What changed in this filing

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Item 1. Financial Statements

2023-10-23 compared with 2023-04-24 · 137 added, 313 removed, 377 unchanged (54% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

Three Months Ended Nine Months Ended

2023 March 27,

2022 March 26,

2023 March 27,

Three Months Ended

September 24,

2023 September 25,

Revenue $ 3,482,062 $ 5,074,121

23 unchanged sentences

(in thousands)

Three Months Ended Nine Months Ended

2023 March 27,

2022 March 26,

2023 March 27,

Three Months Ended

September 24,

2023 September 25,

Net income $ 887,398 $ 1,425,879

2 unchanged sentences

Cash flow hedges:

Net unrealized (losses) gains during the period ( 3,320 ) 12,506 ( 3,135 ) 16,293

Net losses (gains) reclassified into net income 2,546 ( 5,759 ) ( 5,478 ) ( 17,205 )

Net unrealized gains during the period 8,598 18,803

Net gains reclassified into net income ( 8,917 ) ( 9,297 )

( 319 ) 9,506

Available-for-sale investments:

Net unrealized gains (losses) during the period 652 ( 1,333 ) 1,222 ( 4,523 )

Net (gains) losses reclassified into net income ( 105 ) ( 34 ) ( 158 ) 1,456

547 ( 1,367 ) 1,064 ( 3,067 )

Net unrealized gains during the period 182 80

Net gains reclassified into net income ( 10 ) ( 53 )

Defined benefit plans, net change in unrealized component 181 293

Other comprehensive income (loss), net of tax 3,776 ( 9,520 ) 4,887 ( 33,538 )

Other comprehensive loss, net of tax ( 20,644 ) ( 23,783 )

Comprehensive income $ 866,754 $ 1,402,096

4 unchanged sentences

(in thousands, except per share data)

September 24,

2023 June 25,

2 unchanged sentences

Investments 30,557 37,641

Accounts receivable, less allowance of $ 5,359 as of March 26, 2023, and $ 5,606 as of June 26, 2022

Accounts receivable, less allowance of $ 5,255 as of September 24, 2023, and $ 5,344 as of June 25, 2023

2,810,953 2,823,376

3 unchanged sentences

Property and equipment, net 2,110,511 1,856,672

Restricted cash and investments 250,688 251,534

Goodwill 1,626,382 1,622,489

12 unchanged sentences

Total liabilities 10,491,127 10,571,471

Commitments and contingencies

Commitments and contingencies (refer to Note 13)

Stockholders’ equity:

2 unchanged sentences

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

authorized, 400,000 shares as of March 26, 2023 and June 26, 2022;

issued and outstanding, 134,692 shares as of March 26, 2023, and 136,975 shares as of June 26, 2022

authorized, 400,000 shares as of September 24, 2023 and June 25, 2023;

issued and outstanding, 132,072 shares as of September 24, 2023, and 133,297 shares as of June 25, 2023

Additional paid-in capital 7,879,031 7,809,002

Treasury stock, at cost;

159,940 shares as of March 26, 2023, and 157,087 shares as of June 26, 2022

162,646 shares as of September 24, 2023, and 161,380 shares as of June 25, 2023

( 22,365,872 ) ( 21,530,353 )

9 unchanged sentences

(in thousands) (unaudited)

Nine Months Ended

2023 March 27,

Three Months Ended

September 24,

2023 September 25,

CASH FLOWS FROM OPERATING ACTIVITIES:

9 unchanged sentences

Capital expenditures and intangible assets ( 76,992 ) ( 140,063 )

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

Purchases of available-for-sale securities — ( 567,819 )

Proceeds from maturities of available-for-sales securities 7,275 14,695

Proceeds from sales of available-for-sale securities 6,837 1,543,094

Other, net ( 4,966 ) ( 2,435 )

Net cash (used for) provided by investing activities ( 479,382 ) 688,212

Net cash used for investing activities ( 74,683 ) ( 127,803 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal payments on debt ( 21,145 ) ( 9,857 )

Principal payments on debt, including finance lease obligations ( 253,109 ) ( 1,854 )

Treasury stock purchases ( 843,238 ) ( 109,779 )

Dividends paid ( 230,332 ) ( 205,615 )

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

Proceeds from issuance of common stock 2,818 6,796

2 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 11,031 ) ( 16,925 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 1,782,801 ( 224,995 )

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 460,563 ) 733,919

Cash, cash equivalents, and restricted cash at beginning of period (1)

5,587,372 3,773,535

Cash, cash equivalents, and restricted cash at end of period (1)

$ 5,126,809 $ 4,507,454

Schedule of non-cash transactions:

3 unchanged sentences

Transfers of finished goods inventory to property and equipment 18,014 20,798

Reconciliation of cash, cash equivalents, and restricted cash March 26,

2023 March 27,

Reconciliation of cash, cash equivalents, and restricted cash September 24,

2023 September 25,

Cash and cash equivalents $ 5,126,150 $ 4,256,499

1 unchanged sentence

Total cash, cash equivalents, and restricted cash $ 5,126,809 $ 4,507,454

(1) Restricted cash is reported within Other assets, in the Condensed Consolidated Balance Sheets

See Notes to Condensed Consolidated Financial Statements

4 unchanged sentences

Three Months Ended

March 26, 2023

Shares Common

Stock Additional

Capital Treasury

Stock Accumulated

Comprehensive

Loss Retained

Earnings Total

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

Issuance of common stock 454 1 ( 1 ) — — — —

Purchase of treasury stock ( 1,165 ) ( 1 ) — ( 555,898 ) — — ( 555,899 )

Equity-based compensation expense — — 73,911 — — — 73,911

Net income — — — — — 814,008 814,008

Other comprehensive income — — — — 3,776 — 3,776

Cash dividends declared ($ 1.725 per common share)

— — — — — ( 233,043 ) ( 233,043 )

Balance at March 26, 2023 134,692 $ 135 $ 7,680,059 $ ( 20,627,829 ) $ ( 105,095 ) $ 21,460,118 $ 8,407,388

Nine Months Ended

March 26, 2023

September 24, 2023

Shares Common

8 unchanged sentences

Purchase of treasury stock ( 1,266 ) ( 1 ) — ( 835,519 ) — — ( 835,520 )

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

Equity-based compensation expense — — 67,211 — — — 67,211

Net income — — — — — 887,398 887,398

Other comprehensive income — — — — 4,887 — 4,887

Cash dividends declared ($ 5.175 per common share)

— — — — — ( 703,000 ) ( 703,000 )

Balance at March 26, 2023 134,692 $ 135 $ 7,680,059 $ ( 20,627,829 ) $ ( 105,095 ) $ 21,460,118 $ 8,407,388

See Notes to Condensed Consolidated Financial Statements

Lam Research Corporation 2023 Q3 10-Q 7

Three Months Ended

March 27, 2022

Shares Common

Stock Additional

Capital Treasury

Stock Accumulated

Comprehensive

Loss Retained

Earnings Total

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

Issuance of common stock 664 1 491 — — — 492

Purchase of treasury stock ( 2,232 ) ( 2 ) — ( 1,322,525 ) — — ( 1,322,527 )

Equity-based compensation expense — — 68,543 — — — 68,543

Net income — — — — — 1,021,778 1,021,778

Other comprehensive loss — — — — ( 20,644 ) — ( 20,644 )

1 unchanged sentence

— — — — — ( 264,105 ) ( 264,105 )

Balance at March 27, 2022 138,707 $ 139 $ 7,289,393 $ ( 18,616,780 ) $ ( 97,666 ) $ 17,451,404 $ 6,026,490

Nine Months Ended

March 27, 2022

Balance at September 24, 2023 132,072 $ 132 $ 7,879,031 $ ( 22,365,872 ) $ ( 121,350 ) $ 22,655,389 $ 8,047,330

Three Months Ended

September 25, 2022

Shares Common

8 unchanged sentences

Purchase of treasury stock ( 686 ) ( 1 ) — ( 109,820 ) — — ( 109,821 )

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

Equity-based compensation expense — — 71,110 — — — 71,110

3 unchanged sentences

— — — — — ( 235,980 ) ( 235,980 )

Balance at March 27, 2022 138,707 $ 139 $ 7,289,393 $ ( 18,616,780 ) $ ( 97,666 ) $ 17,451,404 $ 6,026,490

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

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 26, 2023

September 24, 2023

NOTE 1 — BASIS OF PRESENTATION

4 unchanged sentences

The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements of Lam Research Corporation (“Lam Research” or the “Company”) for the fiscal year ended June 25, 2023, which are included in the Company’s Annual Report on Form 10-K as of and for the year ended June 25, 2023 (the “2023 Form 10-K”).

The Company’s reports on Form 10-K, Form 10-Q and Form 8-K are available online at the Securities and Exchange Commission website on the Internet.

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 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.

The condensed consolidated financial statements include the accounts of Lam Research and its wholly-owned subsidiaries.

2 unchanged sentences

The Company’s current fiscal year will end June 30, 2024 and includes 53 weeks.

The quarters ended March 26, 2023 (the “March 2023 quarter”) and March 27, 2022 included 13 weeks.

The quarters ended September 24, 2023 (the “September 2023 quarter”) and September 25, 2022 included 13 weeks.

Reclassification:

Certain amounts for the June 25, 2023 Condensed Consolidated Balance Sheet and notes to the financial statements have been reclassified to conform to the current period presentation.

NOTE 2 — RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted or Effective

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.

The Company has not adopted any new accounting standards during the first quarter of fiscal year 2024 that 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 Q3 10-Q 9

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

NOTE 3 — REVENUE

Deferred Revenue

Revenue of $ 149.1 million and $ 1,881.8 million included in deferred profit at June 26, 2022 was recognized during the three and nine months ended March 26, 2023, respectively.

The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of March 26, 2023 and when the Company expects to recognize the amounts as revenue:

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

(In thousands)

Deferred revenue $ 1,731,567 $ 243,733 (1)

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

Disaggregation of Revenue

8 unchanged sentences

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

Three Months Ended Nine Months Ended

2023 March 27,

2022 March 26,

2023 March 27,

Three Months Ended

September 24,

2023 September 25,

(In thousands)

System revenue $ 2,256,033 $ 2,650,842 $ 8,985,538 $ 8,315,898

Systems revenue $ 2,056,655 $ 3,181,987

Customer support-related revenue and other 1,425,407 1,892,134

$ 3,482,062 $ 5,074,121

System revenue includes sales of new leading-edge equipment in deposition, etch and clean markets.

Systems revenue includes sales of new leading-edge equipment in deposition, etch and clean markets.

Customer support-related revenue includes sales of customer service, spares, upgrades, and non-leading-edge equipment from the Company’s Reliant product line.

Lam Research Corporation 2024 Q1 10-Q 8

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

Three Months Ended Nine Months Ended

2023 March 27,

2022 March 26,

2023 March 27,

Three Months Ended

September 24,

2023 September 25,

(In thousands)

Korea $ 847,728 $ 961,300 $ 2,780,158 $ 2,947,657

China $ 1,687,311 $ 1,530,475

Taiwan 713,708 663,494 2,825,827 2,074,681

United States 594,426 309,161 1,402,641 782,170

Korea 547,945 855,378

Japan 324,520 458,693

United States 282,224 304,977

Taiwan 242,490 1,120,946

Europe 238,469 262,588

1 unchanged sentence

$ 3,482,062 $ 5,074,121

Lam Research Corporation 2023 Q3 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 Nine Months Ended

2023 March 27,

2022 March 26,

2023 March 27,

Three Months Ended

September 24,

2023 September 25,

Memory 38 % 52 %

1 unchanged sentence

Logic/integrated device manufacturing 26 % 14 %

Deferred Revenue

Revenue of $ 561.8 million included in deferred profit at June 25, 2023 was recognized during the three months ended September 24, 2023, representing 31 % of the $ 1,837.9 million of deferred revenue as of June 25, 2023.

The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of September 24, 2023 and when the Company expects to recognize the amounts as revenue:

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

(In thousands)

Deferred revenue $ 1,421,440 $ 226,972 (1)

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

NOTE 4 — EQUITY-BASED COMPENSATION PLANS

5 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 2024 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 Nine Months Ended

2023 March 27,

2022 March 26,

2023 March 27,

Three Months Ended

September 24,

2023 September 25,

(in thousands)

3 unchanged sentences

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

Three Months Ended Nine Months Ended

2023 March 27,

2022 March 26,

2023 March 27,

Three Months Ended

September 24,

2023 September 25,

(in thousands)

1 unchanged sentence

Interest expense ( 45,331 ) ( 46,052 )

Gains (losses) on deferred compensation plan-related assets, net 5,443 ( 13,118 ) 3,588 ( 5,737 )

Foreign exchange (losses) gains, net ( 5,519 ) 943 ( 8,812 ) 1,657

(Losses) gains on deferred compensation plan-related assets, net ( 2,901 ) ( 12,726 )

Foreign exchange gains (losses), net 1,269 6,821

Other, net ( 7,000 ) ( 6,194 )

$ 2,601 $ ( 43,095 )

Other, net includes an unrealized gain totaling $ 63.6 million associated with an equity investee that became publicly traded during the nine months ended March 27, 2022.

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

Lam Research Corporation 2023 Q3 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 Nine Months Ended

2023 March 27,

2022 March 26,

2023 March 27,

Three Months Ended

September 24,

2023 September 25,

(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 and nine months ended March 26, 2023 and March 27, 2022 was primarily due to income in lower tax jurisdictions.

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

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

As of September 25, 2022, the IRS has proposed adjustments resulting in a tax liability increase of approximately $ 50.0 million, which was previously reserved.

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 statutory tax rate of 21% and the Company’s effective tax rate for the three months ended September 24, 2023 and September 25, 2022 was primarily due to income in lower tax jurisdictions.

On August 16, 2022, the Inflation Reduction Act (the “IRA”) was signed into law.

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

The IRA includes a new 15% corporate minimum tax.

The Company has evaluated the potential impacts of the IRA and does not expect it to have a material impact on the effective tax rate.

However, the Company expects future guidance from the Treasury Department and will further analyze when the guidance is issued.

The Internal Revenue Service (“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 March 26, 2023, no adjustments have been proposed by the IRS.

To date, 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.

2 unchanged sentences

The change in uncertain tax positions as a result of lapses of statutes of limitation may range up to $ 9.8 million.

Lam Research Corporation 2024 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 Nine Months Ended

2023 March 27,

2022 March 26,

2023 March 27,

Three Months Ended

September 24,

2023 September 25,

(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 and nine months ended March 26, 2023 and March 27, 2022.

Lam Research Corporation 2023 Q3 10-Q 12

The impact from potentially dilutive securities, including options and RSUs, was not material for the three months ended September 24, 2023 and September 25, 2022.

NOTE 8 — FINANCIAL INSTRUMENTS

The Company maintains an investment portfolio of various holdings, types, and maturities.

The Company’s mutual funds, which are related to the Company’s obligations under the deferred compensation plan, are classified as trading securities.

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 income (expense), net in the Condensed Consolidated Statements of Operations.

All of the Company’s debt securities are classified as available-for-sale and consequently are recorded in the Condensed Consolidated Balance Sheets at fair value with unrealized gains or losses associated with market valuation changes, unrelated to credit losses, reported as a separate component of accumulated other comprehensive income (loss), net of tax;

and credit losses, if any, recognized as other income (expense), net in the Condensed Consolidated Statements of Operations.

The Company periodically invests in equity securities.

For equity investments that do not have a readily determinable fair value, the Company records them using either 1) the measurement alternative which measures the equity investments at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes;

or 2) the equity method whereby the Company recognizes its proportional share of the income or loss from the equity method investment on a one-quarter lag.

The equity method is utilized when the Company does not have the ability to control the investee but is deemed to have the ability to exercise significant influence over the investee’s operating or financial policies.

For equity investments that have a readily determinable fair value, the Company records them at fair market value on a recurring basis based upon quoted market prices.

Realized and unrealized gains and losses resulting from application of the measurement alternative, the impact of the application of the equity method to the Company’s equity investments, and recognition of changes in fair market value, as applicable, are recognized as other income (expense), net in the Condensed Consolidated Statements of Operations.

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.

A fair value hierarchy has been established that prioritizes the inputs to valuation techniques used to measure fair value.

The level of an asset or liability in the hierarchy is based on the lowest level of input that is significant to the fair value measurement.

Assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

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 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 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.

The fair value of derivative contracts is determined using observable market inputs such as the foreign currency rates, forward rate curves, currency volatility and interest rates and considers nonperformance risk of the Company and its counterparties.

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, 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.

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 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 March 26, 2023, and June 26, 2022, equity investments of $ 128.9 million and $ 125.2 million, respectively, were reported in other assets in the Condensed Consolidated Balance Sheets.

Lam Research Corporation 2023 Q3 10-Q 13

With the exception of one equity investee that became publicly traded during the nine months ended March 27, 2022, net gains resulting from the application of the measurement alternative to the Company’s equity investments were immaterial for the three and nine months ended March 26, 2023, and March 27, 2022.

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 nine months ended March 27, 2022.

The Company’s investment strategies and investment and fair value policies are unchanged from those disclosed in Note 9, “Financial Instruments,” to our Consolidated Financial Statements in Part II, Item 8 of our 2023 Form 10-K.

The financial statement impacts to the Condensed Consolidated Statement of Operations from debt and equity investments were not material as of and for the three months ended September 24, 2023 and September 25, 2022.

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 March 26, 2023, and June 26, 2022:

March 26, 2023

The following tables set forth the Company’s cash, cash equivalents, investments, and other assets measured at fair value on a recurring basis as of September 24, 2023, and June 25, 2023:

September 24, 2023

(Reported Within)

2 unchanged sentences

(Loss) Fair Value Cash and

Equivalents Investments Restricted

Investments Other

Equivalents Investments Other

(in thousands)

8 unchanged sentences

Total $ 5,272,332 $ 5,126,150 $ 30,557 $ 115,625

Lam Research Corporation 2024 Q1 10-Q 11

June 25, 2023

3 unchanged sentences

(Loss) Fair Value Cash and

Equivalents Investments Restricted

Investments Other

Equivalents Investments Other

(in thousands)

8 unchanged sentences

Total $ 5,731,682 $ 5,337,056 $ 37,641 $ 356,985

The Company accounts for its investment portfolio at fair value.

Realized gains (losses) for investment sales are specifically identified.

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.

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 three and nine months ended March 26, 2023 and March 27, 2022.

Lam Research Corporation 2023 Q3 10-Q 14

Gross realized gains/(losses) from sales of investments were insignificant in the three and nine months ended March 26, 2023 and March 27, 2022.

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

March 26, 2023

September 24, 2023

Unrealized Losses

2 unchanged sentences

Fair Value Gross

Loss Fair Value Gross

Fair Value Gross

(in thousands)

2 unchanged sentences

$ 5,977 $ ( 7 ) $ 39,622 $ ( 2,138 ) $ 45,599 $ ( 2,145 )

The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities are as follows as of March 26, 2023:

The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities as of September 24, 2023 are as follows:

(in thousands)

6 unchanged sentences

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 2023 Form 10-K.

The financial statement impacts from derivative instruments and hedging activities were not material as of and for the three and nine months ended March 26, 2023 and March 27, 2022.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, investments, restricted cash and investments, trade accounts receivable, and derivative financial instruments used in hedging activities.

Cash is placed on deposit at large, global financial institutions.

Such deposits may be in excess of insured limits.

Management believes that the financial institutions that hold the Company’s cash are creditworthy and, accordingly, minimal credit risk exists with respect to these balances.

The Company’s overall portfolio of available-for-sale securities must maintain an average minimum rating of “AA-” or “Aa3” as rated by Standard and Poor’s, Fitch Ratings, or Moody’s Investor Services.

To ensure diversification and minimize concentration, the Company’s policy limits the amount of credit exposure with any one financial institution or commercial issuer.

The Company is exposed to credit losses in the event of nonperformance by counterparties on foreign currency and interest rate hedge contracts that are used to mitigate the effect of exchange rate and interest rate fluctuations, and on contracts related to structured share repurchase arrangements.

These counterparties are large global financial institutions, and, to date, no such counterparty has failed to meet its financial obligations to the Company.

Credit risk evaluations, including trade references, bank references, and Dun & Bradstreet ratings, are performed on all new customers and the Company monitors its customers’ financial condition and payment performance.

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

As of September 24, 2023 and June 25, 2023 the fair value of outstanding cash flow and balance sheet hedges were not material.

The financial statement impacts to the Condensed Consolidated Statement of Operations from derivative instruments and hedging activities were not material as of and for the three months ended September 24, 2023 and September 25, 2022.

Lam Research Corporation 2024 Q1 10-Q 12

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk and the Company’s mitigation strategies are unchanged from those disclosed in Note 9, “Financial Instruments,” to our Consolidated Financial Statements in Part II, Item 8 of our 2023 Form 10-K.

NOTE 9 — INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value.

Inventories are stated at the lower of cost or net realizable value using standard costs that approximate actual costs on a first-in, first-out basis.

System shipments to customers in Japan, for which title does not transfer until customer acceptance, are classified as finished goods inventory and carried at cost until title transfers.

Inventories consist of the following:

September 24,

2023 June 25,

5 unchanged sentences

NOTE 10 — GOODWILL AND INTANGIBLE ASSETS

The balance of goodwill is approximately $ 1.6 billion and $ 1.5 billion as of March 26, 2023 and June 26, 2022, respectively.

As of March 26, 2023 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 17 - Business Combinations for additional information regarding the Company’s goodwill balance.

The balance of goodwill is approximately $ 1.6 billion as of September 24, 2023 and June 25, 2023.

As of September 24, 2023 and June 25, 2023, $ 65.4 million of the goodwill balance is tax deductible and the remaining balance is not tax deductible due to purchase accounting and applicable foreign law.

Intangible Assets

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

March 26, 2023 June 26, 2022

September 24, 2023 June 25, 2023

Gross Accumulated

8 unchanged sentences

Total intangible assets $ 1,592,650 $ ( 1,435,032 ) $ 157,618 $ 1,591,082 $ ( 1,422,628 ) $ 168,454

The Company recognized $ 13.8 million and $ 20.4 million in intangible asset amortization expense during the three months ended March 26, 2023 and March 27, 2022, respectively.

The Company recognized $ 37.4 million and $ 58.9 million in intangible asset amortization expense during the nine months ended March 26, 2023 and March 27, 2022, respectively.

The estimated future amortization expense of intangible assets as of March 26, 2023, is reflected in the table below.

The table excludes $ 20.7 million of capitalized costs for internal-use software, included in Patents and other intangible assets in the table above, that have not been placed into service.

The Company recognized $ 14.0 million and $ 11.6 million in intangible asset amortization expense during the three months ended September 24, 2023 and September 25, 2022, respectively.

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The estimated future amortization expense of intangible assets as of September 24, 2023, is reflected in the table below.

The table excludes $ 18.8 million of capitalized costs for intangible assets that have not been placed into service.

Fiscal Year Amount

2 unchanged sentences

Thereafter 15,928

Refer to Note 17 - Business Combinations for additional information regarding the Company’s intangible assets.

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NOTE 11 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

September 24,

2023 June 25,

7 unchanged sentences

$ 2,120,055 $ 2,010,637

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 March 26, 2023, the Company had no borrowings outstanding under the credit facility and was in compliance with all financial covenants.

(1) The balance in income and other taxes payable includes an accrual of $ 180.0 million related to federal estimated taxes for which payment is deferred until our quarter ending December 24, 2023, under the IRS Federal tax relief for California disaster area taxpayers.

NOTE 12 — LEASES

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.

Selected Leases and Related Guarantees

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, Tualatin, Oregon campus, and certain other facility leases provide the Company with options to extend the leases for additional periods or to purchase the facilities.

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

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 March 26, 2023.

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.

The Company elected to exercise purchase options available under its finance leases for certain improved properties in Fremont and Livermore, California (the “California Facility Leases”) in the three months ended September 24, 2023.

As a result, the Company released cash collateral in an aggregate of approximately $ 250.0 million of restricted cash that is reported in Other assets in the Company’s Condensed Consolidated Balance Sheet.

Additionally, guarantees made to the lessor that each property would have a certain minimum residual value totaling $ 298.4 million as of June 25, 2023 in the aggregate were eliminated with the extinguishment of the California Facilities Leases.

As a result of the purchase of the improved properties, $ 250.5 million of additions were made to Property and Equipment, Net in the Company’s Condensed Consolidated Balance Sheets primarily comprised of land ($ 40.5 million) and buildings and improvements ($ 210.0 million).

NOTE 13 — COMMITMENTS AND CONTINGENCIES

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

Lam Research Corporation 2023 Q3 10-Q 17

Other Guarantees

The Company has issued certain indemnifications to its lessors for taxes and general liability under some of its agreements.

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

As of March 26, 2023, 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 September 24, 2023, 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.

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The Company does not believe that it is probable that any material amounts will be paid under these guarantees.

Lam Research Corporation 2024 Q1 10-Q 14

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 March 26, 2023, the maximum potential amount of future payments that the Company could be required to make under these arrangements and letters of credit was $ 99.6 million.

As of September 24, 2023, the maximum potential amount of future payments that the Company could be required to make under these arrangements and letters of credit was $ 197.9 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 March 26, 2023, warranty reserves totaling $ 35.6 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 September 24, 2023, warranty reserves totaling $ 24.8 million were reported 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 Nine Months Ended

2023 March 27,

2022 March 26,

2023 March 27,

Three Months Ended

September 24,

2023 September 25,

(in thousands)

10 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 Q3 10-Q 18

NOTE 14 — STOCK REPURCHASE PROGRAM

3 unchanged sentences

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:

1 unchanged sentence

Repurchased Total Cost of

Repurchase Average Price

Repurchase (2)

Average Price

Available Under

2 unchanged sentences

Quarter ended September 24, 2023 1,257 $ 829,874 $ 660.01 $ 2,707,343

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

Quarter ended March 26, 2023 1,017 $ 483,418 (3) $ 475.18 (3) $ 4,443,010

(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 nine months ended March 26, 2023.

(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 nine months ended March 26, 2023.

(3) As of January 1, 2023, the Company’s net share repurchases are subject to a 1% excise tax under the Inflation Reduction Act.

Excise tax incurred reduces the amount available under the repurchase program, as applicable, and is included in the cost of share repurchased in the Condensed Consolidated Statement of Stockholders’ Equity.

In addition to the shares repurchased under the Board-authorized repurchase program shown above, during the three and nine months ended March 26, 2023, the Company acquired 148 thousand shares at a total cost of $ 72.5 million and 167 thousand shares at a total cost of $ 80.4 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.

(2) The Company’s net share repurchases are subject to a 1% excise tax under the Inflation Reduction Act.

Excise tax incurred reduces the amount available under the repurchase program, as applicable, and is included in the cost of shares repurchased in the Condensed Consolidated Statement of Stockholders’ Equity and the calculation of the average price paid per share.

In addition to the shares repurchased under the Board-authorized repurchase program shown above, during the three months ended September 24, 2023, the Company acquired 9 thousand shares at a total cost of $ 5.5 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.

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.

Accelerated Share Repurchase Agreements

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 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 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 Q3 10-Q 19

NOTE 16 — ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss, net of tax at March 26, 2023, as well as the activity for the nine months ending March 26, 2023, were as follows:

Accumulated Foreign Currency Translation Adjustment Accumulated

Gain or Loss on

Cash flow hedges Accumulated

Gain or Loss on

Available-For-Sale Investments Accumulated

Benefit Plans Total

(in thousands)

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

Other comprehensive income (loss) before reclassifications 11,588 ( 3,135 ) 1,222 848 10,523

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

( 158 ) — ( 5,636 )

Net current-period other comprehensive income (loss) 11,588 ( 8,613 ) 1,064 848 4,887

Balance at March 26, 2023 $ ( 70,167 ) $ ( 20,943 ) $ ( 573 ) $ ( 13,412 ) $ ( 105,095 )

(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.

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 $ 102.2 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 nine months ended March 26, 2023.

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 15 — RESTRUCTURING CHARGES, NET

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The majority of restructuring charges that have been incurred but not yet paid are recorded in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.

Lam Research Corporation 2023 Q3 10-Q 20

In the three and nine months ended March 26, 2023, the Company initiated a restructuring plan designed to better align the Company’s cost structure with its outlook for the economic environment and business opportunities.

In the fiscal year ended June 25, 2023, the Company initiated a restructuring plan designed to better align the Company’s cost structure with its outlook for the economic environment and business opportunities.

Under the plan the Company terminated approximately 1,650 employees, incurring expenses related to employee severance and separation costs.

Employee severance and separation costs primarily relate to severance, non-cash severance, including equity award compensation expense, pension and other termination benefits.

Additionally, the Company made a strategic decision to relocate certain manufacturing activities to pre-existing facilities.

During the three and nine months ended March 26, 2023, net restructuring costs of $ 66.7 million and $ 40.4 million were recorded in restructuring charges, net - cost of goods sold, and restructuring charges, net - operating expenses, respectively in the Condensed Consolidated Statements of Operations.

The Company anticipates the restructuring plan to be substantially complete by December 24, 2023, and estimates that incremental restructuring charges totaling approximately $ 40 million will be incurred through the fiscal quarter ending December 24, 2023.

Additionally, the Company made a strategic decision to relocate certain manufacturing activities to pre-existing facilities and incurred charges to move inventory and equipment and exit selected supplier arrangements.

During the three months ending September 24, 2023, net restructuring costs of $ 7.9 million and $ 2.0 million were recorded in restructuring charges, net - cost of goods sold, and restructuring charges, net - operating expenses, respectively, in the Condensed Consolidated Statements of Operations.

No restructuring charges were recognized during the three months ending September 25, 2022.

The cumulative cost of the restructuring plan as of September 24, 2023 was $ 130.3 million.

The Company anticipates the restructuring plan to be substantially complete by December 24, 2023, and estimates that incremental restructuring charges totaling approximately $ 7 million will be incurred in the fiscal quarter ending December 24, 2023.

The following table is a summary of the activity related to the restructuring plan:

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(in thousands)

Restructuring liability as of June 25, 2023 $ 7,989 $ 246 $ 8,235

Restructuring expense 5,474 4,487 9,961

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Non-cash activities 54 16 70

Restructuring liability as of March 26, 2023 $ 75,581 $ 4,859 $ 80,440

Restructuring liability as of September 24, 2023 $ 2,992 $ 487 $ 3,479

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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