What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-08-29 compared with 2023-08-15 · 198 added, 304 removed, 1047 unchanged (32% of the section changed)

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Table of Content

LAM RESEARCH CORPORATION

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Table of Content

LAM RESEARCH CORPORATION

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Defined benefit plans, net change in unrealized component 6,054 83 5,941

Other comprehensive income (loss), net of tax 9,276 ( 45,854 ) 30,083

Other comprehensive (loss) income, net of tax ( 29,722 ) 9,276 ( 45,854 )

Comprehensive income $ 3,798,050 $ 4,520,207 $ 4,559,432

1 unchanged sentence

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Table of Content

LAM RESEARCH CORPORATION

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Cash and cash equivalents $ 5,847,856 $ 5,337,056

Investments 37,641 135,731

Accounts receivable, less allowance of $ 5,277 as of June 30, 2024 and $ 5,344 as of June 25, 2023

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Property and equipment, net 2,154,518 1,856,672

Restricted cash and investments 250,316 251,534

Goodwill 1,626,528 1,622,489

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Table of Content

LAM RESEARCH CORPORATION

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Table of Content

2024 June 25,

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Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 22,374 ) 128 ( 30,227 )

Net increase (decrease) in cash, cash equivalents and restricted cash 1,813,837 ( 897,215 ) ( 498,333 )

Net change in cash, cash equivalents and restricted cash 263,431 1,813,837 ( 897,215 )

Cash, cash equivalents and restricted cash at beginning of year (1) 5,587,372 3,773,535 4,670,750

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Total cash, cash equivalents, and restricted cash $ 5,850,803 $ 5,587,372 $ 3,773,535

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

See Notes to Consolidated Financial Statements

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Table of Content

LAM RESEARCH CORPORATION

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

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

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

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

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

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

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

Cash dividends declared ($ 6.00 per common share)

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Net income — — — — — 4,510,931 4,510,931

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

Other comprehensive income — — — — 9,276 — 9,276

Cash dividends declared ($ 6.90 per common share)

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Net income — — — — — 3,827,772 3,827,772

Other comprehensive income — — — — 9,276 — 9,276

Other comprehensive loss — — — — ( 29,722 ) — ( 29,722 )

Cash dividends declared ($ 8.00 per common share)

3 unchanged sentences

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Table of Content

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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For these and other reasons, the Company’s results of operations for fiscal years 2024, 2023, and 2022 may not necessarily be indicative of future operating results.

Reclassification:

Certain amounts for the fiscal years 2023 and 2022 Consolidated Balance Sheets and notes to the financial statements have been reclassified to conform to the fiscal year 2024 presentation.

Summary of Significant Accounting Policies

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Revenue Recognition:

The Company recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process, (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below.

Identify the contract with a customer .

The Company generally considers documentation of terms with an approved purchase order as a customer contract, provided that collection is considered probable, which is assessed based on the creditworthiness of the customer as determined by credit checks, payment histories, and/or other circumstances.

Identify the performance obligations in the contract .

Performance obligations include sales of systems, spare parts, and services.

In addition, customer contracts contain provisions for installation and training services which have been deemed immaterial in the context of the contract.

Determine the transaction price .

The transaction price for the Company’s contracts with its customers consists of both fixed and variable consideration provided it is probable that a significant reversal of revenue will not occur when the uncertainty related to variable consideration is resolved.

The transaction price for contracts with customers is allocated among the identified performance obligations and consists of both fixed and variable consideration provided it is probable that a significant reversal of revenue will not occur when the uncertainty related to variable consideration is resolved.

Fixed consideration includes amounts to be contractually billed to the customer while variable consideration includes estimates for discounts and credits for future usage which are based on contractual terms outlined in volume purchase agreements and other factors known at the time.

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The Company’s contracts with customers typically do not include significant financing components as the period between the transfer of performance obligations and timing of payment are generally within one year.

Allocate the transaction price to the performance obligations in the contract .

For contracts that contain multiple performance obligations, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis.

Standalone selling prices are based on multiple factors including, but not limited to historical discounting trends for products and services and pricing practices in different geographies.

Recognize revenue when or as the Company satisfies a performance obligation .

Revenue for systems and spares are recognized at a point in time, which is generally upon shipment or delivery.

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

Revenue is recognized in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services.

Inventory Valuation:

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.

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

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

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

Management evaluates the need to record adjustments for impairment of inventory at least quarterly.

The Company’s policy is to assess the valuation of all inventories including manufacturing raw materials, work-in-process, finished goods, and spare parts in each reporting period.

Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its estimated market value if less than cost.

Estimates of market value include but are not limited to management’s forecasts related to the Company’s future manufacturing schedules, customer demand, technological and/or market obsolescence, general semiconductor market conditions, and possible alternative uses.

Inventory in excess of management’s estimated usage requirement and obsolete inventory is written down to its estimated net realizable value if less than cost.

Estimates of net realizable value include but are not limited to management’s forecasts related to customer demand, the Company’s future manufacturing schedules, technological and/or market obsolescence, general semiconductor market conditions, and possible alternative uses.

If future customer demand or market conditions are less favorable than the Company’s projections, additional inventory write-downs may be required and would be reflected in cost of goods sold in the period in which the revision is made.

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All actual or estimated parts and labor costs incurred in subsequent periods are charged to those established reserves on a system-by-system basis.

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Table of Content

While the Company periodically monitors the performance and cost of warranty activities, if actual costs incurred are different than its estimates, the Company may recognize adjustments to provisions in the period in which those differences arise or are identified.

In addition to the provision of standard warranties, the Company offers customer-paid extended warranty services.

Revenues for extended maintenance and warranty services with a fixed payment amount are recognized on a straight-line basis over the term of the contract.

Related costs are recorded as incurred.

Equity-based Compensation — Employee Stock Plans:

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

The process of evaluating the potential impairment of goodwill requires significant judgment.

When reviewing goodwill for impairment, the Company first performs a qualitative assessment to

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determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.

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

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

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The Company did no t record impairments of goodwill during the years ended June 30, 2024, June 25, 2023, or June 26, 2022.

The Company determines the fair value of its reporting units by using an income approach.

Under the income approach, the Company determines fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn.

In estimating the fair value of a reporting unit, the Company makes estimates and judgments about the future cash flows of its reporting units, including estimated growth rates and assumptions about the economic environment.

Although the Company’s cash flow forecasts are based on assumptions that are consistent with the plans and estimates it is using to manage the underlying businesses, there is significant judgment involved in determining the cash flows attributable to a reporting unit.

In addition, the Company makes certain judgments about allocating shared assets to the estimated balance sheets of its reporting units.

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

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

Impairment of Long-lived Assets (Excluding Goodwill):

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Assets to be disposed of are reported at the lower of the carrying amount or fair value.

For the periods presented, there was no impairment of long-lived assets.

For the periods presented, impairment of long-lived assets were no t material.

In addition, for fully amortized intangible assets, we derecognize the gross cost and accumulated amortization in the period we determine the intangible asset no longer enhances future cash flows.

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Table of Content

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

The Company’s most recent fiscal years ended June 25, 2023, June 26, 2022, and June 27, 2021, and each included 52 weeks.

The Company’s most recent fiscal year ended on June 30, 2024 and included 53 weeks, and the fiscal years ended June 25, 2023 and June 26, 2022 each included 52 weeks.

Principles of Consolidation:

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

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

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

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 Consolidated Statement of Operations.

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.

To the extent such losses are the result of credit losses, those amounts are recognized in the Consolidated Statement of Operations.

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 years ended June 25, 2023, June 26, 2022 and June 27, 2021.

No such losses were recognized through the Consolidated Statement of Operations during the years ended June 30, 2024, June 25, 2023 and June 26, 2022.

Allowance for Expected Credit Losses:

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

The Company also

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provides allowances based on its write-off history.

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

Bad debt expense was not material for fiscal years ended June 30, 2024, June 25, 2023, and June 26, 2022.

Property and Equipment:

Property and equipment is stated at cost.

Property and equipment is stated at cost, less recognized impairments, if any.

Equipment is depreciated by the straight-line method over the estimated useful lives of the assets, generally three to five years .

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The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future lease payments when the rate implicit in the lease is unknown.

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Table of Content

The Company has elected the following practical expedients and accounting policy elections for accounting under ASC 842:

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and (ii) lease and non-lease components of a contract are accounted for as a single lease component.

The Company has certain finance leases that contain provisions whereby the properties subject to the finance leases may be remarketed at lease expiration.

The Company has guaranteed to the lessor an amount approximating the lessor’s investment in the property.

Also, the Company’s guarantees generally include certain indemnifications to its lessors for environmental matters, potential overdraft protection obligations to financial institutions related to one of the Company’s subsidiaries, indemnifications to the Company’s customers for certain infringement of third-party intellectual property rights by its products and services, indemnifications for its officers and directors, and the Company’s warranty obligations under sales of its products.

The Company’s guarantees generally include certain indemnifications to its lessors for environmental matters, potential overdraft protection obligations to financial institutions related to one of the Company’s subsidiaries, indemnifications to the Company’s customers for certain infringement of third-party intellectual property rights by its products and services, indemnifications for its officers and directors, and the Company’s warranty obligations under sales of its products.

Government Assistance:

For government grants, the Company recognizes a benefit in the Consolidated Statement of Operations, as a reduction to the expense for which the individual government grant (“Grant” or “Grants”) is designed to compensate, over the duration of the program when the Company has reasonable assurance that it will comply with the conditions under the Grant and that the Grant will be received.

Grants related to investments in property and equipment are recognized as a reduction to the cost basis of the underlying assets with an ongoing reduction to depreciation expense over the assets’ estimated useful life.

Operating-related grants are recorded as a reduction to expense in the same line item on the Consolidated Statements of Operation as the expenditure for which the incentive is intended to compensate.

Foreign Currency Translation:

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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

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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 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 Consolidated Financial Statements.

In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832):

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

The Company prospectively adopted ASU 2021-10 in the fiscal year ended June 25, 2023.

The adoption of the new standard did not have a material impact on the Company’s Consolidated Financial Statements.

Refer to Note 17:

Commitments and Contingencies for additional information regarding the Company’s government assistance.

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 the Company’s Consolidated Financial Statements.

Refer to Note 14:

Long-term Debt and Other Borrowings for further information regarding the terms of the Credit Agreement.

The Company did not adopt any new accounting standards during fiscal year 2024 that had a material impact on the Company’s 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 Consolidated Financial Statements.

Deferred Revenue

Revenue of $ 1,984.6 million included in deferred profit at June 26, 2022 was recognized during fiscal year 2023, representing the majority of the $ 2,198.1 million of deferred revenue as of June 26, 2022.

The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of June 25, 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 $ 1,624,427 $ 183,045 (1) $ 30,435 (1) $ 1,837,907

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

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources.

The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is required to adopt this standard in the fiscal year 2025 for the annual reporting period ending June 29, 2025, with retrospective disclosure of prior periods presented.

The Company is currently in the process of evaluating the impact of adoption on its Consolidated Financial Statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which requires public entities to disclose consistent categories and greater disaggregation of information in the rate reconciliation and for income taxes paid.

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

The guidance is effective for financial statements issued for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is required to adopt this standard prospectively in fiscal year 2026 for the annual reporting period ending June 28, 2026.

The Company is currently in the process of evaluating the impact of adoption on its Consolidated Financial Statements.

Disaggregation of Revenue

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

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

2024 June 25,

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Table of Content

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

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Logic/integrated device manufacturing 18 % 20 % 14 %

Deferred Revenue

Revenue of $ 1,506.6 million included in deferred profit at June 25, 2023 was recognized during fiscal year 2024, representing 82 % 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 June 30, 2024 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 $ 1,152,155 $ 353,617 (1) $ 45,824 (1) $ 1,551,596

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

Equity-based Compensation Plan

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

The Company has stock plans that provide for grants of non-qualified equity-based awards of the Company’s Common Stock to eligible employees and non-employee directors, including stock options, restricted stock units (“RSUs”), and market-based performance RSUs (“market-based PRSUs”).

An option is a right to purchase Common Stock at a set price.

An RSU award is an agreement to issue a set number of shares of Common Stock at the time of vesting.

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

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

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

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as of June 30, 2024, 6,891,996 shares remain available for future issuance to satisfy stock option exercises and vesting of awards.

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

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 Consolidated Statements of Operations:

2024 June 25,

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

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Table of Content

Restricted Stock Units

During the fiscal years 2023, 2022, and 2021, the Company issued both service-based RSUs and market-based performance RSUs (“PRSUs”).

During the fiscal years 2024, 2023, and 2022, the Company issued both service-based RSUs and market-based PRSUs.

Service-based RSUs typically vest annually over a period of 3 years or less.

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

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

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Outstanding, June 30, 2024 923 $ 655.89

Of the 1.1 million shares outstanding at June 25, 2023, 896.0 thousand are service-based RSUs and 182.0 thousand are market-based PRSUs.

Of the 923 thousand shares outstanding at June 30, 2024, 749 thousand are service-based RSUs and 174 thousand are market-based PRSUs.

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

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At June 30, 2024, approximately 5.1 million shares were available for purchase, and the Company had $ 15.7 million of total unrecognized compensation cost, which is expected to be recognized over a remaining period of less than six months .

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Table of Content

Other Income (Expense), Net

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Gains (losses) on deferred compensation plan related assets, net 58,767 20,186 ( 38,053 )

Foreign exchange (losses) gains, net ( 7,078 ) ( 723 ) ( 6,962 )

Foreign exchange losses, net ( 4,837 ) ( 7,078 ) ( 723 )

Other, net ( 24,323 ) ( 31,280 ) 19,618

$ 96,309 $ ( 65,650 ) $ ( 188,708 )

Interest income in the year ended June 25, 2023, increased compared to the year ended June 26, 2022, primarily as a result of higher yields and higher cash balances.

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

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Interest expense in the year ended June 25, 2023, was flat compared to the year ended June 26, 2022.

The decrease in interest expense in the year ended June 26, 2022, compared to the year ended June 27, 2021, was primarily due to the payoff of $ 800 million of senior notes in June 2021.

Interest income in the year ended June 30, 2024, increased compared to the years ended June 25, 2023 and June 26, 2022, primarily as a result of higher yields and higher cash balances.

Interest expense in the year ended June 30, 2024, was flat compared to the years ended June 25, 2023 and June 26, 2022.

The gains or losses on deferred compensation plan related assets, net in fiscal years 2024, 2023 and 2022 were driven by fluctuations in the fair market value of the underlying funds.

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$ 4,360,222 $ 5,109,210 $ 5,193,114

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Table of Content

Significant components of the provision (benefit) for income taxes attributable to income before income taxes were as follows:

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Total provision for income taxes $ 532,450 $ 598,279 $ 587,828

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Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards.

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Net deferred tax assets $ 908,635 $ 712,349

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Table of Content

The change in gross deferred tax assets, gross deferred tax liabilities, and valuation allowance between fiscal year 2024 and 2023 is primarily due to increases in gross deferred tax assets for outside basis differences of foreign subsidiaries, tax credits, and capitalized research and experimental expenditures.

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Substantially all of these credits can be carried forward indefinitely.

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A reconciliation of income tax expense provided at the federal statutory rate ( 21 % in fiscal years 2024, 2023, and 2022) to actual income tax expense is as follows:

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Equity-based compensation ( 11,296 ) 15,816 ( 13,168 )

Increases in uncertain tax positions 62,333 34,661 35,148

Other permanent differences and miscellaneous items 17,080 11,348 16,894

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

The statutory tax rate in Malaysia is 24%.

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

The Company expects to apply for renewals upon expiration.

The impact of the tax incentive decreased worldwide taxes by approximately $ 576.0 million for fiscal year 2023.

The benefit of the tax incentive on diluted earnings per share was approximately $ 4.24 in fiscal year 2023.

The impact of the tax incentive decreased worldwide taxes by approximately $ 416.3 million, $ 576.0 million, and $ 574.7 million for fiscal years 2024, 2023, and 2022, respectively.

The benefit of the tax incentive on diluted earnings per share was approximately $ 3.15 , $ 4.24 , and $ 4.09 in fiscal years 2024, 2023, and 2022, respectively.

Earnings of the Company’s foreign subsidiaries included in consolidated retained earnings that are indefinitely reinvested in foreign operations aggregated to approximately $ 1.1 billion at June 30, 2024.

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On August 16, 2022, the IRA was signed into law.

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

The IRA includes a new 15% corporate minimum tax.

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

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.

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 alternative minimum tax.

The Company has evaluated the impacts of the IRA, including guidance issued by the Treasury Department, and does not expect it to have a material impact on the effective tax rate.

The Company’s gross uncertain tax positions were $ 723.8 million, $ 640.2 million, and $ 617.4 million as of June 30, 2024, June 25, 2023, and June 26, 2022, respectively.

During fiscal year 2024, gross uncertain tax positions increased by $ 83.6 million.

The amount of uncertain tax positions that, if recognized, would impact the effective tax rate was $ 550.1 million, $ 539.6 million, and $ 504.4 million, as of June 25, 2023, June 26, 2022, and June 27, 2021, respectively.

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Table of Content

of uncertain tax positions that, if recognized, would impact the effective tax rate was $ 622.6 million, $ 550.1 million, and $ 539.6 million, as of June 30, 2024, June 25, 2023, and June 26, 2022, respectively.

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

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Lapse of statute of limitations ( 10,114 )

Increases in balances related to tax positions taken during prior periods 5,841

Decreases in balances related to tax positions taken during prior periods ( 12,326 )

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As of June 30, 2024, tax years 2006-2024 remain subject to examination in the jurisdictions where the Company operates.

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

federal income tax returns for the fiscal years ended June 30, 2019, June 28, 2020, and June 27, 2021.

To date, no significant adjustments have been proposed by the IRS.

4 unchanged sentences

Lam Research Corporation 2024 10-K 53

Table of Content

Net Income per Share

Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period.

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

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

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

6 unchanged sentences

Employee stock plans 585 362 729

Convertible notes — — 543

Diluted average shares outstanding 131,995 135,834 140,628

2 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 fiscal years ended June 25, 2023, June 26, 2022, and June 27, 2021.

These anti-dilutive securities, including options, service-based RSUs, and market-based PRSUs, were not material for fiscal years ended June 30, 2024, June 25, 2023, and June 26, 2022.

Financial Instruments

11 unchanged sentences

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 Company’s primary financial instruments include its cash, cash equivalents, 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 estimated fair values of lease obligations approximate their carrying value as the majority of these obligations are generally short-term in nature and have interest rates that reset upon renewal or modification.

Refer to Note 14:

1 unchanged sentence

Lam Research Corporation 2024 10-K 54

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

As of June 25, 2023 and June 26, 2022, equity investments of $ 118.4 million and $ 125.2 million, respectively, were recognized in other assets in the Consolidated Balance Sheets.

Net gains resulting from the application of the measurement alternative to the Company’s equity investments were immaterial in the fiscal years ended 2023, 2022, and 2021.

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

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

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

The following tables set forth the Company’s cash, cash equivalents, investments, restricted cash and investments, and other assets measured at fair value on a recurring basis as of June 25, 2023, and June 26, 2022:

June 25, 2023

(Reported Within)

Cost Unrealized

Gain Unrealized

(Loss) Fair Value Cash and

Equivalents Investments Restricted

Investments Other

(in thousands)

Money market funds $ 2,223,642 $ — $ — $ 2,223,642 $ 2,223,642 $ — $ — $ —

Mutual funds 96,646 12,092 ( 2,069 ) 106,669 — — — 106,669

Level 1 Total 2,320,288 12,092 ( 2,069 ) 2,330,311 2,223,642 — — 106,669

Corporate notes and bonds 38,033 — ( 392 ) 37,641 — 37,641 — —

Level 2 Total 38,033 — ( 392 ) 37,641 — 37,641 — —

Total subject to fair value hierarchy

$ 2,358,321 $ 12,092 $ ( 2,461 ) $ 2,367,952

Cash 2,132,811 2,132,522 — 289 —

Time deposits 1,230,919 980,892 — 250,027 —

Total $ 5,731,682 $ 5,337,056 $ 37,641 $ 250,316 $ 106,669

June 26, 2022

(Reported Within)

Cost Unrealized

Gain Unrealized

(Loss) Fair Value Cash and

Equivalents Investments Restricted

Investments Other

(in thousands)

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

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

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

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

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

Total subject to fair value hierarchy

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

Cash 1,017,253 1,015,747 — 1,506 —

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

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

Table of Content

The Company accounts for its investment portfolio at fair value.

2 unchanged sentences

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

In either such situation, the difference between fair value and amortized cost is recognized as a loss in the Consolidated Statement of Operations.

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.

To the extent such losses are the result of credit losses, those amounts are recognized in the Consolidated Statement of Operations.

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

No such losses were recognized through the income statement during the twelve months ended June 25, 2023, and June 26, 2022.

Lam Research Corporation 2023 10-K 57

No such losses were recognized through the Consolidated Statement of Operations during the twelve months ended June 30, 2024, June 25, 2023, and June 26, 2022.

Investments are recorded within Prepaid expenses and other current assets in the Company’s Consolidated Balance Sheets.

As of June 30, 2024 and June 25, 2023, the fair value;

and associated unrealized loss positions, if any, of mutual funds and debt and equity investments were not material.

Gross realized gains/(losses) from sales of investments were insignificant in the fiscal years 2024, 2023, and 2022.

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

The financial instruments reported within Cash and cash equivalents in the Company’s Consolidated Balance Sheets as of June 30, 2024, and June 25, 2023 consisted of the following:

2024 June 25,

Unrealized Losses

Less than 12 Months Unrealized Losses

12 Months or Greater Total

Fair Value Gross

Loss Fair Value Gross

(in thousands)

Mutual funds $ — $ — $ 30,356 $ ( 2,069 ) $ 30,356 $ ( 2,069 )

Corporate notes and bonds 9,105 ( 6 ) 26,517 ( 386 ) 35,622 ( 392 )

$ 9,105 $ ( 6 ) $ 56,873 $ ( 2,455 ) $ 65,978 $ ( 2,461 )

The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities as of June 25, 2023, are as follows:

Cost Fair Value

(in thousands)

Due in one year or less $ 3,489,100 $ 3,488,721

Due after one year through five years 3,494 3,481

$ 3,492,594 $ 3,492,202

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.

Accordingly, those investments with contractual maturities greater than 12 months from the date of purchase nonetheless are classified as short-term on the accompanying Consolidated Balance Sheets.

Money market funds (fair value measured on a recurring basis, level 1) $ 2,543,462 $ 2,223,642

Cash 1,568,315 2,132,522

Time deposits 1,736,079 980,892

Total $ 5,847,856 $ 5,337,056

In addition, as of June 25, 2023 the Company had restricted cash in the form of time deposits of $ 250.0 million reported within Other assets in the Consolidated Balance Sheets that was subsequently released in the three months ended September 24, 2023.

Refer to Note 15:

Leas e s for more information.

Derivative Instruments and Hedging

15 unchanged sentences

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

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Table of Content

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

2 unchanged sentences

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

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

5 unchanged sentences

There were no material gains or losses during the fiscal years ended June 30, 2024, June 25, 2023, or June 26, 2022 associated with forecasted transactions that did not occur, nor any ineffectiveness recognized in the same periods.

As of June 25, 2023, the fair value of outstanding cash flow hedges was not material.

Additionally, as of June 25, 2023, the Company had an immaterial net gain or loss accumulated in other comprehensive income, net of tax, related to foreign exchange cash flow hedges and interest rate contracts which it expects to reclassify from other comprehensive income into earnings over the next 12 months.

The following table provides the total notional value of cash flow hedge instruments outstanding as of June 25, 2023:

June 25, 2023

(In thousands)

Buy Contracts $ 269,827

Sell Contracts 168,233

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

Year Ended June 25, 2023 Year Ended June 26, 2022

Recognized in or

Reclassified into

in AOCI Gain (Loss)

into Income Gain (Loss)

in AOCI Gain (Loss) Reclassified

Derivatives in Cash Flow Hedging Relationships (in thousands)

Foreign exchange contracts Revenue $ 11,801 $ 1,810 $ 57,058 $ 45,057

Foreign exchange contracts Cost of goods sold 1,804 3,002 ( 23,414 ) ( 11,410 )

Foreign exchange contracts R&D — ( 5 ) ( 1,948 ) ( 10 )

Foreign exchange contracts SG&A 418 140 ( 6,914 ) ( 2,434 )

Interest rate contracts Other income (expense), net — ( 1,091 ) — ( 4,238 )

$ 14,023 $ 3,856 $ 24,782 $ 26,965

As of June 30, 2024 and June 25, 2023, the fair value of outstanding cash flow hedges was not material.

As of June 30, 2024, the Company had an immaterial net gain or loss accumulated in other comprehensive income, net of tax, related to foreign exchange cash flow hedges and interest rate contracts which it expects to reclassify from other comprehensive income into earnings over the next 12 months.

The total notional value of cash flow hedge instruments outstanding as of June 30, 2024 included $ 307.3 million of buy contracts and $ 136.5 million of sell contracts.

Balance Sheet Hedges

3 unchanged sentences

As of June 30, 2024 and June 25, 2023, the fair value of outstanding balance sheet hedges was not material.

The following table provides the total notional value of balance sheet hedge instruments outstanding as of June 25, 2023:

June 25, 2023

(In thousands)

Buy Contracts $ 268,166

Sell Contracts 166,723

Lam Research Corporation 2023 10-K 59

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

June 25, 2023 June 26, 2022

Derivatives Not Designated as Hedging Instruments:

Location of (Loss) Gain

in Income (Loss)

in Income Gain

(in thousands)

Foreign exchange contracts Other income (expense), net $ ( 9,544 ) $ 14,362

The effect of the Company’s balance sheet hedge derivative instruments on the Company’s Consolidated Statements of Operations were not material as of and for the twelve months ended June 30, 2024.

The total notional value of balance sheet hedge instruments outstanding as of June 30, 2024 included $ 366.9 million of buy contracts and $ 238.2 million of sell contracts.

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.

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

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

8 unchanged sentences

As of June 30, 2024, three customers accounted for approximately 16 %, 13 % and 13 % of accounts receivable, respectively.

As of June 26, 2022, two customers accounted for approximately 20 %, and 14 % of accounts receivable, respectively.

No other customers accounted for more than 10% of accounts receivable, respectively.

The Company’s balance and transactional activity for its allowance for doubtful accounts is not material as of and for the twelve months ended June 25, 2023, June 26, 2022, and June 27, 2021.

As of June 25, 2023, three customers accounted for approximately 32 %, 13 %, and 10 % of accounts receivable, respectively.

No other customers accounted for 10% or more of accounts receivable.

The Company’s balance and transactional activity for its allowance for doubtful accounts is not material as of and for the years ended June 30, 2024, June 25, 2023, and June 26, 2022.

Refer to Note 19:

Segment, Geographic Information, and Major Customers for additional information regarding customer concentrations.

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

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.

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Table of Content

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.

Inventories consist of the following:

5 unchanged sentences

$ 4,217,924 $ 4,816,190

Lam Research Corporation 2023 10-K 60

Property and Equipment

14 unchanged sentences

Goodwill and Intangible Assets

The balance of goodwill was $ 1.6 billion and $ 1.5 billion as of June 25, 2023 and June 26, 2022, respectively.

As of June 25, 2023 and June 26, 2022, $ 65.4 million and $ 62.0 million, respectively, of the goodwill balance is tax deductible, and the remaining balance is not tax deductible due to purchase accounting and applicable foreign law.

The balance of goodwill was $ 1.6 billion as of June 30, 2024 and June 25, 2023, respectively.

As of June 30, 2024 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.

No goodwill impairments were recognized in fiscal years 2024, 2023, or 2022.

Refer t o Note 20:

Business Combina tion s for additional information regarding the Company’s goodwill balance.

Business Combinations for additional information regarding the Company’s goodwill balance.

Intangible Assets

11 unchanged sentences

Total intangible assets $ 1,599,570 $ ( 1,461,025 ) $ 138,545 $ 1,591,082 $ ( 1,422,628 ) $ 168,454

Lam Research Corporation 2024 10-K 57

Table of Content

The Company recognized $ 56.3 million, $ 51.5 million, and $ 78.0 million in intangible asset amortization expense during fiscal years 2024, 2023, and 2022, respectively.

Intangible asset impairments in fiscal year 2024 were insignificant.

No intangible asset impairments were recognized in fiscal years 2023 or 2022.

Lam Research Corporation 2023 10-K 61

The estimated future amortization expense of intangible assets as of June 30, 2024, is reflected in the table below.

17 unchanged sentences

$ 1,801,877 $ 2,010,637

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Table of Content

Long Term Debt and Other Borrowings

26 unchanged sentences

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

Lam Research Corporation 2023 10-K 62

The Company’s contractual cash obligations relating to its outstanding debt as of June 30, 2024, were as follows:

15 unchanged sentences

The Company pays interest at an annual rate of 3.80 % on the 2025 Notes on a semi-annual basis on March 15 and September 15 of each year.

The Company may redeem the 2025, 2026, 2029, 2030, 2049, 2050, and 2060 Notes (collectively the “Senior Notes”) at a redemption price equal to 100 % of the principal amount of such series (“par”), plus a “make whole” premium as described in the indenture in respect to the Senior Notes and accrued and unpaid interest before December 15, 2024 for the 2025 Notes, before January 15, 2026 for the 2026 Notes, before December 15, 2028 for the 2029 Notes, before March 15, 2030 for the 2030 Notes, before September 15, 2048 for the 2049 Notes, before December 15, 2049 for the 2050 Notes, and before December 15, 2059 for the 2060 Notes.

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Table of Content

January 15, 2026 for the 2026 Notes, before December 15, 2028 for the 2029 Notes, before March 15, 2030 for the 2030 Notes, before September 15, 2048 for the 2049 Notes, before December 15, 2049 for the 2050 Notes, and before December 15, 2059 for the 2060 Notes.

The Company may redeem the Senior Notes at par, plus accrued and unpaid interest at any time on or after December 24, 2024 for the 2025 Notes, on or after January 15, 2026 for the 2026 Notes, on or after December 15, 2028 for the 2029 Notes, on or after March 15, 2030 for the 2030 Notes, on or after September 15, 2048 for the 2049 Notes, on or after December 15, 2049 for the 2050 Notes, and on or after December 15, 2059 for the 2060 Notes.

13 unchanged sentences

This agreement was amended on November 10, 2015 (the “Amended and Restated Credit Agreement”), October 13, 2017 (the “2nd Amendment”), February 25, 2019 (the “3rd Amendment”), 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 Second Amended and Restated Credit Agreement provides for a $ 1.50 billion revolving credit facility with a syndicate of lenders, along with an expansion option that will allow the Company, subject to certain requirements, to request an increase in the facility of up to an additional $ 600.0 million, for a potential total commitment of

Lam Research Corporation 2023 10-K 63

$ 2.10 billion.

The facility matures on June 17, 2026.

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 Chicago Mercantile Exchange term SOFR administrator plus 0.10 % (“adjusted term SOFR”), with no change to the amount or timing of contractual cash flows.

The Amendment No.1 To Second Amended and Restated Credit Agreement replaces the benchmark reference rate, London inter-bank offered rate, with term secured overnight financing rate (“SOFR”) equal to the term rate determined by the Chicago Mercantile Exchange 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.

7 unchanged sentences

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

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

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

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

2 unchanged sentences

Interest Cost

The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the debt discount, issuance costs, and effective portion of interest rate contracts with respect to the Senior Notes, convertible notes, and the revolving credit facility during the fiscal years ended June 25, 2023, June 26, 2022, and June 27, 2021.

The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the debt discount, issuance costs, and effective portion of interest rate contracts with respect to the Senior Notes, and the revolving credit facility during the fiscal years ended June 30, 2024, June 25, 2023, and June 26, 2022.

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Table of Content

2024 June 25,

18 unchanged sentences

Variable lease cost 176,641 227,726 259,041

Lam Research Corporation 2023 10-K 64

Variable lease payments are expensed as incurred and are not included within the right of use asset and lease liability calculation.

12 unchanged sentences

Finance leases 226,519 20,161 13,868

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Table of Content

Supplemental balance sheet information related to leases was as follows as of June 30, 2024 and June 25, 2023:

16 unchanged sentences

Finance leases 5.8 3.39 % 5.2 2.56 %

Lam Research Corporation 2023 10-K 65

As of June 30, 2024, the maturities of lease liabilities are as follows:

11 unchanged sentences

Selected Leases and Related Guarantees

The Company leases the some 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;

The Company leases some 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 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 million in separate interest-bearing accounts as security for the Company’s obligations.

These amounts are recorded with other restricted cash and investments in the Company’s Consolidated Balance Sheets as of June 25, 2023 and June 26, 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.

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.

During the fiscal year ended June 25, 2023, the Company recognized an immaterial liability associated with one of the leased properties in other long-term liabilities in its Consolidated Balances Sheets, as a result of an annual assessment of potential liability under the residual value guarantee arrangements.

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 million of restricted cash that was reported in Other assets in the Company’s 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 Facility 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 Consolidated Balance Sheets primarily comprised of land ($ 40.5 million) and buildings and improvements ($ 210.0 million).

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Table of Content

Retirement and Deferred Compensation Plans

18 unchanged sentences

The benefit obligation was $ 31.2 million and $ 33.2 million as of June 30, 2024, and June 25, 2023, respectively.

Lam Research Corporation 2023 10-K 66

Commitments and Contingencies

20 unchanged sentences

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

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Table of Content

Purchase Obligations

8 unchanged sentences

Thereafter 3,113

Purchase obligations for which timing of payment is indeterminable 64,061

Total $ 926,683

4 unchanged sentences

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

As of September 25, 2022, this one-time tax was adjusted, resulting in a total tax liability increase of approximately $ 50.0 million, which was spread over the same 8-year period (see Note 7:

Income Taxes for further discussion).

Lam Research Corporation 2023 10-K 67

During fiscal year 2023, this one-time tax was adjusted, resulting in a total tax liability increase of approximately $ 50.0 million, which was spread over the same 8-year period.

The Company’s remaining obligation related to this arrangement as of June 30, 2024, were as follows:

7 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 June 25, 2023, warranty reserves totaling $ 29.9 million were recognized in other long-term liabilities, the remainder were included in accrued expenses and other current liabilities in the Company’s Consolidated Balance Sheets.

As of June 30, 2024, warranty reserves totaling $ 22.3 million were reported in Other long-term liabilities, the remainder were included in Accrued expenses and other current liabilities in the Company’s Consolidated Balance Sheets.

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Table of Content

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

8 unchanged sentences

Government Assistance

In the fiscal year ended June 25, 2023, the Company received government assistance from various domestic and international governments in the form of cash grants or refundable tax credits (collectively “Grant” or “Grants”).

In the fiscal years ended June 30, 2024 and June 25, 2023, the Company received government assistance from various domestic and international governments in the form of cash grants or refundable tax credits.

The Grants typically specify conditions that must be met in order for the Grants to be earned, such as employment or employee retention targets;

2 unchanged sentences

If conditions are not satisfied or if the duration period for the arrangement is not met, the Grants are often subject to reduction, repayment, or termination.

The Company’s policy is to recognize a benefit in the Consolidated Statement of Operations, as a reduction to the expense the individual Grant is designed to compensate for, over the duration of the program when the Company has reasonable assurance that it will comply with the conditions under the Grant and that the Grant will be received.

During the fiscal year ended June 25, 2023, the Company received an insignificant amount related to Grants.

To the extent amounts have been received by the Company in advance of completion of the conditions, they have been recognized in accrued expense and other liabilities, or other long-term liabilities in the Consolidated Balance Sheets, as appropriate.

During the fiscal years ended June 30, 2024 and June 25, 2023, the Company’s cash Grants were insignificant.

During the fiscal years ended June 30, 2024 and June 25, 2023, the Company recognized immaterial reductions to the cost basis of acquired property and equipment related to refundable tax credits earned.

This reduction in the cost basis of acquired property and equipment is recorded with a corresponding reduction to taxes payable and classified under Accrued expense and other current liabilities, or Other long-term liabilities, as appropriate, in the Consolidated Balance Sheets.

Legal Proceedings

1 unchanged sentence

The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable.

Judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable.

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.

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Stock Repurchase Program

15 unchanged sentences

Quarter ended March 31, 2024 828 (2) $ 860,084 $ 774.77 $ 1,206,992

Board authorization, $ 10 billion increase, May 2024

Quarter ended June 30, 2024 525 (2) $ 382,332 $ 993.91 $ 10,824,660

1 unchanged sentence

See additional disclosure below regarding the Company’s accelerated share repurchase activity during the fiscal year.

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

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

see additional disclosures below regarding the Company’s accelerated share repurchase activity during the fiscal year.

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

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Table of Content

(3) 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 Consolidated Statement of Stockholders’ Equity and the calculation of the average price paid per share.

2 unchanged sentences

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.

Comprehensive Income (Loss)

The components of accumulated other comprehensive loss, net of tax at the end of June 25, 2023, as well as the activity during the fiscal year ended June 25, 2023, were as follows:

Adjustment Accumulated

Hedges Accumulated

Available-For-

Investments Accumulated

Benefit Plans Total

(in thousands)

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

Other comprehensive income before reclassifications 6,858 10,413 1,491 83 18,845

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

— ( 9,411 ) ( 158 ) — ( 9,569 )

Net current-period other comprehensive income (loss) 6,858 1,002 1,333 83 9,276

Balance as of June 25, 2023 $ ( 74,897 ) $ ( 11,328 ) $ ( 304 ) $ ( 14,177 ) $ ( 100,706 )

(1) Amount of after-tax gain reclassified from accumulated other comprehensive income into net income is not material individually or in the aggregate, or to any individual location in our Consolidated Statement of Operations.

Lam Research Corporation 2023 10-K 69

Tax related to other comprehensive income, and the components thereto, for the years ended June 25, 2023, June 26, 2022, and June 27, 2021 was not material.

On February 1, 2024, the Company entered into accelerated share repurchase agreements (the "February 2024 ASRs") with two financial institutions to repurchase a total of $ 700 million of Common Stock.

The Company took an initial delivery of approximately 631 thousand shares, which represented 75 % of the prepayment amount divided by our closing stock price on February 1, 2024.

The total number of shares received under the February 2024 ASRs was based upon the average daily volume weighted average price of the Company’s Common Stock during the repurchase period, less an agreed upon discount.

Final settlement of the February 2024 ASRs occurred during April 2024, resulting in the receipt of approximately 140 thousand additional shares, which yielded a weighted-average share price of $ 917.38 (net of applicable excise taxes) for the transaction period.

The Company recorded the February 2024 ASRs as equity transactions;

as such, at the time of receipt, shares were included in treasury stock at fair market value as of the corresponding trade date.

The Company reflects shares received as a repurchase of common stock in the weighted average common shares outstanding calculation for basic and diluted earnings per share.

Segment, Geographic Information, and Major Customers

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Total revenue $ 14,905,386 $ 17,428,516 $ 17,227,039

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2024 June 25,

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Taiwan 98,268 65,432 72,845

China 8,865 7,214 9,301

Japan 7,858 8,452 8,406

China 6,390 8,865 7,214

$ 2,462,854 $ 2,099,328 $ 1,874,235

In fiscal year 2024, one customer accounted for approximately 17 % of total revenues.

In fiscal year 2023, two customers accounted for approximately 22 % and 16 % of total revenues, respectively.

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

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

No other customers accounted for more than 10% of total revenues.

Lam Research Corporation 2023 10-K 70

No other customers accounted for 10% or more of total revenues.

Business Combinations

In November 2022, the Company completed two business combination transactions acquiring the outstanding shares of two separate private companies in cash transactions collectively 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;

The Company’s 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 purchase price allocation related to the two business combination transactions is considered final.

The Company expensed all associated costs, as incurred, in Selling, general, and administrative expense in the Consolidated Statement of Operations for the year ended June 25, 2023.

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

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

Weighted-Average Useful Life Estimated Purchase Date Fair Value

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In process research and development Indefinite 30,081

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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 Consolidated Balance Sheets.

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.

During 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, through June 30, 2024, the Company terminated approximately 1,760 employees, incurring expenses related to employee severance and separation costs.

Employee severance and separation costs are primarily related 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 and incurred charges to move inventory and equipment and exit selected supplier arrangements.

During the fiscal year ended June 30, 2024, net restructuring costs of $ 43.4 million and $ 18.2 million were recorded in Restructuring charges, net - cost of goods sold, and Restructuring charges, net - operating expenses, respectively in the 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 $ 18 million will be incurred in the fiscal quarters ending September 24, 2023 and December 24, 2023.

During the fiscal year ended June 25, 2023, net restructuring costs of $ 78.2 million and $ 42.2 million were recorded in Restructuring charges, net - cost of goods sold, and Restructuring charges, net - operating expenses, respectively in the Consolidated Statements of Operations.

The restructuring plan is substantially complete as of June 30, 2024, and cumulative costs as of June 30, 2024 total $ 181.9 million .

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 26, 2022 $ — $ — $ —

Restructuring expense 107,063 13,253 120,316

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

Restructuring expense 29,926 31,636 61,562

Cash payments ( 36,684 ) ( 24,045 ) ( 60,729 )

Non-cash activities ( 1,034 ) ( 6,941 ) ( 7,975 )

Restructuring liability as of June 30, 2024 $ 197 $ 896 $ 1,093

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Report of Independent Registered Public Accounting Firm

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Lam Research Corporation 2024 10-K 69

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Inventory - Valuation

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As explained in Note 2 to the consolidated financial statements, the Company assesses the valuation of all inventories including manufacturing raw materials, work-in-process, finished goods, and spare parts in each reporting period.

Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its estimated net realizable value if less than cost.

Inventory in excess of management’s estimated usage requirement and obsolete inventory is written down to its estimated net realizable value if less than cost.

Auditing management’s estimates for excess and obsolete inventory involved subjective auditor judgment because management’s assessment of whether a write down is required and the measurement of any excess of cost over net realizable value is judgmental and considers a number of qualitative factors that are affected by market and economic conditions outside the Company’s control.

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This included controls over management’s assessment of inventory valuation, including the development of forecasted usage of inventories and consideration of how factors outside of the Company’s control might affect management’s judgment related to the valuation of excess and obsolete inventory.

Our audit procedures included, among others, evaluating the significant assumptions (e.g., forecasts related to the Company’s future manufacturing schedules, customer demand, technological and/or market obsolescence, and possible alternative uses) and the underlying data used in management’s excess and obsolete inventory valuation assessment.

Our audit procedures included, among others, evaluating the significant assumptions (e.g., forecasts related to the Company’s future manufacturing schedules, customer demand, technological obsolescence, and possible alternative uses) and the underlying data used in management’s excess and obsolete inventory valuation assessment.

We evaluated inventory levels compared to forecasted demand, historical sales and specific product considerations.

5 unchanged sentences

Lam Research Corporation 2024 10-K 70

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Report of Independent Registered Public Accounting Firm

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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data