( 111,219 ) $ ( 98,824 )

Interest income in the year ended June 27, 2021, decreased compared to the year ended June 28, 2020, primarily as a result of lower yield.

Interest income decreased in the year ended June 28, 2020, compared to the year ended June 30, 2019, as a result of lower yield, partially offset by a higher cash balance.

Interest expense in the year ended June 27, 2021, increased compared to the year ended June 28, 2020, primarily due to the full year impact of the issuance of the $ 2.0 billion senior notes in fiscal year 2020.

The increase in interest expense in the year ended June 28, 2020, compared to the year ended June 30, 2019, was primarily due to the full year impact of the issuance of the $ 2.5 billion of senior notes in fiscal year 2019 and issuance of the $ 2.0 billion senior notes in fiscal year 2020.

The gains on deferred compensation plan related assets in the years presented were driven by an improvement in the fair market value of the underlying funds.

The gains in other, net for the year ended June 27, 2021 compared to the years ended June 28, 2020 and June 30, 2019 were primarily driven by private equity investments.

Interest income in the year ended June 26, 2022, decreased compared to the year ended June 27, 2021, primarily as a result of lower cash balances.

Interest income decreased in the year ended June 27, 2021, compared to the year ended June 28, 2020, as a result of lower yield.

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The components of income (loss) before income taxes were as follows:

Interest expense in the year ended June 26, 2022, decreased compared to the year ended June 27, 2021, primarily due to the payoff of $ 800 million of senior notes in June 2021.

The increase in interest expense in the year ended June 27, 2021, compared to the year ended June 28, 2020, primarily due to the full year impact of the issuance of the $ 2.0 billion senior notes in fiscal year 2020.

The gains or losses on deferred compensation plan related assets, net in fiscal years 2022, 2021 and 2020 were driven by fluctuations in the fair market value of the underlying funds.

The variation in other, net for the year ended June 26, 2022 compared to the years ended June 27, 2021 and June 28, 2020 were primarily driven by fluctuations in the fair market value of equity investments.

The components of income before income taxes were as follows:

2022 June 27,

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Operating lease liabilities 50,294 37,562

Finance lease assets 35,754 35,600

Intangible assets 889 —

Other 23,955 22,575

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Intangible assets — ( 3,113 )

Convertible debt — ( 24,530 )

Capital assets ( 114,644 ) ( 81,412 )

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Right-of-use assets ( 50,294 ) ( 37,562 )

Finance lease liabilities ( 52,379 ) ( 50,683 )

Other ( 2,395 ) ( 1,369 )

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Net deferred tax assets $ 560,697 $ 307,594

The change in gross deferred tax assets, gross deferred tax liabilities, and valuation allowance between fiscal year 2021 and 2020 is primarily due to increases in gross deferred tax assets for outside basis differences of foreign subsidiaries, allowances and reserves, and tax credits, and decreases in gross deferred tax liabilities for convertible debt.

The change in gross deferred tax assets, gross deferred tax liabilities, and valuation allowance between fiscal year 2022 and 2021 is primarily due to increases in gross deferred tax assets for outside basis differences of foreign subsidiaries and tax credits, and increases in gross deferred tax liabilities for capital assets.

The Company previously made an accounting policy election to record deferred taxes related to Global Intangible Low-Taxed Income (“GILTI”).

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Other permanent differences and miscellaneous items 52,042 50,450 50,490

tax reform impacts — — 63,913

$ 587,828 $ 462,346 $ 323,225

In November 2019, the Ninth Circuit rejected the en banc appeal petitioned by Altera in July 2019.

In that quarter, the Company evaluated the impact of the decision and viewed the denial as an indication that Altera’s position of excluding stock-based compensation expense in an intercompany cost-sharing arrangement was unlikely to be sustained upon further litigation.

As a result, the Company reversed $ 74.5 million of net tax assets associated with stock-based compensation benefits related to previous years in the Condensed Consolidated Financial Statements in the three months ended December 29, 2019 and the Company no longer reflected a net tax benefit within its financial statements related to excluding stock-based compensation from its intercompany cost-sharing arrangement.

In February 2020, Altera petitioned the SCOTUS to hear their case.

In June 2020, the SCOTUS denied the petition.

Effective from fiscal year 2022, the Company has a 15-year tax incentive ruling in Malaysia for one of its foreign subsidiaries.

The statutory tax rate in Malaysia is 24%.

The tax incentive provides exemptions on foreign income earned and is contingent upon meeting certain conditions.

The Company expects to apply for renewals upon expiration.

The impact of the tax incentive decreased worldwide taxes by approximately $ 574.7 million for fiscal year 2022.

The benefit of the tax incentive on diluted earnings per share was approximately $ 4.09 in fiscal year 2022.

Earnings of the Company’s foreign subsidiaries included in consolidated retained earnings that are indefinitely reinvested in foreign operations aggregated to approximately $ 894.8 million at June 26, 2022.

If these earnings were remitted to the United States, they would be subject to foreign withholding taxes of approximately $ 122.1 million at current statutory rates.

The potential tax expense associated with these foreign withholding taxes would be substantially offset by foreign tax credits that would be generated in the United States upon remittance.

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If these earnings were remitted to the United States, they would be subject to foreign withholding taxes of approximately $ 137.0 million at the current statutory rates.

The potential tax expense associated with these foreign withholding taxes would be offset by $ 109.6 million of foreign tax credits that would be generated in the United States upon remittance.

On August 16, 2022, the Inflation Reduction Act was signed into law.

In general, the provisions of the IRA will be effective beginning with the Company’s fiscal year 2024, with certain exceptions.

The IRA includes a new 15% corporate minimum tax.

The Company is in the process of evaluating the potential impacts of the IRA.

The impact on income taxes due to changes in legislation is required under the authoritative guidance of ASC 740, Income Taxes, to be recognized in the period in which the law is enacted.

While the Company does not currently expect the IRA to have a material impact on our effective tax rate, our analysis is ongoing and incomplete, and it is possible that the IRA could have a material adverse effect on the Company’s tax liability.

The Company will continue to monitor issuance of additional guidance.

The Company’s gross uncertain tax positions were $ 617.4 million, $ 566.8 million, and $ 476.7 million as of June 26, 2022, June 27, 2021, and June 28, 2020, respectively.

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The amount of uncertain tax positions that, if recognized, would impact the effective tax rate was $ 539.6 million, $ 504.4 million, and $ 423.8 million, as of June 26, 2022, June 27, 2021, and June 28, 2020, respectively.

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The aggregate changes in the balance of gross uncertain tax positions were as follows:

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federal income tax return for the fiscal year ended June 24, 2018.

As of June 27, 2021, no significant adjustments have been proposed by the IRS.

The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the IRS will occur.

As of June 26, 2022, the IRS has proposed adjustments resulting in a tax liability increase of approximately $ 50.0 million.

If the Company agrees to the proposed adjustments, cash settlements with respect to the increased liabilities will be made accordingly.

The Company is in various stages of examinations in connection with all of its tax audits worldwide, and it is difficult to determine when these examinations will be settled.

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The change in uncertain tax positions may range up to $ 20.0 million.

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Net Income per Share

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Diluted net income per share is computed using the treasury stock method, for dilutive stock options, restricted stock units, and convertible notes.

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The following table reconciles the inputs to the basic and diluted computations for net income per share.

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Convertible notes — 543 3,040

Warrants — — 504

Diluted average shares outstanding 140,628 145,320 149,090

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Valuations based on quoted prices in active markets for identical assets or liabilities with sufficient volume and frequency of transactions.

Valuations based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or model-derived valuations techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Valuations based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are less active for identical assets or liabilities, or model-derived valuations techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Valuations based on unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities and based on non-binding, broker-provided price quotes and may not have been corroborated by observable market data.

The Company engages with pricing vendors to provide fair values for a majority of its Level 1 and Level 2 investments.

The vendors provide either a quoted market price in an active market or use observable inputs without applying significant adjustments in their pricing.

The vendors provide either a quoted market price or use observable inputs without applying significant adjustments in their pricing.

Significant observable inputs include interest rates and yield curves observable at commonly quoted intervals, volatility and credit risks.

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The Company’s primary financial instruments include its cash, cash equivalents, investments, restricted cash and investments, long-term investments, accounts receivable, accounts payable, long-term debt and leases, and foreign currency related derivative instruments.

The estimated fair value of cash, accounts receivable, and accounts payable approximates their carrying value due to the short period of time to their maturities.

The estimated fair value of cash, time deposits, accounts receivable, and accounts payable approximates their carrying value due to the short period of time to their maturities.

The estimated fair values of lease obligations approximate their carrying value as the majority of these obligations have interest rates that adjust to market rates on a periodic basis.

Refer to Note 14 - Long Term Debt and Other Borrowings for additional information regarding the fair value of the Company’s senior notes and convertible senior notes.

Refer to Note 14 - Long Term Debt and Other Borrowings for additional information regarding the fair value of the Company’s senior notes.

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Equity Investments measured at fair value on a non-recurring basis

As of June 26, 2022 and June 27, 2021, equity investments of $ 125.2 million and $ 117.3 million, respectively, were recognized in other assets in the Consolidated Balance Sheets.

Net gains resulting from the application of the measurement alternative to the Company’s equity investments were immaterial in the fiscal years ended 2022, 2021, and 2020.

During the fiscal year 2022, one of the Company’s equity investees became publicly traded and the market value of that investee fluctuated throughout the fiscal year;

the Company liquidated its position in this equity investee during the last quarter of the fiscal year ended June 26, 2022 and recognized an immaterial cumulative gain on disposition.

Debt and Equity Investments measured at fair value on a recurring basis

The following tables set forth the Company’s cash, cash equivalents, investments, restricted cash and investments, and other assets measured at fair value on a recurring basis as of June 26, 2022, and June 27, 2021:

7 unchanged sentences

(in thousands)

Cash $ 875,738 $ — $ — $ 875,738 $ 873,278 $ — $ 2,460 $ —

Time deposit 1,548,874 — — 1,548,874 1,298,847 — 250,027 —

Money market funds $ 712,076 $ — $ — $ 712,076 $ 712,076 $ — $ — $ —

Treasury and agencies 204,743 96 ( 47 ) 204,792 — 204,792 — —

Mutual funds 84,851 12,027 ( 1,659 ) 95,219 — — — 95,219

Level 1 total 796,927 12,027 ( 1,659 ) 807,295 712,076 — — 95,219

Government-sponsored enterprises 3,498 7 — 3,505 — 3,505 — —

Foreign government bonds 32,995 21 ( 4 ) 33,012 — 33,012 — —

Corporate notes and bonds 137,859 — ( 2,128 ) 135,731 — 135,731 — —

Mortgage backed securities - residential 5,623 54 — 5,677 — 5,677 — —

Mortgage backed securities - commercial 18,830 17 ( 59 ) 18,788 — 18,788 — —

Level 2 Total 137,859 — ( 2,128 ) 135,731 — 135,731 — —

Total subject to fair value hierarchy

$ 934,786 $ 12,027 $ ( 3,787 ) $ 943,026

Cash 1,017,253 1,015,747 — 1,506 —

Time deposits 2,044,206 1,794,178 — 250,028 —

Total $ 4,004,485 $ 3,522,001 $ 135,731 $ 251,534 $ 95,219

7 unchanged sentences

(in thousands)

Cash $ 977,862 $ — $ — $ 977,862 $ 973,978 $ — $ 3,884 $ —

Time deposit 2,244,655 — — 2,244,655 1,994,628 — 250,027 —

Money market funds $ 2,246,138 $ — $ — $ 2,246,138 $ 2,246,138 $ — $ — $ —

8 unchanged sentences

Level 2 Total 1,104,254 2,346 ( 520 ) 1,106,080 — 1,106,080 — —

Total subject to fair value hierarchy

$ 3,635,829 $ 17,952 $ ( 600 ) $ 3,653,181

Cash 875,738 873,278 — 2,460 —

Time deposits 1,548,874 1,298,847 — 250,027 —

Total $ 6,077,793 $ 4,418,263 $ 1,310,872 $ 252,487 $ 96,171

2 unchanged sentences

Management assesses the fair value of investments in debt securities that are not actively traded through consideration of interest rates and their impact on the present value of the cash flows to be received from the investments.

Gross realized gains/(losses) from sales of investments were insignificant in the fiscal years 2021, 2020, and 2019.

Lam Research Corporation 2022 10-K 57

The following is an analysis of the Company’s cash, cash equivalents, investments, and restricted cash and investments in unrealized loss positions.

As of June 27, 2021, there are no unrealized loss positions with a duration equal to or greater than twelve months:

The Company evaluates its investments with fair value less than amortized cost by first considering whether the Company has the intent to sell the security or whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis.

In either such situation, the difference between fair value and amortized cost is recognized as a loss in the income statement.

Where such sales are not likely to occur, the Company considers whether a portion of the loss is the result of a credit loss.

To the extent such losses are the result of credit losses, those amounts are recognized in the income statement.

All other differences between fair value and amortized cost are recognized in other comprehensive income.

No such losses were recognized through the income statement during the twelve months ended June 26, 2022, and June 27, 2021.

Gross realized gains/(losses) from sales of investments were insignificant in the fiscal years 2022, 2021, and 2020.

The following is an analysis of the Company’s investments in unrealized loss positions.:

June 26, 2022

Unrealized Losses

Less than 12 Months

Less than 12 Months Unrealized Losses

12 Months or Greater Total

Fair Value Gross

Loss Fair Value Gross

(in thousands)

Treasury and agencies $ 122,791 $ ( 47 )

Mutual funds $ 38,536 $ ( 1,447 ) $ 1,701 $ ( 212 ) $ 40,237 $ ( 1,659 )

Foreign government bonds 2,133 ( 4 )

Corporate notes and bonds 134,964 ( 2,128 ) — — 134,964 ( 2,128 )

Mortgage backed securities - commercial 15,076 ( 59 )

$ 173,500 $ ( 3,575 ) $ 1,701 $ ( 212 ) $ 175,201 $ ( 3,787 )

4 unchanged sentences

Due after one year through five years 64,721 63,457

Due in more than five years 39,283 39,330

$ 2,894,141 $ 2,892,013

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The effective portion of the contracts’ gains or losses is included in accumulated other comprehensive income (loss) and is amortized into income as the hedged item affects earnings.

During the year ended June 28, 2020, the company recognized a net loss of $ 31.5 million of accumulated other comprehensive income, net of tax, related to interest rate swap agreements.

No such activity occurred during the years ended June 27, 2021 or June 30, 2019.

During the year

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ended June 28, 2020, the company recognized a net loss of $ 31.5 million of accumulated other comprehensive income, net of tax, related to interest rate swap agreements.

No such activity occurred during the years ended June 26, 2022 or June 27, 2021.

At inception and at each quarter-end, hedges are tested prospectively and retrospectively for effectiveness using regression analysis.

2 unchanged sentences

These criteria include identification of the hedging instrument, the hedged item, the nature of the risk being hedged, and how the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows will be measured.

There were no material gains or losses during the fiscal years ended June 27, 2021, June 28, 2020, or June 30, 2019 associated with forecasted transactions that failed to occur.

There were no material gains or losses during the fiscal year ended June 30, 2019 associated with ineffectiveness.

To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be tested to demonstrate an expectation of providing highly effective offsetting changes to future cash flows on hedged transactions.

4 unchanged sentences

Additionally, related amounts previously recorded in other comprehensive income would be reclassified to earnings immediately.

There were no material gains or losses during the fiscal years ended June 26, 2022, June 27, 2021, or June 28, 2020 associated with forecasted transactions that did not occur, nor any ineffectiveness recognized in the same periods.

As of June 26, 2022, the fair value of outstanding cash flow hedges was not material.

4 unchanged sentences

Buy Contracts $ 306,211

Sell Contacts 598,407

Sell Contracts 541,999

The effect of derivative instruments designated as cash flow hedges on the Company’s Consolidated Statements of Operations, including accumulated other comprehensive income (“AOCI”), was as follows:

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Foreign exchange contracts SG&A ( 6,914 ) ( 2,434 ) 4,190 3,623

Interest rate contracts Other expense, net — ( 3,855 ) ( 40,610 ) ( 700 )

Interest rate contracts Other income (expense), net — ( 4,238 ) — ( 3,855 )

$ 24,782 $ 26,965 $ 26,458 $ 4,295

2 unchanged sentences

These forward contracts are not designated for hedge accounting treatment.

Therefore, the change in fair value of these derivatives is recorded as a component of other expense, net and offsets the change in the carrying value of the foreign currency denominated assets and liabilities related to remeasurement, which are also recorded in other expense, net.

Therefore, the change in the carrying value of these derivatives is recorded as a component of other income (expense),net and offsets the change in fair value of the foreign currency denominated assets and liabilities related to remeasurement, which are also recorded in other income (expense), net.

As of June 26, 2022 and June 27, 2021, the fair value of outstanding balance sheet hedges was not material.

4 unchanged sentences

Buy Contracts $ 184,310

Sell Contacts 228,880

The effect of the Company’s balance sheet hedge derivative instruments on the Company’s Consolidated Statement of Operations was as follows:

Sell Contracts 326,776

The effect of the Company’s balance sheet hedge derivative instruments on the Company’s Consolidated Statements of Operations was as follows:

June 26, 2022 June 27, 2021

Derivatives Not Designated as Hedging Instruments:

Location of Gain (Loss)

Location of Gain

in Income Gain

in Income Loss

in Income Gain

(in thousands)

Foreign exchange contracts Other expense, net $ 7,057 $ ( 5,971 )

Foreign exchange contracts Other income (expense), net $ 14,362 $ 7,057

Concentrations of Credit Risk

38 unchanged sentences

See Note 15 - Leases for additional information regarding these finance lease right-of-use assets.

Depreciation expense, excluding amortization of finance lease right of use assets, during fiscal years 2021 and 2020 was $ 229.8 million and $ 198.8 million, respectively.

During fiscal year 2019, depreciation expense, including amortization of capital leases, was $ 182.1 million.

Depreciation expense, excluding amortization of finance lease right of use assets, during fiscal years 2022, 2021, and 2020 was $ 248.2 million, $ 229.8 million, and $ 198.8 million, respectively.

Goodwill and Intangible Assets

The balance of goodwill was $ 1.5 billion as of June 27, 2021 and June 28, 2020, respectively.

As of June 27, 2021 and June 28, 2020 , $ 61.1 million of the goodwill balance is tax deductible, and the remaining balance is not tax deductible due to purchase accounting and applicable foreign law.

The balance of goodwill was $ 1.5 billion as of June 26, 2022 and June 27, 2021.

As of June 26, 2022 and June 27, 2021, $ 62.0 million and $ 61.1 million, respectively, of the goodwill balance is tax deductible, and the remaining balance is not tax deductible due to purchase accounting and applicable foreign law.

No goodwill impairments were recognized in fiscal years 2022, 2021, or 2020.

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(in thousands) Effective Interest Rate

Fixed-rate 2.80 % Senior Notes Due June 15, 2021 (“2021 Notes”)

$ — — % $ 800,000 2.95 %

Fixed-rate 3.80 % Senior Notes Due March 15, 2025 (“2025 Notes”)

6 unchanged sentences

750,000 2.01 % 750,000 2.01 %

Fixed-rate 2.625 % Convertible Notes Due May 15, 2041 (“2041 Notes”)

— (1) — % 48,460 (2) 4.28 %

Fixed-rate 4.875 % Senior Notes Due March 15, 2049 ("2049 Notes")

9 unchanged sentences

Total debt outstanding, at carrying value $ 4,962,459 $ 4,960,935

Current portion of long-term debt $ — $ 836,107

Long-term debt $ 4,962,459 $ 4,960,935

Total debt outstanding, at carrying value $ 4,960,935 $ 5,795,478

(1) On March 26, 2021, the Company issued a notice of redemption to the existing bondholders with a redemption date of May 21, 2021.

As such, the convertible notes outstanding on May 21, 2021 were redeemed by the Company.

(2) As of June 28, 2020, these notes were convertible at the option of the bondholder.

This is a result of the following condition being met:

the market value of the Company’s Common Stock was greater than 130 % of the convertible notes conversion price for 20 or more of the 30 consecutive trading days preceding the quarter-end.

As a result, the 2041 Notes were classified in current liabilities and a portion of the equity component associated with the convertible notes, representing the unamortized discount, was classified in temporary equity on the Company’s Consolidated Balance Sheets.

(1) This amount represents a cumulative fair value gain for discontinued hedging relationships, net of an immaterial amount of amortization as of the periods presented.

Lam Research Corporation 2021 10-K 65

The Company’s contractual cash obligations relating to its outstanding debt as of June 26, 2022, were as follows:

Payments Due by Fiscal Year:

Principal Interest

(in thousands)

2023 $ — $ 175,125

2024 — 175,125

2025 500,000 175,125

2026 750,000 161,222

2027 — 128,000

Thereafter 3,750,000 1,914,214

Total $ 5,000,000 $ 2,728,811

Convertible Senior Notes

In June 2012, with the acquisition of Novellus, the Company assumed $ 700 million in aggregate principal amount of 2.625 % Convertible Senior Notes due May 15, 2041 (the “2041 Notes”).

On May 21, 2021, the 2041 Notes then outstanding were redeemed pursuant to Section 6.01 of the underlying indenture at a price equal to outstanding principal plus accrued and unpaid interest.

No 2041 Notes were outstanding as of June 27, 2021.

Selected additional information regarding the 2041 Notes outstanding as of June 28, 2020, is as follows:

(in thousands, except years, percentages, conversion rate, and conversion price)

Carrying amount of permanent equity component, net of tax $ 161,467

Carrying amount of temporary equity component, net of tax $ 10,995

Remaining amortization period (years) 20.9

On May 5, 2020, the Company completed a public offering of $ 750 million aggregate principal amount of the Company’s Senior Notes due June 15, 2030 (the “2030 Notes”), $ 750 million aggregate principal amount of the Company’s Senior Notes due June 15, 2050 (the “2050 Notes”), and $ 500 million aggregate principal amount of the Company’s Senior Notes due June 15, 2060 (the “2060 Notes”).

The Company pays interest at an annual rate of 1.90 %, 2.875 %, and 3.125 %, on the 2030, 2050, and 2060 Notes, respectively, on a semi-annual basis on June 15 and December 15 of each year.

On March 4, 2019, the company completed a public offering of $ 750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2026 (the “2026 Notes”), $ 1.0 billion aggregate principal amount of the Company’s Senior Notes due March 15, 2029 (the “2029 Notes”), and $ 750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2049 (the “2049 Notes”).

On March 4, 2019, the Company completed a public offering of $ 750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2026 (the “2026 Notes”), $ 1.0 billion aggregate principal amount of the Company’s Senior Notes due March 15,

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2029 (the “2029 Notes”), and $ 750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2049 (the “2049 Notes”).

The Company pays interest at an annual rate of 3.75 %, 4.00 %, and 4.875 %, on the 2026, 2029, and 2049 Notes, respectively, on a semi-annual basis on March 15 and September 15 of each year.

On June 7, 2016, the Company completed a public offering of $ 800 million aggregate principal amount of Senior Notes due June 15, 2021, (the “2021 Notes”).

The Company settled the 2021 Notes upon maturity, June 15, 2021.

On March 12, 2015, the Company completed a public offering of $ 500 million aggregate principal amount of the Company’s Senior Notes due March 15, 2025 (the “2025 Notes”).

3 unchanged sentences

In addition, upon the occurrence of certain events, as described in the indenture, the Company will be required to make an offer to repurchase the Senior Notes at a price equal to 101 % of the principal amount of the respective note, plus accrued and unpaid interest.

Lam Research Corporation 2021 10-K 66

Selected additional information regarding the Senior Notes outstanding as of June 26, 2022, is as follows:

11 unchanged sentences

This agreement was amended on November 10, 2015 (the “Amended and Restated Credit Agreement”), October 13, 2017 (the “2nd Amendment”), February 25, 2019 (the “3rd Amendment”), and June 17, 2021 (the “Second Amended and Restated Credit Agreement”).

Among other things, the Second Amended and Restated Credit Agreement provides for a $ 250 million increase in the Company’s revolving credit facility, from $ 1.25 billion to $ 1.50 billion with a syndicate of lenders, along with an expansion option that will allow the Company, subject to certain requirements, to request an increase in the facility of up to an additional $ 600.0 million, for a potential total commitment of $ 2.10 billion.

The Second Amended and Restated Credit Agreement provides for a $ 1.50 billion revolving credit facility with a syndicate of lenders, along with an expansion option that will allow the Company, subject to certain requirements, to request an increase in the facility of up to an additional $ 600.0 million, for a potential total commitment of $ 2.10 billion.

The facility matures on June 17, 2026.

Interest on amounts borrowed under the credit facility is, at the Company’s option, based on (1) a base rate, defined as the greatest of (a) prime rate, (b) Federal Funds rate plus 0.5 %, or (c) one-month LIBOR plus 1.0 %, plus a spread of 0.00 % to 0.30 %, or (2) LIBOR , plus a spread of 0.805 % to 1.30 %, in each case plus a facility fee, with such spread and facility fee determined based on the rating of the Company’s non-credit enhanced, senior unsecured long-term debt.

Interest on amounts borrowed under the credit facility is, at the Company’s option, based on (1) a base rate, defined as the greatest of (a) prime rate, (b) Federal Funds rate plus 0.5 %, or (c) one-month London Interbank Offered Rate (“LIBOR”) plus 1.0 %, plus a spread of 0.00 % to 0.30 %, or (2) LIBOR multiplied by the statutory rate, plus a spread of 0.805 % to 1.30 %, in each case plus a facility fee, with such spread and facility fee determined based on the rating of the Company’s non-credit enhanced, senior unsecured long-term debt.

Such spreads and such facility fees are further subject to sustainability adjustments as described in the Second Amended and Restated Credit Agreement, in each case based on the Company’s performance of certain energy savings and health and safety standards metrics.

5 unchanged sentences

Commercial Paper Program

On November 13, 2017, the Company established a commercial paper program under which the Company may issue unsecured commercial paper notes on a private placement basis up to a maximum aggregate principal amount of $ 1.25 billion.

On November 13, 2017, the Company established a commercial paper program (the “CP Program”) under which the Company may issue unsecured commercial paper notes on a private placement basis up to a maximum aggregate principal amount of $ 1.25 billion.

In July 2021, the Company amended the CP Program size to a maximum aggregate amount outstanding at any time of $ 1.50 billion.

The net proceeds from the CP Program will be used for general corporate purposes, including repurchases of the Company’s Common Stock from time to time under the Company’s stock repurchase program.

Amounts available under the CP Program may be re-borrowed.

Amounts available under the CP Program may be

Lam Research Corporation 2022 10-K 63

The CP Program is backstopped by the Company’s Revolving Credit Arrangement.

1 unchanged sentence

Interest Cost

The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the debt discount, issuance costs, and effective portion of interest rate contracts with respect to the Senior Notes, convertible notes, commercial paper, and the revolving credit facility during the fiscal years ended June 27, 2021, June 28, 2020, and June 30, 2019.

The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the debt discount, issuance costs, and effective portion of interest rate contracts with respect to the Senior Notes, convertible notes, and the revolving credit facility during the fiscal years ended June 26, 2022, June 27, 2021, and June 28, 2020.

2022 June 27,

6 unchanged sentences

Total interest cost recognized $ 181,701 $ 205,010 $ 176,432

Lam Research Corporation 2021 10-K 67

The Company leases certain office spaces, manufacturing and warehouse spaces, equipment, and vehicles.

While the majority of the Company’s lease arrangements are operating leases, the Company has certain leases that qualify as finance leases.

The components of lease expense were as follows for the years ended June 27, 2021 and June 28, 2020:

The components of lease expense were as follows for the years ended June 26, 2022, June 27, 2021, and June 28, 2020:

2022 June 27,

2021 June 28,

(in thousands)

8 unchanged sentences

Variable lease costs will fluctuate based on factory output and material receipt volumes.

Short-term rental expense, for agreements less than one year in duration, were immaterial for the twelve months ended June 27, 2021 and June 28, 2020, respectively.

Supplemental cash flow information related to leases was as follows as of June 27, 2021 and June 28, 2020:

Short-term rental expense, for agreements less than one year in duration, were immaterial for the twelve months ended June 26, 2022, June 27, 2021, and June 28, 2020, respectively.

Supplemental cash flow information related to leases was as follows as of June 26, 2022, June 27, 2021, and June 28, 2020:

2022 June 27,

2021 June 28,

(in thousands)

37 unchanged sentences

Selected Leases and Related Guarantees

The Company had leases regarding certain improved properties in Fremont and Livermore, California (the “California Facility Leases”) that were classified as operating leases as of June 28, 2020.

On September 21, 2020, the Company renewed these leases for an additional seven-year term, and concluded the modified leases are finance leases, and recognized approximately $ 31.4 million of property and equipment, net, for the associated right of use assets, and $ 29.8 million of finance lease obligations ($ 3.1 million classified in current portion of long-term debt and finance lease obligations and the remainder in long-term debt and finance lease obligations, less current portion).

The Company is required to maintain cash collateral in an aggregate of approximately $ 250 million in separate interest-bearing accounts as security for the Company’s obligations.

These amounts are recorded with other restricted cash and investments in the Company’s Consolidated Balance Sheet as of June 27, 2021 and June 28, 2020.

During the term of the California Facility Leases and when the terms of the California Facility Leases expire, the property subject to the California Facility Leases may be re-marketed.

The Company has guaranteed to the lessor that each property will have a certain minimum residual value.

The aggregate maximum guarantee made by the Company under the California Facility Leases is $ 298.4 million.

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The Company leases the majority of its administrative, R&D and manufacturing facilities, regional sales/service offices, and certain equipment under non-cancelable leases.

The Company leases the majority of its administrative, research and development and manufacturing facilities, regional sales/service offices, and certain equipment under non-cancelable leases.

Certain of the Company’s facility leases for buildings located at its Fremont, California headquarters;

2 unchanged sentences

Certain of the Company’s facility leases provide for periodic rent increases based on the general rate of inflation.

The Company’s rental expense for facilities occupied during fiscal year 2019 was $ 28.1 million.

The Company has finance leases for certain improved properties in Fremont and Livermore, California (the “California Facility Leases”).

The Company is required to maintain cash collateral in an aggregate of approximately $ 250 million in separate interest-bearing accounts as security for the Company’s obligations.

These amounts are recorded with other restricted cash and investments in the Company’s Consolidated Balance Sheet as of June 26, 2022 and June 27, 2021.

Lam Research Corporation 2022 10-K 65

During the seven-year term of the California Facility Leases and when the terms of the California Facility Leases expire, the property subject to the California Facility Leases may be re-marketed.

The Company has guaranteed to the lessor that each property will have a certain minimum residual value.

The aggregate maximum guarantee made by the Company under the California Facility Leases is $ 298.4 million.

Retirement and Deferred Compensation Plans

24 unchanged sentences

The Company’s commitments relating to off-balance sheet agreements are included in the tables below.

These amounts exclude $ 527.3 million of liabilities related to uncertain tax positions (see Note 7 - Income Taxes for further discussion), $ 180.0 million of liability associated with a minimum purchase penalty obligation to a certain supplier, and $ 200.7 million of capital expenditures associated with facilities under construction as of the end of the fiscal year because the Company is unable to reasonably estimate the ultimate amount or time of settlement.

These amounts exclude $ 561.2 million of liabilities related to uncertain tax positions (see Note 7 - Income Taxes for further discussion) as of the end of the fiscal year because the Company is unable to reasonably estimate the ultimate amount or time of settlement.

Other Guarantees

8 unchanged sentences

The Company does not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid.

In addition, the Company has entered into indemnification agreements with its officers and directors, consistent with its Bylaws and Certificate of Incorporation;

and under local law, the Company may be required to provide indemnification to its employees for actions

In addition, the Company has entered into indemnification agreements with its directors, officers and certain other employees, consistent with its Bylaws and Certificate of Incorporation;

and under local law, the Company may be required to provide indemnification to its employees for actions within the scope of their employment.

Although the Company maintains insurance contracts that cover some of the potential liability associated with these indemnification agreements, there is no guarantee that all

Lam Research Corporation 2022 10-K 66

within the scope of their employment.

Although the Company maintains insurance contracts that cover some of the potential liability associated with these indemnification agreements, there is no guarantee that all such liabilities will be covered.

such liabilities will be covered.

The Company does not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under such indemnification agreements or statutory obligations.

10 unchanged sentences

Total $ 1,217,953

Transition Tax Liability

On December 22, 2017, the “Tax Cuts & Jobs Act” was signed into law, among other items, this U.S.

tax reform assessed a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred.

As a result the Company recognized a total transition tax of $ 868.4 million and elected to pay the one-time tax over a period of 8 years, commencing in the twelve months ended June 30, 2019.

The Company’s remaining obligation related to this arrangement as of June 26, 2022, were as follows:

Payments Due by Fiscal Year (1) :

Transition Tax

(in thousands)

2023 $ 69,469

Total $ 590,485

(1) The Company may choose to apply existing tax credits, thereby reducing the actual cash payment.

The Company provides standard warranties on its systems.

1 unchanged sentence

As of June 26, 2022, warranty reserves totaling $ 24.0 million were recognized in other long-term liabilities, the remainder were included in accrued expenses and other current liabilities in the Company’s Consolidated Balance Sheets.

Lam Research Corporation 2022 10-K 67

Changes in the Company’s product warranty reserves were as follows:

4 unchanged sentences

Settlements made during the period ( 272,954 ) ( 172,759 )

Changes in liability for warranties issued during the period 14,951 —

Changes in liability for pre-existing warranties 27,336 6,294

6 unchanged sentences

Stock Repurchase Program

In November 2020, the Board of Directors authorized the Company to repurchase up to an additional $ 5.0 billion of Common Stock;

In May 2022, the Board of Directors authorized the Company to repurchase up to an additional $ 5.0 billion of Common Stock;

this authorization supplements the remaining balances from any prior authorizations.

1 unchanged sentence

This repurchase program has no termination date and may be suspended or discontinued at any time.

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Repurchases under the repurchase program were as follows during the periods indicated:

8 unchanged sentences

Quarter ended September 26, 2021 1,725 $ 1,209,744 $ 608.98 $ 3,012,476

Board authorization, $ 5 billion increase, November 2020

Quarter ended December 26, 2021 677 $ 429,983 $ 634.74 $ 2,582,493

Quarter ended March 27, 2022 2,007 $ 1,200,206 $ 609.61 $ 1,382,287

Board authorization, $ 5 billion increase, May 2022

Quarter ended June 26, 2022 1,912 (2) $ 867,651 $ 485.31 $ 5,514,636

6 unchanged sentences

Accelerated Share Repurchase Agreements

On February 11, 2021, the Company entered into an accelerated share repurchase agreement (the “February 2021 ASR") with a financial institution to repurchase a total of $ 500 million of Common Stock.

On June 2, 2022, the Company entered into an accelerated share repurchase agreement (the "June 2022 ASR") with two financial institutions to repurchase a total of $ 500 million of Common Stock.

The Company took an initial delivery of approximately 717 thousand shares, which represented 75 % of the prepayment amount divided by our closing stock price on June 2, 2022.

The total number of shares received under the June 2022 ASR will be based upon the average daily volume weighted average price of the Company’s Common Stock during the repurchase period, less an agreed upon discount.

Final settlement of the June 2022 ASR will between August 18, 2022 and November 4, 2022.

Lam Research Corporation 2022 10-K 68

On February 15, 2022, the Company entered into an accelerated share repurchase agreement (the “February 2022 ASR") with two financial institutions to repurchase a total of $ 600 million of Common Stock.

The Company took an initial delivery of approximately 758 thousand shares, which represented 75 % of the prepayment amount divided by the Company’s closing stock price on February 15, 2022.

The total number of shares received under the February 2022 ASR was based upon the average daily volume weighted average price of the Company’s Common Stock during the repurchase period, less an agreed upon discount.

Final settlement of the February 2021 ASR occurred during May 2021, resulting in the receipt of approximately 213 thousand additional shares, which yielded a weighted-average share price of approximately $ 575.74 for the transaction period.

Final settlement of the February 2022 ASR occurred in May 2022, resulting in the receipt of approximately 438 thousand additional shares, which yielded a weighted-average share price of $ 502.06 for the transaction period.

On August 31, 2021, the Company entered into an accelerated share repurchase agreement (the “August 2021 ASR") with two financial institutions to repurchase a total of $ 650 million of Common Stock.

The Company took an initial delivery of approximately 806 thousand shares, which represented 75 % of the prepayment amount divided by the Company’s closing stock price on August 31, 2021.

The total number of shares received under the August 2021 ASR was based upon the average daily volume weighted average price of the Company’s Common Stock during the repurchase period, less an agreed upon discount.

Final settlement of the August 2021 ASR occurred in January 2022, resulting in the receipt of approximately 265 thousand additional shares, which yielded a weighted-average share price of $ 606.71 for the transaction period.

Comprehensive Income (Loss)

7 unchanged sentences

Balance as of June 27, 2021 $ ( 31,413 ) $ ( 14,125 ) $ 1,611 $ ( 20,201 ) $ ( 64,128 )

Other comprehensive income (loss) before reclassifications 14,398 22,139 ( 4,098 ) 326 32,765

Other comprehensive (loss) income before reclassifications ( 50,342 ) 30,849 ( 4,638 ) 5,941 ( 18,190 )

(Gains) losses reclassified from accumulated other comprehensive income (loss) to net income (1)

4 unchanged sentences

Tax related to other comprehensive income, and the components thereto, for the years ended June 26, 2022, June 27, 2021, and June 28, 2020 was not material.

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Segment, Geographic Information, and Major Customers

7 unchanged sentences

are attributed to the geographic locations in which the assets are located.

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Revenues and long-lived assets by geographic region were as follows:

16 unchanged sentences

Southeast Asia 248,029 129,881 31,027

Europe 77,661 80,297 72,928

Korea 183,809 62,502 49,943

Europe 77,658 77,661 80,297

Taiwan 72,845 47,279 11,555

2 unchanged sentences

$ 1,874,235 $ 1,477,263 $ 1,246,082

In fiscal year 2021, three customers accounted for approximately 25 %, 12 %, and 10 % of total revenues, respectively.

In fiscal year 2022, four customers accounted for approximately 21 %, 12 %, 12 % and 11 % of total revenues, respectively.

In fiscal year 2021, three customers accounted for approximately 25 %, 12 % and 10 % of total revenues, respectively.

In fiscal year 2020, four customers accounted for approximately 24 %, 14 %, 10 %, and 10 %, of total revenues, respectively.

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of Lam Research Corporation (the Company) as of June 26, 2022 and June 27, 2021, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended June 26, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 27, 2021 and June 28, 2020, and the results of its operations and its cash flows for each of the three years in the period ended June 27, 2021, in conformity with U.S.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 26, 2022 and June 27, 2021, and the results of its operations and its cash flows for each of the three years in the period ended June 26, 2022, in conformity with U.S.

generally accepted accounting principles.

59 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data