LAM RESEARCH CORP 10-Q

ITEM 1. Financial Statements LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended December 29, 2024 December 24, 2023 December 29, 2024 December 24, 2023 Revenue $ 4,376,047 $ 3,758,259 $ 8,544,023 $ 7,240,321 Cost of goods sold 2,303,066 1,985,847 4,468,359 3,805,267 Restructuring charges, net - cost of goods sold — 14,957 — 22,897 Total cost of goods sold 2,303,066 2,000,804 4,468,359 3,828,164 Gross margin 2,072,981 1,757,455 4,075,664 3,412,157 Research and development 494,947 469,712 990,305 892,341 Selling, general, and administrative 244,150 228,843 487,278 435,866 Restructuring charges, net - operating expenses — 1,688 — 3,709 Total operating expenses 739,097 700,243 1,477,583 1,331,916 Operating income 1,333,884 1,057,212 2,598,081 2,080,241 Other income (expense), net 14,262 29,839 44,343 32,440 Income before income taxes 1,348,146 1,087,051 2,642,424 2,112,681 Income tax expense ( 157,128 ) ( 132,785 ) ( 334,962 ) ( 271,017 ) Net income $ 1,191,018 $ 954,266 $ 2,307,462 $ 1,841,664 Net income per share: Basic $ 0.93 $ 0.72 $ 1.78 $ 1.39 Diluted $ 0.92 $ 0.72 $ 1.78 $ 1.39 Number of shares used in per share calculations: Basic 1,287,109 1,316,293 1,293,173 1,321,067 Diluted 1,291,469 1,322,201 1,297,767 1,326,933 See Notes to Condensed Consolidated Financial Statements Lam Research Corporation 2025 Q2 10-Q 3 Table of Contents LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) (unaudited) Three Months Ended Six Months Ended December 29, 2024 December 24, 2023 December 29, 2024 December 24, 2023 Net income $ 1,191,018 $ 954,266 $ 2,307,462 $ 1,841,664 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment ( 48,613 ) 14,530 ( 3,487 ) ( 6,148 ) Cash flow hedges: Net unrealized gains during the period 4,552 1,671 2,116 10,269 Net gains reclassified into net income ( 2,260 ) ( 12,826 ) ( 2,364 ) ( 21,743 ) 2,292 ( 11,155 ) ( 248 ) ( 11,474 ) Available-for-sale investments: Net unrealized gains during the period — 102 — 284 Net gains reclassified into net income — — — ( 10 ) — 102 — 274 Defined benefit plans, net change in unrealized component 39 179 78 360 Other comprehensive income (loss), net of tax ( 46,282 ) 3,656 ( 3,657 ) ( 16,988 ) Comprehensive income $ 1,144,736 $ 957,922 $ 2,303,805 $ 1,824,676 See Notes to Condensed Consolidated Financial Statements Lam Research Corporation 2025 Q2 10-Q 4 Table of Contents LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) December 29, 2024 June 30, 2024 (unaudited) (1) ASSETS Cash and cash equivalents $ 5,665,379 $ 5,847,856 Accounts receivable, less allowance of $ 5,713 as of December 29, 2024, and $ 5,277 as of June 30, 2024 3,304,946 2,519,250 Inventories 4,358,152 4,217,924 Prepaid expenses and other current assets 284,370 298,190 Total current assets 13,612,847 12,883,220 Property and equipment, net 2,313,590 2,154,518 Goodwill and intangible assets 1,761,021 1,765,073 Other assets 2,152,458 1,941,917 Total assets $ 19,839,916 $ 18,744,728 LIABILITIES AND STOCKHOLDERS’ EQUITY Trade accounts payable $ 822,278 $ 613,966 Accrued expenses and other current liabilities 2,095,989 1,801,877 Deferred profit 1,927,893 1,417,781 Current portion of long-term debt and finance lease obligations 504,136 504,814 Total current liabilities 5,350,296 4,338,438 Long-term debt and finance lease obligations, less current portion 4,478,148 4,478,520 Income taxes payable 669,747 813,304 Other long-term liabilities 533,699 575,012 Total liabilities 11,031,890 10,205,274 Commitments and contingencies (refer to Note 12) Stockholders’ equity: Preferred stock, at par value of $ 0.001 per share; authorized, 5,000 shares, none outstanding — — Common stock, at par value of $ 0.001 per share; authorized, 4,000,000 shares as of December 29, 2024 and June 30, 2024; issued and outstanding, 1,284,956 shares as of December 29, 2024, and 1,303,769 shares as of June 30, 2024 1,285 1,304 Additional paid-in capital 8,439,903 8,223,046 Treasury stock, at cost; 1,667,484 shares as of December 29, 2024, and 1,648,239 shares as of June 30, 2024 ( 26,024,098 ) ( 24,365,783 ) Accumulated other comprehensive loss ( 134,085 ) ( 130,428 ) Retained earnings 26,525,021 24,811,315 Total stockholders’ equity 8,808,026 8,539,454 Total liabilities and stockholders’ equity $ 19,839,916 $ 18,744,728 (1) Derived from audited financial statements See Notes to Condensed Consolidated Financial Statements Lam Research Corporation 2025 Q2 10-Q 5 Table of Contents LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended December 29, 2024 December 24, 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,307,462 $ 1,841,664 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 190,495 181,420 Deferred income taxes ( 191,576 ) ( 112,985 ) Equity-based compensation expense 161,970 137,112 Other, net ( 9,049 ) 4,032 Changes in operating assets and liabilities ( 148,889 ) 353,760 Net cash provided by operating activities 2,310,413 2,405,003 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures and intangible assets ( 298,937 ) ( 192,268 ) Proceeds from maturities of available-for-sales securities — 23,116 Other, net 13,011 ( 7,489 ) Net cash used for investing activities ( 285,926 ) ( 176,641 ) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on debt, including finance lease obligations ( 1,966 ) ( 254,095 ) Treasury stock purchases, including excise tax payments ( 1,694,723 ) ( 1,488,696 ) Dividends paid ( 558,619 ) ( 494,746 ) Reissuance of treasury stock related to employee stock purchase plan 60,557 53,081 Proceeds from issuance of common stock, net issuance costs ( 237 ) 4,522 Other, net 437 ( 5,972 ) Net cash used for financing activities ( 2,194,551 ) ( 2,185,906 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 3,340 ) ( 4,306 ) Net change in cash, cash equivalents, and restricted cash ( 173,404 ) 38,150 Cash, cash equivalents, and restricted cash at beginning of period (1) 5,850,803 5,587,372 Cash, cash equivalents, and restricted cash at end of period (1) $ 5,677,399 $ 5,625,522 Schedule of non-cash transactions: Accrued payables for stock repurchases, including applicable excise tax $ 20,515 $ 37,263 Accrued payables for capital expenditures 82,155 63,126 Dividends payable 296,042 263,133 Transfers of finished goods inventory to property and equipment 58,801 37,927 Reconciliation of cash, cash equivalents, and restricted cash December 29, 2024 December 24, 2023 Cash and cash equivalents $ 5,665,379 $ 5,623,289 Restricted cash and cash equivalents (1) 12,020 2,233 Total cash, cash equivalents, and restricted cash $ 5,677,399 $ 5,625,522 (1) Restricted cash is reported within Other assets in the Condensed Consolidated Balance Sheets See Notes to Condensed Consolidated Financial Statements Lam Research Corporation 2025 Q2 10-Q 6 Table of Contents LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) (unaudited) Three Months Ended December 29, 2024 Common Stock Shares Common Stock Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Loss Retained Earnings Total Balance at September 29, 2024 1,291,958 $ 1,292 $ 8,303,014 $ ( 25,374,657 ) $ ( 87,803 ) $ 25,630,045 $ 8,471,891 Issuance of common stock 232 — ( 194 ) — — — ( 194 ) Purchase of treasury stock ( 8,396 ) ( 8 ) — ( 654,873 ) — — ( 654,881 ) Reissuance of treasury stock 1,162 1 55,124 5,432 — — 60,557 Equity-based compensation expense — — 81,959 — — — 81,959 Net income — — — — — 1,191,018 1,191,018 Other comprehensive loss — — — — ( 46,282 ) — ( 46,282 ) Cash dividends declared ($ 0.23 per common share) — — — — — ( 296,042 ) ( 296,042 ) Balance at December 29, 2024 1,284,956 $ 1,285 $ 8,439,903 $ ( 26,024,098 ) $ ( 134,085 ) $ 26,525,021 $ 8,808,026 Six Months Ended December 29, 2024 Common Stock Shares Common Stock Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Loss Retained Earnings Total Balance at June 30, 2024 1,303,769 $ 1,304 $ 8,223,046 $ ( 24,365,783 ) $ ( 130,428 ) $ 24,811,315 $ 8,539,454 Issuance of common stock 432 — ( 237 ) — — — ( 237 ) Purchase of treasury stock ( 20,407 ) ( 20 ) — ( 1,663,747 ) — — ( 1,663,767 ) Reissuance of treasury stock 1,162 1 55,124 5,432 — — 60,557 Equity-based compensation expense — — 161,970 — — — 161,970 Net income — — — — — 2,307,462 2,307,462 Other comprehensive loss — — — — ( 3,657 ) — ( 3,657 ) Cash dividends declared ($ 0.46 per common share) — — — — — ( 593,756 ) ( 593,756 ) Balance at December 29, 2024 1,284,956 $ 1,285 $ 8,439,903 $ ( 26,024,098 ) $ ( 134,085 ) $ 26,525,021 $ 8,808,026 See Notes to Condensed Consolidated Financial Statements Lam Research Corporation 2025 Q2 10-Q 7 Table of Contents Three Months Ended December 24, 2023 Common Stock Shares Common Stock Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Loss Retained Earnings Total Balance at September 24, 2023 1,320,721 $ 1,320 $ 7,876,778 $ ( 22,364,807 ) $ ( 121,350 ) $ 22,655,389 $ 8,047,330 Issuance of common stock 312 1 1,703 — — — 1,704 Purchase of treasury stock ( 9,755 ) ( 9 ) — ( 644,944 ) — — ( 644,953 ) Reissuance of treasury stock 1,504 1 46,615 6,465 — — 53,081 Equity-based compensation expense — — 69,901 — — — 69,901 Net income — — — — — 954,266 954,266 Other comprehensive income — — — — 3,656 — 3,656 Cash dividends declared ($ 0.20 per common share) — — — — — ( 262,507 ) ( 262,507 ) Balance at December 24, 2023 1,312,782 $ 1,313 $ 7,994,997 $ ( 23,003,286 ) $ ( 117,694 ) $ 23,347,148 $ 8,222,478 Six Months Ended December 24, 2023 Common Stock Shares Common Stock Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Loss Retained Earnings Total Balance at June 25, 2023 1,332,966 $ 1,333 $ 7,806,749 $ ( 21,529,300 ) $ ( 100,706 ) $ 22,032,096 $ 8,210,172 Issuance of common stock 726 1 4,521 — — — 4,522 Purchase of treasury stock ( 22,414 ) ( 22 ) — ( 1,480,451 ) — — ( 1,480,473 ) Reissuance of treasury stock 1,504 1 46,615 6,465 — — 53,081 Equity-based compensation expense — — 137,112 — — — 137,112 Net income — — — — — 1,841,664 1,841,664 Other comprehensive loss — — — — ( 16,988 ) — ( 16,988 ) Cash dividends declared ($ 0.40 per common share) — — — — — ( 526,612 ) ( 526,612 ) Balance at December 24, 2023 1,312,782 $ 1,313 $ 7,994,997 $ ( 23,003,286 ) $ ( 117,694 ) $ 23,347,148 $ 8,222,478 See Notes to Condensed Consolidated Financial Statements Lam Research Corporation 2025 Q2 10-Q 8 Table of Contents LAM RESEARCH CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 29, 2024 (Unaudited) NOTE 1 — BASIS OF PRESENTATION The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. 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 30, 2024, which are included in the Company’s Annual Report on Form 10-K as of and for the year ended June 30, 2024 (the “2024 Form 10-K”). The condensed consolidated financial statements include the accounts of Lam Research and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s reporting period is a 52/53-week fiscal year. The Company’s current fiscal year will end June 29, 2025 and includes 52 weeks. The quarters ended December 29, 2024 (the “December 2024 quarter”) and December 24, 2023 included 13 weeks. Common Stock Split: On October 2, 2024, the Company effected a ten -for-one stock split of its common stock and a proportionate increase in the number of authorized shares. All share and per share amounts throughout this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the stock split. The par value per share remains unchanged at $ 0.001 per share after the stock split. Reclassification: Certain amounts for the June 30, 2024 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 The Company has not adopted any new accounting standards during the six months ended December 29, 2024 that have a material impact on the Company’s Condensed Consolidated Financial Statements. Updates Not Yet Effective 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. In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires disaggregation of certain expenses in the notes to the financial statements to provide enhanced transparency into the expense captions presented on the face of the income statement. In January 2025, the FASB issued ASU 2025-01 which clarified the effective date for entities that do not have an annual reporting period that ends on December 31st. The guidance is effective for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is required to adopt this standard either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is required to adopt this standard in fiscal year 2028 for the annual reporting period ending June 25, 2028. The Company Lam Research Corporation 2025 Q2 10-Q 9 Table of Contents will apply the guidance prospectively and is currently in the process of evaluating the impact of adoption on its Consolidated Financial Statements. NOTE 3 — REVENUE Disaggregation of Revenue The Company operates in one reportable business segment: manufacturing and servicing of wafer processing semiconductor manufacturing equipment. The Company’s material operating segments qualify for aggregation due to their customer base and similarities in economic characteristics, nature of products and services, and processes for procurement, manufacturing, and distribution. The Company operates in seven geographic regions: United States, China, Europe, Japan, Korea, Southeast Asia, and Taiwan. For geographical reporting, revenue is attributed to the geographic location in which the customers’ facilities are located. The Company serves three primary markets: memory, foundry, and logic/integrated device manufacturing. The following table presents the Company’s revenues disaggregated between systems and customer support-related revenue: Three Months Ended Six Months Ended December 29, 2024 December 24, 2023 December 29, 2024 December 24, 2023 (In thousands) Systems revenue $ 2,625,649 $ 2,299,286 $ 5,018,379 $ 4,355,941 Customer support-related revenue and other 1,750,398 1,458,973 3,525,644 2,884,380 $ 4,376,047 $ 3,758,259 $ 8,544,023 $ 7,240,321 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. The following table presents the Company’s revenues disaggregated by geographic region: Three Months Ended Six Months Ended December 29, 2024 December 24, 2023 December 29, 2024 December 24, 2023 (In thousands) China $ 1,342,798 $ 1,493,395 $ 2,901,202 $ 3,180,706 Korea 1,090,264 711,951 1,852,345 1,259,896 Taiwan 737,674 499,883 1,353,042 742,373 United States 413,281 218,789 901,662 501,013 Japan 363,276 512,845 664,662 837,365 Southeast Asia 287,318 145,629 532,107 304,732 Europe 141,436 175,767 339,003 414,236 $ 4,376,047 $ 3,758,259 $ 8,544,023 $ 7,240,321 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 Six Months Ended December 29, 2024 December 24, 2023 December 29, 2024 December 24, 2023 Memory 50 % 48 % 43 % 43 % Foundry 35 % 38 % 38 % 37 % Logic/integrated device manufacturing 15 % 14 % 19 % 20 % Lam Research Corporation 2025 Q2 10-Q 10 Table of Contents Deferred Revenue Revenue of $ 311.7 million and $ 683.1 million included in deferred profit at June 30, 2024 was recognized during the three and six months ended December 29, 2024, representing 20 % and 44 %, respectively, of the $ 1,551.6 million of deferred revenue as of June 30, 2024. The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of December 29, 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 $ 1,622,089 $ 329,859 (1) $ 79,652 (1) $ 2,031,600 (1) This amount is reported in Deferred profit on the Company's Condensed Consolidated Balance Sheets as the customers can demand the performance to be satisfied at any time. NOTE 4 — EQUITY-BASED COMPENSATION PLANS The Lam Research Corporation 2015 Stock Incentive Plan, as amended, provides for the grant 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’s market-based PRSUs contain both a market condition and a service condition. The Company’s option, RSU, and market-based PRSU awards typically vest over a period of three years . 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 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 Six Months Ended December 29, 2024 December 24, 2023 December 29, 2024 December 24, 2023 (in thousands) Equity-based compensation expense $ 81,959 $ 69,901 $ 161,970 $ 137,112 Income tax benefit recognized related to equity-based compensation expense $ 10,589 $ 9,354 $ 21,171 $ 18,918 NOTE 5 — OTHER INCOME (EXPENSE), NET The significant components of other income (expense), net, are as follows: Three Months Ended Six Months Ended December 29, 2024 December 24, 2023 December 29, 2024 December 24, 2023 (in thousands) Interest income $ 57,611 $ 57,595 $ 126,060 $ 114,159 Interest expense ( 45,299 ) ( 46,313 ) ( 90,245 ) ( 91,644 ) Gains on deferred compensation plan-related assets, net 4,502 25,530 21,922 22,629 Foreign exchange (losses) gains, net ( 5,117 ) ( 568 ) ( 14,803 ) 701 Other, net 2,565 ( 6,405 ) 1,409 ( 13,405 ) $ 14,262 $ 29,839 $ 44,343 $ 32,440 Lam Research Corporation 2025 Q2 10-Q 11 Table of Contents NOTE 6 — INCOME TAX EXPENSE The Company’s provision for income taxes and effective tax rate are as follows: Three Months Ended Six Months Ended December 29, 2024 December 24, 2023 December 29, 2024 December 24, 2023 (in thousands, except percentages) Income tax expense $ 157,128 $ 132,785 $ 334,962 $ 271,017 Effective tax rate 11.7 % 12.2 % 12.7 % 12.8 % The difference between the U.S. federal statutory tax rate of 21% and the Company’s effective tax rate for the three and six months ended December 29, 2024 and December 24, 2023 was primarily due to income in lower tax jurisdictions. The Internal Revenue Service (“IRS”) is examining the Company’s U.S. 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. The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the IRS will occur. The Company is in various stages of examinations in connection with all of its tax audits worldwide, and it is difficult to determine when these examinations will be settled. It is reasonably possible that over the next 12-month period the Company may experience an increase or decrease in its uncertain tax positions as a result of tax examinations or lapses of statutes of limitation. The change in uncertain tax positions as a result of lapses of statutes of limitation may range up to $ 211.1 million. NOTE 7 — 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, and restricted stock units. The following table reconciles the inputs to the basic and diluted computations for net income per share. Three Months Ended Six Months Ended December 29, 2024 December 24, 2023 December 29, 2024 December 24, 2023 (in thousands, except per share data) Numerator: Net income $ 1,191,018 $ 954,266 $ 2,307,462 $ 1,841,664 Denominator: Basic average shares outstanding 1,287,109 1,316,293 1,293,173 1,321,067 Effect of potential dilutive securities: Employee stock plans 4,360 5,908 4,594 5,866 Diluted average shares outstanding 1,291,469 1,322,201 1,297,767 1,326,933 Net income per share - basic $ 0.93 $ 0.72 $ 1.78 $ 1.39 Net income per share - diluted $ 0.92 $ 0.72 $ 1.78 $ 1.39 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. These anti-dilutive securities, including options and RSUs, were not material for the three and six months ended December 29, 2024 and December 24, 2023. NOTE 8 — FINANCIAL INSTRUMENTS The Company’s investment strategies and investment and fair value policies are unchanged from those disclosed in Note 9, “Financial Instruments,” to the Consolidated Financial Statements in Part II, Item 8 of its 2024 Form 10-K. As of December 29, 2024 and June 30, 2024, the fair value of mutual funds and equity investments were not material. The Company had no debt security investments as of December 29, 2024 and June 30, 2024. 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 and six months ended December 29, 2024 and December 24, 2023. Lam Research Corporation 2025 Q2 10-Q 12 Table of Contents The financial instruments reported within Cash and Cash Equivalents in the Company’s Condensed Consolidated Balance Sheets as of December 29, 2024, and June 30, 2024 consisted of the following: December 29, 2024 June 30, 2024 (in thousands) Money market funds (fair value measured on a recurring basis, level 1) $ 1,990,046 $ 2,543,462 Cash 1,970,426 1,568,315 Time deposits 1,704,907 1,736,079 Total $ 5,665,379 $ 5,847,856 Derivative Instruments and Hedging The Company’s hedging strategies and policies are unchanged from those disclosed in Note 9, “Financial Instruments,” to the Consolidated Financial Statements in Part II, Item 8 of its 2024 Form 10-K. As of December 29, 2024 and June 30, 2024, 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 and six months ended December 29, 2024 and December 24, 2023. 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 the Consolidated Financial Statements in Part II, Item 8 of its 2024 Form 10-K. NOTE 9 — INVENTORIES 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: December 29, 2024 June 30, 2024 (in thousands) Raw materials $ 2,821,983 $ 2,921,139 Work-in-process 357,321 284,078 Finished goods 1,178,848 1,012,707 $ 4,358,152 $ 4,217,924 NOTE 10 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following: December 29, 2024 June 30, 2024 (in thousands) Accrued compensation $ 650,080 $ 516,717 Warranty reserves 231,453 228,060 Income and other taxes payable 302,825 186,700 Dividend payable 296,042 260,905 Other 615,589 609,495 $ 2,095,989 $ 1,801,877 NOTE 11 — LONG-TERM DEBT AND OTHER BORROWINGS Senior Notes The Company’s outstanding Senior Notes are unchanged from those disclosed in Note 14, “Long-term Debt and Other Borrowings,” to the Consolidated Financial Statements in Part II, Item 8 of its 2024 Form 10-K. Lam Research Corporation 2025 Q2 10-Q 13 Table of Contents 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”), December 7, 2022 (“Amendment No.1 to Second Amended and Restated Credit Agreement”), and January 27, 2025 (the “Third Amended and Restated Credit Agreement”). The Third Amended and Restated Credit Agreement provides for a $ 2.0 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 $ 750.0 million, for a potential total commitment of $ 2.75 billion. The facility matures on January 25, 2030. Interest on amounts borrowed under the credit facility is, at the Company’s option, based on (1) a base rate, plus a spread of 0.00 % to 0.10 %, or (2) an adjusted term Secured Overnight Financing Rate, plus a spread of 0.70 % to 1.10 %, in each case plus a facility fee, with such spread and facility fee determined in accordance with the Third Amended and Restated Credit Agreement, and with the spread and facility fee based on the rating of the Company’s non-credit enhanced, senior unsecured long-term debt. Principal and any accrued and unpaid interest are due and payable upon maturity. Additionally, the Company will pay the lenders a quarterly commitment fee that varies based on the Company’s credit rating as described above. As of December 29, 2024, the Company had no borrowings outstanding under the credit facility and was in compliance with all financial covenants. Commercial Paper Program The Company’s commercial paper program is unchanged from those disclosed in Note 14, “Long-term Debt and Other Borrowings,” to the Consolidated Financial Statements in Part II, Item 8 of its 2024 Form 10-K. NOTE 12 — COMMITMENTS AND CONTINGENCIES 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 December 29, 2024, 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. The Company seeks to limit its liability for such indemnity to an amount not to exceed the sales price of the products or services subject to its indemnification obligations. The Company does not believe that it is probable that any material amounts will be paid under these guarantees. 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 December 29, 2024, the maximum potential amount of future payments that the Company could be required to make under these arrangements and letters of credit was $ 203.6 million. The Company does not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid. In addition, the Company has entered into indemnification agreements with its directors, officers, and certain other employees, consistent with its Bylaws and Certificate of Incorporation; and under local law, the Company may be required to provide indemnification to its employees for actions within the scope of their employment. Although the Company maintains insurance contracts that cover some of the potential liability associated with these indemnification agreements, there is no guarantee that all such liabilities will be covered. The Company does not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under such indemnification agreements or statutory obligations. Warranties The Company provides standard warranties on its systems. 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 December 29, 2024, warranty reserves totaling $ 23.4 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. Lam Research Corporation 2025 Q2 10-Q 14 Table of Contents Changes in the Company’s product warranty reserves were as follows: Three Months Ended Six Months Ended December 29, 2024 December 24, 2023 December 29, 2024 December 24, 2023 (in thousands) Balance at beginning of period $ 250,375 $ 265,374 $ 250,404 $ 286,663 Warranties issued during the period 69,150 51,715 131,880 96,234 Settlements made during the period ( 46,288 ) ( 49,443 ) ( 91,256 ) ( 101,679 ) Changes in liability for warranties issued during the period ( 321 ) ( 24 ) ( 145 ) ( 74 ) Changes in liability for pre-existing warranties ( 18,104 ) ( 6,782 ) ( 36,071 ) ( 20,304 ) Balance at end of period $ 254,812 $ 260,840 $ 254,812 $ 260,840 Legal Proceedings While the Company is not currently a party to any legal proceedings that it believes material, the Company is either a defendant or plaintiff in various actions that have arisen from time to time in the normal course of business, including intellectual property claims. 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. 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. NOTE 13 — STOCK REPURCHASE PROGRAM In May 2024, the Board of Directors authorized the Company to repurchase up to an additional $ 10.0 billion of Common Stock; this authorization supplements the remaining balances from any prior authorizations. These repurchases can be conducted on the open market or as private purchases and may include the use of derivative contracts with large financial institutions, in all cases subject to compliance with applicable law. This repurchase program has no termination date and may be suspended or discontinued at any time. Repurchases under the repurchase program were as follows during the periods indicated. All references to share and per share amounts have been retroactively adjusted to reflect the effects of the stock split. See Note 1 for more information. Period Total Number of Shares Repurchased Total Cost of Repurchase Average Price Paid per Share (1) Amount Available Under Repurchase Program (in thousands, except per share data) Available balance as of June 30, 2024 $ 10,824,660 Quarter ended September 29, 2024 11,952 $ 1,003,654 $ 83.97 $ 9,821,006 Quarter ended December 29, 2024 8,336 $ 650,445 $ 78.03 $ 9,170,561 (1) 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. NOTE 14 — RESTRUCTURING CHARGES, NET 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, and incurred expenses related to employee severance and separation costs. Employee severance and separation costs were 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. Lam Research Corporation 2025 Q2 10-Q 15 Table of Contents No restructuring charges were recorded during the three and six months ended December 29, 2024. During the three months ended December 24, 2023, net restructuring costs of $ 15.0 million and $ 1.7 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. During the six months ended December 24, 2023, net restructuring costs of $ 22.9 million and $ 3.7 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 restructuring plan was substantially completed as of June 30, 2024, and cumulative costs as of June 30, 2024 totaled $ 181.9 million. The restructuring liability reported as of June 30, 2024 totaling $ 1.1 million was substantially satisfied in the three months ended September 29, 2024. Lam Research Corporation 2025 Q2 10-Q 16 Table of Contents