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These factors include but are not limited to the following: • general market, semiconductor, or semiconductor equipment industry conditions; • economic or political events, trends, and unexpected developments occurring nationally, globally, or in any of our key sales regions; • variations in our quarterly operating results and financial condition, including our liquidity; • variations in our revenues, earnings, or other business and financial metrics from forecasts by us or securities analysts or from those experienced by other companies in our industry; • announcements of restructurings, reductions in force, departure of key employees, and/or consolidations of operations; • government regulations; • developments in, or claims relating to, patent or other proprietary rights; Continues on next page Lam Research Corporation 2017 10-K 23 • technological innovations and the introduction of new products by us or our competitors; • commercial success or failure of our new and existing products; • disruptions of relationships with key customers or suppliers; or • dilutive impacts of our Convertible Notes and related warrants. |
Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to: • economic conditions in the electronics and semiconductor industries in general and specifically the semiconductor equipment industry; • the size and timing of orders from customers; • consolidation of the customer base, which may result in the investment decisions of one customer or market having a significant effect on demand for our products or services; • procurement shortages; • the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations; • manufacturing difficulties; • customer cancellations or delays in shipments, installations, and/or customer acceptances; • the extent that customers continue to purchase and use our products and services in their business; • our customers’ reuse of existing and installed products, to the extent that such reuse decreases their need to purchase new products or services; • changes in average selling prices, customer mix, and product mix; Continues on next page Lam Research Corporation 2016 10-K 14 • our ability in a timely manner to develop, introduce and market new, enhanced, and competitive products; • our competitors’ introduction of new products; • legal or technical challenges to our products and technology; • transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as strikes, acts of God, wars, terrorist activities, and natural or man-made disasters; • legal, tax, accounting, or regulatory changes (including but not limited to change in import/export regulations) or changes in the interpretation or enforcement of existing requirements; • changes in our estimated effective tax rate; • foreign currency exchange rate fluctuations; and • the dilutive impact of our Convertible Notes (as defined below) and related warrants on our earnings per share. |
We are subject to various challenges related to international sales and the management of global operations including, but not limited to: • trade balance issues; • tariffs and other barriers; • global or national economic and political conditions; • changes in currency controls; • differences in the enforcement of intellectual property and contract rights in varying jurisdictions; • our ability to respond to customer and foreign government demands for locally sourced systems, spare parts and services and develop the necessary relationships with local suppliers; Continues on next page Lam Research Corporation 2016 10-K 19 • compliance with U.S. and international laws and regulations affecting foreign operations; including U.S. and international trade restrictions and sanctions, anti-bribery, anti-corruption, environmental, and labor laws; • fluctuations in interest and foreign currency exchange rates; • our ability to repatriate cash in a tax-efficient manner; • the need for technical support resources in different locations; and • our ability to secure and retain qualified people, and effectively manage people, in all necessary locations for the successful operation of our business. |
These factors include but are not limited to the following: • our ability to complete the contemplated acquisition of KLA-Tencor, or any delays thereto; • general market, semiconductor, or semiconductor equipment industry conditions; • economic or political events and trends occurring globally or in any of our key sales regions; • variations in our quarterly operating results and financial condition, including our liquidity; • variations in our revenues, earnings or other business and financial metrics from forecasts by us or securities analysts, or from those experienced by other companies in our industry; • announcements of restructurings, reductions in force, departure of key employees, and/or consolidations of operations; • government regulations; • developments in, or claims relating to, patent or other proprietary rights; • technological innovations and the introduction of new products by us or our competitors; • commercial success or failure of our new and existing products; • disruptions of relationships with key customers or suppliers; or • dilutive impacts of our Convertible Notes and related warrants. |
Additional risks and uncertainties associated with the merger include: • various conditions to the closing of the merger may not be satisfied or waived; • the failure to consummate the merger may result in negative publicity and a negative impression of us in the investment community; • we and KLA-Tencor are subject to litigation related to the merger, and may be subject to additional proceedings in the future, which may effect the merger from becoming effective within the expected time frame, or at all; • required regulatory approvals from governmental entities may delay the merger or result in the imposition of conditions that could cause the abandonment of the merger; • the merger agreement may be terminated in circumstances that would require us to pay KLA-Tencor a termination fee of up to $290 million; • the merger agreement contains provisions that could discourage a potential acquirer of the Company; • our ability to attract, recruit, retain and motivate current and prospective employees who may be uncertain about the timing of the merger or their future roles and relationships with us following the completion of the merger may be adversely affected; • the increase in our leverage and debt service obligations as a result of the assumption of KLA-Tencor’s debt and the incurrence of additional financing in connection with the merger may adversely affect the combined company’s financial condition, results of operations and earnings per share; and • the attention of our employees and management may be diverted due to activities related to the merger; and disruptions from the merger, whether completed or not, may harm our relationships Continues on next page Lam Research Corporation 2016 10-K 24 with our employees, customers, distributors, suppliers or other business partners, may impair our ability to continuously innovate to meet the industry inflections, and may result in a loss of or a substantial decrease in purchases by our customers. |
Potential difficulties that the combined company may encounter as part of the integration process include the following: • the inability to successfully combine our business with KLA-Tencor in a manner that permits the combined company to achieve the full revenue and cost synergies and other benefits anticipated to result from the merger; • required regulatory approvals from governmental entities may result in limitations, additional costs or placement of restrictions on the conduct of the combined company, imposition of additional material costs on or materially limiting the revenues of the combined company following the merger; • complexities associated with managing the combined businesses, including difficulty addressing possible differences in corporate cultures and management philosophies and the challenge of integrating complex systems, technology, networks and other assets of each of the companies in a seamless manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies; and • potential unknown liabilities and unforeseen increased expenses or delays associated with the merger. |
Financial Statements and Supplementary Data Index to Consolidated Financial Statements Continues on next page Lam Research Corporation 2016 10-K 51 LAM RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) See Notes to Consolidated Financial Statements Continues on next page Lam Research Corporation 2016 10-K 52 LAM RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) See Notes to Consolidated Financial Statements Continues on next page Lam Research Corporation 2016 10-K 53 LAM RESEARCH CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) See Notes to Consolidated Financial Statements Continues on next page Lam Research Corporation 2016 10-K 54 LAM RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Continues on next page Lam Research Corporation 2016 10-K 55 See Notes to Consolidated Financial Statements Continues on next page Lam Research Corporation 2016 10-K 56 LAM RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) See Notes to Consolidated Financial Statements Continues on next page Lam Research Corporation 2016 10-K 57 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 26, 2016 Note 1: Company and Industry Information The Company designs, manufactures, markets, refurbishes and services semiconductor processing equipment used in the fabrication of integrated circuits. |
Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to: • economic conditions in the electronics and semiconductor industries in general and specifically the semiconductor equipment industry; • the size and timing of orders from customers; • Consolidation of the customer base may result in the investment decisions of one customer or market to having a significant effect on demand for our products or services; • procurement shortages; • the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations; • manufacturing difficulties; • customer cancellations or delays in shipments, installations, and/or customer acceptances; • the extent that customers continue to purchase and use our products and services in their business; • our customers’ reuse of existing and installed products, to the extent that such reuse decreases their need to purchase new products or services; • changes in average selling prices, customer mix, and product mix; • our ability in a timely manner to develop, introduce and market new, enhanced, and competitive products; • our competitors’ introduction of new products; • legal or technical challenges to our products and technology; • transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as strikes, acts of God, wars, terrorist activities, and natural or man-made disasters; • legal, tax, accounting, or regulatory changes (including but not limited to change in import/export regulations) or changes in the interpretation or enforcement of existing requirements; • changes in our estimated effective tax rate; • foreign currency exchange rate fluctuations; and • convertibility and the dilutive impact of our Convertible Notes and related warrants on our earnings per share. |
We are subject to various challenges related to international sales and the management of global operations including, but not limited to: • trade balance issues; • tariffs and other barriers; • global or national economic and political conditions; • changes in currency controls; • differences in the enforcement of intellectual property and contract rights in varying jurisdictions; • our ability to respond to customer and foreign government demands for locally sourced systems, spare parts and services and develop the necessary relationships with local suppliers; • compliance with U.S. and international laws and regulations affecting foreign operations; including U.S. and international trade restrictions and sanctions, anti-bribery, anti-corruption, environmental, and labor laws; • fluctuations in interest and foreign currency exchange rates; • our ability to repatriate cash in a tax-efficient manner; • the need for technical support resources in different locations; and • our ability to secure and retain qualified people, and effectively manage people, in all necessary locations for the successful operation of our business. |
These factors include but are not limited to the following: • general market, semiconductor, or semiconductor equipment industry conditions; • economic or political events and trends occurring globally or in any of our key sales regions; • variations in our quarterly operating results and financial condition, including our liquidity; • variations in our revenues, earnings or other business and financial metrics from forecasts by us or securities analysts, or from those experienced by other companies in our industry; • announcements of restructurings, reductions in force, departure of key employees, and/or consolidations of operations; • government regulations; • developments in, or claims relating to, patent or other proprietary rights; • technological innovations and the introduction of new products by us or our competitors; • commercial success or failure of our new and existing products; • disruptions of relationships with key customers or suppliers; or • convertibility and dilutive impacts of our Convertible Notes and related warrants. |
Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to: • economic conditions in the electronics and semiconductor industries in general and specifically the semiconductor equipment industry; • the size and timing of orders from customers; • procurement shortages; • the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations; • manufacturing difficulties; • customer cancellations or delays in shipments, installations, and/or customer acceptances; • the extent that customers continue to purchase and use our products and services in their business; • our customers’ reuse of existing and installed products, to the extent that such reuse decreases their need to purchase new products or services; • changes in average selling prices, customer mix, and product mix; • our ability in a timely manner to develop, introduce and market new, enhanced, and competitive products; • our competitors’ introduction of new products; • legal or technical challenges to our products and technology; • transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as strikes, acts of God, wars, terrorist activities, and natural disasters; • legal, tax, accounting, or regulatory changes (including but not limited to change in import/export regulations) or changes in the interpretation or enforcement of existing requirements; • changes in our estimated effective tax rate; • foreign currency exchange rate fluctuations; and • the dilutive impact of our convertible notes and related warrants on our earnings per share. |
2016 Notes The 2016 Notes may be converted at any time prior to the close of business on the business day immediately preceding February 15, 2016, at the option of the holder, only under the following circumstances: 1) during the five business-day period after any ten consecutive trading-day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2016 Notes for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s Common Stock and the applicable conversion rate on each such trading day; 2) during any fiscal quarter commencing after the fiscal quarter ending September 25, 2011, if the last reported sale price of the Company’s Common Stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price in effect on the last trading day of the immediately preceding fiscal quarter; or 3) upon the occurrence of specified corporate events. |
2018 Notes The 2018 Notes may be converted at any time prior to the close of business on the business day immediately preceding February 15, 2018, at the option of the holder only under the following circumstances: 1) during the five business-day period after any ten consecutive trading-day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2018 Notes for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s Common Stock and the applicable conversion rate on each such trading day; 2) during any fiscal quarter commencing after the fiscal quarter ending September 25, 2011, if the last reported sale price of the Company’s Common Stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price in effect on the last trading day of the immediately preceding fiscal quarter; or 3) upon the occurrence of specified corporate events. |
Specific issues that must be addressed in integrating the operations of Novellus into our pre-existing operations in order to realize the anticipated benefits of the acquisition include, among other things: • integrating and optimizing the utilization of the properties, equipment, suppliers, distribution channels, manufacturing, service, marketing, promotion and sales activities and information technologies of the combined company; • consolidating corporate and administrative infrastructures of the combined company; • coordinating geographically dispersed organizations of the combined company; • retaining and growing business at existing customers and attracting new customers to the combined company; • managing our contractual and business relationships with common suppliers and customers to reduce inconsistent or inefficient effects; • retaining key employees and utilizing their technical knowledge and business expertise; • communicating the inherently complex factors that a business combination will have on our financial position and results of operations; and • conforming standards, controls, procedures, policies, business cultures and compensation structures throughout the combined company. |
Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to: • economic conditions in the electronics and semiconductor industries in general and specifically the semiconductor equipment industry; • the size and timing of orders from customers; • procurement shortages; • the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations; • manufacturing difficulties; • customer cancellations or delays in shipments, installations, and/or customer acceptances; • the extent that customers continue to purchase and use our products and services in their business; • changes in average selling prices, customer mix, and product mix; • our ability in a timely manner to develop, introduce and market new, enhanced, and competitive products; • our competitors’ introduction of new products; • legal or technical challenges to our products and technology; • transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as strikes, acts of God, wars, terrorist activities, and natural disasters; • legal, tax, accounting, or regulatory changes (including but not limited to change in import/export regulations) or changes in the interpretation or enforcement of existing requirements; • changes in our estimated effective tax rate; • foreign currency exchange rate fluctuations; and • the dilutive impact of our convertible notes and related warrants on our earnings per share. |
We are subject to various challenges related to international sales and the management of global operations including, but not limited to: • trade balance issues; • global economic and political conditions, including the ongoing macroeconomic challenges associated with sovereign debt levels in certain euro-zone countries and the financial contagion to global markets; • changes in currency controls; • differences in the enforcement of intellectual property and contract rights in varying jurisdictions; • our ability to respond to customer and foreign government demands for locally sourced systems, spare parts and services and develop the necessary relationships with local suppliers; • compliance with U.S. and international laws and regulations affecting foreign operations, including U.S. and international export restrictions and foreign labor laws; • fluctuations in interest and foreign currency exchange rates; • our ability to repatriate cash in a tax-efficient manner; • the need for technical support resources in different locations; and • our ability to secure and retain qualified people in all necessary locations for the successful operation of our business. |
2016 Notes The 2016 Notes may be converted at any time prior to the close of business on the business day immediately preceding February 15, 2016, at the option of the holder, only under the following circumstances: 1) during the five business-day period after any ten consecutive trading-day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2016 Notes for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such trading day; 2) during any fiscal quarter commencing after the fiscal quarter ending September 25, 2011, if the last reported sale price of the Company’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price in effect on the last trading day of the immediately preceding fiscal quarter; or 3) upon the occurrence of specified corporate events. |
2018 Notes The 2018 Notes may be converted at any time prior to the close of business on the business day immediately preceding February 15, 2018, at the option of the holder only under the following circumstances: 1) during the five business-day period after any ten consecutive trading-day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2018 Notes for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such trading day; 2) during any fiscal quarter commencing after the fiscal quarter ending September 25, 2011, if the last reported sale price of the Company’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price in effect on the last trading day of the immediately preceding fiscal quarter; or 3) upon the occurrence of specified corporate events. |
As a result of the acquisition, Lam Research issued common stock and equity-based awards, subject to certain exceptions, as follows: (i) each issued and outstanding share of common stock of Novellus was converted into 1.125 (the “exchange ratio”) shares of Lam Research common stock, with cash paid in lieu of fractional shares; (ii) each outstanding option for Novellus’ common stock held by a then-current employee of Novellus, whether vested or unvested, was assumed by Lam Research and converted into an option (A) to acquire that number of shares of Lam Research common stock (rounded down to the nearest whole share) equal to the product of (x) the number of shares of Novellus common stock for which such option was exercisable immediately prior to the acquisition date multiplied by (y) the exchange ratio and (B) with an exercise price per share of Lam Research (rounded up to the nearest whole penny) equal to the quotient obtained by dividing (z) the exercise price per share of Novellus common stock subject to such option immediately prior to the acquisition date divided by (y) the exchange ratio. |
Specific issues that must be addressed in integrating the operations of Novellus into our pre-existing operations in order to realize the anticipated benefits of the acquisition include, among other things: • integrating and optimizing the utilization of the properties, equipment, suppliers, distribution channels, manufacturing, service, marketing, promotion and sales activities and information technologies of the combined company; • consolidating corporate and administrative infrastructures of the combined company; • coordinating geographically dispersed organizations of the combined company; • retaining and growing business at existing customers and attracting new customers to the combined company; • managing our contractual and business relationships with common suppliers and customers to reduce inconsistent or inefficient effects; • retaining key employees and utilizing their technical knowledge and business expertise; • communicating the inherently complex factors that a business combination will have on our financial position and results of operations; and • conforming standards, controls, procedures, policies, business cultures and compensation structures throughout the combined company. |
Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to: • economic conditions in the electronics and semiconductor industries in general and specifically the semiconductor equipment industry; • the size and timing of orders from customers; • procurement shortages; • the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations; • manufacturing difficulties; • customer cancellations or delays in shipments, installations, and/or customer acceptances; • the extent that customers continue to purchase and use our products and services in their business; • changes in average selling prices, customer mix, and product mix; • our ability in a timely manner to develop, introduce and market new, enhanced, and competitive products; • our competitors’ introduction of new products; • legal or technical challenges to our products and technology; • transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as strikes, acts of God, wars, terrorist activities, and natural disasters; • legal, tax, accounting, or regulatory changes (including but not limited to change in import/export regulations) or changes in the interpretation or enforcement of existing requirements; • changes in our estimated effective tax rate; • foreign currency exchange rate fluctuations; and • the dilutive impact of our convertible notes and related warrants on our earnings per share. |
We are subject to various challenges related to international sales and the management of global operations including, but not limited to: • trade balance issues; • global economic and political conditions, including the ongoing macroeconomic challenges associated with sovereign debt levels in certain Euro-zone countries and the financial contagion to global markets; • changes in currency controls; • differences in the enforcement of intellectual property and contract rights in varying jurisdictions; • our ability to respond to customer and foreign government demands for locally sourced systems, spare parts and services and develop the necessary relationships with local suppliers; • compliance with U.S. and international laws and regulations affecting foreign operations, including U.S. export restrictions; • fluctuations in interest and foreign currency exchange rates; • the need for technical support resources in different locations; and • our ability to secure and retain qualified people in all necessary locations for the successful operation of our business. |
2016 Notes The 2016 Notes may be converted at any time prior to the close of business on the business day immediately preceding February 15, 2016, at the option of the holder, only under the following circumstances: 1) during the five business-day period after any ten consecutive trading-day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2016 Notes for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such trading day; 2) during any fiscal quarter commencing after the fiscal quarter ending September 25, 2011, if the last reported sale price of the Company’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price in effect on the last trading day of the immediately preceding fiscal quarter; or 3) upon the occurrence of specified corporate events. |
2018 Notes The 2018 Notes may be converted at any time prior to the close of business on the business day immediately preceding February 15, 2018, at the option of the holder only under the following circumstances: 1) during the five business-day period after any ten consecutive trading-day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2018 Notes for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such trading day; 2) during any fiscal quarter commencing after the fiscal quarter ending September 25, 2011, if the last reported sale price of the Company’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price in effect on the last trading day of the immediately preceding fiscal quarter; or 3) upon the occurrence of specified corporate events. |
As a result of the acquisition, Lam Research issued common stock and equity-based awards, subject to certain exceptions, as follows: (i) each issued and outstanding share of common stock of Novellus was converted into 1.125 (the “exchange ratio”) shares of Lam Research common stock, with cash paid in lieu of fractional shares; (ii) each outstanding option for Novellus’ common stock held by a then-current employee of Novellus, whether vested or unvested, was assumed by Lam Research and converted into an option (A) to acquire that number of shares of Lam Research common stock (rounded down to the nearest whole share) equal to the product of (x) the number of shares of Novellus common stock for which such option was exercisable immediately prior to the acquisition date multiplied by (y) the exchange ratio and (B) with an exercise price per share of Lam Research (rounded up to the nearest whole penny) equal to the quotient obtained by dividing (z) the exercise price per share of Novellus common stock subject to such option immediately prior to the acquisition date divided by (y) the exchange ratio. |
Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to: · economic conditions in the electronics and semiconductor industries in general and specifically the semiconductor equipment industry; · the size and timing of orders from customers; · procurement shortages; · the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations; · manufacturing difficulties; · customer cancellations or delays in shipments, installations, and/or customer acceptances; · the extent that customers continue to purchase and use our products and services in their business; · changes in average selling prices, customer mix, and product mix; · our ability in a timely manner to develop, introduce and market new, enhanced, and competitive products; · our competitors’ introduction of new products; · legal or technical challenges to our products and technology; · transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as strikes, acts of God, wars, terrorist activities, and natural disasters; · legal, tax, accounting, or regulatory changes (including but not limited to change in import/export regulations) or changes in the interpretation or enforcement of existing requirements; · changes in our estimated effective tax rate; · foreign currency exchange rate fluctuations; and · the dilutive impact of our convertible notes and related warrants on our earnings per share. |
The remaining bond discount of the 2016 Notes and 2018 Notes of $74.4 million and $103.2 million, respectively, as of June 26, 2011 will be amortized over the respective remaining lives of the Notes NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) JUNE 26, 2011 The 2016 Notes may be converted at any time prior to the close of business on the business day immediately preceding February 15, 2016, at the option of the holder, only under the following circumstances: 1) during the five business-day period after any ten consecutive trading-day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2016 notes for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such trading day; 2) during any fiscal quarter commencing after the fiscal quarter ending September 25, 2011, if the last reported sale price of the Company’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price in effect on the last trading day of the immediately preceding fiscal quarter; or 3) upon the occurrence of specified corporate events. |
The 2018 Notes may be converted at any time prior to the close of business on the business day immediately preceding February 15, 2018, at the option of the holder only under the following circumstances: 1) during the five business-day period after any ten consecutive trading-day period (the “measurement period”) in which the trading price per 1,000 principal amount of 2018 notes for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such trading day; 2) during any fiscal quarter commencing after the fiscal quarter ending September 25, 2011, if the last reported sale price of the Company’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price in effect on the last trading day of the immediately preceding fiscal quarter; or 3) upon the occurrence of specified corporate events. |
Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to: · economic conditions in the electronics and semiconductor industries in general and specifically the equipment industry; · the size and timing of orders from customers; · procurement shortages; · the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations; · manufacturing difficulties; · customer cancellations or delays in shipments, installations, and/or customer acceptances; · the extent that customers continue to purchase and use our products and services in their business; · changes in average selling prices, customer mix, and product mix; · our ability in a timely manner to develop, introduce and market new, enhanced, and competitive products; · our competitors’ introduction of new products; · legal or technical challenges to our products and technology; · transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as acts of God, wars, terrorist activities, and natural disasters; · natural, physical, logistical or other events or disruptions affecting our principal facilities (including labor disruptions, earthquakes, and power failures) · legal, tax, accounting, or regulatory changes (including but not limited to change in import/export regulations) or changes in the interpretation or enforcement of existing requirements; · changes in our estimated effective tax rate; and · foreign currency exchange rate fluctuations. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides a description of our results of operations and should be read in conjunction with our Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements included in this 2010 Form 10-K. MD&A consists of the following sections: Executive Summary provides a summary of the key highlights of our results of operations and our management’s assessment of material trends and uncertainties relevant to our business Results of Operations provides an analysis of operating results Critical Accounting Policies and Estimates discusses accounting policies that reflect the more significant judgments and estimates used in the preparation of our consolidated financial statements Liquidity and Capital Resources provides an analysis of cash flows, contractual obligations and financial position Executive Summary We design, manufacture, market, refurbish, and service semiconductor processing equipment used in the fabrication of integrated circuits and are recognized as a major provider of such equipment to the worldwide semiconductor industry. |
Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to: · economic conditions in the electronics and semiconductor industries generally and the equipment industry specifically; · the extent that customers use our products and services in their business; · timing of customer acceptances of equipment; · the size and timing of orders from customers; · customer cancellations or delays in our shipments, installations, and/or acceptances; · changes in average selling prices, customer mix, and product mix; · our ability in a timely manner to develop, introduce and market new, enhanced, and competitive products; · our competitors’ introduction of new products; · legal or technical challenges to our products and technology; · changes in import/export regulations; · transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as acts of God, wars, terrorist activities, and natural disasters; · legislative, tax, accounting, or regulatory changes or changes in their interpretation; · procurement shortages; · manufacturing difficulties; · the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations; · changes in our estimated effective tax rate; and · foreign currency exchange rate fluctuations. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides a description of our results of operations and should be read in conjunction with our Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements included in this 2009 Form 10-K. MD&A consists of the following sections: Executive Summary provides a summary of the key highlights of our results of operations and our management’s assessment of material trends and uncertainties relevant to our business Results of Operations provides an analysis of operating results Critical Accounting Policies and Estimates discusses accounting policies that reflect the more significant judgments and estimates used in the preparation of our consolidated financial statements Liquidity and Capital Resources provides an analysis of cash flows, contractual obligations and financial position Executive Summary We design, manufacture, market, and service semiconductor processing equipment used in the fabrication of integrated circuits and are recognized as a major provider of such equipment to the worldwide semiconductor industry. |
Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to: • economic conditions in the electronics and semiconductor industries generally and the equipment industry specifically; • the extent that customers use our products and services in their business; • timing of customer acceptances of equipment; • the size and timing of orders from customers; • customer cancellations or delays in our shipments, installations, and/or acceptances; • changes in average selling prices, customer mix, and product mix; • our ability in a timely manner to develop, introduce and market new, enhanced, and competitive products; • our competitors’ introduction of new products; • legal or technical challenges to our products and technology; • changes in import/export regulations; • transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as acts of God, wars, terrorist activities, and natural disasters; • legislative, tax, accounting, or regulatory changes or changes in their interpretation; • procurement shortages; • manufacturing difficulties; • the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations; • changes in our estimated effective tax rate; • new or modified accounting regulations and practices; and • exchange rate fluctuations. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) provides a description of our results of operations and should be read in conjunction with our Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements included in this 2008 Form 10-K. MD&A consists of the following sections: Executive Summary provides a summary of the key highlights of our results of operations Results of Operations provides an analysis of operating results Critical Accounting Policies and Estimates discusses accounting policies that reflect the more significant judgments and estimates used in the preparation of our consolidated financial statements Liquidity and Capital Resources provides an analysis of cash flows, contractual obligations and financial position Executive Summary We design, manufacture, market, and service semiconductor processing equipment used in the fabrication of integrated circuits and are recognized as a major provider of such equipment to the worldwide semiconductor industry. |
Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to: • economic conditions in the electronics and semiconductor industries generally and the equipment industry specifically; • the extent that customers use our products and services in their business; • timing of customer acceptances of equipment; • the size and timing of orders from customers; • customer cancellations or delays in our shipments, installations, and/or acceptances; • changes in average selling prices, customer mix, and product mix; • our ability in a timely manner to develop, introduce and market new, enhanced, and competitive products; • our competitors’ introduction of new products; • legal or technical challenges to our products and technology; • changes in import/export regulations; • transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as acts of God, wars, terrorist activities, and natural disasters; • legislative, tax, accounting, or regulatory changes or changes in their interpretation; • procurement shortages; • manufacturing difficulties; • the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations; • changes in our estimated effective tax rate; • new or modified accounting regulations and practices; and • exchange rate fluctuations. |
The Audit Committee appoints and provides for the compensation of the Company’s Independent Registered Public Accounting Firm; oversees and evaluates the work and performance of the Independent Registered Public Accounting Firm; reviews the scope of the audit; considers comments made by the Independent Registered Public Accounting Firm with respect to accounting procedures and internal controls and the consideration given thereto by the Company’s management; approves in accordance with applicable securities laws all professional services to be provided to the Company by its Independent Registered Public Accounting Firm; reviews internal accounting procedures and controls with the Company’s financial and accounting staff; oversees a procedure that provides for the receipt, retention and treatment of complaints received by the Company and for the confidential and anonymous submission by employees regarding questionable accounting or auditing matters; reviews and approves all related-party transactions; and performs related duties as set forth in applicable securities laws, NASDAQ corporate governance guidelines, and the Committee charter. |
CD&A consists of the following sections: Philosophy & Objectives explains the philosophy and objectives of our compensation program Executive Compensation Program Components and Process explains the major elements of our compensation program as well as the process by which the compensation of our executive officers is determined Peer Group identifies the peer group to which we compare our compensation program Base Salary, Annual Incentive Awards and Multi-Year Cash-Based Incentive Program (MYIP) each explain a major element of our compensation program Equity Incentive Compensation explains the role of equity incentive awards in our compensation program Compensation of Chief Executive Officer and Compensation of Executive Chairman summarizes the employment agreements that we have with our Chief Executive Officer and our Executive Chairman Change in Control and Severance Arrangements explains the role of such arrangements in our compensation program Elective Deferred Compensation Plan summarizes this plan and the role it has in our compensation program Retirement Benefits Under the 401(k) Plan and Not-Generally-Available Benefit Program summarizes our retirement benefits under the 401(k) plan as well as other benefits provided to our executive officers that are not generally available to all of our employees Medical and Dental Insurance Retirement Benefit summarizes this element of our compensation program Executive Stock Ownership Guidelines sets forth the stock ownership guidelines that we have adopted for our executive officers Accounting and Tax Considerations explain the accounting and tax matters that we consider when setting compensation This CD&A discusses our executive compensation in the context of a calendar year because our compensation program is designed and evaluated on a calendar year basis rather than a fiscal year basis. |
LAM RESEARCH CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) See Notes to Consolidated Financial Statements (1) See Note 3 “Restatements of Consolidated Financial Statements” to Consolidated Financial Statements LAM RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) See Notes to Consolidated Financial Statements (1) See Note 3 “Restatements of Consolidated Financial Statements” to Consolidated Financial Statements LAM RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) See Notes to Consolidated Financial Statements (1) See Note 3 “Restatements of Consolidated Financial Statements” to Consolidated Financial Statements LAM RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) See Notes to Consolidated Financial Statements (1) See Note 3 “Restatements of Consolidated Financial Statements” to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 24, 2007 Note 1: Company and Industry Information Lam Research Corporation (“Lam Research” or the “Company”) designs, manufactures, markets, and services semiconductor processing equipment used in the fabrication of integrated circuits and is recognized as a major provider of such equipment to the worldwide semiconductor industry. |
Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to: • economic conditions in the electronics and semiconductor industry generally and the equipment industry specifically; • the extent that customers use our products and services in their business; • timing of customer acceptances of equipment; • the size and timing of orders from customers; • customer cancellations or delays in our shipments, installations, and/or acceptances; • changes in average selling prices and product mix; • our ability in a timely manner to develop, introduce and market new, enhanced and competitive products; • our competitors’ introduction of new products; • legal or technical challenges to our products and technology; • changes in import/export regulations; • transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as acts of God, wars, terrorist activities and natural disasters; • legislative, tax, accounting, or regulatory changes or changes in their interpretation; • procurement shortages; • manufacturing difficulties; • the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations; • changes in our estimated effective tax rate; • new or modified accounting regulations; and • exchange rate fluctuations. |
Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to: • economic conditions in the electronics and semiconductor industry generally and the equipment industry specifically; • the extent that customers use our products and services in their business; • timing of customer acceptances of equipment; • the size and timing of orders from customers; • customer cancellations or delays in our shipments, installations, and/or acceptances; • changes in average selling prices and product mix; • our ability in a timely manner to develop, introduce and market new, enhanced and competitive products; • our competitors’ introduction of new products; • legal or technical challenges to our products and technology; • changes in import/export regulations; • transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as acts of God, wars, terrorist activities and natural disasters; • legislative, tax, accounting, or regulatory changes or changes in their interpretation; • procurement shortages; • manufacturing difficulties; • the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations; • new or modified accounting regulations; and • exchange rate fluctuations. |
Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to: • economic conditions in the electronics and semiconductor industry generally and the equipment industry specifically; • the extent that customers use our products and services in their business; • timing of customer acceptances of equipment; • the size and timing of orders from customers; • customer cancellations or delays in our shipments, installations, and/or acceptances; • changes in average selling prices and product mix; • our ability in a timely manner to develop, introduce and market new, enhanced and competitive products; • our competitors’ introduction of new products; • legal or technical challenges to our products and technology; • changes in import/export regulations; • transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as acts of God, wars, terrorist activities and natural disasters; • legislative, tax, accounting, or regulatory changes or changes in their interpretation; • procurement shortages; • manufacturing difficulties; • the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations; • new or modified accounting regulations; and • exchange rate fluctuations. |
Factors that may cause our financial results to fluctuate unpredictably include, but are not limited to: • economic conditions in the electronics and semiconductor industry generally and the equipment industry specifically; • the extent that customers use our products and services in their business; • timing of customer acceptances of equipment; • the size and timing of orders from customers; • customer cancellations or delays in our shipments, installations, and/or acceptances; • changes in average selling prices and product mix; • our ability in a timely manner to develop, introduce and market new, enhanced and competitive products; • our competitors’ introduction of new products; • legal or technical challenges to our products and technology; • changes in import/export regulations; • transportation, communication, demand, information technology or supply disruptions based on factors outside our control such as Acts of God, wars, terrorist activities and natural disasters; • legislative, tax, or regulatory changes or changes in their interpretation; • procurement shortages; • manufacturing difficulties; • the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations; • new or modified accounting regulations; • exchange rate fluctuations; and • exposure on interest rate swap agreements. |
Selected Consolidated Financial Data Year ended ----------------------------------------------------------- June 30, June 24, June 25, June 30, June 30, 2002 2001 2000 1999 1998 ----------- ----------- ----------- ----------- ----------- OPERATIONS: (in thousands, except per share data) Total revenue (1)............................ $943,114 $1,519,789 $1,230,767 $647,955 $1,052,586 Gross margin................................. 266,089 653,479 541,855 233,364 374,142 Restructuring charge (recovery) (2)......... 44,850 12,780 (33,691) 53,372 116,925 Purchased technology for research and development................... -- 8,000 7,460 5,000 12,100 Merger costs................................. -- -- -- -- 17,685 Operating income (loss) ..................... (119,838) 186,532 229,842 (113,201) (180,924) Loss on equity derivative in ................ Company stock (EITF 00-19)................. (8,236) -- -- -- -- Income (loss) before cumulative effect of changes in accounting principles........ (90,051) 141,137 204,756 (112,913) (144,599) Cumulative effect of EITF 00-19 (3)............ -- 33,074 -- -- -- Cumulative effect of SAB 101, net of tax (4)............................ -- (122,105) -- -- -- Net income (loss)............................ (90,051) 52,106 204,756 (112,913) (144,599) Net income (loss) per share: Income (loss) before cumulative effect of changes in accounting principles Basic...................................... ($0.71) $1.14 $1.69 ($0.98) ($1.27) Diluted.................................... ($0.71) $1.07 $1.53 ($0.98) ($1.27) Cumulative effect of EITF 00-19 (3) Basic...................................... -- $0.27 -- -- -- Diluted.................................... -- $0.25 -- -- -- Cumulative effect of SAB 101, net of tax (4) Basic...................................... -- ($0.99) -- -- -- Diluted.................................... -- ($0.92) -- -- -- Net Income (loss) Basic...................................... ($0.71) $0.42 $1.69 ($0.98) ($1.27) Diluted.................................... ($0.71) $0.39 $1.53 ($0.98) ($1.27) Pro forma amounts with the change in accounting principle related to revenue recognition applied retroactively (unaudited): Total revenues (5)................. n/a 1,519,789 1,009,006 761,000 ** Net income (loss) (5).............. n/a 174,211 108,133 (66,277) ** Net income (loss) per share: Basic (5)....................... n/a $1.41 $0.89 ($0.57) ** Diluted (5)..................... n/a $1.32 $0.81 ($0.57) ** BALANCE SHEET: Working capital.............................. $757,880 $1,076,922 $733,579 $494,875 $603,580 Total assets................................. 1,632,291 1,871,775 1,244,837 979,451 1,150,772 Long-term obligations, less current portion............................ 359,691 659,718 321,657 326,500 334,174 (1) We changed our revenue recognition policy in the fourth quarter of fiscal 2001, effective June 26, 2000, based on guidance provided in Securities and Exchange Commission Staff Accounting Bulletin No. |
UNAUDITED SELECTED QUARTERLY FINANCIAL DATA 1ST 2ND 3RD 4TH --------------- --------------- --------------- --------------- (in thousands, except per share data) QUARTERLY FISCAL 2002 Total revenue................................ $339,580 $259,173 $164,105 $180,256 Gross margin................................. 118,111 26,648 54,987 66,343 Restructuring charges/(recoveries)(1)........ 13,448 33,773 -- (2,371) Operating income (loss)...................... 10,268 (100,383) (22,414) (7,309) Gain (loss) on equity derivative in Company stock........................... (17,994) 18,884 16,828 (25,954) Net income (loss)............................ (8,920) (51,655) 1,569 (31,045) Net income (loss) per share Basic...................................... ($0.07) ($0.41) $0.01 ($0.24) Diluted.................................... ($0.07) ($0.41) $0.01 ($0.24) Price range per share........................ $14.73-$30.80 $15.37-$25.82 $20.52-$29.74 $16.63-$29.98 1ST 2ND 3RD 4TH --------------- --------------- --------------- --------------- Restated (2) Restated (2) Restated (2) QUARTERLY FISCAL 2001 (in thousands, except per share data) Total revenue................................ $305,031 $384,097 $465,125 $365,536 Gross margin................................. 132,668 170,031 203,023 147,757 Restructuring charge (1)..................... -- -- -- 12,780 Purchased technology for research and development................... -- 8,000 -- -- Operating Income............................. 23,701 41,313 88,617 32,901 Income before cumulative effect of changes in accounting principles........... 19,840 30,969 65,122 25,206 Cumulative effect of EITF 00-19............. -- -- -- 33,074 Cumulative effect of SAB 101, net of tax.... (122,105) -- -- -- Net income (loss)............................ (102,265) 30,969 65,122 58,280 Net income (loss) per share: Income before cumulative effect of changes in accounting principles Basic...................................... $0.16 $0.25 $0.53 $0.20 Diluted.................................... $0.15 $0.24 $0.48 $0.19 Cumulative effect of EITF 00-19 Basic...................................... -- -- -- $0.27 Diluted.................................... -- -- -- $0.25 Cumulative effect of SAB 101, net of tax Basic...................................... ($0.98) -- -- -- Diluted.................................... ($0.91) -- -- -- Net Income (loss) Basic...................................... ($0.82) $0.25 $0.53 $0.47 Diluted.................................... ($0.76) $0.24 $0.48 $0.44 Price range per share........................ $19.63 - $41.69 $13.00 - $24.00 $14.06 - $30.13 $19.38 - $33.76 (1) Restructuring charge (recovery) excludes restructuring charges (recoveries) included in cost of goods sold and reflected in gross margin for the years ending June 30, 2002, and June 24, 2001. |
The table below presents principal amounts and related weighted-average interest rates by year of maturity for our investment portfolio and long-term debt obligations at June 30, 2002, and June 24, 2001: June 30, June 24, 2002 2001 ------------------------------------------------------------------------------ --------- THERE- FAIR 2003 2004 2005 2006 2007 AFTER TOTAL VALUE TOTAL --------- --------- --------- --------- --------- -------- --------- --------- --------- ($ in thousands) Cash equivalents Fixed rate............. $145,700 -- -- -- -- -- $145,700 $145,700 $175,000 Average rate............. 1.87% -- -- -- -- -- 1.87% -- 4.03% Short-term investments Fixed rate............. $368,469 $130,756 -- -- -- -- $499,225 $499,225 $505,050 Average rate............. 4.32% 3.27% -- -- -- -- 4.04% -- 4.94% Auction rate preferreds Variable rate.......... $202,549 -- -- -- -- -- $202,549 $202,549 $137,850 Average rate............. 2.13% -- -- -- -- -- 2.13% -- 4.36% Restricted cash Fixed rate ............ $60,433 $10,550 -- -- -- -- $70,983 $70,983 $60,800 Average rate............. 2.36% 3.41% -- -- -- -- 2.52% -- 4.79% --------- --------- --------- --------- --------- -------- --------- --------- --------- Total investment Securities............. $777,151 $141,306 -- -- -- -- $918,457 $918,457 $878,700 --------- --------- --------- --------- --------- -------- --------- --------- --------- Average rate............. 3.14% 3.28% -- -- -- -- 3.15% -- 4.66% --------- --------- --------- --------- --------- -------- --------- --------- --------- Long-term debt Fixed rate............. $310,260 -- -- 300,000 -- -- $610,260 $566,010 $618,936 Average rate............. 5.00% -- -- 4.00% -- -- 4.51% -- 4.45% Variable rate.......... -- $48,535 -- -- -- -- $48,535 $48,535 $49,263 Average rate............. -- 2.60% -- -- -- -- 2.61% -- 1.81% --------- --------- --------- --------- --------- -------- --------- --------- --------- Total long-term Debt $310,260 $48,535 -- $300,000 -- -- $658,795 $614,545 $668,199 --------- --------- --------- --------- --------- -------- --------- --------- --------- Average rate............. 5.00% 2.60% -- 4.00% -- -- 4.37% -- 4.26% --------- --------- --------- --------- --------- -------- --------- --------- --------- We mitigate default risk by targeting investments in high credit quality securities and by constantly positioning our portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer or guarantor. |
CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) June 30, June 24, 2002 2001 ----------- ----------- ASSETS Cash and cash equivalents...................................... $172,431 $221,659 Short-term investments......................................... 701,774 642,900 Accounts receivable, less allowance for doubtful accounts of $4,995 in 2002 and $4,948 in 2001................ 132,113 248,910 Inventories.................................................... 180,799 284,757 Prepaid expenses and other assets.............................. 43,080 20,855 Deferred income taxes.......................................... 125,227 157,525 ----------- ----------- Total current assets................................. 1,355,424 1,576,606 Property and equipment, net.................................... 67,496 126,533 Restricted cash................................................ 70,983 60,800 Deferred income taxes.......................................... 86,231 19,767 Other assets................................................... 52,157 88,069 ----------- ----------- Total assets......................................... $1,632,291 $1,871,775 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Trade accounts payable......................................... $59,806 $56,568 Accrued expenses and other liabilities......................... 159,012 183,319 Deferred profit................................................ 63,435 250,834 Current portion of long-term debt,capital lease obligations and other long-term liabilities.............................. 315,291 8,963 ----------- ----------- Total current liabilities............................ 597,544 499,684 Long-term debt,capital lease obligations, and other long-term liabilites, less current portion................... 359,691 659,718 Commitments and contingencies Stockholders' equity: Preferred stock at par value of $0.001 per share; 5,000 shares authorized, none outstanding................................. -- -- Common stock at par value of $0.001 per share Authorized -- 400,000 shares; issued and outstanding, 127,978 shares at June 30, 2002 and 124,917 shares at June 24, 2001.. 128 125 Additional paid-in capital..................................... 542,228 498,066 Treasury stock, at cost ....................................... (9,100) (21,904) Accumulated other comprehensive loss........................... (15,240) (18,195) Retained earnings.............................................. 157,040 254,281 ----------- ----------- Total stockholders' equity........................... 675,056 712,373 ----------- ----------- Total liabilities and stockholders' equity........... $1,632,291 $1,871,775 =========== =========== See Notes to Consolidated Financial Statements. |
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) YEAR ENDED ----------------------------------- June 30, June 24, June 25, 2002 2001 2000 ----------- ----------- ----------- Total revenue................................................ $943,114 $1,519,789 $1,230,767 Costs and expenses: Cost of goods sold ........................................ 632,319 862,321 691,161 Cost of goods sold -- restructuring charges (recoveries)..................................... 5,926 3,989 (2,249) Cost of goods sold -- patent settlement.................... 38,780 -- -- ----------- ----------- ----------- Gross margin............................................ 266,089 653,479 541,855 Research and development................................... 179,217 227,248 176,895 Selling, general and administrative........................ 161,860 218,919 161,349 Restructuring charges (recoveries)......................... 44,850 12,780 (33,691) Purchased technology for research and development.......... -- 8,000 7,460 ----------- ----------- ----------- 385,927 466,947 312,013 ----------- ----------- ----------- Operating income (loss)................................. (119,838) 186,532 229,842 ----------- ----------- ----------- Other income (expense): Interest income............................................ 31,703 31,950 25,088 Interest expense........................................... (26,185) (19,980) (20,655) Loss on equity derivative contracts in Company stock (EITF 00-19).............................................. (8,236) -- -- Other, net................................................. (5,439) 3,132 2,538 ----------- ----------- ----------- (8,157) 15,102 6,971 ----------- ----------- ----------- Income (loss) before income taxes and cumulative effect adjustments.......................... (127,995) 201,634 236,813 Income tax provision (benefit) .............................. (37,944) 60,497 32,057 ----------- ----------- ----------- Income (loss) before cumulative effect adjustments...... (90,051) 141,137 204,756 Cumulative effect of EITF 00-19, no related tax ............. -- 33,074 -- Cumulative effect of SAB 101, net of $81,441 related tax benefit........................................ -- (122,105) -- ----------- ----------- ----------- Net income (loss)....................................... ($90,051) $52,106 $204,756 =========== =========== =========== Net income (loss) per share: Basic: Income (loss) before cumulative effect of changes in accounting principles........................ ($0.71) $1.14 $1.69 Cumulative effect of EITF 00-19 ........................... -- $0.27 -- Cumulative effect of SAB 101............................... -- ($0.99) -- ----------- ----------- ----------- Basic net income (loss) per share.......................... ($0.71) $0.42 $1.69 =========== =========== =========== Diluted: Income (loss) before cumulative effect of changes in accounting principles........................ ($0.71) $1.07 $1.53 Cumulative effect of EITF 00-19............................ -- $0.25 -- Cumulative effect of SAB 101............................... -- ($0.92) -- ----------- ----------- ----------- Diluted net income (loss) per share........................ ($0.71) $0.39 $1.53 =========== =========== =========== Number of shares used in per share calculations: Basic...................................................... 126,356 123,856 120,949 =========== =========== =========== Diluted.................................................... 126,356 132,243 143,327 =========== =========== =========== Pro forma amounts with the change in accounting principle related to SAB 101 applied retroactivley (unaudited): Total revenue......................................... -- $1,519,789 $1,009,006 Net income............................................ -- $174,211 $108,133 Net income per share: Basic............................................. -- $1.41 $0.89 Diluted........................................... -- $1.32 $0.81 Number of shares used in pro forma per share calculations: Basic...................................................... -- 123,856 120,949 =========== =========== =========== Diluted.................................................... -- 132,243 132,736 =========== =========== =========== See Notes to Consolidated Financial Statements. |
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) YEAR ENDED ----------------------------------- June 30, June 24, June 25, 2002 2001 2000 ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss).................................................. ($90,051) $52,106 $204,756 Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: Cumulative effect of change in accounting principle EITF 00-19................................................... -- (33,074) -- Cumulative effect of change in accounting principle, SAB 101 net of tax .................................................. -- 122,105 -- Loss on equity derivative contracts in company stock.......... 8,236 Depreciation and amortization................................. 57,814 58,727 46,015 Amortization of premiums on securities........................ 6,524 -- -- Deferred income taxes......................................... (34,166) (7,027) 18,566 Restructuring charges (recoveries)............................ 50,776 16,769 (30,609) Patent settlement............................................. 33,780 -- -- Asset impairment charge....................................... 9,500 Loss on disposal of long-lived assets......................... 3,124 -- -- Purchased technology for research and development................................................. -- 8,000 7,460 Other......................................................... 2,835 (442) -- Changes in certain working capital accounts: Accounts receivable, net of allowance....................... 44,468 (168,048) (232,152) Sales of accounts receivable................................ 73,778 236,608 81,327 Inventories................................................. 96,511 (73,118) (44,804) Prepaid expenses and other assets........................... 6,255 (122) (3,940) Trade accounts payable...................................... 5,237 (17,828) 25,367 Deferred profit............................................. (187,435) 45,776 -- Accrued expenses and other liabilities...................... (65,389) (28,557) 47,864 Tax benefit from employee stock options..................... -- 49,412 -- ----------- ----------- ----------- Net cash provided by operating activities............................................... 21,797 261,287 119,850 CASH FLOWS FROM INVESTING ACTIVITIES: Gross capital expenditures......................................... (10,619) (64,395) (50,360) Purchases of available-for-sale securities......................... (2,734,748) (1,359,095) (4,304,863) Sales of available-for-sale securities............................. 2,669,349 1,017,861 4,277,033 Purchase of investments for restricted cash........................ (10,500) -- -- Strategic investments.............................................. -- (14,000) (6,460) Other.............................................................. (1,609) (7,915) (7,091) ----------- ----------- ----------- Net cash used for investing activities............................................... (88,127) (427,544) (91,741) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of debt................................. -- 359,604 8,685 Principal payments on long-term debt and capital lease obligations............................................... (8,693) (23,876) (29,081) Treasury stock purchases........................................... (10,678) (45,070) (31,584) Reissuances of treasury stock...................................... 16,292 24,489 7,277 Proceeds from issuance of common stock............................. 19,383 6,706 53,088 ----------- ----------- ----------- Net cash provided by financing activities............................................... 16,304 321,853 8,385 ----------- ----------- ----------- Effect of exchange rate changes on cash............................ 798 (3,993) (4,403) ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents............... (49,228) 151,603 32,091 Cash and cash equivalents at beginning of year..................... 221,659 70,056 37,965 ----------- ----------- ----------- Cash and cash equivalents at end of year........................... $172,431 $221,659 $70,056 =========== =========== =========== Supplemental disclosures: Cash payments for interest......................................... $28,717 $20,111 $15,978 =========== =========== =========== Cash payments for income taxes..................................... $4,564 $14,968 $7,765 =========== =========== =========== See Notes to Consolidated Financial Statements. |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands) COMMON ADDITIONAL ACCUMULATED OTHER STOCK COMMON PAID-IN TREASURY COMPREHENSIVE RETAINED SHARES STOCK CAPITAL STOCK INCOME/(LOSS) EARNINGS TOTAL -------- -------- ---------- --------- ---------------- ---------- ---------- Balance at June 30, 1999................ 116,535 $117 $388,868 ($8,429) ($432) $28,832 $408,956 -------- -------- ---------- --------- ---------------- ---------- ---------- Sale of common stock.................... 7,854 7 53,081 -- -- -- 53,088 Purchase of treasury stock.............. -- -- -- (31,584) -- -- (31,584) Reissuance of treasury stock............ -- -- -- 13,575 -- (6,298) 7,277 Components of comprehensive income: Net income.......................... -- -- -- -- -- 204,756 204,756 Foreign currency translation adjustment....................... -- -- -- -- (7,069) -- (7,069) ---------- Total comprehensive income..... 197,687 -------- -------- ---------- --------- ---------------- ---------- ---------- Balance at June 25, 2000................ 124,389 124 441,949 (26,438) (7,501) 227,290 635,424 -------- -------- ---------- --------- ---------------- ---------- ---------- Sale of common stock.................... 528 1 6,705 -- -- -- 6,706 Income tax benefit from stock option transactions................... -- -- 49,412 -- -- -- 49,412 Purchase of treasury stock.............. -- -- -- (45,070) -- -- (45,070) Reissuance of treasury stock............ -- -- -- 49,604 -- (25,115) 24,489 Components of comprehensive income: Net income.......................... -- -- -- -- -- 52,106 52,106 Foreign currency translation adjustment....................... -- -- -- -- (15,631) -- (15,631) Change in fair value of derivatives. |
See Footnote D. Note F: Inventories Inventories consist of the following: June 30 June 24, 2002 2001 --------- --------- (in thousands) Raw materials............................. $108,595 $158,508 Work-in-process........................... 45,309 74,170 Finished goods............................ 26,895 52,079 --------- --------- $180,799 $284,757 ========= ========= Note G: Property and Equipment Property and equipment consists of the following: June 30, June 24, 2002 2001 --------- --------- (in thousands) Manufacturing and other equipment................. $123,117 $147,203 Leasehold improvements............................ 65,749 89,587 Furniture and fixtures............................ 5,246 6,363 Computer equipment and software................... 73,769 76,211 --------- --------- 267,881 319,364 Less accumulated depreciation and amortization.... (200,385) (192,831) --------- --------- $67,496 $126,533 ========= ========= Note H: Accrued Expenses and Other Liabilities The significant components of accrued expenses and other liabilities consist of the following: June 30, June 24, 2002 2001 --------- --------- (in thousands) Accrued compensation.............................. $51,853 $74,207 Warranty reserves................................. 15,497 28,337 Income and other taxes payable.................... 24,500 26,619 Restructuring charges.............................. 15,434 5,924 Other............................................. 51,728 48,232 --------- --------- $159,012 $183,319 ========= ========= No individual component of "Other" exceeds 5% of total current liabilities for the periods presented. |
Note I: Long-Term Debt, Capital Lease Obligations and Other Long-Term Liabilities Long-term debt, capital lease obligations and other long-term liabilities consist of the following: June 30, June 24, 2002 2001 --------- --------- (in thousands) 5% Convertible subordinated notes, interest payable semi-annually, due September 2002................................ $309,763 $309,763 4% Convertible subordinated notes, interest payable semi-annually, due June 2006..................................... 303,505 300,000 Capitalized lease obligations, with interest rates from 4.6% to 9.5%................................................ -- 482 Japanese Yen-denominated bank loans with fixed interest rates from 2.08% to 4.25%, principal payable in quarterly and semi-annual installments from September 2001 to April 2004............................................................. 497 8,973 Japanese Yen-denominated bank loan with floating interest rate at year end of 2.6%, principal payable at maturity, June 2004... 48,535 49,263 Other (1).......................................................... 12,682 200 --------- --------- 674,982 668,681 Less current portion............................................... (315,291) (8,963) --------- --------- $359,691 $659,718 ========= ========= (1) Other, in fiscal 2002 includes a long-term patent settlement obligation. |
Interest Rate terms 4% payable on June 1 and December 1 of each year, commencing December 1 2001 5% payable on September 1 and March 1 of each year, commencing March 1 1998 Conversion Rights Convertible into Lam Common Stock at any time prior to close of business on the maturity date, unless previously redeemed, at a conversion price of $44.93 per share subject to anti-dilution adjustments Convertible into Lam Common Stock at any time prior to close of business on the maturity date, unless previously redeemed, at a conversion price of $29.26 per share subject to anti-dilution adjustments Redemption terms Redeemable at Lam option, beginning June 5, 2004 with at least 20 days and no more than 60 days notice, at redemption prices starting at 101.0% and at diminishing prices thereafter, plus accrued interest Redeemable at Lam option, beginning September 6, 2000 with at least 20 days notice, at redemption prices starting at 102.0% and at diminishing prices thereafter, plus accrued interest, if the closing price of Lam Common Stock is at least 130% of the conversion price for at least 20 trading days ending within a period of 30 consecutive trading days ending within 5 trading days prior to the notice of redemption Security 4% Notes are unsecured and subordinated in right of payment in full to all existing and future senior indebtedness of the company 5% Notes are unsecured and subordinated in right of payment in full to all existing and future senior indebtedness of the company The carrying value of the 4% Notes is adjusted to reflect changes in fair value attributable to changes in the benchmark interest rate in connection with the Company's fair value hedge accomplished through the swap transaction discussed in Footnote E. At June 30, 2002, the carrying value of the 4% Notes was increased by $3.5 million (to $303.5 million) with the corresponding loss recorded in Other Income (Expense), net, offset by a $3.2 million gain on the carrying value of the swap. |
2002 2001 2000 ----------- ----------- ----------- (in thousands, except per share data) Numerator: Basic income (loss) before cumulative effect of change in accounting principle............. $ (90,051)$ 141,137 $ 204,756 Add: Interest expense on convertible subordinated notes, net of taxes..................... -- -- 14,996 ----------- ----------- ----------- Diluted income (loss) before cumulative effect of change in accounting principle............. $ (90,051)$ 141,137 $ 219,752 =========== =========== =========== Denominator: Basic income (loss) per share before cumulative effect of change in accounting principle -- average shares outstanding................................... 126,356 123,856 120,949 Effect of potential dilutive securities: Convertible subordinated notes.................... -- -- 10,591 Employee stock plans.............................. -- 8,387 11,787 Diluted income (loss) per share before cumulative effect of change in accounting principle -- average shares ----------- ----------- ----------- outstanding and other potential common shares........ 126,356 132,243 143,327 ----------- ----------- ----------- Income (loss) per share before cumulative effect of change in accounting principle - Basic.............. ($0.71) $1.14 $1.69 =========== =========== =========== Income (loss) per share before cumulative effect of change in accounting principle - Diluted............ ($0.71) $1.07 $1.53 =========== =========== =========== Options, warrants and convertible securities were outstanding during fiscal 2002, but 29,779,000 potential common shares were excluded from the computation of diluted net loss per common share because the effect would have been antidilutive. |
Note L: Comprehensive Income (Loss) The components of comprehensive income (loss), net of tax, are as follows: 2002 2001 2000 ---------- ---------- ---------- (in thousands) Net income (loss).............................. ($90,051) $52,106 $204,756 Foreign currency translation adjustment........ 6,674 (15,631) (7,069) Unrealized gain (loss) on financial instruments (3,719) 4,937 -- ---------- ---------- ---------- Comprehensive income (loss).................... ($87,096) $41,412 $197,687 ========== ========== ========== Accumulated other comprehensive income (loss), is as follow: 2002 2001 --------- --------- (in thousands) Accumulated foreign currency translation adjustment...................................... ($16,458) ($23,132) Accumulated unrealized gain on financial instruments............................ 1,218 4,937 --------- --------- Accumulated other comprehensive loss...............($15,240) ($18,195) ========= ========= Note M: Stock Option Plans and Stock Purchase Plan The Company has adopted stock option plans that provide for the grant to key employees of options to purchase shares of Lam Common Stock. |
A summary of stock option plan transactions follows: AVAILABLE OPTION WEIGHTED FOR GRANT OUTSTANDING PRICE AVERAGE ------------ ----------- ----------- --------- June 30, 1999..................... 1,536,882 27,641,256 $ 0.09-18.48 $7.72 Additional amount authorized...... 6,000,000 -- -- -- Granted........................... (7,038,815) 7,038,815 14.67-53.00 28.44 Exercised......................... -- (7,285,119) 0.09-16.94 6.35 Canceled.......................... 1,517,989 (1,517,989) 1.00-53.00 9.32 Expired........................... (174,130) -- -- ------------ ----------- ----------- --------- June 25, 2000..................... 1,841,926 25,876,963 $ 1.75-53.00 $13.41 Additional amount authorized...... 909,428 -- -- -- Granted........................... (2,963,388) 2,963,388 14.38-40.25 21.94 Exercised......................... -- (1,747,566) 1.75-29.58 7.94 Canceled.......................... 2,173,636 (2,173,636) 3.33-53.00 21.43 Expired........................... (1,310) -- -- ------------ ----------- ----------- --------- June 24, 2001..................... 1,960,292 24,919,149 $ 1.75-53.00 $14.13 Additional amount authorized...... 9,000,000 -- -- -- Granted........................... (9,736,347) 9,736,347 16.00-29.87 21.81 Exercised......................... -- (2,453,796) 1.75-29.58 7.85 Canceled.......................... 2,579,527 (2,579,527) 3.33-53.00 19.48 Expired........................... (347,836) -- -- ------------ ----------- ----------- --------- June 30, 2002..................... 3,455,636 29,622,173 $ 3.33-53.00 $16.68 ============ =========== =========== ========= At June 30, 2002, 33,077,809 shares of Lam Common Stock were reserved for future issuance under the various stock option plans. |
Outstanding and exercisable options presented by price range at June 30, 2002 are as follows: OPTIONS OUTSTANDING OPTIONS EXERCISABLE ------------------------------------- -------------------------- NUMBER OF WEIGHTED NUMBER OF OPTIONS AVERAGE WEIGHTED OPTIONS WEIGHTED RANGE OF OUTSTANDING REMAINING AVERAGE EXERCISABLE AVERAGE EXERCISE AT JUNE 30, LIFE EXERCISE AT JUNE 30, EXERCISE PRICES 2002 (YEARS) PRICE 2002 PRICE -------------- -------------- ---------- ----------- -------------- ----------- $ 3.33 - 4.82 2,212,146 6.32 $4.74 2,197,976 $4.75 5.97 - 6.33 3,718,577 6.50 6.31 2,363,640 6.30 6.38 - 6.96 3,488,638 3.50 6.91 3,466,116 6.91 7.21 - 18.47 5,704,157 6.46 14.83 3,464,642 14.43 18.48 - 26.44 12,723,355 7.30 22.75 1,168,898 23.56 26.44 - 53.00 1,818,359 7.84 34.63 693,769 34.96 -------------- -------------- ---------- ----------- -------------- ----------- $ 3.33 - 53.00 29,665,232 6.55 $16.68 13,355,041 $11.31 ============== ============== ========== =========== ============== =========== The 1997 Stock Incentive Plan provides for annual non-employee director options to be granted in December. |
The Company's pro forma information follows: 2002 2001 2000 ---------- ---------- ---------- (in thousands, except per share amounts) Income (loss) before cumulative effect of changes in accounting principles -- as reported................ ($90,051) $141,137 $204,756 Income (loss) before cumulative effect of changes in accounting principles -- pro forma.................. (122,851) 100,073 176,079 Net income (loss) -- as reported......................... (90,051) 52,106 204,756 Net income (loss) -- pro forma........................... (122,851) 11,042 176,079 Basic income (loss) per share before cumulative effect of changes in accounting principles -- as reported...... (0.71) 1.14 1.69 Basic income (loss) per share before cumulative effect of changes in accounting principles -- pro forma........ (0.97) 0.81 1.46 Basic net income (loss) per share -- as reported......... (0.71) 0.42 1.69 Basic net income (loss) per share -- pro forma........... (0.97) 0.09 1.46 Diluted income (loss) per share before cumulative effect of changes in accounting principles -- as reported...... (0.71) 1.07 1.53 Diluted income (loss) per share before cumulative effect of changes in accounting principles -- pro forma........ (0.97) 0.76 1.33 Diluted net income (loss) per share -- as reported....... (0.71) 0.39 1.53 Diluted net income (loss) per share -- pro forma......... ($0.97) $0.08 $1.33 Note N: Profit Sharing and Benefit Plans Profit sharing is awarded to employees based upon performance against certain corporate financial and operating goals. |
Note P: Income Taxes Significant components of the provision (benefit) for income taxes attributable to income before income taxes and cumulative effects of changes in accounting principles are as follows: 2002 2001 2000 ---------- ---------- ---------- (in thousands) Federal: Current.................................. ($1,527) $58,595 $2,781 Deferred................................. (45,074) (309) 15,425 ---------- ---------- ---------- (46,601) 58,286 18,206 State: Current.................................. 175 206 135 Deferred................................. 4,109 (5,218) 3,141 ---------- ---------- ---------- 4,284 (5,012) 3,276 Foreign: Current.................................. (2,742) 8,723 10,575 Deferred................................. 7,115 (1,500) -- ---------- ---------- ---------- 4,373 7,223 10,575 ---------- ---------- ---------- ($37,944) $60,497 $32,057 ========== ========== ========== Under FAS 109 "Accounting for Income Taxes", deferred income taxes reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. |
The summary of local operations by geographic region for fiscal years 2002, 2001, and 2000 is as follows: Years Ended ----------------------------------- June 30, June 24, June 25, 2002 2001 2000 ----------- ----------- ----------- (in thousands) Sales to unaffiliated customers: United States.............................$ 678,523 $ 1,213,583 $ 1,001,048 Europe.................................... 70,388 96,828 65,623 Asia Pacific.............................. 51,011 69,057 40,334 Japan..................................... 143,192 140,321 123,762 ----------- ----------- ----------- Total sales to unaffiliated customers......................... 943,114 1,519,789 1,230,767 =========== =========== =========== Operating income (loss): United States............................. (164,337) 113,851 182,951 Europe.................................... 18,959 34,579 12,914 Asia Pacific.............................. 8,780 25,267 1,644 Japan..................................... 16,760 12,835 32,333 ----------- ----------- ----------- Total operating income (loss).......$ (119,838)$ 186,532 $ 229,842 =========== =========== =========== Property and equipment, net: United States.............................$ 60,445 $ 104,427 $ 101,279 Europe.................................... 1,910 2,245 1,494 Asia Pacific.............................. 2,351 4,296 4,842 Japan..................................... 2,790 15,565 11,577 ----------- ----------- ----------- Total property and equipment, net... 67,496 126,533 119,192 All other identifiable assets: United States............................. 1,313,438 1,490,739 1,008,801 Europe.................................... 50,503 62,976 37,478 Asia Pacific.............................. 53,707 39,597 22,860 Japan..................................... 147,147 151,930 56,506 ----------- ----------- ----------- Total all other identifiable assets. |
September 9, 2002 /s/ Mercedes Johnson Mercedes Johnson Senior Vice President, Finance, Chief Financial Officer and Chief Accounting Officer LAM RESEARCH CORPORATION SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS ADDITIONS ----------- ----------- --------- BALANCE CHARGED CHARGED BALANCE AT TO TO AT BEGINNING COSTS OTHER END OF AND ACCOUNTS DEDUCTIONS OF DESCRIPTION PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD ----------------------------------- ----------- ----------- --------- ----------- ----------- COL. A COL. B COL. C COL. D COL. E ----------------------------------- ----------- ----------- ----------- ----------- YEAR ENDED JUNE 30, 2002 Deducted from asset accounts: Allowance for doubtful accounts.. $4,948,000 639,000 -- 592,000 (1)$4,995,000 YEAR ENDED JUNE 24, 2001 Deducted from asset accounts: Allowance for doubtful accounts.. $4,570,000 2,047,000 -- 1,669,000 (1)$4,948,000 YEAR ENDED JUNE 25, 2000 Deducted from asset accounts: Allowance for doubtful accounts.. $4,580,000 1,525,000 -- 1,535,000 (1)$4,570,000 (1) Represents specific customer accounts written-off. |
10.20(17) Credit Agreement dated June 24, 1994 between Lam Research Corporation and ABN Amro Bank 10.21(17) Credit Agreement dated July 22, 1994 between Lam Research Corporation and Union Bank 10.22(16) Trust Indenture 10.25(19) Receivables Purchase Agreement between Lam Research Corporation and ABN-AMRO Bank N.V., Cayman Islands Branch 10.26(20) Amendment to Receivables Purchase Agreement between Lam Research Corporation and ABN-AMRO Bank N.V., Cayman Islands Branch 10.27(20) Receivables Purchase Agreement between Lam Research Corporation and ABN-AMRO Bank N.V., Tokyo Branch 10.28(20) Guaranty of Supplemental Receivables Purchase Agreement between Lam Research Corporation and ABN-AMRO Bank N.V., Tokyo Branch dated June 28, 1995 10.29(22) Credit Agreement Between Lam Research Corporation and ABN-AMRO Bank N.V. dated December 20, 1995 10.30(23) Operating Lease Agreement Between Lam Research Corporation and the Industrial Bank of Japan, Limited dated March 27, 1996 10.31 Term Loan Agreement between The Sakura Bank and Lam Research Co. Ltd. dated June 26, 1996 10.32 The Continuing Guaranty between The Sakura Bank Ltd. and Lam Research Corporation dated June 26, 1996 11.1 Computation of Earnings Per Share 13.1 Annual Report to Stockholders for the year ended June 30, 1996 (to be deemed filed only to the extent required by the instruction to exhibits for reports on Form 10-K 21 Subsidiaries of the Registrant. |
Further, under the NASDAQ definition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years), employed by the company; (2) has not (or whose immediate family members have not) been paid more than $120,000 during the current or past three fiscal years; (3) has not (or whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organization’s consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of Arbor has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years) a partner of Arbor’s outside auditor. |
Such charter would be expected to include, among other things: ● being directly responsible for the appointment, compensation and oversight of our independent auditor, which shall report directly to the audit committee, including resolution of disagreements between management and the auditors regarding financial reporting for the purpose of preparing or issuing an audit report or related work; ● annually reviewing and reassessing the adequacy of the committee’s formal charter; ● reviewing the annual audited financial statements with our management and the independent auditors and the adequacy of our internal accounting controls; ● reviewing analyses prepared by our management and independent auditors concerning significant financial reporting issues and judgments made in connection with the preparation of our financial statements; ● reviewing the independence of the independent auditors; ● reviewing our auditing and accounting principles and practices with the independent auditors and reviewing major changes to our auditing and accounting principles and practices as suggested by the independent auditor or its management; ● reviewing all related party transactions on an ongoing basis for potential conflict of interest situations; and ● all responsibilities given to the audit committee by virtue of the Sarbanes-Oxley Act of 2002, which was signed into law by President George W. Bush on July 30, 2002. |
Further, under the NASDAQ definition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years), employed by the company; (2) has not (or whose immediate family members have not) been paid more than $120,000 during the current or past three fiscal years; (3) has not (or whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organization’s consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of Arbor has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years) a partner of Arbor’s outside auditor. |
Such charter would be expected to include, among other things: ●being directly responsible for the appointment, compensation and oversight of our independent auditor, which shall report directly to the audit committee, including resolution of disagreements between management and the auditors regarding financial reporting for the purpose of preparing or issuing an audit report or related work; ●annually reviewing and reassessing the adequacy of the committee’s formal charter; ●reviewing the annual audited financial statements with our management and the independent auditors and the adequacy of our internal accounting controls; ●reviewing analyses prepared by our management and independent auditors concerning significant financial reporting issues and judgments made in connection with the preparation of our financial statements; ●reviewing the independence of the independent auditors; ●reviewing our auditing and accounting principles and practices with the independent auditors and reviewing major changes to our auditing and accounting principles and practices as suggested by the independent auditor or its management; ●reviewing all related party transactions on an ongoing basis for potential conflict of interest situations; and ●all responsibilities given to the audit committee by virtue of the Sarbanes-Oxley Act of 2002, which was signed into law by President George W. Bush on July 30, 2002. |
Further, under the NASDAQ definition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years), employed by the company; (2) has not (or whose immediate family members have not) been paid more than $120,000 during the current or past three fiscal years; (3) has not (or whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organization’s consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of Arbor has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years) a partner of Arbor’s outside auditor. |
Such charter would be expected to include, among other things: being directly responsible for the appointment, compensation and oversight of our independent auditor, which shall report directly to the audit committee, including resolution of disagreements between management and the auditors regarding financial reporting for the purpose of preparing or issuing an audit report or related work; annually reviewing and reassessing the adequacy of the committee’s formal charter; reviewing the annual audited financial statements with our management and the independent auditors and the adequacy of our internal accounting controls; reviewing analyses prepared by our management and independent auditors concerning significant financial reporting issues and judgments made in connection with the preparation of our financial statements; reviewing the independence of the independent auditors; reviewing our auditing and accounting principles and practices with the independent auditors and reviewing major changes to our auditing and accounting principles and practices as suggested by the independent auditor or its management; reviewing all related party transactions on an ongoing basis for potential conflict of interest situations; and all responsibilities given to the audit committee by virtue of the Sarbanes-Oxley Act of 2002, which was signed into law by President George W. Bush on July 30, 2002. |
Further, under the NASDAQ definition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years), employed by the company; (2) has not (or whose immediate family members have not) been paid more than $120,000 during the current or past three fiscal years; (3) has not (or whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organization’s consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of Arbor has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years) a partner of Arbor’s outside auditor. |
Such charter would be expected to include, among other things: being directly responsible for the appointment, compensation and oversight of our independent auditor, which shall report directly to the audit committee, including resolution of disagreements between management and the auditors regarding financial reporting for the purpose of preparing or issuing an audit report or related work; annually reviewing and reassessing the adequacy of the committee’s formal charter; reviewing the annual audited financial statements with our management and the independent auditors and the adequacy of our internal accounting controls; reviewing analyses prepared by our management and independent auditors concerning significant financial reporting issues and judgments made in connection with the preparation of our financial statements; reviewing the independence of the independent auditors; reviewing our auditing and accounting principles and practices with the independent auditors and reviewing major changes to our auditing and accounting principles and practices as suggested by the independent auditor or its management; reviewing all related party transactions on an ongoing basis for potential conflict of interest situations; and all responsibilities given to the audit committee by virtue of the Sarbanes-Oxley Act of 2002, which was signed into law by President George W. Bush on July 30, 2002. |
Further, under the NASDAQ definition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years), employed by the company; (2) has not (or whose immediate family members have not) been paid more than $120,000 during the current or past three fiscal years; (3) has not (or whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organization’s consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of Arbor has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years) a partner of Arbor’s outside auditor. |
Such charter would be expected to include, among other things: · being directly responsible for the appointment, compensation and oversight of our independent auditor, which shall report directly to the audit committee, including resolution of disagreements between management and the auditors regarding financial reporting for the purpose of preparing or issuing an audit report or related work; · annually reviewing and reassessing the adequacy of the committee’s formal charter; · reviewing the annual audited financial statements with our management and the independent auditors and the adequacy of our internal accounting controls; · reviewing analyses prepared by our management and independent auditors concerning significant financial reporting issues and judgments made in connection with the preparation of our financial statements; · reviewing the independence of the independent auditors; · reviewing our auditing and accounting principles and practices with the independent auditors and reviewing major changes to our auditing and accounting principles and practices as suggested by the independent auditor or its management; · reviewing all related party transactions on an ongoing basis for potential conflict of interest situations; and · all responsibilities given to the audit committee by virtue of the Sarbanes-Oxley Act of 2002, which was signed into law by President George W. Bush on July 30, 2002. |
Further, under the NASDAQ definition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years), employed by the company; (2) has not (or whose immediate family members have not) been paid more than $120,000 during the current or past three fiscal years; (3) has not (or whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organization’s consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of Arbor has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years) a partner of Arbor’s outside auditor. |
Such charter would be expected to include, among other things: being directly responsible for the appointment, compensation and oversight of our independent auditor, which shall report directly to the audit committee, including resolution of disagreements between management and the auditors regarding financial reporting for the purpose of preparing or issuing an audit report or related work; · annually reviewing and reassessing the adequacy of the committee’s formal charter; · reviewing the annual audited financial statements with our management and the independent auditors and the adequacy of our internal accounting controls; · reviewing analyses prepared by our management and independent auditors concerning significant financial reporting issues and judgments made in connection with the preparation of our financial statements; · reviewing the independence of the independent auditors; · reviewing our auditing and accounting principles and practices with the independent auditors and reviewing major changes to our auditing and accounting principles and practices as suggested by the independent auditor or its management; · reviewing all related party transactions on an ongoing basis for potential conflict of interest situations; and · all responsibilities given to the audit committee by virtue of the Sarbanes-Oxley Act of 2002, which was signed into law by President George W. Bush on July 30, 2002. |
Further, under the NASDAQ definition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years), employed by the company; (2) has not (or whose immediate family members have not) been paid more than $120,000 during the current or past three fiscal years; (3) has not (or whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organization’s consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of Arbor has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years) a partner of Arbor’s outside auditor. |
Such charter would be expected to include, among other things: · being directly responsible for the appointment, compensation and oversight of our independent auditor, which shall report directly to the audit committee, including resolution of disagreements between management and the auditors regarding financial reporting for the purpose of preparing or issuing an audit report or related work; · annually reviewing and reassessing the adequacy of the committee’s formal charter; · reviewing the annual audited financial statements with our management and the independent auditors and the adequacy of our internal accounting controls; · reviewing analyses prepared by our management and independent auditors concerning significant financial reporting issues and judgments made in connection with the preparation of our financial statements; · reviewing the independence of the independent auditors; · reviewing our auditing and accounting principles and practices with the independent auditors and reviewing major changes to our auditing and accounting principles and practices as suggested by the independent auditor or its management; · reviewing all related party transactions on an ongoing basis for potential conflict of interest situations; and · all responsibilities given to the audit committee by virtue of the Sarbanes-Oxley Act of 2002, which was signed into law by President George W. Bush on July 30, 2002. |
Further, under the NASDAQ definition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years), employed by the company; (2) has not (or whose immediate family members have not) been paid more than $60,000 during the current or past three fiscal years; (3) has not (or whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organization’s consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of Arbor has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years) a partner of Arbor’s outside auditor. |
Such charter would be expected to include, among other things: · being directly responsible for the appointment, compensation and oversight of our independent auditor, which shall report directly to the audit committee, including resolution of disagreements between management and the auditors regarding financial reporting for the purpose of preparing or issuing an audit report or related work; · annually reviewing and reassessing the adequacy of the committee’s formal charter; · reviewing the annual audited financial statements with our management and the independent auditors and the adequacy of our internal accounting controls; · reviewing analyses prepared by our management and independent auditors concerning significant financial reporting issues and judgments made in connection with the preparation of our financial statements; · reviewing the independence of the independent auditors; · reviewing our auditing and accounting principles and practices with the independent auditors and reviewing major changes to our auditing and accounting principles and practices as suggested by the independent auditor or its management; · reviewing all related party transactions on an ongoing basis for potential conflict of interest situations; and · all responsibilities given to the audit committee by virtue of the Sarbanes-Oxley Act of 2002, which was signed into law by President George W. Bush on July 30, 2002. |
Further, under the NASDAQ definition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years), employed by the company; (2) has not (or whose immediate family members have not) been paid more than $60,000 during the current or past three fiscal years; (3) has not (or whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organization’s consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of Arbor has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years) a partner of Arbor’s outside auditor. |
Such charter would be expected to include, among other things: · being directly responsible for the appointment, compensation and oversight of our independent auditor, which shall report directly to the audit committee, including resolution of disagreements between management and the auditors regarding financial reporting for the purpose of preparing or issuing an audit report or related work; · annually reviewing and reassessing the adequacy of the committee’s formal charter; · reviewing the annual audited financial statements with our management and the independent auditors and the adequacy of our internal accounting controls; · reviewing analyses prepared by our management and independent auditors concerning significant financial reporting issues and judgments made in connection with the preparation of our financial statements; · reviewing the independence of the independent auditors; · reviewing our auditing and accounting principles and practices with the independent auditors and reviewing major changes to our auditing and accounting principles and practices as suggested by the independent auditor or its management; · reviewing all related party transactions on an ongoing basis for potential conflict of interest situations; and · all responsibilities given to the audit committee by virtue of the Sarbanes-Oxley Act of 2002, which was signed into law by President George W. Bush on July 30, 2002. |
Further, under the NASDAQ definition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years), employed by the company; (2) has not (or whose immediate family members have not) been paid more than $60,000 during the current or past three fiscal years; (3) has not (or whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organizations consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of Arbor has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years) a partner of Arbor’s outside auditor. |
Such charter would be expected to include, among other things: ▪ being directly responsible for the appointment, compensation and oversight of our independent auditor, which shall report directly to the audit committee, including resolution of disagreements between management and the auditors regarding financial reporting for the purpose of preparing or issuing an audit report or related work; ▪ annually reviewing and reassessing the adequacy of the committee’s formal charter; ▪ reviewing the annual audited financial statements with our management and the independent auditors and the adequacy of our internal accounting controls; ▪ reviewing analyses prepared by our management and independent auditors concerning significant financial reporting issues and judgments made in connection with the preparation of our financial statements; ▪ reviewing the independence of the independent auditors; ▪ reviewing our auditing and accounting principles and practices with the independent auditors and reviewing major changes to our auditing and accounting principles and practices as suggested by the independent auditor or its management; ▪ reviewing all related party transactions on an ongoing basis for potential conflict of interest situations; and ▪ all responsibilities given to the audit committee by virtue of the Sarbanes-Oxley Act of 2002, which was signed into law by President George W. Bush on July 30, 2002. |
Risks commonly encountered in such transactions include: • risk that an acquired company or assets may not further our business strategy or that we paid more than the company or assets were worth; • difficulty of assimilating the operations and retaining and motivating personnel of an acquired company; • risk that we may not be able to integrate acquired technologies or products with our current products and technologies; • potential disruption of our ongoing business and the diversion of our management’s attention from other business concerns; • inability of management to maximize our financial and strategic position through the successful integration of an acquired company; • adverse impact on our annual effective tax rate; • dilution of existing equity holders caused by capital stock issuance to the shareholders of an acquired company or stock option grants to retain employees of an acquired company; • difficulty in maintaining controls, procedures and policies; • potential adverse impact on our relationships with partner companies or third-party providers of technology or products; • impairment of relationships with employees and customers; • potential assumption of liabilities of our acquisition targets; • significant exit or impairment charges if products acquired in business combinations are unsuccessful; and • issues with product quality, product architecture, legal contingencies, product development issues, or other significant issues that may not be detected through our due diligence process. |
The following factors, among others, could have an adverse impact on our business and earnings: • failure to properly comply with foreign laws and regulations applicable to our foreign activities including, without limitation, software localization requirements; • failure to properly comply with U.S. laws and regulations relating to the export of our products and services; • compliance with multiple and potentially conflicting regulations in Europe, Asia and North America, including export requirements, tariffs, import duties and other trade barriers, as well as health and safety requirements; • difficulties in managing foreign operations and appropriate levels of staffing; • longer collection cycles; • tariffs and other trade barriers, including the economic burden and uncertainty placed on our customers by the imposition and threatened imposition of tariffs by the U.S., China and perhaps other countries; • seasonal reductions in business activities, particularly throughout Europe; • reduced protection for intellectual property rights in some countries; • proper compliance with local tax laws which can be complex and may result in unintended adverse tax consequences; • anti-American sentiment due to conflicts in the Middle East and other American policies that may be unpopular in certain countries; • localized spread of infection resulting from the COVID-19 pandemic, including any economic downturns and other adverse impacts. |
• increasing political instability, adverse economic conditions and the potential for war or other hostilities in many of these countries; • difficulties in enforcing agreements through foreign legal systems; • fluctuations in exchange rates that may affect product demand and may adversely affect the profitability in U.S. dollars of products and services provided by us in foreign markets where payment for our products and services is made in the local currency, including any fluctuations caused by uncertainties relating to the United Kingdom’s exit from the European Union (“Brexit”); • impact of Brexit on the United Kingdom’s access to the European Union Single Market, the related regulatory environment, the global economy and the resulting impact on our business, including the delay of execution of contracts by our customers; • changes in general economic, health and political conditions in countries where we operate; • potential labor strikes, lockouts, work slowdowns and work stoppages; and • restrictions on downsizing operations in Europe and expenses and delays associated with any such activities. |
Our sales activity is difficult to forecast for a variety of reasons, including the following: • we complete a significant portion of our customer agreements within the last few weeks of each quarter; • if an agreement includes cloud services such as managing the application and hosting the server that are performed over the term of the contract, this requires all the revenue to be spread over the term of the contract; • our sales cycle for products and services, including multiple levels of authorization required by some customers, is relatively long and variable because of the complex and mission-critical nature of our products; • the demand for our products and services can vary significantly; • the size of our transactions can vary significantly; • the possibility of adverse global political or health conditions and economic downturns, both domestic and international, characterized by decreased product demand, price erosion, technological shifts, work slowdowns and layoffs, may substantially reduce customer demand and contracting activity; • customers may unexpectedly postpone or cancel anticipated system replacement or new system evaluation and implementation due to changes in their strategic priorities, project objectives, budgetary constraints, internal purchasing processes or company management; • customer evaluation and purchasing processes vary from company to company, and a customer’s internal approval and expenditure authorization process can be difficult and time-consuming, even after selection of a vendor; and • the number, timing and significance of software product enhancements and new software product announcements by us and by our competitors may affect purchase decisions. |
The trading price of our common stock has been in the past and may in the future be subject to wide fluctuations in response to factors such as the following: • general market conditions; • revenue or results of operations in any quarter failing to meet the expectations, published or otherwise, of the investment community; • customer order deferrals resulting from the anticipation of new products, economic uncertainty, disappointing operating results by the customer, management changes, corporate reorganizations or otherwise; • reduced investor confidence in equity markets, due in part to corporate collapses in recent years; • speculation in the press or analyst community; • wide fluctuations in stock prices, particularly in relation to the stock prices for other technology companies; • announcements of technological innovations by us or our competitors; • new products or the acquisition or loss of significant customers by us or our competitors; • developments with respect to our copyrights or other proprietary rights or those of our competitors; • changes in interest rates; • changes in investors’ beliefs as to the appropriate price-earnings ratios for us and our competitors; • changes in recommendations or financial estimates by securities analysts who track our common stock or the stock of other software companies; • changes in management; • sales of common stock by our controlling shareholders, directors and executive officers; • rumors or dissemination of false or misleading information, particularly through Internet chat rooms, instant messaging, and other rapid-dissemination methods; • conditions and trends in the software industry generally; • the announcement of acquisitions or other significant transactions by us or our competitors; • adoption of new accounting standards affecting the software industry; • domestic or international terrorism, public health crises including the COVID-19 pandemic and other factors; and • the other factors described in these “Risk Factors.” Fluctuations in the price of our common stock may expose us to the risk of securities class action lawsuits. |
Risks commonly encountered in such transactions include: • risk that an acquired company or assets may not further our business strategy or that we paid more than the company or assets were worth; • difficulty of assimilating the operations and retaining and motivating personnel of an acquired company; • risk that we may not be able to integrate acquired technologies or products with our current products and technologies; • potential disruption of our ongoing business and the diversion of our management’s attention from other business concerns; • inability of management to maximize our financial and strategic position through the successful integration of an acquired company; • adverse impact on our annual effective tax rate; • dilution of existing equity holders caused by capital stock issuance to the shareholders of an acquired company or stock option grants to retain employees of an acquired company; • difficulty in maintaining controls, procedures and policies; • potential adverse impact on our relationships with partner companies or third-party providers of technology or products; • impairment of relationships with employees and customers; • potential assumption of liabilities of our acquisition targets; • significant exit or impairment charges if products acquired in business combinations are unsuccessful; and • issues with product quality, product architecture, legal contingencies, product development issues, or other significant issues that may not be detected through our due diligence process. |
The following factors, among others, could have an adverse impact on our business and earnings: • failure to properly comply with foreign laws and regulations applicable to our foreign activities including, without limitation, software localization requirements; • failure to properly comply with U.S. laws and regulations relating to the export of our products and services; • compliance with multiple and potentially conflicting regulations in Europe, Asia and North America, including export requirements, tariffs, import duties and other trade barriers, as well as health and safety requirements; • difficulties in managing foreign operations and appropriate levels of staffing; • longer collection cycles; • tariffs and other trade barriers, including the economic burden and uncertainty placed on our customers by the imposition and threatened imposition of tariffs by the U.S., China and perhaps other countries; • seasonal reductions in business activities, particularly throughout Europe; • reduced protection for intellectual property rights in some countries; • proper compliance with local tax laws which can be complex and may result in unintended adverse tax consequences; • anti-American sentiment due to conflicts in the Middle East and other American policies that may be unpopular in certain countries; • increasing political instability, adverse economic conditions and the potential for war or other hostilities in many of these countries; • difficulties in enforcing agreements through foreign legal systems; • fluctuations in exchange rates that may affect product demand and may adversely affect the profitability in U.S. dollars of products and services provided by us in foreign markets where payment for our products and services is made in the local currency, including any fluctuations caused by uncertainties relating to the June 2016 referendum vote by the United Kingdom to exit the European Union (“Brexit”); • changes in general economic and political conditions in countries where we operate; • impact of Brexit on the United Kingdom’s access to the European Union Single Market, the related regulatory environment, the global economy and the resulting impact on our business, including the delay of execution of contracts by our customers; • potential labor strikes, lockouts, work slowdowns and work stoppages; and • restrictions on downsizing operations in Europe and expenses and delays associated with any such activities. |
Our contracting activity is difficult to forecast for a variety of reasons, including the following: • we complete a significant portion of our customer agreements within the last few weeks of each quarter; • if a license agreement includes cloud services such as managing the application and hosting the server that are performed over the term of the contract, this requires all the revenue to be spread over the term of the contract; • our sales cycle for products and services, including multiple levels of authorization required by some customers, is relatively long and variable because of the complex and mission-critical nature of our products; •the demand for our products and services can vary significantly; •the size of our transactions can vary significantly; • the possibility of adverse global political conditions and economic downturns, both domestic and international, characterized by decreased product demand, price erosion, technological shifts, work slowdowns and layoffs, may substantially reduce customer demand and contracting activity; • customers may unexpectedly postpone or cancel anticipated system replacement or new system evaluation and implementation due to changes in their strategic priorities, project objectives, budgetary constraints, internal purchasing processes or company management; • customer evaluations and purchasing processes vary from company to company, and a customer’s internal approval and expenditure authorization process can be difficult and time-consuming, even after selection of a vendor; and • the number, timing and significance of software product enhancements and new software product announcements by us and by our competitors may affect purchase decisions. |
The trading price of our common stock has been in the past and may in the future be subject to wide fluctuations in response to factors such as the following: • general market conditions; • revenue or results of operations in any quarter failing to meet the expectations, published or otherwise, of the investment community; • customer order deferrals resulting from the anticipation of new products, economic uncertainty, disappointing operating results by the customer, management changes, corporate reorganizations or otherwise; • reduced investor confidence in equity markets, due in part to corporate collapses in recent years; • speculation in the press or analyst community; • wide fluctuations in stock prices, particularly with respect to the stock prices for other technology companies; • announcements of technological innovations by us or our competitors; • new products or the acquisition or loss of significant customers by us or our competitors; • developments with respect to our copyrights or other proprietary rights or those of our competitors; • changes in interest rates; • changes in investors’ beliefs as to the appropriate price-earnings ratios for us and our competitors; • changes in recommendations or financial estimates by securities analysts who track our common stock or the stock of other software companies; • changes in management; • sales of common stock by our controlling shareholders, directors and executive officers; • rumors or dissemination of false or misleading information, particularly through Internet chat rooms, instant messaging, and other rapid-dissemination methods; • conditions and trends in the software industry generally; • the announcement of acquisitions or other significant transactions by us or our competitors; • adoption of new accounting standards affecting the software industry; • domestic or international terrorism and other factors; and • the other factors described in these “Risk Factors.” Fluctuations in the price of our common stock may expose us to the risk of securities class action lawsuits. |
Internal control over financial reporting is a process designed by or under the supervision of our CEO and CFO, and used by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles and includes those policies and procedures that: • Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations from our management and directors; and • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Risks commonly encountered in such transactions include: • the risk that an acquired company or assets may not further our business strategy or that we paid more than the company or assets were worth; • the difficulty of assimilating the operations and retaining and motivating personnel of an acquired company; • the risk that we may not be able to integrate acquired technologies or products with our current products and technologies; • the potential disruption of our ongoing business and the diversion of our management’s attention from other business concerns; • the inability of management to maximize our financial and strategic position through the successful integration of an acquired company; • adverse impact on our annual effective tax rate; • dilution of existing equity holders caused by capital stock issuance to the shareholders of an acquired company or stock option grants to retain employees of an acquired company; • difficulty in maintaining controls, procedures and policies; • potential adverse impact on our relationships with partner companies or third-party providers of technology or products; • the impairment of relationships with employees and customers; • potential assumption of liabilities of our acquisition targets; • significant exit or impairment charges if products acquired in business combinations are unsuccessful; and • issues with product quality, product architecture, legal contingencies, product development issues, or other significant issues that may not be detected through our due diligence process. |
The following factors, among others, could have an adverse impact on our business and earnings: • failure to properly comply with foreign laws and regulations applicable to our foreign activities including, without limitation, software localization requirements; • failure to properly comply with U.S. laws and regulations relating to the export of our products and services; • compliance with multiple and potentially conflicting regulations in Europe, Asia and North America, including export requirements, tariffs, import duties and other trade barriers, as well as health and safety requirements; • difficulties in managing foreign operations and appropriate levels of staffing; • longer collection cycles; • tariffs and other trade barriers; • seasonal reductions in business activities, particularly throughout Europe; • reduced protection for intellectual property rights in some countries; • proper compliance with local tax laws which can be complex and may result in unintended adverse tax consequences; • anti-American sentiment due to conflicts in the Middle East and other American policies that may be unpopular in certain countries; • increasing political instability, adverse economic conditions and the potential for war or other hostilities in many of these countries; • difficulties in enforcing agreements through foreign legal systems; • fluctuations in exchange rates that may affect product demand and may adversely affect the profitability in U.S. dollars of products and services provided by us in foreign markets where payment for our products and services is made in the local currency, including any fluctuations caused by uncertainties relating to the June 2016 referendum vote by the United Kingdom to exit the European Union (“Brexit”); • changes in general economic and political conditions in countries where we operate; • the impact of Brexit on the United Kingdom’s access to the European Union Single Market, the related regulatory environment, the global economy and the resulting impact on our business, including the delay of execution of contracts by our customers; • potential labor strikes, lockouts, work slowdowns and work stoppages; and • restrictions on downsizing operations in Europe and expenses and delays associated with any such activities. |
Our contracting activity is difficult to forecast for a variety of reasons, including the following: • we complete a significant portion of our license agreements within the last few weeks of each quarter; • whether the license agreement includes cloud services such as managing the application and hosting the server that are performed over the term of the contract that then require all the revenue to be spread over the term of the contract; • our sales cycle for products and services, including multiple levels of authorization required by some customers, is relatively long and variable because of the complex and mission-critical nature of our products; • the demand for our products and services can vary significantly; • the size of our license transactions can vary significantly; • the possibility of adverse global political conditions and economic downturns, both domestic and international, characterized by decreased product demand, price erosion, technological shifts, work slowdowns and layoffs, may substantially reduce customer demand and contracting activity; • customers may unexpectedly postpone or cancel anticipated system replacement or new system evaluation and implementation due to changes in their strategic priorities, project objectives, budgetary constraints, internal purchasing processes or company management; • customer evaluations and purchasing processes vary from company to company, and a customer’s internal approval and expenditure authorization process can be difficult and time-consuming, even after selection of a vendor; and • the number, timing and significance of software product enhancements and new software product announcements by us and by our competitors may affect purchase decisions. |
The trading price of our common stock has been in the past and may in the future be subject to wide fluctuations in response to factors such as the following: • general market conditions; • revenue or results of operations in any quarter failing to meet the expectations, published or otherwise, of the investment community; • customer order deferrals resulting from the anticipation of new products, economic uncertainty, disappointing operating results by the customer, management changes, corporate reorganizations or otherwise; • reduced investor confidence in equity markets, due in part to corporate collapses in recent years; • speculation in the press or analyst community; • wide fluctuations in stock prices, particularly with respect to the stock prices for other technology companies; • announcements of technological innovations by us or our competitors; • new products or the acquisition or loss of significant customers by us or our competitors; • developments with respect to our copyrights or other proprietary rights or those of our competitors; • changes in interest rates; • changes in investors’ beliefs as to the appropriate price-earnings ratios for us and our competitors; • changes in recommendations or financial estimates by securities analysts who track our common stock or the stock of other software companies; • changes in management; • sales of common stock by our controlling shareholders, directors and executive officers; • rumors or dissemination of false or misleading information, particularly through Internet chat rooms, instant messaging, and other rapid-dissemination methods; • conditions and trends in the software industry generally; • the announcement of acquisitions or other significant transactions by us or our competitors; • adoption of new accounting standards affecting the software industry; • domestic or international terrorism and other factors; and • the other factors described in these “Risk Factors.” Fluctuations in the price of our common stock may expose us to the risk of securities class action lawsuits. |
The decrease in cash provided by operating activities in fiscal 2018 compared to fiscal 2017 was due primarily to: (1) an increase in the purchases of trading securities due to timing, (2) a decrease in accounts payable and other liabilities in fiscal 2018 when compared to an increase in fiscal 2017 due primarily to timing and the amount of sales commissions, bonuses and tax liabilities, (3) an increase in accounts receivable in fiscal 2018 when compared to an decrease in fiscal 2017 due to timing of sales and billing, (4) a decrease in net earnings, (5) a decrease in the net proceeds from sales and maturities of trading securities in fiscal 2018 compared to fiscal 2017 due to timing of purchases and maturity dates, (6) an increase in prepaid expenses and other assets in fiscal 2018 compared to the increase in fiscal 2017 due to timing of purchases and (7) lower depreciation and amortization expense due to timing of closing capitalized software projects and the sale of real estate in fiscal 2017 (8) higher gains on unrealized investments due to timing of sales of investments, and (9) a decrease in deferred income taxes in fiscal 2018 compared to fiscal 2017 due to timing. |
Internal control over financial reporting is a process designed by or under the supervision of our CEO and CFO, and effectively by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles and includes those policies and procedures that: • Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations from our management and directors; and • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Risks commonly encountered in such transactions include: • the risk that an acquired company or assets may not further our business strategy or that we paid more than the company or assets were worth; • the difficulty of assimilating the operations and retaining and motivating personnel of an acquired company; • the risk that we may not be able to integrate acquired technologies or products with our current products and technologies; • the potential disruption of our ongoing business and the diversion of our management’s attention from other business concerns; • the inability of management to maximize our financial and strategic position through the successful integration of an acquired company; • adverse impact on our annual effective tax rate; • dilution of existing equity holders caused by capital stock issuance to the shareholders of an acquired company or stock option grants to retain employees of an acquired company; • difficulty in maintaining controls, procedures and policies; • potential adverse impact on our relationships with partner companies or third-party providers of technology or products; • the impairment of relationships with employees and customers; • potential assumption of liabilities of our acquisition targets; • significant exit or impairment charges if products acquired in business combinations are unsuccessful; and • issues with product quality, product architecture, legal contingencies, product development issues, or other significant issues that may not be detected through our due diligence process. |
The following factors, among others, could have an adverse impact on our business and earnings: • failure to properly comply with foreign laws and regulations applicable to our foreign activities including, without limitation, software localization requirements; • failure to properly comply with U.S. laws and regulations relating to the export of our products and services; • compliance with multiple and potentially conflicting regulations in Europe, Asia and North America, including export requirements, tariffs, import duties and other trade barriers, as well as health and safety requirements; • difficulties in managing foreign operations and appropriate levels of staffing; • longer collection cycles; • tariffs and other trade barriers; • seasonal reductions in business activities, particularly throughout Europe; Index to Financial Statements • reduced protection for intellectual property rights in some countries; • proper compliance with local tax laws which can be complex and may result in unintended adverse tax consequences; • anti-American sentiment due to conflicts in the Middle East and other American policies that may be unpopular in certain countries; • increasing political instability, adverse economic conditions and the potential for war or other hostilities in many of these countries; • difficulties in enforcing agreements through foreign legal systems; • fluctuations in exchange rates that may affect product demand and may adversely affect the profitability in U.S. dollars of products and services provided by us in foreign markets where payment for our products and services is made in the local currency, including any fluctuations caused by uncertainties relating to the June 2016 referendum vote by the United Kingdom to exit the European Union (“Brexit”); • changes in general economic and political conditions in countries where we operate; • the impact of Brexit on the United Kingdom’s access to the European Union Single Market, the related regulatory environment, the global economy and the resulting impact on our business, including the delay of execution of contracts by our customers; • potential labor strikes, lockouts, work slowdowns and work stoppages; and • restrictions on downsizing operations in Europe and expenses and delays associated with any such activities. |
Our contracting activity is difficult to forecast for a variety of reasons, including the following: • we complete a significant portion of our license agreements within the last few weeks of each quarter; • whether the license agreement includes cloud services such as managing the application and hosting the server that are performed over the term of the contract that then require all the revenue to be spread over the term of the contract; • our sales cycle for products and services, including multiple levels of authorization required by some customers, is relatively long and variable because of the complex and mission-critical nature of our products; • the demand for our products and services can vary significantly; • the size of our license transactions can vary significantly; • the possibility of adverse global political conditions and economic downturns, both domestic and international, characterized by decreased product demand, price erosion, technological shifts, work slowdowns and layoffs, may substantially reduce customer demand and contracting activity; • customers may unexpectedly postpone or cancel anticipated system replacement or new system evaluation and implementation due to changes in their strategic priorities, project objectives, budgetary constraints, internal purchasing processes or company management; • customer evaluations and purchasing processes vary from company to company, and a customer’s internal approval and expenditure authorization process can be difficult and time-consuming, even after selection of a vendor; and • the number, timing and significance of software product enhancements and new software product announcements by us and by our competitors may affect purchase decisions. |
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