What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-01-30 compared with 2022-10-24 · 204 added, 101 removed, 464 unchanged (40% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

Three Months Ended

September 25,

2022 September 26,

Three Months Ended Six Months Ended

2022 December 26,

2021 December 25,

2022 December 26,

Revenue $ 5,277,569 $ 4,226,604 $ 10,351,690 $ 8,531,069

20 unchanged sentences

(in thousands)

Three Months Ended

September 25,

2022 September 26,

Three Months Ended Six Months Ended

2022 December 26,

2021 December 25,

2022 December 26,

Net income $ 1,468,507 $ 1,194,830 $ 2,894,386 $ 2,374,574

2 unchanged sentences

Cash flow hedges:

Net unrealized gains (losses) during the period 18,803 ( 9,005 )

Net gains reclassified into net income ( 9,297 ) ( 3,542 )

Net unrealized (losses) gains during the period ( 18,618 ) 12,792 185 3,787

Net losses (gains) reclassified into net income 1,273 ( 7,904 ) ( 8,024 ) ( 11,446 )

( 17,345 ) 4,888 ( 7,839 ) ( 7,659 )

1 unchanged sentence

Net unrealized gains (losses) during the period 490 ( 785 ) 570 ( 3,190 )

Net (gains) losses reclassified into net income ( 53 ) 1,145

Net losses (gains) reclassified into net income — 345 ( 53 ) 1,490

490 ( 440 ) 517 ( 1,700 )

Defined benefit plans, net change in unrealized component 279 ( 1,006 ) 572 ( 807 )

Other comprehensive (loss) income, net of tax ( 23,783 ) ( 17,640 )

Other comprehensive income (loss), net of tax 24,894 ( 6,378 ) 1,111 ( 24,018 )

Comprehensive income $ 1,493,401 $ 1,188,452 $ 2,895,497 $ 2,350,556

4 unchanged sentences

(in thousands, except per share data)

September 25,

2022 June 26,

2 unchanged sentences

Investments 103,130 135,731

Accounts receivable, less allowance of $ 5,536 as of September 25, 2022, and $ 5,606 as of June 26, 2022

Accounts receivable, less allowance of $ 5,411 as of December 25, 2022, and $ 5,606 as of June 26, 2022

4,070,088 4,313,818

23 unchanged sentences

Common stock, at par value of $ 0.001 per share;

authorized, 400,000 shares as of September 25, 2022 and June 26, 2022;

issued and outstanding, 136,374 shares as of September 25, 2022, and 136,975 shares as of June 26, 2022

authorized, 400,000 shares as of December 25, 2022 and June 26, 2022;

issued and outstanding, 135,403 shares as of December 25, 2022, and 136,975 shares as of June 26, 2022

Additional paid-in capital 7,606,149 7,414,916

Treasury stock, at cost;

157,773 shares as of September 25, 2022, and 157,087 shares as of June 26, 2022

158,775 shares as of December 25, 2022, and 157,087 shares as of June 26, 2022

( 20,071,931 ) ( 19,481,429 )

9 unchanged sentences

(in thousands) (unaudited)

Three Months Ended

September 25,

2022 September 26,

Six Months Ended

2022 December 26,

CASH FLOWS FROM OPERATING ACTIVITIES:

9 unchanged sentences

Capital expenditures and intangible assets ( 303,441 ) ( 274,920 )

Business acquisitions, net of cash acquired ( 119,955 ) —

Purchases of available-for-sale securities — ( 268,457 )

7 unchanged sentences

Dividends paid ( 441,595 ) ( 396,647 )

Reissuance of treasury stock related to employee stock purchase plan 44,996 46,380

Proceeds from issuance of common stock 7,673 4,193

2 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 953 ( 8,454 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 733,919 ( 377,151 )

Net increase in cash, cash equivalents, and restricted cash 962,525 666,657

Cash, cash equivalents, and restricted cash at beginning of period 3,773,535 4,670,750

5 unchanged sentences

Transfers of finished goods inventory to property and equipment 56,932 55,322

Reconciliation of cash, cash equivalents, and restricted cash September 25,

2022 September 26,

Reconciliation of cash, cash equivalents, and restricted cash December 25,

2022 December 26,

Cash and cash equivalents $ 4,484,716 $ 5,086,544

7 unchanged sentences

Three Months Ended

September 25, 2022

December 25, 2022

Shares Common

5 unchanged sentences

Earnings Total

Balance at September 25, 2022 136,374 $ 136 $ 7,492,822 $ ( 19,591,249 ) $ ( 133,765 ) $ 19,644,623 $ 7,412,567

Issuance of common stock 31 — 877 — — — 877

Purchase of treasury stock ( 1,133 ) ( 1 ) — ( 486,312 ) — — ( 486,313 )

Reissuance of treasury stock 131 — 39,366 5,630 — — 44,996

Equity-based compensation expense — — 73,084 — — — 73,084

Net income — — — — — 1,468,507 1,468,507

Other comprehensive income — — — — 24,894 — 24,894

Cash dividends declared ($ 1.725 per common share)

— — — — — ( 233,977 ) ( 233,977 )

Balance at December 25, 2022 135,403 $ 135 $ 7,606,149 $ ( 20,071,931 ) $ ( 108,871 ) $ 20,879,153 $ 8,304,635

Six Months Ended

December 25, 2022

Shares Common

Stock Additional

Capital Treasury

Stock Accumulated

Comprehensive

Loss Retained

Earnings Total

Balance at June 26, 2022 136,975 $ 137 $ 7,414,916 $ ( 19,481,429 ) $ ( 109,982 ) $ 18,454,724 $ 6,278,366

1 unchanged sentence

Purchase of treasury stock ( 1,819 ) ( 2 ) — ( 596,132 ) — — ( 596,134 )

Reissuance of treasury stock 131 — 39,366 5,630 — — 44,996

Equity-based compensation expense — — 144,194 — — — 144,194

Net income — — — — — 2,894,386 2,894,386

Other comprehensive loss — — — — ( 23,783 ) — ( 23,783 )

Other comprehensive income — — — — 1,111 — 1,111

Cash dividends declared ($ 3.450 per common share)

— — — — — ( 469,957 ) ( 469,957 )

Balance at September 25, 2022 136,374 $ 136 $ 7,492,822 $ ( 19,591,249 ) $ ( 133,765 ) $ 19,644,623 $ 7,412,567

Balance at December 25, 2022 135,403 $ 135 $ 7,606,149 $ ( 20,071,931 ) $ ( 108,871 ) $ 20,879,153 $ 8,304,635

See Notes to Condensed Consolidated Financial Statements

Lam Research Corporation 2023 Q2 10-Q 7

Three Months Ended

September 26, 2021

December 26, 2021

Shares Common

5 unchanged sentences

Earnings Total

Balance at September 26, 2021 140,811 $ 141 $ 7,111,803 $ ( 16,863,573 ) $ ( 81,768 ) $ 15,653,440 $ 5,820,043

Issuance of common stock 52 — 3,451 — — — 3,451

Purchase of treasury stock ( 685 ) ( 1 ) — ( 434,791 ) — — ( 434,792 )

Reissuance of treasury stock 97 — 42,271 4,109 — — 46,380

Equity-based compensation expense — — 62,834 — — — 62,834

Net income — — — — — 1,194,830 1,194,830

Other comprehensive loss — — — — ( 6,378 ) — ( 6,378 )

Cash dividends declared ($ 1.50 per common share)

— — — — — ( 210,587 ) ( 210,587 )

Balance at December 26, 2021 140,275 $ 140 $ 7,220,359 $ ( 17,294,255 ) $ ( 88,146 ) $ 16,637,683 $ 6,475,781

Six Months Ended

December 26, 2021

Shares Common

Stock Additional

Capital Treasury

Stock Accumulated

Comprehensive

Loss Retained

Earnings Total

Balance at June 27, 2021 142,501 $ 143 $ 7,052,962 $ ( 15,646,701 ) $ ( 64,128 ) $ 14,684,912 $ 6,027,188

1 unchanged sentence

Purchase of treasury stock ( 2,422 ) ( 3 ) — ( 1,651,663 ) — — ( 1,651,666 )

Reissuance of treasury stock 97 — 42,271 4,109 — — 46,380

Equity-based compensation expense — — 120,933 — — — 120,933

3 unchanged sentences

— — — — — ( 421,803 ) ( 421,803 )

Balance at September 26, 2021 140,811 $ 141 $ 7,111,803 $ ( 16,863,573 ) $ ( 81,768 ) $ 15,653,440 $ 5,820,043

Balance at December 26, 2021 140,275 $ 140 $ 7,220,359 $ ( 17,294,255 ) $ ( 88,146 ) $ 16,637,683 $ 6,475,781

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 25, 2022

December 25, 2022

NOTE 1 — BASIS OF PRESENTATION

6 unchanged sentences

The address of that site is www.sec.gov .

The Company also posts its reports on Form 10-K, Form 10-Q and Form 8-K on its corporate website at http://investor.lamresearch.com .

The Company also posts its reports on Form 10-K, Form 10-Q and Form 8-K on its corporate website at https://investor.lamresearch.com .

The content on any website referred to in this Form 10-Q is not a part of or incorporated by reference in this Form 10-Q unless expressly noted.

3 unchanged sentences

The Company’s current fiscal year will end June 25, 2023 and includes 52 weeks.

The quarters ended September 25, 2022 (the “September 2022 quarter”) and September 26, 2021 included 13 weeks.

The quarters ended December 25, 2022 (the “December 2022 quarter”) and December 26, 2021 included 13 weeks.

NOTE 2 — RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted or Effective

The Company has not adopted any new accounting standards during the first quarter of fiscal year 2023 that have a material impact on the Company’s Condensed Consolidated Financial Statements.

In March 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“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.

In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848,” extending the relief offered in this series of ASUs through December 31, 2024.

In December 2022, the Company executed Amendment No.

1 To Second Amended and Restated Credit Agreement, the primary purpose of which was to change the reference rate for borrowings under the Credit Agreement by replacing LIBOR with the Secured Overnight Financing Rate (“SOFR”).

The Company applied practical expedients provided in Topic 848 allowing for the changes in contractual terms to be accounted for prospectively.

These modifications had no significant impact on our financial statements.

Refer to Note 12 - Long-term debt and other borrowings for further information regarding the terms of the Credit Agreement.

In October 2021, the FASB issued ASU No.

2021-08, “Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires contract assets and contract liabilities (e.g., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers” as if the acquirer had originated the contracts.

The guidance is applied prospectively to acquisitions occurring on or after the effective date.

The Company early adopted ASU No.

2021-08 during the quarter ended December 25, 2022.

The adoption of the new standard did not have a material impact on the Company’s Condensed Consolidated financial statements.

Updates Not Yet Effective

There are no new accounting pronouncements not yet adopted or effective that are expected to have a material impact on the Company’s Condensed Consolidated Financial Statements.

Lam Research Corporation 2023 Q2 10-Q 9

NOTE 3 — REVENUE

Deferred Revenue

Revenue of $ 1,542.5 million included in deferred profit at June 26, 2022 was recognized during the three months ended September 25, 2022.

The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of September 25, 2022 and when the Company expects to recognize the amounts as revenue:

Revenue of $ 190.2 million and $ 1,732.7 million included in deferred profit at June 26, 2022 was recognized during the three and six months ended December 25, 2022, respectively.

The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of December 25, 2022 and when the Company expects to recognize the amounts as revenue:

Less than 1 Year 1-3 Years More than 3 Years Total

11 unchanged sentences

memory, foundry, and logic/integrated device manufacturing.

Lam Research Corporation 2023 Q1 10-Q 8

The following table presents the Company’s revenues disaggregated between system and its customer support-related revenue:

Three Months Ended

September 25,

2022 September 26,

Three Months Ended Six Months Ended

2022 December 26,

2021 December 25,

2022 December 26,

(In thousands)

5 unchanged sentences

The following table presents the Company’s revenues disaggregated by geographic region:

Three Months Ended

September 25,

2022 September 26,

Three Months Ended Six Months Ended

2022 December 26,

2021 December 25,

2022 December 26,

(In thousands)

China $ 1,263,507 $ 1,080,973 $ 2,793,982 $ 2,688,683

Taiwan 1,120,946 638,066

Korea 1,077,052 1,068,220 1,932,430 1,986,357

Southeast Asia 541,064 365,248

Taiwan 991,173 773,121 2,112,119 1,411,187

Japan 575,945 513,936 1,034,638 982,667

Southeast Asia 528,836 364,382 1,069,900 729,630

United States 503,238 244,798 808,215 473,009

1 unchanged sentence

$ 5,277,569 $ 4,226,604 $ 10,351,690 $ 8,531,069

Lam Research Corporation 2023 Q2 10-Q 10

The following table presents the percentages of leading- and non-leading-edge equipment and upgrade revenue to each of the primary markets the Company serves:

Three Months Ended

September 25,

2022 September 26,

Three Months Ended Six Months Ended

2022 December 26,

2021 December 25,

2022 December 26,

Memory 50 % 58 % 50 % 61 %

8 unchanged sentences

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

Lam Research Corporation 2023 Q1 10-Q 9

The Company recognized the following equity-based compensation expense (including expense related to the employee stock purchase plan) and related income tax benefit in the Condensed Consolidated Statements of Operations:

Three Months Ended

September 25,

2022 September 26,

Three Months Ended Six Months Ended

2022 December 26,

2021 December 25,

2022 December 26,

(in thousands)

3 unchanged sentences

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

Three Months Ended

September 25,

2022 September 26,

Three Months Ended Six Months Ended

2022 December 26,

2021 December 25,

2022 December 26,

(in thousands)

1 unchanged sentence

Interest expense ( 46,661 ) ( 46,765 ) ( 92,713 ) ( 91,821 )

(Losses) gains on deferred compensation plan-related assets, net ( 12,726 ) 7,437

Foreign exchange gains (losses), net 6,821 ( 17 )

Gains (losses) on deferred compensation plan-related assets, net 10,871 ( 56 ) ( 1,855 ) 7,381

Foreign exchange (losses) gains, net ( 10,114 ) 731 ( 3,293 ) 714

Other, net ( 8,455 ) 61,717 ( 14,649 ) 65,818

$ ( 28,234 ) $ 17,999 $ ( 71,329 ) $ ( 10,858 )

Other, net includes an unrealized gain totaling $ 46.6 million associated with an equity investee that became publicly traded during the three and six months ended December 26, 2021.

Refer to Note 8 - Financial Instruments for additional information regarding the Company’s investments.

Lam Research Corporation 2023 Q2 10-Q 11

NOTE 6 — INCOME TAX EXPENSE

The Company’s provision for income taxes and effective tax rate are as follows:

Three Months Ended

September 25,

2022 September 26,

Three Months Ended Six Months Ended

2022 December 26,

2021 December 25,

2022 December 26,

(in thousands, except percentages)

2 unchanged sentences

The difference between the U.S.

federal statutory tax rate of 21% and the Company’s effective tax rate for the three months ended September 25, 2022 and September 26, 2021 was primarily due to income in lower tax jurisdictions.

federal statutory tax rate of 21% and the Company’s effective tax rate for the three and six months ended December 25, 2022 and December 26, 2021 was primarily due to income in lower tax jurisdictions.

The Internal Revenue Service (“IRS”) has examined the Company’s U.S.

2 unchanged sentences

The Company has agreed to pay the amount and has made a partial cash settlement in the September quarter with the remaining settlement expected to be paid based on the IRS requirements.

The IRS is examining the Company’s U.S.

federal income tax returns for the fiscal years ended June 30, 2019, and June 28, 2020.

As of December 25, 2022, 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.

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.

1 unchanged sentence

The change in uncertain tax positions as a result of lapses of statutes of limitation may range up to $ 18.4 million.

Lam Research Corporation 2023 Q1 10-Q 10

NOTE 7 — NET INCOME PER SHARE

2 unchanged sentences

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

Three Months Ended

September 25,

2022 September 26,

Three Months Ended Six Months Ended

2022 December 26,

2021 December 25,

2022 December 26,

(in thousands, except per share data)

7 unchanged sentences

For purposes of computing diluted net income per share, weighted-average common shares do not include potentially dilutive securities that are anti-dilutive under the treasury stock method.

The impact from potentially dilutive securities, including options and RSUs, was not material for the three months ended September 25, 2022 and September 26, 2021.

The impact from potentially dilutive securities, including options and RSUs, was not material for the three and six months ended December 25, 2022 and December 26, 2021.

Lam Research Corporation 2023 Q2 10-Q 12

NOTE 8 — FINANCIAL INSTRUMENTS

17 unchanged sentences

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

Lam Research Corporation 2023 Q1 10-Q 11

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 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.

8 unchanged sentences

The fair value of the Company’s senior notes is based on the quoted price (level 2);

the fair value of the Company's senior notes have not changed materially to that disclosed in Note 14, “Long Term Debt and Other Borrowings,” to our Consolidated Financial Statements in Part II, Item 8 of our 2022 Form 10-K.

the fair value of the Company's senior notes have not changed materially to that disclosed in Note 14, “Long Term Debt and Other Borrowings,” to the Company’s Consolidated Financial Statements in Part II, Item 8 of our 2022 Form 10-K.

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

As of September 25, 2022, and June 26, 2022, equity investments of $ 126.0 million and $ 125.2 million, respectively, were reported in other assets in the Condensed Consolidated Balance Sheets.

Net gains resulting from the application of the measurement alternative to the Company’s equity investments were immaterial for the three months ended September 25, 2022, and September 26, 2021.

As of December 25, 2022, and June 26, 2022, equity investments of $ 121.3 million and $ 125.2 million, respectively, were reported in other assets in the Condensed Consolidated Balance Sheets.

Lam Research Corporation 2023 Q2 10-Q 13

With the exception of one equity investee that became publicly traded during the three and six months ended December 26, 2021, net gains resulting from the application of the measurement alternative to the Company’s equity investments were immaterial for the three and six months ended December 25, 2022, and December 26, 2021.

Refer to Note 5 - Other Income (Expense), net for additional information regarding the gain associated with an equity investee that became publicly traded in the three and six months ended December 26, 2021.

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 September 25, 2022, and June 26, 2022:

September 25, 2022

December 25, 2022

(Reported Within)

14 unchanged sentences

Total $ 4,931,980 $ 4,484,716 $ 103,130 $ 251,344 $ 92,790

Lam Research Corporation 2023 Q1 10-Q 12

June 26, 2022

23 unchanged sentences

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 three months ended September 25, 2022 and September 26, 2021.

Gross realized gains/(losses) from sales of investments were insignificant in the three months ended September 25, 2022 and September 26, 2021.

No such losses were recognized through the income statement during the three and six months ended December 25, 2022 and December 26, 2021.

Lam Research Corporation 2023 Q2 10-Q 14

Gross realized gains/(losses) from sales of investments were insignificant in the three and six months ended December 25, 2022 and December 26, 2021.

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

September 25, 2022

December 25, 2022

Unrealized Losses

8 unchanged sentences

$ 109,447 $ ( 3,741 ) $ 19,994 $ ( 519 ) $ 129,441 $ ( 4,260 )

The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities are as follows as of September 25, 2022:

The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities are as follows as of December 25, 2022:

(in thousands)

2 unchanged sentences

$ 2,817,996 $ 2,816,541

Lam Research Corporation 2023 Q1 10-Q 13

The Company has the ability, if necessary, to liquidate its investments in order to meet the Company’s liquidity needs in the next 12 months.

1 unchanged sentence

Derivative Instruments and Hedging

The Company’s hedging strategies and policies are unchanged to those disclosed in Note 9, “Financial Instruments,” to our Consolidated Financial Statements in Part II, Item 8 of our 2022 Form 10-K.

The financial statement impacts from derivative instruments and hedging activities were not material as of and for the three months ended September 25, 2022 and September 26, 2021.

The Company’s hedging strategies and policies are unchanged from those disclosed in Note 9, “Financial Instruments,” to our Consolidated Financial Statements in Part II, Item 8 of our 2022 Form 10-K.

The financial statement impacts from derivative instruments and hedging activities were not material as of and for the three and six months ended December 25, 2022 and December 26, 2021.

Concentrations of Credit Risk

9 unchanged sentences

In general, the Company does not require collateral on sales.

Lam Research Corporation 2023 Q2 10-Q 15

NOTE 9 — INVENTORIES

2 unchanged sentences

Inventories consist of the following:

September 25,

2022 June 26,

5 unchanged sentences

NOTE 10 — GOODWILL AND INTANGIBLE ASSETS

The balance of goodwill is approximately $ 1.5 billion as of September 25, 2022 and June 26, 2022.

As of September 25, 2022 and June 26, 2022, $ 62.0 million of the goodwill balance is tax deductible and the remaining balance is not tax deductible due to purchase accounting and applicable foreign law.

Lam Research Corporation 2023 Q1 10-Q 14

The balance of goodwill is approximately $ 1.6 billion and $ 1.5 billion as of December 25, 2022 and June 26, 2022, respectively.

As of December 25, 2022 and June 26, 2022, $ 62.0 million of the goodwill balance is tax deductible and the remaining balance is not tax deductible due to purchase accounting and applicable foreign law.

Refer to Note 1 7 - Business Combination s for additional information regarding the Company’s goodwill balance.

Intangible Assets

The following table provides the Company’s intangible assets, other than goodwill:

September 25, 2022 June 26, 2022

December 25, 2022 June 26, 2022

Gross Accumulated

5 unchanged sentences

Patents and other intangible assets 191,676 ( 100,870 ) 90,806 167,821 ( 84,493 ) 83,328

Intangible assets subject to amortization 1,553,025 ( 1,398,325 ) 154,700 1,477,997 ( 1,376,147 ) 101,850

In process research and development 30,081 — 30,081 — — —

Total intangible assets $ 1,583,106 $ ( 1,398,325 ) $ 184,781 $ 1,477,997 $ ( 1,376,147 ) $ 101,850

The Company recognized $ 11.6 million and $ 19.1 million in intangible asset amortization expense during the three months ended September 25, 2022 and September 26, 2021, respectively.

The estimated future amortization expense of intangible assets as of September 25, 2022, is reflected in the table below.

The Company recognized $ 12.2 million and $ 19.5 million in intangible asset amortization expense during the three months ended December 25, 2022 and December 26, 2021, respectively.

The Company recognized $ 23.8 million and $ 38.6 million in intangible asset amortization expense during the six months ended December 25, 2022 and December 26, 2021, respectively.

The estimated future amortization expense of intangible assets as of December 25, 2022, is reflected in the table below.

The table excludes $ 27.7 million of capitalized costs for internal-use software that have not been placed into service.

3 unchanged sentences

Thereafter 19,237

Refer to Note 1 7 - Business Combination s for additional information regarding the Company’s intangible assets.

Lam Research Corporation 2023 Q2 10-Q 16

NOTE 11 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

September 25,

2022 June 26,

6 unchanged sentences

$ 2,068,370 $ 1,974,272

NOTE 12 — LONG-TERM DEBT AND OTHER BORROWINGS

Revolving Credit Facility

On March 12, 2014, the Company established an unsecured Credit Agreement.

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”), June 17, 2021 (the “Second Amended and Restated Credit Agreement”), and December 7, 2022 (“Amendment No.1 to Second Amended and Restated Credit Agreement”).

The Amendment No.1 To Second Amended and Restated Credit Agreement replaces the benchmark reference rate, LIBOR, with term SOFR equal to the term rate determined by the CME term SOFR administrator plus 0.10 % (“adjusted term SOFR”), with no change to the amount or timing of contractual cash flows.

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) adjusted term SOFR plus 1.0 %, plus a spread of 0.00 % to 0.30 %, or (2) adjusted term SOFR, 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 Amendment No.1 To 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.

As of December 25, 2022, the Company had no borrowings outstanding under the credit facility and was in compliance with all financial covenants.

NOTE 13 — LEASES

5 unchanged sentences

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

Lam Research Corporation 2023 Q1 10-Q 15

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 $ 250.0 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 Condensed Consolidated Balance Sheet as of September 25, 2022.

These amounts are recorded with other restricted cash and investments in the Company’s Condensed Consolidated Balance Sheet as of December 25, 2022.

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.

3 unchanged sentences

Refer to Note 13 - Leases for details regarding guarantees surrounding selected leases.

Lam Research Corporation 2023 Q2 10-Q 17

Other Guarantees

1 unchanged sentence

The Company has entered into insurance contracts that are intended to limit its exposure to such indemnifications.

As of September 25, 2022, the Company had not recorded any liability on its Condensed Consolidated Financial Statements in connection with these indemnifications, as it does not believe that it is probable that any material amounts will be paid under these guarantees.

As of December 25, 2022, the Company had not recorded any liability on its Condensed Consolidated Financial Statements in connection with these indemnifications, as it does not believe that it is probable that any material amounts will be paid under these guarantees.

Generally, the Company indemnifies, under pre-determined conditions and limitations, its customers for infringement of third-party intellectual property rights by the Company’s products or services.

2 unchanged sentences

The Company provides guarantees and standby letters of credit to certain parties as required for certain transactions initiated during the ordinary course of business.

As of September 25, 2022, the maximum potential amount of future payments that the Company could be required to make under these arrangements and letters of credit was $ 97.4 million.

As of December 25, 2022, the maximum potential amount of future payments that the Company could be required to make under these arrangements and letters of credit was $ 98.6 million.

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.

5 unchanged sentences

The liability amount is based on actual historical warranty spending activity by type of system, customer, and geographic region, modified for any known differences such as the impact of system reliability improvements.

As of September 25, 2022, warranty reserves totaling $ 26.4 million were recognized in other long-term liabilities, the remainder were included in accrued expenses and other current liabilities in the Company’s Condensed Consolidated Balance Sheets.

As of December 25, 2022, warranty reserves totaling $ 34.8 million were recognized in other long-term liabilities, the remainder were included in accrued expenses and other current liabilities in the Company’s Condensed Consolidated Balance Sheets.

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

Three Months Ended

September 25,

2022 September 26,

Three Months Ended Six Months Ended

2022 December 26,

2021 December 25,

2022 December 26,

(in thousands)

5 unchanged sentences

Balance at end of period $ 318,969 $ 228,388 $ 318,969 $ 228,388

Lam Research Corporation 2023 Q1 10-Q 16

Legal Proceedings

3 unchanged sentences

Based on current information, the Company does not believe that a material loss from known matters is probable and therefore has not recorded an accrual of any material amount for litigation or other contingencies related to existing legal proceedings.

Lam Research Corporation 2023 Q2 10-Q 18

NOTE 15 — STOCK REPURCHASE PROGRAM

12 unchanged sentences

Quarter ended September 25, 2022 675 (2) $ 104,982 $ 432.74 $ 5,409,654

Quarter ended December 25, 2022 1,125 $ 483,226 $ 429.42 $ 4,926,428

(1) Average price paid per share excludes the effect of accelerated share repurchase activities.

See additional disclosure below regarding the Company’s accelerated share repurchase activity during the three months ended September 25, 2022.

See additional disclosure below regarding the Company’s accelerated share repurchase activity during the six months ended December 25, 2022.

(2) Includes shares received at final settlement of accelerated share repurchase agreements;

see additional disclosures below regarding the Company’s accelerated share repurchase activity during the three months ended September 25, 2022.

In addition to the shares repurchased under the Board-authorized repurchase program shown above, during the three months ended September 25, 2022, the Company acquired 11 thousand shares at a total cost of $ 4.8 million, which the Company withheld through net settlements to cover minimum tax withholding obligations upon the vesting of restricted stock unit awards granted under the Company’s equity compensation plans.

see additional disclosures below regarding the Company’s accelerated share repurchase activity during the six months ended December 25, 2022.

In addition to the shares repurchased under the Board-authorized repurchase program shown above, during the three and six months ended December 25, 2022, the Company acquired 8 thousand shares at a total cost of $ 3.1 million and 19 thousand shares at a total cost of $ 7.9 million, respectively, which the Company withheld through net settlements to cover minimum tax withholding obligations upon the vesting of restricted stock unit awards granted under the Company’s equity compensation plans.

The shares retained by the Company through these net share settlements are not a part of the Board-authorized repurchase program but instead are authorized under the Company’s equity compensation plan.

4 unchanged sentences

Final settlement of the June 2022 ASR occurred in September 2022, resulting in the receipt of approximately 433 thousand additional shares, which yielded a weighted-average share price of $ 435.20 for the transaction period.

Lam Research Corporation 2023 Q1 10-Q 17

NOTE 16 — ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss, net of tax at September 25, 2022, as well as the activity for the three months ending September 25, 2022, were as follows:

The components of accumulated other comprehensive loss, net of tax at December 25, 2022, as well as the activity for the six months ending December 25, 2022, were as follows:

Accumulated Foreign Currency Translation Adjustment Accumulated

6 unchanged sentences

Balance at June 26, 2022 $ ( 81,755 ) $ ( 12,330 ) $ ( 1,637 ) $ ( 14,260 ) $ ( 109,982 )

Other comprehensive (loss) income before reclassifications ( 33,609 ) 18,803 80 293 ( 14,433 )

Other comprehensive income before reclassifications 7,861 185 570 572 9,188

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

( 53 ) — ( 8,077 )

Net current-period other comprehensive loss ( 33,609 ) 9,506 27 293 ( 23,783 )

Balance at September 25, 2022 $ ( 115,364 ) $ ( 2,824 ) $ ( 1,610 ) $ ( 13,967 ) $ ( 133,765 )

Net current-period other comprehensive income (loss) 7,861 ( 7,839 ) 517 572 1,111

Balance at December 25, 2022 $ ( 73,894 ) $ ( 20,169 ) $ ( 1,120 ) $ ( 13,688 ) $ ( 108,871 )

(1) Amount of after-tax gains reclassified from AOCI into net income is not material in the aggregate, or to any individual location in our Condensed Consolidated Statements of Operations.

Lam Research Corporation 2023 Q2 10-Q 19

NOTE 17 — BUSINESS COMBINATIONS

In November 2022, the Company completed two business combination transactions acquiring the outstanding shares of two separate private companies in cash transactions valued at $ 153.8 million as of the respective purchase dates.

The Company’s preliminary assessment of acquisition date fair value of the assets acquired and liabilities assumed resulted in the recognition of $ 100.4 million of goodwill and $ 81.2 million of intangible assets;

all other assets acquired and all liabilities assumed were immaterial .

The preliminary fair value of net tangible liabilities assumed and intangible assets acquired was based on preliminary valuations, estimates, and assumptions which are subject to change within the measurement period (up to one year from the acquisition date).

The Company expensed all associated costs, as incurred, in selling, general, and administrative expense in the Condensed Consolidated Statement of Operations for the three and six months ended December 25, 2022.

The following table is a summary of the preliminary fair value estimates of the identifiable intangible assets and their useful lives:

Weighted-Average Useful Life Estimated Purchase Date Fair Value

(in thousands)

Existing technology 7 years

Customer relationships 8 years

In process research and development Indefinite 30,081

NOTE 18 — SUBSEQUENT EVENT

In January 2023, the Company announced its plan to reduce headcount by approximately 1,300 employees as part of restructuring activity that will commence in the three months ended March 26, 2023.

The Company estimates it will incur approximately $ 80.0 million in connection with this activity.

Lam Research Corporation 2023 Q2 10-Q 20

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-Q

Item 1. Financial Statements